Tocao vs. Court of Appeals

342 SCRA 20, October 4, 2000

Ponente: Justice Ynares-Santiago

FACTS:

Nenita Anay met William Belo, Vice-President for Operations of Ultra Clean Water Purifier, through her former employer in Bangkok, Thailand. Belo introduced her to Marjorie Tocao. The three agreed to form a joint venture for the importation and local distribution of kitchen cookware. Under this joint venture, Belo acted as capitalist, Tocao as President and General Manager, and Anay as head of the marketing department and later, Vice-President for sales. The parties agreed that Belo’s name should not appear in any documents relating to their transactions with West Bend Company. Instead, they agreed to use Anay’s name in securing distributorship of cookware from that company. The parties agreed further that Anay would be entitled to:

1. 10% of the annual net profits of the business;

2. Overriding commission of 6% of the overall weekly production;

3. 30% of the sales she would make; and

4. 2% for her demonstration services.

The agreement was not reduced to writing on the strength of Belo’s assurances that he was sincere, dependable and honest when it comes to financial commitments. They operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocao’s name. Thereafter, Anay learned that Tocao signed a letter to the effect that she was no longer the vice-president of Geminesse Enterprise and received a note the she was barred by Tocao from holding office and conducting demonstrations in both Makati and Cubao offices. She demands for her overriding commission for the peiod of January 8, 1988 to February 5, 1988 and the audit of the company to determine her share in the net profits. However it was not answered by the petitioners. Anay filed a complaint against the petitioner. Tocao and Belo contends that the agreement between them were neither written nor ratified and that there could not have been a partnership, Tocao being the sole proprietorship.

ISSUE:

Whether or not partnership exists.

HELD:

Yes. The Court held that there is partnership between the petitioners and Anay. Petitioners admit that Anay had the expertise to engage in the business of distributorship of cookware. She contributed such expertise to the partnership and hence, under the law, she was the industrial or managing partner. It was through her reputation with the West Bend Company that the partnership was able to open the business of distributorship of that company’s cookware products; it was through the same efforts that the business was propelled to financial success.

To be considered a juridical personality, a partnership must fulfill these requisites: (1) two or more persons bind themselves to contribute money, property or industry to a common fund; and (2) intention on the part of the partners to divide the profits among themselves. It may be constituted in any form; a public instrument is necessary only where immovable property or real rights are contributed thereto. This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one. Where no immovable property or real rights are involved, what matters is that the parties have complied with the requisites of a partnership. The fact that there appears to be no record in the Securities and Exchange Commission of a public instrument embodying the partnership agreement pursuant to Article 1772 of the Civil Code did not cause the nullification of the partnership.

Since the partnership created by petitioners and private respondent has no fixed term and is therefore a partnership at will predicated on their mutual desire and consent, it may be dissolved by the will of a partner. An unjustified dissolution by a partner can subject him to action for damages because by the mutual agency that arises in a partnership, the doctrine of delectus personae allows the partners to have the power, although not necessarily the right to dissolve the partnership.

Heirs of Tan Eng Kee vs. Court of Appeals

341 SCRA 740, October 3, 2000

Ponente: Justice De Leon, Jr.

FACTS:

Petitioners are the common law spouse of Tan Eng Kee, with their children Teresita, Nena, Clarita, Carlos, Corazon and Elpidio. They filed a suit against the decedent’s brother Tan Eng Lay for the accounting, liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay. They alleged that after the second World War, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. Their enterprise was named “Benguet Lumber” which they jointly managed until Tan Eng Kee’s death. Petitioners averred that the business prospered due to the hardwork and thrift of the alleged partners. However, they claimed that Tan Eng Lay and his children caused the conversion of the partnership “Benguet Lumber” into a corporation called “Benguet Lumber Company”. The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and liquidation and the equal division of the net assets of Benguet Lumber.

ISSUE:

Wheter or not there is partnership between Tang Eng Kee and Tan Eng Lay.

HELD:

The Supreme Court ruled that Tan Eng Kee was only an employee, not a partner because Tan Eng Lay directly controverted testimonies of petitioner’s witnesses that Tan Eng Kee contributed resources to a common fund to establish a partnership; despite the forty years the partnership was allegedly in existence, Tan Eng Kee never asked for an accounting; payrolls show that Tan Eng Kee was an ordinary employee of Benguet Lumber who received wages; petitioners failed to show how much share in the profits of the company, if any, their father Tan Eng Kee, receives for any particular period.

In order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits among themselves. The agreement need not be formally reduced into writing, since statute allows the oral constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed, and (2) when the partnership has a capital of three thousand pesos or more. In both cases, a public instrument is required. An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership.

Oña vs. Commissioner of Internal Revenue

45 SCRA 74, May 25, 1972

Ponente: Justice Barredo

FACTS:

Petitioner is the surviving spouse of Julia Buñales. He was appointed as the administrator of the estate of the deceased and thereafter, the guardian of their minor children when the project of partition was approved. It shows that the heirs have undivided ½ interest in 10 parcels of land and money from the War Damage Commission. Although it was approved, there was no attempt made to divide the said properties. Instead, the properties remained under the management of the petitioner, who used said properties in business by leasing or selling them and investing the income derived therefrom and the proceeds from the sales thereof in real properties and securities. As a result, petitioners’ properties and investments gradually increased from P105,450.00 in 1949 to P480,005.20 in 1956. From the said investments and properties, petitioners derived such incomes as profits from installment sales of subdivided lots, profits from sales of stocks, dividends, rentals and interests. The said incomes are recorded in the books of account kept by petitioner, where the corresponding shares of the petitioners in the net income for the year are also known. Every year, petitioners returned for income tax purposes their shares in the net income derived from said properties and securities and/or from transactions involving them. However, petitioners did not actually receive their shares in the yearly income. The income was always left in the hands of petitioner who invested them in real properties and securities. With these facts, respondent decided that petitioner formed an unregistered partnership and therefore, subject to the corporate income tax.

ISSUE:

Whether or not petitioner be considered as co-owners of the properties o must be deemed to have formed an unregistered partnership subject to tax.

HELD:

The Court held that there was an unregistered partnership. From the moment petitioners allowed not only the incomes from their respective shares of the inheritance but even the inherited properties themselves to be used by Lorenzo T. Oña (who managed the properties) as a common fund in undertaking several transactions or in business, with the intention of deriving profit to be shared by them proportionally, such act was tantamount to actually contributing such incomes to a common fund and, in effect, they thereby formed an unregistered partnership within the purview of the provisions of the Tax Code.

In cases of inheritance, there is a period when the heirs can be considered as co-owners rather than unregistered co-partners within the contemplation of our corporate tax laws. Before the partition and distribution of the estate of the deceased, all the income thereof does belong commonly to all the heirs, obviously, without them becoming thereby unregistered co-partners. For tax purposes, the co-ownership of inherited properties is automatically converted into an unregistered partnership, for it is easily conceivable that after knowing their respective shares in the partition, they (heirs) might decide to continue holding said shares under the common management of the administrator or executor or of anyone chosen by them and engage in business on that basis.

Gatchalian vs. Collector of Internal Revenue

67 Phil. 666, April 29, 1939

Ponente: Justice Imperial

FACTS:

Petitioners purchased, in the ordinary course of business, from one of the duly authorized agents of the National Charity Sweepstakes Office one ticket for the sum of two pesos (P2), said ticket was registered in the name of Jose Gatchalian and Company. The ticket won one of the third-prizes in the amount of P50,000. Gatchalian was required to file the corresponding income tax return covering the prize won. Respondent made an assessment against the petitioners requesting the payment to the deputy provincial treasurer of Pulilan, Bulacan. However, a petitioner, through their counsel, made a request for exemption but was denied. Petitioner failed to pay the amount due, hence a warrant of distraint and levy was issued. They paid under protest a part of the tax and penalties to avoid the effects of the warrant.

ISSUE:

Whether or not the petitioners formed a partnership for them to be liable for income tax.

HELD:

Yes. There is no doubt that if the petitioners merely formed a community of property the latter is exempt from the payment of income tax under the law. But according to the stipulated facts the petitioners organized a partnership of a civil nature because each of them put up money to buy a sweepstakes ticket for the sole purpose of dividing equally the prize which they may win, as they did in fact in the amount of P50,000 The partnership was not only formed, but upon the organization thereof and the winning of the prize, Jose Gatchalian personally appeared in the office of the Philippine Charity Sweepstakes, in his capacity as co-partner, as such collected the prize, the office issued the check for P50,000 in favor of Jose Gatchalian and company, and the said partner. in the same capacity, collected the said check. All these circumstances repel the idea that the plaintiffs organized and formed a community of property only.

Liwanag vs. Court of Appeals

281 SCRA 1225, October 24, 1997

Ponente: Justice Romero

FACTS:

Petitioner and a certain Thelma Tabligan went to the house of Isidora Rosales and asked her to join them in the business of buying and selling cigarettes. Convinced of the feasibility of the venture, Rosales readily agreed. Under their agreement, Rosales would give the money needed to buy the cigarettes while Liwanag and Tabligan would act as her agents, with a corresponding 40% commission to her if the goods are sold; otherwise the money would be returned to Rosales. Consequently, Rosales gave several cash advances to Liwanag and Tabligan amounting to P633,650.00. During the first two months, Liwanag and Tabligan made periodic visits to Rosales to report on the progress of the transactions. The visits, however, suddenly stopped, and all efforts by Rosales to obtain information regarding their business proved futile.

Alarmed by this development and believing that the amounts she advanced were being misappropriated, Rosales filed a case of estafa against Liwanag.

ISSUE:

Whether Rosales entered into a contract of partnership and entitled to the return of her money.

