CHAPTER 4
commission?
Modes of Extinguishment of Agency
Article 1919. Agency is extinguished:
(1) By its revocation;
(2) By the withdrawal of the agent;
(3) By the death, civil interdiction, insanity or insolvency of the principal
or of the agent;
(4) By the dissolution of the firm or corporation which entrusted or
accepted the agency;
(5) By the accomplishment of the object or purpose of the agency;
(6) By the expiration of the period for which the agency was constituted.
(1732a)
Article 1920. The principal may revoke the agency at will, and compel the
agent to return the document evidencing the agency.
Such revocation may be express or implied. (1733a)
INFANTE vs. CUNANAN
CASE NUMBER: G.R. No. L-5180
DATE: August 31, 1953
PONENTE: BAUTISTA ANGELO, J.
FACTS:
1. Consejo Infante owns of two parcels of land with a house built thereon in Manila
2. Infante contracted the services of Jose Cunanan and Juan Mijares, to sell the
property for a price of P30,000 subject to the condition that the purchaser would
assume the mortgage existing thereon in the favor of the Rehabilitation Finance
Corporation. 3. Infante agreed to pay them a commission of 5% on the purchase
price plus whatever overprice they may obtain for
Page 37
the property. 4. Cunanan & Mijares found one Pio S. Noche who was willing to buy
the property under the terms agreed upon with Infante but when they introduced
him to Infante the latter informed them that she was no longer interested in selling
the property and succeeded in making them sign a document stating therein that
the written authority she had given them was already can-celled. 5. However,
Infantedealt directly with Pio S. Noche selling to him the property for P31,000. 6.
Upon learning this transaction, Cunanan & Mijares demanded from Infante the
payment of their commission, but she refused and so they brought the present
action.
ISSUE: Were Cunanan and Mijares as brokers entitled to payment of their
RULING: YES
1. After infante had given the written authority to respondents to sell her land for
the sum of P30,000, respondents found a buyer in the person of one Pio S. Noche
who was willing to buy the property under the terms agreed upon, and this matter
was immediately brought to the knowledge of Infante. 2. Infante, perhaps by way of
strategem, advised respondents that she was no longer interested in the deal and
was able to prevail upon them to sign a document agreeing to the cancellation of
the written authority. 3. Infante had changed her mind even if respondents had
found a buyer who was willing to close the deal, is a matter that would not give rise
to a legal consequence if respondents agree to call off the transaction in deference
to the request of the petitioner. But the situation varies if one of the parties takes
advantage of the benevolence of the other and acts in a manner that would
promote his own selfish interest. This act is unfair as would amount to bad faith.
This act cannot be sanctioned without according to the party prejudiced the reward
which is due him. This is the situation in which respondents were placed by
petitioner. 4. Infante took advantage of the services rendered by respondents, but
believing that she could evade payment of their commission, she made use of a
ruse by inducing them to sign the deed of cancellation Exhibit 1. This act of
subversion cannot be sanctioned and cannot serve as basis for petitioner to escape
payment of the commission agreed upon.
DANONA vs. BRIMO & CO.
CASE NUMBER: G.R. No. 15823
DATE: September 12, 1921
PONENTE: JOHNSON, J.:
FACTS:
Danon was employed byHolland American Oil Co thru its manager, Antonio A.
Brimo,to look for a purchaser of its factoryfor the sum of P1,200,000, payable in
cash;
Brimopromised to pay the Danon, as compensation for his services, a
commission of five per cent on the said sum of P1,200,000, if the sale was
consummated, or if he should find a purchaser ready, able and willing to buy said
factory for the said sum of P1,200,000;
No definite period of time was fixed where Danon should effect the sale. It seems
that 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 the fact
either by Brimo himself or by someone else; at least, it is probable that Dano was
aware that he was not alone in the field, and his whole effort was to forestall his
competitor by being the first to find a purchaser and effect the sale.
 Danon found such a purchaser, but Brimo refused to sell the said factory without
any justifiable motive or reason therefor and without having previously notified
Danon of its desistance or variation in the price and terms of the sale.
