DANON V BRIMO & CO.Sept 12, 1921 | Johnson, J. | Appeal from CFI | Revocation; agency coupled with an interest

PETITIONER: Julio DanonRESPONDENTS: Antonio Brimo & Co.

SUMMARY: Danon acted as the broker for Brimo for the sale of the latter’s factory, to be paid a 5% commission should he successfully consumate a sale or find a willing buyer. He was not granted an exclusive agency, nor was there a period set. Eventually another broker was able to close the deal. Danon instituted an action for recovery of reasonable value for his services, and the TC granted this. SC reversed this since brokers were not entitled to their commissions if they had not contribute to the sale. DOCTRINE: Where no time for the continuance of the contract is fixed by its terms either party is at liberty to terminate it at will, subject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject to the right of the seller to sell independently. But having been granted him, the right of the principal to terminate his authority is absolute and unrestricted, except only that he may not do it in bad faith, and as a mere device to escape the payment of the broker's commissions. Thus, if in the midst of negotiations instituted by the broker, and which were plainly and evidently approaching success, the seller should revoke the authority of the broker, with the view of concluding the bargain without his aid, and avoiding the payment of commission about to be earned, it might be well said that the due performance his obligation by the broker was purposely prevented by the principal. But if the latter acts in good faith, not seeking to escape the payment of commissions, but moved fairly by a view of his own interest, he has the absolute right before a bargain is made while negotiations remain unsuccessful, before commissions are earned, to revoke the broker's authority, and the latter cannot thereafter claim compensation for a sale made by the principal, even though it be to a customer with whom the broker unsuccessfully negotiated, and even though, to some extent, the seller might justly be said to have availed himself of the fruits of the broker's labor.

FACTS:1. Plaintiff alleges that in August 1918, the defendant company, through its manager Brimo, employed him to look for a purchaser of its factory (Holland American Oil Co.) for the sum of P1,200,000; that the defendant promised to pay to the plaintiff, as compensation for his services, a commission of 5% on the said sum of P1,200,000, if the sale was consummated, or if the plaintiff should find a purchaser willing to buy; that subsequently the plaintiff found such a purchaser, but that the defendant refused to sell the said factory without any justifiable motive or reason therefor and without having previously notified the plaintiff of its desistance or variation in the price and terms of the sale.2. Apparently, another broker, Sellner, was also negotiating the sale, or trying to find a purchaser for the same property and that the plaintiff was informed of that fact. Also, there was no definite period fixed by the defendant within which the plaintiff might effect the sale of its factory. 3. Plaintiff Danon was able to contact Mr. Prieto (pres of Sta. Ana Oil Mill Corp.), who asked for an appointment with Brimo. Meanwhile, Sellner, the other broker, found a purchaser who paid P1,300,000. For that reason Mr. Prieto never came to see Mr. Brimo to perfect the proposed negotiation.4. Plaintiff instituted an action for recovery of reasonable value for his services. TC ruled in his favor and ordered Brimo to pay his P60k commission.

ISSUE/S: WON plaintiff was entitled to his commission – NORULING: Judgment appealed from revoked, defendant resolved from liability.

RATIO:1. Plaintiff had not performed all that was required of him under that contract to entitle him to recover the commission agreed upon. He had found a person who might have bought the defendant's

factory if the defendant had not sold it to someone else. The evidence does not show that the Santa Ana Oil Mill had definitely decided to buy the property at P1,200,000. The board of directors of said corporation had not resolved to purchase said property.2. Plaintiff’s services did not entitle him to recover the sum of P50,000 since his "services" did not in any way contribute towards bringing about the sale of the factory in question. He was not "the efficient agent or the procuring cause of the sale."3. The broker must be the efficient agent or the procuring cause of the sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker.4. A broker is never entitled to commissions for unsuccessful efforts. The broker may devote his time and labor, and expend his money with ever so much of devotion to the interest of his employer, and yet if the fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions. He loses the labor and effort which was staked upon success. And in such event it matters not that after his failure, and the termination of his agency, what he has done proves of use and benefit to the principal.5. The limitation to the general rule is if the efforts of the broker are rendered a failure by the fault of the employer; if capriciously he changes his mind after the purchaser, ready and willing, and consenting to the prescribed terms, is produced; or if the latter declines to complete the contract because of some defect of title in the ownership of the seller, some unremoved incumbrance, some defect which is the fault of the latter, then the broker does not lose his commissions. But this limitation is not even an exception to the general rule affecting the broker's right for it goes on the ground that the broker has done his duty, that he has brought buyer and seller to an agreement, but that the contract is not consummated and fails though the after-fault of the seller.

DIOLOSA v. CAJuly 16, 1984 | Relova, J. | Petition for Certiorari | Revocation; Agency Coupled with an Interest

PETITIONER: Mariano Diolosa and Alegria Villanueva-DiolosaRESPONDENT: CA, Quirino Baterna (owner, proprietor of Quin Baterna Realty)

SUMMARY: Quirino Baterina was authorized to be the exclusive sales agent of the Spouses Diolosa to dispose of, sell, cede, transfer and convey the lots they own in the Villa Alegre Subdivision. Baterina’s services were terminated by the Spouses through a letter signed by the wife, Alegria. Baterina assails the termination as invalid since he had irrevocable rights to sell all the lots. CA ruled in favor of Baterina. SC sustained.

DOCTRINE: The agency agreement as a valid contract may only be rescinded on the ground specified in Art 1381 and 1382.

FACTS:1. June 20, 1968: Baterina, a licensed real estate broker, and the Spouses Diolosa, entered into an agreement1 wherein Baterina would serve as the spouses’ exclusive sales agent, its successors, heirs and assigns, to dispose of, sell, cede, transfer and convey the lots they own in the Villa Alegre Subdivision. 2. Sept 27, 1968: the Spouses Diolosa, through a letter signed by Mrs. Diolosa, terminated the services of Baterina as their exclusive sales agent citing the reservation of the unsold lots for their grandchildren.2 3. Baterina contends that: (a) under the terms of the contract he had irrevocable authority to sell all the lots included in the Villa Alegre Subdivision and to act as exclusive sales agent of the Spouses Diolosa until all the lots shall have been disposed of; and (b) the rescission of the contract contravenes the agreement of the parties.4. Spouses’ defense: they were within their legal right to terminate the agency on the ground that they needed the undisposed lots for the use of the family; and Baterina has no right in law to case for commission on lots that they have not sold.5. CA: The spouses could not terminate the agency agreement without paying damages. Mrs. Diolosa’s intention to reserve some

lots for her own family use cannot prevail over the clear terms of the agency agreement. The same is not a legal reason to terminate the agency agreement.  

ISSUE: WON the agency agreement was validly terminated – NO

RULING: Petition DISMISSED without pronouncement as to costs.

RATIO:1. Baterina is allowed under the agreement "to dispose of, sell, cede, transfer and convey ... until all the subject property as subdivided is fully disposed of." The authority to sell is not extinguished until all the lots have been disposed of.2. The agency agreement as a valid contract may only be rescinded on the ground specified in Art 1381 and 1382.3 3. In the case at bar, not one of the grounds under Art 1381 or 1382 is present which may be the subject of an action of rescission. The Spouses can’t say that the Baterina violated the terms of their agreement-such as failure to deliver to them the proceeds of the purchase price of the lots.

1 That the PARTY OF THE FIRST PART is the lawful and absolute owner in fee simple of VILLA ALEGRE SUBDIVISION situated in the District of Mandurriao, Iloilo City, which parcel of land is more particularly described as follows, to wit:

A parcel of land, Lot No. 2110-b-2-C, PSD 74002, Transfer Certificate of Title No. T_____ situated in the District of Mandurriao, Iloilo, Philippines, containing an area of 39016 square meters, more or less, with improvements thereon.

That the PARTY OF THE FIRST PART by virtue of these presents, to enhance the sale of the lots of the above-described subdivision, is engaging as their EXCLUSIVE SALES AGENT the PARTY OF THE SECOND PART, its successors, heirs and assigns to dispose of, sell, cede, transfer and convey the above-described property in whatever manner and nature the PARTY OF THE SECOND PART, with the concurrence of the PARTY OF THE FIRST PART, may deem wise and proper under the premises, whether it be in cash or installment basis, until all the subject property as subdivided is fully disposed of.2 Dear Mr. Baterna:

Please be informed that we have finally decided to reserve the remaining unsold lots, as of this date of our VILLA ALEGRE Subdivision for our grandchildren.

