G.R. No.
L-15568 November 8, 1919
Philpotts vs. Philippine Manufacturing Co. and Berry
W.G. Philpotts (Petitioner) , a stockholder in Philippine Manufacturing Company sought to compel respondents to
permit plaintiff, a person or by some authorized agent or attorney to inspect and examine the records of the
business transacted by said company since January 1, 1918.
Respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything
relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place
records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his
duly authorized agent or attorney. Petitioner desires to exercise said right through agent or attorney.
Petition is filed originally in the Supreme Court under authority of Section 515of Code of Civil Procedure, which
gives SC concurrent jurisdiction with then Court of First Instance in cases where any corporation or person
unlawfully excludes the plaintiff from use and enjoyment and some right he is entitled.
ISSUE:
Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper
agent or attorney of the stockholder as well as by stockholder in person.
HELD:
Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as well as by
stockholder in person. The right of inspection / examination into corporate affairs given to a stockholder in section
51 of the Corporation Law which states: “The records of all business transactions of the corporation and the
minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the
corporation at reasonable hour” can be exercised either by himself or by any duly authorized
representative or attorney in fact, and either with or without the attendance of the stockholder. This is in
conformity with the general rule that what a man may do in person he may do through another.
W.G. Philpotts vs. Philippine Manufacturing Co.
Facts:
The petitioner seeks to compel the respondent to permit the plaintiff in person or an authorized agent/ attorney to
inspect and examine the records of the business transacted by the company.
Issue:
Whether the right to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as
the stockholder
Held:
YES. The right of inspection given to a stockholder can be exercised either by himself or by any proper
representative or atty-in-fact, and either with or without the attendance of the stockholder. GR: What a man may do
in person, he may do through another. The right of inspection to stockholders of corporations are to be liberally
construed and that said right may be exercised through any other properly authorized person.
Rallos vs. Felix Go Chan & Realty Corp., Munoz-Palma
Plaintiff: Ramon Rallos
Defendant: Felix Go Chan & Sons Realty Corporation
Facts: Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land known
as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of Title No. 11116 of the
Registry of Cebu.They executed a special power of attorney in favor of their brother, Simeon Rallos,
authorizing him to sell such land for and in their behalf. After Concepcion died, Simeon Rallos sold the
undivided shares of his sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for
the sum of P10,686.90. New TCTs were issued to the latter. Petitioner Ramon Rallos, administrator of
the Intestate Estate of Concepcion filed a complaint praying (1) that the sale of the undivided share of
the deceased Concepcion Rallos in lot 5983 be unenforceable, and said share be reconveyed to her
estate; (2) that the Certificate of ‘title issued in the name of Felix Go Chan & Sons Realty Corporation be
cancelled and another title be issuedin the names of the corporation and the “Intestate estate of
Concepcion Rallos” in equal undivided and (3) that plaintiff be indemnified by way of attorney’s fees and
payment of costs of suit.
Issues:
1) WON sale was valid although it was executed after the death of the principal, Concepcion.
2) WON sale fell within the exception to the general rule that death extinguishes the authority of the
agent
3) WON agent’s knowledge of the principal’s death is a material factor.
4) WON petitioner must suffer the consequence of failing to annotate a notice of death in the title (thus
there was good faith on the part of the Respondent vendee)
5) WON good faith on the part of the respondent in this case should be treated parallel to that of an
agent
CFI: Sale of land was null and void insofar as the one-half pro-indiviso share of Concepcion Rallos
Ordered the issuance of new TCTs to respondent corporation and the estate of Concepcion in
theproportion of ½ share each pro-indiviso and the payment of attorney’s fees and cost of litigation
Respondent filed cross claim against Simon Rallos(*Simon and Gerundia died during pendency of case)
juan T. Borromeo, administrator of the Estate of Simeon Rallos was ordered to pay defendant the price
of the ½ share of the land (P5,343.45) plus attorney’s fees [Borromeo filed a third party complaint
against Josefina Rallos, special administratrix of the Estate of Gerundia] Dismissed without prejudice to
filing either a complaint against the regular administrator of the Estate of Gerundia Rallos or a claim in
the Intestate-Estate of Cerundia Rallos, covering the same subject-matter
CA: CFI Decision reversed, upheld the sale of Concepcion’s share.MR: denied.innocent purchaser for a
value of a land.
RAMON RALLOS v. FELIX GO CHAN AND SONS REALTY CORPORATION
(1978)
J. Muñoz Palma
Under what topic: Death; agency coupled with an interest
Petitioner: Ramon Rallos, administrator of the estate of Concepcion Rallos
Respondent: Felix Go Chan and Sons Realty Corporation and CA
Synopsis: This is a case of an attorney-in-fact, Simeon Rallos, who after of the death of his principal, Concepcion
Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of attorney which the principal had
executed in his favor. The administrator of the estate of Concepcion went to court
to have the sale declared unenforceable and to recover the disposed share. The trial court granted the relief
prayed for, and nullified the sale with respect to the ½ pro indiviso share of Concepcion; but upon appeal the Court
of Appeals upheld the validity of the sale. SC reversed the CA ruling and reinstated the
trial court decision. The agency was extinguished by operation of law because of the death of the principal and this
case does not fall under any of the exceptions.
Doctrine:
General Rule: Agency is extinguished by the death of the principal
Exceptions:
ART. 1930. The agency shall remain in full force and effect even after the death of the principal, 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.
ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause
which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have
contracted with him in good faith.
Requisites: (1) that the agent acted without knowledge of the death of the principal and (2) that the third person
who contracted with the agent himself acted in good faith. Good faith here means that the third person was not
aware of the death of the principal at the time he contracted with said agent. These two requisites must concur
the absence of onewill render the act of the agent invalid and unenforceable.
Facts:
Concepcion and Gerundia Rallos were sisters and co-owners of a parcel of land in Cebu. On April 1954,
the sisters executed a special power of attorney (SPA) in favor of their brother Simeon,
authorizing him to sell for and in their behalf said lot. On March 1955, Concepcion died. Simeon sold the
undivided shares of the sisters in the lot to Respondent Felix Go Chan and Sons Realty Corporation (FGC) for
₱ 10 686.90. Petitioner Ramon Rallos, the administrator of Concepcion’s intestate estate, filed a
complaint before CFI Cebu, praying that: 1.) the sale of Concepcion’s undivided
share be declared unenforceable and that the same be reconveyed to her estate; 2.) the TCT issued in favor of
FGC be cancelled and new one be issued in the names of the corporation (FGC) and the “Intestate Estate of
Concepcion Rallos” in equal undivided shares; and 3.) he be indemnified by way of attorney’s fees and
payment of costs. The CFI ruled in favor of Ramon and ordered FGC to deliver the possession of the
undivided one-half share of the lot to the former. CA granted FGC’s appeal, sustaining the validity of the
sale in question. MR was denied. Hence, this Petition for Review on certiorari.
Issue: WON the sale conducted after Concepcion’s death was valid.
Ruling:
NO. CA REVERSED.
