Enrique C. Lopez, Demandante-Apelante, Contra Ernesto J. Seva, A. P. Seva Y Jorge L. Araneta, Demandados-Apelados

Summary

This 1940 Supreme Court case involved a dispute over liability for unauthorized stock transactions. Plaintiff Lopez delivered mining company shares to Ralph Worrell, believing him to be an authorized agent of The Negros-Manila Stock Mart brokerage owned by defendant Seva. Worrell sold the shares below the requested price and misappropriated the proceeds. The Court held that defendants were not liable because Worrell was never formally appointed as an agent in writing with the principal's approval as required by the power of attorney terms. The Court emphasized that those dealing with alleged agents assume the risk of verifying the agent's actual authority, and silent acquiescence by a sub-attorney to unauthorized acts does not create binding agency relationships. The decision reinforced strict compliance requirements for agency appointments and the principle that principals are only bound by acts within the mandate's express limits under Article 1727 of the Civil Code.