Lustan vs.

CA

Principal: Adoracion Lustan

Agent: Nicolas Parangan
Third Party: PNB

1. Lustan a registered owner of a parcel of land leased her property to Parangan. During the
period of the lease, Parangan was regularly extending loans in small amounts to petitioner to
finance her daughter's education.
2. Petitioner executed an SPA in favor of Parangan to secure an agricultural loan from
private respondent PNB with the aforesaid lot as collateral.
3. Another SPA was executed by Lustan. Parangan was able to secure 4 additional loans. The
last 3 loans were acquired by Parangan w/out the knowledge of Lustan and used the proceeds to
himself.
4. Petitioner then signed a Deed of Pacto de Retro Sale in favor of Parangan which was
superseded by the Deed of Definite Sale which Lustan signed upon Parangan’s representation
that the same merely evidences the loans extended by Parangan to Lustan.
5. For fear that her property might be prejudiced by the continued of borrowing, petitoner
demanded return of her CT.
6. Lustan then filed cancellation of liens, quieting of title, recovery of possession and
damages against Parangan and PNB in the RTC.

Issue: Whether the petitioner’s property is liable to PNB for the loans contracted by Parangan by
virtue of the SPA? Yes.

Article 1921 of the Civil Code provides: "If the agency has been entrusted for the purpose of
contracting with specified persons, its revocation shall not prejudice the latter if they were not
given notice thereof."

As far as third persons are concerned, an act is deemed to have been performed within the scope
of the agent's authority if such is

within the terms of the power of attorney as written even if the agent has in fact exceeded the
limits of his authority according to the understanding between the principal and the agent.

Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if
the former allowed the latter to act as though he had full powers (Article 1911, Civil Code).
In this case, so long as valid consent was given, the fact that the loans were solely for the benefit
of Parangan… the mortgage itself is still valid.

In consenting thereto, her property shall secure and respond for the performance of the
principal obligation.
Petitioner argues that the last three mortgages were void for lack of authority. Petitioner totally
failed to consider that said Special Powers of Attorney are a continuing one and absent a valid
revocation duly furnished to the mortgagee, the same continues to have force and effect as
against third persons who had no knowledge of such lack of authority.

The Special Power of Attorney particularly provides that the same is good not only for the
principal loan but also for subsequent commercial, industrial, agricultural loan or credit
accommodation that the attorney-in-fact may obtain and until the power of attorney is
revoked in a public instrument and a copy of which is furnished to PNB.

Legarda vs. Zarate

Principal: Legarda
Agent: Gavito
3rd Person: Zarate

1. Legarda owned Nagtahan Hacienda in Manila. Valdez was constituted as Legarda’s

attorney-in-fact and administrator of his estate. The lots inside the hacienda were leased to
Japanese women — which were eventually conveyed to defendant Zarate.
2. Zarate refused to pay rents for a year and a half (the whole 1914 to May 1915). Thus,
counsel for Legarda filed a suit to collect the rent in arrears amounting to 1,166.65.
3. Defense of Zarate: negotiated with Ramon Gavito (administrator of the Nagtahan
Hacienda) that the rent would be based on 10% of the assessed valuation of the lots or not exceed
1 peso per square meter. However, rentals at that time was 4 pesos per square in year 1914 and 3
pesos in 1915.
4. Valdez, on the other hand, Zarate should pay 10% of the assessed valuation in any period
of time. Dr. Valdez also questioned the authority of Ramon Gavito to enter or interfere into any
contract as Valdez had the exclusive right to contract regarding the estate
5. Arguelles, who facilitated the transfer of the lease from the Japanese women to Zarate,
testified that he was initially unsure as to the meaning of ‘10% of the assessed valuation’ but
Ramon Gavito assured him that the 10% would not exceed the rate of 1 peso per square meter.
Issue: Whether agency to Gavito has been revoked? YES
Held: “Art. 1923. The appointment of a new agent for the same business or transaction revokes
the previous agency from the day on which notice thereof was given to the former agent, without
prejudice to the provisions of the two preceding articles. “
On December 28, 1905, Ramon S. Gavito was appointed administrator by the late Benito
Legarda, according to the notarial instrument with right to lease parcels of land, but with a
proviso that all the contracts of lease executed by him should produce no effect whatever until
they had been approved by the signature of the lessor Legarda.

