Barreto v Santa MarinaG.R. No. 8169 December 29, 1913

PRINCIPAL AND AGENT; REVOCATION OF AGENT'S AUTHORITY. —

(Art. 1733, Civil Code; art. 279, Code of Commerce.)

2. ID.; ID.; RIGHT OF PRINCIPAL TO DISMISS AGENT. — Even though a period is stipulated during which the agent or employee is to hold his position in the service of the owner or head of a mercantile establishment, yet the latter may, for any of the special reasons specified in article 300 of the Code of Commerce, dismiss such agent or employee even before the termination of the period.

D E C I S I O NTORRES, J p:

Facts:

Plaintiff’s side: On January 5, 1911, counsel for the plaintiff Antonio M.a Barretto filed suit against Jose Santa Marina, alleging that the defendant for payment of compensation of services rendered subsequent to December 31, 1909.

On January 8, 1910, and for a long time prior thereto, the plaintiff 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; that the plaintiff's services were rendered in pursuance of a contract whereby 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; 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; 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.

Defendant’s side: 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 hem 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 resignation 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.

Honorable S. del Rosario, judge, sentenced the defendant to pay to the plaintiff the salary to which he was entitled for the first eight days of January, 1910, also that for the following month, at the rate of P3,083.33 per month, without special finding as to costs, and dismissed the second cause of action contained in the complaint presented in that case.

Demand is made in this suit for the payment of the considerable sum of P137,000, together with the legal interest thereon. Two amounts make up this sum: One of P37,000, as salary for the year 1910, claimed to be due for services rendered by the plaintiff as agent and manager of the tobacco factory known as La Insular; and the other of P100,000 as an indemnity for losses and damages, on account of the plaintiff's removal without just cause from his position as agent and manager of said factory, effected arbitrarily and in violation of the contract of hire of services between the parties, the plaintiff claiming to be still entitled to hold the position from which he was dismissed.

The record does not show that Santa Marina, his principal, required him to resign his position as manager, but that Barretto himself voluntarily stated by letter to his principal that, for the reasons therein mentioned, he resigned and placed at the latter's disposal the position of agent and manager of the La Insular factory; and if the principal, Santa Marina, deemed it suitable to relieve the agent, for having been negligent and overstepping his authority in the discharge of his office, and furthermore because of his having expressly resigned his position, and placed it at the disposal of the chief owner of the business, it cannot be explained how such person can be entitled to demand an indemnity for losses and damages, from his principal, who merely exercised his lawful right of relieving the plaintiff from the position which he had voluntarily given up.

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

tendered 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 this establishment, the defendant Santa Marina, had to look 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 in is letters, Exhibits 3 and 6, the 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, by means of the letter, Exhibit D, which was presented to him by the bearer thereof, McGavin himself, the new manager and agent appointed.

Issue and Held:

1) Whether any period or term for the duration of the position of agent and manager was fixed in the verbal contract made between the deceased Joaquin Santa Marina

No. 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 contacting 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 cannot 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 indispensable condition of a power of attorney disappeared and the conduct of the agent ceased 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.

The time during which the agent may hold his position is indefinite or undetermined, when no period has been fixed in his commission and so long as the confidence reposed in him by the principal exists; but as soon as this confidence disappears the principal has a right to revoke the power he conferred upon the agent, especially when the latter has resigned his position for good reasons.

2) Whether or not Santa Marina can validly revoke contract of agency, even before expiration of period if any was fixed.

Yes. The contract of agency can subsist only so long as the principal has confidence in his agent, because, from the moment such confidence disappears and although there be a fixed period for the exercise of the office of 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.

Article 1733 of the Civil Code, applicable to the case at bar, according to the provisions of article 2 of the Code of Commerce, prescribes: "The principal may, at his will, revoke the power and compel the agent to return the instrument containing the same in which the authority was given."

Article 279 of the Code of Commerce provides: "The principal may revoke the commission intrusted to an agent at any stage of the transaction, advising him thereof, but always being liable for the result of the transactions which took place before the latter was informed of the revocation."

It is not incumbent upon the courts to fix the period during which contracts for services shall last. Their duration is understood to be implicitly fixed, in default of express stipulation, by the period for the payment of the salary of the employee. Even though the annual salary 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.

Article 302 of the Code of Commerce reads thus:"In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may dissolve it, advising the other party thereof one month in advance."The factor or shop clerk shall be entitled, in such case, to the salary due for the month."

From the mere fact that the principal no longer had confidence in the agent, he is entitled to withdraw it and to revoke the power he conferred upon the latter, even before the expiration of the period of the period of the engagement or of the agreement made between them; but, in the present case, once it has been shown that, between the deceased Joaquin Santa Marina and the 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 of agent 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.

The defendant, Jose Santa Marina, in his letter of December 2, 1909, whereby he communicated to the plaintiff the revocation of the power he had conferred upon him and the appointment of another new agent, Mr. McGavin, stated among other things that the loan contracted by the agent Barretto, without the approval of the principal, caused a great panic among the stockholders of the factory and that the defendant hoped to allay it by the new measure that he expected to adopt. This, then, was still another reason that induced the principal to withdraw the confidence placed in the plaintiff and to revoke the power he had conferred upon him. Therefore, even omitting consideration of the resignation before mentioned, we find duly warranted the reasons which impelled the defendant to revoke the said power and relieve the plaintiff from the position of agent and manager of the La Insular factory.

In revoking the authority conferred upon the plaintiff, acted within his unquestionable powers and did not thereby violate any statute whatever that may have limited them; consequently, he could not have caused the plaintiff any harm or detriment to his right and interests, for not only had Santa Marina a justifiable reason to proceed as he did, but also no period whatever had been stipulated

during which the plaintiff should be entitled to hold his position; and furthermore, because, in relieving the latter and appointing another person in his place, the defendant acted in accordance with the renunciation and resignation which the plaintiff had tendered. If the plaintiff is entitled to any indemnity in accordance with law, such was awarded to him in the judgment of the lower court by granting him the right to collect salary for one month and some odd days.

Coleongco v. Clarapols| G.R. No. L-18616 (1964)|Reyes, J.B.L., J.

Facts:Since 1951, Eduardo L. Claparols, operated a factory for the manufacture of nails in Talisay, Occidental Negros, the "Claparols Steel & Nail Plant". The raw material, nail wire, was imported from foreign sources, specially from Belgium; and he 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.

Losses compelled Claparols in 1953 to look for someone to finance his imports of nail wire. 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 year to year until 1958, and Coleongco's share subsequently increased by 5% of the net profit of the factory. 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.Around mid-November 1956, Claparols learned from the PNB that Coleongco wrote the bank trying to discredit him, causing the bank to issue an alias writ of execution. Behind Claparol's back, Colengco wrote the bank alleging that Claparol was not serious in meeting his financial obligations

by selling the machines. Claparols was able to settle the matter with the bank but because of this, he revoked the SPA and informed Coleongco of the same thru registered mail. He also hired an autditing firm C. Miller & Company, auditors, to go over the books and records of the business with a view to adjusting the accounts of the associates. This is after learning the Coleongco asked the superintendent Agsam to pour acid on the machinery to paralyze the factory. Coleongco also wrote Kho To to cut his monthly advances from P2000 to P1000 to take advantage of the financial difficulties of Claparols and so that later, they may own the factory. This was carried on by Kho To in a letter advising that he can only draw P1000. The auditors found that Coleongco owed the Claparols Nail Factory the amount of P81,387.37, as of June 30, 1957. Coleongco was also dismissed as the assistant manager. Coleongco denies the allegations and claims that the revocation of the SPA was illegal and that he is entitled to the share of the profits as well as moral damages. Claparols counterclaimed. 

