Eduardo Litonjua, Jr. and Antonio Litonjua v. Eternit Corp.

(now Eterton
Multi-Resources Corp.), Eteroutremer, S.A. and Far East Bank & Trust Co.
G.R. No. 144805 June 8, 2006
Callejo, Sr.
FACTS:
1. Eternit Corp. is engaged in the manufacture of roofing materials and pipe
products. Its manufacturing operations were conducted on 8 parcels of land
located in Mandaluyong City, covered by TCTs with Far East Bank & Trust
Company, as trustee. 90% of the shares of stocks of Eternit Corp. were owned
by Eteroutremer S.A. Corporation (ESAC), a corporation organized and
registered under the laws of Belgium. Jack Glanville, an Australian citizen,
was the General Manager and President of Eternit Corp., while Claude
Frederick Delsaux was the Regional Director for Asia of ESAC.
2.
In 1986, the management of ESAC grew concerned about the political
situation in the Philippines and wanted to stop its operations in the country. The
Committee for Asia of ESAC instructed Michael Adams, a member of Eternit
Corp.s Board of Directors, to dispose of the eight parcels of land. Adams engaged
the services of realtor/broker Lauro G. Marquez so that the properties could be
offered for sale to prospective buyers.
3.
Marquez offered the parcels of land and the improvements thereon to
Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. Marquez declared that he
was authorized to sell the properties for P27,000,000.00 and that the terms of the
sale were subject to negotiation.
4.
Eduardo Litonjua, Jr. responded to the offer. Marquez showed the property to
Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The Litonjua siblings
offered to buy the property for P20,000,000.00 cash. Marquez apprised Glanville of
the Litonjua siblings offer and relayed the same to Delsaux in Belgium, but the
latter did not respond. Glanville telexed Delsaux in Belgium, inquiring on his
position/ counterproposal to the offer of the Litonjua siblings. Delsaux sent a telex
to Glanville stating that, based on the Belgian/Swiss decision, the final offer was
US$1,000,000.00 and P2,500,000.00 to cover all existing obligations prior to final
liquidation.
5.
Litonjua, Jr. accepted the counterproposal of Delsaux. Marquez conferred with
Glanville, and confirmed that the Litonjua siblings had accepted the counterproposal of Delsaux. He also stated that the Litonjua siblings would confirm full
payment within 90 days after execution and preparation of all documents of sale,
together with the necessary governmental clearances.
6.
The Litonjua brothers deposited the amount of US$1,000,000.00 with the
Security Bank & Trust Company, Ermita Branch, and drafted an Escrow Agreement
to expedite the sale.
7.
With the assumption of Corazon Aquino as President of RP, the political
situation in the Philippines had improved. Marquez received a telephone call from
Glanville, advising that the sale would no longer proceed. Glanville followed it up
with a letter, confirming that he had been instructed by his principal to inform
Marquez that the decision has been taken at a Board Meeting not to sell the
properties on which Eternit Corp. is situated.

8.
When apprised of this development, the Litonjuas, through counsel, wrote
Eternit Corp., demanding payment for damages they had suffered on account of
the aborted sale. EC, however, rejected their demand.

ISSUE: WON Marquez, Glanville, and Delsaux were authorized by respondent

Eternit Corp. to act as its agents relative to the sale of the properties of Eternit
Corp., and if so, what are the boundaries of their authority as agents

