AGENCY TERMINATION/EXTINGUISHMENT OF AGENCY

CASE #1 MANUEL BUASON and LOLITA M. REYES, Plaintiffs-Appellants, v. MARIANO PANUYAS, 

DOCTRINE: AGENCY; ACTS DONE BY AN AGENT AFTER DEATH OF PRINCIPAL WITHOUT His KNOWLEDGE
OF SUCH DEATH.—The contention that as the death of the principal ended the authority of the agent,
the sale made by the latter of the land in question after the death of the principal is null and void, is
untenable. it not having been shown that the agent knew of his principal's demise, and for that reason
the sale made by the agent is valid and effective with respect to third persons who have contracted with
him in good faith. (Art. 1723, Old Civil Code, 1931, New Civil Code). 
FACTS:
In their lifetime the spouses Buenaventura Dayao and Eugenia Vega acquired by homestead patent a
parcel of land situated at barrio Gabaldon, municipality of Muñoz, province of Nueva Ecija, containing an
area of 14.8413 hectares covered by original certificate of title No. 1187.
On 29 October 1930 they executed a power of attorney authorizing Eustaquio Bayuga to engage the
services of an attorney to prosecute their case against Leonardo Gambito for annulment of a contract of
sale of the parcel of land (civil No. 5787 of the same court) and after the termination of the case in their
favor to sell it, and from the proceeds of the sale to deduct whatever expenses he had incurred in the
litigation.
14 March 1934 Buenaventura Dayao died leaving his wife Eugenia Vega and children Pablo, Teodoro,
Fortunata and Juliana, all surnamed Dayao. On 21 March 1939 his four children executed a deed of sale
conveying 12.8413 hectares of the parcel of land to the appellants, the spouses Manuel Buason and
Lolita M. Reyes (Exhibit A). Their mother Eugenia Vega affixed her thumbmark to the deed of sale as
witness (Exhibit A). The appellants took possession of the parcel of land through their tenants in 1939.
On 18 July 1944 Eustaquio Bayuga sold 8 hectares of the same parcel of land to the spouses Mariano
Panuyas (appellee herein) and Sotera B. Cruz (Exhibit D). Eustaquio Bayuga died on 25 March 1946 and
Eugenia Vega in 1954.
The appellants and the appellee claim ownership to the same parcel of land. In their complaint the
appellants prayed that the appellee be ordered to deliver possession of the part of the parcel of land
held by him; that the deed of sale of that part of the parcel of land held by the appellee executed by
Eustaquio Bayuga in his favor and of his wife (Exhibit D) be declared null and void and that transfer
certificate of title No. 8419 issued in their name be cancelled; that the deed of sale of the parcel of land
executed by the children and heirs of Buenaventura Dayao in their favor (Exhibit A) be declared valid;
that the appellee be ordered to pay them damages and attorney's fees in the sum of P9,600; and that he
be ordered to pay the costs of the suit. The appellee's affirmative defenses are that he and his wife were
buyers in good faith and for valuable consideration; that appellants' causes of action are barred by the
statute of limitations; that the complaint states no cause of action; that the claim on which their action
is based is unenforceable under the statute of frauds; and that the appellants are guilty of laches. By
way of counterclaim, he prayed that for bringing a clearly unfounded suit against him which depreciated
the value of the land and injured his good reputation, the appellants be ordered to pay him the sums of
P5,000 as actual damages and P10,000 as moral damages.
RTC RULING: the Court rendered judgment holding that the appellants' action is barred by the statute of
limitations and dismissing their complaint. 
CA RULING: motion for reconsiderationDENIED
ISSUE: WHETHER OR NOT THE SALE MADE BY THE AGENT TO A THIRD PERSON WHO HAS NO
KNOWLEDGE OF THE DEATH OF THE PRINCIPAL IS VALID
HELD:
Yes, the sale made by the agent is valid.
It appears that the appellants did not register the sale of 12.8413 hectares of the parcel of land in
question executed in their favor by the Dayao children on 21 March 1939 after the death of their father
Buenaventura Dayao. On the other hand, the power of attorney executed by Buenaventura Dayao on 29
October 1930 authorizing Eustaquio Bayuga to sell the parcel of land, (Exhibit B) was annotated or
inscribed on the back of original certificate of title No. 1187 (Exhibit C) as Entry No. 16836/H-1187, and
the sale executed by Eustaquio Bayuga in favor of the appellee Mariano Panuyas and his wife Sotera B.
Cruz under the aforesaid power of attorney was annotated or inscribed on the back of the same original
certificate of title (Exhibit C) as Entry No. 778/H-1187.
It does not appear that the appellee and his wife had actual knowledge of the previous sale. In the
absence of such knowledge, they had a right to rely on the face of the certificate of title of the registered
owners and of the authority conferred by them upon the agent also recorded on the back of the
certificate of title. As this is a case of double sale of land registered under the Land Registration Act, he
who recorded the sale in the Registry of Deeds has a better right than he who did not.
As to the appellants' contention that, as the death of the principal on 14 March 1934 ended the
authority of the agent, the sale of 8 hectares of the parcel of land by the agent to the appellee Mariano
Panuyas and his wife Sotera B. Cruz was null and void, suffice it to state that it has not been shown that
the agent knew of his principal's demise, and for that reason article 1738, old Civil Code or 1931, new
Civil Code, which provides:
Anything done by the agent, without knowledge of the death of the principal or of any other cause
which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may
have contracted with him in good faith, is the law applicable to the point raised by the appellants.
The judgment appealed from is affirmed, with costs against the appellants. 
CASE 2: HERMOSA VS. LONGARA G.R. No. L-5267 October 27, 1953
FACTS:
This is an appeal by certiorari against the decision of CA
approving certain claims presented by Epifanio Longara against the
testate estate of Fernando Hermosa Sr.
The claims are of three kinds: 1) P2,341.41 representing credit
advances made to the intestate from 1932 to 1944; 2) P12,924.12 made
to his son Francisco Hermosa; and 3) P3,772 made to his grandson
Fernando Hermosa Jr.
CA found that the intestate had asked for the said credit
advances for himself and for the members of his family “on condition
that their payment should be made by Fernando Hermosa Sr as soon as he
receive funds derived from the sale of his property in Spain.” CA held
that payment of the advances did not become due until the
administratrix received the sum of P20,000 from the buyer of the
property. Upon authorization of the probate court in October, 1947,
and the same was paid for subsequently. The claim was the filed.
It is contended on this appeal that the obligation contracted by
the intestate was subject to a condition exclusively dependent upon
the will of the debtor and therefore null and void.
ISSUE:
1. WON the obligation contracted by the intestate was subject to
a condition exclusively dependent upon the will of the debtor and
therefore null and void?
2. WON the third group of claims credits furnished the
intestate’s grandson after the intestate’s death?
RULING:
1. NO. The condition which states “as soon as he receives funds
from the sale of his property in Spain” is a condition that does not
depend exclusively upon the will of the debtor, hence, valid.
Upon review by the Court of Appeals, the condition implies that
the intestate had already decided to sell his house, or at least that
he had made his creditors believe that he had done so, and that all
that we needed to make his obligation (to pay his indebtedness)
demandable is that the sale be consummated and the price thereof
remitted to the islands. It is evident, therefore, that the condition
of the obligation was not purely potestative—i.e., depending
exclusively upon the will of the intestate—but a mixed one, depending
partly upon the will of intestate and partly upon chance. The
obligation is clearly governed by the second sentence of Article 1115
of the old Civil Code. The condition is, besides, a suspensive
condition, upon the happening of which the obligation to pay is made
dependent. And upon the happening of the condition, the debt became
immediately due and demandable.
2. Yes. Even if authorization to furnish necessaries to his
grandson may have been given, this authorization could not be made to
extend after his death, for two obvious reasons. First because the
obligation to furnish support is personal and is extinguished upon the
death of the person obliged to give support (article 150, old Civil
Code), and second because upon the death of a principal (the intestate
in this case), his agent's authority or authorization is deemed
terminated (article 1732, old Civil Code). That part of the decision
allowing this group of claims, amounting to P3,772 should be reversed.
The judgment appealed from is hereby affirmed in so far as it
approves the claims of appellee in the amounts of P2,341 and
P12,942.12, and reversed as to that of P3,772.

Case 3- Jane 

ANTONIO M. A. BARRETTO, plaintiff-appellant,

vs.
JOSE SANTA MARINA, defendant-appellee.
Facts:
Joaquin Santa Marina, a resident of Spain, was then the owner and proprietor of
La Insular Cigar and Cigarette Factory. Barretto, plaintiff, held and had held the
position of agent of the defendant in the Philippine Islands for the management of
the said business in the name and for the account of the said defendant for a long
time. Barrretto's services were rendered in pursuance of a contract with
compensation of such services at the rate of P37,000 pesos per year. Joaquin
died and herein defendant-appellee, Jose, Joaquin’s brother, ratified said agency
contract.
Barreto alleged that the defendant, Jose, without reason, justification, or pretext
and in violation of the contract before mentioned, summarily and arbitrarily
dispensed with the plaintiff's services and removed him from the management of
the business, and had refused to pay him the compensation due him for his
services and that he had suffered losses and damages in the sum of P100,000. He
then prayed for the payment of P137,000 and the interest thereon at the legal rate,
in addition to the payment of the costs, together with such other equitable
remedies as the law allows.
The defendant denied each and all of the allegations contained in the complaint.
He set forth that he revoked the agency for just cause and only acted upon
Barretto's letter of renunciation of the position he held as agent and manager of
the said factory, which was freely and voluntarily made by him on the occasion of
the insolvency and disappearance of the Chinaman Uy Yan, who had bought from
the factory products aggregating in value the considerable sum of P97,000 and,
without paying this large debt, disappeared and has not been seen since.
Santa Marina did not immediately reply. He then communicated to the plaintiff
that he had revoked the power conferred upon him and had appointed Mr. J.
McGavin to substitute him in his position of manager of the La Insular factory,
and that the plaintiff's resignation was expressly accepted.

Issue: WON the agency was validly revoked

Ruling:

Yes. Barretto was not really dismissed or removed by the defendant Santa
Marina. What did occur was that, in view of the resignation rendered by the
plaintiff, the owner of the establishment, had to look for and appoint another
agent and manager to relieve and substitute him in the said employment — a
lawful act performed by the principal owner of the factory and one which cannot
serve as a ground upon which to demand from the latter an indemnity for losses
and damages.
Article 1733 of the civil Code, applicable to the case at bar, according to the
provisions of article 2 of the Code of Commerce, prescribes: "The principal may,
at his will, revoke the power and compel the agent to return the instrument
containing the same in which the authority was given."
Article 279 of the Code of Commerce provides: "The principal may revoke the
commission intrusted to an agent at any stage of the transaction, advising him
thereof, but always being liable for the result of the transactions which took place
before the latter was informed of the revocation."1awphi1.net
The contract of agency can subsist only so long as the principal has confidence
in his agent, because, from the moment such confidence disappears and
although there be a fixed period for the exercise of the office of agent, the
principal has a perfect right to revoke the power that he had conferred upon the
agent owing to the confidence he had in him and which for sound reasons had
ceased to exist.
If the defendant had not communicated to him immediately his decision, it was
owing to the circumstance that the principal owner of the factory did not then
have, any other person whom he could appoint and place in his stead, for, as
soon as the defendant Santa Marina could appoint the said McGavin, he revoked
the power he had conferred upon the plaintiff and communicated this fact to the
latter.
The loan contracted by the agent Barretto, without the approval of the principal,
caused a great panic among the stockholders of the factory and that the
defendant hoped to allay it by the new measure that he expected to adopt. This,
then, was still another reason that induced the principal to withdraw the
confidence placed in the plaintiff and to revoke the power he had conferred upon
him.
Furthermore, in relieving the latter and appointing another person in his place,
the defendant acted in accordance with the renunciation and resignation which
the plaintiff had tendered.
For the foregoing reasons, whereby the errors assigned to the said judgment and
order are deemed to have been refuted, both judgment and order are hereby
affirmed, with costs against the appellant.

1913 case siya guys. Nahirapan akong intindihin full text. Sowy.

Case 4- Del Rosarios (heirs of Tiburcio) vs Primitivo Abad and Teoderico Abad 

Facts: 
Tiburcio del Rosario was granted a homestead in San José, Nueva Ecija (9
hectares ng lupa). Within the prohibitive period of five years, homesteader, Tiburcio
del Rosario mortgaged the property by obtaining a loan from Primitivo Abad in the sum
of P2,000 with interest at the rate of 12% per annum.  Tiburcio executed an “irrevocable
special power of attorney coupled with interest” in favor of the mortgagee, authorizing
him to sell and convey the parcel of land. However, he died in December 1945 leaving
the debt unpaid.
Mortgagee Primitivo Abad, acting as attorney-in-fact of Del Rosario sold the
parcel of land to his son Teodorico Abad in consideration of the tokensum of P1.00 and
the payment of the mortgage debt of the late Tiburcio. Teodorico took possession of the
land, cancelled the original certificate of title and registered the land under his name in a
TCT.
The heirs of Del Rosario brought suit against the defendants to recover
possession and ownership of the parcel of land. The defendants on the other hand,
answered the complaint and prayed for the dismissal thereof. 
The lower court ruled in favor of the heirs of Del Rosarios and declared the sale
of Primitivo to Teodirico null and void. 
The CA certified the case as no question of fact involved. 
Hence, this petition. 
 

Issue: Whether the power of attorney executed by Del Rosario was coupled with
interest that will not terminate the agency upon the death of the principal 
 
Ruling: 
No. The power of attorney executed by del Rosario in favor of Primitivo Abad
providing, among others, that “it is coupled with an interest in the subject matter thereof
and are therefore 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” 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 interest is not
enough. In what does such interest consist must be stated in the power of attorney. The
fact that Tiburcio had mortgaged the improvements of the parcel of land to 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. As the agency was not coupled with interest, it
was terminated upon the death of del Reosario,and Primitivo Abad, the agent
could no longer validly convey the parcel of land to Teodorico Abad. Hence, the
sale was null and void.

(Tapos sabi pa sa case, assuming arguendo that the irrevocable power of atty was
lawful and valid, it would subject the parcel of land to an encumbrance. As the
homestead patent was issued on 12 December 1936 and the power of attorney was
executed on 24 February 1937, it was in violation of the law that prohibits the alienation
or encumbrance of land acquired by homestead from the date of the approval of the
application and for a term of five years from and after the issuance of the patent or
grant.) 

Case 5- Mark Valentina Vanguardia 

CASE#6  (4 yung issues ditto pero di ko na sinali yung isa discussing the effect of working agreements sa
contract kasi novation na yung topic doon)

BISAYA LAND TRANSPORTATION CO., INC., ANTONIO V. CUENCO and BENJAMIN G. ROA, petitioner 
vs. MARCIANO C. SANCHEZ AND THE HON. INTERMEDIATE APPELLATE COURT, respondents.
FACTS:
In May 1975, Mariano Sanchez was appointed by BISTRANCO as shipping agent in Butuan City for the
vessel M/V Don Mariano. On 12 March 1976, when BISTRANCO was under receivership, Sanchez was
appointed by its Receiver, Atty. Adolfo V. Amor, as acting shipping agent, also for M/V Doña Remedios,
in addition to M/V Doña Filomena, in the port of Butuan City "pending the execution of the formal
contract of agency".
When Sanchez was constituted as acting shipping agent, he received the same commission as his
predecessor, one ONG YUI, who received 10% for all freight and passenger revenues coming from
Butuan City and 5% for all freight going to Butuan. Thereafter, or on 27 July 1976, a formal Contract of
Agency, was executed between BISTRANCO, represented by Receiver Atty. Adolfo V. Amor and Marciano
C. Sanchez, represented by his authorized representative Exequiel Aranas.
On 30 July 1976, after Sanchez found that Paragraph 16 of the Contract of agency was quite prejudicial
to him, he executed with BISTRANCO a Supplemental Shipping Agency Contract, which was duly signed
by Receiver Atty. Adolfo V. Amor on behalf of BISTRANCO and Marciano C. Sanchez himself. But, both
the Contract of Agency and the Supplemental Shipping Agency Contract were never submitted by Atty.
Adolfo Amor to the receivership court for its approval.
By virtue of the Contract of Agency and the Supplemental Shipping Agency Contract (hereinafter
referred to as Contracts), Sanchez performed his duties as shipping agent of BISTRANCO, and he
received his corresponding commissions as such shipping agent. Pursuant to the Contracts, Sanchez
leased a parcel of land owned by Jose S. Mondejar which was used as the wharf and berthing facilities of
BISTRANCO. At an expense of more than P100,000.00, Sanchez constructed the wharf on the land he
leased and the wharf was used to facilitate the loading and unloading of cargoes of the BISTRANCO
vessels at the port of Butuan City from 1976 to December 1979.
Sanchez also constructed a bodega at his wharf for use in connection with the shipping business of
BISTRANCO. He constructed an office for the agency and, as of December 1979, he had an office force of
13 employees, all paid and maintained by him. Sanchez also operated six (6) cargo trucks and one (1)
jeep for the service of the shipping agency. As shipping agent, Sanchez put up billboards and other forms
of advertisement to enhance the shipping business of BISTRANCO. He established good business
relations with the business community of Butuan City. In these endeavors, Sanchez succeeded in
increasing the volume of the shipping business of BISTRANCO at the Butuan City port, so much so that
his earnings on freight alone increased from an average of P8,535.00 a month in 1975 to an average of
about P32,000.00 a month in the last seven months of 1979.
While the shipping business of BISTRANCO in Butuan City flourished, evidently to the mutual benefit of
both parties, on 26 December 1979, co-petitioner Benjamin G. Roa, as Executive Vice-President of
BISTRANCO, wrote Sanchez a letter advising him that, effective 1 January 1980, BISTRANCO would
commence operating its branch office in Butuan City. Prior to this, on 11 December 1979, Sanchez was
invited to attend a meeting of the Board of Directors of BISTRANCO wherein he was told by co-petitioner
Antonio V. Cuenco that the Board was to open a branch office in Butuan City and he was asked what
would be his proposals. Sanchez submitted his proposals in writing but these were not acceptable to
BISTRANCO.
Realizing that the letter about the opening of a new branch would mean a repudiation of the Contracts,
Sanchez filed an action for specific performance with preliminary injunction and damages with the
Regional Trial Court of Cebu City on 28 December 1979.
Pursuant to the said letter, BISTRANCO actually opened and operated a branch office in Butuan City on
15 January 1980. BISTRANCO through its new representative contacted the shippers in Butuan City and
neighboring towns, advising them to transact their business directly with its new branch office in Butuan
City. Under these circumstances, the business of Sanchez, as shipping agent of BISTRANCO in Butuan
City, was seriously impaired and undermined. He could not solicit as many passengers as he used to,
because the passenger tickets issued to him by BISTRANCO were limited. The cargoes solicited by
Sanchez were loaded on a "chance basis" because those that were solicited by the branch office were
given priority.
RTC RULING: rendered judgment in favor of Sanchez declaing the contracts as valid and binding between
plaintiffs and defendant BISTRANCO up to its expiry on July 27, 1981.
CA RULING: AFFIRMED in toto the decision of RTC
ISSUES:
1. WHETHER OR NOT A COURT APPOINTED RECEIVER VALIDLY ENTER INTO A CONTRACT WITHOUT
COURT APPROVAL;
2. WHETHER OR NOT THE OPENING BY BISTRANCO OF A BRANCH OFFICE IN BUTUAN CITY A
VIOLATION OF THE CONTRACT OF AGENCY AND SUPPLEMENTAL SHIPPING AGENCY CONTRACT
ASSUMING THEM TO BE VALID;
3. WHETHER OR NOT THE AWARD FOR UNEARNED COMMISSION AND DAMAGES IS JUSTIFIED.
HELD:
1. Generally, a contract entered into by a court-appointed receiver is unenforceable, however, it
becomes valid once ratified.

The general powers of a court-appointed receiver are provided in Section 7, Rule 59 of the Rules
of Court. Under such rule, the receiver is "subject to the control of the court in which the action
is pending" and he can "generally do such acts respecting the property as the court may
authorize". 
It is undisputed that Atty. Adolfo Amor was entrusted, as receiver, with the administration of
BISTRANCO and it business but the act of entering into a contract is one which requires the
authorization of the court which appointed him receiver. Consequently, the questioned
Contracts can rightfully be classified as unenforceable for having been entered into by one who
had acted beyond his powers, due to Receiver Amor's failure to secure the court's approval of
said Contracts.
 These unenforceable Contracts were nevertheless deemed ratified based upon the facts and
circumstances on record which have led this Court to conclude that BISTRANCO had actually
ratified the questioned Contracts.

2. Yes, considering that the contract of agency and the supplemental shipping agency contract are
valid and binding between BISTRANCO and Sanchez, the former's opening of a branch in Butuan
City was, in effect, a violation of the Contracts. 

Article 1315 of the Civil Code provides:

"Contracts are perfected by mere consent, and from that moment the parties are bound not
only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law."

Sanchez entered into the agency Contract because of the expected income and profits for
himself. There could be no other motive from a businessman's point of view. A provision in the
Supplemental Shipping Agency Contract reads:
"That in consideration of the foregoing additional particular obligations of the
AGENT, the COMPANY agrees not to appoint or employ another agent in Butuan City or
in any of the City's neighboring towns without the written consent of the AGENT first
obtained." 

Article 1927 of the Civil Code, among others, provides: "An agency cannot be revoked if a
bilateral contract depends upon it, or if it is the means of fulfilling an obligation already
contracted". 

Note: ung obligations ditto ay pertaining dun sa mga nagawa/ginawa nya as an agent. Yung
construction of wharf and berthing facilities, nagkaron ng increase ng income, etc.

It may be true that there is no express prohibition for BISTRANCO to open its branch in Butuan
City. But, the very reason why BISTRANCO agreed not to employ or appoint another agent in
Butuan City was to prevent competition against Sanchez' agency, in order that he might recover
what he invested and eventually maximize his profits. The opening by BISTRANCO of a branch in
Butuan City virtually resulted in consequences to Sanchez worse than if another agent had been
appointed. 

3. As to the issue of whether the award of P588,000.00 to Sanchez for unearned commissions and
damages is justified, the answer is also in the affirmative, considering that BISTRANCO violated
the Contracts of agency and that Sanchez, before the breach by BISTRANCO of said agency
Contracts, was already earning an average monthly commission of P32,000.00, as shown by the
statements of commissions prepared by BISTRANCO itself. 
PETITION DENIED.
CASE 7: COLEONGCO VS. CLAPAROLS G.R. No. L-18616 March 31, 1964
FACTS:
- Since 1951, defendant-appellee, Eduardo L. Claparols, operated a
factory for the manufacture of nails in Talisay, Occidental
Negros, under the style of "Claparols Steel & Nail Plant". Raw
material (nail wire) was imported from foreign sources (Belgium.
The marketing of the nails was handled by the "ABCD Commercial"
of Bacolod, which was owned by a Chinaman named Kho To.
- Losses compelled Claparols to look for someone to finance his
imports of nail wires. Chinaman introduced his compadre,
appellant Vicente Colengco recommending the said appellant to be
the financier instead of Kho To.
- Claparols agreed that a contract was perfected between them
whereby Coleongco undertook to finance and up the funds required
for the importation of the nail wire.
- Claparols executed in favor of Coleongco, at the latter’s behest
a special power of attorney to open and negotiate letters of
credit, to sign contracts, bills of lading, invoices, and papers
covering transactions; to represent appellee and the nail
factory; and to accept payments and to accept payments and cash
advances from dealers and distributors. Coleongco also became the
assistant manager of the factory, and took over its business
transactions, while Claparols devoted most of his time to the
nail manufacture processes.
- On November 1956, Claparols was disagreeably surprised by service
of an alias writ of execution to enforce a judgment obtained
against him by the Philippine National Bank, despite the fact
that on the preceding September he had submitted an amortization
plan to settle the account. He learned to his dismay that the
execution had been procured because of derogatory information
against appellee that had reached the bank from his associate,
appellant Coleongco.
- Claparols consequently revoked the power of attorney,
and informedColeongco by registered mail, demanding a full
accounting at the same time. Coleongco protested. Claparols
requested external auditors, examination showed that
Coleongco owed the Claparols Nail Factory the
amount ofP87,387.37, as of June 30, 1957.
- As the parties could not amicably settle their accounts,
Coleongco filed a suit against Claparols charging breach of
contract, asking for accounting, and praying for P528,762.19 as
damages, and attorney's fees, to which Claparols answered,
 denying the charge, and counter-claiming for the rescission of
the agreement with Coleongco for P561,387.99 by way of damages.
- CFI Negros Occidental dismissed plaintiff’s action for damages
and ordered him to pay defendant Claparols the amount of P81K
plus legal interests.
- Coleongco was also dismissed as the assistant manager, Coleongco
denies the allegations and claims that the revocation of the SPA
was illegal and that he was entitled to the share of the profits
as well as moral damages.
ISSUE: WON a contract of agency when coupled with an interest may be
validly revoked by the principal?
RULING:
YES. The contract of agency may be validly revoked.
It is undisputed that Coleongco acted in bad faith towards his
principal Claparols. The letters sent by him to PNB attempting to
undermine the credit of the principal and to acquire the factory of
the latter, without the principal’s knowledge are plain acts of
deliberate sabotage by the agent that fully justified the revocation
of the power of attorney. The facts mentioned acts of deliberate
sabotage by the agent that fully justified the revocation of the power
of attorney.
It must not be forgotten that a power of attorney can be made
irrevocable by contract only in the sense that the principal may not
recall it at his pleasure; but coupled with interest or not, the
authority certainly can be revoked for a just cause, such as when the
attorney-in-fact betrays the interest of the principal, as happened in
this case. It is not open to serious doubt that the irrevocability of
the power of attorney may not be used to shield the perpetration of
acts in bad faith, breach of confidence, or betrayal of trust, by the
agent for that would amount to holding that a power coupled with an
interest authorizes the agent to commit frauds against the principal.
Article 1172 expressly provides the contrary in
prescribing that responsibility arising from fraud is demandable in
all obligations, and that any waiver of action for future fraud is
void. It is also on this principle that the Civil Code, in its Article
1800, declares that the powers of a partner, appointed as manager, in
the articles of co-partnership are irrevocable without just or lawful
cause; and an agent with power coupled with an interest cannot stand
on better ground than such a partner in so far as irrevocability of
the power is concerned.
Decision appealed from is affirmed.
Case 5 - G.R. No. L-41420 July 10, 1992 CMS LOGGING, INC. vs. THE COURT OF
APPEALS and D.R. AGUINALDO CORPORATION

Facts:

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 5 years. CMS was able to sell through DRACOR a
total of 77,264,672 bd ft of logs in Japan, from 1957 to April 1962.

Six months prior to the expiration of the agreement, while on a trip to Tokyo, Japan, CMS's
president and general manager, who is also the legal counsel, discovered that DRACOR had
used Shinko Trading Co., Ltd. as agent in selling CMS's logs in Japan for which Shinko earned
a commission of U.S. $1.00 per 1,000 board feet, with a total of U.S. $77,264.67.

CMS claimed that the commission paid to Shinko was in violation of the agreement and it is
entitled to this amount as part of the proceeds of the sale. Likewise, 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.

After this discovery, CMS sold and shipped logs valued at U.S. $739,321.13 or P2,883,351.90,
directly to several firms in Japan without the aid or intervention of DRACOR.

CMS sued DRACOR for the commission received by Shinko amounting to P144,167.59. In its
reply, CMS averred as a defense to the counterclaim that DRACOR had retained the sum of
P101,167.59 as part of its commission for the sales made by CMS. Thus, as its counterclaim to
DRACOR's counterclaim, CMS demanded DRACOR return the amount it unlawfully retained.
DRACOR later filed an amended counterclaim, alleging that the balance of its commission on
the sales made by CMS was P42,630.82, thus impliedly admitting that it retained the amount
alleged by CMS.

RTC Ruling: No evidence was presented to show that Shinko received the commission of U.S.
$77,264.67 arising from the sale of CMS's logs in Japan. The counterclaim was likewise
dismissed, as it was shown that DRACOR had waived its rights to the balance of its
commission.

CA Ruling: Affirmed the dismissal since the trial court could not have made a categorical
finding that Shinko collected commissions from the buyers of CMS logs in Japan. 

Issue: 
 1. WON CMS is entitled to the amount of commission paid to SHINKO since said amount is
part of the proceeds of the sale made by DRACO in Japan. 
2. WON DRACO was entitled to a 5% commission from the sales made by CMS to
Japanese firms. (ETO TALAGA RELATED SA TOPIC SINCE SI 1 IS FOR EVIDENCE
THING, PERO MALAY NIYO MAGKUBRA SI SO WHAT HAHAHAHA)

Ruling:
1. Court ruled it unmeritorious.
While it is true that the evidence adduced establishes the fact that Shinko is DRACOR's agent
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.

The fact that Shinko received the commissions in question was not established by the testimony
of the General Manager to the effect that Shinko's president and director told him that Shinko
received a commission of U.S. $1.00 for every 1,000 board feet of logs sold, since the same is
hearsay. 

It is a rule that "a statement is not competent as an admission where it does not, under a
reasonable construction, appear to admit or acknowledge the fact which is sought to be proved
by it". An admission or declaration to be competent must have been expressed in definite,
certain and unequivocal language.

CMS's contention that DRACOR had admitted by its silence the allegation that Shinko received
the commissions in question when it failed to respond to CMS’s President letter is not supported
by the evidence. DRACOR did in fact reply to the letter of Atty. Sison.

But even if it was shown that Shinko did in fact receive the commissions in question, CMS is not
entitled thereto since these were apparently paid by the buyers to Shinko for arranging the sale.
This is therefore not part of the gross sales of CMS's logs.

2. 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 has not yet
expired. As the principal has this absolute right to revoke the agency, the agent can not 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 it 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 is not one falling under the exception mentioned, which is to evade the
payment of the agent's commission.