NATURE, FORM AND KINDS

1. ORIENT SERVICES AND HOTEL REPRESENTATIVES VS. CA AND AMERICAN AIRLINES

Art. 1868 (b) Agent, by legal fiction, becomes principal - In acting for the principal, the agent,
by legal fiction, becomes the principal authorized to perform all acts which the latter would have
him do. Such a relationship can only be effected “with the consent or authority” of the principal
which cannot, in any way be compelled by law or by any court.
2. PHILPOTTS VS. PHIL. MFG. CO., 40 PHIL. 491 [1919]
Art. 1868 Acts that may be/not be delegated to agents - The general rule is that what a man
may do in person, he may do thru another. Thus, a stockholder may delegate to another his
right to inspect the books of the corporation because this is an act which he can lawfully do
personally.

AGENT’S OBLIGATIONS
1. BRITISH AIRWAYS VS. COURT OF APPEALS, 285 SCRA 450 [1998]
Art. 1884 (3) Exercise of reasonable care - By accepting an employment whose requirements
he knows, without stipulating otherwise, the agent impliedly undertakes that he possesses a
degree of skill reasonably or ordinarily competent for the performance of the service, and that
in performing his undertaking, he will exercise reasonable care, skill and diligence. He does not
agree that he will make no mistake whatsoever, or that he will exercise the highest skill or
diligence, but he does agree that he will exercise reasonable skill, and that he will take the usual
precautions as a reasonably careful agent would under similar circumstances. Failure to do so
constitutes a breach of his duty.
2. PHILIPPINE NATIONAL BANK VS. RITRATTO GROUPS, INC., 362 SCRA 216 [2001]
Art. 1897 When agent may incur personal liability - A suit against an agent cannot, without
compelling reasons, be considered a suit against the principal.

PRINCIPAL’S OBLIGATIONS
1. AIR FRANCE VS. COURT OF APPEALS, 126 SCRA 448 [1983]
Art. 1910 Liability of third persons to principal
(b) Since notice by a third party to the agent is notice to the principal, the third party is not liable
for damages for failure of the agent to give notice to his principal.
2. LUSTAN VS. COURT OF APPEALS, 266 SCRA 663 [1997]
Art. 1911 When principal solidarily liable with the agent - Article 1911 is based on the
principle of estoppel and it is necessary for the protection of innocent third persons. It is an
instance when solidarity is imposed by law. (Arts. 1207, 1208.) Both the principal and the agent
may be considered as joint tortfeasors whose liability is solidary.

EXTINGUISHMENT
1. INFANTE VS. CUNANAN, 93 PHIL. 693 [1953]
Art. 1924 Revocation by direct management of business by principal himself - If the purpose
of the principal in dealing directly with the purchaser and himself effecting the sale of the
principal’s property is to avoid payment of his agent’s commission, the implied revocation is

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 deemed made in bad faith and cannot be sanctioned without according to the agent the
commission which is due him.
2. COLEONGCO VS. CLAPAROLS, 10 SCRA 577 [1964]
Art. 1927 Revocability of agency coupled with an interest - Where there is a just cause. — A
power of attorney can be made irrevocable by contract only in the sense that the principal may
not recall it at his pleasure; but coupled with interest or not, the authority certainly can be
revoked for a just cause, such as when the agent betrays the interest of the principal. It is not
open to serious doubt that the irrevocability of a power of attorney may not be used to shield
the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent for
that would amount to holding that a power coupled with an interest authorizes the agent to
commit frauds against the principal.

LANDMARK CASES
1. CONDE VS. CA
Art. 1869 Implied Agency - Agency may even be implied from words and conduct of the
parties and the circumstances of the particular case. (Arts. 1869-1872.)
Vendees a retro did not repudiate the deed of repurchase signed by their son-in-law.
2. JIMENEZ VS. RABOT
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.
> A letter is sufficient.

