AGENCY DIGEST

PHILPOTTS VS. PHILIPPINE MANUFACTURING CO. AND BERRY

W.G. Philpotts (Petitioner), a stockholder in Philippine Manufacturing Company sought to compel respondents to permit plaintiff, a person or by some authorized agent or attorney to inspect and examine the records of the business transacted by said company since January 1, 1918.

Respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his duly authorized agent or attorney. Petitioner desires to exercise said right through agent or attorney.

Petition is filed originally in the Supreme Court under authority of Section 515 of Code of Civil Procedure, which gives SC concurrent jurisdiction with then Court of First Instance in cases where any corporation or person unlawfully excludes the plaintiff from use and enjoyment and some right he is entitled.

ISSUE:

Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by stockholder in person

HELD:

Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as well as by stockholder in person.

The right of inspection / examination into corporate affairs given to a stockholder in section 51 of the Corporation Law which states: “The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hour” can be exercised either by himself or by any duly authorized representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another.

RALLOS v. FELIX GO CHAN

G.R. No. L-24332 January 31, 1978

FACTS:

This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal, Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of attorney which the principal had executed in favor. The administrator of the estate of the went to court to have the sale declared uneanforceable and to recover the disposed share. The trial court granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity of the sale and the complaint.

Hence, this Petition for Review on certiorari.

Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the sisters executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 5983 to Felix Go Chan & Sons Realty Corporation for the

sum of P10,686.90. The deed of sale was registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled, and a new transfer certificate of Title No. 12989 was issued in the named of the vendee.

On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a complaint docketed as Civil Case No. R-4530 of the Court of First Instance of Cebu, praying (1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be d unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of suit. Named party defendants were Felix Go Chan & Sons Realty Corporation, Simeon Rallos, and the Register of Deeds of Cebu, but subsequently, the latter was dropped from the complaint. The complaint was amended twice; defendant Corporation's Answer contained a crossclaim against its co-defendant, Simon Rallos while the latter filed third-party complaint against his sister, Gerundia Rallos While the case was pending in the trial court, both Simon and his sister Gerundia died and they were substituted by the respective administrators of their estates.

ISSUES:

What is the legal effect of an act performed by an agent after the death of his principal? Applied more particularly to the instant case, We have the query. is the sale of the undivided share of Concepcion Rallos in lot 5983 valid although it was executed by the agent after the death of his principal? What is the law in this jurisdiction as to the effect of the death of the principal on the authority of the agent to act for and in behalf of the latter? Is the fact of knowledge of the death of the principal a material factor in determining the legal effect of an act performed after such death?

HELD:

By reason of the very nature of the relationship between Principal and agent, agency is extinguished by the death of the principal or the agent. This is the law in this jurisdiction.

Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the rationale for the law is found in the juridical basis of agency which is representation Them being an in. integration of the personality of the principal integration that of the agent it is not possible for the representation to continue to exist once the death of either is establish. Pothier agrees with Manresa that by reason of the nature of agency, death is a necessary cause for its extinction. Laurent says that the juridical tie between the principal and the agent is severed ipso jure upon the death of either without necessity for the heirs of the fact to notify the agent of the fact of death of the former.

The same rule prevails at common law the death of the principal effects instantaneous and absolute revocation of the authority of the agent unless the Power be coupled with an interest. This is the prevalent rule in American Jurisprudence where it is well-settled that a power without an interest confer. red upon an agent is dissolved by the principal's death, and any attempted execution of the power afterward is not binding on the heirs or representatives of the deceased.

In the instant case, it cannot be questioned that the agent, Simeon Rallos, knew of the death of his principal at the time he sold the latter's share in Lot No. 5983 to respondent corporation. The knowledge of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the trial court. 12 That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact of the court a quo 13 and of respondent appellate court when the latter stated that Simon Rallos 'must have known of the death of his sister, and yet he proceeded with the sale of the lot in the name of both his

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sisters Concepcion and Gerundia Rallos without informing appellant (the realty corporation) of the death of the former.

