notice binding on the principal, even when in fact the principal never became awarethereof. Air France v. Therelationsofanagenttohisprincipal arefduciaryandinregardtothepropertyforming the subject matter of the agency, he is estopped from acquiring or asserting a titleadverse to that of the principal.Severino v. Severino, 44 Phil. 343 !"#3$.%y reason of the personal, representative and derivative nature of agency, agency ise&tinguished by the death of the principal or agent. Rallos v. Felix Go Chan & Sons RealtyCorp., '! ()*+ #,! !"-'$.+ contract of agency is generally revocable as it is a personal contract of representationbased on trust and confdence reposed by the principal on his agent. +s the power of theagent to act depends on the will and license of the principal he represents, the power oftheagent ceases whenthe will or permission is withdrawn by theprincipal. Thus,generally, the agency may be revoed by the principal at !ill.Republic v. "vangelista, 4..()*+ ,44 #//,$.0n an agency, the principal1s personality is e&tended through the facility of the agent2the agent, by legal fction, becomes the principal, authori3ed to perform all acts which thelatter would have him do. (uch a relationship can only be e4ected with the consent of theprincipal, which must not, in any way, becompelledby lawor by any court. The+greement itself between the parties states that 5either party may terminate the+greement without cause by giving the other 3/ days1 notice by letter, telegram or cable.6Orient Air Services v. Court of Appeals, 197 SCRA 645 (1991).!5. Distinguished from Other Similr Contr!ts". #rom $m%lo&ment Contr!tThe relationship between the corporation which owns and operates a theatre, and theindividual it hires as a security guard to maintain the peace and order at the entrance ofthe theatre is not that of principal and agent, because the principle of representation wasinnoway involved.Thesecurity guard wasnot employed torepresentthe defendantcorporation in its dealings with third parties7 he was a mere employee hired to perform acertainspecifcdutyortas8, thatofactingasspecial guardandstayingatthemainentranceof themoviehousetostopgatecrashersandtomaintainpeaceandorderwithin the premises.#ela Cru$ v. %orthern Theatrical "nterprises, ", Phil -3" !",4$.%ut to set the record straight, the concept of a single person having the dual role ofagentandemployeewhiledoingthesametas8isanovel oneinourjurisprudence,which must be viewed with caution especially when it is de'oid of n& (uris%rudentilsu%%ort or %re!edent. +ll these, read without any clear understanding of fne legaldistinctions, appear to spea8 of control by the insurance company over its agents. Theyare, however, controls aimed only at specifc results in underta8ing an insurance agency,andare, infact, parameters set by lawindefninganinsuranceagency andtheattendant duties and responsibilities an insurance agent must observe and underta8e.They do not reach the level of control into the means and manner of doing an assignedtas8 that invariably characteri3es an employment relationship as defned by labor law.!Litonjua, Jr. v. Eternit Corp., 490 SCRA 204 (2006).Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., 64) SCRA *95(+)11).,. #rom Contr!t for-ie!e.of./or0Ta8ing into consideration the facts that the operator owed his position to the companyand the latter could remove him or terminate his services at will7 that the service stationbelonged to the company and bore its tradename and the operator sold only the productsof the company7 that the equipment used by the operator belonged to the company andwerejust loanedtotheoperator andthecompanytoo8chargeof their repair andmaintenance7 that an employee of the company supervised the operator and conductedperiodic inspection of the company9s gasoline and service station7 that the price of theproducts sold by the operator was f&ed by the company and not by the operator7 andthat he was a mere agent, the fnding of the )ourt of +ppeals that the operator was anagent of the company and not an independent contractor should not be disturbed. Shellv. Firemen&s 'ns. Co., !// Phil -,- !",-$.!. #rom 1ro0er The question as to what constitutes a sale so as to entitle a real estate bro8er to hiscommissions is e&tensively annotated in the case of (unney vs. )ealey :ebras8a$ . . . 44;aw *ep. +nn. ,"3 5Thebusinessof areal estatebro8er or agent, generally, isonlytofndapurchaser, andthesettledruleasstatedbythecourtsisthat, intheabsenceof ane&press contract between bro8er and his principal, the implication generally is that thebro8er becomes entitled to the usual commissions whenever he brings to his principal aparty who is able and willing to ta8e the property and enter into a valid contract upon theterms then named by the principal, although the particulars may be arranged and thematter negotiatedandcompletedbetweentheprincipal andthepurchaser directly.6*acondray & Co. v. Sellner, 33 Phil. 3-/ !"!.$.5Thedutiesandliabilityofabro8ertohisemployerareessentiallythosewhichanagent owes to his principal. )onsequently, the decisive legal provisions on determiningwhether a bro8er is mandated to give to the employer the propina or gift received fromthe buyer would be +rticles !'"! and !"