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1919-1932 | 2D 2012


FACTS: Santa Marina, owner of the La Insular Cigar and
Cigarette Factory, appointed Barretto as agent. Later on,
Barretto sent a letter saying he wants to resign because
some Chinaman became insolvent and disappeared
without paying his large debt. Then now, Barretto seeks
the payment of his salary and that the revocation of his
agency is in violation of the contract between him and
the principal because there is no specific period for the
exercise of the powers of the agent.

ISSUE: W/N the revocation of agency of Barretto was
validly revoked.

HELD: YES. Even if Santa Marina did not yet reply as to
his letter of resignation, he appointed a new agent to do
duties of Barretto. That should be deemed as acceptance
of the resignation. When Barretto resigned, the agency
was revoked already. He cannot complain anymore.

2. TERRADO V CA (ART. 1919)

FACTS: On January 21, 1973, the Philippine Legislature
ceded a certain portion of Bayambang Province of
Pangasinan (which was once public land) to the
municipality of the Bayambang to be used or disposed of
in accordance with the general municipal law relative to
the letting of fisheries in municipal waters. On 1974, the
municipality of Bayambang enacted Ordinance No. 8,
establishing the Bayambang Fishery and Hunting Park and
Municipal Water Shed. Also in the said ordinance, the
municipality appointed and constituted private
respondent Lacuesta as Manager-Administrator of the
watershed for a period of 25 years, renewable for
another 25 years. This is under the condition that said
respondent shall pay the municipality the sum equivalent
to 10% of the annual gross income that may be derived
from the forest products, wild game and fish. Such
ordinance was approved by the Provincial Board of
Pangasinan but was disapproved by the Secretary of
Agriculture and Natural Resources as it grants fishery
privileges to respondent Lacuesta without the benefit of
competitive public hearing in contravention to law. The
municipality then informed Lacuesta of the disapproval
of the ordinance and directed him to refrain and desist
from acting as Administrator-Manager. However,
Lacuesta refused and insisted on retaining possession of
the fisheries. Despite such refusal, the municipality of
Bayambang passed another resolution resolving to
advertise for public bidding the said fishery area. Among
the winning bidders are herein petitioners.
There was a long line of petitions/motions filed in the
RTC, CA, and SC filed by both parties. What is important
is that while the case was pending in the CFI of
Pangasinan, Lacuesta died. The judge of said court
(Judge Villalon, also a respondent) sided with Lacuesta.
As such, despite the fact that Lacuesta died, she still
ordered the restoration of the possession of all fisheries
and areas covered by the contract to Lacuesta and his

(1) Whether or not the Management Administration
contract between the municipality and Lacuesta was
(2) Whether or not the Management-Administration
contract still stands even if Lacuesta already died

(1) NO. The Management-Administration contract
entered into by Lacuesta and the municipalty was void as
it lacked a vital procedural aspect (public bidding)
necessary for the validity of the contract. Moreover, the
Supreme Court held that the municipality had no power
to grant exclusive privileges of fishing for more than 5

(2) NO. Essentially, the contract of management and
administration between the Municipality and Lacuesta is
one of agency whereby 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. Lacuesta bound himself as Manager-Administrator
of the Bayambang Fishing and Hunting Park and Municipal
Watershed to render service or perform duties and
responsibilities in representation or on behalf of the
Municipality of Bayambang, with the consent or authority
of the latter. Under Art. 1919 of the Civil Code, agency is
extinguished by the death of the agent. His rights and
obligations arising from the contract are not
transmittable to his heirs or predecessors-in-interest.

3. LAVINA V CA (ART. 1919)

April 6, 1983 Carmen Gabriel executed a
donation mortis causa in favor of her sister-in-
law, Josefina Gabriel, over the Sampaloc
August 11, 1983 (4 months later) Carmen
executed a last will and testament where she
bequeathed the Sampaloc property to her
cousin, Remedios Muyot. She also named her
friend Concepcion De Garcia as her executrix
in the said will.
August 15, 1983 Carmen executed a general
power of atty. appointing Muyot as her Atty-in-
fact to
o (1) Administer, take charge and
manage for carmens sole benefit all
her properties, whether
real/personal/wheresoever located.
o (2) To execute, sign, authenticate, and
enter into any and all contracts and
agreements for me and in my name
with any person or entity; and, if
necessary to settle my personal
obligations, such as for medical
expenses, to mortgage or to dispose of
for value any or portion of any of my
properties, whether real or personal;
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

