Agency Assigned Case

7/29/2019 Agency Assigned Case

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Rallos v. Felix Go Chan (MAI)January 31, 1978Muoz Palma, J.FACTS: Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land known as Lot No.5983. In 1954, they executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him tosell for and in their behalf the aforementioned parcel of land. On March 1955, Concepcion Rallos died. On September1955, Simeon Rallos sold the undivided shares of his sisters in lot 5983 to Felix Go Chan and Sons Realty

Corporation. The deed of sale was registered and the previous TCT was cancelled. On May 1956, Ramos Rallos, asadministrator of the Intestate Estate of Concepcion Rallos, filed a complaint with the CFI of Cebu, praying (1) that thesale of the undivided share of the deceased Concepcion Rallos be declared unenforceable, and said share bereconveyed to her estate; (2) that the TCT issued in the name of Felix Go Chan and Sons Realty Corporation becancelled; and (3) that the plaintiff be indemnified by way of attorneys fees and payment of costs of suit.The trial court rendered judgment declaring the deed of sale null and void, insofar as the one-half pro-indiviso shareof Concepcion Rallos in the property in question, and sentencing Juan Borromeo, the administrator of the estate ofSimeon Rallos, to pay Felix Go Chan and Sons Realty Corporation the sum representing the price of one-half of thelot. The appellate court reversed the decision and sustained the sale. ISSUE: Whether or not the sale of the agent ofthe principals property after the latters death is valid HELD: NO. The general rule in Article 1919 of the NCC is thatdeath is one of the causes for the extinguishment of agency. There being an integration of the personality of theprincipal into that of the agent, it is not possible for the representation to continue once the death of either isestablished. There are certain exceptions, however, Article 1931 being one of them. Under this provision, an act doneby the agent after the death of the principal is valid and effective if two conditions concur: (1) the agent acted withoutknowledge of the death of the principal; and (2) that the third person who contracted with the agent acted in good

faith. But because it was established that Simeon Rallos had knowledge of the death of his principal when he madethe sale, Article 1931 will not apply. The general rule shall apply then that any act of an agent after the death of hisprincipal is void ab initio. Simeon Rallos act of selling the share of Concepcion after her death is therefore null andvoid.

AGENCY:The relationship of agency is whereby one party, called the principal (mandante), authorizes another, called the agent(mandatario), to act for and in his behalf in transactions with third persons. The essential elements of agency are: (1)there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a

juridical act in relation to a third person; (3) the agents acts as a representative and not for himself, and (4) the agentacts within the scope of his authority. Agency is basically personal representative, and derivative in nature. Theauthority of the agent to act emanates from the powers granted to him by his principal; his act is the act of theprincipal if done within the scope of the authority. Qui facit per alium facit se. "He who acts through another actshimself".

Bordador vs Luz

1. Petitioners were engaged in the business of purchase and sale of jewelry and respondent Brigida D. Luz, also

known as Aida D. Luz, was their regular customer.

2. On several occasions during the period from April 27, 1987 to September 4, 1987, respondent Narciso Deganos,

the brother to Brigida D. Luz, received several pieces of gold and jewelry from petitioner amounting to

P382,816.00. 1 These items and their prices were indicated in seventeen receipts covering the same. Eleven of the

receipts stated that they were received for a certain Evelyn Aquino, a niece of Deganos, and the remaining six

indicated that they were received for Brigida D. Luz.

3. Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold

items to petitioners.

4. Deganos remitted only the sum of P53,207.00. He neither paid the balance of the sales proceeds, nor did he

return any unsold item to petitioners.

5. By January 1990, the total of his unpaid account to petitioners, including interest, reached the sum of

P725,463.98.

6. Petitioners eventually filed a complaint in the barangaycourt against Deganos to recover said amount.

7. In the barangayproceedings, Brigida D. Luz, who was not impleaded in the case, appeared as a witness for

Deganos and ultimately, she and her husband, together with Deganos, signed a compromise agreement with

petitioners.

8. In that compromise agreement, Deganos obligated himself to pay petitioners, on installment basis, the balance

of his account plus interest thereon. However, he failed to comply with his aforestated undertakings.


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9. On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in the Regional Trial Court of Malolos, Bulacan

against Deganos and Brigida, D. Luz for recovery of a sum of money and damages, with an application for

preliminary attachment. 4 Ernesto Luz was impleaded therein as the spouse of Brigida.

10. Petitioners claimed that Deganos acted as the agent of Brigida D. Luz when he received the subject items of

jewelry and, because he failed to pay for the same, Brigida, as principal, and her spouse are solidarily liable with

him therefor.

11. Private Respondent: Deganos admitted that he had an unpaid obligation to petitioners, he claimed that thesame was only in the sum of P382,816.00 and not P725,463.98. He further asserted that it was he alone who was

involved in the transaction with the petitioners; that he neither acted as agent for nor was he authorized to act as

an agent by Brigida D. Luz, notwithstanding the fact that six of the receipts indicated that the items were received

by him for the latter. He further claimed that he never delivered any of the items he received from petitioners to

Brigida.

12. Trial court below found that only Deganos was liable to petitioners for the amount and damages claimed. It

held that while Brigida D. Luz did have transactions with petitioners in the past, the items involved were already

paid for and all that Brigida owed petitioners was the sum of P21,483.00 representing interest on the principal

account which she had previously paid for.

13. CA AFFIRMED

ISSUE: whether or not herein respondent spouses are liable to petitioners for the latter's claim for money anddamages in the sum of P725,463.98, plus interests and attorney's fees, despite the fact that the evidence does not

show that they signed any of the subject receipts or authorized Deganos to received the items of jewelry on their

behalf.

HELD. NO.

RATIO:

- The evidence does not support the theory of petitioners that Deganos was an agent of Brigida D. Luz and that the

latter should consequently be held solidarily liable with Deganos in his obligation to petitioners. While the quoted

statement in the findings of fact of the assailed appellate decision mentioned that Deganos ostensibly acted as an


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agent of Brigida, the actual conclusion and ruling of the Court of Appeals categorically stated that, "(Brigida Luz)

never authorized her brother (Deganos) to act for and in her behalf in any transaction with Petitioners . . . .

- It is clear, therefore, that even assuming arguendo that Deganos acted as an agent of Brigida, the latter never

authorized him to act on her behalf with regard to the transaction subject of this case.

- The basis for agency is representation. Here, there is no showing that Brigida consented to the acts of Deganos or

authorized him to act on her behalf, much less with respect to the particular transactions involved. Petitioners'

attempt to foist liability on respondent spouses through the supposed agency relation with Deganos is groundlessand ill-advised.

- Besides, it was grossly and inexcusably negligent of petitioners to entrust to Deganos, not once or twice but on at

least six occasions as evidenced by six receipts, several pieces of jewelry of substantial value without requiring a

written authorization from his alleged principal. A person dealing with an agent is put upon inquiry and must

discover upon his peril the authority of the agent.

- The records show that neither an express nor an implied agency was proven to have existed between

Deganos and Brigida D. Luz. Evidently, petitioners, who were negligent in their transactions with Deganos,

cannot seek relief from the effects of their negligence by conjuring a supposed agency relation between the

two respondents where no evidence supports such claim.

Victorias Milling Co., Inc. vs. CA and Consolidated Sugar Corp., [G.R. # 117356]

Post undercase digests,Civil LawatTuesday, February 21, 2012Posted by Schizophrenic Mind

Facts: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc.

In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts to STM as proof of

purchases. Among these was SLDR No. 1214M, which gave rise to the instant case. SLDR No. 1214M covers 25,000

bags of sugar. The transaction it covered was a "direct sale."

Thereafter, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M.

That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by the

SLDR. However, after 2,000 bags had been released, petitioner refused to allow further withdrawals of sugar. CSC

thus inquired when it would be allowed to withdraw the remaining 23,000 bags. In its reply, petitioner said that it

could not allow any further withdrawals of sugar because STM had already withdrawn all the sugar covered by the

cleared checks. Petitioner also noted that CSC had represented itself to be STM's agent as it had withdrawn the

2,000 bags "for and in behalf" of STM.

