EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v.

  CUIZON
G.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 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.

RALLOS v GO CHAN
G.R. No. L-24332
January 31, 1978

Petitioner: RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS

Respodents: FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF APPEALS
Ponente: MUÑOZ PALMA

FACTS:

BACKGROUND OF CASE
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 went to court to have the sale declared
uneanforceable and to recover the disposed share.

TC granted the relief prayed for, but upon appeal CA uphold the validity of the sale and the complaint.
Hence, this Petition for Review on certiorari.

FACTS OF THE CASE:

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. 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.
March 3, 1955: Concepcion Rallos died.

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.

FILING OF ACTION

May 18, 1956: Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a complaint praying
that:

1. Sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be unenforceable, and
said share be reconveyed to her estate.

2. 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. 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.

TC RULING (lateronwasafirmedbySC)
On Plaintiffs Complaint —

1. Declaring the deed of sale null and void insofar as the one-half pro-indiviso share of Concepcion
Rallos in the property in question, — Lot 5983 of the Cadastral Survey of Cebu — is concerned;

2. Ordering the Register of Deeds of Cebu City to cancel Transfer Certificate of Title No.12989
covering Lot 5983 and to issue in lieu thereof another in the names of FELIX GO CHAN & SONS
REALTY CORPORATION and the Estate of Concepcion Rallos in the proportion of one-half (1/2)
share each pro-indiviso;

3. Ordering Felix Go Chan & Sons Realty Corporation to deliver the possession of an undivided one-
half (1/2) share of Lot 5983 to the herein plaintiff;

4. Sentencing the defendant Juan T. Borromeo, administrator of the Estate of Simeon Rallos, to
pay to plaintiff in concept of reasonable attorney's fees the sum of P1,000.00; and

5. Ordering both defendants to pay the costs jointly and severally.

On GO CHANTS Cross-Claim:
1. Sentencing the co-defendant Juan T. Borromeo, administrator of the Estate of Simeon Rallos, to
pay to defendant Felix Co Chan & Sons Realty Corporation P5,343.45, representing the price of
one-half (1/2) share of lot 5983;

2. Ordering co-defendant Juan T. Borromeo, administrator of the Estate of Simeon Rallos, to pay in
concept of reasonable attorney's fees to Felix Go Chan & Sons Realty Corporation P500.00

On Third-Party Complaint of defendant Juan T. Borromeo administrator of Estate of Simeon Rallos, against

Josefina Rallos special administratrix of the Estate of Gerundia Rallos:

Dismissing the third-party complaint without prejudice to filing either a complaint against the
regular administrator of the Estate of Gerundia Rallos or a claim in the Intestate-Estate of
Cerundia Rallos, covering the same subject-matter of the third-party complaint, at bar.

CA RULING

Felix Go Chan & Sons Realty Corporation appealed to CA from the TC judgment insofar as it set aside the sale of the
one-half (1/2) share of Concepcion Rallos. The appellate tribunal, resolved the appeal in favour of the appellant
corporation sustaining the sale in question. The appellee administrator, Ramon Rallos, moved for a reconsider of the
decision but the same was denied

ISSUE:
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? – NO

HELD:

IN VIEW OF ALL THE FOREGOING, We set aside the decision 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 with costs against
respondent realty corporation at all instances.

RATIO:
CERTAIN PRINCIPLES OF LAW RELEVANT TO AGENCY

It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name of another
without being authorized by the latter, or unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or the legal representation or who has acted
beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly,
by the person on whose behalf it has been executed, before it is revoked by the other contracting party.

Agency is basically personal representative, and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal; his act is the act of the principal if done within
the scope of the authority. Qui facit per alium facit se. "He who acts through another acts himself".

There are various ways of extinguishing agency, but here we are concerned only with one cause — death
of the principal. Paragraph 3 of Art. 1919 of the Civil Code which was taken from Art. 1709 of the Spanish

Civil Code provides:

ART.1919.Agency is extinguished.
3.By the death, civil interdiction,insanity or insolvency of the principal or of the agent;.

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 integration of the
personality of the principal and 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 conferred 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.

CASE AT BAR
· Is the general rule provided for in Article 1919 that the death of the principal or of the agent extinguishes
the agency, subject to any exception, and if so, is the instant case within that exception? That is the
determinative point in issue in this litigation.

· It is the contention of respondent corporation which was sustained by respondent court that
notwithstanding the death of the principal Concepcion Rallos the act of the attorney-in-fact, Simeon Rallosin selling the
former's sham in the property is valid and enforceable inasmuch as the corporation acted in good faith in buying the
property in question.

· Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore-mentioned.
Article 1930 is not involved because admittedly the special power of attorney executed in favor of Simeon Rallos was
not coupled with an interest.

· Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of his
principal is valid and effective only under two conditions

1. That the agent acted without knowledge of the death of the principal and
2. That the third person who contracted with the agent himself acted in good faith.

· Good faith here means that the third person was not aware of the death of the principal at the time he
contracted with said agent.

· These two requisites must concur the absence of one will render the act of the agent invalid and
unenforceable.

· Article 1931, being an exception to the general rule, is to be strictly construed, it is not to be given an
interpretation or application beyond the clear import of its terms for otherwise the courts will be involved
in a process of legislation outside of their judicial function. 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

· 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.

· That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact of the court a quo 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 concerning the death of principal, Article 1931 of CC 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.
· Buason&Reyesv.Panuyas: 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.

· Herera, et al., v. Luy Kim Guan, et al.: plaintiffs presented no proof and there is no indication in the
record, that the agent Luy Kim Guan was aware of the death of his principal 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 of the agency.

The fact that no notice of the death of the principal was registered on the certificate of title of the
property in the Office of the Register of Deeds, is not fatal to the cause of the estate of the principal

· Another argument advanced by respondent court is that the vendee acting in good faith relied on the
power of attorney which was duly registered on the original certificate of title recorded in the Register of
Deeds of the province of Cebu, that no notice of the death was aver annotated on said certificate of title
by the heirs of the principal and accordingly they must suffer the consequences of such omission.

· A revocation by an act of the principal as a mode of terminating an agency is distinctive from revocation by
operation of law such as death of the principal, which is similar to the case at bar.

· Revocation by an act of principal as mode of termination(quotingManresa):

If the agency has been granted for the purpose of contracting with certain persons, the
revocation must be made known to them. But if the agency is general in nature, without
reference to particular person with whom the agent is to contract, it is sufficient that the
principal exercise due diligence to make the revocation of the agency publicity known. In this
case, all acts, executed with third persons who contracted in good faith, without knowledge of
the revocation, are valid.

· Revocation by operation of law (applicabletocase):

By reason of the very nature of the relationship between principal and agent, agency is
extinguished ipso jure upon the death of either principal or agent.

Although a revocation of a power of attorney to be effective must be communicated to the

parties concerned, yet a revocation by operation of law, such as by death of the principal is, as a
rule, instantaneously effective inasmuch as "by legal fiction the agent's exercise of authority is
regarded as an execution of the principal's continuing will.

With death, the principal's will ceases or is the of authority is extinguished.

The Civil Code does not impose a duty on the heirs to notify the agent of the death of
the principal. What the Code provides in Article 1932 is that, if the agent die his heirs must
notify the principal thereof, and in the meantime adopt such measures as the
circumstances may demand in the interest of the latter.

Whatever conflict of legal opinion was generated by Cassidayv. McKenzie in American jurisprudence,
no such conflict exists in our own

· One last point raised by respondent corporation in support of the appealed decision is an 1842 ruling of
the Supreme Court of Pennsylvania in Cassiday v. McKenzie wherein payments made to an agent after the death of the
principal were held to be "good", "the parties being ignorant of the death".

