Agency Case Digest
November 17, 2024
COUNTRY BANKERS INSURANCE CORPORATION, petitioner, vs. KEPPEL CEBU
SHIPYARD, UNIMARINE SHIPPING LINES, INC., PAUL RODRIGUEZ, PETER
RODRIGUEZ, ALBERT HONTANOSAS, and BETHOVEN QUINAIN, respondents.
G.R. No. 166044 June 18, 2012.
Facts:
Unimarine, engaged Keppel Cebu Shipyard, herein respondents, for dry docking and
repair of M/V Pacific Fortune. Unimarine obtained a P3,000,000.00 surety bond from
CBIC, herein petitioner, through Quinain, herein private respondent. Unimarine failed to
pay the first installment; a post-dated check was dishonored. Thus, Cebu Shipyard filed
a complaint against Unimarine, CBIC, and Plaridel after repeated demands for payment
were ignored. On the other hand, CBIC claimed the bond was issued beyond Quinain's
authority and that Cebu Shipyard should have verified this. Hence, the petition.
Issue:
Whether the petitioner is liable for the unauthorized act of its agent?
Held:
No, the petitioner insurance company is not liable for the unauthorized act of its agent.
In a contract of agency, a person, the agent, binds himself to represent another, the
principal, with the latter’s consent or authority. By this legal fiction of representation, the
actual or legal absence of the principal is converted into his legal or juridical presence.
An agent’s act, even if done beyond the scope of his authority, may bind the principal if
he ratifies them, whether expressly or tacitly. It must be stressed though that only the
principal, and not the agent, can ratify the unauthorized acts, which the principal must
know.
Further, the scope of an agent’s authority is what appears in the written terms of the
power of attorney granted to him. Under Article 1878(11) of the Civil Code, a special
power of attorney is necessary to obligate the principal as a guarantor or surety.
In an Agency by Estoppel, the principal is solidarily liable to the agent even when the
latter has exceeded his authority, if the principal allowed him to act as though he had full
powers. However, for an agency by estoppel to exist, the following must be established:
1. The principal manifested a representation of the agent’s authority or knowingly allowed the
agent to assume such authority; 2. The third person, in good faith, relied upon such representation;
and 3. Relying upon such representation, such third person has changed his position to his
detriment.
Persons dealing with an assumed agent are bound at their peril, and if they would hold
the principal liable, to ascertain not only the fact of agency but also the nature and extent
of authority, and in case either is controverted, the burden of proof is upon them to prove
it.
EDUARDO V. LINTONJUA, JR. and ANTONIO K. LITONJUA, petitioners, vs.
ETERNIT CORPORATION (now ETERTON MULTI-RESOURCES
CORPORATION), ETEROUTREMER, S.A. and FAR EAST BANK & TRUST
COMPANY, respondents. G.R. No. 144805 June 8, 2006.
Facts:
Eternit Corporation (EC), herein respondent, owned eight parcels of land. Due to political
instability in the Philippines, ESAC decided to cease operations and instructed Michael
Adams, a member of EC's Board of Directors, to sell the properties. Adams enlisted
realtor Marquez, who offered the properties to Eduardo B. Litonjua, Jr, herein petitioner.
The Litonjua brothers counter-offered P20,000,000.00, which was communicated to
Claude Frederick Delsaux, ESAC's Regional Director for Asia. Delsaux countered with a
final offer of US$1,000,000.00 plus P2,500,000.00, which the Litonjua brothers accepted
and deposited in an escrow account. However, ESAC decided not to proceed with the
sale. The Litonjua brothers filed a complaint for specific performance and damages,
which the RTC of Pasig City dismissed, ruling the sale void due to lack of written
authority from EC's Board of Directors. Hence, the petition.
Issue:
Whether Marquez, Glanville, and Delsaux have the necessary authority as agents to do
acts within the scope of their authority to sell the properties?
Held:
No, Marquez, Glanville, and Delsaux have no authority to sell the properties. Any sale of
real property of a corporation by a person purporting to be an agent thereof but without
written authority from the corporation is null and void. The declarations of the agent
alone are generally insufficient to establish the fact or extent of his/her authority.
The consent of both the principal and agent is necessary to create an agency. The principal
must intend that the agent shall act for him; the agent must intend to accept the authority
and act on it, and the intention of the parties must find expression either in words or
conduct between them.
An agency may be expressed or implied from the act of the principal, from his silence or
lack of action, or his failure to repudiate the agency knowing that another person is acting
on his behalf without authority. An agency may be oral unless the law requires a specific
form. However, to create or convey real rights over immovable property, a special power
of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is
through an agent, the authority of the latter shall be in writing, otherwise, the sale shall
be void.
A person dealing with a known agent is not authorized, under any circumstances, blindly
to trust the agents—statements as to the extent of his powers—such person must not act
negligently but must use reasonable diligence and prudence to ascertain whether the
agent acts within the scope of his authority.
Agency by Estoppel to exist, the following must be established: 1. The principal
manifested a representation of the agent’s authority or knowingly allowed the agent to
assume such authority; 2. The third person, in good faith, relied upon such
representation; and 3. Relying upon such representation, such a third person has changed
his position to his detriment.
EUROTECH INDUSTRIAL TECHNOLOGIES, INC., petitioner, vs. EDWIN CUIZON
and ERWIN CUIZON, respondents. G.R. No. 167552, April 23, 2007.
Facts:
Eurotech Industrial Technologies, Inc., herein petitioner, imports and distributes
European industrial equipment in the Philippines. Impact Systems Sales, a sole
proprietorship owned by Erwin Cuizon, herein respondent, who is also the sales manager
of the said entity, is a customer of Eurotech. Impact Systems intended to purchase a
sludge pump priced at PHP 250,000 and made a down payment of PHP 50,000. However,
Eurotech refused to deliver the sludge pump until Impact Systems paid its outstanding
debt. Thereafter, Edwin Cuizon and Alberto de Jesus, Eurotech's general manager,
executed a Deed of Assignment of receivables from Toledo Power Corporation in favor
of Eurotech. Impact Systems collected the receivables from Toledo Power Corporation
despite the Deed of Assignment. Eurotech made numerous demands for payment but
received only partial payments. Thus, Eurotech sent a final demand letter stating Impact
Systems' total obligations. Due to non-compliance, Eurotech filed a complaint for a sum
of money, damages, and preliminary attachments against Edwin and Erwin Cuizon.
Hence, the petition.
Issue:
Whether Edwin Cuizon exceeded his authority as an agent warranting personal liability
and should be personally liable under Article 1897 of the New Civil Code?
Held:
Edwin did not fall under the New Civil Code exceptions that impose liability on an agent.
The underlying principle of the contract of agency is to accomplish results by using the
services of others, to do a great variety of things like selling, buying, manufacturing, and
transporting.
The elements of the contract of agency are; (1) consent, express or implied, of the parties
to establish the relationship; (2) the object is the execution of a juridical act in relation to
a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts
within the scope of his authority. However, two instances when an agent becomes
personally liable to a third person. The first is when he expressly binds himself to the
obligation and the second is when he exceeds his authority. In the last instance, the
agent can be held liable if he does not give the third party sufficient notice of his powers.
The Court holds that respondent Edwin does not fall within any of the exceptions
contained in this provision.
Further, the position of manager is unique in that it presupposes the grant of broad
powers with which to conduct the business of the principal. Furthermore, in case of
excess of authority by the agent, the law does not say that a third person can recover from
both the principal and the agent.
Thus, an agent acting within his authority as such, who did not acquire any right nor
incur any liability arising from a Deed, is not a real property in interest who should be
impleaded; A real party in interest stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit.
CELESTINA T. NAGUIAT, petitioner, vs. COURT OF APPEALS and AURORA
QUEAÑO, respondents. G.R. No. 118375, October 3, 2003.
Facts:
Queaño, herein private respondent, applied for a loan from Naguiat, herein petitioner.
