BARRETTO V. SANTA MARINA, G.R.

NO L-8169 (1913)
FACTS: Defendant Jose Santa Marina was the owner and proprietor of La Insular Cigar and
Cigarette Factory
1. Prior to 1910, plaintiff Barretto acted as the agent of Santa Marina for the management
of the said business. In consideration for the services he rendered, Barretto was given an
annual compensation of P37,000
2. Plaintiff filed an action against Santa Marina for summarily and arbitrarily terminating the
agency and refused to pay him compensation
3. In his defense, Santa Marina argued that there was no stipulation as to the period for
which Barretto was to render his services as manager of the factory
4. It appears that Barretto voluntarily resigned from his position as agent and manager of
the said factory due to the insolvency and disappearance of one Uy Yan, who had
bought tobacco products from the factory amounting to P97,000, as evidenced by a
letter from Barretto addressed to Santa Marina
5. However, Santa Marina did not reply to the said letter

ISSUE: WON the revocation of the agency was valid

HELD: Yes. Art 1733 Old Civil Code and Art 278 Code of Commerce provide that the contract of
agency can subsist only so long as the principal has confidence in his agent, because from the
moment such confidence disappears and although there be a fixed period for the exercise of
the office of the agent, a circumstance that does not appear in the present case has a perfect
right to revoke the power than had conferred upon the agent owing to the confidence he had
in him and which for sound reasons had ceased to exist.

Art 1732 Old Civil Code states that agency is terminated by: (1) revocation; (2) withdrawal of the
agent; or (3) death, interdiction, bankruptcy or insolvency of the principal or of the agent.

From the mere fact that the principal no longer had confidence in the agent, he is entitled to
withdraw it and to revoke the power he conferred upon the latter, even before the expiration of
the period of the engagement or of the agreement made between them; but in the present
case, once it has been shown that between the deceased Joaquin Santa Marina and the
latters heir (defendant), on the one hand, and plaintiff Barretto on the other, no period
whatever was stipulated during which Barretto should hold the office and manager of said
factory. It is unquestionable that Santa Marina, even without good reasons, could lawfully
revoke the power conferred upon Barretto and appoint in his place another person, and
thereby contracted no liability whatever other than the obligation to pay the plaintiff the salary
pertaining to the number of days he held the office prior to the revocation of the agency.














LUSTAN V. CA, G.R. NO 111924 (1997)
FACTS: Petitioner Lustan is the registered owner of a parcel of land in Iloilo. In 1959, petitioner
leased the property to private respondent Parangan for 10 years and an annual rent of P1,000.
1. In 1970, petitioner executed a Special Power of Attorney in favor of Parangan to secure
an agricultural loan from private respondent PNB with the subject property as collateral.
2. Parangan was able to secure 4 additional loans with the same property was security.
However, the last 3 loans were without the knowledge of Lustan. These encumbrances
were duly annotated on the TCT of the property
3. Subsequently, petitioner signed a Deed of Definite Sale which petitioner signed upon
Parangans representation that the same merely evidences the loans extended by him
to Lustan
4. Fearing that her property might be prejudiced by the continued borrowing of Parangan,
petitioner demanded the return of the TCT but instead of complying, Parangan asserted
his rights over the property which allegedly had become his by virtue of the Deed of
Definite Sale
5. As such, Lustan filed an action for cancellation of liens, quieting of title, recovery of
possession and damages against Parangan and PNB

ISSUE: WON petitioners property is liable to PNB for the loans contracted by Parangan by virtue
of the SPA

HELD: Yes. Petitioner argued that the last 3 mortgages were void for lack of authority. But she
totally failed to consider that said SPA is 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 SPA executed by petitioner in favor of Parangan duly clothed Parangan with authority to
deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that
the last 3 loans were without the express authority of petitioner, it cannot be prejudiced thereby.
As far as third persons are concerned, an act is deemed to have been performed even if the
agent has in fact exceeded the limits of his authority according to the understanding between
the principal and the agent. The SPA particularly provides that the same is good not only for the
principal loan for also for subsequent commercial, industrial, agricultural loan or credit
accommodation that the agent may obtain and until the power of attorney is revoked in a
public instrument and a copy of which is furnished to PNB. 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.















