VII. Modes of Extinguishment Art.

1919

A. RevocationArt. 1920, 1921, 1922, 1923, 1924, 1925, 1926

Rallos v. Yangco, GR No. 6906, 27 September 1911

Dy Buncio v. Ong Guan, 60 Phil. 606

FACTS: Ong Guan Can, the owner of a rice mill and camarin, sold the
same to Juan Tong and Pua Giok Eng through his agent son, Guan Can
Jr., by virtue of a power of attorney dated May 23 of 1928. It showed
however that the power of attorney was not a general power of
attorney but a limited one and does not give the express power to
alienate the properties in question. Now, alleging that since the sale
was not valid, the debtor of Ong Guan, Dy Buncio & Company, Inc.
claims that the properties are subject to attachment and execution.
However, Ong Guan claims that the defect on the power of attorney
was cured by the prior power of attorney executed in 1920.

ISSUE: WON the prior power of attorney was revoked by the

subsequent one.

RULING: 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. Thus,
the title of Ong Guan Can not having been divested by the so-called
deed of sale, his properties are subject to attachment and execution.

Del Rosario v. Abad, 104 Phil. 648

FACTS: Tiburcio Del Rosario was awarded with a homestead patent to

which a certificate of title was later issued to him. Tiburcio later
obtained a loan from Primitivo Abad secured by mortgage on his
property. In this connection, Tiburcio executed an "irrevocable special
power of attorney coupled with interest" in favor of the mortgagee,
authorizing him, among others, to sell and convey the parcel of land.
Later on, Tiburcio died. Primitivo then, acting as Tiburcio’s attorney-in-
fact, sold the mortgaged property to his son, Teodorico. A new title
was then issued to Teodorico. This prompted the heirs of Tiburcio to
file a case for the recovery of possession and ownership of the
property against the senior and junior Abad.

The lower court ruled in favor of the Del Rosario heirs, and declared
the sale void.

ISSUE: WON the sale was valid considering that Tiburcio, the
principal, is already dead when the sale was made.

RULING: The power of attorney executed by Tiburcio del Rosario in

favor of Primitivo Abad providing, among others, that is coupled with
an interest in the subject matter thereof in favor of the said attorney
and are therefore irrevocable… does not create an agency coupled with
an interest nor does it clothe the agency with an irrevocable character.

A mere statement in the power of attorney that it 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 Tiburcio del Rosario, the
principal, had mortgaged the improvements of the parcel of land to
Primitivo Abad, the agent, is not such an interest as could render
irrevocable the power of attorney executed by the principal in favor of
the agent. In fact no mention of it is made in the power of attorney.
The mortgage on the improvements of the parcel of land 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.

As the agency was not coupled with an interest, it was terminated

upon the death of Tiburcio del Rosario, the principal, and Primitivo
Abad, the agent, could no longer validly convey the parcel of land to
Teodorico Abad after the death. The sale, therefore, to the later was
null and void.

New Manila v. Republic, 107 Phil. 824

FACTS: The Republic, through the Director of Schools, entered into a

contract with one Alfonso Mendoza to build 2 schoolhouses. For this
purpose, New Manila Lumber Company, Inc. supplied the lumber
materials for the constructions of the said buildings. Contractor
Mendoza executed a power of attorney constituting New Manila
Lumber as his attorney-in-fact with specific and exclusive authority to
collect and receive from the Director of Schools any and all amount
due in connection with the construction of said buildings. However, the
Director of Schools paid contractor Mendoza himself without first
making payment to New Manila Lumber. This prompted New Manila to
file a case for collection of sum of money against the Republic. The
lower court dismissed the case ruling that there is no juridical tie
between New Manila Lumber and the Republic.

ISSUE: WON the agency was revoked when contractor Mendoza as

principal, collected the payment directly from the Director of Schools.

RULING: Yes. Under the facts alleged in the complaint, the powers of
attorney in question made New Lumber the contractor's agent in the
collection of whatever amounts may be due the contractor from the
Republic. And since it is also alleged that, after the execution of the
powers of attorney, the contractor (principal) demanded and collected
from defendant the money the collection of which he entrusted to
plaintiff, the agency apparently has already been revoked.

The point is made by plaintiff that the powers of attorney executed by

the contractor in its favor are irrevocable and are coupled with
interest. But even supposing that they are, still their alleged
irrevocability cannot affect defendant who is not a party thereto. They
are obligatory only on the principal who executed the agency.

Coleongco v. Claparols, 10 SCRA 577 not finished

FACTS: Claparols is in the business of nail manufacturing and the

marketing of which is handled by Kho To. When faced with losses,
Claparols was compelled to look for a financier who will finance his
imports of raw materials. Kho To later introduced Coleongco.
Thereafter, an agreement was made between Claparols and
Coleongco. In connection still to the agreement, Claparols executed an
SPA in favor of 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.

ISSUE: WON Claparols can validly revoke the power of attorney.

RULING: 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.

Here, Coleongco acted in bad faith towards his principal Claparols.

