TUASON vs. OROZCO GR No. 2344 | Feb.

10, 1906 | Mapa | Appeal Plaintiff: Gonzalo Tuason Defendant: Dolores Orozco Quick Summary: Facts: Juan de Vargas executed a power of attorney to Enrique Grupe, authorizing him to dispose of all his property, particularly his house and lot in Malate, Manila, and to mortgage the house to secure the payment of any amount advanced to his wife, Orozco. Grupe and Orozco obtained a loan for P3,500 from Tuason. Grupe gave P2,200 to Orozco while he retained the P1,300 for himself, which he will use for his business. Grupe assumed liability for the loan and pledged his 18 shares of stock as special security. Held: A debt thus incurred by the agent is binding directly upon the principal, provided the agent acted within the scope of his authority. The fact that the agent has also bound himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. The individual liability of the agent constitutes a further security in favor of the creditor and does not affect or preclude the liability of the principal. The law does not provide that the agent cannot bind himself personally to the fulfillment of an obligation incurred by him in the name and on behalf of his principal. On the contrary, it provides that such act on the part of an agent would be valid. Facts: Juan de Vargas, Dolores Orozcos husband, executed a power of attorney to Enrique Grupe. Vargas authorized Grupe to dispose of all his property, particularly his house and lot in 24 Calle Nueva, Malate, Manila for the price at which it was actually sold. Grupe was also authorized to

mortgage the house for the purpose of securing the payment of any amount advanced to Orozco. Thereafter, Grupe and Orozco obtained a loan from Gonzalo Tuason secured by a mortgage on the said house. In said instrument, Grupe appeared for himself and in behalf of Juan de Vargas. As evidenced by the instrument1which was duly recorded in the Registry of Property, Grupe received P3,500 in cash which he promises to pay within 1 year. Of said amount, he delivered 2,200 to Orozco while retaining the 1,300 for his use in his business. Grupe also assumed liability for the whole sum of P3,500, which he promises to pay in current gold or silver coin, without discount. Aside from this, he pledged as special security for the debts payment his 18 shares of stock in the Compania de los Tranvias de Filipinas. Tuason filed a case for the recovery of the debt, which refers only to the P2,200 delivered to Orozco. However, she denied having received said amount. CFI: ordered Orozco to pay Tuason the said amount Issue: WON the debt was incurred by Grupe for his own benefit as evidenced by his assumption of paying the whole loan and his act of pledging his shares of stock as special security[NO] Ratio: The mortgage agreement was signed by Grupe as the attorney-in-fact of

Juan de Vargas. A debt thus incurred by the agent is binding directly upon the principal, provided the agent acted within the scope of his authority. The fact that the agent has also bound himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. The individual liability of the agent constitutes a further security in favor of the creditor and does not affect or preclude the liability of the principal. The law does not provide that the agent cannot bind himself personally to the fulfillment of an obligation incurred by him in the name and on behalf of hisprincipal. On the contrary, it provides that such act on the part of an agent would be valid [Article 1725 CC]. On whether Orozco received the money Orozcos assertion that she did not receive the money is belied by the following: she was one of the parties to the instrument and she correspondingly signed it she personally intervened in the execution of the mortgage she stated in the deed that the mortgage had been created with her knowledge and consent she wrote a letter to Tuasons lawyers promising to pay the debt on or before November 5, which she admitted as

valid Thirteen years had elapsed since she signed the mortgage deed. During all this time she never denied having received the money. On the contrary, she promised to settle within a short time. Validity of the Mortgage The fact that Orozco received the money from Grupe and not from Tuason does not affect the validity of the mortgage in view of the conditions contained in the power of attorney under which the mortgage was created. Nowhere does it appear in this power that the money was to be delivered to her by the creditor himself and not through the agent or any other person. The important thing was that she should have received the money. The mortgage being valid and having been duly recorded in the Register of Property, directly subjects the property thus encumbered, whoever its possessor may be, to the fulfillment of the obligation for the security of which it was created. [Article 1876 CC & Article 105, Mortgage Law] Whether Grupes shares of stock that he has pledged should be accounted for to satisfy the debt before proceeding to foreclose the mortgage A mortgage directly subjects the property encumbered, whoever its possessor may be, to the fulfillment of the obligation for the security of which it was

created. Moreover, it was incumbent upon Orozco to show that the debt had been paid with those shares. Payment is not presumed but must be proved. It is a defense, which the Orozco may interpose. It was therefore her duty to show this fact affirmatively. --------------------------------------------------------------------------------------------THE MANILA REMNANT CO., INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and OSCAR VENTANILLA, JR. and CARMEN GLORIA DIAZ, respondents.1990 November 223rd DivisionG.R. No. 82978D E C I S I O N FERNAN, J.: Like any other couple, Oscar Ventanilla and his wife Carmen, both faculty members of the University of the Philippines and renting a faculty unit, dreamed of someday owning a house and lot. Instead of attaining this dream, they became innocent victims of deceit and found themselves in the midst of an ensuing squabble between a subdivision owner and its real estate agent. The facts as found by the trial court and adopted by the Appellate Court are as follows: Petitioner Manila Remnant Co., Inc. is the owner of the parcels of land situated in Quezon City covered by Transfer Certificates of Title Nos. 26400, 26401, 30783 and