As a result, CSC filed a complaint for specific performance. Petitioner's primary defense a quo was that it was an

unpaid seller for the 23,000 bags. Since STM had already drawn in full all the sugar corresponding to the amount of

its cleared checks, it could no longer authorize further delivery of sugar to CSC. Petitioner also contended that it

had no privity of contract with CSC. Furthermore, the SLDRs prescribed delivery of the sugar to the party specified

therein and did not authorize the transfer of said party's rights and interests.

The Trial Court rendered its judgment favoring the private respondent CSC. The appellate court affirmed said

decision but modified the costs against petitioner.
http://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/search/label/case%20digestshttp://coffeeafficionado.blogspot.com/search/label/case%20digestshttp://coffeeafficionado.blogspot.com/search/label/case%20digestshttp://coffeeafficionado.blogspot.com/search/label/Civil%20Lawhttp://coffeeafficionado.blogspot.com/search/label/Civil%20Lawhttp://coffeeafficionado.blogspot.com/search/label/Civil%20Lawhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.htmlhttp://coffeeafficionado.blogspot.com/search/label/Civil%20Lawhttp://coffeeafficionado.blogspot.com/search/label/case%20digestshttp://coffeeafficionado.blogspot.com/2012/02/victorias-milling-co-inc-vs-ca-and.html


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Issue: Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence, estopped

to sue upon SLDR No. 1214M as an assignee.

Held: No. It is clear from Article 1868 that the basis of agency is representation. One factor which most clearly

distinguishes agency from other legal concepts is control; one person - the agent - agrees to act under the control

or direction of another - the principal

That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an

agency. Ultimately, what is decisive is the intention of the parties. That no agency was meant to be established by

the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been "sold and

endorsed" to it. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale,

and not an agency. Hence, on this score, no error was committed by the respondent appellate court when it held

that CSC was not STM's agent and could independently sue petitioner.

Litonjua, Jr. v. Eternit Corp

8 June 2006 | Callejo, Sr., J.

Topic: Essential characteristics and requirements of a contract of agencyOverview:

Statement of the Case: Petition for Review on Certiorati of the CA decision affirming the TC-Pasig anddenying petitioners MR

Petitioners: Eduardo Litonjua, Jr. and Antonio LitonjuaRespondents: Eternit Corporation (now Eterton Multi-resources Corporation; EC for brevity),Eteroutremer, S.A. Corporation (ESAC for brevity) and Far East Bank and Trust Company (Bankfor brevity)

Statement of Facts:

EC is a manufacturer of roofing materials and pipe products in the Philippines and operates oneight parcels of lands in Mandaluyong City with a total of 47,233 sq.m., all covered by variousTransfer Certificates under the name of Bank as trustee.

90% of the shares of EC were owned by ESAC, a Belgian company.1986: ESACs management grew wary of the political situation of the Philippines (Marcosadministration) and instructed Michael Adams, a member of ECs Board of Directors, to disposeof the eight parcels of lands. For this, he hired Lauro G. Marquez as realtor/broker. Jack Glanville,an Australian citizen and the General Manager and President of EC, showed Marquez the lands.

Sept. 12, 1986: Marquez offered the lands to Eduardo Litonjua, Jr. of the Litonjua & Company,Inc. The offer, made through letter with Marquez claim of authority to sell the property, was for27M with the terms of the sale subject to negotiation.Eduardo, along with his brother Antonio, looked at the property and offered to buy it for 20M incash. Marquez communicated the offer to Glanville and Claude Delsaux, Regional Director for

Asia of ESAC (both held offices in Belgium).

Oct. 28, 1986: Glanville telexed Delsaux about their decision on the offer since Delsaux failed toreply to the previous communication

Feb. 12, 1987: Delsaux replied that their final offer, based on Belgian/Swiss decision, was for$1M plus P2.5M to cover all existing obligations prior to liquidation.


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Eduardo accepted the final offer and said that they would confirm full payment within 90 daysafter execution and preparation of all documents of sale and government clearancesThe Litonjua brothers deposited $1M with Security Bank and executed an Escrow AgreementSometime later, Glanville communicated with Delsaux that he had met with the buyers and askedwhen the sale would be implemented, upon inquiry of the Litonjua brothers and Marquez. TheLitonjua brothers were concerned because they would be incurring expenses in bank

commitment fees.Soon after Corazon Aquino assumed office, Glanville told Marquez that the sale would not pushthrough because of the stabilization of the political situation.

The Litonjuas demanded payment for damages from EC but EC refusedThe Litonjuas filed with the RTC-Pasig a complaint for specific performance and damages againstherein respondents and amended to include Benito Tan, Ruperto Tan, Stock Ha Tan andDeogracias Eufemio because of their purchase of ESAC stocks and were the controllingstockholders.

Respondents answer:o ESACr does not do business in the Philippines so the court has no jurisdictiono The Board and stockholders of EC never approved a resolution to sell the land or toauthorize Marquez to do the sameo The Oct. 28 telex of Glanville was his own personal making and does not bind EC

TC dismissed case:o No valid and binding sale between partieso No cause of action against Far East Bank and Trust Companyo Counter-claim of respondents dismissed as wello The authority of the agents/realtors was not made in writing therefore the sale is notmerely unenforceable but void. Ratification of this authority may not be appliedretroactively. Petitioners could not assume that the defendants gave the agents authoritywithout clear authorization in the form of Board resolutions.o The supposed sale involves all assets of EC which would mean complete cessation of itsoperations.

Litonjuas appealed to the CA, claiming that:o Marquez was not an agent but merely a broker or go-between so he did not need writtenauthorityo Agency by estoppels was created when corporation clothed Marquez with apparentauthorityo It was a bilateral contract to buy and sell which is equivalent to a contract of sale and isbinding upon the corporation to consummate

ECs answer: Neither Marquez nor Glanville and Desaux were authorized by the Board ofDirectors had written authority to sell or offer the property for sale. Since the sale involved almostall the properties of EC, naturally it would need the consent of all the stockholders.

CA affirmed the RTC and denied petitioners MR:o Marquez being a real estate broker was considered to be a special agent under NCC1874. Under Sec. 23 of the Corporation Code, he needed a special authority from theBoard of Directors to bind the corporation to the sale.o Delsaux was merely a representative of ESAC, the majority stockholder of EC, but wasnot a part of ECs Board of Directors, so he had no authority to bind EC.o Litonjuas failed to prove agency by estoppelsPetitioners brought case to the SC, claiming that:o There was valid offer and acceptance when they accepted the final offer of EC andMarquez made known to them the acceptance before they withdrew the offero Marquez did not need special authority because he was not tasked to sell the propertiesbut merely to bring both parties to a sale together, as a broker. Therefore, NCC 1874does not apply.o Glanville and Delsaux were clothed with authority to sell the properties because it wouldbe inconsistent to say they didnt when they made a counter-offer and later on rejectedthe sale


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o Petitioners were in good faith because Glanville and Delsaux presented themselves tothe public as if they had authority from ECo Glanville and Delsaux have authority because they sold 90% of the stocks of EC toRuperto Tan in 1997, therefore a Board Resolution is a mere formality since they holdsuch high positions

Respondents reply:

o Factual matters so cannot be taken cognizance by the SC under Rule 45 of the Rules ofCourto On the matters, they reiterate their stand in the CA

Issues:1. W/N there was a perfected contract of sale2. W/N Marquez needed written authority from ESAC3. W/N Glanville and Delsaux had the necessary or apparent authority from ESAC

Held & Rationale: Petition is without merit1. The issues are factual, therefore not falling within the ambit of Rule 45.In the absence of express written terms of the relationship of agency, the existence of arelationship and the bounds of it is a question of fact. Whether the person acted within hisauthority or whether there was apparent authority is also a question of fact. These findings shall

not be disturbed unless it is shown that some facts and circumstances were not properlyappreciated.2. Petitioners failed to prove agency.Petitioners failed to prove that EC accepted their counter-offer through Glanville and Delsaux.When the case is for specific performance of a contract, agency must be proven through clear,certain and specific proof. Under Sec. 23 of the Corporation Code, a corporation has a separateand distinct personality from its stockholders and is not affected by transactions of the latter.Under Sec. 36 of the same code, it authorizes the corporation to dispose of their properties.However, these acts such as offering a property for sale and accepting a counter-offer may notbe done without the authority of corporate by-laws or specific acts of the board of directors.

Absent this authority, the rule is that the declaration of one director conferring such is not bindingon the corporation. Any act of an agent of a corporation must be ratified by the Board of Directors,therefore it has to have written authority. Written authority is also necessary because in this

case, real rights over immoveable property are conveyed, with which agency is required to be inwriting or else the sale is void.Facts also showed that the final offer made by Delsaux was only from the Belgian/Swisscomponent but not from the management or Board of Directors of ESAC, thus it is not bindingupon EC because they were officers of ESAC but not EC. Though it is true that they ownedmajority of the stocks of EC, the Court held that even if it owned all of the stocks, it does notmerge them into one corporation. Thus, they could not act to bind EC without a Board resolutionfrom the Board of Directors of EC itself. A Board resolution is not a mere formality but is acondition sine qua non to the validity of the sale.The Litonjuas had the responsibility to exercise due diligence in confirming the authority of theagent. The rule is that anyone who deals with an assumed does so at his own peril.Marquez had no authority to be an agent. Marquez acted not merely as a broker but also as anagent. He confirmed the offer and acceptance of the Litonjuas to the officers of ESAC.

There was no agency by estoppels. The following are the requisites for agency by estoppel: (1)the principal manifested a representation of the agents authority or knowingly allowed the agentto assume such authority; (2) the third person, in good faith, relied upon such representation; (3)relying upon such representation, such third person has changed his position to his detriment.Proof of reliance on such representation was lacking in this case because in the communicationsbetween the Litonjuas and Glanville, Delsaux and Marquez, the latter parties clearly stated thatthey were acting in the behalf of ESAC only. It cannot be said also that EC ratified the acts of thelatter parties. There is no showing that the communications between them were forwarded toECs Board of Directors for ratification.Judgment: Petition denied for lack of merit. Costs against petitioners.


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Dominion Insurance Corp. v CA (GEN)Feb. 6, 2002Pardo, J.FACTS: Rodolfo Guevarra claimed to have advanced P156, 473.90 in his capacity as a manager ofDominion Insurance Corp. to satisfy certain claims filed by the petitioners clients. He then instituted acomplaint for sum of money against the petitioner. The petitioner denied any liability to plaintiff andasserted a counterclaim of P249,672.53, representing premium that Guevarra failed to pay. The RTCruled in favor of Guevarra and ordered thepetitioner to pay him the sum he claims. The CA affirmed the decision of the RTC.

ISSUE: WON Guevarra acted within his authority as agent for petitioner?

HELD: NO. The Special Power of Attorney entered into by petitioner and Guevarra would show that theyintended to enter into a principal-agent relationship. Despite the word special in the document, thecontents reveal that what was constituted was actually a general agency. The agency comprises all thebusiness of the principal but couched in general terms; hence it is limited only to acts of administration.Thus, the general agency constituted does not warrant the payment or settlement of claims as theyspecifically require a Special Power of Attorney as provided by Art. 1878 of the Civil Code. But asprovided by the Memorandum of Management Agreement, Guevarra was authorized to pay the claim butthe payment shall come from the revolving fund or collection in his possession. Having deviated from theinstructions of the principal, the expenses that Guevarra incurred in the settlement of the claims of theinsured may not be reimbursed from Dominion in accordance with Art. 1918 of the Civil Code.Nevertheless, under Art. 1236, to the extent that the obligation of the petitioner has been extinguished,Guevarra may demand for reimbursement from his principal.