/" of the )ivil )ode.6 ?et the facts did indicateclearly that the real estate bro8er was appointed as an e&clusive agent.$ o!ingo v.o!ingo, 4+ SCRA 1*1 (1971).@here the purported agent was orally given authority to 5follow up6 the purchase ofthe fre truc8 with the municipalgovernment, there is no authority to sellnor has thepurported agent been empowered to ma8e a sale for and in behalf of the seller.Guardexv. %(RC, !"! ()*+ 4'- !""/$.@henthetermsoftheagencyarrangementistothee4ectthatentitlementtothecommission was contingent on the purchase by a customer of a fre truc8, the implicitconditionbeingthat theagentwouldearnthecommissionif hewasinstrumental inbringing the sale about. (ince the agent had nothing to do with the sale of the fre truc8,and is not therefore entitled to any commission at all. Guardex v. %(RC, !"! ()*+ 4'-!""/$.+ broeris one who is engaged,forothers,on a commission,negotiating contractsrelative to property with the custody of which he has no concern7 the negotiator betweenthe other parties, never acting in his own name but in the name of those who employedhim. Aisoccupationistobringthepartiestogether, inmatterof trade, commerceornavigation.Sch!i" an" O#erl$, Inc. v. %&L Martine', 166 SCRA 49* (1922).+nagent receives a commission upon the successful conclusion of a sale. Bn the other hand,a broerearns his pay merely by bringing the buyer and the seller together, even if nosale is eventually made.Tan v. (ullas, *9* SCRA **4 (+))+).0nrelationthereto, wehaveheldthat theterm5procuringcause6indescribingabro8er1s activity, refers to a cause originating a series of events which, without brea8 intheir continuity, result in the accomplishment of the prime objective of the employmentof the bro8er2producing a purchaser ready, willing and able to buy on the owner1s terms.To be regarded as the 5procuring cause6 of a sale as to be entitled to a commission, abro8er1s e4orts must have been the foundation on which the negotiations resulting in asale began. Me"rano v. Court of Appeals, 45+ SCRA 77 (+))5).#+ realestate bro8er is one who negotiates the sale of realproperties. Ais business,generally spea8ing, is only to fnd a purchaser who is willing to buy the land upon termsf&ed by the owner. Ae has no authority to bind the principal by signing a contract of sale.0ndeed, an authority to fnd a purchaser of real property does not include an authority tosell. Liton)ua, &r. v. *ternit Corp., 49) SCRA +)4 (+))6).(ince bro8erage relationship is necessary a contract for the employment of an agent,principles of contract law also govern the bro8erCprincipal relationship. xAbacus SecuritiesCorp. v. Ampil, 4'3 ()*+ 3!, #//.$.)ontrary tothe appellatecourt9s conclusion,this arrangementshowsanagency.+nagent receives a commission upon the successful conclusion of a sale. Bn the other hand,a bro8er earns his pay merely by bringing the buyer and the seller together, even if nosale is eventually made. +biter , the issue !as !hether it !as an independentdistributoro- .*/carsinthe0hilippines$x)ahnv. Courto- Appeals, #..()*+,3-!""-$.d. #rom Sle@hen the terms of the agreement compels the purported agent to pay for the productsreceived from the purported principal within the stipulated period, even when there hasbeen no sale thereof to the public, the underlying relationship is not one of contract ofagency to sell, but one of actual sale. + real agent does not assume personalresponsibility for the payment of the price of the object of the agency7 his obligation ismerely to turnCover to the principal the proceeds of the sale once he receives them fromthe buyer. )onsequently, since the underlying agreement is not an agency agreement, itcannot be revo8ed e&cept for cause.1uiroga v. 0arsons, 3' Phil ,/# !"!'$.@hen under the agreement the purported agent becomes responsible for any changesin the acquisition cost of the object he has been authori3ed to purchase from a supplier inthe Dnited (tates, the underlying agreement is not an contract of agency to buy, since atrue agent does not bear any ris8 relating to the subject matter or the price. %eing acontract of saleandnot agency, anyprofts reali3edbythepurportedagent fromdiscounts receivedfromthe+mericansupplier pertainedtoit withnoobligationtoaccount for it, much less to turn it over, to the purported principal.Gon$alo 0uyat v. Arco,-# Phil. 4/# !"4!$.#Reiterated in 0hil. )ealth2care 0roviders 3*axicare4 v. "strada, ,4# ()*+ .!. #//'$. ThedistinctionsbetweenasaleandanagencyarenotdiEculttodiscernandthis)ourt, as early as !"-/, had already formulated the guidelines that would aid indi4erentiating the two #$ contracts. < that the primordial di4erentiating considerationbetweenthetwo#$ contractsisthetransferof ownershiportitleoverthepropertysubject of the contract. 0n an agency, the principal retains ownership and control over theproperty and the agent merely acts on the principal9s behalf and under his instructions infurtherance of the objectives for which the agency was established. Bn the other hand,the contract is clearly a sale if the parties intended that the delivery of the property wille4ect a relinquishment of title, control and ownership in such a way that the recipientmay do with the property as he pleases. Spouses 5iloria v. Continental Airlines, 'nc., F.