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AGENCY

DIGEST

PHILPOTTS
VS.
PHILIPPINE
MANUFACTURING CO. AND BERRY
W.G. Philpotts (Petitioner), a stockholder in
Philippine Manufacturing Company sought to
compel respondents to permit plaintiff, a
person or by some authorized agent or
attorney to inspect and examine the records
of the business transacted by said company
since January 1, 1918.
Respondent corporation or any of its officials
has refused to allow the petitioner himself to
examine anything relating to the affairs of
the company, and the petitioner prays for an
order commanding respondents to place
records of all business transactions of the
company, during a specific period, at the
disposal of the plaintiff or his duly authorized
agent or attorney. Petitioner desires to
exercise said right through agent or attorney.
Petition is filed originally in the Supreme
Court under authority of Section 515 of Code
of Civil Procedure, which gives SC concurrent
jurisdiction with then Court of First Instance
in cases where any corporation or person
unlawfully excludes the plaintiff from use and
enjoyment and some right he is entitled.
ISSUE:
Whether the right which the law concedes to
a stockholder to inspect the records can be
exercised by a proper agent or attorney of
the stockholder as well as by stockholder in
person
HELD:
Yes. Right of inspection of records can be
exercised by proper agent or attorney of the
stockholder as well as by stockholder in
person.
The right of inspection / examination into
corporate affairs given to a stockholder in
section 51 of the Corporation Law which
states: The records of all business
transactions of the corporation and the
minutes of any meeting shall be open to the
inspection of any director, member, or
stockholder of the corporation at reasonable
hour can be exercised either by himself or
by any duly authorized representative or
attorney in fact, and either with or without
the attendance of the stockholder. This is in
conformity with the general rule that what a
man may do in person he may do through
another.

RALLOS v. FELIX GO CHAN


G.R. No. L-24332 January 31, 1978
FACTS:
This is a case of an attorney-in-fact, Simeon
Rallos, who after of his death of his principal,
Concepcion Rallos, sold the latter's undivided
share in a parcel of land pursuant to a power
of attorney which the principal had executed
in favor. The administrator of the estate of
the went to court to have the sale declared
uneanforceable and to recover the disposed
share. The trial court granted the relief
prayed for, but upon appeal the Court of
Appeals uphold the validity of the sale and
the complaint.
Hence, this Petition for Review on certiorari.
Concepcion and Gerundia both surnamed
Rallos were sisters and registered co-owners
of a parcel of land known as Lot No. 5983 of
the Cadastral Survey of Cebu covered by
Transfer Certificate of Title No. 11116 of the
Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney
in favor of their brother, Simeon Rallos,
authorizing him to sell for and in their behalf
lot 5983. On March 3, 1955, Concepcion
Rallos died. On September 12, 1955, Simeon
Rallos sold the undivided shares of his sisters
Concepcion and Gerundia in lot 5983 to Felix
Go Chan & Sons Realty Corporation for the
sum of P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu,
TCT No. 11118 was cancelled, and a new
transfer certificate of Title No. 12989 was
issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as
administrator of the Intestate Estate of
Concepcion Rallos filed a complaint docketed
as Civil Case No. R-4530 of the Court of First
Instance of Cebu, praying (1) that the sale of
the undivided share of the deceased
Concepcion Rallos in lot 5983 be d
unenforceable, and said share be reconveyed
to her estate; (2) that the Certificate of 'title
issued in the name of Felix Go Chan & Sons
Realty Corporation be cancelled and another
title be issued in the names of the
corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and
(3) that plaintiff be indemnified by way of
attorney's fees and payment of costs of suit.
Named party defendants were Felix Go Chan
& Sons Realty Corporation, Simeon Rallos,
and the Register of Deeds of Cebu, but
subsequently, the latter was dropped from
the complaint. The complaint was amended
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AGENCY
DIGEST

twice; defendant Corporation's Answer


contained a crossclaim against its codefendant, Simon Rallos while the latter filed
third-party complaint against his sister,
Gerundia Rallos While the case was pending
in the trial court, both Simon and his sister
Gerundia died and they were substituted by
the respective administrators of their
estates.
ISSUES:
What is the legal effect of an act performed
by an agent after the death of his principal?
Applied more particularly to the instant case,
We have the query. is the sale of the
undivided share of Concepcion Rallos in lot
5983 valid although it was executed by the
agent after the death of his principal? What
is the law in this jurisdiction as to the effect
of the death of the principal on the authority
of the agent to act for and in behalf of the
latter? Is the fact of knowledge of the death
of the principal a material factor in
determining the legal effect of an act
performed after such death?
HELD:
By reason of the very nature of the
relationship between Principal and agent,
agency is extinguished by the death of the
principal or the agent. This is the law in this
jurisdiction.
Manresa commenting on Art. 1709 of the
Spanish Civil Code explains that the rationale
for the law is found in the juridical basis of
agency which is representation Them being
an in. integration of the personality of the
principal integration that of the agent it is
not possible for the representation to
continue to exist once the death of either is
establish. Pothier agrees with Manresa that
by reason of the nature of agency, death is a
necessary cause for its extinction. Laurent
says that the juridical tie between the
principal and the agent is severed ipso jure
upon the death of either without necessity
for the heirs of the fact to notify the agent of
the fact of death of the former.
The same rule prevails at common law the
death of the principal effects instantaneous
and absolute revocation of the authority of
the agent unless the Power be coupled with
an interest. This is the prevalent rule in
American Jurisprudence where it is wellsettled that a power without an interest
confer. red upon an agent is dissolved by the
principal's death, and any attempted
execution of the power afterward is not

