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AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?

BARRETO vs. STA. MARINA Torres, J. (1913) The La Insular cigar and cigarette factory is a joint account association with a nominal capital of P865,000, the plaintiff's share being P20,000, or 4/173 of the whole. On March 14, 1910, the plaintiff's attorneys wrote the defendant's local representative a letter offering to sell to the defendant plaintiff's participation in the factory. The result of the correspondence1 between the parties and their representatives was that Exhibit G was duly executed on May 3, 1910. In accordance with the terms of this exhibit a committee of appraisers was appointed to ascertain and fix the actual value of La Insular. The committee rendered its report on November 14, 1910, fixing the net value at P4,428,194.44. Of this amount 4/173 part represented the plaintiffs's share on his P20,000 of the nominal capital. In Exhibit J which was executed on November 22, 1910, the plaintiff acknowledged to have received from the defendant that amount. Subsequently to the execution of Exhibit J, demand was made by the plaintiff upon the defendant for his share of the profits from June 30, 1909, to November 22, 1910. This demand was refused and thereupon this action was instituted to recover said profits. Upon the evidence submitted at the hearing, the court below held: (1) That the agreement of May 3, 1910, was by its terms a contract to sell in the future and did not pass title and (2) that the sale of plaintiff's interest did not include the profits in question. Judgment was rendered accordingly, with interest and cost. The defendant appealed. ISSUE: Whether the agreement is one of a perfected sale. YES The plaintiff and defendant were both interested in La Insular. The plaintiff was the local general manager from November 14, 1906, to January 8, 1910. From the correspondence above mentioned it appears that the plaintiff offered to sell to the defendant his participation in La Insular. This offer was made on account of the strained relations existing between the parties at that time and the desire on the part of the plaintiff to separate himself from that business. In the offer the plaintiff's interest of or participation was definitely defined and stated to be P20,000 in the nominal capital of P865,000. (We are not now dealing with the plaintiff's interest in the P69,400 of Barretto & Company.) Article 1450 of the Civil Code reads: "The sale shall be perfected between vendor and vendees and shall be binding on both of them, if they have agreed upon the thing which is the object of the contract and upon the price, even when neither has been delivered." This is supplemented by article 1447 of the Code which reads as follows: "In order that the price may be considered fixed, it shall be sufficient that it be fixed with regard to another determinate thing also specific, or that the determination of the same be left to the judgment of a specified person." The following appears in the contract of November 22, 1910: "Antonio M. Barretto hereby declares to have received from John D. MacGavin as legal representative of Jose Santa Marina as the price of the cession and transfer of the said shares, the sum of P280,025.70 Philippine currency by check No. 528525 drawn by the said MacGavin The plaintiff's atttorneys wrote the defendant's representative a letter on January 14, 1910, saying: On behalf of Sr. D. Antonio M. Barretto, we beg leave to offer for sale to your principal, at their actual market value, the participation of Sr. Barretto in the joint venture known as La Insular and the one-half interest of the latter in the participation therein which stands in the name of Messrs. Barretto & Co. As you are doubtless aware these participations represent nominal values of P20,000 and P69,400, making a total nominal value of P54,700 which is hereby offered. Again the plaintiff's attorneys after acknowledging the receipt of the balance sheet of the profits for the year ending June 30, 1909, stated in their letter to the defendant's representative, dated March 2, 1910, that, "Now that the accord between the interested parties no longer exists we do not deem if feasible to subscribe a balance of this nature, unless . . ." And again, the plaintiff himself, in his letter of April 7, 1910, addressed to the defendant's representative, said: "In view of the relations that have come about between Mr. Santa Marina and myself, I believe it would suit both of us that our interest in the La Insular business should be separated, and that the only point to be discussed is that of the amount that should be paid me for my share."
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in his above-stated capacity upon the Hongkong & Shanghai Bank of this city, for which sum the first named issues to him a most legal bill of sale. Antonio M. Barretto also acknowledges by virtue of the present sale, cession, and transfer that he has from this date relinguished (separado) all intervention, claim, right, or action that he has in said factory by reason of the shares under consideration." Under article 1450, supra, there are two indespensable requisites in a perfected sale: (1) There must be an agreement upon the thing which is the object of the contract; and (2) the contracting parties must agree upon the price. The object of the contract in the case at bar was the whole of the plaintiff's right, title, and interest in La Insular. This whole was 4/173 of the entire net value of the business. The parties agreed that the price should be 4/173 of the total net value. The fixing of such net value was unreservedly left to the judgment of the appraisers. As to the thing and the price the minds of the contracting parties met, and all questions relating thereto were settled. Nothing was left unfinished in so far as the contracting parties were concerned. Neither party could withdraw from the contract without the consent of the other. The result is that the two essential requisites necessary to constitute a perfected sale were present. In the contract of May 3, we find that the parties did not only agree "the one sell and the other to buy" and that "one will immediately sell and the other will immediately buy" the whole of the plaintiff's interest but that they were unable to agree "as to the true present value of the said interest;" they did agree, however, upon the method of fixing and determining such value by appointing appraisers for this purpose. It was the duty of the appraisers to hear the respective claims of the one and the other party relative to the value and assets of the business, "and in accordance with the proof adduced relative to said values to fix and determine the same for the purposes of the purchase and sale above mentioned." They did not say for the purposes of a sale to be made in the future. When the parties used this language "for the purposes of the purchase and sale above mentioned" they had in mind the purchase and sale which they had just made. According to the ordinary and wellunderstood use of the words "purchase" and "sale" they mean, in the absence of any expression to limit their significance, a transmutation of property from one party to another in consideration of some price or recompense in value; a transmission of property by a voluntary act or agreement, founded on a valuable consideration; divesting the title out of the vendor and vesting it in the vendee. Again, not only was the title of the plaintiff's interest vested in the defendant on the execution of the contract of May 3 but the possession of that interest was also then transferred to the defendant. (Art. 1462, Civil Code; Uy Piaoco vs. McMicking, 10 Phil. Rep., 286.) The total value of the business as fixed by the appraisers was final and conclusive and binding upon each of the parties. Neither could question the correctness of such value when once thus fixed.

ISSUE: WON sale in question included that proportionate share of the profits due the plaintiff by reason of his investment in the concern- YES In the second paragraph of the contract of May 3 this language was used: "Whereas the respective contracting parties have been unable to agree as to the true present value of said interest of the party of the second part, . . . . The "said interest" was the whole of the right, title, and interest of the plaintiff in the factory. The "true present value" was the actual value of the plaintiff's entire interest on that date, May 3. The appraisers were appointed to ascertain and fix the total net value so that the true present value, 4/173 of the whole net value, of the plaintiff's interest might be segregated and paid for. The plaintiff delivered to the defendant or his predecessor in interest a sum of money in order to participate in the profits and losses that might accrue from the business denominated La Insular. An obligation was thereby created between the parties by virtue of which the plaintiff became the creditor and the defendant the debtor. The plaintiff was a creditor in a double sense, to wit: (a) For the capital invested, and (b) for the profits which that capital might produce. This juridical relation existed on May 3, 1910, when that contract was executed and signed by the parties. On this date the plaintiff had: right to and right of action for his capital invested in the business of La Insular, right to participate, in proportion to his investment in the expansion and increase of the company's capital, right in proportion to his capital in all the trademarks, credit, and good will of the business, right to a proportional share in the annual dividends of the business on his capital invested, after deduction of the 20 per cent of said dividends to which Santa Marina is entitled in his capacity of managing

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


partner,right to revise, approve or impugn the annual statements rendered by the managing partner, Santa Marina. The sum total of these constituted on May 3, 1910 the whole of the plaintiff's right, title, and interest in the "La Insular." "The whole of the right, title, and interest of the said Antonio Maria Barretto in and to said joint account association" means what it says if it means anything at all. Language will not admit of a clearer and more expressive statement of what was sold. Exclude the profits sought to be recovered then the plaintiff did not sell the whole of his right, title, and interest, he only sold a part is never equal to the whole. That the profits were a part of the plaintiff's interest is self-evident. The contracts and the report of the appraisers are so clear and cover the entire subject matter so fully that we are convinced that the subsequent demand for the profits in question was an afterthought. If there had been any doubt in the mind of the plaintiff about the inclusion of the accrued profits in the sale of May 3 or that the appraisers were authorized to take into consideration such profits in fixing the total net value of the business so that the entire present value of the plaintiff's interest might be ascertained, the plaintiff would certainly have raised the question at the time. He remained perfectly quiet until after he had received the full value of the whole of his right, title, and interest in the factory and had solemnly declared that he "relinquished all intervention, claim, right, or action in said factory by reason of the shares under consideration." After this he came forward for the first time and demanded his share of the profit which he had sold and received payment therefor. Surely he does not expect to be paid twice for the same thing. DIOLOSA vs. COURT OF APPEALS Relova, J. (1984) Quirino BATERNA (private respondent) is a licensed real estate broker An agreement between him and Mariano DIOLOSA (petitioner) was executed wherein BATERNA was constituted as exclusive sales agent of DIOLOSA, given authority to dispose of, sell, cede, transfer and convey the lots in Villa Alegre Subdivision owned by DIOLOSA On Sept 27, 1968, DIOLOSA terminated the services of BATERNA as exclusive sales agent This prompted BATERNA to bring suit before the CFI Iloilo for recovery of unpaid commissions against DIOLOSA over some of the lots subject of an agency agreement that were NOT SOLD + moral damages, damages to his goodwill, attys fees and exemplary damages BATERNA alleged that under their agency contract, he had irrevocable authority to sell all the lots in DIOLOSAs subdivision where he was to act as exclusive sales agent until ALL lots shall have been disposed of DIOLOSA, on the other hand, contended that he had the legal right to terminate the agency on the ground that they needed the undisposed lots for use of his grandchildren. In any case, BATERNA has no right in law to claim commissions on lots that he has not sold CFI dismissed BATERNAs suit On appeal, the CA reversed the CFI and ordered DIOLOSA to pay BATERNA hence, this appeal by DIOLOSA ISSUE: WON DIOLOSA (principal) could terminate the agency agreement without paying damages to BATERNA (agent) HELD: NO. The principal DIOLOSA cannot terminate the agency contract without paying damages to the agent BATERNA RATIO: DIOLOSAs claim that he had an agreement with BATERNA to the effect that some of the lots in the subdivision were reserved for his familys use (for his grandchildren) deserves scant consideration no proof was adduced to support this allegation. His bare allegation cannot prevail over the clear terms of the agency contract There were a total of 27 unsold lots when DIOLOSA terminated the agency agreement with BATERNA allegedly on the grounds that the same were already reserved for his grandchildren DIOLOSA only has 6 grandchildren! So what happens to the 21 other lots?! And besides, he has other lands which he could reserve for his grandchildren. This is clearly not a legal reason for him to terminate the agency The terms of the agency contract between DIOLOSA and BATERNA expressly allowed the agent to dispose of, sell, cede, transfer and convey x x x until all the subject property as subdivided is fully disposed of, this only means that the authority to sell granted to BATERNA is NOT extinguished until all lots have been disposed of Hence, when DIOLOSA revoked the agency contract with BATERNA, they already became liable to the latter for damages for BREACH OF CONTRACT Since the agency contract is a valid contract, it can only be rescinded on grounds specified in Art 1381 and 1382, CC FROM SCRIBD the agency in this case is one with a period or one with a specific purpose, and it is not extinguished until all the lots have been disposed of. Consequently, if the contract is terminated by the principal before all the lots in the subdivision has been disposed of, there is a breach of contract for which the principal would be liable for damages. NEW MANILA v. REPUBLIC Gutierrez, J. (1960) Quick Facts: New Manilas 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 Mendoza, on the basis of powers of attorney executed by the latter authorizing said plaintiff to collect and receive from Republic any amount due or may be due to said contractor as contract price for the payment of the materials so supplied. H: After the execution of the powers of attorney, the contractor (principal) demanded and collected from Republic the money the collection of which he entrusted to New Manila, the agency apparently has already been revoked. FACTS: New Manila Lumber Company, Inc. filed a complaint against the Republic of the Philippines in the CFI for the recovery of a sum of money. The complaint alleges that: - Republic, thru the Director of Schools, entered into a contract with Alfonso Mendoza to build 2 school houses - New Manila furnished the lumber materials in the construction of the said buildings - prior to the payment by Republic of any amount due the contractor, the latter executed powers of attorney in favor of New Manila "constituting it as his sole, true and lawful attorney-in-fact with specific and exclusive authority to collect and receive from Republic any and all amounts due or may be due to said contractor from Republic in connection with the construction of the aforesaid school buildings, as may be necessary to pay materials supplied by New Namina" - originals of the powers of attorney were received by Republic (thru the Director of Public Schools) who promised to pay New Manila, but that it, nevertheless, paid the contractor several amounts on different occasions without first making payment to New Manila - Prays that Republic be ordered to pay the sum of P18,327.15, the unpaid balance of the cost of lumber supplied and used in the construction of the school buildings, with interest at the legal rate from the date same was due, plus attorney's fees and costs. Republic moved to dismiss the same on the grounds (1) that it does not allege a sufficient cause of action, (2) that plaintiff has no right to institute the action under Act No. 3688, and (3) that the court is without jurisdiction to entertain the same against the defendant. New manila opposed the motion. CFI dismissed the complaint holding that there is no juridical tie between New Manila-supplier and Republic-owner. New Manilas MR denied. ISSUE/HELD: WON New Manila can enforce against Republic a claim for the payment of materials it furnished the contractor on the basis of powers of attorney? NO RATIO: New Manila - An implied contract between it and Republic arose, when the latter, thru the Director of Public Schools, on being furnished copies of the powers of attorney executed by the contractor, promised to make payment to New Manila for the materials supplied for the construction of the school buildings. Republic was not a party to the execution of the powers of attorney. Besides, the Director of Public Schools had no authority to bind Republic on the payment. While he was the official who entered into contract with the contractor for the construction of the school buildings, payment of the contract price was not within his exclusive control but subject to approval under existing laws not only by the Department Head (Sec. 568, Rev. Adm, Code), but also by the Auditor General.