o (3) To bring suit, defend, and enter
into compromises in my name and
stead, in connection with actions
brought for or against me, of whatever
nature and kind
November 3, 1983 Josefina registered an
adverse claim on Sampaloc property when she
realized it was bequeathed to Muyot when it
was already supposedly donated to her
November 4, 1983 Muyot, as atty. in fact hired
Atty. Lavina as Carmens counsel.
Nov. 19, 1983 Carmen thumb marked affidavit
of denial saying the donation she supposedly
made to Josefina was procured with trickery and
fraud (Carmen did not really intend to give it to
Nov 21, 1983 Sampaloc property was sold to
Spouses Cebrero
Nov 29, 1983 Carmen passed away
Dec 1, 1983 Revocation of donation (to
Josefina) was registered at the back of the
sampaloc propertys title
Dec 5 , 1983 Josefina filed a complaint
o Questioned the Revocation
o Wanted a lis pendens over the
sampaloc propertys title
o Wanted the court to appoint an
administrator ad litem
o (amended complaint at a later date)
Questioned Muyots general power of
atty. saying Carmens death
extinguished the agency
o Thus questioned the sale to Cebereros
by Muyot
o Also questioned Lavinas appointment
as Carmens counsel
Jan 24, 1984 Sampaloc property was registered
in Cebereros name.
Jan 23, 1987 Ceberero filed a motion to cancel
lis pendens (lower court with judge vicencio)
Feb 6, 1987 Josefina filed a petition on
certiorari (w/ CA) saying that lower could not
acquire jurisdiction over estate of Carmen
because summons were served to Muyot who
was NOT an executor/administrator, thus the
lower court (Judge Vicencio) could not issue a
cancellation of lis pendens accordingly.

Was Atty Lavina/Muyots agency extinguished upon the
death of Carmen? (Was Muyot capacitated to receive
summons for Carmens estate/ Was Lavina capacitated to
represent Carmen as her Atty?)

HELD: Yes. Estate of a dead person may only be
summoned through the executor or administrator in this
case, De Garcia.
The estate of a dead person may only be summoned
through the executor or administrator of his estate for it
is the executor or administrator who may sue or be sued
(Sec. 3, Rule 3, Rules of Court) and who may bring or
defend actions for the recovery or protection of the
property or rights of the deceased (Sec. 2, Rule 87, Rules
of Court).
The general power of attorney appointing Remedios as
Carmen's agent or attorney-in- fact was extinguished
upon Carmen's demise (Art. 1919[3], Civil Code).
Thereafter, Remedios was bereft of authority to
represent Carmen.
The petitioner's contention that the agency was
"constituted in the common interest of the principal and
the agent" and that hence it was not extinguished by the
death of the principal (Art. 1930, Civil Code) is refuted
by the instrument itself which explicitly provided that
the powers conferred on the agent were to be
exercised for the "sole benefit" of the principal,
Carmen P. Gabriel.
Carmen's death likewise divested Attorney Lavia of
authority to represent her as counsel. A dead client has
no personality and cannot be represented by an attorney.


FACTS: As agent of Philamgen, Valenzuela is authorized
to solicit and sell all kinds of non-life insurance. In
return, he gets full agents commission. One of
Valenzuelas clients, Delta Motors, paid premiums to
Philamgen to which Valenzuela should get a commission
of P632K. Philamgen became interested in the
commission and said it wanted to share in the
commission on a 50-50 basis. Valenzuela refused.
Because of his refusal, Philamgen threatened
Valenzueladid not pay his commission, leaked bad news
against him etc), afterwhich, Philamgen terminated
him as agent.

ISSUE: W/N Philamgen can be held liable for damages
due to the termination of the General agency agreement

HELD: YES. Philamgen was in bad faith in terminating the
contract of Valenzuela. Because of the bad faith,
Philamgen is liable for damages. Also, an exception to
the principle that agency is revocable at will is when the
agency has been given not only for the interest of
principal but for the interest of third persons or for
mutual interest of principal and agent. Such is the case
at bar. However, because of the sour relationship
between the two, the court decided to terminate the
agency relationship.

5. LUSTAN V CA (ART. 1921)

FACTS: Petitioner Adoracion Lustan is the registered
owner of a parcel of land in Calinog, Iloilo containing an
area of 10.0057 hectares. Petitioner leased the above
described property to private respondent Nicolas
Parangan for a term of ten (10) years and an annual rent
of One Thousand (P1,000.00) Pesos. During the period of
lease, Parangan was regularly extending loans in small
amounts to petitioner to defray her daily expenses and to
finance her daughter's education. On July 29, 1970,
petitioner executed a Special Power of Attorney in favor
of Parangan to secure an agricultural loan from private
respondent Philippine National Bank (PNB) with the
aforesaid lot as collateral. On February 18, 1972, a
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