Manila Memorial Park Inc. vs Linsangan (November 22, 2004)

Post undercase digests,Civil LawatTuesday, February 21, 2012Posted by Schizophrenic Mind

Facts: Florencia Baluyot is authorized by the Manila Memorial Park Inc. (MMPI) to sell burial lots to those

interested in purchasing. Herein respondent Atty. Linsangan was approached by Florencia with an offer to sell to

the former a lot that she alleges to have already been previously sold but the owner thereof has cancelled and

thus, Atty. Linsangan shall only continue the payment thereof amounting to P95,000, Atty. Linsangan agreed and

payed an initial P35, 000. Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract

and that she needed him to sign a new contract stipulating the total price of P132, 000 but Florencia assured Atty.

Linsangan that he would only pay the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has

read and understood all the stipulations therein. The payment was made in installments for two years which Atty.

Linsangan completed, however, after two years, Florencia informed Linsangan that their contract was cancelled

and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract against MMPI

and Florencia. MMPI avers that Florencia acted beyond the scope of her authority as MMPIs agent since the latter
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did not allow her to renegotiate existing contracts but only to sell new contracts. Atty. Lnsangan on the other hand

argues that MMPI should be liable for the acts of its agents.

Issue: Whether or not MMPI is liable for the acts of Florencia

Held: NO. The SC ruled that Florencia acted outside the scope of her authority as agent of MMPI and Atty.

Linsangan failed to ascertain the authority given to Florencia especially that their agreement on the second

contract had a different stipulation than what he a nd Florencia agreed upon. Moreover, Atty. Linsangans

signature over the new contract signifies his agreement thereto and serves as a form of ratification for the acts of

Florencia which were outside the authority given her. As such, the SC ruled that the principal cannot be held liable

for actions of agents outside the scope of their authority when such acts are ratified by the principal himself. On

the part of MMPI, they did not ratify Florencias acts, nor did they know of such actions

EUROTECH vs. Cuizon- Eurotech is engaged in the business of importation and distribution of various European industrialequipment for customers here in the Philippines- It has as one of its customers Impact Systems Sales ("Impact Systems") which is asole proprietorship owned by respondent ERWIN Cuizon (ERWIN). Respondent EDWINis the sales manager of Impact Systems and was impleaded ] in the court a quo insaid capacity.- From January to April 1995, Eurotech sold to Impact Systems various productsallegedly amounting to ninety-one thousand three hundred thirty-eight (P91,338.00)pesos- Subsequently, respondents sought to buy from petitioner one unit of sludge pumpvalued at P250,000.00 with respondents making a down payment of fifty thousand

pesos (P50,000.00).- When the sludge pump arrived from the United Kingdom, Eurotech refused to deliverthe same to the Cuizons without their having fully settled their indebtedness topetitioner.- Hence, the EDWIN, the sales manager, executed a Deed of Assignment in favor ofEurotech, assigning its receivables of P365,000 from the Toledo Power Company.- Because of this Deed of Assignment, Eurotech delivered the said sludge pump.- However, despite the existence of the Deed of Assignment, ERWIN Cuizon proceededto collect from Toledo Power Company.-Alarmed by this development, Eurotech made several demands upon respondents topay their obligations.- While the Cuizons were able to initially make partial payment, after a few months ofnot being able to pay, Eurotechs counsel sent respondents a final demand letter.

Because of respondentsfailure to abide by said final demand letter, petitionerEurotech instituted a complaint for sum of money, including Edwin the sales manager

as a real party in interest.- Respondent EDWIN 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 ImpactSystems, in his transaction with petitioner and the latter was very much aware of thisfact.o Edwins contention:

Impact Systems Sales ratified the act of Edwin B. Cuizon; the records


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further show that plaintiff knew that Impact Systems Sales, theprincipal, ratified the act of Edwin B. Cuizon, the agent, when itaccepted the down payment of P50,000.00. Plaintiff, therefore, cannotsay that it was deceived by defendant Edwin B. Cuizon, since in theinstant case the principal has ratified the act of its agent and plaintiffknew about said ratification. Plaintiff could not say that the subjectcontract was entered into by Edwin B. Cuizon in excess of his powerssince [Impact] Systems Sales made a down payment of P50,000.00two days later.