Issue:Can Claparols validly revoke the Special Power of Attorney even if it is coupled with interest on the part of the agent?

Held:YES. It is first contended by the appellant Coleongco that the power of attorney was made to protect his interest under the financing agreement and was one coupled with an interest that the appellee Claparols had no legal power to revoke. This point cannot be sustained. 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.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 copartnership are irrevocable without just or lawful cause; and an agent with power coupled with an interest cannot stand on better ground than such a partner in so far as irrevocability of the power is concerned.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 under paragraph 2 of the contract, Exhibit "B", it was stipulated:"That the Party of the Second Part (Coleongeo) has agreed to finance and put up all the necessary money which may be needed to pay for the importation of the raw material

needed by such nail factory and allocated by the ICC from time to time either in cash or 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."

Instead of putting up all the necessary money needed to finance the imports of raw material, Coleangco 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. 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 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. Under paragraphs 8 and 11 of the financing agreement, Coleongeo 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.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), the court finds no justification for his insistence in sharing in the factory's profit for these years, nor for the restoration of the revoked power of attorney.The accountant's reports and testimony 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 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.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 Colleongco 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.Judgment affirmed.

NEW MANILA LUMBER COMPANY, plaintiff-appellant, vs. REPUBLIC OF THE PHILIPPINES, defendant-appellee| G.R. No. L-14248 April 28, 1960 | GUTIERREZ DAVID, J. - Kat

Facts:

New Manila filed a complaint against the Republic for the recovery of a sum of money and alleges that:

- the Republic, thru the Director of Schools, entered into a contract with Alfonso Mendoza to build 2 school houses, where the lumber materials in said construction were supplied by New Manila;

- prior to the payment by Republic of any amount due the contractor, the latter executed powers of attorney in favor of New Manila "constituting it as his sole, true and lawful attorney-in-fact with specific and exclusive authority to collect and receive from the Republic any and all amounts due or may be due to said contractor Mendoza from the Republic in connection with the construction of the aforesaid school buildings, as may be necessary to pay materials supplied by New Manila";

- that originals of the powers of attorney were received by Republic (thru the Director of Public Schools) who promised to pay New Manila, but it paid the contractor on different occasions without first making payment to New Manila.

- that Republic be ordered to pay New Manila P18,327.15 as the unpaid balance of the cost of lumber supplied with legal interest from the due date, attorney's fees and costs.

The Republic, through the Sol-Gen, moved to dismiss on ff. grounds: (1) it does not allege a sufficient cause of action, (2) New Manila has no right to institute the action under Act No. 3688, and (3) the court is without jurisdiction to entertain the same against the Republic.

TC: in favor of the Republic holding that "there is no juridical tie between plaintiff-supplier and defendant-owner and dismissed the complaint. Hence, this appeal.

Issue: WON New Manila can collect from the Republic the amount due to it based on the power of attorney executed in its favor by contractor Mendoza

Held: NO.

Section 1 of Public Act No. 3688, entitled "An Act for the protection of persons furnishing material and labor for the construction of public works", reads in part as follows:

SECTION 1. Any person. . .entering into a formal contract with the Government of the Philippine Islands for the construction of any public building. . . shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties; and any. . .corporation who has furnished

labor or materials . . .and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the Government . . .on the bond of the contractor, and to have their rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the Government . . . If the full amount of the liability of the surety on said bond is insufficient to pay the full amount of said claims and demands, then, after paying the full amount due the Government, the remainder shall be distributed pro rata among said intervenors. If no suit should be brought by the Government . . . within six months from the completion and final settlement of said contract, or if the Government expressly waives its right to institute action on the penal bond, then the person or persons supplying the contractor with labor and materials shall, upon application therefor, and furnishing affidavit to the department under the direction of which said work has been prosecuted, that labor or materials for the prosecution of such work have been supplied by him or them, and payment for which has not been made, be furnished with a certified copy of said contract and bond, upon which he or they shall have a right of action, and shall be, and are hereby, authorized to bring suit in the name of the Government . . . in the CFI in the district in which said contract was to be performed and executed. . .against said contractor and his sureties. . .

The Republic has already instituted a suit against the contractor Mendoza 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 2 school buildings. The contractor Mendoza 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.

New Manila argues that an implied contract between it and the 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 New Manila for the materials supplied for the construction of the school buildings.

The Republic was not a party to the execution of the powers of attorney. Besides, the Director of Public Schools had no authority to bind the Republic 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 exclusive control but subject to approval under existing laws not only by the Department Head (Sec. 568, Rev. Adm, Code), but also by the Auditor General.

At any rate, the powers of attorney made New Manila the contractor's agent in the collection of whatever amounts may be due the contractor from the Republic. And since after the execution of the powers of attorney, the contractor (principal) demanded and collected from the Republic the money the collection of which he entrusted to New

Manila, the agency apparently has already been revoked. (Articles 1920 and 1924, NCC)

New Manila argued that the powers of attorney in its favor are irrevocable and are coupled with interest. Even supposing that they are, still their alleged irrevocability cannot affect the Republic who is not a party thereto. They are obligatory only on the principal who executed the agency.

Plaintiff also cites Article 1729 of NCC:

Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made.

This article, however, "is subject to the provisions of special law," which, here, is Act No. 3688.

New Manila’s action being a claim for sum of money arising from an alleged implied contract between it and the Republic should have been lodged with the Auditor General as the state cannot be sued without its consent. Affirmed.

DY BUNCIO & COMPANY, INC., plaintiff-appelle, vs. ONG GUAN CAN, ET AL., defendants. JUAN TONG and PUA GIOK ENG, appellants. - Chachu

FACTS

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, 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, by Ong Guan Can, Jr.

After trial the CFI of Capiz held that the deed was invalid and that the property was subject to the execution which has been levied on said properties by the judgment creditor of the owner. Defendants Juan Tong and Pua Giok bring this appeal and insist that the deed of the 31st of July, 1931, is valid.

The first recital of the deed is that Ong Guan Can, Jr., as agent of Ong Guan Can, the proprietor of the commercial firm of Ong Guan Can & Sons, sells the rice-mill and camarin for P13,000 and gives as his authority the power of attorney dated the 23d of May, 1928, a copy of this public instrument being attached to the deed and recorded with the deed in the office of the register of deeds of Capiz.

The receipt of the money acknowledged in the deed was to the agent, and the deed was signed by the agent in his own name and without any words indicating that he was signing it for the principal.

ISSUE 1. WON the power of attorney gives the agent the power to alienate the property- NO

The power of attorney is not a general power of attorney but a limited one and does not give the express power to alienate the properties in question. (Article 1713 of the Civil Code.)

Appellants claim that this defect is cured by Exhibit 1, which purports to be a general power of attorney given to the same agent in 1920.

ISSUE 2. WON this purported 2nd power of attorney cured the defect in the first- NO Article 1732 of the Civil Code is silent over the

partial termination of an agency. The making and accepting of a new power of attorney, whether it enlarges or decreases the power of the agent under a prior power of attorney, must be held to supplant and revoke the latter when the two are inconsistent. If the new appointment with limited powers does not revoke the general power of attorney, the execution of the second power of attorney would be a mere futile gesture.

The title of Ong Guan Can not having been divested by the so-called deed of July 31, 1931, his properties are subject to attachment and execution.

          The judgment appealed from is therefore affirmed.

JUAN GARCIA Y PALICIO, plaintiff and appellee, vs. JOSEFA DE MANZANO, as administratrix of the estate of her husband Narciso Lopez Manzano, defendant and appellant.|February 4, 1919|MOIR, J.: - Hazel

1. Narciso Lopez Manzano1 gave a general power-of-attorney to his son, Angel L. Manzano on the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to his wife, Josefa Samson.

2. Narciso L. Manzano had had various commercial dealings with the plaintiff Garcia in this case and renewed these dealings before leaving for Spain.

3. 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.

4. When this period expired Ocejo, Perez & Co., refused to continue the contract and demanded that Manzano buy or sell. As he did not want to sell at the price offered and could not buy, plaintiff Juan Garcia bought the half interest held by Ocejo, Perez & Co., on the 15th of October, 1910.

5. 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

1 was a merchant in Atimonan, Tayabas, who went to Spain in May, 1910, and died there the 8th of September, 1913

Agustin Garcia, a son of the plaintiff, who at that time, was a minor about twenty years old. Agustin Garcia shortly thereafter died, leaving his parents as his heirs at law, and as such heir, plaintiff's wife was made a party.

6. Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso L. Manzano, executed a contract, Exhibit A, 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 Manzano.

7. 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.

8. Upon death of Narciso, Josefa Samson y San Pedro, was named as administratrix of the property and no claims having been presented against the estate to the commissioners

9. CFI ordered the partition of the partition of the property amongst the heirs of Narciso.

10. Plaintiff Garcia filed his action in the Court of First Instance of Tayabas to foreclose the so-called mortgage in Exhibit A.

11. Defendants, "Josefa de Manzano y otros," filed an answer on September 4, 1915, stating they knew such a mortgage document set up in the complaint existed, but as they were not certain that Exhibit A was an exact copy, they denied the document; they denied its efficacy and legal effect; they denied the jurisdiction of the court to hear and decide the case, and alleged that the action had prescribed.

CFI: The trial court held there was no legal mortgage and gave judgment in favour of plaintiff Garcia against Josefa Samson only.

ISSUE #1: WON the power-of-attorney to the wife revoked the one to the son, in accordance with article 17352 of the Civil Code.

HELD: NO. There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his mother.

It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that the son had notice of the second power-of-attorney. They have not done so, and it must be considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half interest was legally inherited by the plaintiffs.

ISSUE#2: WON the power-of-attorney authorized the sale of the boat by Angel L. Manzano.

2 "The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article."

HELD: YES. 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.

The power does not expressly state that the agent may sell the boat, but a power so full and complete and authorizing 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.

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.

DISPOSITIVE: That part of the judgment ordering the defendant Josefa Samson de Manzano to pay the plaintiff 11,12,752.85 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.

TORRES, J., with whom concurs ARAULLO, J., dissenting in part:

- the defendant Josefa Samson, widow of the late Narciso Lopez Manzano, should be obliged to pay one-half of the sum stated in her letter of September 10, 1913, with interest at the rate of 6 per cent per annum from January 10, 1917, the date on which the amended complaint was filed.

- It is contended that the conjugal partnership property is directly liable for the payment of the debts of such partnership and that in order to determine what this property is, in case of the death of one of the spouses, it is indispensable that a liquidation be made of the property that may have been left by the deceased husband or wife, for the purpose of classifying and separating in the estate the private property of each spouse and such property as partakes of the nature of community property.

- The record shows that, not only was the liquidation made, but also that the partition of the estate left by Narciso Lopez Manzano at his death, had already been effected, so that it appears duly determined what property as community property would have pertained to the widow, Josefa Samson; and, as it is a proven fact, and one not discussed, that, on the death of the husband Manzano, the dissolved conjugal partnership was in debt to the plaintiff in the sum of P12,752.85. Under this premise it is unquestionable that the widow Samson, the surviving member of that partnership, should be obliged to pay one-half of this sum, that is P6,376.425, for it would not be right for her to enrich herself by keeping possession of this amount, to the prejudice of the plaintiff creditor.

Rallos v Yangco|G.R. No. 6906|September 27, 1911 - Naty

Quick Summary:

Yangco opened a steamship office and proceeded to do business with Rallos in the buying and selling of tobacco. In his invitation letter, he indicated that Collantes was his agent, equipped with a public power of attorney, and authorized to perform in his name and on his behalf all acts necessary for carrying out his plans. Plaintiffs, as according to their practice, sent 218 bundles of tobacco in the leaf to be sold on commission. They were unable to collect the sum of PhP1,537.08 for this shipment as amount was apparently converted to agent’s own use. The court held that Yangco is liable since he failed to send actual or constructive, of the termination of such relationship. Unknown to the defendant, Yangco had already severed his business relationship with Collantes. Rallos cannot be prejudiced (Art. 1921).

Facts: Collantes is an agent of Yangco, the owner of the steamship company and doing business with the defendant. Yangco had previously introduced Collantes through a letter to them as his agent, equipped with a public power of attorney, and authorized to act in his name and on his behalf.

On February 1909, 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.

However, 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 from the defendant.

Held: Yes, 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 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.

CMS Logging v. CA| 211 SCRA 375 (1992)|Nocon, J.- Elaine

Facts:CMS Logging is a forest concessionaire engaged in logging business while DRACOR is engaged in exporting and selling logs and lumber. On Aug. 28, 1957, the parties entered into a contract of agency whereby CMS appointed DRACOR as its sales agent for all logs that it may produce, for a period of 5 years. By virtue of the agreement, CMS was able to sell through DRACOR a total of 77,264,672 board feet of logs in Japan from April 20, 1957 to April 4, 1962. About 6 months before the expiration of the contract, the CMS president Atty. Carlos Moran Sison and general manager and legal counsel Atty. Teodoro R. Dominguez discovered that DRACOR had used Shinko Trading as agent in selling the logs in Japan for which Shinko earned a commission of US $1 per 1000 board feet for a total of US$77,264.67.CMS claimed that this commission to Shinko was in violation of the agreement and is entitled to this amount as DRACOR had already been paid the 5% commission under the agreement. After this discovery, CMS shipped logs directly to several firms in Japan without aid or intervention of DRACOR for a total of US$739,321.13 or P2,883,351.90. CMS sued DRACOR for the commission received by Shinko while DRACOR filed a counterclaim for its own commission from the CMS' direct sale to Japanese firms. The trial court dismissed the complaint while the CA affirmed. 

Issues:a.Whether or not CMS is entitled to the commission received by Shinko;b.Whether or not the contract of agency was revoked by CMS? c.Is DRACOR still entitled to commission?

Held:a.NO. There is no evidence to establish that Shinko did receive the amount of US$77,264.67 as commission arising from the sale of CMS' logs to Japan. It was not established by the testimonies and letters of the witnesses including Atty. Dominguez since the same were mere hearsays. The letters presented also cannot be considered as admissions since it did not categorically declare that Shinko in fact receive the commissions. Even if it was shown that Shinko received the commissions in question, CMS is not entitled thereto since these were apparently paid by the buyers to Shinko for arranging the sale. 

b.YES. The principal may revoke a contract of agency at will, and it may be express or implied, and may be availed of even if the period fixed in the contract of agency has not yet expired. As the principal has this absolute right to revoke the agency, the agent cannot object thereto; neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the payment of agent's commission. In this case, DRACOR admitted that CMS sold its logs directly to the Japanese firms during the

existence of the contract of agency. This constitutes implied revocation under Art. 1924 which provides that: "The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons." 

c.NO. Since the contract of agency was revoked by CMS when it sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale and is not entitled to retain whatever money it may have received as its commission for said transactions. Neither could it collect damages from CMS since damages are not generally awarded to the agent for revocation of the agency and the case does not fall under the exception , which is to evade the payment of the agent's commission. Judgment MODIFIED. 

JOSE DE LA PEA Y DE RAMON, plaintiff-appellant, vs.FEDERICO HIDALGO, defendant-appellant.| G.R. No. L-5486, 1910| TORRES, J.:| Kat

In the original decision of TC, it ruled in favor of the plaintiff-administrator Jose De La Pea y De Ramon for P13,606.19 and legal interest from the date of the filing of the complaint and the costs of the trial. Both Jose De La Pea y De Ramon and Federico Hidalgo appealed and the latter presented a written motion for new hearing, alleging the discovery of new evidence favorable to him which would necessarily influence the decision which was granted.

Jose dela Peña y de Ramon, and Vicenta de Ramon, in her own behalf and as the legal guardian of her son Roberto de la Peña, filed in the CFI of Manila the original and first complaint drawn against Federico, Antonio, and Francisco Hidalgo, who had successively administered the property3 of Jose de la Peña y Gomiz, now deceased; but later the action was directed only against Federico; the administration of the property, from the time its owner left these Islands and returned to Spain, lasted from November 18, 1887, to January 7, 1904; and third, the administration by Federico4, Antonio5, and Francisco Hidalgo6 should be divided in their respective periods.

Before Peña y Gomiz embarked for Spain, on November 12, 1887, he executed before a notary a power of attorney in favor of Federico Hidalgo, Antonio L. Rocha, Francisco Roxas and Isidro Llado, so that, as his agents, they might represent him and administer, in the order in which they were appointed, various properties he owned and possessed in

3 (1) house and lot at No. 48 Calle San Luis; (1) house and lot at No. 6 Calle Cortada; (1) house and lot at 56 Calle San Luis, and (1) fenced lot on the same street, all of the district of Ermita, and (1) house and lot at No. 81 Calle Looban de Paco4 From November 18, 1887, to December 31, 1893, the property of the absent Jose de la Peña y Gomiz was administered by his agent, Federico Hidalgo, under power of attorney5 From January 1, 1894, to September, 1902, Antonio Hidalgo administered the said property6 From October, 1902, to January 7, 1904, Francisco Hidalgo was its

administrator.

Manila. Federico Hidalgo took charge of the administration of the properties on November 18, 1887.

After Federico had occupied the position of agent and administrator for several years, he wrote to his principal requesting him to designate a person who might substitute him in his position in the event of his being obliged to absent himself from these Islands, as one of those appointed in the said power of attorney had died and the others did not wish to take charge of the administration of their principal's property. Hidalgo, stated that, Peña y Gomiz, did not answer his letters, to approve or object to the former's accounts, and did not appoint or designate another person who might substitute Federico in his administration of his constituent's property.

For reasons of health and by order of his physician, Federico was obliged, on March 22, 1894, to embark for Spain, and, on preparing for his departure, he rendered the accounts of his administration corresponding to the last quarters, up to December 31, 1893, not as yet transmitted, and forwarded them to his constituent with a general statement of all the partial balances, which amounted to P6,774.50, by letter dated March 22, 1894, addressed to his principal, Peña y Gomiz. In this letter Federico informed the latter of the writer's intended departure for Spain and of his having provisionally turned over the administration of the property to his cousin, Antonio Hidalgo, upon whom the writer had conferred a general power of attorney, but asking, in case that this was not sufficient, that Peña send to Antonio Hidalgo a new power of attorney.

Four causes of action of plaintiff as to Federico’s liability:

1. P72,548.24 and interest thereon which covers the collected rents and income from the properties (from November 12, 1887 to January 7, 1904, when Federico Hidalgo had possession of and administered the properties) constitutive of P50,244 collected in partial amounts which Federico failed to deposit as per verbal agreement b/w Federico and his principal in the general treasury of the Spanish Government at 5% interest per annum, with the exception of P1,289.03

2. P6,751.60 (inclusive of interest where the original amount P6,360 was deposited by Gonzalo Tuason in the general treasury of the Spanish Government, to the credit of Peña y Gomiz, at 5% interest per annum, and on December 20, 1888, Federico, as agent, withdrew said amount with its interest and disposed of it for his own use and benefit, notwithstanding the demands made upon him) plus interest thereon

3. P4,402.76 with 5% interest p.a., compounded yearly, to the time of filing of complaint and w/ 6% interest from then which was based on the P6K (3K each) remitted from Singapore by Peña y Gomiz, on his voyage to Spain, to Fr. Ramon Caviedas, a Franciscan friar residing in this city, with the request to deliver the same to Federico, who, on receiving this money, appropriated it to his own use and benefit, and only remitted to Peña y Gomiz in Spain, by drafts of, P737.24 and P860, without having returned or paid the balance of the sum, notwithstanding demands upon him so to do

4. P2K he (on his arrival from Spain and w/o having any knowledge or information of the true condition of affairs relative to the property of Peña y Gomiz and its administration) paid to Federico

at the latter’s request, derived from the property of the deceased, which Federico has not returned despite demands upon him.

Federico Hidalgo alleged:

1. That prior to March 22 (when Federico left for Spain for treatment), Federico came, rendered accounts to his principal, and on the date when he embarked for Spain rendered the accounts pertaining to the years 1892-1893, which were those that yet remained to be forwarded, and transmitted to him a general statement of accounts from November 18, 1887, to December 31, 1893, with a balance of P6,774.50 in favor of Peña y Gomiz, which remained in the control of the acting administrator, Antonio Hidalgo; when Federico left these Islands, he has not again intervened nor taken any part directly or indirectly in the administration of the property of Peña y Gomiz, the latter's administrator by express authorization having been Antonio Hidalgo, who later delegated his powers to Francisco Hidalgo; that from 1887 to December 31, 1893, which accounts the plaintiff approved without any protest whatever and received to his entire satisfaction the balance due and the vouchers and documents and documents relating to the property of the deceased Peña y Gomiz and issued to Federico the proper acquaintance therefor.

2. that Jose de la Peña y Gomiz, on several occasions ordered Federico Hidalgo through Fr. Caviedas, to collect the interest from the principal amount from the caja general de depositos (General Deposit Bank) with the corresponding deposit receipt and the draft on London for their transmittal to Peña y Gomiz: all of which was performed by Federico from the Chartered Bank of India, Australia and China and delivered the draft, together with the receipt from the General Deposit Bank, to Fr. Caviedas, and to again deposit the P5,500, in the Bank in Peña y Gomiz's own name, then Fr. Caviedas delivered to Federico, by order of Peña y Gomiz, the deposit receipt for P5,500 with the request that he withdraw from the General Deposit Bank the capital and accrued interest, which amounted altogether to P5,775, and that he deliver this amount to Father Caviedas, which he did, in order that it might be remitted to Peña y Gomiz.

3. The defendant denied each of the allegations contained in the 3rd and 4th causes of action, and avers that they are all false and calumnious.

As a counterclaim, Federico alleges that Peña y Gomiz owed him P4K with 6%interest p.a., and P3,600, and on the plaintiff's being presented with the receipt subscribed by his father, Peña y Gomiz, evidencing his debt, plaintiff freely and voluntarily offered to exchange for the said receipt another document executed by him, and transcribed in the complaint and that plaintiff has not paid him the said sum, with the exception of P2K.

TC: Federico Hidalgo owed plaintiff P37,084.93; plaintiff was not entitled to recover any sum from Federico for the second, third, and fourth causes of action; plaintiff owed Federico P10,155, which Federico was entitled to deduct from the sum he owed plaintiff. Judgment was against Federico to pay P26,629.93, with 6% interest p.a. from May 23, 1906, and the costs.

Plaintiff prayed for the execution of the judgment, but Federico solicited a suspension of the issuance of the writ of execution until his motion for appeal is approved, which was granted upon the defendants giving a bond for P34K.

Issue: WON Federico is liable to the plaintiff-administrator of the estate for the amounts covering his administration, that of Antonio, and that of Francisco

Held: NO. Federico Hidalgo is only liable for the results and consequences of his administration during the period when the said property was in his charge, and therefore his liability cannot extend beyond the period of his management.

On renunciation of agency by Federico Hidalgo

From the procedure followed by Federico Hidalgo, it is logically inferred that he had definitely renounced his agency was duly terminated, according to the provisions of article 1732 of CC, because, although in the said letter of March 22, 1894, the word "renounce" was not employed in connection with the agency or power of attorney executed in his favor, yet when the agent informs his principal that for reasons of health and by medical advice he is about to depart from the place where he is exercising his trust and where the property subject to his administration is situated, abandons the property, turns it over a third party, without stating when he may return to take charge of the administration, renders accounts of its revenues up to a certain date, December 31, 1893, and transmits to his principal a general statement which summarizes and embraces all the balances of his accounts since he began to exercise his agency to the date when he ceased to hold his trust, and asks that a power of attorney in due form in due form be executed and transmitted to another person who substituted him and took charge of the administration of the principal's property, it is then reasonable and just to conclude that the said agent expressly and definitely renounced his agency.

This renouncement was confirmed by the subsequent procedure, as well as of the agent as of the principal, until the latter died, on August 2, 1902, since the principal Peña did not disapprove the designation of Antonio Hidalgo, nor did he appoint another, nor send a new power of attorney to the same, as he was requested to by the previous administrator who abandoned his charge; and the trial record certainly contains no proof that Federico, since he left these Islands until his return, took any part whatever, directly or even indirectly, in the said administration of the principal's property, while Antonio Hidalgo was the only person who was in charge of the aforementioned administration of De la Peña y Gomiz's property and the one who was to represent the latter in his business affairs, with his tacit consent. Antonio Hidalgo acted in the matter of the administration of the property of Jose de la Peña y Gomiz by virtue of an implied agency derived from the latter, in accordance with article 1710 of CC.

On receipt of letters by Pena y Gomiz written by Federico

The statements of Federico regarding the letters he sent to his principal of his designation of Antonio as administrator since he will leave for Spain for health reasons were proven by letters, but denied by plaintiff, but on the introduction of a copy thereof by Federico at the trial, it was admitted without objection by the plaintiff; this letter of the 22d of March, 1894 shows conclusively that it was received by the

deceased, and the letter of transmittal of the 22nd of March, 1894, one of the several letters written by Hidalgo, which Fr. Gomiz, affirms that he saw among the papers of the deceased Peña, the dates were from 1890-1894; From all of which it is deduced that Peña y Gomiz was informed of the departure of his agent from these Islands for reasons of health and because of the physician's advice, of the latter's having turned over the administration of the property to Antonio Hidalgo, and of his agent's the defendant's petition that he send a new power of attorney to the substitute.

On implied agency of Antonio Hidalgo

The proof of the tacit consent of the principal, Jose de la Peña y Gomiz consists in that Peña, knowing that on account of the departure of Federico from the Philippines, requested him to send a new power of attorney in favor of the said Antonio, nevertheless, Peña y Gomiz saw fit not to execute nor transmit any power of attorney whatever to the new administrator of his property and remained silent for nearly 9 years; in permitting Antonio Hidalgo to administer his property in this city during such 8 years, it is inferred, from the procedure and silence of the owner thereof, that he consented to have Antonio Hidalgo administer his property, and in fact created in his favor an implied agency, as the true and legitimate administrator.

On lack of authority to substitute the power of agency

The designation of Antonio Hidalgo was not made as a result of substitution of the power of attorney executed by Peña in favor of the defendant, but in order that the principal's property should not be abandoned.

As to Antonio Hidalgo’s liability

Federico Hidalgo could not and can not be responsible for the administration of the property which was administered by Antonio during 8 years and some months because of the sole fact of his having turned over to the latter the administration of the said property on his departure for Spain. The care of the property and interests of another does not require sacrifice on the part of the agent of his own life and interests. Federico was obliged to deliver the said property belonging to Peña y Gomiz to Antonio for good and valid reasons, and reasons, and in proceeding in the manner he complied with the duty required of him by law and justice and acted as a diligent agent.

As to liability of Federico for Francisco’s administration

If Federico is not responsible for the results of the administration by Antonio, neither is he responsible for that performed by Francisco, as the latter was not even chosen by Federico, who, on October 1, 1902, when Francisco took charge of Peñas' property that had been turned over to him by Antonio, was in Spain and had no knowledge of nor intervention in such delivery; wherefore Federico can in no

manner be obliged to pay to the plaintiff any sum that may be found owing by Francisco.

Francisco Hidalgo rendered accounts to the plaintiff of the administration of the property in question during the third period (for 1 year, 3 months) and that he delivered to the plaintiff the balance of P1,280.03, for which the latter issued to Francisco the document written in his own handwriting and the signature which, affixed by himself, he admitted in his testimony was authentic—plaintiff was not entitled to recover any sum whatever for the rents pertaining to the administration by Francisco.

As to last partial accounts made by Federico

Peña y Gomiz remained silent and offered no objection to the said accounts and did not manifest his disapproval of the same nor of the general statement; and when his son, the plaintiff, came to this city in company with Federico from Spain and arrived in Manila, the former, for the purpose of taking charge of the estate left by his father, and after the plaintiff had examined the accounts kept by Federico, he approved them and therefore issued in favor of Federico the in which Peña y de Ramon acknowledged having received from his deceased father's old agent the accounts, balances, and vouchers to his entire satisfaction, and gave an acquittance in full settlement of the administration that had been commended to the defendant Hidalgo. This document contains no proof of any kind of Federico Hidalgo's having obtained it by coercion, intimidation, deceit, or fraud; neither is its shown to have been duly impugned as false, criminally or civilly.

With respect to the responsibility contracted by the defendant,

It is not enough that the agent should have satisfactorily rendered the accounts pertaining to his trust, but it is also indispensable that it be proved that he had paid to his principal, or to the owner of the property administered, the balance resulting from his accounts. This balance amounts to P6,774.50. It was the imperative duty of Federico to transmit this to his principal, Peña y Gomiz, as the final balance of the accounts of his administration and failure so to do and delivery of the same to his successor, Antonio, he acted improperly, and must pay the same to the plaintiff.

As to the 2nd cause of action of plaintiff

The 2 amounts of P3K each, expressed in two deposit receipts received from De la Peña y Gomiz by Fr. Caviedas and later delivered to Francisco Hidalgo for the successive operations of remittance and redeposit in the bank before mentioned, are the same and only ones that were on deposit in the said bank in the name of their owner, Peña y Gomiz. Hence, plaintiff was not entitled to recover any sum for the second and third causes of action, notwithstanding that plaintiff withdrew the third cause of action.

Liability of Pena y Gomiz to Federico Hidalgo

Peña y Gomiz owed, during his lifetime, to Federico Hidalgo, P7,600, P4K of which were to bear 6% interest p.a., and the remainder w/o any interest, and that, notwithstanding the lapse of the period of 3 years, from November, 1887, within which he bound himself to repay the amount borrowed, and in spite of his creditor's demand of payment, made by registered letter, the debt was not paid up to the time of the debtor's death. But, to deduct the P2K which Federico received from the plaintiff on account of the credit.

As to interest

It was not expressly stipulated that either the balance of the last account rendered by the Federico in 1893, or the sum which the plaintiff bound himself to pay to Federico, in the instrument of 1904, should bear interest; nor is there proof that a demand was made, on the part of the respective creditors, until the date of complaint, on the part of the plaintiff, and that of the counterclaim, on the part of Federico.

FEDERICO VALERA, Plaintiff-Appellant , vs. MIGUEL VELASCO, Defendant-Appellee. - Chachu

FACTSs

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.

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.

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 and udgment was rendered in his favor 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. virtual law library

Subsequently, the plaintiff sold his right of redemption to one Eduardo Hernandez, for the sum of P200. This purchaser conveyed the same right of redemption, for the sum of P200, to the plaintiff himself, Federico Valera. virtual law library

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 came to vest the said defendant.

ISSUE 1. WON one of the ways of terminating an agency is by the express or tacit renunciation of the agent and WON 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- YES

Article 1732 of the Civil Code reads as follows:

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.

And article 1736 of the same Code provides that:

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.

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 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. 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. law library

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.

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.ch

ISSUE 2: WON the sale to Hernandez by Valero is valid- NO

It is deemed unnecessary to discuss the validity of the sale made by Federico Valera to Eduardo Hernandez of his right of redemption in the sale of his usufructuary right made by the sheriff by virtue of the execution of the judgment in favor of Miguel Velasco and against the said Federico Valera; and the same thing is true as to the validity of the resale of the same right of redemption made by Eduardo Hernandez to Federico Valera; inasmuch as Miguel Velasco's purchase at public auction held by virtue of an execution of Federico Valera's usufructuary right is valid and legal, and as neither the latter nor Eduardo Hernandez exercised his right of redemption within the legal period, the purchaser's title became absolute.

Moreover, the defendant-appellee, Miguel Velasco, having acquired Federico Valera's right of redemption from Salvador Vallejo, who had acquired it at public auction by virtue of a writ of execution issued upon the judgment obtained by the said Vallejo against the said Valera, the latter lost all right to said usufruct. law library

And even supposing that Eduardo Hernandez had been tricked by Miguel Velasco into selling Federico Valera's right of repurchase to the latter so that Salvador Vallejo might levy an execution on it, and even supposing that said resale was null for lack of consideration, yet, inasmuch as Eduardo Hernandez did not present a third party claim when the right was levied upon for the execution of the judgment obtained by Vallejo against Federico Vallera, nor did he file a complaint to recover said right before the period of redemption expired, said Eduardo Hernandez, and much less Federico Valera, cannot now contest the validity of said resale, for the reason that the one-year period of redemption has already elapsed.

ISSUE 3: WON Miguel Velasco has to render a liquidation of accounts from March 31, 1923- NO

inasmuch as Velasco had acquired the rights of the plaintiff by purchase at the execution sale, and as purchaser, he was entitled to receive the rents from the date of the sale until the date of the repurchase, considering them as part of the redemption price; but not having exercised the right repurchase during the legal period, and the title of the repurchaser having become absolute, the latter did not have to account for said rents.

CONSOLACION L. RAMOS, administratrix-appellant, vs. BENIGNO A. CAOIBES, attorney-in-fact-appellee.|G.R. No. L-5142|  February 26, 1954|JUGO, J.: - Hazel

Principal: Concepcion RamosATTY-in fact: Benigno A. Caoibes

QUICK SUMMARY:Concepcion Ramos executed 2 documents. The first is a power of attorney appointing Caoibes to collect from Phil. War damage Commission any claim regarding property lost during the last war. The 2nd document is an affidavit stating that any claim made- half to be given to her sister and the other to Caoibes. Before Ramos died, she filed a claim with the Commission. This was encashed by Caoibes after death of Ramos thru the power of atty. Administratrix Consolacion Ramos discovered the collection made by Caoibes. She filed a motion with the court asking that Caoibes be ordered to deposit the sum of P501.62 with the clerk of court. Caoibes was willing to deliver P250. This was refused by administratrix. TC ruled in favour of Caoibes. SC reversed. Held: When Caoibes made use of the power of attorney, his principal, Concepcion was already dead

1. Concepcion Ramos Dipusoy executed before a notary public two documents which have been marked as Annex "A" and Annex "B.

2. ANNEX A- a power of attorney- constituting and appointing Mr. Benigno A. Caoibes.. ”to collect any amount due me(Ramos) from the Philippine War Damage Commission, regarding my claim filed for my properties that were lost during the last war in Balayan, Batangas, to cash checks, warrants and to sign receipts, vouchers, documents which shall be necessary to the said purpose.”

3. ANNEX B- an affidavit stating that “at in case payment of any amount or amounts collected from the Philippine War Damage Commission, my nephew and at the same time attorney-in-fact, shall give my sister Teopista Vda. de Basa one-half , of the corresponding amount and the other half shall be given to my nephew and niece Mr. and Mrs. Benigno A. Caoibes”

4. Concepcion Ramos died on August 19, 1948, leaving a will dated January 7, 1927 admitted to probate on October 4, 1948, in which she ordered that the credits due to her be distributed among the children of the deceased Antonino Ramos, namely, Consolacion, Ramon, Socorro and Cirila

5. One year before she died, Concepcion Ramos filed with the War Damage Commission a claim.

6. The Commission issued a check, in the amount of P501.62, payable to the deceased Concepcion Ramos. This

check was returned to the Commission and substituted by the latter on November 10, 1948, for the same amount, but payable to Benigno A. Caoibes, who had presented to said entity Annexes "A" and "B, in order to exchange the first check which he cashed for himself.

7. Annexes "A" and "B" were presented to the Commission by Caoibes after the death of Concepcion.

8. The administratrix, Consolacion L. Ramos, the appellant herein, discovered the collection made by Caoibes when she saw the note "previous payment" which appeared in the account sent to her by the Commission on October 13, 1950.

9. She filed a motion with the court asking that Caoibes be ordered to deposit the sum of P501.62 with the clerk of court.

10.Caoibes contended that, by virtue of Annex "A", and Annex "B", he had the right to retain, for himself, half of the sum of P501.62. He was however willing to deliver to the clerk the sum of P250.81

11.TC: ordered Caoibes to deposit P250.81 at the disposal of the administratrix and the other parties in this intestate proceedings

ISSUE: WON atty-in-fact Caoibes is obliged to deliver the full amount of the check P501.62.

HELD. YES

RATIO- Annex A is only a power of attorney. Caoibes, as agent,

had the obligation to deliver the amount collected by virtue of said power to his principal, Concepcion, or, after her death, to the administratrix of her estate, Consolacion.

- There is absolutely no cession of rights made in favor of Caoibes in Annex "A", and under Article 1711 of the old Civil Code (which was in force at the time of the transaction), the contract of agency is presumed to be gratuitous, unless the agent is a professional agent. There is no proof that Caoibes was such.

- Furthermore, according to Article 1732 of said Code, an agency is terminated, among other causes, by the death of the principal or of the agent. When Caoibes made use of the power of attorney, his principal, Concepcion was already dead.

- Coming now to Annex "B", the alleged document of donation, it should be noted that it is not a donation of real but of personal property and is governed by article 632 of the old Civil Code.

- The alleged donation was made in writing but it has not been accepted in the same form, and consequently, has no validity. It cannot be considered a donation upon valuable consideration, for no services nor any valuable consideration had passed from the donees to the donor.

- The mere fact that Caoibes collected the claim from the War Damage Commission is not such a service as to require compensation. Caoibes did not even prepare the claim.

- The court below in its order of June 15, 1951, said that it "having had the opportunity to personally confer with the parties and Attorney Caoibes being agreeable to turn over the amount of P250.81 to the Clerk of this Court in final

settlement of this matter - it is ordered that the said Atty. Caoibes deposit the amount of P250.81 with the Clerk of this Court, the said amount to be at the disposal of the administratrix and the other parties in these intestate proceedings. With this order, the matter before the administratrix never consented to the reduction of the claim.

Dispositive: reversed and Benigno A. Caoibes is ordered to deposit with the Clerk of Court of Batangas the sum of P501.62 to be at the disposal of the administratrix in her capacity as such, without pronouncement as to costs. So ordered.chanroblesvirtualawlibrary chanrobles virtual law library

Herrera v Luy Kim GuanG.R. No. L-17043 January 31, 1961

Quick Summary: Plaintiff is the legitimate daughter of the Luis Herrera, previous owner of three lots with improvements. Prior to leaving for China, Luis Herrera executed in 1931 a deed of General Power of Attorney which authorized and empowered the defendant Kim Guan, among others to administer and sell these properties. Sale of the lots were effected in 1931, 1937 and 1939. As admitted by both parties (plaintiffs and defendants), Luis Herrera is now deceased, but as to the specific and precise date of his death the evidence of both parties failed to show. Plaintiff posits that all the transactions mentioned in the preceding quoted portion of the decision were fraudulent and were executed after the death of Luis Herrera and, consequently, when the power of attorney was no longer operative. The court held the sale valid as plaintiff was unable to satisfy the court in proving that Herrera died in 1936. The notice letter from “Candi” did not even name Luis Herrera and was properly rejected by the court. There was also positive testimony from Chung Lian that he saw Luis Herrera alive when he visited him in 1940. Even ranting 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 prince 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.

Facts: The Plaintiff Natividad Herrera is the legitimate daughter of Luis Herrera, now deceased and who died in China sometime after he went to that country in the last part of 1931 or early part of 1932. The said Luis Herrera in his lifetime was the owner of three (3) parcels of land and their improvements, known as Lots 1740, 4465 and 4467.

Before leaving for China, however, Luis Herrera executed on December 1, 1931, a deed of General Power of Attorney, Exhibit 'B', which authorized and empowered the defendant Kim Guan,

among others to administer and sell the properties of said Luis Herrera.

These lots were later sold by the defendant Luy Kim in his capacity as attorney-in-fact of the deceased Luis Herrera to Luy Chay on September 11, 1939. Transfer Certificate of Title was issued to Luy Chay by virtue of deed of sale. On August 28, 1941, to secure a loan of P2,00 a deed of mortgage to the Zamboanga Mutual Building and Association was executed by Luy Chay. On January 31, 1947, the said Luy Chay executed a deed of sale in favor of Lino Bangayan.

One half (½) participation in the two lots, was sold to Nicomedes Salaza and to the defendant Luy Kim Guan. On August 4, 1937, the defendant Luy Kim Guan and Nicomedes Salazar executed a deed of mortgage in favor of Bank of the Philippine Islands to secure a loan of P3,500.00. On August 17, 1937, the defendant Luy Kim Guan and Nicomedes Salazar sold Lot 4465 to Carlos Eijansantos . Nicomedes Salazar sold his one half (½) interest on Lot 4467 to the defendant Lino Bangayan for P3,000.00 on February 22, 1949 and the corresponding Transfer Certificate of Titlewas issued to Lino Bangayan and to Luy Kim Guan, both becoming co-owners in equal shares.

As admitted by both parties (plaintiffs and defendants), Luis Herrera is now deceased, but as to the specific and precise date of his death the evidence of both parties failed to show. It is the contention of plaintiff-appellant that all the transactions mentioned in the preceding quoted portion of the decision were fraudulent and were executed after the death of Luis Herrera and, consequently, when the power of attorney was no longer operative.

Issue: Were the sale transactions null and void and of no effect because they were executed by the attorney-in-fact after the death of his Principal? Did Kim Guan cease being the agent of Luis Herrera upon his death?

Held: 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 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. On 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.

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 prince 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.

Del Rosario vs. Abad G.R. No. L-10881 Padilla, J.- Elaine

Summary:Within the prohibitive period of five years, the homesteader mortgaged the improvements of the homestead in favor of defendant. At the same time, he executed an "irrevocable special power of attorney coupled with interest" in favor of the mortgagee authorizhig him to sell the land. After the lapse of the prohibitive period, the mortgagor died leaving the mortgage debt unpaid. Thereafter, acting on the power of attorney, the mortgagee sold the land. Held: The power of attorney executed by the homesteader in favor of defendant did not create an agency with interest nor did it clothe the agency with irrevocable character. A mere statement in the power of attorney that it is coupled with interest is not enough. In what does such interest consist must be stated in the power of attorney. The mortgage 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 the principal, and the agent could no longer validly convey the land. Hence, the sale was null and void.

Facts: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, with an area of 9 hectares 43 aces and 14 centares in Nueva Ecija. 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. 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. 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. The vendee took possession of the parcel of land. The plaintiffs are the children and heirs of the late Tiburcio del Rosario, sought 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.

Issue: 

Can the attorney-in-fact validly sell the property even after the death of the principal? 

Held:NO. The encumbrance or alienation of lands acquired by free patent or homestead in violation of this section is null and void. Section 116 of the Public Land Act (Act No. 2874), under which the homestead was granted to the appellees' father, provides:"Lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of the issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations."

The power of attorney executed by Tiburcio del Rosario in favor of Primitivo Abad does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character. A mere statement in the power of attorney that it is coupled with an interest is not enough. 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 latter was null and void. But granting that the irrevocable power of attorney was lawful and valid it would subject the parcel of land to all encumbranceas it was in violation of the law that prohibits the alienation or encumbrance of lands acquired by homstead 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. As the sale to Teodorico Abad is null and void, the appellees cannot 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 Primitivo 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.The judgment appealed from is affirmed, with costs against the appellants.

Estate of the deceased Gabina Labitoria. ENRIQUE M. PASNO, petitioner-appellee, vs. FORTUNATA RAVINA and PONCIANA RAVINA, oppositors-appellants. PNB, appellant.MALCOLM, J.: - Kat

There are two appeals in this case. One appeal has been taken by Ravina to the legalization of the will of Gabina Labitoria, and concerns the validity of that will. The other appeal has been taken by PNB and concerns the survivability of the right of sale of the mortgaged property under special power while the mortgaged property is in custodia legis. We will deal with these appeals separately.

I. PASNO vs. RAVINA. Validity of Gabina Labitoria's will.

As the stenographic notes have not been written up and elevated to this court, any discussion of the evidence is rendered impossible.

Issue: WON the admitted fact that the will was executed on July 27, 1928, although stating that it was executed on February 6, 1926, invalidates the will.

Held: NO. As said by the TC judge, the reason for the error was on account of the will being in great part a reproduction of another will of February 6, 1926, and inadvertently retaining this date.

Section 618, as amended, of the Code of Civil Procedure prescribes the requisites necessary to the execution of a valid will. The law does not require that the will shall be dated. Accordingly, a will without a date is valid. So likewise an erroneous date will not defeat a will.

TC was right in admitting the will of Labitoria to probate.

II. PASNO vs. PNB. Right of the mortgagee PNB to foreclose the mortgage in its favor executed by Gabina Labitoria during her lifetime now that the mortgaged property is in the hands of an administrator.

Facts:

Gabina Labitoria during her lifetime mortgaged 3 parcels of land to the PNB to secure an indebtedness of P1,600. It was stipulated in the mortgage that the mortgagee "may remove, sell or dispose of the mortgaged property or any buildings, improvements or other property in, on or attached to it and belonging to the mortgagor in accordance with the provisions of Act No. 3135 or take other legal action that it may deem necessary." The mortgagor died, and a petition was presented in court for the probate of her last will and testament. During the pendency of these proceedings, a special administrator was appointed by the TC who took possession of the estate of the deceased, including the 3 parcels of land mortgaged to the PNB. The estate having failed to comply with the conditions of the

mortgage, the PNB asked the sheriff of Tayabas to proceed with the sale of the parcels of land. When the attorney for the special administrator received notice of the proposed action, he filed a motion in court in which an order was asked requiring the sheriff to vacate the attachment over the mortgaged properties and to abstain from selling the same which the TC granted.

Issue: WON the Power of sale in deed of mortgage can be enforced extrajudicially when the mortgagor died prior to the enforcement of the same

Held: NO.

The mortgage makes special reference to Act No. 3135, which regulates the sale of property under special powers inserted in or annexed to real-estate mortgages. It fails to make provision regarding the sale of mortgaged property which is in custodia legis. Under these circumstances, it would be logical to suppose that the general provisions of Philippine law would govern this latter contingency. Statutes in pari materia are to be read together. The legislative body which enacted Act No. 3135 must be presumed to have been acquainted with the provisions of such a well known law as the Code of Civil Procedure and to have passed Act No. 3135 with reference thereto.

PNB practically concedes that the law applicable to the case is section 708 of the Code of Civil Procedure. The cited section reads:

"A creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon the security and prosecute his claim before the committee, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to realize upon the security, he may prove his deficiency judgment before the committee against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudge it to be for the best interest of the estate that such redemption shall be made."

The law provides two remedies. The creditor here is not taking advantage of the first remedy for the mortgage security has not been abandoned. Rather is the second remedy invoked but until now unsuccessfully since the mortgagee has not begun an ordinary action in court to foreclose the mortgage making the special administrator a party defendant.

The power of sale given in a mortgage is a power coupled with an interest which survives the death of the grantor. In Carter vs. Slocomb, it was held that a sale after the death of the mortgagor is valid without notice to the heirs of the mortgagor. However that may be, conceding that the power of sale is not revoked by the death of the mortgagor, nevertheless in view of the silence of Act No. 3135 and in view of what is found in section 708 of the Code of Civil Procedure, it would be preferable to reach the conclusion that the mortgagee with a power of sale should be made to foreclose the mortgage in conformity with the procedure pointed out in section 708 of the Code of Civil Procedure. That would safeguard the interests of the estate by putting the estate on notice while it would not jeopardize any rights of the mortgagee. The only result is to suspend temporarily the power to sell so as not to interfere with the orderly administration of the estate of a decedent.

Affirmed.

Separate Opinions| STREET, VILLAMOR, and OSTRAND, JJ., concurring and dissenting:

It is our opinion that, under such a power of sale in deed of mortgage, the sale may be proceeded with under the provisions of Act No. 3135, which is expressly referred to in the mortgage now under consideration.

Section 708 of the Code of Civil Procedure, if attentively examined, it will be seen that the bringing of an action to foreclose is necessary only when the mortgagee wishes to obtain a judgment over for the deficiency remaining unpaid after foreclosure is effected.

Part of section 708:

Or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate.

The alternative here contemplated is a foreclosure under power of sale contained in the mortgage. It must be so, since there are no other modes of foreclosure known to the law than by ordinary action and foreclosure under power of sale in deed of mortgage, and the procedure by action is covered in that part of section 708 which immediately precedes the words which we have quoted above. It will be noted that the result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate.

The policy of the court in requiring foreclosure by action in case of the death of a mortgagor, where a power of sale is inserted in the mortgage, will prove highly prejudicial to the estates of deceased mortgagors. The creditor can recover, for attorney's fees and expenses, whatever the court will allow as reasonable, within the stipulated limit. On the other hand, if an extrajudicial

foreclosure is effected under the power of sale, the expenses of foreclosure are limited to the cost of advertising and other actual expenses of the sale, not including the attorney's fee.

If foreclosure is effected extrajudicially under the power, in conformity with the provisions of Act No. 3135, mortgagor has a full year, from the date of the sale, within which to redeem the property. On the other hand, the provisions of the Code of Civil Procedure on foreclosure of mortgages by action allows no fixed period for redemption after sale; although, in the closing words of section 708 of the Code of Civil Procedure the court is authorized to permit the administrator to redeem mortgaged property, this refers to redemption to be effected before the foreclosure becomes final. The decision in this case will impose a burden upon the estates of deceased persons who have mortgaged real property for the security of debts, without any compensatory advantage.