Extinguishment of agency by cause of death General Rule NCC 1919. Agency is extinguished xxx (3) By the
death, civil interdiction, insanity or insolvency of the principal or agent; xxx By the very nature of the
relationship between the principal and the agent, agency is extinguished by the death of either one of them
Manresa: the juridical basis of agency is representation, there being an integration of the personality of
the principal into that of the agent. Therefore, it is impossible for representation to continue to exist
once the death of either is established Exceptions NCC 1930
and 1931 provide for the exceptions. Under NCC 1931, an act done by the agent after the principal’s death is
valid if: 1) the agent acted without knowledge of the Art. 1930. The agency shall remain in full force and
effect even after the death of the principal, 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. Death
of the principal; and 2) the third person who contracted with the agent acted in good faith (third person not
aware of the principal’s death at the time he contracted with the agent)
Application to the case
The SC found that Simeon was aware of Concepcion’s death when he sold the lot, This can be inferred from
the pleadings he filed before the CFI. This is also a finding of fact made by the CFI and the CA. Thus, NCC 1931
is inapplicable to this case. The law expressly requires for its application lack of knowledge on the part of the
agent of the death of his principal; it is not enough that the third person acted in good faith. The general rule is
that the death of the principal extinguishes the agency. Thus, any act of an agent after the death of the
principal is void ab initio unless the same falls under the
exceptions provided for under NCC 1930 and 1931. Being an exception to the general rule, NCC 1931must
be strictly construed. Good faith of the vendee. The CA upheld the sale because it found that FGC acted in
good faith, relying on: 1) the power of attorney which was duly registered on the original certificate of title;
and 2) the absence of notice of death on the certificate of title. The SC held that revocation by an act of the
principal as a mode of terminating an agency must be distinguished from revocation by operation of
law, such as death.
2. Art. 1931. Anything done by the agent, without the knowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid and shall be fully effective with respect to third person
who may have contracted with him in good faith. Although a revocation of a power of attorney to be effective
must be communicated to the parties concerned, a revocation by operation of law (ipso jure), such as the
death of the principal, is, as a rule, instantaneously effective inasmuch as “by legal fiction the agent’s
exercise of authority is regarded as an execution of the principal’s
continuing will.” The NCC does not impose a duty on the heirs to notify the agent of the death of the
principal. NCC 1932 only requires the agent’s heirs to notify the principal of the agent’s death. Thus, the fact
that no notice of death of the principal was registered on the certificate of title in the
Office of the Register of Deeds is not fatal to the Petitioner’s cause.
Dispositive:
CA decision dismissed; CFI decision reinstated
ORIENT AIR SERVICES & HOTEL REPRESENTATIVES vs. COURT OF APPEALS and AMERICAN AIRLINES
INCORPORATED
G.R. No. 76931. May 29, 1991
(DIGEST)
Principal:
AMERICAN AIRLINES INCORPORATED
Agent:
ORIENT AIR SERVICES & HOTEL REPRESENTATIVES
FACTS:
The respondent, American Air, is an air carrier offering passenger and air cargo transportation in the Philippines,
and Orient Air & et. al., entered into a General Sales Agency Agreement (GSA) whereby the former authorized the
latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation.
-----------------------------------
General Sales Agency Agreement (GSA):
1.Representation of American by Orient Air Services Orient Air Services will act on American’s behalf as its
exclusive General Sales Agent within the Philippines, including any United States military installation therein which
are not serviced by an Air Carrier Representation Office (ACRO), for the sale of air passenger transportation. The
services to be performed by Orient Air Services shall include: (a) soliciting and promoting passenger traffic for the
services of American and, if necessary, employing staff competent and sufficient to do so; (b) providing and
maintaining a suitable area in its place of business to be used exclusively for the transaction of the business of
American; (c) arranging for distribution of American’s timetables, tariffs and promotional material to sales agents
and the general public in the assigned territory; (d) servicing and supervising of sales agents (including such sub-
agents as may be appointed by Orient Air Services with the prior written consent of American) in the assigned
territory including if required by American the control of remittances and commissions retained; and (e) holding
out a passenger reservation facility to sales agents and the general public in the assigned territory.
5. Commissions:
(b)Overriding commission
In addition to the above commission American will pay Orient Air Services an overriding commission of 3% of the
tariff fares and charges for all sales of transportation over American’s service by Orient Air Service or its sub-
agents.
13.Termination
American may terminate the Agreement on two days’ notice in the event Orient Air Services is unable to transfer
to the United States the funds payable by Orient Air Services to American under this Agreement. Either party may
terminate the Agreement without cause by giving the other 30 days’ notice by letter, telegram or cable.
-------------------------------------
:
Respondent (American Air)’s contention:
It alleged that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net
proceeds of sales for the months of January to March 1981 in the amount of US $254,400.40, American Air by itself
undertook the collection of the proceeds of tickets sold originally by Orient Air and
terminated forthwith the Agreement in accordance with Paragraph 13 thereof. American Air instituted suit against
Orient Air for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining
Order, averring the basis for the termination of the Agreement as well as therein defendant’s previous record of
failures “to promptly settle past outstanding refunds of which there were available funds in the possession of the
defendant, to the damage and prejudice of plaintiff.
Eduardo Litonjua, Jr. and Antonio Litonjua v. Eternit Corp, and Eteroutremer S.A. & Far East Bank &
Trust Co. (2006)
Callejo, Sr., J.
Facts:
Eternit Corp. is in the manufacture of roofing materials and pipes. It conducted manufacturing operations on 8
parcels of land in Mandaluyong, with Far East Bank as trustee. 90% of the shares of stocks of Eternit Corp. were
owned by Eteroutremer Corp (ESAC) - a corp organized and registered under the laws of Belgium. ESAC
management grew concerned about the political situation in the Philippines and wanted to stop its
operations here. [ martial law,1986] properties for P27mil and that the terms of the sale were subject to
negotiation. He showed the land + improvements to Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The
Litonjua siblings offered to buy the property for P20mil cash. Marquez apprised the General Manager/President of
Eternit Corp (Jack Glanville) and Regional Director for Asia of ESAC (Claude Delsaux) of the Litonjua siblings’ offer.
Delsaux did not respond. Glanville telexed Delsaux in Belgium, inquiring on his position to the offer. Delsaux
answered that based on the “Belgian/Swiss decision,” (meaning: the Belgian/Swiss component of ESAC) the final
offer was $1mil and P2.5mil for all existing obligations prior to final liquidation. Litonjua, Jr. accepted the
counterproposal. Broker Marquez stated that the Litonjua siblings would confirm full payment within 90 days after
execution of all documents of sale, with the governmental clearances. The Litonjua brothers deposited the amount
of $1mil with Security Bank and drafted an Escrow Agreement to expedite the sale. Later on, with Cory as
President, the political situation in the Philippines improved. President Glanville told Broker Marquez that the sale
would not push through. Tthe decision has been taken at a Board Meeting not to sell the properties. The Litonjuas
wrote Eternit demanding payment for damages they had suffered because of the aborted sale. Eternit rejected
this.
Issue:
Were Broker Marquez, Pres Glanville, and Reg Dir Delsaux authorized by Eternit to act as its agents in the sale of
the properties of Eternit?
RULING:
NO.
In an agent-principal relationship, the personality of the principal is extended through the facility of
the agent. The agent, by legal fiction, becomes the principal, authorized to perform all acts which the
principal would have him do. This 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.
A corporation is a juridical person separate and distinct from its members or stockholders. It is not
affected by the personal rights, obligations and transactions of the members/stockholders. It may act
only through its board of directors or through its officers or agents.
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.
Section 36 of the Corporation Code: “A corporation may sell or convey its real properties, subject to the
limitations prescribed by law and the Constitution.” The property of a corporation is not the property
of the stockholders or members. These 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 and the execution of the deed of sale, can be performed by the
corporation only by officers or agents or by specific acts of the board of directors.
Absent such valid authorization, the rule is that the declarations of an individual director, but not in the
course of or connected with the performance of the authorized duties of the director, are not binding on
the corp.
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.
Agency may be oral unless the law requires a specific form.
To create or convey real rights over immovable property, a special power of attorney is necessary.
The Litonjuas failed to produce evidence any resolution of the Board of Directors of Eternit empowering
the broker, president, or reg dir as its agents, to sell in its behalf, the property. The bare fact that Delsaux
may have been authorized to sell to a certain stockholder (Ruperto Tan) the shares of stock cannot be
used as basis for Litonjua’s claim that he had likewise been authorized by Eternit to sell the land.
While Glanville was the Pres and Gen Mngr of Eternit 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.
A board resolution of the grant of authority is needed to bind Eternit to any agreement on the sale of the
properties.
The board resolution is not a mere formality but is a condition sine qua non to bind Eternit.
Requisites of an agency by estoppels:
1. The principal manifested a representation of the agent’s 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.
An agency by estoppel, which is similar to the doctrine of apparent authority, requires proof of reliance upon the
representations. Proof is lacking in this case.
Neither may Eternit be deemed to have ratified the transactions through Glanville, Delsaux and Marquez. The
transactions and the communications were never submitted to the Board of Directors of Eternit for ratification.
Petition denied.
Eduardo Litonjua, Jr. and Antonio Litonjua v. Eternit Corp, and Eteroutremer S.A. & Far East Bank & Trust Co.
(2006)
Facts:
The Eternit Corporation manufactures roofing materials and pipe products. 90% of the shares of stocks of
EC were owned by Eteroutreme S.A. Corporation, a corporation registered under the laws of Belgium. Glanville
was the General Manager and President of EC, while Delsaux was the Regional Director for Asia of ESAC. In 1986,
because of the political situation in the Philippines, the management of ESAC wanted to stop its operations and to
dispose the land in Mandaluyong City. They engaged the services of realtor/broker Lauro G Marquez.
Marquez thereafter offered the land to Eduardo B. Litonjua, Jr. for Php 27,000,000.00. Litonjua counter offered
Php 20,000,000.00 cash. Marquez apprised Glanville & Delsaux of the offer. Delsaux sent a telex stating that, based
on the “Belgian/Swiss decision”, the final offer was US$1,000,000.00 and Php 2,500,000.00. The Litonjua brothers
deposited US$ 1,000,000.00 with the Security Bank & Trust Company, and drafted an Escrow Agreement to
expedite the sale.
Meanwhile, with the assumption of Corazon Aquino as President, the political situation improved. Marquez
received a letter from Delsaux that the ESAC Regional Office decided not to proceed with the sale. When informed
of this, the Litonjuas filed a complaint for specific performance and payment for damages on account of the
aborted sale. Both the trial court and appellate court rendered judgment in favour of defendants and dismissed
the complaint.
The lower court declared that since the authority of the agents/realtors was not in writing, the sale is void and not
merely unenforceable.
Issue: WON the appellate court committed grave error of law in holding that Marquez needed a written authority
from respondent ETERNIT before the sale can be perfected.
Ruling:
Respondents maintain that Glanville, Delsaux and Marquez had no authority from the stockholders of EC
and its Board of Director to offer the properties for sale to the petitioners.
Petitioners assert that there was no need for a written authority from the Board of Directors of EC for
Marquez to validly act as broker. As broker, Marquez was not an ordinary agent because his only job as a broker
was to look for a buyer and to bring together the parties to the transaction. He was not authorized to sell the
properties; hence, petitioners argue, Article 1874 of the NCC does not apply.
A corporation is a juridical person separate and distinct from its 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 by its board resolution, through its officers or agents. 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.
Agency may be oral unless the law requires specific form. However, to create or convey real rights over
immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion
thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void.
In this case, the petitioners failed to adduce in evidence any resolution of the BOD of EC empowering
Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of
land owned by it.
Moreover, the evidence of petitioners shows that Adams and Glanville acted on the authority of Delsaux,
who, in turn, acted on the authority of respondent ESAC, through its Committee for Asia,the Board of Directors of
respondent ESAC, and the Belgian/Swiss component of the management of respondent ESAC. The offer of Delsaux
emanated only from the "Belgian/Swiss decision," and not the entire management or Board of Directors of
respondent ESAC. While it is true that petitioners accepted the counter-offer of respondent ESAC, respondent EC
was not a party to the transaction between them; hence, EC was not bound by such acceptance.