In view thereof, notice is hereby served upon you to the effect that our agreement dated June 20, 1968 giving you the authority to sell as exclusive sales agent of our subdivision is hereby rescinded.

Please be duly guided.

Very truly yours,ALEGRIA V. DIOLOSASubdivision Owner3 ART. 1381. The following contracts are rescissible:(1) Those which are entered in to by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof;(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number;(3) Those undertaken in fraud of creditors when the latter cannot in any other name collect the claims due them;(4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority;(5) All other contracts specially declared by law to be subject to rescission.ART. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible.

LUSTAN v. CAJanuary 27, 1997 | FRANCISCO, J. | Petition for Certiorari | Revocation; agency coupled with an interest

PETITIONER: ADORACION LUSTAN

RESPONDENT: CA, NICOLAS PARANGAN and SOLEDAD PARANGAN, PHILIPPINE NATIONAL BANK

SUMMARY: Adoracion Lustan leased her parcel of land to Nicolas Parangan for 10 years. During such lease, Parangan regularly extended loans to her. An SpoA was executed by Lustan in favor of Parangan for an agricultural loan with PNB with the lot as collateral. A second SPoA was then executed by virtue of which Parangan was able to obtain 4 additional loans. However, the last 3 loans were without the knowledge of Lustan. A Deed of Pacto de Retro Sale was subsequently signed by Lustan, but it was eventually superseded by a Deed of Definite Sale which Lustan signed upon Parangan's representation that the same merely evidences the loans he extended to her. Lustan eventually demanded the return of her certificate of title, but instead of complying with the request, Parangan asserted his rights over the property which allegedly had become his by virtue of the Deed of Definite Sale. The SC held that the deed was in reality an equitable mortgage so it still belonged to Lustan. However, the lot is still liable to the loans contracted by Parangan from PNB because they were obtained by virtue of the SPoA.

DOCTRINE: Held: Lustan totally failed to consider that said SPoAs are a continuing one and absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect as against third persons who had no knowledge of such lack of authority. | "Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof."

FACTS:Adoracion Lustan is the registered owner of a parcel of land which he leased to Nicolas Parangan for a term of ten (10) years and an annual rent of P1,000. During the period of lease, Parangan was regularly extending loans in small amounts to Lustan to defray her daily expenses and to finance her daughter's education.

In 1970, Lustan executed a Special Power of Attorney (SPoA) in favor of Parangan to secure an agricultural loan from PNB with the aforesaid lot as collateral. In 1972, a second SPoA was executed by Lustan, by virtue of which, Parangan was able to secure 4 additional loans, to wit: the sums of P24,000.00, P38,000.00, P38,600.00 and P25,000.00. The last three loans were without the knowledge of Lustan and all the proceeds therefrom were used by Parangan for his own benefit. These encumbrances were duly annotated on the certificate of title. In 1973, Lustan signed a Deed of Pacto de Retro Sale in favor of Parangan which was superseded by the Deed of Definite Sale dated May 4, 1979 which Lustan signed upon Parangan's representation that the same merely evidences the loans extended by him unto the former.

For fear that her property might be prejudiced by the continued borrowing of Parangan, Lustan demanded the return of her certificate of title. Instead of complying with the request, Parangan asserted his rights over the property which allegedly had become his by virtue of the Deed of Definite Sale. Under said document, Lustan conveyed the property and all the improvements thereon unto Parangan absolutely for and in consideration of P75,000.00.

Aggrieved, Lustan filed an action for cancellation of liens, quieting of title, recovery of possession and damages against Parangan and PNB with the RTC Iloilo City which ruled in her favor. The RTC held that the deed of definite sale is in reality an equitable mortgage. However, the CA reversed said decision on appeal.

ISSUES: 1. WON the Deed of Definite Sale is in reality an equitable mortgage. – YES 2. WON Lustan's property is liable to PNB for the loans contracted

by Parangan by virtue of the SpoA. - YES

RATIO: 1. The Deed of Definite Sale is in reality an equitable mortgage as it was shown beyond doubt that the intention of the parties was one of a loan secured by Lustan's land.

A contract of sale is perfected by mere consent (meeting of minds upon the thing which is the object of the contract and upon the price). The meeting of the minds speaks of the intent of the parties in entering into the contract respecting the subject matter and the consideration thereof. If the words of the contract appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. In the case at bench, the evidence is sufficient to warrant a finding that Lustan and Parangan merely intended to consolidate the former's indebtedness to the latter in a single instrument and to secure the same with the subject property. Even when a document appears on its face to be a sale, the owner of the property may prove that the contract is really a loan with mortgage by raising as an issue the fact that the document does not express the true intent of the parties and prove such allegation through parol evidence. If proven, the court will enforce the agreement or understanding in consonance with the true intent of the parties at the time of the execution of the contract.

For a presumption of an equitable mortgage to arise, two requisites must be satisfied, namely: that the parties entered into a contract denominated as a contract of sale and that their intention was to secure an existing debt by way of mortgage. Art. 1602(6), in relation to Art 1604 provides that a contract of sale is presumed to be an equitable mortgage in any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. That the case clearly falls under this category can be inferred from the circumstances surrounding the transaction as herein set forth:

Lustan had no knowledge that the contract she signed is a deed of sale. The contents of the same were not read nor explained to her

so that she may intelligibly formulate in her mind the consequences of her conduct and the nature of the rights she was ceding in favor of Parangan. She is illiterate and her condition constrained her to merely rely on Parangan's assurance that the contract only evidences her indebtedness to the latter. When one of the contracting parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former. To our mind, this burden has not been satisfactorily discharged.

We do not find the testimony of Parangan and Delia Cabial that the contract was duly read and explained to Lustan worthy of credit. The assessment by the trial court of the credibility of witnesses is entitled to great respect and weight for having had the opportunity of observing the conduct and demeanor of the witnesses while testifying. There are noted major contradictions between the testimonies of Cabial and Judge Lebaquin, who notarized the purported Deed of Definite Sale. While the former testified that receipts were presented before Judge Lebaquin, who in turn made an accounting to determine the price of the land, the latter categorically denied the allegation. This contradiction casts doubt on the credibility of Cabial as it is ostensible that her version of the story is concocted.

On the other hand, Lustan's witness Celso Pamplona, testified that the contract was not read nor explained to Lustan. This witness gave a more accurate account of the circumstances surrounding the transaction. He has no motive to prevaricate or concoct a story as he witnessed the execution of the document at the behest of Parangan himself who, at the outset, informed him that he will witness a document consolidating Lustan's debts. Furthermore, we note the absence of any question propounded to Judge Lebaquin to establish that the deed of sale was read and explained by him to Lustan.

2. Third persons who are not parties to a loan may secure the latter by pledging or mortgaging their own property. So long as valid consent was given, the fact that the loans were solely for the benefit of Parangan would not invalidate the mortgage with respect to Lustan's property. In consenting thereto, even granting that Lustan may not be assuming personal liability for the debt, her property shall nevertheless secure and respond for the performance of the principal obligation. It is admitted that Lustan is the owner of the

parcel of land mortgaged to PNB on five (5) occasions by virtue of the SPoA executed by Lustan in favor of Parangan. Lustan argues that the last three mortgages were void for lack of authority. She totally failed to consider that said SPoAs are a continuing one and absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect as against third persons who had no knowledge of such lack of authority.

"Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof."

The SPoA executed by Lustan in favor of Parangan duly authorized the latter to represent and act on behalf of the former. Having done so, Lustan clothed Parangan with authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the last three loans were without the express authority of Lustan, it cannot be prejudiced thereby.

As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such is within the terms of the power of attorney as written even if the agent has in fact exceeded the limits of his authority according to the understanding between the principal and the agent. The SpoA particularly provides that the same is good not only for the principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument and a copy of which is furnished to PNB.

Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. The mortgage directly and immediately subjects the property upon which it is imposed. The property of third persons which has been expressly mortgaged to guarantee an obligation to which the said persons are foreign, is directly and jointly liable for the fulfillment thereof; it is therefore subject to execution and sale for the purpose of paying the amount of the debt for which it is liable. However, Lustan has an unquestionable right to demand proportional indemnification from Parangan with respect to the sum paid to PNB from the proceeds of the sale of her property in case the same is sold to satisfy the unpaid debts.

