Philippine National Bank vs Intermediate Appellate Court

189 SCRA 680 September 18, 1990

FACTS:
Leticia de la Vina- Sepe executed a real estate mortgage in favor of PNB over a lot in her name to secure her loan
of P3, 400. Later, Leticia Sepe, acting as an attorney-in-fact for her brother-in-law, private respondent Romeo Alcedo,
executed an amended real estate mortgage to include Alcedos lot as additional collateral for Sepes increased loan of
P16, 500. Leticia Sepe and private respondent verbally agreed to split fifty-fifty the proceeds of the loan but failing to
receive his one-half share from her, Alcedo wrote a letter to the PNB to revoke the Special Power of Attorney which he
had given to Leticia Sepe to mortgage his lot.

The PNB, through its manager, advised Alcedo that his land had already been included as collateral for Sepes
loan, nevertheless, PNB assured Alcedo that the bank would exclude his lot as collateral for Sepes forthcoming loan. The
PNB also advised Sepe in writing to replace the lot with another collateral of equal or higher value.

Despite of the advice of PNB, Sepe was still able to obtain an additional loan on the security of Alcedos property.
Thereafter, Alcedo received a letter that Sepe defaulted in paying her loan wherein he was given six days to settle Sepes
obligation, otherwise a foreclosure proceeding would be commenced against his property.

Alcedo requested Sepe to pay to forestall foreclosure proceedings against his property, but to no avail. Thus,
private respondent sued Sepe and the PNB for collection, injunction and damages. During the pendency of the case, extra
judicial foreclosure commenced which was sold to the PNB as the highest bidder. Later he amended his complaint praying
for the annulment of the extra judicial foreclosure sale and reconveyance of his lot. The PNB, on its answer alleged that
the revocation of SPA of Alcedo was not in accordance with the law, thus, the revocation of the SPA did not impair the
real estate mortgage earlier executed by Sepe in favor of the bank.

The lower court rendered judgment in favor of the private respondent Alcedo. The CA also affirmed the decision
of the lower court in toto. Hence, this petition.

ISSUE:
Whether or not a revocation of a special power of attorney in a private writing is valid and binding.

RULING:
YES. The revocation of a special power of attorney, although embodied in a private writing, is valid and binding
between the parties.

While Article 1358 of the Civil Code requires that the revocation of Alcedos Special Power of Attorney to
mortgage his property should appear in a public instrument: xxx nevertheless, a revocation in a private writing is valid
and binding between the parties for- The legalization by a public writing and the recording of the same in the registry
are not essential requisites of a contract entered into, as between the parties, but mere conditions of form or solemnities
which the law imposes in order that such contract may be valid as against third persons, and to insure that a publicly
executed and recorded agreement shall be respected by the latter.

1
Dy Buncio and Co Vs Ong Guan Gan
60 Phil 696

FACTS:
Plaintiff claims that the property belongs to its judgment debtor, Ong Guan Can, while defendants Juan Tong and
Pua Giok Eng claim as owner and lessee of the owner by virtue of a deed dated July 31, 1939, by ONg Guan Can Jr.

Ong Guan Can Jr., as an agent of Ong Guan Can, the proprietor of the commercial firm of Ong Guan Can and
Sons; sells the rice-mill and camarin for p13, 000 and gives as his authority the power of attorney dated the 23 rd of May,
1928, a copy of this public instrument being attached to the deed and recorded with the deed in the Office of the Registry
of Deeds in Capiz. The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the
agent in his own name and without any words indicating that he was signing it for the principal.

The trial court held that the deed was invalid and that the property was subject to execution which has been
levied on the properties by the judgment creditor. Furthermore, leaving aside the irregularities of the deed, the power of
attorney referred to in the deed and registered therewith is not a general power of atoorney but a limited one and does
not give the express power to alienate the properties in question. Appellants claim that this defect is cured by a general
power of attorney given to the same agent.

ISSUE:
Whether or not the general power of attorney first issued cures the defect on the limited power of attorney
subsequently issued.

RULING:
NO. The general power of attorney issued in 1920 does not cure the defect on the limited power of attorney.
Article 1732 of the Civil Code is silent over the partial termination of an agency. The making and accepting of a new
power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be
held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does
not revoke the general power of attorney, the execution of the second power of attorney would be mere futile gesture.
Thus, the power of attorney used by Ong Guan Can Jr. does not give the power to alienate the property making the sale
in 1928 invalid.

2
Infante Vs Cunanan
93 Phil 693 (1953)

FACTS:

Consejo Infante, contracted the services of Jose Cunanan and Juan Mijares, plaintiff herein, to sell his property
for a price of P30,000 subject to the condition that the purchaser would assume the mortgage existing thereon in the
favor of the Rehabilitation Finance Corporation. She agreed to pay them a commission of 5 per cent on the purchase
price plus whatever overprice they may obtain for the property. Plaintiffs found one Pio S. Noche who was willing to buy
the property under the terms agreed upon with defendant, but when they introduced him to defendant, the latter
informed them that she was no longer interested in selling the property and succeeded in making them sign a document
stating therein that the written authority she had given them was already can-celled. However, on December 20, 1948,
defendant dealt directly with Pio S. Noche selling to him the property for P31,000. Upon learning this transaction,
plaintiffs demanded from defendant the payment of their commission, but she refused and so they brought the present
action.

The lower court found that the preponderance of evidence was in favor of the plaintiffs and rendered judgment
sentencing the defendant to pay the plaintiff the sum of P2,500 with legal interest thereon from February 2,1949 plus the
costs of action. This decision was affirmed in toto by the Court of Appeals. Hence, this petition.

ISSUE:
Whether or not the petitioner was obliged to pay the commission of the respondents despite the authority to sell
was terminated.

RULING:
YES. A principal may withdraw the authority given to an agent at will. But respondents agreed to cancel the
authority given to them upon assurance by petitioner that should property be sold to Noche, they would be given
commission.
That petitioner had changed her mind even if respondents had found a buyer who was willing to close the deal, is
a matter that would give rise to a legal consequence if respondents agree to call off to transaction in deference to the
request of the petitioner. Petitioner took advantage of the services of respondents, but believing that she could evade
payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation. This act of
subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commissions agreed
upon.

3
 1.
Coleongco Vs. Claparols
10 SCRA 577

FACTS:
Since 1951, Claparols operated a factory for the manufacture of nails under the style of "Claparols Steel & Nail
Plant". The raw material, nail wire, was imported from foreign sources. Losses compelled Claparols in 1953 to look for
someone to finance his imports of nail wires. Coleongco became his financier. A financing agreement was perfected. In
addition, a special power of attorney was executed authorizing Coleongco 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 cash advances from dealers and distributors. Thereafter, Coleongco also became the assistant
manager of the factory. In 1956, Claparols was 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 that the execution had been procured because of derogatory
information against appellee that had reached the bank Coleongco. His letters to the Philippine National attempting to
undermine the credit of the principal and to acquire the factory of the latter, without the principal's knowledge.
Fortunately, Claparols managed to arrange matters with the bank and to have the execution levy lifted. He further
discovered the following acts of disloyalty of Coleongco: A letter to his cousin, Kho To , instructing the latter to reduce to
one-half the usual monthly advances to Claparols on account of nail sales in order to squeeze said appellee and compel
him to extend the contract entitling Coleongco to share in the profits of the nail factory on better terms, and ultimately
"own his factory", a plan carried out by Kho's letter, ,reducing the advances to Claparols; Coleongco's attempt to, have
Romulo Agsam pour acid on the machinery; His illegal diversion of the profits of the factory to his own benefit; And the
surreptitious disposition of the Yates band resaw machine in favor of his cousin's Hong Shing Lumber Yard, made while
Claparols was in Baguio in July and August of 1956. Instead of putting up all the necessary money needed to finance the
imports of raw material, Coelongco merely advanced 25% in cash on account of the price and had the balance covered
by surety agreements with Claparols and others as solidary guarantors.

Claparols consequently revoked the power of attorney, and informed Coleongco 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 of P87,387.37, as of June 30, 1957. The Complaint: Coleongco
filed a suit against Claparols charging breach of contract asking for accounting plus damages. His Argument: He also
contended that the power of attorney was made to protect his interest under the financing agreement and was one
coupled with an interest that the appellee Claparols had no legal power to revoke. Caparols' mal-administration of the
business endangered the security for the advances that he had made under the financing contract Appellant likewise
denies the authorship of the letter to Kho as well as the attempt to induce Agsam to damage the machinery of the factory
RTC: Dismiss action for damages and order him to pay Claparols P81,387.27 as per audit as adjusted plus damages.
Hence, this petition.

ISSUE:
Whether or not a contract of agency when coupled with an interest may be validly revoked by the principal.

RULING:
YES. A power of attorney although coupled with interest in a partnership can be revoked for a just cause, such as
when the attorney-in-fact betrays the interest of the principal, as what happened in the case at bar. 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. Our new Civil Code, in Article 1172, expressly

4
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. That the appellee Coleongco acted in bad faith towards his principal Claparols is,
on the record, unquestionable. The facts mentioned acts of deliberate sabotage by the agent that fully justified the
revocation of the power of attorney.

Herrera Vs. Luy Kim Guan

1 SCRA 406

FACTS:
Natividad Herrera is a legitimate daughter of Luis Herrera. Luis Herrera owned three parcels of land and before
leaving for China, he executed a Deed of General Power of Attorney in favor of Luy Kim Guan, authorizing him to
administer and sell the properties of the latter. Luuy Kim Guan, in his capacity as an attorney-in-fact for Luis Herrera sold
the Lot 1740 to Luy Chay. Luy Chay then executed a Deed of Sale in favor of one Lino Bangayan. Luy Kim Guan, acting
again as an attorney-in-fact flor Luis Herrera sold Nicomedes Salazar one half of the two lots. Luy Kim Guan and
Nicomedes Salazae executed a Deed of Mortagage in favor of BPI.

Luy Kim Guan and Salazar sold part of the remaining lot to Carlos Cizantos. Salazar then sold his remaining
interest to Lino Bangayan and Luy Kim Guan, both are as co-owners. Both Natividad Herrera and Luy Kim Guan admitted
that Luis Herrera is now deceased. The appellants contend that the abovementioned transactions were fraudulent and
were executed after the death of Luis Herrera (principal) when the power of attorney was no longer operative.

ISSUE:
Whether or not the transactions were null and void because they are executed after the death of the principal.

RULING:
No. The transactions are not null and void and of no effect. The death of the principal does not render the act of
an agent unenforceable, where the latter had no knowledge of such extinguishment of the agency.

Coming now to the contention that these transactions are null and void and of no effect because they were
executed by the attorney-in-fact after the death of his principal, suffice it to say that as found by the lower court, the
date of death of Luis Herrera has not been satisfactorily proven. The only evidence presented by the Plaintiff-appellant in
this respect is a supposed letter received from a certain "Candi", dated at Amoy in November, 1936, purporting to give
information that Luis Herrera (without mentioning his name) had died in August of that year. This piece of evidence
was properly rejected by the lower court for lack of identification. On the other hand, we have the testimony
of the witness Chung Lian to the effect that when he was in Amoy the year 1940, Luis Herrera visited him and had a
conversation with him, showing that the latter was still alive at the time. Since the documents had been executed the
attorney-in-fact one in 1937 and the other in 1939, it is evident, if we are to believe this testimony, that the documents
were executed during the lifetime of the principal. Be that as it may, even granting arguendo that Luis Herrera did die in
1936, plaintiffs presented no proof and there is no indication in the record, that the age Luy Kim Guan was aware of the
death of his prince at the time he sold the property. The death of the principal does not render the act of an agent
unenforceable, where the latter had no knowledge of such extinguishment the agency

5
Buason and Ryes Vs. Panuyas
105 Phil 795

FACTS:
In their lifetime, the spouses Buenaventura Dayao and Eugenia Vega acquired by homestead patent a parcel of
land situated at Barrio Gabaldon containing an area of 14.8413 hectares.

On October 29, 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 contract of sale of the parcel of land and
after the termination of the case in favor to sell it, and from the proceeds of the sale to deduct whatever expenses he had
incurred in the litigation.

On March 14,1934 Buenaventura Dayao died leaving his wife Eugenia Vega and children Pablo, Teodoro,
Fortunata and Juliana, all surnamed Dayao.

On March 21, 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. Their mother Eugenia Vega affixed her thumbmark to
the deed of sale as witness. The appellants took possession of the parcel of land through their tenants in 1939.

On July 18, 1944 Eustaquio Bayuga sold 8 hectares of the same parcel of land to the spouses Mariano Panuyas
(appellee herein) and Sotera B. Cruz. Eustaquio Bayuga died on March 25, 1946 and Eugenia Vega in 1954.

The appellants and the appellee claim ownership to the same parcel of land.

ISSUE:
Whether or not the sale of 8 hectares of land by the agent to the appellee Mariano Panuyas and wife Sotera Cruz
was valid.

RULING:
Yes. The principle that the death of the principal ended the authority of the agent was not applicable in this case
because it has not been shown that the agent knew of his principals demise, thus Article 1931 of the New Civil Code
applies, which provides: Anything done by the agent, without knowledge of the death of the principal or any other casue
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.