binding on the heirs or representatives of the


deceased.
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 respondent
corporation. The knowledge of the death is
clearly to be inferred from the pleadings filed
by Simon Rallos before the trial court. 12
That Simeon Rallos knew of the death of his
sister Concepcion is also a finding of fact of
the court a quo 13 and of respondent
appellate court when the latter stated that
Simon Rallos 'must have known of the death
of his sister, and yet he proceeded with the
sale of the lot in the name of both his sisters
Concepcion and Gerundia Rallos without
informing appellant (the realty corporation)
of the death of the former.
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 inapplicable. The law
expressly requires for its application lack of
knowledge on the part of the agent of the
death of his principal; it is not enough that
the third person acted in good faith. Thus in
Buason & Reyes v. Panuyas, the Court
applying Article 1738 of the old Civil rode
now Art. 1931 of the new Civil Code
sustained the validity , of a sale made after
the death of the principal because it was not
shown that the agent knew of his principal's
demise.
Whatever conflict of legal opinion was
generated by Cassiday v. McKenzie in
American jurisprudence, no such conflict
exists in our own for the simple reason that
our statute, the Civil Code, expressly
provides for two exceptions to the general
rule that death of the principal revokes ipso
jure the agency, to wit: (1) that the agency is
coupled with an interest (Art 1930), and (2)
that the act of the agent was executed
without knowledge of the death of the
principal and the third person who
contracted with the agent acted also in good
faith (Art. 1931). Exception No. 2 is the
doctrine followed in Cassiday, and again We
stress the indispensable requirement that
the agent acted without knowledge or notice
of the death of the principal In the case
before Us the agent Ramon Rallos executed
the sale notwithstanding notice of the death
of his principal Accordingly, the agent's act is
unenforceable against the estate of his
principal.
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AGENCY
DIGEST

IN VIEW OF ALL THE FOREGOING, We set


aside the ecision of respondent appellate
court, and We affirm en toto the judgment
rendered by then Hon. Amador E. Gomez of
the Court of First Instance of Cebu, quoted in
pages 2 and 3 of this Opinion, with costs
against respondent realty corporation at all
instances.
ORIENT AIR SERVCES
REPRESENTATIVES V CA

AND

HOTEL

FACTS:
American Airlines, inc, an air carrier offering
passenger and air cargo transportation in the
Phils, and Orient Air Services and Hotel
Representatives entered into a General Sales
Agency Agreement whereby the former
authorized the latter to act as its exclusive
general sales agent within the Phils for the
sale of air passenger transportation
Some of the pertinent provisions are:
Orient Air
services:

Services

shall

perform

these

a. solict and promote passenger traffic for


the services of American and if necessary,
employ staff competen and sufficient to do
so
b. provide and maintain a suitable area in its
place of business to be used exclusively for
the transaction of the business of American
c. arrange for distribution of Americans
timetables, tariffs and promotional material
to sales agents nad the general public in the
assigned territory
d. service and supervise sales agents in the
assigned territory including if required by
American the control of remittances and
commissions retained
e. hold out a passenger reservation facility to
sales agents and general public in the
assigned territory
Alleging that Orient Air had reneged on its
obligations under the Agreement by failing to
remit the net proceeds of sale in the amount
of US $ 254,400, American Air by itself
undertook the collection of the proceeds of
tickets sold originally by Orient Air and
terminated forthwith the Agreement
American Air instituted suit against Orient Air
for Accounting with Preliminary Attachment
or Garnishment, Mandatory Injunction and
Restraining Order averring the basis for the

termination of the Agreement as well as


Orient Airs previous record of failures to
promptly settle past outstanding refunds of
which there were available funds in the
possession of the Orient Air to the damage
and prejudice of American Air
TC ruled in favor of Orient Air to which the
Intermediate Appelalate Court (now CA)
affirmed TCs decision with modifications
with respect to monetary awards granted.
ISSUE: W/N Orient Air is entitled to the 3%
overriding commission
RULING: Yes
It is a well settled principle that in the
interpretation of a contract, the entirety
thereof must be taken into consideration to
ascertain the meaning of its provisions. The
various stipulations in the contract must be
read together to give effect to all
The Agreement, when interpreted in
accordance with the foregoing principles,
entitles
Orient Air to the 3% overriding
commission based on total revenue or as
referred to by the parties, total flown
revenues.
As the designated General Sales Agent of
American Air, Orient Air was responsible for
the promotion and marketing of American
Airs
services
for
air
passenger
transportation and the solicitation of sales
therefor. In return for such efforts and
services, Orient Air was to be paid
commissions of 2 kinds: first, a sales agency
commission, ranging from 7 to 8% of tariff
fares and charges from sales by Orient Air
when made on American Air ticket stock; and
second, an overriding commission of 3% of
tariff fares and charges for all sales of
passenger transportation over American Air
services.
The second type of commissions would
accrue for sales of American Air services
made not on its ticket stocket but on the
ticket stock of other air carriers sold by such
carriers or other authorized ticketing facilities
or travel agents.
In addition, it is clear from the records that
American Air was the party responsible for
the
preparation
of
the
Agreement.
Consequently,
any
ambiguity
in
this
contract of adhesion is to be taken contra
proferentem construed against the party
who cause the ambiguity and could have
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AGENCY
DIGEST

