OBLIGATIONS OF THE PRINCIPAL Because of the bad faith of the defendant/third-party plaintiff in its shirk its responsibility for

shirk its responsibility for such frauds, even though no benefit

breach of its contract with the plaintiffs, the latter are, therefore, may accrue to the bank therefrom (10 Am Jur 2d, p. 114).
1. PRUDENTIAL BANK vs. CA entitled to an award of moral damages. Accordingly, a banking corporation is liable to innocent third
G.R. No. 108957 June 14, 1993 There is no question that the petitioner was made liable for its persons where the representation is made in the course of its
failure or refusal to deliver to Cruz the amount she had deposited business by an agent acting within the general scope of his
FACTS: Private respondent Aurora F. Cruz filed a complaint for with it and which she had a right to withdraw upon its maturity. authority even though, in the particular case, the agent is secretly
breach of contract against Prudential Bank in the Regional Trial That investment was acknowledged by its own employees, who abusing his authority and attempting to perpetrate a fraud upon
Court of Quezon City. She demanded the return of her money had the apparent authority to do so and so could legally bind it by his principal or some other person, for his own ultimate benefit
with interest, plus damages and attorney's fees. its acts vis-a-vis Cruz. Whatever might have happened to the (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR
investment — whether it was lost or stolen by whoever — was 1021.)
Controversy arose when Cruz sought to withdraw her not the concern of the depositor. It was the concern of the bank.
P200,000.00 invested by her evidenced by a Confirmation of Application of these principles in especially necessary because
Sale delivered to Cruz two days later, together with a Debit As far as Cruz was concerned, she had the right to withdraw her banks have a fiduciary relationship with the public and their
Memo in the amount withdrawn and applied to the confirmed sale P200,000.00 placement when it matured pursuant to the terms of stability depends on the confidence of the people in their honesty
issued by Susan Quimbo, the employee of the bank to whom her investment as acknowledged and reflected in the and efficiency. Such faith will be eroded where banks do not
Cruz was referred and who was apparently in charge of such Confirmation of Sale. The failure of the bank to deliver the exercise strict care in the selection and supervision of its
transactions. amount to her pursuant to the Confirmation of Sale constituted its employees, resulting in prejudice to their depositors.
breach of their contract, for which it should be held liable.
However, after verification of her records, she was informed that It would appear from the facts established in the case before us
the investment appeared to have been already withdrawn by her The liability of the principal for the acts of the agent is not even that the petitioner was less than eager to present Quimbo at the
on August 25, 1986. There was no copy on file of the debatable. Law and jurisprudence are clearly and absolutely trial or even to establish her liability although it made the initial
Confirmation of Sale and the Debit Memo allegedly issued to her against the petitioner. effort — which it did not pursue — to hold her answerable in the
by Quimbo. third-party complaint. What ever happened to her does not
Such liability dates back to the Roman Law maxim, Qui per alium appear in the record. Her absence from the proceedings feeds
Accordingly, RTC of Quezon City ruled in her favor. facit per seipsum facere videtur. "He who does a thing by an the suspicion of her possible misdeed, which the bank seems to
1 AGENCY: Obligations of the Principal (Arts. 1910 to 1918)
agent is considered as doing it himself." This rule is affirmed by have studiously ignored by its insistence that the missing money
Unsatisfied, petitioner bank appealed the lower court’s decision the Civil Code thus: had been actually withdrawn by Cruz. By such insistence, the
but the latter affirmed the decision. bank is absolving not only itself but also, in effect and by
Art. 1910. The principal must comply with all the obligations extension, the disappeared Quimbo who apparently has much to
ISSUE: WHETHER OR NOT THE PETITIONER BANK IS NOT which the agent may have contracted within the scope of his explain.
LIABLE. authority.
2. CUISON vs. CA
RULING: No. Petitioner bank is liable. Art. 1911. Even when the agent has exceeded his authority, G.R. No. 88539 October 26, 1993
the principal is solidarily liable with the agent if the former
The Supreme Court finds that the Court of Appeals held the bank allowed the latter to act as though he had full powers. FACTS: Kue Cuison is a sole proprietorship engaged in the
liable on a quasi-delict. The argument of the petitioner on this purchase and sale of newsprint, bond paper and scrap.
issue is pallid, to say the least, consisting as it does only of the Conformably, we have declared in countless decisions that
observation that the article cited by the respondent court on the the principal is liable for obligations contracted by the agent. Valiant Investment Associates delivered various kinds of paper
agent's liability falls under the heading in the Civil Code on quasi- The agent's apparent representation yields to the principal's products to a certain Tan. The deliveries were made by Valiant
delicts. On the other hand, the respondent court clearly declared true representation and the contract is considered as pursuant to orders allegedly placed by Tiac who was then
that: entered into between the principal and the third person. employed in the Binondo office of petitioner. Upon delivery, Tan
paid for the merchandise by issuing several checks payable to
cash at the specific request of Tiac. In turn, Tiac issued nine (9)
The defendant/third-party plaintiff being liable for the return of the A bank is liable for wrongful acts of its officers done in the postdated checks to Valiant as payment for the paper products.
P200,000.00 placement of the plaintiffs, the extent of the liability interests of the bank or in the course of dealings of the officers in Unfortunately, sad checks were later dishonored by the drawee
of the defendant/third-party plaintiff for damages resultant their representative capacity but not for acts outside the scope of bank.
thereof, which is contractual, is for all damages which may be their authority. (9 c.q.s. p. 417) A bank holding out its officers and
reasonably attributed to the non-performance of the agent as worthy of confidence will not be permitted to profit by Thereafter, Valiant made several demands upon petitioner to pay
obligation, . . . the frauds they may thus be enabled to perpetrate in the for the merchandise in question, claiming that Tiac was duly
apparent scope of their employment; nor will it be permitted to authorized by petitioner as the manager of his Binondo office, to