On the basis of the established knowledge of Simon Rallos concerning the death of his principal Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law expressly requires for its application lack of knowledge on the part of the agent of the death of his principal; it is not enough that the third person acted in good faith. Thus in Buason & Reyes v. Panuyas, the Court applying Article 1738 of the old Civil rode now Art. 1931 of the new Civil Code sustained the validity , of a sale made after the death of the principal because it was not shown that the agent knew of his principal's demise.

Whatever conflict of legal opinion was generated by Cassiday v. McKenzie in American jurisprudence, no such conflict exists in our own for the simple reason that our statute, the Civil Code, expressly provides for two exceptions to the general rule that death of the principal revokes ipso jure the agency, to wit: (1) that the agency is coupled with an interest (Art 1930), and (2) that the act of the agent was executed without knowledge of the death of the principal and the third person who contracted with the agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine followed in Cassiday, and again We stress the indispensable requirement that the agent acted without knowledge or notice of the death of the principal In the case before Us the agent Ramon Rallos executed the sale notwithstanding notice of the death of his principal Accordingly, the agent's act is unenforceable against the estate of his principal.

IN VIEW OF ALL THE FOREGOING, We set aside the ecision of respondent appellate court, and We affirm en toto the judgment rendered by then Hon. Amador E. Gomez of the Court of First Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with costs against respondent realty corporation at all instances.

ORIENT AIR SERVCES AND HOTEL REPRESENTATIVES V CA

FACTS:

American Airlines, inc, an air carrier offering passenger and air cargo transportation in the Phils, and Orient Air Services and Hotel Representatives entered into a General Sales Agency Agreement whereby the former authorized the latter to act as its exclusive general sales agent within the Phils for the sale of air passenger transportation

Some of the pertinent provisions are:

Orient Air Services shall perform these services:

a. solict and promote passenger traffic for the services of American and if necessary, employ staff competen and sufficient to do so

b. provide and maintain a suitable area in its place of business to be used exclusively for the transaction of the business of American

c. arrange for distribution of American’s timetables, tariffs and promotional material to sales agents nad the general public in the assigned territory

d. service and supervise sales agents in the assigned territory including if required by American the control of remittances and commissions retained

e. hold out a passenger reservation facility to sales agents and general public in the assigned territory

Alleging that Orient Air had reneged on its obligations under the Agreement by failing to remit the net proceeds of sale in the amount of US $ 254,400, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement

American Air instituted suit against Orient Air for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order averring the basis for the termination of the Agreement as well as Orient Air’s previous record of failures “to promptly settle past outstanding refunds of which there were available funds in the possession of the Orient Air to the damage and prejudice of American Air

TC ruled in favor of Orient Air to which the Intermediate Appelalate Court (now CA) affirmed TC’s decision with modifications with respect to monetary awards granted.

ISSUE: W/N Orient Air is entitled to the 3% overriding commission

RULING: Yes

It is a well settled principle that in the interpretation of a contract, the entirety thereof must be taken into consideration to ascertain the meaning of its provisions. The various stipulations in the contract must be read together to give effect to all

The Agreement, when interpreted in accordance with the foregoing principles, entitles Orient Air to the 3% overriding commission based on total revenue or as referred to by the parties, “total flown revenues”.

As the designated General Sales Agent of American Air, Orient Air was responsible for the promotion and marketing of American Air’s services for air passenger transportation and the solicitation of sales therefor. In return for such efforts and services, Orient Air was to be paid commissions of 2 kinds: first, a sales agency commission, ranging from 7 to 8% of tariff fares and charges from sales by Orient Air when made on American Air ticket stock; and second, an overriding commission of 3% of tariff fares and charges for all sales of passenger transportation over American Air services.

The second type of commissions would accrue for sales of American Air services made not on its ticket stocket but on the ticket stock of other air carriers sold by such carriers or other authorized ticketing facilities or travel agents.

In addition, it is clear from the records that American Air was the party responsible for the preparation of the Agreement. Consequently, any ambiguity in this “contract of adhesion” is to be taken “contra proferentem” –construed against the party who cause the ambiguity and could have avoided it by the exercise of a little more care.

G.R. No. 144805 June 8, 2006

LINTONJUA, JR. vs. ETERNIT CORPORATION

Facts: The Eternit Corporation (EC) manufactures roofing materials and pipe products. Ninety (90%) percent of the shares of stocks of EC were owned by Eteroutremer S.A. Corporation (ESAC), a corporation registered under the laws of Belgium. Glanville was the General Manager and President of EC, while Delsaux was the Regional Director for Asia of ESAC. In 1986, because of the political situation in the Philippines the management of ESAC wanted to stop its operations and to dispose the land in Mandaluyong City. They engaged the services of realtor/broker Lauro G. Marquez.

Marquez thereafter offered the land to Eduardo B. Litonjua, Jr. for P27,000,000.00. Litonjua counter offered P20,000,000.00 cash. Marquez apprised Glanville & Delsaux of the offer. Delsaux sent a telex stating that, based on the "Belgian/Swiss decision," the final offer was "US$1,000,000.00 and P2,500,000.00. The Litonjua brothers deposited US$1,000,000.00 with the Security Bank & Trust Company, and drafted an Escrow Agreement to expedite the sale.

Meanwhile, with the assumption of Corazon C. Aquino as President, the political situation improved. Marquez received a letter from Delsaux that the

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ESAC Regional Office decided not to proceed with the sale. When informed of this, the Litonjuas, filed a complaint for specific performance and payment for damages on account of the aborted sale. Both the trial court and appellate court rendered judgment in favor of defendants and dismissed the complaint.

The lower court declared that since the authority of the agents/realtors was not in writing, the sale is void and not merely unenforceable.

Issue: WON the appellate court committed grave error of law in holding that Marquez needed a written authority from respondent ETERNIT before the sale can be perfected.

Held: Respondents maintain that Glanville, Delsaux and Marquez had no authority from the stockholders of EC and its Board of Directors to offer the properties for sale to the petitioners.

Petitioners assert that there was no need for a written authority from the Board of Directors of EC for Marquez to validly act as broker. As broker, Marquez was not an ordinary agent because his only job as a broker was to look for a buyer and to bring together the parties to the transaction. He was not authorized to sell the properties; hence, petitioners argue, Article 1874 of the New Civil Code does not apply.

A corporation is a juridical person separate and distinct from its stockholders and is not affected by the personal rights, obligations and transactions of the latter. It may act only through its board of directors or, when authorized by its board resolution, through its officers or agents. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law.

Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void.

In this case, the petitioners failed to adduce in evidence any resolution of the Board of Directors of EC empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of land owned by it.

Moreover, the evidence of petitioners shows that Adams and Glanville acted on the authority of Delsaux, who, in turn, acted on the authority of ESAC, through its Committee for Asia, and the Belgian/Swiss component of the management of ESAC. The offer of Delsaux emanated only from the "Belgian/Swiss decision," and not the entire management or Board of Directors of ESAC. While it is true that petitioners accepted the counter-offer of ESAC, EC was not a party to the transaction between them; hence, EC was not bound by such acceptance. Decision of the lower court is affirmed.

Jocelyn B. Doles vs. Ma. Aura Tina Angeles

G.R. No. 149353. June 26, 2006.

Facts:

Petitioner executed a Deed of Absolute Sale ceding a parcel of land in favor of respondent to satisfy the alleged indebtedness of the former in the amount of P405,430.00. Since the said land was mortgaged to the National Home Mortgage Finance Corporation, they further agreed that respondent assume the remaining balance of the loan. Learning that the petitioner still has arrearages, respondent demanded that the arrearages be paid first. Petitioner did not heed, thus a case was filed by the respondent.

In answer, the petitioner alleged that sale was void for lack of consideration and that she was not indebted to the respondent as she only referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. Further petitioner contended that since the respondent is also an agent, she does not have the capacity to sue her.

It is an admitted fact by both petitioner and defendant, based on their testimonies, that respondent knew that the money will be used by the friends of the petitioner; that the respondent was merely representing Arsenio Pua; and that before the supposed friends of the petitioner defaulted in payment, each issued their personal checks in the name of Arsenio Pua for the payment of their debt.