avoided it by the exercise of a little more


care.
G.R. No. 144805 June 8, 2006
LINTONJUA,
CORPORATION

JR.

vs.

ETERNIT

Facts:
The
Eternit
Corporation
(EC)
manufactures roofing materials and pipe
products. Ninety (90%) percent of the shares
of stocks of EC were owned by Eteroutremer
S.A. Corporation (ESAC), a corporation
registered under the laws of Belgium.
Glanville was the General Manager and
President of EC, while Delsaux was the
Regional Director for Asia of ESAC. In 1986,
because of the political situation in the
Philippines the management of ESAC wanted
to stop its operations and to dispose the land
in Mandaluyong City. They engaged the
services of realtor/broker Lauro G. Marquez.
Marquez thereafter offered the land to
Eduardo B. Litonjua, Jr. for P27,000,000.00.
Litonjua counter offered P20,000,000.00
cash. Marquez apprised Glanville & Delsaux
of the offer. Delsaux sent a telex stating that,
based on the "Belgian/Swiss decision," the
final offer was "US$1,000,000.00 and
P2,500,000.00.
The
Litonjua
brothers
deposited US$1,000,000.00 with the Security
Bank & Trust Company, and drafted an
Escrow Agreement to expedite the sale.
Meanwhile, with the assumption of Corazon
C. Aquino as President, the political situation
improved. Marquez received a letter from
Delsaux that the ESAC Regional Office
decided not to proceed with the sale. When
informed of this, the Litonjuas, filed a
complaint for specific performance and
payment for damages on account of the
aborted sale. Both the trial court and
appellate court rendered judgment in favor
of defendants and dismissed the complaint.
The lower court declared that since the
authority of the agents/realtors was not in
writing, the sale is void and not merely
unenforceable.
Issue: WON the appellate court committed
grave error of law in holding that Marquez
needed a written authority from respondent
ETERNIT before the sale can be perfected.
Held: Respondents maintain that Glanville,
Delsaux and Marquez had no authority from
the stockholders of EC and its Board of
Directors to offer the properties for sale to
the petitioners.

Petitioners assert that there was no need for


a written authority from the Board of
Directors of EC for Marquez to validly act as
broker. As broker, Marquez was not an
ordinary agent because his only job as a
broker was to look for a buyer and to bring
together the parties to the transaction. He
was not authorized to sell the properties;
hence, petitioners argue, Article 1874 of the
New Civil Code does not apply.
A corporation is a juridical person separate
and distinct from its stockholders and is not
affected by the personal rights, obligations
and transactions of the latter. It may act only
through its board of directors or, when
authorized by its board resolution, through
its officers or agents. The general principles
of agency govern the relation between the
corporation and its officers or agents, subject
to the articles of incorporation, by-laws, or
relevant provisions of law.
Agency may be oral unless the law requires a
specific form. However, to create or convey
real rights over immovable property, a
special power of attorney is necessary. Thus,
when a sale of a piece of land or any portion
thereof is through an agent, the authority of
the latter shall be in writing, otherwise, the
sale shall be void.
In this case, the petitioners failed to adduce
in evidence any resolution of the Board of
Directors of EC empowering Marquez,
Glanville or Delsaux as its agents, to sell, let
alone offer for sale, for and in its behalf, the
eight parcels of land owned by it.
Moreover, the evidence of petitioners shows
that Adams and Glanville acted on the
authority of Delsaux, who, in turn, acted on
the authority of ESAC, through its Committee
for Asia, and the Belgian/Swiss component of
the management of ESAC. The offer of
Delsaux
emanated
only
from
the
"Belgian/Swiss decision," and not the entire
management or Board of Directors of ESAC.
While it is true that petitioners accepted the
counter-offer of ESAC, EC was not a party to
the transaction between them; hence, EC
was not bound by such acceptance. Decision
of the lower court is affirmed.
Jocelyn B. Doles vs. Ma. Aura Tina
Angeles
G.R. No. 149353. June 26, 2006.
Facts:

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AGENCY
DIGEST

Petitioner executed a Deed of Absolute Sale


ceding a parcel of land in favor of respondent
to satisfy the alleged indebtedness of the
former in the amount of P405,430.00. Since
the said land was mortgaged to the National
Home Mortgage Finance Corporation, they
further agreed that respondent assume the
remaining balance of the loan. Learning that
the
petitioner
still
has
arrearages,
respondent demanded that the arrearages
be paid first. Petitioner did not heed, thus a
case was filed by the respondent.
In answer, the petitioner alleged that sale
was void for lack of consideration and that
she was not indebted to the respondent as
she only referred her friends to respondent
whom she knew to be engaged in the
business of lending money in exchange for
personal checks through her capitalist
Arsenio Pua. Further petitioner contended
that since the respondent is also an agent,
she does not have the capacity to sue her.
It is an admitted fact by both petitioner and
defendant, based on their testimonies, that
respondent knew that the money will be
used by the friends of the petitioner; that the
respondent was merely representing Arsenio
Pua; and that before the supposed friends of
the petitioner defaulted in payment, each
issued their personal checks in the name of
Arsenio Pua for the payment of their debt.
Issue/s:
Whether or not petitioner and respondent
were acting on their personal capacity or as
mere agents.

Ruling:
The question whether an agency has been
created is ordinarily a question which may be
established in the same was as any other
fact, either by direct or circumstantial
evidence. Agency may be implied from the
words and conduct of the parties and the
circumstances of the particular case. Though
the fact or extent of authority of the agents
may not, as a general rule, be established
from the declarations of the agents alone, if
one frofessed to act as agent for another,
she may be stopped to deny her agency both
as against the asserted principal and the
third persons interested in the transaction in
which he or she is engaged.
In this case, petitioner knew that the
financier of the respondent is Pua, and

respondent knew that the borrowers are


friends of petitioner. It is sufficient that
petitioner disclosed to respondent that the
former was acting in behalf of her principals,
her friends. For an agency to arise, it is not
necessary that the principal personally
encounter the third person with whom the
agent interacts.
Here, both petitioner and respondent have
undeniably disclosed to each other that they
are representing someone else and so both
of them are estopped to deny the same.
That both parties acted as mere agents is
shown by the undisputed fact that the
friends of the petitioner issued checks in
payment of the loan in the name of Arsenio
Pua.

EUROTECH INDUSTRIAL TECHNOLOGIES,


INC. v. CUIZON
EUROTECH INDUSTRIAL TECHNOLOGIES,
INC. v. CUIZON
G.R. No. 167552; April 23, 2007
Ponente: J. Chico-Nazario
FACTS:
From January to April 1995, petitioner sold to
Impact Systems various products allegedly
amounting
to
P91,338.00
pesos.
Subsequently, respondents sought to buy
from petitioner one unit of sludge pump
valued at P250,000.00 with respondents
making a down payment of P50,000.00.
When the sludge pump arrived from the
United Kingdom, petitioner refused to deliver
the same to respondents without their
having fully settled their indebtedness to
petitioner.
Thus,
on
28
June
1995,
respondent EDWIN and Alberto de Jesus,
general manager of petitioner, executed a
Deed of Assignment of receivables in favor of
petitioner. Impact systems is owed by ERWIN
Cuizon.
Despite the existence of the Deed of
Assignment, respondents proceeded to
collect from Toledo Power Company the
amount of P365,135.29. Alarmed by this
development,
petitioner
made
several
demands upon respondents to pay their
obligations. As a result, respondents were
able to make partial payments to petitioner.
On 7 October 1996, petitioner's counsel sent
respondents a final demand letter wherein it
was stated that as of 11 June 1996,
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AGENCY
DIGEST

respondents' total obligations stood at


P295,000.00
excluding
interests
and
attorney's fees. Because of respondents'
failure to abide by said final demand letter,
petitioner instituted a complaint for sum of
money, damages, with application for
preliminary
attachment
against
herein
respondents
By way of special and affirmative defenses,
respondent EDWIN alleged that he is not a
real party in interest in this case. According
to him, he was acting as mere agent of his
principal, which was the Impact Systems, in
his transaction with petitioner and the latter
was very much aware of this fact.
ISSUE:
Whether the act of Edwin in signing the
Deed of Assignment binds his principal
Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of
Assignment binds Impact Systems
The Supreme Court held that in a contract of
agency, a person binds himself to render
some service or to do something in
representation or on behalf of another with
the latter's consent. Its purpose is to extend
the personality of the principal or the party
for whom another acts and from whom he or
she derives the authority to act. It is said
that the basis of agency is representation,
that is, the agent acts for and on behalf of
the principal on matters within the scope of
his authority and said acts have the same
legal effect as if they were personally
executed by the principal.
In this case at hand, the parties do not
dispute the existence of the agency
relationship between respondents ERWIN as
principal and EDWIN as agent.
Philex Mining Corporation vs. CIR [G.R.
No. 148187 (April 16, 2008)]