HELD:

The Court held that the language of the receipt could not be any clearer. It indicates that the money delivered to Liwanag was for a specific purpose, that is, for the purchase of cigarettes, and in the event the cigarettes cannot be sold, the money must be returned to Rosales. Thus, even assuming that a contract of partnership was indeed entered into by and between the parties, we have ruled that when money or property have been received by a partner for a specific purpose and he later misappropriated it, such partner is guilty of estafa. Neither can the transaction be considered a loan, since in a contract of loan once the money is received by the debtor, ownership over the same is transferred. Being the owner, the borrower can dispose of it for whatever purpose he may deem proper. It is evident that Liwanag could not dispose of the money as she pleased because it was only delivered to her for a single purpose, namely, for the purchase of cigarettes, and if this was not possible then to return the money to Rosales. Since in this case there was no transfer of ownership of the money delivered, Liwanag is liable for conversion.

Evangelista & Co. vs. Abad Santos

51 SCRA 416, June 28, 1973

Ponente: Justice Makalintal

FACTS:

A co-partnership was formed under the name of "Evangelista & Co." The Articles of Co-partnership were amended so as to include Estrella Abad Santos, as industrial partner, with herein petitioners Domingo C. Evangelista, Jr., Leonarda Atienza Abad Santos and Conchita P. Navarro, the original capitalist partners, remaining in that capacity, with a contribution of P17,500 each. The amended Articles provided,inter alia, that "the contribution of Estrella Abad Santos consists of her industry being an industrial partner;" and that the profits and losses "shall be divided and distributed among the partners in the proportion of 70% for the first three partners, Evangelista, Jr., Navarro and Abad Santos to be divided among them equally; and 30% for the fourth partner, Estrella Abad Santos." Respondent filed suit against the three other partners alleging that the partnership, which was also made a party-defendant, had been paying dividends to the partners except to her; and that notwithstanding her demands the defendants had refused and continued to refuse to let her examine the partnership books or to give her information regarding the partnership affairs or to pay her any share in the dividends declared by the partnership. She therefore prayed that the defendants be ordered to render an accounting to her of the partnership business and to pay her corresponding share in the partnership profits after such accounting. The defendants denied likewise that the plaintiff ever demanded that she be allowed to examine the partnership books.

ISSUE:

Whether or not petitioner is an industrial partner and that he is entitled to the formal accounting of the business operations of the partnership.

HELD:

The Court held that even as she was and still is a Judge of the City Court of Manila, she has rendered services for respondents without which they would not have had the wherewithal to operate the business for which appellant company was organized. Article 1767 of the New Civil Code which provides that "By contract of partnership two or more persons bind themselves, to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves, it does not specify the kind of industry that a partner may thus contribute, hence the said services may legitimately be considered as respondent’s contribution to the common fund. It is not disputed that the provision against the industrial partner engaging in business for himself seeks to prevent any conflict of interest between the industrial partner and the partnership, and to insure faithful compliance by said partner with this prestation. The respondent is an industrial partner of petitioner company, with the right to demand for a formal accounting and to receive her share in the net profit that may result from such an accounting, which right appellants take exception under their second assigned error.

Ramnani vs. Court of Appeals

196 SCRA 731, May 7, 1991

Ponente: Justice Gancayco

FACTS:

Petitioners are brothers of the full blood. Ishwar and his spouse Sonya had their main business based in New York. They executed a general power of attorney appointing Navalrai and Choithram as attorneys-in-fact empowering them to manage and conduct their business concern in the Philippines. Chroithram in his capacity as attorney-in-fact of his brother, entered into two agreements for the purchase of two parcels of land from Ortigas Company. Buildings were constructed on the said land, which were subsequently burned. Ishwar asked Chroithram to account for the income and income related to the property during the period 1967 to 1970. Chroithram failed and refuse to render such accounting. As a consequence, Ishwar revoked the general power of attorney. Subsequently, Chroithram transferred all rights and interests of Ishwar and Sonya in favor of his daughter in law Ramnani. Ishwar and Sonya filed a complaint in Court of First Instance for damages and reconveyance of the said properties. Lower court dismissed the complaint. On appeal, Court of Appeals reversed the decision.

ISSUE:

Whether or not Chroithram is entitled to the fruits of the partnership/

HELD:

Yes. The Court held that under the peculiar circumstances of this case and despite the fact that Choithram, have committed acts which demonstrate their bad faith and scheme to defraud spouses of their rightful share in the properties in litigation, the Court cannot ignore the fact that Choithram must have been motivated by a strong conviction that as the industrial partner in the acquisition of said assets he has as much claim to said properties as Ishwar, the capitalist partner in the joint venture.

Spouses Ishwar supplied the capital for the business. They entrusted the money to Choithram to invest in a profitable business venture in the Philippines. For this purpose they appointed Choithram as their attorney-in-fact.

After all, blood is thicker than water. The situation is where two brothers engaged in a business venture. One furnished the capital, the other contributed his industry and talent. Justice and equity dictate that the two share equally the fruit of their joint investment and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation. Both would stand to gain. No one would end up the loser.

Philippine National Bank vs. Lo

52 Phil. 802, October 5, 1927

Ponente: Justice Villamor

FACTS:

The defendants Severo Eugenio Lo and Ng Khey Ling, together with J. A. Say Lian Ping, Ko Tiao Hun, On Yem Ke Lam and Co Sieng Peng formed a commercial partnership under the name of "Tai Sing & Co.," with a capital of P40,000 contributed by said partners. In the articles of copartnership, , it appears that the partnership is for the purpose to do business in the City of Iloilo, Province of Iloilo, or in any other part of the Philippine Islands the partners might desire, under the name of "Tai Sing & Co.," for the purchase and sale of merchandise, goods, and native, as well as Chinese and Japanese, products, and to carry on such business and speculations as they might consider profitable. One of the partners, J. A. Say Lian Ping was appointed general manager of the partnership, with the powers specified in said articles of copartnership. The general manager executed a power of attorneyin favor of A. Y. Kelam, authorizing him to act in his stead as manager and administrator of "Tai Sing & Co." Acting under such power of attorney, he applied for, and obtained loans from the bank and as security for said loan, he mortgaged certain personal properties of Tai Sing & Co. These credits were renewed several times. The other partners executed a power of attorney in favor of Sy Tit to, representing Tai Sing & Co., obtained a credit from plaintiff bank executing a chattel mortgage on certain personal property belonging to Tai Sing & Co. Plaintiff now asks for the sum of debt the partnership owes him. Defendant Eugenio Lo sets up, as a general defense, that Tai Sing & Co., was not a general partnership, and that the commercial credit in current account which Tai Sing & Co. obtained from the plaintiff bank had not been authorized by the board of directors of the company, nor was the person who subscribed said contract authorized to make the same, under the articles of copartnership. The other defendants, Yap Sing and Ng Khey Ling, answered the complaint denying each and every one of the allegations contained therein.

ISSUE:

Whether or not there is general partnership and if yes, what are their liabilities?

HELD:

The Court held that there was a general partnership. They formed a partnership which was registered in the mercantile register, and carried on business contracting debts with the plaintiff bank. The anomalous adoption of the firm name does not affect the liability of the general partners to third parties under article 127 of the Code of Commerce.In requiring a general partnership to transact business under the name of all its members, of several of them, or of one only, is to protect the public from imposition and fraud; and that the provision of said article 126 is for the protection of the creditors rather than of the partners themselves. And consequently the doctrine was enunciated that the law must be construed as rendering contracts made in violation of it unlawful and unenforceable only as between the partners and at the instance of the violating party, but not in the sense of depriving innocent parties of their rights who may have dealt with the offenders in ignorance of the latter having violated the law; and that contracts entered into by commercial associations defectively organized are valid when voluntarily executed by the parties, and the only question is whether or not they complied with the agreement. Therefore, the defendants cannot invoke in their defense the anomaly in the firm name which they themselves adopted.

The partnership is liable to Philippine National Bank for the debt incurred by them because Ou Yong Kelam was a partner who contracted in the name of the partnership, without any objection of the other partners; and because it appears in the record that the appellant-partners Severo Eugenio Lo, Ng Khey Ling and Yap Seng, appointed Sy Tit as manager, and he obtained from the plaintiff bank the credit in current account, the debit balance of which is sought to be recovered in this action.

Compania Maritima vs. Muñoz

9 Phil. 326, December 12, 1907

Ponente: Justice Willard

FACTS:

The plaintiff brought this action against the partnership of Francisco Muñoz & Sons, and against Francisco Muñoz de Bustillo, Emilio Muñoz de Bustillo, and Rafael Naval to recover the sum of P26,828.30, with interest and costs. The defendants formed on ordinary general mercantile partnership under the name of Francisco Muñoz & Sons for the purpose of carrying on the mercantile business in the Province of Albay which had formerly been carried on by Francisco Muñoz. Francisco Muñoz was a capitalist partner and Emilio Muñoz and Rafael Naval were industrial partners. Judgment was rendered in the court acquitting Emilio Muñoz de Bustillo and Rafael Naval of the complaint, and in favor of the plaintiff and against the defendant partnership, Francisco Muñoz & Sons, and Francisco Muñoz de Bustillo.

ISSUE:

Whether or not an industrial partner is included in the phrase general partners.

Whether or not they are liable for the debts incurred by the partnership.

HELD:

The Court held that the industrial partners must be included. It cannot have been intended that, in such a partnership as the one in question, where there were two industrial and only one capitalist partner, the industrial partners should have no voice in the management of the business when the articles of partnership were silent on that subject; that when the manager appointed mismanages the business the industrial partners should have no right to appoint a comanager; that they should have no right to examine the books; that they might use the firm name in their private business; or that they have no voice in the liquidation of the business after dissolution.

The industrial partners are also liable for the debts incurred by the partnership. Neither on principle nor on authority can the industrial partner be relieved from liability to third persons for the debts of the partnership. They are liable for the liability incurred against third person but they are relieved from the losses.