Dialosa v. CA, 130 SCRA 350

FACTS: Spouses Mariano and Alegria Diolosa constituted Quirino

Baterna, owner of Quin Baterna Realty as exclusive sales agent to sell
lots included in Villa Alegre Subdivision owned by the former. Baterna
was then able to sell several lots. However, 3 months later, Spouses
Diolosa terminated the services of Baterna reasoning that they needed
the undisposed lots for the use of their family. During this time, there
remain 27 lots unsold. This prompted Baterna to file a complained for
recovery of unpaid commission over the lots subject of agency
agreement that were not sold. Spouses Diolosa on the other hand
contended that it is within their right to terminate the agency and that
Baterna is not entitled to commission on lots that were not sold.

ISSUE: WON Spouses Diolosa can validly terminate the agency

agreement without paying Baterna damages.

RULING: No. Article 1920 of the Civil Code of the Philippines

notwithstanding, Spouses Diolosa could not terminate the agency
agreement at will without paying damages. The said agency
agreement expressly stipulates ... until all the subject property as
subdivided is fully disposed of ..." When, therefore, the petitioners
revoked the contract with private respondent in a letter, they become
liable to the private respondent for damages for breach of contract.

And, it may be added that since the agency agreement, Exhibit "A", is
a valid contract, the same may be rescinded only on grounds specified
in Articles 1381 and 1382 of the Civil Code, as follows:
 ART. 1381. The following contracts are rescissible:

(1) Those which are entered in to by guardians

whenever the wards whom they represent
suffer lesion by more than one-fourth of the
value of the things which are the object
thereof;

(2) Those agreed upon in representation of

absentees, if the latter suffer the lesion stated
in the preceding number;

(3) Those undertaken in fraud of creditors

when the latter cannot in any other name
collect the claims due them;

(4) Those which refer to things under litigation

if they have been entered into by the
defendant without the knowledge and approval
of the litigants or of competent judicial
authority;

(5) All other contracts specially declared by law

to be subject to rescission.

ART. 1382. Payments made in a state of insolvency for

obligations to whose fulfillment the debtor could not be
compelled at the time they were effected, are also
rescissible."

In the case at bar, not one of the grounds mentioned above is present
which may be the subject of an action of rescission, much less can
petitioners say that the private respondent violated the terms of their
agreement-such as failure to deliver to them (Subdivision owners) the
proceeds of the purchase price of the lots.

Siasat v. IAC, 139 SCRA 238

CMS Logging v. Court of Appeals, GR No. L-41420, 10 July 1992

FACTS: CMS Logging Inc. and D.R. Aguinaldo Corp or DRACOR

entered into a 5-year contract of agency wherein CMS appointed
DRACOR as its exclusive export and sales agent for all logs that CMS
may produce with 5% commission.

ISSUE:

RULING:

Lim v. Saban, GR No. 163720, 16 December 2004

FACTS: Ybañez, as the owner of a parcel of land, authorized Saban to

sell the subject land for P200,000 and to mark up the selling price to
include other expenses as well as for his commission for the sale.
Saban thereafter was able to find buyers, one of which is Genevieve
Lim. Under the deed of sale, the lot is priced at P200,000 but the
vendees agreed to pay P600,000. The mark up worth P400,000
comprise the commission fees and taxes due on the transaction. PDCs
were issued by Lim. When Ybañez found out about this, he sent a
letter to Lim to cancel all the checks issued in favor of Saban. This
prompted Saban to file a case for collection of sum of money and
damages against Ybañez and Lim. Saban alleged that Ybañez and Lim
connived to deprive him of his sales commission by withholding
payment of the checks. For his part, For his part, Ybañez claimed that
Saban was not entitled to any commission because he concealed the
actual selling price from him and because he was not a licensed real
estate broker.

ISSUE: WON Saban is entitled to receive his commission from the

sale; and, assuming that Saban is entitled thereto, whether it is Lim
who is liable to pay Saban his sales commission.

RULING: The agency was not revoked since Ybañez requested Lim to
make stop payment orders only after the consummation of the sale.
To deprive Saban of his commission subsequent to the sale which was
consummated through his efforts would be a breach of his contract of
agency with Ybañez which expressly states that Saban would be
entitled to any excess in the purchase price after deducting
the P200,000.00 due to Ybañez and the transfer taxes and other
incidental expenses of the sale.
However, the agency was not one coupled with interest. In an agency
coupled with an interest, the agent’s interest must be in the subject
matter of the power conferred and not merely an interest in the
exercise of the power because it entitles him to compensation. When
an agent’s interest is confined to earning his agreed compensation, the
agency is not one coupled with an interest, since an agent’s interest in
obtaining his compensation as such agent is an ordinary incident of the
agency relationship.

