SUB- AGENCY

G.R. No. 130423

November 18, 2002

SERONA VS. HON. COURT OF APPEALS

Leonida Quilatan delivered pieces of jewelry to petitioner Serona to be sold on
commission basis. By oral agreement of the parties, petitioner shall remit
payment or return the pieces of jewelry if not sold to Quilatan, both within 30
days from receipt of the items. Upon petitioners failure to pay, Quilatan required
her to execute an acknowledgment receipt signed by petitioner and witness
Navarette. Uknown to Quilatan, petitioner had earlier entrusted the jewelry to
Labrador for the latter to sell on commission basis. Petitioner was not able to
collect payment from Labrador, which caused her to likewise fail to pay her
obligation to Quilatan. Failure of petitioner to settle obligation upon demand,
Quilatan filed an information for estafa against petitioner. The trial court found
petitioner Serona of the crime charged guilty beyond reasonable doubt. Petitioner
appealed to the Court of Appeals, which affirmed the judgment of conviction.
Hence this petition for review on the ground that the prosecution failed to
establish the elements of estafa.
ISSUE: WON THERE WAS AN ABUSE OF CONFIDENCE ON THE PART OF
PETITIONER IN ENTRUSTING THE SUBJECT JEWELRIES TO HER SUB-AGENT
FOR SALE ON COMMISSION TO PROSPECTIVE BUYERS.
RULING: NONE. . It must be pointed out that the law on agency in our jurisdiction
allows the appointment by an agent of a substitute or sub-agent in the absence
of an express agreement to the contrary between the agent and the principal.
Consequently, petitioner did not ipso facto commit the crime of estafa through
conversion or misappropriation by delivering the jewelry to a sub-agent for sale
on commission basis. There is no conversion since the pieces of jewelry were not
devoted to a purpose or use different from that agreed upon. The pieces of
jewelry were given by petitioner to Labrador to achieve the very same end for
which they were delivered to her in the first place. WHEREFORE, THE PETITION IS
GRANTED.

G.R. No. 137162

ESCUETA VS. LIM

January 24, 2007

Respondent Rufina Lim filed an action to remove cloud on, or quiet title to,
real property, with preliminary injunction and issuance of [a hold-departure
order] against Ignacio Rubio. Lim alleged that she bought the hereditary
shares of Rubio and the heirs of Luz Baloloy all executed in her favor. Said
vendors received a down payment and that the balance of the purchase
price would be paid to each heir upon presentation of their individual
certificates of title; However, the heirs of Rubio and Baloloy refused to
receive the other half of the down payment and denied delivery to the
respondents the certificates of title covering his share on the two lots.
On the other hand, petitioner Escueta, in spite of her knowledge that the
disputed lots have already been sold by Rubio to respondent, it is alleged
that a simulated deed of sale was effected in her favor.
Petitioner contended that Rubio has not entered into a contract of sale but
mere a way of loan when he received the payment for the disputed lots
made by respondent. That Rubio has appointed his daughter Patricia Llamas
to be his attorney-in-fact and not in favor of Lim, who represented him in the
sale of the disputed lots in favor of respondent..
The trial court ruled in favor of Lim, and so did the CA. Hence this petition for
review to annual the decision of the Court of appeals on the ground that the
contract between respondent and Virginia is a contract to sell, not a contract
of sale. The real character of the contract is not the title given, but the
intention of the parties..
ISSUE: WON THERE IS A PERFECTED CONTRACT OF SALE BETWEEN
THE AGENT OF RUBIO AND LIM
RULING: YES, valid.
1. Ignacio Rubio is not prohibited from appointing a substitute. By authorizing
Virginia Lim to sell the subject properties, Patricia merely acted within the
limits of the authority given by her father, but she will have to be
"responsible for the acts of the sub-agent," among which is precisely the sale
of the subject properties in favor of respondent.
2. Even assuming that Virginia Lim has no authority to sell the subject
properties, the contract she executed in favor of respondent is not void, but
simply unenforceable, under the second paragraph of Article 1317 of the
Civil Code which provides that a contract entered into in the name of
another by one who has no authority or legal representation, or who
has acted beyond his powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf it has
been executed, before it is revoked by the other contracting party.

Applying this to the case at bar: Rubio is now estopped since he accepted
and encashed the check. Such acts constitute ratification and produce the
effects of an express power of agency. The same applies to the Baloloy heirs.
3. Indeed, Virginia Lim and respondent have entered into a contract of sale.
Not only has the title to the subject properties passed to the latter upon
delivery of the thing sold, but there is also no stipulation in the contract that
states the ownership is to be reserved in or "retained by the vendor until full
payment of the price."

LIABILITY FOR INTEREST

G.R. No. L-31739

March 11, 1930

MENDEZONA vs. VIUDA DE GOITIA

G.R. NO. L-19689APRIL

4,

1923

PHILIPPINE NATIONAL BANK VS. WELCH, FAIRCHILD & CO., INC.

