G.R. No. 28050, March 13, 1928
FEDERICO VALERA, plaintiff-appellant, vs. MIGUEL VELASCO, defendant-appellee.

FACTS

Federico Valera (principal) appointed Miguel Velasco as his attorney-in-fact to manage his usufructuary right over a property in Manila. After rendering accounts, a misunderstanding arose when the liquidation showed Valera owed Velasco P1,100. Velasco sued Valera to collect this debt, obtained a favorable judgment, and levied execution on Valera’s usufructuary right. The sheriff sold the usufruct at public auction to Velasco. Subsequently, Valera sold his right of redemption to Eduardo Hernandez, who later resold it back to Valera. This right of redemption was then levied upon by another creditor, Salvador Vallejo, sold at public auction to Vallejo, and eventually transferred to Velasco. Valera filed a complaint seeking, among others, the annulment of the various sales, a declaration that Velasco remained his agent, an accounting, and damages. The trial court dismissed the complaint, ruling Valera failed to prove his cause of action.

ISSUE

1. Whether the agency relationship between Valera and Velasco was terminated by Velasco’s act of filing a lawsuit against his principal.
2. Whether the subsequent sales and transfers of the right of redemption (involving Hernandez, Vallejo, and Velasco) were valid, thereby vesting title to the usufruct in Velasco.

RULING

The Supreme Court AFFIRMED the trial court’s judgment, dismissing Valera’s complaint.

1. On the Termination of Agency: The Court held that the agency was terminated. Under Articles 1732 and 1736 of the Civil Code, an agency may be terminated by the agent’s withdrawal. The act of the agent (Velasco) filing a civil action against his principal (Valera) to collect a debt arising from their agency accounts constituted a clear and express renunciation of the agency. This antagonistic act created a rupture in their fiduciary relationship, which was “more expressive than words” and equivalent to a withdrawal. Therefore, Velasco was no longer Valera’s agent when the subsequent transactions occurred.

2. On the Validity of the Sales and Transfers: The Court upheld the validity of the series of transactions. Velasco’s purchase of the usufruct at the execution sale was valid. Neither Valera nor his transferee, Eduardo Hernandez, validly exercised the right of redemption within the legal period. Consequently, Velasco’s title became absolute. The subsequent levy and sale of the right of redemption to Vallejo, and its eventual transfer to Velasco, further consolidated Velasco’s title. Any alleged defect in the resale from Hernandez back to Valera was irrelevant because Hernandez failed to assert his rights via a third-party claim or an action within the redemption period. Since the redemption period had lapsed, Valera lost all rights to the usufruct.

3. On the Prayer for Accounting and Damages: The Court denied the accounting and damages. As the agency was terminated and Velasco had become the absolute owner of the usufruct through valid purchases, he had no obligation to account for rents received after his title became absolute.