Santiago Syjuco vs. Castro

175 scra 171, July 7, 1989

Ponente: Justice Narvasa

FACTS:

Eugenio Lim, along with his brothers, all hereinafter collectively called the Lims, borrowed from petitioner Santiago Syjuco, Inc. the sum of 800,000.00. The loan was given on the security of a first mortgage on property registered in the names of said borrowers as owners in common. Thereafter, additional loans on the same security were obtained by the Lims from Syjuco, so that the aggregate of the loans stoo at P2, 460,000.00, exclusive of interest. When the obligation matured, the Lims failed to pay it despite demand. Consequently, petitioner caused extra judicial proceedings for the foreclosure of the mortgage and for the execution of public auction sale. One of which the respondent concluded that the mortgage which they had individually constituted were no longer belonged to them, having been given by them to the partnership, “Heirs of Hugo Lim”, making the said mortgage void because it was executed by them without authority from the partnership. Judgment was rendered by the trial court declaring void the mortgaged in question because it was executed by the Lims without authority from the partnership which was and had been the exclusive owner of the mortgaged property.

ISSUE:

Whether or not the partnership liable.

HELD:

The Court held that despite the concealment of the existence of the partnership, for all intents and purposes and consistently with the Lims' own theory, it was that partnership which was the real party in interest in all the actions; it was actually represented in said actions by all the individual members thereof, and consequently, those members' acts, declarations and omissions cannot be deemed to be simply the individual acts of said members, but in fact and in law, those of the partnership. Also, where the title to real property is in the names of all the partners, a conveyance executed by all the partners passes all their rights in such property. Consequently, those members' acts, declarations and omissions cannot be deemed to be simply the individual acts of said members, but in fact and in law, those of the partnership.

Munasque v Court of Appeals

139 SCRA 533, November 11, 1985

Ponente: Justice Gutierrez, Jr.

FACTS:

Petitioner filed a complaint for payment of sum of money and damages against Celestino Galan, Tropical Commercial, Co., Inc. (Tropical) and Ramon Pons, alleging that the petitioner entered into a contract with respondent Tropical through its Cebu Branch Manager Pons for remodeling a portion of its building without exchanging or expecting any consideration from Galan although the latter was casually named as partner in the contract; that by virtue of his having introduced the petitioner to the employing company (Tropical), Galan would receive some kind of compensation in the form of some percentages or commission; that Tropical, under the terms of the contract, agreed to give petitioner the amount of P7,000.00 soon after the construction began and thereafter the amount of P6,000.00 every fifteen (15) days during the construction. Tropical and/or Pons delivered a check for P7,000.00 not to the plaintiff but to a stranger to the contract, Galan, who succeeded in getting petitioner's indorsement on the same check persuading the latter that the same be deposited in a joint account; that on January 26, 1967, when the second check for P6,000.00 was due, petitioner refused to indorse said check presented to him by Galan but through later manipulations, respondent Pons succeeded in changing the payee's name from Elmo Muñasque to Galan and Associates, thus enabling Galan to cash the same at the Cebu Branch of the Philippine Commercial and Industrial Bank (PCIB) placing the petitioner in great financial difficulty in his construction business and subjecting him to demands of creditors to pay for construction material. Petitioner undertook the construction at his own expense completing it prior to the deadline.

ISSUE:

Whether or not there petitioner and Galan are partners.

Whether or not there is liability for the wrongful act or breach of trust by a partner.

HELD:

The Court held that there was partnership between petitioner and Galan. There is nothing in the records to indicate that the partnership organized by the two men was not a genuine one. If there was a falling out or misunderstanding between the partners, such does not convert the partnership into a sham organization. When Muñasque received the first payment of Tropical in the amount of P7,000.00 with a check made out in his name, he indorsed the check in favor of Galan. Respondent Tropical therefore, had every right to presume that the petitioner and Galan were true partners. If they were not partners as petitioner claims, then he has only himself to blame for making the relationship appear otherwise, not only to Tropical but to their other creditors as well. The payments made to the partnership were, therefore, valid payments.

The liability of the partners are merely joint in transactions entered into by the partnership, a third person who transacted with said partnership can hold the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 or 1823 of the Civil Code. The obligation is solidary because the law protects him, who in good faith relied upon the authority of a partner, whether such authority is real or apparent. That is why under Article 1824 of the Civil Code all partners, whether innocent or guilty, as well as the legal entity which is the partnership, are solidarily liable. In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and Associates" and delivering the same to Galan because as far as it was concerned, Galan was a true partner with real authority to transact on behalf of the partnership with which it was dealing.

Yu vs. National Labor Relations Commission

224 SCRA 75, 1993

Ponente:

FACTS:

Petitioner, as Assistant General Manager, of the marble quarrying and export business organized with Bendals as general partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang as limited partners; had a monthly salary of 4000. Yu, however, actually received only half of his stipulated salary, since he had accepted the promise of the partners that the balance would be paid when the firm shall have secured additional operating funds from abroad. Yu actually managed the operations and finances of the business; he had overall supervision of the workers at the marble quarry in Bulacan and took charge of the preparation of papers relating to the exportation of the firm’s products. Bendals sold and transferred their interests in the partnership to Co and Emmanuel Zapanta which continued to use the old firm name of Jade Mountain.

ISSUE:

Whether or not the partnership which had been extinguished and replaced by a new partnership composed of Co and Zapanta.

HELD:

Yes. The Court held that the changes in the membership of the partnership resulted in the dissolution of the old partnership which had hired Yu and the emergence of a new partnership composed of Co and Zapanta. Art. 1828 states that, the dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business. Art. 1830 states that the dissolution is caused: (1) without violation of the agreement between the partners; (b) by the express will of any partner, who must act in good faith, when no definite term or particular undertaking is specified; (2) in contravention of the agreement between the partners, where the circumstances do not permit a dissolution under any other provision of this article, by the express will of any partner at any time; No winding up of affairs in this case as contemplated in Art. 1829: on dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed the new partnership simply took over the business enterprise owned by the old partnership, and continued using the old name of Jade Mountain Products Company Limited, without winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets or most of them and opening a new business enterprise.

Lim Tanhu vs. Ramolete

66 SCRA 425, August 29, 1975

Ponente: Justice Barredo

FACTS:

Tan Put alleged that she is the widow of Tee Hoon Lim Po Chuan, whow as a partner and practically the owner who has controlling interest of Glory Commercial Company and Chinese citizen until his death. Petitioners were partners in name but they were mere employees of Po Chuan and were naturalized Filipino Citizens. Tan Put filed complaint against petitioners including their son and other persons, that through fraud and machination took actual and active management of the partnership and that she alleged entitlement to share not only in the capital and profits of the partnership but also in the other assets, both real and personal, acquired by the partnership with funds of the latter during its lifetime.

ISSUE:

Whether or not a specific amounts or properties may be adjudicated to the heir or legal representative of the deceased partner without the liquidation being first terminated.

HELD:

The Court held that where it appears that most of the properties supposed to have been acquired by defendants with funds of the partnership appear to have been transferred in their names long after the partnership had been automatically dissolved as a result of the death of a partner, defendants have no obligation to account to anyone for such acquisitions in the absence of clear proof that they had violated the trust of the deceased partner during the existence of the partnership. In the absence of a finding that a new corporation was organized after the death of the partner with capital from the funds of the partnership, or finding as to how some of the defendants who just happen to be the wives of the surviving partners could in any way be accountable to plaintiffs, it was error for the trial court to order defendants to deliver or pay jointly and severally to the plaintiff 1/3 of the supposed cash belonging to the partnership and in the same breath sentence defendants to partition and give 1/3 of the properties enumerated in the dispositive portion of the decision, which seemingly are the very properties allegedly purchased from the funds of the partnership would naturally include the amounts defendants have to account for. And if there has not yet been any liquidation of the partnership, so that said partnership would have the status of a partnership in liquidation, the only right plaintiff could have would be to what might result after much liquidation to belong to the deceased partner (her alleged husband) and before this is finished, it is impossible to determine, what rights or interest, if any the deceased had. In other words, no specific amounts or properties may be adjudicated to the heir or legal representative of the deceased partner without the liquidation being first terminated.

Eurotech Industrial Technologies, Inc. vs. Cuizon

521 SCRA 584, April 23, 2007

Ponente: Justice Chico-Nazario

FACTS:

Petitioner is engaged in in the business of importation and distribution of various European industrial equipment. It has as one of its customers Impact Systems Sales which is a sole proprietorshipowned by respondent. Petitioner sold to Impact Systems various product. Respondent sought to buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making a down payment of P50,000.00. When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to respondent without their having fully settled their indebtedness to Eurotech. Thus respondent and Alberto de Jesus, general manager of Eurotech, executed a Deed of Assignment of receivables in favor of petitioner. Respondent alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact.

ISSUE:

Whether or not the acts of agent are the acts of principal.

HELD:

The Court held that the act of an agent is the act of the principal. 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 latter's consent. The underlying principle of the contract of agency is to accomplish results by using the services of others — to do a great variety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence. The elements of the contract of agency are: (1) 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; (4) the agent acts within the scope of his authority.

It held that Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. To recall, petitioner refused to deliver the one unit of sludge pump unless it received, in full, the payment for Impact Systems' indebtedness. We may very well assume that Impact Systems desperately needed the sludge pump for its business since after it paid the amount of fifty thousand pesos (P50,000.00) as down payment, it still persisted in negotiating with petitioner which culminated in the execution of the Deed of Assignment of its receivables from Toledo Power Company. The significant amount of time spent on the negotiation for the sale of the sludge pump underscores Impact Systems' perseverance to get hold of the said equipment. There is, therefore, no doubt in our mind that respondent EDWIN's participation in the Deed of Assignment was "reasonably necessary" or was required in order for him to protect the business of his principal. Had he not acted in the way he did, the business of his principal would have been adversely affected and he would have violated his fiduciary relation with his principal.

Baltazar vs. Ombudsman

510 SCRA 74, December 6, 2006

Ponente: Justice Velasco, Jr.

FACTS:

Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado leased the fishpond to Eduardo Lapid for a three (3)-year period. Lessee Eduardo Lapid in turn sub-leased the fishpond to Rafael Lopez during the last seven (7) months of the original lease. Respondent Ernesto Salenga was hired by Eduardo Lapid as fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent Salenga. Meanwhile Salenga, through a certain Francis Lagman, sent his demand letter to Rafael Lopez and Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the harvest.

Sub-lessee Rafael Lopez wrote a letter to Salenga informing the latter that for the last two (2) months of the sub-lease, he had given the rights over the fishpond to Mario Palad and Ambit Perez. This prompted respondent Salenga to file a Complaint before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San Fernando, Pampanga for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of Harvest. The Complaint was signed by respondent Jose D. Jimenez, Jr., Legal Officer of the Department of Agrarian Reform (DAR) Region III Office in San Fernando, Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M. Mariano was the Chief Legal Officer of DAR Region III. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB, Pampanga.

ISSUE:

Whether or not an agent can further delegate his agency to another

HELD:

No. The Court held that petitioner is duly authorized by Faustino Mercado to institute the suit and presented a Special Power of Attorney (SPA) from Faustino Mercado. However, such SPA is unavailing for petitioner. For one, petitioner's principal, Faustino Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency. A power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of FaustinoMercado. Moreover, while the Civil Code under Article 1892 allows the agent to appoint a substitute, such is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is clear in the aforecited Article that what is allowed is a substitute and not a delegation of the agency. Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a real party in interest in the criminal proceedings conducted by the Ombudsman as elevated to the Sandiganbayan. He is not a party who will be benefited or injured by the results of both cases.

Ong vs. Court of Appeals

401 SCRA 684, April 29, 2003

Ponente: Justice Carpio

FACTS:

Petitioner Edward Ong, in his capacity as an officer of ARMAGRI International Corporation (ARMAGRI), executed two trust receipts acknowledging receipt from the Solid Bank Corp. of goods valued at P 2,532,500 and P 2, 050,000. In addition, he bounded himself to any increase or decrease of interest rate in case Central Bank floated rates and to pay any additional penalty until the trust receipts are fully paid. When the trust receipts became due and demandable, ARMAGRI failed to pay or deliver the goods to the Bank despite several demand letters. The trial court convicted Ong of two counts of estafa for violation of the Trust Receipts Law. On appeal, Ong posited that he is no longer liable for Estafa since a compromise agreement was entered into by him and ARMGARI.

ISSUE:

Whether or not petitioner is liable for estafa.

HELD:

The Court held that contrary to petitioner's assertions, the Informations explicitly allege that petitioner, representing ARMAGRI, defrauded the Bank by failing to remit the proceeds of the sale or to return the goods despite demands by the Bank, to the latter's prejudice. As an essential element of estafa with abuse of confidence, it is sufficient that the Informations specifically allege that the entrustee received the goods. The Informations expressly state that ARMAGRI, represented by petitioner, received the goods in trust for the Bank under the express obligation to remit the proceeds of the sale or to return the goods upon demand by the Bank. There is no need to allege in the Informations in what capacity petitioner participated to hold him responsible for the offense. Under the Trust Receipts Law, it is sufficient to allege and establish the failure of ARMAGRI, whom petitioner represented, to remit the proceeds or to return the goods to the Bank. When petitioner signed the trust receipts, he claimed he was representing ARMAGRI. The corporation obviously acts only through its human agents and it is the conduct of such agents which the law must deter. The existence of the corporate entity does not shield from prosecution the agent who knowingly and intentionally commits a crime at the instance of a corporation.

Sunace International Management Services, Inc. vs. National Labor Relations Commission

480 SCRA 146, January 25, 2006

Ponente: Justice Carpio-Morales

FACTS:

Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and existing under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic helper under a 12-month contract effective February 1, 1997. 1 The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd. After the expiration of the contract, Montehermozo continued her employment with her Taiwanese employer for another 2 years. When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that she was underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year extension of her employment contract was with the consent and knowledge of Sunace. Sunace, on the other hand, denied all the allegations. The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor Relations Commission and Court of Appeals affirmed the labor arbiter’s decision. Hence, the filing of this appeal.

ISSUE:

Whether or not the 2-year extension of Montehermozo’s employment was made with the knowledge and consent of petitioner.

HELD:

The Court held that there is an implied revocation of an agency relationship when after the termination of the original employment contract, the foreign principal directly negotiated with the employee and entered into a new and separate employment contract. Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese broker Wang, not with the foreign employer. The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to petitioner, that Sunace continually communicated with the foreign "principal" (sic) and therefore was aware of and had consented to the execution of the extension of the contract is misplaced. It contains nothing about the extension or petititoner’s consent thereto. The theory of imputed knowledge ascribes the knowledge of the agent, petitioner, to the principal, employer, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent petitioner.

There being no substantial proof that petitioner knew of and consented to be bound under the 2-year employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily liable for any of Montehermozo’s claims arising from the 2-year employment extension. As the New Civil Code provides, Contracts take effect only between the parties, their assigns, and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. Furthermore, as petitioner correctly points out, there was an implied revocation of its agency relationship with its foreign principal when, after the termination of the original employment contract, the foreign principal directly negotiated with Montehermozo and entered into a new and separate employment contract in Taiwan. Article 1924 of the New Civil Code states that the agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

Sevilla vs. Court of Appeals

160 SCRA 171, April 5, 1988

Ponente: Justice Sarmiento

FACTS:

Segundina Noguera, party of the first part; the Tourist World Service, Inc. represented by Canilao as party of the second part, and hereinafter referred to as appellants, the Tourist World Service Inc.. leased the premises belonging to the party of the first part of Mabini St., Manila for the former use as a branch office. In the said contract, the party of the third part he held herself solidarily liable with the party of the part for the prompt payment of the monthly rental agreed on. When the branch office was opened, the same was run by Una Sevilla payable to Tourist World Services Inc. by any airline for any fare brought in on the efforts of Una Sevilla, 4% was to go to petitioner and 3% was to be withheld by the Tourist World Service, Inc. The Tourist World Service , Inc. appears to have been informed that petitioner was connecte with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service considered closing down its office. In petitioner’s appeal, she claimed that a joint business venture was entered into by and between her and appellee with offices at Ermita branch office and that she was not an employee of the Tourist World Service, Inc. to the end that her relationship with Tourist World Service, Inc. was one of a joint venture.

ISSUE:

Whether or not the padlocking of the premises by the Tourist World Service, Inc. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages prayed for.

HELD:

The Court held that petitioner is entitled to damages prayed for. When the petitioner, Lina Sevilla, agreed to man the private respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency. It is the essence of this contract that the agent renders services "in representation or on behalf of another." In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she received 4% of the proceeds in the concept of commissions. Sevilla herself, based on her letter, presumed her principal's authority as owner of the business undertaking. We are convinced, considering the circumstances and from the respondent Court's recital of facts, that the parties had contemplated a principal-agent relationship, rather than a joint management or a partnership.

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

Hahn vs. Court of Appeals

266 SCRA 537, January 22, 1997

Ponente: Justice Mendoza

FACTS:

Petitioner is a Filipino citizen doing business under the name and style of “Hanh-Manila”. BMW is a non resident foreign corporation existing under the laws of Germany. Petitioner executed in favor of BMW a Deed of Assignment. He was informed that his exclusive dealership was in danger of being terminated due to deteriorating services and sales. He claimed that the termination of his exclusive dealership would be a breach of the deed of assignment. He then filed for a complaint of specific performance and damages against BMW to compel it to continue with the exclusive dealership. BMW on the other hand, filed for a motion to dismiss, contending that the court did not acquire jurisdiction over it because it was a foreign corporation and was not doing business in the Philippines. It further claimed that the execution of Deed of Assignment was an isolated transaction and that petitioner was not its agent and was merely a middleman transacting business for his own name and for his own account.

ISSUE:

Whether the petitioner was an agent or distributor in the Philippines of BMW.

HELD:

Yes. The Court held that Alfred Hahn was an agent of BMW and consequently, BMW is doing business in the Philippines. Hahn claimed that he took orders for BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the down payment and pricing charges, notified petitioner of the scheduled production month for the orders, and reconfirmed the orders by signing and returning to Hahn the acceptance sheets. Payment was made by the buyer directly to BMW. Title to cars price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14% of the purchase price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing that the vehicles had been registered in thePhilippines and serviced by him, Hahn received an additional 3% of the full purchase price. Hahn performed after-sale services, including, warranty services, for which he received reimbursement from BMW. All orders were on invoices and forms of BMW. This arrangement shows an agency. An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

Uytengsu III vs. Baduel

477 SCRA 621, December 14, 2005

Ponente: Justice Tinga

FACTS:

Complainant is one of the heirs of Tirso Uytengsu, Jr. He and his co-heirs had a pending patent application. He alleges that respondent requested him to sign a special power of attorney (SPA) authorizing Luis Wee and/or Thomas Jacobo to claim, demand, acknowledge and receive on his behalf the certificates of title from the Register of Deeds, General Santos City, Department of Environment and Natural Resources and from any government office or agency due to complainant and his co-heirs by reason of their application for Homestead Patent both situated in Lagao, General Santos City. Complainant refused to sign the SPA as he wanted to obtain the documents personally. Subsequently though, before he could get the title and other documents, complainant learned that respondent caused to have the SPA signed by Connie U. Kokseng , the former guardian of the heirs of Tirso Uytengsu, Jr. Complainant maintains that the document signed by Kokseng was the same SPA which was presented to him for signature by respondent. As a result, the titles and other documents were received and taken by other persons without his or his co-heirs' knowledge and consent. Complainant contends that the said SPA was prepared and notarized by the law office of respondent and the latter stood as a witness to the public instrument. Complainant further avers that respondent used to do some legal work for him and knew fully well that Kokseng has already ceased to be his and his co-heirs' guardian when the Regional Trial Court, Branch 19 of Cebu City terminated the letters of guardianship over her youngest sibling on 30 August 1985 in the case entitled "In the Matter of Guardianship of Tirso M. Uytengsu III, Kathleen Anne M. Uytengsu, and Barbara Anne M. Uytengsu," In essence, complainant asserts that respondent caused Kokseng to execute an SPA in favor of Wee and/or Jacobo to the damage and prejudice of the heirs of Tirso Uytengsu, Jr. even if he knew that Kokseng had no authority to do so.

ISSUE:

Whether or not the respondent has the authority to represent the petitioner in their homestead application.

HELD:

The Court held that the relation of attorney and client is in many respects one of agency and the general rules of ordinary agency apply to such relation. The extent of authority of a lawyer, when acting on behalf of his client outside of court, is measured by the same test as that which is applied to an ordinary agent. Such being the case, even respondent himself can acquire the certificates of title and other documents without need of an SPA from complainant and his co-heirs. In addition, the Court agrees with the investigating commissioner that the allegations of complainant constitutes mere hearsay evidence and may not be admissible in any proceeding.

J-Phil. Marine, Inc. vs. National Labor Relations Commission (NLRC)

561 SCRA 675, August 11, 2008

Ponente: Justice Carpio-Morales

FACTS:

Warlito E. Dumalaog, who served as cook aboard vessels plying overseas, filed before the National Labor Relations Commission (NLRC) a pro-forma complaint against petitioners, manning agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping Services, for unpaid money claims, moral and exemplary damages, and attorney's fees. The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed the decision of the Labor Arbiter. The Court of Appeals affirmed the dismissal for failure to attach to the petition all material documents and for defective verification and certification. Consequently, a petition was filed before the Court of Appeals.

While the case was pending in the Supreme Court, the respondent entered into a compromise agreement and signed Quitclaims and Release. The same has been subscribed and sworn to before the Labor Arbiter.

ISSUE:

Whether or not the compromise agreement entered into by the respondent, without his counsel, is valid,

HELD:

The Court held that the relation of attorney and client is in many respects one of agency, and the general rules of agency apply to such relation. The acts of an agent are deemed the acts of the principal only if the agent acts within the scope of his authority. The circumstances of this case indicate that respondent's counsel is acting beyond the scope of his authority in questioning the compromise agreement.

That a client has undoubtedly the right to compromise a suit without the intervention of his lawyer cannot be gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the fees justly due him, the compromise must be subject to the said fees. In the case at bar, there is no showing that respondent intended to defraud his counsel of his fees.

Lim vs. Saban

447 SCRA 232, December 16, 2004

Ponente: Justice Tinga

FACTS:

The late Eduardo Ybañez, owner of a 1,000-square meter lot in Cebu City, entered into an Agreement and Authority to Negotiate and Sell with respondent Florencio Saban. Under the Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot for Two Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban's commission for the sale. Through Saban's efforts, Ybañez and his wife were able to sell the lot to the petitioner and the Spouses Lim. The price of the lot as indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos (P200,000.00). It appears, however, that the vendees agreed to purchase the lot at the price of Six Hundred Thousand Pesos (P600,000.00), inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the amounts of One Hundred Thirteen Thousand Two Hundred Fifty Seven Pesos (P113,257.00) for payment of taxes due on the transaction as well as Fifty Thousand Pesos (P50,000.00) as broker's commission. Lim also issued in the name of Saban four postdated checks in the aggregate amount of Two Hundred Thirty Six Thousand Seven Hundred Forty Three Pesos (P236,743.00). Subsequently, Ybañez sent a letter addressed to Lim. In the letter Ybañez asked Lim to cancel all the checks issued by her in Saban's favor and to "extend another partial payment" for the lot in his favor.

ISSUE:

Whether or not respondent is entitled to receive his commission from the sale.

HELD:

Yes. The Court held that the magency was not revoked since Ybañez requested that Lim make stop payment orders for the checks payable to respondent only after the consummation of the sale. At that time, respondent had already performed his obligation as Ybañez’s agent when, through his efforts, Ybañez executed the Deed of Absolute Sale of the lot with Lim and the Spouses Lim. Saban’s agency was not one coupled with an interest. an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship.

Veloso vs. Court of Appeals

260 SCRA 593, August 21, 1996

Ponente: Justice Torres, Jr.

FACTS:

Petitioner Francisco Veloso was the owner of a parcel of land situated in the district of Tondo, Manila, with an area of one hundred seventy seven (177) square meters. The title was registered in the name of Francisco A. Veloso, single. The said title was subsequently cancelled and a new one, was issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario.

Petitioner filed an action for annulment of documents, reconveyance of property with damages and preliminary injunction and/or restraining order. Petitioner alleged therein that he was the absolute owner of the subject property and he never authorized anybody, not even his wife, to sell it. He alleged that he was in possession of the title but when his wife, Irma, left for abroad, he found out that his copy was missing. He then verified with the Registry of Deeds of Manila and there he discovered that his title was already canceled in favor of defendant Aglaloma Escario. The transfer of property was supported by a General Power of Attorney and Deed of Absolute Sale executed by Irma Veloso, wife of the petitioner and appearing as his attorney-in-fact, and defendant Aglaloma Escario. Petitioner, however, denied having executed the power of attorney and alleged that his signature was falsified. Thus, he contended that the sale of the property, and the subsequent transfer thereof, were null and void. Defendant Aglaloma Escario in her answer alleged that she was a buyer in good faith and denied any knowledge of the alleged irregularity. She allegedly relied on the general power of attorney of Irma Veloso which was sufficient in form and substance and was duly notarized. She contended that plaintiff (herein petitioner), had no cause of action against her.

ISSUE:

Whether or not there was a valid sale.

HELD:

The Court held that an examination of the records showed that the assailed power of attorney was valid and regular on its face. It was notarized and as such, it carries the evidentiary weight conferred upon it with respect to its due execution. While it is true that it was denominated as a general power of attorney, a perusal thereof revealed that it stated an authority to sell. There was no need to execute a separate and special power of attorney since the general power of attorney had expressly authorized the agent or attorney in fact the power to sell the subject property. The special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required. Aglaloma was an innocent purchaser for value. He relied on the power of attorney presented by petitioner's wife, Irma. Being the wife of the owner and having with her the title of the property, there was no reason for the private respondent not to believe, in her authority. Moreover, the power of attorney was notarized and as such, carried with it the presumption of its due execution. Thus, having had no inkling on any irregularity and having no participation thereof, private respondent was a buyer in good faith. It has been consistently held that a purchaser in good faith is one who buys property of another, without notice that some other person has a right to, or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other person in the property.

Estate of Lino Olaguer vs. Ongjoco

563 SCRA 373, August 26, 2008

Ponente: Justice Chico-Nazario

FACTS:

The petitioners are the legitimate children of the spouses Lino Olaguer and defendant Olivia P. Olaguer. Lino Olaguer died and her wife was appointed as administrator pursuant to the will. Olivia P. Olaguer got married to defendant Jose A. Olaguer. Pursuant to this authority, administrators Olivia P. Olaguer and Eduardo Olaguer sold to Pastor Bacani twelve (12) parcels of land by virtue of special power of attorney. Respondent also bought parcel of land from Olaguer. However, the petitioner represented by the legitimate children of the spouses Lino Olaguer and defendant Olivia P. Olaguer, as attorney-in-fact and in her own behalf, filed an action for the Annulment of Sales of Real Property and/or Cancellation of Titles in the then Court of First Instance of Albay. Ongjoco claimed that he innocent purchaser for value.

ISSUE:

Whether or not the sale of parcel of land to Onjoco is valid

HELD:

No. The Court held that according to the provisions of Article 1874 of the Civil Code on Agency, when the sale of a piece of land or any interest therein is made through an agent, the authority of the latter shall be in writing. Absent this requirement, the sale shall be void. Also, under Article 1878, a special power of attorney is necessary in order for an agent to enter into a contract by which the ownership of an immovable property is transmitted or acquired, either gratuitously or for a valuable consideration. Therefore, hinges on the existence of the written power of attorney upon which respondent Ongjoco bases his good faith.

Unfortunately for respondent, the power of attorney that was purportedly issued by Virgilio in favor of Jose Olaguer with respect to the sale of Lots Nos. 1 and 2 was never presented to the trial court. Neither was respondent able to explain the omission. Other than the self-serving statement of respondent, no evidence was offered at all to prove the alleged written power of attorney. There is no written power of attorney to speak of. Accordingly, respondent Ongjoco’s claim of good faith in the sale of Lots Nos. 1 and 2 has no leg to stand on.

Domingo vs. Domingo

42 SCRA 131, October 29, 1971

Ponente: Justice Makasiar

FACTS:

Petitioner granted to Gregorio Domingo, a real estate broker, the exclusive agency to sell his Lot in a document. Accordingly, Gregorio is entitled to 5% commission on the total price if the property is sold by petitioner or by anyone else during the 30-day duration of the agency. Subsequently, Gregorio authorized Purisima to look for a buyer without notifying petitioner. Gregorio promised Teofilo certain commission. Teofilo then introduced Oscar de Leon to Gregorio as a prospective buyer. Oscar submitted a written offer, which was very much lower than the P2 per sq. m. price. Petitioner directed Gregorio to tell Oscar to raise his offer. After several conferences between the parties, the offer was raised to P1.20 per sq. m. or P109k in total to which petitioner agreed. Upon his demand, Oscar issued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Gregorio. Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente. Oscar did not pay Vicente the additional P1,000 Vicente asked from him as earnest money. The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from his brother in the US, which he communicated to Gregorio. Gregorio did not see Oscar for several weeks thus sensing that something fishy might be going on. He went to Vicente’s house where he read a portion of the agreement to the effect that Vicente was still willing to pay him 5% commission, P5,450. Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was executed by Amparo de Leon, Oscar’s wife, over their house and lot in favor of Vicente. After discovering that Vicente sold his lot to Oscar’s wife, Gregorio demanded in writing the payment of his commission. Gregorio also conferred with Oscar who told him that: Vicente went to him and asked him to eliminate Gregorio in the transaction and that he would sell his property to him for P104k. In his reply, Vicente stated that Gregorio is not entitled to the 5% commission: Since he sold the property not to Gregorio’s buyer (Oscar de Leon) but to another buyer (Amparo Diaz) who is the wife of Oscar de Leon. Court of Appeals held that the exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to Oscar.

ISSUE:

Whether or not petitioner or Gregorio should be directly liable to the intervenor for the latter’s share in the expected commission of Gregorio by reason of the sale

HELD:

Yes. The Court held that An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it.

Gregorio Domingo as the broker received a gift from the prospective buyer Oscar de Leon, without the knowledge and consent of the principal, Vicente. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial advance on his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the counter-offer of the prospective buyer to purchase the property at P1.20 per sq. m. The duties and liabilities of a broker to his employer are essentially those, which an agent owes to his principal.

National Power Corporation vs. National Merchandising Corporation

117 SCRA 789, October 23, 1982

Ponente: Justice Aquino

FACTS:

Petitioner and respondent, the Philippine representative of New York-based International Commodities Corporation, executed a contract of sale of sulfur with a stipulation for liquidated damages in case of breach. Domestic Insurance Company executed a performance bond in favor of petitioner to guarantee the seller’s obligation. In entering into the contract, respondent, however, did not disclose to petitioner that respondent’s principal, in a cabled instruction, stated that the sale was subject to availability of a steamer, and contrary to its principal’s instruction, respondent agreed that non-availability of a steamer was not a justification for non-payment of liquidated damages. The New York supplier was not able to deliver the sulfur due to its inability to secure shipping space. Consequently, the Government Corporate Counsel rescinded the contract of sale due to the supplier’s non-performance of its obligations, and demanded payment of liquidated damages from both respondent and the surety. Thereafter, petitioner sued for recovery of the stipulated liquidated damages.

ISSUE:

Whether or not respondent exceeds his authority as an agent

HELD:

Yes. The Court held that under Article 1897 of the Civil Code the agent who exceeds the limits of his authority without giving the party with whom he contracts sufficient notice of his powers is personally liable to such party. Respondent, the agent of a New York-based principal, entered into a contract of sale with the petitioner without disclosing to the petitioner the limits of its powers and, contrary to its principal’s prior cabled instructions that the sale should be subject to availability of a steamer, it agreed that non-availability of a steamer was not a justification for nonpayment of the liquidated damages. Therefore, is liable for damages.

Development Bank of the Philippines vs. Court of Appeals

231 SCRA 370, March 21, 1994

Ponente: Justice Quiason

FACTS:

Dans, together with his wife Candida, his son and daughter-in-law, applied for a loan of with the petitioner, Basilan Branch. As the principal mortgagor, Dans, then 76 years of age, was advised by petitioner to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool). A loan, in the reduced amount of P300,000.00, was approved by petitioner. From the proceeds of the loan, DBP deducted the amount of P1,476.00 as payment for the MRI premium. Dans accomplished and submitted the "MRI Application for Insurance" and the "Health Statement for DBP MRI Pool." The MRI premium of Dans, less the DBP service fee of 10%, was credited by DBP to the savings account of the DBP MRI Pool. Accordingly, the DBP MRI Pool was advised of the credit. Dans died of cardiac arrest. The DBP, upon notice, relayed this information to the DBP MRI Pool. The DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of 60 years at the time of application. DBP apprised Candida Dans of the disapproval of her late husband's MRI application. The DBP offered to refund the premium of P1,476.00 which the deceased had paid, but Candida Dans refused to accept the same, demanding payment of the face value of the MRI or an amount equivalent to the loan. She, likewise, refused to accept an ex gratia settlement of P30,000.00, which the DBP later offered. The Estate of the Late Juan B. Dans, through Candida Dans as administrator, filed a complaint with the Regional Trial Court, Branch I, Basilan, against DBP and the insurance pool for collection of Sum of Money with Damages.

ISSUE:

Whether or not Development Bank of the Philippines exceeds its authority

HELD:

Yes. The Court held that the liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent's powers. There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI. As an insurance agent, petitioner made Dans go through the motion of applying for said insurance, thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming. Apparently, DBP had full knowledge that Dan's application was never going to be approved. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned.

Article 1987 of the Civil Code of the Philippines provides that, "the agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers." The DBP is not authorized to accept applications for MRI when its clients are more than 60 years of age. Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age, DBP exceeded the scope of its authority when it accepted Dan's application for MRI by collecting the insurance premium, and deducting its agent's commission and service fee.

Safic Alcan& Cie vs. Imperial Vegetable Oil co., Inc.,

355 SCRA 559, March 28, 2001

Ponente: Justice Ynares-Santiago

FACTS:

Petitioner, a corporation, entered into an agreement with respondent, whereby the latter shall deliver tones of coconut oil to petitioner. Both parties complied. IVO was represented by its president, Dominador Monteverde. In 1986, SAC again entered into a several agreements with IVO but this time it was agreed that IVO shall deliver the coconut oil 8 months from the agreement or sometime in 1987. This time, IVO failed to deliver and petitioner sued IVO. In its defense aver that Monteverde was acting beyond his power as president when he made the 1986 agreement with petitioner; that Monteverde is acting beyond his power because the 1986 contracts were speculative in nature and speculative contracts are prohibited by the by-laws of IVO.

Petitioner insists that there is an implied agency between IVO and Monteverde because SAC and Monteverde has been transacting since 1985 and that IVO benefited from said transactions.

ISSUE:

Whether or not Monteverde’s act in entering into the 1986 contracts exceeds his authority

HELD:

Yes. The Court held that it was proven by the respondent, when they presented a copy of their by-laws, that Monteverde acted beyond his authority when he entered into speculative contracts with petitioner. The 1986 contracts are speculative because at the time of the contracts, the coconuts are not even growing at that time and are yet to be harvested. Hence, the 1986 contracts are sales of mere expectations – and this is something prohibited by the by-laws and the Board of Directors of IVO. Therefore, there can be no implied agency too simply because there has been a previous transaction between the parties, where IVO was represented by Monteverde. Further, Monteverde did not even present the said 1986 agreements before the Board of Directors so there was, in fact, no occasion at all for ratification. The contracts were not even reported in respondent’s export sales book and turn-out book. Neither were they reflected in other books and records of the corporation. It must be pointed out that the Board of Directors, not Monteverde, exercises corporate power. Clearly, Monteverde’s speculative contracts with petitioner never bound respondent and petitioner cannot therefore enforce those contracts against the other party.

Filipinas Life Assurance Company vs. Pedroso

543 SCRA 559, February 4, 2008

Ponente: Justice Quisumbing

FACTS:

Respondent is a policyholder of a 20-year endowment life insurance issued by petitioner. Respondent claims Renato Valle was her insurance agent since 1972 and Valle collected her monthly premiums. Valle told her that the petitioner’s Escolta Office was holding a promotional investment program for policyholders. It was offering 8% prepaid interest a month for certain amounts deposited on a monthly basis. Enticed, she initially invested and issued a post-dated check for P10,000. In return, Valle issued respondent his personal check forP800 for the 8% prepaid interest and a Filipinas Life Agent receipt. Respondent called the Escolta office and talked to Francisco Alcantara, the administrative assistant, who referred her to the branch manager, Angel Apetrior. Respondent inquired about the promotional investment and Apetrior confirmed that there was such a promotion. She was even told she could push through with the check she issued. From the records, the check, with the endorsement of Alcantara at the back, was deposited in the account of Filipinas Life with the Commercial Bank and Trust Company, Escolta Branch.

Respondent relying on the representations made by Filipinas Life’s duly authorized representatives Apetrior and Alcantara, as well as having known agent Valle for quite some time, he waited for the maturity of her initial investment. To collect the amount, respondent personally went to the Escolta branch where Alcantara gave her the P10,000 in cash. After a second investment, she made 7 to 8more investments in varying amounts, totaling P37,000 but at a lower rate of 5% prepaid interest a month. Upon maturity of respondent’s subsequent investments, Valle would take back from respondent the corresponding agent’s receipt he issued to the latter.

ISSUE:

Whether or not Filipinas Life Assurance and its co-defendants jointly and severally liable to respondent.

HELD:

Yes. The Court held that Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The general rule is that the principal is responsible for the acts of its agent done within the scope of its authority, and should bear the damage caused to third persons. When the agent exceeds his authority, the agent becomes personally liable for the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the agent if the principal allowed the agent to act as though the agent had full powers. The acts of an agent beyond the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or impliedly.

Domingo vs. Robles

453 SCRA 812, March 18, 2005

Ponente: Justice Panganiban

FACTS:

Petitioner and her husband were the registered owners of land covered by Transfer Certificate of Title. On this lot, Petitioner discontinued the construction of her house allegedly for failure of her husband to send the necessary financial support and she decided to dispose of the property. Bacani, volunteered to act as petitioner’s agent in selling the lot. Petitioner delivered their owner’s copy of Transfer Certificate of Title, however, the title was said to have been lost. In the petition for its reconstitution, petitioner gave Bacani all her receipts of payment for real estate taxes. Petitioner visited the lot and was surprised to see the respondent starting to build a house on the subject lot. Petitioner assumed that the Deed of Absolute Sale is a forgery and, therefore, could not validly transfer ownership of the lot to the respondents. Hence, the case for the nullity thereof and its reconveyance was filed. Regional Trial dismiss the complaint.

ISSUE:

Whether or not Robles is innocent purchaser of value

HELD:

Yes. The Court held that the sale was admittedly made with the aid of the petitioner’s agent, who had with him the original of the owner’s duplicate Certificate of Title to the property, free from any liens or encumbrances. The signatures of petitioners, the registered owners, appear on the Deed of Absolute Sale. Petitioner’s husband met with Robles and received payment for the property. The Torrens Act requires, as a prerequisite to registration, the production of the owner’s certificate of title and the instrument of conveyance. The registered owner who places in the hands of another an executed document of transfer of registered land effectively represents to a third party that the holder of such document is authorized to deal with the property.

Rural Bank of Milaor vs. Ocfemia

326 SCRA 99, February 8, 2000

Ponente: Justice Panganiban

FACTS:

The respondents mortgaged the parcels of land during the lifetime of the respondent’s grandparents to petitioner as shown by the Deed of Real Estate Mortgage and the Promissory Note. Respondents were not able to redeem the mortgaged properties consisting of seven parcels of land and so the mortgage was foreclosed and thereafter ownership was transferred to the petitioner bank. Five of the parcels of land are in the possession of the respondents because these were sold by the petitioner bank to the respondents as evidenced by a Deed of Sale. However, the five parcels of land cannot be transferred in the name of the parents of one of the respondents, because there is a need to have the document of sale registered. The Register of deeds, however, said that the document of sale cannot be registered without the board resolution of the petitioner bank confirming both the Deed of sale and the authority of the bank manager to enter such transaction. The petitioner bank refused her request for a board resolution and made many alibis. Respondents initiated the present proceedings so that they could transfer to their names the subject five parcel of land and subsequently mortgage said lots and to use the loan proceeds for the medical expenses of their ailing mother.

ISSUE:

Whether or not the Board of Directors of petitioner be compelled to confirm a deed of absolute sale of real property owned by the corporation

HELD:

Yes. The court held that the bank acknowledges, by its own acts or failure to act, the authority of the bank manager to enter into binding contracts. Respondents occupied the properties in dispute and paid the real estate taxes after the execution of the Deed of Sale. If the bank management believed that it had title to the property, it should have taken measures to prevent the infringement and invasion of title thereto and possession thereof. The petitioner is estopped from questioning the authority of the bank to enter into contract of sale. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it holds the agent out to the public as possessing the power to do those acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent’s authority.

Air France vs. Court of Appeals

126 SCRA 448, December 29, 1983

Ponente: Justice Melencio-Herrera

FACTS:

Gana family purchased from petitioner an "open-dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route. Petitioner exchanged or substituted the aforementioned tickets with other tickets for the same route. The aforesaid tickets were valid until 8 May 1971. The GANAS did not depart on the said expiration date. Instead, Jose Gana sought the assistance of the Secretary of the Sta. Clara Lumber Company where he was the Director and Treasurer, for the extension of the validity of their tickets. The secretary enlisted the help of Manager of the Philippine Travel Bureau. The manager sent the tickets to the Office Manager of petitioner. The tickets were returned to Eher who was informed that extension was not possible unless the fare differentials resulting from the increase in fares triggered by an increase of the exchange rate of the US dollar to the Philippine peso and the increased travel tax were first paid. Ganas rescheduled their flight one day before the expiration but same answers were given to them and warned them that although the tickets could be used by the GANAS if they left on 7 May 1971 the tickets would no longer be valid for the rest of their trip because the tickets would then have expired on 8 May 1971. The Secretary replied that it will be up to the GANAS to make the arrangements. With that assurance, Ella on his own, attached to the tickets validating stickers for the Osaka/Tokyo flight, one a JAL. sticker and the other a Scandinavian Airways System sticker.

ISSUE:

Whether or not the Secretary of the Sta. Clara Lumber Company was the agent of the GANAS and notice to her of the rejection of the request for the extension of the validity of the tickets notice to GANAS.

HELD:

Yes. The Court held that the GANAS cannot defend by contending lack of knowledge of those rules since the evidence bears out that the secretary, who handled travel arrangements for the GANAS, was duly informed by travel agent of the advice of the Office Manager of petitioner, that the tickets in question could not be extended beyond the period of their validity without paying the fare differentials and additional travel taxes brought about by the increased fare rate and travel taxes. Since she is the agent of Ganas, a notice to her of the rejection of the request for extension of the validity of the tickets was notice to the GANAS, her principals. The circumstances that personnel of petitioner at the ticket counter in the airport allowed the GANAS to leave is not tantamount to an implied ratification of travel agent's irregular actuations. It should be recalled that the GANAS left in Manila the day before the expiry date of their tickets and that "other arrangements" were to be made with respect to the remaining segments.

Philippine National Bank vs. Intermediate Appellate Court

189 SCRA 680, September 18, 1990

Ponente: Justice Griño-Aquino

FACTS:

Leticia de la Vina-Sepe executed a real estate mortgage in favor of petitioner, over a lot registered in her name to secure the payment of a sugar crop loan. Later, Leticia Sepe, acting as attorney-in-fact for her brother-in-law, Alcedo, executed an amended real estate mortgage to include his Alcedo's lot. Leticia Sepe and Alcedo verbally agreed to split fifty-fifty (50-50) the proceeds of the loan but failing to receive his one-half share from her, Alcedo wrote a letter on to the PNB, San Carlos Branch, revoking the Special Power of Attorney which he had given to Leticia Sepe to mortgage his Lot. The petitioner Branch Manager, Jose T. Gellegani advised Alcedo that his land had already been included as collateral for Sepe's 1970-71 sugar crop loan, which the latter had already availed of, nevertheless, he assured Alcedo that the bank would exclude his lot as collateral for Sepe's forthcoming (1971-72) sugar crop loan. Alcedo received letters from PNB informing her failure to pay the loan. Petitioner alleged that it had no knowledge of the agreement between Mrs. Sepe and Alcedo to split the crop loan proceeds between them. It required Sepe to put up other collaterals when it granted her an additional loan because Alcedo informed the Bank that he was revoking the Special Power of Attorney he gave Sepe; that the revocation was not formalized in accordance with law.

ISSUE:

Whether or not petitioner validly foreclosed the real estate mortgage on Alcedo's property despite notice of Alcedo's revocation of the Special Power of Attorney

HELD:

No. The Court held that under the doctrine of promissory estoppels, the act and assurance given by the petitioner to Alcedo "that we shall exclude the aforementioned lot as a collateral of Leticia de la Vina-Sepe in our recommendation for her 1971-72 sugar crop loan" is binding on the bank. Having given that assurance, the bank may not turn around and do the exact opposite of what it said it would not do. One may not take inconsistent positions. A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them.

While Article 1358 of the New Civil Code requires that the revocation of Alcedo's Special Power of Attorney to mortgage his property should appear in a public instrument nevertheless, a revocation embodied in a private writing is valid and binding between the parties. The legalization by a public writing and the recording of the same in the registry are not essential requisites of a contract entered into, as between the parties, but mere conditions of form or solemnities which the law imposes in order that such contract may be valid as against third persons, and to insure that a publicly executed and recorded agreement shall be respected by the latter.

Philex Mining Corporation vs. Commission of Internal Revenue

551 SCRA 428, April 16, 2008

Ponente: Justice Ynares-Santiago

FACTS:

Petitioner entered into an agreement with Baguio Gold Mining Corporation for the former to manage the latter’s mining claim know as the Sto. Mine. The parties’ agreement was denominated as “Power of Attorney”. The mine suffered continuing losses over the years, which resulted in petitioners’ withdrawal as manager of the mine. The parties executed a “Compromise Dation in Payment”. Petitioner deducted said amount from its gross income in its annual tax income return as “loss on the settlement of receivables from Baguio Gold against reserves and allowances”. BIR disallowed the amount as deduction for bad debt. Petitioner claims that it entered a contract of agency evidenced by the “power of attorney” executed by them and the advances made by petitioners is in the nature of a loan and thus can be deducted from its gross income.

ISSUE:

Whether or not there is an agency.

HELD:

No. The Court held that the “Power of Attorney” is the instrument material in determining the true nature of the business relationship between petitioner and Baguio. The said Power of Attorney reveals that a partnership was indeed intended by the parties and establish a common fund for the purpose. While a corporation like the petitioner cannot generally enter into a contract of partnership unless authorized by law or its charter, it has been held that it may enter into a joint venture, which is akin to a particular partnership. They also had a joint interest in the profits of the business as shown by the 50-50 sharing of income of the mine.

Furthermore, in an agency coupled with interest, it is the agency that cannot be revoked or withdrawn by the principal due to an interest of a third party that depends upon it or the mutual interest of both principal and agent. In this case the non-revocation or non-withdrawal under the power of attorney applies to the advances made by the petitioner who is the agent and not the principal under the contract. Thus, it cannot be inferred from the stipulation that it is an agency

Estate of H.M. Ruiz vs. Court of Appeals

252 SCRA 541, January 29, 1996

Ponente: Justice Puno

FACTS:

Hilario M. Ruiz executed a holographic will naming as his heirs his only son, Edmond Ruiz, his adopted daughter, Maria Pilar Ruiz Montes, and his three granddaughters, all children of Edmond Ruiz. The testator bequeathed to his heirs substantial cash, personal and real properties and named Edmond Ruiz executor of his estate. Immediately after he died, the cash component of his estate was distributed among Edmond Ruiz and his heirs in accordance with the decedent's will. For unknown reasons, Edmond, the named executor, did not take any action for the probate of his father's holographic will. Four years after the testator's death, it was private Maria Pilar Ruiz Montes who filed, a petition for the probate and approval of Hilario Ruiz's will and for the issuance of letters testamentary to Edmond Ruiz. Edmond opposed the petition on the ground that the will was executed under undue influence. Edmond withdrew his opposition to the probate of the will. Consequently, the probate court, on May 18, 1993, admitted the will to probate and ordered the issuance of letters testamentary to Edmond conditioned upon the filing of a bond.