Sanchez v. Medicard, GR No. 141525, 2 September 2005

FACTS: Medicard Phils Inc. appointed Carlos Sanchez as its special

corporate agent and as such he was to be given a commission based
on the “cash brought in”. Thereafter, Sanchez was able to bring a
contract between Medicard and Unilab wherein Unilab will pay
medicard a fixed monthly premium for health insurance of its
personnel. With this, Sanchez was able to get his commission. The
contract was renewed for another year and Sanchez was again able to
get his commission from the 2nd contract. Before the expiration of the
2nd contract, Medicard proposed an increase in the premium for the
next year which Unilab rejected for being too high. Fearing that the
termination of the health insurance will become prejudicial to its
personnel, Carlos Ejercito of Unilab negotiated with Dr Montoyo and
other officers of Medicard to discuss ways of continuing the insurance
coverage. A new scheme was agreed upon between Unilab and
Medicard. With the new scheme, Sanchez was no longer given any
commission. This prompted Sanchez to file a case for sum of money
against Medicard. The RTC dismissed the complaint which is affirmed
by CA. According to the CA there is no proof that the execution of the
new contract between the parties under the "cost plus" system is a
strategy to deprive petitioner of his commission; that Medicard did not
commit any fraudulent act in revoking its agency contract with
Sanchez; that when Unilab rejected Medicard’s proposal for an
increase of premium, their Health Care Program Contract on its third
year was effectively revoked; and that where the contract is
ineffectual, then the agent is not entitled to a commission.

ISSUE: WON the contract of agency has been revoked by Medicard,

hence, petitioner is not entitled to a commission.

RULING: It is clear that since Sanchez refused to reduce his

commission, Medicard directly negotiated with Unilab, thus revoking its
agency contract with petitioner. We hold that such revocation is
authorized by Article 1924 of the Civil Code which provides:
"Art. 1924. The agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third persons."

Moreover, as found by the lower courts, Sanchez did not render

services to Medicard, his principal, to entitle him to a commission.
There is no indication from the records that he exerted any effort in
order that Unilab and Medicard, after the expiration of the Health Care
Program Contract, can renew it for the third time. In fact, his refusal
to reduce his commission constrained Medicard to negotiate directly
with Unilab. We find no reason in law or in equity to rule that he is
entitled to a commission. Obviously, he was not the agent or the
"procuring cause" of the third Health Care Program Contract between
Medicard and Unilab.

B. Withdrawal

Art. 1928

Valera v. Velasco, GR No. L-28050, 13 March 1928

FACTS:

ISSUE:

RULING:

C. Death, Civil Interdiction, Insanity

Art. 1930 Art. 1931 Art. 1932

Pasno v. Ravina, 54 Phil 378

FACTS: Gabina Labitoria, during her lifetime, mortgaged 3 parcels of

land to PNB to secure a loan with a provision stating that the bank
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. When Gabina died, her will was presented
for probate and during the pendency of the probate proceedings, a
special administrator was appointed by the court who took possession
of the estate including the subject parcels of land. For failure to
comply with the mortgage obligations, PNB asked the sheriff to
proceed with the sale of the mortgaged parcels of land. The attorney
of the estate filed a motion to vacate such attachment.

ISSUE: WON the authority to sell given to PNB can be made despite
occurring after the death of the mortgagor.

RULING: 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.

Herrera v. Luy Kim Guan, 1 SCRA 406

FACTS: Luis Herrera who owned 3 parcels of land executed a general

power of attorney in favor of Kim Guan to administer and sell the Luis’
property. Thereafter, in the years 1937 and 1939, Kim Guan made
several transactions concerning the properties of Luis including
numerous sale and mortgage. Thereafter, according to Natividad
Herrera, Luis’ legitimate daughter, sought to recover the parcels of
land alleging that all of these transactions were fraudulent and were
executed after the death of Luis when the power of attorney was
already inoperative. However, no evidence was presented to confirm
Luis’ specific and precise date of death.

ISSUE: WON the death of Luis, although undetermined as to exact

date, extinguished the agency.

RULING:  The date of death of Luis Herrera has not been satisfactorily
proven. The only evidence presented by the Plaintiff-appellant in this
respect is a supposed letter received from a certain "Candi", dated at
Amoy in November, 1936, purporting to give information that Luis
Herrera (without mentioning his name) had died in August of that
year. This piece of evidence was properly rejected by the lower court
for lack of identification. the other hand, we have the testimony of the
witness Chung Lian to the effect that when he was in Amoy the year
1940, Luis Herrera visited him and had a conversation with him,
showing that the latter was still alive at the time. Since the documents
had been executed the attorney-in-fact one in 1937 and the other in
1939, it is evident, if we are to believe this testimony, that the
documents were executed during the lifetime of the principal. Be that
as it may, even granting arguendo that Luis Herrera did die in 1936,
plaintiffs presented no proof and there is no indication in the record,
that the age Luy Kim Guan was aware of the death of his prince at the
time he sold the property. The death of the principal does not render
the act of an agent unenforceable, where the latter had no knowledge
of such extinguishment the agency.

Rallos v. Felix Go Chan, GR No. L-24332, 31 January 1978

FACTS:

ISSUE:

RULING:

La Vina v. Court of Appeals, GR No. 78295 & 79917, 10 April

1989

FACTS:

ISSUE:

RULING: Carmen's death likewise divested Attorney Laviña of

authority to represent her as counsel. A dead client has no personality
and cannot be represented by an attorney. The Remedios Muyot’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.

Buado v. Layag, AC No. 5182, 12 August 2004

FACTS:

ISSUE:

RULING: