AGENCY DIGESTED CASES

JERNEL JANZ P. TRINIDAD

SEVERINO VS SEVERINO
FACTS:
This is an action brought by the plaintiff as the alleged natural daughter and sole heir of
one Melecio Severino, deceased, to compel the defendant Guillermo Severino to convey to her
four parcels of land described in the complaint, or in default there of to pay her the sum of
P800,000 in damages for wrongfully causing said land to be registered in his own name. The
evidence shows that Melecio Severino died on the 25th day of May, 1915; that some 428
hectares of the land were recorded in the Mortgage Law Register in his name in the year 1901
by virtue of possessory information proceedings instituted on the 9th day of May of that year by
his brother Agapito Severino in his behalf; that during the lifetime of Melecio Severino the land
was worked by the defendant, Guillermo Severino, his brother, as administrator for and on
behalf of the said Melecio Severino; that after Melencios death, the defendant Guillermo
Severino continued to occupy the land; that in 1916 a parcel survey was made of the lands in
the municipality of Silay, including the land here in question, and cadastral proceedings were
instituted for the registration of the land titles within the surveyed area; that in the cadastral
proceedings the land here in question was described as four separate lots numbered as above
stated; that Roque Hofilea, as lawyer for Guillermo Severino, filed answers in behalf of the
latter in said proceedings claiming the lots mentioned as the property of his client; that no
opposition was presented in the proceedings to the claims of Guillermo Severino and the court
therefore decreed the title in his favor, in pursuance of which decree certificates of title were
issued to him in the month of March, 1917.
It may be further observed that at the time of the cadastral proceedings the plaintiff Fabiola
Severino was a minor; that Guillermo Severino did not appear personally in proceedings and did
not there testify; that the only testimony in support of his claim was that of his attorney Hofilea,
who swore that he knew the land and that he also knew that Guillermo Severino inherited the
land from his father and that he, by himself, and through his predecessors in interest, had
possessed the land for thirty years.
ISSUE:
Whether or not the trial court erred in concluding that the evidence adduced by plaintiff and
intervenor established that defendant was guilty of fraud in procuring title to the lands in
question in his name.
HELD:
Upon no point can the defendant's contentions be sustained. It may first be observed that this is
not an action under section 38 of the Land Registration Act to reopen or set aside a decree; it is
an action in personam against an agent to compel him to return, or retransfer, to the heirs or the

estate of its principal, the property committed to his custody as such agent, to execute the
necessary documents of conveyance to effect such retransfer or, in default thereof, to pay
damages.

That the defendant came into the possession of the property here in question as the agent of
the deceased Melecio Severino in the administration of the property, cannot be successfully
disputed. His testimony in the case of Montelibano vs. Severino (civil case No. 902 of the Court
of First Instance of Occidental Negros and which forms a part of the evidence in the present
case) is, in fact, conclusive in this respect. He there stated under oath that from the year 1902
up to the time the testimony was given, in the year 1913, he had been continuously in charge
and occupation of the land as the encargado or administrator of Melecio Severino; that he had
always known the land as the property of Melecio Severino; and that the possession of the latter
had been peaceful, continuous, and exclusive. In his answer filed in the same case, the same
defendant, through his attorney, disclaimed all personal interest in the land and averred that it
was wholly the property of his brother Melecio.
Neither is it disputed that the possession enjoyed by the defendant at the time of obtaining his
decree was of the same character as that held during the lifetime of his brother, except in so far
as shortly before the trial of the cadastral case the defendant had secured from his brothers and
sisters a relinguishment in his favor of such rights as they might have in the land.
The relations of an agent to his principal are fiduciary and it is an elementary and very old rule
that in regard to property forming the subject-matter of the agency, he is estopped from
acquiring or asserting a title adverse to that of the principal. His position is analogous to that of a
trustee and he cannot consistently, with the principles of good faith, be allowed to create in
himself an interest in opposition to that of his principal or cestui que trust. Upon this ground, and
substantially in harmony with the principles of the Civil Law (see sentence of the supreme court
of Spain of May 1, 1900), the English Chancellors held that in general whatever a trustee does
for the advantage of the trust estate inures to the benefit of the cestui que trust. (Greenlaw vs.
King, 5 Jur., 18; Ex parte Burnell, 7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex parte James, 8
Ves., 337; Oliver vs. Court, 8 Price, 127.) The same principle has been consistently adhered to
in so many American cases and is so well established that exhaustive citations of authorities are
superfluous and we shall therefore limit ourselves to quoting a few of the numerous judicial
expressions upon the subject. The principle is well stated in the case of Gilbert vs. Hewetson
(79 Minn., 326):
A receiver, trustee, attorney, agent, or any other person occupying fiduciary relations respecting
property or persons, is utterly disabled from acquiring for his own benefit the property committed
to his custody for management. This rule is entirely independent of the fact whether any fraud
has intervened. No fraud in fact need be shown, and no excuse will be heard from the trustee. It
is to avoid the necessity of any such inquiry that the rule takes so general a form. The rule
stands on the moral obligation to refrain from placing one's self in positions which ordinarily
excite conflicts between self-interest and integrity. It seeks to remove the temptation that might
arise out of such a relation to serve one's self-interest at the expense of one's integrity and duty

to another, by making it impossible to profit by yielding to temptation. It applies universally to all

who come within its principle.
THOMAS VS PINEDA
FACTS
Before the war, Pineda was Thomas agent and trustee, tasked to manage the latters business,
Silver Dollar Caf. To protect the business from being seized by Japanese forces, it was
agreed that Pineda would pretend to be the buyer of the business with the secret understanding
in a written contract that such sale is fictitious and that after the war, the sale becomes null and
void. Blinded by greed, Pineda refused to make an accounting after the war and put up another
bar with the same name registered as its tradename, Silver Dollar Caf, to the exclusion of
Thomas business right to said tradename. Thomas bought the bar and restaurant known as
Silver Dollar Cafe located at Plaza Santa Cruz, Manila and employed Pineda, the formerowners
employee, as a bartender,
He eventually became cashier and manager of the business. The outbreak of war found him
holding the latter position with a monthly compensation of P250. To prevent the business and its
property from falling into enemy hands, David Thomas on or about December 28, 1941, made a
fictitious sale thereof to the Pineda for P10k; and to clothe the sale with a semblance of reality,
the bill of sale was antedated November 29, 1941. They executed another agreement in secret,
stating that the sale is fictitious, was prepared and executed only for the purpose of avoiding the
seizure of the said establishment if and when the enemy forces entered the City of Manila. Upon
the restoration of peace and order, the said document automatically becomes null and void and
of no effect, the P10k having been not paid. Pineda managed the business as Thomas
employee or trustee during the Japanese occupation of the City of Manila. But on February 3,
1945, the building was destroyed by fire but the defendant had been able to remove some of its
furniture, the cash register, the piano, the safe, and a considerable quantity of stocks to a place
of safety. According to the defendant, all of these goods were accounted for and turned over to
the plaintiff after the City of Manila had been retaken by the American Forces. On May 8, 1945,
a bar was opened on Bambang, under the old name of Silver Dollar Cafe. Housed in a
makeshift structure, which was erected on a lot belonging to the defendant, the Bambang shop
was conducted for about four months, i.e., until September of the same year, when it was
transferred to the original location of the Silver Dollar Cafe at No. 15 Plaza Sta. Cruz. It is
asserted and denied that they both took a more or less active part in the management of the
post-liberation business, on a share of the profits basis, until about the middle of September of
the following year, when, it is also alleged, Thomas brought a CPA to the establishment for the
purpose of examining the books of the business. Pineda threatened them with a gun if they
persisted in their purpose. Thomas forthwith filed the present action, and set up a separate
business under the same trade-name, Silver Dollar Cafe, on a different location (Echague
Street). Pineda remained with the Silver Dollar Cafe at Plaza Sta. Cruz, which was burn down
on December 15, 1946. Pineda put up another business registered with the same name on
September 27, 1945, prompting the second COA. Defendant Pineda endeavored to prove that
there was athird, verbal, agreement, the import of which was that he was to operate the
business with no liability other than to turn it over to the plaintiff Thomas as he would find it after