DY BUNCIO v ONG GUAN CANOctober 2, 1934 | Hull, J. | Appeal against CFI judgment | Extinguishment – Revocation; Agency coupled w/ interest

FACTS:1. 1920 – The Principal (Ong Guan Can,) executed a GPA

(General Power of Attorney; “The 1920 GPA”) in favor of the Agent (Ong Guan Can, Jr.)

2. May 23, 1928 – The Principal executed a power of attorney in favor of the Agent. (Case did not provide the contents though, but the Court eventually found it to be a limited one

by DBCI as judgment creditor since the 1931 Deed was invalid.

6. Juan Tong and Pua Giok Eng appeal, claiming as owner and lessee, respectively, based on the 1931 Deed.

ISSUES:1. (Topical) WON the execution of the previous GPA (1920) cured

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PLAINTIFF-APPELLEE: Dy Buncio & Company, Inc. (DBCI)DEFENDANTS: Ong Guan Can (proprietor of Ong Guan Can & Sons, “OGCS,” which owns a rice-mill and camarin in Dao, Capiz,) et al.APPELLANTS: Juan Tong and Pua Giok Eng

SUMMARY: This case originates from a suit by DBCI against Ong Guan Can (the Principal.) The Principal executed a GPA in favor of the Agent (Ong Guan Can, Jr.) in 1920. In 1928, the Principal executed a power of attorney (which the SC eventually held to be a limited one) in favor of the same Agent. In 1931, the Agent sold the Principal’s rice-mill and camarin to Juan Tong based on the 1928 Power of Attorney. DBCI eventually sued the Principal and obtained a favorable judgment from the CFI, which held the 1931 Sale to be invalid, paving the way for subjecting the properties to the execution levied by DBCI. The alleged new owner (Tong) and his lessee (Eng) appealed the CFI’s judgment. SC held that the sale was invalid since the second power of attorney was limited and did not expressly authorize the Agent to alienate the properties, and that the second power of attorney’s lack of express authority to sell the properties was not cured by the first GPA.

DOCTRINE: In case of inconsistency between 2 powers of attorney, the making and accepting of the newer one supplants and revokes the previous one, regardless of whether the newer one enlarges or decreases the Agent's powers under the previous one. (Implied by the SC to be called Partial Termination of Agency.)

enlarges or decreases an agent’s powers under the previous one. (Court did not state its basis though.)A) Then-Art. 1732 (now 1919) of the Old Civil Code is silent

on the effects of a partial termination of an agency.B) If the new appointment w/ limited powers does not revoke

the general power of attorney, executing the second power of attorney would merely be a futile gesture.

2. The Agent’s sale was invalid because his power of attorney was limited and did not give the express power to alienate the rice-mill and camarin.A) On its face, the power of attorney referred to in the 1931

Deed is a limited one not giving the express power to alienate the rice-mill and camarin.

B) The power of attorney was not a general one. 3. The Principal’s title did not pass so the properties are subject to

attachment and execution.

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Garcia v ManzanoFebruary 4, 1919 | Moir, J. | Appeal | Agency coupled with an interest (actually more on revocation of agency and requisites of a valid power of

attorney)

PLAINTIFF-APPELLEE: Juan Garcia PalicioDEFENDANT-APPELLANT:Josefa de Manzano

SUMMARY: Narciso Manzano owned half an interest in a steamship. He gave a power of attorney first to his son then subsequently to his wife as regards the management of this share. His son, Angel, sold the share to Garcia. Garcia loaned the Manzanos money with a mortgage on their real properties. During the foreclosure suit, the wife filed a counterclaim against Garcia for the return of the share which was sold to him by Angel using two contentions: 1. The son had no power to alienate the object of the power of attorney and 2. The wife’s power of attorney revoked the authority given to the son hence he had no power to alienate the half interest. The court held that the power authorizing the sale of real property includes the power to alienate an interest in a ship. Also, notice was required to the son in order that he may know that this power was revoked and a new one was issued to another person.

DOCTRINES:The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article.

The power does not expressly state that the agent may sell the boat, but a power so full and complete authoring the sale of real property, must necessarily carry with it the right to sell a half interest in a small boat.

FACTS:Narciso Lopez Manzano was a merchant in Atimonan, Tayabas, who went to Spain and died there. Before leaving, he gave a general power-of-attorney to his son, Angel L. Manzano and a second general power-of-attorney to his wife, Josefa Samson, a few months after.

Narciso L. Manzano had various commercial dealings before leaving for Spain. One of these was the interest in a steamboat. He owned half of it while the other half was owned by Ocejo and Co and both operated the steamer on a partnership agreement for a term. When the term expired, Ocejo refused to continue the contract and demanded Manzano buy his interest or sell his own. Manzano didn’t want to sell his interest nor buy Ocejo’s share. Juan Garcia instead bought Ocejo’s share.

Contentious issue: Angel L. Manzano, acting under his power-of-attorney, sold Narciso’s share to Garcia, but as Garcia is a Spaniard and could not register the boat in his name, the boat was registered in the name of Agustin Garcia, a son of the plaintiff, who at that time, was a minor about twenty years old. Agustin Garcia shortly thereafter died, leaving Juan and his wife as his heirs at law.

Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso L. Manzano, executed a contract, Exhibit A, made a part of the complaint, by which Juan Garcia agreed to extend a credit to Narciso L. Manzano in the sum of P12,000, and this credit was used by the house of Manzano. To secure it a mortgage was given in the same document on three parcels of land in Atimonan, with their improvements. The registration of this mortgage was refused by the registrar.

The CFI of Tayabas, named Josefa Samson y San Pedro, administratrix of the property of Narciso L. Manzano, the principal who died in Spain.The court ordered the partition of the property amongst the heirs of Narciso L. Manzano.

Juan Garcia filed his action to foreclose the so-called mortgage in Exhibit A.

Josefa de Manzano, the administratrix, countered the foreclosure suit by filing a pleading stating:

1.that the estate had already been divided; 2. that the property mentioned in Exhibit A of the plaintiff had been assigned, to her and her children3. that her son Angel had ceded his share to her; 4. that all the other children were minors and suggesting that she be made guardian ad litem for the minors.

Plaintiff filed an amended complaint based on the stipulation made by the parties wherein Manzano’s children were impleaded together with their guardian. He also prayed for the amount of Php 14,000 for the amount of the loan secured by the mortgage and the foreclosure of the properties in the event of non-payment.

The defendants denied the efficacy and legal effect of the mortgage document; they also denied the jurisdiction of the court to hear and decide the case, and alleged that the action had prescribed.

The defendants also filed a counter-claim against Juan Garcia as regards the alienation of Manzano’s share in the steamship. Issue which caused the problem: They claimed that Garcia used fraud in making the younger Manzano believe that he had the right to alienate his father’s share in the steamer when in fact it was beyond the scope of the power of attorney.

The trial court held that there was no legal mortgage and made Josefa liable for the loan of Php 12,000. Hence this appeal by Josefa.

Issues: 1. WON the power of attorney given to the wife (Josefa) revoked the one given to the son (Angel)?

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2. WON the power of attorney, even if valid, didn’t authorize the sale of the half interest in the steamship?

1. Article 1735 of the Civil code is as follows:

The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article.

There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his mother.

It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that the son had notice of the second power-of-attorney. They have not done so, and it must be considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half interest was legally inherited by the plaintiffs.

2. The document under which Angel L. Manzano sold the boat reads in part as follows:

To enable him to buy or sell, absolutely or under pacto de retro, any of the rural or urban estates that now own and may acquire in the future, at such price as he may deem most advantageous, which he shall collect in cash or by installments and under such conditions as he may consider proper, and he shall set forth the encumbrances on the properties and their origin. I bind myself to warrant and defend, in accordance with law, the titles to such properties; and if the properties alienated by this agreement should be redeemed, he is empowered to redeem them by paying the price that may have been fixed, and, for this purpose, shall execute the proper instrument.

The power-of-attorney authorizes the sale of real property, the buying of real property and mortgaging the same the borrowing of money and in fact is general and complete.