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


Sec. 1 of Public Act No. 3688, entitled "An Act for the protection of persons furnishing material and labor for the construction of public works", reads in part as follows SECTION 1. Any person, partnership or corporation entering into a formal contract with the Government of the Philippine Islands for the construction of any public building, or the prosecution and completion of any public work, or for repairs upon any public building or public work, shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties, with the additional obligation that such contractor or his or its sub-contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company or corporation who has furnished labor or materials in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the Government of the Philippine Islands on the bond of the contractor, and to have their rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the Government of the Philippine Islands. If the full amount of the liability of the surety on said bond is insufficient to pay the full amount of said claims and demands, then, after paying the full amount due the Government, the remainder shall be distributed pro rata among said intervenors. If no suit should be brought by the Government of the Philippine Islands within six months from the completion and final settlement of said contract, or if the Government expressly waives its right to institute action on the penal bond, then the person or persons supplying the contractor with labor and materials shall, upon application therefor, and furnishing affidavit to the department under the direction of which said work has been prosecuted, that labor or materials for the prosecution of such work have been supplied by him or them, and payment for which has not been made, be furnished with a certified copy of said contract and bond, upon which he or they shall have a right of action, and shall be, and are hereby, authorized to bring suit in the name of the Government of the Philippine Islands in the Court of First Instance in the district in which said contract was to be performed and executed, and not elsewhere, for his or their use and benefit, against said contractor and his sureties, and to prosecute the same to final judgment and execution, .... Republic has already instituted a suit against the contractor for the forfeiture of the latter's bond posted to secure the faithful performance of stipulations in the construction contract with regards to 1 of the 2 school buildings. The contractor has a similar bond with respect to the other school building. Pursuant to Act 3688, New Manila's legal remedy is, not to bring suit against the Government, there being no privity of contract between them, but to intervene in the civil case above-mentioned as an unpaid supplier of materials to the contractor, or file an action in the name of the Republic against said contractor on the latter's other bond. The powers of attorney in question made New Manila the contractor's agent in the collection of whatever amounts may be due the contractor from Republic. And since it is also alleged that, after the execution of the powers of attorney, the contractor (principal) demanded and collected from Republic the money the collection of which he entrusted to New Manila, the agency apparently has already been revoked. (Arts. 1920 and 1924, CC) New Manila - the powers of attorney executed by the contractor in its favor are irrevocable and are coupled with interest. Their alleged irrevocability cannot affect Republic who is not a party thereto. They are obligatory only on the principal who executed the agency. New Manila - cites Article 1729 of the new Civil Code: Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. . . . This article, however, as expressly provided in its last paragraph, "is subject to the provisions of special law." The special law governing in the present case, as already seen, is Act No. 3688. There is another reason for upholding the order of dismissal. New Manila's action being a claim for sum of money arising from an alleged implied contract between it and the Republic, the same should have been lodged with the Auditor General. The state cannot be sued without its consent. The order of dismissal appealed from is affirmed. DY BUNCIO vs. ONG GUAN Hull, J. (1934) *guys, this is literally the full text. no sense in digest-ing. Lucky me. Hahahaha. Ja 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. The judgment appealed from is therefore affirmed. Costs against appellants. So ordered. GARCIA vs. DE MANZANO Moir, J. (1919) Quick Facts: Father gave first POA to son and then second POA to wife; son sold half interest in the boat A second POA (of wife) revokes the first one only after notice is given to the first agent (son). Facts: Narciso Lopez Manzano gave a general power-of-attorney to his son, Angel L. Manzano on the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to his wife, Josefa Samson. Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other half being owned by Ocejo, Perez & Co., with whom there was a partnership agreement to run the steamer for a few years. When this period expired Ocejo, Perez & Co demanded that Manzano buy or sell. As he did not want to sell at the price offered and could not buy, Juan Garcia bought the half interest held by Ocejo, Perez & Co. Angel L. Manzano, acting under his power-of-attorney, sold in July, 1911, the other half of the boat to the plaintiff, but as Garcia is a Spaniard and could not register the boat in his name at the Custom House, the boat was registered in the name of Agustin Garcia, a son of the plaintiff, who at that time, July 2d, 1913, was a minor about twenty years old. Agustin Garcia shortly thereafter died, leaving his parents as his heirs at law, and as such heirs plaintiff's wife was made a party. Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso L. Manzano, executed a contract by which Juan Garcia agreed

