VICTORIAS MILLING CO., INC., petitioner, Merchandising) and herein petitioner.

Merchandising) and herein petitioner. Since the former could not be served with
vs.
COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATION, respondents.
G.R. No. 117356 June 19, 2000
St. Therese Merchandising (hereafter STM) regularly bought sugar from
petitioner Victorias Milling Co., Inc., (VMC). In the course of their dealings, petitioner
issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases.
Among these was SLDR No. 1214M, which gave rise to the instant case. Dated October
16, 1989, SLDR No. 1214M covers 25,000 bags of sugar. Each bag contained 50 kilograms
and priced at P638.00 per bag as "per sales order VMC Marketing No. 042 dated October
16, 1989." The transaction it covered was a "direct sale." The SLDR also contains an
additional note which reads: "subject for (sic) availability of a (sic) stock at NAWACO
(warehouse)."
On October 25, 1989, STM sold to private respondent Consolidated Sugar
Corporation (CSC) its rights in SLDR No. 1214M for P 14,750,000.00. CSC issued one
check dated October 25, 1989 and three checks postdated November 13, 1989 in
payment. That same day, CSC wrote petitioner that it had been authorized by STM
to withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were a
copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to
withdraw for and in our behalf the refined sugar covered by Shipping
List/Delivery Receipt-Refined Sugar (SDR) No. 1214 dated October 16, 1989 in the
total quantity of 25,000 bags."
On October 27, 1989, STM issued 16 checks in the total amount of
P31,900,000.00 with petitioner as payee. The latter, in turn, issued Official Receipt No.
33743 dated October 27, 1989 acknowledging receipt of the said checks in payment of
50,000 bags. Aside from SLDR No. 1214M, said checks also covered SLDR No. 1213.
Private respondent CSC surrendered SLDR No. 1214M to the petitioner's
NAWACO warehouse and was allowed to withdraw sugar. However, after 2,000 bags had
been released, petitioner refused to allow further withdrawals of sugar against SLDR No.
1214M. CSC then sent petitioner a letter dated January 23, 1990 informing it that SLDR
No. 1214M had been "sold and endorsed" to it but that it had been refused further
withdrawals of sugar from petitioner's warehouse despite the fact that only 2,000 bags
had been withdrawn. CSC thus inquired when it would be allowed to withdraw the
remaining 23,000 bags.
On January 31, 1990, petitioner replied that it could not allow any further
withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all
the sugar covered by the cleared checks.
On March 2, 1990, CSC sent petitioner a letter demanding the release of the
balance of 23,000 bags.
Seven days later, petitioner reiterated that all the sugar corresponding to the
amount of STM's cleared checks had been fully withdrawn and hence, there would be no
more deliveries of the commodity to STM's account. Petitioner also noted that CSC had
represented itself to be STM's agent as it had withdrawn the 2,000 bags against SLDR No.
1214M "for and in behalf" of STM.
On April 27, 1990, CSC filed a complaint for specific performance against
Defendants were Teresita Ng Sy (doing business under the name of St. Therese
summons, the case proceeded only against the latter. During the trial, it was discovered
that Teresita Ng Go who testified for CSC was the same Teresita Ng Sy who could not be
reached through summons. CSC, however, did not bother to pursue its case against her,
but instead used her as its witness.
CSC's complaint alleged that STM had fully paid petitioner for the sugar covered
by SLDR No. 1214M. Therefore, the latter had no justification for refusing delivery of the
sugar. CSC prayed that petitioner be ordered to deliver the 23,000 bags covered by SLDR
No. 1214M and sought the award of P1,104,000.00 in unrealized profits, P3,000,000.00
as exemplary damages, P2,200,000.00 as attorney's fees and litigation expenses.
Petitioner's primary defense a quo was that it was an unpaid seller for the
23,000 bags. Since STM had already drawn in full all the sugar corresponding to the
amount of its cleared checks, it could no longer authorize further delivery of sugar to
CSC. Petitioner also contended that it had no privity of contract with CSC.
Petitioner explained that the SLDRs, which it had issued, were not documents
of title, but mere delivery receipts issued pursuant to a series of transactions entered
into between it and STM. The SLDRs prescribed delivery of the sugar to the party
specified therein and did not authorize the transfer of said party's rights and interests.
Petitioner also alleged that CSC did not pay for the SLDR and was actually STM's
co-conspirator to defraud it through a misrepresentation that CSC was an innocent
purchaser for value and in good faith.
The trial court rendered its judgment favoring private respondent CSC ordering
defendant Victorias Milling Company to deliver to the plaintiff 23,000 bags of refined
sugar due under SLDR No. 1214.
