July 2009 Philippine Supreme Court Decisions on Civil Law

Contracts; agency. It is true that a person dealing with an agent is not authorized, under any circumstances, to trust blindly the agent’s statements as to the extent of his powers. Such person must not act negligently but must use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority. The settled rule is that persons dealing with an assumed agent are bound at their peril; and if they would hold the principal liable, they must ascertain not only the fact of agency, but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to prove it.  Soriamont Steamship Agencies, Inc., et al. vs. Sprint Transport Services, Inc. etc., G.R. No. 174610, July 14, 2009.

Contracts; compromise agreement. Compromise agreements are contracts, whereby the parties undertake reciprocal obligations to resolve their differences, thus, avoiding litigation, or put an end to one already commenced. As a contract, when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties; the terms are to be understood literally, just as they appear on the face of the contract. Considering that Caruff never intended to transfer the subject property to PMO, burdened by the generating set and sump pumps, respondent should remove them from the subject property.  Privatization Management Office vs. Legaspi Towers 300, Inc., G.R. No. 147957, July 22, 2009.

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