HELD: No.
A corporation is a juridical person separate and distinct from its members or
stockholders and is not affected by the personal rights, obligations and transactions
of the latter. It may act only through its board of directors or, when authorized
either by its by-laws or by its board resolution, through its officers or agents in the
normal course of business. The general principles of agency govern the relation
between the corporation and its officers or agents, subject to the articles of
incorporation, by-laws, or relevant provisions of law.
The property of a corporation is not the property of the stockholders or members,
and as such, may not be sold without express authority from the board of directors.
Physical acts, like the offering of the properties of the corporation for sale, or the
acceptance of a counter-offer of prospective buyers of such properties and the
execution of the deed of sale covering such property, can be performed by the
corporation only by officers or agents duly authorized for the purpose by corporate
by-laws or by specific acts of the board of directors. Absent such valid
delegation/authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation, but not in the course of, or connected with,
the performance of authorized duties of such director, are not binding on the
corporation.
While a corporation may appoint agents to negotiate for the sale of its real
properties, the final say will have to be with the board of directors through its
officers and agents as authorized by a board resolution or by its by-laws.30 An
unauthorized act of an officer of the corporation is not binding on it unless the latter
ratifies the same expressly or impliedly by its board of directors. Any sale of real
property of a corporation by a person purporting to be an agent thereof but without
written authority from the corporation is null and void.
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that another
person is acting on his behalf without authority. Acceptance by the agent may be
expressed, or implied from his acts which carry out the agency, or from his silence
or inaction according to the circumstances. Agency may be oral unless the law
requires a specific form. However, to create or convey real rights over immovable
property, a special power of attorney is necessary.
The Litonjuas failed to adduce in evidence any resolution of the Board of Directors
of Eternit Corp. empowering Marquez, Glanville or Delsaux as its agents, to sell, let
alone offer for sale, for and in its behalf, the 8 parcels of land owned by Eternit

Corp. including the improvements thereon. The bare fact that Delsaux may have
been authorized to sell to Ruperto Tan the shares of stock of respondent ESAC
cannot be used as basis for Litonjuas claim that he had likewise been authorized by
Eternit Corp. to sell the parcels of land.
While Glanville was the President and General Manager of Eternit Corp., and Adams
and Delsaux were members of its Board of Directors, the three acted for and in
behalf of respondent ESAC, and not as duly authorized agents of Eternit Corp.; a
board resolution evincing the grant of such authority is needed to bind Eternit Corp.
to any agreement regarding the sale of the subject properties. Such board
resolution is not a mere formality but is a condition sine qua non to bind Eternit
Corp.
Requisites of an agency by estoppels: (1) the principal manifested a representation
of the agents authority or knowingly allowed the agent to assume such authority;
(2) the third person, in good faith, relied upon such representation; (3) relying upon
such representation, such third person has changed his position to his detriment.

G.R. No. 75198 October 18, 1988

SCHMID & OBERLY, INC., petitioner,
vs.
RJL MARTINEZ FISHING CORPORATION, respondent.

Facts:

1. RJL Martinez Fishing Corporation is engaged in deep-sea fishing. In the course

of its business, it needed electrical generators for the operation of its
business. Schmid and Oberly sells electrical generators with the brand of
Nagata, a Japanese product. D. Nagata Co. Ltd. of Japan was Schmids
supplier. Schmid advertised the 12 Nagata generators for sale and RJL
purchased 12 brand new generators. Through an irrevocable line of credit,
Nagata shipped to the Schmid the generators and RJL paid the amount of the
purchase price. (First sale = 3 generators; Second sale = 12 generators).
2. Later, the generators were found to be factory defective. RJL informed the
Schmid that it shall return the 12 generators. 3 were returned. Schmid
replaced the 3 generators subject of the first sale with generators of a
different brand. As to the second sale, 3 were shipped to Japan and the
remaining 9 were not replaced.
3. RJL sued the defendant on the warranty, asking for rescission of the contract
and that Schmid be ordered to accept the generators and be ordered to pay
back the purchase money as well as be liable for damages. Schmid opposes
such liability averring that it was merely the indentor in the sale between
Nagata Co., the exporter and RJL Martinez, the importer. As mere indentor, it

avers that is not liable for the sellers implied warranty against hidden
defects, Schmid not having personally assumed any such warranty.
4. it is argued that if SCHMID is considered as a mere agent of NAGATA CO., a
foreign corporation not licensed to do business in the Philippines, then the
officers and employees of the former may be penalized for violation of the old
Corporation Law which provided:
Sec. 69 ... Any officer or agent of the corporation or any person transacting
business for any foreign corporation not having the license prescribed shall
be punished by imprisonment for not less than six months nor more than two
years or by a fine 'of not less than two hundred pesos nor more than one
thousand pesos or both such imprisonment and fine, in the discretion of the
Court.
Issue:
1) WON Schmid an agent of nagata?
2) Even is Schmid is merely an indentor, may it still be liable for the warranty?
Held: 1) NO!!!
the afore-quoted penal provision in the Corporation Law finds no application to
SCHMID and its officers and employees relative to the transactions in the instant
case. What the law seeks to prevent, through said provision, is the circumvention by
foreign corporations of licensing requirements through the device of employing local
representatives. An indentor, acting in his own name, is not, however, covered by
the above-quoted provision. In fact, the provision of the Rules and Regulations
implementing the Omnibus Investments Code quoted above, which was copied from
the Rules implementing Republic Act No. 5455, recognizes the distinct role of an
indentor, such that when a foreign corporation does business through such indentor,
the foreign corporation is not deemed doing business in the Philippines.
In view of the above considerations, this Court rules that SCHMID was merely acting
as an indentor in the purchase and sale of the twelve (12) generators subject of the
second transaction. Not being the vendor, SCHMID cannot be held liable for the
implied warranty for hidden defects under the Civil Code [Art. 1561, et seq.]
2) nope.
However, even as SCHMID was merely an indentor, there was nothing to prevent it
from voluntarily warranting that twelve (12) generators subject of the second
transaction are free from any hidden defects. In other words, SCHMID may be held
answerable for some other contractual obligation, if indeed it had so bound itself. As
stated above, an indentor is to some extent an agent of both the vendor and the
vendee. As such agent, therefore, he may expressly obligate himself to undertake
the obligations of his principal (See Art. 1897, Civil Code.)

The Court's inquiry, therefore, shifts to a determination of whether or not SCHMID

expressly bound itself to warrant that the twelve (12) generators are free of any
hidden defects.
Again, we consider the facts.
The Quotation (Exhibit A is in writing. It is the repository of the contract between RJL
MARTINEZ and SCHMID. Notably, nowhere is it stated therein that SCHMID did bind
itself to answer for the defects of the things sold. There being no allegation nor any
proof that the Quotation does not express the true intent and agreement of the
contracting parties, extrinsic parol evidence of warranty will be to no avail [See Rule
123, Sec. 22.]

DOMINGO v. DOMINGO
DOMINGO v. DOMINGO
G.R. No. L-30573; October 29, 1971
Ponente: J. Makasiar

FACTS:

1. Vicente M. Domingo granted Gregorio Domingo, a real estate broker, the

exclusive agency to sell his lot No. 883 of Piedad Estate with an area of about
88,477 square meters at the rate of P2.00 per square meter (or for
P176,954.00) with a commission of 5% on the total price, if the property is
sold by Vicente or by anyone else during the 30-day duration of the agency
or if the property is sold by Vicente within three months from the termination
of the agency to a purchaser to whom it was submitted by Gregorio during
the continuance of the agency with notice to Vicente. The said agency
contract was in triplicate, one copy was given to Vicente, while the original
and another copy were retained by Gregorio.
2. Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer,
promising him one-half of the 5% commission.Thereafter, Teofilo Purisima
introduced Oscar de Leon to Gregorio as a prospective buyer.
3. Oscar de Leon submitted a written offer which was very much lower than the
price of P2.00 per square meter. Vicente directed Gregorio to tell Oscar de
Leon to raise his offer. After several conferences between Gregorio and Oscar
de Leon, the latter raised his offer to P109,000.00 on June 20 and Vicente
agreed.

4. Upon demand of Vicente, Oscar de Leon issued to him a check in the amount
of P1,000.00 as earnest money, after which Vicente advanced to Gregorio the
sum of P300.00. Oscar de Leon confirmed his former offer to pay for the
property at P1.20 per square meter in another letter. Subsequently, Vicente
asked for an additional amount of P1,000.00 as earnest money, which Oscar
de Leon promised to deliver to him.
5. Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the
sum of 1,000.00 for succeeding in persuading Vicente to sell his lot at P1.20
per square meter or a total in round figure of P109,000.00. This gift of
P1,000.00 was not disclosed by Gregorio to Vicente. Neither did Oscar pay
Vicente the additional amount of P1,000.00 by way of earnest money.
6. When the deed of sale was not executed on August 1, 1956 as stipulated nor
on August 16, 1956 as extended by Vicente, Oscar told Gregorio that he did
not receive his money from his brother in the United States, for which reason
he was giving up the negotiation including the amount of P 1,000 given as
earnest money to Vicente and the P 1,000 given to Gregorio as propina or
gift.
7. When Oscar did not see him after several weeks, Gregorio sensed something
fishy. So, he went to Vicente and read a portion to the effect that Vicente was
still committed to pay him 5% commission. Vicente grabbed the original of
the document and tore it to pieces.
8. From his meeting with Vicente, Gregorio proceeded to the office of the
Register of Deeds of Quezon City, where he discovered a deed of sale
executed on September 17, 1956 by Amparo Diaz.
9. Upon thus learning that Vicente sold his property to the same buyer, Oscar de
Leon and his wife, he demanded in writing payment of his commission on the
sale price of P109,000.00.
10.Vicente stated that Gregorio is not entitled to the 5% commission because he
sold the property not to Gregorio's buyer, Oscar de Leon, but to another
buyer, Amparo Diaz, wife of Oscar de Leon

ISSUE:
Whether Gregorio was entitled to receive the 5% commission

HELD:

No, Gregorio is not entitled to receive the 5% commission.

The Supreme Court held that the law imposes upon the agent the absolute
obligation to make a full disclosure or complete account to his principal of all his
transactions and other material facts relevant to the agency, so much so that the
law as amended does not countenance any stipulation exempting the agent from
such an obligation and considers such an exemption as void.

Hence, by taking such profit or bonus or gift or propina from the vendee, the agent
thereby assumes a position wholly inconsistent with that of being an agent for his
principal, who has a right to treat him, insofar as his Commission is concerned, as if
no agency had existed. The fact that the principal may have been benefited by the
valuable services of the said agent does not exculpate the agent who has only
himself to blame for such a result by reason of his treachery or perfidy.

OLAGUER vs. PURUGGANAN, JR. and LOCSIN, G.R. No. 158907 February
12, 2007
FACTS:
1. Petitioner Eduardo B. Olaguer who is an activist against the Marcos
administration was the owner of 60,000 shares of stock of Businessday
Corporation with a total par value of P600,000.00.
2. Anticipating the possibility that petitioner would be arrested and detained by
the Marcos military, Locsin, Joaquin, and Hector Holifea had an unwritten
agreement that, in the event that petitioner was arrested, they would support
the petitioners family by the continued payment of his salary.
3. Oleguer executed a Special Power of Attorney (SPA), on 26 May 1979,
appointing as his attorneys-in-fact Locsin, Joaquin and Hofilea for the
purpose of selling or transferring petitioners shares of stock with
Businessday.
4. The parties acknowledged the SPA before respondent Emilio Purugganan, Jr.,
who was then the Corporate Secretary of Businessday, and at the same time,
a notary public for Quezon City.
5. On 24 December 1979, petitioner was arrested by the Marcos military by
virtue of an Arrest, Search and Seizure Order and detained for allegedly
committing arson. In view of petitioners previous instructions, for such price
and under such terms and conditions that the agents may deem proper.
When petitioner was detained, respondent Locsin tried to sell petitioners
shares, but nobody wanted to buy them.
6. Petitioners reputation as an oppositionist resulted in the poor financial
condition of Businessday and discouraged any buyers for the shares of stock.

7. Respondent Locsin decided to buy the shares himself. Although the capital
deficiency suffered by Businessday caused the book value of the shares to
plummet below par value, respondent Locsin, nevertheless, bought the
shares at par value.
8. The RTC found that petitioner consented to have respondent Locsin buy the
shares himself, through his wife received from respondent Locsin the amount
of P600,000.00 as payment for the shares of stock.
ISSUE: Whether respondent Locsin exceeded his authority under the SPA.
Ruling:
It is a general rule that a power of attorney must be strictly construed; the
instrument will be held to grant only those powers that are specified, and the agent
may neither go beyond nor deviate from the power of attorney. However, the rule is
not absolute and should not be applied to the extent of destroying the very purpose
of the power. If the language will permit, the construction that should be adopted is
that which will carry out instead of defeat the purpose of the appointment. Clauses
in a power of attorney that are repugnant to each other should be reconciled so as
to give effect to the instrument in accordance with its general intent or predominant
purpose. Furthermore, the instrument should always be deemed to give such
powers as essential or usual in effectuating the express powers.
In the present case, limiting the definitions of "absence" to that provided under
Article 381 of the Civil Code and of "incapacity" under Article 38 of the same Code
negates the effect of the power of attorney by creating absurd, if not impossible,
legal situations. Article 381 provides the necessarily stringent standards that would
justify the appointment of a representative by a judge. Among the standards the
said article enumerates is that no agent has been appointed to administer the
property. In the present case, petitioner himself had already authorized agents to do
specific acts of administration and thus, no longer necessitated the appointment of
one by the court. Likewise, limiting the construction of "incapacity" to "minority,
insanity, imbecility, the state of being a deaf-mute, prodigality and civil
interdiction," as provided under Article 38, would render the SPA ineffective.
Petitioner received from respondent Locsin, through his wife and in-laws, the
installment payments for a total of P600,000.00 from 1980 to 1982, without any
protest or complaint. It was only four years after 1982 when petitioner demanded
the return of the shares. The petitioners claim that he did not instruct respondent
Locsin to deposit the money to the bank accounts of his in-laws fails to prove that
petitioner did not give his consent to the sale since respondent Locsin was
authorized, under the SPA, to negotiate the terms and conditions of the sale
including the manner of payment. Moreover, had respondent Locsin given the
proceeds directly to the petitioner, as the latter suggested in this petition, the
proceeds were likely to have been included among petitioners properties which
were confiscated by the military. Instead, respondent Locsin deposited the money in
the bank accounts of petitioners in-laws, and consequently, assured that the
petitioners wife received these amounts. Article 1882 of the Civil Code provides
that the limits of an agents authority shall not be considered exceeded should it

have been performed in a manner more advantageous to the principal than that
specified by him.

Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente
Pedrosa, Teresita Pedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008
Quisumbing, J.
FACTS:
1. Teresita Pedroso is a policyholder of a 20-year endowment life insurance
issued by Filipinas Life Assurance Co. Pedroso claims Renato Valle was her
insurance agent since 1972 and Valle collected her monthly premiums. In the
first week of January 1977, Valle told her that the Filipinas Life Escolta Office
was holding a promotional investment program for policyholders. It was
offering 8% prepaid interest a month for certain amounts deposited on a
monthly basis. Enticed, she initially invested and issued a post-dated check
for P10,000. In return, Valle issued Pedroso his personal check for P800 for
the 8% prepaid interest and a Filipinas Life Agent receipt.
2.
Pedroso called the Escolta office and talked to Francisco Alcantara, the
administrative assistant, who referred her to the branch manager, Angel Apetrior.
Pedroso inquired about the promotional investment and Apetrior confirmed that
there was such a promotion. She was even told she could push through with the
check she issued. From the records, the check, with the endorsement of Alcantara
at the back, was deposited in the account of Filipinas Life with the Commercial
Bank and Trust Company, Escolta Branch.
3.
Relying on the representations made by Filipinas Lifes duly authorized
representatives Apetrior and Alcantara, as well as having known agent Valle for
quite some time, Pedroso waited for the maturity of her initial investment. A
month after, her investment of P10,000 was returned to her after she made a
written request for its refund. To collect the amount, Pedroso personally went to
the Escolta branch where Alcantara gave her the P10,000 in cash. After a second
investment, she made 7 to 8 more investments in varying amounts, totaling
P37,000 but at a lower rate of 5% prepaid interest a month. Upon maturity of
Pedrosos subsequent investments, Valle would take back from Pedroso the
corresponding agents receipt he issued to the latter.
4.
Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance
policyholder, about the investment plan. Palacio made a total investment of
P49,550 but at only 5% prepaid interest. However, when Pedroso tried to withdraw
her investment, Valle did not want to return some P17,000 worth of it. Palacio also
tried to withdraw hers, but Filipinas Life, despite demands, refused to return her
money.

ISSUE: WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara
on the claim of Pedroso and Palacio or WON its agent Renato Valle is solely liable to
Pedroso and Palacio

HELD:
Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were
received by Valle and remitted to Filipinas Life, using Filipinas Lifes official
receipts. Valles authority to solicit and receive investments was also established
by the parties. When Pedroso and Palacio sought confirmation, Alcantara, holding
a supervisory position, and Apetrior, the branch manager, confirmed that Valle
had authority. While it is true that a person dealing with an agent is put upon
inquiry and must discover at his own peril the agents authority, in this case,
Pedroso and Palacio did exercise due diligence in removing all doubts and in
confirming the validity of the representations made by Valle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle.
By the contract of agency, 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. The general rule is that the principal is responsible for the acts of its
agent done within the scope of its authority, and should bear the damage caused
to third persons. When the agent exceeds his authority, the agent becomes
personally liable for the damage. But even when the agent exceeds his authority,
the principal is still solidarily liable together with the agent if the principal allowed
the agent to act as though the agent had full powers. The acts of an agent beyond
the scope of his authority do not bind the principal, unless the principal ratifies
them, expressly or impliedly.

Ratification adoption or confirmation by one person of an act performed on his

behalf by another without authority
Even if Valles representations were beyond his authority as a debit/insurance
agent, Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified
Valles acts. Filipinas Life benefited from the investments deposited by Valle in the
account of Filipinas Life.

Sarsaba vs Vda dela Torre 594 SCRA 410

Facts:
1. Respondent Fe Vda. de Te, represented by her attorney-in-fact, Faustino
Castaeda, filed with the RTC, a Complaint for recovery of motor vehicle,
damages with prayer for the delivery of the truck pendente lite against
petitioner (Atty. Sarsaba), Sereno, Lavarez and the NLRC of Davao City.
2. Respondent alleged, among others, that: (1) she is the wife of the late Pedro
Te, the registered owner of the truck, as evidenced by the Official Receipt and
Certificate of Registration.
3. Petitioner Sarsaba alleges that that there was no showing that the heirs have
filed an intestate estate proceedings of the estate of Pedro Te, or that
respondent was duly authorized by her co-heirs to file the case; and that the
truck was already sold to Gasing on March 11, 1986 by one Jesus Matias, who
bought the same from the Spouses Te. Corollarily, Gasing was already the
lawful owner of the truck when it was levied on execution and, later on, sold at
public auction.
4. On October 17, 2005, petitioner Sarsaba filed an Omnibus Motion to Dismiss
the Case on the following grounds: (1) lack of jurisdiction over one of the
principal defendants; and (2) to discharge respondent's attorney-in-fact for lack
of legal personality to sue.
5. It appeared that the respondent, Fe Vda. de Te, died on April 12, 2005.
6. Respondent, through her lawyer, argues that respondent's death did not
render functus officio her right to sue since her attorney-in-fact, Faustino
Castaeda, had long testified on the complaint on March 13, 1998 for and on
her behalf and, accordingly, submitted documentary exhibits in support of the
complaint.
Issue: What is the legal effect of death of the plaintiff during the pendency of the
case?
Held:
In the case before Us, it appears that respondent's counsel did not make any
manifestation before the RTC as to her death. In fact, he had actively participated in
the proceedings. Neither had he shown any proof that he had been retained by
respondent's legal representative or any one who succeeded her.
However, such failure of counsel would not lead Us to invalidate the proceedings
that have long taken place before the RTC. The Court has repeatedly declared that
failure of the counsel to comply with his duty to inform the court of the death of his
client, such that no substitution is effected, will not invalidate the proceedings and
the judgment rendered thereon if the action survives the death of such party. The
trial court's jurisdiction over the case subsists despite the death of the party. 48
The purpose behind this rule is the protection of the right to due process of every
party to the litigation who may be affected by the intervening death. The deceased

litigants are themselves protected as they continue to be properly represented in

the suit through the duly appointed legal representative of their estate. 49
Anent the claim of petitioner that the special power of attorney 50 dated March 4,
1997 executed by respondent in favor of Faustino has become functus officio and
that the agency constituted between them has been extinguished upon the death of
respondent, corollarily, he had no more personality to appear and prosecute the
case on her behalf.
Agency is extinguished by the death of the principal. 51 The only exception where the
agency shall remain in full force and effect even after the death of the principal is
when if it has been constituted in the common interest of the latter and of the
agent, or in the interest of a third person who has accepted the stipulation in his
favor.52
A perusal of the special power of attorney leads us to conclude that it was
constituted for the benefit solely of the principal or for respondent Fe Vda. de Te.
Nowhere can we infer from the stipulations therein that it was created for the
common interest of respondent and her attorney-in-fact. Neither was there any
mention that it was to benefit a third person who has accepted the stipulation in his
favor.
On this ground, We agree with petitioner. However, We do not believe that such
ground would cause the dismissal of the complaint. For as We have said, Civil Case
No. 3488, which is an action for the recovery of a personal property, a motor
vehicle, is an action that survives pursuant to Section 1, Rule 87 of the Rules of
Court. As such, it is not extinguished by the death of a party.

BORDADOR V LUZ

FACTS:
1. Petitioners were engaged in the business of purchase and sale of jewelry and
respondent Brigida Luz, also known as Aida Luz, was their regular customer.
2. On several occasions, respondent Deganos, brother of Luz, received several
pieces of gold and jewelry from petitioners amounting to P382, 816. These
items and their prices were indicated in seventeen receipts covering the
same. 11 of the receipts stated that they were received for a certain Aquino,
a niece of Deganos, and the remaining 6 receipts indicated that they were
received for Luz.
3. Deganos was supposed to sell the items at a profit and thereafter remit the
proceeds and return the unsold items to Bordador. Deganos remitted only the
sum of P53, 207. He neither paid the balance of the sales proceeds, nor did
he return any unsold item to petitioners.

4. The total of his unpaid account to Bordador, including interest, reached the
sum of P725, 463.98. Petitioners eventually filed a complaint in the barangay
court against Deganos to recover said amount.
5. In the barangay proceedings, Luz, who was not impleaded in the caes,
appeared as a witness for Deganos and ultimately, she and her husband,
together with Deganos signed a compromise agreement with petitioners.
6. In that compromise agreement, Deganos obligated himself to pay petitioners,
on installment basis , the balance of his account plus interest thereon.
However, he failed to comply with his aforestated undertakings.
7. Petitioners instituted a complaint for recovery of sum of money and damages,
with an application for preliminary attachment against Deganos and Luz.
8. Deganos and Luz was also charged with estafa
9. During the trial of the civil cae, petitioners claimed that Deganos acted as
agent of Luz when received the subject items of jewelry, and because he
failed to pay for the same, Luz, as principal, and her spouse are solidarily
liable with him
10.Trial court ruled that only Deganos was liable to Bordador for the amount and
damages claimed. It held that while Luz did have transactions
with
petitioners in the past, the items involved were already paid for and all that
Luz owed Bordador was the sum or P21, 483 representing interest on the
principal account which she had previously paid for.
11.CA affirmed TCs decision

ISSUE:
W/N Luz are liable to petitioners for the latters claim for money and damages in the
sum of P725,463.98, plus interests and attorneys fees, despite the fact that the
evidence does not show that they signed any of the subject receipts or authorized
Deganos to receive the items of jewelry on their behalf

RULING: No
Evidence does not support the theory of Bordador that Deganos was an agent of Luz
and that the latter should consequently be held solidarily liable with Deganos in his
obligation to petitioners.
The basis for agency is representation. Here, there is no showing that Luz consented
to the acts of Deganos or authorized him to act on her behalf, much less with
respect to the particular transactions involved.

It was grossly and inexcusably negligent of petitioner to entrust to Deganos, not

once or twice but on at least six occasions as evidenced by 6 receipts, several
pieces of jewelry of substantial value without requiring a written authorization from
his alleged principal.
A person dealing with an agent is put upon inquiry and must discover upon his peril
the authority of the agent.
Records show that neither an express nor an implied agency was proven to have
existed between Deganos and Luz. Evidently, Bordador who were negligent in their
transactions with Deganos cannot seek relief from the effects of their negligence by
conjuring a supposed agency relation between the two respondents where no
evidence supports such claim