AGENCY, PARTNERSHIP, AND TRUST

WEEK 8

SMITH, BELL & CO., LTD., vs VICENTE SOTELO MATTI

FACTS:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into
contracts whereby the former obligated itself to sell, and the latter to purchase from it, two steel tanks,
for the total price of twenty-one thousand pesos (P 21,000), the same to be shipped from New York and
delivered at Manila within three or four months; two expellers at the price of twenty five thousand pesos
(P 25,000) each, which were to be shipped from San Francisco in the month of September 1918, or as
soon as possible; and two electric motors at the price of two thousand pesos (P 2,000) each, as to the
delivery of which stipulation was made, couched in these words: "Approximate delivery within ninety
days. This is not guaranteed."

The tanks arrived at Manila on the 27th of April 1919: the expellers on the 26th of October,
1918; and the motors on the 27th of February 1919. The plaintiff corporation notified Mr. Sotelo of the
arrival of these goods, but he refused to receive them and to pay the prices stipulated. The plaintiff
brought suit against the defendant alleging that it immediately notified the defendant of the arrival of the
goods, and asked instructions from him as to the delivery thereof, and that the defendant refused to
receive any of them and to pay their price.

In their Answer, Mr. Sotelo and the intervenor, the Manila Oil Refining and By-Products Co.,
Inc., denied the plaintiff's allegations. They interposed as special defense that Mr. Sotelo had made the
contracts in question as manager of the intervenor, the Manila Oil Refining and By-Products Co., Inc.,
which fact was known to the plaintiff, and that it was only in May 1919, that it notified the intervenor that
said tanks had arrived, the motors and the expellers having arrived incomplete and long after the date
stipulated. The lower court absolved the defendants from the complaint insofar as the tanks and the
electric motors were concerned, but rendered judgment against them and ordered them them to receive
the aforesaid expellers and pay the plaintiff the sum of fifty thousand pesos with legal interest thereon
from July 26, 1919, and costs.

ISSUE:

Whether or not, under the contracts entered into, the plaintiff has fulfilled in due time its obligation to
bring the goods in question to Manila

RULING:

NO. The SC held that the plaintiff corporation has not been guilty of any delay in the fulfillment
of its obligation, and, consequently, it could not have incurred any of the liabilities mentioned by the
intervenor in its counterclaim. The term which the parties attempted to fix is so uncertain that one
cannot tell just whether, as a matter of fact, those articles could be brought to Manila or not. If that is
the case, the obligation must be regarded as conditional. Under these stipulations, it cannot be said
that any definite date was fixed for the delivery of the goods. As to the tanks, the agreement was that
the delivery was to be made within 3 or 4 months, but that period was subject to the contingencies
referred to in a subsequent clause. With regard to the expellers, the contract says within the month of
September 1918, but to this is added or as soon as possible. And with reference to the motors, the
contract contains this expression, approximate delivery within ninety days, but right after this, it is noted
that this is not guaranteed.

And as the export of the machinery in question was, as stated in the contract, contingent upon
the sellers obtaining certificate of priority and permission of the United States Government, subject to
the rules and regulations, as well as to railroad embargoes, then the delivery was subject to a condition
the fulfillment of which depended not only upon the effort of the herein plaintiff, but upon the will of third
persons who could in no way be compelled to fulfill the condition. In cases like this, which are not
expressly provided for, but impliedly covered by the old Civil Code, the obligor will be deemed to have
sufficiently performed his part of the obligation, if he has done all that was in his power, even if the
condition has not been fulfilled in reality. The decisions prior to the Civil Code have held that the obligee
having done all that was in his power was entitled to enforce performance of the obligation. This
performance, which is fictitious and is not expressly authorized by the Code, which limits itself only to
declare valid those conditions and the obligation thereby affected; but it is neither disallowed, and the
Code being thus silent, the old view can be maintained as a doctrine.
 When the contract provides for delivery as soon as possible, the seller is entitled to a
reasonable time, in view of all the circumstances, such as the necessities of manufacture, or of putting
the goods in condition for delivery. The term does not mean immediately or that the seller must stop all
his other work and devote himself to that particular order. But the seller must nevertheless act with all
reasonable diligence or without unreasonable delay. It has been held that a requirement that the
shipment of goods should be the earliest possible must be construed as meaning that the goods should
be sent as soon as the seller could possibly send them, and that it signified rather more than that the
goods should be sent within a reasonable time.

