Professional Documents
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Agency: Nature, Form and Kinds of Agency
Agency: Nature, Form and Kinds of Agency
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BA FINANCE CORPORATION v. CA
GR 94566, July 1992
FACTS:
On December 17, 1980, Renato Gaytano, doing
business under the name Gebbs International, applied for
and was granted a loan with respondent Traders Royal Bank
in the amount of P60,000.00. As security for the payment of
said loan, the Gaytano spouses executed a deed of
suretyship whereby they agreed to pay jointly and severally
to respondent bank the amount of the loan including
interests, penalty and other bank charges.
In a letter dated December 5, 1980 addressed to
respondent bank, Philip Wong as credit administrator of BA
Finance Corporation for and in behalf of the latter, undertook
to guarantee the loan of the Gaytano spouses.
Partial payments were made on the loan leaving an unpaid
balance in the amount of P85,807.25. Since the Gaytano
spouses refused to pay their obligation, respondent bank
filed with the trial court complaint for sum of money against
the Gaytano spouses and petitioner corporation as
alternative defendant.
The Gaytano spouses did not present evidence for
their defense. Petitioner corporation, on the other hand,
raised the defense of lack of authority of its credit
administrator to bind the corporation.
On December 12, 1988, the trial court rendered a
decision in favor of plaintiff and against defendants/Gaytano
spouses, ordering the latter to jointly and severally pay the
plaintiff.
Not satisfied with the decision, respondent bank
appealed with the Court of Appeals. On March 13, 1990,
respondent appellate court rendered judgment modifying the
decision of the trial court. Hence, this petition.
ISSUE:
Whether the letter of guaranty is ultra vires and thus
invalid and/or unenforceable.
HELD:
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HELD:
In the case at bar, defendant-appellee Gregorio
Domingo as the broker, received a gift or propina in the
amount of One Thousand Pesos (P1,000.00) from the
prospective buyer Oscar de Leon, without the knowledge and
consent of his principal, herein petitioner-appellant Vicente
Domingo. His acceptance of said substantial monetary gift
corrupted his duty to serve the interests only of his principal
and undermined his loyalty to his principal, who gave him
partial advance of Three Hundred Pesos (P300.00) on his
commission. As a consequence, instead of exerting his best
to persuade his prospective buyer to purchase the property
on the most advantageous terms desired by his principal, the
broker, herein defendant-appellee Gregorio Domingo,
succeeded in persuading his principal to accept the counteroffer of the prospective buyer to purchase the property at
P1.20 per square meter or One Hundred Nine Thousand
Pesos (P109,000.00) in round figure for the lot of 88,477
square meters, which is very much lower the the price of
P2.00 per square meter or One Hundred Seventy-Six
Thousand Nine Hundred Fifty-Four Pesos (P176,954.00) for
said lot originally offered by his principal.
The duty embodied in Article 1891 of the New Civil Code will
not apply if the agent or broker acted only as a middleman
with the task of merely bringing together the vendor and
vendee, who themselves thereafter will negotiate on the
terms and conditions of the transaction. Neither would the
rule apply if the agent or broker had informed the principal of
the gift or bonus or profit he received from the purchaser and
his principal did not object therto. 11 Herein defendantappellee Gregorio Domingo was not merely a middleman of
the petitioner-appellant Vicente Domingo and the buyer
Oscar de Leon. He was the broker and agent of said
petitioner-appellant only. And therein petitioner-appellant was
not aware of the gift of One Thousand Pesos (P1,000.00)
received by Gregorio Domingo from the prospective buyer;
much less did he consent to his agent's accepting such a gift.
The fact that the buyer appearing in the deed of sale
is Amparo Diaz, the wife of Oscar de Leon, does not
materially alter the situation; because the transaction, to be
valid, must necessarily be with the consent of the husband
Oscar de Leon, who is the administrator of their conjugal
assets including their house and lot at No. 40 Denver Street,
Cubao, Quezon City, which were given as part of and
constituted the down payment on, the purchase price of
herein petitioner-appellant's lot No. 883 of Piedad Estate.
Hence, both in law and in fact, it was still Oscar de Leon who
was the buyer.
As a necessary consequence of such breach of trust,
defendant-appellee Gregorio Domingo must forfeit his right
to the commission and must return the part of the
commission he received from his principal.
Teofilo Purisima, the sub-agent of Gregorio Domingo,
can only recover from Gregorio Domingo his one-half share of
whatever amounts Gregorio Domingo received by virtue of
the transaction as his sub-agency contract was with Gregorio
Domingo alone and not with Vicente Domingo, who was not
even aware of such sub-agency. Since Gregorio Domingo
received from Vicente Domingo and Oscar de Leon
respectively the amounts of Three Hundred Pesos (P300.00)
and One Thousand Pesos (P1,000.00) or a total of One
Thousand Three Hundred Pesos (P1,300.00), one-half of the
same, which is Six Hundred Fifty Pesos (P650.00), should be
paid by Gregorio Domingo to Teofilo Purisima.
Because Gregorio Domingo's clearly unfounded
complaint caused Vicente Domingo mental anguish and
serious anxiety as well as wounded feelings, petitionerappellant Vicente Domingo should be awarded moral
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Policy No. 326, for P10,000, was issued to, and in the name
of policy No. 326, for P10,000, was issued to, and in the
name of the plaintiff by The Yang-Tsze Insurance Association,
Limited, and recites that the premium of P125 was paid by
the plaintiff to the association, and that, in the event of loss
by fire between certain dates, "the funds and property of the
said association shall be subject and liable to pay, reinstate,
or make good to the said assured, their heirs, executors, or
administrators, such loss or damage as shall be occasioned
by fire to the property above-mentioned and hereby insured,"
not exceeding the amount of the policy.
Policy No. 796111, for P8,000, was issued by The
States Assurance Company, Limited, to the plaintiff for a
premium of P100, which was paid to the Assurance Company
through the defendant, its authorized agent, and recites that
"the company agrees with the insured that in the event of
loss by fire between certain dates, the company will, out of
its capital, stock and funds, pay the amount of such loss or
damage," not exceeding the amount of the policy, and it is
attested by the defendant, through its "Cashier and
Accountant and Manager, Agents, State Assurance Co., Ltd.,"
authorized agents of the Assurance Company.
Policy No. 4143 is attested "on behalf of The China
Fire Insurance Company, Limited," by the cashier and
accountant and manager of the defendant, as agents of The
China Fire Insurance Company, Limited. The same is true as
to policy no. 4382.
Policy No. 326 recites the payment of a premium of
P125 by the plaintiff to The Yang-Tsze Insurance Association,
Limited, and that, in the event of loss, "the funds and
property of the said association shall be subject and liable to
pay, reinstate, or make good to the said assured, their heirs,
executors, or administrators, such loss or damage as shall be
occasioned by fire or lightning to the property" insured, not
exceeding the amount of the policy, and it is attested by the
defendant, through its cashier and accountant and manager,
as agents of the association "under the authority of a Power
of Attorney from The Yang-Tsze Insurance Association,
Limited," "to sign, for and on behalf of the said Association,
etc."
March 25, 1919, and while the policies were in force,
a loss occurred in which the insured property was more or
less damaged by fire and the use of water resulting from the
fire.
The plaintiff made a claim for damages under its policies, but
could not agree as to the amount of loss sustained. It sold
the insured property in its then damaged condition, and
brought this action against Warner, Barnes & Co., in its
capacity as agents, to recover the difference between the
amount of the policies and the amount realized from the sale
of the property, and in the first cause of action, it prayed for
judgment for P23,052.99, and in the second cause of action
P9,857.15.
The numbers and amounts of the policies and the
names of the insurance companies are set forth and alleged
in the complaint.
After trial the court found that there was due the
plaintiff from the three insurance companies p18,493.29 with
interest thereon at the rate of 6 per cent per annum, from
the date of the commencement of the action, and costs
ISSUE:
Whether the resident agent in Manila of the
companies, and was authorized to solicit and do business for
them as such agent; that each company is a foreign
corporation.