RTC ruled in favor of Danon
CA affirmed RTCs ruling
ISSUE: Was Danon as broker entitled to payment of his commission?
RULING: NO
The broker must be the efficient agent or the procuring cause of 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.
Under the proofs in this case, the most that can be said as to what the plaintiff had
accomplished is, that 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
in question at the fixed price of P1,200,000. The board of directors of said
corporation had not resolved to purchase said property; and even if its president
could legally make the purchase without previous formal authorization of the board
of directors, yet said president does not pretend that he had definitely and formally
agreed to buy the factory in question on behalf of his corporation at the price
stated.
In all the cases, under all and varying forms of expression, the fundamental and
correct doctrine, is, that the duty assumed by the broker is to bring the minds of the
buyer and seller to an agreement for a sale, and the price and terms on which it is
to be made, and until that is done his right to commissions does not accrue. It
follows, as a necessary deduction from the established rule, that a broker is never
entitled to commissions for unsuccessful efforts. The risk of a failure is wholly his.
The undertaking to procure a purchaser requires of the party so undertaking, not
simply to name or introduce a person who may be willing to make any sort of
contract in reference to the property, but to produce a party capable, and who
ultimately becomes the purchaser.
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 of course 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.
Article 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. (1734)
Article 1922. If the agent had general powers, revocation of the agency
does not prejudice third persons who acted in good faith
and without knowledge of the revocation. Notice of the revocation in a
newspaper of general circulation is a sufficient warning to
third persons. (n)
Article 1923. The appointment of a new agent for the same business or
transaction revokes the previous agency from the day on
which notice thereof was given to the former agent, without prejudice to
the provisions of the two preceding articles. (1735a)
Article 1924. The agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third
persons. (n)
Article 1925. When two or more principals have granted a power of
attorney for a common transaction, any one of them may
revoke the same without the consent of the others. (n)
Article 1926. A general power of attorney is revoked by a special one
granted to another agent, as regards the special matter
involved in the latter. (n)
RALLOS vs. YANGCO
CASE NUMBER: 6906
DATE: September 27, 1911
PONENTE: Moreland, J.
FACTS:
Yangco sent a letter of invitation to rallos.
This was an invitation regarding the buying and selling of tobacco
In the letter, it was stated that collantes would be his agent and that as agent
collantes would be acting in his behalf.
This arrangement was accepted by rallos
At one point, rallos gave collantes 218 bundles of tobacco, which was sold at a
price of 1744 pesos
206 pesos was deducted for charges involving the sale, leaving the sum of 1537
pesos.
This amount was not remitted by collantes to rallos.
Apparently, collantes used the money for his personal gain
Rallos was now claiming from yangco the unpaid amount for the sale of tobacco.
Yangco refused, saying that collantes was no longer connected with him.
Yangco also claims that at the time when the 218 bundles of tobacco was given
to collantes, the latter was no longer acting as his factor.
Page 31
This then forced rallos to file a collection case.
The lower court ruled in favor of rallos.
ISSUE: Should yangco still be liable for the acts of collantes, considering that
collantes was no longer his agent at the time of the transaction?
RULING: YES!! Yangco is still liable
Yangco did not even inform rallos that collantes was no longer his agent.
Furthermore, yangco advertised collantes to be his agent, he should have given
rallos timely notice that he had already severed ties with collantes.
The negligence of yangco to give timely notice to rallos, makes him liable for the
acts of collantes.
It was the duty of yangco to notify rallos regarding the severed relation with
collantes.
RAMNANI v. CA
196 scra 731; May 7, 1991
Ponente: J. Gancayco

FACTS:
Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the
full blood. Ishwar and his spouse Sonya had their main business based in New York.
Realizing the difficulty of managing their investments in the Philippines they
executed a general power of attorney on January 24, 1966 appointing Navalrai and
Choithram as attorneys-in-fact, empowering them to manage and conduct their
business concern in the Philippines
were burned later, Choithram was able to build two other buildings on the property.
He rented them out and collected the rentals. Through the industry and genius of
Choithram, Ishwar's property was developed and improved into what it is now.
Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts. Perhaps this Solomonic solution may pave the way towards
their reconciliation. Both would stand to gain. No one would end up the loser. After
all, blood is thicker than water.