However, she failed to do so. Final Note Said debt having been incurred by Vargas during his marriage, it should not be paid out of property belonging to Orozco exclusively but from that pertaining to the conjugal partnership. Dispositive: Judgment 31986 and constituting the subdivision known as Capital Homes Subdivision Nos. I and II. On July 25, 1972, Manila Remnant and A.U. Valencia & Co. Inc. entered into a written agreement entitled "Confirmation of Land Development and Sales Contract" to formalize an earlier verbal agreement whereby for a consideration of 17 and 1/2% fee, including sales commission and management fee, A.U. Valencia and Co., Inc. was to develop the aforesaid subdivision with authority to manage the sales thereof, execute contracts to sell to lot buyers and issue official receipts. 1 At that time the President of both A.U. Valencia and Co. Inc. and Manila Remnant Co., Inc. was Artemio U. Valencia. On March 3, 1970, Manila Remnant thru A.U. Valencia and Co. executed two "contracts to sell" covering Lots 1 and 2 of Block 17 in favor of Oscar C. Ventanilla and Carmen Gloria Diaz for the combined contract price of P66,571.00 payable monthly for ten years. 2 As thus agreed in the contracts to sell, the Ventanillas paid

the down payments on the two lots even before the formal contract was signed on March 3, 1970. Ten (10) days after the signing of the contracts with the Ventanillas or on March 13, 1970, Artemio U. Valencia, as President of Manila Remnant, and without the knowledge of the Ventanilla couple, sold Lots 1 and 2 of Block 17 again, this time in favor of Carlos Crisostomo, one of his sales agents without any consideration. 3 Artemio Valencia then transmitted the fictitious Crisostomo contracts to Manila Remnant while he kept in his files the contracts to sell in favor of the Ventanillas. All the amounts paid by the Ventanillas were deposited in Valencia's bank account. Beginning March 13, 1970, upon orders of Artemio Valencia, the monthly payments of the Ventanillas were remitted to Manila Remnant as payments of Crisostomo for which the former issued receipts in favor of Crisostomo. Since Valencia kept the receipts in his files and never transmitted the same to Crisostomo, the latter and the Ventanillas remained ignorant of Valencia's scheme. Thus, the Ventanillas continued paying their monthly installments. Subsequently, the harmonious business relationship between Artemio Valencia and Manila Remnant ended. On May 30, 1973, Manila Remnant, through its General Manager Karl Landahl, wrote Artemio Valencia informing him that Manila Remnant

was terminating its existing collection agreement with his firm on account of the considerable amount of discrepancies and irregularities discovered in its collections and remittances by virtue of confirmations received from lot buyers. 4 As a consequence, on June 6, 1973, Artemio Valencia was removed as President by the Board of Directors of Manila Remnant. Therefore, from May of 1973, Valencia stopped transmitting Ventanilla's monthly installments which at that time had already amounted to P17,925.40 for Lot 1 and P18,141.95 for Lot 2, (which appeared in Manila Remnant's record as credited in the name of Crisostomo). 5 On June 8, 1973, A.U. Valencia and Co. sued Manila Remnant before Branch 19 of the then Court of First Instance of Manila 6 to impugn the abrogation of their agency agreement. On June 10 and July 10, 1973, said court ordered all lot buyers to deposit their monthly amortizations with the court. 7 But on July 17, 1973, A.U. Valencia and Co. wrote the Ventanillas that it was still authorized by the court to collect the monthly amortizations and requested them to continue remitting their amortizations with the assurance that said payments would be deposited later in court. 8 On May 22, 1974, the trial court issued an order prohibiting A.U. Valencia and Co. from collecting the monthly installments. 9 On July 22, 1974 and February

6, 1976 the same court ordered the Valencia firm to furnish the court with a complete list of all lot buyers who had already made down payments to Manila Remnant before December 1972. 10 Valencia complied with the court's order on August 6, 1974 by submitting a list which excluded the name of the Ventanillas. 11 Since A.U. Valencia and Co. failed to forward its collections after May 1973, Manila Remnant caused on August 20, 1976 the publication in the Times Journal of a notice cancelling the contracts to sell of some lot buyers including that of Carlos Crisostomo in whose name the payments of the Ventanillas had been credited. 12 To prevent the effective cancellation of their contracts, Artemio Valencia instigated on September 22, 1976 the filing by Carlos Crisostomo and seventeen (17) other lot vendees of a complaint for specific performance with damages against Manila Remnant before the Court of First Instance of Quezon City. The complaint alleged that Crisostomo had already paid a total of P17,922.40 and P18,136.85 on Lots 1 and 2, respectively. 13 It was not until March 1978 when the Ventanillas, after learning of the termination of the agency agreement between Manila Remnant and A.U. Valencia & Co., decided to stop paying their amortizations to the latter. The Ventanillas, believing that they had already remitted P37,007.00 for Lot 1 and P36,911.00 for Lot 2 or a

grand total, inclusive of interest, of P73,122.35 for the two lots, thereby leaving a balance of P13,531.58 for Lot 1 and P13,540.22 for Lot 2, went directly to Manila Remnant and offered to pay the entire outstanding balance of the purchase price. 14 To their shock and utter consternation, they discovered from Gloria Caballes, an accountant of Manila Remnant, that their names did not appear in the records of A.U. Valencia and Co. as lot buyers. Caballes showed the Ventanillas copies of the contracts to sell in favor of Carlos Crisostomo, duly signed by Artemio U. Valencia as President of Manila Remnant. 15 Whereupon, Manila Remnant refused the offer of the Ventanillas to pay for the remainder of the contract price because they did not have the personality to do so. Furthermore, they were shown the published Notice of Cancellation in the January 29, 1978 issue of the Times Journal rescinding the contracts of delinquent buyers including Crisostomo. Thus, on November 21, 1978, the Ventanillas commenced an action for specific performance, annulment of deeds and damages against Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo before the Court of First Instance of Quezon City, Branch 17-B. 16 Crisostomo was declared in default for failure to file an answer. On November 17, 1980, the trial court rendered a decision 1) declaring the