*.:o. !''#''.!. Ganuary#/!#.33. #OR4S A5D 635DS O# A7$5C8 1. 9o: Agen!& 4& 1e Constituted (Art. 1269)Therearesomeprovisionsof lawwhichrequirecertainformalitiesfor particularcontracts= thefrstiswhentheformisrequiredforthevalidityof thecontract7 thesecond is when it is required to ma8e the contract e4ective as against third parties7 andthe third is when the form is required for the purpose of proving the e&istence of thecontract. + contract of agency to sell on commission basis does not belong to any ofthese three categories, hence it is valid and enforceable in whatever form in may beenteredinto. )onsequently, whentheagent signsher signatureonanyfaceof thereceipt showing that she receives the jewelry for her to sell on commission, she is boundto the obligations of an agent. The e&act position of the agent1s signature in the receiptin this case near the description of the goods and not on top of her printed name$ isimmaterial. (im v. Court o- Appeals, #,4 ()*+ !-/ !"".$.. #rom Side of the -rin!i%l (Art. 1269)@hen the buyersCa2retrofailed for severalyears to clear their title to the propertypurchased and allowed the sellerCa2retroto remain in possession in spite of thee&pirationof theperiodof redemption, thenthee&ecutionof thememorandumofrepurchase by the buyers1 sonCinClaw, which stood unrepudiated for many years,constituted an implied agency under +rticle !'." of the )ivil )ode, from their silence orlac8 of action, or their failure to repudiate the agency.Conde v. Court o- Appeals, !!"()*+ #4, !"'#$.@here the principal has acquiesced in the act of his agent for a long period of time,and has received and appropriated to his own use the benefts result in from the acts ofhis agent, courts should be slow in declaring the acts of the agent null and void.(inan v.0uno, 3! Phil. #," !"!,$.,. #rom Side of the Agent (Arts. 127), 1271 nd 127+)!. #rom Side of ;hird -rtiesnless AuthoriJed (Art.1491H+I) The prohibition against agents purchasing property in their hands for sale ormanagement is, however, clearly, not absolute. @hen so authori3ed by the principal,the agent is not disqualifed from purchasing the property he holds under a contract ofagency to sell. +laguer v. 0urugganan, 8r., ,!, ()*+ 4./ #//-$.(6) ;o ?ese Rel -ro%ert& for 4ore ;hn One 8er+rticle !'-' of the )ivil )ode e&presses that a special power of attorney isnecessary to lease any realproperty to another person for more than one year. Theleaseof real propertyfor morethanoneyear isconsiderednot merelyanact ofadministrationbut anact of strict dominionor of ownership. +special power ofattorney is thus necessary for its e&ecution through an agent.Shopper3s Para"ise%ealt$ v. %o4ue, 419 SCRA 9* (+))4).@here the lease contract involves the lease of realproperty for a period of morethan one year, and it was entered into by the agent of the lessor and not the lessorherself, in such a case, +rticle !'-' of the )ivil )ode requires that the agent be armedwith a special power of attorney to lease the premises. )onsequently, the provisions ofthe contract of lease, including the grant therein of an option to purchase to the lessee,would be unenforceable. ."a. e Chua v. IAC, ++9 SCRA 99 (1994).@hen the attorneyCinCfact was empowered by his principal to ma8e an assignmentof credits, rights, and interests, in payment of debts for professional serviced rendered3AF Realty & Dev., Inc. v. Dieselman Freigt Services Co., 3 SCRA +, (2002); Firme v. !u"al Enterprises an# Dev. Corp., 414 SCRA 190 (200).by laws, and the hiring of lawyers to ta8e charge of any actions necessary or e&pedientfor the interests of his principal, and to defend suits brought against the principal, suchpowers necessarilyimplies theauthoritytopayfor theprofessional services thusengaged, whichincludesassignment of thejudgment securedfor theprincipal insettlement of outstanding professional fees.*unicipal Council o- 'loilo v. "vangelista,,, Phil. #"/ !"3/$.(7) ;o Crete or Con'e& Rel Rights o'er 3mmo',le -ro%ert&5There is no documentary evidence on record that the respondentsCownersspecifcally authori3ed respondent Hernande3 to sell their properties to another,including the petitioners.+rticle !'-' of the :ew)ivil )ode providesthat aspecialpower of attorney is necessary to enter into any contract by which the ownership of animmovable is transmitted or acquired either gratuitously or for a valuableconsideration, or to create or convey real rights over immovable property, or for anyother act of strict dominion. +ny sale of real property by one purporting to be the agentof the registered owner without any authority therefore in writing from the said ownerisnull andvoid. Thedeclarationsof theagent alonearegenerallyinsuEcient toestablish the fact or e&tent of her authority.6 Liton)ua v. -ernan"e', 4+7 SCRA472, 49* (+))4).(2) ;o 40e 7ifts(9) ;o ?on or 1orro: 4one&$B!e%t"The agent may borrow money when it s urgent and indispensable for thepreservation of the things which are under administration. -o:er to Sell $B!ludes -o:er to 4ortgge nd .ice .ersa (Art. 1279)+ special power of attorney is necessary for an agent to borrow money, unless itbeurgentandindispensablefor thepreservationof thethingswhichareunderadministration. :asuma v. )eirs o- Cecilio S. #e 5illa, 4"" ()*+ 4.. #//.$.40t is a generalrule in the law agency that, in order to bind the principalby amortgage on real property e&ecuted by an agent, it must upon its face purport to bemade, signed and sealed in the name of the principal, otherwise, it willbind theagent only. Go$un v. *ercado ,!! ()*+ 3/, #//.$.+ power of attorney, li8e any other instrument, is to be construed according tothenatural import of its language7 andtheauthority whichtheprincipal hasconferred upon his agent is not to be e&tended by implication beyond the naturaland ordinary signifcance of the terms in which that authority has been given. Theattorney has only such authority as the principal has chosen to confer upon him,and one dealing with him must ascertain at his own ris8 whether his acts will bindtheprincipal. Thus, wherethepower of attorneywhichvestedtheagent withauthority 5for me and in my name to sign, sealand e&ecute, and as my act anddeed, delivery any lease, any other deed for conveying any real or personalproperty6 or 5any other deed for the conveying of any real or personal property,6 itdoes not carry with it or imply that the agent for and on behalf of his principal hasthepower toe&ecuteapromissorynoteor amortgagetosecureitspayment.%ational .an v. Tan +ng S$e, ,3 Phil. 4,! !"#"$.4$o%un v. &erca#o ,11 SCRA 0, (2006).@here the power of attorney e&ecuted by the principal authori3ed the agent 5%ymeans of a mortgage of my real property, to borrow and lend sums in cash, at suchinterest and for such periods and conditions as he may deem property and to collector to pay the principal and interest thereon when due,6 while it did not authori3e theagent to e&ecute deeds of sale with right of repurchase over the property of theprincipal, nonetheless would validate the main contract of loan entered into with thedeed of sale with right of repurchase constituting merely an equitable mortgage,both contracts of which were within the scope of authority of the agent to enter intointhenameof theprincipal.Rodrigue$v. 0amintuanand#e8esus, 3-Phil '-.!"!'$.+ special power of attorney to mortgage real estate is limited to such authorityto mortgage and does not bind the grantor personally to other obligationscontracted by the grantee in this case the personal loan obtained by the agent inhis own name from the P:%$ in the absence of any ratifcation or other similar actthat would estop the grantor from questioning or disowning such other obligationscontractedbythegrantee.0hilippine%ational .anv. Sta. *aria, #"()*+3/3!"."$. 0notherwords, thepowertomortgagedoesnotincludethepowertoobtainloans, especially when the grantors allege that they had no beneft at all from theproceeds of the loan ta8en by the agent in his own name from the ban8. 50t is notunusual infamilyandbusinesscirclesthat onewouldallowhispropertyor anundivided share in real estate to be mortgaged by another as security, either as anaccommodation or for valuable consideration, but the grant of such authority doesnot e&tend to assuming personal liability, much less solidary liability, for any loansecured by the grantee in the absence of e&press authority so given by the grantor.60hilippine %ational .an v. Sta. *aria, #" ()*+ 3/3, 3!/ !"."$.@here the power of attorney given to the husband by the wife was limited to agrant of authority to mortgage a parcel of land titled in the wife1s name, the wifemay not be heldliableforthepayment ofthemortgage debt contracted bythehusband, astheauthoritytomortgagedoesnot carrywithit theauthoritytocontract obligation. #e 5illa v. Fabricante, !/, Phil. .-# !","$.(1)) ;o 1ind the -rin!i%l to Render Some Ser'i!e /ithout Com%enstion(11) ;o 1ind the -rin!i%l inContr!t of -rtnershi%(1+) ;o O,ligte the -rin!i%l s7urntor or Suret&@here a power of attorney is e&ecuted primarily to enable the attorneyCinCfact, asmanagerof amercantilebusiness, toconductitsa4airsforandonbehalf of theprincipal, who is the owner of the business, and to this end the attorneyCinCfact isauthori3ed to e&ecute contracts relating to the principal1s property N5act and deeddelivery, any lease, or any other deedfor theconveyingany real or personalproperty6 and 5act and deed delivery, any lease, release, bargain, sale, assignment,conveyance or assurance, or any other deed for the conveying any real or personalproperty6O , such power will not be interpreted as giving the attorneyCinCfact power tobind the principal by a contract of independent guaranty or surety unconnected withthe conduct of the mercantile business. Feneral words contained in such power willnot be interpreted to e&tend power to the ma8ing of a contract of suretyship, but willbelimited, under thewellC8nowruleof constructionindicatedinthee&press ine9usdemgeneris, asapplyingtomatterssimilar tothoseparticularlymentioned.#irector v. Sing 8uco, ,3 Phil #/, !"#"$.(1*) ;o A!!e%t or Re%udite n 3nheritn!e(14) ;o Rtif& or Re!ogniJe O,ligtions Contr!ted 1efore the Agen!&@here it appears that a wife gave her husband a power of attorney 5to loan andborrowmoney6andtomortgageherproperty, thatfactdoesnotcarrywithitorimply that he has a legal right to sign her name to a promissory note which wouldma8e her liable for the payment of a preCe&isting debt of the husband or that of hisfrm, for which she was not previously liable, or to mortgage her property to securethe preCe&isting debt. .an o- 0.'