On February 1, 1966 and on May 16, 1966, Choithram entered into two agreements Garcia v. de Manzano, 39 Phil 577 ANGELA
for the purchase of two parcels of land located in Barrio Ugong, Pasig, Rizal, from
1919
Ortigas & Company, Ltd. Partnership. A building was constructed thereon by
Moir, J.
Choithram in 1966. Three other buildings were built thereon by Choithram through
FACTS
a loan of P100,000.00 obtained from the Merchants Bank as well as the income
Narciso gave a general power of attorney
derived from the first building.
to his son, Angel L. Manzano on the 9th of
February, 1910, and on the 25th of March a
Sometime in 1970 Ishwar asked Choithram to account for the income and expenses
second general power-of-attorney to his wife,
relative to these properties during the period 1967 to 1970. Choithram failed and
Josefa Samson.
refused to render such accounting. Thereafter, Ishwar revoked the general power of
Angel, acting under his GPA sold Narcisos
attorney. Choithram and Ortigas were duly notified of such revocation on April 1,
half interest to the steamer San Nicolas, and
1971 and May 24, 1971, respectively. Said notice was also registered with the
mortgaged 3 parcels of land in Antimonan to
Securities and Exchange Commission on March 29, 1971 and was published in the
Juan Garcia.
April 2, 1971 issue of The Manila Times for the information of the general public.
Upon Narcisos death, Josefa was named
administratrix to Narcisos properties.
Nevertheless, Choithram, transferred all rights and interests of Ishwar and Sonya in
Garcia brought action against Narcisos
favor of his daughter-in-law, Nirmla Ramnani, on February 19, 1973.
Estate to foreclose the mortgage.
ISSUES [as raised in Josefas counterclaim]
On October 6, 1982, Ishwar and Sonya filed a complaint against Choitram and/or
1. WON the power of attorney of Josefa revoked
spouses Nirmla and Moti and Ortigas for reconveyance of said properties or
that of Angel?
payment of its value and damages.
2. WON Angels GPA authorize her to sell the boat ?
HELD/RATIO:
ISSUE:
1. NO
Art. 1735 [now 1923a] provides: The
Whether Ishram can recover the entire properties subject in the ligitation appointment of a new agent for the same
business produces a revocation of the previous
HELD: agency from the day on which notice was
given to the former agent, excepting the
No, Ishram cannot recover the entire properties subject. provisions of the next preceding article.
There is no proof in the record that the first
The Supreme Court held that despite the fact that Choithram, et al., have agent, the son, knew of the power-of-attorney
committed acts which demonstrate their bad faith and scheme to defraud spouses to his mother.
Ishwar and Sonya of their rightful share in the properties in litigation, the Court It was necessary for the defendants to
cannot ignore the fact that Choithram must have been motivated by a strong prove that the son had notice of the second
conviction that as the industrial partner in the acquisition of said assets he has as power-of-attorney. As they have not done so,
much claim to said properties as Ishwar, the capitalist partner in the joint venture. and it must be considered that Angel L.
Manzano was acting under a valid power-ofattorney
from his father which had not been
Choithram in turn decided to invest in the real estate business. He bought the two
legally revoked on the date of the sale of the
(2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar. Instead of
half interest in the steamer to the Garcia.
paying for the lots in cash, he paid in installments and used the balance of the
2. YES.
capital entrusted to him, plus a loan, to build two buildings. Although the buildings
 The power-of-attorney 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.
CMS Logging v. CA (TOPE)
1992
J. Nocon
Facts:
Petitioner CMS is a forest concessionaire
engaged in the logging business, while private
respondent DRACOR is engaged in the
business of exporting and selling logs and
lumber. On August 28, 1957, CMS and DRACOR
entered into a contract of agency whereby the
former appointed the latter as its exclusive
export and sales agent for all logs that the
former may produce, for a period of five (5)
years.
One of the provisions indicated that DRACOR
was to handle all negotiations.
6 months before the CoAgency was about to
expire CMS president went to Tokyo and found
out that DRACOR sold CMS logs through Shinko
Trading and earned a commission of $1 per
1000 bd. Ft. of logs.
CMS claimed that this commission paid to
Shinko was in violation of the agreement and
that it (CMS) is entitled to this amount as part
of the proceeds of the sale of the logs. CMS
contended that since DRACOR had been paid
the 5% commission under the agreement, it is
no longer entitled to the additional commission
paid to Shinko as this tantamount to DRACOR
receiving double compensation for the services
it rendered.
CMS later shipped and sold directly to Japanes
buyers without the help of DRACOR.
DRACOR counterclaims for the commissions on
these transactions.
CA found no evidence that Shinko collected the
commissions
Issue:
1. WoN Shinko received the commissions
2. WoN DRACOR is entitled to the commissions on
the Direct Sales of CMS to Japanese buyers
1. Petition unmeritorious, no evidence. The
finding of fact was only based on a summary
from CMS itself.
Moreover, even if it was shown that Shinko did in
fact receive the commissions in question, CMS is
not entitled thereto since these were apparently
paid by the buyers to Shinko for arranging the sale.
This is therefore not part of the gross sales of
CMS's logs.
2. No. We find merit in CMS's contention that
the appellate court erred in holding that
DRACOR was entitled to its commission from
the sales made by CMS to Japanese firms.
The principal may revoke a contract of agency at
will, and such revocation may be express, or
implied, and may be availed of even if the period
fixed in the contract of agency as not yet expired.
As the principal has this absolute right to revoke
the agency, the agent can not object thereto;
neither may he claim damages arising from such
revocation, unless it is shown that such was done
in order to evade the payment of agent's
commission.
In the case at bar, CMS appointed DRACOR as its
agent for the sale of its logs to Japanese firms. Yet,
during the existence of the contract of agency,
DRACOR admitted that CMS sold its logs directly to
several Japanese firms. This act constituted an
implied revocation of the contract of agency under
Article 1924 of the Civil Code, which provides:
Art. 1924 The agency is revoked if the
principal directly manages the business
entrusted to the agent, dealing directly
with third persons.
Since the contract of agency was revoked by CMS
when it sold its logs to Japanese firms without the
intervention of DRACOR, the latter is no longer
entitled to its commission from the proceeds of
such sale and is not entitled to retain whatever
moneys it may have received as its commission for
said transactions. Neither would DRACOR be
entitled to collect damages from CMS, since
damages are generally not awarded to the agent
for the revocation of the agency, and the case at
bar is not one falling under the exception
mentioned, which is to evade the payment of the
agent's commission.

Dy Buncio and Co v Ong Guan Ca
This is a suit over a rice mill
and camarin situated at Dao, Province of Capiz.
Plaintiff claims that the property belongs to its
judgment debtor, Ong Guan Can, while defendants
Juan Tong and Pua Giok Eng claim as owner and
lessee of the owner by virtue of a deed dated July
31, 1931, by Ong Guan Can, Jr.
After trial, the Court of First Instance of Capiz
held that the deed was invalid and that the
property was subject to the execution which has
been levied on said properties by the judgment
creditor of the owner. Defendants Juan Tong and
Pua Giok bring this appeal and insist that the deed
of the 31st of July, 1931, is valid.
The first recital of the deed is that Ong Guan
Can, Jr., as agent of Ong Guan Can, the proprietor
of the commercial firm of Ong Guan Can & Sons,
sells the rice-mill and camarin for P13,000 and
gives as his authority the power of attorney dated
the 23d of May, 1928, a copy of this public
instrument being attached to the deed and
recorded with the deed in the office of the register
of deeds of Capiz. The receipt of the money
acknowledged in the deed was to the agent, and
the deed was signed by the agent in his own name
and without any words indicating that he was
signing it for the principal.
Leaving aside the irregularities of the deed
and coming to the power of attorney referred to in
the deed and registered therewith, it is at once
seen that it is not a general power of attorney but
a limited one and does not give the express power
to alienate the properties in question. (Article 1713
of the Civil Code.)
Appellants claim that this defect is cured by
Exhibit 1, which purports to be a general power of
attorney given to the same agent in 1920. Article
1732 of the Civil Code is silent over the partial
termination of an agency. The making and
accepting of a new power of attorney,
whether it enlarges or decreases the power
of the agent under a prior power of attorney,
must be held to supplant and revoke the
latter when the two are inconsistent. If the
new appointment with limited powers does
not revoke the general power of attorney,
the execution of the second power of
attorney would be a mere futile gesture.
The title of Ong Guan Can not having been
divested by the so-called deed of July 31, 1931, his
properties are subject to attachment and
execution.
A special power of atty giving the son the authority
to sell the principals properties is deemed revoked
by a subsequent general power of atty that does
not give such power to the son, and any sale
effected thereafter by the son in the name of the
father would be void.
The judgment appealed from is therefore
affirmed. Costs against appellants. So ordered.
Article 1927. 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. (n)
SEVILLA VS. COURT OF APPEALS
CASE NUMBER: L-41182-3
DATE: APRIL 15, 1988
PONENTE: SARMIENTO, J.
FACTS:
1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila to Tourist
World Service, Inc. (TWSI), represented by Eliseo Canilao, for the latters use as
branch office.
2. In the said contract Mrs. Lina Sevilla held herself solidarily liable with TWSI for the
prompt payment of the monthly rental agreed on.
3. When the branch office was opened, the same was run by petitioner Mrs. Sevilla,
who was designated as branch manager by TWSI. For any fare bought in on the
efforts of Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by TWSI
4. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connected
with a rival travel firm. Since the branch office was losing, TWSI considered closing
it down. The firms board of directors issued two resolutions; the first abolishing the
office of manager of the Ermita Branch Office and the second, authorizing the
corporate secretary to receive the property of TWSI in said branch
5. In January 1962, the lease contract to use the premises as branch office was
terminated. In June 1962, the Corporate Secretary went over to the office to comply
with the mandate of the resolutions. Finding the premises locked and unable to
contact Mrs. Sevilla, he padlocked the premises to protect the interests of TWSI
6. As such, petitioners Spouses Sevilla filed a complaint against respondents TWSI,
Canilao and Noguera, praying for mandatory preliminary injunction. Petitioners
claim that Mrs. Sevillas relationship with TWSI was one of joint business venture
and notone of employment.
7. In its answer, TWSI contend that Mrs. Sevilla was its employee and as such was
designated manager.
8. The trial court held for the private respondents. It ruled that TWSI, being the true
lessee, has the privilege to terminate the lease and padlock the premises. It also
held that Mrs. Sevilla was a mere employee of TWSI and that she was bound by the
act of her employer.
9. The Court of Appeals affirmed said decision, Hence, the instant petition.
ISSUE: WON there is a contract of agency between respondent-principal TWSI and
petitioner Sevilla? If yes, should
Page 23
principal TWSI be liable for damages for its unwarranted revocation of the contract
of agency?
YES for both.
Decision: Decision of CA is REVERSED and SET ASIDE. Costs against respondent
TWSI
RULING: 1. This case involves a contract of Agency. There is neither joint venture
between nor partnership TWSI and Mrs. Sevilla The relationship of said parties is
one that of a principal and an agent. Case at bar:
o Petitioner Sevilla agreed to man the Ermita office of respondent TWSI based on a
contract of agency. o It is the essence of this contract that the agent renders
services in representation or on behalf of another
o Sevilla solicited airline fares but she did so for and on behalf of her principal TWSI.
As compensation, she received 4% of the proceeds in the concept of commissions.
Sevilla pre-assumed her principals authority as owner of the business undertaking.
Considering the facts, this case involves a principal-agent relationship rather than a
joint management or partnership. o But unlike simple grants of a power of attorney,
the agency that the Court here by declares to be compatible with the intent of the
parties cannot be revoked at will. o The reason is that it is an agency coupled with
an interest, the agency having been created for mutual interest of the agent and
the principal. o In this case, the agency cannot be revoked at the pleasure of the
principal. This unwarranted revocation of the contract of agency entitles petitioner
Sevilla to damages Respondent TWIS is liable for P 25,000 moral damages, P
10,000 exemplary damages, P 5,000 nominal damages and/or temperate damages.
Article 1928. The agent may withdraw from the agency by giving due
notice to the principal. If the latter should suffer any damage
by reason of the withdrawal, the agent must indemnify him therefor,
unless the agent should base his withdrawal upon the
impossibility of continuing the performance of the agency without grave
detriment to himself. (1736a)
Article 1929. The agent, even if he should withdraw from the agency for a
valid reason, must continue to act until the principal has
had reasonable opportunity to take the necessary steps to meet the
situation. (1737a)
Article 1930. The agency shall remain in full force and effect even after
the death of the principal, if it has been constituted in the
common interest of the latter and of the agent, or in the interest of a third
person who has accepted the stipulation in his favor. (n)
Article 1931. Anything done by the agent, without knowledge of the death
of the principal or of any other cause which extinguishes
the agency, is valid and shall be fully effective with respect to third
persons who may have contracted with him in good faith. (1738)
Article 1932. If the agent dies, his heirs must notify the principal thereof,
and in the meantime adopt such measures as the
circumstances may demand in the interest of the latter. (1739)
PASNO v. FORTUNATA RAVINA
G.R. No. L-31581 February 3, 1930
FACTS:
Gabina Labitoria during her lifetime mortgaged three
parcels of land to the Philippine National Bank to secure an
indebtedness of P1,600. It was stipulated in the mortgage,
among other things, that the mortgagee "may remove, sell or
dispose of the mortgaged property or any buildings,
improvements or other property in, on or attached to it and
belonging to the mortgagor in accordance with the provisions
of Act No. 3135 or take other legal action that it may deem
necessary." The mortgagor died, and a petition was
presented in court for the probate of her last will and
testament. During the pendency of these proceedings, a
special administrator was appointed by the lower court who
took possession of the estate of the deceased, including the
three parcels of land mortgaged to the Philippine National
Bank. The estate having failed to comply with the conditions
of the mortgage, the Philippine National Bank, pursuant to
the stipulations contained in the same, asked the sheriff of
Tayabas to proceed with the sale of the parcels of land. When
the attorney for the special administrator received notice of
the proposed action, he filed a motion in court in which an
order was asked requiring the sheriff to vacate the
attachment over the mortgaged properties and to abstain
from selling the same. The lower court granted the petition in
an order of February 14, 1929, and later denied a motion for
reconsideration presented on behalf of the Philippine
National Bank.
The mortgage makes special reference to Act No.
3135. That Act is one to regulate the sale of property under
special powers inserted in or annexed to real-estate
mortgages. It fails to make provision regarding the sale of
mortgaged property which is in custodia legis. Under these
circumstances, it would be logical to suppose that the
general provisions of Philippine law would govern this latter
contingency. It is a familiar rule that statutes in pari materia
are to be read together. The legislative body which enacted
Act No. 3135 must be presumed to have been acquainted
with the provisions of such a well known law as the Code of
Civil Procedure and to have passed Act No. 3135 with
reference thereto.
ISSUE:
Whether the right of sale of the
mortgaged property can survive and can be enforced under
special power while the mortgaged property is in custodia
legis
HELD:
The power of sale given in a mortgage is a power coupled
with an interest which survives the death of the grantor. One
case, that of Carter vs. Slocomb ([1898], 122 N. C., 475), has
gone so far as to hold that a sale after the death of the
mortgagor is valid without notice to the heirs of the
mortgagor. However that may be, conceding that the power
of sale is not revoked by the death of the mortgagor,
nevertheless in view of the silence of Act No. 3135 and in
view of what is found in section 708 of the Code of Civil
Procedure, it would be preferable to reach the conclusion that
the mortgagee with a power of sale should be made to
foreclose the mortgage in conformity with the procedure
pointed out in section 708 of the Code of Civil Procedure.
That would safeguard the interests of the estate by putting
the estate on notice while it would not jeopardize any rights
of the mortgagee. The only result is to suspend temporarily
the power to sell so as not to interfere with the orderly
administration of the estate of a decedent. A contrary
holding would be inconsistent with the portion of our law
governing the settlement of estates of deceased persons.
It results that the trial judge committed no error in sustaining
the petition of the administrator of the estate of the
deceased Gabina Labitoria and in denying the motion of the
Philippine National Bank.
Agreeable to the foregoing pronouncements, the
judgment and orders appealed from will be affirmed, with
one-half of the costs of this instance against the oppositors
and appellants Fortunata Ravina and Ponciano Ravina, and
the other half of the costs of this instance against the
Philippine National Bank.
PEREZ V PNB
Del Rosario v. Abad, 104 Phil 648 - ABBY
1958; Padilla
Facts:
Plaintiffs are the children and heirs of Tiburcio
del Rosario. Del Rosario was a grantee of a
homestead patent in Nueva Ecija. The
Certificate was issue Feb 11, 1937. He obtained
a loan from Primitivo Abad Feb 24, 1937
(remember the 5 yr prohibition from
encumbrance rule) for P2000 at 12% pa
payable Dec 1941.
The security for the payment was the
improvement on the parcel of land. An
irrevocable special power of attorney was also
executed authorizing Abad to sell and convey
the parcel of land.
December 1945 Tiburcio died leaving the
mortgage debt unpaid. Later, Primitivo sold
the land to his son Teodorico Abad for P1. Title
now registered in Teodoricos name.
Del Rosario heirs filed suit for recovery and
possession of the land.
Issue:
1. WoN Power of Attorney created an agency
coupled with an interest
2. WoN the land was sold validly
Held: No. The power of attorney executed by the
homesteader in favor of Abad did not create an
agency nor did it clothe the agency with
irrevocable character. A mere statement in the
power of attorney that it is coupled with an interest
is not enough. In what does such interest consist
must be stated in the power of attorney. The
mortgage has nothing to do with the power of
attorney and may be foreclosed by the mortgagee
upon the failure of the mortgagor to comply with
his obligation. 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 land. Hence, the sale was null and void.
Granting that the PoA in question was valid it
would subject the land to an encumbrance.
(executed within 5 yrs after issuance of the patent,
the same is null and void.)
BUASON V PANUYAS
FACTS: Spouses Dayao acquired a homestead patent over
a parcel of land (14hec) in Nueva Ecija. In 1930, they
executed a power of attorney authorizing Bayuga to
engage the services of an attorney to prosecute their
case against Gambito for annulment of a contract of sale
of the parcel of land and after the termination of the
case in their favor to sell it, and from the proceeds of
the sale to deduct whatever expenses he had incurred in
the litigation.
In 1934, Dayao-husband died leaving his wife and 4
children and in 1939, the 4 children executed a deed of
sale over 12 hec in favor of Buason. The Dayao-wife
affixed her thumbmark as witness. Buason took
possession of the land through their tenants that same
year.
In 1944, Bayuga sold 8 hec to Panuyas and Cruz. Bayuga
died in 1946 and Dayao-wife in 1954.
Buason and Panuyas claimed ownership over the same
parcel of land. RTC ruled in favor of Panuyas, declaring
that Buason was barred by prescription.
ISSUE: W/N the death of Dayao (principal) ended the
authority of the agent
HELD: NO. It was not shown that Bayuga knew about the
death of his principal, Dayao. Art. 1931 states that
anything done by the agent, without the knowledge of
the death of the principal or of any other cause which
extinguishes the agency, is valid and shall be fully
effective with respect to third persons who may have
contracted with him in good faith.
Therefore, since the sale by the agent to Panuyas was
registered, while the sale to Buason was not, the former
has a better right over the parcel of land than the latter.
18. HERRERA V UY KIM GUAN (ART. 1931)
FACTS: Natividad Herrera is the legitimate daughter of
Luis Herrera, now deceased and who died in China
sometime after he went to that country. Luis was the
owner of the three parcels of land and their
improvements. Before leaving for China, Luis executed a
deed of General Power of Attorney, which authorized
and empowered Uy Kim Guan among others to administer
and sell the properties of Luis.
Lots were sold after 1936. As admitted by both parties,
Luis is now deceased, but as to the specific and precise
date of his death, the evidence of both parties fails to
show.
ISSUE: W/N the sale of the lands is valid
HELD: YES. The date of death of Luis has not been
satisfactorily proven. The only evidence presented by the
plaintiff is a supposed letter received from a certain
Candi, dated Nov. 1936, purporting to give information
that Luis (without mentioning his name) had died in
August that year. This was properly rejected by the trial
court for lack of identification. The testimony of the
witness Lu Chung Chian that when he was in Amoy in the
year 1940, Luis visited him. Since the documents had
been executed in 1937 and 1939, it is evident that the
documents were executed during the lifetime of the
principal.
Even granting arguendo that Luis did die in 1936,
plaintiffs presented no proof that the agent Uy 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.
RALLOS vs. FELIX GO CHAN & SONS REALTY CORPORATION
CASE NUMBER: L-24332
DATE: January 31, 1978
PONENTE: Munoz-Palma, J.
FACTS: Concepcion and Gerundia Rallos were sisters and registered co-owners of
a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu covered by
Transfer Certificate of Title No. 11116 of the Registry of Cebu. They executed a
special power of attorney in favor of their brother, Simeon Rallos, authorizing him to
sell such land for and in their behalf. After Concepcion died, Simeon Rallos sold
the undivided shares of his sisters Concepcion and Gerundia to Felix Go Chan &
Sons Realty Corporation for the sum of P10,686.90. New TCTs were issued to the
latter. Petitioner Ramon Rallos, administrator of the Intestate Estate of
Concepcion filed a complaint praying (1) that the sale of the undivided share of the
deceased Concepcion Rallos in lot 5983 be unenforceable, and said share be
reconveyed to her estate; (2) that the Certificate of 'title issued in the name of Felix
Go Chan & Sons Realty Corporation be cancelled and another title be issued in the
names of the corporation and the "Intestate estate of Concepcion Rallos" in equal
undivided and (3) that plaintiff be indemnified by way of attorney's fees and
payment of costs of suit. CFI: [Plaintiffs Complaint] Sale of land was null and void
insofar as the one-half pro-indiviso share of Concepcion Rallos Ordered the
issuance of new TCTs to respondent corporation and the estate of Concepcion in the
proportion of share each pro-indiviso and the payment of attorneys fees and cost
of litigation [Respondent filed cross claim against Simon Rallos(*Simon and
Gerundia died during pendency of case)] Juan T. Borromeo, administrator of the
Estate of Simeon Rallos was ordered to pay defendant the price of the share of
the land (P5,343.45) plus attorneys fees [Borromeo filed a third party complaint
against Josefina Rallos, special administratrix of the Estate of Gerundia]
Dismissed without prejudice to filing either a complaint against the regular
administrator of the Estate of Gerundia Rallos or a claim in the Intestate-Estate of
Cerundia Rallos, covering the same subject-matter CA: CFI Decision reversed,
upheld the sale of Concepcions share. MR: denied.
ISSUES & RULING: 1) WON sale was valid although it was executed after the death
of the principal, Concepcion.? Sale was void. o No one may contract in the name
of another without being authorized by the latter, or unless he has by law a right to
represent him (Art. 1317 of the Civil Code). o Simons authority as agent was
extinguished upon Concolacions death 2) WON sale fell within the exception to the
general rule that death extinguishes the authority of the agent The sale did not
fall under the exceptions to the general rule that death ipso jure extinguishes the
authority of the agent o Art. 1930 inapplicable: SPA in favor of Simon Rallos was not
coupled with interest o Art. 1931 inapplicable: Simon Rallos knew (as can be
inferred from his pleadings) of principal Concepcions death For Art 1931 to
apply, both requirements must be present 3) WON agents knowledge of the
principals death is a material factor. Yes, agents knowledge of principals death
is material. o Respondent asserts that: there is no provision in the Code which
provides that whatever is done by an agent having knowledge of the death of his
principal is void even with respect to third persons who may have contracted with
him in good faith and without knowledge of the death of the principal o Court says:
this contention ignored the ignores the existence of the general rule enunciated in
Article 1919 that the death of the principal extinguishes the agency. Article 1931,
being an exception to the general rule, is to be strictly construed.