· Cassiday v McKenzie: that a payment may be good today, or bad tomorrow, from the accident
circumstance of the death of the principal, which he did not know, and which by no possibility could he
know? It would be unjust to the agent and unjust to the debtor. In the civil law, the acts of the agent,
done bona fide in ignorance of the death of his principal are held valid and binding upon the heirs of the
latter. The same rule holds in the Scottish law, and I cannot believe the common law is so unreasonable...

· The above-cited case represents the minority view in American jurisprudence and stands alone among
common law authorities as later on stated in ClaytonvMeretand TraversvCrane

· 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.
The case is covered expressly by a provision of law on agency and cannot be interpreted contrary to its
tenor or paralleled to that of laws on land registration

· Holding that the good faith of a third person in said with an agent affords the former sufficient protection, respondent
court drew a "parallel" between the instant case and that of an innocent purchaser for value of a land, stating that if a
person purchases a registered land from one who acquired it in bad faith — even to the extent of foregoing or falsifying
the deed of sale in his favor — the registered owner has no recourse against such innocent purchaser for value but only
against the forger.

· Respondent cites case of Blondeau,etal.,v. Nanoand Valejo which stated that an executed transfer of
registered lands placed by the registered owner thereof in the hands of another operates as a
representation to a third party that the holder of the transfer is authorized to deal with the land. As
between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one
who made it possible by his act of coincidence bear the loss.

· The Blondeau decision, however, is not on all fours with the case before Us because here We are
confronted with one who admittedly was an agent of his sister and who sold the property of the latter
after her death with full knowledge of such death. The situation is expressly covered by a provision of law
on agency the terms of which are clear and unmistakable leaving no room for an interpretation contrary to
its tenor, This is in the same manner that the ruling in Blondeau found a basis in Section 55 of the Land
Registration Law.

G.R. No. 18058   January 16, 1923

Fabiola Severino
vs.
Guillermo Severino
Facts:
Defendant Guillermo Severino, after the death of his brother (Melecio Severino), was the latter’s
administrator and as such, continued to occupy the land owned by Melecio. Eventually, cadastral
proceedings were instituted for the registration of the land titles. Guillermo claimed such land and since no
opposition was presented, the court decreed the title in his favor.
Melecio’s daughter and sole heir, plaintiff Fabiola Severino, compelled Guillermo to convey to her the land. It
bears noting that Fabiola was a minor during the time of the cadastral proceedings.
Issue:
Whether or not Guillermo can be compelled to convey the land to Fabiola, even if there is already a title in
Guillermo’s name.
Held:
Yes. The relations of an agent to his principal are fiduciary. Guillermo’s position as agent is analogous to that
of a trustee and he cannot consistently, with the principles of good faith, be allowed to create in himself an
interest in opposition to that of his principal or cestui que trust. Whatever a trustee does for the advantage of
the trust estate inures to the benefit of the cestui que trust.
SC cited the following jurisprudence:
A receiver, trustee, attorney, agent, or any other person occupying fiduciary relations respecting property or
persons, is utterly disabled from acquiring for his own benefit the property committed to his custody for
management. This rule is entirely independent of the fact whether any fraud has intervened. No fraud in fact
need be shown, and no excuse will be heard from the trustee. It is to avoid the necessity of any such inquiry
that the rule takes so general a form. The rule stands on the moral obligation to refrain from placing one’s
self in positions which ordinarily excite conflicts between self-interest and integrity. It seeks to remove the
temptation that might arise out of such a relation to serve one’s self-interest at the expense of one’s integrity
and duty to another, by making it impossible to profit by yielding to temptation. It applies universally to all
who come within its principle.
SC reiterated that an agent, who has entered and surveyed a portion of that land for himself and obtained a
patent for it in his own name, becomes a trustee for his principal. He cannot hold the land under an entry for
himself otherwise than as trustee for his principal.
The substance of these authorities is that, wherever a person obtains the legal title to land by any artifice or
concealment, or by making use of facilities intended for the benefit of another, a court of equity will impress
upon the land so held by him a trust in favor of the party who is justly entitled to them, and will order the trust
executed by decreeing their conveyance to the party in whose favor the trust was created.
There have been a number of cases before this court in which a title to real property was acquired by a
person in his own name, while acting under a fiduciary capacity, and who afterwards sought to take
advantage of the confidence reposed in him by claiming the ownership of the property for himself. This court
has invariably held such evidence competent as between the fiduciary and the cestui que trust. What
judgment ought to be entered in this case? The court simply absolved the defendant from the complaint. The
proper procedure in such a case, so long as the rights of innocent third persons have not intervened, is to
compel a conveyance to the rightful owner.
The Land Registration Act cannot cut off, through an issuance of title, equitable rights or remedies. Torrens
titles carries a strong presumption in favor of their regularity or validity, and in order to maintain an action
such as the present, the proof as to the fiduciary relation of the parties and of the breach of trust must be
clear and convincing. Such proof is not lacking in this case. But once the relation and the breach of trust on
the part of the fiduciary is thus established, there is no reason, neither practical nor legal, why he should not
be compelled to make such reparation as may lie within his power for the injury caused by his wrong, and as
long as the land stands registered in the name of the party who is guilty of the breach of trust and no rights of
innocent third parties are adversely affected, there can be no reason why such reparation should not, in the
proper case, take the form of a conveyance or transfer of the title to the cestui que trust. No reasons of
public policy demand that a person guilty of fraud or breach of trust be permitted to use his certificate of title
as a shield against the consequences of his own wrong.