On appeal, petitioner averred that the dealings between it and STM were part of
a series of transactions involving only one account or one general contract of sale.
Pursuant to this contract, STM or any of its authorized agents could withdraw bags of
sugar only against cleared checks of STM. SLDR No. 21214M was only one of 22 SLDRs
issued to STM and since the latter had already withdrawn its full quota of sugar under
the said SLDR, CSC was already precluded from seeking delivery of the 23,000 bags of
sugar.
Private respondent CSC countered that the sugar purchases involving SLDR No.
1214M were separate and independent transactions and that the details of the series of
purchases were contained in a single statement with a consolidated summary of cleared
check payments and sugar stock withdrawals because this a more convenient system
than issuing separate statements for each purchase.
The appellate court considered the following issues: (a) Whether or not the
transaction between petitioner and STM involving SLDR No. 1214M was a separate,
independent, and single transaction; (b) Whether or not CSC had the capacity to sue on
its own on SLDR No. 1214M; and (c) Whether or not CSC as buyer from STM of the rights
to 25,000 bags of sugar covered by SLDR No. 1214M could compel petitioner to deliver
23,000 bags allegedly unwithdrawn.
On February 24, 1994, the Court of Appeals rendered its decision modifying the
trial court's judgment, to wit:
 "1) Deliver to plaintiff-appellee 12,586 bags of sugar covered by SLDR No.
1214M;
Both parties then seasonably filed separate motions for reconsideration.
In its resolution dated September 30, 1994, the appellate court modified its
decision to read:
"WHEREFORE, the Court hereby modifies the assailed judgment and orders defendant-
appellant to:
"(1) Deliver to plaintiff-appellee 23,000 bags of refined sugar under SLDR No.
1214M
ISSUE:
(1)....Whether or not the Court of Appeals erred in not ruling that CSC was an
agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee.
(2)....Whether or not the Court of Appeals erred in applying the law on
compensation to the transaction under SLDR No. 1214M so as to preclude
petitioner from offsetting its credits on the other SLDRs.
(3)....Whether or not the Court of Appeals erred in not ruling that the sale of
sugar under SLDR No. 1214M was a conditional sale or a contract to sell and
hence freed petitioner from further obligations.
(4)....Whether or not the Court of Appeals committed an error of law in not
applying the "clean hands doctrine" to preclude CSC from seeking judicial relief.
RULING:
Anent the first issue, we find from the records that petitioner raised this issue
for the first time on appeal. It is settled that an issue which was not raised during the
trial in the court below could not be raised for the first time on appeal as to do so would
be offensive to the basic rules of fair play, justice, and due process. Nonetheless, the
Court of Appeals opted to address this issue, hence, now a matter for our consideration.
Petitioner heavily relies upon STM's letter of authority allowing CSC to
withdraw sugar against SLDR No. 1214M to show that the latter was STM's agent. The
pertinent portion of said letter reads:
"This is to authorize Consolidated Sugar Corporation or its representative to
withdraw form and in our behalf (stress supplied) the refined sugar covered by
Shipping List/Delivery Receipt = Refined Sugar (SDR) No. 1214 dated October 16, 1989
in the total quantity of 25, 000 bags."
The Civil Code defines a contract of agency as follows:
"Art. 1868. By the contract of agency a person binds himself to render
some service or to do something in representation or on behalf of another, with
the consent or authority of the latter."
It is clear from Article 1868 that the basis of agency is representation. On
the part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions; and on the part of the
agent, there must be an intention to accept the appointment and act on it, and in
the absence of such intent, there is generally no agency. One factor which most
clearly distinguishes agency from other legal concepts is control; one person - the agent -
agrees to act under the control or direction of another - the principal. Indeed, the very
word "agency" has come to connote control by the principal. The control factor, more
than any other, has caused the courts to put contracts between principal and agent
in a separate category. The Court of Appeals, in finding that CSC, was not an agent of
STM, opined:
"This Court has ruled that where the relation of agency is dependent upon the
acts of the parties, the law makes no presumption of agency, and it is always a fact to be
proved, with the burden of proof resting upon the persons alleging the agency, to show
not only the fact of its existence, but also its nature and extent (Antonio vs. Enriquez [CA],
51 O.G. 3536]. Here, defendant-appellant failed to sufficiently establish the existence of
an agency relation between plaintiff-appellee and STM. The fact alone that it (STM) had
authorized withdrawal of sugar by plaintiff-appellee "for and in our (STM's) behalf"
should not be eyed as pointing to the existence of an agency relation ...It should be
viewed in the context of all the circumstances obtaining. Although it would seem STM
represented plaintiff-appellee as being its agent by the use of the phrase "for and in our
(STM's) behalf" the matter was cleared when on 23 January 1990, plaintiff-appellee
informed defendant-appellant that SLDFR No. 1214M had been "sold and endorsed" to it
by STM. Further, plaintiff-appellee has shown that the 25, 000 bags of sugar covered by
the SLDR No. 1214M were sold and transferred by STM to it ...A conclusion that there
was a valid sale and transfer to plaintiff-appellee may, therefore, be made thus
capacitating plaintiff-appellee to sue in its own name, without need of joining its imputed
principal STM as co-plaintiff."
In the instant case, it appears plain to us that private respondent CSC was a
buyer of the SLDFR form, and not an agent of STM. Private respondent CSC was not
subject to STM's control. The question of whether a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect of
the language employed. That the authorization given to CSC contained the phrase "for
and in our (STM's) behalf" did not establish an agency. Ultimately, what is decisive is the
intention of the parties. That no agency was meant to be established by the CSC and STM
is clearly shown by CSC's communication to petitioner that SLDR No. 1214M had been
"sold and endorsed" to it. The use of the words "sold and endorsed" means that STM and
CSC intended a contract of sale, and not an agency. Hence, on this score, no error was
committed by the respondent appellate court when it held that CSC was not STM's agent
and could independently sue petitioner.
On the second issue, proceeding from the theory that the transactions entered
into between petitioner and STM are but serial parts of one account, petitioner insists
that its debt has been offset by its claim for STM's unpaid purchases, pursuant to Article
1279 of the Civil Code. However, the trial court found, and the Court of Appeals
concurred, that the purchase of sugar covered by SLDR No. 1214M was a separate and
independent transaction; it was not a serial part of a single transaction or of one account
contrary to petitioner's insistence. Evidence on record shows, without being rebutted,
that petitioner had been paid for the sugar purchased under SLDR No. 1214M. Petitioner
clearly had the obligation to deliver said commodity to STM or its assignee. Since said
sugar had been fully paid for, petitioner and CSC, as assignee of STM, were not mutually
creditors and debtors of each other. No reversible error could thereby be imputed to
respondent appellate court when, it refused to apply Article 1279 of the Civil Code to the
present case.
 Regarding the third issue, petitioner contends that the sale of sugar under SLDR
No. 1214M is a conditional sale or a contract to sell, with title to the sugar still remaining
with the vendor. Noteworthy, SLDR No. 1214M contains the following terms and
conditions:
"It is understood and agreed that by payment by buyer/trader of
refined sugar and/or receipt of this document by the buyer/trader personally
or through a representative, title to refined sugar is transferred to buyer/trader
and delivery to him/it is deemed effected and completed (stress supplied) and
buyer/trader assumes full responsibility therefore"
The aforequoted terms and conditions clearly show that petitioner transferred
title to the sugar to the buyer or his assignee upon payment of the purchase price. Said
terms clearly establish a contract of sale, not a contract to sell. Petitioner is now
estopped from alleging the contrary. The contract is the law between the contracting
parties. And where the terms and conditions so stipulated are not contrary to law,
morals, good customs, public policy or public order, the contract is valid and must be
upheld. Having transferred title to the sugar in question, petitioner is now obliged to
deliver it to the purchaser or its assignee.
As to the fourth issue, petitioner submits that STM and private respondent CSC
have entered into a conspiracy to defraud it of its sugar. This conspiracy is allegedly
evidenced by: (a) the fact that STM's selling price to CSC was below its purchasing price;
(b) CSC's refusal to pursue its case against Teresita Ng Go; and (c) the authority given by
the latter to other persons to withdraw sugar against SLDR No. 1214M after she had sold
her rights under said SLDR to CSC. Petitioner prays that the doctrine of "clean hands"
should be applied to preclude CSC from seeking judicial relief. However, despite careful
scrutiny, we find here the records bare of convincing evidence whatsoever to support the
petitioner's allegations of fraud. We are now constrained to deem this matter purely
speculative, bereft of concrete proof.
REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in his
capacity as former Chief of the Intelligence Service, Armed Forces of the
Philippines (ISAFP), and former Commanding General, Presidential Security Group
(PSG), and MAJ. DAVID B. DICIANO, in his capacity as an Officer of ISAFP and
former member of the PSG, Petitioners,
vs.
HON. VICTORINO EVANGELISTA, in his capacity as Presiding Judge, Regional Trial
Court, Branch 223, Quezon City, and DANTE LEGASPI, represented by his attorney-
in-fact, Paul Gutierrez, Respondent.
G.R. No. 156015. August 11, 2005
Private respondent Dante Legaspi is the owner of a land located in Bigte,
Norzagaray, Bulacan. In November 1999, petitioner Jose Calimlim, representing the
Republic of the Philippines, and as then head of the Intelligence Service of the Armed
Forces of the Philippines and the Presidential Security Group, entered into a
Memorandum of Agreement (MOA) with one Ciriaco Reyes. The MOA granted Reyes a
permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan. Petitioner Diciano
signed the MOA as a witness. It was further alleged that thereafter, Reyes, together with
petitioners, started, digging, tunneling and blasting works on the said land of Legaspi.
The complaint also alleged that petitioner Calimlim assigned about 80 military personnel
to guard the area and encamp thereon to intimidate Legaspi and other occupants of the
area from going near the subject land.
On February 15, 2000, Legaspi executed a special power of attorney (SPA)
appointing his nephew, private respondent Gutierrez, as his attorney-in-fact. Gutierrez
was given the power to deal with the treasure hunting activities on Legaspis land and to
file charges against those who may enter it without the latters authority. Legaspi agreed
to give Gutierrez 40% of the treasure that may be found in the land.
On February 29, 2000, Gutierrez filed a case for damages and injunction against
petitioners for illegally entering Legaspis land. He hired the legal services of Atty.
Homobono Adaza. Their contract provided that as legal fees, Atty. Adaza shall be entitled
to 30% of Legaspis share in whatever treasure may be found in the land. In addition,
Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee per court hearing and
defray all expenses for the cost of the litigation. Upon the filing of the complaint, then
Executive Judge Perlita J. Tria Tirona issued a 72-hour temporary restraining order
(TRO) against petitioners.
The case was subsequently raffled to the RTC of Quezon City, Branch 223, then
presided by public respondent Judge Victorino P. Evangelista. On March 2, 2000,
respondent judge issued another 72-hour TRO and a summary hearing for its extension
was set on March 7, 2000.
On March 14, 2000, petitioners filed a Motion to Dismiss contending: first, there
is no real party-in-interest as the SPA of Gutierrez to bring the suit was already revoked
by Legaspi on March 7, 2000, as evidenced by a Deed of Revocation, and, second,
Gutierrez failed to establish that the alleged armed men guarding the area were acting on
orders of petitioners.
On March 23, 2000, the trial court granted private respondents application for
a writ of preliminary injunction on the following grounds: (1) the diggings and blastings
appear to have been made on the land of Legaspi, hence, there is an urgent need to
maintain the status quo to prevent serious damage to Legaspis land; and, (2) the SPA
granted to Gutierrez continues to be valid.
On even date, the trial court issued another Order denying petitioners motion
to dismiss and requiring petitioners to answer the complaint. On April 4, 2000, it
likewise denied petitioners motion for inhibition. On appeal, the Court of Appeals
affirmed the decision of the trial court.
ISSUE:
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE
RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.
RULING:
On the first issue, petitioners claim that the special power of attorney of
Gutierrez to represent Legaspi has already been revoked by the latter. Private
respondent Gutierrez, however, contends that the unilateral revocation is invalid as his
agency is coupled with interest.
We agree with private respondent.
Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds
himself to render some service or do something in representation or on behalf of
another, known as the principal, with the consent or authority of the latter.
A contract of agency is generally revocable as it is a personal contract of
representation based on trust and confidence reposed by the principal on his agent. As
the power of the agent to act depends on the will and license of the principal he
represents, the power of the agent ceases when the will or permission is withdrawn by
the principal. Thus, generally, the agency may be revoked by the principal at will.
However, an exception to the revocability of a contract of agency is when
it is coupled with interest, i.e., if a bilateral contract depends upon the agency. The
reason for its irrevocability is because the agency becomes part of another obligation or
agreement. It is not solely the rights of the principal but also that of the agent and third
persons which are affected. Hence, the law provides that in such cases, the agency cannot
be revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate courts
that the agency granted by Legaspi to Gutierrez is coupled with interest as a bilateral
contract depends on it. It is clear from the records that Gutierrez was given by Legaspi,
inter alia, the power to manage the treasure hunting activities in the subject land;
to file any case against anyone who enters the land without authority from
Legaspi; to engage the services of lawyers to carry out the agency; and, to dig for
any treasure within the land and enter into agreements relative thereto.
It was likewise agreed upon that Gutierrez shall be entitled to 40% of
whatever treasure may be found in the land. Pursuant to this authority and to protect
Legaspis land from the alleged illegal entry of petitioners, agent Gutierrez hired the
services of Atty. Adaza to prosecute the case for damages and injunction against
petitioners. As payment for legal services, Gutierrez agreed to assign to Atty. Adaza
30% of Legaspis share in whatever treasure may be recovered in the subject land.
It is clear that the treasure that may be found in the land is the subject matter of the
agency; that under the SPA, Gutierrez can enter into contract for the legal services of to disqualify him. To be disqualifying, it must be shown that the bias and prejudice
Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of stemmed from an extrajudicial source and result in an opinion on the merits on some
the agency, i.e., in the treasures that may be found in the land. basis other than what the judge learned from his participation in the case. Opinions
formed in the course of judicial proceedings, although erroneous, as long as based on the
This bilateral contract depends on the agency and thus renders it as one
evidence adduced, do not prove bias or prejudice. We also emphasized that repeated
coupled with interest, irrevocable at the sole will of the principal Legaspi. When an
rulings against a litigant, no matter how erroneously, vigorously and consistently
agency is constituted as a clause in a bilateral contract, that is, when the agency is
expressed, do not amount to bias and prejudice which can be a bases for the
inserted in another agreement, the agency ceases to be revocable at the pleasure of the disqualification of a judge.
principal as the agency shall now follow the condition of the bilateral agreement.
Consequently, the Deed of Revocation executed by Legaspi has no effect. The authority of
Gutierrez to file and continue with the prosecution of the case at bar is unaffected.
OTHER ISSUES:
On the second issue, we hold that the issuance of the writ of preliminary
injunction is justified. A writ of preliminary injunction is an ancilliary or preventive
remedy that is resorted to by a litigant to protect or preserve his rights or interests and
for no other purpose during the pendency of the principal action. It is issued by the court
to prevent threatened or continuous irremediable injury to the applicant before his claim
can be thoroughly studied and adjudicated. Its aim is to preserve the status quo ante until
the merits of the case can be heard fully, upon the applicants showing of two important
conditions, viz.: (1) the right to be protected prima facie exists; and, (2) the acts sought to
be enjoined are violative of that right.
It is crystal clear that at the hearing for the issuance of a writ of preliminary
injunction, mere prima facie evidence is needed to establish the applicants rights or
interests in the subject matter of the main action. It is not required that the applicant
should conclusively show that there was a violation of his rights as this issue will still be
fully litigated in the main case. Thus, an applicant for a writ is required only to show
that he has an ostensible right to the final relief prayed for in his complaint.
In the case at bar, we find that respondent judge had sufficient basis to issue the
writ of preliminary injunction. It was established, prima facie, that Legaspi has a right
to peaceful possession of his land, pendente lite. Legaspi had title to the subject land.
It was likewise established that the diggings were conducted by petitioners in the
enclosed area of Legaspis land. Whether the land fenced by Gutierrez and claimed to
be included in the land of Legaspi covered an area beyond that which is included in
the title of Legaspi is a factual issue still subject to litigation and proof by the
parties in the main case for damages. It was necessary for the trial court to issue the
writ of preliminary injunction during the pendency of the main case in order to preserve
the rights and interests of private respondents Legaspi and Gutierrez.
We have carefully examined the records and we find no sufficient basis to hold
that respondent judge should have recused himself from hearing the case. There is no
discernible pattern of bias on the rulings of the respondent judge. Bias and partiality can
never be presumed. Bare allegations of partiality will not suffice in an absence of a clear
showing that will overcome the presumption that the judge dispensed justice without
fear or favor. It bears to stress again that a judges appreciation or misappreciation of the
sufficiency of evidence adduced by the parties, or the correctness of a judges orders or
rulings on the objections of counsels during the hearing, without proof of malice on the
part of respondent judge, is not sufficient to show bias or partiality.
As we held in the case of Webb vs. People, the adverse and erroneous rulings
of a judge on the various motions of a party do not sufficiently prove bias and prejudice
GENEVIEVE LIM, petitioner,
vs.
FLORENCIO SABAN, respondents.
FACTS
The late Eduardo Ybaez (Ybaez), the owner of a 1,000-square meter lot in Cebu City
(the "lot"), entered into anAgreement and Authority to Negotiate and Sell (Agency
Agreement) with respondent Florencio Saban (Saban) on February 8, 1994. Under the
Agency Agreement, Ybaez authorized Saban to look for a buyer of the lot for Two
Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the
amounts needed for payment of taxes, transfer of title and other expenses incident to the
sale, as well as Sabans commission for the sale.
Through Sabans efforts, Ybaez and his wife were able to sell the lot to the petitioner
Genevieve Lim (Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on
March 10, 1994. The price of the lot as indicated in theDeed of Absolute Sale is Two
Hundred Thousand Pesos (P200,000.00). It appears, however, that the vendees agreed to
purchase the lot at the price of Six Hundred Thousand Pesos (P600,000.00), inclusive of
taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the
amounts of One Hundred Thirteen Thousand Two Hundred Fifty Seven Pesos
(P113,257.00) for payment of taxes due on the transaction as well as Fifty Thousand
Pesos (P50,000.00) as brokers commission. Lim also issued in the name of Saban four
postdated checks in the aggregate amount of Two Hundred Thirty Six Thousand Seven
Hundred Forty Three Pesos (P236,743.00).
Subsequently, Ybaez sent a letter dated June 10, 1994 addressed to Lim. In the letter
Ybaez asked Lim to cancel all the checks issued by her in Sabans favor and to "extend
another partial payment" for the lot in his (Ybaezs) favor.
After the four checks in his favor were dishonored upon presentment, Saban filed
a Complaint for collection of sum of money and damages against Ybaez and Lim with
the Regional Trial Court (RTC) of Cebu City.
Saban alleged that Ybaez told Lim that he (Saban) was not entitled to any commission
for the sale since he concealed the actual selling price of the lot from Ybaez and because
he was not a licensed real estate broker. Ybaez was able to convince Lim to cancel all
four checks.
Saban further averred that Ybaez and Lim connived to deprive him of his sales
commission by withholding payment of the first three checks. He also claimed that Lim
failed to make good the fourth check which was dishonored because the account against
which it was drawn was closed.
Ybaez died during the pendency of the case before the RTC. Upon motion of his counsel,
the trial court dismissed the case only against him without any objection from the other
parties.
On May 14, 1997, the RTC rendered its Decision dismissing Sabans complaint, declaring
the four (4) checks issued by Lim as stale and non-negotiable, and absolving Lim from
any liability towards Saban.
Saban appealed the trial courts Decision to the Court of Appeals.
On October 27, 2003, the appellate court promulgated its Decision reversing the trial
courts ruling. It held that Saban was entitled to his commission amounting
to P236,743.00.
The Court of Appeals ruled that Ybaezs revocation of his contract of agency with
Saban was invalid because the agency was coupled with an interest and Ybaez
effected the revocation in bad faith in order to deprive Saban of his commission and to
keep the profits for himself.
ISSUE
Whether or not the contract of agency between Ybaez and Saban is coupled with
interest?
RULING
No.
The Court gives due course to the petition, but agrees with the result reached by
the Court of Appeals.
The Court affirms the appellate courts finding that the agency was not revoked since
Ybaez requested that Lim make stop payment orders for the checks payable to Saban
only after the consummation of the sale on March 10, 1994. At that time, Saban had
already performed his obligation as Ybaezs agent when, through his (Sabans) efforts,
Ybaez executed the Deed of Absolute Sale of the lot with Lim and the Spouses Lim.
To deprive Saban of his commission subsequent to the sale which was consummated
through his efforts would be a breach of his contract of agency with Ybaez which
expressly states that Saban would be entitled to any excess in the purchase price after
deducting the P200,000.00 due to Ybaez and the transfer taxes and other incidental
expenses of the sale.
Saban had completely performed his obligations under his contract of agency with
Ybaez by finding a suitable buyer to preparing the Deed of Absolute Sale between
Ybaez and Lim and her co-vendees. Moreover, the contract of agency very clearly states
that Saban is entitled to the excess of the mark-up of the price of the lot after deducting
Ybaezs share of P200,000.00 and the taxes and other incidental expenses of the sale.
However, the Court does not agree with the appellate courts pronouncement that
Sabans agency was one coupled with an interest. Under Article 1927 of the Civil
Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is
the means of fulfilling an obligation already contracted, or if a partner is appointed
manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable. Stated differently, an agency is deemed as one
coupled with an interest where it is established for the mutual benefit of the
principal and of the agent, or for the interest of the principal and of third persons,
and it cannot be revoked by the principal so long as the interest of the agent or of a
third person subsists. In an agency coupled with an interest, the agents interest
must be in the subject matter of the power conferred and not merely an interest in
the exercise of the power because it entitles him to compensation. When an agents
interest is confined to earning his agreed compensation, the agency is not one
coupled with an interest, since an agents interest in obtaining his compensation as
such agent is an ordinary incident of the agency relationship.
Sabans entitlement to his commission having been settled, the Court must now
determine whether Lim is the proper party against whom Saban should address his
claim.
Sabans right to receive compensation for negotiating as broker for Ybaez arises from
the Agency Agreement between them. Lim is not a party to the contract. However, the
record reveals that she had knowledge of the fact that Ybaez set the price of the lot
at P200,000.00 and that the P600,000.00the price agreed upon by her and Saban
was more than the amount set by Ybaez because it included the amount for payment of
taxes and for Sabans commission as broker for Ybaez.
Considering the circumstances surrounding the case, and the undisputed fact that Lim
had not yet paid the balance of P200,000.00 of the purchase price of P600,000.00, it is
just and proper for her to pay Saban the balance ofP200,000.00.
Furthermore, since Ybaez received a total of P230,000.00 from Lim, or an excess
of P30,000.00 from his asking price of P200,000.00, Saban may claim such excess from
Ybaezs estate, if that remedy is still available, in view of the trial courts dismissal of
Sabans complaint as against Ybaez, with Sabans express consent, due to the latters
demise on November 11, 1994.
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS, petitioner,
vs.
FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF
APPEALS, respondents.
FACTS
Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners
of a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu covered by
Transfer Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney in favor of their brother, Simeon Rallos,
authorizing him to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion
Rallos died. On September 12, 1955, Simeon Rallos sold the undivided shares of his
sisters Concepcion and Gerundia in lot 5983 to Felix Go Chan & Sons Realty Corporation
for the sum of P10,686.90. The deed of sale was registered in the Registry of Deeds of
Cebu, TCT No. 11118 was cancelled, and a new transfer certificate of Title No. 12989 was
issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion
Rallos filed a complaint docketed as Civil Case No. R-4530 of the Court of First Instance of
Cebu, praying (1) that the sale of the undivided share of the deceased Concepcion Rallos
in lot 5983 be d unenforceable, and said share be reconveyed to her estate; (2) that the
Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be
cancelled and another title be issued in the names of the corporation and the "Intestate
estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by
way of attorney's fees and payment of costs of suit. While the case was pending in the
trial court, both Simon and his sister Gerundia died and they were substituted by the
respective administrators of their estates.
What is the legal effect of an act performed by an agent after the death of his principal?
Applied more particularly to the instant case, We have the query. is the sale of the
undivided share of Concepcion Rallos in lot 5983 valid although it was executed by the
agent after the death of his principal? What is the law in this jurisdiction as to the effect
of the death of the principal on the authority of the agent to act for and in behalf of the
latter? Is the fact of knowledge of the death of the principal a material factor in
determining the legal effect of an act performed after such death?
ISSUE
Whether or not the sale of Simeon Rallos (Agent) is valid after the death of his sister
Concepcion (Principal)?
RULING
No.
The Civil Code, expressly provides for two exceptions to the general rule that death of the
principal revokes ipso jure the agency, to wit: (1) that the agency is coupled with an
interest (Art 1930), and (2) that the act of the agent was executed without knowledge of
the death of the principal and the third person who contracted with the agent acted also
in good faith.
It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the
name of another without being authorized by the latter, or unless he has by law a right to
represent him. A contract entered into in the name of another by one who has no
authority or the legal representation or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf
it has been executed, before it is revoked by the other contracting party. Article 1403 (1)
of the same Code also provides:
ART. 1403. The following contracts are unenforceable, unless they are justified:
(1) Those entered into in the name of another person by one who hi - been
given no authority or legal representation or who has acted beyond his powers;
...
Out of the above given principles, sprung the creation and acceptance of the relationship
of agency whereby one party, caged the principal (mandante), authorizes another, called
the agent (mandatario), to act for and in his behalf in transactions with third persons.
The essential elements of agency are: (1) there is consent, express or implied of the
parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agents acts as a representative and not for himself, and
(4) the agent acts within the scope of his authority. 5
Agency is basically personal representative, and derivative in nature. The authority of the
agent to act emanates from the powers granted to him by his principal; his act is the act
of the principal if done within the scope of the authority. Qui facit per alium facit se. "He
who acts through another acts himself".
There are various ways of extinguishing agency, but here, we are concerned only with
one cause death of the principal Paragraph 3 of Art. 1919 of the Civil Code which was
taken from Art. 1709 of the Spanish Civil Code provides:
ART. 1919. Agency is extinguished.
xxx xxx xxx
3. By the death, civil interdiction, insanity or insolvency of the
principal or of the agent; ...
By reason of the very nature of the relationship between Principal and agent, agency is
extinguished by the death of the principal or the agent. This is the law in this jurisdiction.
Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the rationale
for the law is found in the juridical basis of agency which is representation Them being an
in. integration of the personality of the principal integration that of the agent it is not
possible for the representation to continue to exist once the death of either is
establish. Pothier agrees with Manresa that by reason of the nature of agency, death is a
necessary cause for its extinction. Laurent says that the juridical tie between the
principal and the agent is severed ipso jure upon the death of either without necessity
for the heirs of the fact to notify the agent of the fact of death of the former.
The same rule prevails at common law the death of the principal effects instantaneous
and absolute revocation of the authority of the agent unless the Power be coupled with
an interest. This is the prevalent rule in American Jurisprudence where it is well-settled
that a power without an interest confer. red upon an agent is dissolved by the principal's
death, and any attempted execution of the power afterward is not binding on the heirs or
representatives of the deceased.
Is the general rule provided for in Article 1919 that the death of the principal or of the
agent extinguishes the agency, subject to any exception, and if so, is the instant case
within that exception? That is the determinative point in issue in this litigation. It is the If the agency has been granted for the purpose of contracting with certain
contention of respondent corporation which was sustained by respondent court that persons, the revocation must be made known to them. But if the agency is
notwithstanding the death of the principal Concepcion Rallos the act of the attorney-in- general iii nature, without reference to particular person with whom the agent
fact, Simeon Rallos in selling the former's sham in the property is valid and enforceable is to contract, it is sufficient that the principal exercise due diligence to make
inasmuch as the corporation acted in good faith in buying the property in question. the revocation of the agency publicity known.
Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore- In case of a general power which does not specify the persons to whom
mentioned. represents' on should be made, it is the general opinion that all acts, executed
with third persons who contracted in good faith, Without knowledge of the
ART. 1930. The agency shall remain in full force and effect even after
revocation, are valid. In such case, the principal may exercise his right against
the death of the principal, if it has been constituted in the common
the agent, who, knowing of the revocation, continued to assume a personality
interest of the latter and of the agent, or in the interest of a third
which he no longer had.
person who has accepted the stipulation in his favor.
The above discourse however, treats of revocation by an act of the principal as a mode of
ART. 1931. Anything done by the agent, without knowledge of the
terminating an agency which is to be distinguished from revocation by operation of
death of the principal or of any other cause which extinguishes the
law such as death of the principal which obtains in this case. On page six of this Opinion
agency, is valid and shall be fully effective with respect to third
We stressed that by reason of the very nature of the relationship between principal and
persons who may have contracted with him in good. faith.
agent, agency is extinguished ipso jure upon the death of either principal or agent.
Article 1930 is not involved because admittedly the special power of attorney executed Although a revocation of a power of attorney to be effective must be communicated to
in favor of Simeon Rallos was not coupled with an interest. the parties concerned, yet a revocation by operation of law, such as by death of the
principal is, as a rule, instantaneously effective inasmuch as "by legal fiction the agent's
Article 1931 is the applicable law. Under this provision, an act done by the agent after the exercise of authority is regarded as an execution of the principal's continuing will. With
death of his principal is valid and effective only under two conditions, viz: (1) that the death, the principal's will ceases or is the of authority is extinguished.
agent acted without knowledge of the death of the principal and (2) that the third person
who contracted with the agent himself acted in good faith. Good faith here means that the The Civil Code does not impose a duty on the heirs to notify the agent of the death of the
third person was not aware of the death of the principal at the time he contracted with principal. What the Code provides in Article 1932 is that, if the agent die his heirs must
said agent. These two requisites must concur the absence of one will render the act of the notify the principal thereof, and in the meantime adopt such measures as the
agent invalid and unenforceable. circumstances may demand in the interest of the latter. Hence, the fact that no notice of
the death of the principal was registered on the certificate of title of the property in the
In the instant case, it cannot be questioned that the agent, Simeon Rallos, knew of the Office of the Register of Deeds, is not fatal to the cause of the estate of the principal
death of his principal at the time he sold the latter's share in Lot No. 5983 to respondent
corporation. The knowledge of the death is clearly to be inferred from the pleadings filed
by Simon Rallos before the trial court. That Simeon Rallos knew of the death of his sister
Concepcion is also a finding of fact of the court a quo and of respondent appellate court
when the latter stated that Simon Rallos 'must have known of the death of his sister, and
yet he proceeded with the sale of the lot in the name of both his sisters Concepcion and
Gerundia Rallos without informing appellant (the realty corporation) of the death of the
former.
On the basis of the established knowledge of Simon Rallos concerning the death of his
principal Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law
expressly requires for its application lack of knowledge on the part of the agent of the
death of his principal; it is not enough that the third person acted in good faith.
Another argument advanced by respondent court is that the vendee acting in good faith
relied on the power of attorney which was duly registered on the original certificate of
title recorded in the Register of Deeds of the province of Cebu, that no notice of the death
was aver annotated on said certificate of title by the heirs of the principal and
accordingly they must suffer the consequences of such omission.
To support such argument reference is made to a portion in Manresa's Commentaries
which We quote: