1. Laviña VS CA, , G.R. No.

78295 & 79917, April 10, 1989171 SCRA 691

Facts:
On April 6, 1983, Maria Carmen Gabriel y Paterno, single, 72 years old, executed a
donation mortis causa in favor of her widowed sister-in-law, Josefina C. Gabriel, 75
years of age, over a 3,081 square-meter parcel of land with improvements in Sampaloc,
Manila, covered by Transfer Certificate of Title No. 155865 in Carmen's name. The
donation was thumbmarked by Carmen before Notary Public Jose T. Constantino. It
was accepted by the donee in the same instrument.
Four months later, on August 11, Carmen, who was already gravely ill with breast
cancer, executed a Last Win And Testament in which she bequeathed the same
Sampaloc property to her cousin and companion, Remedios C. Muyot, and willed a
small 240-square-meter lot in Antipolo, Rizal (TCT No. 278-6) to Josefina. She named a
friend, Concepcion M. De Garcia, as executrix of her will (pp. 288-291, Rollo, G.R. No.
79917).
On August 15, Carmen executed a General Power of Attorney to Muyot, as her
attorney-in-fact to (1) administer all her properties, (2) to collect debts, (3) to sign and
enter into any contract of disposition of property; (4) to bring suit in her name.
On November 3, Josefina registered an adverse claim on the title of the Sampaloc
property based on the donation made by Carmen in her favor. The next day, Muyot
hired Atty. Celso D. Laviña, as Carmen's counsel.
On November 19, Carmen thumbmarked an "AFFIDAVIT OF DENIAL", and a
"REVOCATION OF DONATION", repudiating the donation of the Sampaloc property to
Josefina because it was allegedly procured through fraud and trickery.
On November 21, Muyot, sold the Sampaloc property of Carmen to Cebrero for
P2,664,655.00.
On November 29, Carmen passed away.
On December 5, Josefina filed a complaint in the RTC Manila against Carmen's
estate and the Register of Deeds of Manila to annul the Deed of Revocation of
Donation, alleging that the deed of revocation, made only ten (10) days before
Carmen's death, was false and fictitious. She asked the court to appoint an
administrator ad litem for the estate of Carmen. Upon filing the complaint, she
caused to be recorded a Notice of Lis Pendens on the title of the property.
Without appointing a special administrator for Carmen's estate, the court caused
summons to be served on the estate. The summons was received by Muyot.
On February 6, 1984, Josefina's complaint was amended to implead Muyot and the
Cebrero spouses as additional defendants. It also sought the nullification of Muyot's
General Power of Attorney and of the sale of the Sampaloc property.
Atty. Laviña filed an Answer for the Estate and Muyot.
Thereupon, Josefina filed a motion to disqualify him on the ground that his authority as
counsel for Carmen was extinguished upon her death. She also assailed the service
of summons to the decedent's Estate through Muyot and reiterated her motion for
the appointment of a special administrator for the Estate.

Issue:
1. Whether or not the trial court had not acquired jurisdiction over the estate of
Carmen P. Gabriel;
2. Whether or not Attorney Celso Laviña's authority as counsel for Carmen P.
Gabriel was extinguished upon her death

Ruling:
 1. Yes, the court had not acquired jurisdiction. The petitioners' argument that
service of the summons on Remedios Muyot was valid and sufficient to vest jurisdiction
in the Court over the Estate of Carmen P. Gabriel, because Muyot was Carmen's
attorney-in-fact, is not correct. The estate of a dead person may only be summoned
through the executor or administrator of his estate for it is the executor or administrator
who may sue or be sued (Sec. 3, Rule 3, Rules of Court) and who may bring or defend
actions for the recovery or protection of the property or rights of the deceased (Sec. 2,
Rule 87, Rules of Court). The general power of attorney appointing Remedios as
Carmen's agent or attorney-in- fact was extinguished upon Carmen's demise (Art.
1919[3], Civil Code; Ramos vs. Caoibes 94 Phil. 440; Hermosa vs. Longara 93 Phil.
977). Thereafter, Muyot was bereft of authority to represent Carmen.

2. Yes, the authority as counsel was extinguished. Carmen's death divested

Attorney Laviña of authority to represent her as counsel. A dead client has no
personality and cannot be represented by an attorney (Barrameda vs. Barbara, 90 Phil.
718, 723; Caisip vs. Hon. Cabangon, 109 Phil. 150).

2. CMS LOGGING V CA

FACTS:
Petitioner CMS is a forest concessionaire engaged in the logging business, while
private respondent DRACOR is engaged in the business of exporting and selling logs
and lumber. On August 28, 1957, CMS and DRACOR entered into a contract of agency
whereby the former appointed the latter as its exclusive export and sales agent for all
logs that the former may produce, for a period of five (5) years.
CMS was able to sell through DRACOR a total of 77,264,672 board feet of logs in
Japan, from September 20, 1957 to April 4, 1962. Six months prior the end of their
agreement, CMS found out that DRACOR was using Shingko Trading to sell their logs
and earned commission for it. CMS claimed that it was a violation of their agreement
since DRACOR already received 5% commission and is no longer entitled to the
additional commission to Shinko. After the discovery, CMS directly transacted with
Japanese firms without the aid if DRACOR. CMS sued DRACOR for the commission
Shingko received while DRACOR counterclaimed for the commission of the sales made
by CMS with the Japanese firms.