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ORIENT AIR SERVICES & HOTEL REPRESENTATIVES v. COURT OF APPEALS and AMERICAN AIR-
LINES INCORPORATED

G.R. No. 76933 May 29, 1991 

PADILLA, J.:

Facts:

American Airlines, Inc. (American Air), an air carrier offering passenger and air cargo
transportation in the Philippines, and Orient Air Services and Hotel Representatives (Orient Air),
entered into a General Sales Agency Agreement (Agreement), whereby the former authorized
the latter to act as its exclusive general sales agent within the Philippines for the sale of air
passenger transportation. In the agreement, Orient Air shall remit in United States dollars to
American the ticket stock or exchange orders, less commissions to which Orient Air Services is
entitled, not less frequently than semi-monthly. On the other hand, American will pay Orient
Air Services commission on transportation sold by Orient Air Services or its sub-agents.
Thereafter, American alleged that Orient Air had reneged on its obligations under the
Agreement by failing to promptly remit the net proceeds of sales for the months of January to
March 1981 in the amount of US $254,400.40, American Air by itself undertook the collection
of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement
in accordance with paragraph 13 which authorize the termination of the thereof in case Orient
Air is unable to transfer to the United States the funds payable by Orient Air Services to
American. American Air instituted suit against Orient Air with the Court of First Instance of
Manila “for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction
and Restraining Order” averring the aforesaid basis for the termination of the Agreement as
well as therein defendant's previous record of failures "to promptly settle past outstanding
refunds of which there were available funds in the possession of the defendant, . . . to the
damage and prejudice of plaintiff." 

Orient Air denied the material allegations of the complaint with respect to plaintiff's
entitlement to alleged unremitted amounts, contending that after application thereof to the
commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in
unpaid overriding commissions. Further, the defendant contended that the actions taken by
American Air in the course of terminating the Agreement as well as the termination itself were
untenable. The trial court ruled in its favor which decision was affirmed with modification by
Court of Appeals. It held the termination made by the latter as affecting the GSA agreement
illegal and improper and ordered the plaintiff to reinstate defendant as its general sales agent
for passenger transportation in the Philippines in accordance with said GSA agreement.

Issue:

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 Whether the Court of Appeals erred in ordering the reinstatement of the defendant as
its general sales agent for passenger transportation in the Philippines in accordance with said
GSA Agreement

Held:

Yes. By affirming this ruling of the trial court, respondent appellate court, in effect,
compels American Air to extend its personality to Orient Air. Such would be violative of the
principles and essence of agency, defined by law as a contract 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. In an agent-principal relationship, the personality of
the principal is extended through the facility of the agent. In so doing, the agent, by legal
fiction, becomes the principal, authorized to perform all acts which the latter would have him
do. Such a relationship can only be effected with the consent of the principal, which must not,
in any way, be compelled by law or by any court. The Agreement itself between the parties
states that "either party may terminate the Agreement without cause by giving the other 30
days' notice by letter, telegram or cable." (emphasis supplied) We, therefore, set aside the
portion of the ruling of the respondent appellate court reinstating Orient Air as general sales
agent of American Air.

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W. G. PHILPOTTS vs. PHILIPPINE MANUFACTURING COMPANY and F. N. BERRY

G.R. No. L-15568 November 8, 1919

Facts:
Petitioner, W. G. Philpotts, a stockholder in the Philippine Manufacturing Company, one
of the respondents herein, seeks by this proceeding to obtain a writ of mandamus to compel
the respondents to permit the plaintiff, in 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. The respondent corporation has refused to allow the petitioner himself to examine
anything relating to the affairs of the company, and the petition prays for a peremptory order
commanding the respondents to place the records of all business transactions of the company.
Petitioner further desires to exercise said right through an agent or attorney. It is conceded by
counsel for the respondents that there is a right of examination in the stockholder granted
under section 51 of the Corporation Law, but it is insisted that this right must be exercised in
person.
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 the stockholder in
person
Ruling:
YES. The right of inspection given to a stockholder in the provision above quoted can be
exercised either by himself or by any proper 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; and we find nothing in the statute
that would justify us in qualifying the right in the manner suggested by the respondents.
Second paragraph of section 51 of Act No. 1459 states that: "The record 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 hours." This provision
is to be read of course in connection with the related provisions of sections 51 and 52, defining
the duty of the corporation in respect to the keeping of its records.
This conclusion is supported by the undoubted weight of authority in the United States,
where it is generally held that the provisions of law conceding the right of inspection to
stockholders of corporations are to be liberally construed and that said right may be exercised

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through any other properly authorized person. As was said in Foster vs. White (86 Ala., 467),
"The right may be regarded as personal, in the sense that only a stockholder may enjoy it; but
the inspection and examination may be made by another. Otherwise it would be unavailing in
many instances."

British Airways v. Court of Appeals

G.R. No. 121824, 29 January 1998, 285 SCRA 450

Facts:

Mahtani decided to visit his relatives in Bombay, India. He obtained services of Mr. Gumar
to prepare his travel plans. The latter purchased a ticket from British Airways (BA). Since BA
had no direct flights from Manila to Bombay, Mahtani had to take a flight to HongKong via
PAL, and upon arrival in HK he had to take a connecting flight to Bombay on board BA.
Mahtani checked in at the PAL counter in Manila his 2 pieces of luggage containing his
clothing and personal effects, confident that upon reaching HK, the same would be
transferred to the BA flight bound for Bombay.
When Mahtani arrived in Bombay, he discovered that his luggage was missing and that
upon inquiry from the BA representatives, he was told that the same might be diverted to
London. After one week, BA finally advised him to file a claim by accomplishing the Property
Irregularity Report. Back in the Philippines, Mahtani filed his claim for damages against BA
and Mr. Gumar. BA contended that Mahtani did not have cause of action against it. BA also
filed a third party complaint against PAL alleging that the reason for the non-transfer of the
luggage was due to the latter’s late arrival in HK, thus leaving hardly any time for the proper
transfer of Mahtani’s luggage to the BA aircraft bound for Bombay. PAL disclaimed liability
arguing that there was adequate time to transfer the luggage to BA facilities in HK.
Trial court rendered its decision in favor of Mahtani. The third party complaint against PAL
was dismissed for lack of cause of action. CA affirmed in toto.
Issues:

1. Whether or not BA is liable for compensatory damages and attorney’s fees.

2. Whether or not the dismissal of the third party complaint is correct.
Ruling:

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 1. Yes. In determining compensatory damages, it is vital that the claimant
satisfactorily prove during the trial the existence of the factual basis of the damages and its
causal connection to the defendant’s acts. The benefits of limited liability are subject to waiver
such as when the air carrier failed to raise timely objections during the trial when questions and
answers regarding the actual claims and damages sustained by the passenger were asked. In
the case at bar, BA had waived the defense of limited liability when it allowed Mahtani to
testify as to the actual damages he incurred due to the misplacement of his luggage, without
any objection.
2. No. The contract of air transportation was exclusive between Mahtani and BA. It
is undisputed that PAL, in transporting Mahtani from Manila to HK, acted as the agent of BA. It
is a well-settled rule that an agent is also responsible for any negligence in the performance of
its function and is liable for damages which the principal may suffer by reason of its negligent
act. Since the instant petition was based on breach of contract of carriage, Mahtani can only
sue BA and not PAL, since the latter was not a party to the contract. However, this is not to say
that PAL is relieved from any liability due to any of its negligent act.

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PHILIPPINE NATIONAL BANK, petitioner,
vs.
RITRATTO GROUP INC., RIATTO INTERNATIONAL, INC., and DADASAN GENERAL
MERCHANDISE, respondents.
G.R. No. 142616            July 31, 2001
Facts:
PNB International Finance Ltd., a subsidiary company of PNB extended a letter of credit
to Ritratto Group Inc., which was secured by a real estate mortgage over 4 parcels of land.
Ritratto later defaulted and pursuant to the terms of the real estate mortgages, PNB-IFL
through its attorney-in-fact PNB notified Ritratto of the foreclosure and public auction. Ritratto
then filed for a complaint for injunction with prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order. PNB filed for a motion to dismiss on the grounds
of failure to state a cause of action and the absence of any privity between the petitioner and
the respondents. The RTC ruled in favor of Ritratto and ordered the issuance of the writ. The
petition for certiorari before the CA was dismissed for lack of merit.

Issue:
WON PNB is a real party-in-interest in the contract, being merely an attorney-in-fact
authorized to enforce an ancillary contract?

Ruling:
NO. Ritratto argues that PNB is a party-in-interest even if PNB-IFL and PNB are separate
entities and thus be the proper subject for the writ of preliminary injunction they prayed for
because it is tasked to commit the acts of foreclosure of Ritratto’s properties. They also argue
that the entire credit facility is void because it violates the principle of mutuality of contracts
(determination of interest rates were left to the sole discretion of PNB and that the rate of
interest may be unilaterally modified by PNB etc) and that the RTC was correct in piercing the
corporate veil because PNB is a mere alter ego of PNB-IFL.

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 The Court disagreed with their arguments. The contract was between Ritratto and PNB-IFL,
not PNB. Ritratto even admits that PNB is a mere attorney-in-fact for PNB-IFL with full power
and authority to foreclose the properties. PNB is therefore an agent with limited authority and
specific duties under a special power of attorney incorporated in the real estate mortgage. The
conclusion is that PNB is not privy to the loan contracts entered into by Ritratto and PNB-IFL.
The validity of the loan contracts is a matter between PNB-IFL and Ritratto. The latter’s
prayer that petitioner PNB, despite being merely an agent, be ordered to recompute the
rescheduling of the interest they had to pay cannot be granted. Since it was not a part of the
contract it has no power to recomputed the interest rates, therefore Ritratto has no cause of
action against PNB.
The SC disagrees with the RTC ruling that because PNB-IFL is a subsidiary of PNB, a suit
against the latter is a suit against the former, citing Koppel Phil Inc vs Yatco. In said case, it was
held that corporate entity may be discarded where a corporation is a mere alter ego of a person
or where the corporation is so organized and controlled and its affairs are so conducted as to
make it merely an instrumentality, agency, conduit or adjunct of another corporation. The SC
restated that the GR is that a corporation has a personality distinct and separate from its
individual stockholders or members and is not affected by the personal rights, obligations and
transactions of the latter. Just because a corporation owns all the stocks of another
corporation, by itself, is not sufficient to treat them as one entity. Koppel could not be applied
in this case because Ritratto failed to show any good reason to disregard the separate entities
of PNB and PNB-IFL.
With regard to the piercing of the corporate veil, the Court held that its application is
justified when the corporate fiction is used to defeat public convenience, justify wrong, protect
fraud or defend crime or when it is made as a shield to confuse the legit issues. In Concept
Builders Inc v NLRC the court laid down the test in determining its applicability: 1. Complete
control or domination of not only finances but also of policy and business practice, 2. Such
control must have been used to commit fraud or wrong and 3. The control and breach of duty
must proximately cause the injury or unjust loss complained of. All three must be present in
order for the doctrine to be applicable.

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AIR FRANCE vs. Court of Appeals
December 29, 1983 G.R. No. L-57339

Facts:

In February, 1970, the late Jose G. Gana and his family, (the GANAS), purchased from
AIR FRANCE through Imperial Travels, Incorporated, a duly authorized travel agent, nine "open-
dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route.

On April 24, 1970, AIR FRANCE exchanged or substituted the aforementioned tickets
with other tickets for the same route. At this time, the GANAS were booked for the
Manila/Osaka segment on AIR FRANCE Flight 184 for May 8, 1970, and for the Tokyo/Manila
return trip on AIR FRANCE Flight 187 on May 22, 1970. The aforesaid tickets were valid until
May 8, 1971.The GANAS did not depart on 8 May 1970.

Jose Gana sought the assistance of Teresita Manucdoc, a Secretary of the Sta. Clara
Lumber Company where Jose Gana was the Director and Treasurer, for the extension of the
validity of their tickets, which were due to expire on May 8, 1971. Teresita enlisted the help of
Lee Ella Manager of the Philippine Travel Bureau, who used to handle travel arrangements for
the personnel of the Sta. Clara Lumber Company. Ella sent the tickets to Cesar Rillo, Office
Manager of AIR FRANCE.

The tickets were returned to Ella who was informed that extension was not possible. Ella
then returned the tickets to Teresita and informed her of the impossibility of extension.

In the meantime, the GANAS had scheduled their departure on May 7, 1971 or one day
before the expiry date. In the morning of the very day of their scheduled departure on the first
leg of their trip, Teresita requested travel agent Ella to arrange the revalidation of the tickets.
Ella gave the same negative answer and warned her that although the tickets could be used by
the GANAS if they left on May 7, 1971, the tickets would no longer be valid for the rest of their
trip because the tickets would then have expired on May 8,1971. Teresita replied that it will be
up to the GANAS to make the arrangements. Notwithstanding the warnings, the GANAS
departed from Manila in the afternoon of May 7, 1971 on board AIR FRANCE Flight 184 for
Osaka, Japan.

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 However, for the Osaka/Tokyo flight on May 17, 1971, Japan Airlines refused to honor
the tickets because of their expiration, and the GANAS had to purchase new tickets. They
encountered the same difficulty with respect to their return trip to Manila as AIR FRANCE also
refused to honor their tickets. They were able to return only after pre-payment in Manila,
through their relatives, of the readjusted rates. They finally flew back to Manila on separate Air
France Frights.

Issue:
Whether or not Teresita was the agent of the GANAS and notice to of the rejection of
the request of the validity of the tickets was notice to the GANAS, her principals.  

Held:

The GANAS cannot defend by contending lack of knowledge of those rules since the
evidence bears out that Teresita, who handled travel arrangements for the GANAS, was duly
informed by travel agent Ella of the advice of Reno, the Office Manager of Air France, that the
tickets in question could not be extended beyond the period of their validity without paying the
fare differentials and additional travel taxes brought about by the increased fare rate and travel
taxes.

To all legal intents and purposes, Teresita was the agent of the GANAS and notice to her
of the rejection of the request for extension of the validity of the tickets was notice to the
GANAS, her principals.

WHEREFORE, the judgment under review is hereby reversed and set aside, and the
Amended Complaint filed by private respondents hereby dismissed.

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LUSTAN VS. CA
G.R. No. 111924. January 27, 1997
FRANCISCO, J.:

Facts:
Petitioner Adoracion Lustan is the registered owner of a parcel of land. He 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. 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. He was able to secure additional loans,
the last three of which were 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 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. Aggrieved, petitioner
filed an action for cancellation of liens, quieting of title, recovery of possession and damages
against Parangan and PNB in the Regional Trial Court of Iloilo City. Petitioner argues that the
last three mortgages were void for lack of authority.
Issue:
WON Parangan has acted beyond the authority given by the petitioner.
Held:

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 Yes. "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).

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CONSEJO INFANTE v JOSE CUNANAN, Juan Mijares and the CA
31 Aug 1953

Facts:
Infante was the owner of two parcels of land, together with a house built thereon,
situated in Manila. Infante contracted the services of Cunanan and Mjiares to sell the above-
mentioned property for Php30,000 subject to the condition that the purchaser would assume
the mortgage existing thereon in favor of the Rehabilitation Finance Corporation. Infante
agreed to pay them a commission of 5% on the purchaser price plus whatever overprice they
may obtain for the property. Cunanan and Mijares found one Pio Noche who was willing to buy
the property under such terms. When Noche was introduced to Infante, she informed them
that she was no longer interested in selling the property. She made them sign a document
stating that the written authority she gave them was already cancelled. A few weeks later,
Infante dealt directly with Noche, selling him the property for Php31,000.
Cunanan and Mijares demanded the payment of their commission but Infante refused.

Infante admitted having contracted the service of Cunanan and Mijares to sell her
property but stated that she agreed to pay a commission of Php1,200 only on condition that
they buy her a property along Taft Avenue. While Cunanan and Mijares took steps to selling her
property as agreed upon, they sold the property at Taft Avenue to another party which
prompted her to cancel the authority she gave them. Lower court ruled in favor of Cunanan and
Mijares and ordered Infante to pay. CA affirmed in toto.

Issue:

W/N petitioner has obligation to pay respondents

Ruling:

YES. Respondents were authorized by petitioner to sell her property with the
understanding that they will be given a commission plus whatever overprice they may obtain.
Infante avers that the authority has already been withdrawn when, by voluntary act of

14
respondents, they executed a document stating that the authority shall be considered
cancelled.

Under the old Civil Code, Infante’s right to withdraw such authority is recognized. A
principal may withdraw the authority given to an agent at will. However, respondents claim
that although they agreed to cancel the written authority, they did so upon the verbal
assurance that should the property be sold to Noche, they would be given the commission
agreed upon.

There is enough justification to conclude that respondents are entitled to the

commission originally agreed upon. That petitioner had changed her mind even if respondent
had found a buyer who was willing to close the deal, is a matter that would not give rise to a
legal consequence if respondents agree to call off the transactions. However, petitioner took
advantage of the services rendered by petitioner. Believing that she could evade payment of
their commission, she induced them to sign the deed of cancellation. This cannot be sanctioned
and cannot serve as basis for petitioner to escape payment of the commission agreed upon.
Decision appealed from is affirmed.

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G.R. No. L-18616             March 31, 1964

VICENTE M. COLEONGCO, plaintiff-appellant, vs.
EDUARDO L. CLAPAROLS, defendant-appellee.

Facts:

Since 1951, Claparols operated a factory for the manufacture of nails under the style of
"Claparols Steel & Nail Plant". The raw material, nail wire, was imported from foreign sources.
Losses compelled Claparols in 1953 to look for someone to finance his imports of nail wires.
Coleongco became his financier. A financing agreement was perfected . In addition, a special
power of attorney was executed authorizing Coleongco to open and negotiate letters of credit,
to sign contracts, bills of lading, invoices, and papers covering transactions; to represent
appellee and the nail factory; and to accept payments and cash advances from dealers and
distributors. Thereafter, Coleongco also became the assistant manager of the factory.,

1956, Claparols was surprised by service of an alias writ of execution to enforce a

judgment obtained against him by the Philippine National Bank, despite the fact that on the
preceding September he had submitted an amortization plan to settle the account. He learned
that the execution had been procured because of derogatory information against appellee that
had reached the bank Coleongco. His letters to the Philippine National attempting to undermine
the credit of the principal and to acquire the factory of the latter, without the principal's
knowledge. Fortunately, Claparols managed to arrange matters with the bank and to have the
execution levy lifted.

He further discovered the following acts of disloyalty of Coleongco:

 A letter to his cousin, Kho To , instructing the latter to reduce to one-half the usual
monthly advances to Claparols on account of nail sales in order to squeeze said appellee and
compel him to extend the contract entitling Coleongco to share in the profits of the nail factory

16
on better terms, and ultimately "own his factory", a plan carried out by Kho's letter, ,reducing
the advances to Claparols;

 Coleongco's attempt to, have Romulo Agsam pour acid on the machinery;

 His illegal diversion of the profits of the factory to his own benefit;

 And the surreptitious disposition of the Yates band resaw machine in favor of his
cousin's Hong Shing Lumber Yard, made while Claparols was in Baguio in July and August of
1956,

 Instead of putting up all the necessary money needed to finance the imports of raw
material, Coelongco merely advanced 25% in cash on account of the price and had the balance
covered by surety agreements with Claparols and others as solidary guarantors.

Claparols consequently revoked the power of attorney, and informed Coleongco by registered
mail, demanding a full accounting at the same time. Coleongco protested. Claparols requested
external auditors, examination showed that Coleongco owed the Claparols Nail Factory the
amount of P87,387.37, as of June 30, 1957.

The Complaint:

Coleongco field a suit against Claparols charging breach of contract asking for
accounting plus damages.

His Argument:

He also contended that the power of attorney was made to protect his interest under
the financing agreement and was one coupled with an interest that the appellee Claparols had
no legal power to revoke. Caparols' mal-administration of the business endangered the security
for the advances that he had made under the financing contract

Appellant likewise denies the authorship of the letter to Kho as well as the attempt to
induce Agsam to damage the machinery of the factory

RTC:
Dismiss action for damages and order him to pay Claparols P81,387.27 as per audit as
adjusted plus damages.

Issues:

17
 1.) WON the contract of agency between Claparols and Coleongco was one coupled with
interest. NO

2.) WON a contract of agency when coupled with an interest may be validly revoked by
the principal. YES

Ruling:

1.) The financing agreement itself already contained clauses for the protection of
appellant's interest, and did not call for the execution of any power of attorney in favor
of Coleongco.

2.) But granting appellant's view, it must not be forgotten that a power of attorney can be
made irrevocable by contract only in the sense that the principal may not recall it at his
pleasure; but coupled with interest or not, the authority certainly can be revoked for a
just cause, such as when the attorney-in-fact betrays the interest of the principal, as
happened in this case. It is not open to serious doubt that the irrevocability of the
power of attorney may not be used to shield the perpetration of acts in bad faith,
breach of confidence, or betrayal of trust, by the agent for that would amount to
holding that a power coupled with an interest authorizes the agent to commit frauds
against the principal.

Our new Civil Code, in Article 1172, expressly provides the contrary in prescribing that
responsibility arising from fraud is demandable in all obligations, and that any waiver of
action for future fraud is void. It is also on this principle that the Civil Code, in its Article
1800, declares that the powers of a partner, appointed as manager, in the articles of co-
partnership are irrevocable without just or lawful cause; and an agent with power
coupled with an interest cannot stand on better ground than such a partner in so far as
irrevocability of the power is concerned.

That the appellee Coleongco acted in bad faith towards his principal Claparols is, on the
record, unquestionable.

The facts mentioned acts of deliberate sabotage by the agent that fully justified the
revocation of the power of attorney.

18
DOMINGA CONDE vs. CA
G.R. No. L-40242, 15 December 1982

FACTS:
            
On 7 April 1938, Margarita Conde, Bernardo Conde and Dominga Conde, as heirs of
Santiago Conde, sold with right to repurchase, within 10 years from said date, a 1 hectare
parcel of agricultural land situated in Burauen, Leyte to Casimira Pasagui and Pio Altera for
P165. Three years later, Original Certificate of Title No. N-534 covering the land in question was
issued in the name of the Alteras subject to the stipulated right of repurchase by the Condes.
On 28 November 1945, Paciente Cordero, son-in-law of the Alteras and their representative,
signed a document in Bisaya stating that the Memorandum of Repurchase got lost during World
War II despite all diligent searches being made; that the two parcels of land were inherited by
the Condes; that Eusebio Amarille was authorized by the Condes to repurchase the land; that
they received P165 in consideration of the sale; and that the Condes, by virtue of the
repurchase, shall repossess the said parcels of land. Neither the vendees-a-retro, Pio Altera nor
Casimira Pasagui, were signatories to that document. Many years later, the pacto de retro
document was found. In June 1965, Pio Altera sold the disputed lot to Ramon and Catalina
Conde, whose relationship to Dominga does not appear on record. Consequently, in 1969,
Dominga filed with the CFI of Leyte a complaint for quieting of title and declaration of
ownership against all the respondents. The trial court dismissed the complaint and ordered
Dominga to vacate the premises and to deliver the disputed land to respondents. The Court of
Appeals affirmed the decision and ruled that Dominga failed to validly exercise her right to
repurchase because the Memorandum of Repurchase was not signed by the Alteras but by
Paciente, who was not authorized to sign for the said vendees-a-retro.

ISSUE:
            
Whether or not there was an implied agency when Cordero signed the Memorandum of
Repurchase.

19
HELD:

            Yes. Although the contending parties were legally wanting in their respective actuations,
for example Dominga did nothing to formalize her repurchase while the Alteras did nothing to
clear their title of the encumbrance therein regarding Dominga’s right to repurchase, the
repurchase by Dominga is supported by her admission that she had been in possession since
1945, the date of the repurchase, and has been paying land taxes thereon since then. No new
agreement was entered into by the parties as stipulated in the deed of pacto de retro, if the
vendors-a-retro failed to exercise their right of redemption within 10 years. If, as alleged,
Dominga did not exert an effort to procure Pio Altera’s signature after he had recovered from
illness, neither did the Alteras repudiate the deed signed by their son-in-law for 24 years, from
which the Alteras are deemed to have incurred in laches. Thus, an implied agency must have
been held to have been created by their silence or lack of action, or their failure to repudiate
the agency created. (Art. 1869, New Civil Code). Wherefore, Dominga is declared the owner of
the land in question.

20
G.R. No. 12579 – Jimenez v. Rabot
Street, J.

Gregorio’s elder sister, Nicolasa Jimenez, was the agent of the former. Previously, Gregorio
wrote his sister that he was pressed for money and requested her to sell one of his parcels of
land and send him the money so he could pay his debts. Acting upon this letter, Nicolasa
approached Pedro Rabot and offered the parcel in question for PHP 500. Pedro paid PHP 250
and agreed that the deed of conveyance will be paid when the balance is settled. Nicolasa
admits this, but there is no proof that she actually sent the money to Gregorio. One year later,
Gregorio came to Alaminos and demanded that his sister surrender the said piece of land to
him. Gregorio Jimenez instituted an action to recover from Pedro Rabot a parcel of land
situated in the municipality of Alaminos. The lower court rendered a judgment in favor of
Pedro, thus Gregorio appealed to the Supreme Court. It was posited by the plaintiffs that a
power of attorney (making Nicolasa the agent) should be in a public document and the power
of attorney in question is merely in the form of a private document. The Court however, ruled
otherwise and stated that the authority was sufficient thus the sale to Pedro Rabat was proper
and Gregorio cannot recover.

DOCTRINE
Where the owner of real property decides to confer upon an attorney in fact the authority to
sell the same, it is necessary that the authority should be expressed in writing but it is not
necessary that the same be in a public document, nor is it necessary that the property to be
sold be expressly described. It is sufficient if the authority is so expressed as to determine
without doubt the limits of the agent’s authority.

21
FACTS

1. Gregorio Jimenez owns a land (approximately 3 hectares) situated in the municipality of Alaminos,
Province of Pangasinan.
2. Gregorio, in 1911, was staying in Vigan and his property in Alaminos was confided by him to the care of
his elder sister, Nicolasa Jimenez (agent).
3. On February 7, 1911, Gregorio wrote his sister that he was pressed for money and asked her to sell one
of his parcels of land so he could pay his debts using the proceeds from the sale.
4. Acting upon this letter, Nicolasa approached Pedro Rabot, the defendant, and the latter agreed to buy
the land for PHP 500.
5. Rabot paid PHP 250 and it was agreed that the deed of conveyance would be executed when the
balance is settled.
6. One year later, Gregorio returned to Alaminos and demanded from his sister the land in question.
7. Nicolasa refused to do so and Gregorio instituted an action to recover his land from her control.
Gregorio won the case in August 12, 1913.
8. Meanwhile, on May 31, 1912, Nicolasa executed and delivered to Rabot the deed purporting to convey
the land.
9. Rabot thus acquired the possession of the deed from Nicolasa during the pendency of the litigation but
it does not appear that he was cognizant of that circumstance at that time.
10. Gregorio instituted an action to recover from Pedro Rabot the said parcel of land. The lower court
ruled in favor of Rabot, thus Gregorio appealed to the Supreme Court.

ISSUE with HOLDING

Whether a power of attorney to convey real property ought to appear in a public document. – NO.

 It is established doctrine that a private document is competent to create, transmit, modify or

extinguish a right in real property.
 Thus it follows that a power of attorney to convey such property, even though in the form of a private
document, will operate with effect.
 Assuming that the letter Gregorio sent contained adequate authority for Nicolasa to sell the property,
her action in conveying the said property in her own name without her telling Pedro of the capacity in
which she was acting, was irregular.
 However, the Court added, such deed would in any event operate to bind Gregorio in its character as a
contract and he can thus be compelled by a proper judicial proceeding to execute a document to carry
such contract into effect (specific performance).

Whether the authority conferred on Nicolasa by the letter of her brother was sufficient to enable her to bind
her brother. – YES.

 The only provisions in law related to this point are Article 1713 of the Civil Code and subsection 5 of
Section 335 of the Code of Civil Procedure.
 Article 1713 requires that the authority to alienate land shall be contained in an express mandate.
 On the other hand, the Code of Civil Procedure states that the authority of the agent must be in
writing and subscribed by the party to be charged.
  The Court held that the authority in the letter sufficiently complied with both requirements.
 Petitioners urged that in order for the authority to be sufficient under the Code of Civil Procedure the
authorization must have a particular description of the property to be sold.
o The Court said that there is no such requirement in subsection 5 section 335 of the Code, and it
would not be legitimate to read such a requirement into it.
o As long as the agent acts within the limits authorized by the principal, the latter cannot
question the validity of his act.
 The Court also held that Nicolasa acted within the scope of the authority which had been conferred
upon her.

ADDITIONAL INFORMATION

 The Court also added that the problem concerned in the case is the sufficiency of the power of
attorney not the sufficiency of the note or memorandum of the contract or agreement of sale required
by the same subsection. (Jurisprudence dictates that there must be a description of the property
subject of the sale for the contract to be sufficient).
 The aforementioned principle however, is not applicable to the present case which relates to the
sufficiency of the authorization, not to the sufficiency of the contract or conveyance.

DISPOSITIVE PORTION

Judgment will accordingly be reversed without any express adjudication of costs of this instance. So
ordered.