THE PRINCIPAL

FILIPINAS LIFE INSURANCE Vs. PEDROSO

Teresita Pedroso, a policyholder of a life insurance issued by Filipinas Life Assurance Co. Pedroso claims Renato
Valle was her insurance agent since 1972 and Valle collected her monthly premiums. In the first week of January
1977, Valle told her that the Filipinas Life Escolta Office was holding a promotional investment program for
policyholders. Enticed, she initially invested and issued a post-dated check for P10,000. In return, Valle issued
Pedroso his personal check forP800 for the 8% prepaid interest and a Filipinas Life Agent receipt.
Pedroso called the Escolta office and talked to Francisco Alcantara, the administrative assistant, who referred
her to the branch manager, Angel Apetrior. Pedroso inquired about the promotional investment and Apetrior
confirmed that there was such a promotion. She was even told she could push through with the check she issued.
From the records, the check, with the endorsement of Alcantara at the back, was deposited in the account of
Filipinas Life with the Commercial Bank and TrustCompany, Escolta Branch.
Relying on the representations made by Filipinas Lifes duly authorized representatives Apetrior and Alcantara, as
well as having known agent Valle for quite some time, Pedroso waited for the maturity of her initial
investment. A month after, her investment of P10,000 was returned to her after she made a written request for its
refund. To collect the amount, Pedroso personally went to the Escoltabranch where Alcantara gave her the
P10,000 in cash. After a second investment, she made 7 to 8more investments in varying amounts, totaling
P37,000 but at a lower rate of 5% prepaid interest a month. Upon maturity of Pedrosos subsequent investments,
Valle would take back from Pedroso the corresponding agents receipt he issued to the latter.
Pedroso told respondent Jennifer Palacio, also
a Filipinas Life insurance policyholder, about theinvestment plan. Palacio made a total investment of P49,550
but at only 5% prepaid interest. However, when Pedroso tried to withdraw her investment, Valle did not want to
return some P17,000worth of it. Palacio also tried to withdraw hers, but Filipinas Life, despite demands, refused to
return her money.
WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the claim of Pedroso and Palacio or
WON its agent Renato Valle is solely liable to Pedroso and Palacio
Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract of agency, a
person binds himself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter. The general rule is that the principal is responsible for the acts of its agent
done within the scope of its authority, and should bear the damage
caused to third persons. When the agent exceeds his authority, the agent becomespersonally liable for
the damage. But even when the agent exceeds his authority, the principal is still solidarily liable together with the
agent if the principal allowed the agent to act as though the agent had full powers. The acts of an agent beyond
the scope of his authority do not bind the principal, unless the principal ratifies them, expressly or impliedly.
Ratification, adoption or confirmation by one person of an act performed on his behalf by another without
authority. Even if Valles representations were beyond his authority as a debit/insurance agent, Filipinas Life thru
Alcantara and Apetrior expressly and knowingly ratified Valles acts. Filipinas Life benefited from the investments
deposited by Valle in the account of Filipinas Life.
Manila Memorial Park Inc. vs Linsangan
Facts: Florencia Baluyot is authorized by the Manila Memorial Park Inc. (MMPI) to sell burial lots to those
interested in purchasing. Herein respondent Atty. Linsangan was approached by Florencia with an offer to sell to
the former a lot that she alleges to have already been previously sold but the owner thereof has cancelled and
thus, Atty. Linsangan shall only continue the payment thereof amounting to P95,000, Atty. Linsangan agreed and

payed an initial P35, 000. Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract
and that she needed him to sign a new contract stipulating the total price of P132, 000 but Florencia assured Atty.
Linsangan that he would only pay the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has
read and understood all the stipulations therein. The payment was made in installments for two years which Atty.
Linsangan completed, however, after two years, Florencia informed Linsangan that their contract was cancelled
and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract against MMPI
and Florencia. MMPI avers that Florencia acted beyond the scope of her authority as MMPIs agent since the latter
did not allow her to renegotiate existing contracts but only to sell new contracts. Atty. Lnsangan on the other hand
argues that MMPI should be liable for the acts of its agents.
Issue: Whether or not MMPI is liable for the acts of Florencia
Held: No. The SC ruled that Florencia acted outside the scope of her authority as agent of MMPI and Atty.
Linsangan failed to ascertain the authority given to Florencia especially that their agreement on the second
contract had a different stipulation than what he and Florencia agreed upon. Moreover, Atty. Linsangans
signature over the new contract signifies his agreement thereto and serves as a form of ratification for the acts of
Florencia which were outside the authority given her. As such, the SC ruled that the principal cannot be held liable
for actions of agents outside the scope of their authority when such acts are ratified by the principal himself. On
the part of MMPI, they did not ratify Florencias acts, nor did they know of such actions.
Woodchild v. Roxas Electric and Construction Inc.
Facts: Roxas Electric (RECCI) authorized its President to sell a property near Sumulong Highway. In turn, said
President was able to contract with Woodchild, they agreed that RECCI would give Woodchild a right of way to
Sumulong Highway. The latter constructed a warehouse thereon and leased it to another company. However,
vehicles of RECCI were blocking the path from said warehouse to Sumulong Highway. Due this, Woodchild
reiterated their contract with the President. The latter then promised to look after the matter. However, the
president died soon thereafter. Woodchild then informed RECCI about the easement. RECCI in turn argued that
they have no obligation to give such easement. They said that the president exceeded its authority since the
power of attorney only authorizes said president to sell said land and not to encumber other properties of the
RECCI. Woodchild counter-argued that by executing a contract of sale and by accepting their payment, RECCI gave
the President apparent authority.
Issue: WON the contention of Woodchild is tenable
Held:No. the contention of woodchild is untenable. Well-settled is the rule that without estoppel or ratification,
apparent authority cannot remedy the lack of the written power required under the statement of frauds.
Moreover, for the principle of apparent authority to apply, the Woodchild should prove the following: (a) the acts
of the principal justifying belief in the agency by third persons; (b) knowledge thereof by the principal which is
sought to be held; and, (c) reliance thereon by the third person consistent with ordinary care and prudence. In this
case, there is no evidence on record of specific acts made by RECCI showing or indicating that it had full knowledge
of any representations made by the president to Woodchild.
Rural Bank of Milaor vs Ocfemia
Facts: Respondents initiated the present proceedings, so that they could transfer to their names the subject five
parcels of land; and subsequently, to mortgage said lots and to use the loan proceeds for the medical expenses of
their ailing mother. For the property to be transferred in their names, however, the register of deeds required the
submission of a board resolution from the bank confirming both the Deed of Sale and the authority of the bank
manager, Fe S. Tena, to enter into such transaction. Petitioner refused. After being given the runaround by the
bank, respondents sued in exasperation.

Issue: May the board of directors of a rural banking corporation be compelled to confirm a deed of absolute sale
of real property owned by the corporation which deed of sale was executed by the bank manager without prior
authority of the board of directors of the rural banking corporation?
Held: In failing to file its answer, within the reglementary period, specifically denying under oath the Deed of Sale,
the bank admitted the due execution of the said contract. Such admission means that it acknowledged that Tena
was authorized to sign the Deed of Sale on its behalf. Thus, defenses that are inconsistent with the due execution
and the genuineness of the written instrument are cut off by an admission implied from a failure to make a
verified specific denial. A bank is liable to innocent third persons where representation is made in the course of its
normal business by an agent like Manager Tena, even though such agent is abusing her authority. Clearly, persons
dealing with her could not be blamed for believing that she was authorized to transact business for and on behalf
of the bank.
Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general
practice, custom, and policy, the general manager may bind the company without formal authorization of the
board of directors. In varying language, existence of such authority is established, by proof of the course of
business, the usages and practices of the company and by the knowledge which the board of directors has, or
must be presumed to have, of acts and doings of its subordinates in and about the affairs of the corporation.
The authority to act for and bind a corporation may be presumed from acts of recognition in other instances
where the power was in fact exercised.Thus, when, in the usual course of business of a corporation, an officer has
been allowed in his official capacity to manage its affairs, his authority to represent the corporation may be
implied from the manner in which he has been permitted by the directors to manage its business.
The bank failed to categorically declare that Tena had no authority. As already observed, it is familiar doctrine that
if a corporation knowingly permits one of its officers, or any other agent, to do acts within the scope of an
apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation
will, as against anyone who has in good faith dealt with the corporation through such agent, be estopped from
denying his authority; and where it is said "if the corporation permits this means the same as "if the thing is
permitted by the directing power of the corporation."
In this light, the bank is estopped from questioning the authority of the bank manager to enter into the contract of
sale. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an
apparent authority, it holds the agent out to the public as possessing the power to do those acts; thus, the
corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from
denying the agent's authority.
Cuison vs. CA/Valiant Investment Associates
Cuison is an owner of a junk shop. His employee placed an order for various paper products with Valiant, to be
delivered to LT Trading. Tan, owner of LT, paid the merchandise to the employee with checks; in turn, the
employee also paid Valiant with checks which were later dishonored. After several demands made by Valiant were
refused, saying the employee did not have the proper authority to enter into said transactions, the latter filed for
collection with Cuison. RTC dismissed the petition but CA reversed it.

the case at bar, the employee is well-known to the Valiants manager, to Tan, and to the community as the
manager of Cuison and has been regarded as a kinakapatid of the latter. Cuison is liable for the transactions
entered into his behalf. Thus, even when the agent has exceeded his authority, the principal is solidarily liable with
the agent if the former allowed the latter to fact as though he had full powers. Although it may appear that the
employee defrauded his principal in not turning over the proceeds of the transaction to the latter, such fact
cannot in any way relieve or exonerate the Cuison of his liability to Valiant. For it is an equitable maxim that as
between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear
the resulting loss.
De Castro Vs. Court Of Appeals And Francisco Artigo
Facts: De castro were co-owners of four (4) lots. In a letter, Artigo was authorized by appellants to act as real
estate broker in the sale of these properties and five percent(5%) of which will be given to the agent as
commission. It was appellee who first found Times Transit Corporation, who bought 2 lots. Artigo felt short of his
commission. Hence, he sued below to collect the balance. De castros then moved for the dismissal for failure to
implead other co-owners as indispensable parties. The De Castros claim that Artigo always knew that the two lots
were co-owned with their other siblings and failure to implead such indispensable parties is fatal to the complaint
since Artigo, as agent of all the four co-owners, would be paid with funds co-owned by the four co-owners.
Issue: WON the complaint merits dismissal for failure to implead other co-owners as indispensable parties
Ruling: Devoid of merit. Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.
The rule in this article applies even when the appointments were made by the principals in separate acts, provided
that they are for the same transaction. The solidarity arises from the common interest of the principals, and not
from the act of constituting the agency. By virtue of this solidarity, the agent can recover from any principal the
whole compensation and indemnity owing to him by the others. The parties, however, may, by express
agreement, negate this solidary responsibility. The solidarity does not disappear by the mere partition effected by
the principals after the accomplishment of the agency.
When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of
agency, each obligor may be compelled to pay the entire obligation.The agent may recover the whole
compensation from any one of the co-principals, as in this case.
PNB vs AGUDELO
FACTS: SPAs were issued in favor of Garrucho by his sister and his aunt. SPA is sufficiently broad in scope to
enable him to sell, alienate and mortgage all real estate properties of his sister and aunt. Garrucho mortgaged the
Principals parcels of land, under his own signature, in favor of PNB to secure payment of his loans.
Issue: WON the principals are liable for loans obtained by the agent from PNB.
Held ART. 1717. When an agent acts in his own name, the principal shall have no right of action against the
persons with whom the agent has contracted, or such persons against the principal.
In such case, the agent is directly liable to the person with whom he has contracted, as if the transaction were his
own. Cases involving things belonging to the principal are excepted.

Was there a contract of agency? Can the principal be held liable?

Under the law, one who clothes another with apparent authority as his agent and holds him out to the public as
such cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent
third parties dealing with such person in good faith and in the honest belief that he is what he appears to be. In

The special power of attorney, does not authorize Mauro A. Garrucho to constitute a mortgage on the real estate
of his principal to secure his personal obligations. Therefore, in doing so he exceeded the scope if his authority and
his principal is not liable for his acts.

He executed the promissory notes evidencing the aforesaid loans, under his own signature, without authority from
his principal and, therefore, were not binding upon the latter. Neither is there anything to show that he executed
the promissory notes in question for the account, and at the request, of his respective principals.
When an agent negotiates a loan in his personal capacity and executes a promissory note under his own signature,
without express authority from his principal, giving as security therefor real estate belonging to the letter, also in
his own name and not in the name and representation of the said principal, the obligation do constructed by him
is personal and does not bind his aforesaid principal.
Gold Star Mining vs Lim Jimena
Lincallo bound himself in writing to turn to Jimena 1/2 of the proceeds from all mining claims that he would
purchase with the money to be advanced by Jimena. Lincallo, in his own name, assigned mining rights over part of
the claims to Gold Starr. Gold star failed to give the interest due to Jimena. Jimena filed a complaint against Gold
Star.