second Special Power of Attorney was executed by
petitioner, by virtue of which, Parangan was able to
secure four (4) additional loans, to wit: the sums of
P24,000.00, P38,000.00, P38,600.00 and P25,000.00 on
December 15, 1975, September 6, 1976, July 2, 1979 and
June 2, 1980, respectively. The last three loans were
without the knowledge of herein petitioner and all the
proceeds therefrom were used by Parangan for his own
benefit. These encumbrances were duly annotated on
the certificate of title.
On April 16, 1973, petitioner signed a Deed of Pacto de
Retro Sale in favor of Parangan which was superseded by
the Deed of Definite Sale dated May 4, 1979 which
petitioner signed upon Parangan's representation that the
same merely evidences the loans extended by him unto
the former. For fear that her property might be
prejudiced by the continued borrowing of Parangan,
petitioner demanded the return of her certificate of
title. Instead of complying with the request, Parangan
asserted his rights over the property which allegedly had
become his by virtue of the aforementioned Deed of
Definite Sale. Under said document, petitioner conveyed
the subject property and all the improvements thereon
unto Parangan absolutely for and in consideration of the
sum of Seventy Five Thousand (P75,000.00) Pesos.

ISSUE: W/N petitioner's property is liable to PNB for the
loans contracted by Parangan by virtue of the special
power of attorney.

HELD: YES, the mortgages can be enforced against
petitioner. It is admitted that petitioner is the owner of
the parcel of land mortgaged to PNB on five (5) occasions
by virtue of the Special Powers of Attorney executed by
petitioner in favor of Parangan. Petitioner argues that
the last three mortgages were void for lack of authority.
She totally failed to consider that said Special Powers of
Attorney are a continuing one and absent a valid
revocation duly furnished to the mortgagee, the same
continues to have force and effect as against third
persons who had no knowledge of such lack of authority.
Article 1921 of the Civil Code provides:
Art. 1921. If the agency has been
entrusted for the purpose of contracting
with specified persons, its revocation
shall not prejudice the latter if they were
not given notice thereof.
The Special Power of Attorney executed by petitioner
in favor of Parangan duly authorized the latter to
represent and act on behalf of the former. Having done
so, petitioner clothed Parangan with authority to deal
with PNB on her behalf and in the absence of any proof
that the bank had knowledge that the last three loans
were without the express authority of petitioner, it
cannot be prejudiced thereby. As far as third persons are
concerned, an act is deemed to have been performed
within the scope of the agent's authority if such is within
the terms of the power of attorney as written even if the
agent has in fact exceeded the limits of his authority
according to the understanding between the principal
and the agent.
The Special Power of Attorney particularly provides
that the same is good not only for the principal loan but
also for subsequent commercial, industrial, agricultural
loan or credit accommodation that the attorney-in-fact
may obtain and until the power of attorney is revoked in
a public instrument and a copy of which is furnished to
PNB. Even when the agent has exceeded his authority,
the principal is solidarily liable with the agent if the
former allowed the latter to act as though he had full
powers (Article 1911, Civil Code). The mortgage directly
and immediately subjects the property upon which it is
imposed. The property of third persons which has been
expressly mortgaged to guarantee an obligation to which
the said persons are foreign, is directly and jointly liable
for the fulfillment thereof; it is therefore subject to
execution and sale for the purpose of paying the amount
of the debt for which it is liable. However, petitioner has
an unquestionable right to demand proportional
indemnification from Parangan with respect to the sum
paid to PNB from the proceeds of the sale of her property
in case the same is sold to satisfy the unpaid debts.


FACTS: Plaintiff commenced an action against the
defendant for the purpose of recovering P442 for goods
sold and delivered by the plaintiff through its agent
Gutierrez to the defendant. The defendant admitted that
he had purchased from plaintiffs agent of the goods
amounting to P692 and that he had sold to Gutierrez
abaca and other effects amounting to P1,308 leaving a
balance due him of P616. Plaintiff claims that it had
suspended Gutierrez as its agent and that he had no
further authority to represent it.

ISSUE: W/N plaintiff correctly terminated the agency

HELD: NO. There is no proof that the orders given by the
plaintiff to Gutierrez had ever been communicated to
the defendant. The defendant had a perfect right to
believe, until otherwise informed, that the agent of the
plaintiff in his purchase of abaca and other effects was
still representing the plaintiff in said transactions.


Narciso Manzano was a merchant in Tayabas who
went to Spain in May 1910 and died there on
Sept 1913. Prior to his death, he gave a general
power-of-attorney to his son, Angel and a
second general power-of-attorney to his wife,
Narciso was the owner of a half interest in a
small steamer, the San Nicolas. The other half
was owned by Ocejo, Perez & Co. (Ocejo), with
whom there was a partnership agreement to run
the steamer for a few years.
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

When this period expired, Ocejo refused to
continue the contact and demanded that Narciso
buy or sell.
Since Narciso did not want to sell at the price
offered and could not buy, Juan Garcia bought
the half interest held by Ocejo.
Angel, acting under his power-of-attorney, sold
the other half of the boat to the Juan, but as
Juan was 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,
Joses son, who at that time was a minor about
20 yrs old.
Angel, by virtue of the power-of-attorney from
his father, then executed a contract by which
Juan agreed to extend a credit to Narciso in the
sum of P12,000.
To secure it, a mortgage was given in the same
document on 3 parcels of land in Atimonan. The
registration of this mortgage was refused by the
On April 1914, the CFI of Tayabas named Josefa
the administratrix of the property of Narciso,
and ordered the partition of the property
amongst Narciso's heirs.
Juan then filed an action in the CFI to foreclose
the so-called mortgage.
Josefa and defendants filed a pleading stating
that the estate had already been divided among
her and her children, and denied the legal
effect of the mortgage.
Josefa and defendants also alleged that:
o The power-of-attorney given to
Josefa revoked the one to the son,
o The power-of-attorney, even if valid,
did not authorize the sale by Angel of
the half interest in the boat to Juan

1) W/n the power-of-attorney to the wife Josefa
revoked the one to the son Angel
2) W/n power-of-attorney authorized the sale by
Angel of the half interest in the boat to Juan

1) NO. Angel was acting under a valid power-of-
Article 1735 of the Civil Code: 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.
There is no proof in the record that the first
agent, the son, knew of the power-of-attorney
to his mother.
Since defendants were unable to prove that the
son had notice of the second power-of-attorney,
it must be considered that he 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 Juans
This half interest was legally inherited by the

2) YES. Angel is authorized to sell the one-half interest
in the boat then owned by Narciso.
The power-of-attorney given to Angel is general
and complete. It authorized the sale of real
property, the buying of real property, the
mortgaging of the same and the borrowing of
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 and for his benefit.


FACTS: In 1958, New Manila Lumber Co sought to enforce
against the defendant Republic a money claim for the
payment of materials it furnished for the construction of
2 public school buildings undertaken by contractor
Mendoza, on the basis of powers of attorney executed by
the latter authorizing New Manila Lumber to collect and
receive from Republic any amount due or may be due
said contractor as contract price for the payment of the
materials supplied.
Republic instituted a suit against Mendoza for the
forfeiture of the latter's bond posted to secure the
faithful performance of stipulations in the construction
contract with regard to one of the two school buildings.
The contractor has a similar bond with respect to the
other school building. Pursuant to Act 3688 (Act for the
Protection of Persons Furnishing Material and Labor for
the Construction of Public Works), New Manila Lumber's
remedy is, not to bring suit against the Government,
there being no privity of contract between them, but to
intervene in the civil case instituted by the Government
against Mendoza 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.

1. W/N there was an implied contract between New
Manila Lumber and Republic upon the execution
of the powers of attorney
2. W/N the agency was revoked upon the demand
and collection of Mendoza from New Manila
Lumber the money the collection of which he
entrusted to the latter

1. NO. Republic was not a party to the execution of the
powers of attorney. Director of Public Schools had no
authority to bind Republic on the payment. While he was
the official who entered into contract with Mendoza,
payment of the contract price was not within his
exclusive control but subject to the approval of existing
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

laws not only of the Department Head but also by Auditor

2. YES. Art. 1920 and 1924 of the New Civil Code provide
that the principal may revoke the agency at will, which
may be express or implied and that the agency is revoked
if the principal directly manages the business entrusted
to the agent, directly dealing with third persons.


