XIII. How is agency extinguished?
order in so far as it sustained the demurrer interposed by the
Agency, 276 to 310

A. Revocation; agency coupled with an interest – Arts. 1873, 1919 to
1927
Barreto v. Sta. Maria, 26 Phil. 440
Facts:
 Antonio Barretto filed suit against Jose Santa Maria, alleging that the
defendant, a resident of Spain, was then the owner and proprietor of
the business known as the La Insular Cigar and Cigarette Factory,
established in these Islands, which business consisted in the purchase
of leaf tobacco and other raw material, in the preparation of the same,
and in the sale of cigars and cigarettes in large quantities;
 On January 8, 1910, and for a long time prior thereto, the plaintiff held
and had held the position of agent of the defendant in the Philippine
Islands for the management of the said business in the name and for the
account of the said defendant;
o the defendant obligated himself in writing to hire the said
services for so long a time as the plaintiff should not show
discouragement and to compensate such services at the rate of
P37,000 Philippine currency per annum;
o that, on the aforesaid 8th day of January, 1910, the defendant,
without reason, justification, or pretext and in violation of the
contract before mentioned, summarily and arbitrarily
dispensed with the plaintiff's services and removed him from
the management of the business, since which date the
defendant had refused to pay him the compensation, or any
part thereof, due him and payable in full for services rendered
subsequent to December 31, 1909;
o and that, as a second cause of action based upon the facts
aforestated, the plaintiff had suffered losses and damages in
the sum of P100,000 Philippine currency. Said counsel
therefore prayed that judgment be rendered against the
defendant by sentencing him to pay to the plaintiff P137,000
Philippine currency, and the interest thereon at the legal rate,
in addition to the payment of the costs, together with such
other equitable remedies as the law allows.
 By an order of March 14, 1911, the Honorable A. S. Crossfield, judge
overruled the demurrer to the first cause of action, but sustained that
to the second. Counsel for the plaintiff entered an exception to this
defendant to the second cause of action.
 By his written answer to the complaint, on July 19, 1911, counsel for
the defendant, reserving his exception to the order of the court
overruling his demurrer filed against the first cause of action, denied
each and all of the allegations contained in the complaint, relative to
such first cause of action.
 Defense of Sta Maria: plaintiff had no contract whatever with the
defendant in which any period of time was stipulated during which the
former was to render his services as manager of the La Insular factory;
that the defendant revoked for just cause the power conferred upon the
plaintiff; that subsequent to the revocation of such power, and on the
occasion of the plaintiff's having sold all his rights and interests in the
business of the La Insular factory to the defendant, in consideration of
the sum received by him, the plaintiff renounced all action, intervention
and claim that he might have against the defendant relative to the
business aforementioned, whereby all the questions that might have
arisen between them were settled.
 The most important fact in this case, which stands out prominently
from the evidence regarded as a whole, is that of the plaintiff Barretto's
renunciation or registration of the position he held as agent and
manager of the said factory, which was freely and voluntarily made by
him on the occasion of the insolvency and disappearance of the
Chinaman Uy Yan, who had bought from the factory products
aggregating in value the considerable sum of P97,000 and, without
paying this large debt, disappeared and has not been seen since.
 Although Santa Marina did not immediately reply and tell him what
opinion he may have formed and the decision he had reached in the
matter, it is no less true that the silence and lack of reply on the part of
the chief owner of the factory were sufficient indications that the
resignation had been virtually accepted and that if he did not reply
immediately it was because he intended to act cautiously. As the
addressee, the chief owner of the factory, knew of no one at that time
whom he could appoint relieve the writer, who had resigned, it was to
be presumed that he was thereafter looking for some trustworthy
person who might substitute the plaintiff in his position of agent and
manager of the factory, communicated to the plaintiff that he had
revoked the power conferred upon him and had appointed Mr. J.
McGavin to substitute him in his position of manager of the La Insular
factor
Issue:
 W/N Barreto’s services were unjustly dispensed with? NO. valid
revocation because he had already resigned.
1
Held:
 So, the agent and manager Barretto was not really dismissed or
removed by the defendant Santa Marina. What did occur was that, in
view of the resignation rendered by the plaintiff for the reasons which
he himself conscientiously deemed to warrant his surrender of the
position he was holding in the La Insular factory, the principal owner of
the establishment, the defendant Santa Marina, had to took for and
appoint another agent and manager to relieve and substitute him in the
said employment — a lawful act performed by the principal owner of
the factory and one which cannot serve as a ground upon which to
demand from the latter an indemnity for losses and damages, inasmuch
as, in view of the facts that occurred and were acknowledged and
confessed by Barretto
 plaintiff could not expect, nor ought to have expected, that the
defendant should have insisted on the unsuccessful agent's continuance
in his position, or that he should not have accepted the resignation
tendered by the plaintiff in his first letter. By the mere fact that the
defendant remained silent and designated another person, Mr. J.
McGavin, to, discharge in the plaintiff's stead the powers and duties of
agent and manager of the said factory, Barretto should have
understood that his resignation had been accepted and that if its
acceptance was not communicated to him immediately it was owing to
the circumstance that the principal owner of the factory did not then
have, nor until several months afterwards, any other person whom he
could appoint and place in his stead, for, as soon as the defendant Santa
Marina could appoint the said McGavin, he revoked the power he had
conferred upon the plaintiff and communicated this fact to the latter,
 The defendant acknowledged the said verbal contract and also its
ratification by him after his brother's death; but he denied any
stipulation therein that Barretto should hold his office for any specific
period of time fixed by and between the contracting parties, for the
deceased Joaquin Santa Marina, in conferring power upon the plaintiff,
did not do so for any specific time nor did he set any period within
which he should hold his office of agent and manager of the La Insular
factory; neither did he fix the date for the termination of such services,
in the instrument of power of attorney executed by the defendant Santa
Marina before a notary on the 25th of September, 1908.
 From the context of the instrument just mentioned it can not be
concluded that any time whatever was fixed during which the plaintiff
should hold his position of agent. The defendant, in executing that
instrument, whereby the agreement made between his brother Joaquin
and Barretto was ratified, did no more than accord to the plaintiff the
same confidence that the defendant's predecessor in interest had in
him; and so long as this merely subjective condition of trust lodged in
the agent existed, the time during which the latter might hold his office
could be considered indefinite or undetermined, but as soon as that
indespensable condition of a power of attorney disappeared and the
conduct of the agent deceased to inspire confidence, the principal had a
right to revoke the power he had conferred upon his agent, especially
when the latter, for good reasons, gave up the office he was holding.
 From the above legal provisions it is clearly to be inferred 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 excercise of the
office of agent, a circumstance that does not appear in the present case
the principal has a perfect right to revoke the power that he had
conferred upon the agent owing to the confidence he had in him and
which for sound reasons had ceased to exist.