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


to extend a credit to Narciso L. Manzano in the sum of P12,000, and this credit was used by the house of Manzano. To secure it a mortgage was given in the same document on three parcels of land in Atimonan, with their improvements. The registration of this mortgage was refused by the registrar. Josefa Samson y San Pedro was named administratrix of the property of Narciso L. Manzano, and commissioners were duly appointed, and notice was published, and no claims having been presented against the estate to the commissioners, they so reported to the court on the 7th of December, 1914. Court of First Instance ordered the partition of the property amongst the heirs of Narciso L. Manzano. Plaintiff filed his action to foreclose the so-called mortgage. willing to go into business with him, Yangco would consign Rallos' products and then pay him once sold. In the letter, Yangco conferred public power of attorney to Florentino Collantes, to perform in his name and on his behalf all acts necessary for carrying out his plans, in the belief that through Collantes knowledge and long experience in the business, along with Yangco's commercial connections with the merchants of this city and of the provinces. Mr. Collantes will sign by power of attorney. Accepting this invitation, the plaintiffs proceeded to do a considerable business with the defendant through the said Collantes, as his factor, sending to him as agent for the defendant a good deal of produce to be sold on commission. Later, and in the month of February, 1909, the plaintiffs sent to the said Collantes, as agent for the defendant, 218 bundles of tobacco in the leaf to be sold on commission, as had been other produce previously. The said Collantes received said tobacco and sold it for the sum of P1,744. The charges for such sale were P206.96. leaving in the hands of said Collantes the sum of P1,537.08 belonging to the plaintiffs. This sum was, apparently, converted to his own use by said agent. It appears, however, that prior to the sending of said tobacco the defendant had severed his relations with Collantes and that the latter was no longer acting as his factor. This fact was not known to the plaintiffs; and it is conceded in the case that no notice of any kind was given by the defendant to the plaintiffs of the termination of the relations between the defendant and his agent. The defendant refused to pay the said sum upon demand of the plaintiffs, placing such refusal upon the ground that at the time the said tobacco was received and sold by Collantes he was acting

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Argument of Defendants: that Garcia taking advantage of the youth and inexperience of Angel L. Manzano falsely and maliciously made him believe that he had authority under the power-of-attorney from his father to sell the half interest in the San Nicolas, and that he did so That Angel L. Manzano had no authority to sell the interest in the steamer, but that since the date of said sale, July, 1912, (1911?) the plaintiff had illegally appropriated all rents and profits of the boat to his own use, which amount to P30,000 per year, after paying for all repairs, etc. Issue 1: WON the power-of-attorney to the wife revoked the one to the son, in accordance with article 1735 of the Civil code (Article 1735 of the Civil code is as follows: The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article. Held: There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his mother. It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that the son had notice of the second power-of-attorney. They have not done so, and it must be considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half interest was legally inherited by the plaintiffs. Issue 2: WON the sale of the boat by Angel L. Manzano was authorized Argument of defendants: the power-of-attorney under which Angel L. Manzano acted, even if a valid power, did not authorize the sale of the boat, and they want it back it with one-half of the profits derived from its use by the plaintiff. Held: The authorization is so complete that it carries with it full authority to sell the one-half interest in the boat which was then owned by Narciso L. Manzano. Ratio: The power does not expressly state that the agent may sell the boat, but a power so full and complete authoring the sale of real property, must necessarily carry with it the right to sell a half interest in a small boat. The record further shows the sale was necessary in order to get money or a credit without which it would be impossible to continue the business which was being conducted in the name of Narciso L. Manzano and for his benefit. RALLOS vs. YANGCO Moreland, J. (1911) FACTS: 1) Yangco opened a steamship office, a shipping and commission department for buying and selling leaf tobacco and other native products. 2) He sent a letter2 to plaintiff Rallos on 1907, asking if Rallos was

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2 CIRCULAR NO. 1. MANILA, November 27, 1907 MR. FLORENTINO RALLOS, Cebu. DEAR SIR: I have the honor to inform you that I have on this date opened in my steamship office at No. 163 Muelle de la Reina, Binondo, Manila, P. I., a shipping and commission department for buying and selling leaf tobacco and other native products, under the following conditions: 1. When the consignment has been received, the consignor thereof will be credited with a sum not to exceed two-thirds of the value of the goods shipped, which may be made available by acceptance of a draft or written

order of the consignor on five to ten day's sight, or by his ordering at his option a bill of goods. In the latter case he must pay a commission of 2 per cent. 2. No draft or written order will be accepted without previous notice forwarding the consignment of goods to guarantee the same. 3. Expenses of freight, hauling and everything necessary for duly executing the commission will be charged in the commission. 4. All advances made under sections (1) and (3) shall bear interest at 10 per cent a year, counting by the sale of the goods shipped or remittance of the amount thereof. 5. A commission of 2 per cent will be collected on the amount realized from the sale of the goods shipped 6. A Payment will be made immediately after collection of the price of the goods shipped. 7. Orders will be taken for the purchase of general merchandise, shipstores, cloths, etc., upon remittance of the amount with the commission of 2 per cent on the total value of the goods bought. Expenses of freight, hauling, and everything necessary for properly executing the commission will be charged to the consignor. 8. The consignor of the good may not fix upon the consignee a longer period than four months, counting from the date of receipt, for selling the same; with the understanding that after such period the consignee is authorized to make the sale, so as to prevent the advance and cost of storage from amounting to more than the actual value of said goods, as has often happened. 9. The shipment to the consignors of the goods ordered on account of the amount realized from the sale of the goods consigned and of the goods bought on remittance of the value thereof, under sections (1) and (3), will not be insured against risk by sea and land except on written order of the interested parties. 10. On all consignments of goods not insured according to the next preceding section, the consignors will bear the risk. 11. All the foregoing conditions will take effect only after this office has acknowledged the consignor's previous notice. 12. All other conditions and details will be furnished at the office of the undersigned. If you care to favor me with your patronage, my office is at No. 163 Muelle de la Reinna, Binondo, Manila, P. I., under the name of "Teodoro R. Yangco." In this connection it gives me great pleasure to introduce to you Mr. Florentino Collantes, upon whom I have conferred public power of attorney before the notary, Mr. Perfecto Salas Rodriguez, dated November 16, 1907, to perform in my name and on my behalf all acts necessary for carrying out my plans, in the belief that through his knowledge and long experience in the business, along with my commercial connections with the merchants of this city and of the provinces, I may hope to secure the most advantageous prices for my patrons. Mr. Collantes will sign by power of attorney, so I beg that you make due note of his signature hereto affixed. Very respectfully, (Sgd.) T. R. YANGCO. (Sgd.) F. COLLANTES.

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


personally and not as agent of the defendant. This action was brought to recover said sum. ISSUE: WON Rallos can recover the amount from Yangco. HELD: YES RATIO: Yangco is liable. Having advertised the fact that Collantes was his agent and having given them a special invitation to deal with such agent, it was the duty of the defendant on the termination of the relationship of principal and agent to give due and timely notice thereof to the plaintiffs. Failing to do so, he is responsible to them for whatever goods may have been in good faith and without negligence sent to the agent without knowledge, actual or constructive, of the termination of such relationship. COMPANIA GENERAL DE TABACCOS vs. DIABA Johnson, J. (1911) (Super short case. Less than 1 page lang siguro dito.) La Compania plaintiff and appellant Diaba defendant and appellees Plaintiff filed action to recover the sum of P442 for goods sold and delivered by his agent to the defendant from January to April 1909. The defendant filed an answer admitting that he did purchase from plaintiffs agent goods, wares, etc amounting to P692 but stated that he sold to the plaintiffs agent abaca and other effects amounting to P1308.80 from JanFeb 1909. This meant that the plaintiff actually owed him P616.80. The plaintiff attempted to show that it had suspended its agents authority at the time the transactions took place. However, there was no proof that the suspension was communicated to the defendant. ISSUE: WON the defendant was liable to the plaintiff for the goods he purchased from the plaintiffs agent. HELD: No. RATIO: There was no proof that the suspension was communicated to the defendant. The defendant had the right to believe that the agent was still representing the plaintiff. The agent also testified that he bought the abaca and other effects as agent of the plaintiff and that these were delivered to the plaintiff. Also, it appears that the plaintiff was willing to ratify the act of the agent in selling goods to the defendant but not his act of purchasing from him. DEL ROSARIO vs. ABAD Padilla, J. (1958) FACTS: 1) 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. 2) On February 1937, the Registrar of Deeds issued to him an original certificate of title. 3) On February 24, 1937, del Rosario obtained a loan from Primitivo Abad in the sum of P2000 with interest payable on December 3, 1941. 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. 4) Del Rosario died in December 1945 leaving the debt unpaid/ 5) 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. 6) Teodorico too possession of the land, cancelled the original certificate of title and reigistered the land under his name in a transfer certificate of title. 7) The heirs of Del Rosario filed this case to recover the possession and ownership of the parcel of land, damages, etc. 8) The lower court ruled for del Rosario. ISSUES: 1) WON the mortgage executed was valid. YES. 2) WON the power of attorney executed by Del Rosario was coupled with interest that will not terminate the agency upon the death of the principal. NO. RATIO: 1) The mortgage on the improvements of the parcel of land executed by del Rosario is valid as provided for in the Public Land Act. What is prohibited is the encumbrance or alienation of lands acquired by free patent or homestead. 2) The power of attorney executed by del Rosario in favor of Primitivo Abad providing, among others, that it is coupled with an interest in the subject matter thereof and are therefore irrevocable, and conferring upon my said attorney full and ample power and authority to do and perform all things reasonably necessary and proper for the due carrying out of the said powers according to the true tenor and purport of the same does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character. A mere statement like such 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 parcel of land to Abad, the agent is not such an interest as could render irrevocable the power of attorney executed by the principal in favor of the agent. As the agency was not coupled with interest, it was terminated upon the death of del Reosario, the principal, sometime in December 1945, and Primitivo Abad, the agent could no longer validly convey the parcel of land to Teodorico Abad on June 9, 1947. The sale, therefore was null and void. CALEONGCO vs. CLAPAROLS Reyes, JBL, J. (1964) Caleongco plaintiff-appellant Claparols defendant-appellee Claparols, who was operating a factory for the manufacture of nails, was looking for someone to finance his imports of nail wires. At first Kho To (not a party to this case) who owned the company handling the marketing of the nails agreed to do it but later on introduced his compadre Coleongco and recommended him (Coleongco) to be the financier in his stead. Claparols agreed and entered into a contract with Coleongco wherein the latter undertook to finance the imports of the nail wires which Claparols bound himself to convert into nails. The following stipulations were agreed upon in the financing agreement - that Caleongco would have the exclusive distribution, marketing and promotion of the product all over the Phils except in Davao, - that Caleongco would share the control of all the cash, - that he (Caleongco) would have a representative in the management, - that contracts should be jointly approved by the parties, - that proper books would be kept and annual accounts rendered, and - that profits and losses would be shared on a 50-50 basis. (in short, they became partners) Claparols also executed a special power of attorney in favor of Caleongco where the former authorized the latter - to open and negotiate letters of credit, - to sign contracts, bills of lading, invoices and papers covering transactions, - to represent Claparols and the nail factory, and - to accept payments and cash advances from dealers and distributors. Caleongco also became the assistant manager of the company. (This is where it all begins) Sometime after, Claparols received an alias writ of execution to enforce a judgment obtained against him by PNB, despite fact that he had submitted an amortization plan to settle the account. He went to Manila to confer with the bank authorities, and this is where he starts to discover all the acts of Caleongco. Caleongcos acts of betrayal: 1. He wrote a letter to PNB saying that he had acquired the wholw interest of Claparols in the plant and in the factory. 2. He wrote another letter telling the bank wherein he charged Claparols of taking the machines mortgaged to the bank. 3. He proposed to Agsam, the machinery superintendent of the company, that the latter pour acid on the machinery to paralyze the factory. 4. He wrote a letter to Kho To where he proposed that Kho To cut his monthly advances to Claparols. He also mentioned their (Caleongco and Kho To) plan to acquire ownership of the factory.