Facts: Petitioner Philex entered into an


agreement
with
Baguio
Gold
Mining
Corporation for the former to manage the
latters mining claim know as the Sto. Mine.
The parties agreement was denominated as
Power of Attorney. The mine suffered
continuing losses over the years, which

resulted in petitioners withdrawal as


manager of the mine. The parties executed a
Compromise Dation in Payment, wherein
the debt of Baguio amounted to Php.
112,136,000.00. Petitioner deducted said
amount from its gross income in its annual
tax income return as loss on the settlement
of receivables from Baguio Gold against
reserves and allowances. BIR disallowed the
amount as deduction for bad debt. Petitioner
claims that it entered a contract of agency
evidenced by the power of attorney
executed by them and the advances made
by petitioners is in the nature of a loan and
thus can be deducted from its gross income.
Court of Tax Appeals (CTA) rejected the claim
and held that it is a partnership rather than
an agency. CA affirmed CTA
Issue: Whether or not it is an agency.
Held: No. The lower courts correctly held
that the Power of Attorney (PA) is the
instrument material that is material in
determining the true nature of the business
relationship between petitioner and Baguio.
An examination of the said PA reveals that a
partnership or joint venture was indeed
intended by the parties. While a corporation
like the petitioner cannot generally enter into
a contract of partnership unless authorized
by law or its charter, it has been held that it
may enter into a joint venture, which is akin
to a particular partnership. The PA indicates
that the parties had intended to create a PAT
and establish a common fund for the
purpose. They also had a joint interest in the
profits of the business as shown by the 50-50
sharing of income of the mine.
Moreover, in an agency coupled with
interest, it is the agency that cannot be
revoked or withdrawn by the principal due to
an interest of a third party that depends
upon it or the mutual interest of both
principal and agent. In this case the nonrevocation or non-withdrawal under the PA
applies to the advances made by the
petitioner who is the agent and not the
principal under the contract. Thus, it cannot
be inferred from the stipulation that it is an
agency.
RALLOS v. FELIX GO CHAN
G.R. No. L-24332 January 31, 1978
FACTS:

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AGENCY
DIGEST

This is a case of an attorney-in-fact, Simeon


Rallos, who after of his death of his principal,
Concepcion Rallos, sold the latter's undivided
share in a parcel of land pursuant to a power
of attorney which the principal had executed
in favor. The administrator of the estate of
the went to court to have the sale declared
uneanforceable and to recover the disposed
share. The trial court granted the relief
prayed for, but upon appeal the Court of
Appeals uphold the validity of the sale and
the complaint.
Hence, this Petition for Review on certiorari.
Concepcion and Gerundia both surnamed
Rallos were sisters and registered co-owners
of a parcel of land known as Lot No. 5983 of
the Cadastral Survey of Cebu covered by
Transfer Certificate of Title No. 11116 of the
Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney
in favor of their brother, Simeon Rallos,
authorizing him to sell for and in their behalf
lot 5983. On March 3, 1955, Concepcion
Rallos died. On September 12, 1955, Simeon
Rallos sold the undivided shares of his sisters
Concepcion and Gerundia in lot 5983 to Felix
Go Chan & Sons Realty Corporation for the
sum of P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu,
TCT No. 11118 was cancelled, and a new
transfer certificate of Title No. 12989 was
issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as
administrator of the Intestate Estate of
Concepcion Rallos filed a complaint docketed
as Civil Case No. R-4530 of the Court of First
Instance of Cebu, praying (1) that the sale of
the undivided share of the deceased
Concepcion Rallos in lot 5983 be d
unenforceable, and said share be reconveyed
to her estate; (2) that the Certificate of 'title
issued in the name of Felix Go Chan & Sons
Realty Corporation be cancelled and another
title be issued in the names of the
corporation and the "Intestate estate of
Concepcion Rallos" in equal undivided and
(3) that plaintiff be indemnified by way of
attorney's fees and payment of costs of suit.
Named party defendants were Felix Go Chan
& Sons Realty Corporation, Simeon Rallos,
and the Register of Deeds of Cebu, but
subsequently, the latter was dropped from
the complaint. The complaint was amended
twice; defendant Corporation's Answer
contained a crossclaim against its codefendant, Simon Rallos while the latter filed
third-party complaint against his sister,
Gerundia Rallos While the case was pending

in the trial court, both Simon and his sister


Gerundia died and they were substituted by
the respective administrators of their
estates.
ISSUES:
What is the legal effect of an act performed
by an agent after the death of his principal?
Applied more particularly to the instant case,
We have the query. is the sale of the
undivided share of Concepcion Rallos in lot
5983 valid although it was executed by the
agent after the death of his principal? What
is the law in this jurisdiction as to the effect
of the death of the principal on the authority
of the agent to act for and in behalf of the
latter? Is the fact of knowledge of the death
of the principal a material factor in
determining the legal effect of an act
performed after such death?
HELD:
By reason of the very nature of the
relationship between Principal and agent,
agency is extinguished by the death of the
principal or the agent. This is the law in this
jurisdiction.
Manresa commenting on Art. 1709 of the
Spanish Civil Code explains that the rationale
for the law is found in the juridical basis of
agency which is representation Them being
an in. integration of the personality of the
principal integration that of the agent it is
not possible for the representation to
continue to exist once the death of either is
establish. Pothier agrees with Manresa that
by reason of the nature of agency, death is a
necessary cause for its extinction. Laurent
says that the juridical tie between the
principal and the agent is severed ipso jure
upon the death of either without necessity
for the heirs of the fact to notify the agent of
the fact of death of the former.
The same rule prevails at common law the
death of the principal effects instantaneous
and absolute revocation of the authority of
the agent unless the Power be coupled with
an interest. This is the prevalent rule in
American Jurisprudence where it is wellsettled that a power without an interest
confer. red upon an agent is dissolved by the
principal's death, and any attempted
execution of the power afterward is not
binding on the heirs or representatives of the
deceased.
In the instant case, it cannot be questioned
that the agent, Simeon Rallos, knew of the
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death of his principal at the time he sold the