FACTS: Petitioner CMS Logging and respondent DRACOR
entered into a contract of agency whereby the former
appointed the latter as its exclusive export and sales
agent for all logs that the former may produce, for a
period of 5 years. Out of this agreement, DRACOR was
entitled to 5% commission of the gross sales of the logs
sold. CMS was then able to sell through DRACOR a total
of 77,264,672 board feet of logs in Japan, from
September 20, 1957 to April 4, 1962.
About six months prior to the expiration of the
agreement, while on a trip to Japan, CMS's president and
general manager and legal counsel, discovered that
DRACOR had used Shinko Trading as agent,
representative or liaison officer in selling CMS's logs in
Japan for which Shinko earned a commission of U.S.
$1.00 per 1,000 board feet from the buyer of the logs.
Under this arrangement, Shinko was able to collect a
total of U.S. $77,264.67.
CMS claimed that this commission paid to Shinko was in
violation of the agreement and that they are entitled to
this amount as part of the proceeds of the sale of the
logs. CMS contended that since DRACOR had been paid
the 5% commission under the agreement, it is no longer
entitled to the additional commission paid to Shinko as
this tantamount to DRACOR receiving double
compensation for the services it rendered.
After this discovery, CMS sold and shipped logs directly
to several firms in Japan without the aid or intervention
Petitioner then sued respondent for recovery of the
commission that Shinko received as well as for damages
while DRACOR counterclaimed for all the sales made by
CMS to the other Japanese firms.
ISSUE: W/N DRACOR is entitled to its commission from
the sales made by CMS to Japanese firms.
HELD: NO. The principal may revoke a contract of agency
at will, and such revocation may be express, or implied,
and may be availed of even if the period fixed in the
contract of agency as not yet expired. As the principal
has this absolute right to revoke the agency, the agent
can not object thereto; neither may he claim damages
arising from such revocation, unless it is shown that such
was done in order to evade the payment of agent's
In the case at bar, CMS appointed DRACOR as its agent
for the sale of its logs to Japanese firms. Yet, during the
existence of the contract of agency, DRACOR admitted
that CMS sold its logs directly to several Japanese firms.
This act constituted an implied revocation of the
contract of agency under Article 1924 of the Civil Code,
which provides: The agency is revoked if the principal
directly manages the business entrusted to the agent,
dealing directly with third persons.
Since the contract of agency was revoked by CMS when
it sold its logs to Japanese firms without the intervention
of DRACOR, the latter is no longer entitled to its
commission from the proceeds of such sale and is not
entitled to retain whatever moneys it may have received
as its commission for said transactions. Neither would
DRACOR be entitled to collect damages from CMS, since
damages are generally not awarded to the agent for the
revocation of the agency, and the case at bar is not one
falling under the exception mentioned, which is to evade
the payment of the agent's commission.


FACTS: Escandor, under the name of Guardex
Enterprises, was engaged in the manufacture and sale of
fire fighting equipment and the building or fabrication of
fire trucks. Upon learning of Escandor's offer to
Rubberworld Phil Inc., Orbeta, a freelance salesman,
wrote Escandor inquiring about the amount of the
commission for the sale of a fire truck, which was
Four days later, Orbeta offered to look after the
pending proposal to sell a fire truck to Rubberworld and
asked for P250 as representation expenses to which
Escandor agreed and gave him money.
When Escandor did not get any word from Orbeta after
3 days, she herself inquired in writing from Rubberworld
about her offer of sale of a fire truck. She then sent a
revised price quotation some ten days later.
In the meantime, Orbeta sold to other individuals some
of Escandor's fire extinguishers, receiving traveling
expenses in connection therewith as well as the
corresponding commissions and after that he then
dropped out of sight.
After 7 months, Escandor herself finally concluded a
contract with Rubberworld for the latter's purchase of a
fire truck. Orbeta suddenly reappeared and asked for his
commission for the sale of the fire truck to Rubberworld.
However, Escandor refused, saying that he had nothing
to do with the offer, negotiation and consummation of
the sale.

ISSUE: W/N there is still an existing agency between
Esandor and Orbeta

HELD: NO. When the Orbeta dropped out of the scene
and it was Escandor who directly negotiated with the
company to oversee the perfection and consummation of
the sale, no commission was due to the agent because
"such agency would have been deemed revoked upon the
resumption of direct negotiations between" Escandor and

AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012


FACTS: 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 are
claiming to be the owner and lessee 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, sells the rice-mill and camarin
for P13,000 and gives as his authority the power of
attorney dated the 23d of May, 1928. 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.)
ISSUES: W/N the deed of sale executed by Ong Guan Can
Jr. was valid.

RULING: NO. 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.


Tiburcio del Rosario obtained a loan from
Primitivo Abad in the sum of P2,000 with a 12%
interest payable on 31 December 1941.
As security for payment, he mortgaged the
improvements of the parcel of land in favor of
Title for said land, located in Nueva Ecija, was
issued under a homestead patent in 12
December 1936.
On 24 February 1937, Mortgagor (Tiburcio) also
executed an irrevocable power of attorney
coupled with interest in favor of the mortgagee
(Primitivo), authorizing him among others, to
sell and convey the parcel of land.
Sometime in December 1945, Tiburcio died
leaving the mortgage debt unpaid.
On 9 June 1947, Primitivo, acting as attorney-in-
fact of Tiburcio, sold the parcel of land to his
son Teodorico Abad for P1 and the payment of
Tiburcios mortgage debt.
Children and heirs of Tiburcio brought a suit to
recover possession and ownership of land.

3) W/N the power-of-attorney was coupled with an
interest? No.
4) W/N the sale of Primitivo to Teodrico was null
and void? Yes.