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 enter into the questioned transactions with Valiant and Tan. Tiac, therefore, by petitioner’s own representations and ISSUE: Whether or not Yangco as principal is liable brought by
Petitioner denied any involvement in the transaction entered into manifestations, became an agent of petitioner by estoppel, an the sale of the produce
by Tiac and refused to pay Valiant. admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against RULING: Yes.
the person relying thereon (Article 1431, Civil Code of the Yangco, as principal is liable. Having advertised the fact that
Left with no recourse, private respondent filed an action against
Philippines). A party cannot be allowed to go back on his own Collantes was his agent and having given special notice to Rallos
petitioner for the collection of sum of money representing the
acts and representations to the prejudice of the other party who, of that fact, and having given them a special invitation to deal with
price of the merchandise. After due hearing, the trial court
in good faith, relied upon them. Taken in this light,. petitioner is such agent, it was the duty of Yangco on the termination of the
dismissed the complaint against petitioner for lack of merit. On
liable for the transaction entered into by Tiac on his behalf. Thus, relationship of the principal and agent to give due and timely
appeal, however, the decision of the trial court was modified, but
even when the agent has exceeded his authority, the principal is notice thereof to Rallos. Failing to do so, he is responsible to
was in effect reversed by the CA. CA ordered petitioner to pay
solidarily liable with the agent if the former allowed the latter to them for whatever goods may have been in good faith and
Valiant with the sum plus interest, AF and costs.
fact as though he had full powers (Article 1911 Civil Code), as in without negligence sent to the agent without knowledge, actual or
the case at bar. constructive, of the termination of such relationship.
ISSUE: WON Tiac possessed the required authority from
petitioner sufficient to hold the latter liable for the disputed
Finally, although it may appear that Tiac defrauded his principal EXTINGUISHMENT OF AGENCY
transaction.
(petitioner) in not turning over the proceeds of the transaction to
the latter, such fact cannot in any way relieve nor exonerate 1. COLEONGCO vs. CLAPAROLS
RULING: Yes. petitioner of his liability to private respondent. For it is an GR No. L-18616. March 31, 1964.
equitable maxim that as between two innocent parties, the one
who made it possible for the wrong to be done should be the one FACTS: Since 1951, defendant-appellee, Eduardo L. Claparols,
As to the merits of the case, it is a well-established rule that one to bear the resulting loss. operated a factory for the manufacture of nails in Talisay,
who clothes another with apparent authority as his agent and
holds him out to the public as such cannot be permitted to deny Occidental Negros, under the style of "Claparols Steel & Nail
the authority of such person to act as his agent, to the prejudice Plant". The raw material, nail wire, was imported from foreign
of innocent third parties dealing with such person in good faith 3. RALLOS vs. YANGCO sources, specially from Belgium; and Claparols had a regular
and in the honest belief that he is what he appears to be G.R. No. 6906 September 27, 1911 dollar allocation therefor, granted by the Import Control
Commission and the Central Bank. The marketing of the nails
FACTS: Teodoro Yangco sent Florentino Rallos a letter inviting was handled by the "ABCD Commercial" of Bacolod, which was
2 It matters not whether the representations are intentional or the latter to be the consignor in buying and selling of leaf tobacco AGENCY:
owned by Obligations of the Kho
a Chinaman named Principal
To. (Arts. 1910 to 1918)
merely negligent so long as innocent, third persons relied upon and other native products. Terms and conditions were also
such representations in good faith and for value. contained in the letter. Losses compelled Claparols in 1953 to look for someone to
finance his imports of nail wires. At first, Kho To agreed to do the
Article 1911 of the Civil Code provides: Accepting the invitation, Rallos proceeded to do a considerable financing but later he introduced his compadre, appellant Vicente
business with Yangco through the Mr. Florentino Collantes, as Coleongco, to Claparols, recommending said appellant to be the
his factor, sending to him as agent for Yangco a good deal of financier in the stead of Kho To.
“Even when the agent has exceeded his authority, the produce to be sold on commission.
principal is solidarily liable with the agent if the former Claparols agreed, and on April 25 of that year a contract (Exhibit
allowed the latter to act as though he had full powers.” Later, and in the month of February 1909, Rallos sent to the said B) was perfected between them whereby Coleongco undertook to
Collantes, as agent for Yangco, 218 bundles of tobacco in the finance and put up the funds required for the importation of the
The above-quoted article is new. It is intended to protect the leaf to be sold on commission, as had been other produce nail wire, which Claparols bound himself to convert into nails at
rights of innocent persons. In such a situation, both the principal previously. The said Collantes received said tobacco and sold it his plant. It was agreed that:
and the agent may be considered as joint tortfeasors whose for the sum of P1,744. The charges for such sale were P206.96,
liability is joint and solidary. leaving in the hands of said Collantes the sum of 1,537.08 1. Coleongco would have the exclusive distribution of the
belonging to Rallos. This sum was, apparently, converted to his product, and the "absolute care in the marketing of
own use by said agent. It appears, however, that prior to the these nails and the promotion of sales all over the
It is evident from the records that by his own acts and admission, sending of said tobacco, Yangco had severed his relations with Philippines", except the Davao Agency;
petitioner held out Tiac to the public as the manager of his store Collantes and that the latter was no longer acting as his factor. 2. Coleongco would "share the control of all the cash"
in Binondo. More particularly, petitioner explicitly introduced to This fact was not known to Rallos; and it is conceded in the case from sales or deposited in banks; that he would have a
Villanueva, Valiant’s manager, as his (petitioner’s) branch that no notice of any kind was given by Yangco of the termination representative in the management;
manager as testified to by Villanueva. Secondly, Tan, who has of the relations between Yangco and his agent, Collantes. 3. all contracts and transactions should be jointly
been doing business with petitioner for quite a while, also testified approved by both parties;
that she knew Tiac to be the manager of the Binondo branch. Yangco thus refused to pay the said sum upon demand of Rallos, 4. proper books would be kept and annual accounts
Even petitioner admitted his close relationship with Tiu Huy Tiac placing such refusal upon the ground that at the time the said rendered; and that profits and losses would be shared
when he said that they are “like brothers” There was thus no tobacco was received and sold by Collantes, he was acting "on a 50-50 basis".
reason for anybody especially those transacting business with personally and not as agent of Yangco.
petitioner to even doubt the authority of Tiac as his manager in
the Binondo branch.