G.R. No. 149353 June 26, 2006

JOCELYN B. DOLES, Petitioner, 


vs. 

MA. AURA TINA ANGELES, Respondent.

AUSTRIA-MARTINEZ, J.:

Facts: Respondent alleged that petitioner was indebted to the former in the concept of a personal loan amounting

to P405,430.00 representing the principal amount and interest; that on October 5, 1996, by virtue of a "Deed of
Absolute Sale",3petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the improvements
thereon, with an area of 42 square meters, in order to satisfy her personal loan with respondent.

Petitioner, denied that she borrowed money from respondent, and averred that from June to September 1995, she
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. She alleged that her friends, borrowed money from respondent and
issued personal checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her
efforts to assist respondent to collect from the borrowers, she could no longer locate them; that she was forced to issue
eight checks amounting to P350,000 to answer for the bounced checks of the borrowers she referred; that prior to the
issuance of the checks she informed respondent that they were not sufficiently funded but the latter nonetheless
deposited the checks and for which reason they were subsequently dishonored, that she was forced by respondent to
execute an "Absolute Deed of Sale" over her property in Bacoor, Cavite, to avoid criminal prosecution.

RTC: Plaintiff Angeles’ admission that the borrowers are the friends of defendant Doles and further admission that the
checks issued by these borrowers in payment of the loan obligation negates the cause or consideration of the contract of
sale executed by and between plaintiff and defendant.

CA Reversed: The CA concluded that petitioner was the borrower and, in turn, would "re-lend" the amount borrowed
from the respondent to her friends. Hence, the Deed of Absolute Sale was supported by a valid consideration, which is
the sum of money petitioner owed respondent amounting to P405,430.00, representing both principal and interest.

Petitioner filed her Motion for Reconsideration, arguing that respondent categorically admitted in open court that she
acted only as agent or representative of Arsenio Pua, the principal financier and, hence, she had no legal capacity to sue
petitioner. Hence this petition.

Issues:

Whether or not the petitioner can be considered as a debtor of the respondent.

Whether or not an agent who was not authorized by the principal to collect debt in his behalf could directly collect
payment from the debtor.

Held: No. No.

Ratio: Petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of
petitioner. This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation. In
the case at bar, 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. And since plaintiff, being an agent, was not
authorized by the principal to collect the debt in his behalf, and respondent was acting only as an agent with regards to
the debtors, the sale of the respondent's property having been predicated on the loan is void for lack of consideration.