ISSUE:
w/n DRACOR is entitled to its commissions from the sales made by CMS to Japanese
firms

HELD:
The principal may revoke a contract of agency at will, and such revocation may be
express, or implied, and may be availed of even if the period fixed in the contract of
agency as not yet expired. As the principal has this absolute right to revoke the agency,
the agent can not 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. During the existence of the contract of agency, DRACOR admitted
that CMS sold its logs directly to several Japanese firms. This act constituted an implied
revocation of the contract of agency under Article 1924 of the Civil Code, which
provides: Art. 1924 The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons. DRACOR is not entitled to
commission since it was revoked by CMS when they transacted directly with the
Japanese firms

2. CMS Logging v. CA, 211 SCRA 374

Facts:
CMS a logging concessionaire, entered into an agency contract with DRACOR for the
exclusive export and sales of its logs and lumber for a period of five (5) years. By virtue of
such agreement CMS was able to sell through DRACOR a total of 77,264,672 board feet of
logs in Japan, from September 20, 1957 to April 4, 1962.

About six (6) months from the expiration of the contract of agency, CMS President
Atty. Sison and legal counsel Atty. Dominguez, while on a trip to Japan, discovered that
DRACOR used Shinko Trading Co., Ltd. As its agent or representative in selling logs in Japan
with a commission of USD 1.00 per board foot from the buyer of logs. It was alleged that a
total of USD 77,264.67 was collected by Shinko.

Aggrieved to this set up, in its subsequent sale to Japanese buyers, CMS directly sold
it without the help of DRACOR. CMS then sued DRACOR for the commission paid to Shinko
alleging that it amounts to double commission on the part of DRACOR as per understanding
of CMS; the commission paid to Shinko was on top of the 5% commission agreed to be paid
to DRACOR. Thus, double compensation on the part of DRACOR (as it will then exceed 5%
commission as agreed). DRACOR countered that he is entitled to the commission of Php
144,167.59 for sales made by CMS directly to Japanese buyers. CMS also countered to the
counterclaim of DRACOR that DRACOR unlawfully retained the amount of Php 101,167.59.
The

Issues:
A. W/N there was double compensation on the part of DRACOR for commissions paid to
Shinko?
B. W/N DRACOR was entitled to the commission for sales made directly by CMS to
Japanese buyers?

Ruling:
A. No; there was no proof that the commission paid to Shinko was out of the gross
sales of CMS through its agent DRACOR. The evidences presented on the part of CMS
cannot be sustained as they are all mere hearsay. The persons from whom CMS received
such information were not presented at trial to testify. In fact, it was found out by the court
that it was the buyers of the logs who paid Shinko for the completed purchase of logs and
not DRACOR out of its 5% commission no CMS from the gross sales of the logs.

B. No; DRACOR cannot be entitled to commission. Article 1924 provides:

Art. 1924 — The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.

CMS in directly selling the logs to Japanese buyers constituted an implied revocation of the
contract of agency with DRACOR. Thus, it follows that when the sale was made, DRACOR
was no longer an agent of CMS. DRACOR cannot be entitled to the commission of such sale.
Consequently, DRACOR unlawfully retained the Php 101,167.59 which it believes to be its
due compensation for sales made directly by CMS to Japanese buyers. 

3. Lina Sevilla v Court of Appeals

Facts:

On October 19, 1960, Mrs. Segundina Noguera and Tourist World Service, Inc., (TWS) entered
into a contract where Noguera leased her premises at Mabini St. Manila for the latter’s use as branch
office. In the said contract, Lina O. Sevilla as the Branch Manager held herself solidary liable with TWS
for the prompt payment of the monthly rental agreed upon. As Sevilla runs the Ermita Branch, any fare by
any airline brought in on her efforts will entitle her to 4% commission and 3% was to be withheld by
TWS. TWS appears to have been informed that Sevilla was connected with a rival firm. Since the branch
office was anyhow losing, the TWS considered closing down its office. This was firmed up by two
resolutions of the Board of Directors of TWS. First, abolishing the office of the Manager and Vice-
President of the TWS Ermita Branch, and second, authorizing the corporate secretary to receive the
properties of the TWS then located at the said branch office. It further appears that on Jan. 3, 1962, the
contract with Noguera for the use of the branch office premises was terminated and while the effectivity
thereof was Jan. 31, 1962, TWS no longer used it. As a matter of fact, TWS used it since Nov. 1961. The
corporate secretary Canilao from the mandate of TWS went over to the branch office and, finding the
premises locked, and, being unable to contact Sevilla, he padlocked the premises on June 4, 1962 to
protect the interests of the TWS. When neither the Sevilla nor any of her employees could enter the
locked premises.
A complaint was filed by the Sevillas against the TWS and Noguera with a prayer for the issuance of
mandatory preliminary injunction. Both answered with counterclaims. For apparent lack of interest of the
parties therein, the trial court ordered the dismissal of the case without prejudice.

Noguera sought reconsideration of the order dismissing her counterclaim which the court granted
permitting her to present evidence in support of her counterclaim.

Sevilla refiled her case against TWS and Noguera and after the issues were joined, the reinstated
counterclaim of Noguera and the new complaint of Sevilla were jointly heard following which the court
ordered both cases dismissed for lack of merit, on the basis of which was elevated the instant appeal.

In the appeal, Sevilla claims that a joint business venture was entered into by and between her and TWS
with offices at the Ermita branch and that she was not an employee of the TWS to the end that her
relationship with TWS was one of a joint business venture. On the other hand, TWS contend that the
Sevilla was an employee of the TWS and as such was designated manager.

Trial Court - ruled in favor TWS, being the true lessee, it was within its prerogative to terminate the lease
and padlock the premises. It likewise found Sevilla, to be a mere employee of said TWS and as such, she
was bound by the acts of her employer.

CA- affirmed the decision of the lower court.

Hence, this petition.

Issue:: W/N Sevilla is an employee of TWSI. NO.

Ruling: No

The Court found Sevilla as an agent based on the RIGHT OF CONTROL TEST. One is an employee if
“the person for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end.” Since, Sevilla is just a manager by title and
that she basically runs the office by herself, there is no direct and manifest control by TWS on her
business operations. In addition to such standard, the existing economic conditions, that she was not part
of the TWSI’s payroll, concretely shows that she is not an employee. The parties did not even show
themselves as partners, having co-equal propriety interest in the capital or property contributed. Sevilla is
merely an agent who is entitled to a 4% commission upon sale of air fare tickets through her office.

In rejecting TWS’ arguments however, we are not, as a consequence, accepting Sevilla's own, that is, that
the parties had embarked on a joint venture or otherwise, a partnership. A joint venture, including a
partnership, presupposes generally a parity of standing between the joint co-venturers or partners, in
which each party has an equal proprietary interest.

It appears that Sevilla is a bona fide travel agent herself, and as such, she had acquired an interest in the
business entrusted to her. Moreover, she had assumed a personal obligation for the operation thereof,
holding herself solidarily liable for the payment of rentals. She continued the business, using her own
name, after TWS had stopped further operations. Her interest, obviously, is not limited to the
commissions she earned as a result of her business transactions, but one that extends to the very subject
matter of the power of management delegated to her. It is an agency that, as we said, cannot be revoked at
the pleasure of the principal. Furthermore, Sevilla was not a stranger to that contract having been
explicitly named therein as a third party in charge of rental payments (solidarily with TWS). She could
not be ousted from possession as summarily as one would eject an interloper.

In the case agency is one couple with an interest having been created for the mutual interest of the
Principal, TWS and Agent, Sevilla. She has acquired an interest in the business entrusted to her by
assuming personal obligation for the operation thereof. Her interest is not limited to commissions
she earns as a result of the business transactions but one that extends to the very subject matter of
the power of management delegated to her. The reason for the exception is that the agent is not
acting for the principal but also in his own behalf to assert a personal interest.
4. Philippine National Bank (PNB) vs Intermediate Appellate Court (IAC)

Facts:

Leticia de la Vina- Sepe executed a real estate mortgage in favor of PNB over a lot in her name to
secure her loan of P3, 400. Later, Leticia Sepe, acting as an attorney-in-fact for her brother-in-law, private
respondent Romeo Alcedo, executed an amended real estate mortgage to include Alcedo’s lot as
additional collateral for Sepe’s increased loan of P16, 500. Leticia Sepe and private respondent verbally
agreed to split fifty-fifty the proceeds of the loan but failing to receive his one-half share from her, Alcedo
wrote a letter to the PNB to revoke the Special Power of Attorney which he had given to Leticia Sepe to
mortgage his lot.

PNB, through its manager, advised Alcedo that his land had already been included as collateral for Sepe’s
loan, nevertheless, PNB assured Alcedo that the bank would exclude his lot as collateral for Sepe’s
forthcoming loan. One the same day, The PNB also advised Sepe in writing to replace the lot with
another collateral of equal or higher value.

Despite of the advice of PNB, Sepe was still able to obtain an additional loan on the security of
Alcedo’s property. Thereafter, Alcedo received a letter that Sepe defaulted in paying her loan wherein he
was given six days to settle Sepe’s obligation, otherwise a foreclosure proceeding would be commenced
against his property. Alcedo requested Sepe to pay to forestall foreclosure proceedings against his
property, but to no avail.

Alcedo sued Sepe and the PNB for collection, injunction and damages. During the pendency of the case,
extra judicial foreclosure commenced which was sold to the PNB as the highest bidder. Later he amended
his complaint praying for the annulment of the extra judicial foreclosure sale and reconveyance of his lot.
The PNB, on its answer alleged that the revocation of SPA of Alcedo was not in accordance with the law,
thus, the revocation of the SPA did not impair the real estate mortgage earlier executed by Sepe in favor
of the bank.

Lower court - rendered judgment in favor of the private respondent Alcedo.

CA- affirmed the decision of the lower court in toto. Hence, this petition.

Issue: W/N a revocation of a special power of attorney in a private writing is valid and binding.

Ruling:

YES. The revocation of a special power of attorney, although embodied in a private writing, is
valid and binding between the parties.

While Article 1358 of the Civil Code requires that the revocation of Alcedo’s Special Power of
Attorney to mortgage his property should appear in a public instrument: xxx nevertheless, a revocation in
a private writing is valid and binding between the parties for- “ The legalization by a public writing and
the recording of the same in the registry are not essential requisites of a contract entered into, as between
the parties, but mere conditions of form or solemnities which the law imposes in order that such contract
may be valid as against third persons, and to insure that a publicly executed and recorded agreement shall
be respected by the latter”.

"The legalization by a public writing and the recording of the same in the registry are not essential
requisites of a contract entered into, as between the parties, but mere conditions of form or solemnities
which the law imposes in order that such contract may be valid as against third persons, and to insure that
a publicly executed and recorded agreement shall be respected by the latter." (Alano, et al. vs. Babasa, 10
Phil. 511.)
Under doctrine of promissory estoppel enunciated in the case of Republic Flour Mills, Inc. vs. Central
Bank, the act and assurance given by the PNB to Alcedo "that we shall exclude the aforementioned lot
[Lot No. 1402] as a collateral of Leticia de la Vina-Sepe in our recommendation for her 1971-72 sugar
crop loan" binding on the bank. Having given that assurance, the bank may not turn around and do the
exact opposite of what it said it would not do. A party may not go back on his own acts and
representations to the prejudice of the other party who relied upon them

PNB acted with bad faith in proceeding against Alcedo's property to satisfy Sepe's unpaid 1971-72 sugar
crop loan. The extrajudicial foreclosure being null and void ab initio, the certificate of sale which the
Sheriff delivered to PNB as the highest bidder at the sale is also null and void.

5. Lustan v. CA
Facts:
Adoracion Lustan is the registered owner of a parcel of land in Calinog, Iloilo.
Lustan leased the said parcel of land to private respondent Nicolas Parangan for a term
of 10 years and an annual rent of P1,000. During the period of lease, Parangan was
regularly extending loans in small amounts to Lustan to defray her daily expenses and
to fund the education of her daughter. On later date, Lustan executed a Special Power
of Attorney in favor of Parangan to secure an agricultural loan from private respondent
PNB with the aforesaid lot as the collateral. A second SPA was executed by Lustan in
favor of Parangan, by virtue of which Paramgan was able to secure 4 additional loans.
The last three loans were without the knowledge of Lustan and all the proceeds thereof
was used by Parangan for his own benefit. The encumbrances made were duly
annotated on Lustan’s certificate of title. A Deed of definite sale was the made and
signed by Lustan in favor of Parangan upon the latter’s representation that the same
merely evidences the loans extended by him to Lustan.
Lustan then demanded the return of her certificate of title for fear that her
property might be prejudiced by Parangan’s continued borrowing of the same. But
Parangan did not comply with the request and instead asserted his right over the
property which he contends that become his by virtue of the Deed of definite Sale.
Aggrieved, Lustan filed an action for cancellation of liens and quieting of title,
recovery of possession and damages against Parangan and PNB.
The trial court ruled in favor of Lustan.
On appeal, the Court of Appeals reversed the trial court decision.
Hence, this petition.

Issue:
Whether the outstanding mortgages on the subject property can be enforced
against Lustan.

Held:
The Court ruled on the affirmative. Third persons who are not parties to a may
secure the latter by pledging or mortgaging their own property. So long as valid consent
was given, the fact that the loans were solely for the benefit of Parangan would not
invalidate the mortgage with respect to petitioner's property. In consenting thereto, even
granting that petitioner may not be assuming personal liability for the debt, her property
shall nevertheless secure and respond for the performance of the principal
obligation.21 It is admitted that petitioner is the owner of the parcel of land mortgaged to
PNB on five (5) occasions by virtue of the Special Powers of Attorney executed by
petitioner in favor of Parangan. Petitioner argues that the last three mortgages were
void for lack of authority. She totally failed to consider that said Special Powers of
Attorney are a continuing one and absent a valid revocation duly furnished to the
mortgagee, the same continues to have force and effect as against third persons who
had no knowledge of such lack of authority. 
The Special Power of Attorney executed by petitioner in favor of Parangan duly
authorized the latter to represent and act on behalf of the former. Having done so,
petitioner clothed Parangan with authority to deal with PNB on her behalf and in the
absence of any proof that the bank had knowledge that the last three loans were without
the express authority of petitioner, it cannot be prejudiced thereby. As far as third
persons are concerned, an act is deemed to have been performed within the scope of
the agent's authority if such is within the terms of the power of attorney as written even if
the agent has in fact exceeded the limits of his authority according to the understanding
between the principal and the agent. The Special Power of Attorney particularly
provides that the same is good not only for the principal loan but also for subsequent
commercial, industrial, agricultural loan or credit accommodation that the attorney-in-
fact may obtain and until the power of attorney is revoked in a public instrument and a
copy of which is furnished to PNB
Therefore, the Court ruled that the mortgages in favor of PNB are valid and
subsisting and may be subjected to execution sale.

Another Issue:

whether or not the Deed of Definite Sale is in reality an equitable mortgage 

Held:
In the case at bench, the evidence is sufficient to warrant a finding that petitioner
and Parangan merely intended to consolidate the former's indebtedness to the latter in
a single instrument and to secure the same with the subject property. Even when a
document appears on its face to be a sale, the owner of the property may prove that the
contract is really a loan with mortgage by raising as an issue the fact that the document
does not express the true intent of the parties. In this case, parol evidence then
becomes competent and admissible to prove that the instrument was in truth and in fact
given merely as a security for the repayment of a loan. And upon proof of the truth of
such allegations, the court will enforce the agreement or understanding in consonance
with the true intent of the parties at the time of the execution of the contract.
for a presumption of an equitable mortgage to arise, we must first satisfy two
requisites namely: that the parties entered into a contract denominated as a contract of
sale and that their intention was to secure an existing debt by way of mortgage.
The Court ruled that the trial court is correct in declaring the Deed of Definite
Sale is actually a Deed of Equitable Mortgage.

6. Santana-Cruz v. CA, 361 SCRA 520

Facts:
Attorney-in-Fact Patrocinia Juanson-Cuizon, representing private respondents herein,
filed against petitioner and Ma. Paz S. Concepcion a Complaint for Revival/Execution of
Judgment After Lapse of Five Years with the Regional Trial Court. The judgment sought to
be revived/executed was the decision dated September 30, 1964 of the then Court of First
Instance of Rizal. Francisco Santana and the Heirs of Catalina Reyes were ordered to
 reconvey in favor of the Heirs of Valeriana Marilao Lots Nos. 2, 4, 6, 11 and 12 of plan Psd-
1536-LRC and covered by Transfer Certificate of Title No. 65611 of the Register of Deeds of
Rizal upon payment by the latter to the former the sum of Php 6,233.40. The necessary deed
of reconveyance should be executed within five days from receipt of the aforementioned
sum. The Court of Appeals affirmed the said Decision in toto on December 5, 1979.

Petitioner filed an Omnibus Motion stating, among others, that the complaint was barred
by the statute of limitations. The Omnibus Motion was denied and an alias writ of execution
was ordered to be issued by the court a quo. In a second order, the court a quo issued an Alias
Writ of Execution, which sought to implement the decision of the Court of Appeals. A third
order was issued by the Court, which modified its previous order, thereby requiring the
Register of Deeds of Marikina, Metro Manila to cancel TCT No. 65611 and all the resultant
titles derived therein, and in lieu thereof, the corresponding new transfer certificates of title
be issued in the name of the Heirs of Valeriana Marilao. Petitioner filed a petition for
certiorari and prohibition with the Court of Appeals alleging that the court a quo acted with
grave abuse of discretion in issuing the three orders mentioned. On October 12, 1994, the
Court of Appeals rendered judgment giving due course to the petition. The three questioned
orders were reversed and set aside. The alias writ of execution was declared void and the
complaint for revival/execution of judgment was dismissed on the ground of prescription.
Thereafter, the case was further complicated when two lawyers, representing private
respondents herein, filed several motions with the Court of Appeals and with the Supreme
Court, as well. Only one lawyer was eventually recognized and he was the original counsel
of record, Atty. Raul A. Mora. Through Atty. Mora, a resolution was issued by the Court of
Appeals, which reconsidered and set aside its October 12, 1994 order. Petitioner herein
questioned the jurisdiction of the Court of Appeals in issuing the resolution considering that
Atty. Mora already filed before the Supreme Court a motion affecting the case. Petitioner
further prayed that the said resolution of the Court of Appeals be annulled and set aside.

Issues:
A. W/N Atty. Yap duly substituted Atty. Mora?
B. W/N the resolution of the CA is valid?

Ruling:
A. No, there was no valid substitution of counsel. The court ruled that for a valid
substitution of counsel the following must be met:
a. there must be a written request for substitution;
b. it must be filed with the written consent of the client;
c. it must be with the written consent of the attorney to be substituted; and
d. in case the consent of the attorney to be substituted cannot be obtained, there
must be at least a proof of notice that the motion for substitution was served
on him in the manner prescribed by the Rules of Court.

In this case, in the Supplemental Motion for Reconsideration filed by Atty. Raul A. Mora
with the Court of Appeals, he stated that the heirs of Valeriana Marilao never dismissed
him nor replaced him as their counsel, thus, the appearance of Atty. Julian S. Yap was
improper. In Cruz’s Opposition filed on November 25, 1994, she stated that she received
two (2) motions for reconsideration from private respondents filed by different counsels,
and was bound to treat Atty. Raul A. Mora as private respondents' counsel of record as
she had not received any notice of proper substitution of private respondents' counsel. In
the absence of compliance with the essential requirements for valid substitution of the
counsel of record, Atty. Mora, the court can safely presume that he is responsible for the
conduct of the case. The rule is intended to ensure the orderly disposition of cases.

No, the CA resolution iss sset aside. As to the subject matter of the case, which was the
reconveyance of title of lots, the Supreme Court resolved to set aside the resolution of the Court
of Appeals and reinstated its original order annulling the alias writ of execution and order of
reconveyance. The prescriptive period for the enforcement of a judgment by ordinary action is
ten (10) years computed from the time the judgment became final, and the lifetime of a writ of
execution is sixty (60) days after its receipt by the levying officer. Absent any finding of delay
caused by the petitioner in the execution of the judgment, the Court held that the complaint for
revival/execution of judgment filed by private respondents thirteen (13) years after the decision
in CA-G.R. No. 48321-R became final and executory on December 23, 1979, has long
prescribed. The writ of execution became impossible to enforce because the subject lots were
already sold long before an action was filed in Court and the vendees, who were considered as
indispensable parties to the case, were not impleaded.

7. Bitte v. Jonas 777 SCRA 489

Facts:
Rosa Elsa executed an SPA authorizing her mother Andrea to sell her lot. She then
went to Australia.

Later on, her brother Cipriano offered the said lot to Sps. Bitte showing them the
authority given by Rosa Elsa to Andrea. The Sps. Bitte agreed to buy and gave partial
payments to Cirpriano totaling Php 600,000.00. The Sps. Bitte then wanted to have a final
meeting or negotiation with Rosa Elsa but Rosa Elsa was still in Australia and she had no
spare funds for tickets. Unknowingly to Rosa Elsa, Sps. Bitte then paid for her round trip
ticket and Rosa Elsa was then able to return to the Philippines.

When Rosa Elsa arrived in the Philippines on October 10, 1996, she revoked the SPA
she gave to Andrea. The revocation was made through an instrument and was dated the
same day. She even handed a copy to Andrea.

The next day, Rosa Elsa and Sps. Bitte met and there were no final agreement
reached. Rosa Elsa then withdrew from the transaction. Sps. Bitte filed Civil Case No.
24,771-96 for specific performance with damages to transfer the title of the lot to their
name.

Thile that case was pending, Andrea sold the same lot to the Sps. Bitte through a
Deed of Sale purportedly notarized by Atty. Bolcan, Jr. Immediately thereafter, Rosa Elsa
sought for the cancellation of the sale docket as Civil Case No. 27,667-99.
 
Undisputed by the parties is the fact that Rosa Elsa earlier mortgaged the subject
property to Mindanao Development Bank. Upon failure to pay the loan on maturity, the
mortgage was foreclosed and sold at a public auction on December 14, 1998 as evidenced
by the annotation on the title, Entry No. 1173153. When the lot was foreclosed, the Sps.
Bitte, armed with the Deed of Absolute Sale, was able to redeem the same and thereafter
sold the same lot to Sps. Ganzon.

The RTC consolidated the cases and ruled that the Deed of Sale was valid and order the
Sps. Bitte to pay Rosa Elsa the remaining balance of the sale. Rosa Elsa appealed to the CA
and reversed the RTC decision. Hence, Sps. Bitte appealed to the SC.

Issue:
W/N the sale was valid and that the Sps. Yap and purchasers in good faith and for
value?

Ruling:
No; the sale was not valid and Sps. Yap were not purchasers in good faith and for
value.

Validity of the sale

A. The genuineness and due execution of the sale was not proven – The deed of sale
was indeed not a notarized document. There were no records in the National Archives,
Records Management and Archives Office, Regional Archives in Davao City relating to such
deed. In fact, based on the references indicated by Atty. Bolcan, such notary reference
pertain to a different transaction.

B. Granting arguendo that the document was genuine, the Deed of Sale is still
unenforceable – The court said that it is true, as what Sps. Bitte contend, a third party
cannot be bound by a revocation, making Apparent Authority survive the termination of the
agency, unless the third persons had notice or knowledge of such revocation. However, the
court said that such notice or knowledge may be express or implied from the acts of the
third person. In either case, when there is notice or knowledge, the Apparent Authority
cannot survive the termination.

The court found out that in this case there was implied notice of revocation in the part of
Sps. Bitte in relation with Article 1924 of the Civil Code which provides that “an agency is
revoked if the principal directly manages the business entrusted to the agent, dealing
directly with third persons.”

Initially, Sps. Bitte transacted with Andrea. But when it transacted later on with Rosa Elsa,
the agency of Andrea was later on revoked which makes the subsequent sale made by
Andrea, in Andrea’s personal capacity. There is then an implied notice of that revocation
when Sps. Bitte continued transacting with Rosa Elsa. Thus, the sale accordingly should be
unenforceable.

On Sps. Yap as purchases in good faith and for value

No, they cannot be considered as purchasers in good faith and for value. It must be
noted that when the sale was made to them, the land was still registered in the name of
Rosa Elsa as evidenced by the TCT. Knowing that the registration was under the name of a
person different than whom they transacted with, the Sps. Bitte, it should have prompted
Sps. Yap that there may be circumstances to warrant a defect in the title of Sps. Bitte.

8. Sunace v. NLRC 480 SCRA 146

Facts:
Sunace deployed Divina Montehermozo to Taiwan as a domestic helper for a contract
period of one year effective February 1, 1997. The deployment was under the aide of
Taiwanese broker Edmund Wang. After her one year contract, Divina continued working
with his employer Hang Rui Xiong for another 2 years extension. When Divina returned in
the Philippines, she filed a complaint in the NLRC against Sunace, her foreign employer and
Wang. She alleged that she was jailed for three months and was underpaid during her
three-yea stay in Taiwan and that the deduction of tax and savings for the last two years of
her stay was not refunded to her. Sunace countered that since in the last 2 yearsof her stay
was just an extension which was without the knowledge of Sunace, the latter cannot be held
liable therefrom.

The Labor Arbiter ruled in favor of Divina. LA stated that it cannot be held that
Sunace had no knowledge of the extension of Divina since Sunace has purportedly
continued communication with Divina’s employer. The case was then appealed to the NLRC
and affirmed the decision. The CA then affirmed the decision of the LA and NLRC ruling that
Sunace had imputed knowledge of the extension as it continued communicating with
Divina’s foreign employer and that it cannot deny such knowledge since the act of the
principal in extending the contract necessarily bound Sunace, being the agent of Divina’s
employer. Hence, the appeal by Sunace to the Supreme Court.

Issue:
W/N Sunace is liable?

Ruling:
No, Sunace cannot be held liable. The CA misapplied the rule on imputed knowledge
in the rules governing agency. It is the knowledge of the agent that binds the principal and
not the other way around. In this case, the act of principal in extending the contract cannot
impute knowledge on the part of Sunace. In the absence of any evidence that Suance knew
of the extention, it cannot be held liable.

Furthermore, the court ruled and as Sunace correctly pointed out, in a contract of
agency, there is implied revocation when the principal or the foreign employer of Divina
directly negotiated with Divina to extend her contract after the expiration of her original
contract. This argument proceed from Article 1924 of the Civil Code which provides:
“The agency is revoked if the principal directly manages the business entrusted to
the agent, dealing directly with third persons.”

Thus, Sunace cannot be held liable.

9. NATIONAL SUGAR TRADING and/or the SUGAR REGULATORY

ADMINISTRATION, vs. PHILIPPINE NATIONAL BANK
G.R. No. 151218 January 28, 2003

Facts:
Former President Marcos signed PD 579 authorizing Philippine Exchange Company, Inc.
(PHILEXCHANGE), a wholly owned subsidiary of Philippine National Bank (PNB) to serve as
the marketing agent of Philippine Sugar Commission or PHILSUCOM (a sole buying and
selling agent of sugar on the quedan permit level). Pursuant to PD 579, PHILEXCHANGE's
purchases of sugar shall be financed by PNB and the proceeds of sugar trading operations of
PHILEXCHANGE shall be used to pay its liabilities with PNB.
In February 1975, PD 659 was issued, constituting PHILEXCHANGE and/or PNB as the
exclusive sugar trading agencies of the government for buying sugar from planters or
millers and selling or exporting them. PNB then extended loans to PHILEXCHANGE for the
latter's sugar trading operations. At first, PHILEXCHANGE religiously paid its obligations to
PNB by depositing the proceeds of the sale of sugar with the bank. Subsequently, however,
with the fall of sugar prices in the world market, PHILEXCHANGE defaulted in the payments
of its loans.

The National Sugar Trading Corporation (NASUTRA) replaced PHILEXCHANGE as the

marketing agent of PHILSUCOM. Accordingly, PHILEXCHANGE sold and turned over all sugar
quedans to NASUTRA. To finance its sugar trading operations, NASUTRA applied for and was
granted a P408 Million Revolving Credit Line by PNB in 1981. Every time NASUTRA availed
of the credit line, its Executive Vice-President, Jose Unson, executed a promissory note in
favor of PNB with the following proviso:

In order to stabilize sugar liquidation prices at a minimum of P300.00 per picul, PHILSUCOM
issued on March 15, 1985 Circular Letter No. EC-4-85, considering all sugar produced during
crop year 1984–1985 as domestic sugar. Furthermore, PHILSUCOM's Chairman of Executive
Committee, Armando C. Gustillo proposed on May 14, 1985 the following liquidation scheme
of the sugar quedans assigned to PNB by the sugar planters:

Upon notice from NASUTRA, PNB shall credit the individual producer and millers loan
accounts for their sugar proceeds and shall treat the same as loans of NASUTRA.

Despite such liquidation scheme, NASUTRA/PHILSUCOM still failed to remit the interest
payments to PNB. As a result, thereof, then President Marcos issued PD 2005 dissolving
NASUTRA. NASUTRA's records of its sugar trading operations, however, were destroyed
during the Edsa Revolution in February 1986. On 1986, then President Corazon C. Aquino
issued Executive Order (EO) No. 18 creating the Sugar Regulatory Administration (SRA) and
abolishing PHILSUCOM. All the assets and records of PHILSUCOM including its beneficial
interests over the assets of NASUTRA were transferred to SRA. Still, NASUTRA (and
consequently the SRA) defaulted in its loans, ended up owing a total of P380 Million. PNB
received remittances from foreign banks amounting to P690 million representing the
proceeds of NASUTRA’s export. Said remittances were then applied by PNB to the unpaid
accounts of NASUTRA/PHILSUCOM with PNB and PHILEXCHANGE. As well as the 200M
PHILEXCHANGE account still on PHILSUCOM’s books.

NASUTRA then filed a petition for arbitration with the DOJ because PNB was unable to
furnish NASUTRA the necessary document and explanation as regards to the
disposition/application, accounting and restitution of the remittances. The SOJ ruled that the
accounts were validly applied as validly applied to outstanding account of NASUTRA to PNB
and that PNB should refund the 200M back to NASUTRA representing the amount of
remittance applied to PHILSUCOM account carried in the books of Philexchange. Both
parties appealed to the Office of the President which affirmed the same with modification.
NASUTRA filed with CA petition for review but such petition was dismissed, thus this
petition.

Issue:
Whether PNB validly offset the subject remittances to the accounts of NASUTRA with PNB
for the unpaid loans. (2 issues ni NASUTRA-PNB mao ni mainsert agency(offsetting) and
NASUTRA-PHILEXCHANGE account more on corpo nuon ni. Wala na nako giinclude corpo
related)

Held:
Yes.

Article 1306 of the New Civil Code provides:

Contracting parties may establish such stipulations, clauses terms and conditions as they may deem
convenient provided they are not contrary to law, morals, good customs, public order or public policy.

In the instant case, NASUTRA applied for a P408 million credit line with PNB in order to
finance its trading operations. PNB, on the other hand, approved said credit line in its
Resolution No. 68. Thereafter, NASUTRA availed of the credit and in fact drew
P389,246,324.60, in principal and accrued interest, from the approved credit line. Evidence
shows that every time NASUTRA availed of the credit, its Executive Vice President, Jose
Unson, executed a promissory note 31 in favor of PNB with the following proviso:

In the event that this note is not paid at maturity or when the same becomes due under
any of the provisions hereof, I/We hereby authorize the Bank, at its option and without
notice, to apply to the payment of this note, any and all moneys, securities and things of
 values which may be in the hands on deposit or otherwise belonging to me/us and for this
purpose, I/We hereby, jointly and severally, irrevocably constitute and appoint the Bank
to be my/our true Attorney-in-Fact with full power and authority for me/us and in my/our
name and behalf and without prior notice to negotiate, sell and transfer any moneys,
securities and things of value which it may hold, by public or private sale and apply the
proceeds thereof to the payment of this note.

While we agree with petitioners that the application of subject remittances cannot be
justified under Article 1278 in relation to Article 1279 of the Civil Code, considering that
some elements of legal compensation were lacking, application of the subject remittances to
NASUTRA's account with PNB and the claims of various PNB branches for interest on the
unpaid CY 1984–1985 sugar proceeds is authorized under the above-quoted stipulation.
PNB correctly treated the subject remittances for the account of NASUTRA as moneys in its
hands which may be applied for the payment of the note.

Also, the relationship between NASUTRA/SRA and PNB when the former constituted the
latter as its attorney-in-fact is not a simple agency. NASUTRA/SRA has assigned and
practically surrendered its rights in favor of PNB for a substantial consideration. To reiterate,
NASUTRA/SRA executed promissory notes in favor of PNB every time it availed of the credit
line. The agency established between the parties is one coupled with interest which cannot
be revoked or cancelled at will by any of the parties.

SC DENIED THE PETITION.

10. G.R. No. L-18616 March 31, 1964

VICENTE M. COLEONGCO vs. EDUARDO L. CLAPAROLS,

Facts:

Eduardo Claparols operated a factory of nails which imported their raw materials abroad.
Claparols entered into a contract with Vicente Coleongco whereby Coleongco will finance
and put up the funds required for the importation of the nail wire. It was agreed that
Coleongco would have the exclusive distribution of the product, and the "absolute care in
the marketing of these nails and the promotion of sales all over the Philippines", except the
Davao Agency; that Coleongco would "share the control of all the cash" from sales or
deposited in banks; that he would have a representative in the management; that all
contracts and transactions should be jointly approved by both parties; that proper books
would be kept and annual accounts rendered; and that profits and losses would be shared
"on a 50-50 basis". The contract was renewed from one year to year until 1958, and
Coleongco's share subsequently increased by 5% of the net profit of the factory.

Claparols executed in favor of Coleongco, at the latter's behest a special power of attorney
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.

However, he received a service of an alias writ of execution to enforce a judgment obtained

against him by the Philippine National Bank, despite the fact that on the preceding
September he had submitted an amortization plan to settle the account. He lateron found
out that Coleongco has been writing letters to the bank and without his knowledge telling
them that Claparol has no plans in meeting the obligations with the bank and has been
transacting in bad faith.

Claparols revoked the power of attorney and informed Coleongco via registered mail
demanding a full accounting at the same time. He also dismissed Coleongco as the assistant
manager of his plant. Coleongco filed a suit against Claparol for breach of contract. He
contended that the power of attorney was made to protect his interest in the financing
agreement and was one coupled with interest that Claparol cannot validy revoked. The
lower court decided in favor of Claparol.

Issue:

Whether the revocation of the power of attorney by Claparol is valid.

Held:

Yes. The Court ruled 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.

The decision appealed from is affirmed.