The power does not expressly state that the agent may sell the boat, but a power so full and complete authoring the sale of real property, must necessarily carry with it the right to sell a half interest in a small boat. The record further shows the sale was necessary in order to get money or a credit without which it would be impossible to continue the business which was being conducted in the name of Narciso L. Manzano and for his benefit.

We consider that the authorization is so complete that it carries with it full authority to sell the one-half interest in the boat which was then owned by Narciso L. Manzano.

Separate Opinions (unrelated to the topic of agency)TORRES, J., dissenting:The undersigned is of the opinion that the defendant Josefa Samson, widow of the late Narciso Lopez Manzano, should be obliged to pay one-half of the sum stated in her letter of September 10, 1913, with interest at the rate of 6 per cent per annum from January 10, 1917, the date on which the amended complaint was filed.

It is contended that the conjugal partnership property is directly liable for the payment of the debts of such partnerships and that in order to determine what this property is, in case of the death of one of the spouses, it is indispensable that a liquidation be made of the property that may have been left by the deceased husband or wife, for the purpose of classifying and separating in the estate the private property of each spouse and such property as partakes of the nature of community property.

The record shows that, not only was the liquidation made, but also that the partition of the estate left by Narciso Lopez Manzano at his death, had already been effected, so that it appears duly determined what property as community property would have pertained to the widow, Josefa Samson; and, as it is a proven fact, and one not discussed, that, on the death of the husband Manzano, the dissolved conjugal partnership was in debt to the plaintiff in the sum of P12, 752.85. Under this premise it is unquestionable that the window Samson, the surviving member of that partnership, should be obliged to pay one-half of this sum, that is P6,376.425, for it would not be right for her to enrich herself by keeping possession of this amount, to the prejudice of the plaintiff creditor.

Although, on the death of the husband, the property of the conjugal partnership was in a mass and pro indiviso, after the liquidation and partition of this property had been made, the widow, a member of the dissolved partnership, received her share of the community property, and it would not be just that, for the collection of one-half of the debt, for which she is liable, the creditor should be force to subject himself to and observe the proceedings prescribed for the collection of the amount owing him, from the testate or intestate estate of the deceased debtor.

We abstain in this opinion from an examination of the right which the plaintiff creditor may have had to collect the debt owing him from the estate of the deceased debtor, and we restrict our opinion solely to the debt which the defendant Josefa Samson, on her part, had the obligation to pay, not in her capacity of administratrix, but in that of widow member of the partnership, the property of which is directly liable for the debts contracted by her; and if the defendant Samson, as lawful owner of one-half of the community property, was entitled to receive it, and in fact did receive it, nothing could be more just than that she should, in turn, be compelled to pay, out of the property she received, the one-half of the debts for which part thereof she is liable.

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CMS Logging v DR Aguinaldo CorporationJuly 10, 1992 | Nocon, J. | Petition for Certiorari | Revocation of Agency

PETITIONER: CMS Logging IncRESPONDENT: CA and DR AGUINALDO CORPORATION

SUMMARY: CMS had appointed DRACOR as its exclusive agent to sell logs produced by CMS to firms in Japan. Prior to the expiration of the 5 year period, CMS heard that DRACOR had employed a Japanese firm SHINKO to sell logs in Japan; thinking DRACOR had misapplied gross sales of CMS to pay Shinko’s commission, CMS chose to sell to Japanese firms directly six months before the agency contract’s period had expired. DRACOR claims it is entitled to amounts it has retained as its commission prior to expiration of the agency period. The Court ordered DRACOR to remit these amounts. A principal may revoke an agency at will, whether expressly or impliedly, even before the period has expired. In this case, the fact that CMS sold logs directly to several Japanese firms constitutes an implied revocation of the contract of agency.

DOCTRINE: NCC 1924: The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.

FACTS:1. CMS LOGGING, a forest concessionaire, appointed DRACOR (exporting and selling lumber) as its export an dsales agent for all logs produced by CMS for a period of 5 years: DRACOR was to exclusively handle all negotiations of export sales of CMS with buyers, and to receive a 5% commission of gross sales based on invoice values, to be deducted from proceeds of money received by DRACOR on CMS’ behalf.2. From Sept 1957 – April 1942, CMS through DRACOR sold over 77 million board feet of logs in Japan. However, 6 months before expiration of the agreement, Sison, CMS’ president, learned while he was on a trip to Tokyo that DRACOR had used SHINKO TRADING CO as an agent in selling CMS’ logs in Japan, and that Shinko had allegedly earned $1 per 1k board feet, thus collecting $77, 264 from CMS’ sales.3. CMS claimed said commission to Shinko was inviolation of the agency agreement, and that since DRACOR had already been paid 5% commission, it was no longer entitled to the additional commission paid to Shinko. CMS then sold logs directly to Japan without DRACOR’s help, and sued DRACOR and Shinko for damages. DRACOR counter-claimed for commission.4. The Trial Court dismissed CMS’ complaint: it seems DRACOR paid Shinko’s commission out of its own 5% commission and not out of CMS’ gross sales. CA affirmed the dismissal on the finding that Shinko collected commission from BUYERS of CMS’ logs, and not from CMS’ gross sales. 5. Hence this appeal by CMS.

ISSUE/S:4. WON Shinko received commissions from CMS’ gross sales.

NO.5. [TOPIC] WON DRACOR is entitled ot commission from sales

made by CMS directly to Japanese firms.– NO.

RULING: CA affirmed: no proof that Shinko earned separate commissions, but DRACOR has no right to retain the amounts as commission from sales by CMS directly to Japanese firms. DRACOR ordered to remit the same.

RATIO:1. [Minor] Findings of the CA are conclusive: no evidence proved that Shinko received amount as commission arising from sale of CMS logs to Japanese firms; the evidence produced by CMS was purely heresay (i.e. statements that Atty Dominguez, CMS’ legal counsel, heard from Shinko’s President that Shink had received said commission. DRACOR explicitly denied record or knowledge of payment of commission by Tokyo Menka to Shinko. Even if Shinko had received questione commissions, the letters presented in evidence were mere statements that Tokyo Menka, a buyer of logs, had paid Shinko for services thus the amounts received by Shinko were paid by buyers and not out of CMS’ gross sales.2. [MAIN] a principal may revoke agency at will, whether expressly or impliedly, even if the period has not yet expired. The principal has absolute right to revoke agency, and the agent cannot object, nor claim damages, unless revocation was in order to evade payment for commission. 3. Although CMS appointed DRACOR as agent for sale of logs to Japanese firms, DRACOR admitted that CMS had later sold logs directly to several Japanese firms: this constituted an IMPLIED REVOCATION OF THE CONTRACT OF AGENCY. 4. NCC 1924: the agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. 5. a contractor who, after executing powers of attorney in favor of aother, emowering the latter to collect amounts due to him from the government, but thereafter demands and collects from the government money he entrusted to the attorney’s in fact, constitutes a revocation of agency. (New Manila Lumber Co. v Republic of the Ph)6. AS APPLIED: the contract of agency was revoked when CMS sold directly to Japanese firms, without the intervention of DRACOR; for suchs sales, DRACOR no longer entitle to commission nor entitled to retain money received a commission from said transactions. DRACOR is likewise not entitled to damages since this case does not fall under the exceptions provided in the Civil Code, such as evasion of payment.7. However, CMS likewise not entitled to damages,since there is no sign that DRACOR committed acts of bad faith.

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REPUBLIC v. EVANGELISTAAugust 11, 2005 | PUNO, J. | Revocation; agency coupled with an interest

PETITIONER: REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM (Chief of the Intelligence Service, AFP, and former Commanding General, Presidential Security Group), and MAJ. DAVID B. DICIANO (ISAFP Officer and former PSG member)RESPONDENT: HON. VICTORINO EVANGELISTA (Presiding Judge, RTC QC), DANTE LEGASPI

SUMMARY: After filing for damages against petitioners for entering his land to hunt for treasure, Legaspi executed an SPA granting Gutierrez the power to manage the treasure hunting activities on his land and file cases against anyone who enters his land without authority, engage a lawyer, and dig for treasure. Gutierrez shall also be entitled to 40% of whatever treasure may be found in the land. Petitioners contend that there is no real party-in-interest because Legaspi thereafter revoked the SPA via a Deed of Revocation. SC held that said revocation had no effect because the agency granted to Gutierrez is coupled with interest.