1) NO. Since it is not an agency coupled with an
interest, agency is terminated upon death of principal
The power of attorney executed by Tiburcio
(principal) in favor of Primitivo (agent)
providing, among others, that it is coupled
with an interest in favor of the attorney, and is
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
A mere statement in the power of attorney that
is coupled with an interest is not enough. In
what does such interest consist must be stated
in the power of attorney.
The fact that principal had mortgaged the
improvements of the parcel of land to agent is
not such an interest as could render irrevocable
the power of attorney executed in favor of the
The mortgage has nothing to do with the power
of attorney and may be foreclosed by the
mortgagee upon failure of the mortgagor to
comply with his obligation.

2) YES. Sale is null and void. Teodorico not entitled to
reimbursement, but without prejudice to right of
Primitivo to foreclose the mortgage on the
improvements of the land if the mortgage debt is not
paid by heirs of Tiburcio.
As the agency is not coupled with an interest, it
was terminated upon the death of Tiburcio. The
agent could no longer validly convey the parcel
of land to Teodorico. The sale, therefore, is
null and void.
Even if the power-of-attorney remained valid,
sale would still be in violation of the law that
prohibits the alienation or encumbrance of lands
acquired by homestead from the date of
approval of the application and for a term of 5
years from and after the issuance of the patent
or grant.

AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

13. SEVILLA V CA (ART. 1927)

FACTS: On Oct. 19, 1960, Tourist World Services (TWS)
Inc. signed a lease agreement with Segundina Noguera
for the rent of the latters premises in Mabini St., Manila.
The premises where intended as the Ermita Branch of
TWS wherein Lina O. Sevilla became the Branch Manager
and held herself solidary liable for the payment of the
monthly rent for the said office space. As Lina Sevilla
runs the Ermita Branch, she was entitled to 4%
commission for any fare brought in on her efforts.
On Nov. 24, 1964, TWS was informed that Lina Sevilla
was connected with a rival form, the Philippine Travel
Bureau, and since the Ermita Branch was losing anyway,
TWS board and directors decided to close it down. Thus,
the board of TWS issued two resolutions, the first to
abolish the positions of Office Manager and VP of the
Ermita Branch, and second, to authorize the Corporate
Secretary, Mr. Gabino Canilao, (apparently, a very close
family friend of Lina Sevilla, who introduced Lina to TWS,
and eventually brought about the business venture), to
receive the properties of Tourist World Services Inc.,
then located at the said branch.
On June 4, 1962, Mr. Gabino Canilao went to the
premises and padlocked the office, though as early as
November 1961 Lina and her crew started not using the
space anymore. Upon knowledge of the padlocking
event, Lina Sevilla filed a case in the RTC praying for the
issuance of preliminary injunction. However, RTC
dismissed the case for lack of Merit. On reconsideration,
the court ruled that Lina Sevilla is not entitled for
damages incurred and deemed her as an employee of
TWS and since the latter was the true lessee of the
premises, it was within its prerogative to terminate the
lease and padlock the premises. The Court of Appeals
affirmed the RTC decision.

1. W/N the padlocking of the premises by TWS
without the knowledge and consent of the Lina
Sevilla entitled the latter to the relief of
damages prayed for.
2. W/N Lina Sevilla is an employee of TWSI.

HELD: Lina Sevilla is not an employee of TWSI but an
agent. She is also entitled for damages due to the
offensive actuations of TWSI. Contrary to Linas view that
she is a partner in a business venture and TWSI view that
Lina is an employee, the Court found Lina Sevilla as an
agent based on the RIGHT OF CONTROL TEST. One is an
employee if the person for whom the services are
performed reserves a right to control not only the end
to be achieved but also the means to be used in
reaching such end. Since, Lina Sevilla is just a manager
by title and that she basically runs the office by herself,
there is no direct and manifest control by TWS on her
business operations. In addition to such standard, the
existing economic conditions, that she was not part of
the TWSIs payroll, concretely shows that she is not an
employee. The parties did not even show themselves as
partners, having co-equal propriety interest in the
capital or property contributed. Lina Sevilla is merely an
agent who is entitled to a 4% commission upon sale of air
fare tickets through her office.
Being an agent, the extinguishment of the agency must
be brought upon to her knowledge before the revocation
was made. The alleged connivance of Lina Sevilla with
the Philippine Travel Bureau was inconclusive. Thus, the
decision to terminate the services of Lina without her
prior knowledge, in line with such allegation,
disconnection and non-reconnection of the telephone
lines, and padlocking of the office, are offensive acts
exhibiting breach of contract through bad faith which
entitles Lina Sevilla an award for damages in lieu of
Article 21 of the Civil Code.