SANCHEZ V. MEDICARD, G.R. NO 141525 (2005)
FACTS: Sometime in 1987, Medicard appointed petitioner Sanchez as its special corporate
agent. As such agent, Medicard gave him commission based on the cash brought in
1. Through petitioners efforts, Medicard and Unilab executed a health care program. The
following year, the service agreement was again renewed through the help of the
petitioner
2. Prior to the expiration of the renewed contract, Medicard proposed to Unilab an
increase of the premium for the following year. This was rejected by Unilab, prompting
Medicard to request petitioner to reduce his commission but the latter refused
3. In order not to lose the account completely, Medicard and Unilab negotiated to
continue the insurance coverage of Unilabs personnel. Under the new scheme, Unilab is
to pay an amount less than the proposed amount by petitioner.
4. Medicard did not give petitioner any commission under the new scheme
5. As such, petitioner demanded payment of his commission on the new scheme but the
Medicard refused

ISSUE: WON the authority of Sanchez was revoked upon Medicards direct transaction with
Unilab

HELD: Yes. It is clear that since petitioner refused to reduce his commission, Medicard directly
negotiated with Unilab thus revoking its agency contract with petitioner. Such revocation is
authorized under Art 1924 NCC which provides that the agency is revoked if the principal
directly manages the business entrusted to the agent, dealing directly with third persons.

Petitioner did not render services to Medicard to entitle him to a commission. There is no
indication from the records that he exerted any effort in order that Unilab and Medicard, after
the expiration of the service agreement, can renew it for the third time. In fact, his refusal to
reduce his commission constrained Medicard to negotiate directly with Unilab.

























LIM V. SABAN, G.R. NO 163720 (2004)
FACTS: Under an agency agreement, Ybanez authorized respondent Saban to look for a buyer
of the Ybanezs lot for P200,000 and to mark up the selling price to include the amount for the
payment of taxes, transfer of title and other expenses incident to the sale, as well as Sabans
commission
1. Through Sabans effort, Ybanez was able to sell the lot to petitioner Lim. The price of the
lot indicated in the Deed of Sale was P200,000. However, it appears that the vendees
agreed to purchase the lot for P600,000, inclusive of all fees and expenses
2. After the sale, Lim remitted to Saban P113,257 as payment for the tax and P50,000 as
Sabans commission. Lim also issued 4 postdated checks amounting to P236,743
3. Subsequently, Ybanez asked Lim to cancel the postdated checks and to pay directly to
the former
4. Since the checks were dishonored, Saban field an action for sum of money against Lim.
Saban alleged that Ybanez and Lim connived to deprive him of his brokers commission
5. In his answer, Ybanez claimed that Saban was not entitled to any commission because
he concealed the actual selling price of Ybanez and also because Saban was not a
licensed real estate broker
6. The trial held in favor of Ybanez and Lim and dismissed Sabans complaint.
7. On appeal, CA reversed the trial court decision and held that Ybanezs revocation of his
contract of agency with Saban was invalid because the agency was coupled with an
interest and Ybanez effected the revocation in bad faith in order to deprive Saban of his
commission

ISSUE: WON the agency was validly revoked

HELD: No. CA was correct in finding that the agency was revoked since Ybanez requested that
Lim make stop payment orders for the checks payable to Saban only after the consummation of
the sale. At that time, Saban had already performed his obligation as Ybanezs agent when,
through his efforts, Ybanez executed a Deed of Absolute Sale over the lot with petitioner Lim.

However, the CAs pronouncement that Sabans agency was one coupled with an interest is
incorrect. Under Art 1927NCC, an agency cannot be revoked if a bilateral contract depends
upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is
appointed manager of a partnership in a contract of partnership and his removal form the
management is unjustifiable. Stated differently, an agency is deemed as one coupled with
interest where it is established for the mutual benefit of the principal and of the agent, or for the
interest of the principal and of third persons and it cannot be revoked by the principal so long as
the interest of the agent or of a third person subsists. In an agency couple with an interest, the
agents interest must be in the subject matter of the power conferred and not merely an interest
in the exercise of the power because it entitles him to compensation. When an agents interest is
confined to earning his agreed compensation, the agency is not one coupled with an interest,
since an agents interest in obtaining his compensation as such agent is ordinary incident of the
agency relationship.









VALENZUELA V. CA, G.R. NO 83122 (1990)
FACTS: Petitioner Valenzuela is a general agent of private respondent Philippine American
General Insurance Co (PHILAMGEN) since 1965. As such, he was authorized to sell all kinds of
non-life insurance, and as compensation therefor he was entitled to 32.5% commission.
1. From 1973 to 1975, Valenzuela solicited marine insurance form one of its clients, Delta
Motors Inc in the amount of P4.4 million from which he was entitled to P1.6 million as
commission
2. During the period of 1976 to 1978, premium payments amounting to P1.9 million were
directly paid to PHILAMGEN and Valenzuelas commission to which he is entitled
amounted to P632,737
3. Subsequently, PHILAMGEN and its president insisted on the sharing of the commission with
Valenzuela on a 50-50 basis. Valenzuela objected to such proposal
4. Because of Valenzuelas refusal, PHILAMGEN and its officers took drastic action against
Valenzuela. They (a) reversed the commission due him by not crediting in his account
the commission earned from Delta Motors Inc; (b) placed agency transactions on a cash
and carry basis; (c) threatened cancellation of policies issued by his agency; (d) started
to leak out news that Valenzuela has a substantial account with PHILAMGEN. All these
resulted in the decline of his business as an insurance agent. Then, PHILAMGEN
terminated the general agency agreement of Valenzuela
5. As such, petitioner filed an action against PHILAMGEN. The trial court held in favor of
Valenzuela and ordered PHILAMGEN to reinstate petitioner as its general agent

ISSUE: WON PHILAMGEN and/or its officers can be held liable for damages due to the
termination of the general agency agreement it entered into with the petitioner

HELD: The principal cause of the termination of Valenzuela as general agent of PHILAMGEN
arose from his refusal to share his Delta commission. PHILAMGEN obviously acted in bad faith in
terminating the general agency agreement of petitioner as shown by the acts of PHILAMGEN in
threats to terminate Valenzuela.

ISSUE: WON the agency can be revoked

HELD: No. It is evident from the records that the agency between petitioner and PHILAMGEN is
one coupled with interest and therefore not freely revocable at the unilateral will of the
principal.

An exception to the principle that an agency is revocable at will is when the agency has been
given not only for the interest of principal but for the interest of third persons or for the mutual
interest of the principal and the agent. In these cases, it is evident that the agency ceases to be
freely revocable by the sole will of the principal.

If a principal violates a contractual or quasi-contractual duty which he owes his agent, the
agent may as a rule bring an appropriate action for the breach of that duty. The agent may in a
proper case maintain an action at law for compensation or damages. A wrongfully discharged
agent has a right of action for damages and in such action the measure and element of
damages are controlled generally by the rules governing any other action for the action for
employers breach of an employment contract.

For the pivotal factor rendering PHILAMGEN and the other private respondents liable in
damages is that the termination by them of the general agency agreement was tainted with
bad faith. Hence, if a principal acts in bad faith and with abuse of right in terminating the
agency, then he is liable in damages. This is in accordance with the precepts in human relations
in the Civil Code.

VALERA V. VELASCO, G.R. NO 28050 (1928)
FACTS: Valera authorized Velasco to manage his property in the Philippines, consisting of a
usufruct of a real property
1. Velasco accepted the agency, managed Valeras property, reported his operations
and rendered accounts of his administration. On March 31, 1923, Velasco presented the
final account of his administration wherein it appears that there is a balance of P3,058.33
in favor of plaintiff Valera
2. The liquidation of the accounts revealed that Valera owed Velasco P1,100 and as
misunderstanding arose between them, Velasco filed an action against Valera.
3. The trial court held in favor of Velasco and after a writ of execution was issued, the sheriff
levied upon Valeras right of usufruct and sold it at a public auction
4. Subsequently, Valera sold his right of redemption to one Eduardo Hernandez for P200.
Hernandez, in turn, conveyed the same right of redemption for P200 in favor of Valera
5. After Valera recovered his right of redemption, Vallejo who had an execution judgment
against him, levied upon the right of redemption and the same was sold at a public
auction. Vallejo subsequently sold the right of redemption to Velasco

ISSUE: WON the agency between Valera and Velasco was terminated

HELD: Yes. The misunderstanding between plaintiff Valera and defendant Velasco over the
payment of the balance of P1,100 due the latter, as a result of the liquidation of the accounts
arising from the agency between them and Velascos institution of a collection suit against
Valera, more than prove the breach of the juridical relation between them. Although the agent
has not expressly told his principal that he renounced the agency, yet neither di gnity 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 accounts between them in
connection with the agency, Valera could not have understood otherwise than that Velasco
renounced the agency, because his act was more expressive than words and could not have
caused any doubt. In order to terminate their relations by virtue of the agency, Velasco as
agent, rendered his final account to the plaintiff as principal.

The fact than 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 a final account of his operations, is equivalent to an express renunciation of the
agency, and terminates the juridical relation between them.

Since Velasos institution of the collection suit against his principal ipso facto terminated the
agency, the purchase Valeras right of usufructs valid and legal.













RALLOS V. FELIX GO CHAN, G.R. NO L-243332 (1978)
FACTS: Concepcion and Gerundia Rallos were registered co-owners of a parcel of land. The
sisters executed a SPA in favor of their brother, petitioner Rallos, authorizing him to sell for and in
their behalf said parcel of land.
1. Thereafter, Concepcion died.
2. Rallos, then, sold the undivided shares of his sisters to respondent Felix Go Chan.
3. The administrator of Concepcions estate subsequently filed an action to declare the
sale of Concepcions share in the lot unenforceable and for said share to be
reconveyed to her estate
4. Respondent contended that notwithstanding the death of the principal Concepcion,
the act of Simeon Rallos as agent in selling the formers share in the property is valid and
enforceable since the corporation acted in good faith in buying the property in question

ISSUE: Is the general rule under Art 1919 that the death of the principal or of the agent
extinguishes the agency, subject to any exception and if so, does the instant case fall within
such exception

HELD: No. Respondent contends that the despite the death of the principal, the sale of the
property by the agent is valid and enforceable inasmuch as the respondent acted in good faith
in buying the property in question.

Under Art 1931, an act done by the agent after the death of the principal is valid and effective
only under two conditions:
(a) That the agent acted without knowledge of the principals death; and
(b) 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 principals death at the time
he contracted with the agent. These two requisites must concur; the absence of one will render
the act of the agent invalid and unenforceable.

CAB: It cannot be denied that the agent Rallos knew of the death of the principal at the time he
sold the latters share to respondent. This can be clearly inferred from the pleadings filed by the
agent before the trial court. On the basis of the established knowledge of Rallos concerning the
deateh of his principal, Art 1931 is not applicable. The law expressly requires lack of knowledge
on the part of the agent of the death of the principal; it is not enough that the third person acted
in good faith.

The fact that the notice of death was not annotated in the Certificate of Title by the heirs of the
principal is of no moment. The court made a distinction between revocation by an act of the
principal as a mode of terminating the agency as opposed to revocation by operation of law
such as the death of the principal. Although a revocation of a power of attorney in order to be
effective must be communicated to the parties concerned, revocation by operation of law such
as in the death of the principal, is instantaneously effective. With death, the principals will or his
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 it provides in Art 1931 is that if the agent dies, his heirs must notify the principal
thereof. As such, the lack of notice of the death of the principal on the TCT is not fatal to the
cause of the estate of the principal.