DOCTRINE: GR: A contract of agency is generally revocable. It is a personal contract of representation based on trust and confidence reposed by the principal on his agent. As his power to act depends on the will of the principal he represents, his power ceases when the will or permission is withdrawn by the principal.EXCEPTION: When it is coupled with interest,i.e., if a bilateral contract depends upon the agency. When an agency is constituted as a clause in a bilateral contract, that is, when the agency is inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal.

FACTS:1. Legaspi filed a complaint for damages with injunction against

petitioners alleging that:a. Legaspi owns land in Norzagaray, Bulacanb. Gen. Calimlim entered into a MOA with Reyes, granting

Reyes a permit to hunt for treasure in said landc. Reyes and petitioners started digging works in said landd. Calimlim assigned 80 military personnel to guard the area

to intimidate Legaspi from going near the land2. Legaspi executed a SPA giving his nephew, Gutierrez, the

power to deal with the treasure hunting activities and file charges against those who may enter into the land. He agreed to give Gutierrez 40% of the treasure found.

3. Gutierrez filed for damages and injunction against petitioners for illegally entering into Legaspi’s land.

4. Gutierrez hired Atty. Adaza. As legal fees, Adaza shall be entitled to 30% of Legaspi’s share in the treasure found

5. Case was raffled to RTC QC presided by Evangelista.6. Petitioners filed a Motion to Dismiss contending

a. No real party-in-interest. Gutierrez’s SPA was revoked by Legaspi as evidenced by a Deed of Revocation

b. Gutierrez failed to establish that the alleged armed men were acting on the orders of petitioners

7. TC: Injunction granted on the ff. grounds:a. Urgent need to maintain the status quo to prevent serious

damage to Legaspi’s landb. SPA granted to Gutierrez continues to be valid

8. CA affirmed.9. Petitioners: SPA of Gutierrez has already been revoked.

Gutierrez: The unilateral revocation is invalid as his agency is coupled with interest

ISSUE: W/N the contract of agency between Legaspi and Gutierrez has been effectively revoked by Legaspi – NO

RATIO:1. GR: A contract of agency is generally revocable. REASON:

It is a personal contract of representation based on trust and confidence reposed by the principal on his agent. As the power of the agent to act depends on the will and license of the principal he represents, his power ceases when the will or permission is withdrawn by the principal.

2. EXCEPTION: When it is coupled with interest,i.e., if a bilateral contract depends upon the agency. REASON: the agency becomes part of another obligation or agreement. It is not solely the rights of the principal but also that of the agent and third persons which are affected.

3. AS APPLIED: The agency granted by Legaspi to Gutierrez is coupled with interest. A bilateral contract depends on it. Evidence:a. Gutierrez was given by Legaspi, inter alia, the power:

1. manage the treasure hunting activities in the land;2. file any case against anyone who enters the land

without authority from Legaspi;3. engage a lawyers to carry out the agency;4. dig for any treasure within the land and enter into

agreements relative thereto.b. It was also agreed upon that Gutierrez shall be entitled to

40% of whatever treasure may be found in the land. The treasure is the subject matter of the agency;

c. Under the SPA, Gutierrez can enter into contract for the legal services of Adaza; Thus Gutierrez and Adaza have an interest in the subject matter of the agency.

d. This bilateral contract depends on the agency and thus renders it as one coupled with interest, irrevocable at the sole will of the principal Legaspi

4. When an agency is constituted as a clause in a bilateral contract, that is, when the agency is inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal as the agency shall now follow the condition of the bilateral agreement.

5. Consequently, the Deed of Revocation executed by Legaspi has no effect. The authority of Gutierrez to file and continue with the prosecution of the case at bar is unaffected.

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BACALING v. MUYAApril 11, 2002 | De Leon Jr., J. | Petition for Review | Agency coupled with an interest

PETITIONER: Nelita Bacaling and Jose Juan TongRESPONDENT: Felomino Muya, Crispin Amor, Wilfredo Jereza, Rodolfo Lazarte and Nemesio Tonocante

SUMMARY: Petitioner was the owner of 3 parcels of land subdivided into 110 lots which were mortgaged to GSIS for a loan to be used in the development of the subdivision project. She later on sold these lands and executed an irrevocable SPA in favor of Tong for the purpose of transferring the property in the latter’s name. Respondents are allegedly the agricultural tenants of the petitioner who later on procured certificates of land transfer from DAR. Tong filed a petition to cancel the CLTs and in CA level, petitioner revoked the SPA and questioned the interest of Tong to file the case. Court held that the SPA could not be revoked at will because it is one coupled with an interest.

DOCTRINE: The fiduciary relationship inherent in contract of agency is replaced by a material consideration which prevents it revocation at will. Why? Because the agency was created for the mutual interest of the agent and the principal. The interest of the agent is not limited to the commission alone but it extends to the very subject matter of the agency.

FACTS:1. The Sps Nelita and Ramon Bacaling owned 3 parcels of land

with a total area of 9.96 hectares in Jaro, Iloilo City. The land was divided into 110 sub-lots for purposes of developing a low-cost residential community. It was processed and approved as residential or subdivision by National Urban Planning Commision (NUPC). A subdivision plan was approved by Bureau of Lands (BoL).

2. Because of this project, Nelita obtained a loan (P600,000) from GSIS to develop the land. However only P240,000 was released to them (court did not explain why). As security, she mortgaged the 110 sub-lots. Sps Bacaling failed to pay the amortizations of the loan and the mortgage was foreclosed in 1957. It was only in 1989 when the Bacalings were able to restore to herself the ownership of the said lots.

3. The respondents are allegedly tenant tillers of the Bacalings over the subject property wherein a sharing basis of 1.5 to 2.5 hectares for each of the respondents. This was later changed to an agricultural leasehold wherein they delivered rentals to the petitioner. In 1980, they secured certificates of land transfer (CLT) .

4. The city council also enacted an ordinance declaring the lots as residential and non-agricultural. The property was also registered with the National Housing Authority as the Bacaling-Moreno Subdivision.

5. In 1990, Sps Bacaling and Jose Tong entered into a contract of sale of the 110 sub-lots. The sale was done after the former was able to repurchase the property from GSIS (remember when GSIS foreclosed the security on the loan). To transfer title to Tong, an irrevocable SPA was issued appointing Tong as atty-in-fact. (authority includes: file, prosecute, terminate a case, enter into compromise agreement, hire lawyer etc)

6. However after 10 years from the sale, petitioner filed a complaint to nullify the contract of sale. The case was dismissed with prejudice and it became final and executory.

7. Under the strength of the SPA, Tong filed a petition with DAR Iloilo to cancel the CLT given to the respondents. DAR dismissed the petition and found that there was no legitimate conversion of the lots from agricultural to residential. This decision was appealed to Office of the President (OP) which reversed DAR in acknowledging the competence of NUPC and BoL to classify the lots.

8. This decision was appealed in CA via Rule 43. However before the case was decided, Nenita revoked the SPA, admitted that

the respondents were her tenants and that the land was agricultural in character. She then filed a motion to dismiss (MTD) and alleged that Tong lacked material interest in the controversy because of her manifestation. CA then reversed the decision of OP and upheld the respondents’ CLT. It did not rule on the manifestation of lack of material interest.

ISSUE/S:1. WON Tong has an interest in litigating this petition for review?

YES, the SPA could not be revoked because it is coupled with an interest.

2. WON the respondents are agricultural lessees? NO.3. WON the110 lots were agricultural or residential lots?

RESIDENTIAL.

RULING: CA decision reversed.

RATIO:On Tong’s interest in filing this petition

1. A real party in interest is the one who would be benefited or injured by the judgment. Tong has a material interest in the disposition of this case because of the transfer of the property to him by virtue of the contract of sale and SPA in his favor. He stands to be benefited or injured in the outcome of this case because he might lose his investment on the property.

2. Once a party adopts a certain theory in the lower court, he will not be permitted to change his theory upon appeal. Doing so would be unfair to the other party and contrary to the rules of fairplay, justice and due process. Her MTD is a belated attempt to divest Tong of his ownership rights over the property. (Note that she also filed a civil case for annulment of the sale but it was dismissed with prejudice) She also colluded with the respondents as evidenced by their coordinated legal maneuvers when respondents filed a similar manifestation in CA. (court did not expound on this and even the resps did not pursue this manifestation). The motion having dubious roots, character and purpose is not considered by the court.

On the validity of the revocation of SPA3. Bacaling could not revoke the SPA at will because it is one

coupled with an interest. The fiduciary relationship inherent in contract of agency is replaced by a material consideration which prevents it revocation at will. Why? Because the agency was created for the mutual interest of the agent and the

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principal. The interest of the agent is not limited to the commission alone but it extends to the very subject matter of the agency. As applied, SPA cannot be revoked unilaterally by Bacaling. It is also expressly stated that it is irrevocable and the purpose of which is to complete the performance of the contract of sale between the parties. (the subject matter of the agency) The mandate of the agency is to remove all clouds on the title of Bacaling, after which the title is to be transferred and delivered to Tong. The allegation of fraud in the performance of the contract cannot be given merit without proof of the same. Bacaling could not vest in herself the unilateral authority to rescind the contract.

On the issue of agricultural tenants4. The requirements to have a valid agricultural leasehold are:

(1) parties are the landowners and the tenant or agricultural lessee;

(2)subject matter is an agricultural land; (3) there is consent between the parties to the

relationship; (4) purpose is to bring about agricultural production; (5) personal culitcation on the part of the tenants; (6) harvest is shared between landowner and tenant.

As applied, requirements 3 and 6 are absent in this case. At the time the respondents entered into the property, the owner is GSIS by virtue of its foreclosure of the property in 1961 and upon the confirmation of the sale (to GSIS) in 1975. The date of confirmation of the sale retroacts to the date of actual sale (1961). The respondents alleged that GSIS cannot be considered as owner of the land in 1961 because the foreclosure proceedings attained finality only in 1989. However the court dismissed the argument because the mere pendency of an action is NOT maintenance of status quo, with Bacaling as owner. Note that what was appealed in the foreclosure proceedings was the issue of redemption in a judicial foreclosure proceeding after the confirmation of the public auction sale. The ownership of GSIS of the lots was never questioned. (CREDIT part) Since GSIS is not a banking institution and the foreclosure is JUDICIAL, then no right of redemption exists after the judicial confirmation of the pulic auction sale of the lots.

Therefore the respondents cannot claim that they are tenants of the land as their agreement was with Bacaling who was not the owner of the lots at the time of the agreement. (Again note that Bacaling consistently questioned their status as tenants except in the CA level) They cannot claim security of tenure and other rights accorded by agrarian laws.

On the issue of conversion of the lots to residential 5. The applicability of agrarian reform laws depends on NATURE

of the property. Lands not devoted to agricultural activity (i.e. residential, industrial, commercial) prior to agrarian reform law RA 6657 is excluded. PD 27 limits its applicability to lands primarily devoted to rice and corn. As applied, the property in question is NOT AGRICULTURAL LAND as it is classified by NUPC as residential and even approved the subdivision project. The city council of Iloilo recognized this classification when it passed a zoning ordinance. It was the intention of the spouses to use the property for the development of a subdivision as evidenced by the loan it obtained from GSIS. The project being too costly, they sold the same to Tong who was interested to pursue the same. The overt acts of the parties and the consistent official government act of recognizing the land as residential placed the property outside the scope of agricultural laws.

6. NUPC was created under EO 98 to prepare plans, zoning ordinances and subdivision regulations. It is duty-bound to act on realty projects for human settlements and not agricultural purposes. According to EO 98 approval of NUPC is mandatory for subdivisions of land for residential, commercial and industrial purposes. As applied, the approval of NUPC of the subdivision of the 3 parcels of land into 110 sub-lots in 1955 is a classification of the land for residential purposes which excluded it from the operation of PD 27 and RA 6657. Therefore the CLT that the respondents have is void. They do not have the right to be compensated for the disturbance of their possession of the lots nor are they entitled to reimbursement.

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COLEONGCO V CLAPAROLSMarch 31, 1964 | JBL Reyes, J. | Petition for Certiorari | Extinguishment of Agency > Revocation; agency coupled with an interest

PETITIONER: Vicente ColeongcoRESPONDENT: Eduardo Claparols

SUMMARY: Because of financial difficulties in his nail factory, Claparols entered into a financing agreement and a contract of agency with Coleongco. After a string of attempted sabotage aimed at acquiring the factory for himself, Coleongco was relieved from his duty as agent. A suit for breach of contract was filed by Coleongco against Claparols, arguing that the SPA was important to protect his interests in the financing agreement and therefore the agency cannot be revoked. The Court ruled that there was a valid revocation as there was just cause. The Court ruled that the revocation was proper since even if the contract was made irrevocable, he can still revoke it provided that there was just cause. Furthermore, the SPA cannot be used to shield the perpetration of acts in bad faith, breach of confidence or betrayal of trust by the agent.

DOCTRINE: For an agency coupled with an interest to exist, the agency must be essential to protecting the interest involved or that the interest must require the agency for it to be exercised.An agency, even if irrevocable, may be revoked for just cause, such as acts in bad faith, breach of confidence, or betrayal of trust.

FACTS:1. Eduardo Claparols operaded a nails factory that imported raw materials

from foreign sources. The marketing was handled by ABCD commercial, which was owned by Kho To. Due to losses suffered by his business, he sought the help of Kho To for financing but he was instead introduced to petitioner Coleongco. Claparols agreed, and on April 25 of that year a contract was perfected between them whereby Coleongco undertook to finance and put up the funds required for the importation of the nail wire, which Claparols bound himself to convert into nails at his plant.

2. In sum the terms of the contract would be as follows:

a. Coleongco would have exclusive distribution of the product, and absolute care in the marketing of the nails all over the country

b. Coleongco would share the control of the cash

c. He will be represented in the management

d. All contracts and transactions would be approved by the parties and books of accounts rendered

e. 50-50 share in profits and losses

3. Two days after the execution of the basic agreement, on April 27, 1953, Claparols executed in favor of Coleongco, at the latter's behest a special power of attorney to open and negotiate letters of credit, to sign contracts, bills of lading, invoices, and papers covering transactions; to represent appellee and the nail factory; and to accept payments and cash advances from dealers and distributors. Thereafter, Coleongco also became the assistant manager of the factory, and took over its business transactions, while Claparols devoted most of his time to the nail manufacture processes.

4. Claparols was later surprised to learn that an alias writ of execution was served on him to enforce a judgment obtained against him by the PNB. He then found out that Coleongco's correspondence with the PNB contained derogatory statements alleging that Claparols was not serious in meeting his obligations.

5. Claparols was fortunately able to manage his affairs with the bank. Angry at his agent's dishonesty, he revoked the SPA and demanded a full accounting. He later relieved Coleongco of his position as assistant manager after learning of his plan to sabotage the factory. An audit revealed that Coleongco had a debt of more than 80k to the company. To add insult to injury, Claparols found out that Coloeongco and Kho

To were in cahoots to take advantage of his financial difficulties and squeeze him out and take over his factory.

6. A suit for breach of contract was filed by Coleongco against Claparols, arguing that the SPA was important to protect his interests in the financing agreement and therefore the agency cannot be revoked.

ISSUE:WON the revocation is valid – YES.RULING: CA decision AFFIRMED.

RATIO:1. As to the power to revoke. Coleongco contended that the power of

attorney is to protect his interest in the financing agreement and that it was coupled with an interest that he had no power to revoke. The contention is wrong since the financing agreement already contained clauses that protected his interests and there was no need for an SPA. Even if the Court went with the assumption that the contract was made irrevocable (regardless WON the agency was coupled with interest), it may still be revoked provided that there was just cause in doing so such as when the attorney-in-fact betrays the interest of the principal, as happened in this case. See doctrine.

2. As to Coleongco’s acting in bad faith. In this case there was no question that Coleongco acted in bad faith in attempting to undermine the credit of Claparols and ultimately acquiring his factory. The facts prove that there were plain acts of deliberate sabotage (the letter to Kho, the attempt to pour acid, the diversion of funds) to that end. Coleongco claimed that it was due to the mal-administration of the factory but he should have protested to Claparols first. His credibility is also undermined because of his former conviction for estafa, which is a crime involving moral turpitude.

3. As to Damages: The SC agreed with the lower court: P50,000 for damages, material, moral, and exemplary, caused by the appellant Coleongco's acts in maliciously undermining appellee's credit that led the PNB to secure a writ of execution against Claparols. Undeniably, the attempts of Coleongco to discredit and "squeeze" Claparols out of his own factory and business could not but cause the latter mental anguish and serious anxiety, as found by the court below, for which he is entitled to compensation; and the malevolence that lay behind appellee's actions justified also the imposition of exemplary damages.

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VALERA v. VELASCOMarch 13, 1928 | Villa-Real, J. | Appeal | Withdrawal

PETITIONER: Federico ValeraRESPONDENT: Miguel Velasco

SUMMARY: Because of a misunderstanding on amounts due to the agent, the agent sued the principal and won. The right under administration was eventually levied in an execution sale and it came into the hands of the agent. The Court held that the agent validly acquired the right of usufruct since he renounced the agency the moment he filed the suit against his principal;

DOCTRINE: The filing of a civil action by the agent due to unpaid sums resulting from liquidation is a fact showing rupture of relations and is more expressive than when the agent merely said "I renounce the agency"

FACTS:1. On August 1922, defendant Velasco was appointed as the agent of plaintiff Valera. Power of attorney gave authority to manage properties in the Philippines consisting of a usufruct on a real property located in Manila. 2. On March 1923, Velasco delivered his final accounting of his administration, where it appears that there is a balance of P3,058.33 owing to the principal.3.Liquidation of accounts revealed that principal owed agent the sum of P 1,100. Because of a misunderstanding the agent filed a suit, and won. The usufruct was levied upon in execution. Principal sold his right of redemption to a third person but he bought such right back. 4. When principal recovered his right of redemption it was levied upon in another case and sold via aution sale. Vallejo, the buyer at the public auction, sold such right to the agent. Agent then acquired the right of usufruct.5. Principal filed suit to recover the usufruct arguing that since defendant was an agent, he had no right to buy the property under administration. Agent countered that the agency relationship was no longer subsisting and therefore he can acquire the usufruct.

ISSUE/S:4. WON the agency relationship was terminated– YES, by virtue

of the suit filed by the agent

RULING: AFFIRMED with costs.

RATIO:1. There are different ways to renounce an agency. An agent may withdraw from the agency by giving notice to the principal. Should the latter suffer any damage through the withdrawal, the agent must indemnify him therefore, unless the agent's reason for his withdrawal should be the impossibility of continuing to act as such

without serious detriment to himself. (1736, OLD Civil Code)2. Aside from express renunciation stated above, implied renunciation is also recognized in the case of Dela Peña v. Hidalgo: When the agent and administrator of property informs his principal by letter that for reasons of health and medical treatment he is about to depart from the place where he is executing his trust and wherein the said property is situated, and abandons the property, turns it over to a third party, renders accounts of its revenues up to the date on which he ceases to hold his position and transmits to his principal statement which summarizes and embraces all the balances of his accounts since he began the administration to the date of the termination of his trust... it is but reasonable and just to conclude that the said agent had expressly and definitely renounced his agency and that such agency duly terminated. 3. The misunderstanding between the plaintiff and the defendant over the payment of the balance of P1,000 due the latter and the fact that the said defendant brought suit prove the breach of the juridical relation between them; for, although the agent has not expressly told his principal that he renounced the agency, yet neither dignity nor decorum permits the latter to continue representing a person who has adopted such an antagonistic attitude towards him.4. The fact that an agent institutes an action against his principal for the recovery of the balance in his favor resulting from the liquidation of the accounts between them due to the agency, and renders and final account of his operations, is equivalent to an express renunciation of the agency, and terminates the juridical relation between them.5. Velaco, therefore, validly acquired the right of usufruct over the property that is supposed to be under administration.

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HERRERA v. LUY KIM GUANJan 31, 1961 | Barrera, J. | Appeal | Extinguishment of Agency - Death

PETITIONER: Natividad Herrera, assisted by her husband Emigdio SalazarRESPONDENT: Luy Kim Guan & Lino Bangayan

SUMMARY: P’s dad executed a GPA to sell his land in favor of Kim Guan. P is alleging that the transactions happened when her dad was already dead. Held: No proof of date of actual death of dad, and assuming that he did die, there was no proof that Kim Guan, as agent, knew of the death of his principal during the transactions.

DOCTRINE: The death of the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment of the agency.

FACTS:1. Natividad: legitimate daughter of Luis Herrera, who owned 3 parcels of land. Luis died sometime (specific date of death not proved by parties) in China after he went there in the last part of 1931/early 1932. But before he left, Luis executed on Dec. 1, 1931, a deed of General Power of Atty which authorized and emowered Kim Guan, among others, to administer and sell the properties of Luis.

2. (Series of transactions involving the lands)Lot 1740Sept 11, 1939: Sold by Kim Guan as atty-in-fact of Luis to Luy Chay;Aug 28, 1941: Luy Chay mortgaged the land in favor of Zamboanga Mutual Bldg to secure a loan of P2.00;Jan 31, 1947: Luy Chay executed a deed of sale in favor of Lino Bangayan.

Lot 4465 & 4467Dec 1, 1931: Luis sold his ½ interest in the said lots to Kim Guan;July 23, 1937: Luis, through atty-in-fact Kim Guan, sold to Nicomedes Salazar his ½ participation in these 2 lots for 3k; a TCT was issued in the name of Nicomedes AND Kim Guan;Aug 4, 1937: Kim Guan and Nicomedes executed deed of mortgage in favor of BPI to secure a loan of 3.5k;Aug 17, 1937: Kim Guan and Nicomedes sold Lot 4465 to Carlos Eijansantion for P100;Feb 22, 1949: Nicomedes sold his ½ interest on Lot 4467 to Lino Bangayan for 3k; TCR was issued to Lino and Kim Guan.

Ending: Lot 1740 is in the name of Lino; Lot 4465 is in the name of Carlos; and Lot 4467 is in the name of Lino and Kim Guan as co-owners.

3. Natividad: (1) All the transactions were fraudulent and were executed after the death of Luis, when the power of atty was no longer effective; (2) Lino and Kim Guan can’t own land since they are Chinese nationals; (3) The contract actually executed by Luis on Dec 1 was a lease contract over the 2 lots for a period of 20 years for which Kim Guan paid 2k, not a sale of half of his interest.

ISSUE/S:6. WON the transactions are valid – YES. No proof that Luis was

already dead when the transactions happened and of Kim Guan’s knowledge of such death.

RULING: Decision appealed from is hereby affirmed w/o prejudice to appellant’s rt. to demand from the agent an acting of proceeds of the agency, if such rt. is still available.

RATIO:1. Only evidence presented by Natividad was her testimony that her dad showed her the contract stating that it was a lease contract; while Kim Guan showed a cetification from the Register of Deeds that a deed of sale was executed by Luis. If it was a lease contract there would have been no purpose for Luis to constitue Kim Guan as his atty-in-fact to administer and take charge of the same properties already covered by the lease.

2. The date of death of Luis has not been satisfactorily proven. Natividad showed a letter from ‘Candi’ dated at Amony in Nov 1936 purporting to give info that Luis (without mentioning his name) had died in August of that year; while Respondent’s witness (Chung Lian) stated that when he was in Amoy in 1940, Luis visited him and had a convo with him.

Since the docs were executed in 1937 and 1939, then the docs were executed during the lifetime of Luis, if we follow the testimony.

3. Even if Luis did die in 1936, Natividad did not present proof that Kim Guan was aware of the death of his principal at the time he sold the property. The death of the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment of the agency.

4. No evidence that respondents were Chinese nationals—Lino had sufficiently established his PH citizenship, Kim Guan acquired his ½ share long before the Consti was adopted = ownership can’t be attacked on acct of citizenship.

5. Respondents not entitled to atty’s fees and expenses of litigation—complaint was filed in good faith.

DEL ROSARIO V. ABADSeptember 30, 1958 | Padilla, J. | Appeal from a judgment of the CFI | Death

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PLAINTIFF-APPELLEES: Eulogio, Aurelio, Benito, Bernardo, Isidra, Dominga del Rosario and Concepcion BorromeoDEFENDANTS-APPELLANT: Primitivo and Teodorico Abad.

SUMMARY: Tiburcio was granted a homestead patent over a parcel of land. He mortgaged the improvements on the land to Primitivo and excuted an “irrevocable special power of attorney” which authorized the latter to convey and sell the parcel of land. Tiburcio moved away and eventually died. Two years after Tiburcio’s death, Primitivo sold the property to his son for one peso and the payment of the mortgage debt. The plaintiffs, Tiburcio’s heirs filed a complaint for the nullification of the sale and the reconveyance of the land to them. The CFI ruled in favor of the Tiburcio’s heirs, finding the land to be null and void. The SC upheld this ruling because the case at bar falls under the general rule that death of either the principal or agent shall extinguish the agency. The defendant-appellee’s argue that the case is an exception to the general rule because the special power of attorney granted to Primitivo was an “irrevocable special power of attorney COUPLED WITH INTEREST”

DOCTRINE: A mere statement in the power of attorney that it is coupled with an interest is not enough. In what such interest consist must be stated in the power of attorney. Even the fact that Tiburcio, the principal, had indeed mortgaged the property to Primitivo, his agent, it is not the interest contemplated in Art. 1930 of the Civil Code. No such interest was mentioned in the power of attorney.

FACTS:1. In December 1936, Tiburcio del Rosario was granted a homestead

patent over a land with an area of more than 9 hectares Nueva Ecija. In February of 1937, the land was registered in his name.

2. Shortly after, he obtained a loan from Primitivo Abad in the sum of P2,000, payable in December 1941. As security for the loan, he mortgaged the improvements of the parcel of land in favor of Abad. Tiburcio executed an “irrevocable special power of attorney coupled with interest” in Primitivo’s favor, authorizing him to sell and convey the land, among others. Tiburcio then moved to Isabela with his family.

3. In 1945, Tiburcio died, leaving the debt unpaid. Primitivo, as Tiburcio’s attorney-in-fact, then sold the parcel of land to his son Teodorico for and in consideration of ONE PESO and the payment of the mortgage debt. Teodorico took possession of the land and had the land title transferred to his name.

4. In December 1952 the plaintiffs brought suit against the defendants to recover possession and ownership of the parcel of land, damages, attorney's fees and costs. The Court rendered judgment in favor of the del Rosarios, declaring the deed of sale null and void and ordering Teodorico to reconvey the title to them.

ISSUES: 1. WoN the mortgage over the IMPROVEMENTS on the land

was valid. – YES.2. WoN there was an agency coupled with interest. – NO.3. WoN the sale of the land was valid. – NO, because the agency

was not coupled with interest, it was extinguished by the death of the principal.

RULING: The judgment appealed from is affirmed.RATIO:1. According to Section 116 of the Public Land Act (Act No. 2874),

“Lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of the issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on

the land may be mortgaged or pledged to qualified persons, associations, or corporations.”

2. The power of attorney executed by Tiburcio in favor of Primitivo providing that is coupled with an interest in the subject matter thereof in favor of the said attorney and are therefore irrevocable . . ." does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character.The fact that Tiburcio, the principal, had mortgaged the improvements of the parcel of land to Primitivo, the agent, is not such an interest as could render irrevocable the power of attorney executed by the principal in favor of the agent. In fact no mention of it is made in the power of attorney. The mortgage on the improvements of the parcel of land has nothing to do with the power of attorney and may be foreclosed by the mortgagee upon failure of the mortgagor to comply with his obligation.

3. The sale cannot be valid for 2 reasons:a. As the agency was not coupled with an interest, it was

terminated upon the death of Tiburcio. Primitivo then could no longer validly convey the parcel of land to Teodorico in 1947. The sale, therefore, to the later was null and void.

b. But granting that the irrevocable power of attorney was lawful and valid it would subject the parcel of land to an encumbrance. As the homestead patent was issued on 12 December 1936 and the power of attorney was executed on 24 February 1937, it was in violation of the law that prohibits the alienation or encumbrance of land acquired by homestead from the date of the approval of the application and for a term of five years from and after the issuance of the patent or grant. Appellants contend that the power of attorney was to be availed of by the agent after the lapse of the prohibition period of five years, and that in fact Primitivo sold the parcel of land on 9 June 1947, after the lapse of such period. Nothing to that effect is found in the power of attorney.

RALLOS v. FELIX GO CHAN & SONS CORP.Jan. 31, 1978 | Munoz-Palma, J. | Review on Certiorari | Elements of Agency

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PETITIONER: RAMON RALLOS (Administrator of Estate of Concepcion Rallos)RESPONDENT: FELIX GO CHAN & SONS CORP., CA

SUMMARY: Concepcion and Gerundia Rallos executed a SPA in favor of their brother Simeon to sell their lot in their behalf. Simeon sold the lot to Felix Go Chan & Sons months after Concepcion’s death. The administrator of Concepcion’s estate (Ramon Rallos) moved to have the sale declared unenforceable. SC ruled in favor of Ramon. DOCTRINE: See Ratio No. 2 on elements of agency.

FACTS:1. Concepcion and Gerundia Rallos were sisters and co-owners of a registered lot in Cebu. On Apr. 21, 1954, the sisters executed a Special Power of Attorney (SPA) in favor of their brother Simeon authorizing him to sell in their behalf the lot. 2. Concepcion died on Mar. 3, 1955. Simeon sold the lot to Felix Go Chan & Sons on Sept. 12, 1995. The deed of sale was registered w/ the Registry of Deeds and a new TCT was issued to Felix Go Chan & Sons after the original one was canceled. 3. On May 18, 1956, Ramon Rallos (petitioner in this case), the administrator of the Intestate Estate of Concepcion Rallos, filed a complaint praying that the sale of Concepcion’s undivided share be declared unenforceable and said share be reconveyed to the estate, the TCTs canceled and another one issued in the names of the vendee corporation and the Concepcion’s estate, and for atty’s fees and costs of litigation4. The trial court ruled in favor of petitioner, declaring the sale null and void. The CA, however, reversed the trial court. Hence, Rallos’ petition to the SC.

ISSUE/S: WoN Simeon’s act is of selling Concepcion’s share after the latter’s death is enforceable against the latter’s estate - NO

RULING: CA decision set aside.

RATIO:1. Under Art. 1317, in relation to Art. 1403 (1), 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. 2. Essential elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) 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 agent acts within the scope of his authority. 3. Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. 4. Generally, death of the principal or of the agent extinguishes the agency. The exceptions to these rule are if the agency has been constituted in the common interest of the principal and of the agent, or in the interest of a third person who has accepted the stipulation in his favor (Art. 1930) and, under Art. 1931, (1) that the agent acted without knowledge of the death of the principal, AND (2) that the third person who contracted with the agent himself acted in good faith.

5. Article 1930: not applicable because admittedly the SPA executed in favor of Simeon Rallos was not coupled with an interest. Art. 1931 is also inapplicable since Concepcion’s death was known to Simeon based from his pleadings in the trial court and was also a finding of fact of the trial courts. 6. Since the general rule is that death of the principal extinguishes the agency, it follows that any act of an agent after the death of his principal is void ab initio unless the same falls under the exceptions provided for in the aforementioned Art. 1930 and 1931. Article 1931, being an exception to the rule, should be strictly construed. 7. The CA ruling that the heirs of the principal (Concepcion) should suffer the loss since the vendee corp acted in good faith by relying on the SPA registered on the Certificate of Title and that no notice of the principal’s death was annotated on the Certificate is untenable. By reason of the very nature of the relationship between principal and agent, agency is extinguished ipso jure upon the death of either principal or agent. Although a revocation of a power of atty must be communicated to the parties concerned to be effective , yet a revocation by operation of law, such as by death of the principal is, as a rule, instantaneously effective inasmuch as "by legal fiction the agent's exercise of authority is regarded as an execution of the principal's continuing will." With death, the principal's will ceases or is terminated; the source of authority is extinguished. 8. The Civil Code does not impose a duty on the heirs to notify the agent of the death of the principal. What the Code provides in Art. 1932 is that the heirs of the agent must notify the principal of the former’s death, and in the meantime adopt such measures as the circumstances may demand in the interest of the principal.

Note: SC also declared the CA’s attempt at drawing parallelism b/w the instant case w/ that of an innocent purchaser for value of a registered land (citing Blondeau v. Nano and Vallejo) as erroneous since the two cases are governed by express provisions of the law: the CC provisions on agency (w/ respect to the instant case) and the Land Registration Law (Blondeau).

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