Issues:
WON Keeler Electric authorized Montelibano to receive or receipt for money in its behalf
WON Rodriguez had a right to assume by any act or deed of Keeler Electric that Montelibano was authorized to
receive the money

Held/Ratio:
1.

Issue: WON Jimena has locus standi to file such complaint.

Held: YES Art. 1883. principal can sue the person with whom his agent dealt with in agent's own name, when the
transaction involves things belonging to the principal.
THIRD PARTY DEALING
Harry E. Keeler Electric Co. vs. Rodriguez
Facts:

2.
Plaintiff is Harry E. Keeler Electric Co., a domestic corporation based in Manila engaged in the electrical
business, and among other things in the sale of what is known as the "Matthews" electric plant.
Defendant is Domingo Rodriguez a resident of Talisay, Occidental Negros
Montelibano, a resident of Iloilo, went to Keeler Electric and made arrangement with the latter
wherein:
o
He claimed that he could find purchaser for the "Matthews" plant
o
Keeler Electric told Montelibano that for any plant that he could sell or any customer that he
could find he would be paid a commission of 10% for his services, if the sale was
consummated.
Through Montelibanos efforts, Keeler was able to sell to Rodriguez one of the "Matthews" plants
Rodriguez paid Montelibano (the purchase price of P2,513.55), after the installation of the plant and
without the knowledge of Keeler Electric,
Keeler Electric filed an action against Rodriguez for the payment of the purchase price.
Rodriguez: Claimed that he already paid the price of the plant. In addition, he alleged that:
o
Montelibano sold and delivered the plant to him, and "was the one who ordered the
installation of that electrical plant"
o
There were evidences: a statement and receipt which Montelibano signed to whom he paid
the money.
o
He paid Montelibano because the latter was the one who sold, delivered, and installed the
electrical plant, and he presented to him the account, and assured him that he was duly
authorized to collect the value of the electrical plant
Witness (Juan Cenar):
o
Cenar was sent by Keeler Electric to install the plant in Rodriguezs premises in Iloilo
o
He brought with him a statement of account for Rodriguez but the latter said that he would
pay in Manila.
***Lower Court: In favor of Rodriguez. It held that:
o
Keeler Electric had held out Montelibano to Rodriguez as an agent authorized to collect
o
Payment to Montelibano would discharge the debt of Rodriguez
o
The bill was given to Montelibano for collection purposes

Keeler Electric appealed. It alleged that:

o
Montelibano had no authority to receive the money.
o
His services were confined to the finding of purchasers for the "Matthews" plant
o
Montelibano was not an electrician, could not install the plant and did not know anything
about its mechanism.

NO, Montelibano was not authorized. The plant was sold by Keeler Electric to Rodriguez and was
consigned to Iloilo where it was installed by Cenar, acting for, and representing, Keeler Electric, whose
expense for the trip is included in, and made a part of, the bill which was receipted by Montelibano.
a.
Montelibano was not an agent of Keeler Electric
o
Outside of the fact that Montelibano received the money and signed this receipt, there is no
evidence that he had any authority, real or apparent, to receive or receipt for the money.
o
Neither is there any evidence that Keeler Electric ever delivered the statement to
Montelibano.
b. It was Juan Cenar, and not Montelibano who sold the plant to Rodiguez
o
The evidence is in direct conflict with Rodriguezs own pleadings and the receipt statement
which he offered in evidence. This claim must be for the expenses of Cenar in going to Iloilo
from Manila and return, to install the plant, and is strong evidence that it was Cenar and not
Montelibano who installed the plant.
NO.
a.
Relevant laws:

Article 1162 CC: Payment must be made to the persons in whose favor the obligation is
constituted, or to another authorized to receive it in his name.

Article 1727 CC: The principal shall be liable as to matters with respect to which the agent
has exceeded his authority only when he ratifies the same expressly or by implication.

Ormachea Tin-Conco vs. Trillana: The repayment of a debt must be made to the person in
whose favor the obligation is constituted, or to another expressly authorized to receive the
payment in his name.
b. On whether an assumed authority exist
o
Persons dealing with an assumed agent, whether the assumed agency be a general or
special one, are bound at their peril, if they would hold the principal, to ascertain not only
the fact of the agency but the nature and extent of the authority, and in case either is
controverted, the burden of proof is upon them to establish it.

Judgment of the lower court is REVERSED. Rodriguez should pay Keeler Electric the purchase price of the plant.
Tuazon vs. Ramos
Heirs of Bartolome Ramos alleged that spouses Leonilo and Maria Tuazon purchased cavans of rice from ramos. In
payment therefor, the spouses Tuazon issued several Traders Royal Bank checks. But when these checks were
encashed, all of the checks bounced due to insufficiency of funds. Santos denied having purchased the rice and
alleged that it was Magdalena Ramos, wife of said deceased, who owned and traded the merchandise and Maria
Tuazon was merely her agent. They argued that it was Evangeline Santos who was the buyer of the rice and issued
the checks to Maria Tuazon as payments therefor. In good faith the checks were received from Evangeline Santos
and turned over to Ramos without knowing that these were not funded.
ISSUE: WON there is a contract of agency.

HELD: No. In a contract of agency, one binds oneself to render some service or to do something in representation
or on behalf of another, with the latter's consent or authority. The following are the elements of agency: (1) the
parties' consent, express or implied, to establish the relationship; (2) the object, which is the execution of a
juridical act in relation to a third person; (3) the representation, by which the one who acts as an agent does so,
not for oneself, but as a representative; (4) the limitation that the agent acts within the scope of his or her
authority. As the basis of agency is representation, there must be, on the part of the principal, an actual intention
to appoint, an intention naturally inferable from the principal's words or actions. In the same manner, there must
be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent,
there is generally no agency. Petitioners were the rice buyers themselves; they were not mere agents of
respondents in their rice dealership. Petitioners, on their own behalf, sued Evangeline Santos for collection of the
amounts represented by the bounced checks, in a separate civil case that they sought to be consolidated with the
current one. Their filing a suit against her in their own names negates their claim that they acted as mere agents in
selling the rice obtained from Bartolome Ramos.
Yu Eng Cho Vs. Pan Am
Facts: Yung eng cho and his family booked a flight with Claudia Tagunicar, who is a supposed agent of a travel
agency. They were to fly to Japan and soon after, to America for a business trip. Having confirmed their flights,
they traveled to Tokyo, Japan and, after staying there for about a week and before going to the airport to board
their flight to the US, they called up Pan-Am, which was the airline booked, and learned that their names were not
listed in the flight manifest. The Yu eng cho family then returned to the Philippines since they could not secure a
flight with pan am to America. The family then sued their travel agent Claudia and impleaded both the travel
agency and pan am.
Issue: Yu eng cho contended that the travel agency was an agent of pan am and that Claudia was, in fact, the sub
agent of the travel agency. Hence, the three parties should thus be held liable for the acts of their agents.
Held: No, there was no contact of agency between pan am and the travel agency and as between Claudia and the
travel agency. It was found that Claudia merely bought tickets from said agency and sold them to the plaintiffs at a
higher price. The was no intent to create an agency. She simply deducted her "commissions" upon paying for the
ticket. In this regard, there was merely a contract of sale. Claudia is solely liable for misrepresenting herself as an
agent where she had no actual authority. Moreover, the plaintiff's motives were suspect because it was found that
they impleaded pan am airlines knowing that Claudia cannot pay for the civil action they instituted. Their target for
the suit was the air line all along.
BA Finance Corp v CA and Traders Royal Bank
Nature: Petition for review on certiorari of the decision of CA which reversed the ruling of RTC dismissing the case
against the petitioner.
Facts: Gaytano spouses obtained a loan with respondent Traders Royal Bank, and Philip Wong as a credit
administrator of BA Finance Corporation for and in behalf of the latter undertook to guarantee the loan of the
Gaytano spouses evidencing by a letter. Gaytano spouses after partial payment of the loan refused to pay their
obligation. Respondent bank filed a complaint against the spouses including the petitioner corporation as an
alternative defendant. Petitioner raised the defense of lack of authority of its credit administrator to bind the
corporation. Wong was only authorized to approve loans even up to P350,00.00 but not the power to issue
guarantees. RTC held dismissing the case against the defendant. CA modify the judgment including the petitioner
to pay bank.
Issue: WON BA Finance Corp can be held liable as a guarantor due to the acts of its employee?
Held: NO. It is a settled rule that persons dealing with an assumed agent, whether the assumed agency be a
general or special one are bound at their peril, if they would hold the principal liable, to 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 establish it. Hence, the burden is on respondent bank to satisfactorily prove that the credit

administrator with whom they transacted acted within the authority given to him by his principal, petitioner
corporation.
The representation of one who acts as agent cannot by itself serve as proof of his authority to act as agent or of
the extent of his authority as agent agent (Velasco v. La Urbana, 58 Phil. 681)
The rule is clear that an agent who exceeds his authority is personally liable for damages (National Power
Corporation v. National Merchandising Corporation, Nos. L-33819 and
L-33897, October 23, 1982, 117 SCRA 789).
NPC v. NAMERCO
FACTS On October 17, 1956, NPC and Namerco of 3111 Nagtahan Street, Manila, as the representative of the
International Commodities Corporation of 11 Mercer Street, New York City executed in Manila a contract for the
purchase by the NPC from the New York firm of four thousand long tons of crude sulfur for its Maria Cristina
Fertilizer Plant in Iligan City at a total price of P450,716
On that same date, a performance bond in the sum of P90,143.20 was executed by the Domestic Insurance
Company in favor of the NPC to guarantee the sellers obligations.
It was stipulated in the contract of sale that the seller would deliver the sulfur at Iligan City within sixty days from
notice of the establishment in its favor of a letter of credit for $212,120 and that failure to effect delivery would
subject the seller and its surety to the payment of liquidated damages at the rate of 2/5 of 1% of the full contract
price for the first thirty days of default and 4/5 of 1% for every day thereafter until complete delivery is made.
Letter 11/12/1956 - the NPC advised John Z. Sycip, the president of Namerco, of the opening on November 8 of a
letter of credit for $212,120 in favor of International Commodities Corporation which would expire on January 31,
1957. Notice of that letter of credit was received by cable by the New York firm on November 15, 1956. Thus, the
deadline for the delivery of the sulfur was January 15, 1957.
The New York supplier was not able to deliver the sulfur due to its inability to secure shipping space. During the
period from January 20 to 26, 1957 there was a shutdown of the NPCs fertilizer plant because there was no sulfur.
No fertilizer was produced.
Letter O2/27/1957 - the general manager of the NPC advised Namerco and the Domestic Insurance Company that
under Article 9 of the contract of sale nonavailability of bottom or vessel was not a fortuitous event that would
excuse nonperformance and that the NPC would resort to legal remedies to enforce its rights.
The Government Corporate Counsel in his letter to Sycip dated May 8, 1957 rescinded the contract of sale due to
the New York suppliers nonperformance of its obligations. The same counsel in his letter of June 8, 1957
demanded from Namerco the payment of P360,572.80 as liquidated damages. He explained that time was of the
essence of the contract. A similar demand was made upon the surety.
The liquidated damages were computed on the basis of the 115-day period between January 15, 1957, the
deadline for the delivery of the sulfur at Iligan City, and May 9, 1957 when Namerco was notified of the rescission
of the contract, or P54,085.92 for the first thirty days and P306,486.88 for the remaining eighty-five days. Total:
P360,572.80.
ISSUES: W/N Namerco acted within the scope of its authority as agent in signing the contract of sale NO
RATIO: It is true that the New York corporation in its cable to Namerco dated August 9, 1956 stated that the sale
was subject to availability of a steamer. However, Namerco did not disclose that cable to the NPC and, contrary to

its principals instruction, it agreed that non-availability of a steamer was not a justification for nonpayment of the
liquidated damages.
Namerco acted beyond the bounds of its authority because it violated its principals cabled instructions: The
delivery of the sulfur should be C & F Manila, not C & F Iligan City The sale be subject to the availability of a
steamer and The seller should be allowed to withdraw right away the full amount of the letter of credit and not
merely eighty percent thereof.
RULING: WHEREFORE, the lower courts judgment is modified and defendants National Merchandising
Corporation and Domestic Insurance Company of the Philippines are ordered to pay solidarily to the National
Power Corporation the sum of P45,100.00 as liquidated damages. No costs.

On 8 January 1910, defendant refused to pay the petitioner his compensation for services rendered after 31
December 1909. On 5 January 1911, petitioner Barretto filed a suit for recovery of sum of money and payment of
damages in the amount of Php 137,000.00 - Php 37,000.00 as salary for the year 1910 and Php 100,000.00 as
indemnity for removal without just cause.
The lower court ruled in favor of the petitioner for the recovery of compensation but dismissed the complaint for
damages.
Issue: 1) Whether or not the agency was extinguished by virtue of the letter sent by Barretto to Santa Marina; 2)
Whether or not the Santa Marina has a right to terminate the agency
Held:

San Juan Structural vs. CA

FACTS: San Juan Structural and Steel Fabricators, Inc.s (SJSSI) alleged that on 14 February 1989, it entered into an
agreement with Motorich Sales Corporation for the transfer to it of a parcel of land in Acropolis Greens
Subdivision, Murphy, Quezon City, Metro Manila, containing an area of Four Hundred Fourteen (414) square
meters, covered by TCT No. (362909) 2876. A downpayment of 100K was given and to be fully paid on March 1,
1989. When SaJSSI was is ready to pay, the treasurer Nenita Lee Gruenberg did not appear. Despite demand for
specific performance, Motorich Sales refused to execute a deed of sale to convey the property.
ISSUE: May a corporate treasurer, by herself and without any authorization from the board of directors, validly sell
a parcel of land owned by the corporation?
HELD: Validity of Agreement
Petitioner San Juan Structural and Steel Fabricators, Inc. alleges that on February 14, 1989, it entered through its
president, Andres Co, into the disputed Agreement with Respondent Motorich Sales Corporation, which was in
turn allegedly represented by its treasurer, Nenita Lee Gruenberg. Petitioner insists that *w+hen Gruenberg and
Co affixed their signatures on the contract they both consented to be bound by the terms thereof. Ergo,
petitioner contends that the contract is binding on the two corporations. We do not agree.
True, Gruenberg and Co signed on February 14, 1989, the Agreement, according to which a lot owned by Motorich
Sales Corporation was purportedly sold. Such contract, however, cannot bind Motorich, because it never
authorized or ratified such sale.
A corporation is a juridical person separate and distinct from its stockholders or members. Accordingly, the
property of the corporation is not the property of its stockholders or members and may not be sold by the
stockholders or members without express authorization from the corporations board of directors.

A. The agency was terminated by virtue of the resignation of Barretto, as evidenced by the letter It is no less true
that the silence and lack of reply on the part of the chief owner of the factory were sufficient indications that the
resignation had been virtually accepted and that if he did not reply immediately it was because he intended to act
cautiously. By the mere fact that the defendant remained silent and designated another person, Mr. J. McGavin,
to, discharge in the plaintiff's stead the powers and duties of agent and manager of the said factory, Barretto
should have understood that his resignation had been accepted. As soon as the defendant Santa Marina could
appoint the said McGavin, he revoked the power he had conferred upon the plaintiff and communicated this fact
to the latter, by means of the letter, Exhibit D, which was presented to him by the bearer thereof, McGavin
himself, the new manager and agent appointed.
B. Santa Marina has a right to terminate the agency Article 1733 of the Civil Code prescribes: "The principal may,
at his will, revoke the power and compel the agent to return the instrument containing the same in which the
authority was given." Article 279 of the Code of Commerce provides: "The principal may revoke the commission
intrusted to an agent at any stage of the transaction, advising him thereof, but always being liable for the result of
the transactions which took place before the latter was informed of the revocation." From the above legal
provisions it is clearly to be inferred that the contract of agency can subsist only so long as the principal has
confidence in his agent, because, from the moment such confidence disappears, and although there be a fixed
period for the exercise of the office of agent, the principal has a perfect right to revoke the power that he had
conferred upon the agent owing to the confidence he had in him and which for sound reasons had ceased to exist.

EXTINGUISHING THE AGENCY

Barreto vs Santa Marina
Facts: Antonio Ma. Barreto was the agent and manager of La Insular Cigar and Cigarette Factory, owned by
Joaquin Santa Marina by virtue of a verbal agreement. When Joaquin Santa Marina died, his brother Jose Santa
Marina, inherited the property and acknowledged the verbal agreement between the deceased and Barretto and
ratified the same by executing a power of attorney notarized on 25 September 1908.
On 2 January 1909, Petitioner sent a letter to defendant reporting that a certain Uy Yan owed the company Ph
97,000.00 and for that reason stated that he should resign but left the discretion with Santa Marina. Santa Marina
did not respond to said letter.
However, on 2 December 1909, Santa Marina communicated to Barretto the revocation of the power the
defendant conferred upon him and advised the petitioner of the appointment of another agent, Mr. McGavin. The
reason for the revocation was that the loan contracted by the agent Barretto, without the approval of the
principal, caused a great panic among the stockholders of the factory and that the defendant hoped to allay it by
the new measure that he expected to adopt.

The defendant, in executing that instrument, whereby the agreement made between his brother Joaquin and
Barretto was ratified, did no more than accord to the plaintiff the same confidence that the defendant's
predecessor in interest had in him; and so long as this merely subjective condition of trust lodged in the agent
existed, the time during which the latter might hold his office could be considered indefinite or undetermined, but
as soon as that indispensable condition of a power of attorney disappeared and the conduct of the agent deceased
to inspire confidence, the principal had a right to revoke the power he had conferred upon his agent, especially
when the latter, for good reasons, gave up the office he was holding.
Article 300 of the same code prescribes: "The following shall be special reasons for which principals may discharge
their employees, even though the time of service of the contract has not elapsed: Fraud or breach of trust in the
business intrusted to them . . . " By reason of these legal provisions the defendant, in revoking the authority
conferred upon the plaintiff, acted within his unquestionable powers and did not thereby violate any statute
whatever that may have limited them; consequently, he could not have caused the plaintiff any harm or detriment
to his rights and interests, for not only had Santa Marina a justifiable reason to proceed as he did, but also no
period whatever had been stipulated during which the plaintiff should be entitled to hold his position; and
furthermore, because, in relieving the latter and appointing another person in his place, the defendant acted in
accordance with the renunciation and resignation which the plaintiff had tendered.

Lustan vs. CA/Parangan/PNB

Parangan was a lesse of Lustan in a property. Parangan regularly extended small loans to her lessor to defray some
expenses. Lustan executed an SPA in favor of Parangan to secure an agri loan with PNB, the land as collateral. A
second SPA was executed wherein Parangan obtained 4 additional loans, 3 of which were without the Lustans
knowledge and were used by the Parangan for his own benefit. After some time, Lustan executed a deed of sale to
Parangan with an option to repurchase, which was superseded by a deed of definite sale;Prangan reassured
Lustan that such deed served only as mere evidence of the loans made by the former to his lesse. For fear that the
property might be lost, Lustan asked for the return of the deed but Parangan denied. RTC favored Lustan and
cancelled all the liens on the property and treated the sale as an equitable mortgage. CA reversed the decision.