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 The contract was renewed from one year to year until 1958, and the rescission of the agreement with Coleongco for P561,387.99 usual monthly advances to Claparols on account of nail sales in
Coleongco's share subsequently increased by 5% of the net profit by way of damages. order to squeeze said appellee and compel him to extend the
of the factory.Two days after the execution of the basic contract entitling Coleongco to share in the profits of the nail
agreement, on April 27, 1953, Claparols executed in favor of The Court of First Instance of Negros Occidental ordered the factory on better terms, and ultimately "own his factory", a plan
Coleongco, at the latter's behest a special power of attorney to: dismissal of the plaintiff's action for damages, and ordering him to carried out by Kho's letter, reducing: the advances to Claparols;
1. open and negotiate letters of credit, to sign contracts, pay defendant Eduardo Claparols the amount of P81,387.27 plus Coleongco's attempt to have Romulo Agsam pour acid on the
bills of lading, invoices, and papers covering legal interest from the filing of the counterclaim till payment machinery; his illegal diversion of the profits of the factory to his
transactions; thereof; P50,000 as moral and compensatory damages suffered own benefit; and the surreptitious disposition of the Yates band
2. represent appellee and the nail factory; and by defendant; and costs. A writ of preliminary attachment for the resaw machine in favor of his cousin's Hong Shing Lumber Yard,
3. accept payments and cash advances from dealers and sum of P 100,000 was subsequently issued against plaintiff's made while Claparols was in Baguio in July, are plain acts of
distributors. properties, in spite of opposition thereto. deliberate sabotage by the agent that fully justified the revocation
of the power of attorney by Claparols and his demand for an
Thereafter, Coleongco also became the assistant manager of the Aggrieved, Plaintiff Coleongco, appealed to this Court directly. He accounting from his agent Coleongco.
factory, and took over its business transactions, while Claparols contended that the power of attorney was made to protect his
devoted most of his time to the nail manufacture processes. interest under the financing agreement and was one coupled with Caleongco attempts to justify his letter to the Philippine National
an interest that Claparols had no legal power to revoke. Bank, claiming that Claparols' mal-administration of the business
Sometime after, Claparols received a service of an alias writ of endangered the security for the advances that he had made
execution to enforce a judgment obtained against him by the Hence, this petition. under the financing contract. But if that were the case, it is to be
Philippine National Bank, despite the fact that on the preceding expected that Coleongco would have first protested to Claparols
September he had submitted an amortization plan to settle the ISSUE: Whether the power of attorney was made to protect himself, which he never did. Appellant likewise denies the
account. Worried and alarmed, Claparols immediately left for Caleongco’s interest under the financing agreement and was one authorship of the letter to Kho as well as the attempt to induce
Manila to confer with the bank authorities. Upon arrival, he coupled with an interest that 'Claparols had no legal power to Agsam to damage the machinery of the factory.
learned to his dismay that the execution had been procured revoke.
because of derogatory information against appellee that had The court see no reason to alter the lower court's conclusion on
reached the bank from his associate, appellant Coleongco. And RULING: This point cannot be sustained. the value of the evidence before it, considering that Kho's letter to
this he has started to discover all the betrayal acts of Coleongco. Claparols plainly corroborates and dovetails with the plan outlined
The financing agreement itself already contained clauses for the in Coleongco's own letter, signed by him, and that the credibility
Caleonco’s Betrayal acts: protection of appellant's interest, and did not call for the execution of Coleongco is affected adversely by his own admission of his
3 1. He wrote PNB that saying that he had acquired the of any power of attorney in favor of Coleongco. But granting AGENCY:
having beenObligations
previously of the Principal
convicted (Arts.
of estafa, 1910 that
a crime to 1918)
implies
whole interest of Claparols in the plant and factory appellant's view, it must not be forgotten that a power of moral turpitude. Even disregarding Coleongco's letter to his son-
2. He wrote another letter that to the bank wherein he attorney although coupled with interest in a partnership can in-law that so fully reveals Coleongco's lack of business scruples,
charged Claparols of taking the machines mortgaged be revoked for a just cause, such as when the attorney-in- the clear preponderance of evidence is against appellant.
to the bank fact betrays the interest of the principal, as what happened
3. He proposed to Agsam, the machinery superintendent in the case at bar. It is not open to serious doubt that the The action of plaintiff-appellant for damages and lost profits due
of the company, that the latter shoud pour acid on the irrevocability of the power of attorney may not be used to to the discontinuance of the financing agreement, may not
machinery to paralyze the factory shield the perpetration of acts in bad faith, breach of prosper, because the record shows that the appellant likewise
4. He wrote a letter to Kho To where he instructed Kho To confidence, or betrayal of trust, by the agent for that would breached his part of the contract. The basic rule of contracts
cut his monthly advances to Claparols. He also amount to holding that a power coupled with an interest requires parties to act loyally toward each other in the pursuit of
mentioned their plan (Caleongco & Kho To) plan to authorizes the agent to commit frauds against the principal. the common end, and appellant clearly violated the rule of good
acquire the ownership of the factory faith prescribed by Art. 1315 of the new Civil Code.
5. He surreptitiously disposed the Yates band resaw Our new Civil Code, in Article 1172, expressly provides the
machine in favor of his cousin’s lumber yard. contrary in prescribing that responsibility arising from fraud is 2. RALLOS vs. FELIX GO CHAN & SONS REALTY
demandable in all obligations, and that any waiver of action for CORPORATION and COURT OF APPEALS
Fortunately, Claparols managed to arrange matters with the future fraud is void. It is also on this principle that the Civil Code, GR No. L-24332 January 31, 1978.
bank. Incensed at what he regarded as disloyalty of his attorney- in its Article 1800, declares that the powers of a partner,
in-fact, he revoked the power of attorney and informed appointed as manager, in the articles of co-partnership are FACTS: Concepcion and Gerundia Rallos were sisters and
Coleongco thereof by registered mail, demanding a full irrevocable without just or lawful cause; and an agent with power registered co-owners of a parcel of land in Cebu known as Lot
accounting at the same time. He also dismiss Coleongco as coupled with an interest cannot stand on better ground than such No. 5983 covered by Transfer Certificate of Title No. 11116. On
assistant manager of the plant and ask the auditors to go over a partner in so far as irrevocability of the power is concerned. April 21, 1954, the sisters executed a special power of attorney in
the books and records of the business. favor of their brother, Simeon Rallos, authorizing him to sell for
Moreover, Coleongco acted in bad faith towards his principal and in their behalf loathe said lot
Coleongco, on the other hand, filed a suit against Claparols Claparols is, on the record, unquestionable. His letters to the
charging breach of contract, asking for accounting, and praying Philippine National Bank attempting to undermine the credit of Concepcion Rallos died. Thereafter, Simeon Rallos sold the
for P528,762.19 as damages, and attorney's fees, to which the principal and to acquire the factory factory .of the latter, undivided shares of his sisters Concepcion and Gerundia to Felix
Claparols answered, denying the charge, and counterclaiming for without the principal's knowledge; Coleongco's letter to his Go Chan & Sons Realty Corporation for the sum of P10,686.90.
cousin, Kho To, instructing the latter to reduce to one-half the The deed of sale was registered in the Registry of Deeds of

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 Cebu, TCT No. 11118 was cancelled, and a new transfer ISSUE: Whether the sale of the undivided share of Concepcion be fully effective with respect to third persons who may
certificate of Title No. 12989 was issued in the named of the Rallos in lot 5983 is valid although it was executed by the agent have contracted with him in good faith.
vendee. after the death of his principal
Article 1930 is not involved because admittedly the special power
Ramon Rallos as administrator of the Intestate Estate of RULING: No, the sale is invalid. of attorney executed in favor of Simeon Rallos was not coupled
Concepcion Rallos filed a complaint before the Court of First with an interest.
Instance of Cebu, praying: By the relationship of agency, one party called the principal
authorizes another called the agent to act for and in his behalf in Article 1931 is the applicable law. Under this provision, an
(1) that the sale of the undivided share of the deceased transactions with third persons. The essential elements of agency act done by the agent after the death of his principal is valid
Concepcion Rallos be declared unenforceable, and are:(l) there is consent, express or implied, of the parties to and effective only under two conditions, viz:
said share be reconveyed to her estate; establish the relationship: (2) the object is the execution of a
(2) that the Certificate of 'title issued in the name of Felix juridical act in relation to a third person; (3) the agent acts as a (1) that the agent acted without knowledge of the
Go Chan & Sons Realty Corporation be cancelled and representative and not for himself; and (4) the agent acts within death of the principal and
another title be issued in the names of the corporation the scope of his authority. (2) that the third person who contracted with the
and the "Intestate estate of Concepcion Rallos" in agent himself acted in good faith. Good faith here
equal undivided and Agency is basically personal, representative, and derivative in means that the third person was not aware of the
(3) that plaintiff be indemnified by way of attorney's fees nature. The authority of the agent to act emanates from the death of the principal at the time he contracted
and payment of costs of suit. powers granted to him by his principal; his act is the act of the with said agent.
principal if done within the scope of the authority. “He who acts
Named party defendants were Felix Go Chan & Sons Realty through another acts himself.” These two requisites must concur the absence of one will
Corporation, Simeon Rallos, and the Register of Deeds of Cebu, render the act of the agent invalid and unenforceable.
but subsequently, the latter was dropped from the complaint. The As a general rule, agency is extinguished by the death of the
complaint was amended twice; defendant Corporation's Answer principal or the agent (Art. 1919) Manresa explains that the In the instant case, it cannot be questioned that the agent,
contained a crossclaim against its co-defendant, Simon Rallos rationale for the law is found in the juridical basis of agency which Simeon Rallos, knew of the death of his principal at the time he
while the latter filed third-party complaint against his sister, is representation. Laurent says that the juridical tie between the sold the latter's share in Lot No. 5983 to respondent corporation
Gerundia Rallos While the case was pending in the trial court, principal and the agent is severed ipso jure upon the death of and yet he proceeded with the sale of the lot in the name of both
both Simon and his sister Gerundia died and they were either without necessity for the heirs of the principal to notify the his sisters Concepcion and Gerundia Rallos without informing the
substituted by the respective administrators of their estates. agent of the fact of death of the former. The same rule prevails at respondent corporation of the death of the former. Thus, on the
4 common law—the death of the principal effects instantaneous AGENCY: Obligations
basis of the establishedofknowledge
the Principal (Arts. Rallos
of Simon 1910 to 1918)
concerning
The trial court: and absolute revocation of the authority of the agent unless the the death of his principal Concepcion Rallos, Article 1931 of the
1. Declaring the deed of sale, null and void insofar as the power be coupled with an interest. This is the prevalent rule in Civil Code is inapplicable in this case. The law expressly requires
one-half pro-indiviso share of Concepcion Rallos in the American jurisprudence where it is well-settled that a power for its application lack of knowledge on the part of the agent of
property in question, is concerned; without an interest conferred upon an agent is dissolved by the the death of his principal; it is not enough that the third person
2. Ordering the Register of Deeds of Cebu City to cancel principal’s death, and any attempted execution of the power acted in good faith.
Transfer Certificate of Title No. 12989 and to issue in afterwards is not binding on the heirs or representatives of the
lieu thereof another in the names of FELIX GO CHAN deceased. In sustaining the validity of the sale to respondent corporation,
& SONS REALTY CORPORATION and the Estate of the Court of Appeals reasoned out that there is no provision in
Concepcion Rallos in the proportion of one-half (1/2) It is the contention of respondent corporation which was the Civil Code which provides that whatever is done by an agent
share each pro-indiviso; sustained by respondent court that notwithstanding the death of having knowledge of the death of his principal is void even with
3. Ordering Felix Go Chan & Sons Realty Corporation to the principal Concepcion Rallos the act of the attorney-in-fact, respect to third persons who may have contracted with him in
deliver the possession of an undivided one-half (1/2) Simeon Rallos in selling the former's sham in the property is valid good faith and without knowledge of the death of the principal.
share of Lot to the herein plaintiff and enforceable inasmuch as the corporation acted in good faith The court cannot see the merits of the foregoing argument as it
4. Sentencing the co-defendant Juan T. Borromeo, in buying the property in question. ignores the existence of the general rule enunciated in Art. 1919
administrator of the Estate of Simeon Rallos, to pay to that the death of the principal extinguishes the agency. That
defendant Felix Co Chan & Sons Realty Corporation Articles 1930 and 1931 of the Civil Code provide the being the general rule it follows a fortiori that any act of an agent
the sum of P5,343.45, representing the price of one- exceptions to the general rule afore-mentioned. after the death of his principal is void ab initiounless the same
half (1/2) share of lot 5983; falls under the exceptions provided for in the aforementioned
ART. 1930. The agency shall remain in full force and Articles 1930 and 1931. Article 1931, being an exception to the
Aggrieved, Felix Go Chan & Sons Realty Corporation appealed effect even after the death of the principal, if it has general rule, is to be strictly construed; it is not to be given an
to the Court of Appeals insofar as it set aside the sale of the one- been constituted in the common interest of the latter interpretation or application beyond the clear import of its terms
half (1/2) share of Concepcion Rallos. The CA resolved the and of the agent, or in the interest of a third person for otherwise the courts will be involved in a process of legislation
appeal in favor of the appellant corporation sustaining the sale in who has accepted the stipulation in his favor. outside of their judicial function.
question. The appellee administrator, Ramon Rallos, moved for
a reconsideration of the decision but the same was denied in a ART. 1931. Anything done by the agent, without Another argument advanced by respondent court is that the
resolution of March 4, 1965. knowledge of the death of the principal or of any other vendee acting in good faith relied on the power of attorney which
cause which extinguishes the agency, is valid and shall was duly registered on the original certificate of title recorded in

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 the Register of Deeds of the province of Cebu, that no notice of is entitled to a commission on the lots unsold because of the In the case at bar, not one of the grounds mentioned above is
the death was aver annotated on said certificate of title by the rescission of the contract. present which may be the subject of an action of rescission,
heirs of the principal and accordingly they must suffer the much less can petitioners say that the private respondent violated
consequences of such omission. ISSUE: Whether or not the spouse Diolosa could terminate the
the terms of their agreement-such as failure to deliver to them
agency agreement without paying damages to plaintiff.
The Civil Code does not impose a duty on the heirs of the (Subdivision owners) the proceeds of the purchase price of the
principal to notify the agent of the death of said principal. RULING: Article 1920 of the Civil Code of the Philippines lots.
What the Code provides in Article 1932 is that, if the agent notwithstanding, the defendants could not terminate the agency
dies, his heirs must notify the principal thereof, and in the agreement at will without paying damages. The said agency
meantime adopt such measures as the circumstances may agreement expressly stipulates … until all the subject property as
demand in the interest of the latter. Hence, the fact that no subdivided is fully disposed of …” The testimony of Roberto
notice of the death of the principal was registered on the Malundo that the plaintiff agreed to the intention of Mrs. Diolosa 4. PHILIPPINE NATIONAL BANK VS IAC
certificate of title of the property in the Office of the Register to reserve some lots for her own famay use cannot prevail over G.R. No. 66715, SEPTEMBER 18, 1990
of Deeds, is not fatal to the cause of the estate of the the clear terms of the agency agreement. Moreover, the plaintiff
principal. denied that there was an agreement to reserve any of the lots for
the family of the defendants. FACTS: Leticia de la Vina- Sepe executed a real estate
Further, Holding that the good faith of a third person in dealing mortgage in favor of PNB over a lot in her name to secure her
with an agent affords the former sufficient protection, respondent Under the contract, herein petitioners allowed the private loan of P3, 400. Later, Leticia Sepe, acting as an attorney-in-fact
court drew a “parallel” between the instant case and that of an respondent “to dispose of, sell, cede, transfer and convey … until for her brother-in-law, private respondent Romeo Alcedo,
innocent purchaser for value of a registered land, stating that if a out the subject property as subdivided is fully disposed of.” The executed an amended real estate mortgage to include Alcedo’s
person purchases a registered land from one who acquired it in authority to sell is not extinguished until all the lots have been
lot as additional collateral for Sepe’s increased loan of P16, 500.
bad faith—even to the extent of forging or falsifying the deed of disposed of. When, therefore, the petitioners revoked the contract
sale in his favor—the registered owner has no recourse against with private respondent in a letter they become liable to the Leticia Sepe and private respondent verbally agreed to split fifty-
such innocent purchaser for value but only against the forger. To private respondent for damages for breach of contract. fifty the proceeds of the loan but failing to receive his one-half
support the correctness of this “parallelism”, respondent share from her, Alcedo wrote a letter to the PNB to revoke the
corporation, in its brief, cites the case of Blondeau, et al. vs. And, it may be added that since the agency agreement, is a valid Special Power of Attorney which he had given to Leticia Sepe to
Nano and Vallejo, 61 Phil. 625. x x x The Blondeau decision, contract, the same may be rescinded only on grounds specified mortgage his lot.
however, is not on all fours with the case before us because here in Articles 1381 and 1382 of the Civil Code, as follows:
5 we are confronted with one who admittedly was an agent of his AGENCY: Obligations of the Principal (Arts. 1910 to 1918)
The PNB, through its manager, advised Alcedo that his land had
sister and who sold the property of the latter after her death with ART. 1381. The following contracts are rescissible:
full knowledge of such death. The situation is expressly covered already been included as collateral for Sepe’s loan, nevertheless,
by a provision of law on agency the terms of which are clear and (1) Those which are entered in to by guardians whenever the PNB assured Alcedo that the bank would exclude his lot as
unmistakable leaving no room for an interpretation contrary to its wards whom they represent suffer lesion by more than one-fourth collateral for Sepe’s forthcoming loan. The PNB also advised
tenor, in the same manner that the ruling in Blondeau and the of the value of the things which are the object thereof; Sepe in writing to replace the lot with another collateral of equal
cases cited therein found a basis in Section 55 of the Land or higher value.
Registration Law. (2) Those agreed upon in representation of absentees, if the
latter suffer the lesion stated in the preceding number; Despite of the advice of PNB, Sepe was still able to obtain an
3. DIOLOSA V. COURT OF APPEALS
G.R. NO. L-36585, 16 JULY 1984 additional loan on the security of Alcedo’s property. Thereafter,
(3) Those undertaken in fraud of creditors when the latter cannot Alcedo received a letter that Sepe defaulted in paying her loan
FACTS: The plaintiff was and still is a licensed real estate broker, in any other name collect the claims due them; wherein he was given six days to settle Sepe’s obligation,
and as such licensed real estate broker on June 20, 1968, an otherwise a foreclosure proceeding would be commenced against
agreement was entered into between him as party of the second his property.
(4) Those which refer to things under litigation if they have been
part and the defendants spouses as party of the first part,
entered into by the defendant without the knowledge and
whereby the former was constituted as exclusive sales agent of
approval of the litigants or of competent judicial authority; Alcedo requested Sepe to pay to forestall foreclosure
the defendants, its successors, heirs and assigns, to dispose of,
sell, cede, transfer and convey the lots included in VILLA proceedings against his property, but to no avail. Thus, private
ALEGRE SUBDIVISION owned by the defendants, under the (5) All other contracts specially declared by law to be subject to respondent sued Sepe and the PNB for collection, injunction and
terms and conditions embodied in said agreement, the plaintiff rescission. damages. During the pendency of the case, extra judicial
acted for and in behalf of the defendants as their agent in the foreclosure commenced which was sold to the PNB as the
sale of the lots included in the VILLA ALEGRE SUBDIVISION; highest bidder. Later he amended his complaint praying for the
ART. 1382. Payments made in a state of insolvency for
annulment of the extra judicial foreclosure sale and reconveyance
That on September 27, 1968, the defendants terminated the obligations to whose fulfillment the debtor could not be compelled
services of plaintiff as their exclusive sales agent for the reason of his lot. The PNB, on its answer alleged that the revocation of
at the time they were effected, are also rescissible.”
stated in the latter. The plaintiff filed a suit on the ground that he SPA of Alcedo was not in accordance with the law, thus, the

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 revocation of the SPA did not impair the real estate mortgage coming to the power of attorney referred to in the deed and also asked them to buy her a new one along Taft Avenue.
earlier executed by Sepe in favor of the bank. registered therewith, it is at once seen that it is not a general Instead, they sold the property on Taft Avenue to another person.
power of attorney but a limited one and does not give the express The RTC ruled in favor of the agents and the CA affirmed it in
The lower court rendered judgment in favor of the private power to alienate the properties in question. (Article 1713 of the toto.
respondent Alcedo. The CA also affirmed the decision of the Civil Code.)
lower court in toto. Hence, this petition. ISSUE: WON the herein petitioner should pay the respondents
ISSUE: W/N the deed of sale executed by Ong Guan Can Jr. the commission agreed in the agency though it was already
ISSUE: Whether or not a revocation of a special power of was valid. revoked prior to the sale made
attorney in a private writing is valid and binding.
RULING: No. RULING: Yes.
RULING: Yes.
Appellants claim that this defect is cured by Exhibit 1, which A principal may withdraw the authority given to an agent at will.
The revocation of a special power of attorney, although embodied
purports to be a general power of attorney given to the same But respondents agreed to cancel the authority given to them
in a private writing, is valid and binding between the parties.
agent in 1920. Article 1732 of the Civil Code is silent over the upon assurance by petitioner that should property be sold to
partial termination of an agency. The making and accepting of Noche, they would be given commission.
While Article 1358 of the Civil Code requires that the revocation
a new power of attorney, whether it enlarges or decreases
of Alcedo’s Special Power of Attorney to mortgage his property
the power of the agent under a prior power of attorney, must That petitioner had changed her mind even if respondents had
should appear in a public instrument: xxx nevertheless, a
be held to supplant and revoke the latter when the two are found a buyer who was willing to close the deal, is a matter that
revocation in a private writing is valid and binding between the
inconsistent. If the new appointment with limited powers does would not give rise to a legal consequence if respondents agree
parties for- “ The legalization by a public writing and the recording
not revoke the general power of attorney, the execution of the to call off the transaction in deference to the request of the
of the same in the registry are not essential requisites of a
second power of attorney would be a mere futile gesture. petitioner. But the situation varies if one of the parties takes
contract entered into, as between the parties, but mere conditions
advantage of the benevolence of the other and acts in a manner
of form or solemnities which the law imposes in order that such
The title of Ong Guan Gan not having been divested by the so- that would promote his own selfish interest. This act is unfair as
contract may be valid as against third persons, and to insure that
called deed of July 31, 1931, his properties are subject to would amount to bad faith. This act cannot be sanctioned without
a publicly executed and recorded agreement shall be respected
6 attachment and execution. A special power of attorney giving the AGENCY:
according Obligations
to the party of the Principal
prejudiced (Arts.which
the reward 1910 is
to due
1918)
him.
by the latter”.
son the authority to sell the principal’s properties is deemed This is the situation in which respondents were placed by
revoked by a subsequent general power of attorney that does not petitioner. Petitioner took advantage of the services rendered by
5. DY BUNCIO vs. ONG GUAN CAN, ET AL.
give such power to the son, and any sale effected thereafter by respondents, but believing that she could evade payment of their
60 Phil. 696 October 2, 1934
the son in the name of the father would be void. commission, she made use of a ruse by inducing them to sign the
deed of cancellation. This act of subversion cannot be sanctioned
FACTS: This is a suit over a rice-mill and camarin situated at
6. INFANTE vs. CUNANAN and cannot serve as basis for petitioner to escape payment of the
Dao, Province of Capiz. Plaintiff claims that the property belongs
G.R. No. L-5180, August 31, 1953 commission agreed upon.
to its judgment debtor, Ong Guan Can, while defendants Juan
Tong and Pua Giok Eng are claiming to be the owner and lessee
FACTS: Consejo Infante owned two parcels of land with a house 7. HERRERA vs. LUY KIM GUAN and LINO BANGAYAN
by virtue of a deed dated July 31, 1931, by Ong Guan Can, Jr.
built there. She asked the respondents Cunanan and Mijares to G.R. No. L-17043 January 31, 1961
After trial the Court of First Instance of Capiz held that the deed
was invalid and that the property was subject to the execution sell these properties on the condition that the buyer would
assume the existing mortgage on these properties. She would FACTS: The plaintiff Natividad Herrera is the legitimate daughter
which has been levied on said properties by the judgment
give them a 5% commission plus the overprice they might obtain of Luis Herrera, now deceased and who died in China sometime
creditor of the owner. Defendants Juan Tong and Pua Giok bring
from the sale. Noche agreed to purchase the properties on these after he went to that country in the last part of 1931 or early part
this appeal and insist that the deed of the 31st of July, 1931, is
conditions. After knowing this, Infante revoked the agency and of 1932. The said Luis Herrera in his lifetime was the owner of
valid.
stated she was no longer interested in selling her properties. She three (3) parcels of land and their improvements, known as Lots
then asked Cunanan and Mijares to sign a written document 1740, 4465 and 4467 of Expediente No. 5, G.L.R.O. Record 477
The first recital of the deed is that Ong Guan Can Jr., as agent of
revoking the authority she gave them. Later on, she directly sold and the area, nature, improvements and boundaries of each and
Ong Guan Can, sells the rice-mill and camarin for P13, 000 and
the properties to Noche. Upon learning this, Cunanan and every of these three (3) lots are sufficiently described in the
gives as his authority the power of attorney dated the 23d of May,
Mijares filed an action to recover the sum for their commission. complaint filed by the plaintiffs.
1928. The receipt of the money acknowledged in the deed was to
Infante admitted she contracted their services but stated that she
the agent, and the deed was signed by the agent in his own
revoked them because they did not follow through with her "Before leaving for China, however, Luis Herrera executed on
name and without any words indicating that he was signing it for
instructions. When she asked them to sell her properties, she December 1, 1931, a deed of General Power of Attorney, Exhibit
the principal. Leaving aside the irregularities of the deed and

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 'B', which authorized and empowered the defendant Luy Kim "As admitted by both parties (plaintiffs and defendants), Luis for lack of identification. On the other hand, we have the
Guan, among others to administer and sell the properties of said Herrera is now deceased, but as to the specific and precise date testimony of the witness Lu Chung Lian to the effect that when he
Luis Herrera. of his death the evidence of both parties failed to show." was in Amoy in the year 1940, Luis Herrera visited him and had a
conversation with him, showing that the latter was still alive at the
"Lot 1740 was originally covered by Original Certificate of Title ISSUE: Whether these transactions are null and void and of no time. Since the documents had been executed by the attorney-in-
8601 registered in the name of Luis Herrera, married to Go Bang. effect because they were executed by the attorney-in-fact after fact one in 1937 and the other in 1939, it is evident, if we are to
This lot was sold by the defendant Luy Kim Guan in his capacity the death of his principal. believe this testimony, that the documents were executed during
as attorney-in-fact of the deceased Luis Herrera to Luy Chay on the lifetime of the principal. Be that as it may, even granting
September 11. 1939, as shown in Exhibit '2', the corresponding RULING: No arguendo that Luis Herrera did die in 1936, plaintiffs presented no
deed of sale. Transfer Certificate of Title No. 3162, Exhibit '3', proof and there is no indication in the record, that the agent Luy
was issued to Luy Chay by virtue of said deed of sale. On August Kim Guan was aware of the death of his principal at the time he
PLAINTIFF-APPELLANT: all the transactions mentioned in the
28, 1941, to secure a loan of P2,000,00, a deed of mortgage to sold the property.
preceding quoted portion of the decision were fraudulent and
the Zamboanga Mutual Building and Loan Association was were executed after the death of Luis Herrera and, consequently,
executed by Luy Chay, Exhibit '4'. On January 31, 1947, the said when the power of attorney was no longer operative. It is also The death of the principal does not render the act of an
Luy Chay executed a deed of sale, Exhibit 'E', in favor of Lino claimed that the defendants Lino Bangayan and Luy Kim Guan agent unenforceable, where the latter had no knowledge of
Bangayan. By virtue of this sale, Transfer Certificate of Title T- who now claim to be the owners of Lots Nos. 1740 and 4467 are such extinguishment of the agency.
2567 was issued to Lino Bangayan on June 24, 1949, Exhibit '1'. Chinese by nationality and, therefore, are disqualified to acquire
real properties. Plaintiff-appellant, in addition, questions the 8. BUASON v. PANUYAS
"Lots 4465 and 4467 were originally registered in the name of supposed deed of sale allegedly executed by Luis Herrera on G.R. No. L-11415. May 25, 1959
Luis Herrera, married to Go Bang, under Original Certificate of December 1, 1931 in favor of defendant Luy Kim Guan,
Title No. 0-14360, Exhibit '5'. On December 1, 1931, Luis Herrera conveying one-half interest on the two lots, Nos. 4465 and 4467, FACTS: In their lifetime the spouses Buenaventura Dayao and
sold one-half (1/2) undivided share and to Luis Herrera and Go asserting that what was actually executed on that date, jointly Eugenia Vega acquired by homestead patent a parcel of land
Bang, the other half (1/2), as shown by Exhibit '12' and Exhibit with the general power of attorney, was a lease contract over the situated at barrio Gabaldon, municipality of Munoz, province of
'12-A', the latter an annotation made by the Register of Deeds of same properties for a period of 20 years for which Luy Kim Guan Nueva Ecija. On 29 October 1930 they executed a power of
7 the City of Zamboanga. paid the sum of P2,000.00. AGENCY: Obligations
attorney authorizing of the Principal
Eustaquio Bayuga to(Arts.
engage1910
the to 1918) of
services
an attorney to prosecute their case against Leonardo Gambito for
"On July 23, 1937, Luis Herrera thru his attorney-in-fact Luy Kim With respect to Lot No. 1740, the same was sold by Luy Kim annulment of a contract of sale of the parcel of land (civil No.
Guan, one of the defendants, sold to Nicomedes Salazar his one Guan, in his capacity as attorney-in-fact of Luis Herrera, on 5787 of the same court) and after the termination of the case in
half (1/2) participation in these two (2) lots, as shown in Exhibit September 11, 1939 to Luy Chay who, in August, 1941, their favor to sell it, and from the proceeds of the sale to deduct
'C', the corresponding deed of sale for P3,000.00. Transfer mortgaged the same to the Zamboanga Mutual Loan and whatever expenses he had incurred in the litigation (Exhibit B).
Certificate of Title No. T-494-(T-13045) was issued to Nicomedes Building Association issued in the name of Luy Chay). Later on, On 14 March 1934 Buenaventura Dayao died leaving his wife
Salazar and to the defendent Luy Kim Guan, Exhibit 'T, On Luy Chay sold the entire lot to defendant Lino Bangayan by virtue Eugenia Vega and children Pablo, Teodoro, Fortunata and
August 4, 1937, the defendant Luy Kim Guan and Nicomedes of the deed of sale dated January 31, 1947, and as a Juliana, all surnamed Dayao. On 21 March 1939 his four children
Salazar executed a deed of mortgage in favor of the Bank of the consequence thereof, TCT No. 2567 was issued in the name of executed a deed of sale conveying 12.8413 hectares of the
Philippine Islands to secure a loan of P3,500.00, Exhibit '6'. On said vendee. As a result of these various transactions, duly parcel of land to the appellants, the spouses Manuel Buason and
August 17, 1937, the defendant Luy Kim Guan and Nicomedes recorded in the corresponding office of the Register of Deeds, Lolita M. Reyes (Exhibit A). Their mother Eugenia Vega affixed
Salazar sold Lot 4465 to Carlos Eijansantos for the sum of and covered by appropriate transfer certificates of title, the her thumbmark to the deed of sale as witness (Exhibit A). The
P100.00 as shown in Exhibit '9', the corresponding deed of sale, properties are now registered in the following manner: Lot No. appellants took possession of the parcel of land through their
and Transfer Certificate of Title No. T-2653 was issued on 1740, in the name of Lino Bangayan; Lot No. 4465, in the name tenants in 1939. On 18 July 1944 Eustaquio Bayuga sold 8
September 7, 1939 to Carlos Eijansantos, Exhibit '10'. of Carlos Eijansantos; and Lot No. 4467, in the names of Lino hectares of the same parcel of land to the spouses Mariano
Nicomedes Salazar sold his one half (1/2) interest on Lot 4467 to Bangayan and Luy Kim Guan in undivided equal shares. Panuyas (appellee herein) and Sotera B. Cruz (Exhibit D).
the defendant Lino Bangayan for P3,000.00 on February 22, Eustaquio Bayuga died on 25 March 1946 and Eugenia Vega in
1949, Exhibit 'B', and the corresponding Transfer Certificate of Suffice it to say that as found by the lower court, the date of 1954.
Title T-2654 was issued to Lino Bangayan and to Luy Kim Guan, death of Luis Herrera has not been satisfactorily proven. The only
both are co-owners in equal shares, Exhibit '8'. Opinion of the evidence presented by the plaintiff-appellant in this respect is a The appellant and the appellee claim ownership to the same
City Attorney, Exhibit 'p', and an affidavit of Atty. Jose T. Atilano, supposed letter received from a certain "Candi", dated at Amoy in parcel of land. In their complaint the appellants prayed that the
Exhibit 'O', state that Lino Bangayan is a Filipino citizen. November, 1936, purporting to give information that Luis Herrera appellee be ordered to deliver possession of the part of the parcel
(without mentioning his name) had died in August of that year. of land held by him; that the deed of sale of that part of the parcel
This piece of evidence was properly rejected by the lower court of land held by the appellee executed by Eustaquio Bayuga in his

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino

 favor and of his wife (Exhibit D) be declared null and void and
that transfer certificate of title No. 8419 issued in their name be
cancelled; that the deed of sale of the parcel of land executed by
the children and heirs of Buenaventura Dayao in their fabor
(Exhibit A) be declared valid.

ISSUE: Whether the death of the principal on 14 March 1934

ended the authority of the agent.

RULING: No

It appears that the appellants did not register the sale of 12.8413
hectares of the parcel of land in question executed in their favor
by the Dayao children on 21 March 1939 after death of their
father Buenaventura Dayao. On the other hand, the power of
attorney executed by Buenaventura Dayao on 29 October 1930
authorizing Eustaquio Bayuga to sell the parcel of land (Exhibit B)
was annotated or inscribed on the back of original certificate of
title No. 1187 (Exhibit C) as Entry No. 16836/H-1187, and the
sale executed by Eustaquio Bayuga in favor of the appellee
Mariano Panuyas and his wife Sotera B. Cruz under the
aforesaid power of attorney was annotated or inscribed on the
back of the same original certificate of title (Exhibit C) as Entry
No. 778/H-1187. It does not appear that the appellee and his wife
8 had actual knowledge of the previous sale. In the absence of AGENCY: Obligations of the Principal (Arts. 1910 to 1918)
such knowledge, they had a right to rely on the face of the
certificate of title of the registered owners and of the authority
conferred by them upon the agent also recorded on the back of
the certificate of title. As this is a case of double sale of land
registered under the Land Registration Act, he who recorded the
sale in the Registry of Deeds has a better right than he who did
not.

As to the appellants’ contention that, as the death of the principal

on 14 March 1934 ended the authority of the agent, the sale of 8
hectares of the parcel of land by the agent to the appellee
Mariano Panuyas and his wife Sotera B. Cruz was null and void,
suffice it to state that it has not been shown that the agent
knew of his principal’s demise, and for that reason article
1738, old Civil Code or 1931, new Civil Code, which provides:

Anything done by the agent, without knowledge of the death

of the principal or of any other cause which extinguishes the
agency, is valid and shall be fully effective with respect to
third persons who may have contracted with him in good
faith.

Cases from the discussions of Atty. Princess Claudin C. Omelio-Balino