Naguiat issued and endorsed two checks to Queaño and executed a Real Estate Mortgage
on the same date to secure the loan. Queaño issued a promissory note and a post-dated
check of P200,000.00 to Naguiat. The post-dated check, upon maturity, was dishonored
for insufficiency of funds and Queaño requested a stop payment arguing she never
received the proceeds, as the checks remained with Ruby Ruebenfeldt, allegedly
Naguiat’s agent. Hence, the petition.
Issue:
Whether Ruebenfeldt’s representations could be admitted against Naguiat based on
agency?
Held:
The Court held that sufficient evidence demonstrated an agency relationship between
Naguiat and Ruebenfeldt – either actual or ostensible. Additionally, the evidence showed
that the loan proceeds were not transferred to Queaño, thus Ruebenfeldt’s acts and
declarations, as Naguiat’s agent, bound Naguiat.
One who clothes another with apparent authority as his agent, and holds him out to the
public as such, cannot be permitted to deny the authority of such person to act as his
agent, to the prejudice of innocent third parties dealing with such person in good faith,
and in the honest belief that he is what he appears to be. Thus, Agency by Estoppel
applies.
PRIMITIVO SIASAT and MARCELINO SIASAT, petitioners, vs. INTERMEDIATE
APPELLATE COURT and TERESITA NACIANCENO, respondents. G.R. No. L-67889
October 10, 1985.
Facts:
Primitivo Siasat and Marcelino Siasat, herein petitioners, are the owners of United Flag
Industry. Nacianceno, herein private respondent, facilitated the purchase of one million
pesos worth of national flags by the Department of Education and Culture for public
schools. An agreement was formalized, granting Nacianceno authority to represent the
United Flag Industry in marketing their products with a 30% commission. First delivery
of 7,933 flags was made. However, Siasat revoked Nacianceno’s authority. After
receiving payment for the first delivery, Siasat offered Nacianceno only 5% of the amount
received, which she accepted under the assurance of full payment after the second
delivery. Respondent later learned that the petitioner had already received payment for
the Second delivery but did not give her commission. Hence, the petition.
Issue:
1.) Whether the respondent is an agent of the petitioners?
2.) Whether the contract of agency between the parties was entered into a fraudulent
representation?
3.) Whether the respondent is entitled to a commission on the second delivery despite the
revocation of agency?
Held:
1.)
Yes, the respondent is the agent of the petitioners. Where general words were employed
in an agreement that no restrictions were intended as to the manner the agency was to be
carried out or in the place where it was to be executed, a general agency is constituted.
The power granted to the respondent was so broad that it practically covers the
negotiations leading to, and the execution of, a contract of sale of petitioners' merchandise
with any entity or organization.
2.)
No. The petitioners would have exerted efforts to protect their interests by limiting the
respondent's authority. There was nothing to prevent the petitioners from stating in the
contract of agency that the respondent could represent them only in the Visayas or to
state that the Department of Education and Culture and the Department of National
Defense, which alone would need a million pesos worth of flags, are outside the scope of
the agency. As the trial court opined, it is incredible that they could be so careless after
being in the business for fifteen years.
3.)
Yes, the respondent is entitled to a commission. Since only one transaction was involved,
the Court denied the petitioners' contention that respondent Nacianceno was not entitled
to the stipulated commission on the second delivery because of the revocation of the
agency effected after the first delivery. The revocation of agency could not prevent the
respondent from earning her commission because as the trial court opined, it came too
late, the contract of sale having been already perfected and partly executed.
FRANCISCO A. VELOSO, petitioner, vs. COURT OF APPEALS, AGLALOMA B.
ESCARIO, assisted by her husband GREGORIO L. ESCARIO, the REGISTER OF
DEEDS FOR THE CITY OF MANILA, respondents, G.R. No. 102737 August 21, 1996.
Facts:
Veloso, herein petitioner, owned a parcel of land covered by Transfer Certificate of Title
No. 49138, duly registered. The said title was subsequently canceled and a new one,
Transfer Certificate of Title No. 180685, was issued in the name of Aglaloma B. Escario,
married to Gregorio L. Escario. Petitioner filed an action for annulment of documents,
reconveyance of property with damages, preliminary injunction, and/or restraining
order. Petitioner alleged therein that he was the absolute owner of the subject property
and he never authorized anybody, not even his wife, to sell it. He then verified with the
Registry of Deeds of Manila and there he discovered that his title was already canceled
in favor of defendant Escario. The transfer of property was supported by a General Power
of Attorney executed by Irma Veloso, wife of the petitioner and appearing as his attorney-
in-fact, and defendant Escario. Petitioner Veloso, however, denied having executed the
power of attorney and alleged that his signature was falsified. On the other hand, the
respondent alleged that she was a buyer in good faith and denied any knowledge of the
alleged irregularity. She allegedly relied on the general power of attorney of Irma Veloso
which was sufficient in form and substance and was duly notarized. Hence, the petition.
Issue:
Whether the sale valid?
Held:
Yes, the sale was valid. A notarized power of attorney carries with it the evidentiary
weight conferred upon it with respect to its due execution.
Respondent relied on the power of attorney presented by the petitioner’s wife, Irma.
Being the wife of the owner and having with her the title of the property, there was no
reason for the private respondent not to believe in her authority. Moreover, the power of
attorney was notarized and as such, carried with it the presumption of its due execution.
Thus, having had no inkling of any irregularity and having no participation thereof, the
private respondent was a buyer in good faith.
Thus, there was no need to execute a separate and special power of attorney since the
general power of attorney had expressly authorized the agent or attorney in fact the
power to sell the subject property. The special power of attorney can be included in the
general power when it is specified therein the act or transaction for which the special
power is required.
DR. TERESITO V. ORBETA, ENGRACIA O. HONGCUAY, DEOGRACIAS
HONGCUAY, JESUSA VDA. DE ORBETA, CORAZON VDA. DE PINILI,
SEGUNDINA T. ORBETA, ALFRED S. ORBETA, MARY ANN S. ORBETA,
MARILYN S. ORBETA, MAY LOIRDELIT S. ORBETA, ALAN S. ORBETA,
ALNASAR S. ORBETA, SHERWIN O. SISICAN, MARLON T. ORBETA, EDGARDO
ORBETA, MARIA LUISA LOCSIN, SOFIE M. CASTRO, PAZ C. VABSILLERO,
SALVADOR CABALLERO, NICOLAS M. DE CASTRO, MA. CORAZON
MONSERRAT, and MANUEL MONSERRAT, petitioners, vs.
PAUL B. SENDIONG, herein Represented by his ATTORNEY-IN-FACT MAE A.
SENDIONG, respondent, G.R. No. 155236 July 8, 2005.
Facts:
Montenegro sold a portion of the land to the spouses Maximo Orbeta and Basilisa Teves.
Orbeta, herein petitioner, sold the same land to the spouses Sendiong and Castellanes,
herein respondents. Over time, various claims arose between the Orbeta and Sendiong
families and their heirs concerning the property. However, the petitioners assert that the
respondent submitted a "false certification" on non-forum shopping, primarily on the
ground that the said certification was signed not by the respondent, but by his daughter,
Mae Sendiong, by the authority of a General Power of Attorney, which petitioners claim
was not specified for the purpose of filing the petition. Hence, the petition.
Issue:
Whether the certification against forum shopping valid, despite being signed by an
attorney-in-fact?
Held:
Yes, the certification against forum shopping is valid. A perusal of the General Power of
Attorney shows that Mae Sendiong is empowered, among others, "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 "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."
A special power of attorney simply refers to a clear mandate specifically authorizing the
performance of a specific power and express acts subsumed therein—a general power of
attorney may include a special power if such special power is mentioned or referred to
in the general power. Neither would the fact that the document is captioned “General
Power of Attorney” militate against its construction as granting specific powers to the
agent pertaining to the petition for annulment of judgment.
LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, and JULIAN MERCADO, JR.,
represented by their Attorney-In-Fact, ALFREDO M. PEREZ, petitioners, vs. ALLIED
BANKING CORPORATION, respondent, G.R. No. 171460, July 24, 2007.
Facts:
Perla N. Mercado executed a Special Power of Attorney (SPA) in favor of her husband,
Julian D. Mercado, herein petitioner. The SPA authorized Julian to manage, sell, and
mortgage Perla’s properties, which included properties in Oriental Mindoro, Susana
Heights, Muntinlupa, and Cavite. Julian obtained loans from Allied Banking
Corporation, using a property covered by TCT No. RT-18206 (106338) as security, which
was not included in the SPA. However, Mercado defaulted on the loans, leading to
foreclosure and an auction sale where Allied Banking Corporation was the highest
bidder. Petitioners sought annulment of the real estate mortgage and foreclosure
proceedings, arguing the SPA did not cover the property and was revoked by Perla on
March 10, 1993. Hence, the petition.
Issue:
Whether Perla Mercado intend to include the subject property in the SPA?
Held:
No, the subject property was not among those enumerated therein. A special power of
attorney is necessary in cases where real rights over immovable property are created or
conveyed. The SPA likewise authorized Julian “[t]o exercise any or all acts of strict
dominion or ownership” over the identified properties, and rights and interest therein.
The existence and due execution of this SPA by Perla was not denied or challenged by
petitioners. The instrument will be held to grant only those powers which are specified
therein, and the agent may neither go beyond nor deviate from the power of attorney.
Thus, where powers and duties are specified and defined in an instrument, all such
powers and duties are limited and are confined to those which are specified and defined,
and all other powers and duties are excluded.
LAUREANO T. ANGELES, petitioner, vs. PHILIPPINE NATIONAL RAILWAYS
(PNR) AND RODOLFO FLORES, respondents, G.R. No. 150128 August 31, 2006.
Facts:
Laureano T. Angeles, herein petitioner, filed a complaint against the Philippine National
Railways and its corporate secretary, Rodolfo Flores, herein respondents, for specific
performance and damages. This case stemmed from when PNR accepted Gaudencio
Romualdez's offer to purchase scrap/unserviceable rails on an "AS IS, WHERE IS" basis
for P96,600.00. Romualdez authorized Lizette R. Wijanco (the petitioner's deceased wife)
to act as his representative for withdrawing the rails. PNR suspended the withdrawal
due to documentary discrepancies and reported pilferages. Thus, the petitioner
demanded a refund of the P96k but PNR refused. While the case was pending, Lizette
died and was substituted by her husband, Laureano Angeles and heirs. Hence, the
petition.
Issue:
Whether Lizette was an agent and not an assignee?
Held:
Yes, Lizette is merely an agent and has no legal standing. Generally, the agent has neither
rights nor liabilities against the third party. He cannot thus sue or be sued on the contract.
Since a contract may be violated only by the parties thereto as against each other, the real
party-in-interest, either as plaintiff or defendant in an action upon that contract must,
generally, be a contracting party.
However, the legal situation is different where an agent is constituted as an assignee. In
such a case, the agent may, on his behalf, sue on a contract made for his principal, as an
assignee of such contract. The rule requiring every action to be prosecuted in the name of
the real party-in-interest recognizes the assignment of rights of action and also recognizes
that when one has a right assigned to him, he is then the real party-in-interest and may
maintain an action upon such claim or right.
A power of attorney is only but an instrument in writing by which a person, as principal,
appoints another as his agent and confers upon him the authority to perform certain
specified acts on behalf of the principal. The written authorization itself is the power of
attorney, and this is indicated by the fact that it has also been called a “letter of attorney.”
SHOPPER’S PARADISE REALTY & DEVELOPMENT CORPORATION, petitioner,
vs. EFREN P. ROQUE, respondent, G.R. No. 148775, January 13, 2004.
Facts:
Shopper's Paradise Realty & Development Corporation, represented by its president
Veredigno Atienza, herein petitioners, entered into a twenty-five-year lease agreement
with Dr. Felipe C. Roque. The property was covered by Transfer Certificate of Title (TCT)
No. 30591 in Dr. Roque's name. The Contract of Lease and Memorandum of Agreement
were both notarized but were not annotated due to the demise of Dr. Roque, thus, was
represented by his son/heir, Efren P. Roque, herein respondent, but without an
agreement. Because of this, the petitioners filed a case for annulment of the Contract of
Lease and Memorandum of Agreement. On the other hand, the respondent alleged that
he was the owner of the subject property by a deed of donation inter-vivos executed by
his parents and that Dr. Roque was only delegated with the administration of the
property when he left for United States. Hence, the petition.
Issue:
Whether the respondent is barred by laches?
Held:
No, the respondent is not barred by laches. Laches, in its real sense, is the failure or
neglect, for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned or declined to assert it. It must be noted
that during their negotiation, the petitioner, through its representatives, was apprised of
the fact that the subject property belonged to the respondent. It was not shown that Dr.
Felipe C. Roque had been an authorized agent of respondent.
The lease of real property for more than one year is considered not merely an act of
administration but an act of strict dominion or ownership, thus, a special power of
attorney is necessary for its execution through an agent.
VICTORIAS MILLING CO., INC., petitioner, vs. COURT OF APPEALS and
CONSOLIDATED SUGAR CORPORATION, respondents, G.R. No. 117356, June 19,
2000.
Facts:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co
(VMC), herein private respondent. In the course of their dealings, VMC issued several
Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these
was SLDR No. 1214M. SLDR No. 1214M. STM sold to Consolidated Sugar Corporation
(CSC), herein private respondent, its rights in the same SLDR, issued checks in payment.
That same day, the private respondent wrote petitioner that it had been authorized by
STM to withdraw the sugar covered by the said SLDR. Enclosed in the letter were a copy
of SLDR No. 1214M and a letter of authority from STM authorizing CSC to “withdraw
for and on our behalf the refined sugar covered by the SLDR”. On the other hand, CSC
demanded the release of the 23,000 undelivered bags but to no avail. Consequently, they
initiated a complaint for specific performance against STM and VMC. However, legal
proceedings solely continued against VMC with Teresita Ng Go (owner of STM) taking
the stand as CSC’s witness instead. Hence, the petition.
Issue:
Whether the private respondent is an agent, thereby estopped from suing as an assignee
of SLDR No. 1214M?
Held:
No, the respondent was not an agent. It is clear from Article 1868 that the basis of agency
is representation. On the part of the principal, there must be an actual intention to appoint
or an intention naturally inferable from his words or actions; and on the part of the agent,
there must be an intention to accept the appointment and act on it, and in the absence of
such intent, there is generally no agency. One factor that most clearly distinguishes
agency from other legal concepts is control; one person—the agent—agrees to act under
the control or direction of another—the principal. Indeed, the very word “agency” has
come to connote control by the principal. The control factor, more than any other, has
caused the courts to put contracts between principal and agent in a separate category.
An authorization given to another containing the phrase “for and in our behalf” does not
necessarily establish an agency, as ultimately, what is decisive is the intention of the
parties, and the use of the words “sold and endorsed” means that the parties intended a
contract of sale and not an agency.
REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in
his capacity as former Chief of the Intelligence Service, Armed Forces of the
Philippines (ISAFP), and former Commanding General, Presidential Security Group
(PSG), and MAJ. DAVID B. DICIANO, in his capacity as an Officer of ISAFP and
former member of the PSG, petitioners, vs. HON. VICTORINO EVANGELISTA, in
his capacity as Presiding Judge, Regional Trial Court, Branch 223, Quezon City, and
DANTE LEGASPI, represented by his attorney-in-fact, Paul Gutierrez, respondent,
G.R. No. 156015. August 11, 2005.
Facts:
Dante Legaspi, represented by his attorney-in-fact Paul Gutierrez, herein private
respondents, filed the complaint against military officers Gen. Jose M. Calimlim, herein
petitioner, Ciriaco Reyes, and Maj. David Diciano. The petitioner, representing the
Republic of the Philippines and as head of ISAFP and PSG, entered into a Memorandum
of Agreement (MOA) with Ciriaco Reyes, granting Reyes a permit to hunt for treasure on
Legaspi's land. Legaspi executed a Special Power of Attorney (SPA) appointing his
nephew, Gutierrez, as his attorney-in-fact. Gutierrez was promised 40% of any treasure
found. However, Gutierrez filed a complaint for damages and injunction against the
petitioners for illegal entry, hiring Atty. Homobono Adaza. Their contract entitled Atty.
Adaza to 30% of Legaspi’s share of any treasure and P5,000.00 per court hearing.
Petitioners filed a Motion to Dismiss arguing Gutierrez’s SPA was revoked by Legaspi
on March 7, 2000, with a Deed of Revocation as evidence. Hence, the petition.
Issue:
Whether the contract of agency between Legaspi and Gutierrez has been effectively
revoked?
Held:
No, the contract of agency between Legaspi and Gutierrez is not revocable at will. A
contract of agency is generally revocable as it is a personal contract of representation
based on trust and confidence reposed by the principal in his agent. As the power of the
agent to act depends on the will and license of the principal he represents, the power of
the agent ceases when the will or permission is withdrawn by the principal. Thus,
generally, the agency may be revoked by the principal at will.
However, the revocability of a contract of agency is when it is coupled with interest, i.e.,
if a bilateral contract depends upon the agency. The reason for its irrevocability is that
the agency becomes part of another obligation or agreement. It is not solely the rights of
the principal but also that of the agent and third persons who are affected. Hence, the law
provides that in such cases, the agency cannot be revoked at the sole will of the principal.
The Court agreed that the agency granted by Legaspi to Gutierrez is coupled with interest
as a bilateral contract depends on it. It is clear from the records that Gutierrez was given
by Legaspi, inter alia, the power to manage the treasure-hunting activities in the subject
land; to file any case against anyone who enters the land without authority from Legaspi;
to engage the services of lawyers to carry out the agency; and, to dig for any treasure
within the land and enter into agreements relative thereto.
This bilateral contract depends on the agency and thus renders it as one coupled with
interest, irrevocable at the sole will of the principal Legaspi. When an agency is
constituted as a clause in a bilateral contract, that is, when the agency is inserted in
another agreement, the agency ceases to be revocable at the pleasure of the principal as
the agency shall now follow the condition of the bilateral agreement. Consequently, the
Deed of Revocation executed by Legaspi has no effect. The authority of Gutierrez to file
and continue with the prosecution of the case at the bar is unaffected.
GENEVIEVE LIM, petitioner, vs. FLORENCIO SABAN, respondent, G.R. No. 163720
December 16, 2004.
Facts:
Ybañez entered into a Contract of Agency and authorized Saban, herein respondent, to
look for a buyer of the lot for Two Hundred Thousand Pesos (P200,000.00) and to mark
up the selling price to include the amounts needed for payment of taxes, transfer of title
and other expenses incident to the sale, as well as Saban's commission for the sale. Saban
facilitated the sale of the lot to Genevieve Lim, herein petitioner, and the spouses
Benjamin and Lourdes Lim. Lim issued checks to Saban as partial payment but later
canceled them at Ybañez's request. After the four checks in his favor were dishonored
upon presentment, Saban filed a complaint for collection of the sum of money and
damages against Ybañez and Lim Saban alleged that Ybañez told Lim that he (Saban)
was not entitled to any commission for the sale since he concealed the actual selling price
of the lot from Ybañez and because he was not a licensed real estate broker. Ybañez was
able to convince Lim to cancel all four checks. Hence, the petition.
Issue:
Whether Saban is entitled to a commission?
Held:
Yes, Saban is entitled to a commission. The Court recognized the right of a broker to his
commission for finding a suitable buyer for the seller’s property even though the seller
himself consummated the sale with the buyer. The Court held that it would be at the
height of injustice to permit the principal to terminate the contract of agency to the
prejudice of the broker when he had already reaped the benefits of the broker’s efforts.
The Court upheld the right of the brokers to their commissions although the seller
revoked their authority to act on his behalf after they had found a buyer for his properties
and negotiated the sale directly with the buyer whom he met through the brokers’ efforts.
The Court ruled that the seller’s withdrawal in bad faith of the brokers’ authority cannot
unjustly deprive the brokers of their commissions as the seller’s duly constituted agents.
Further, an agency is deemed as one coupled with an interest where it is established for
the mutual benefit of the principal and of the agent, or for the interest of the principal and
of third persons, and it cannot be revoked by the principal so long as the interest of the
agent or a third person subsists. 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.
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS,
petitioner, vs. FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF
APPEALS, respondents, G.R. No. L-24332, January 31, 1978.
Facts:
A Special Power of Attorney was executed by sisters Concepcion and Gerundia Rallos,
herein petitioners, in favor of their brother Simeon for the sale of a parcel of land co-
owned by the two. Months after Conception died, Simeon sold the undivided shares of
his sisters to Felix Go Chan & Realty Corp, herein respondent. However, Concepcion
Rallos passed away, despite knowing about Concepcion’s death, Simeon sold the
undivided shares to Felix Go Chan & Sons Realty Corporation. The sale was registered,
and a new Transfer Certificate of Title was issued to the vendee. Ramon Rallos filed a
complaint to nullify the sale and recover Concepcion's share. Hence, the petition.
Issue:
Whether the death of the principal terminate the agency?
Held:
Yes, the death of the principal terminates the agency. By the relationship of agency, one
party called the principal authorizes another called the agent to act for and on his behalf
in transactions with third persons. The essential elements of agency are:(l) there is
consent, express or implied, of the parties to establish the relationship: (2) the object is the
execution of a juridical act concerning a third person; (3) the agent acts as a representative
and not for himself; and (4) the agent acts within the scope of his authority. The agency
is personal, representative, and derivative. The authority of the agent to act emanates
from the powers granted to him by his principal; his act is the act of the principal if done
within the scope of the authority. “He who acts through another acts himself.”
Reason of the very nature of the relationship between principal and agent, agency is
extinguished by the death of the principal. Manresa explains that the rationale for the law
is found in the juridical basis of agency which is representation. The juridical tie between
the principal and the agent is severed ipso jure upon the death of either without the
necessity for the heirs of the principal to notify the agent of the fact of the death of the
former.
However, Under Art. 1931 of the Civil Code, an act done by the agent after the death of
his principal is valid and effective only under two conditions, viz: (1) that the agent acted
without knowledge of the death of the principal, and (2) that the third person who
contracted with the agent himself acted in good faith. Good faith here means that the
third person was not aware of the death of the principal at the time he contracted with
said agent. These two requisites must concur: the absence of one will render the act of the
agent invalid and unenforceable.
Any act of an agent after the death of his principal is void ab initio unless the same falls
under the exceptions provided for in the aforementioned Articles 1930 and 1931. Article
1931, being an exception to the general rule, is to be strictly construed; it is not to be given
an interpretation or application beyond the clear import of its terms for otherwise the
courts will be involved in a process of legislation outside of their judicial function.
Revocation by an act of the principal as a mode of terminating an agency is to be
distinguished from revocation by operation of law such as the death of the principal
which obtains in this case. The decision stressed that by reason of the very nature of the
relationship between principal and agent, the agency is extinguished ipso jure upon the
death of either principal or agent. Although a revocation of a power of attorney to be
effective must be communicated to the parties concerned, a revocation by operation of
law, such as by death of the principal is, as a rule, instantaneously effective inasmuch as
“by legal fiction the agent’s exercise of authority is regarded as an execution of the
principal’s continuing will.” With death, the principal’s will ceases or is terminated; the
source of authority is extinguished.
