REVOCATION OF AGENCY RULING: YES.

FLORENTINO RALLOS, ET AL Defendant is liable. Having advertised the fact that

vs.
TEODORO R. YANGCO
DOCTRINE: It was the duty of the principal on the
termination of his relationship with his agent to give due
and timely notice thereof to third persons. Failing to do
so, he is 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.
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 and timely notice thereof
to the plaintiffs. Failing to do so, he is 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.

FACTS:
The defendant in this case on the 27th day of November,
1907, sent to the plaintiff Florentino Rallos a letter
inviting the latter to be the consignor in buying
and selling leaf tobacco and other native products. Terms
and conditions were also contained in the letter.
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, 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.
It appears, 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: 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.
REPUBLIC VS. EVANGELISTA
DOCTRINE: When an agency is constituted as a clause
in a bilateral contract, that is, when the agency is inserted
in another agreement, the agency ceases to be revocable
at the pleasure of the principal as the agency shall now
follow the condition of the bilateral agreement.
An exception to the revocability of a contract of agency is
when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency.
FACTS:
A contract of agency is generally revocable as it is a
personal contract of representation based on trust and
confidence reposed by the principal on his agent.
An exception to the revocability of a contract of agency is
when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability
is because the agency becomes part of another obligation
or agreement. It is not solely the rights of the principal but
also that of the agent and third persons which are affected.
Hence, the law provides that in such cases, the agency
cannot be revoked at the sole will of the principal.

Private respondent Legaspi is the owner of a land located In the case at bar, we agree with the finding of the trial
in Bulacan. and appellate courts that the agency granted by Legaspi to
Gutierrez is coupled with interest as a bilateral contract
Petitioner Calimlim (Lt. General), entered into a MOA depends on it. It is clear from the records that Gutierrez
with one Ciriaco Reyes. The MOA granted Reyes a was given by Legaspi, inter alia, the power to manage the
permit to hunt for treasure in a land in Bulacan. Reyes, treasure hunting activities in the subject land. It was
with petitioners, started, digging, tunneling and blasting likewise agreed upon that Gutierrez shall be entitled to
works on the said land of Legaspi. It was also alleged that 40% of whatever treasure may be found in the land. When
Calimlim assigned about 80 military personnel to guard an agency is constituted as a clause in a bilateral contract,
the area and intimidate Legaspi and other occupants of the that is, when the agency is inserted in another agreement,
area from going near the subject land. the agency ceases to be revocable at the pleasure of the
Legaspi executed an SPA appointing his nephew, private principal as the agency shall now follow the condition of
respondent Gutierrez, as his attorney-in-fact. Gutierrez the bilateral agreement. Consequently, the Deed of
was given the power to deal with the treasure hunting Revocation executed by Legaspi has no effect. The
activities on Legaspi’s land and to file charges against authority of Gutierrez to file and continue with the
those who may enter it without the latter’s authority. prosecution of the case at bar is unaffected.
Legaspi agreed to give Gutierrez 40% of the treasure that
may be found in the land.
Gutierrez filed a case against petitioners for illegally
entering Legaspi’s land. He hired the legal services of
Atty. Adaza (as legal fees, Atty. Adaza shall be entitled to
30% of Legaspi’s share in whatever treasure may be
found in the land). Upon the filing of the complaint, a 72-
hour TRO was issued against petitioners. The case was
then raffled to the court of Judge Evangelista, who then
granted an extension to the TRO.
Petitioners filed a Motion to Dismiss contending. One
issue that they raised was that there is no real party-in-
interest as the SPA of Gutierrez to bring the suit was
already revoked by Legaspi as evidenced by a Deed of
Revocation.
RTC ruled in favor of the private respondents. CA
affirmed the decision.
Issue: Whether the contract of agency between Legaspi
and Gutierrez has been effectively revoked by Legaspi.
RULING: NO. CA decision is Affirmed.
LIM VS. SABAN
DOCTRINE: In an agency coupled with an interest, the
agent’s 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 agent’s interest is confined to earning, his agreed
compensation, the agency is not one coupled with an
interest, since an agent’s interest in obtaining his
compensation as such agent is an ordinary incident of the
agency relationship.
FACTS:
The late Eduardo Ybañez (Ybañez), the owner of a 1,000-
square meter lot in Cebu City (the “lot”), entered into
an Agreement and Authority to Negotiate and
Sell (Agency Agreement) with respondent Florencio
Saban (Saban) on February 8, 1994. Under the Agency
Agreement, Ybañez authorized Saban to look for a buyer
of the lot for Two Hundred Thousand Pesos
(P200,000.00) and to mark up the selling price to include
the amounts needed for payment of taxes, transfer of title
and other expenses incident to the sale, as well as Saban’s
commission for the sale.
Through Saban’s efforts, Ybañez and his wife were able
to sell the lot to the petitioner Genevieve Lim (Lim) and
the spouses Benjamin and Lourdes Lim (the Spouses
Lim) on March 10, 1994. The price of the lot as indicated
in the Deed of Absolute Sale is Two Hundred Thousand
Pesos (P200,000.00). It appears, however, that the
vendees agreed to purchase the lot at the price of Six
Hundred Thousand Pesos (P600,000.00), inclusive of
taxes and other incidental expenses of the sale. After the
sale, Lim remitted to Saban the amounts of One Hundred
Thirteen Thousand Two Hundred Fifty Seven Pesos
(P113,257.00) for payment of taxes due on the transaction
as well as Fifty Thousand Pesos (P50,000.00) as broker’s
commission.
Lim also issued in the name of Saban four postdated
checks in the aggregate amount of Two Hundred Thirty
Six Thousand Seven Hundred Forty Three Pesos
(P236,743.00). Subsequently, Ybañez sent a letter dated
June 10, 1994 addressed to Lim. In the letter Ybañez
asked Lim to cancel all the checks issued by her in
Saban’s favor and to “extend another partial payment” for
the lot in his (Ybañez’s) favor. Subsequently, Ybañez sent
a letter dated June 10, 1994 addressed to Lim. In the letter
Ybañez asked Lim to cancel all the checks issued by her
in Saban’s favor and to “extend another partial payment”
for the lot in his (Ybañez’s) favor.
After the four checks in his favor were dishonored upon
presentment, Saban filed a Complaint for collection of
sum of money and damages against Ybañez and Lim with
the Regional Trial Court (RTC) of Cebu City on August
3, 1994. The case was assigned to Branch 20 of the RTC.
In his Complaint, Saban alleged that Lim and the Spouses
Lim agreed to purchase the lot for P600,000.00, i.e., with
a mark-up of Four Hundred Thousand Pesos
(P400,000.00) from the price set by Ybañez. Of the total
purchase price of P600,000.00, P200,000.00 went to
Ybañez, P50,000.00 allegedly went to Lim’s agent, and
P113,257.00 was given to Saban to cover taxes and other
expenses incidental to the sale. Lim also issued four (4)
postdated checks in favor of Saban for the remaining
P236,743.00.
Issues:
(1) Whether or not Saban is entitled to receive his
commission from the sale - YES
(2) assuming that Saban is entitled thereto, whether or not
it is Lim who is liable to pay Saban his sales commission.-
YES
RULING:
(1) YES. the Supreme Court ruled in the affirmative. To
deprive Saban of his commission subsequent to the sale
which was consummated through his efforts would be a
breach of his contract of agency with Ybañez which
expressly states that Saban would be entitled to any excess
in the purchase price after deducting the P200,000.00 due
to Ybañez and the transfer taxes and other incidental
expenses of the sale. The agency was not revoked since
Ybañez requested that Lim make stop payment orders for
the checks payable to Saban only after the consummation
of the sale on March 10, 1994. At that time, Saban had
already performed his obligation as Ybañez’s agent when,
through his (Saban’s) efforts, Ybañez executed the Deed
of Absolute Sale of the lot with Lim and the Spouses Lim.
However, the agency cannot be treated as one coupled
with an interest. An agency is deemed as one coupled with
an 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 available, in view of the trial court’s dismissal of Saban’s
third person subsists. complaint as against Ybañez, with Saban’s express
consent, due to the latter’s demise on November 11, 1994.
In an agency coupled with an interest, the agent’s 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 agent’s interest
is confined to earning his agreed compensation, the
agency is not one coupled with an interest, since an
agent’s interest in obtaining his compensation as such
agent is an ordinary incident of the agency relationship.

(2) the Supreme Court stated that Saban’s right to receive

compensation for negotiating as broker for Ybañez arises
from the Agency Agreement between them. Lim is not a
party to the contract. However, the record reveals that she
had knowledge of the fact that Ybañez set the price of the
lot at P200,000.00 and that the P600,000.00—the price
agreed upon by her and Saban—was more than the
amount set by Ybañez because it included the amount for
payment of taxes and for Saban’s commission as broker
for Ybañez.

Lim’s act of issuing the four checks amounting to

P236,743.00 in Saban’s favor belies her claim that she and
her co-vendees did not agree to purchase the lot at
P600,000.00. If she did not agree thereto, there would be
no reason for her to issue those checks which is the
balance of P600,000.00 less the amounts of P200,000.00
(due to Ybañez), P50,000.00 (commission), and the
P113,257.00 (taxes). The only logical conclusion is that
Lim changed her mind about agreeing to purchase the lot
at P600,000.00 after talking to Ybañez and ultimately
realizing that Saban’s commission is even more than what
Ybañez received as his share of the purchase price as
vendor.

Obviously, this change of mind resulted to the prejudice

of Saban whose efforts led to the completion of the sale
between the latter, and Lim and her co-vendees.
Considering the circumstances surrounding the case, and
the undisputed fact that Lim had not yet paid the balance
of P200,000.00 of the purchase price of P600,000.00, it is
just and proper for her to pay Saban the balance of
P200,000.00. Furthermore, since Ybañez received a total
of P230,000.00 from Lim, or an excess of P30,000.00
from his asking price of P200,000.00, Saban may claim
such excess from Ybañez’s estate, if that remedy is still
DEATH – ARTICLES 1930 TO 1932
HERRERA VS. LUY KIM GUAN
DOCTRINE: The death of the principal does not render
the act of an agent unenforceable, where the latter had no
knowledge of such extinguishment.
FACTS:
Natividad Herrera is a legitimate daughter of Luis Herrera
Luis Herrera owned three (3) parcels of land and before
leaving for China, he executed a Deed of General Power
of Attorney in favor Luy Kim Guan authorizing him to
administer and sell the properties of the latter. Luy Kim
Guan, in his capacity as an attorney-in-fact for Luis
Herrera sold the lot 1740 to Luy chay.
Luy Chay then executed a deed of sale in favor of one
Lino Bangayan. Luy Kim Guan, acting again as an
attorney-in-fact for Luis Herrera sold to Nicomedes
Salazar ½ of the two lots. Luy Kim Guan Nicomedes
Salazar executed a deed of mortgage in favor of Bank of
the Philippines Islands.
of death of Luis Herrera has not been satisfactorily
proven. The only evidence presented by the Plaintiff-
appellant in this respect is a supposed letter received from
a certain "Candi", dated at Amoy in November, 1936,
purporting to give information that Luis Herrera (without
mentioning his name) had died in August of that year.
This piece of evidence was properly rejected by the lower
court for lack of identification. the other hand, we have
the testimony of the witness Chung Lian to the effect that
when he was in Amoy the year 1940, Luis Herrera visited
him and had a conversation with him, showing that the
latter was still alive at the time. Since the documents had
been executed the attorney-in-fact one in 1937 and the
other in 1939, it is evident, if we are to believe this
testimony, that the documents were executed during the
lifetime of the principal. Be that as it may, even granting
arguendo that Luis Herrera did die in 1936, plaintiffs
presented no proof and there is no indication in the record,
that the agent Luy Kim Guan was aware of the death of
his principal at the time he sold the property. The death of
the principal does not render the act of an agent
unenforceable, where the latter had no knowledge of such
extinguishment the agency.

Luy Kim Guan and Salazar sold part of the remaining lot
to Carlos Cizantos. Salazar then sold his remaining
interest to Lino Bangayan and Luy Kim Guan, both are as
co-owners.

Both Natividad Herrera and Luy Kim Guan admitted that

Luis Herrera is now deceased but as to the specific and
precise date of his death the evidence of both parties failed
to show. The plaintiff-appellants contend that the
abovementioned transactions were fraudulent and were
executed after the death of Luis Herrera (principal) when
the power of attorney was no longer operative.

ISSUE: WON The transactions were null and void

because they are executed after the death of the principal.

HELD: No, The transactions are not null and void and of
no effect.

Coming now to the contention that these transactions are

null and void and of no effect because they were executed
by the attorney-in-fact after the death of his Principal,
suffice it to say that as found by the lower court, the date
TERRADO VS. CA ISSUES:
DOCTRINE: Agency is extinguished by the death of the (1) Whether or not the Management Administration
agent. His rights and obligations arising from the contract contract between the municipality and Lacuesta was valid
are not transmittable to his heirs or predecessors-in-
(2) Whether or not the Management-Administration
interest.
contract still stands even if Lacuesta already died
FACTS:
RULING:
On January 21, 1973, the Philippine Legislature ceded a
(1) NO. The Management-Administration contract
certain portion of Bayambang Province of Pangasinan
entered into by Lacuesta and the municipalty was void as
(which was once public land) to the municipality of the
it lacked a vital procedural aspect (public bidding)
Bayambang to be used or disposed of in accordance with
necessary for the validity of the contract. Moreover, the
the general municipal law relative to the letting of
Supreme Court held that the municipality had no power
fisheries in municipal waters.
to grant exclusive privileges of fishing for more than 5
On 1974, the municipality of Bayambang enacted years.
Ordinance No. 8, establishing the Bayambang Fishery
(2) NO. Essentially, the contract of management and
and Hunting Park and Municipal Water Shed. Also in the
administration between the Municipality and Lacuesta is
said ordinance, the municipality appointed and
one of agency whereby a person binds himself to render
constituted private respondent Lacuesta as Manager-
some service or to do something in representation or on
Administrator of the watershed for a period of 25 years,
behalf of another, with the consent or authority of the
renewable for another 25 years. This is under the
latter. Lacuesta bound himself as Manager-Administrator
condition that said respondent shall pay the municipality
of the Bayambang Fishing and Hunting Park and
the sum equivalent to 10% of the annual gross income that
Municipal Watershed to render service or perform duties
may be derived from the forest products, wild game and
and responsibilities in representation or on behalf of the
fish.
Municipality of Bayambang, with the consent or authority
Such ordinance was approved by the Provincial Board of of the latter. Under Art. 1919 of the Civil Code, agency is
Pangasinan but was disapproved by the Secretary of extinguished by the death of the agent. His rights and
Agriculture and Natural Resources as it “grants fishery obligations arising from the contract are not transmittable
privileges to respondent Lacuesta without the benefit of to his heirs or predecessors-in-interest.
competitive public hearing in contravention to law.”
The municipality then informed Lacuesta of the
disapproval of the ordinance and directed him to refrain
and desist from acting as Administrator-Manager.
However, Lacuesta refused and insisted on retaining
possession of the fisheries. Despite such refusal, the
municipality of Bayambang passed another resolution
resolving to advertise for public bidding the said fishery
area. Among the winning bidders are herein petitioners.
There was a long line of petitions/motions filed in the
RTC, CA, and SC filed by both parties. What is important
is that while the case was pending in the CFI of
Pangasinan, Lacuesta died. The judge of said court (Judge
Villalon, also a respondent) sided with Lacuesta.
As such, despite the fact that Lacuesta died, she still
ordered the restoration of the possession of all fisheries
and areas covered by the contract to Lacuesta and his
party.