HELD:
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FACTS:
Defendant-appellant Damaso Perez has presented a
motion for new trial on the ground of newly discovered
evidence. It is claimed that movant was not aware of the
nature of the power of attorney that Ramon Racelis used,
purportedly signed by him, to secure the loans for the
Republic Armored Car Service Corporation and the Republic
Credit Corporation. In the motion it is claimed that a
photostatic copy of the power of attorney used by Ramon
Racelis was presented at the trial. This photostatic copy or a
copy thereof has not been submitted to us, for this reason
We cannot rule upon his claim and contention that Ramon
Racelis had no authority to bind the movant as surety for the
loans obtained from the appellee Commercial Bank & Trust
Company. Not having before Us the supposed photostatic
copy of the power of attorney used to secure the loans, there
is no reason for Us to rule, in accordance with his contention,
that Racelis exceeded his authority in securing the loans
subject of the present actions.
The motion for reconsideration, however, presents a
copy of a power of attorney purportedly executed by movant
on October 22, 1952. It is not expressly mentioned that this
is the precise power of attorney that Ramon Racelis Utilized
to secure the loans the collection of which is sought in these
cases. But assuming, for the sake of argument, that the said
power of attorney incorporated in the motion for
reconsideration was the one used to obtain the loans. We find
that the movant's contention has no merit. In accordance
with the document, Racelis was authorized to negotiate for a
loan or various loans .. with other being institution, financing
corporation,
insurance
companies
or
investment
corporations, in such sum or sums, aforesaid Attorney-in-fact
Mr. Ramon Racelis, may deem proper and convenient to my
interests, ... and to execute any and all documents he deems
requisite and necessary in order to obtain such loans, always
having in mind best interest; ...
ISSUE:
Whether the general power of attorney is sufficient
for Atty. Racelis to obtain a loan
HELD:
SC holds that this general power attorney to secure
loans from any banking institute was sufficient authority for
Ramon Racelis to obtain the credits subject of the present
suits.
It will be noted furthermore that Racelis, as agent
Damaso Perez, executed the documents evidencing the loans
signing the same "Damaso Perez by Ramon Racelis," and in
the said contracts Damaso Perez agreed jointly and severally
to be responsible for the loans. As the document as signed
makes Perez jointly and severally responsible, there is no
merit in the contention that Perez was only being held liable
as a guarantor.
Furthermore, the promissory notes evidencing the loan
are attached to the complaint in G.R. Nos. L-182 and L-
FACTS:
This is an appeal by way of certiorari against a
decision of the Court of Appeals, fourth division, approving
certain claims presented by Epifanio M. Longara against the
testate estate of Fernando Hermosa, Sr. The claims are of
three kinds, namely, P2,341.41 representing credit advances
made to the intestate from 1932 to 1944, P12,924.12 made
to his son Francisco Hermosa, and P3,772 made to his
grandson, Fernando Hermosa, Jr. from 1945 to 1947, after the
death of the intestate, which occurred in December, 1944.
The claimant presented evidence and the Court of Appeals
found, in accordance therewith, 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." Claimant had
testified without opposition that the credit advances were to
be "payable as soon as Fernando Hermosa, Sr.'s property in
Spain was sold and he receive money derived from the sale."
The Court of Appeals 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 filed on October 2, 1948.
ISSUE:
Whether the obligation contracted by the intestate
was subject to a condition exclusively dependent upon the
will of the debtor (a condicion potestativa) and therefore null
and void
Whether the sale was not effected in the lifetime of
the debtor (the intestate), but after his death and by his
administrator, the very wife of the claimant
HELD:
In accordance with article 1115 of the old Civil Code.
The case of Osmea vs. Rama, (14 Phil. 99) is cited to
support appellants contention. In this case, this court seems
to have filed that a promise to pay an indebtedness "if a
house of strong materials is sold" is an obligation the
performance of which depended on the will of the debtor. We
have examined this case and we find that the supposed
ruling was merely an assumption and the same was not the
actual ruling of the case.