HELD:
ART 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing
directly with 3rd person.
Del Rosario Vs Abad
Del Rosario mortgaged his homestead grant, as security for a loan, to Abad and executed an irrevocable special
power of attorney coupled with interest in Abads favor. Mortgagor Del Rosario died, leaving the debt unpaid.
Abad, acting as attorney-in-fact of del Rosario, sold the land to his son for P1 with the condition that his son will
pay the unpaid debt.
Issue: Whether or not the irrevocable power of attorney was valid

Was the DOS a mortgage? Can the property be validly encumbered by virtue of the SPA?
Under the law, a contract is perfected by mere consent. Intent of the parties shall prevail over the words of the
contract. 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. Lustan did not know
how to read or write; he only relied on the assurance by Parangan that the deed was only an evidence of
indebtedness. Third persons who are not parties to a loan may secure the latter by pledging or mortgaging their
own property. 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, petitioner 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.
Rallos v. Yangco
FACTS: Yangco sent Rallos a letter inviting the latter to be the consignor in buying and selling leaf tobacco and
other native products. In its letter, he introduced Collantes as his agent. Accepting the invitation, Rallos proceeded
to do a considerable business with Yangco through Collantes, as his factor. Rallos sent Collantes, as agent for
Yangco, bundles of tobacco to be sold on commission. Collantes received said tobacco and sold and converted the
amount to his own use. It appears, however, that prior to the sending of said tobacco, Yangco had severed his
relations with Collantes and that the latter was no longer acting as his factor. This fact was not known to Rallos
and that no notice of any kind was given by Yangco of the termination of the relations between his agent,
Collantes. Yangco thus refused to pay the said sum upon demand of Rallos, placing such refusal upon the ground
that at the time the said tobacco was received and sold by Collantes, he was acting personally and not as agent of
Yangco.

Held:No. It was not valid. Thus, the subsequent sale was also invalid.
The Court held that this sale is invalid. Abad did not have an irrevocable special power of attorney coupled with
interest. A mere statement in the power of attorney that it is coupled with an interest is not enough. It must be
stated in the power of attorney all the interests it consists. The fact that the principal, had mortgaged the
improvements of the parcel of land to the agent is not such an interest as could render irrevocable the power of
attorney executed by the principal in favor of the agent. As the agency was not coupled with an interest, it was
terminated upon the death of the principal, and the agent, could no longer validly convey the parcel of land. The
sale therefore was null and void.
Lim vs. Saban
FACTS: The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter lot in Cebu City (the lot), entered
into an Agreement and Authority to Negotiate and Sell (Agency Agreement) with respondent Florencio Saban
(Saban) on February 8, 1994. Under the Agency Agreement, Ybaez authorized Saban to look for a buyer of the lot
for Two Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the amounts needed
for payment of taxes, transfer of title and other expenses incident to the sale, as well as Sabans commission for
the sale.Through Sabans efforts, Ybaez and his wife were able to sell the lot to the petitioner Genevieve Lim
(Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on March 10, 1994. The price of the lot as
indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos (P200,000.00). It appears, however, that
the vendees agreed to purchase the lot at the price of Six Hundred Thousand Pesos (P600,000.00), inclusive of
taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the amounts of P113,257.00
for payment of taxes due on the transaction as well P50,000.00 as brokers commission.
Lim also issued in the name of Saban four postdated checks in the aggregate amount of P236,743.00. However,
Ybaez was able to convince Lim to cancel all four checks but instead to extend another partial payment in
Ybaezs favour. Ybaez claimed that Saban was not entitled to any commission because he concealed the actual
selling price from him and because he was not a licensed real estate broker.

ISSUE: WON Yangco is liable..

RULING: Yes. Yangco, as principal is liable. Having advertised the fact that Collantes was his agent and having
given special notice to Rallos of that fact, and having given them a special invitation to deal with such agent, it was
the duty of Yangco on the termination of the relationship of the principal and agent to give due and timely notice
thereof to Rallos. Failing to do so, he is responsible to them for whatever goods may have been in good faith and
without negligence sent to the agent without knowledge, actual or constructive, of the termination of such
relationship

After the four checks were dishonored, Saban filed a Complaint for collection of sum of money and damages
against Ybaez and Lim with the Regional Trial Court (RTC) In his Complaint, Saban alleged that Lim and the
Spouses Lim agreed to purchase the lot for P600,000.00, i.e., with a mark-up of Four Hundred Thousand Pesos
(P400,000.00) from the price set by Ybaez. Of the total purchase price of P600,000.00, P200,000.00 went to
Ybaez, P50,000.00 allegedly went to Lims agent, and P113,257.00 was given to Saban to cover taxes and other
expenses incidental to the sale. Saban further averred that Ybaez and Lim connived to deprive him of his sales
commission by withholding payment of the first three checks. He also claimed that Lim failed to make good the
fourth check which was dishonored because the account against which it was drawn was closed.

CMS Logging vs CA
In a contract of agency, CMS appointed DRACOR as its exclusive export sales agent for all logs that CMS may
produce. Thereafter, cms sold its logs directly to several japanese firms.

On May 14, 1997, the RTC rendered its Decision11 dismissing Sabans complaint, declaring the four (4) checks
issued by Lim as stale and non-negotiable, and absolving Lim from any liability towards Saban. Saban appealed the
trial courts Decision to the Court of Appeals. On October 27, 2003, the appellate court promulgated its Decision12
reversing the trial courts ruling. It held that Saban was entitled to his commission amounting to P236,743.00. The

Court of Appeals ruled that Ybaezs revocation of his contract of agency with Saban was invalid because the
agency was coupled with an interest and Ybaez effected the revocation in bad faith in order to deprive Saban of
his commission and to keep the profits for himself.
ISSUE: The issues for the Courts resolution are whether Saban is entitled to receive his commission from the sale;
and, assuming that Saban is entitled thereto, whether it is Lim who is liable to pay Saban his sales commission.
RATIO: Civil Law; Agency; The right of a broker to his commission for finding a suitable buyer for the sellers
property even though the seller himself consummated the sale with the buyer recognized by the Court.In
Macondray & Co. v. Sellner, the Court recognized the right of a broker to his commission for finding a suitable
buyer for the sellers property even though the seller himself consummated the sale with the buyer. The Court
held that it would be in the height of injustice to permit the principal to terminate the contract of agency to the
prejudice of the broker when he had already reaped the benefits of the brokers efforts.
Same; Same; The sellers withdrawal in bad faith of the brokers authority cannot unjustly deprive the brokers of
their commission as the sellers duly constituted agents.In Infante v. Cunanan, et al., the Court upheld the right
of the brokers to their commissions although the seller revoked their authority to act in his behalf after they had
found a buyer for his properties and negotiated the sale directly with the buyer whom he met through the
brokers efforts. The Court ruled that the sellers withdrawal in bad faith of the brokers authority cannot unjustly
deprive the brokers of their commissions as the sellers duly constituted agents.
Same; Same; Agency Coupled with an Interest; An agency is deemed as one coupled with an interest where it is
established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third
persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person
subsists.Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon
it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal from the management is unjustifiable. Stated
differently, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of
the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by
the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an
interest, the agents interest must be in the subject matter of the power conferred and not merely an interest in
the exercise of the power because it entitles him to compensation. When an agents interest is confined to earning
his agreed compensation, the agency is not one coupled with an interest, since an agents interest in obtaining his
compensation as such agent is an ordinary incident of the agency relationship.
RULING: the Petition is DISMISSED.
Valenzuela vs. CA
Petitioner Valenzuela, a General Agent respondent Philamgen, was authorized to solicit and sell all kinds of nonlife insurance. Valenzuela solicited marine insurance from Delta Motors, Inc. from which he was entitled to a
commission . However, Valenzuela did not receive his full commission. Premium payments amounting were paid
directly to Philamgen.Philamgen wanted to cut Valenzuelas commission to 50% of the amount. He declined.
When Philamgen offered again, Valenzuela firmly reiterated his objection.
Philamgen took drastic action against Valenzuela. They: reversed the commission due him, threatened the
cancellation of policies issued by his agency, and started to leak out news that Valenzuela has a substantial debt
with Philamgen. His agency contract was terminated.
The trial court found that the principal cause of the termination as agent was his refusal to share his Delta
commission.
ISSUE: WON the agency contract was validly terminated.

Held: No. The agency is one "coupled with an interest," and, therefore, should not be freely revocable at the
unilateral will of the company.
Private respondent started to covet a share of the insurance business that Valenzuela had built up, developed and
nurtured. The company appropriated the entire insurance business of Valenzuela. Worse, despite the termination
of the agency, Philamgen continued to hold Valenzuela jointly and severally liable with the insured for unpaid
premiums.
There is an exception to the principle that an agency is revocable at will and that is when the agency has been
given not only for the interest of the principal but also for the mutual interest of the principal and the agent. The
principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Also, if a
principal violates a contractual or quasi-contractual duty which he owes his agent, the agent may as a rule bring an
appropriate action for the breach of that duty. Hence, if a principal acts in bad faith and with abuse of right in
terminating the agency, then he is liable in damages. Respondent Philamgen has been appropriating for itself all
these years the gross billings and income that it unceremoniously took away from the petitioners. 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. The right of the principal to terminate his authority is absolute and
unrestricted, except only that he may not do so in bad faith.

Republic Of The Philippines Vs. Evangelista

FACTS: Dante Legaspi owns a land located in Norzagaray, Bulacan. In 1999, General Calimlim, representing the
Republic of the Philippines ordered the excavation of the said land in order to look for hidden treasure. Pursuant
to the said order, about 80 military personnel began to guard the land of Legaspi to intimidate the latter.
As a response, Legaspi executed a contract of agency with Paul Gutierrez where the former empowered the latter
through an SPA to deal with the treasure hunting activities on the said land and to file charges against those who
may enter it without permission from Legaspi. There was also an agreement that Gutierrez shall be entitled to
receive 40% of whatever treasure that may be found therein. Gutierrez then hired a lawyer to file a complaint
against Gen. Calimlim et al. It was agreed that the lawyer will receive 30% of the treasure as payment. Upon filing
the complaint, Gutierrez and the lawyer was granted an injunction by the court through Judge Evangelista. This
order was then assailed by Gen. Calimlim hence the case at bar.
ISSUE: The contention of Gen. Calimlim was that Gutierrez, in fact, had no more authority since Legaspi had
revoked the SPA he issued. He proved this by showing a deed of revocation. He argues, therefore, Gutierrez is not
a real party in interest to the suit (no legal standing). The question now is, whether there is still an Agency
between Legaspi and Gutierrez.
HELD: The contention is without merit. The agency still subsists. Although as a general rule, a contract of agency is
generally revocable as it is a personal contract of representation based on trust and confidence reposed by the
principal on his agent. The agency may thus be revoked by the will of the principal (anytime he wants).
The exception, however, is illustrated in this case. When the agency is coupled with interest (e.g if a bilateral
contract depends upon an agency), the agency cannot be revoked at the sole will of the principal. The reason for
its irrevocability is because 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.
The extinguishment of the agency will impair the rights of other persons, in this case, that of Gutierrez and the
lawyer. The injunction, therefore, is upheld.
Vicente Coleongco v Eduardo Claparols

Nature: Plaintiff Vicente Coleongco appealed from a decision of CFI dismissing his action for damages and ordering
him to pay defendant Eduardo Claparols the amount the latter paid from the filing of the counterclaim with legal
interest plus damages.

redemption nauwi kay Velasco so in effect the title was consolidated in his name, ergo the agent got the title to
the right of usufruct to the aforementioned property)
ISSUE: WON the agency was terminated

Facts: Defendant operated a factory for the manufacture of nails in Talisay, Occidental Negros, nder the style of
Claparols Steel & Nail Plant. The marketing was handles by Kho To, owner of ABCD Commercial. Due to losses,
Claparols was compelled in 1953 to look for someone to finance his imports of nail wires. Kho To recommended
his cousin Vicente Coleongco as the financier. When the contract between Coleongco and Claparols was perfected,
they agreed to some stipulations regarding how the business would work. Days after, Claparols executed in favor
of Coleongco 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. Around mid-November of 1956, Claparols found out that Coleongco
wrote letters to the Philippine National Bank attempting to undermine the credit of the principal and to acquire
the factory of the latter, without the principal's knowledge; Coleongco's letter to his cousin, Kho To instructing the
latter to reduce to one-half the usual monthly advances to Claparols on account of nail sales in order to squeeze
said appellee and compel him to extend the contract entitling Coleongco to share in the profits of the nail factory
on better terms, and ultimately "own his factory", a plan carried out by Kho's letter, reducing the advances to
Claparols; Coleongco's attempt to, have Romulo Agsam pour acid on the machinery; his illegal diversion of the
profits of the factory to his own benefit; and the surreptitious disposition of the Yates band resaw machine in
favor of his cousin's Hong Shing Lumber Yard, made while Claparols was in Baguio in July and August of 1956. As
the parties could not amicably settle their accounts, Coleongco charged the defendant breach of contract due to
the revocation of the latter of the SPA and praying for damages, he contended that the SPA was made to protect
his interest under the agreement and was one coupled wit an interest and Claparols has no legal power to revoke.
RTC held in favor of defendant.
Issue:WON the power of attorney, in this case, coupled with an interest can be revoked ?
Held: Yes. Power of attorney can be made irrevocable by contract only in the sense that the principal may not
recall it at his pleasure; but coupled with interest or not, the authority certainly can be revoked for a just cause,
such as when the attorney-in-fact betrays the interest of the principal, as happened in this case. It is not open to
serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in
bad faith, breach of confidence, or betrayal of trust, by the agent for that would amount to holding that a power
coupled with an interest authorizes the agent to commit frauds against the principal.

HELD: YES: Art 1732. Agency is terminated by: a) revocation, b)withdrawal of agent, c)death, interdiction,
bankruptcy, or insolvency of the principal or of the agent. A1736. An agent may withdraw by giving notice to
principal. If principal suffer any damage, agent must indemnify him unless the agents reason should be the
impossibility of continuing to act as such without serious detriment to himself Cited syllabus of De la Pena vs
Hidalgo (weird!) renouncing agency-agent about to depart because of health & medical reasons The
misunderstanding between the plaintiff and the defendant over the payment of the balance of P1,000 due the
latter more than 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
When the agent filed a complaint against his principal for recovery of a sum of money arising from the liquidation
of the accounts between them in connection with the agency, Federico Valera could not have understood
otherwise than that Miguel Velasco renounced the agency; because his act was more expressive than words and
could not have caused any doubt. In order to terminate their relations by virtue of the agency the defendant, as
agent, rendered his final account on March 31, 1923 to the plaintiff, as principal.
Briefly, then, 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 arising from 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.
Hence, the said agent's purchase of the aforesaid principal's right of usufruct at public auction held by virtue of an
execution issued upon the judgment rendered in favor of the former and against the latter, is valid and legal
Moreover, the defendant-appellee, Miguel Velasco, having acquired Federico Valera's right of redemption from
Salvador Vallejo, who had acquired it at public auction by virtue of a writ of execution issued upon the judgment
obtained by the said Vallejo against the said Valera, the latter lost all right to said usufruct.

Article 1800, declares that the powers of a partner, appointed as manager, in the articles of co-partnership
are irrevocable without just or lawful cause; and an agent with power coupled with an interest can not stand on
better ground than such a partner in so far as irrevocability of the power is concerned.

Neither did the trial court err in not ordering Miguel Velasco to render a liquidation of accounts from March 31,
1923, inasmuch as he had acquired the rights of the plaintiff by purchase at the execution sale, and as purchaser,
he was entitled to receive the rents from the date of the sale until the date of the repurchase, considering them as
part of the redemption price; but not having exercised the right repurchase during the legal period, and the title of
the repurchaser having become absolute, the latter did not have to account for said rents.

Valera Vs Velasco

Rallos v. Felix Go Chan (MAI)

FACTS: By virtue of the powers of attorney executed by the Valera, the Velasco was appointed attorney-in-fact of
the said Valera with authority to manage his property in the Philippines, consisting of the usufruct of a real
property located of Echague Street, City of Manila The liquidation of accounts revealed that the Valera owed the
defendant P1,100, and as misunderstanding arose between them, the Velasco brought suit against the Valera

FACTS: Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land known as Lot No.
5983. In 1954, they executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him
to sell for and in their behalf the aforementioned parcel of land. On March 1955, Concepcion Rallos died. On
September 1955, Simeon Rallos sold the undivided shares of his sisters in lot 5983 to Felix Go Chan and Sons
Realty Corporation. The deed of sale was registered and the previous TCT was cancelled.

TC: in favor of agent Velasco; sheriff levied upon Valeras right of usufruct, sold it at public auction and adjudicated
it to Velasco in payment of all his claim
Valera sold his right of redemption to Eduardo Hernandez- Hernandez conveyed the same right of redemption to
Valera himself-but then another person Salvador Vallejo, who had an execution upon a judgment against the
plaintiff rendered in another case, levied upon said right of redemption- right of redemption sold to Vallejo and
was definitely adjudicated to him. Later, he transferred the said right of redemption to Velasco (so ung right of

On May 1956, Ramos Rallos, as administrator of the Intestate Estate of Concepcion Rallos, filed a complaint with
the CFI of Cebu, praying (1) that the sale of the undivided share of the deceased Concepcion Rallos be declared
unenforceable, and said share be reconveyed to her estate; (2) that the TCT issued in the name of Felix Go Chan
and Sons Realty Corporation be cancelled; and (3) that the plaintiff be indemnified by way of attorneys fees and
payment of costs of suit.

The trial court rendered judgment declaring the deed of sale null and void, insofar as the one-half pro-indiviso
share of Concepcion Rallos in the property in question, and sentencing Juan Borromeo, the administrator of the
estate of Simeon Rallos, to pay Felix Go Chan and Sons Realty Corporation the sum representing the price of onehalf of the lot. The appellate court reversed the decision and sustained the sale.
ISSUE: Whether or not the sale of the agent of the principals property after the latters death is valid
HELD: NO. The general rule in Article 1919 of the NCC is that death is one of the causes for the extinguishment of
agency. There being an integration of the personality of the principal into that of the agent, it is not possible for
the representation to continue once the death of either is established. There are certain exceptions, however,
Article 1931 being one of them. Under this provision, an act done by the agent after the death of the principal is
valid and effective if two conditions concur: (1) the agent acted without knowledge of the death of the principal;
and (2) that the third person who contracted with the agent acted in good faith. But because it was established
that Simeon Rallos had knowledge of the death of his principal when he made the sale, Article 1931 will not apply.
The general rule shall apply then that any act of an agent after the death of his principal is void ab initio. Simeon
Rallos act of selling the share of Concepcion after her death is therefore null and void.
AGENCY:
The relationship of agency is whereby one party, called the principal (mandante), authorizes another, called the
agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of
agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the
execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself,
and (4) the agent acts within the scope of his authority.
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. Qui facit per alium facit se. "He who acts through another acts himself".