he was a mere agent of Impact Systems which is owned by ERWIN and

that his status as such is known even to petitioner as it is alleged in theComplaint (that Eurotech filed before RTC) that he is being sued in hiscapacity as the sales manager of the said business venture. Likewise,respondent EDWIN points to the Deed of Assignment which clearlystates that he was acting as a representative of Impact Systems in saidtransaction.- Trial Court dropped Edwin as a party defendant- CA affirmed- Eurotechs contention before SC:

o Court of Appeals failed to appreciate the effect of ERWINs act of collectingthe receivables from the Toledo Power Corporation notwithstanding theexistence of the Deed of Assignment signed by EDWIN on behalf of ImpactSystems. While said collection did not revoke the agency relations ofrespondents, petitioner insists that ERWINs action repudiated EDWINs powerto sign the Deed of Assignment. As EDWIN did not sufficiently notify it of theextent of his powers as an agent, petitioner claims that he should be madepersonally liable for the obligations of his principal.o respondent EDWIN acted beyond the authority granted by his principal and heshould therefore bear the effect of his deed pursuant to Article 1897 of theNew Civil CodeIssue: Whether Edwin Cuizon acted in excess of his authority, thus making him personallyliable to Eurotech.Held: NO

Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is notpersonally liable to the party with whom he contracts. The same provision, however,presents two instances when an agent becomes personally liable to a third person. The firstis when he expressly binds himself to the obligation and the second is when he exceeds hisauthority. In the last instance, the agent can be held liable if he does not give the third partysufficient notice of his powers. We hold that respondent EDWIN does not fall within any ofthe exceptions contained in this provision.The Deed of Assignment clearly states that respondent EDWIN signed thereon as the salesmanager of Impact Systems. As discussed elsewhere, the position of manager is unique inthat it presupposes the grant of broad powers with which to conduct the business of theprincipal, thus:The powers of an agent are particularly broad in the case of one acting as a general agent ormanager; such a position presupposes a degree of confidence reposed and investiture with

liberal powers for the exercise of judgment and discretion in transactions and concernswhich are incidental or appurtenant to the business entrusted to his care and management.In the absence of an agreement to the contrary, a managing agent may enter into anycontracts that he deems reasonably necessary or requisite for the protection of the interestsof his principal entrusted to his management.

Applying the foregoing to the present case, we hold that Edwin Cuizon acted well-within hisauthority when he signed the Deed of Assignment. To recall, petitioner refused to deliver theone unit of sludge pump unless it received, in full, the payment for Impact Systemsindebtedness. We may very well assume that Impact Systems desperately needed the


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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 whichculminated in the execution of the Deed of Assignment of its receivables from Toledo PowerCompany. The significant amount of time spent on the negotiation for the sale of the sludgepump underscores Impact Systems perseverance to get hold of the said equipment. Thereis, therefore, no doubt in our mind that respondent EDWINs participation in the Deed of

Assignment was "reasonably necessary" or was required in order for him to protect thebusiness of his principal. Had he not acted in the way he did, the business of his principalwould have been adversely affected and he would have violated his fiduciary relation withhis principal.We likewise take note of the fact that in this case, petitioner is seeking to recover both fromrespondents ERWIN, the principal, and EDWIN, the agent. It is well to state here that Article1897 of the New Civil Code upon which petitioner anchors its claim against respondentEDWIN "does not hold that in case of excess of authority, both the agent and the principalare liable to the other contracting party. To reiterate, the first part of Article 1897 declaresthat the principal is liable in cases when the agent acted within the bounds of his authority.Under this, the agent is completely absolved of any liability. The second part of the saidprovision presents the situations when the agent himself becomes liable to a third partywhen he expressly binds himself or he exceeds the l imits of his authority without givingnotice of his powers to the third person. However, it must be pointed out that in case of

excess of authority by the agent, like what petitioner claims exists here, the law does notsay that a third person can recover from both the principal and the agent.

EVANGELISTA, ET. AL. VS. COLLECTOR OFINTERNAL REVENUE, ET. AL.Facts: The petitioners borrowed from their father PhP59,140.00 which amount together with theirpersonal monies was used by them for the purpose of buying and selling real properties. From 1943 to1944, they bought 24 parcels of land (including theimprovements thereon) on four different occasions. In 1945, they appointed their brother Simeon tomanage their properties with full power to lease; to collect and receive rents; to issue receipts therefore;in default of such payment, to bring suits against the

defaulting tenant; and to endorse and deposit all notes and checks for them. In 1948, their net rentalincome amounted to PhP12,615.35. On September 1954, the respondent Collector of Internal Revenuedemanded the payment of (1) income tax on corporations, (2) real estate dealers fixed tax, and (3)corporation residence tax for the years 1945-1949, computed according to theassessments made on their properties. Because of this, the petitioners filed a case against therespondents in the Court of Tax Appeals, praying that the decision of the respondent contained in itsletter of demand be reversed and that they be absolved from the payment of the taxes in question.

Issue: Whether the petitioners are subject to the tax on corporations, real estate dealers fixed tax, andcorporation residence tax.

Court of Tax Appeals: The petitioners are liable. (No explanation for such in the case)Petitioners: They are mere co-owners, not copartners, for, in consequence of the acts performed by

them, a legal entity, with a personality independent of that of its members, did not come into existence,and some of the characteristics ofpartnerships are lacking in the case at bar.

Held: The petitioners are liable to pay the tax on corporations provided for in Sec. 24 of theCommonwealth Act No. 466, otherwise known as the National Internal Revenue Code. According to Sec.84 of the same statute, the term corporation includes partnerships, no matter how created or organized,

joint-stock companies, joint accounts, associations or insurance companies, but does not include dulyregistered general co-partnerships. Also, Article 1767 of the Civil Code provides: By the contract of


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partnership, two or more persons bind themselves to contribute money, property, or industry to a commonfund, with the intention ofdividing the profits among themselves. Pursuant to this article, the essential elements of a partnershipare two, namely: (1) an agreement to contribute money, property or industry to a common fund; and (2)intent to divide the profits among the contracting parties. The first element is undoubtedly present in thecase at bar, for, admittedly, the petitioners have agreed to, and did, contribute money and property to acommon fund. Also, it can be said that their purpose was to engage in real estate transactions formonetary gain and then divide the same among themselves because: (1) they created the common fundpurposely; (2) theyinvested the same, not merely in one transaction, but in a series of transactions; (3) the parcels of landthat they bought were not devoted to residential purposes, or to other personal uses of the petitioners butwere leased separately to several persons; (4)the properties have been under the management of one person, namely Simeon Evangelista, making theaffairs relative to the said properties appear to have been handled as if the same belonged to acorporation or business enterprise operated forprofit; and (5) the petitioners have not testified or introduced any evidence, either on their purpose increating the set up already adverted to, or on the causes for its continued existence. Hence, thepetitioners herein constitute a partnership, and in so far as the National Internal Revenue Code isconcerned, they are subject to the income tax for corporations.I. As regards to the residence tax for corporations provided Sec. 2 of Commonwealth Act No. 4651, the

terms corporation and partnership are used in both statutes with substantially the same meaning.Consequently, petitioners are subject, also, to the residence tax for corporations. 1 Entities liable toresidence taxEvery corporation, no matter how created ororganized, whether domestic or resident foreign, engaged in or doing business in the Philippines shallpay an annual residence tax of five pesos and an annual additional tax, which in no case, shall exceedone thousand pesos,in accordance with the following schedule: * * *

II. Lastly, the records show that the petitioners have habitually engaged in leasing the properties for aperiod of 12 years, and thatthe yearly gross rentals of the said properties from 1945 to 1948 ranged from PhP9,599.00 to PhP17,453.00. Thus, they are subject to the tax provided in Section 193 (q) of our National Internal RevenueCode, forreal estate dealers, inasmuch as, pursuant to Section 194 (s) thereof:

Real estate dealers include any person engaged in the business of buying, selling, exchanging, leasing,or renting property of his own account as principal and holding himself out as full ro part-time dealer inreal estate or as an owner of rental property or properties rented or offered to rent for an aggregateamount of three thousand pesos or more a year. * * *

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