G.R. No.

L-24332, January 31, 1978

RAMON RALLOS, ADMINISTRATOR OF
THE ESTATE OF CONCEPCION RALLOS,
PETITIONER, VS. FELIX GO CHAN AND
SONS REALTY CORPORATION AND
COURT OF APPEALS, RESPONDENTS.

FACTS:

Concepcion and Gerundia Rallos were sisters and

registered co-owners of a parcel of land known as Lot No.
5983. The sisters executed an SPA in favor of their
brother, Simeon Rallos, authorizing him to sell the lot for
and in their behalf. Concepcion Rallos died. Simeon sold
the undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty Corporation
(FGCSRC) for P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu. The old TCT
was cancelled, and a new TCT was issued in the name of
the vendee.

Ramon Rallos as administrator of the estate of

Concepcion Rallos filed a complaint in the CFI, praying
(1) that the sale of the undivided share of Concepcion be
declared unenforceable, and said share be reconveyed to
her estate; (2) that the new TCT Certificate of Title be
cancelled and another title be issued in the names of the
corporation and the "Intestate estate of Concepcion
Rallos" in equal undivided shares; and (3) that plaintiff be
indemnified by way of attorney's fees and payment of
costs of suit. While the case was pending in the trial court,
both Simeon and his sister Gerundia died and they were
substituted by the respective administrators of their
estates.

The CFI declared the deed of sale null and void insofar as
the one-half pro-indiviso share of Concepcion in the
property in question, and ordered the Register of Deeds of
Cebu City to cancel the new TCT issued to FGCSRC, and
a new one issued. The latter was also asked to deliver
possession of the 1/2 share of the lot to the plaintiff.

On appeal, the CA ruled in favor of FGCSRC, sustaining

the sale in question. Rallos moved for reconsideration, but
was denied. Hence, this petition.

ISSUE:
Whether or not the sale of the undivided share of
Concepcion Rallos is valid although it was executed by
the agent after the death of his principal? - No. It is
unenforceable.
Whether or not the fact of knowledge of the death of the
principal is a material factor in determining the legal
effect of an act performed after such death? - Yes.
RULING:

Agency is personal, representative, and derivative  in

nature. By reason of the very nature of the relationship
between principal and agent, agency is extinguished by
the death of the principal or of the agent. However,
certain exceptions apply. An act done by the agent after
the death of his principal is valid and effective only under
two conditions, viz: (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 one will render the act of the agent
invalid and unenforceable.

In the instant case, the agent, Simeon Rallos, knew of the

death of his principal at the time he sold the latter's share,
as clearly inferred from his pleadings. On the basis of the
established knowledge of Simeon Rallos concerning the
death of his principal, Concepcion, Article 1931 of the
Civil Code is inapplicable. 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 CA’s findings cannot be sustained as it ignores the
existence of the general rule enunciated in Article 1919
that the death of the principal extinguishes the agency.
That being the general rule it follows a fortiori that any
act of an agent after the death of his principal is void ab
initio  unless the same falls under the exceptions provided
for in the aforementioned Articles 1930 and 1931.

By reason of the very nature of the relationship between

principal and agent, agency is extinguished ipso jure 
upon the death of either principal or agent. Although a
revocation of a power of attorney to be effective must be
communicated to the parties concerned, yet a revocation
by operation of law, such as by 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." With death,
the principal's will ceases or is terminated; the source of
authority is extinguished.

The Civil Code does not impose a duty on the heirs to

notify the agent of the death of the principal. The fact that
no notice of the death of the principal was registered on
the certificate of title of the property in the Office of the
Register of Deeds, is not fatal to the cause of the estate of
the principal.

The Civil Code, expressly provides for two exceptions to

the general rule that death of the principal revokes ipso
jure  the agency, to wit: (1) that the agency is coupled
with an interest (Art. 1930), and (2) that the act of the
agent was executed without knowledge of the death of the
principal and the third person who contracted with the
agent acted also in good faith (Art. 1931). In the case
before Us the agent Ramon Rallos executed the sale
notwithstanding notice of the death of his principal.
Accordingly, the agent's act is unenforceable against the
estate of his principal.

The CA’s decision was set aside, and the CFI’s ruling was
affirmed en toto.

====================

G.R. NO. 144805, June 08, 2006

EDUARDO V. LINTONJUA, JR. AND
ANTONIO K. LITONJUA, PETITIONERS,
VS. ETERNIT CORPORATION (NOW
ETERTON MULTI- RESOURCES
CORPORATION), ETEROUTREMER, S.A.
AND FAR EAST BANK & TRUST
COMPANY, RESPONDENTS.

FACTS:
The Eternit Corporation (EC), a corporation organized
and registered under Philippine laws, is engaged in the
manufacture of roofing materials and pipe products. Its
manufacturing operations were conducted on eight parcels
of land in Mandaluyong, with a total area of 47,233
square meters. The properties were covered by TCT[s,
under the name of Far East Bank & Trust Company, as
trustee. 90% percent of the shares of stocks of EC 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
GM and President of EC, while Claude Frederick Delsaux
was the RD for Asia of ESAC. Both had their offices in
Belgium.

In 1986, the management of ESAC grew concerned about

the political situation in the Philippines and wanted to
stop its operations in the country. Michael Adams, a
member of EC's Board of Directors, was tasked to dispose
of the eight parcels of land. Adams engaged the services
of realtor/broker Lauro G. Marquez.

Marquez offered the parcels of land and the

improvements thereon to Eduardo B. Litonjua, Jr. In a
Letter, 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.
Eduardo Litonjua, Jr. responded to the offer. Marquez
showed the property to Eduardo Litonjua, Jr., and his
brother Antonio. 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. It was only on February 12, 1987 that 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."

Marquez furnished Eduardo Litonjua, Jr. with a copy of

the telex sent by Delsaux. Litonjua, Jr. accepted the
counterproposal of Delsaux. Marquez conferred with
Glanville, and in a Letter dated February 26, 1987,
confirmed that the Litonjua siblings had accepted the
counter-proposal 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.

The Litonjua brothers deposited the amount of

US$1,000,000.00 with the Security Bank & Trust
Company and drafted an Escrow Agreement (An escrow
agreement is a contract that defines an arrangement between parties where
one party deposits an asset with a third party. This third party then delivers
the asset to the second party when the contract conditions are met.) to
expedite the sale.

Sometime later, Marquez and the Litonjua brothers

inquired from Glanville when the sale would be
implemented. In a telex dated April 22, 1987, Glanville
informed Delsaux that he had met with the buyer, which
had given him the impression that "he is prepared to press
for a satisfactory conclusion to the sale."  He also
emphasized to Delsaux that the buyers were concerned
because they would incur expenses in bank commitment
fees as a consequence of prolonged period of inaction.

Meanwhile, with the assumption of Aquino as President

of the Republic of the Philippines, 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 dated May 7, 1987, 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.

The Litonjuas then filed a complaint for specific

performance and damages against EC (now the Eterton
Multi-Resources Corporation.) Meanwhile, EC and ESAC
alleged that since Eteroutremer was not doing business in
the Philippines, it cannot be subject to the jurisdiction of
Philippine courts; the Board and stockholders of EC never
approved any resolution to sell subject properties nor
authorized Marquez to sell the same; and the telex of Jack
Glanville was his own personal making which did not
bind EC.

The trial court rendered judgment in favor of defendants

and dismissed the amended complaint, finding that there
is no valid and binding sale between the plaintiffs and
said defendants.

The trial court also declared that since the authority of the
agents/realtors was not in writing, the sale is void and not
merely unenforceable, and as such, could not have been
ratified by the principal. In any event, such ratification
cannot be given any retroactive effect. Plaintiffs could not
assume that defendants had agreed to sell the property
without a clear authorization from the corporation
concerned, that is, through resolutions of the Board of
Directors and stockholders. The trial court also pointed
out that the supposed sale involves substantially all the
assets of defendant EC which would result in the eventual
total cessation of its operation.

The Litonjuas appealed to the CA, alleging that Marquez

acted merely as a broker or go-between and not as agent
of the corporation; hence, it was not necessary for him to
be empowered as such by any written authority. They
further claimed that an agency by estoppel was created
when the corporation clothed Marquez with apparent
authority to negotiate for the sale of the properties. 
However, since it was a bilateral contract to buy and sell,
it was equivalent to a perfected contract of sale, which the
corporation was obliged to consummate.

The CA rendered judgment affirming the decision of the

RTC. The Litonjuas filed a motion for reconsideration,
which was also denied.