contracts to sell issued in favor of the Ventanillas valid and subsisting and annulling the contracts to sell in Crisostomo's favor; 2) ordering Manila Remnant to execute in favor of the Ventanillas an Absolute Deed of Sale free from all liens and encumbrances; and 3) condemning defendants A.U. Valencia and Co. Inc., Manila Remnant and Carlos Crisostomo jointly and severally to pay the Ventanillas the amount of P100,000.00 as moral damages, P100,000.00 as exemplary damages, and P100,000.00 as attorney's fees. The lower court also added that if, for any legal reason, the transfer of the lots could no longer be effected, the defendants should reimburse jointly and severally to the Ventanillas the total amount of P73,122.35 representing the total amount paid for the two lots plus legal interest thereon from March 1970 plus damages as aforestated. With regard to the cross claim of Manila Remnant against Valencia, the court found that Manila Remnant could have not been dragged into this suit without the fraudulent manipulations of Valencia. Hence, it adjudged A.U. Valencia and Co. to pay the Manila Remnant P5,000.00 as moral damages and exemplary damages and P5,000.00 as attorney's fees. 17 Subsequently, Manila Remnant and A.U. Valencia and Co. elevated the lower court's decision to the Court of Appeals through separate appeals. On October 13, 1987,

the Appellate Court affirmed in toto the decision of the lower court. Reconsideration sought by petitioner Manila Remnant was denied, hence the instant petition. There is no question that the contracts to sell in favor of the Ventanilla spouses are valid and subsisting. The only issue remaining is whether or not petitioner Manila Remnant should be held solidarily liable together with A.U. Valencia and Co. and Carlos Crisostomo for the payment of moral, exemplary damages and attorney's fees in favor of the Ventanillas. 18 While petitioner Manila Remnant has not refuted the legality of the award of damages per se, it believes that it cannot be made jointly and severally liable with its agent A.U. Valencia and Co. since it was not aware of the illegal acts perpetrated nor did it consent or ratify said acts of its agent. The argument is devoid of merit. In the case at bar, the Valencia realty firm had clearly overstepped the bounds of its authority as agent and for that matter, even the law when it undertook the double sale of the disputed lots. Such being the case, the principal, Manila Remnant, would have been in the clear pursuant to Article 1897 of the Civil Code which states that "(t)he agent who acts as such is not personally liable to that party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers."

However, the unique relationship existing between the principal and the agent at the time of the dual sale must be underscored. Bear in mind that the president then of both firms was Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the fact that the double sale was beyond the power of the agent, Manila Remnant as principal was chargeable with the knowledge or constructive notice of that fact and not having done anything to correct such an irregularity was deemed to have ratified the same. 19 More in point, we find that by the principle of estoppel, Manila Remnant is deemed to have allowed its agent to act as though it had plenary powers. Article 1911 of the Civil Code provides: "Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers." The above-quoted article is new. It is intended to protect the rights of innocent persons. In such a situation, both the principal and the agent may be considered as joint feasors whose liability is joint and solidary. 20 Authority by estoppel has arisen in the instant case because by its negligence, the principal, Manila Remnant, has permitted its agent, A.U. Valencia and Co., to exercise powers not granted to it. That the principal might not have had actual knowledge of the agent's misdeed is of no moment. Consider the following circumstances:

Firstly, Manila Remnant literally gave carte blanche to its agent A.U. Valencia and Co. in the sale and disposition of the subdivision lots. As a disclosed principal in the contracts to sell in favor of the Ventanilla couple, there was no doubt that they were in fact contracting with the principal. Section 7 of the Ventanillas' contracts to sell states: "7. That all payments whether deposits, down payment and monthly installment agreed to be made by the vendee shall be payable to A.U. Valencia and Co., Inc. It is hereby expressly understood that unauthorized payments made to real estate brokers or agents shall be the sole and exclusive responsibility and at the risk of the vendee and any and all such payments shall not be recognized by the vendors unless the official receipts therefor shall have been duly signed by the vendors' duly authorized agent, A.U. Valencia and Co., Inc." Indeed, once Manila Remnant had been furnished with the usual copies of the contracts to sell, its only participation then was to accept the collections and pay the commissions to the agent. The latter had complete control of the business arrangement. 21 Secondly, it is evident from the records that Manila Remnant was less than prudent in the conduct of its business as a subdivision owner. For instance, Manila Remnant failed to take immediate steps to avert any damage that might be incurred by the

lot buyers as a result of its unilateral abrogation of the agency contract. The publication of the cancelled contracts to sell in the Times Journal came three years after Manila Remnant had revoked its agreement with A.U. Valencia and Co. Moreover, Manila Remnant also failed to check the records of its agent immediately after the revocation of the agency contract despite the fact that such revocation was due to reported anomalies in Valencia's collections. Altogether, as pointed out by the counsel for the Ventanillas, Manila Remnant could and should have devised a system whereby it could monitor and require a regular accounting from A.U. Valencia and Co., its agent. Not having done so, Manila Remnant has made itself liable to those who have relied on its agent and the representation that such agent was clothed with sufficient powers to act on behalf of the principal. Even assuming that Manila Remnant was as much a victim as the other innocent lot buyers, it cannot be gainsaid that it was precisely its negligence and laxity in the day to day operations of the real estate business which made it possible for the agent to deceive unsuspecting vendees like the Ventanillas. In essence, therefore, the basis for Manila Remnant's solidary liability is estoppel which, in turn, is rooted in the principal's neglectfulness in failing to properly supervise and control the affairs of its agent and to adopt the needed measures to

prevent further misrepresentation. As a consequence, Manila Remnant is considered estopped from pleading the truth that it had no direct hand in the deception employed by its agent. 22 A final word. The Court cannot help but be alarmed over the reported practice of supposedly reputable real estate brokers of manipulating prices by allowing their own agents to "buy" lots in their names in the hope of reselling the same at a higher price to the prejudice of bona fide lot buyers, as precisely what the agent had intended to happen in the present case. This is a serious matter that must be looked into by the appropriate government housing authority. WHEREFORE, in view of the foregoing, the appealed decision of the Court of Appeals dated October 13, 1987 sustaining the decision of the Quezon City trial court dated November 17, 1980 is AFFIRMED. This judgment is immediately executory. Costs against petitioner. -------------------------------------------------------------Infante vs. Cunanan G.R L- 5180 August 31, 1953 Bautista Angelo, J: Facts: Infante was the owner of the land with a house built on it. Cunanan and Mijares were contracted to sell the property from which they would receive commission. Noche agreed to purchase the lot

but Infante informed C & M about her change of mind to sell the lot and had them sign a document stating that their authority to sell was already cancelled. Subsequently, Infante sold the lot & house to Noche. Defendants herein demanded for their commission. RTC ordered Infante to pay commission. CA affirmed. Issue: Whether or not petitioner was duty bound to pay commission notwithstanding that authority to sell has been cancelled. Ruling: A principal may withdraw the authority given to an agent at will. But respondents agreed to cancel the authority given to them upon assurance by petitioner that should property be sold to Noche, they would be given commission. That petitioner had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter that would give rise to a legal consequence if respondents agree to call off to transaction in deference to the request of the petitioner. Petitioner took advantage of the services of respondents, but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commissions agreed upon. ------------------------------------------------------------------------

Barreto v Santa Marina G.R. No. 8169 December 29, 1913 PRINCIPAL AND AGENT; REVOCATION OF AGENT'S AUTHORITY. (Art. 1733, Civil Code; art. 279, Code of Commerce.) 2. ID.; ID.; RIGHT OF PRINCIPAL TO DISMISS AGENT. Even though a period is stipulated during which the agent or employee is to hold his position in the service of the owner or head of a mercantile establishment, yet the latter may, for any of the special reasons specified in article 300 of the Code of Commerce, dismiss such agent or employee even before the termination of the period. DECISION TORRES, J p: Facts: Plaintiffs side: On January 5, 1911, counsel for the plaintiff Antonio M.a Barretto filed suit against Jose Santa Marina, alleging that the defendant for payment of compensation of services rendered subsequent to December 31, 1909. On January 8, 1910, and for a long time prior thereto, the plaintiff had held the position of agent of the defendant in the Philippine Islands for the management of the said business in the name and for the account of the said defendant; that the plaintiff's services were rendered in pursuance of a contract whereby the defendant obligated himself in writing to hire the said services for so long a time as the plaintiff should not show discouragement and to compensate such services at the rate of P37,000 Philippine currency per annum; The defendant, without reason, justification, or pretext and in violation of the contract before mentioned, summarily and arbitrarily dispensed with the plaintiff's services and removed him from the management of the business, since which date the defendant had

refused to pay him the compensation, or any part thereof, due him and payable in full for services rendered subsequent to December 31, 1909; and that, as a second cause of action based upon the facts aforestated, the plaintiff had suffered losses and damages in the sum of P100,000 Philippine currency. Said counsel therefore prayed that judgment be rendered against the defendant by sentencing him to pay to the plaintiff P137,000 Philippine currency, and the interest thereon at the legal rate, in addition to the payment of the costs, together with such other equitable remedies as the law allows. Defendants side: Plaintiff had no contract whatever with the defendant in which any period of time was stipulated during which the former was to render his services as manager of the La Insular factory; That the defendant revoked for just cause the power conferred upon the plaintiff; that subsequent to the revocation of such power, and on the occasion of the plaintiff's having sold all his rights and interests in the business of the La Insular factory to the defendant, in consideration of the sum received by him, the plaintiff renounced all action, intervention and claim that he might have against the defendant relative to the business aforementioned, whereby all the questions that might have arisen between hem were settled. The most important fact in this case, which stands out prominently from the evidence regarded as a whole, is that of the plaintiff Barretto's renunciation or resignation of the position he held as agent and manager of the said factory, which was freely and voluntarily made by him on the occasion of the insolvency and disappearance of the Chinaman Uy Yan, who had bought from the factory products aggregating in value the considerable sum of P97,000 and, without paying this large debt, disappeared

and has not been seen since. Honorable S. del Rosario, judge, sentenced the defendant to pay to the plaintiff the salary to which he was entitled for the first eight days of January, 1910, also that for the following month, at the rate of P3,083.33 per month, without special finding as to costs, and dismissed the second cause of action contained in the complaint presented in that case. Demand is made in this suit for the payment of the considerable sum of P137,000, together with the legal interest thereon. Two amounts make up this sum: One of P37,000, as salary for the year 1910, claimed to be due for services rendered by the plaintiff as agent and manager of the tobacco factory known as La Insular; and the other of P100,000 as an indemnity for losses and damages, on account of the plaintiff's removal without just cause from his position as agent and manager of said factory, effected arbitrarily and in violation of the contract of hire of services between the parties, the plaintiff claiming to be still entitled to hold the position from which he was dismissed. The record does not show that Santa Marina, his principal, required him to resign his position as manager, but that Barretto himself voluntarily stated by letter to his principal that, for the reasons therein mentioned, he resigned and placed at the latter's disposal the position of agent and manager of the La Insular factory; and if the principal, Santa Marina, deemed it suitable to relieve the agent, for having been negligent and overstepping his authority in the discharge of his office, and furthermore because of his having expressly resigned his position, and placed it at the disposal of the chief owner of the business, it cannot be explained how such person can be entitled to demand an indemnity for losses and damages, from his principal, who merely exercised his lawful right of relieving the plaintiff from the position which he had voluntarily given up. So, the agent and manager Barretto was not really

dismissed or removed by the defendant Santa Marina. What did occur was that, in view of the resignation tendered by the plaintiff for the reasons which he himself conscientiously deemed to warrant his surrender of the position he was holding in the La Insular factory, the principal owner of this establishment, the defendant Santa Marina, had to look for and appoint another agent and manager to relieve and substitute him in the said employment a lawful act performed by the principal owner of the factory and one which cannot serve as a ground upon which to demand from the latter an indemnity for losses and damages, inasmuch as, in view of the facts that occurred and were acknowledged and confessed by Barretto in is letters, Exhibits 3 and 6, the plaintiff could not expect, nor ought to have expected, that the defendant should have insisted on the unsuccessful agent's continuance in his position, or that he should not have accepted the resignation tendered by the plaintiff in his first letter. By the mere fact that the defendant remained silent and designated another person, Mr. J. McGavin, to discharge in the plaintiff's stead the powers and duties of agent and manager of the said factory, Barretto should have understood that his resignation had been accepted and that if its acceptance was not communicated to him immediately it was owing to the circumstance that the principal owner of the factory did not then have, nor until several months afterwards, any other person whom he could appoint and place in his stead, for, as soon as the defendant Santa Marina could appoint the said McGavin, he revoked the power he had conferred upon the plaintiff and communicated this fact to the latter, by means of the letter, Exhibit D, which was presented to him by the bearer thereof, McGavin himself, the new manager and agent appointed. Issue and Held:

1) Whether any period or term for the duration of the position of agent and manager was fixed in the verbal contract made between the deceased Joaquin Santa Marina No. The defendant acknowledged the said verbal contract and also its ratification by him after his brother's death; but he denied any stipulation therein that Barretto should hold his office for any specific period of time fixed by and between the contacting parties, for the deceased Joaquin Santa Marina, in conferring power upon the plaintiff, did not do so for any specific time, nor did he set any period within which he should hold his office of agent and manager of the La Insular factory; neither did he fix the date for the termination of such services, in the instrument of power of attorney executed by the defendant Santa Marina before a notary on the 25th of September, 1908. From the context of the instrument just mentioned it cannot be concluded that any time whatever was fixed during which the plaintiff should hold his position of agent. The defendant, in executing that instrument, whereby the agreement made between his brother Joaquin and Barretto was ratified, did no more than accord to the plaintiff the same confidence that the defendant's predecessor in interest had in him; and so long as this merely subjective condition of trust lodged in the agent existed, the time during which the latter might hold his office could be considered indefinite or undetermined, but as soon as that indispensable condition of a power of attorney disappeared and the conduct of the agent ceased to inspire confidence, the principal had a right to revoke the power he had conferred upon his agent, especially when the latter, for good reasons, gave up the office he was holding. The time during which the agent may hold his position is indefinite or undetermined, when no period has been

fixed in his commission and so long as the confidence reposed in him by the principal exists; but as soon as this confidence disappears the principal has a right to revoke the power he conferred upon the agent, especially when the latter has resigned his position for good reasons. 2) Whether or not Santa Marina can validly revoke contract of agency, even before expiration of period if any was fixed. Yes. The contract of agency can subsist only so long as the principal has confidence in his agent, because, from the moment such confidence disappears and although there be a fixed period for the exercise of the office of agent, a circumstance that does not appear in the present case, the principal has a perfect right to revoke the power that he had conferred upon the agent owing to the confidence he had in him and which for sound reasons had ceased to exist.The record does not show it to have been duly proved, notwithstanding the plaintiff's allegation, that a period was fixed for holding his agency or office of agent and manager of the La Insular factory. Article 1733 of the Civil Code, applicable to the case at bar, according to the provisions of article 2 of the Code of Commerce, prescribes: "The principal may, at his will, revoke the power and compel the agent to return the instrument containing the same in which the authority was given." Article 279 of the Code of Commerce provides: "The principal may revoke the commission intrusted to an agent at any stage of the transaction, advising him thereof, but always being liable for the result of the transactions which took place before the latter was informed of the revocation." It is not incumbent upon the courts to fix the period during which contracts for services shall last. Their duration is

understood to be implicitly fixed, in default of express stipulation, by the period for the payment of the salary of the employee. Even though the annual salary fixed for the year are collected and paid in monthly installments as they fall due, and so the plaintiff collected and was paid his remuneration; therefore, on the latter's discontinuance in his office as agent, he would at most be entitled to the salary for one month and some odd days, allowed in the judgment of the lower court. Article 302 of the Code of Commerce reads thus: "In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it, advising the other party thereof one month in advance. "The factor or shop clerk shall be entitled, in such case, to the salary due for the month." From the mere fact that the principal no longer had confidence in the agent, he is entitled to withdraw it and to revoke the power he conferred upon the latter, even before the expiration of the period of the period of the engagement or of the agreement made between them; but, in the present case, once it has been shown that, between the deceased Joaquin Santa Marina and the latter's heir, now the defendant, on the one hand, and the plaintiff Barretto, on the other, no period whatever was stipulated during which the last-named should hold the office of agent manager of the said factory, it is unquestionable that the defendant, even without good reasons, could lawfully revoke the power conferred upon the plaintiff and appoint in his place Mr. McGavin, and thereby contracted no liability whatever other than the obligation to pay the plaintiff the salary pertaining to one month and some odd days, as held in the judgment below. Barretto himself acknowledged in his aforesaid letter, Exhibit 3, that he had exceeded his authority and acted

negligently in selling on credit to the said Chinaman a large quantity of the products of the factory under the plaintiff's management, reaching the considerable value of P97,000; whereby he confessed one of the causes which led to his removal, the revocation of the power conferred upon him and the appointment of a new agent in his place. The defendant, Jose Santa Marina, in his letter of December 2, 1909, whereby he communicated to the plaintiff the revocation of the power he had conferred upon him and the appointment of another new agent, Mr. McGavin, stated among other things that the loan contracted by the agent Barretto, without the approval of the principal, caused a great panic among the stockholders of the factory and that the defendant hoped to allay it by the new measure that he expected to adopt. This, then, was still another reason that induced the principal to withdraw the confidence placed in the plaintiff and to revoke the power he had conferred upon him. Therefore, even omitting consideration of the resignation before mentioned, we find duly warranted the reasons which impelled the defendant to revoke the said power and relieve the plaintiff from the position of agent and manager of the La Insular factory. In revoking the authority conferred upon the plaintiff, acted within his unquestionable powers and did not thereby violate any statute whatever that may have limited them; consequently, he could not have caused the plaintiff any harm or detriment to his right and interests, for not only had Santa Marina a justifiable reason to proceed as he did, but also no period whatever had been stipulated during which the plaintiff should be entitled to hold his position; and furthermore, because, in relieving the latter and appointing another person in his place, the defendant acted in accordance with the renunciation and resignation which the plaintiff had tendered. If the plaintiff is entitled to any indemnity in accordance with law,

such was awarded to him in the judgment of the lower court by granting him the right to collect salary for one month and some odd days. --------------------------------------------------------------Coleongco v. Clarapols| G.R. No. L-18616 (1964)| Reyes, J.B.L., J. Facts: Since 1951, Eduardo L. Claparols, operated a factory for the manufacture of nails in Talisay, Occidental Negros, the "Claparols Steel & Nail Plant". The raw material, nail wire, was imported from foreign sources, specially from Belgium; and he had a regular dollar allocation therefor, granted by the Import Control Commission and the Central Bank. The marketing of the nails was handled by the "ABCD Commercial" of Bacolod, which was owned by a chinaman named Kho To. Losses compelled Claparols in 1953 to look for someone to finance his imports of nail wire. At first, Kho To agreed to do the financing, but on April 25, 1953, the Chinaman introduced his compadre, appellant Vicente Coleongco, to the appellee, recommending said appellant to be the financier in the stead of Kho To. Claparols agreed, and on April 25 of that year a contract (Exhibit B) was perfected between them whereby Coleongco undertook to finance and put up the funds required for the importation of the nail wire, which Claparols bound himself to convert into nails at his plant. It was agreed that Coleongco would have the exclusive distribution of the product, and the "absolute care in the marketing of these nails and the promotion of sales all over the Philippines", except the Davao Agency; that Coleongco would "share the control of

all the cash" from sales or deposited in banks; that he would have a representative in-the management; that all contracts and transactions should be jointly approved by both parties; that proper books would be kept and annual accounts rendered; and that profits and losses would be shared "on a 50-50 basis". The contract was renewed from year to year until 1958, and Coleongco's share subsequently increased by 5% of the net profit of the factory. On April 27, 1953, Claparols executed in favor of Coleongco, at the latter's behest, a special power of attorney (Exhibit C) to open and negotiate letters of credit, to sign contracts, bills of lading, invoices, and papers covering transactions; to represent appellee and the nail factory; and to accept payments and cash advances from dealers and distributors. Thereafter, Coleongco also became the assistant manager of the factory, and took over its business transactions, while Claparols devoted most of his time to the nail manufacture processes. Around mid-November 1956, Claparols learned from the PNB that Coleongco wrote the bank trying to discredit him, causing the bank to issue an alias writ of execution. Behind Claparol's back, Colengco wrote the bank alleging that Claparol was not serious in meeting his financial obligations by selling the machines. Claparols was able to settle the matter with the bank but because of this, he revoked the SPA and informed Coleongco of the same thru registered mail. He also hired an autditing firm C. Miller & Company, auditors, to go over the books and records of the business with a view to adjusting the accounts of the associates. This is after learning the Coleongco asked the superintendent Agsam to pour acid on the

machinery to paralyze the factory. Coleongco also wrote Kho To to cut his monthly advances from P2000 to P1000 to take advantage of the financial difficulties of Claparols and so that later, they may own the factory. This was carried on by Kho To in a letter advising that he can only draw P1000. The auditors found that Coleongco owed the Claparols Nail Factory the amount of P81,387.37, as of June 30, 1957. Coleongco was also dismissed as the assistant manager. Coleongco denies the allegations and claims that the revocation of the SPA was illegal and that he is entitled to the share of the profits as well as moral damages. Claparols counterclaimed. Issue: Can Claparols validly revoke the Special Power of Attorney even if it is coupled with interest on the part of the agent? Held: YES. It is first contended by the appellant Coleongco that the power of attorney was made to protect his interest under the financing agreement and was one coupled with an interest that the appellee Claparols had no legal power to revoke. This point cannot be sustained. It must not be forgotten that a power of attorney can be made irrevocable by contract only in the sense that the principal may not recall it at his pleasure; but coupled with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney-in-fact betrays the interest of the principal, as happened in this case. It is not open to serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent, for

that would amount to holding that a power, coupled with an interest authorizes the agent to commit frauds against the principal. Our new Civil Code, in Article 1172, expressly provides the contrary in prescribing that responsibility arising from fraud is demandable in all obligations, and that any waiver of action for future fraud is void. It is also on this principle that the Civil Code, in its Article 1800, declares that the powers of a partner, appointed as manager, in the articles of copartnership are irrevocable without just or lawful cause; and an agent with power coupled with an interest cannot stand on better ground than such a partner in so far as irrevocability of the power is concerned. The action of plaintiff -appellant for damages and lost profits due to the discontinuance of the financing agreement, Exhibit "B", may not prosper, because the record shows that the appellant likewise breached his part of the contract. It will be recalled that under paragraph 2 of the contract, Exhibit "B", it was stipulated: "That the Party of the Second Part (Coleongeo) has agreed to finance and put up all the necessary money which may be needed to pay for the importation of the raw material needed by such nail factory and allocated by the ICC from time to time either in cash or with whatever suitable means which the Party of the Second Part may be able to make by suitable arrangements with any well known banking institution recognized by the Central Bank of the Philippines." Instead of putting up all the necessary money needed to finance the imports of raw material, Coleangco merely advanced 25% in cash on account

of the price and had the balance covered by surety agreements executed by Claparols and others as solidary (joint and several) guarantors. Claparols was made to shoulder 3/4, of the payment for the imports, contrary to the financing agreement. Paragraph 11 of the latter expressly denied Coleongco any power or authority to bind Claparols without previous consultation and authority. When the balances for the cost of the importations became due, Coleongco in some instances, paid it with the dealers' advances to the nail factory against future sales without the knowledge of Claparols. Under paragraphs 8 and 11 of the financing agreement, Coleongeo was to give preference to the operating expenses before sharing profits, so that until the operating costs were provided for, Coleongco had no right to apply the factory's income to pay his own obligations. For 1957 to 1958 Claparols financed the imports of nail wire without the help of appellant, and in view of the latter's infringement of his obligations, his acts of disloyalty previously discussed, and his diversions of factory funds (he even bought two motor vehicles with them), the court finds no justification for his insistence in sharing in the factory's profit for these years, nor for the restoration of the revoked power of attorney. The accountant's reports and testimony prove that as of June 30, 1957, Coleongco owed to Claparols the sum of P83,466.34 that after some adjustment was reduced to P81,387.37, practically accepted even by appellant's auditor. The basic rule of contracts requires parties to act loyally toward each other, in the pursuit of the common end, and appellant clearly violated the rule

of good faith prescribed by Art. 1315 of the New Civil Code. The lower court also allowed Claparols P50,000 for damages, material, moral and exemplary, caused by the appellant Coleongco's acts in maliciously undermining appellee's credit that led the Philippine National Bank to secure a writ of execution against Claparols. Undeniably, the attempts of Colleongco to discredit and "squeeze" Claparols out of his own factory and business could not but cause the latter mental anguish and serious anxiety, as found by the court below, for which he is entitled to compensation; and the malevolence that lay behind appellee's actions justified also the imposition of exemplary or deterrent damages (Civ. Code, Art. 2232). While the award could have been made larger without violating the canons of justice, the discretion in fixing such damages primarily lay in the trial court, and we feel that the same should be respected. Judgment affirmed -------------------------------------------------------------DY BUNCIO & COMPANY, INC., plaintiff-appelle, vs. ONG GUAN CAN, ET AL., defendants. JUAN TONG and PUA GIOK ENG, appellants. - Chachu FACTS This is a suit over a rice mill and camarin situated at Dao, Province of Capiz. Plaintiff claims that the property belongs to its judgment debtor, Ong Guan Can, while defendants Juan Tong and Pua Giok Eng claim as owner and lessee of the owner by virtue of a deed dated July 31, 1931, by Ong Guan Can, Jr.

After trial the CFI of Capiz held that the deed was invalid and that the property was subject to the execution which has been levied on said properties by the judgment creditor of the owner. Defendants Juan Tong and Pua Giok bring this appeal and insist that the deed of the 31st of July, 1931, is valid. The first recital of the deed is that Ong Guan Can, Jr., as agent of Ong Guan Can, the proprietor of the commercial firm of Ong Guan Can & Sons, sells the rice-mill and camarin for P13,000 and gives as his authority the power of attorney dated the 23d of May, 1928, a copy of this public instrument being attached to the deed and recorded with the deed in the office of the register of deeds of Capiz. The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the agent in his own name and without any words indicating that he was signing it for the principal. ISSUE 1. WON the power of attorney gives the agent the power to alienate the property- NO The power of attorney is not a general power of attorney but a limited one and does not give the express power to alienate the properties in question. (Article 1713 of the Civil Code.) Appellants claim that this defect is cured by Exhibit 1, which purports to be a general power of attorney given to the same agent in 1920. ISSUE 2. WON this purported 2nd power of attorney cured the defect in the first- NO Article 1732 of the Civil Code is silent over the partial termination of an agency. The making and accepting of a new power of

attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture. The title of Ong Guan Can not having been divested by the so-called deed of July 31, 1931, his properties are subject to attachment and execution. The judgment appealed from is therefore affirmed. --------------------------------------------FEDERICO VALERA, Plaintiff-Appellant , vs. MIGUEL VELASCO, Defendant-Appellee. - Chachu FACTSs By virtue of the powers of attorney, Exhibits X and Z, executed by the plaintiff on April 11, 1919, and on August 8, 1922, the defendant was appointed attorney-in-fact of the said plaintiff with authority to manage his property in the Philippines, consisting of the usufruct of a real property located of Echague Street, City of Manila. The defendant accepted both powers of attorney, managed plaintiff's property, reported his operations, and rendered accounts of his administration; and on March 31, 1923 presented exhibit F to plaintiff, which is the final account of his administration for said month,

wherein it appears that there is a balance of P3,058.33 in favor of the plaintiff. The liquidation of accounts revealed that the plaintiff owed the defendant P1,100, and as misunderstanding arose between them, the defendant brought suit against the plaintiff and udgment was rendered in his favor and after the writ of execution was issued, the sheriff levied upon the plaintiff's right of usufruct, sold it at public auction and adjudicated it to the defendant in payment of all of his claim. virtual law library Subsequently, the plaintiff sold his right of redemption to one Eduardo Hernandez, for the sum of P200. This purchaser conveyed the same right of redemption, for the sum of P200, to the plaintiff himself, Federico Valera. virtual law library After the plaintiff had recovered his right of redemption, one Salvador Vallejo, who had an execution upon a judgment against the plaintiff rendered in a civil case against the latter, levied upon said right of redemption, which was sold by the sheriff at public auction to Salvador Vallejo for P250 and was definitely adjudicated to him. Later, he transferred said right of redemption to the defendant Velasco. This is how the title to the right of usufruct to the aforementioned property later came to vest the said defendant. ISSUE 1. WON one of the ways of terminating an agency is by the express or tacit renunciation of the agent and WON the institution of a civil action and the execution of the judgment obtained by the agent against his principal is but renunciation of the

powers conferred on the agent- YES Article 1732 of the Civil Code reads as follows: Art. 1732. Agency is terminated: 1. By revocation; 2. By the withdrawal of the agent; 3. By the death, interdiction, bankruptcy, or insolvency of the principal or of the agent. And article 1736 of the same Code provides that: Art. 1736. An agent may withdraw from the agency by giving notice to the principal. Should the latter suffer any damage through the withdrawal, the agent must indemnify him therefore, unless the agent's reason for his withdrawal should be the impossibility of continuing to act as such without serious detriment to himself. The misunderstanding between the plaintiff and the defendant over the payment of the balance of P1,000 due the latter, as a result of the liquidation of the accounts between them arising from the collections by virtue of the former's usufructuary right, who was the principal, made by the latter as his agent, and the fact that the said defendant brought suit against the said principal for the payment of said balance, more than prove the breach of the juridical relation between them; for, although the agent has not expressly told his principal that he renounced the agency, yet neither dignity nor decorum permits the latter to continue representing a person who has adopted such an antagonistic attitude towards him. When the agent filed a complaint against his principal for recovery of a sum of money arising from the liquidation of the accounts between them in connection with

the agency, Federico Valera could not have understood otherwise than that Miguel Velasco renounced the agency; because his act was more expressive than words and could not have caused any doubt. In order to terminate their relations by virtue of the agency the defendant, as agent, rendered his final account on March 31, 1923 to the plaintiff, as principal. law library Briefly, then, the fact that an agent institutes an action against his principal for the recovery of the balance in his favor resulting from the liquidation of the accounts between them arising from the agency, and renders and final account of his operations, is equivalent to an express renunciation of the agency, and terminates the juridical relation between them. If, as we have found, the defendant-appellee Miguel Velasco, in adopting a hostile attitude towards his principal, suing him for the collection of the balance in his favor, resulting from the liquidation of the agency accounts, ceased ipso facto to be the agent of the plaintiff-appellant, said agent's purchase of the aforesaid principal's right of usufruct at public auction held by virtue of an execution issued upon the judgment rendered in favor of the former and against the latter, is valid and legal, and the lower court did not commit the fourth and fifth assignments of error attributed to it by the plaintiff-appellant.ch ISSUE 2: WON the sale to Hernandez by Valero is valid- NO It is deemed unnecessary to discuss the validity of the sale made by Federico Valera to

Eduardo Hernandez of his right of redemption in the sale of his usufructuary right made by the sheriff by virtue of the execution of the judgment in favor of Miguel Velasco and against the said Federico Valera; and the same thing is true as to the validity of the resale of the same right of redemption made by Eduardo Hernandez to Federico Valera; inasmuch as Miguel Velasco's purchase at public auction held by virtue of an execution of Federico Valera's usufructuary right is valid and legal, and as neither the latter nor Eduardo Hernandez exercised his right of redemption within the legal period, the purchaser's title became absolute. Moreover, the defendant-appellee, Miguel Velasco, having acquired Federico Valera's right of redemption from Salvador Vallejo, who had acquired it at public auction by virtue of a writ of execution issued upon the judgment obtained by the said Vallejo against the said Valera, the latter lost all right to said usufruct. law library And even supposing that Eduardo Hernandez had been tricked by Miguel Velasco into selling Federico Valera's right of repurchase to the latter so that Salvador Vallejo might levy an execution on it, and even supposing that said resale was null for lack of consideration, yet, inasmuch as Eduardo Hernandez did not present a third party claim when the right was levied upon for the execution of the judgment obtained by Vallejo against Federico Vallera, nor did he file a complaint to recover said right before the period of redemption expired, said Eduardo

Hernandez, and much less Federico Valera, cannot now contest the validity of said resale, for the reason that the one-year period of redemption has already elapsed. ISSUE 3: WON Miguel Velasco has to render a liquidation of accounts from March 31, 1923- NO inasmuch as Velasco had acquired the rights of the plaintiff by purchase at the execution sale, and as purchaser, he was entitled to receive the rents from the date of the sale until the date of the repurchase, considering them as part of the redemption price; but not having exercised the right repurchase during the legal period, and the title of the repurchaser having become absolute, the latter did not have to account for said rents.