. v. #e Coster, 4- Phil ,"4 !"#,$.@here the terms of the power granted to the substituted attorneyCinCfact was totheendthattheprincipalCsellermaybeabletocollectthebalanceofthesellingprice of the printing establishment sold, such substitute agent had no power to enterinto new sales arrangements with the buyer, or to novate the terms of the originalsale. 5illa v. Garcia .os6ue, 4" Phil !#. !"#.$.e. 5otriJed -o:er of Attorne&+ notari3ed power of attorney carries with it the evidentiary weight conferred uponit with respect to its due e&ectuion. 5elso v. Court o- Appeals, #./ ()*+ ,"3 !"".$.@henthedocument under scrutinyisaspecial power of attorneythat isdulynotari3ed, the notarial ac8nowledgment is prima -acie evidence of the fact of its duee&ecution2a buyer has every reason to rely on a person1s authority to sell a particularproperty owned by a corporationon thebasis of a notari3ed board resolution2undeniably the buyer is an innocent purchaser for value in good faith.St. *ary&s Farm,'nc. v. 0rima Real 0roperties, 'nc., ,./ ()*+ -/4 #//'$.333.-O/$R A5D O1?37A;3O5S O# ;9$ A7$5; 1. 7enerl O,ligtion of Agent /ho A!!e%ts the Agen!& (Art. 1224). >%on A!!e%tn!e of A%%ointment" Agent 3s 1ound to Crr& on Agen!& to 3tsCom%letion nd for the 1eneKt of -rin!i%lO;9$R/3S$ =Agent /ill 1e ?i,le for Dmges :hi!h ;hrough 9is 5on.-erformn!e the -rin!i%l 4& SuCer Dmges,.3n$'entofDethof-rin!i%l"Agent4ust#inish1usinessAlred&1egunShould Del& $ntil An& Dnger50T S**" Art. 1919(*) . Deth $BtinguishesAgen!&$0n construing the original version of +rticle !''4 +rticle !-!' of the old )ivil )ode$, the(upreme )ourt held that the burden is on the person who see8s to ma8e an agent liable toshow that the losses and damage caused were occasioned by the fault or negligence oftheagent7 mereallegationwithout substantiationis not enoughtoma8etheagentpersonally liable. )eredia v. Salina, !/ Phil !,- !"/'$.@here the holder of an e&clusive and irrevocable power of attorney to ma8ecollections, failed to collect the sums due to the principal and thereby allowed the allottedfunds to be e&hausted by other creditors, such agent was adjudged to have failed to actwiththecareof agoodfather of afamilyrequiredunder +rticle!''-andbecamepersonally liable for the damages which the principal may su4er through his nonCperformance. 0%. v. *anila Surety, !4 ()*+ --. !".,$.@heretheprevailingstatutoryrulethenwas+rticle#.-of the)odeof )ommercewhich declared that no agent shall purchase for himself or for another that which he hasbeen ordered to sell, the )ourt held that a sale by a bro8er to himself without the consentof theprincipal wouldbevoidandine4ectual whether thebro8er hasbeenguiltyoffraudulent conduct or not. )onsequently, suchbro8er is not entitledtoreceiveanycommissionunderthecontract, muchlessanyreimbursementof e&pensesincurredinpursuing and closing such sales. The same prohibition is now contained in +rticle !4"!!$of the )ivil )ode. .arton v. (eyte Asphalt, 4. Phil "3' !"#4$.@henthefnancecompanye&ecutesamortgagecontractthatcontainsaprovisionthat in the event of accident or loss, it shall ma8e a proper claim against the insurancecompany, wasine4ect anagencyrelation, andthat under +rticle!''4, thefnancecompanywasboundbyitsacceptancetocarryout theagency, andinspiteof theinstructions of the borrowers to ma8e such claims instead insisted on having the vehiclerepaired but eventually resulting in loss of the insurance coverage, the fnance companyhadbreachedits dutyof diligence, andmust assumethedamages su4eredbytheborrowers, and consequently can no longer collect on the balance of the mortgage loansecured thereby. 5A -inance v. Court of Appeals, +)1 SCRA 157 (1991).ThewellCsettledruleisthatanagentisalsoresponsibleforanynegligenceintheperformance of its function +rt. !"/"$ and is liable for the damages which the principalmaysu4erbyreasonof itsnegligentact. +rt. !''4$.5ritishAir,a$sv.CourtofAppeals, +25 SCRA 45) (1992).+. O,ligtion of Agent /ho De!lines Agen!& (Art. 1225).3f 7oods Are #or:rded to 9im"Bbserve diligence of a good father of a family incustody and preservation of goods until new agent appointed,. Com%re :ith Art. 19+9 R Bbligation of an agent who withdraws form an agency R hemust continue to act until principal ta8es necessary steps to meet situation*. 7enerl Rule on $Ber!ise of -o:er. Agent 4ust A!t @/ithin the S!o%e of 9is Authorit&A (Art. 1221)(1) Meaning of 6Perfor!ance 7ithin the Scope of Authorit$8 (Art. 19)))(+) 1e Ma$ Perfor! Acts Con"ucive to Acco!plish!ent of Agenc$ PurposeDnder +rticle !''! of the )ivil )ode, the agent must act within the scope of hisauthoritytobindhisprincipal. (olongastheagent hasauthority, e&pressorimplied, the principal is bound by the acts of the agent on his behalf, whether or notthe third person dealing with the agent believes that the agent has actual authority.Thus, all signatoriesinacontract shouldbeclothedwithauthoritytobindtheparties they represent. Sargasso Construction & #evelopment Corporation>0ic &Shovel, 'nc.,>Atlantic "rectors, 'nc. 38oint 5enture4 v. 0hilippine 0orts Authority, .#3()*+ #./ #/!/$.+rticle !''! of the )ivil )ode provides that Sthe agent must act within the scopeof hisauthority.S Pursuant totheauthoritygivenbytheprincipal, theagent isgranted the right Sto a4ect the legal relations of his principal by the performance ofacts e4ectuated in accordance with the principal9s manifestation of consent.SPaci9c %ehouse Corp. v. *I5 Securities, Inc., 6** SCRA +14 (+)1)).,. Com%re :ith Art. 1227 R Agent 4ust #ollo: 3nstru!tions of the -rin!i%l!.Authorit&of Agent5otDeemed$B!eeded3f-erformedin4nner4oreAd'ntgeous to -rin!i%l (Art. 122+)(1)Com%re"Agent Shoul" /ot Act If It 7oul" Manifestl$ %esult in Loss ora!age to Principal (Art. 1222).+rticle!''#ofthe)ivil )odeprovidesthatthelimitsofanagent1sauthorityshall not beconsiderede&ceededshouldit havebeenperformedinamanneradvantageous to the principal than that specifed by him. +laguer v. 0urugganan, 8r.,,!, ()*+ 4./ #//-$.The admissions obtained by the agent from the adverse party prior to the formalamendment of the complaint that included the principal as a party to the suit, canbeavailedof bytheprincipal 5sinceanagent maydosuchacts as maybeconducive to the accomplishment of the purpose of the agency, admissions securedby the agent within the scope of the agency ought to favor the principal. This has tobe the rule, for the act or declarations of an agent of the party within the scope ofthe agency and during its e&istence are considered and treated in turn asdeclarations, acts and representations of his principal and may be given in evidenceagainst such party6 .ay 5ie! )otel v. 7er & Co., !!. ()*+ 3#- !"'#$.d. $Ce!ts of 5on.RtiKedA!ts Done ,& Agent in$B!ess of 9is Authorit&">nenfor!e,le, 5ot Foid (Arts. 1*17, 14)*, nd 1292)@hen money is received as a deposit by an agent, and that money is turned over bytheagent totheprincipal, withnoticethat it isthemoneyof thedepositor, theprincipal is bound to deliver to the depositor, even if his agent was not authori3ed toreceive such deposit. NThere has, in e4ect, ratifcation of the unauthori3ed act of theagent, thereby binding the principalO. Cason v. Ricards, , Phil .3" !"/.$.@hentheadministrator entersintoacontract that areoutsideof thescopeofauthority, thecontract wouldnevertheless not beanabsolutenullity, but simplyvoidableNunenforceableO at theinstanceof theparties whohadbeenimproperlyrepresented, and only such parties can assert the nullity of said contracts as to them.?ayco v. Serra, 4" Phil "', !"#,$.Dnder +rticle !'"' of the :ew )ivil )ode, the acts of an agent beyond the scope ofhis authority do not bind the principal, unless the latter ratifes the same e&pressly orimpliedly.Hurthermore,when the third person. .. 8nows that the agent wasactingbeyond his power or authority, the principal cannot be held liable for the acts of theagent. 0f the said third person is aware of the limits of the authority, he is to blame, andisnot entitledtorecover damagesfromtheagent, unlessthelatter undertoo8tosecure the principal1s ratifcation.Cervantes v. Court of Appeals, *)4 SCRA +5(1999)7 Sa@c Alcan v. 'mperial 5egetable, 3,, ()*+ ,," #//!$.Kven when the agent, in this case the attorneyCatClaw who represented the client inforgingacompromiseagreement, has e&ceededhis authorityininsertingpenaltyclause, the status of the said clause is not void but merely voidable,i.e.,capable ofbeing ratifed. 0ndeed, the client1s failure to question the inclusion of the penalty in thejudicial compromise despite several opportunities to do so and with the representationof newcounsel, wastantamount toratifcation. Aence, theclient isstoppedfromassailing the validity thereof.5or)a, Sr. v. Sul$ap, Inc., *99 SCRA 6)1 (+))*).)ontracts entered into in the name of another person by one who has been given noauthority or legal representation or who has acted beyond his powers are classifed asunauthori3edcontractsandareunenforceable, unlesstheyareratifed.(o'unv.Merca"o 511 SCRA *)5 (+))6).e. ConseGuen!es /hen Agent A!ts in 9is O:n 5me (Art. 122*)(1)Principal 1as/o%ightAgainstThir"PersonIfAgentActsin1isO,n/a!e+rticle !-!- of the NoldO )ivil )ode provides that 5@hen an agent acts in his ownname, the principal shall have no action against the persons with whom the agenthas contracted, nor the said persons against the principal.6 +rticle #4. of the )odeof )ommerce provides that 5@hen an agent transacts business in his own name, itshall not be necessary for him to state who is the principal, and he shall be directlyliable as if the business were for his own account, to the persons with whom hetransacts the same, said person not having any right of action against the principal,nor thelatteragainst the former,the liabilitiesof theprincipal andtheagent toeachother always reserved.6 0t beingestablishedby apreponderanceof theevidence that the agent acted in his own name in selling the merchandise to thedefendants, and that the defendants fully believed that they were dealing with thesaidagent, without any8nowledgeof thefact that hewas theagent of theplainti4s, and having paid him in full for the merchandise purchased, they are notliable to the plainti4s, for said merchandise. This is true whether the transaction iscovered by the provisions o- the )ivil )ode or by the provisions of the )ommercial)ode. (im Tiu v. Rui$ & Rementeria, !, Phil. 3.-, 3-/ !"!/$.@hen an agent acts in his own name, the principal has no right of action againstthepersonswithwhomtheagent hascontracted, or suchpersonsagainst theprincipal. 0n such case, the agent is directly liable to the person with whom he hascontracted, as if the transactions were his own.Smith .ell v. Sotelo *atti, 44 Phil.'-4 !"##$.Kven when the agent has a special power of attorney to mortgage the property ofthe principal, when such agent nevertheless e&ecuted the real estate mortgage inhisownname, thenitisnotvalidandbindingontheprincipal pursuanttotheprovisions of +rticle !''3 of the )ivil )ode.0hilippine Sugar "states #ev. Corp. v.0oi$at, 4' Phil. ,3. !"#,$7 Rural .an o- .ombon v. Court o- Appeals, #!# ()*+ #,!""#$.Dnder +rticle!''3of the)ivil )ode, if anagent actsinhisownname, theprincipal hasnoright of actionagainst thepersonswithwhomtheagent hascontracted7 neither have such persons against the principal. 0n such case the agentis the one directly bound in favor of the person with whom he has contracted, as ifthe transaction were his own, e&cept when the contract involves things belonging tothe principal. (ince the principals have caused their agent to enter into a charterparty in his own name and without disclosing that he acts for any principal, thensuch principals have no standing to sue upon any issue or cause of action arisingfrom said charter party. *arimperio Compania %aviera, S.A. v. Court o- Appeals, !,.()*+ 3.' !"'-$.(+)Agent Is irectl$ 5oun" to Thir" Person as If the Transaction 7ere 1isO,n@hen the agent e&ecutes a contract in his personal capacity, the fact that he isdescribed in the contract as the agent of the principal and the properties mortgagedpertain to the principal, may not be ta8en to mean that he enters into the contractin the name of the principal. + mortgage on real property of the principal not madeand signed in the name of the principalis not valid as to the principal. %ational.an v. 0alma Gil, ,, Phil. .3" !"3!$7 %ational .an v. Agudelo, ,' Phil .,, !"33$.+partywhosigns abill of e&changeas anagent as thePresident of thecompany$, but failedtodisclosehisprincipal becomespersonallyliablefor thedrafts he accepted, even when he did so e&pressly as an agent. (ection #/ of the:egotiable 0nstruments ;aw says provides e&pressly that when an agent signs in anrepresentative capacity, but does not indicate or disclose his principal would incurpersonal liability on the bill of e&change.0hil. .an o- Commerce v. Aruego, !/#()*+ ,3/ !"'!$.$LC$-;3O5 "/hen Contr!t 3n'ol'es ;hings 1elonging to -rin!i%lKven when the agent has written authority to convey real property on behalf ofthe principal, nevertheless when the deed of sale was e&ecuted by the agent in herown name without showing the capacity in which she acted, although the act wasdoubtless irregular, the deed operated to bind the principal who had authori3ed thesale. 8imene$ v. Rabot, 3' Phil. 3-' !"!'$.@here the plainti4s appointed the defendant to purchase a vessel and giving himmoney for that purpose, but the agent purchased the boat and placed it in his ownname, he has breached his fduciary obligation and is obliged to transfer the sameto the plainti4s,or the plainti4shave a right to be subrogated.+ccordingtothee&ceptionunder +rt. !-!-of theold)ivil )odewhenthingsbelongingtotheprincipal are dealt with$the agent is bound to the principal although he does notassumethecharacter o- suchagent andappearsactinginhiso!nname. Themoneywithwhichthelaunchwas bought havingcomefromtheplainti4, thee&ception established in +rt. !-!- is applicable to the instant case. (y28uco v. Sy28uco, 4/ Phil. .34 !"#/$.@here a coCowner transfers the entirety of the mining claim to the buyer, wherethebuyer 8newthat itincludedtheoneChalf sharepro2indivisoof theother coCowner, thenthetransactionmaybeconsideredasonewherethedisposingcoCowner acted as agent of the other coCowner. )onsequently, under +rticle !''3 ofthe )ivil )ode, such other coCowner may sue the person with whom the agent dealtwith in his agent1s$ own name, when the transaction involves things belong to theprincipal. Goldstar v. (im, #, ()*+ ,"- !".'$.@hen acommissionagententers into ashipping contract inhis own name totransport the grains of :H+ on a vessel owned by a shipping company, :H+ cannotclaim it is not liable to the shipping company under +rticle !''3 when things belongto the principal are dealt with, the agent is bound to the principal although he doesnot assume the character of such agent and appears acting in his own name. 0nother words, the agent1 apparent representation yields to the principal1s truerepresentation and that, in reality and in e4ect, the contract must be considered asentered into between the principal and the third person )orollarily, if the principalcan be obliged to perform his duties under the contract, then it can also demand theenforcement of its rights arising from the contract.%ational Food Authority v. 'AC,!'4 ()*+ !.. !""/$.(*) Provisions Are 7ithout Pre)u"ice to Actions 5et,een Principal an" Agent:See "iscussions #elo, on #reach #$ agent of his "ut$ of lo$alt$I4. S%e!iK! O,ligtion Rules for Agents. 5o O,ligtion of Agent to Ad'n!e #unds (Art. 1226)" It isPrincipal3so#ligationtoa"vancethefun"s, #ut Principal topa$interestona"vances!a"e#$Agentfro!"a$hea"vancesthe!one$(Art. 191+).