However, this power and authority granted to Gavito in the document of December 28, 1905,
should be deemed to be revoked by reason of the full and unlimited power conferred by the
heirs and sons in laws of Legarda, by means of the notarial document of December 20, 1907,
which was amplified by another such instrument of November 12, 1909.

The new contract is now binding upon the heirs of Legarda, with one of Legarda’s son acting as
agent and Zarate as 3rd person.
Garcia vs. Manzano
Agents: Angel Manzano (son) and Josefa Samson (wife)
Principal: Narciso Manzano
3rd Party: Garcia

1. Narciso Lopez Manzano gave a general power-of-attorney to his son, Angel L. Manzano
on the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to his
wife, Josefa Samson.
2. Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other
half being owned by Ocejo, Perez & Co (OPC). When the period expired, Ocejo, Perez & Co
demanded that Manzano buy or sell.
3. As he did not want to sell at the price offered and could not buy, Juan Garcia bought the
half interest held by Ocejo, Perez & Co. through Angel Manzano who acted under the power of
attorney. Since Garcia was a Spaniard, the boat was registered under the name of his son.
4. The son of Garcia died, leaving his parents as heirs at law.
5. Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso L.
Manzano, executed a contract by which Juan Garcia agreed to extend credit to Narciso Manzano
the sum of 12,000.00. To secure it, three parcels of land in Antimonan were mortgaged.
6. Thereafter, when Narciso Manzano died, Josefa Samson (wife) was named
administratrix of the property of Narciso L. Manzano, and the Court ordered the partition
of property amongst the heirs.
7. Garcia then filed his action to foreclose the so-called mortagage.

Issue 1: WON the power-of-attorney to the wife revoked the one to the son, in accordance with
article 1735 of the Civil code (Article 1735 of the Civil code is as follows: The appointment of a new
agent for the same business produces a revocation of the previous agency from the day on which
notice was given to the former agent, excepting the provisions of the next preceding article.

Held: There is no proof in the record that the first agent, the son, knew of the power-of-attorney
to his mother. It was necessary under the law for the defendants, in order to establish their
counterclaim, to prove that the son had notice of the second power-of-attorney. They have not
done so, and it must be considered that Angel L. Manzano was acting under a valid power-of-
attorney from his father which had not been legally revoked on the date of the sale of the half
interest in the steamer to the plaintiff's son, which half interest was legally inherited by the
plaintiffs.

Issue 2: WON the sale of the boat by Angel L. Manzano was authorized?
Held: The authorization is so complete that it carries with it full authority to sell the one-half
interest in the boat which was then owned by Narciso L. Manzano.

Ratio: The power does not expressly state that the agent may sell the boat, but a power so
full and complete authoring the sale of real property, must necessarily carry with it the right
to sell a half interest in a small boat. The record further shows the sale was necessary in order to
get money or a credit without which it would be impossible to continue the business which was
being conducted in the name of Narciso L. Manzano and for his benefit.

Municipal of Iloilo vs. Evangelista

1. Tantoco won a civil case against the Municipality wherein she sought to recover from the
Municipality the value of the land that was stripped of her ownership and was taken away by the
municipality to widen the street.
2. The judgment entitled Tantoco to recover P42,966.40 from the Municipality of Iloilo.
3. Several adverse claimants appeared. The court directed the Municipality that the
claimaints interplead.
Claimants: Soriano —-> Mauricio Cruz & Co.
4. The trial court rendered judgment declaring valid and binding the deed of assignment of
credit executed by Tantoco through Tan Boon Tiong, in favor of Soriano. Also, that the
assignment of Soriano during his lifetime in favour of defendant Mauricio Cruz & Co was declared
valid and binding.
5. Tantoco was ordered to pay Mauricio Cruz & Co, the balance of P30,966.40.

Issue: (1) Whether Tan Boon Tiong was empowered by his principal to make an
assignment of credits, rights, and interests, in payment of debts for professional
services rendered by lawyers? YES

(2) Whether the failure of Tan Montano, the other attorney-in-fact of Tantoco, to
consent to the deed of assignment done by Tan Boon Tiong would invalidate the said
assignment? NO

RULINGS:

1. Yes.
In paragraph VI of the power of attorney, Tan Boon Tiong is authorized to employ and contract
for the services of lawyers for the interests of his principal, and to defend suits brought against
her. This power necessarily implies the authority to pay for the professional services thus
engaged.

In the present case, Tantoco had to pay Atty. Soriano for services rendered in other cases. Since
the judgment money that was recovered in Civil case 3154 belongs to Tantoco, such credit can be
used to pay Atty. Soriano by way of assignment. Being authorized to take charge of any action
necessary for the interest of Tantoco, Tan Boon Tiong has the power to assign Tantoco’s
credits to Atty. Soriano.

2. No.
When a person appoints two attorneys-in-fact independently, the consent of the one will not be
required to validate the acts of the other unless that appears positively to have been the
principal's intention.
In the present case, Tantoco gave each of her attorneys-in-fact separate letters of attorney,
which shows that it was not the principal's intention that the two representatives should act
jointly in order to make their acts valid. Thus, the act of Tan Boon Tiong in assigning credits to
Soriano without Tan Montano’s consent remains valid.

Doctrine:
When a person appoints two agents independently, the consent of one will not be required to
validate the acts of the other, unless that appears positively to have been the principal's
intention.

New Manila Lumber Co. vs. Republic of the Philippines

Principal – Alfonso Mendoza
Agent – Petitioner New Manila
Third party – Republic of the Philippines

1. Petitioner New Manila Lumber alleges that defendant Republic of the

Philippines (RP) entered into contract with a contractor named Alfonso Mendoza to
build two school houses and that petitioner supplied the lumber materials for such
construction;

2. Mendoza executed a special power of attorney authorizing petitioner New

Manila to collect and receive all amounts due in connection with the construction. The
SPAs were received by defendant RP who promised to pay petitioner the sums of
money.

3. Defendant directly paid the contractor without coursing it through the

petitioner. Dismissed: no juridical tie between New Manila and RP.

Issue: Whether the agent is entitled to collect money by virtue of the SPA?

Ruling: No.
(L): Article 1920 – The principal may revoke the agency at will, and compel the agent to
return the document evidencing the agency. Such revocation may be express or implied

Article – 1924 – The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.

In this case, when the principal demanded and collected from defendant RP the subject payment
(which collection was entrusted to the agent, petitioner New Lumber, by virtue of the SPA), it
essentially revoked the agency. Thus, petitioner cannot collect money through it.

In any case, defendant RP has actually filed a suit against contractor Mendoza for the
forfeiture of the latter’s bond which was to secure the construction. Thus, petitioner
cannot bring suit against RP there being no privity of contract between them, instead,
he should intervene in the civil case mentioned as an unpaid supplier of materials to the
contractor.

CMS Logging vs. CA

Principal: CMS
Agent: Dracor
Third Party: Japanese Firms

1. Petitioner CMS is a forest concessionaire engaged in the logging business, while private
respondent DRACOR is engaged in the business of exporting and selling logs and lumber.
2. CMS and DRACOR entered into a contract of agency and appoints DRACOR as its
exclusive export and sales agent for all logs that CMS may produce for a period of five (5) years.
3. About six months prior to the expiration of the agreement, while on a trip to Tokyo, Japan,
CMS's president, Atty. Sison, and general manager and legal counsel, Atty. Dominguez,
discovered that DRACOR had used Shinko Trading Co., Ltd. as agent, representative or liaison
officer in selling CMS's logs in Japan for which Shinko earned a commission of U.S. $1.00 per
1,000 board feet from the buyer of the logs.
4. CMS claimed that this commission paid to Shinko was in violation of the agreement and
that it (CMS) is entitled to this amount as part of the proceeds of the sale of the logs. After such
discovery, CMS sold and shipped logs directly to several firms in Japan without the aid or
intervention of DRACOR. CMS sued DRACOR for the commission received by Shinko and for
moral and exemplary damages. DRACOR counterclaimed for its commission, amounting to
P144,167.59, from the sales made by CMS of logs to Japanese firms.

ISSUE: Whether DRACOR is entitled to its commission from the sales made by CMS to Japanese
firms? No. DRACOR is not entitled to its commission.

RULING:

Art. 1924 The agency is revoked if the principal directly manages the business entrusted to the
agent, dealing directly with third persons.

The principal may revoke a contract of agency at will, and such revocation may be express,
or implied, and may be availed of even if the period fixed in the contract of agency as not yet
expired. As the principal has this absolute right to revoke the agency, the agent can not object
thereto; neither may he claim damages arising from such revocation, unless it is shown that such
was done in order to evade the payment of agent's commission.
 In the case at bar, CMS appointed DRACOR as its agent for the sale of its logs to Japanese
firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its
logs directly to several Japanese firms. This act constituted an implied revocation of the contract
of agency under Article 1924.

Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms
without the intervention of DRACOR, the latter is no longer entitled to its commission from the
proceeds of such sale and is not entitled to retain whatever moneys it may have received as its
commission for said transactions. Neither would DRACOR be entitled to collect damages from
CMS, since damages are generally not awarded to the agent for the revocation of the agency, and
the case at bar is not one falling under the exception mentioned, which is to evade the payment
of the agent's commission.

Del Rosario vs. Abad

1. Tiburcio del Rosario obtained a loan from Primitivo Abad in the sum of P2,000. As security
for the payment thereof, Tiburcio mortgaged the improvements of the parcel of land in favor of
the Primitivo.
2. On the same day, Tiburcio executed an "irrevocable special power of attorney coupled
with interest" in favor of the Primitivo, authorizing him, among others, to sell and convey the
parcel of land.
3. Tiburcio thereafter moved to Isabela, and died leaving the mortgage debt unpaid.
4. Primitivo Abad, acting as attorney-in-fact of Tiburcio del Rosario, sold the parcel of land to
his son in consideration of 1.00. The vendee took possession of the parcel of land. The original
certificate of title was cancelled and a new one was issued in favor of the son of Primitivo Abad.

ISSUE: Whether or not the power of attorney excuted by Tiburcio in favor of Primitivo Abad is
one coupled with an interest, thus irrevocable? NO.

RULING:
The power of attorney executed by Tiburcio del Rosario in favor of Primitivo Abad does not create
an agency coupled with an interest nor does it clothe the agency with an irrevocable character.

A mere statement in the power of attorney that it is coupled with an interest is not enough. In
what does such interest consist must be stated in the power of attorney.

The fact that Tiburcio del Rosario, the principal, had mortgaged the improvements of the
parcel of land to Primitivo Abad, the agent, is not such an interest as could render irrevocable the
power of attorney executed by the principal in favor of the agent. In fact no mention of it is made
in the power of attorney.
The mortgage on the improvements of the parcel of land has nothing to do with the power
of attorney and may be foreclosed by the mortgagee upon failure of the mortgagor to comply
with his obligation.
As the agency was not coupled with an interest, it was terminated upon the death of
Tiburcio del Rosario, the principal, sometime in December 1945, and Primitivo Abad, the agent,
could no longer validly convey the parcel of land to Teodorico Abad on 9 June 1947. The sale,
therefore, to the later was null and void.

Additional Notes: Absent the ruling above, the sale between Primitivo and Teodorico is still null
and void by virtue of the Public Land Act which provides that the encumbrance or alienation of
lands acquired by free patent or homestead in violation of this section 116 of the said law is null
and void

Valenzuela vs CA and Philippine American General Insurance Company (Philmagen)

Principal = Philamgen
Agent = Valenzuela
Third Party = Delta Motors

1. Petitioner Valenzuela (Valenzuela for short) is a General Agent of private respondent

Philippine American General Insurance Company, Inc. (Philamgen for short) since 1965.
2. He was authorized to solicit and sell in behalf of Philamgen all kinds of non-life insurance,
and in consideration of his services… he was entitled to receive 32.5% as commission.
3. Delta Motors was one of the clients of Valenzuela and he was able to solicit 4.4 Million.
4. However, Valenzuela did not receive his full commission which amounted to P1.6 Million
from the P4.4 Million insurance coverage of the Delta Motors.

Issue: WON the agency involving petitioner and private respondent is one coupled with an
interest? YES

RULING:
It is also evident from the records that the agency involving petitioner and private
respondent is one "coupled with an interest," and, therefore, should not be freely revocable at the
unilateral will of the latter.

The records sustain the finding that the private respondent started to covet a share of the
insurance business that Valenzuela had built up, developed and nurtured to profitability
through over thirteen (13) years of patient work and perseverance. When Valenzuela refused
to share his commission in the Delta account, the boom suddenly fell on him.
The private respondents by the simple expedient of terminating the General Agency
Agreement appropriated the entire insurance business of Valenzuela. With the termination of the
General Agency Agreement, Valenzuela would no longer be entitled to commission on the
renewal of insurance policies of clients sourced from his agency.
 Worse, despite the termination of the agency, Philamgen continued to hold Valenzuela
jointly and severally liable with the insured for unpaid premiums. Under these circumstances, it is
clear that Valenzuela had an interest in the continuation of the agency when it was
unceremoniously terminated not only because of the commissions he should continue to receive
from the insurance business he has solicited and procured but also for the fact that by the very
acts of the respondents, he was made liable to Philamgen in the event the insured fail to pay the
premiums due. They are estopped by their own positive averments and claims for damages.

Therefore, the respondents cannot state that the agency relationship between Valenzuela
and Philamgen is not coupled with interest. "There may be cases in which an agent has been
induced to assume a responsibility or incur a liability, in reliance upon the continuance of the
authority under such circumstances that, if the authority be withdrawn, the agent will be exposed
to personal loss or liability" (See MEC 569 p. 406).

Republic vs. Evangelista

Principal = Legaspi
Agent = Gutierrez
Third Party = Republic of the Philippines

1. Legaspi is the owner of a land located in Bigte, Norzagaray, Bulacan.

2. Petitioner in this case, represented by Calimlim entered into a MOA with Ciriaco Reyes.
The MOA granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan.
3. Petitioners then started, digging, tunneling and blasting works on the said land of Legaspi.
4. Consequently, Legaspi Legaspi executed a special power of attorney (SPA) appointing his
nephew, private respondent Gutierrez, as his attorney-in-fact.
5. Gutierrez was given the power to file charges against those who may enter it without the
latters authority. Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the
land.
6. Gutierrez filed a case for damages and injunction against petitioners for illegally entering
Legaspis land. He hired the legal services of Atty. Homobono Adaza. Their contract provided that
as legal fees, Atty. Adaza shall be entitled to 30% of Legaspis share in whatever treasure may be
found in the land. In addition, Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee
per court hearing and defray all expenses for the cost of the litigation.
7. A TRO was issued against the petitioners.

ISSUE: Whether the contract of agency between Legaspi and Gutierrez has been effectively
revoked by Legaspi? No, the contract was not revoked.

RULING:
An exception to the revocability of a contract of agency is when it is coupled with interest, i.e., if a
bilateral contract depends upon the agency. The reason for its irrevocability is because the
agency becomes part of another obligation or agreement. It is not solely the rights of the principal
but also that of the agent and third persons which are affected. Hence, the law provides that in
such cases, the agency cannot be revoked at the sole will of the principal.

In the case at bar, we agree with the finding of the trial and appellate courts that the agency
granted by Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It is
clear from the records that Legaspi gave Gutierrez to file any case against anyone who enters the
land without authority from Legaspi; to engage the services of lawyers to carry out the agency;
and, to dig for any treasure within the land and enter into agreements relative thereto. As
payment for legal services, Gutierrez agreed to assign to Atty. Adaza 30% of Legaspis share in
whatever treasure may be recovered in the subject land. It is clear that the treasure that may be
found in the land is the subject matter of the agency; that under the SPA, Gutierrez can enter into
contract for the legal services of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an
interest in the subject matter of the agency, i.e., in the treasures that may be found in the land.

This bilateral contract depends on the agency and thus renders it as one coupled with interest, irrevocable
at the sole will of the principal Legaspi. When an agency is constituted as a clause in a bilateral contract,
that is, when the agency is inserted in another agreement, the agency ceases to be revocable at the
pleasure of the principal as the agency shall now follow the condition of the bilateral agreement.

Consequently, the Deed of Revocation executed by Legaspi has no effect. The authority of Gutierrez to file
and continue with the prosecution of the case at bar is unaffected.

Coleongco vs Claparols
Principal – Eduardo Claparol
Agent – Vicente Crisologo
1. Claparols operated a factory of nails under the name “Claparols Steel & Nail Plant.” The
raw materials were imported from Belgium.
2. Because of losses, Claparols was compelled to engage petitioner Coleongco to finance the
importation of raw materials.
3. Later, respondent Claparol made Crisologo the factory’s assistant manager and executed
in favor of the latter a special power of attorney to: (R-A-S-O)
o Open and negotiate letters of credit
o Sign contracts, bills of lading, invoices and other transactions
o Represent him and the factory
o Accept payments and cash advances from dealers and distributors
4. Claparols was served a writ of execution by PNB. Respondent learned that Coleongco
wrote to the bank, behind his back, saying that:
o Coleingco acquired all shares and interest of Eduardo on the factory
5. Consequently, Claparols revoked the power of attorney and dismissed him as assistant
manager. He also ordered auditors to examine the books and records of the factory.
6. Claparol also discovered that Kho To betrayed him in transferring the ownership of the
property.
7. Both parties filed cases against each other, but CFI ruled in favor of Eduardo.
8. Vicente argues that the power of attorney was made to protect his interest under the
financing agreement (FA) and was coupled with an interest which Eduardo cannot revoke

ISSUE: Whether the special power of attorney is coupled with interest, and therefore cannot be
revoked by Eduardo? No.

(L): 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

Art. 1315 – Parties in a contract must act loyally toward each other in pursuit of a common end

In this case, the following acts of deliberate sabotage by the agent justifies the revocation of the
power of attorney:
• When Vicente wrote to PNB attempting to undermine the credit of the principal
• When Vicente instructed Kho To to reduce to ½ the usual monthly advances to Eduardo
• When Vicente attempted to have Romulo pour acid on the machinery
• Vicente’s illegal diversion of the factory’s profits to his own benefit
• When Vicente disposed the sawing equipment to his cousin’s lumber yard but pinned the
blame to Eduardo
• When Vicente breached his contract by failing to put up all the necessary money needed
to finance the imports of raw material. Vicente merely advanced 25% of the price resulting to
Eduardo shouldering ¾ of the payment of import, contrary to the finance agreement

Valera vs Velasco
Principal: Valera
Agent: Velasco

1. Valera executed a power of attorney and appointed Velasco as his attorney-in-fact with
authority to manage his property in the Philippines, consisting of the usufruct of a real property.
2. During liquidiaton, accounts revealed that Valera owed the defendant P1,100, and as
misunderstanding arose between them, Velasco brought suit against Valera.
3. RTC rendered judgment in favor of agent.

ISSUE: Whether or not the agency was terminated?

HELD: YES.
Art 1732: Agency is terminated by: a) revocation, b) withdrawal of agent, c) death, interdiction,
bankruptcy, or insolvency of the principal or of the agent.
Art 1736: An agent may withdraw by giving notice to principal. Should the principal suffer any
damage, agent must indemnify him unless the agent’s reason should be the impossibility of
continuing to act as such without serious detriment to himself.
The misunderstanding between the plaintiff and the defendant over the payment of the balance
of P1,000 due the latter 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, and renders
his final account of his operations, is equivalent to an express renunciation of the agency, and
terminates the juridical relation between them.

Pasno vs Ravina
Principal – Gabina Labitoria
Agent - Administrator
Third party – PNB

1. Gabina Labitoria, during her lifetime, mortgaged three parcels of land to PNB to secure a
P1,600 loan. The mortgage allowed PNB to “remove, sell or dispose the property or any
improvements thereon;”
2. When the Gabina died, a special administrator was appointed to take possession of
Gabina’s estate.
3. Gabina’s estate defaulted, PNB filed for the extra-judicial foreclosure of the property;
however the estate administrator opposed; the Court denied PNB’s motion
4. The mortgage makes special reference to Act No. 3135 which regulates the sale of
property under special powers inserted in to real estate mortgages. It fails to make provision
regarding the sale of mortgaged property which is in custodia legis. However, it is presumed that
Act No. 3135 was passed with reference to the Code of Civil Procedure.
ISSUE: Whether the right of sale of the mortgaged property can survive and can be enforced
under special power? Yes.