latter's share in Lot No. 5983 to respondent
corporation. The knowledge of the death is
clearly to be inferred from the pleadings filed
by Simon Rallos before the trial court. 12
That Simeon Rallos knew of the death of his
sister Concepcion is also a finding of fact of
the court a quo 13 and of respondent
appellate court when the latter stated that
Simon Rallos 'must have known of the death
of his sister, and yet he proceeded with the
sale of the lot in the name of both his sisters
Concepcion and Gerundia Rallos without
informing appellant (the realty corporation)
of the death of the former.
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 inapplicable. The law
expressly requires for its application lack of
knowledge on the part of the agent of the
death of his principal; it is not enough that
the third person acted in good faith. Thus in
Buason & Reyes v. Panuyas, the Court
applying Article 1738 of the old Civil rode
now Art. 1931 of the new Civil Code
sustained the validity , of a sale made after
the death of the principal because it was not
shown that the agent knew of his principal's
demise.
Whatever conflict of legal opinion was
generated by Cassiday v. McKenzie in
American jurisprudence, no such conflict
exists in our own for the simple reason that
our statute, the Civil Code, expressly
provides for two exceptions to the general
rule that death of the principal revokes ipso
jure the agency, to wit: (1) that the agency is
coupled with an interest (Art 1930), and (2)
that the act of the agent was executed
without knowledge of the death of the
principal and the third person who
contracted with the agent acted also in good
faith (Art. 1931). Exception No. 2 is the
doctrine followed in Cassiday, and again We
stress the indispensable requirement that
the agent acted without knowledge or notice
of the death of the principal In the case
before Us the agent Ramon Rallos executed
the sale notwithstanding notice of the death
of his principal Accordingly, the agent's act is
unenforceable against the estate of his
principal.
IN VIEW OF ALL THE FOREGOING, We set
aside the ecision of respondent appellate
court, and We affirm en toto the judgment
rendered by then Hon. Amador E. Gomez of
the Court of First Instance of Cebu, quoted in

pages 2 and 3 of this Opinion, with costs


against respondent realty corporation at all
instances.
Rallos v. Felix Go Chan & Realty Corp.
FACTS: An SPA was executed by sisters
Concepcion and Gerundia in favor of their
brother Simeon for the sale of a parcel of
land co-owned by the two. Months after
Conception died, Simeon sold the undivided
shares of his sisters to herein respondent
Felix Go Chan & Realty Corp. Petitioner
Ramon Rallos, administrator of he late
Concepcion's estate, prayed that the sale of
the undivided share of the deceased be
invalidated and a new certificate be issued in
the name of respondent corporation and
Concepion's intestate estate, plus damages.
CFI ruled in favor of petitioner and granted
the payers but CA reversed the decision.
Respondent's MR was further denied. ISSUE:
Whete the sale entered into by an agent is
valid alhough executed after death of the
principal.
HELD: No, the sale is void because Simeon's
authority as an agent of Concepcion was
extinguished upon her death. Article 1317
provides that no one may contract inthe
name of another without being authorized or
unless he has, by law, a righ to represent
him. Article 1919 urthers hat the death of the
princpal terminates the agency. The case at
bar is also not among the exceptions
whereby an agent's acts bind the principal
even after the latter's death because of
Simeon's knowledge of Concepion's death is
material. CA's decision is reversed, CFI
decision affimed. The sale was null and void.

YU ENG CHO VS. PAN AMERICAN


Tokyo-San Francisco flight was not confirmed
yet the plaintiffs pushed through with the
flight. Business agreement did not push
through. Sought for damages against
PanAm, TWSI, and independent travel agent
who represented herself as agent of TWSI.
Facts:
Yu Eng Cho is the owner of Young Hardware
Co. and Achilles Marketing. He travels from
time to time to Malaysia, Taipei, and
Hongkong. On July 10, 1976 he bought plane
tickets to Fairfield, New Jersey from
defendant Claudia Tagunicar who
represented herseld to be an agent of TWSI.
The purpose of the trip was to buy 2 lines of
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infrared heating system processing textured


plastic article.
Only the Manila-Hongkong-Tokyo
passage were conrfirmed. Tokyo-San
Francisco was on RQ status, meaning on
request. After a few days, plaintiffs returned
to follow-up and Tagunicar told them that the
flight was confirmed all the way. A few days
before the flight, plaintiffs son called Pan Am
office to verify the status of the flight, and a
personnel confirmed the bookings.
They left for HK, then to Tokyo. Upon
arrival in Tokyo, they called Pan Am for
reconfirmation of fight to SF. The officer said
that their names were not in the manifest.
They cannot stay in Japan for more than
72hrs and NW Airlines was on strike, thus
they could not leave for US. They were
forced to return to Taipei, then back to
Manila.
Japan Airlines refunded their fare, but
the business deal with Radiant Heat
Enterprises was cancelled. Yung Eng Cho
expected to realize a profit of 300k-400k. A
complaint for damages was filed against Pan
Am, TWSI and Canilao, and Tagunicar for the
costs of tickets and hotel accommodations.
RTC held the defendants solidarily
liable. Appellate court modified the amount
of damages and held Tagunicar solely liable,
because the latter is an independent travel
solicitor and not a duly authorized agent or
representative of either Pan Am or TWSI.
Issue: WON Tagunicar was an agent of Pan
Am or TWSI. NO.
Held: (Agency defined, elements, rule in
Keeler)
II. Tagunicar issued an affidavit to the effect
that she is indeed an agent of TWSI, but
subsequently she made a court statement
that she was independent travel agent. Court
gave more weight to the testimony in open
court.
III. It was shown that plaintiff only sued Pan
Am to recover money since they did not
expect the agent to have something to pay
them (according to the Amended Complaint).
this Court will not tolerate an abuse of the
judicial process by passengers in order to pry
on international airlines for damage
awards
The meritless suit is more glaring
when the plaintiff did not give a demand
letter to Pan Am, TWSI and Canilao.

IV. The ticket was not confirmed for good


reasons.
1. Persistent calls by Tagunicar to Canilao
and Pan Am are indications that
petitioners knew their tickets have not
been confirmed. Why would one
continually try to have ones ticket
confirmed if it already had?
2. Tagunicar was not authorized to attach
validation stickers (for exclusive use of
airline company)
3. Names of petitioners did not appear in
passenger manifest
4. Status of Tokyo-SF segment still on
request
5. With this Tagunicar stated, Bahala
na.
Thus petitioners knew that they might be
bumped off at Tokyo. Aware of this risk, they
still proceeded with the flight.
Ratio: Against the agent, the third person
has the obligation to determine the existence
and scope of agency. He who deals with an
agent is bound at his peril, having the
burden to ascertain not only the fact of
agency but also its nature and the extent of
authority granted.
MANILA MEMORIAL PARK CEMETERY,
INC.vs.PEDRO L. LINSANGAN
FACTS:
Florencia Baluyot offered Atty. Pedro L.
Linsangan a lot called Garden State at the
Holy Cross Memorial Park owned by
petitioner (MMPCI). According to Baluyot, a
former owner of a memorial lot under
Contract No. 25012 was no longer interested
in acquiring the lot and had opted to sell his
rights subject to reimbursement of the
amounts he already paid. The contract was
for P95,000.00. Baluyot reassured Atty.
Linsangan that once reimbursement is made
to the former buyer, the contract would be
transferred to him.
Atty. Linsangan agreed and gave Baluyot
P35,295.00 representing the amount to be
reimbursed to the original buyer and to
complete the down payment to MMPCI.
Baluyot issued handwritten and typewritten
receipts for these payments. Contract No.
28660 has a listed price of P132,250.00. Atty.
Linsangan objected to the new contract
price, as the same was not the amount
previously agreed upon. To convince Atty.
Linsangan, Baluyot executed a document
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confirming that while the contract price is


P132,250.00, Atty. Linsangan would pay only
the original price of P95,000.00.
Later on, Baluyot verbally advised Atty.
Linsangan that Contract No. 28660 was
cancelled for reasons the latter could not
explain. For the alleged failure of MMPCI and
Baluyot to conform to their agreement, Atty.
Linsangan filed a Complaint for Breach of
Contract and Damages against the former.
MMPCI alleged that Contract No. 28660 was
cancelled conformably with the terms of the
contract because of non-payment of
arrearages. MMPCI stated that Baluyot was
not an agent but an independent contractor,
and as such was not authorized to represent
MMPCI or to use its name except as to the
extent expressly stated in the Agency
Manager Agreement. Moreover, MMPCI was
not aware of the arrangements entered into
by Atty. Linsangan and Baluyot, as it in fact
received a down payment and monthly
installments as indicated in the contract.
The trial court held MMPCI and Baluyot jointly
and severally liable. The Court of Appeals
affirmed the decision of the trial court.
ISSUES:
1. Whether or not there was a contract of
agency between Baluyot and MMPCI?
2. Whether or not MMPCI should be liable for
Baluyots act?
HELD:
First Issue. Yes. By the contract of agency, a
person binds himself to render some service
or to do something in representation or on
behalf of another, with the consent or
authority of the latter. As properly found both
by the trial court and the Court of Appeals,
Baluyot was authorized to solicit and remit to
MMPCI offers to purchase interment spaces
obtained on forms provided by MMPCI. The
terms of the offer to purchase, therefore, are
contained in such forms and, when signed by
the buyer and an authorized officer of
MMPCI, becomes binding on both parties.
Second Issue. No. While there is no more
question as to the agency relationship
between Baluyot and MMPCI, there is no
indication that MMPCI let the public, or
specifically, Atty. Linsangan to believe that
Baluyot had the authority to alter the
standard contracts of the company. Neither is

there any showing that prior to signing


Contract No. 28660, MMPCI had any
knowledge of Baluyot's commitment to Atty.
Linsangan. Even assuming that Atty.
Linsangan was misled by MMPCI's actuations,
he still cannot invoke the principle of
estoppel, as he was clearly negligent in his
dealings with Baluyot, and could have easily
determined, had he only been cautious and
prudent, whether said agent was clothed
with the authority to change the terms of the
principal's written contract.
To repeat, the acts of the agent beyond the
scope of his authority do not bind the
principal unless the latter ratifies the same.
It also bears emphasis that when the third
person knows that the agent was acting
beyond his power or authority, the principal
cannot be held liable for the acts of the
agent. If the said third person was aware of
such limits of authority, he is to blame and is
not entitled to recover damages from the
agent, unless the latter undertook to secure
the principal's ratification.
By the contract of agency, a person binds
himself to render some service or to do
something in representation or on behalf of
another, with the consent or authority of the
latter. Thus, the elements of agency are (i)
consent, express or implied, of the parties to
establish the relationship; (ii) the object is
the execution of a juridical act in relation to a
third person; (iii) the agent acts as a
representative and not for himself; and (iv)
the agent acts within the scope of his
authority.
BORDADOR V LUZ
FACTS:
Petitioners were engaged in the business of
purchase and sale of jewelry and respondent
Brigida Luz, also known as Aida Luz, was
their regular customer.
On several occasions, respondent Deganos,
brother of Luz, received several pieces of
gold and jewelry from petitioners amounting
to P382, 816. These items and their prices
were indicated in seventeen receipts
covering the same. 11 of the receipts stated
that they were received for a certain Aquino,
a niece of Deganos, and the remaining 6
receipts indicated that they were received for
Luz.
Deganos was supposed to sell the items at a
profit and thereafter remit the proceeds and
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return the unsold items to Bordador.


Deganos remitted only the sum of P53, 207.
He neither paid the balance of the sales
proceeds, nor did he return any unsold item
to petitioners.
The total of his unpaid account to Bordador,
including interest, reached the sum of P725,
463.98. Petitioners eventually filed a
complaint in the barangay court against
Deganos to recover said amount.
In the barangay proceedings, Luz, who was
not impleaded in the caes, appeared as a
witness for Deganos and ultimately, she and
her husband, together with Deganos signed
a compromise agreement with petitioners.
In that compromise agreement, Deganos
obligated himself to pay petitioners, on
installment basis , the balance of his account
plus interest thereon. However, he failed to
comply with his aforestated undertakings.
Petitioners instituted a complaint for
recovery of sum of money and damages,
with
an
application
for
preliminary
attachment against Deganos and Luz.
Deganos and Luz was also charged with
estafa
During the trial of the civil cae, petitioners
claimed that Deganos acted as agent of Luz
when received the subject items of jewelry,
and because he failed to pay for the same,
Luz, as principal, and her spouse are
solidarily liable with him
Trial court ruled that only Deganos was liable
to Bordador for the amount and damages
claimed. It held that while Luz did have
transactions with petitioners in the past, the
items involved were already paid for and all
that Luz owed Bordador was the sum or P21,
483 representing interest on the principal
account which she had previously paid for.

ISSUE:
W/N Luz are liable to petitioners for the
latters claim for money and damages in the
sum of P725,463.98, plus interests and
attorneys fees, despite the fact that the
evidence does not show that they signed any
of the subject receipts or authorized
Deganos to receive the items of jewelry on
their behalf
RULING: No
Evidence does not support the theory of
Bordador that Deganos was an agent of Luz
and that the latter should consequently be
held solidarily liable with Deganos in his
obligation to petitioners.
The basis for agency is representation. Here,
there is no showing that Luz consented to
the acts of Deganos or authorized him to act
on her behalf, much less with respect to the
particular transactions involved.
It was grossly and inexcusably negligent of
petitioner to entrust to Deganos, not once or
twice but on at least six occasions as
evidenced by 6 receipts, several pieces of
jewelry of substantial value without requiring
a written authorization from his alleged
principal.
A person dealing with an agent is put upon
inquiry and must discover upon his peril the
authority of the agent.
Records show that neither an express nor an
implied agency was proven to have existed
between Deganos and Luz. Evidently,
Bordador who were negligent in their
transactions with Deganos cannot seek relief
from the effects of their negligence by
conjuring a supposed agency relation
between the two respondents where no
evidence supports such claim

CA affirmed TCs decision

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