ISSUES:

1. Whether or not there was a perfected contract of sale.

No.
2. Whether or not Marquez was merely a broker.
3. Whether or not a written authority from the BoD of EC
was necessary.

RULING:
The petition has no merit.

In the absence of express written terms creating the

relationship of an agency, the existence of an agency is a
fact question.  Whether an agency by estoppel was created
or whether a person acted within the bounds of his
apparent authority, and whether the principal is estopped
to deny the apparent authority of its agent are, likewise,
questions of fact to be resolved on the basis of the
evidence on record. The findings of the trial court on such
issues, as affirmed by the CA, are conclusive on the
Court, absent evidence that the trial and appellate courts
ignored, misconstrued, or misapplied facts and
circumstances of substance which, if considered, would
warrant a modification or reversal of the outcome of the
case.

It was the duty of the petitioners to prove that respondent

EC had decided to sell its properties and that it had
empowered Adams, Glanville and Delsaux or Marquez to
offer the properties for sale to prospective buyers and to
accept any counter-offer. Petitioners likewise failed to
prove that their counter-offer had been accepted by
respondent EC, through Glanville and Delsaux. When
specific performance is sought of a contract made with an
agent, the agency must be established by clear, certain
and specific proof.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. 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. 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. The
declarations of the agent alone are generally insufficient
to establish the fact or extent of his/her authority.

By the contract of agency, a person binds himself to

render some service or to do something in representation
on behalf of another, with the consent or authority of the
latter.  Consent of both principal and agent is necessary to
create an agency.  The principal must intend that the agent
shall act for him; the agent must intend to accept the
authority and act on it, and the intention of the parties
must find expression either in words or conduct between
them.

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. 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 as plaintiffs below, failed to

adduce in evidence any resolution of the Board of
Directors of respondent 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.
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.

While Glanville was the President and GM of respondent

EC, 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
respondent EC; a board resolution evincing the grant of
such authority is needed to bind EC 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 respondent EC.

The petitioners cannot feign ignorance of the absence of

any regular and valid authority of respondent EC
empowering Adams, Glanville or Delsaux to offer the
properties for sale and to sell the said properties to the
petitioners.  A person dealing with a known agent is not
authorized, under any circumstances, blindly to trust the
agents; statements as to the extent of his powers; such
person must not act negligently but must use reasonable
diligence and prudence to ascertain whether the agent acts
within the scope of his authority. The settled rule is that,
persons dealing with an assumed agent are bound at
their peril, and if they would hold the principal liable,
to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to
prove it. In this case, the petitioners failed to discharge
their burden; hence, petitioners are not entitled to
damages from respondent EC.

It appears that Marquez acted not only as real estate

broker for the petitioners but also as their agent.  As
gleaned from the letter of Marquez to Glanville, on
February 26, 1987, he confirmed, for and in behalf of the
petitioners, that the latter had accepted such offer to sell
the land and the improvements thereon. However, we
agree with the ruling of the appellate court that Marquez
had no authority to bind respondent EC to sell the subject
properties.  A real estate broker is one who negotiates the
sale of real properties. His business, generally speaking, is
only to find a purchaser who is willing to buy the land
upon terms fixed by the owner.  He has no authority to
bind the principal by signing a contract of sale. Indeed, an
authority to find a purchaser of real property does not
include an authority to sell.
[47]

Equally barren of merit is petitioners' contention that

respondent EC is estopped to deny the existence of a
principal-agency relationship between it and Glanville or
Delsaux.  For an agency by estoppel to exist, the
following must be established: (1) the principal
manifested a representation of the agent's authority or
knowlingly allowed the agent to assume suchauthority;
(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.[48] 
An agency by estoppel, which is similar to the doctrine of
apparent authority, requires proof of reliance upon the
representations, and that, in turn, needs proof that the
representations predated the action taken in reliance.[49]
Such proof is lacking in this case. In their
communications to the petitioners, Glanville and Delsaux
positively and unequivocally declared that they were
acting for and in behalf of respondent ESAC.

Neither may respondent EC be deemed to have ratified

the transactions between the petitioners and respondent
ESAC, through Glanville, Delsaux and Marquez. The
transactions and the various communications inter se
were never submitted to the Board of Directors of
respondent EC for ratification.

IN LIGHT OF ALL THE FOREGOING, the petition is

DENIED for lack of merit.  Costs against the petitioners.

SO ORDERED.