The probate court denied petitioner's motion for release of funds but Montes' motion in view of petitioner's lack of opposition. It thus ordered the release of the rent payments to the decedent's three granddaughters. It further ordered the delivery of the titles to and possession of the properties bequeathed to the three granddaughters and respondent Montes.

ISSUE:

Whether the probate court has the authority to grant possession of all properties of the estate to the executor of the will after admitting the will to probate but before payment of the estate's debts and obligations,

HELD:

No. The Court held that petitioner cannot correctly claim that the order deprived him of his right to take possession of all the real and personal properties of the estate. The right of an executor or administrator to the possession and management of the real and personal properties of the deceased is not absolute and can only be exercised "so long as it is necessary for the payment of the debts and expenses of administration." Petitioner must be reminded that his right of ownership over the properties of his father is merely inchoate as long as the estate has not been fully settled and partitioned. As executor, he is a mere trustee of his father's estate. He cannot unilaterally assign to himself and possess all his parents' properties and the fruits thereof without first submitting an inventory and appraisal of all real and personal properties of the deceased, rendering a true account of his administration, the expenses of administration, the amount of the obligations and estate tax, all of which are subject to a determination by the court as to their veracity, propriety and justness.

Ungab-Valeroso vs. Ungab-Grado

524 SCRA 699, June 15, 2007

Ponente: Justice Quisumbing

FACTS:

Timoteo Ungab, a deceased owned a parcel of land in Bacolod. Petitioner is his only direct heir while respondent are heirs of his brothers and sisters except one, Felix. There is no showing that petitioner and her mother signed and affidavit of acknowledgement recognizing the rights of the brothers and sister of Timoteo. In addition to that, a compromise agreement was entered into by the parties showing that a trust given to petitioner to hold the subject of the controversy when respondents asked for the share of the proceeds of the land, petitioner refused to grant the share of the proceeds on the ground that there exists no co-ownership between the parties and the latter is the sole heir of the deceased Tomoteo. The lower court and appellate court however ruled co-ownership.

ISSUE:

Whether or not there is an intention to create a trust.

HELD:

Yes. The Court held that the execution of the Affidavit of Acknowledgment and the compromise agreement established an express trust. The respondents, as trustors, reposed their confidence on petitioner and her mother, as trustees, that they will hold the land subject of the co-ownership. There are no particular words required in the creation of an express trust, it being sufficient that a trust is clearly intended. This express trust is shown in the two documents. Express trusts do not prescribe except when the trustee repudiates the trust.

Abellana vs. Ponce

437 SCRA 53, September 3, 2004

Ponente: Justice Ynares-Santiago

FACTS:

Petitioner, a spinster, pharmacist and aunt of respondent, purchased from the late Estela Caldoza-Pacres a 44,297 square meter agricultural lot with the intention of giving said lot to her niece. Thus, in the deed of sale, the latter was designated as the buyer of the lot. Subsequently, she applied for the issuance of title in the name of her niece, which remained in her possession who developed the lot through Torreon and paid real property taxes thereon. The relationship between petitioner and respondent, however, turned sour. The latter allegedly became disrespectful and ungrateful to the point of hurlingher insults and even attempting to hurt her physically. Hence, petitioner filed for the revocation of implied trust to recover legal title over the property. The trial court held that an implied trust existed between petitioner and respondent, such that the latter is merely holding the lot for the benefit of the former.

ISSUE:

Whether or not there is an implied trust.

HELD:

No. The Court held that implied trust finds no application in the instant case. The concept of implied trusts is that from the facts and circumstances of a given case, the existence of a trust relationship is inferred in order to effect the presumed intention of the parties. Thus, one of the recognized exceptions to the establishment of an implied trust is where a contrary intention is proved. From the testimony of the petitioner, she wanted to give the lot to respondent as a gift. To her mind, the execution of a deed with her niece as the buyer and the subsequent issuance of title in the latter’s name were the acts that would effectuate her generosity. In so carrying out what she conceived, petitioner evidently displayed her unequivocal intention to transfer ownership of the lot and not merely to constitute her as a trustee thereof. It was only when their relationship soured that she sought to revoke the donation on the theory of implied trust, though as previously discussed, there is nothing to revoke because the donation was never perfected.

Abellana vs. Ponce

437 SCRA 53, September 3, 2004

Ponente: Justice Ynares-Santiago

FACTS:

Petitioner, a spinster, pharmacist and aunt of respondent, purchased from the late Estela Caldoza-Pacres a 44,297 square meter agricultural lot with the intention of giving said lot to her niece. Thus, in the deed of sale, the latter was designated as the buyer of the lot. Subsequently, she applied for the issuance of title in the name of her niece, which remained in her possession who developed the lot through Torreon and paid real property taxes thereon. The relationship between petitioner and respondent, however, turned sour. The latter allegedly became disrespectful and ungrateful to the point of hurlingher insults and even attempting to hurt her physically. Hence, petitioner filed for the revocation of implied trust to recover legal title over the property. The trial court held that an implied trust existed between petitioner and respondent, such that the latter is merely holding the lot for the benefit of the former.

ISSUE:

Whether or not there is an implied trust.

HELD:

No. The Court held that implied trust finds no application in the instant case. The concept of implied trusts is that from the facts and circumstances of a given case, the existence of a trust relationship is inferred in order to effect the presumed intention of the parties. Thus, one of the recognized exceptions to the establishment of an implied trust is where a contrary intention is proved. From the testimony of the petitioner, she wanted to give the lot to respondent as a gift. To her mind, the execution of a deed with her niece as the buyer and the subsequent issuance of title in the latter’s name were the acts that would effectuate her generosity. In so carrying out what she conceived, petitioner evidently displayed her unequivocal intention to transfer ownership of the lot and not merely to constitute her as a trustee thereof. It was only when their relationship soured that she sought to revoke the donation on the theory of implied trust, though as previously discussed, there is nothing to revoke because the donation was never perfected.

Pangan vs. Court of Appeals

166 SCRA 365, October 18,1988

Ponente: Justice Justice Cruz

FACTS:

The petitioners filed an application for the registration of the land in their names by virtue of their continuous and exclusive possession thereof since 1895, by themselves and their father and grandfather before them. The trial court issued an order of general default and approved the application. A petition was filed to set aside the said decision, which the trial Court granted. On appeal, respondent reversed the decision on the ground that the appellees had not clearly proved that they had acquired the property by prescription. The petitioners' position is that the respondent court erred in holding that the private respondent was entitled to one-half of the land, which she had not lost by extinctive prescription because it was held by them in trust for her.

ISSUE:

Whether or not the respondent who filed the complaint failed to assert her right over the land thereby enable the petitioners to perfect their claim by acquisitive prescription

HELD:

No. The Court held that it is a settled rule that possession by one co-owner will not be regarded as adverse to the other co-owners but in fact as beneficial to all of them. As long as his co-ownership is recognized, an action to compel partition will not prescribe and may be filed at any time against the actual possessor by any of the other co-owners. Therefore, if the co-owner actually holding the property asserts exclusive dominion over it against the other co-owners, the corollary of the rule is that he can acquire sole title to it after the lapse of the prescribed prescriptive period. The question involved will be one of ownership and no longer mere partition.

The petitioners have acted in bad faith in denying their aunt and co-heir her legal share to the property they had all inherited through their respective parents. Petitioner presumably was sincere in this assurance, but it was unfortunately not honored by his children upon his death for they soon dismissed out of hand the claim to the subject property.

The Court affirmed the finding of the respondent court that there was no adequate notice by the petitioners of the rejection of her claim to her share in the subject property. Noticeably absent here is a categorical assertion by the petitioners of their exclusive right to the entire property that barred her own claim of ownership of one-half thereof nor is there any explanation as to why they said she had no right to a share. If this trusting woman did not immediately take legal action to protect her rights, it was simply because of forbearance toward her nephews and nieces, let alone the fact that there was really no cases belli as yet that required her to act decisively.

Caro vs. Sucaldito

458 SCRA 595, May 16, 2005

Ponente: Justice Callejo, Sr.

FACTS:

Petitioner bought a parcel of land in Iloilo City from Gepilano as evidenced by a Deed of Sale. Thereafter, he sold a portion of the said lot to his son, Melchor Caro. They executed a Deed of Definite Sale. The son applied for a free patent before the Bureau of Lands covering the said area of the property, which he bought from his father. The application was, however, opposed. The Regional Director rendered a Decision canceling the said application. Petitioner filed a notice of appeal, however, the appeal was dismissed on the ground of failure to file an appeal memorandum within the reglementary period therefor. Respondent, as the buyer of Lot filed an Application for a Free Patent covering the said lot, and was issued Free Patent Consequently, the Register of Deeds of Iloilo City issued Original Certificate of Title in her favor. Thereafter, petitioner filed a Complaint against Sucaldito for Annulment of Title, Decision, Free Patent and/or Recovery of Ownership and/or Possession with Damages” before the court alleging that he was the owner of the subject lot. He further alleged that since the issuance of the free patent over the subject lot in favor of respondent was wrongful and fraudulent, she had no right whatsoever over the subject lot. Hence, as a “trustee of a constructive trust,” she was obliged to return the same to him as the lawful owner.

ISSUE:

Whether or not petitioner has legal personality.

HELD:

No. The Court held that the petitioner’s complaint prays for the annulment of the free patent issued in the respondent’s favor. Considering that the ultimate relief sought is for the respondent to “return” the subject property to him, it is in reality an action for reconveyance. The essence of an action for reconveyance is that the decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property which has been wrongfully or erroneously registered in another person’s name, to its rightful owner or to one with a better right.” Indeed, in an action for reconveyance filed by a private individual, the property does not go back to the State.

Clearly , a suit filed by one who is not a party-in-interest must be dismissed. Therefore, the petitioner, not being the owner of the disputed property but a mere applicant for a free patent, cannot thus be considered as a party-in-interest with personality to file an action for reconveyance.