The records of this case reveal that the plaintiff did all within its power to have the machinery
arrive at Manila as soon as possible, and immediately upon its arrival it notified the purchaser of the
fact and offered to deliver it to him. Taking these circumstances into account, the SC held that the said
machinery was brought to Manila by the plaintiff within a reasonable time. Therefore, the plaintiff has
not been guilty of any delay in the fulfillment of its obligation, and it could not have incurred any of the
liabilities mentioned by the intervenor in its counterclaim or set-off.

RURAL BANK OF BOMBON vs COURT OF APPEALS, EDERLINDA M. GALLARDO, DANIEL

MANZO and RUFINO S. AQUINO

FACTS:

Ederlinda Gallardo transacted with Rufino Aquino, contracting him to be her agent and providing
him with a Special Power of Attorney authorizing him to mortgage her property in her behalf for the
purpose of securing loans from banks. She provided him with the TCT to the property as well. Rufino
Aquino secured a loan from Rural Bank of Bombon for the amount of P 350,000.00 as principal and
chargeable with a 14% interest per annum. In the contract of mortgage, he represented himself to be
the attorney-in-fact of Gallardo, but proceeded to sign his name as mortgagor. He even got his wife to
sign the documents as wife of mortgagor. Gallardo, upon knowing of the transaction, went to court to
secure the annulment of such contract since she was allegedly shocked to find out that her property
was already mortgaged and correspondence regarding the contract of mortgage were not being sent to
her, and instead sent to the address of Aquino, who has since disappeared from Bulacan and now
resides in Camarines Sur. Further, the mortgage was secured to pay off personal loans of Aquino and
to establish his personal fishpond business.

RTC issued a TRO restraining Rural Bank of Bombon to foreclose the mortgage. In his Answer,
Aquino alleged that Gallardo owed him money and it was already the responsibility of Aquino to take
care of payments due. RTC ruled in favor of Aquino and Bank of Bombon. CA reversed the ruling of the
RTC and held that the Dealof Real Estate Mortgage was not valid. It was not binding on the principal
Gallardo since it was executed not in her name as principal but in the personal capacity of the Aquino
spouses.

ISSUE:

Whether or not real estate mortgage executed by respondent Aquino is valid because he was expressly
authorized by Gallardo to mortgage her property under the special power of attorney she made in his
favor which was duly registered and annotated on Gallardo's title

RULING:

NO. The decision of the Court of Appeals is correct. As held in Philippine Sugar Estates
Development Co. v. Poizat, it is a general rule in the law of agency that, in order to bind the principal by
a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and
sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the
agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal.
Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a
power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to
the mortgage. This is especially true where the agent himself is a party to the instrument. However
clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet,
unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of
the principal, it is not valid as to the principal.

In view of this rule, Aquino's act of signing the Deed of Real Estate Mortgage in his name alone
as mortgagor, without any indication that he was signing for and in behalf of the property owner,
Ederlinda Gallardo, bound himself alone in his personal capacity as a debtor of the petitioner Bank and
not as the agent or attorney-in-fact of Gallardo. The Bank cannot rely on Article 1883 of the Civil Code
to bind the principal Gallardo since it is not applicable to the case at bar. Article 1883 states that in such
case the agent is the one directly bound in favor of the person with whom he has transacted, as if the
transaction was his own, except when the contract involves things belonging to the principal. There is
no principle of law by which a person can become liable on a real mortgage which she never executed
either in person or by attorney in fact. In the instant case, Aquino acted purportedly as an agent of
Gallardo, but actually acted in his personal capacity. Involved herein are properties titled in the name of
respondent Gallardo against which the Bank proposes to foreclose the mortgage constituted by an
agent (Aquino) acting in his personal capacity.

VICENTE SY-JUCO and CIPRIANA VIARDO vs SANTIAGO V. SY-JUCO

FACTS:

Santiago was appointed by the plaintiffs as administrator of their property and acted as such from 1902
to 1916. The plaintiffs are defendant's parents who allege that during his administration the defendant
acquired the properties (a launch, two Casco, and an automobile) claimed in the complaint in his
capacity as plaintiffs' administrator with their money and for their benefit. The lower court ruled in favor
of the plaintiffs and ordered Santiago to return the properties to them.

ISSUE:

Whether or not the properties purchased by Santiago, in his own name as an administrator, lawfully
belong to him

RULING:

NO. Regarding the launch Malabon, it appears that the defendant bought it in his own name
from the Pacific Commercial Co., and afterwards registered it at the Custom House. But his does not
necessarily show that the defendant bought it for himself and with his own money, as he claims. This
transaction was within the agency which he had received from the plaintiffs. The SC held that the fact
that he has acted in his own name is tantamount to a violation of the agency on his part. Pursuant to
Article 1717 of the Civil Code, when an agency acts in his own name, the principal shall have no right of
action against the person with whom the agent has contracted; cases involving things belonging to the
principal are excluded. According to this exception (when things belonging to the principal are dealt
with) the agent is bound to the principal although he does not assume the character of such agent and
appears acting in his own name. This means that in the case of this exception the agent's apparent
representation yields to the principal's true representation and that, in reality and in effect, the contract
must be considered as entered into between the principal and the third person; and, consequently, if
the obligations belong to the former, to him alone must also belong the rights arising from the contract.
The money with which the launch was bought having come from the plaintiff, the exception established
in Article 1717 is applicable to the instant case.

Concerning the Casco No. 2584, the defendant admits it was constructed by the plaintiff himself
in the latter's ship-yard. As to the automobile No. 2060, there is sufficient evidence to show that it was
paid with plaintiffs' money. However, upon an examination of the evidence relative to Casco No. 2545,
the SC find that it belonged to the plaintiffs and that the latter sold it afterwards to the defendant by
means of a public instrument. Attorney Sevilla, who acted as the notary in the execution of this
instrument, testified said that he never verified any document without first inquiring whether the parties
knew its content. The SC thereafter ruled that Casco No. 2545 was lawfully sold to the defendant by the
plaintiffs.

NATIONAL FOOD AUTHORITY vs INTERMEDIATE APPELLATE COURT and SUPERIOR (SG)

SHIPPING CORPORATION

FACTS:

On September 6, 1979, Gil Medalla, as commission agent of Superior Shipping Corporation,

entered into a contract National Food Authority. Under the said contract Medalla obligated to transport
on the MV Sea Runner 8,550 sacks of rice belonging to NFA from the port of San Jose, Occidental
Mindoro, to Malabon, Metro Manila. Upon completion of the delivery of rice at its destination, plaintiff
wrote a letter requesting NFA that it be allowed to collect the amount stated in its statement of account.
On November 5, 1979, plaintiff wrote again defendant NFA, this time specifically requesting that the
payment for freightage and other charges be made to it and not to Medalla because SG Shipping
Corporation was the owner of the vessel MV Sea Runner. NFA then informed Medalla that it could not
grant its request because the contract to transport the rice was entered into by NFA and Medalla who
did not disclose that he was acting as a mere agent of plaintiff.

Thereupon on November 19, 1979, NFA paid Medalla the sum of P 25,974.90, for freight
services in connection with the shipment of 8,550 sacks of rice. On December 4, 1979, SG Shipping
Corporation wrote Medalla demanding that he turn over to them the amount of P 27,000.00 paid to him
by NFA. Medalla, however, ignored the demand. SG Shipping Corporation was therefore constrained to
file the instant complaint. National Food Authority admitted that it entered into a contract with Gil
Medalla whereby SG Shipping Corporation’s vessel MV Sea Runner transported 8,550 sacks of rice of
said defendant from Mindoro to Manila. For services rendered, the National Food Authority paid Gil
Medalla P 27,000.00 for freightage.

Judgment was rendered in favor of the plaintiff. The appellate court affirmed the judgment of the
lower court, hence, this appeal by way of certiorari. Petitioner NFA contended that it is not liable under
the exception laid in Article 1883 of the Civil Code since it had no knowledge of the fact of agency
between respondent Superior Shipping and Medalla at the time when the contract was entered into
between them (NFA and Medalla). It further submits that an undisclosed principal cannot maintain an
action upon a contract made by his agent unless such principal was disclosed in such contract. One
who deals with an agent acquires no right against the undisclosed principal.

ISSUE: Whether or not NFA is jointly and severally liable with Medalla for freightage

RULING:

YES. Petitioner NFA's contention holds no water. It is an undisputed fact that Gil Medalla was a
commission agent of respondent Superior Shipping Corporation which owned MV Sea Runner which
transported the sacks of rice belonging to petitioner NFA. Article 1883 of the Civil Code provides that if
an agent acts in his own name, the principal has no right of action against the persons with whom the
agent has contracted; neither have such persons against the principal. In such case the agent is the
one directly bound in favor of the person with whom he has contracted, as if the transaction were his
own, except when the contract involves things belonging to the principal. The provision of this article
shall be understood to be without prejudice to the actions between the principal and agent.

Consequently, when things belonging to the principal (in this case, Superior Shipping
Corporation) are dealt with, the agent is bound to the principal although he does not assume the
character of such agent and appears acting in his own name. In other words, the agent's apparent
representation yields to the principal's true representation and that, in reality and in effect, the contract
must be considered as entered into between the principal and the third person pursuant to Sy Juco and
Viardo v. Sy Juco. Moreover, if the principal can be obliged to perform his duties under the contract,
then it can also demand the enforcement of its rights arising from the contract. The petition is hereby
DENIED and the appealed decision is hereby AFFIRMED.

GOLD STAR MINING CO., INC., vs MARTA LIM-JIMENA et al

FACTS:

In 1937, Ananias Isaac Lincallo bound himself in writing to turn to Victor Jimena half of the
proceeds from all mining claims that he would purchase with the money to be advanced by the latter.
This agreement was later on modified to include in the equal sharing agreement not only the proceeds
from several mining claims, but also the lands constituting the same, and so as to bring thereby their
heirs, assigns, or legal representatives. The mining rights over parts of the claims were eventually
assigned by Lincallo to Gold Star Mining Co., Inc., while others were assigned to Marinduque Iron
Mines Agents. Meanwhile, Jimena repeatedly apprised both mining corporations of his interests over
the mining claims so assigned and/or leased by Lincallo. However, both corporations ignored his
demands. Jimena also demanded Lincallo for the payment of the P 5,800 he gave Lincallo as money to
purchase the mining claims and the lands, but to no avail. Lincallo did not only fail to settle his accounts
with Jimena, he even transferred about majority of his share in the royalties due from Gold Star to
Gregorio Tolentino, a salaried employee.

Hence, on 2nd of September 1954, Jimena filed a suit against Lincallo for recovery of his
advances and his one-half share in the royalties, and impleaded Gold Star and Marinduque Iron Mines,
as well as Tolentino, later on as defendants. Two weeks later, the trial court issued a writ of preliminary
injunction, preventing both mining companies from paying royalties during the pendency of the case to
Lincallo, his assigns or legal representatives. Despite of such injunction, Gold Star still paid P
30,691.92 to Lincallo and Tolentino. Jimena and Tolentino died successively during the pendency of
the case in the trial court and were, accordingly, substituted by their respective widows and children.

CFI decided in favor of Victor Jimena’s heirs, declaring among others that they be entitled to
half of the shares of the royalties of Lincallo in his contracts with Gold Star, Marinduque Iron Mines and
Alejandro Marquez, that both mining companies pay directly to the former half of the shares of the
royalties until said contracts were terminated, that Lincallo pay the heirs the capital Victor Jimena gave
him to purchase the mining claims and the latter’s shares with interest, and that Gold Star Mining Co.,
Inc. pay them the sum of P 30,691.92 solidarily with Ananias Isaac Lincallo for violation of an injunction.

ISSUE: Whether or not respondents Jimenas have a cause of action against petitioner

RULING:

YES. The SC held that Lincallo, in transferring the mining claims to Gold Star (without disclosing
that Jimena was a co-owner although Gold Star had knowledge of the fact as shown by the proofs
heretofore mentioned), acted as Jimena's agent with respect to Jimena's share of the claims. Under
such conditions, Jimena has an action against Gold Star, pursuant to Article 1883 of the New Civil
Code which provides that the principal may sue the person with whom the agent dealt with in agent's
own name, when the transaction involves things belonging to the principal. As counsel for Jimena has
correctly contended, the remedy of garnishment suggested by Gold Star is utterly inadequate for the
enforcement of Jimena's right against Lincallo because Jimena wanted an accounting and wanted to
receive directly his share of the royalties from Gold Star. That recourse is not open to Jimena unless
Gold Star is made a party in this action.

FEDERICO VALERA vs MIGUEL VELASCO

FACTS:

By virtue of the powers of attorney, executed by the plaintiff on April 11, 1919, and on August 8,
1922, the defendant was appointed attorney-in-fact of the said plaintiff with authority to manage his
property in the Philippines, consisting of the usufruct of a real property in Manila. Velasco accepted
both powers of attorney, managed Valera’s property, reported his operations, and rendered accounts of
his administration. On March 31, 1923 Velasco presented to Valera the final account of his
administration for said month, wherein it appears that there is a balance of P 3,058.33 in favor of
Valera. The liquidation of accounts revealed that Valera owed the Velasco P 1,100 and as
misunderstanding arose between them, Velasco brought suit against Valera. Judgment was rendered
in favor of Velasco, and after the writ of execution was issued, the sheriff levied upon the Valera’s right
of usufruct, sold it at public auction and adjudicated it to Velasco in payment of his entire claim.

Subsequently, on May 11, 1923, the plaintiff sold his right of redemption to Eduardo Hernandez.
On September 4, 1923, this purchaser conveyed the same right of redemption to Federico Valera.
Valera had recovered his right of redemption while 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 Velasco. This is how the title to the right of usufruct
to the aforementioned property later came to vest Velasco.

ISSUE: Whether or not the contract of agency between Valera and Velasco was terminated

RULING:

YES. The misunderstanding between the plaintiff and the defendant over the payment of the
balance of P 1,000 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 principal 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 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 Velasco, as agent, rendered his final account to Valera,
as principal.
In other words, 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. Miguel Velasco, in adopting a hostile
attitude towards his principal, suing him for the collection of the balance in his favor, resulting from the
liquidation of the agency accounts, ceased ipso facto to be the agent of Federico Valera. Furthermore,
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.

NOTES:

Article 1732 of the Civil Code reads as follows:

Agency is terminated by:

1. Revocation;
2. Withdrawal of the agent;
3. 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 him.

ENRIQUE M. PASNO vs FORTUNATA RAVINA and PONCIANO RAVINA

FACTS:

Gabina Labitoria during her lifetime mortgaged three parcels of land to the Philippine National
Bank to secure an indebtedness of P 1,600. 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 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.

ISSUE:

Whether or not the mortgagee PNB can foreclose the mortgage in its favor after the mortgage property
is in the hands of the administrator

RULING:

YES. The power of sale given in a mortgage is a power coupled with an interest which survives
the death of the grantor. In Carter v. Slocomb, it was held 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, the SC concludes 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. 

NOTES:

An example of such situation is when a power of attorney is constituted in a contract of real estate
mortgage pursuant to the requirement of Act No. 3135, which would empower the mortgagee upon the
default of the mortgagor to payment the principal obligation, to execute the sale of the mortgage
property through extrajudicial foreclosure. It has been held in Perez v. PNB that the power of sale in the
deed of real estate mortgage is not revoked by the death of the principal-mortgagor, on the ground that
it is an ancillary stipulation supported by the same cause or consideration that supports the mortgage
and forms an essential inseparable part of that bilateral agreement. The power of attorney therefore
survives the death of the mortgagor, and allows the mortgagee to effect the foreclosure of the real
estate mortgage even after the death of the principal-mortgagor.

CONSOLACION L. RAMOS vs BENIGNO A. CAOIBES

FACTS:

Concepcion Ramos appointed Caoibes through a power of attorney to collect an amount due
him from the Philippine War Damage Commission. Half of that amount will then be given to the sister of
Concepcion and half to her niece and nephew as evidenced by an affidavit. Concepcion Ramos died
on August 19, 1948, leaving a will in which she ordered that the credits due to her be distributed among
the children of the deceased Antonino Ramos, namely, Consolacion, Ramon, Socorro and Cirila. Days
after Concepcion died; a check was issued to Caoibes when he presented the power of
attorney and affidavit and later on encashed it for himself. The administratrix discovered the collection
made by Caoibes. The administratrix Consolacion Ramos filed a motion with the court requesting
Caoibes to deposit the money to the Clerk of Court. Caoibes contended that he will deliver half of the
amount to the Clerk of Court and then asserted that he had the right to retain half of the money under
the power of attorney and affidavit.

ISSUE:

Whether or not Caoibes had the right to retain half of the money under the power of attorney and
affidavit

RULING:

NO. Caoibes, as agent, had the obligation to deliver the amount collected by virtue of said
power to his principal, Concepcion, or, after her death, to the administratrix of her estate, Consolacion.
There is absolutely no cession of rights made in favor of Caoibes in the power of attorney, and under
Article 1711 of the old Civil Code, the contract of agency is presumed to be gratuitous, unless the agent
is a professional agent. There is no proof that Caoibes was such. Furthermore, according to Article
1732 of said Code, an agency is terminated, among other causes, by the death of the principal or of the
agent. When Caoibes made use of the power of attorney, his principal, Concepcion was already dead.

The SC observed that the affidavit herein, an alleged document of donation, is not a donation of
real but of personal property and is governed by article 632 of the old Civil Code provides that
donations of personal property may be made verbally or in writing. Verbal donation requires the
simultaneous delivery of the gift. In the absence of this requisite the donation shall produce no effect,
unless made in writing and accepted in the same form. The alleged donation was made in writing but it
has not been accepted in the same form, and consequently, has no validity. It cannot be considered a
donation upon valuable consideration, for no services nor any valuable consideration had passed from
the donees to the donor. The mere fact that Caoibes collected the claim from the War Damage
Commission is not such a service as to require compensation. Caoibes did not even prepare the claim.

NATIVIDAD HERRERA vs LUY KIM GUAN

FACTS:

Plaintiff Natividad Herrera is the legitimate daughter of Luis Herrera, now deceased and who died in
China sometime after he went to that country in the last part of 1931 or early part of 1932. The said Luis
Herrera in his lifetime was the owner of three (3) parcels of land and their improvements. Before leaving
for China, however, Luis Herrera executed a deed of General Power of Attorney, which authorized and
empowered the defendant Kim Guan, among others to administer and sell the properties of said Luis
Herrera. It is the contention of Natividad Herrera that all of the subsequent transactions were fraudulent
and was executed after the death of Luis Herrera and, consequently, when the power of attorney was
no longer operative.
ISSUE:

Whether or not the transactions in the instant case are null and void because they were executed by
the attorney-in-fact after the death of his principal

RULING:

NO. The SC stressed that the date of death of Luis Herrera has not been satisfactorily proven.
The only evidence presented by the plaintiff-appellant in this respect is a supposed letter received from
a certain Candi, on November 1936, purporting to give information that Luis Herrera (without
mentioning his name) had died in August of that year. This piece of evidence was properly rejected by
the lower court for lack of identification. On the other hand, Chung Lian testified that Luis Herrera
visited him and had a conversation with him, showing that the latter was still alive at the time. Since the
documents had been executed the attorney-in-fact one in 1937 and the other in 1939, it is evident that
the documents were executed during the lifetime of the principal. Be that as it may, even
granting arguendo that Luis Herrera did die in 1936, plaintiffs presented no proof and there is no
indication in the record, that the agent Luy Kim Guan was aware of the death of his prince at the time
he sold the property. As held in Buason, et al. v. Panuyas, the death of the principal does not render
the act of an agent unenforceable, where the latter had no knowledge of such extinguishment the
agency.

RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs FELIX GO CHAN &
SONS REALTY CORPORATION and COURT OF APPEALS

FACTS:

Concepcion and Gerundia Rallos were sisters and registered co-owners of the parcel of land in
issue. 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 re-conveyed 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.

ISSUE:

Whether or not the sale fell within the exception to the general rule that death extinguishes the authority
of the agent

RULING:

YES. Article 1919 of the Civil Code provides that the death of the principal extinguishes the
agency. That being the general rule, it follows a fortiori that any act of an agent after the death of his
principal is void ab initio unless the same fags under the exception provided for in the aforementioned
Articles 1930 and 1931. Article 1930 is not involved because admittedly the special power of attorney
executed in favor of Simeon Rallos was not coupled with an interest. Meanwhile, on the basis of the
established knowledge of Simon Rallos concerning the death of his principal Concepcion Rallos, Article
1931 of the Civil Code is also inapplicable. In the instant case, it cannot be questioned that the agent,
Simeon Rallos, knew of the death of his principal at the time he sold the latter's share in Lot No. 5983
to the respondent corporation. The knowledge of the death is clearly to be inferred from the pleadings
filed by Simon Rallos before the trial court. He knew of the death of his sister, yet he proceeded with
the sale of the lot in the name of both his sisters Concepcion and Gerundia Rallos without informing the
realty corporation of the death of the former. Accordingly, the agent's act is unenforceable against the
estate of his principal and the sale is likewise void.