FACTS: Philippine National Bank, seeks to recover of the defendant, Welch,
Fairchild & Co., Inc., the sum of $125,000, with interest from May 17,
1918, being part of the proceeds of certain insurance effected in the year
1918 upon a ship called the Benito Juarez and collected by the defendant
after said ship had been lost at sea. A corporation , known as La Compaa
Naviera, Inc, was organized in Manila under the laws of the Philippine Islands,
for the purpose of engaging in the business of marine shipping. Among its
shareholders was Welch, Fairchild & Co., another corporation organized under
the laws of these Islands and having its principal place of business in the City
of Manila. In May, 1918, they applied to the Philippine National Bank for
a loan with which to purchase a boat called Benito Juarez, which had been
found on the market in the United States. The necessary credit appears to
have been extended by the bank in the form of a loan to run for one year
from May 17, 1918. Nevertheless, owing to delay in the delivery of the
vessel, the money was not then delivered and was not actually advanced by
the bank until several months later, as will presently appear. Upon visit to the
United States Mr. Fairchild was kept advised as to certain needs of La
Compaa Naviera, and he acted for it in important matters requiring
attention in the United States. In particular it was through the efforts of
himself and of Judge James Ross, as attorney, that the consent of the proper
authorities in Washington, D. C., was obtained for the transfer of the Benito
Juarez to Philippine registry. Welch, Fairchild & Co., in Manila, addressed a

letter on August 8, 1918, to the Philippine National Bank, requesting it to

cable its correspondent in San Francisco to release the money and make
payment for the vessel upon application by Welch & Co., without requiring
the delivery of the bill of sale or policy of insurance, in which event, the
letter continued, the Compaa Naviera will deliver to you here the bill of
sale also the insurance policy covering the voyage to Manila. In a letter
bearing date of August 10, 1918, also addressed to the Philippine National
Bank, La Compaa Naviera, Inc. confirmed this request and authorized the
bank to send the cablegram necessary to give it effect.
ISSUE: WHETHER OR NOT THE CONTENTIONS ARE UNTENABLE AND
THAT THE PLAINTIFF BANK HAS A CLEAR RIGHT OF ACTION AGAINST
THE DEFENDANT
HELD:
An agent who acts for a revealed principal in the making of a contract does
not become personally bound to the other party in the sense that an action
can ordinarily be maintained upon such contract directly against the agent
(art. 1725, Civ. Code), yet that rule clearly does not control this case; for
even conceding that the obligation created by the letter of August 8, 1918,
was directly binding only on the principal, and that in law the agent may
stand apart therefrom. yet it is manifest upon the simplest principles of
jurisprudence that one who has intervened in the making of a contract in the
character of agent cannot be permitted to intercept and appropriate the
thing which the principal is bound to deliver, and thereby make performance
by the principal impossible. The agent in any event must be precluded from
doing any positive act that could prevent performance on the part of his
principal. This much, ordinary good faith towards the other contracting party
requires. The situation before us in effect is one where, notwithstanding the
promise held out jointly by principal and agent in the letters of August 8 and
10, 1918, the two have conspired to make an application of the proceeds of
the insurance entirely contrary to the tenor of said letters.
Upon the delay of the bank in asserting its right to the insurance money, it is
enough to say that mere delay unaccompanied by acts sufficient to create an
equitable estoppel does not destroy legal rights, but such delay as occurred
here is in part explained by the fact that the loan to La Compaa Naviera did
not mature till May 17, 1919, and a demand for the surrender of the proceeds
of the insurance before that date would have seemed premature. Judgment
will be entered in favor of the plaintiff to recover of the defendant the sum of
P250,000, with lawful interest from May 31, 1921, the date of the filling of
the complaint. No special pronouncement will be made as to costs. So
ordered.

G.R NO. L-11442 MAY 23 1958

VDA. DE SALVATIERRA VS. GARLITOS

In 1954, Manuela Vda. De Salvatierra entered into a lease contract with
Philippine Fibers Producers Co., Inc. (PFPC). PFPC was represented by its
president Segundino Refuerzo. It was agreed that Manuela shall lease her
land to PFPC in exchange of rental payments plus shares from the sales of
crops. However, PFPC failed to comply with its obligations and so in 1955,
Manuela sued PFPC and she won. An order was issued by Judge Lorenzo
Garlitos of CFI Leyte ordering the execution of the judgment against
Refuerzos property (there being no property under PFPC). Refuerzo moved
for reconsideration on the ground that he should not be held personally liable
because he merely signed the lease contract in his official capacity as
president of PFPC. Garlitos granted Refuerzos motion.
Manuela assailed the decision of the judge on the ground that she sued PFPC
without impleading Refuerzo because she initially believed that PFPC was a
legitimate corporation. However, during trial, she found out that PFPC was
not actually registered with the Securities and Exchange Commission (SEC)
hence Refuerzo should be personally liable.
ISSUE: WHETHER OR NOT MANUELA IS CORRECT.
HELD: Yes. It is true that as a general rule, the corporation has a personality
separate and distinct from its incorporators and as such the incorporators
cannot be held personally liable for the obligations of the corporation.
However, this doctrine is not applicable to unincorporated associations. The
reason behind this doctrine is obvious-since an organization which before the
law is non-existent has no personality and would be incompetent to act and
appropriate for itself the powers and attribute of a corporation as provided
by law; it cannot create agents or confer authority on another to act in its
behalf; thus, those who act or purport to act as its representatives or agents
do so without authority and at their own risk. In this case, Refuerzo was the
moving spirit behind PFPC. As such, his liability cannot be limited or
restricted that imposed upon [would-be] corporate shareholders. In acting on
behalf of a corporation which he knew to be unregistered, he assumed the
risk of reaping the consequential damages or resultant rights, if any, arising
out of such transaction.