A careful consideration of the condition upon which payment
of the sums advanced was made to depend, "as soon as he
(intestate) receive funds derived from the sale of his property
in Spain," discloses the fact that the condition in question
does not depend exclusively upon the will of the debtor, but
also upon other circumstances beyond his power or control. If
the condition were "if he decides to sell his house." or "if he
likes to pay the sums advanced," or any other condition of
similar import implying that upon him (the debtor) alone
payment would depend, the condition would be protestativa,
dependent exclusively upon his will or discretion. In the form
that the condition was found by the Court of Appeals
however the condition implies that the intestate had already
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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 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
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VALERA v. VELASCO
FACTS:
By virtue of the powers of attorney, the defendant
was appointed attorney-in-fact of the said plaintiff with
authority to manage his property in the Philippines,
consisting of the usufruct of a real property located of
Echague Street, City of Manila.
The defendant accepted both powers of attorney,
managed plaintiff's property, reported his operations, and
rendered accounts of his administration; and on March 31,
1923 presented exhibit F to plaintiff, which is the final
account of his administration for said month, wherein it
appears that there is a balance of P3,058.33 in favor of the
plaintiff.
The liquidation of accounts revealed that the plaintiff
owed the defendant P1,100, and as misunderstanding arose
between them, the defendant brought suit against the
plaintiff, civil case No. 23447 of this court. Judgment was
rendered in his favor on March 28, 1923, and after the writ of
execution was issued, the sheriff levied upon the plaintiff's
right of usufruct, sold it at public auction and adjudicated it
to the defendant in payment of all of his claim.
Subsequently, on May 11, 1923, the plaintiff sold his
right of redemption to one Eduardo Hernandez, for the sum
of P200 (Exhibit A). On September 4, 1923, this purchaser
conveyed the same right of redemption, for the sum of P200,
to the plaintiff himself, Federico Valera (Exhibit C).
After the plaintiff had recovered his right of
redemption, one Salvador Vallejo, who had an execution upon
a judgment against the plaintiff rendered in a civil case
against the latter, levied upon said right of redemption,
which was sold by the sheriff at public auction to Salvador
Vallejo for P250 and was definitely adjudicated to him. Later,
he transferred said right of redemption to the defendant
Velasco. This is how the title to the right of usufruct to the
aforementioned property later came to vest the said
defendant.
ISSUE:
Whether one of the ways of terminating an agency is
by the express or tacit renunciation of the agent;
Whether Miguel Velasco was, and at present is, an
authorized representative of the plaintiff Federico Valera
HELD:
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
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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 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.
(2 C. J., 543.) 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.
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 plaintiffappellant.
In regard to the third assignment of error, it is
deemed unnecessary to discuss the validity of the sale made
by Federico Valera to Eduardo Hernandez of his right of
redemption in the sale of his usufructuary right made by the
sheriff by virtue of the execution of the judgment in favor of
Miguel Velasco and against the said Federico Valera; and the
same thing is true as to the validity of the resale of the same
right of redemption made by Eduardo Hernandez to Federico
Valera; inasmuch as Miguel Velasco's purchase at public
auction held by virtue of an execution of Federico Valera's
usufructuary right is valid and legal, and as neither the latter
nor Eduardo Hernandez exercised his right of redemption
within the legal period, the purchaser's title became
absolute.
Moreover, the defendant-appellee, Miguel Velasco, having
acquired Federico Valera's right of redemption from Salvador
Vallejo, who had acquired it at public auction by virtue of a
writ of execution issued upon the judgment obtained by the
said Vallejo against the said Valera, the latter lost all right to
said usufruct.
And even supposing that Eduardo Hernandez had
been tricked by Miguel Velasco into selling Federico Valera's
right of repurchase to the latter so that Salvador Vallejo
might levy an execution on it, and even supposing that said
resale was null for lack of consideration, yet, inasmuch as
Eduardo Hernandez did not present a third party claim when
the right was levied upon for the execution of the judgment
obtained by Vallejo against Federico Vallera, nor did he file a
complaint to recover said right before the period of
redemption expired, said Eduardo Hernandez, and much less
Federico Valera, cannot now contest the validity of said
resale, for the reason that the one-year period of redemption
has already elapsed.
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ISSUE:
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