FACTS: Jose de la Pena y de Ramon is the administrator
of the estate of his deceased father (Jose de la Pena y
Gomiz). Hidalgo owed the estate a particular sum
(P6,774.50). The estate owed Hidalgo a certain sum
(P9,000.xx) as well. The CFI then ordered the two parties
to set-off the amounts they owed each other- treating
the demand of Hidalgo as counterclaim for what was due
The attorneys for the plaintiff (Messrs. Chicote and
Miranda, Frederick Garfield Waite, and C.W. O'Brien
represented by C.A. DeWitt) asked that they be
permitted to intervene as they held a lien upon the
amount awarded to the plaintiff. Basically, they claim
that there can be no set-off of the amounts since their
lien affected the judgment of the lower court and they
have a better right over the money granted.
They claim that there was in fact two judgments made-
one against Hidalgo and one against de la Pena.

ISSUE: W/N the setting off of the amounts was correct.

HELD: YES. A counterclaim is termed a mutual petition,
because both parties sue each other mutually in the
same action, each of them assuming the double role of
plaintiff and defendant, before the trial judge, and the
two suits are brought under a single proceeding where
both actions are tried at the same time and finally
determined in one and the same judgement.
It is also clear that Jose de la Pena y Ramon was
merely representing his father's estate as its
administrator and not himself personally. It is therefore
unreasonable to affirm that the counterclaim was made
against him personally.
The attorneys' claim that there were 2 judgments
made- one against Hidalgo, and one against de la Pena- is
incorrect since there was only one judgment decided and
eventually appealed. The setting off is correct by virtue
of Art. 1195, 1196, and 1202 of the Civil Code.
If the estate of the deceased Pea y Gomiz is allowed
to collect the amount owing it by Hidalgo, it is equally
just that Hidalgo should have the same right to collect
the sum the estate owes him, according to the same
decision. If the lien or the right to collect professional
fees on the part of the attorneys were superior to the
right of the creditor of the estate, the result would be
that the executory decision would not be complied with;
there would then be no set-off and the defendant would
be compelled to pay to the administrator his debt to the
estate, through the aforementioned lien of the
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

intervening attorneys, but could not collect, the amount
of his debt to the latter; this would be illegal and
opposed to the most rudimentary principles of justice
and, furthermore, would be an absurdity and contrary to
common sense.
The right of attorneys for the administrator Pea y de
Ramon, to collect fees for professional service, under
section 37 of the Code of Civil Procedure, is restricted to
the personal funds of their client, to amounts awarded to
the latter by final decision, but does not comprise sums
of money which, according to the same decision, must be
applied to be made in such decision by virtue of a prior

15. PASNO V RAVINA (ART. 1930)

FACTS: Gabina Labitoria during her lifetime mortgaged
three 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." When Gabina died, a special administrator
was appointed by the lower court who took possession of
the estate of the deceased, including the three parcels
of land mortgaged to the PNB. The estate of Gabina
failed to comply with the conditions of the mortgage
therefore PNB asked the sheriff to proceed with the sale
of the subject parcels of land. When the special
administrator received notice about this, he filed a
motion in court praying that the sale of the lands be
discontinued. The lower court granted this motion.

ISSUE: W/N PNB can foreclose the subject properties
despite the death of the mortgagor.

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 The
appellant practically concedes that the law
applicable to the case is section 708 of the Code
of Civil Procedure. In a nutshell, section 708
provides that a creditor holding a claim against
the deceased has two remedies: 1) he may
abandon the security and share in the general
distribution of the assets of the estate, or 2) he
may foreclose the mortgage by ordinary legal
action and making the special administrator as
party defendant. In the case at bar, PNB opted
for the second remedy which is to foreclose.
The power of sale given in a mortgage is a power
coupled with an interest which survives the death of the
grantor. One case, that of Carter vs. Slocomb ([1898],
122 N. C., 475), has gone so far as to hold that a sale
after the death of the mortgagor is valid without notice
to the heirs of the mortgagor. However that may be,
conceding that the power of sale is not revoked by the
death of the mortgagor, nevertheless in view of the
silence of Act No. 3135 and in view of what is found in
section 708 of the Code of Civil Procedure, it would be
preferable to reach the conclusion that the mortgagee
with a power of sale should be made to foreclose the
mortgage in conformity with the procedure pointed out
in section 708 of the Code of Civil Procedure. That would
safeguard the interests of the estate by putting the
estate on notice while it would not jeopardize any rights
of the mortgagee. The only result is to suspend
temporarily the power to sell so as not to interfere with
the orderly administration of the estate of a decedent. A
contrary holding would be inconsistent with the portion
of our law governing the settlement of estates of
deceased persons.


FACTS: Concepcion and Gerundia Rallos were sisters and
registered co-owners of a parcel of land in Cebu. They
executed an SPA in favor of their brother, Simeon Rallos,
authorizing him to sell for and in their behalf. A year
after, Concepcion died. Six months after, Simeon, as
agent, sold the undivided shares of his sisters to private
respondent, Felix Go Chan Realty. The deed of sale was
registered and a new transfer certificate of Title was
issued in the name of the vendee.
Ramon Rallos as administrator of the Intestate Estate
of Concepcion Rallos filed a complaint praying (1) that
the sale of the undivided share of the deceased
Concepcion Rallos be decalred unenforceable, and said
share be reconveyed to her estate; (2) that the
Certificate of title be cancelled and another title be
issued in the names of the corporation and the "Intestate
estate of Concepcion Rallos."

Is the sale of the undivided share of Concepcion Rallos
valid although it was executed by the agent after the
death of his principal? If such death extinguishes agency,
is it subject to exceptions?

1. ART. 1919. Agency is extinguished. By the death,
civil interdiction, insanity or insolvency of the
principal or of the agent; ...

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. The
rationale for the law is found in the juridical basis of
agency which is representation, an integration of the
personality of the principal and of the agent.

2. Is the instant case an exception since corporation
acted in good faith in buying the property in
No. The exceptions in Article 1931
apply only if the good faith of the third
party purchaser is coupled with lack of
knowledge on the side of the Agent of
the death of the Principal. If one is
absent, act of agent is invalid and
AGENCY | ATTY. OBIETA | ART. 1919-1932 | 2D 2012

unenforceable. As it has been
established by the lower courts that
Simeon knew of the death, this case
does not fall under Article 1931.

CA held that no notice of the death was aver annotated
on said certificate of title by the heirs of the principal
and accordingly they must suffer the consequences of
such omission. SC rules that such recourse treats of
revocation by an act of the principal as a mode of
terminating an agency, which is to be distinguished from
revocation by operation of law such as death of the
principal. The Civil Code does not impose a duty on the
heirs to notify the agent of the death of the principal.
What the Code provides in Article 1932 is that, if the
agent die his heirs must notify the principal thereof.


FACTS: Spouses Dayao acquired a homestead patent over
a parcel of land (14hec) in Nueva Ecija. In 1930, they
executed a power of attorney authorizing Bayuga to
engage the services of an attorney to prosecute their
case against Gambito for annulment of a contract of sale
of the parcel of land and after the termination of the
case in their favor to sell it, and from the proceeds of
the sale to deduct whatever expenses he had incurred in
the litigation.
In 1934, Dayao-husband died leaving his wife and 4
children and in 1939, the 4 children executed a deed of
sale over 12 hec in favor of Buason. The Dayao-wife
affixed her thumbmark as witness. Buason took
possession of the land through their tenants that same
In 1944, Bayuga sold 8 hec to Panuyas and Cruz. Bayuga
died in 1946 and Dayao-wife in 1954.
Buason and Panuyas claimed ownership over the same
parcel of land. RTC ruled in favor of Panuyas, declaring
that Buason was barred by prescription.

ISSUE: W/N the death of Dayao (principal) ended the
authority of the agent

HELD: NO. It was not shown that Bayuga knew about the
death of his principal, Dayao. Art. 1931 states that
anything done by the agent, without the knowledge of
the death of the principal or of any other cause which
extinguishes the agency, is valid and shall be fully
effective with respect to third persons who may have
contracted with him in good faith.
Therefore, since the sale by the agent to Panuyas was
registered, while the sale to Buason was not, the former
has a better right over the parcel of land than the latter.

FACTS: Natividad Herrera is the legitimate daughter of
Luis Herrera, now deceased and who died in China
sometime after he went to that country. Luis was the
owner of the three parcels of land and their
improvements. Before leaving for China, Luis executed a
deed of General Power of Attorney, which authorized
and empowered Uy Kim Guan among others to administer
and sell the properties of Luis.
Lots were sold after 1936. As admitted by both parties,
Luis is now deceased, but as to the specific and precise
date of his death, the evidence of both parties fails to

ISSUE: W/N the sale of the lands is valid

HELD: YES. The date of death of Luis has not been
satisfactorily proven. The only evidence presented by the
plaintiff is a supposed letter received from a certain
Candi, dated Nov. 1936, purporting to give information
that Luis (without mentioning his name) had died in
August that year. This was properly rejected by the trial
court for lack of identification. The testimony of the
witness Lu Chung Chian that when he was in Amoy in the
year 1940, Luis visited him. Since the documents had
been executed in 1937 and 1939, it is evident that the
documents were executed during the lifetime of the
Even granting arguendo that Luis did die in 1936,
plaintiffs presented no proof that the agent Uy Kim Guan
was aware of the death of his principal at the time he
sold the property. The death of the principal does not
render the act of an agent unenforceable, where the
latter had no knowledge of such extinguishment of the

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