Issue/s:

Whether or not petitioner and respondent were acting on their personal capacity or as mere agents.

Ruling:

The question whether an agency has been created is ordinarily a question which may be established in the same was as any other fact, either by direct or circumstantial evidence. Agency may be implied from the words and conduct of the parties and the circumstances of the particular case. Though the fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one frofessed to act as agent for another, she may be stopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged.

In this case, petitioner knew that the financier of the respondent is Pua, and respondent knew that the borrowers are friends of petitioner. It is sufficient that petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts.

Here, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else and so both of them are estopped to deny the same.

That both parties acted as mere agents is shown by the undisputed fact that the friends of the petitioner issued checks in payment of the loan in the name of Arsenio Pua.

EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v. CUIZON

EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v. CUIZONG.R. No. 167552; April 23, 2007

Ponente: J. Chico-Nazario

FACTS:

From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 with respondents making a down payment of P50,000.00. When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of

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Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo Power Company the amount of P365,135.29. Alarmed by this development, petitioner made several demands upon respondents to pay their obligations. As a result, respondents were able to make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations stood at P295,000.00 excluding interests and attorney's fees. Because of respondents' failure to abide by said final demand letter, petitioner instituted a complaint for sum of money, damages, with application for preliminary attachment against herein respondents By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact.

ISSUE: Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems

HELD:

Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that in a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter's consent. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.

In this case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal and EDWIN as agent.

Philex Mining Corporation vs. CIR [G.R. No. 148187 (April 16, 2008)]

Facts: Petitioner Philex entered into an agreement with Baguio Gold Mining Corporation for the former to manage the latter’s mining claim know as the Sto. Mine. The parties’ agreement was denominated as “Power of Attorney”. The mine suffered continuing losses over the years, which resulted in petitioners’ withdrawal as manager of the mine. The parties executed a “Compromise Dation in Payment”, wherein the debt of Baguio amounted to Php. 112,136,000.00. Petitioner deducted said amount from its gross income in its annual tax income return as “loss on the settlement of receivables from Baguio Gold against reserves and allowances”. BIR disallowed the amount as deduction for bad debt. Petitioner claims that it entered a contract of agency evidenced by the “power of attorney” executed by them and the advances made by petitioners is in the nature of a loan and thus can be deducted from its gross income. Court of Tax Appeals (CTA) rejected the claim and held that it is a partnership rather than an agency. CA affirmed CTA

Issue: Whether or not it is an agency.

Held: No. The lower courts correctly held that the “Power of Attorney” (PA) is the instrument material that is material in determining the true nature of the

business relationship between petitioner and Baguio. An examination of the said PA reveals that a partnership or joint venture was indeed intended by the parties. While a corporation like the petitioner cannot generally enter into a contract of partnership unless authorized by law or its charter, it has been held that it may enter into a joint venture, which is akin to a particular partnership. The PA indicates that the parties had intended to create a PAT and establish a common fund for the purpose. They also had a joint interest in the profits of the business as shown by the 50-50 sharing of income of the mine.

Moreover, in an agency coupled with interest, it is the agency that cannot be revoked or withdrawn by the principal due to an interest of a third party that depends upon it or the mutual interest of both principal and agent. In this case the non-revocation or non-withdrawal under the PA applies to the advances made by the petitioner who is the agent and not the principal under the contract. Thus, it cannot be inferred from the stipulation that it is an agency.

RALLOS v. FELIX GO CHAN

G.R. No. L-24332 January 31, 1978

FACTS:

This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal, Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of attorney which the principal had executed in favor. The administrator of the estate of the went to court to have the sale declared uneanforceable and to recover the disposed share. The trial court granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity of the sale and the complaint.

Hence, this Petition for Review on certiorari.

Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the sisters executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 5983 to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. The deed of sale was registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled, and a new transfer certificate of Title No. 12989 was issued in the named of the vendee.

On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a complaint docketed as Civil Case No. R-4530 of the Court of First Instance of Cebu, praying (1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be d unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of suit. Named party defendants were Felix Go Chan & Sons Realty Corporation, Simeon Rallos, and the Register of Deeds of Cebu, but subsequently, the latter was dropped from the complaint. The complaint was amended twice; defendant Corporation's Answer contained a crossclaim against its co-defendant, Simon Rallos while the latter filed third-party complaint against his sister, Gerundia Rallos While the case was pending in the trial court, both Simon and his sister Gerundia died and they were substituted by the respective administrators of their estates.

ISSUES:

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What is the legal effect of an act performed by an agent after the death of his principal? Applied more particularly to the instant case, We have the query. is the sale of the undivided share of Concepcion Rallos in lot 5983 valid although it was executed by the agent after the death of his principal? What is the law in this jurisdiction as to the effect of the death of the principal on the authority of the agent to act for and in behalf of the latter? Is the fact of knowledge of the death of the principal a material factor in determining the legal effect of an act performed after such death?

HELD:

By reason of the very nature of the relationship between Principal and agent, agency is extinguished by the death of the principal or the agent. This is the law in this jurisdiction.

Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the rationale for the law is found in the juridical basis of agency which is representation Them being an in. integration of the personality of the principal integration that of the agent it is not possible for the representation to continue to exist once the death of either is establish. Pothier agrees with Manresa that by reason of the nature of agency, death is a necessary cause for its extinction. Laurent says that the juridical tie between the principal and the agent is severed ipso jure upon the death of either without necessity for the heirs of the fact to notify the agent of the fact of death of the former.

The same rule prevails at common law the death of the principal effects instantaneous and absolute revocation of the authority of the agent unless the Power be coupled with an interest. This is the prevalent rule in American Jurisprudence where it is well-settled that a power without an interest confer. red upon an agent is dissolved by the principal's death, and any attempted execution of the power afterward is not binding on the heirs or representatives of the deceased.

In the instant case, it cannot be questioned that the agent, Simeon Rallos, knew of the death of his principal at the time he sold the latter's share in Lot No. 5983 to respondent corporation. The knowledge of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the trial court. 12 That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact of the court a quo 13 and of respondent appellate court when the latter stated that Simon Rallos 'must have known of the death of his sister, and yet he proceeded with the sale of the lot in the name of both his sisters Concepcion and Gerundia Rallos without informing appellant (the realty corporation) of the death of the former.

On the basis of the established knowledge of Simon Rallos concerning the death of his principal Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law expressly requires for its application lack of knowledge on the part of the agent of the death of his principal; it is not enough that the third person acted in good faith. Thus in Buason & Reyes v. Panuyas, the Court applying Article 1738 of the old Civil rode now Art. 1931 of the new Civil Code sustained the validity , of a sale made after the death of the principal because it was not shown that the agent knew of his principal's demise.

Whatever conflict of legal opinion was generated by Cassiday v. McKenzie in American jurisprudence, no such conflict exists in our own for the simple reason that our statute, the Civil Code, expressly provides for two exceptions to the general rule that death of the principal revokes ipso jure the agency, to wit: (1) that the agency is coupled with an interest (Art 1930), and (2) that the act of the agent was executed without knowledge of the death of the principal and the third person who contracted with the agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine followed in Cassiday, and again We stress the indispensable requirement that the agent acted without knowledge or notice of the death of the principal In the case before Us the agent Ramon Rallos executed the sale notwithstanding notice of the

death of his principal Accordingly, the agent's act is unenforceable against the estate of his principal.

IN VIEW OF ALL THE FOREGOING, We set aside the ecision of respondent appellate court, and We affirm en toto the judgment rendered by then Hon. Amador E. Gomez of the Court of First Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with costs against respondent realty corporation at all instances.

Rallos v. Felix Go Chan & Realty Corp.

FACTS: An SPA was executed by sisters Concepcion and Gerundia in favor of their brother Simeon for the sale of a parcel of land co-owned by the two. Months after Conception died, Simeon sold the undivided shares of his sisters to herein respondent Felix Go Chan & Realty Corp. Petitioner Ramon Rallos, administrator of he late Concepcion's estate, prayed that the sale of the undivided share of the deceased be invalidated and a new certificate be issued in the name of respondent corporation and Concepion's intestate estate, plus damages. CFI ruled in favor of petitioner and granted the payers but CA reversed the decision. Respondent's MR was further denied. ISSUE: Whete the sale entered into by an agent is valid alhough executed after death of the principal.

HELD: No, the sale is void because Simeon's authority as an agent of Concepcion was extinguished upon her death. Article 1317 provides that no one may contract inthe name of another without being authorized or unless he has, by law, a righ to represent him. Article 1919 urthers hat the death of the princpal terminates the agency. The case at bar is also not among the exceptions whereby an agent's acts bind the principal even after the latter's death because of Simeon's knowledge of Concepion's death is material. CA's decision is reversed, CFI decision affimed. The sale was null and void.

YU ENG CHO VS. PAN AMERICANTokyo-San Francisco flight was not confirmed yet the plaintiffs pushed through with the flight. Business agreement did not push through. Sought for damages against PanAm, TWSI, and independent travel agent who represented herself as agent of TWSI.

Facts:Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. He travels from time to time to Malaysia, Taipei, and Hongkong. On July 10, 1976 he bought plane tickets to Fairfield, New Jersey from defendant Claudia Tagunicar who represented herseld to be an agent of TWSI. The purpose of the trip was to buy 2 lines of infrared heating system processing textured plastic article.

Only the Manila-Hongkong-Tokyo passage were conrfirmed. Tokyo-San Francisco was on “RQ” status, meaning “on request.” After a few days, plaintiffs returned to follow-up and Tagunicar told them that the flight was confirmed all the way. A few days before the flight, plaintiff’s son called Pan Am office to verify the status of the flight, and a personnel confirmed the bookings.

They left for HK, then to Tokyo. Upon arrival in Tokyo, they called Pan Am for reconfirmation of fight to SF. The officer said that their names were not in the manifest. They cannot stay in Japan for more than 72hrs and NW Airlines was on strike, thus they could not leave for US. They were forced to return to Taipei, then back to Manila.

Japan Airlines refunded their fare, but the business deal with Radiant Heat Enterprises was cancelled. Yung Eng Cho expected to realize a profit of 300k-400k. A complaint for damages was filed against Pan Am, TWSI and Canilao, and Tagunicar for the costs of tickets and hotel accommodations.

RTC held the defendants solidarily liable. Appellate court modified the amount of damages and held Tagunicar solely liable, because the latter is

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an independent travel solicitor and not a duly authorized agent or representative of either Pan Am or TWSI.

Issue: WON Tagunicar was an agent of Pan Am or TWSI. NO.

Held: (Agency defined, elements, rule in Keeler)

II. Tagunicar issued an affidavit to the effect that she is indeed an agent of TWSI, but subsequently she made a court statement that she was independent travel agent. Court gave more weight to the testimony in open court.

III. It was shown that plaintiff only sued Pan Am to recover money since they did not expect the agent to have something to pay them (according to the Amended Complaint). “…this Court will not tolerate an abuse of the judicial process by passengers in order to pry on international airlines for damage awards…”

The meritless suit is more glaring when the plaintiff did not give a demand letter to Pan Am, TWSI and Canilao.

IV. The ticket was not confirmed for good reasons.1. Persistent calls by Tagunicar to Canilao and Pan Am are

indications that petitioners knew their tickets have not been confirmed. Why would one continually try to have one’s ticket confirmed if it already had?

2. Tagunicar was not authorized to attach validation stickers (for exclusive use of airline company)

3. Names of petitioners did not appear in passenger manifest4. Status of Tokyo-SF segment still on request5. With this Tagunicar stated, “Bahala na.”

Thus petitioners knew that they might be bumped off at Tokyo. Aware of this risk, they still proceeded with the flight.

Ratio: Against the agent, the third person has the obligation to determine the existence and scope of agency. He who deals with an agent is bound at his peril, having the burden to ascertain not only the fact of agency but also its nature and the extent of authority granted.

MANILA MEMORIAL PARK CEMETERY, INC.vs.PEDRO L. LINSANGAN

FACTS:

Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him.

Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and typewritten receipts for these payments. Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new contract price, as the same was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a document confirming that while the contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.

Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against the former.

MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except as to the extent expressly stated in the Agency Manager Agreement. Moreover, MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in fact received a down payment and monthly installments as indicated in the contract.

The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals affirmed the decision of the trial court.

ISSUES:

1. Whether or not there was a contract of agency between Baluyot and MMPCI?2. Whether or not MMPCI should be liable for Baluyot’s act?

HELD:

First Issue. Yes. By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. As properly found both by the trial court and the Court of Appeals, Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and, when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.

Second Issue. No. While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract.

To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It also bears emphasis that when the third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person was aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification.

By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. Thus, the elements of agency are (i) consent, express or implied, of the parties to establish the relationship; (ii) the object is the execution of a juridical act in relation to a third person; (iii) the agent acts as a representative and not for himself; and (iv) the agent acts within the scope of his authority.

BORDADOR V LUZ

FACTS:

Petitioners were engaged in the business of purchase and sale of jewelry and respondent Brigida Luz, also known as Aida Luz, was their regular customer.

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AGENCY DIGEST

On several occasions, respondent Deganos, brother of Luz, received several pieces of gold and jewelry from petitioners amounting to P382, 816. These items and their prices were indicated in seventeen receipts covering the same. 11 of the receipts stated that they were received for a certain Aquino, a niece of Deganos, and the remaining 6 receipts indicated that they were received for Luz.

Deganos was supposed to sell the items at a profit and thereafter remit the proceeds and return the unsold items to Bordador. Deganos remitted only the sum of P53, 207. He neither paid the balance of the sales proceeds, nor did he return any unsold item to petitioners.

The total of his unpaid account to Bordador, including interest, reached the sum of P725, 463.98. Petitioners eventually filed a complaint in the barangay court against Deganos to recover said amount.

In the barangay proceedings, Luz, who was not impleaded in the caes, appeared as a witness for Deganos and ultimately, she and her husband, together with Deganos signed a compromise agreement with petitioners.

In that compromise agreement, Deganos obligated himself to pay petitioners, on installment basis , the balance of his account plus interest thereon. However, he failed to comply with his aforestated undertakings.

Petitioners instituted a complaint for recovery of sum of money and damages, with an application for preliminary attachment against Deganos and Luz.

Deganos and Luz was also charged with estafa

During the trial of the civil cae, petitioners claimed that Deganos acted as agent of Luz when received the subject items of jewelry, and because he failed to pay for the same, Luz, as principal, and her spouse are solidarily liable with him

Trial court ruled that only Deganos was liable to Bordador for the amount and damages claimed. It held that while Luz did have transactions with petitioners in the past, the items involved were already paid for and all that Luz owed Bordador was the sum or P21, 483 representing interest on the principal account which she had previously paid for.

CA affirmed TC’s decision

ISSUE:

W/N Luz are liable to petitioners for the latter’s claim for money and damages in the sum of P725,463.98, plus interests and attorney’s fees, despite the fact that the evidence does not show that they signed any of the subject receipts or authorized Deganos to receive the items of jewelry on their behalf

RULING: No

Evidence does not support the theory of Bordador that Deganos was an agent of Luz and that the latter should consequently be held solidarily liable with Deganos in his obligation to petitioners.

The basis for agency is representation. Here, there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular transactions involved.

It was grossly and inexcusably negligent of petitioner to entrust to Deganos, not once or twice but on at least six occasions as evidenced by 6 receipts, several pieces of jewelry of substantial value without requiring a written authorization from his alleged principal.

A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

Records show that neither an express nor an implied agency was proven to have existed between Deganos and Luz. Evidently, Bordador who were negligent in their transactions with Deganos cannot seek relief from the effects of their negligence by conjuring a supposed agency relation between the two respondents where no evidence supports such claim

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