THE MANILA REMNANT CO., INC.
, Ventanillas remained ignorant of Valencia’s
petitioner, vs. THE HONORABLE COURT
OF APPEALS and OSCAR VENTANILLA,
JR. and CARMEN GLORIA DIAZ,
respondents.
Oscar Ventanilla and his wife, UP faculty.
Manila Remnant Co. Inc. the owner of the parcel
of land in QC constituting a subdivision as Capital
Homes Subd.
Manila Remnant and AU Valencia & Co. entered
into a written agreement entitled “Confirmation of
Land Development and Sales Contract” to
formalize an earlier verbal agreement. AU
Valencia was to develop the subdivision with
authority to manage the sales, execute contracts to
sell to lot buyers and issue official receipts.
At that time the President of Manila Remnant and
AU Valencia was Artemio Valencia.
In March 3, 1970, Manila Remnant thru AU
Valencia executed two “contracts to sell” for the
combine contract price of P66,571 payable
monthly for ten years. The Ventanillas paid the
down payment for 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.
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.
From March 13, 1970 the monthly payments of
Ventanillas were remitted to Manila Remnant as
payment of Crisostomo since Valencia issued
receipts in favor of Crisostomo.
Valencia kept the receipts in his files and never
transmitted the same to Crisostomo, the latter and
scheme.
Manila Remnant terminated its existing collection
agreement with his firm on account of the
considerable amount of discrepancies and
irregularities discovered in its collection and
remittances.
Artemio Valencia was removed as President by
Board of Directors of Manila Remnant.
AU Valencia and Co sued Manila Remnant at CFI
to impugn the abrogation of their agency
agreement.
The court, then ordered that all lot buyers to
deposit their monthly amortizations with the
court.
AU Valencia wrote the Ventanillas that it was still
authorized to collect the monthly amortizations
and assured them that payment be deposited in
the court later.
Since AU Valencia failed to forward its collection
to the court, Manila Remnant then published in
Times Journal a notice cancelling the contracts to
sell of some lot buyers including Carlos
Crisostomo in whose name the payments of
Ventanillas had been credited.
When Ventanillas learned about the termination
of agency agreement between Manila Remnant
and AU Valencia, they decided to stop paying the
amortizations and discovered that their names did
not appear as one of the buyers.
Manila Remnant refused the offer of the
Ventanillas to pay the remainder of the contract
price bec. They did not have the personality to do
so. It was also included in the published Notice of
cancellation of rescinding the contracts of
delinquent buyers including Crisostomo.
Trial Court: 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;
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.
54

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.
Issue: 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?
Ruling: Valencia realty firm had overstepped the
bounds of its authority as agent and made the
double sale of the disputed lots.
Its principal, Manila Remnant, pursuant to Article
1897 of the CC states that:
“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.”
The relationship existing between the principal
and the agent at the time of the dual sale must be
underscored.
The president of both firm was Artemio Valencia,
the individual responsible for the sale scam.
Despite the fact that double sale was beyond the
power of the agent, Manila Remnant as principal
was chargeable with the knowledge or
constructive notice of not having done anything to
correct such as an irregularity was deemed to have
ratified the same.
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."
This article is intended to protect the rights of
innocent person. In such situation, both the
principal and the agent are joint feasors whose
liability is joint and solidary.
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.
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.
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.
Manila Remnant could have devised a system to
monitor and require an accounting from AU
Valencia and Co its agent. Thus, 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.
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
55
estopped from pleading the truth that it had no
direct hand in the deception employed by its agent
Areola v. CA GR 95641
Respondent Insurance company unilaterally
cancelled the insurance of Santos seven months
after the issuance of petitioner Santos Areola’s
Personal Accident Insurance Policy due to
nonpayment of his premiums.
In 1985, respondent insurance offered to reinstate
the policy and extend its lifetime to December 17,
1985, upon finding that the cancellation was
erroneous and that premiums were paid in full but
were not remitted by Teofilo Malapit, respondent
insurance company’s branch manager.
Petitioner Areola confronted its agent Carlito Ang
when he learned that his policy was cancelled.
AVP of the insurance company wrote a letter to
the petitioner that the amount he paid was
received by Prudential.
Petitioner filed an action for damages and breach
of contract against respondent insurance.
Trial Court: in favor of petitioner and ordered
respondent insurance policy to actual damages,
moral damages and exemplary damages.
Had the insured met an accident at the time, the
insurance company would certainly have
disclaimed any liability because technically, the
petitioner could not have been considered insured.
Consequently, the trial court held that there was
breach of contract on the part of respondent
insurance company, entitling petitioner-insured to
an award of the damages prayed for
CA: respondent insurance company was not
motivated by negligence, malice or bad faith in
cancelling subject policy. Bad faith, said the Court
of Appeals, is some motive of self-interest or ill-
will
Petitioner contention: It is the fraudulent act of
Malapit, manager of the insurance company, in
misappropriating his premium payments is the
proximate cause of the cancellation of the
insurance. He theorized that Malapit’s act of
signing and sending the notice of cancellation
despite his personal knowledge of petitioner’s full
payment of premiums, reinforces the allegation of
bad faith.
Respondent contention: Reinstatement of
petitioner’s policy, the equitable relief of the
petitioner was granted at an opportune moment.
Hence, whatever cause of action no longer exists.
Issue: Did the subsequent act of reinstating the
wrongfully cancelled insurance policy by
respondent insurance company, obliterate its
liability for damages?
Ruling: The court uphold the petitioner’s
submission that Malapit’s fraudulent act of
misappropriating the premiums paid by
petitioner-insured is beyond doubt directly
imputable (attributed) to respondent
insurance company.
A corporation such as insurance company, act
solely thru its employees.
Malapit was the manager of its Baguio branch; he
therefore, represented its interests and acted in its
behalf.
His act of receiving the premiums collected is
well within the province of his authority. Thus,
his receipt of said premiums is receipt by private
respondent insurance company who, by provision
of law, particularly under Article 1910 of the Civil
Code, is bound by the acts of its agent.
Article 1910 thus reads:
"ART. 1910. The principal must comply with all
the obligations which the agent may have
contracted within the scope of his authority.
As for any obligation wherein the agent has
exceeded his power, the principal is not bound
except when he ratifies it expressly or tacitly."
The insurance company itself was defrauded
by Malapit such as the non-accrual of premiums,
however it does not free the company from its
obligation to the petitioner.
In Prudential Bank v. CA
56
 a banking corporation is liable to innocent
third persons where the representation
is made in the course of its business
by an agent acting within the general
scope of his authority even though, in
the particular case, the agent is secretly
abusing his authority and attempting
to perpetrate a fraud upon his
principal or some other person, for his
own ultimate benefit.
Respondent insurance company is liable by
way of damages for the fraudulent acts
committed by Malapit that gave occasion to
the erroneous cancellation of subject
insurance policy. Its earlier act of reinstating the
insurance policy cannot obliterate (destroy) the
injury inflicted on petitioner-insured.
Respondent company should be reminded that
a contract of insurance creates reciprocal
obligations for both insurer and insured.
Reciprocal obligations are those which arise
from the same cause and in which each party is
both a debtor and a creditor of the other, such
that the obligation of one is dependent upon
the obligation of the other.
Under the circumstances of instant case, the
relationship as creditor and debtor between the
parties arose from a common cause; i.e., by reason
of their agreement to enter into a contract of
insurance under whose terms, respondent
insurance company promised to extend protection
to petitioner-insured against the risk insured for a
consideration in the form of premiums to be paid
by the latter.
Under the law governing reciprocal obligations,
particularly the second paragraph of Article 1191,
the injured party, petitioner-insured in this case, is
given a choice between fulfillment or rescission of
the obligation in case one of the obligors, such as
respondent insurance company, fails to comply
with what is incumbent upon him. However,
said article entitles the injured party to payment of
damages, regardless of whether he demands
fulfillment or rescission of the obligation.
Untenable then is respondent insurance
company's argument, namely, that reinstatement
being equivalent to fulfillment of its obligation,
divests petitioner-insured of a rightful claim for
payment of damages. Such a claim finds no
support in our laws on obligations and contracts.
The erroneous cancellation of insurance
policy constituted a breach of contract, but
private respondent was able to rectify its
mistake by reinstating the insurance policy of
petitioner. Thus, awarding the nominal damages.
Nominal damages are "recoverable where a legal
right is technically violated and must be vindicated
against an invasion that has produced no actual
present loss of any kind, or where there has been a
breach of contract and no substantial injury or
actual damages whatsoever have been or can be
shown.
Lustan v. CA
Petitioner Lustan is the owner of a parcel of land
in Iloilo. He leased his property to private
respondent Nicolas Parangan for 10 years and an
annual rent of P1,000.
During the period of lease, Parangan regularly
extending loans in small amount to petitioner,
Lustan to defray her daily expenses and to finance
her daughter’s education.
Petitioner executed a SPA in favor of Parangan to
secure an agricultural loan from private
respondent PNB with the lot as collateral.
Second SPA was executed by petitioner in which
Parangan secured 4 additional loans. The three
loans were without knowledge of the petitioner
and the proceeds used by Parangan for his own
benefit.
Petitioner demanded the return of certificate of
title but Parangan asserted his rights over the
property by virtue of Deed of Definite Sale.
Trial Court: Parangan to pay all loans to PNB
CA: reversed trial court.
ISSUE: Whether or not the deed of definite sale is
in reality equitable mortgage and whether or not
petitioner’s property is liable to PNB for the loans
contracted by Parangan thru SPA?
57

Ruling: Deed of Definite Sale is in reality an
equitable mortgage because the intention of
the parties was one of a loan secured by
petitioner's land.
Evidence is sufficient that Lustan intended to
consolidate her indebtedness to the Parangan in a
single instrument and secure it with the property.
Even if a document appears on its face to be a
sale, the owner of the property may prove that the
contract is a loan with mortgage by raising an
issue that the document does not express the
true intent of the parties.
In this case, parol evidence then becomes
competent and admissible to prove that the
instrument was in truth and in fact given
merely as a security for the repayment of a
loan.
for a presumption of an equitable mortgage to
arise, we must first satisfy two requisites namely:
that the parties entered into a contract
denominated as a contract of sale and that their
intention was to secure an existing debt by way of
mortgage. Under Art. 1604 of the Civil Code, a
contract purporting to be an absolute sale shall be
presumed to be an equitable mortgage should any
of the conditions in Art. 1602 be present.
Petitioner had no knowledge that the contract
she signed is a deed of sale. Petitioner is
illiterate and her condition constrained her to
merely rely on Parangan's assurance that the
contract only evidences her indebtedness to
the latter. Settled is the rule that where a party to
a contract is illiterate or cannot read or cannot
understand the language in which the contract is
written, the burden is on the party interested in
enforcing the contract to prove that the terms
thereof are fully explained to the former in a
language understood by him.
It is admitted that petitioner is the owner of the
parcel of land mortgaged to PNB on five (5)
occasions by virtue of the Special Powers of
Attorney executed by petitioner in favor of
Parangan. Petitioner argues that the last three
mortgages were void for lack of authority. She
totally failed to consider that said Special
Powers of Attorney are a continuing one and
absent a valid revocation duly furnished to the
mortgagee, the same continues to have force
and effect as against third persons who had no
knowledge of such lack of authority.
Article 1921 of the Civil Code provides:
Art. 1921. If the agency has been
entrusted for the purpose of contracting
with specified persons, its revocation shall
not prejudice the latter if they were not
given notice thereof.
The Special Power of Attorney executed by
petitioner in favor of Parangan duly authorized the
latter to represent and act on behalf of the former.
Having done so, petitioner clothed Parangan
with authority to deal with PNB on her behalf
and in the absence of any proof that the bank
had knowledge that the last three loans were
without the express authority of petitioner, it
cannot be prejudiced
As far as third persons are concerned, an act is
deemed to have been performed within the
scope of the agent's authority if such is within
the terms of the power of attorney as written
even if the agent has in fact exceeded the
limits of his authority according to the
understanding between the principal and the agent
The Special Power of Attorney particularly
provides that the same is good not only for the
principal loan but also for subsequent commercial,
industrial, agricultural loan or credit
accommodation that the attorney-in-fact may
obtain and until the power of attorney is
revoked in a public instrument and a copy of
which is furnished to PNB.
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 (Article 1911, Civil Code)
The mortgage directly and immediately subjects
the property upon which it is imposed. The
property of third persons which has been
expressly mortgaged to guarantee an obligation to
which the said persons are foreign, is directly and
jointly liable for the fulfillment thereof; it is
therefore subject to execution and sale for the
58
purpose of paying the amount of the debt for
which it is liable.
However, petitioner has an unquestionable
right to demand proportional indemnification
from Parangan with respect to the sum paid to
PNB from the proceeds of the sale of her
property in case the same is sold to satisfy the
unpaid debts.
Wherefore, the mortgage in favor of PNB is valid
and subsisting.
EULOGIO DEL ROSARIO, plaintiffs-
appellees, vs. PRIMITIVO ABAD and
TEODORICO ABAD, defendants-appellants.
Plaintiffs are the children and heirs of late del
Rosario.
Del Rosario obtained a loan from Primitivo Abad
for P2,000 with interest at 12% per annum.
As security for the payment he mortgaged the
improvements of the parcel of land.
The mortgagor (del Rosario) executed an
irrevocable SPA coupled with interest in favor
of the mortgagee (P. Abad) authorizing him to sell
and convey the parcel of land.
The mortgagor and family moved to Isabela as
their new residence until mortgagor (del Rosario)
died.
Abad, acting as attorney-in-fact of del Rosario
sold the parcel of land to his son Teodorico Abad
in consideration of P1.00 and the payment by the
vendee of the mortgage debt of del Rosario to
Abad.
Teodorico Abad received a transfer certificate.
Plaintiff then brought a suit against the defendants
to recover possession and ownership of the parcel
of land.
Trial Court: Deed of Sale in favor of Teodorico
Abad is null and void.
Issue: Whether or not the irrevocable power of
attorney is valid?
Ruling: No. Lands acquired under free patent or
homestead shall not be subject to alienation from
the date of the approval of the application and for
5 years after the date of issuance.
The power of attorney executed by del Rosario in
favor of Primotivo Abad coupled with interest is
irrevocable.. and “conferring upon my said
attorney full and ample power and authority to do
and perform all things reasonably necessary and
proper for the due carrying out of the said powers
according to the true tenor and purport of the
same, . . ."
It does not create an agency coupled with an
interest nor does it clothe the agency with an
irrevocable character
A mere statement in the power of attorney that
it is coupled with an interest is not enough.
It must be stated in the power of attorney all the
interest it consists. (Such interest must be stated
in the power of attorney.)
The fact that del Rosario, the principal, had
mortgaged the improvements of the parcel of
land to Primitivo Abad, the agent, is not such
an interest as could render irrevocable the
power of attorney executed by the principal in
favor of the agent.
In fact, no mention of it is made in the
power of attorney.
The mortgage on the improvements of
the parcel of land has nothing to do with
the power of attorney and may be
foreclosed by the mortgagee upon failure
of the mortgagor to comply with his
obligation.
As the agency was not coupled with an interest, it
was terminated upon the death of Tiburcio del
Rosario, the principal, sometime in December
1945, and Primitivo Abad, the agent, could no
longer validly convey the parcel of land to
Teodorico Abad on 9 June 1947.
The sale, therefore, to the latter was null and
void.
Appellants contend that the power of attorney
was to be availed of by the agent after the lapse of
the prohibition period of five years, and that in
fact Primitivo Abad sold the parcel of land on 9
June 1947, after the lapse of such period. Nothing
to that effect is found in the power of attorney.
59
Lim v. Saban
Late Eduardo Ybanez, owner of lot in Cebu City
entered into an agreement and authority to
negotiate and sell (Agency Agreement) with
respondent Florencio Saban in 1994.
Under agency agreement, Ybanez authorized
Saban to look for a buyer of the lot for P200,000
to mark up the selling price to include the
amounts needed for payment of taxes, transfer of
title and expenses incident to sale as well as
Saban’s commission.
Through Saban’s effort Ybañez 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).
The price of lot indicated in absolute deed of sale
is P200,000. The vendees agreed to purchase the
lot at 600,000. After the sale, Lim remitted to
Saban the 113,257 for payment of taxes and
50,000 as broker’s commission.
Lim issued to Saban 4 postdated checks total
amount of P236,743. Ybanez sent a letter to Lim
to cancel all checks issued by her in Saban’s favor
and to extend another partial payment in favor of
Ybanez.
Saban filed a complaint for collection of sum of
money and damages against Ybanez and Lim.
Saban alleged that Ybanez told Lim that he was
not entitled to any commission for the sale
since he concealed the actual selling price of
the lot and that he was not a licensed broker.
Ybanez said Saban was not entitled to any
commission because he concealed the actual
selling price from him and because he was not a
licensed real estate broker
Lim, for her part, argued that she was not privy to
the agreement between Ybañez and Saban, and
that she issued stop payment orders for the three
checks because Ybañez requested her to pay the
purchase price directly to him
Ybañez died during the pendency of the case
before the RTC.
RTC: dismiss Saban’s complaint
CA: Ybañez's revocation of his contract of agency
with Saban was invalid because the agency was
coupled with an interest and Ybañez effected
the revocation in bad faith in order to deprive
Saban of his commission and to keep the profits
for himself.
Lim is liable to pay Saban as the holder for value
of the checks.
Issue : whether Saban is entitled to receive his
commission from the sale; and, assuming that
Saban is entitled thereto, whether it is Lim who is
liable to pay Saban his sales commission.
Ruling: YES. The agency was not revoked since
Ybañez 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 Ybañez's agent when, through his
(Saban's) efforts, Ybañez 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 Ybañez which expressly states
that Saban would be entitled to any excess in
the purchase price after deducting the
P200,000.00 due to Ybañez and the transfer taxes
and other incidental expenses of the sale.
In Macondary v. Sellner:
It would be in the height of injustice to
permit the principal to terminate the
contract of agency to the prejudice of the
broker when he had already reaped the
benefits of the broker's efforts.
Saban had completely performed his
obligations under his contract of agency with
Ybañez by finding a suitable buyer to
preparing the Deed of Absolute Sale between
Ybañez 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
60
Ybañez's share of P200,000.00 and the taxes and
other incidental expenses of the sale.
However, the Court does not agree with the
appellate court's pronouncement that Saban's
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.
Agency coupled with an interest
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 agent's interest must be in the subject
matter of the power conferred and not merely an
interest in the exercise of the power because it
entitles him to compensation. When an agent's
interest is confined to earning his agreed
compensation, the agency is not one coupled
with an interest, since an agent's interest in
obtaining his compensation as such agent is an
ordinary incident of the agency relationship.
Saban's right to receive compensation for
negotiating as broker for Ybañez arises from the
Agency Agreement between them. Lim is not a
party to the contract.
However, the record reveals that she (Lim) had
knowledge of the fact that Ybañez set the price of
the lot at P200,000.00 and that the P600,000.00-
the price agreed upon by her and Saban-was more
than the amount set by Ybañez because it
included the amount for payment of taxes and for
Saban's commission as broker for Ybañez.
Lim changed her mind about agreeing to
purchase the lot at P600,000.00 after talking to
Ybañez and ultimately realizing that Saban's
commission is even more than what Ybañez
received as his share of the purchase price as
vendor. Obviously, this change of mind resulted
to the prejudice of Saban whose efforts led to the
completion of the sale between the latter, and Lim
and her co-vendees
Republic v. Evangelista
Private respondent Legaspi is the owner of a land
in Bulacan. In 1999, petitioner Calimlim
representing the Republic of the Phil, the Head of
Intelligence Service of the AFP and the Presidential
security entered into a Memorandum of Agreement
with Ciriaco Reyes.
The MOA granted Reyes a permit to hunt for
treasure in Bulacan.
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.
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 Legaspi's land and to file charges
against those who may enter it without the latter's
authority. Legaspi agreed to give Gutierrez 40% of
the treasure that may be found in the land
Gutierrez filed a case for damages and injunction
against petitioners for illegally entering Legaspi's
land.
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.
Trial Court: grants preliminary injunction
CA: affirmed trial court
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
61
unilateral revocation is invalid as his agency is
coupled with interest.
Issue: THE CONTRACT OF AGENCY
BETWEEN LEGASPI AND PRIVATE
RESPONDENT GUTIERREZ HAS BEEN
EFFECTIVELY REVOKED BY LEGASPI.
Ruling: YES. Court agrees that the agency is
coupled with interest.
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.
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.
Pursuant to this authority and to protect Legaspi's
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
Legaspi's 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 Atty. Adaza; and, thus Gutierrez and
Atty. Adaza have an interest in the subject matter
of the agency, i.e., in the treasures that may be
found in the land. This bilateral contract depends
on the agency and thus renders it as one coupled
with interest, irrevocable at the sole will of the
principal Legaspi.
When an agency is constituted as a clause in a
bilateral contract, that is, when the agency is
inserted in another agreement, the agency ceases
to be revocable at the pleasure of the principal as
the agency shall now follow the condition of the
bilateral agreement.
The Deed of Revocation executed by Legaspi has
no effect.
COLEONGCO, plaintiff-appellant, vs.
EDUARDO L. CLAPAROLS, defendant-
appellee.
Eduardo Claparols, operated a factory for the
manufacture of nails in Talisay, Occidental
Negros, under the style of "Claparols Steel & Nail
Plant". The raw material, nail wire, was imported
from foreign sources, specially from Belgium; and
Claparols had a regular dollar allocation therefor,
granted by the Import Control Commission and
the Central Bank.
The marketing of the nails was handled by ABCD
Commercial of Bacolod owned by Kho To.
Claparols look for someone to finance his imports
of nail wire. Kho to agree to do financing but
instead he introduced his compadre Vicente
Coleongco to be the financier.
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; Coleongco would
62
“share the control of all the cash” from sales and
deposited in banks.
Two days after the execution of basic agreement,
Claparols executed in favor of Coleongco a special
power of attorney to open and negotiate letters of
credit, to sign contracts, bill of lading, invoices,
and papers covering transactions; to represent
Claparols and the nail factory; to accept payment
and cash advances from dealers and distributors.
Coleongco filed a suit against Claparols for the
breach of contract.
Coleongco contended that the power of attorney
was made to protect his interest under financing
agreement and was one coupled with an interest
that Claparols had no legal power to revoke.
Issue: Whether or not the contract of agency
between Claparols and Coleongco was one
coupled with interest? NO
The financing agreement itself already contained
clauses for the protection of appellant’s interest,
and did not call for the execution of any power of
attorney in favor of Coleongco.
But granting appellant's (Coleongco) view, 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.
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.
That the appellant Coleongco acted in bad
faith towards his principal Claparols
a. His letters to the Philippine National
Bank attempting to undermine the credit
of the principal and to acquire the factory
of the latter, without the principal's
knowledge;
b. Coleongco's letter to his cousin, Kho To,
instructing the latter to reduce to one-half
the usual monthly advances to Claparols
on account of nail sales in order to
squeeze said appellee and compel him to
extend the contract entitling Coleongco to
share in the profits of the nail factory in
better terms, and ultimately "own his
factory", a plan carried out by Kho's
letter, reducing the advances to Claparols;
Coleongco's attempt to have Romulo
Agsam pour acid on the machinery;
c. his illegal diversion of the profits of the
factory to his own benefit; and the
surreptitious disposition of the Yates
band resaw machine in favor of his
cousin's Hong Shing Lumber Yard, made
while Claparols was in Baguio in July and
August of 1956, are plain acts of
deliberate sabotage by the agent that fully
justified the revocation of the power of
attorney
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 acts of deliberate sabotage by the agent fully
justified the revocation of the power of attorney.
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 Coleongco 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).
CMS LOGGING, INC., petitioner, vs. THE
COURT OF APPEALS and D.R.
AGUINALDO CORPORATION, respondents.
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Petitioner CMS is a forest concessionaire engaged in
the logging business, while private respondent
DRACOR is engaged in the business of exporting
and selling logs and lumber.
CMS and DRACOR entered into a contract of
agency whereby the former appointed the latter as
its exclusive export and sales agent for all logs
that the former may produce, for a period of five (5)
years.
CMS appoints Dracor as his sole and exclusive
sales agent with full authority, to sell and export.
Dracor shall handle exclusively all negotiations of all
export sales of Sison.
Dracor shall receive 5% commission of the gross
sale of logs of CMS
CMS President Sison discovered that Dracor had
used Shinko Trading Co as agent, representative
in selling CMS logs in Japan for which Shinko
earned a commission.
CMS claimed that this commission paid to Shinko
was in violation of the agreement and that CMS is
entitled to this amount as part of the proceeds of the
sale of the logs.
CMS contended that since DRACOR had been paid
the 5% commission under the agreement, it is no
longer entitled to the additional commission paid to
Shinko as this tantamount to DRACOR receiving
double compensation for the services it rendered.
CMS sued DRACOR for the commission received
by Shinko and for moral and exemplary damages,
while DRACOR counterclaimed for its commission,
amounting to P144,167.59, from the sales made by
CMS of logs to Japanese firms
Trial Court: Dismissed the case
Issue: Whether or not the DRACOR is not
entitled to its 5% commission arising from the
direct sales made by CMS to buyers in Japan; and
(6) that DRACOR is guilty of fraud and bad faith
in its dealings with CMS.
Ruling: The evidence adduced establishes the
fact that Shinko is DRACOR's agent or
liaison in Japan, there is no evidence which
established the fact that Shinko did receive the
amount of U.S. $77,264.67 as commission
arising from the sale of CMS's logs to various
Japanese firms.
It does not seem proper, therefore, for CMS
Logging, Inc., as principal, to concern itself with,
much less question, the right of Shinko Trading Co.,
Ltd. with which our client dealt directly, to whatever
benefits it might have derived form the ultimate
consumer/buyer of these logs, Toyo Menka Kaisha,
Ltd. There appears to be no justification for your
client's contention that these benefits, whether they
can be considered as commissions paid by Toyo
Menka Kaisha to Shinko Trading, are to be regarded
part of the gross sales."
However, Court finds merit in CMS's contention
that the appellate court erred in holding that
DRACOR was entitled to its commission from the
sales made by CMS to Japanese firms.
The principal may revoke a contract of agency at
will, and such revocation may be express, or
implied, and may be availed of even if the period
fixed in the contract of agency as not yet
expired. As the principal has this absolute right to
revoke the agency, the agent cannot object thereto;
neither may he claim damages arising from such
revocation, unless it is shown that such was done in
order to evade the payment of agent's commission.
In the case at bar, CMS appointed DRACOR as
its agent for the sale of its logs to Japanese
firms. Yet, during the existence of the contract
of agency, DRACOR admitted that CMS sold its
logs directly to several Japanese firms.
This act constituted an implied revocation of the
contract of agency under
Article 1924 of the Civil Code, which provides:
"Art. 1924 The agency is revoked if the
principal directly manages the business
entrusted to the agent, dealing directly
with third persons."
Since the contract of agency was revoked by
CMS when its sold its logs to Japanese firms
without the intervention of DRACOR, the latter
is no longer entitled to its commission from the
proceeds of such sale and is not entitled to retain
whatever moneys it may have received as its
commission for said transactions. Neither would
DRACOR be entitled to collect damages from CMS,
since damages are generally not awarded to the agent
for the revocation of the agency, and the case at bar
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is not one falling under the exception mentioned,
which is to evade the payment of the agent's
commission.
Regarding CMS's contention that the Court of
Appeals erred in not finding that DRACOR had
committed acts of fraud and bad faith, We find the
same unmeritorious. Like the contention involving
Shinko and the questioned commissions, the findings
of the Court of Appeals on the matter were based on
its appreciation of the evidence, and these findings are
binding on this Court.
Valenzuela v. CA, PhilAm gen
Petitioner Arturo P. Valenzuela is a General Agent
of private respondent Philippine American General
Insurance Company.
He was authorized to solicit and sell in behalf of
Philamgen all kinds of non-life insurance, and was
entitled to receive the full agent's commission of
32.5% from Philamgen under the scheduled
commission rates.
Valenzuela solicited marine insurance from one of
his clients, Delta for P4.4M from which he was
entitled of 32%. However, he did not receive his full
commission amounting to 1.6M.
Philamgen and its President Aragon proposed the
sharing of commission to Valenzuela which
Valenzuela refused.
Philamgen took drastic action against Valenzuela
such as a reversal of the commission due to him;
placed agency transactions on a cash and carry basis;
threatened to cancel the policies issued by his agency
Trial Court findings: That Philamgen position could
have been justified had the termination of plaintiff
Arturo P. Valenzuela was (sic) based solely on the
provisions of the Civil Code and the conditions of
the General Agency Agreement. But the records will
show that the principal cause of the termination of
the plaintiff as General Agent of defendant
PHILAMGEN was his refusal to share his Delta
commission.
These acts of harrassment done by defendants on
plaintiff Arturo P. Valenzuela to force him to agree
to the sharing of his Delta commission, which
culminated in the termination of plaintiff Arturo P.
Valenzuela as one of defendant PHILAMGEN's
General Agent, do not justify said termination of the
General Agency Agreement.
Trial Court: in favor of the plaintiffs and against
defendants ordering the latter to reinstate plaintiff
Arturo P. Valenzuela as its General Agent, and to
pay plaintiffs, jointly and severally.
CA: Plaintiff-appellee Valenzuela to pay defendant-
appellant Philamgen the sum of one million nine
hundred thirty two thousand five hundred thirty-two
pesos and seventeen centavos (P1,902,532.17), with
legal interest thereon from the date of finality of this
judgment until fully paid.
Issue: Whether or not the agency is coupled
with an interest.
Ruling:
The principal cause of the termination of Valenzuela
as General Agent of Philamgen arose from his
refusal to share his Delta commission. The
records sustain the conclusions of the trial court on
the apparent bad faith of the private respondents
in terminating the General Agency Agreement of
petitioners.
The petitioners consistently opposed the
pressures to hand over the agency or half of their
commissions and for a treatment of the Delta
account distinct from other accounts. The
pressures and demands, however, continued
until the agency agreement itself was finally
terminated.
It is also evident from the records that the agency
involving petitioner and private respondent is one
"coupled with an interest," and, therefore, should
not be freely revocable at the unilateral will of the
latter.
The private respondents by the simple expedient of
terminating the General Agency Agreement
appropriated the entire insurance business of
Valenzuela. With the termination of the General
Agency Agreement, Valenzuela would no longer be
entitled to commission on the renewal of insurance
policies of clients sourced from his agency. Worse,
despite the termination of the agency, Philamgen
continued to hold Valenzuela jointly and
severally liable with the insured for unpaid
65
premiums. Under these circumstances, it is clear
that Valenzuela had an interest in the
continuation of the agency when it was
unceremoniously terminated not only because of the
commissions he should continue to receive from the
insurance business he has solicited and procured but
also for the fact that by the very acts of the
respondents, he was made liable to Philamgen in the
event the insured fail to pay the premiums due. They
are estopped by their own positive averments and
claims for damages.
Therefore, the respondents cannot state that the
agency relationship between Valenzuela and
Philamgen is not coupled with interest. "There may
be cases in which an agent has been induced to
assume a responsibility or incur a liability, in reliance
upon the continuance of the authority under such
circumstances that, if the authority be withdrawn, the
agent will be exposed to personal loss or liability"
Furthermore, there is an exception to the principle
that an agency is revocable at will and that is when
the agency has been given not only for the interest of
the principal but for the interest of third persons or
for the mutual interest of the principal and the agent.
In these cases, it is evident that the agency ceases to
be freely revocable by the sole will of the principal.
The following citations are appropriate:
The principal may not defeat the agent's
right to indemnification by a termination of
the contract of agency (Erskine v. Chevrolet
Motors Co. 185 NC 479, 117 SE 706, 32
ALR 196).
Where the principal terminates or
repudiates the agent's employment in
violation of the contract of employment
and without cause ... the agent is entitled to
receive either the amount of net losses
caused and gains prevented by the breach,
or the reasonable value of the services
rendered.
If a principal violates a contractual or quasi-
contractual duty which he owes his agent,
the agent may as a rule bring an appropriate
action for the breach of that duty. The
agent may in a proper case maintain an
action at law for compensation or damages
... A wrongfully discharged agent has a right
of action for damages and in such action
the measure and element of damages are
controlled generally by the rules governing
any other action for the employer's breach
of an employment contract.
The termination of the General Agency
Agreement was tainted with bad faith. Hence, if
a principal act in bad faith and with abuse of
right in terminating the agency, then he is liable
in damages.
FEDERICO VALERA, plaintiff-appellant, vs.
MIGUEL VELASCO, defendant-appellee.
Valera executed power of attorney in favor of
Velasco as appointed attorney-in-fact with authority
to manage his property in Manila.
Plaintiff reported his operations and rendered
accounts of his administration .
The liquidation of the accounts revealed that the
plaintiff owed the defendant P1,100, and as a
misunderstanding arose between them the defendant
brought suit against the plaintiff.
Subsequently, plaintiff sold his right of redemption
to Eduardo Hernandez for P200.
After the plaintiff had recovered his right of
redemption, Salvador Vallejo, who had an execution
upon a judgement rendered in a civil case against the
latter. Later, he transferred the right to Vallejo.
Ruling:
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 on March 28, 1928
for the payment of said balance, more than
prove the breach of the juridical relation
between them; for, although the agent has not
66
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.
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.
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.
Digest net: G.R. No. L-28050 March 13, 1928
FEDERICO VALERA, plaintiff-appellant, vs.
MIGUEL VELASCO, defendant-appellee.
VILLA-REAL, J.:
FACTS:
By virtue of the powers of attorney executed by the
plaintiff-appellant, the defendant-appellee was
appointed attorney-
in-fact with authority to manage his property in the
Philippines, consisting of the usufruct of a real
property. The liquidation of accounts revealed that
the plaintiff-appellant owed the defendant P1,100,
and as misunderstanding arose between them, the
defendant-appellee brought suit against the plaintiff-
appellant . The trial court decided in favor of agent;
sheriff levied upon plaintiff-appellant’s right of
usufruct, sold it at public auction and adjudicated it
to defendant-appellee in payment of his claim.
Plaintiff-appellant sold his right of redemption to
Eduardo Hernandez- Hernandez conveyed the same
right of redemption himself-but then another person
Salvador Vallejo, who had an execution upon a
judgment against the plaintiff rendered in another
case, levied upon said right of redemption- right of
redemption sold to Vallejo and was definitely
adjudicated to him. Later, he transferred the said
right of redemption to defendant-appellee. The title
was consolidated in his name,thus, the agent got the
title to the right of usufruct to the aforementioned
property.
ISSUE: WON the agency was terminated
HELD:
YES. Art 1732- Agency is terminated by: a)
revocation, b)withdrawal of agent, c)death,
interdiction, bankruptcy, or
insolvency of the principal or of the agent. While Art
1736- An agent may withdraw by giving notice to
principal. If principal suffer any damage, agent must
indemnify him unless the agent’s reason 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
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, principal could not
have understood otherwise than that agent
renounced the agency; because his act was more
67
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. 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. Hence, the 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. Moreover, the defendant-appellee, having
acquired 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 plaintiff, the latter
lost all right to said usufruct. Neither did the trial
court err in not ordering the agent to render a
liquidation of accounts from March 31, 1923,
inasmuch as he 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.
Herrera v. Luy Kim Guan
Herrera is the legitimate daughter of Luis Herrera,
now deceased and who died in China. Luis was the
owner of 3 parcels of land.
Before leaving for China, Luis Herrera executed a
general power of attorney authorizing Luy Kim
Guam to administer and sell the properties of Luis.
Lot 1740 registered under Luis Herrera’s name was
sold by defendant Luy Kim as attorney-in-fact of the
deceased Luis Herrera to Luy Chay.
Luy Chay then executed a deed of sale to Lino
Bangayan.
Luis Herrera thru Luy Kim sold to Nicomedes
Salazar his ½ share participation in these two lots.
Natividad Herrera contended that all transactions
made were fraudulent and were executed after the
death of Luis Herrera, when the power of attorney
was no longer operative.
It is also claim that the defendants Lino Bangayan
and Luy Kim Guan who are now the owners of the
lots are Chinese nationality, therefore, disqualified to
acquire real properties.
Issue: WON the transactions were void because it
was executed after the death of the principal?
Ruling: NO. Plaintiff contentions untenable.
With respect to Lot No. 1740, the same was sold by
Luy Kim Guan, in his capacity as attorney-in-fact of
Luis Herrera, on September 11, 1939 to Luy Chay
(See Exh. 2) who, in August, 1941, mortgaged the
same (Exh. 4) to the Zamboanga Mutual Loan and
Building Association (See TCT No. 3162 [Exh. 3]
issued in the name of Luy Chay). Later on, Luy Chay
sold the entire lot to defendant Lino Bangayan by
virtue of the deed of sale dated January 31, 1947
(Exh. E), and as a consequence thereof, TCT No.
2567 was issued in the name of said vendee. (See
Exh. 1). As a result of these various transactions,
duly recorded in the corresponding office of the
Register of Deeds, and covered by appropriate
transfer certificates of title, the properties are now
registered in the following manner: Lot No. 1740, in
the name of Lino Bangayan; Lot No. 4465, in the
name of Carlos Eijansantos; and Lot No. 4467, in
the names of Lino Bangayan and Luy Kim Guan in
undivided equal shares.
Coming now to the contention that these
transactions are null and void and of no effect
because they were executed by the attorney-in-
fact after the death of his Principal, suffice it to
say that as found by the lower court, the date of
death of Luis Herrera has not been satisfactorily
proven.
The only evidence presented by the Plaintiff-
appellant in this respect is a supposed letter
received from a certain "Candi", dated at Amoy
in November, 1936, purporting to give
information that Luis Herrera (without
mentioning his name) had died in August of
that year.
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This piece of evidence was properly rejected by the
lower court for lack of identification.

Since the documents had been executed the

attorney-in-fact one in 1937 and the other in
1939, it is evident, if we are to believe this
testimony, that the documents were executed
during the lifetime of the principal. Be that as it
may, even granting arguendo that Luis Herrera did
die in 1936, plaintiffs presented no proof and
there is no indication in the record, that the age
Luy Kim Guan was aware of the death of his
prince at the time he sold the property. The death
of the principal does not render the act of an agent
unenforceable, where the latter had no knowledge of
such extinguishment the agency.

69