REVOCATION OF AGENT'S AUTHORITY : The time during which the agent may hold his Marina did not
Marina did not immediately reply and tell him of his decision on the matter. After several
position is indefinite or undetermined, when no period has been fixed in his commission
and so long as the confidence reposed in him by the principal exists; but as soon as this
confidence disappears the principal has a right to revoke the power he conferred upon
the agent, especially when the latter has resigned his position for good reasons. (Art.
1733, Civil Code; art. 279, Code of Commerce.)
ANTONIO M. A. BARRETTO, plaintiff-appellant,
vs.
JOSE SANTA MARINA, defendant-appellee.
Hausserman, Cohn and Fisher, for appellant.
W. A. Kincaid and Thos. L. Hartigan, for appellee.
G.R. No. L-8169
December 29, 1913
Ponente: TORRES, J.
NATURE OF CASE
APPEAL from a judgment and an order of the Court of First Instanceof Manila.
FACTS
The plaintiff, Antonio M.A. Barretto, was an agent and manager of Jose Santa Marina, the
defendant, a resident of Spain and the owner and proprietor of the business known as the
La Insular Cigar and Cigarette Factory. The petitioner alleged that the defendant, without
reason, justification, or pretext and in violation of the contract of agency, summarily and
arbitrarily dispensed with the plaintiff's services and removed him from the management
of the business.
The evidence showed that the plaintiff Barretto's renunciation or registration of the
position he held as agent and manager of the said factory was freely and voluntarily made
by him on the occasion of the insolvency and disappearance of a Chinese man who had
bought from the factory products and, without paying this large debt, disappeared and
has not been seen since. Barretto sent a letter of resignation to Santa Marina and Santa
months, Barretto was informed that the power conferred upon him by the defendant has
been revoked and the latter had already appointed J. McGavin to substitute him.
ISSUE/s of the CASE
Whether the contract of agency was validly revoked.
ACTION OF THE COURT
Court of First Intance: Sentenced the defendant to pay to the plaintiff the salary to which
he was entitled for the first eight days of January, 1910, also that for the following month,
at the rate of P3,083.33 per month, without special finding as to costs, and dismissed the
second cause of action contained in the complaint presented in that case.
SC: Affirmed
COURT RATIONALE ON THE ABOVE CASE
Yes, the contract of agency between the plaintiff and the defendant is validy revoked.
Barretto was not really dismissed or removed by Santa Marina. Rather, Barretto resigned
as the defendant’s agent and manager as evidenced by the letter he sent to the
defendant.
Article 1733 of the civil Code, applicable to the case at bar, according to the provisions of
article 2 of the Code of Commerce, 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."1awphi1.net
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.
The fixing of the period by the Courts in their contracts cannot be invoked since the rights
and obligations existing between Barretto and Santa Marina are absolutely different from
those to which it refers, for, according to article 1732 of the Civil Code, agency is
terminated:
1. By revocation.
2. By withdrawal of the agent.
3. By death, interdiction, bankruptcy, or insolvency of the principal or of the
agent.
It is not incumbent upon the courts to fix the period during which contracts for services
shall last. Their duration is understood to be implicity fixed, in default of express
stipulation, by the period for the payment of the salary of the employee.
Article 302 of the Code of Commerce reads thus:
In cases in which no special time is fixed in the contracts of service, any one of
the parties thereto may dissolve it, advising the other party thereof one month in
advance.
The factor or shop clerk shall be entitled, in such case, to the salary due for one
month.
From the mere fact that the principal no longer had confidence in the agent, he is entitled
to withdraw it and to revoke the power he conferred upon the latter, even before the
expiration of the period of the engagement or of the agreement made between them;
but, in the present case, once it has been shown that, between the deceased Joaquin
Santa Marina and the latter's heir, now the defendant, on the one hand, and the plaintiff
Barretto, on the other, no period whatever was stipulated during which the last-named
should hold the office and manager of the said factory, it is unquestionable that the
defendant, even without good reasons, could lawfully revoke the power conferred upon
the plaintiff and appoint in his place Mr. McGavin, and thereby contracted no liability
whatever other than the obligation to pay the plaintiff the salary pertaining to one month
and some odd days.
SUPREME COURT RULING
For the foregoing reasons, whereby the errors assigned to the said judgment and order
are deemed to have been refuted, both judgment and order are hereby affirmed, with
costs against the appellant.
Modes of Extinguishment of Agency (Week 12)
A power of attorney although coupled with interest in a partnership can be revoked for a
just cause, such as when the attorney-in-fact betrays the interest of the principal, as what
happened in the case at bar.
COLEONGCO VS. CLAPAROLS
VICENTE M. COLEONGCO, plaintiff-appellant,
vs.
EDUARDO L. CLAPAROLS, defendant-appellee.
G.R. No. L-18616
March 31, 1964
REYES, J.B.L., J:
NATURE OF CASE
APPEAL from a decision of the Court of First Instance of Negros Occidental. Arellano, J.
BRIEF
Appeal by plaintiff Vicente Coleongco from a decision of the Court of First Instance of
Negros Occidental (in its Civil Case No. 4170) dismissing plaintiff's action for damages, and
ordering him to pay defendant Eduardo Claparols the amount of P81,387.27 plus legal
interest from the filing of the counterclaim till payment thereof; P50,000 as moral and
compensatory damages suffered by defendant; and costs.
FACTS
Claparols, operated a factory for the manufacture of nails under the style of "Claparols
Steel & Nail Plant". The raw material, nail wire, was imported from foreign sources and
Claparols had a regular dollar allocation therefor. The marketing of the nails was handled
by the "ABCD Commercial" of Bacolod, which was owned by Kho To. Losses compelled
him to look for someone to finance his imports of nail wires. Kho To agreed to do the
financing but he introduced his compadre, Coleongco, to Claparols agreed, a contract was
perfected between them whereby Coleongco undertook to finance and put up the funds
required for the importation of the nail wire, which Claparols bound himself to convert
into nails at his plant. It was agreed that Coleongco would have the exclusive distribution
of the product, and the "absolute care in the marketing of these nails and the promotion
of sales all over the Philippines", except the Davao Agency; that Coleongco would "share
the control of all the cash" from sales or deposited in banks; that he would have a
representative in the management; that all contracts and transactions should be jointly
approved by both parties; that proper books would be kept and annual accounts
rendered; and that profits and losses would be shared "on a 50-50 basis". The contract
was renewed from 1 year to until 1958, and Coleongco's share subsequently increased by
5% of the net profit of the factory.
Claparols executed in favor of Coleongco, at the latter's behest a special power of
attorney to open and negotiate letters of credit, etc., to represent appellee and the nail
factory; and to accept payments and cash advances from dealers and distributors.
Coleongco also became the assistant manager of the factory, and took over its business
transactions, while Claparols devoted most of his time to the nail manufacture processes.
Claparols was disagreeably surprised by service of an alias writ of execution to enforce a
judgment obtained against him by the PNB despite the fact he had submitted an
amortization plan to settle the account. He learned that the execution had been procured
because of derogatory information against appellee that had reached the bank from his
associate, appellant Coleongco. The latter, without appellee's knowledge, had written to
the bank wherein he charged Claparols with taking machines mortgaged to the bank.
Claparols managed to arrange matters with the bank and to have the execution levy lifted.
The upshot was that appellee revoked the power of attorney and informed Coleongco
thereof by registered mail, demanding a full accounting at the same time. Coleongco,
protested these acts of Claparols, but the latter insisted and wrote a letter to Coleongco
dismissing him as assistant manager of the plant and asked auditors, to go over the books
and records of the business with a view to adjusting the accounts of the associates.
Further, it was found out that based on accounting, Coleongco owed certain sum to the
business.
Coleongco filed a suit against Claparols charging breach of contract, asking for accounting,
and praying for damages and attorney's fees, to which Claparols answered, denying the
charge, and counterclaiming for the rescission of the agreement with Coleongco by way of
damages.
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.
Article 1800 of the NCC declares that the powers of a partner, appointed as manager, in
the articles of copartnership areirrevocable 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. Appellee Coleongco acted in bad faith
towards his principal Claparols is, on the record, unquestionable His letters to the
Philippine National Bank attempting to undermine the credit of the principal and to
acquire the factory 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". These are plain acts of
deliberate sabotage by the agent that fully justified the revocation of the power of
attorney by Claparols and his demand for an accounting from his agent Coleongco.
SUPREME COURT RULING
IN VIEW OF THE FOREGOING, the decision appealed from is affirmed. Costs against
appellant Vicente Coleongco.

ISSUE/s of the CASE

Whether the power of attorney can be revoked by Claparols.

ACTION OF THE COURT

CFI: dismissing plaintiff's action for damages, and ordering him to pay defendant Eduardo
Claparols the amount of P81,387.27 plus legal interest from the filing of the counterclaim
till payment thereof; P50,000 as moral and compensatory damages suffered by
defendant; and costs.
SC:Decision affirmed.
COURT RATIONALE ON THE ABOVE CASE
Yes, a 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
Topic: Modes of Extinguishment of Agency
DY BUNCIO & COMPANY, INC., plaintiff-appelle,  the power of the agent under a prior power of attorney, must be held to supplant and
vs. revoke the latter when the two are inconsistent. If the new appointment with limited
ONG GUAN CAN, ET AL., defendants.  powers does not revoke the general power of attorney, the execution of the second
JUAN TONG and PUA GIOK ENG, appellants. power of attorney would be a mere futile gesture.lawphi1.net

Pedro Escolin for appellants.

G. Viola Fernando for appellee.

G.R. No. L-40681

October 2, 1934
HULL, J.

BRIEF

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.

FACTS

After trial the Court of First Instance of Capiz held that the deed was invalid,
defendants Juan Tong and Pua Giok bring this appeal and insist that the deed is valid.

The first recital of the deed is that Ong Guan Can, Jr., as agent of Ong Guan Can,
sells the rice-mill and camarin for P13,000 and gives as his authority the power of
attorney. 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. 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.

ISSUE

Whether or not Exhibit 1, which purports to be a general power of attorney,

cured the limited power?

SUPREME COURT

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 G.R. No. L-14248 . April 28, 1960 . EN BANC . GUTIERREZ DAVID,
NEW MANILA LUMBER COMPANY, INC., plaintiff-appellant,  since after the execution of the powers of attorney, the contractor (principal) demanded
vs. and collected from defendant the money the collection of which he entrusted to plaintiff,
REPUBLIC OF THE PHILIPPINES, defendant-appellee. the agency apparently has already been revoked. (Articles 1920 and 1924, new Civil
Code.)
NATURE:
The point is made by plaintiff that the powers of attorney executed by the contractor in its
Appeal from an order of dismissal of the CFI. favor are irrevocable and are coupled with interest. But even supposing that they are, still
their alleged irrevocability cannot affect defendant who is not a party thereto. They are
FACTS: obligatory only on the principal who executed the agency.
Republic of the Philippines, thru the Director of Schools, entered into a contract with DISPOSITIVE PORTION:
Alfonso Mendoza to build two school houses. Manila Lumber Co furnished the lumber
materials in the construction of the said buildings. Prior to the payment by the Republic of In view of the foregoing, the order of dismissal appealed from is affirmed, with costs
any amount due the contractor, the latter executed powers of attorney in favor of the against plaintiff-appellant.
Manila Lumber Co. "constituting it as his sole, true and lawful attorney-in-fact with
specific and exclusive authority to collect and receive from the Republic any and all
amounts in connection with the construction of the aforesaid school buildings, as may be
necessary to pay materials supplied by Manila Lumber". Powers of attorney were received
by the Republic (thru the Director of Public Schools) who promised to pay Manila Lumber,
but it, nevertheless, paid the contractor several amounts on different occasions without
first making payment to Manila Lumber.

Manila Lumber Company filed a complaint against the Republic of the Philippines for the
recovery of a sum of money for the unpaid balance of the cost of lumber supplied and
used in the construction of the school buildings.

Manila Lumber's complaint seeks to enforce against the Republic a money claim for the
payment of materials it furnished for the construction of two public school buildings
undertaken by contractor Alfonso Mendoza, on the basis of powers of attorney executed
by the latter authorizing said plaintiff to collect and receive from defendant Republic any
amount due or may be due to said contractor as contract price for the payment of the
materials so supplied.

CFI: sustained the motion to dismiss

ISSUE:

Whether the contract of agency has been extinguished by Mendoza’s act of collecting the
payment from the Republic.

HELD:

YES. The powers of attorney in question made Manila Lumber the contractor's agent in INFANTE VS. CUNANAN (WEEK 12)
the collection of whatever amounts may be due the contractor from the defendant. And
TOPIC: MODES OF EXTINGUISHMENT OF AGENCY
DOCTRINE:
If the purpose of the principal in dealing with the purchaser and himself effecting the sale
of the principal’s property is to avoid payment of his agent’s commission, the implied
revocation is deemed made in bad faith and cannot be sanctioned without according to
the agent the commission which is due to him. (taken from De Leon’s books).
CONSEJO INFANTE, petitioner,
vs.
JOSE CUNANAN, JUAN MIJARES and THE COURT OF APPEALS, SECOND DIVISION,
respondents.
---------------------------------------------------------------
G.R. No. L-5180
August 31, 1953
Ponente: BAUTISTA ANGELO, J.:
Nature of Case:
Petition for review
Brief:
This is a petition for review of a decision of the Court of appeals affirming the judgement
of the court of origin which orders the defendant to pay the plaintiffs the sum of P2,500
with legal interest thereon from February 2, 1949 and the costs of action.
Facts:
Mr. Consejo Infante owned two parcels of land with a house built thereon situated in the
City of Manila and covered by Transfer Certificate of Title No. 61786. She asked the
respondents Mr. Cunanan and Mr. Mijares to sell these properties on the condition that
the buyer would assume the existing mortgage on these properties in return of a 5%
commission plus the overprice they might obtain from the sale. The respondents found
Mr. Pio S. Noche and agreed to purchase the properties upon the terms agreed with the
defendants. After knowing this, petitioner revoked the agency and stated she was no
longer interested in selling her properties. She then asked respondents to sign a written
document revoking the authority she gave them. Later on, she directly sold the properties
to Mr. Noche. Upon learning this, respondents filed an action to recover the sum for their
commission. Mr. Infante admitted she contracted their services but stated that she
revoked them because they did not follow through with her instructions. When she asked
them to sell her properties, she also asked them to buy her a new one along Taft Avenue.
Petitioner averred that while respondents took steps to sell her property as agreed upon,
they sold the property at Taft Avenue to another party and because of this failure it was
agreed that the authority she had given them be cancelled.
Action of the Court/s:
RTC- found that the preponderance of evidence was in favor of the respondents and
rendered judgement sentencing the petitioner to pay the plaintiff the sum of P2,500 with
legal interest thereon from February 2, 1949 plus the costs of action.
CA- This decision was affirmed in toto
SC- affirmed the decision of the CA.
Issue(s):
Whether or not the herein petitioner should pay the respondents the commission agreed
in the agency though it was already revoked prior to the sale made
Rationale:
SC ruled on the affirmative.
That the petitioner had changed her mind even if the respondents had found her a buyer
who was willing to close the deal, is a matter that would not give rise to a legal
consequence if the 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 the respondents were placed by the petitioner. Petitioner took
advantage of the services rendered by the 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. This act of subversion cannot be sanctioned and cannot serve as
basis for petitioner to escape payment of the commission agreed upon.
Supreme Court Ruling:
The decision appealed from is hereby affirmed, with costs against petitioner.
VALERA VS. VELASCO

AGENCY - EXTINGUISHMENT OF AGENCY
The filing of a complaint by an agent against his principal for the collection of a balance in
his favor resulting from a liquidation of the agency accounts between them, and his
rendering of a final account of his operations, are equivalent to an express renunciation of
the agency and terminate the juridical relation between them.
FEDERICO VALERA, plaintiff and appellant, vs. MIGUEL VELASCO, defendant and
appellee.
51 Phil. 695 | No. 28050
March 13, 1928
Ponente: VILLA-REAL, J.
NATURE OF CASE
APPEAL from a judgment of the Court of First Instance of Manila
BRIEF
This is an appeal taken by FedericoValera from the judgment of the Court of First Instance
of Manila dismissing his complaint against Miguel Velasco, on the ground that he has not
satisfactorily proven his right of action.
FACTS
By virtue of the powers of attorney, the defendant Velasco was appointed attorney-in-fact
of the plaintiff Valera with authority to manage his property in the Philippines, consisting
of the usufruct of a real property located on Echague Street, City of Manila. Velasco
accepted both powers of attorney, managed plaintiff's property, reported his operations,
and rendered accounts of his administration. When Velasco presented to Valera his final
account of his administration, it appears that there is a balance of P3,058.33 in favor of
Valera. The liquidation of accounts revealed that Valera owed Velasco P1,100, and as a
misunderstanding arose between them, Velasco brought suit against Valera. Judgment
was rendered in his favor, and after the writ of execution was issued, the sheriff levied
upon Valera's right of usufruct, sold it at public auction and adjudicated it to Velasco in
payment of all of his claim.
Subsequently, Valera sold his right of redemption to Eduardo Hernandez who conveyed
the same right of redemption to the plaintiff himself (Valera). After Valera had recovered
his right of redemption, one Salvador Vallejo, who had an execution upon a judgment
against Valera rendered in a civil case against the latter, levied upon said right of
redemption, which was sold by the sheriff at public auction to Salvador Vallejo and was
definitely adjudicated to him. Later, he transferred said right of redemption to the
defendant Velasco. This is how the title to the right of usufruct to the aforementioned
property later came to vest in the said defendant.
ISSUE/s of the CASE
1) Whether the lower court erred in holding that one of the ways of terminating an
agency is by the express or tacit renunciation of the agent;
(2) Whether the lower court erred in holding that the institution of a civil action and the
execution of the judgment obtained by the agent against his principal is but a
renunciation of the powers conferred on the agent
ACTION/S OF THE COURT
CFI: Judgment in favor of Velasco
SC: Affirmed the decision of the lower court
COURT RATIONALE ON THE ABOVE CASE
No.
The two assignments of error are very closely related to each other and thus, considered
by the Court jointly.
“Art. 1732. Agency is terminated:
1. By revocation;
2. By the withdrawal of the agent;
3. By the death, interdiction, bankruptcy, or insolvency of the principal or of the
agent.
And article 1736 of the same Code provides that an agent may withdraw from the agency
by giving notice to the principal. Should the latter suffer any damage through the
withdrawal, the agent must indemnify him. Therefore, unless the agent's reason for his
Withdrawal should be the impossibility of continuing to act as such without serious
detriment to himself.
The misunderstanding between the plaintiff and the defendant over the payment of the
balance of P1,000 due the latter, as a result of the liquidation of the accounts between
them arising from the collections by virtue of the former's usufructuary right, who was
the principal, made by the latter as his agent, and the fact that the said defendant brought
suit against the said for the payment of said balance, 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 the 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 to the plaintiff, as principal.
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 a final account of his operations, is equivalent to an express
renunciation of the agency, and terminates the juridical relation between them.
The conclusion is reached that the disagreements between an agent and his principal with
respect to the agency, and the filing of a civil action by the former against the latter for
the collection of the balance in favor of the agent, resulting from a liquidation of the
agency accounts, are facts showing a rupture of relations, and the complaint is equivalent
to an express renunciation of the agency, and is more expressive than if the agent had
merely said, "I renounce the agency."
SUPREME COURT RULING
By virtue of the foregoing, and finding no error in the judgment appealed from, the same
is hereby affirmed in all its parts, with costs against the appellant. So ordered.
Buanson and Reyes vs. Panuyas, 105 Phils. 595
Facts:
In their lifetime the spouses Buenaventura Dayao and Eugenia Vega acquired by
homestead patent a parcel of land situated at barrio Gabaldon, municipality of Muñoz,
province of Nueva Ecija, containing an area of 14.8413 hectares covered by original
certificate of title No. 1187.
On 29 October 1930 they executed a power of attorney authorizing Eustaquio Bayuga to
engage the services of an attorney to prosecute their case against Leonardo 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.
On 14 March 1934 Buenaventura Dayao died leaving his wife Eugenia Vega and children
Pablo, Teodoro, Fortunata and Juliana, all surnamed Dayao. On 21 march 1939 his four
children executed a deed of sale conveying 12.8413 hectares of the parcel of land to the
appellants, the spouses Manuel Buason and Lolita M. Reyes. Their mother Eugenia Vega
affixed her thumb mark to the deed of sale as witness. The appellants took possession of
the parcel of land through their tenants in 1939.
On 18 July 1944 Eustaquio Bayuga sold 8 hectares of the same parcel of land to the
spouses Mariano Panuyas (appellee herein) and Sotera B. Cruz. Eustaquio Bayuga died on
25 March 1946 and Eugenia Vega in 1954.
The appellants and the appellee claim ownership to the same parcel of land.
Issue:
W/N the sale of 8 hectares of the parcel of land by the agent to the appellee Mariano
Panuyas and his wife Sotera B. Cruz was valid.
Held:
Yes. It appears that the appellants did not register the sale of 12.8413 hectares of the
parcel of land in question executed in their favor by the Dayao children on 21 March 1939
after the death of their father Buenaventura Dayao. On the other hand, the power of
attorney executed by Buenaventura Dayao on 29 October 1930 authorizing Eustaquio
Bayuga to sell the parcel of land (Exhibit B) was annotated or inscribed on the back of the
original certificate of title No. 1187 as Entry No. 16836/H-1187, and the sale executed by
Eustaquio Bayuga in favor of the appellee Mariano Panuyas and his wife Sotera B. Cruz
under the aforesaid power of attorney was annotated or inscribed on the back of the
same original certificate of title as Entry No 778/H-1187. It does not appear that the
appellee and his wife had actual knowledge of the previous sale. In the absence of such
knowledge, they had a right to rely on the face of the certificate of title of the registered
owners and of the authority conferred by them upon the agent also recorded on the back
of the certificate of title. As this is a case of double sale of land registered under the Land
Registration Act, he who recorded the sale in the Registry of Deeds has a better right than
he who did not. GUILLERMO AUSTRIA, petitioner, vs.

THE COURT OF APPEALS (Second Division), PACIFICO ABAD and MARIA G.

ABAD, respondents
As to the appellants' contention that, as the death of the principal on 14 March 1934
ended the authority of the agent,2 the sale of 8 hectares of the parcel of land by the G.R. No. L-29640
agent to the appellee Mariano Panuyas and his wife Sotera B. Cruz was null and void, June 10, 1971
suffice it to state that is has not been shown that the agent knew of his principal's demise, Reyes, J.B.L. J.
and for that reason article 1738, old Civil code or 1931, new Civil Code, which provides:

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 NATURE OF CASE: Petition for review of the decision of the Court of Appeals
with respect to third persons who may have contracted with him in good faith is the
law applicable to the point raised by the appellants. FACTS

Maria G. Abad acknowledged having received from Guillermo Austria one (1) pendant
with diamonds valued at P4,500.00, to be sold on commission basis or to be returned on
demand. On 1 February 1961, however, while walking home to her residence in
Mandaluyong, Rizal, Abad was said to have been accosted by two men, one of whom hit
her on the face, while the other snatched her purse containing jewelry and cash, and ran
away. Among the pieces of jewelry allegedly taken by the robbers was the consigned
pendant. The incident became the subject of a criminal case filed in the Court of First
Instance of Rizal against certain persons

As Abad failed to return the jewelry or pay for its value notwithstanding demands, Austria
brought in the Court of First Instance of Manila an action against her and her husband for
recovery of the pendant or of its value, and damages.

ACTION OF THE COURT

The trial court rendered judgment for the plaintiff, and ordered defendants spouses,
jointly and severally, to pay to the former the sum of P4,500.00, with legal interest
thereon, plus the amount of P450.00 as reasonable attorneys' fees, and the costs. The
court ruled the following:
a) defendants failed to prove the fact of robbery; and
b) defendant Maria Abad was guilty of negligence when she went home without
any companion, although it was already getting dark and she was carrying a large
amount of cash and valuables on the day in question.
Topic: Obligation of the Agent
Court of Appeals reversed the decision declaring respondents not responsible for the loss
Austria vs CA of the jewelry on account of a fortuitous event, and relieved them from liability for
damages to the owner.

ISSUE/s of the CASE
Whether in a contract of agency (consignment of goods for sale) it is necessary that there
be prior conviction for robbery before the loss of the article shall exempt the consignee
from liability for such loss.
COURT RATIONALE ON THE ABOVE CASE
No.
It is not necessary that the persons responsible for the occurrence should be found or
punished; it would only be sufficient to established that the enforceable event, the
robbery in this case did take place without any concurrent fault on the debtor's part.
It is recognized in this jurisdiction that to constitute a caso fortuito that would exempt a
person from responsibility, it is necessary that (1) the event must be independent of the
human will (or rather, of the debtor's or obligor's); (2) the occurrence must render it
impossible for the debtor to fulfill the obligation in a normal manner; and that (3) the
obligor must be free of participation in or aggravation of the injury to the creditor. It is not
here disputed that if respondent Maria Abad were indeed the victim of robbery, and if it
were really true that the pendant, which she was obliged either to sell on commission or
to return to petitioner, were taken during the robbery, then the occurrence of that
fortuitous event would have extinguished her liability.
SUPREME COURT RULING
The judgment of the lower court should be and is hereby revoked and that the appellants
should be relieved from all liability under the complaint. Without any finding as to costs, it
is so ordered.
MODES OF EXTINGUISHMENT OF AGENCY – Week 12
G.R. No. L-10881             September 30, 1958
EULOGIO DEL ROSARIO, AURELIO DEL ROSARIO, BENITO DEL ROSARIO, BERNARDO DEL
ROSARIO, ISIDRA DEL ROSARIO, DOMINGA DEL ROSARIO and CONCEPCION
BORROMEO, plaintiff-appellees,  parcel of land to Primitivo Abad, the agent, is not such an interest as could render
vs.
PRIMITIVO ABAD and TEODORICO ABAD, defendants-appellants.
Facts: On December 1936, the Secretary of Agriculture and Commerce issued under the
provisions of the Public Land Act a homestead patent situated in Nueva Ecija to Tiburcio
del Rosario. On February 11, 1937, the Registrar of Deeds issued to him an original
certificate of title. On February 24, 1937, del Rosario obtained a loan from Primitivo Abad
in the sum of P2000 with interest payable on December 3, 1941. Within the prohibitive
period of five years, the homesteader mortgaged the improvements of the homestead in
favor of defendant. At the same time, Del Rosario executed an “irrevocable special power
of attorney coupled with interest” in favor of the mortgagee, authorizing him to sell and
convey the parcel of land.
After the lapse of the prohibitive period, Del Rosario died in December 1945 leaving the
mortgage debt unpaid. Primitivo Abad, acting as attorney-in-fact of Del rosario sold the
parcel of land to his son Teodorico Abad in consideration of the token sum of P1.00 and
the payment of the mortgage debt of the late del Rosario. Teodorico took possession
of the land, cancelled the original certificate of title and registered the land under his
name in a transfer certificate of title. The heirs of Del Rosario filed this case to  recover the
possession and ownership of the parcel of land, damages, attorney's fees and costs.
Issue: Whether or not the power of attorney executed by Del Rosario was coupled with
interest that will not terminate the agency upon the death of the principal.
Held: No. The power of attorney executed by the homesteader in favor of defendant did
not create an agency with interest nor did it clothe the agency with irrevocable character.
A mere statement in the power of attorney that it is coupled with 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 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. 
Court Rationale:
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
fact that Tiburcio del Rosario, the principal, had mortgaged the improvements of the
irrevocable the power of attorney executed by the principal in favor of the agent. In fact
no mention of it is made in the power of attorney. The mortgage on the improvements of
the parcel of land has nothing to do with the power of attorney and may be foreclosed by
the mortgagee upon failure of the mortgagor to comply with his obligation. As the agency
was not coupled with an interest, it was terminated upon the death of Tiburcio del
Rosario, the principal, sometime in December 1945, and Primitivo Abad, the agent, could
no longer validly convey the parcel of land to Teodorico Abad on 9 June 1947. The sale,
therefore, to the later was null and void. But granting that the irrevocable power of
attorney was lawful and valid it would subject the parcel of land to an encumbrance. As
the homestead patent was issued on 12 December 1936 and the power of attorney was
executed on 24 February 1937, it was in violation of the law that prohibits the alienation
or encumbrance of land acquired by homestead from the date of the approval of the
application and for a term of five years from and after the issuance of the patent or grant.
Appellants contend that the power of attorney was to be availed of by the agent after the
lapse of the prohibition period of five years, and that in fact Primitivo Abad sold the parcel
of land on 9 June 1947, after the lapse of such period. Nothing to that effect is found in
the power of attorney.
G.R. No. L-31581             February 3, 1930
Estate of the deceased Gabina Labitoria.  Whether the right of sale of the mortgaged property can survive and can be enforced
ENRIQUE M. PASNO, petitioner-appellee,  under special power while the mortgaged property is in custodia legis.
vs.
FORTUNATA RAVINA and PONCIANA RAVINA, oppositors-appellants. 
PHILIPPINE NATIONAL BANK, appellant.
Brief:
There are two appeals in this case. One appeal has been taken by the oppositors to the
legalization of the will of Gabina Labitoria, and concerns the validity of that will. The other
appeal has been taken by the Philippine National Bank and concerns the survivability of
the right of sale of the mortgaged property under special power while the mortgaged
property is in custodia legis. We will deal with these appeals separately.
Facts:
During Gabina Labitoria’s lifetime mortgaged 3 parcels of land to the Philippine National
Bank (PNB) to secure an indebtedness of Php 1,600.00. It was stipulated in the mortgage
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 deceased, including the 3 parcels of land mortgaged to PNB. The estate having
failed to comply with the conditions of the mortgage, PNB, 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 PNB. The mortgage
makes special reference to Act. No.3135. That Act regulates the sale of property under
special powers inserted in or annexed to real estate mortgages. It fails to make provision
regarding the sale of the mortgaged property which is in custodia legis. Under the
circumstances, it would be logical to suppose that general provisions of Philippine law
would govern this latter contingency. It is a familiar rule that the statutes in pari materia
are to be read together. The legislative body which enacted Act. No. 3135 must be
presumed to have been seen 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:
Ruling:
Yes, 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.

SC Ruling:

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.

Modes of Extinguishment of Agency

Mortgagee’s remedies in case the mortgagor dies - The power to foreclose is not an
ordinary agency that contemplates exclusively the representation of the principal by the
agent, but is primarily an authority conferred upon the mortgagee for the latter’s own
protection.
AMPARO G. PEREZ, ET AL., plaintiffs and appellees, 
vs.
PHILIPPINE NATIONAL BANK, Binalbagan Branch, ET AL., defendants and appellants.
Tomas Besa and A. Galang for defendants and appellants.
Jose U. Carbonell and Celso B. Zamora for plaintiffs and appellees.
G.R. No. L-21813             Ravina 54 Phil. 382, the Bank should have foreclosed its mortgage in court; that the
July 30, 1966
Ponente: REYES, J.B.L., J.:
NATURE OF CASE
APPEAL from a decision of the Court of First Instance of Occidental Negros.
FACTS
Vicente Perez mortgaged his lot to the appellant Philippine National Bank, Bacolod
Branch to secure payment of a loan. Vicente Perez, mortgagor, died intestate, survived by
his widow and children (appellees herein). At that time, there was an outstanding balance
and corresponding interest, on the mortgage indebtedness.
The widow of Perez instituted Special Proceedings for the settlement of the estate of
Vicente Perez and was appointed Administratrix and notice to creditors was duly
published. The Bank did not file a claim and the proceeding was then closed.
It appears also that, prior to the said proceeding, the widow of the late Vicente Perez
inquired by letter from the Bank the status of her husband's account; and she was
informed that there was an outstanding balance and was furnished a copy of the
mortgage anda copy of the Tax Declaration.
The Bank, pursuant to authority granted it in the mortgage deed, caused the mortgaged
properties to be extrajudicially foreclosed. The title of Vicente Perez was cancelled
without notice to the widow and heir.
Three months later, window and heirs instituted this case against the Bank in the court
below, seeking to annul the extra-judicial foreclosure sale and the transfer of the
Certificate of Title as well as to recover damages, claiming that the Bank had acted
illegally and in bad faith. The Bank answered, denying the charges.
ISSUE/s of the CASE
Whether the foreclosure was valid.
ACTION OF THE COURT
Trial Court: rendered judgment holding to the doctrine of this Supreme Court in Pasno vs.
power to sell contained in the deed of mortgage had terminated Perez upon the death of
the mortgagor, Vicente and declared null and void the extra-judicial foreclosure sale to
the Bank, as well as the cancellation of the Certificate of Title of Vicente Perez.
SC: Reversed.
COURT RATIONALE ON THE ABOVE CASE
The ruling in Pasno vs. Ravina not having been reiterated in any other case, We have
carefully reexamined the same after mature deliberation have reached the conclusion
that the dissenting opinion is more in conformity with reason and law. Of the three
alternative courses that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to
wit, (1) to waive the mortgage and claim the entire debt from the estate of the mortgagor
as an ordinary claim; (2) to foreclose the mortgage judicially and prove any deficiency as
an ordinary claim; and (3) to rely on the mortgage exclusively, foreclosing the same at any
time before it is barred by prescription, without right to file a claim for any deficiency, the
majority opinion in Pasno vs. Ravina, in requiring a judicial foreclosure, virtually wipes out
the third alternative conceded by the Rules to the mortgage creditor, and which would
precisely include extra-judicial foreclosures by contrast with the second alternative. This
result we do not consider warranted by the text of the Rules; and, in addition, the
recognition of creditor's right to foreclose extra-judicially presents undoubted advantages
for the estate of the mortgagor, as pointed out by the dissenting opinion in  Pasno vs.
Ravina, supra. In the light of these considerations, we have decided to overrule the
majority decision in said case, and uphold the right of the mortgage creditor to foreclose
extra-judicially in accordance with section 7, Rule 86, of the Revised Rules (old Rule 87).
The argument that foreclosure by the Bank under its power of sale is barred upon death of foreclosure, plus interest thereafter at 12% per annum; and reimbursing the
of the debtor, because agency is extinguished by the death of the principal, under Article Bank the value of any useful expenditures on the said property but deducting
1732 of the Civil Code of 1889 and Article 1919 of the Civil Code of the Philippines, from the amounts thus payable the value of any rents and profits derived by the
neglects to take into account that the power to foreclose is not an ordinary agency that appellee National Bank from the property in question. Such payment to be made
contemplates exclusively the representation of the principal by the agent but is primarily within sixty (60) days after the balance is determined by the court of origin.
an authority conferred upon the mortgagee for the latter's own protection. It is, in fact, an
ancillary stipulation supported by the same causa or consideration for the mortgage and
forms an essential and inseparable part of that bilateral agreement. As can be seen in the
preceding quotations from Pasno vs. Ravina, 54 Phil. 382, both the majority and the
dissenting opinions conceded that the power to foreclose extrajudicially survived the
death of the mortgagor, even under the law prior to the Civil Code of the Philippines now
in force.

Nevertheless, while upholding the validity of the appellant Bank's foreclosure, We can not
close our eyes to the fact that the Bank was apprised since 1947 of the death of its
debtor, Vicente Perez, yet it failed and neglected to give notice of the foreclosure to the
latter's widow and heirs as expressly found by the court a quo. Such failure, in effect,
prevented them from blocking the foreclosure through seasonable payment, as well as
impeded their effectuating a seasonable redemption. In view of these circumstances, it is
our view that both justice and equity would be served by permitting herein appellees to
redeem the foreclosed property within a reasonable time, by paying the capital and
interest of the indebtedness up to the time of redemption, plus foreclosure and useful
expenses, less any rents and profits obtained by the Bank from and after the same
entered into its possession

SUPREME COURT RULING

Wherefore, the judgment appealed from is hereby modified, as follows:

(1) Declaring valid and effective the extra-judicial foreclosure of the mortgage
over Lot 286-E of the Kabankalan Cadastre;

(2) Upholding and confirming the cancellation of Transfer Certificate of Title No.
29350 of the Registry of Deeds of Occidental Negros in the name of the late
Vicente Perez, as well as its replacement by Certificate of Title T-32066 of the
same Registry in the name of appellant Philippine National Bank;

(3) Declaring the appellees herein, widow and other heirs of Vicente Perez
entitled to redeem the property in question by paying or tendering to the Bank
the capital of the debt of Vicente Perez, with the stipulated interest to the date