$LC$-; " (1) 3f Sti%ulted in the Agen!& Agreement(+) /here %rin!i%lisinsol'ent (SeeArt.1919H*I" 3nsol'en!&eBtinguishes n gen!&),.AgentShouldCrr&OutAgen!& inA!!ordn!e :ith -rin!i%lMs3nstru!tions(Art. 1227)(1) 3f gent follo:ed instru!tions, %rin!i%l !nnot set u% gentMs ignorn!e or !ir!umstn!e :hi!h %rin!i%l :s, or ought to h'e ,een, :re of Art.1299$Pursuant to the instructions of the principals, the agent purchased a piece of land intheir names and in the sums given to him by the principal, and that after the fact ofpurchase the principals had ratifed the transaction and even received profts arisingfrom the investment in the land, but that eventually a defect in the title to the landarose, the said principals cannot recover their lost investment from the agent. 5There isnothingintherecordwhichwouldindicatethat thedefendant failedtoe&ercisereasonable care and diligence in the performance of his duty as such agent, or that heundertoo8toguaranteethevendor1stitletothelandpurchasedbydirectionoftheplainti4s.6%epomuceno v. )eredia, - Phil ,.3, ,.. !"/-$.@hen an agent in e&ecuting the orders and commissions of his principal carries outtheinstructionshehasreceivedfromhisprincipal, anddoesnot appear tohavee&ceeded his authority or to have acted with negligence, deceit or fraud, he cannot beheld responsible for the failure of his principal to accomplish the object of the agency.Agents, although they act in representation o- the principal, are not guarantors -or thesuccess o- the business enterprise they are ased to manage.Guiterre$ )ermanos v.+ria )ermanos, 3/ Phil. 4"! !"!,$.!. O,ligtion 5ot Crr& Out Agen!& 3f $Be!ution /ould 4nifestl& Result in ?ossor Dmge to -rin!i%l (Art. 1222)@hile it is true that an agent who acts for a revealed principal in the ma8ing of acontract does not become personally bound to the other party in the sense that anaction can ordinarily be maintained upon such contract directly against the agent, yetthat rule does not control when the agent cannot intercept and appropriate the thingwhichtheprincipal isboundtodeliver, andtherebyma8etheperformanceof theprincipal impossible. The agent in any event must be precluded from doing any positiveact that could prevent performance on the part of his principal, otherwise the agentbecomesliablealsoonthecontract.%ational .anv. /elshFairchild, 44Phil -'/!"#3$.d. D>;8 O# ?O8A?;8 " O,ligtion inConNi!t of 3nterest Sitution (Art. 1229) (1) Agent shll ,e li,le to the %rin!i%l for dmges sustined ,& the ltter:here in !se of !onNi!t of interest sitution, nd gent %referred his o:ninterest.(+) Agent %rohi,ited from ,u&ing %ro%ert& entrusted to him fordministrtion or sle :ithout %rin!i%lMs !onsent (Art. 1491H+I).+n agent cannot represent both himself and his principal in a transaction involvingthe shifting to another person of the agent1s liability for a debt to the principal.Aboiti$v. #e Silva, 4, Phil ''3 !"#4$.Thedirector andgeneral manager of thestoc8corporation, whoalsowas themajority stoc8holder, and was designated to be the main negotiator for the companywith the Fovernment for the sale of its large tract of land, having special 8nowledge ofcommercial information that would increase the value of the shares in relation to thesale of the parcels of land to the Fovernment, can be treated legally as being an agentof the stoc8holders of the company, with a fduciary obligation to reveal to the otherstoc8holders such specialinformation before proceeding to purchase from the otherstoc8holders their shares of stoc8. 0f such director obtains the purchase of the sharesof a stoc8holder without having disclosed important facts or to render the appropriatereport on the e&pected increase in value of the company, there was fraud committedfor which the director shall be liable for the earnings earned against the stoc8holder onthe sale of shares. Strong v. Guiterre$ Repide, 4! Phil. "4- !"/"$.+ confdentialemployee who, 8nowing that his principalwas negotiating with theowner of some land for the purchase thereof, surreptitiously succeeds in buying it inthenameof hiswife, commitsanact of disloyaltyandinfdelitytohisprincipal,wherebyhebecomesliable, amongother things, for thedamagescaused, whichmeant to transfer the property bac8 to the principal under the terms and conditionso4ered to the original owner.Sing 8uco and Sing .engco v. Sunyantong and (lorente,43 Phil ,'" !"##$.@here an uncle who was acting as agent or administrator of property belonging to aniece had procured a Torrens title in his own name to said property, he is deemed to bea trustee, and he must surrender the property to the niece and transfer title to her. Therelations of an agent to his principal are fduciary and in regard to the property formingthe subjectCmatter of the agency, he is estopped from acquiring or asserting a titleadverse to that of the principal. )onsequently, an action in personam will lie against anagent to compel him to return or retransfer to his principal, or the latter1s estate, thereal property committed to his custody as such agent andalso to e&ecutethenecessary documents of conveyance to e4ect such retransfer. Severino v. Severino, 44Phil. 343 !"#3$.e. Rule 3f Agent 3s $m%o:ered to 1orro: