G.R. No. 6906, September 27, 1911
FLORENTINO RALLOS, ET AL., plaintiffs-appellees, vs. TEODORO R. YANGCO, defendant-appellant.

FACTS

Defendant Teodoro R. Yangco sent a circular letter to plaintiff Florentino Rallos, introducing Florentino Collantes as his attorney-in-fact with authority to conduct a shipping and commission business on his behalf. Relying on this representation, the plaintiffs transacted with Collantes as Yangco’s agent, sending produce for sale on commission. In February 1909, plaintiffs sent 218 bundles of tobacco to Collantes, who sold them and retained the proceeds (P1,537.08) for himself. Unknown to the plaintiffs, Yangco had already terminated Collantes’s agency prior to this transaction, but Yangco gave no notice of such termination to the plaintiffs.

ISSUE

Whether the defendant principal (Yangco) is liable for the proceeds of the tobacco sold by his former agent (Collantes) after the agency had been terminated but without notice to the plaintiffs who dealt with the agent in good faith.

RULING

Yes. The Supreme Court affirmed the lower court’s judgment holding Yangco liable. Having publicly represented Collantes as his agent and invited the plaintiffs to transact with him, it was Yangco’s duty to give due and timely notice of the termination of the agency to those who had previously dealt with the agent. Failure to provide such notice renders the principal responsible for acts done by the former agent within the scope of the former authority, to third persons who, in good faith and without negligence, continued to deal with the agent without knowledge of the termination.