the war. But such understanding would be at war with the care and precaution which the
Thomas took to insure his rights in the business and its assets. That all the proceeds from the
business had been used to support Thomas and his daughters and to entertain or bribe
Japanese officers and civilians dispense with Pineda's duty to account. It was wrong for the
court below to declare that there were no surplus profits, and to call matters even. Furthermore,
the following tends to prove that it is not true that Thomas no longer was connected to the bar: After release from prison camp, Thomas immediately took to opening the new bar in Bambang.
The Bambang bar was named Silver Dollar Caf as well Thomas was named as lessee in
the reopened Sta. Cruz bar, personally paid advanced rent to lessor, and in most months the
rentals were paid for in the name of Thomas (except when BIR required it to be in the name of
Pineda for 3 months only to be reissued in the name of Thomas) - The business cards that
Pineda himself had caused to be printed showed him in the first as manager, and not in the
second; both cards showed Thomas a sole prop - Pineda handed Thomas various amounts
totaling 24,100 without even requiring receipt
ISSUE: Whether or not Pineda register the trade name Silver Dollar Caf for the second bar
as his own.
HELD: NO - "The relations of an agent to his principal are fiduciary and it is an elementary and
very old rule that in regard to property forming the subject matter of the agency, he is estopped
from acquiring or asserting a title adverse to that of principal. His position is analogous to that of
a trustee and he cannot consistently, with the principles of good faith, be allowed to create in
himself an interest in opposition to that of his principal or cestui que trust. A receiver, trustee,
attorney, agent or any other person occupying fiduciary relations respecting property or persons
utterly disabled from acquiring for his own benefit the property committed to his custody for
management. This rule is entirely independent of the fact whether any fraud has intervened. No
fraud in fact need be shown, and no excuse will be heard from any such inquiry that the rule
takes so general form. The rule stands on the moral obligation to refrain from placing one's self
in position which ordinarily excite conflicts between self-interest at the expense of one's integrity
and duty to another, by making it possible to profit by yielding to temptation.
CUI VS CUI
FACTS:
Jesus and Antonio are the legitimate children of Don Mariano Cui and Doa Antonia
Perales who died intestate in1939. Jesus alleged that during the marriage of Don Mariano and
Dona Antonia, their parents acquired certain properties in the City of Cebu, namely, Lots Nos.
2312, 2313 and 2319. Upon the death of their mother, the properties were placed under the
administration of their dad. That while the latter was 84 years of age, Antonio by means of
deceit, secured the transfer to themselves the said lots without any pecuniary consideration;
that in the deed of sale executed on March 8, 1946, Rosario Cui appeared as one of the
vendees, but on learning of this fact she subsequently renounced her rights under the sale and
returned her portion to Don Mariano Cui by executing a deed of resale in his favor on October
11, 1946; that defendants, fraudulently and with the desire of enriching themselves unjustly at
the expense of their father, Don Mariano Cui, and of their brothers and co-heirs, secured a loan

of P130,000 from the Rehabilitation properties, and with the loan thus obtained, defendants
constructed thereon an apartment building of strong materials consisting of 14 doors, valued at
approximately P130,000 and another building on the same parcels of land, which buildings were
leased to some Chinese commercial firms a monthly rental of P7,600, which defendants have
collected and will continue to collect to the prejudice of the plaintiffs; Jesus alleged that the sale
should be invalidated so far as the portion of the property sold to Antonio Cui is concerned, for
the reason that when that sale was effected, Antonio was then acting as the agent or
administrator of the properties of Don Mariano Cui. Jesus lays stress on the power of attorney
Exhibit L which was executed by Don Mariano in favor of Antonio Cui on March 2, 1946, wherein
the former has constituted the latter as his "true and lawful attorney" to perform in his name and
that of the intestate heirs of Doa Antonia Perales.
ISSUE:
WON the sale of the property to Antonio was valid.
HELD:
YES. While under article 1459 of the old Civil Code an agent or administrator is disqualified from
purchasing property in his hands for sale or management, and, in this case, the property in
question was sold to Antonio Cui while he was already the agent or administrator of the
properties of Don Mariano Cui, we however believe that this question cannot now be raised or
invoked.
The prohibition of the law is contained in article 1459 of the old Civil Code, but this prohibition
has already been removed.
Under the provisions of article 1491, section 2, of the new Civil Code, an agent may now buy
property placed in his hands for sale or administration, provided that the principal gives his
consent thereto. While the new Code came into effect only on August 30, 1950, however, since
this is a right that is declared for the first time, the same may be given retroactive effect if no
vested or acquired right is impaired (Article 2253, new Civil Code). During the lifetime Don
Mariano, and particularly on March 8, 1946, the herein appellants could not claim any vested or
acquired right in these properties, for, as heirs, the most they had was a mere expentancy. We
may, therefore, invoke now this practical and liberal provision of our new Civil Code even if the
sale had taken place before its effectivity.
VALERA VS VELASCO
FACTS:
The pertinent facts necessary for the solution of the questions raised by the above quoted
assignments of error are contained in the decision appealed from and are as follows:
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, civil
case No. 23447 of this court. Judgment was rendered in his favor on March 28, 1923, and after
the writ of execution was issued, the sheriff levied upon the plaintiff's right of usufruct, sold it at
public auction and adjudicated it to the defendant in payment of all of his claim.
Subsequently, on May 11, 1923, the plaintiff sold his right of redemption to one Eduardo
Hernandez, for the sum of P200 (Exhibit A). On September 4, 1923, this purchaser conveyed
the same right of redemption, for the sum of P200, to the plaintiff himself, Federico Valera
(Exhibit C).
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.
As the first two assignments of error are very closely related to each other, we will consider
them jointly.
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 on March 28, 1928 for the payment of said balance, more
than prove the breach of the juridical relation between them; for, although the agent has not
expressly told his principal that he renounced the agency, yet neither dignity nor decorum
permits the latter to continue representing a person who has adopted such an antagonistic
attitude towards him. When the agent filed a complaint against his principal for recovery of a
sum of money arising from the liquidation of the accounts between them in connection with the
agency, Federico Valera could not have understood otherwise than that Miguel Velasco
renounced the agency; because his act was more expressive than words and could not have
caused any doubt. (2 C. J., 543.) In order to terminate their relations by virtue of the agency the
defendant, as agent, rendered his final account on March 31, 1923 to the plaintiff, as principal.
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.
ISSUE:
Whether or not one of the ways of terminating an agency is by the express or tacit renunciation
of the agent
HELD:
YES. The disagreements between an agent and his principal with respect to the agency, and the
filing of a civil action by the former against the latter for the collection of the balance in favor of
the agent, resulting from a liquidation of the agency accounts, are facts showing a rupture of
relations, and the complaint is equivalent to an express renunciation of the agency, and is more
expressive than if the agent had merely said, "I renounce the agency."

REPUBLIC VS EVANGELISTA

FACTS: private respondent Legaspi is the owner of a land located in Bigte, Norzagaray,
Bulacan. In November 1999, petitioner Calimlim, representing the Republic of the Philippines,
and as then head of the Intelligence Service of the Armed Forces of the Philippines and the
Presidential Security Group, entered into a Memorandum of Agreement (MOA) with one Ciriaco
Reyes. The MOA granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray,
Bulacan. Petitioner Diciano signed the MOA as a witness.[2] It was further alleged that
thereafter, Reyes, together with petitioners, started, digging, tunneling and blasting works on the
said land of Legaspi. The complaint also alleged that petitioner Calimlim assigned about 80

military personnel to guard the area and encamp thereon to intimidate Legaspi and other
occupants of the area from going near the subject land.

On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his
nephew, private respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to
deal with the treasure hunting activities on Legaspis land and to file charges against those who
may enter it without the latters authority.[3] Legaspi agreed to give Gutierrez 40% of the
treasure that may be found in the land. Gutierrez filed a case for damages and injunction
against petitioners for illegally entering Legaspis land. He hired the legal services of Atty.
Homobono Adaza. Their contract provided that as legal fees, Atty. Adaza shall be entitled to
30% of Legaspis share in whatever treasure may be found in the land. In addition, Gutierrez
agreed to pay Atty. Adaza P5,000.00 as appearance fee per court hearing and defray all
expenses for the cost of the litigation.[4] Upon the filing of the complaint, then Executive Judge
Perlita J. Tria Tirona issued a 72-hour temporary restraining order (TRO) against petitioners.
ISSUE:
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND
RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.

PRIVATE

HELD:
petitioners claim that the special power of attorney of Gutierrez to represent Legaspi has
already been revoked by the latter. Private respondent Gutierrez, however, contends that the
unilateral revocation is invalid as his agency is coupled with interest.
We agree with private respondent.
Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to
render some service or do something in representation or on behalf of another, known as the
principal, with the consent or authority of the latter.[13]
A contract of agency is generally revocable as it is a personal contract of representation based
on trust and confidence reposed by the principal on his agent. As the power of the agent to act
depends on the will and license of the principal he represents, the power of the agent ceases
when the will or permission is withdrawn by the principal. Thus, generally, the agency may be
revoked by the principal at will.[14]
However, an exception to the revocability of a contract of agency is when it is coupled with
interest, i.e., if a bilateral contract depends upon the agency.[15] The reason for its irrevocability
is because the agency becomes part of another obligation or agreement. It is not solely the
rights of the principal but also that of the agent and third persons which are affected. Hence, the
law provides that in such cases, the agency cannot be revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate courts that the agency
granted by Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It

is clear from the records that Gutierrez was given by Legaspi, inter alia, the power to manage
the treasure hunting activities in the subject land; to file any case against anyone who enters the
land without authority from Legaspi; to engage the services of lawyers to carry out the agency;
and, to dig for any treasure within the land and enter into agreements relative thereto. It was
likewise agreed upon that Gutierrez shall be entitled to 40% of whatever treasure may be found
in the land. Pursuant to this authority and to protect Legaspis land from the alleged illegal entry
of petitioners, agent Gutierrez hired the services of Atty. Adaza to prosecute the case for
damages and injunction against petitioners. As payment for legal services, Gutierrez agreed to
assign to Atty. Adaza 30% of Legaspis share in whatever treasure may be recovered in the
subject land. It is clear that the treasure that may be found in the land is the subject matter of
the agency; that under the SPA, Gutierrez can enter into contract for the legal services of Atty.
Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of the agency,
i.e., in the treasures that may be found in the land. This bilateral contract depends on the
agency and thus renders it as one coupled with interest, irrevocable at the sole will of the
principal Legaspi.[16] When an agency is constituted as a clause in a bilateral contract, that is,
when the agency is inserted in another agreement, the agency ceases to be revocable at the
pleasure of the principal as the agency shall now follow the condition of the bilateral agreement.
[17] Consequently, the Deed of Revocation executed by Legaspi has no effect. The authority of
Gutierrez to file and continue with the prosecution of the case at bar is unaffected.
ORIENT AIR VS CA
FACTS:
American Airlines, Inc. (American Air), an air carrier offering passenger and air
cargotransportation in the Philippines, and Orient Air Services and Hotel Representatives
(Orient Air),entered into a General Sales Agency Agreement (Agreement), whereby the former
authorizedthe latter to act as its exclusive general sales agent within the Philippines for the sale
of airpassenger transportation. In the agreement, Orient Air shall remit in United States dollars
toAmerican the ticket stock or exchange orders, less commissions to which Orient Air Services
isentitled, not less frequently than semi-monthly. On the other hand, American will pay OrientAir
Services commission on transportation sold by Orient Air Services or its sub-agents.Thereafter,
American alleged that Orient Air had reneged on its obligations under theAgreement by failing to
promptly remit the net proceeds of sales for the months of January toMarch 1981 in the amount
of US $254,400.40, American Air by itself undertook the collectionof the proceeds of tickets sold
originally by Orient Air and terminated forthwith the Agreementin accordance with paragraph 13
which authorize the termination of the thereof in case OrientAir is unable to transfer to the
United States the funds payable by Orient Air Services toAmerican. American Air instituted suit
against Orient Air with the Court of First Instance of Manila for Accounting with Preliminary
Attachment or Garnishment, Mandatory Injunctionand Restraining Order averring the aforesaid
basis for the termination of the Agreement aswell as therein defendant's previous record of
failures "to promptly settle past outstandingrefunds of which there were available funds in the
possession of the defendant, . . . to thedamage and prejudice of plaintiff."Orient Air denied the
material allegations of the complaint with respect to plaintiff'sentitlement to alleged unremitted
amounts, contending that after application thereof to thecommissions due it under the

Agreement, plaintiff in fact still owed Orient Air a balance inunpaid overriding commissions.
Further, the defendant contended that the actions taken byAmerican Air in the course of
terminating the Agreement as well as the termination itself wereuntenable. The trial court ruled
in its favor which decision was affirmed with modification byCourt of Appeals. It held the
termination made by the latter as affecting the GSA agreementillegal and improper and ordered
the plaintiff to reinstate defendant as its general sales agentfor passenger transportation in the
Philippines in accordance with said GSA agreement.
Issue:
Whether CA is correct in ordering reinstatement of Orient Air as an agent
HELD:
2. No. CA in effect compels American Air to extend its personality to Orient Air. Such would be
violative of the principles and essence of agency, defined by law as a contract whereby "a
person binds himself to render some service or to do something in representation or on behalf
of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER. In an agent-principal
relationship, the personality of the principal is extended through the facility of the agent. In so
doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the
latter would have him do. Such a relationship can only be effected with the consent of the
principal, which must not, in any way, be compelled by law or by any court.