G.R NO. 125138 MARCH 2 1999

CERVANTES VS CA
FACTS: PAL issued to Cervantes a round trip ticket for Manila-Honolulu-Los
Angeles-Honolulu-Manila. This ticket expressly provide an expiry date of 1

year from issuance or until March 27, 1990.The ticket was issued in compliance
w/ a Compromise Agreement entered between PAL & Cervantes in 2 previous suits
between them. On March 3, 1990, days before the expiry date, Cervantes used it. Upon
his arrival to LA, on the same day, he immediately booked his LA-Manila return ticket w/
PAL office which was confirmed for April 2, 1990 flight. Cervantes learned that the
same PAL plane would make a stop-over in San Francisco and because he
would be in San Francisco on April 2, 1990, he made arrangements w/ PAL for him to
board the flight in San Francisco instead of boarding it in LA. When Cervantes
checked in at PAL counter in San Francisco he was not allowed to board. PAL personnel
made anotation on his ticket TICKET NOT ACCEPTED DUE TO EXPIRATION OF VALIDITY.
Aggrieved, Cervantes filed a complaint for damages for Breach of Contract of
Carriage. The RTC dismissed the complaint w/c was upheld by the CA.
ISSUE: WON THE ACT OF THE PAL AGENTS IN CONFIRMING THE
TICKET OF CERVANTES EXTENDED THE PERIOD OF VALIDITY.
RULING: NO.
In the case of Lufthansa vs. Court of Appeals, the SC held that the "ticket
constitute the contract between the parties. It is axiomatic that when the terms
are clear and leave no doubt as to the intention of the contracting parties,
contracts are to be interpreted according to their literal meaning. "In his
effort to evade this inevitable conclusion, petitioner theorized that the
confirmation by the PAL's agents in Los Angeles and San Francisco changed the
compromise agreement between the parties. THE 2 PERSONNEL FROM PAL DID NOT
HAVE AN AUTHORITY TO EXTEND THE VALIDITY OF THE TICKET. The said agents,
according to the Court of Appeals, acted without authority when they
confirmed the flights of the petitioner. Under Article 1989 of the New Civil
Code, the acts an agent beyond the scope of his authority do not bind the
principal, unless the latter ratifies the same expressly or impliedly. Furthermore, when
the third person (herein petitioner) knows that the agent was acting beyond his
power or authority, the principal cannot be held liable for the acts of the
agent. If the said third person is aware of such limits of authority, he is to blame, and is
not entitled to recover damages from the agent, unless the latter undertook
to secure the principal's ratification
G.R NO. 126751 MARCH 28 2001
SAFIC, ALCAN &CIE VS. IMPERIAL VEGETABLE OIL., INC
In 1985, Safic Alcan & Cie (SAC), a corporation, entered into an agreement
with Imperial Vegetable Oil Co., Inc. (IVO) whereby the latter shall deliver
tones of coconut oil to SAC. Both parties complied. IVO was represented by
its president, Dominador Monteverde. In 1986, SAC again entered into an

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 SAC sued IVO. IVO in its defense aver that
Monteverde was acting beyond his power as president when he made the
1986 agreement with SAC; 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. SAC 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 MONTEVERDES ACT IN ENTERING INTO
THE 1986 CONTRACTS IS ULTRA VIRES.
HELD: Yes. It was proven by IVO, when they presented a copy of their by-laws
that Monteverde acted beyond his authority when he entered into
speculative contracts with SAC in 1986. 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.
There can be no implied agency too simply because there has been a
previous transaction between SAC and IVO where IVO was represented by
Monteverde. This is because the 1985 contract and the 1986 contracts are
very different. The 1985 contract is not speculative while the 1986 contracts
are speculative hence, SAC should have secured the confirmation by IVOs
Board that Monteverde is indeed authorized to enter into such agreements.
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 IVOs 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, Monteverdes speculative
contracts with Safic never bound IVO and Safic cannot therefore enforce
those contracts against IVO.