RULING: The power of sale given in a mortgage is a power coupled with an interest which
survives the death of the grantor. One case, that of Carter vs. Slocomb ([1898], 122 N. C., 475),
has gone so far as to hold that a sale after the death of the mortgagor is valid without notice to
the heirs of the mortgagor.

However that may be, conceding that the power of sale is not revoked by the death of the
mortgagor, nevertheless in view of the silence of Act No. 3135 and in view of what is found in
section 708 of the Code of Civil Procedure, it would be preferable to reach the conclusion that
the mortgagee with a power of sale should be made to foreclose the mortgage in conformity with
the procedure pointed out in section 708 of the Code of Civil Procedure. That would safeguard the
interests of the estate by putting the estate on notice while it would not jeopardize any rights of
the mortgagee. The only result is to suspend temporarily the power to sell so as not to interfere
with the orderly administration of the estate of a decedent. A contrary holding would be
inconsistent with the portion of our law governing the settlement of estates of deceased persons.
(allowing settlement of estates of deceased persons)

It results that the trial judge committed no error in sustaining the petition of the administrator of
the estate of the deceased Gabina Labitoria and in denying the motion of the Philippine National
Bank.

(administrator) Ramos vs Caoibes (collected the money)

Principal: Concepcion L. Ramos
Agent: Benigno A. Caoibes
Third Party: administratrix Consolacion Ramos

1. Concepcion Ramos executed two documents, namely: (1) Annex A: an SPA appointing
Caoibes to “collect any amount due me from the Philippine War Damage Commissios” and (2)
Annex B: an affidavit "xxx "That in case payment of any amount or amounts collected from the
Philippine War Damage Commission, my nephew and at the same time attorney-in-fact, shall
give my sister Teopista Vda. de Basa one-half (1⁄2), of the corresponding amount and the other
half (1⁄2) shall be given to my nephew and niece Mr. and Mrs. Benigno A. Caoibes (nephew and
sister will equally share the same).
2. Concepcion Ramos died on 19 Aug 1948, leaving a will dated 7 Jan 1927 admitted in which
she ordered that the credits due to her be distributed among the children of the deceased
Antonino Ramos, namely, Consolacion, Ramon, Socorro, and Cirila.
3. One year before she died, Concepcion Ramos filed with the War Damage Commission.
The Commission issued a check in the amount of P501.62 payable to Benigno A. Caoibes.
4. When the administrator Consolacion L. Ramos discovered the collection made by Caoibes
when she saw the note "previous payment”, she filed a motion with the court asking that Caoibes
be ordered to deposit the sum of P501.62 with the clerk of court.
5. Caoibes contended that, he had the right to retain, for himself, half of the sum of P501.62.

ISSUE: Whether the death of the principal (Concepcion Ramos) extinguished the agency with the
agent (Caoibes) which removes his right to retain the credits due to Concepcion Ramos? Yes.

RULING:

No. The Supreme Court held that Caoibes does not have the right to retain the money by
virtue of the power of attorney.

According to Art. 1711 of the old Civil Code, which was in force at the time of the transaction,
the contract of agency is presumed to be gratuitous unless the agent is a professional agent.

In this case, there was no proof that Caoibes was such. Therefore, Caoibes had the obligation
to deliver the amount collected by virtue of power of attorney to the principal or after her
death, to the administratrix of her estate, Ramos because there was absolutely no cession of
rights made in favor of Caoibes in the special power of attorney document.

Furthermore, According to Art. 1732 of the old Civil Code, which was in force at the time
of the transaction, an agency is terminated, among other causes, by the death of the principal
or of the agent. Where an agent makes use of his power of attorney after the death of his
principal, the agent has the obligation to deliver the amount collected by him by virtue of said
power to the administratrix of the estate of his principal. (A) In the case at bar, Caoibes made
use of the power of attorney when his principal was already dead.

Hence, the Supreme Court reversed the order of the lower court and ordered Caoibes to
deposit the full sum of P501.62 with the clerk of court to be at the disposal of administratix
Ramos.