 The record does not show it to have been duly proved. notwithstanding
the plaintiff's allegation, that a period was fixed for holding his agency
or office of agent and manager of the La Insular factory. It would be
improper, for the purpose of supplying such defect, to apply to the
present case the provisions of article 1128 of the Civil Code. This article
relates to obligation for which no period has been fixed for their
fulfillment, but, which, from their nature and circumstances, allow the
inference that there was an intention to grant such period to the debtor,
wherefore the courts are authorized to fix the duration of the same, and
the reason why it is inapplicable is that the rights and obligations
existing between Barretto and Santa Marina are absolutely different
from those to which it refers
 It is not incumbent upon the courts to fix the period during which
contracts for services shall last. Their duration is understood to be
implicity fixed, in default of express stipulation, by the period for the
payment of the salary of the employee. Therefore the doctrine of the
tacit renewal of leases of property, established in article 1566 of the
Civil Code, is not applicable to the case at bar. And even though the
annual salary fixed for the services to be rendered by the plaintiff as
agent and manager of the La Insular factory, was P37,000, yet, in
accordance with the custom universally observed throughout the
world, salaries fixed for the year are collected and paid in monthly
installments as they fall due, and so the plaintiff collected and was paid
his remuneration; therefore, on the latter's discontinuance in his office
as agent, he would at most be entitled to the salary for one month and
some odd days, allowed in the judgment of the lower court.
 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
2
 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 latter's heir, now the defendant, on the
one hand, and the plaintiff Barretto, on the other, no period whatever
was stipulated during which the last-named should hold the office and
manager of the said factory, it is unquestionable that the defendant,
even without good reasons, could lawfully revoke the power conferred
upon the plaintiff and appoint in his place Mr. McGavin, and thereby
contracted no liability whatever other than the obligation to pay the
plaintiff the salary pertaining to one month and some odd days, as held
in the judgment below.
 Barretto himself acknowledged in his aforesaid letter, Exhibit 3, that he
had exceeded his authority and acted negligently in selling on credit to
the said Chinaman a large quantity of the products of the factory under
the plaintiff's management, reaching the considerable value of P97,000;
whereby he confessed one of the causes which led to his removal, the
revocation of the power conferred upon him and the appointment of a
new agent in his place.
Dialosa v. CA, 130 SCRA 350
 Issue
Facts
 This case originated in the then Court of First Instance of Iloilo where
private respondents instituted a case of recovery of unpaid commission
against petitioners over some of the lots subject of an agency
agreement that were not sold.
 Facts from the pre-trial order
 Plaintiff was and still is a licensed real estate broker, and as such
licensed real estate broker on June 20, 1968, an agreement was entered
into between him as party of the second part and the defendants
spouses as party of the first part, whereby the former was constituted
as exclusive sales agent of the defendants, its successors, heirs and
assigns, to dispose of, sell, cede, transfer and convey the lots included in
VILLA ALEGRE SUBDIVISION owned by the defendants, under the
terms and conditions embodied in Exhibit "A", and pursuant to said
agreement (Exhibit "A"), the plaintiff acted for and in behalf of the
defendants as their agent in the sale of the lots included in the VILLA
ALEGRE SUBDIVISION
 That the plaintiff, as a licensed real estate broker, has been seriously
damaged by the action of the defendants in rescinding, the contract for
which the plaintiff suffered moral damages in the amount of
P50,000.00, damages to his good will in the amount of P100,000.00, for
attorney's fees in the amount of P10,000.00 to protect his rights and
interests, plus exemplary damages to be fixed by the Court.
 That the plaintiff is entitled to a commission on the lots unsold because
of the rescission of the contract.
 The plaintiff contends:
o (a) That under the terms of the contract (Exhibit "A") the
plaintiff had unrevocable authority to sell all the lots included
in the Villa Alegre Subdivision and to act as exclusive sales
agent of the defendants until all the lots shall have been
disposed of;
o (b) That the rescission of the contract under Exhibit "B",
contravenes the agreement of the parties.
 The defendants contend:
o (a) That they were within their legal right to terminate the
agency on the ground that they needed the undisposed lots for
the use of the family;
o (b) That the plaintiff has no right in law to case for commission
on lots that they have not sold.
 whether the petitioners could terminate the agency agreement, without
paying damages to the private respondent.
Held
 Under the contract, Exhibit "A", herein petitioners allowed the private
respondent "to dispose of, sell, cede, transfer and convey ... until out the
subject property as subdivided is fully disposed of." The authority to
sell is not extinguished until all the lots have been disposed of. When,
therefore, the petitioners revoked the contract with private respondent
in a letter, Exhibit "B" —
o Dear Mr. Baterna:Please be informed that we have finally
decided to reserve the remaining unsold lots, as of this date of
our VILLA ALEGRE Subdivision for our grandchildren.In view
thereof, notice is hereby served upon you to the effect that our
agreement dated June 20, 1968 giving you the authority to sell
as exclusive sales agent of our subdivision is hereby rescinded.
 they become liable to the private respondent for damages for breach of
contract.
 And, it may be added that since the agency agreement, Exhibit "A", is a
valid contract, the same may be rescinded only on grounds specified in
Articles 1381 and 1382 of the Civil Code, as follows:
 ART. 1381. The following contracts are rescissible:
3
 o (1) Those which are entered in to by guardians whenever the
wards whom they represent suffer lesion by more than one-
fourth of the value of the things which are the object thereof;
o (2) Those agreed upon in representation of absentees, if the
latter suffer the lesion stated in the preceding number;
o (3) Those undertaken in fraud of creditors when the latter
cannot in any other name collect the claims due them;
o (4) Those which refer to things under litigation if they have
been entered into by the defendant without the knowledge and
approval of the litigants or of competent judicial authority;
o (5) All other contracts specially declared by law to be subject
to rescission.
 ART. 1382. Payments made in a state of insolvency for obligations to
whose fulfillment the debtor could not be compelled at the time they
were effected, are also rescissible.
 In the case at bar, not one of the grounds mentioned above is present
which may be the subject of an action of rescission, much less can
petitioners say that the private respondent violated the terms of their
agreement-such as failure to deliver to them (Subdivision owners) the
proceeds of the purchase price of the lots.
New Manila v. Republic, 107 Phil. 824
 Held
Facts
o On May 8, 1958, the plaintiff lumber company filed in the court below a
complaint against the defendant Republic of the Philippines for the
recovery of a sum of money. The complaint alleges, among other things,
that defendant, thru the Director of Schools, entered into a contract
with one Alfonso Mendoza to build two school houses; that plaintiff
furnished the lumber materials in the construction of the said
buildings; that prior to the payment by defendant of any amount due
the contractor, the latter executed powers of attorney in favor of the
plaintiff "constituting it as his sole, true and lawful attorney-in-fact with
specific and exclusive authority to collect and receive from the
defendant any and all amounts due or may be due to said contractor
from the defendant in connection with the construction of the aforesaid
school buildings, as may be necessary to pay materials supplied by the
plaintiff"; and that originals of the powers of attorney were received by
defendant (thru the Director of Public Schools) who promised to pay
plaintiff, but that it, nevertheless, paid the contractor several amounts
on different occasions without first making payment to plaintiff. The
complaint, therefore, prays that defendant be ordered to pay plaintiff
the sum of P18,327.15, the unpaid balance of the cost of lumber
supplied and used in the construction of the school buildings, with
interest at the legal rate from the date same was due, plus attorney's
fees and costs.
o Served with a copy of the complaint, the defendant Republic of the
Philippines, through the Solicitor General, moved to dismiss the same
on the grounds (1) that it does not allege a sufficient cause of action, (2)
that plaintiff has no right to institute the action under Act No. 3688, and
(3) that the court is without jurisdiction to entertain the same against
the defendant.
o plaintiff's complaint seeks to enforce against the Republic of the
Philippines a money claim for the payment of materials it furnished for
the construction of two public school buildings undertaken by
contractor Alfonso Mendoza, on the basis of powers of attorney
executed by the latter authorizing said plaintiff to collect and receive
from defendant Republic any amount due or may be due to said
contractor as contract price for the payment of the materials so
supplied.
Issue
o W/N the plaintiff is entitled to his money claim?
o In the case at bar, it is not disputed that defendant Republic has already
instituted a suit against the contractor for the forfeiture of the latter's
bond posted to secure the faithful performance of stipulations in the
construction contract with regards to one of the two school buildings
(Civil Case No. 26815, Court of First Instance of Manila). The contractor
has a similar bond with respect to the other school building. Pursuant
to Act 3688, plaintiff's legal remedy is, not to bring suit against the
Government, there being no privity of contract between them, but to
intervene in the civil case above-mentioned as an unpaid supplier of
materials to the contractor, or file an action in the name of the Republic
against said contractor on the latter's other bond.
o Plaintiff argues that an implied contract between it and the defendant
Republic arose, when the latter, thru the Director of Public Schools, on
being furnished copies of the powers of attorney executed by the
contractor, promised to make payment to plaintiff for the materials
supplied for the construction of the school buildings. It will be
observed, however, that defendant was not a party to the execution of
the powers of attorney. Besides, the Director of Public Schools had no
authority to bind defendant on the payment. While he was the official
who entered into contract with the contractor for the construction of
the school buildings, payment of the contract price was not within his
4
 exclusive control but subject to approval under existing laws not only Defendants Juan Tong and Pua Giok bring this appeal and insist that the
by the Department Head (Sec. 568, Rev. Adm, Code), but also by the deed of the 31st of July, 1931, is valid.
Auditor General.
o At any rate, under the facts alleged in the complaint, the powers of Issue
attorney in question made plaintiff the contractor's agent in the
collection of whatever amounts may be due the contractor from the o W/N the deed is valid?
defendant. And since it is also alleged that, after the execution of the
powers of attorney, the contractor (principal) demanded and collected Held
from defendant the money the collection of which he entrusted to
plaintiff, the agency apparently has already been revoked. (Articles
o The first recital of the deed is that Ong Guan Can, Jr., as agent of Ong
1920 and 1924, new Civil Code.)
Guan Can, the proprietor of the commercial firm of Ong Guan Can &
o The point is made by plaintiff that the powers of attorney executed by
Sons, sells the rice-mill and camarin for P13,000 and gives as his
the contractor in its favor are irrevocable and are coupled with interest.
authority the power of attorney dated the 23d of May, 1928, a copy of
But even supposing that they are, still their alleged irrevocability
this public instrument being attached to the deed and recorded with
cannot affect defendant who is not a party thereto. They are obligatory
the deed in the office of the register of deeds of Capiz. The receipt of the
only on the principal who executed the agency.
money acknowledged in the deed was to the agent, and the deed was
o Plaintiff also cites Article 1729 of the new Civil Code, which provides
signed by the agent in his own name and without any words indicating
that —
that he was signing it for the principal.
o Those who put their labor upon or furnish materials for a piece of work
o Leaving aside the irregularities of the deed and coming to the power of
undertaken by the contractor have an action against the owner up to
attorney referred to in the deed and registered therewith, it is at once
the amount owing from the latter to the contractor at the time the claim
seen that it is not a general power of attorney but a limited one and
is made. . . .
does not give the express power to alienate the properties in question.
o This article, however, as expressly provided in its last paragraph, "is
(Article 1713 of the Civil Code.)
subject to the provisions of special law." The special law governing in
o Appellants claim that this defect is cured by Exhibit 1, which purports
the present case, as already seen, is Act No. 3688.
to be a general power of attorney given to the same agent in 1920.
o There is another reason for upholding the order of dismissal
Article 1732 of the Civil Code is silent over the partial termination of an
complained of. Plaintiff's action being a claim for sum of money arising
agency. The making and accepting of a new power of attorney, whether
from an alleged implied contract between it and the Republic of the
it enlarges or decreases the power of the agent under a prior power of
Philippines, the same should have been lodged with the Auditor
attorney, must be held to supplant and revoke the latter when the two
General. The state cannot be sued without its consent.
are inconsistent. If the new appointment with limited powers does not
revoke the general power of attorney, the execution of the second
Dy Buncio v. Ong Guan, 60 Phil. 606 power of attorney would be a mere futile gesture.
o The title of Ong Guan Can not having been divested by the so-called
Facts deed of July 31, 1931, his properties are subject to attachment and
execution.
o This is a suit over a rice mill and camarin situated at Dao, Province of
Capiz. Plaintiff claims that the property belongs to its judgment debtor, Garcia v. De Manzano, 39 Phil. 577

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, 1931, Facts
by Ong Guan Can, Jr.
o After trial the Court of First Instance of Capiz held that the deed was o Narciso Lopez Manzano was a merchant in Atimonan, Tayabas, who
invalid and that the property was subject to the execution which has went to Spain in May, 1910, and died there the 8th of September, 1913.
been levied on said properties by the judgment creditor of the owner. He gave a general power-of-attorney to his son, Angel L. Manzano on

5
 the 9th of February, 1910, and on the 25th of March a second general
power-of-attorney to his wife, Josefa Samson.
o Narciso L. Manzano had various commercial dealings before leaving for
Spain.
o Manzano was the owner of a half interest in a small steamer, the San
Nicolas, the other half being owned by Ocejo, Perez & Co., with whom
there was a partnership agreement to run the steamer for a few years.
When this period expired Ocejo, Perez & Co., refused to continue the
contact and demanded that Manzano buy or sell.
o 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., on the 15th of
October, 1910.
o Angel L. Manzano, acting under his power-of-attorney, sold in July,
1911, the other half of the boat to the plaintiff, but as Garcia is a
Spaniard and could not register the boat in his name at the Custom
House, the boat was registered in the name of Agustin Garcia, a son of
the plaintiff
o On the 23rd of July, 1912, Angel L. Manzano, by virtue of the power-of-
attorney from his father, Narciso L. Manzano, executed a contract,
Exhibit A, made a part of the complaint, by which Juan Garcia agreed to
extend a credit to Narciso L. Manzano in the sum of P12,000, and this
credit was used by the house of Manzano. To secure it a mortgage was
given in the same document on three parcels of land in Atimonan, with
their improvements. The registration of this mortgage was refused by
the registrar.
o The court of First Instance of Tayabas, on the 18th of April, 1914,
named Josefa Samson y San Pedro, administratrix of the property of
Narciso L. Manzano, and commissioners were duly appointed, and
notice was published, and no claims having been presented against the
estate to the commissioners, they so reported to the court on the 7th of
December, 1914.
o On the 29th of July, 1915, the Court of First Instance ordered the
partition of the property amongst the heirs of Narciso L. Manzano.
o On the 15th day of May, 1915, the plaintiff filed his action in the Court
of First Instance of Tayabas to foreclose the so-called mortgage in
Exhibit a. Josefa de Manzano filed a pleading stating that the estate had
already been divided; that the property mentioned in Exhibit A of the
plaintiff had been assigned
o The defendants also filed a counter-claim against Juan Garcia and his
wife, Conception Castro, in which they allege that Narciso L. Manzano
was the owner of one-half of the small steamer San Nicolas and Juan
Garcia the owner of the half; that Garcia taking advantage of the youth
and inexperience of Angel L. Manzano falsely and maliciously made him
believe that he had authority under the power-of-attorney from his
father to sell the half interest in the San Nicolas, and that he did so. That
Angel L. Manzano had no authority to sell the interest in the steamer,
but that since the date of said sale, July, 1912, (1911?) the plaintiff had
illegally appropriated all rents and profits of the boat to his own use,
which amount to P30,000 per year, after paying for all repairs, etc., and
they ask the court to absolve them from the complaint, to declare them
the owners of one-half of the steamer San Nicolas, and to order the
plaintiffs to render a detailed account of all the profits received from
the San Nicolas, and to order one-half of the profits paid to the
defendants.
Issue
o W/N the power of attorney to the wife revoked the one to the son?
Held
o As to the first two alleged errors the defendants argue that the power-
of-attorney to the wife revoked the one to the son, in accordance with
article 1735 of the Civil code, and that even if not revoked the power-
of-attorney did not authorize the sale of the boat by Angel L. Manzano.
Article 1735 of the Civil code is as follows:
o 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.
o There is no proof in the record that the first agent, the son, knew of the
power-of-attorney to his mother.
o 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.
o The defendant's next argument is that the power-of-attorney, if valid,
does not authorize the sale of the half interest in the boat to the
plaintiff.
o There is no pretense that the boat was not sold for a fair price, there is
no denial that the value was received in full, but he defendants allege
that the power-of-attorney under which Angel L. Manzano acted, even if
a valid power, did not authorize the sale of the boat, and they want it
back it with one-half of the profits derived from its use by the plaintiff.
o The document under which Angel L. Manzano sold the boat reads in
part as follows:
6
 o To enable him to buy or sell, absolutely or under pacto de retro, any of
the rural or urban estates that now own and may acquire in the future,
at such price as he may deem most advantageous, which he shall collect
in cash or by installments and under such conditions as he may
consider proper, and he shall set forth the encumbrances on the
properties and their origin. I bind myself to warrant and defend, in
accordance with law, the titles to such properties; and if the properties
alienated by this agreement should be redeemed, he is empowered to
redeem them by paying the price that may have been fixed, and, for this
purpose, shall execute the proper instrument.
o The power-of-attorney authorizes the sale of real property, the buying
of real property and mortgaging the same the borrowing of money and
in fact is general and complete.
o 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.
o We consider that 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.
o The last assignment of error is not supported by any reasonable
evidence in the record.
o That part of the judgement ordering the defendant Josefa Samson de
Manzano to pay the plaintiff P12,752.85 is revoked, and the judgment
in so far as it dismisses the counterclaim of the defendants is affirmed,
without any declaration of costs. So ordered.
Rallos v. Yangco, 20 Phil. 269
 and timely notice thereof to the plaintiffs. Failing to do so, he is
Facts
o This is an appeal from a judgment of the Court of First Instance of the
Province of Cebu, the Hon. Adolph Wislizenus presiding, in favor of the
plaintiffs, in the sum of P1,537.08, with interest at 6 per cent per
annum from the month of July, 1909, with costs.
o The defendant in this case on the 27th day of November, 1907, sent to
the plaintiff Florentino Rallos, among others, a letter
o Accepting this invitation, the plaintiffs proceeded to do a considerable
business with the defendant through the said Collantes, as his factor,
sending to him as agent for the defendant a good deal of produce to be
sold on commission. Later, and in the month of February, 1909, the
plaintiffs sent to the said Collantes, as agent for the defendant, 218
bundles of tobacco in the leaf to be sold on commission, as had been
other produce previously. The said Collantes received said tobacco and
sold it for the sum of P1,744. The charges for such sale were P206.96.
leaving in the hands of said Collantes the sum of P1,537.08 belonging to
the plaintiffs. This sum was, apparently, converted to his own use by
said agent.
o It appears, however, that prior to the sending of said tobacco the
defendant had severed his relations with Collantes and that the latter
was no longer acting as his factor. This fact was not known to the
plaintiffs; and it is conceded in the case that no notice of any kind was
given by the defendant to the plaintiffs of the termination of the
relations between the defendant and his agent. The defendant refused
to pay the said sum upon demand of the plaintiffs, placing such refusal
upon the ground that at the time the said tobacco was received and sold
by Collantes he was acting personally and not as agent of the defendant.
This action was brought to recover said sum.
Issue
o Whether or not the plaintiffs, acting in good faith and without
knowledge, having sent produce to sell on commission to the former
agent of the defendant, can recover of the defendant under the
circumstances above set forth
Held
o We are of the opinion that the defendant is liable. Having advertised the
fact that Collantes was his agent and having given them a special
invitation to deal with such agent, it was the duty of the defendant on
the termination of the relationship of principal and agent to give due
responsible to them for whatever goods may have been in good faith
and without negligence sent to the agent without knowledge, actual or
constructive, of the termination of such relationship.
Compañia General de Tabacos de Filipinas v. Diabu, 20 Phil 321
Facts
o Appeal from the decision of the Court of First Instance of Manila
ordering the City Treasurer of Manila to refund the sum of P15,280.00
to Compania General de Tabacos de Filipinas.
o Appellee Compania General de Tabacos de Filipinas filed this action in
the Court of First Instance of Manila to recover from appellants, City of
7
 Manila and its Treasurer, Marcelino Sarmiento the sum of P15,280.00
allegedly overpaid by it as taxes on its wholesale and retail sales of
liquor for the period from the third quarter of 1954 to the second
quarter of 1957, inclusive, under Ordinances Nos. 3634, 3301, and
3816.
o Tabacalera, as a duly licensed first class wholesale and retail liquor
dealer paid the City the fixed license fees prescribed by Ordinance No.
3358 for the years 1954 to 1957, inclusive, and, as a wholesale and
retail dealer of general merchandise, it also paid the sales
taxes required by Ordinances Nos. 3634, 3301, and 3816.1äwphï1.ñët
o In its sworn statements of wholesale, retail, and grocery sales of general
merchandise from the third quarter of 1954 to the second quarter of
1957, inclusive, Tabacalera included its liquor sales of the same period,
and it is not denied that of the taxes it paid on all its sales of general
merchandise, the sum of P15,280.00 subject to the action represents the
tax corresponding to the liquor sales aforesaid.
o Tabacalera's action for refund is based on the theory that, in connection
with its liquor sales, it should pay the license fees prescribed by
Ordinance No. 3358 but not the municipal sales taxes imposed by
Ordinances Nos. 3634, 3301, and 3816; and since it already paid the
license fees aforesaid, the sales taxes paid by it — amounting to the
sum of P15,208.00 — under the three ordinances mentioned
heretofore is an overpayment made by mistake, and therefore
refundable.
o The City, on the other hand, contends that, for the permit issued to it
granting proper authority to "conduct or engage in the sale of alcoholic
beverages, or liquors" Tabacalera is subject to pay the license
fees prescribed by Ordinance No. 3358, aside from the sales
taxes imposed by Ordinances Nos. 3634, 3301, and 3816; that, even
assuming that Tabacalera is not subject to the payment of the sales
taxes prescribed by the said three ordinances as regards itsliquor sales,
it is not entitled to the refund demanded for the following reasons:.
 (a) The said amount was paid by the plaintiff voluntarily and
without protest;(b) If at all the alleged overpayment was made
by mistake, such mistake was one of law and arose from the
plaintiff's neglect of duty; .(c) The said amount had been added
by the plaintiff to the selling price of the liquor sold by it and
passed to the consumers; and (d) The said amount had been
already expended by the defendant City for public
improvements and essential services of the City government,
the benefits of which are enjoyed, and being enjoyed by the
plaintiff.
Issue
o W/N Tabacalera can recover the unpaid taxes from the city of Manila?
Held
o It is admitted that as liquor dealer, Tabacalera paid annually the
wholesale and retail liquor license fees under Ordinance No. 3358. In
1954, City Ordinance No. 3634, amending City Ordinance No. 3420, and
City Ordinance No. 3816, amending City Ordinance No. 3301 were
passed. By reason thereof, the City Treasurer issued the regulations
marked Exhibit A, according to which, the term "general merchandise
as used in said ordinances, includes all articles referred to in Chapter 1,
Sections 123 to 148 of the National Internal Revenue Code. Of these,
Sections 133-135 included liquor among the taxable articles. Pursuant
to said regulations, Tabacalera included its sales of liquor in its sworn
quarterly declaration submitted to the City Treasurer beginning from
the third quarter of 1954 to the second quarter of 1957, with a total
value of P722,501.09 and correspondingly paid a wholesaler's tax
amounting to P13,688.00 and a retailer's tax amounting to P1,520.00,
or a total of P15,208.00 — the amount sought to be recovered.
o It appears that in the year 1954, the City, through its treasurer,
addressed a letter to Messrs. Sycip, Gorres, Velayo and Co., an
accounting firm, expressing the view that liquor dealers paying the
annual wholesale and retail fixed tax under City Ordinance No. 3358
are not subject to the wholesale and retail dealers' taxes prescribed by
City Ordinances Nos. 3634, 3301, and 3816. Upon learning of said
opinion, appellee stopped including its sales of liquor in its quarterly
sworn declarations submitted in accordance with the aforesaid City
Ordinances Nos. 3634, 3301, and 3816, and on December 3, 1957, it
addressed a letter to the City Treasurer demanding refund of the
alleged overpayment. As the claim was disallowed, the present action
was instituted.
o The term "tax" applies — generally speaking — to all kinds of exactions
which become public funds. The term is often loosely used to include
levies for revenue as well as levies for regulatory purposes. Thus
license fees are commonly called taxes. Legally speaking,
however, license fee is a legal concept quite distinct from tax; the former
is imposed in the exercise of police power for purposes of regulation,
while the latter is imposed under the taxing power for the purpose of
raising revenues (MacQuillin, Municipal Corporations, Vol. 9, 3rd
Edition, p. 26).
o Ordinance No. 3358 is clearly one that prescribes municipal license fees
for the privilege to engage in the business of selling liquor or alcoholic
beverages, having been enacted by the Municipal Board of Manila
pursuant to its charter power to fix license fees on, and regulate, the
8
 sale of intoxicating liquors, whether imported or locally manufactured.
(Section 18 [p], Republic Act 409, as amended). The license fees
imposed by it are essentially for purposes of regulation, and are
justified, considering that the sale of intoxicating liquor is, potentially at
least, harmful to public health and morals, and must be subject to
supervision or regulation by the state and by cities and municipalities
authorized to act in the premises. (MacQuillin, supra, p. 445.)
o On the other hand, it is clear that Ordinances Nos. 3634, 3301, and
3816 impose taxes on the sales of general merchandise, wholesale or
retail, and are revenue measures enacted by the Municipal Board of
Manila by virtue of its power to tax dealers for the sale of such
merchandise. (Section 10 [o], Republic Act No. 409, as amended.).
o Under Ordinance No. 3634 the word "merchandise" as employed
therein clearly includes liquor. Aside from this, we have held in City of
Manila vs. Inter-Island Gas Service, Inc., G.R. No. L-8799, August 31,
1956, that the word "merchandise" refers to all subjects of commerce
and traffic; whatever is usually bought and sold in trade or market;
goods or wares bought and sold for gain; commodities or goods to
trade; and commercial commodities in general.
o That Tabacalera is being subjected to double taxation is more apparent
than real. As already stated what is collected under Ordinance No. 3358
is a license fee for the privilege of engaging in the sale of liquor, a
calling in which — it is obvious — not anyone or anybody may freely
engage, considering that the sale of liquor indiscriminately may
endanger public health and morals. On the other hand, what the three
ordinances mentioned heretofore impose is a tax for revenue purposes
based on the sales made of the same article or merchandise. It is
already settled in this connection that both a license fee and a tax may
be imposed on the same business or occupation, or for selling the same
article, this not being in violation of the rule against double taxation
(Bentley Gray Dry Goods Co. vs. City of Tampa, 137 Fla. 641, 188 So.
758; MacQuillin, Municipal Corporations, Vol. 9, 3rd Edition, p. 83). This
is precisely the case with the ordinances involved in the case at bar.
o Appellee's contention that the City is repudiating its previous view —
expressed by its Treasurer in a letter addressed to Messrs. Sycip,
Gorres, Velayo & Co. in 1954 — that a liquor dealer who pays the
annual license fee under Ordinance No. 3358 is exempted from the
wholesalers and retailers taxes under the other three ordinances
mentioned heretofore is of no consequence. The government is not
bound by the errors or mistakes committed by its officers, specially on
matters of law.
o Having arrived at the above conclusion, we deem it unnecessary to
consider the other legal points raised by the City.
Del Rosario v. Abad, 104 Phil. 648

Facts
o Appeal from a judgment rendered by the Court of First Instance of
Nueva Ecija in civil case No. 1084.
o The facts are undisputed, the parties having entered into an agreed
statement thereof, the pertinent and materials part of which are: The
plaintiffs are the children and heirs of the late Tiburcio del Rosario.
o On 12 December 1936, the Secretary of Agriculture and Commerce, by
authority of the President of the Commonwealth of the Philippines,
issued under the provisions of the Public Land Act (Act No. 2874)
homestead patent No. 40596 to Tiburcio del Rosario. The homestead
with an area of 9 hectares, 43 ares and 14 centares is situated in barrio
San Mauricio, municipality of San Jose, province of Nueva Ecija. On 11
February 1937, the Registrar of Deeds in and for the province of Nueva
Ecija issued original certificate of title No. 4820 in the name of the
homesteader
o On 24 February 1937, Tiburcio del Rosario obtained a loan from
Primitivo Abad in the sum of P2,000 with interest at the rate of 12%
per annum, payable on 31 December 1941. As security for the payment
thereof he mortgaged the improvements of the parcel of land in favor of
the creditor (Annex B, complaint, pp. 10-13, Rec. on App.). On the same
day, 24 February, the mortgagor executed an "irrevocable special
power of attorney coupled with interest" in favor of the mortgagee,
authorizing him, among others, to sell and convey the parcel of land
(Annex A, complaint, pp. 7-9, Rec. on App.). Thereafter the mortgagor
and his family moved to Santiago, Isabela, and there established a new
residence. Sometime in December 1945 the mortgagor died leaving the
mortgage debt unpaid. On 9 June 1947, Primitivo Abad, acting as
attorney-in-fact of Tiburcio del Rosario, sold the parcel of land to his
son Teodorico Abad for and in consideration of the token sum of P1.00
and the payment by the vendee of the mortgage debt of Tiburcio del
Rosario to Primitivo Abad (Annex C, complaint, pp. 13-16, Rec. on
App.). The vendee took possession of the parcel of land. Upon the filing
and registration of the last deed of sale, the Registrar of Deeds in and
for the province of Nueva Ecija cancelled original certificate of title No.
4820 in the name of Tiburcio del Rosario and in lieu thereof issued
transfer certificate of title No. 1882 in favor of the vendee Teodorico
Abad.
o On 29 December 1952 the plaintiffs brought suit against the defendants
to recover possession and ownership of the parcel of land, damages,
attorney's fees and costs. The defendants answered the complaint and
prayed for the dismissal thereof, damages, attorney's fees and costs.
9
Issue
o W/N the mortgage is valid?
Held
o There is no question that the mortgage on the improvements of the
parcel of land executed by Tiburcio del Rosario in favor of Primitivo
Abad is valid.
o The power of attorney executed by Tiburcio del Rosario in favor of
Primitivo Abad providing, among others, that is coupled with an
interest in the subject matter thereof in favor of the said attorney and
are therefore irrevocable, and . . . conferring upon my said attorney full
and ample power and authority to do and perform all things reasonably
necessary and proper for the due carrying out of the said powers
according to the true tenor and purport of the same, . . ." 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. But granting
that the irrevocable power of attorney was lawful and valid it would
subject the parcel of land to an encumbrance. As the homestead patent
was issued on 12 December 1936 and the power of attorney was
executed on 24 February 1937, it was in violation of the law that
prohibits the alienation or encumbrance of land acquired by homestead
from the date of the approval of the application and for a term of five
years from and after the issuance of the patent or grant. Appellants
contend that the power of attorney was to be availed of by the agent
after the lapse of the prohibition period of five years, and that in fact
Primitivo Abad sold the parcel of land on 9 June 1947, after the lapse of
such period. Nothing to that effect is found in the power of attorney.
o Appellants claim that the trial court should have directed the appellees
to reimburse Teodorico Abad for what he had paid to Primitivo Abad to
discharge the mortgage in the latter's favor as part of the consideration
of the sale. As the sale to Teodorico Abad is null and void, the appellees
can not be compelled to reimburse Teodorico Abad for what he had
paid to Primitivo Abad. The former's right of action is against the latter,
without prejudice to the right of Primitive Abad to foreclose the
mortgage on the improvements of the parcel of land if the mortgage
debt is not paid by the appellees, as heirs and successors-in-interest of
the mortgagor.
Caleongco v. Claparols, 10 SCRA 577
Facts
o Since 1951, defendant-appellee, Eduardo L. Claparols, operated a
factory for the manufacture of nails in Talisay, Occidental Negros, under
the style of "Claparols Steel & Nail Plant". The raw material, nail wire,
was imported from foreign sources, specially from Belgium; and
Claparols had a regular dollar allocation therefor, granted by the
Import Control Commission and the Central Bank. The marketing of the
nails was handled by the "ABCD Commercial" of Bacolod, which was
owned by a Chinaman named Kho To.1äwphï1.ñët
o Losses compelled Claparols in 1953 to look for someone to finance his
imports of nail wires. At first, Kho To agreed to do the financing, but on
April 25, 1953, the Chinaman introduced his compadre, appellant
Vicente Coleongco, to the appellee, recommending said appellant to be
the financier in the stead of Kho To. Claparols agreed, and on April 25 of
that year a contract (Exhibit B) was perfected between them whereby
Coleongco undertook to finance and put up the funds required for the
importation of the nail wire, which Claparols bound himself to convert
into nails at his plant. It was agreed that Coleongco would have the
exclusive distribution of the product, and the "absolute care in the
marketing of these nails and the promotion of sales all over the
Philippines", except the Davao Agency; that Coleongco would "share the
control of all the cash" from sales or deposited in banks; that he would
have a representative in the management; that all contracts and
transactions should be jointly approved by both parties; that proper
books would be kept and annual accounts rendered; and that profits
and losses would be shared "on a 50-50 basis". The contract was
renewed from one year to year until 1958, and Coleongco's share
subsequently increased by 5% of the net profit of the factory (Exhibits
D, E, F).
10
o Two days after the execution of the basic agreement, Exhibit "B", on
April 27, 1953, Claparols executed in favor of Coleongco, at the latter's
behest a special power of attorney (Exhibit C) 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,
and took over its business transactions, while Claparols devoted most
of his time to the nail manufacture processes.
o Around mid-November of 1956, appellee Claparols was disagreeably
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. Worried and alarmed, Claparols immediately
left for Manila to confer with the bank authorities. Upon arrival, he
learned to his dismay that the execution had been procured because of
derogatory information against appellee that had reached the bank
from his associate, appellant Coleongco. On July 6, 1956, the latter,
without appellee's knowledge, had written to the bank —
o in connection with the verbal offer — for the acquisition by me of the
whole interest of Mr. Eduardo L. Claparols in the Claparols Steel & Nail
Plant and the Claparols Hollow Blocks Factory" (Exhibit 36);
o and later, on October 29, 1956, Coleongco had written again the bank
another letter (Exhibit 35), also behind the back of appellee, wherein
Coleongco charged Claparols with taking machines mortgaged to the
bank, and added - .
o In my humble personal opinion I presume that Mr. Eduardo L. Claparols
is not serious in meeting his obligations with your bank, otherwise he
had not taken these machines and equipments a sign of bad faith since
the factory is making a satisfactory profit of my administration.
o Fortunately, Claparols managed to arrange matters with the bank and
to have the execution levy lifted. Incensed at what he regarded as
disloyalty of his attorney-in-fact, he consulted lawyers. The upshot was
that appellee revoked the power of attorney (Exhibit "C"), and informed
Coleongco thereof (Exhibits T, T-1), by registered mail, demanding a
full accounting at the same time. Coleongco, as could be expected,
protested these acts of Claparols, but the latter insisted, and on the first
of January, 1957 wrote a letter to Coleongco dismissing him as assistant
manager of the plant and asked C. Miller & Company, auditors, to go
over the books and records of the business with a view to adjusting the
accounts of the associates. These last steps were taken in view of the
revelation made by his machinery superintendent, Romulo Agsam, that
in the course of the preceding New Year celebrations Coleongco had
drawn Agsam aside and proposed that the latter should pour acid on
the machinery to paralyze the factory. The examination by the auditors,
summarized in Exhibits 80 and 87, found that Coleongco owed the
Claparols Nail Factory the amount of P87,387.37, as of June 30, 1957.
o In the meantime, Claparols had found in the factory files certain
correspondence in February, 1955 between Coleongco and the nail
dealer Kho To whereby the former proposed to Kho that the latter
should cut his monthly advances to Claparols from P2,000 to P1,000 a
month, because —
o I think it is time that we do our plan to take advantage of the difficulties
of Eddie with the banks for our benefit. If we can squeeze him more. I
am sure that we can extend our contract with him before it ends next
year, and perhaps on better terms. If we play well our cards we might
yet own his factory (Exhibit 32);
o and conformably to Coleongco's proposal, Kho To had written to
Claparols that "due to present business conditions" the latter could only
be allowed to draw P1,000 a month beginning April, 1955 (Exhibit 33).
o As the parties could not amicably settle their accounts, Coleongco filed
a suit against Claparols charging breach of contract, asking for
accounting, and praying for P528,762.19 as damages, and attorney's
fees, to which Claparols answered, denying the charge, and counter-
claiming for the rescission of the agreement with Coleongco for
P561,387.99 by way of damages. After trial, the court rendered
judgment, as stated at the beginning of this opinion.
o In this appeal, it is first contended by the appellant Coleongco that the
power of attorney (Exhibit "C") was made to protect his interest under
the financing agreement (Exhibit "B") and was one coupled with an
interest that the appellee Claparols had no legal power to revoke. This
point can not be sustained. The financing agreement itself already
contained clauses for the protection of appellant's interest, and did not
call for the execution of any power of attorney in favor of Coleongco.
But granting appellant's view, it must not be forgotten that a power of
attorney can be made irrevocable by contract only in the sense that the
principal may not recall it at his pleasure; but coupled with interest or
not, the authority certainly can be revoked for a just cause, such as
when the attorney-in-fact betrays the interest of the principal, as
happened in this case. 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.
Issue
11
 o W/N there was a breach of contract?
Held
o Our new Civil Code, in Article 1172, expressly 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 can not stand on better
ground than such a partner in so far as irrevocability of the power is
concerned.
o That the appellee Coleongco acted in bad faith towards his principal
Claparols is, on the record, unquestionable. His letters to the Philippine
National Bank (Exhibits 35 and 36) attempting to undermine the credit
of the principal and to acquire the factory of the latter, without the
principal's knowledge; Coleongco's letter to his cousin, Kho To (Exhibit
32), 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, Exhibit 33,
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, are plain acts of deliberate sabotage by the agent
that fully justified the revocation of the power of attorney (Exhibit "C")
by Claparols and his demand for an accounting from his agent
Coleongco.
o Appellant attempts to justify his letter to the Philippine National Bank
(Exhibits 35 and 36), claiming that Claparols' mal-administration of the
business endangered the security for the advances that he had made
under the financing contract (Exhibit "B"). But if that were the case, it is
to be expected that Coleongco would have first protested to Claparols
himself, which he never did. Appellant likewise denies the authorship
of the letter to Kho (Exhibit 32) as well as the attempt to induce Agsam
to damage the machinery of the factory. Between the testimony of
Agsam and Claparols and that of Coleongco, the court below whose to
believe the former, and we see no reason to alter the lower court's
conclusion on the value of the evidence before it, considering that Kho's
letter to Claparols (Exhibit 33) plainly corroborates and dovetails with
the plan outlined in Coleongco's own letter (Exhibit 32), signed by him,
and that the credibility of Coleongco is affected adversely by his own
admission of his having been previously convicted of estafa (t.s.n., pp.
139, 276), a crime that implies moral turpitude. Even disregarding
Coleongco's letter to his son-in-law (Exhibit 82) that so fully reveals
Coleongco's lack of business scruples, the clear preponderance of
evidence is against appellant.
o The same remarks apply to the finding of the trial court that it was
appellant Coleongco, and not Claparols, who disposed of the band
resawing equipment, since said machine was received in July, 1956 and
sold in August of that year to the Hong Shing Lumber Co., managed by
appellant's cousin Vicente Kho. The untruth of Coleongco's charge that
Claparols, upon his return from Baguio in September, 1956, admitted
having sold the machine behind his associate's back is further
evidenced by (a) Coleongco's letter, Exhibit "V", dated October 29,
1956, inquiring the whereabouts of the resaw equipment from
Claparols (an inquiry incompatible with Claparols' previous
admission); (b) by the undenied fact that the appellee was in Baguio
and Coleongco was acting for him during the months of July and August
when the machine was received and sold; and (c) the fact that as
between the two it is Coleongco who had a clear interest in selling the
sawing machine to his cousin Kho To's lumber yard. If Claparols wished
to sell the machine without Coleongco's knowledge, he would not have
picked the latter's cousin for a buyer.
o The action of plaintiff-appellant for damages and lost profits due to the
discontinuance of the financing agreement, Exhibit "B", may not
prosper, because the record shows that the appellant likewise breached
his part of the contract. It will be recalled that paragraph 2 of the
contract, Exhibit "B", it was stipulated:
o That the Party of the Second Part (Coleongco) has agreed to finance and
put up all the necessary money which may be needed to pay for the
importation of the raw materials needed by such nail factory and
allocated by the ICC from time to time, either in cash of with whatever
suitable means which the Party of the Second Part may be able to make
by suitable arrangements with any well-known banking institution
recognized by the Central Bank of the Philippines.
o Instead of putting up all the necessary money needed to finance the
imports of raw material, Coleongco merely advanced 25% in cash on
account of the price and had the balance covered by surety agreements
executed by Claparols and others as solidary, (joint and several)
guarantors (see Exhibits G, H, I). The upshot of this arrangement was
that Claparols was made to shoulder 3/4 of the payment for the
imports, contrary to the financing agreement. Paragraph 11 of the latter
expressly denied Coleongco any power or authority to bind Claparols
12
 without previous consultation and authority. When the balances for the
cost of the importations became due, Coleongco, in some instances,
paid it with the dealers' advances to the nail factory against future sales
without the knowledge of Claparols (Exhibits "K" to K-11, K-13). Under
paragraphs 8 and 11 of the financing agreement, Coleongco was to give
preference to the operating expenses before sharing profits, so that
until the operating costs were provided for, Coleongco had no right to
apply the factory's income to pay his own obligations.
o Again, the examination of the books by accountant Atienza of C. Miller
and Co., showed that from 1954 onwards Coleongco (who had the
control of the factory's cash and bank deposits, under Paragraph 11 of
Exhibit "B") never liquidated and paid in full to Claparols his half of the
profits, so that by the end of 1956 there was due to Claparols
P38,068.41 on this account (Exhibit 91). For 1957 to 1958 Claparols
financed the imports of nail wire without the help of appellant, and in
view of the latter's infringement of his obligations, his acts of disloyalty
previously discussed, and his diversions of factory funds (he even
bought two motor vehicles with them), we find no justification for his
insistence in sharing in the factory's profit for those years, nor for the
restoration of the revoked power of attorney.
o The accountant's reports and testimony (specially Exhibits 80 to 87)
prove that as of June 30, 1957, Coleongco owed to Claparols the sum of
P83,466.34 that after some adjustment was reduced to P81,387.37,
practically accepted even by appellant's auditor. The alleged
discrepancies between the general ledger and the result thus arrived at
was satisfactorily explained by accountant Atienza in his testimony
(t.s.n., 1173-1178).
o No error was, therefore, committed by the trial court in declaring the
financing contract (Exh. B) properly resolved by Claparols or in
rendering judgment against appellant in favor of appellee for the said
amount of P81,387.37. The basic rule of contracts requires parties to
act loyally toward each other in the pursuit of the common end, and
appellant clearly violated the rule of good faith prescribed by Art. 1315
of the new Civil Code.
o The lower court also allowed Claparols P50,000 for damages, material,
moral, and exemplary, caused by the appellant Coleongco's acts in
maliciously undermining appellee's credit that led the Philippine
National Bank to secure a writ of execution against Claparols.
Undeniably, the attempts of Coleongco to discredit and "squeeze"
Claparols out of his own factory and business could not but cause the
latter mental anguish and serious anxiety, as found by the court below,
for which he is entitled to compensation; and the malevolence that lay
behind appellee's actions justified also the imposition of exemplary or
deterrent damages (Civ. Code, Art. 2232). While the award could have
been made larger without violating the canons of justice, the discretion
in fixing such damages primarily lay in the trial court, and we feel that
the same should be respected.
B. Withdrawal – Arts. 1919, 1928, 1929
Valera v. Velasco, 51 Phil 695
Facts
o This is an appeal taken by Federico Valera from the judgment of the
Court of First Instance of Manila dismissing his complaint against
Miguel Velasco, on the ground that he has not satisfactorily proven his
right of action.
o By virtue of the powers of attorney, Exhibits X and Z, executed by the
plaintiff on April 11, 1919, and on August 8, 1922, the defendant was
appointed attorney-in-fact of the said plaintiff with authority to manage
his property in the Philippines, consisting of the usufruct of a real
property located of Echague Street, City of Manila.
o The defendant accepted both powers of attorney, managed plaintiff's
property, reported his operations, and rendered accounts of his
administration; and on March 31, 1923 presented exhibit F to plaintiff,
which is the final account of his administration for said month, wherein
it appears that there is a balance of P3,058.33 in favor of the plaintiff.
o The liquidation of accounts revealed that the plaintiff owed the
defendant P1,100, and as misunderstanding arose between them, the
defendant brought suit against the plaintiff, civil case No. 23447 of this
court. Judgment was rendered in his favor on March 28, 1923, and after
the writ of execution was issued, the sheriff levied upon the plaintiff's
right of usufruct, sold it at public auction and adjudicated it to the
defendant in payment of all of his claim.
o Subsequently, on May 11, 1923, the plaintiff sold his right of
redemption to one Eduardo Hernandez, for the sum of P200 (Exhibit
A). On September 4, 1923, this purchaser conveyed the same right of
redemption, for the sum of P200, to the plaintiff himself, Federico
Valera (Exhibit C).
o After the plaintiff had recovered his right of redemption, one Salvador
Vallejo, who had an execution upon a judgment against the plaintiff
rendered in a civil case against the latter, levied upon said right of
redemption, which was sold by the sheriff at public auction to Salvador
Vallejo for P250 and was definitely adjudicated to him. Later, he
transferred said right of redemption to the defendant Velasco. This is
how the title to the right of usufruct to the aforementioned property
later cam
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 o because of the lapse of nearly nine years up to the time of the latter's
Issue
o (1) The lower court erred in holding that one of the ways of terminating
an agency is by the express or tacit renunciation of the agent; (2) the
lower court erred in holding that the institution of a civil action and the
execution of the judgment obtained by the agent against his principal is
but renunciation of the powers conferred on the agent;
Held
o Article 1732 of the Civil Code reads as follows:
o Art. 1732. Agency is terminated:
 1. By revocation;
 2. By the withdrawal of the agent;
 3. By the death, interdiction, bankruptcy, or insolvency
of the principal or of the agent.
o And article 1736 of the same Code provides that:
o Art. 1736. An agent may withdraw from the agency by giving notice to
the principal. Should the latter suffer any damage through the
withdrawal, the agent must indemnify him therefore, unless the agent's
reason for his withdrawal should be the impossibility of continuing to
act as such without serious detriment to himself.
o In the case of De la Peña vs. Hidalgo (16 Phil., 450), this court said laid
down the following rule:
o 1. AGENCY; ADMINISTRATION OF PROPERTY; IMPLIED AGENCY. —
When the agent and administrator of property informs his principal by
letter that for reasons of health and medical treatment he is about to
depart from the place where he is executing his trust and wherein the
said property is situated, and abandons the property, turns it over to a
third party, renders accounts of its revenues up to the date on which he
ceases to hold his position and transmits to his principal statement
which summarizes and embraces all the balances of his accounts since
he began the administration to the date of the termination of his trust,
and, without stating when he may return to take charge of the
administration of the said property, asks his principal to execute a
power of attorney in due form in favor of a transmit the same to
another person who took charge of the administration of the said
property, it is but reasonable and just to conclude that the said agent
had expressly and definitely renounced his agency and that such
agency duly terminated, in accordance with the provisions of article
1732 of the Civil Code, and, although the agent in his aforementioned
letter did not use the words "renouncing the agency," yet such words,
were undoubtedly so understood and accepted by the principal,
death, without his having interrogated either the renouncing agent,
disapproving what he had done, or the person who substituted the
latter.
o The misunderstanding between the plaintiff and the defendant over the
payment of the balance of P1,000 due the latter, as a result of the
liquidation of the accounts between them arising from the collections
by virtue of the former's usufructuary right, who was the principal,
made by the latter as his agent, and the fact that the said defendant
brought suit against the said principal on March 28, 1928 for the
payment of said balance, more than prove the breach of the juridical
relation between them; for, although the agent has not expressly told
his principal that he renounced the agency, yet neither dignity nor
decorum permits the latter to continue representing a person who has
adopted such an antagonistic attitude towards him. When the agent
filed a complaint against his principal for recovery of a sum of money
arising from the liquidation of the accounts between them in
connection with the agency, Federico Valera could not have understood
otherwise than that Miguel Velasco renounced the agency; because his
act was more expressive than words and could not have caused any
doubt. (2 C. J., 543.) In order to terminate their relations by virtue of the
agency the defendant, as agent, rendered his final account on March 31,
1923 to the plaintiff, as principal.
o Briefly, then, the fact that an agent institutes an action against his
principal for the recovery of the balance in his favor resulting from the
liquidation of the accounts between them arising from the agency, and
renders and final account of his operations, is equivalent to an express
renunciation of the agency, and terminates the juridical relation
between them.
o If, as we have found, the defendant-appellee Miguel Velasco, in adopting
a hostile attitude towards his principal, suing him for the collection of
the balance in his favor, resulting from the liquidation of the agency
accounts, ceased ipso facto to be the agent of the plaintiff-appellant,
said agent's purchase of the aforesaid principal's right of usufruct at
public auction held by virtue of an execution issued upon the judgment
rendered in favor of the former and against the latter, is valid and legal,
and the lower court did not commit the fourth and fifth assignments of
error attributed to it by the plaintiff-appellant.
C. Death; agency coupled with an interest – Arts. 1919, 1930 to 1932
Cases:
Pasno v. Ravina, 54 Phil 378

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Ramon v. Caoibes, 94 Phil. 440

Herrera v. Luy Kim Guan, 1 SCRA 406

Rallos v. Felix Go Chan, supra

D. Dissolution of the firm/corporation


E. Accomplishment of the object/purpose

F. Expiration of the period

G. Civil interdiction, insanity, insolvency

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