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


5. He surreptitiously disposed the Yates band resaw machine in favor of his cousins lumber yard. Claparols managed to settle matters with the bank. He also decided to revoke the power of attorney and informed Caleongco of such by registered mail. He also dismissed Caleongco as assistant manager of the plant. Caleongco filed suit against Claparols for breach of contract and damages. He argued that Caleongco had no legal power to revovoke the power of attorney because it was coupled with an interest. ISSUE: WON Caleongco was correct in his contention that the power of attorney was made to protect his interest and that Claparols did not have legal power to revoke the power of attorney because it was coupled with an interest. HELD: NOPE!! RATIO: The financing agreement already contained clauses to protect Caleongco and did not call for the execution of any power of attorney in favor of Caleongco. Granting appellants view, a power of attorney can be made irrevocable only in the sense that the principal may not recall it at his pleasure. It can be revoked for a just cause regardless of whether it was coupled with an interest or not. Irrevocability may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust (like in this case) by the agent for this would amount to a waiver of future fraud, which is prohibited by the Civil Code. It has been proven that Coleongco acted in bad faith. (Acts have been enumerated in the facts.) As to his justification that he wrote the letter to PNB because of Claparols mal-administration, the court said that it was to be expected that he would have first protested to Claparols but he didnt. As to the plan to pour of acid on the machinery which he denied, the court said that the testimonies of Agsam and Claparols were more believable. (basta everything was done by him, and he did everything) EXTRA: Coleongcos claim for damages and lost profits because of the discontinuance of the financing agreement may not proper because he breached the his part of the contract. Instead of putting up the money needed to finance the imports, he merely advanced 25% in cash and had the balance covered by surety agreements executed by Claparols and others as solidary guarantors. In some instances, Coleongco paid the cost of the imports with the dealers; advances without Claparols knowledge. Also, the examination of the books showed that Coleongco did not give Claparols his half of the profits. VALERA vs. VELASCO Villa-real, J. (1928) By virtue of the powers of attorney executed by VALERA, VELASCO was appointed attorney-in-fact of VALERA with authority to manage his property in the Philippines, consisting of the usufruct of a real property located of Echague Street, City of Manila VELASCO (agent) accepted both powers of attorney, managed VALERA's property, reported his operations, rendered accounts of his administration, and presented the FINAL account of his administration wherein it appears that there is a balance of P3,058.33 in favor of the principal VALERA But after the liquidation of accounts, it was revealed that VALERA actually owed VELASCO P1,100, and as misunderstanding arose between them, the agent VELASCO brought suit against VALERA Judgment was rendered in VELASCOs favour Writ of execution was issued, and the sheriff levied upon VALERAs right of usufruct, sold it at public auction and adjudicated it to VELASCO in payment of all of his claim3 Subsequently, VALERA sold his right of redemption (over the levied usufructuary rights) to one Eduardo Hernandez, for the sum of P200 This purchaser later (re)conveyed the same right of redemption, for the sum of P200, to VALERA After VALERA had recovered his right of redemption, one Salvador VALLEJO, who had an execution upon a judgment against VALERA in a separate civil case against the latter, levied upon said right of redemption, which was sold by the sheriff at public auction to VALLEJO for P250 and was definitely adjudicated to him Later, VALLEJO transferred said right of redemption to VELASCO. This is how the title to the right of usufruct to the aforementioned property finally came to VELASCO VALERA questions the validity of VELASCOs purchase of the usufructuary rights at public auction after execution and his later acquisition of the right of redemption thereto when VELASCO was still an authorized representative (agent) of VALERA VELASCO, on the other hand, argued that his acquisitions of the usufructuary and right of redemption thereto were perfectly valid since the agency relationship between them has long been extinguished when he brought suit against VALERA for the collection of P1,100 ISSUE: WON the acquisition of the usufructuary and right of redemption thereto are valid because the agency between VALERA and VELASCO has been extinguished by virtue of the agents filing of a suit against his principal? HELD: YES RATIO: In the case of De la Pea vs. Hidalgo (16 Phil., 450), this court said laid down the following rule: When the agent (or administrator of property) informs his principal that... he is about to depart from the place where he is executing his trust and wherein the said property is situated, and abandons the property, turns it over to a third party, renders accounts of its revenues up to the date on which he ceases to hold his position and transmits to his principal statement which summarizes and embraces all the balances of his accounts since he began the administration to the date of the termination of his trust, and, without stating when he may return to take charge of the administration of the said property... it is but reasonable and just to conclude that the said agent had expressly and definitely renounced his agency and that such agency duly terminated, in accordance with the provisions of Article 1732 of the Civil Code.4 [And] although the agent did not use the words "renouncing the agency," yet such words, were undoubtedly so understood and accepted by the principal by the lapse of several years, without his having interrogated either the renouncing agent, disapproving what he had done, or the person who substituted the latter. The misunderstanding between VALERA (principal) and VELASCO (agent) 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 collections from VALERA's usufructuary right over the property managed by VELASCO, and the fact that the said agent VELASCO brought suit against his principal VALERA for the payment of said balance, more than prove the breach of the juridical relation between them Although VELASCO has not expressly told his principal that he renounced the agency, yet neither dignity nor decorum permits VELASCO to continue representing a person against whom he has adopted such an antagonistic attitude 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, the principal VALERA could not have understood otherwise than that the agent 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 DOCTRINE: 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

Remember that in sales in judicial execution, the losing party has right of legal redemption over his levied property as long as he pays the prevailing partys claim
3

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.
4

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


VELASCO, in adopting a hostile attitude towards his principal, suing him for the collection of the balance in his favor, ceased ipso facto to be the agent of VALERA Since the agency has been extinguished, VELASCO's purchase of the VALERA's right of usufruct at public auction held by virtue of an execution issued upon the judgment rendered in favor of the former and against the latter, is valid and legal It is futile to discuss the validity of the sales and re-sales of the right of redemption made subsequently among different people including VALERA and VELASCO themselves because the same right of redemption has never been exercised within the one-year reglementary. The right of the ultimate purchaser, VELASCO, hence, became absolute in the end. To repeat: In disagreements between an agent and his principal with respect to the agency, 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, is a significant fact 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." PASNO vs. RAVINA Malcolm, J. (1930) 2 appeals in this case. 1st appeal - Taken by the oppositors to the legalization of the will of Gabina Labitoria, and concerns the validity of that will Parties: - Petitioner: Enrique Pasno - Oppositors Fortunato and Ponciano Ravina The stenographic notes have not been written up and elevated to this court, any discussion of the evidence is rendered impossible. Whether the admitted fact that the will was executed on July 27, 1928, although stating that it was executed on February 6, 1926, invalidates the will. Trial judge, the reason for the error was on account of the will being in great part a reproduction of another will of February 6, 1926, and inadvertently retaining this date. Section 618, as amended, of the Code of Civil Procedure prescribes the requisites necessary to the execution of a valid will. The law does not require that the will shall be dated. Accordingly, a will without a date is valid. So likewise an erroneous date will not defeat a will. Trial judge was right in admitting the will of Gabina Labitoria to probate. 2nd Appeal Taken by the PNB and concerns the survivability of the right of sale of the mortgaged property under special power while the mortgaged property is in custodia legis. Parties: Appellee Enrique Pasno Appellant - PNB Facts: Gabina Labitoria during her lifetime mortgaged 3 parcels of land to PNB to secure an indebtedness of P1,600. 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 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 and later denied a motion for reconsideration presented on behalf of PNB. ISSUE/HELD: WON the rirght of sale survives the death of the grantor. YES RATIO: 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. PNB practically concedes that the law applicable to the case is section 708 of the Code of Civil Procedure. The cited section reads: "A creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon the security and prosecute his claim before the committee, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may prove his deficiency judgment before the committee against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that even he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudge it to be for the best interest of the estate that such redemption shall be made." The law provides 2 remedies. The creditor here is not taking advantage of the 1st remedy for the mortgage security has not been abandoned. Rather is the 2nd remedy invoked but until now unsuccessfully since the mortgagee has not begun an ordinary action in court to foreclose the mortgage making the special administrator a party defendant. The power of sale given in a mortgage is a power coupled with an interest which survives the death of the grantor. Carter vs. Slocomb - a sale after the death of the mortgagor is valid without notice to the heirs of the mortgagor. 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. The judgment and orders appealed from will be affirmed. Street, Villamor and Ostrand, concurring and dissenting: Unable to concur in the second part of the decision wherein it is held that, after the death of the mortgagor, the mortgage can only be foreclosed in an ordinary action in court even though it may contain a clause expressly conferring upon the mortgagee the power to sell the property extrajudicially. Under such a power, the sale may be proceeded with under the provisions of Act No. 3135, which is expressly referred to in the mortgage now under consideration. The decisions of English and American courts are almost unanimous to the effect that a power of sale contained in a mortgage is a power coupled with an interest and is not revoked by the mortgagor's death. The opinion of the court refers to section 708 of the Code of Civil Procedure as determining the proposition that, after the death of the mortgagor, foreclosure can be effected only by an ordinary action in court; but if this section be attentively examined, it will be seen that the bringing of an action to foreclose is necessary only when the mortgagee wishes to obtain a judgment over for the deficiency remaining unpaid after foreclosure is effected. In fact this section gives to the mortgagee 3 distinct alternatives, which are (1) to waive his security and prove his credit as an ordinary debt against the estate of the deceased; (2) to foreclose the mortgage by ordinary action in court and recover any deficiency against the estate in administration; and (3) to foreclose

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


without action at any time within the period allowed by the statute of limitations. The third mode of procedure is indicated in that part of section 708 which is expressed in these words: Or he may reply upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate. The alternative here contemplated is a foreclosure under power of sale contained in the mortgage. It must be so, since there are no other modes of foreclosure known to the law than by ordinary action and foreclosure under power, and the procedure by action is covered in that part of section 708 which immediately precedes the words which we have quoted above. It will be noted that the result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate. The policy of the court in requiring foreclosure by action in case of the death of a mortgagor, where a power of sale is inserted in the mortgage, will prove highly prejudicial to the estates of deceased mortgagors. Nowadays nearly every mortgage executed in this country contains a stipulation for the payment of attorney's fees and expenses of foreclosure, usually in an amount not less than 20 or 25 per cent of the mortgage debt. This means, in practical effect, that the creditor can recover, for attorney's fees and expenses, whatever the court will allow as reasonable, within the stipulated limit. On the other hand, if an extrajudicial foreclosure is effected under the power of sale, the expenses of foreclosure are limited to the cost of advertising and other actual expenses of the sale, not including the attorney's fee. If foreclosure is effected extrajudicially under the power, in conformity with the provisions of Act No. 3135, the mortgagor or his representative has a full year, from the date of the sale, within which to redeem the property, this being the same period of time that is allowed to judgment debtors for redeeming after sale under execution. On the other hand, the provisions of the Code of Civil Procedure relative to the foreclosure of mortgages by action allows no fixed period for redemption after sale; and although, in the closing words of section 708 of the Code of Civil Procedure the court is authorized to permit the administrator to redeem mortgaged property, this evidently refers to redemption to be effected before the foreclosure becomes final. When account is further taken of the fact that a creditor who elects to foreclose by extrajudicial sale waives all right to recover against the estate of the deceased debtor for any deficiency remaining unpaid after the sale, it will be readily seen that the decision in this case will impose a burden upon the estates of deceased persons who have mortgaged real property for the security of debts, without any compensatory advantage. We permit ourselves to make one more suggestion, which is that the courts ought to be friendly to the provisions of law relating to mortgages, and they should not, by strict interpretation, deprive the mortgagee of any right fairly deducible from the contract. In this country the contract of sale with pacto de retro, as used in lieu of the mortgage, has an almost uncontrollable vogue, undoubtedly due to the defects of our laws relating to mortgages, and the slender reliance that can be placed upon them. And as long as the attitude of the Legislature and the courts remains unfriendly to the mortgage, to that extent the day is postponed when borrowers, upon the security of real property, can be freed from the dangers incident to the contract of sale with pacto de retro. RAMOS vs. CAOIBES Jugo, J. (1954) FACTS: On August 16, 1948, Concepcion Ramos Dipusoy executed before a notary public two documents, the first one a power of attorney, the second one an affidavit Annex A: Power of attorney which reads as follows: [THIS DOCUMENT WAS ENTITLED SPECIAL POWER OF ATTORNEY] That I, Concepcion Ramos Dipusoy, of legal age, single, Filipino citizen and resident of Balayan, Batangas, have made, constituted and appointed, and by these presents do make, constitute and appoint Mr. Benigno A. Caoibes, also of legal age, married, Filipino citizen and at present residing at 1047 Antipolo Street, Sampaloc, Manila, my true and lawful attorney-in-fact, for me and in my name, place and stead, to collect any amount due me from the Philippine War Damage Commission, regarding my claim filed for my properties that were lost during the last war in Balayan, Batangas, to cash checks, warrants and to sign receipts, vouchers, documents which shall be necessary to the said purpose. That I am giving and granting unto my said attorney-in-fact Benigno A. Caoibes, full and absolute power and authority to do and perform all any every act or thing whatsoever to be done necessary in and about the premises, as fully to all intents and purposes as I might or could myself do if I were personally present, and hereby confirming and ratifying all that my said attorney-in-fact shall lawfully do or cause to be done and by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila, Philippines. Annex B: AFFIDAVIT That I, CONCEPCION RAMOS DIPUSOY, of legal age, single, Filipino citizen, and resident of Balayan, Batangas, after having been duly sworn to in accordance to law depose and say: That in case payment of any amount or amounts collected from the Philippine War Damage Commission, my nephew and at the same time attorney-in-fact, shall give my sister Teopista Vda. de Basa one-half (), of the corresponding amount and the other half () shall be given to my nephew and niece Mr. and Mrs. Benigno A. Caoibes. IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of August, 1948, in the City of Manila.

Concepcion Ramos died on August 19, 1948, leaving a will dated January 7, 1927 admitted to probate on October 4, 1948, 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. One year before she died, Concepcion Ramos filed with the War Damage Commission a claim which was identified as No. 411773. On August 31, 1948, the Commission issued check No. 348444, in the amount of P501.62, payable to the deceased Concepcion Ramos. This check was returned to the Commission and substituted by the latter which check No. 564614, on November 10, 1948, for the same amount, but payable to Benigno A. Caoibes, who had presented to said entity Annexes "A" and "B", above mentioned, in order to exchange the first check No. 564614, which he cashed for himself. Annexes "A" and "B" were presented to the Commission by Caoibes after the death of Concepcion. The administratrix, Consolacion L. Ramos, the appellant herein, discovered the collection made by Caoibes when she saw the note "previous payment" which appeared in the account sent to her by the Commission on October 13, 1950. She filed a motion with the court asking that Caoibes be ordered to deposit the sum of P501.62 with the clerk of court. Caoibes answered the motion admitting that after the death of Concepcion, he presented Annexes "A" and "B" to the Commission and received in cash the sum of P501.62, amount of the second check, above mentioned, but stating that he was willing to deliver to the clerk the sum of P250.81. He contended that, by virtue of Annex "A", and Annex "B", he had the right to retain, for himself, half of the sum of P501.62. LOWER COURTs DECISION: Considering the motion of the administratrix praying that Atty. Benigno A. Caoibes turn over the amount of P510.62, representing war damage claim, to the office of the Clerk of this Court, and the answer of Atty. Caoibes to the said motion and this Court having had the opportunity to personally confer with the parties and Atty. Caoibes being agreeable to turn over the amount of P250.81 to the Clerk of this Court in final settlement of this matter it is ordered that the said Atty. Caoibes deposit the said amount to be at the disposal of the administratrix and the other parties in this intestate proceedings. With this order, the matter before this Court is deemed closed. MR denied. Hence, this petition. ISSUE: HOW TO CONSTRUE THE DOCUMENTS (PA + AFFIDAVIT) Held/Ratio: Annex A is only a power of attorney. 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 Annex "A", and under Article 1711 of the old Civil Code (which was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless the agent is a professional

AJAMINCHAJANZKRIZELPACOVIENYEN How is AGENCY Extinguished?


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. Coming now to Annex "B", the alleged document of donation, it should be noted that it is not a donation of real but of personal property and is governed by article 632 of the old Civil Code, which reads as follows: 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. The court below in its order of June 15, 1951, said that it "having had the opportunity to personally confer with the parties and Attorney Caoibes being agreeable to turn over the amount of P250.81 to the Clerk of this Court in final settlement of this matter it is ordered that the said Atty. Caoibes deposit the amount of P250.81 with the Clerk of this Court, the said amount to be at the disposal of the administratrix and the other parties in these intestate proceedings. With this order, the matter before the administratrix never consented to the reduction of the claim. In view of the foregoing, the order appealed from is hereby reversed and Benigno A. Caoibes is ordered to deposit with the Clerk of Court of Batangas the sum of P501.62 to be at the disposal of the administratrix in her capacity as such, without pronouncement as to costs. So ordered. HERRERA vs. LUY KIM GUAN Barrera, J. (1961) 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. Before leaving for China, however, Luis Herrera executed on December 1, 1931, a deed of General Power of Attorney, Exhibit 'B', which authorized and empowered the defendant Kim Guan, among others to administer and sell the properties of said Luis Herrera. Lot 1740 o was originally covered by Original Certificate Title 8601 registered in the name of Luis Herrera, married to GO Bang. This lot was sold by the defendant Luy Kim in his capacity as attorney-in-fact of the deceased Luis Her to Luy Chay o to secure a loan of P2,00 a deed of mortgage to the Zamboanga Mutual Building and Association was executed by Luy Chay o the said Luy Chay executed a deed of sale, Exhibit "E", in favor of Lino Bangayan. Lots 4465 and 4467 o were originally registered in the of Luis Herrera, married to Go Bang o Luis Herrera sold one-half () undivided share and to Herrera and Go Bang, the other half () Luis Herrera thru his attorney-in-fact Luy Kim Guan, one of the defendants, sold to Nicomedes Salazar his one half () participation in these two (2) lots the defendant Luy Kim Guan Nicomedes Salazar executed a deed of mortgage in favor of Bank of the Philippine Islands to secure a loan of P3,500.00 the defendant Luy Kim Guan and Nicomedes Salazar sold Lot 4465 to Carlos Eijansantos for the sum of P100.00 Nicomedes Salazar sold his one half () interest on Lot 4467 to the defendant Lino Bangayan for P3,000.00 Argument of plaintiff- appellant: all the transactions mentioned were fraudulent and were executed after the death of Luis Herrera and, consequently, when the power of attorney was no longer operative. ISSUE: WON these transactions are null and void and of no effect because they were executed by the attorney-in-fact after the death of his Principal HELD: NO. The date of death of Luis Herrera has not been satisfactorily proven. RATIO: The only evidence presented by the Plaintiff-appellant in this respect is a supposed letter received from a certain "Candi", dated at Amoy in 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. Even granting arguendo that Luis Herrera did die in 1936, plaintiffs presented no proof and there is no indication in the record, that the age Luy Kim Guan was aware of the death of his prince 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 the agency.