Escolar Documentos
Profissional Documentos
Cultura Documentos
G.
company. By the plain language of sections 515 and 222 of our Code of
PHILPOTTS, petitioner,
vs.
PHILIPPINE
COMPANY
and
F.
N.
BERRY, respondents.
Lawrence
and
was the only absolutely necessary party. In the Ohio case of Cincinnati
Volksblatt Co. vs. Hoffmister (61 Ohio St., 432; 48 L. R. A., 735), only
Ross
for
petitioner.
STREET, J.:
The petitioner, W. G. Philpotts, a stockholder in the Philippine
customarily
the person against whom the personal orders of the court would be
court under the authority of section 515 of the Code of Civil Procedure,
unlawfully excludes the plaintiff from the use and enjoyment of some
charged
with
the
custody
of
all
documents,
Section 222 of our Code of Civil Procedure is taken from the California
Code,
and
decision
of
the
California
Supreme
Court
The first point made has reference to a supposed defect of parties, and
Barber vs. Mulford (117 Cal., 356) is quite clear upon the point that
it is said that the action can not be maintained jointly against the
corporation and its secretary without the addition of the allegation that
the latter is the custodian of the business records of the respondent
The real controversy which has brought these litigants into court is
upon the question argued in connection with the second ground of
This is in conformity with the general rule that what a man may do in
anything relating to the affairs of the company, and the petition prays
the respondents.
the United States, where it is generally held that the provisions of law
(86 Ala., 467), "The right may be regarded as personal, in the sense
person.
that only a stockholder may enjoy it; but the inspection and
examination may be made by another. Otherwise it would be
section 51 of Act No. 1459, which reads as follows: "The record of all
contained in Martin vs. Bienville Oil Works Co. (28 La., 204), where it is
were debarred the right of procuring in his behalf the services of one
who could exercise it." In Deadreck vs. Wilson (8 Baxt. [Tenn.], 108),
the court said: "That stockholders have the right to inspect the books
MENDOZA, J.:
Court assailing the (1) July 27, 2010 Decision[1] of the Court of
Appeals (CA) in CA-G.R. CV No. 84725, which affirmed with modification the
In order that the rule above stated may not be taken in too sweeping a
September 27, 2004 Decision[2] of the Regional Trial Court, Branch 56,
sense, we deem it advisable to say that there are some things which a
Makati City (RTC) in Civil Case No. 01-507; and (2) its October 14, 2010
THE FACTS:
On March 27, 2001, respondents Amos P. Francia, Jr., Cecilia Zamora and
that the authorities of the corporation, and more particularly the Board
process form publicity. There is, however, nothing in the petition which
motions were anchored on the ground that the complaint of the Francias
failed to state a cause of action. On July 16, 2001, after several exchanges
of pleadings, the RTC issued an order[6] dismissing the motions to dismiss
Wincorp then filed its Answer,[7] while Pearlbank filed its Answer with
ordered.
The case was set for pre-trial but before pre-trial conference could be held,
finally ensued. The gist of the testimony of Amos Francia, Jr. (Amos) is as
follows:
crossclaim.[11]
1. Sometime in 1999, he was enticed by Ms. Lalaine Alcaraz, the bank
The pre-trial conference was later conducted after the parties had filed their
facts, as contained in the Pre-Trial Order[12] issued by the RTC on April 17,
offering interest rates that were 3% to 5% higher than regular bank interest
2002:
of
net
interest
rate
of
11%
over
43-day
Receipt Nos. 470844[13] and 470845,[14] both dated January 27, 2000,
evidencing the said transactions.[15]
2. When the 43-day placement matured, the Francias wanted to retire their
Wincorp; and
investments but they were told that Wincorp had no funds. Instead,
Wincorp
rolled-over
their
placements
and
issued
Confirmation
supplied)
complaint against Pearlbank was dismissed, while the case was considered
4. Constrained,
they
demanded
from
Pearlbank[18] their
investments. There were several attempts to settle the case, but all proved
futile.
After the testimony of Amos Francia, Jr., the Francias filed their Formal Offer
thereof reads:
WHEREFORE,
judgment
is
rendered
ordering
defendant
Westmont
were admitted for the purposes they were offered, the Francias rested their
case.
1.
2.
Wincorp filed a written motion to postpone the hearing on even date, as its
costs of suit.
SO ORDERED.
Wincorp then filed a motion for reconsideration, but it was denied by the
AGENT
OF
PLAINTIFFS-APPELLEES
WAS
LIABLE
TO
THE
LATTER
granted the same in its Order[24] dated January 12, 2004. Hence, the
2000 to plaintiffs-appellees.
Preliminarily, the Court will rule on the procedural issues raised to know
III. THE REGIONAL TRIAL COURT ERRED IN DISMISSING ALL TOGETHER THE
offered by the parties at the trial. Its function is to enable the trial judge to
know the purpose or purposes for which the proponent is presenting the
56, MakatiCity in
WITH
evidence. On the other hand, this allows opposing parties to examine the
scrutinized by the trial court. Evidence not formally offered during the trial
2000 until fully paid and 100,000.00 as attorneys fees and cost of suit.
can not be used for or against a party litigant. Neither may it be taken into
Civil
Case
No.
01-507
is
hereby AFFIRMED
account on appeal.
SO ORDERED.
The rule on formal offer of evidence is not a trivial matter. Failure to make a
The CA explained:
After a careful and judicious scrutiny of the records of the present case,
together with the applicable laws and jurisprudence, this Court finds
defendant-appellant
Wincorp
solely
liable
to
pay
the
amount
Prescinding therefrom, the very glaring conclusion is that all the documents
In the case at bench, a perusal of the records shows that the plaintiffs-
attached in the motion for reconsideration of the decision of the trial court
appellees
credit for the sole reason that the said documents were not formally offered
as evidence in the trial court because to consider them at this stage will
at the rate of 11% over a 43-day period was distinctly proved by the
have
sufficiently
established
their
cause
of
action
by
back their investment after 43 days and that their investment was rolled
prove what is contrary to its content and that they made a violation of the
over for another 34 days were also established by their oral evidence and
which
indicate
that
their
and 2,548,953.86
investment
upon
its
already
maturity
amounted
to 1,435,108.61
on 13
April
offer is made after all the witnesses of the party making the offer have
testified, specifying the purpose for which the evidence is being offered. It
is only at this time, and not at any other, that objection to the documentary
money
is
defendant-appellee
PearlBank.
Hence,
defendant-appellant
possible time, that is, after the objectionable question is asked or after the
Wincorp alleges that it should be the latter who must be held liable to the
answer is given if the objectionable issue becomes apparent only after the
plaintiffs-appellees.
Wincorps crossclaim as nothing in the records supports its claim. And such
the protection of his interest. Thus, although the award of attorneys fees to
to the transactions involved in this case. The fact that the name of
case, this Court finds it equitable to reduce the same from 10% of the total
Not in conformity, Wincorp seeks relief with this Court via this petition for
plus 11% interest per annum by way of stipulated interest counted from
maturity date (13 April 2000).
As to the award of attorneys fees, this Court finds that the undeniable
ISSUE
evidence on which they are based; (9) when the facts set forth in the
The core issue in this case is whether or not the CA is correct in finding
petition as well as in the petitioners main and reply briefs are not disputed
Wincorp solely liable to pay the Francias the amount of 3,984,062.47 plus
by the respondent; and (10) when the findings of fact are premised on the
general rule.
covers only questions of law. Questions of fact are not reviewable and
cannot be passed upon by this Court in the exercise of its power to
Wincorp insists that the CA should have based its decision on the express
by the Francias as the legal relationship of the parties was clearly spelled
other hand, exists if the doubt centers on the truth or falsity of the alleged
merely brokered the loan transaction between the Francias and Pearlbank.
facts.[31] This being so, the findings of fact of the CA are final and
[33]
between it and the Francias with the latter authorizing the former as their
petition for review on certiorari under Rule 45, the same admits of
by the court, were competent proof that the recipient of the loan proceeds
was Pearlbank.[34]
findings, the same are contrary to the admissions of both appellant and
appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings are conclusions without citation of specific
Francias alleged that they did not have any personal knowledge if
variety of things. Its aim is to extend the personality of the principal or the
party for whom another acts and from whom he or she derives the
This cannot prove the position of Wincorp that it was Pearlbank which
express or implied, of the parties to establish the relationship; (2) the object
received and benefited from the investments made by the Francias. There
is the execution of a juridical act in relation to a third person; (3) the agent
was not even a promissory note validly and duly executed by Pearlbank
acts as a representative and not for himself; (4) the agent acts within the
Another significant point which would support the stand of Pearlbank that it
Wincorp was not duly established by evidence. The records are bereft of
any showing that Wincorp merely brokered the loan transactions between
Francias was the fact that it initiated, filed and pursued several cases
the Francias and Pearlbank and the latter was the actual recipient of the
borrow money for it. Neither was there a ratification, expressly or impliedly,
that it had authorized or consented to said transaction.
It bears stressing too that all the documents attached by Wincorp to its
pleadings before the CA cannot be given any weight or evidentiary value
As to Pearlbank, records bear out that the Francias anchor their cause of
for the sole reason that, as correctly observed by the CA, these documents
were not formally offered as evidence in the trial court. To consider them
now would deny the other parties the right to examine and rebut them.
Apparently, the Francias ran after Pearlbank only after learning that
Section 34. Offer of evidence The court shall consider no evidence which
noting that even in their Complaint and during the pre-trial conference, the
has not been formally offered. The purpose for which the evidence is
offered must be specified.
This is a petition for review on certiorari under Rule 45 of the Revised Rules
of Court assailing the August 24, 2007 Decision [1] of the Court of Appeals
The offer of evidence is necessary because it is the duty of the court to rest
its findings of fact and its judgment only and strictly upon the evidence
offered by the parties. Unless and until admitted by the court in evidence
for the purpose or purposes for which such document is offered, the same
respondent
of P1,896,789.62
Glodel
Brokerage
representing
Corporation (Glodel) in
the
insurance
indemnity
the
amount
which
R&B
THE FACTS:
On August 28, 2001, R&B Insurance issued Marine Policy No. MN-
the formal offer of evidence of the Francias but it chose not to file any.
All told, the CA committed no reversible error in rendering the assailed July
were shipped on board the vessel Richard Rey from Isabela, Leyte, to Pier
27,
2010 Decision
and
in
issuing
the
challenged October
14,
2010 Resolution.
WHEREFORE, the petition is DENIED.
Loadmasters
Customs
Services,
Incorporated
Glodel
Brokerage Corporation
The goods were loaded on board twelve (12) trucks owned by
Loadmasters, driven by its employed drivers and accompanied by its
destined for Lawang Bato, Valenzuela City. The cargoes in six truckloads for
Lawang Bato were duly delivered in Columbias warehouses there. Of the six
(6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the
destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper
cathodes, failed to deliver its cargo.
1.
Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered
but without the copper cathodes. Because of this incident, Columbia filed
amount
of P1,896,789.62
as
insurance
2.
indemnity.
amount
principal
R&B Insurance, thereafter, filed a complaint for damages against
(RTC),
docketed
as
Civil
Case
No.
02-103040. It
amount
to
recovered
10%
of
the
as
and
for
both Loadmasters and Glodel before the Regional Trial Court, Branch 14,
Manila
equivalent
in Court;
sought
reimbursement of the amount it had paid to Columbia for the loss of the
subject cargo. It claimed that it had been subrogated to the right of the
3.
consignee to recover from the party/parties who may be held legally liable
for the loss.[2]
WHEREAS,
the
defendant
Loadmasters
Customs
[3]
for damages for the loss of the subject cargo and dismissing Loadmasters
counterclaim for damages and attorneys fees against R&B Insurance. The
dispositive portion of the decision reads:
With
Corporation.
costs
against
defendant
Glodel
Brokerage
SO ORDERED.[4]
Both R&B Insurance and Glodel appealed the RTC decision to the CA.
1. Can
On August 24, 2007, the CA rendered the assailed decision which
reads in part:
Petitioner
Loadmasters
be
held
liable
to
held
amount
because it never represented the latter in its dealings with the consignee.
indemnity
At any rate, it further contends that Glodel has no recourse against it for its
Insurance Corporation.
liable
to
of P1,896,789.62
appellant
representing
Glodel
the
in
the
insurance
SO ORDERED.
[5]
estopped from filing a cross-claim, Glodel insists that it can still do so even
for the first time on appeal because there is no rule that provides
ISSUES
this case is merely ordinary diligence or that of a good father of the family,
injury.
R&B Insurance, for its part, claims that Glodel is deemed to have interposed
The issue now is who, between Glodel and Loadmasters, is liable to pay
R&B Insurance for the amount of the indemnity it paid Columbia.
Glodel are common carriers to determine their liability for the loss of the
[9]
subject cargo. Under Article 1732 of the Civil Code, common carriers are
rights of the insured to the extent of the amount it paid the consignee
under the marine insurance, as provided under Article 2207 of the Civil
agreement and it does not hold itself out to carry goods for the general
public.[10] The distinction is significant in the sense that the rights and
Glodel.
[13]
from the time the goods are unconditionally placed in the possession of,
it states that it is a
and received by, the carrier for transportation until the same are delivered,
corporation duly organized and existing under the laws of the Republic of
and Glodel are jointly and severally liable to R & B Insurance for the loss of
the subject cargo. Under Article 2194 of the New Civil Code, the
responsibility of two or more persons who are liable for a quasi-delict is
solidary.
from the nature of their business and for reasons of public policy, to
observe the extraordinary diligence in the vigilance over the goods
required by Article 1733 of the Civil Code. When the Court speaks of
with Columbia, but it is liable for tort under the provisions of Article 2176 of
[15]
This exacting
ART.
2176. Whoever
by
act
or
omission
causes
intended to tilt the scales in favor of the shipper who is at the mercy of the
common carrier once the goods have been lodged for shipment. [16] Thus, in
obliged
case of loss of the goods, the common carrier is presumed to have been at
[17]
to
pay
for
the
damage
done. Such
fault
or
demandable not only for ones own acts or omissions, but also
xxxx
scope of their assigned tasks, even though the former are not
It is not disputed that the subject cargo was lost while in the custody
of
Loadmasters
whose
employees
(truck
driver
and
helper)
were
employees who acted within the scope of their assigned task of delivering
alleged
negligent
manner by
which
Mindanao
another,
employer
there
instantly
failed
to
arises
presumption juris
exercisediligentissimi
patris
tantum that
the
families in
the
[20]
To avoid liability
for a
quasi-delict
committed by
its
never
represented
Glodel. Neither
was
it
ever
authorized to make such representation. It is a settled rule that the basis for
convincing proof that he exercised the care and diligence of a good father
agency is representation, that is, the agent acts for and on behalf of the
[21]
In this
principal on matters within the scope of his authority and said acts have the
same legal effect as if they were personally executed by the principal. On
the part of the principal, there must be an actual intention to appoint or an
intention naturally inferable from his words or actions, while on the part of
diligence. It failed to ensure that Loadmasters would fully comply with the
the agent, there must be an intention to accept the appointment and act on
and Glodel? Each wrongdoer is liable for the total damage suffered by R&B
Insurance. Where there are several causes for the resulting damages, a
party is not relieved from liability, even partially. It is sufficient that the
by the CA. Article 1868 of the Civil Code provides: By the contract of
the damage would not have resulted from his negligence alone, without the
was more culpable, and that the duty owed by them to the
did not properly interpose a cross-claim against the latter. Glodel did not
even pray that Loadmasters be liable for any and all claims that it may be
claim cannot be set up for the first time on appeal. For the
consequence, Glodel has no one to blame but itself. The Court cannot come
to its aid on equitable grounds. Equity, which has been aptly described as a
justice outside legality, is applied only in the absence of, and never against,
whose liability is solidary since both of them are liable for the
statutory law or judicial rules of procedure. [26] The Court cannot be a lawyer
and take the cudgels for a party who has been at fault or negligent.
of
them
is
responsible
for
the
whole
WHEREFORE,
judgment
is
rendered
declaring
petitioner
respondent
Loadmasters
Glodel
Customs
Brokerage
Services,
Corporation
Inc.
and
jointly
and
Rallos sold the undivided shares of his sisters Concepcion and Gerundia in
lot 5983 to Felix Go Chan & Sons Realty Corporation for the sum of
RALLOS, petitioner,
vs.
APPEALS, respondents.
the Court of First Instance of Cebu, praying (1) that the sale of the
undivided share of the deceased Concepcion Rallos in lot 5983 be d
unenforceable, and said share be reconveyed to her estate; (2) that the
his principal, Concepcion Rallos, sold the latter's undivided share in a parcel
Certificate of 'title issued in the name of Felix Go Chan & Sons Realty
favor. The administrator of the estate of the went to court to have the sale
declared uneanforceable and to recover the disposed share. The trial court
undivided and (3) that plaintiff be indemnified by way of attorney's fees and
granted the relief prayed for, but upon appeal the Court of Appeals uphold
payment of costs of suit. Named party defendants were Felix Go Chan &
Sons Realty Corporation, Simeon Rallos, and the Register of Deeds of Cebu,
but subsequently, the latter was dropped from the complaint. The
After trial the court a quo rendered judgment with the following dispositive
Simeon Rallos, authorizing him to sell for and in their behalf lot 5983. On
portion:
A. On Plaintiffs Complaint
B. On GO CHANTS Cross-Claim:
(1)
Sentencing
the
co-defendant
Borromeo,
of Cebu is concerned;
administrator
of
the
Juan
T.
Estate
of
sum of P500.00.
Appeal)
Felix Go Chan & Sons Realty Corporation appealed in due time to the Court
of Appeals from the foregoing judgment insofar as it set aside the sale of
The appellee
(1) Those entered into in the name of another person by one
administrator, Ramon Rallos, moved for a reconsider of the decision but the
same was denied in a resolution of March 4, 1965.
Out of the above given principles, sprung the creation and acceptance of
query. is the sale of the undivided share of Concepcion Rallos in lot 5983
the relationship
valid although it was executed by the agent after the death of his principal?
What is the law in this jurisdiction as to the effect of the death of the
and in his behalf in transactions with third persons. The essential elements
principal on the authority of the agent to act for and in behalf of the latter?
establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agents acts as a representative and not
of
agency whereby
one
party,
caged
the
for himself, and (4) the agent acts within the scope of his authority.
principal
1. It is a basic axiom in civil law embodied in our Civil Code that no one may
his principal; his act is the act of the principal if done within the scope of
the authority. Qui facit per alium facit se. "He who acts through another
acts himself".
concerned only with one cause death of the principal Paragraph 3 of Art.
1919 of the Civil Code which was taken from Art. 1709 of the Spanish Civil
Code provides:
ART. 1919. Agency is extinguished.
3. Is the general rule provided for in Article 1919 that the death of the
principal or of the agent extinguishes the agency, subject to any exception,
and if so, is the instant case within that exception? That is the
the rationale for the law is found in thejuridical basis of agency which
is representation Them being an in. integration of the personality of the
principal integration that of the agent it is not possible for the
to
continue
to
notwithstanding the death of the principal Concepcion Rallos the act of the
attorney-in-fact, Simeon Rallos in selling the former's sham in the property
is valid and enforceable inasmuch as the corporation acted in good faith in
Manresa commenting on Art. 1709 of the Spanish Civil Code explains that
representation
exist
the
death
of
either
Articles 1930 and 1931 of the Civil Code provide the exceptions to the
general rule afore-mentioned.
is
ART. 1930. The agency shall remain in full force and effect
agency, death is a necessary cause for its extinction. Laurent says that the
juridical tie between the principal and the agent is severed ipso jure upon
the death of either without necessity for the heirs of the fact to notify the
once
10
11
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. Thus in Buason & Reyes v.
interest.
Panuyas, the Court applying Article 1738 of the old Civil rode now Art. 1931
of the new Civil Code sustained the validity , of a sale made after the death
Article 1931 is the applicable law. Under this provision, an act done by the
of the principal because it was not shown that the agent knew of his
agent after the death of his principal is valid and effective only under two
principal's demise.
conditions, viz: (1) that the agent acted without knowledge of the death of
Kim Guan, et al., 1961, where in the words of Justice Jesus Barrera the Court
the principal and (2) that the third person who contracted with the agent
stated:
15
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
in the record, that the agent Luy Kim Guan was aware of the
death of his principal at the time he sold the property. The
In the instant case, it cannot be questioned that the agent, Simeon Rallos,
knew of the death of his principal at the time he sold the latter's share in
clearly to be inferred from the pleadings filed by Simon Rallos before the
trial court.
12
13
Court of Appeals reasoned out that there is no provision in the Code which
court when the latter stated that Simon Rallos 'must have known of the
death of his sister, and yet he proceeded with the sale of the lot in the
of his principal is void even with respect to third persons who may have
name of both his sisters Concepcion and Gerundia Rallos without informing
contracted with him in good faith and without knowledge of the death of
14
the principal.
16
existence of the general rule enunciated in Article 1919 that the death of
inapplicable. The
the principal extinguishes the agency. That being the general rule it follows
law
expressly
requires
for
its
application
lack
of
a fortiorithat any act of an agent after the death of his principal is void ab
initio unless the same fags under the exception provided for in the
general opinion that all acts, executed with third persons who
contracted
in
good
faith,
Without
knowledge
of
the
(Manresa Vol. 11, pp. 561 and 575; pp. 15-16, rollo)
5. Another argument advanced by respondent court is that the vendee
acting in good faith relied on the power of attorney which was duly
Deeds of the province of Cebu, that no notice of the death was aver
in this case. On page six of this Opinion We stressed that by reason of the
17
To
support
such
argument
reference
is
made
to
portion
18
19
The Civil Code does not impose a duty on the heirs to notify the agent of
the death of the principal What the Code provides in Article 1932 is that,
known.
if the agent die his heirs must notify the principal thereof, and in the
meantime adopt such measures as the circumstances may demand in the
interest of the latter. Hence, the fact that no notice of the death of the
Office of the Register of Deeds, is not fatal to the cause of the estate of the
principal
But there is a narrower ground on which the
6. Holding that the good faith of a third person in said with an agent affords
the instant case and that of an innocent purchaser for value of a land,
stating that if a person purchases a registered land from one who acquired
Vallejo,
sale in his favor the registered owner has no recourse against such
20
fraud
could
not
have
been
the case of Blondeau, et al., v. Nano and Vallejo, 61 Phil. 625. We quote
that
the
holder
of
the
transfer is
496 as amended)
21)
7. One last point raised by respondent corporation in support of the
The Blondeau decision, however, is not on all fours with the case before Us
because here We are confronted with one who admittedly was an agent of
his sister and who sold the property of the latter after her death with full
death of the principal were held to be "good", "the parties being ignorant of
the death". Let us take note that the Opinion of Justice Rogers was
of law on agency the terms of which are clear and unmistakable leaving no
premised on the statement that the parties were ignorant of the death of
room for an interpretation contrary to its tenor, in the same manner that
the ruling in Blondeau and the cases cited therein found a basis in Section
... Here the precise point is, whether a payment to an agent
held void when the principal was dead at the time of the
memorandum
such
of
registration
in
accordance
with
debtor. In the civil law, the acts of the agent, done bona fide
binding upon the heirs of the latter. The same rule holds in
To
avoid
any
wrong
impression
which
the
Opinion
in Cassiday
v.
McKenzie may evoke, mention may be made that the above represents the
minority view in American jurisprudence. Thus in Clayton v. Merrett, the
Court said.
in
an
elaborate
opinion,
this
view
ii
broadly
Whatever
conflict
of
legal
opinion
was
generated
by Cassiday
v.
the simple reason that our statute, the Civil Code, expressly provides for
267; but in this latter case it appeared that the estate of the
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
Urban Bank, Inc., and several of its corporate officers and directors together
agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine
with the concomitant levying and sale in execution of the personal (even
conjugal) properties of those officers and directors; and (4) the fact that
that the agent acted without knowledge or notice of the death of the
principal In the case before Us the agent Ramon Rallos executed the sale
together with those with undeclared values could reach very much more
satisfy the PhP28.5 Million award in favor of Atty. Pea. Incidentally, two
supersedeas bonds worth PhP80 Million (2.8 times the amount of the
judgment) were filed by Urban Bank and some of its officers and directors
appellate court, and We affirm en toto the judgment rendered by then Hon.
Had the four attendant circumstances not afflicted the original case,
it would have been an open-and-shut review where this Court, applying
even just the minimum equitable principle against unjust enrichment would
have easily affirmed the grant of fair recompense to Atty. Pea for services
DECISION
SERENO, J.:
These consolidated petitions began as a simple case for payment of
services rendered and for reimbursement of costs. The case spun a web of
suits and counter-suits because of: (1) the size of the award for agents fee
rendered in favor of Atty. Magdaleno Pea (Pea) PhP24,000,000 rendered by
the trial court; (2) the controversial execution of the full judgment award of
PhP28,500,000 (agents fee plus reimbursement for costs and other
damages) pending appeal; and (3) the finding of solidary liability against
he rendered for Urban Bank if such had been ordered by the trial court.
That Atty. Pea should be paid something by Urban Bank is not in dispute the
Court of Appeals (CA) and the Regional Trial Court (RTC) of Bago City,
agreed on that. What they disagreed on is the basis and the size of the
award. The trial court claims that the basis is an oral contract of agency and
the award should be PhP28,5000,000; while, the appellate court said that
Atty. Pea can only be paid under the legal principle against unjust
enrichment, and the total award in his favor should only amount to
PhP3,000,000.
In the eyes of the trial court, the controlling finding is that Atty. Pea should
At the time the award of PhP28,500,000 by the trial court came out
the trial court. To the Court of Appeals, such an award has no basis, as in
in 1999, the net worth of Urban Bank was PhP2,219,781,104. [2] While the
fact, no contract of agency exists between Atty. Pea and Urban Bank.
bank would be closed by the Bangko Sentral ng Pilipinas (BSP) a year later
there was no reason to believe that at the time such award came out it
net
worth,
and
of PhP11,933,383,630.
[3]
miniscule
0.2%
of
its
total
assets
attempt to abscond was ever raised by Atty. Pea and yet, the trial court
The disparity in the size of the award given by the trial court vis--vis that of
of
unauthorized
sub-tenants
in
twenty-three
commercial
directors. It would have been interesting to find out what drove Atty. Pea to
sue the bank officers and directors of Urban Bank and why he chose to sue
only some, but not all of the board directors of Urban Bank, but there is
nothing on the record with which this analysis can be pursued.
Before us are: (a) the Petitions of Urban Bank (G. R. No. 145817) and
the De Leon Group (G R. No. 145822) questioning the propriety of the grant
of execution pending appeal, and (b) the Petition of Atty. Pea (G. R. No.
162562) assailing the CAs decision on the substantive merits of the case
with respect to his claims of compensation based on an agency agreement.
court
decision
would
have
automatic,
generally-understood
disproportions in this case is too mind-boggling that this Court must exert
extra effort to correct whatever injustices have been occasioned in this
case. Thus, our dispositions will include detailed instructions for several
judicial officials to implement.
Factual Background of the Controversy
Urban Bank, Inc. (both petitioner and respondent in these two consolidated
cases),[4] was a domestic Philippine corporation, engaged in the business of
Two weeks before the lease over the Pasay property was to expire,
officers and members of Urban Banks board of directors, who were sued in
ISCI and Urban Bank executed a Contract to Sell, whereby the latter would
their official and personal capacities. [6] On the other hand, Benjamin L. De
Leon, Delfin C. Gonzalez, Jr., and Eric L. Lee, (hereinafter the de Leon
Group), are the petitioners in G. R. No. 145822 and are three of the same
would be released by the bank upon ISCIs delivery of full and actual
bank officers and directors, who had separately filed the instant Petition
possession of the land, free from any tenants.[20] In the meantime, the
amount of the final installment would be held by the bank in escrow. The
escrow provision in the Contract to Sell, thus, reads:
In 1994, a few months before the lease contract was to expire, ISCI
informed the lessee[15] and his tenants[16] that the lease would no longer be
renewed and that it intended to take over the Pasay property [17] for the
purpose of selling it.[18]
secretary, to take over possession of the Pasay property [22] against the
tenants upon the expiration of the lease. ISCIs president, Mr. Enrique G.
Montilla III (Montilla), faxed a letter to Pea, confirming the latters
President[24]
ISCI and Urban Bank executed a Deed of Absolute Sale [25] over the Pasay
property for the amount agreed upon in the Contract to Sell, but subject to
Director
the above escrow provision.[26] The title to the land was eventually
President
On 30 November 1994, the lessee duly surrendered possession of
the Pasay property to ISCI, [28] but the unauthorized sub-tenants refused to
leave the area.[29]Pursuant to his authority from ISCI, Pea had the gates of
You are hereby directed to recover and take
the property closed to keep the sub-tenants out.[30] He also posted security
[32]
Despite the closure of the gates and the posting of the guards, the sub-
tenants would come back in the evening, force open the gates, and proceed
to carry on with their businesses. [33] On three separate occasions, the sub-
tenants tried to break down the gates of the property, threw stones, and
even threatened to return and inflict greater harm on those guarding it. [34]
Pasay property had already been transferred by ISCI to Urban Bank, the trial
court recalled the TRO and issued a break-open order for the property.
[35]
According to Pea, it was the first time that he was apprised of the sale of
letter to the bank, this time addressed to its president, respondent Teodoro
the land by ISCI and of the transfer of its title in favor of the bank. [46] It is
Borlongan.[36] She repeated therein the earlier request for authority for Pea,
not clear from the records how such information reached the judge or what
since the tenants were questioning ISCIs authority to take over the Pasay
property.
[37]
withdrawal of the posted guards, so that ISCI could get in touch with
petitioner-respondent bank regarding the matter.[48]
complaint for injunction[41] (the First Injunction Complaint) with the RTCPasay City.[42] Acting on ISCIs prayer for preliminary relief, the trial court
favorably issued a temporary restraining order (TRO),[43] which was duly
implemented.[44] At the time the First Injunction Complaint was filed, a new
title to the Pasay property had already been issued in the name of Urban
Bank.[45]
Later that same day, Pea received a telephone call from respondent
Bejasa. After Pea informed her of the situation, she allegedly told him that
Urban Bank would be retaining his services in guarding the Pasay property,
and that he should continue his efforts in retaining possession thereof. He
insisted, however, on talking to the Banks president. Respondent Bejasa
gave him the contact details of respondent Borlongan, then president of
Urban Bank.[49]
The
facts
regarding
the
following
phone
conversation
and
December 1994, which was signed by respondents Bejasa and Manuel, and
is quoted below:
respondent Borlongan. Pea explained that the policemen in Pasay City were
sympathetic to the tenants and were threatening to force their way into the
premises. He expressed his concern that violence might erupt between the
tenants, the city police, and the security guards posted in the Pasay
property. Respondent Borlongan supposedly assured him that the bank was
going to retain his services, and that the latter should not give up
possession of the subject land. Nevertheless, petitioner-respondent Pea
demanded a written letter of authority from the bank. Respondent
Borlongan acceded and instructed him to see respondent Bejasa for the
authorized
representative
of
Urban
Bank,
letter.[50]
(Emphasis supplied)
expenses incurred from the time he took over land until possession was
turned over to Urban Bank. Respondent Borlongan purportedly agreed on
condition that possession would be turned over to the bank, free of tenants,
not
later than
four
months;
otherwise,
Pea
would
lose
the
10%
The
following
narration
of
subsequent
proceedings
is
uncontroverted.
Pea then moved for the dismissal of ISCIs First Injunction Complaint,
filed on behalf of ISCI, on the ground of lack of personality to continue the
action, since the Pasay property, subject of the suit, had already been
transferred to Urban Bank.[54] The RTC-Pasay City dismissed the complaint
and recalled its earlier break-open order.[55]
Urban Bank, filed a separate complaint [56] (the Second Injunction Complaint)
with the RTC-Makati City, to enjoin the tenants from entering the Pasay
purposes.
issued a TRO.[58]
efforts to settle the issue of possession of the Pasay property with the subtenants. During the negotiations, he was exposed to several civil and
criminal cases they filed in connection with the task he had assumed for
Urban Bank, and he received several threats against his life. [59] The subtenants eventually agreed to stay off the property for a total consideration
of PhP1,500,000.[60] Pea advanced the payment for the full and final
settlement of their claims against Urban Bank.[61]
[63]
This collection suit became the basis for Atty. Peas request for
On 28 January 1996, when Urban Bank refused to pay for his services in
connection with the Pasay property, Pea filed a complaint [67] for recovery of
agents compensation and expenses, damages and attorneys fees in RTCBago City in the province of Negros Occidental. [68] Interestingly, Pea sued
only six out of the eleven members of the Board of the Directors of Urban
Bank.[69] No reason was given why the six directors were selected and the
others excluded from Peas complaint. In fact, as pointed out, Atty. Pea
mistakenly impleaded as a defendant, Ben Y. Lim, Jr., who was never even a
member of the Board of Directors of Urban Bank; while, Ben T. Lim, Sr.,
father and namesake of Ben Y. Lim, Jr., who had been a director of the bank,
5.
bank officers and directors argued that it was ISCI, the original owners of
Costs of suit.
SO ORDERED.[73]
the Pasay property, that had engaged the services of Pea in securing the
premises; and, consequently, they could not be held liable for the expenses
Pea had incurred.[71]
Urban Bank and the individual defendant bank directors and officers filed a
common Notice of Appeal,[74] which was given due course.[75] In the appeal,
On 28 May 1999, the RTC-Bago City [72] ruled in favor of Pea, after finding
that an agency relationship had indeed been created between him and
Urban Bank. The eight directors and bank officers were found to be
solidarily liable with the bank for the payment of agencys fees. The trial
court thus ordered Urban Bank and all eight defendant bank directors and
officers whom Pea sued to pay the total amount of PhP28,500,000
P24,000,000
as
compensation
for
plaintiffs services plus the legal rate of interest from the time
reliance on the purported oral contract of agency and Peas claims for
during
the
controverted
telephone
conversation
with
2.
1.
as
reimbursement
plaintiffs expenses;
of
R. No. 145822, argued that, even on the assumption that there had been an
agency contract with the bank, the trial court committed reversible error in
holding them as bank directors solidarily liable with the corporation. [80]
3.
4.
Manuel, Jr., Ben Y. Lim, Jr., and P. Siervo H. Dizon (the Borlongan Group)
fees and costs of suit are deleted, the same not having been
[81]
[82]
[87]
Pea refuted all of their arguments [83] and prayed that the trial courts
Decision be affirmed.[84]
(Emphasis supplied)
Acting favorably on the appeal, the Court of Appeals [85] annulled the
Decision of the RTC-Bago City and ruled that no agency relationship had
been created. Nevertheless, it ordered Urban Bank to reimburse Pea for his
On 07 June 1999, prior to the filing of the notice of appeal of Urban Bank
and
individual
appeal
[91]
bank
officers,[90] Pea
moved
for
execution
[92]
pending
which had
[sic] Special Order of the RTC of Bago City, Branch 62, [86] are
hereby ANNULLED AND SET ASIDE. However, the plaintiffappellee [Pea] in CA GR CV No. 65756 is awarded the
his
pending separate civil action for collection filed against him by his creditor-
to Pea, he had used the proceeds of the loan for securing the banks Pasay
amount
of
P3
Million
as
reimbursement
for
[95]
Writ of Execution[99] on the same day.[100] The Special Order and Writ of
implementing
[102]
the
writ
of
execution
and
to
lift
the
filed by Urban Bank and individual petitioners (G. R. Nos. 145817, 145818
and 145822).
[109]
favorably
granted Peas Motion for Reconsideration, and reversed its earlier Decision
to allow execution pending appeal.[110] The appellate court found that the
bank holiday declared by the BSP after the promulgation of its earlier
Decision, PDICs receivership of Urban Bank, and the imminent insolvency
thereof constituted changes in the banks conditions that would justify
On 29 August 2000, Urban Bank and its officers moved for the
of
the
Amended
De
Leon
Group
reconsideration
by the CA.[125]
that affirmed the execution pending appeal. The details of these Rule 45
Petitions will be discussed in detail later on.
After the denial by the Court of Appeals of Urban Banks motion for
or almost a year after the Court of Appeals amended its decision to allow
Bank and the other bank officers were sold on public auction. The table
below lists the properties that appear on record to have been levied and/or
approved by the Monetary Board of the BSP.[126] Thus, the Monetary Board
[127]
approval of its own supersedeas bond, [128] for the same amount of
PENDING APPEAL
[131]
Owner/
Property
Estimated Value
Total
Defendan
Description
or
Amount
t
Urban
Three
Bank
Shares
Club
Tagaytay
December
one
International Golf
selling
Club
Three
at
Public Auction
As
of
06
Highlands
[133]
Price
share
at
Remarks
4,800,000
1999,
was
P1.6
[134]
Club
Million.
As
of
06
Shares in Makati
December
1999,
2,000,000[137]
Atty.
Pea
was
one
of
the
winning bidders
(MSCI) [Covered
by
selling
Stock
Certificate
A-1893,
Nos.
A-2305
and B-762][135]
and
were
in the auction
sale
No. 57698)[143]
A 64,677 sqm.
Value
PhP700,000,
friend, Roberto
land in Tagaytay
estimate of Urban
respectively.[136]
Ignacio,
City
Bank[145]
at
PhP650,000
and
together
and
Atty.
85 Condominium
The
Units
in
the
Urban
Bank
Plaza,
Makati
City[138]
the
highest
bid
85,000,000
Ramon
Ereeta.
Intervenor
Unimega
condominium
purchased
the
10
the
condominium
of the
execution sale.[139]
units
in
the
155
sqm.
Estimates
are
condominium
based on report of
Urban Bank[142]
(CCT
No.
57697) [141]
A
12.5
sqm.
condominium
parking
space
(Parking
Three,
Unit
12,400,000
P-46)
in
No.
Teodoro
Borlongans
club
Borlongan
in
share
was
Manila
Polo
estimated
[146]
valued
to
35,572,350
1,000,000
Notice of Sale
on Execution on
be
Personal
at
Property
[147]
25
2000[148]
One
in
was estimated to
Subic
Bay
Yacht Club[149]
be
club
valued
share
500,000
at
[150]
P500,000.
As
of
06
in
December
1999,
Baguio
Country Club[151]
on
20471)[144]
One Club Share
P1,000,000.
units wasPhP1M at
time
(TCT
based
in MSCI
[153]
one
share
was
selling
at
P870,000.[152]
As
of
06
December
1999,
and
selling
PhP650,000
PhP700,000
870,000
were
at
and
650,000
dated
August
respectively.[154]
No
estimate
De
in
Polo
was estimated at
on Execution on
available
on
Club
(with
Personal
record.
Gonzales
club
Associate
Property
in
share
was
Membership) [No.
the
25
Real Property
[155]
Manila
Polo
estimated
[156]
valued
P4,000,000.
to
4,000,000
Notice of Sale
on Execution on
be
Personal
at
Property
[157]
25
2000
Gonzales
club
in
share
was
Baguio
Country Club.[159]
estimated
to
C.
Gonzales,
Jr.
P1,077,000.
Gonzales
in
share
Alabang
Country
Club
(Member
No.
estimated
valued
club
to
1,077,000
stock
in
D.
C.
share[166]
(Stock
Certificate No. A-
P450,000.[171]
175)[170]
One Club Share
As
of
06
in
December
1999,
Baguio
Club
[172]
one
share
selling
at
2000
dated
August
[169]
450,000
870,000
was
least
No
records
available as to
P.
at
per
Notice of Sale
P870,000.[173]
2,000,000
properties
Siervo
levied,
G. Dizon
garnished
611,700
[163]
P50.00
was estimated at
(5523)
2,000
or
executed
Eric L. Lee
of
in
Country
[168]
be
share[164]
40
[158]
associate
membership.
De Leons share
MSCI
5,050,000
was
stock
C.
L. de Leon
Share
0597]
One Club Share
[160]
P2,000,000.[162]
P20.00
per
D.
Benjamin
at
550)[161]
30,585 shares of
in
August
[167]
be
valued
Delfin
dated
Manila
Leons
Lees
in
was estimated to
on Execution on
be
Personal
Manila
Club (2038)
Polo
[174]
club
share
valued
P4,000,000.
[175]
at
4,000,000
pending appeal.
Notice of Sale
Property
25
2000
dated
August
[176]
Lees
in
was estimated to
No
Club, Inc.[177]
be
available as to
P15,750,000.[178]
Lees club share
was estimated to
be
Manila
Golf
[179]
club
share
Account[188]
valued
at
valued
in
were estimated to
Intl
levied,
Jr.
garnished
at
P2,000,000.
Lees club shares
Highlands
2,000,000
be
valued
pending appeal.
1,000,000
[189]
Notice of Sale
Corazon
Real Property
on Execution on
Bejasa
Arturo
Real Property[190]
Personal
P1,000,000.[182]
Property
25
dated
August
Manuel, Jr.,
TOTAL VALUE
No
estimated
value.
No
estimated
value.
181,919,19
0
2000[183]
Lees
in
was estimated to
Subic
Yacht
club
share
Club[184]
be
60,757 Shares of
P500,000.[185]
P20.00 per share
stock
valued
500,000
The
sum
of PhP181,919,190 does
not
include
many
other
properties and it is not difficult to believe that the total value covered
at
purchase prices at the auction sale of the properties of Urban Bank and its
in
EQL
Properties,
Inc.
to almost six times the value of the award given by the trial court.
[186]
40
stock
Shares
of
in
EQL
Properties,
Inc.
2,000
[187]
Cash
garnished
from
BPI
or
executed
at
records
properties
Ben T. Lim,
[180]
A Share)
Two Club Shares
Tagaytay
15,750,000
100,000
supersedeas bond[192] and requested that the Court stay the execution
2001.[203] Pea moved for reconsideration of the approval, [204] but his motion
pending appeal.[193] Pea opposed the motion on the ground that it had
already been rendered moot and academic by the sale of the properties of
the bank.[194]
Proceedings in the Supreme Court (G. R. Nos. 145817, 145818 & 145822)
On 23 October 2002, or almost a year after some of the
condominium units were sold in a public auction, EIB, as the successor of
the said condominium units.[195] Thus, EIB tendered three managers checks
execution pending appeal.[208] In response, Pea moved for the denial of the
previously under the name of Urban Bank. [197] Although the trial court noted
petition on the grounds of lack merit, violation of the rule against forum
the banks Manifestation,[198] the sheriff returned the EIBs managers checks.
Comment,[210] Pea also argued that the appellate court had committed no
Bago City, in its Order dated 13 November 2002, ordered the Register of
No. 145818.[212] This Court initially denied their petition on the ground that it
name of Unimega.[202] It has not been shown, though, whether this Order
failed to sufficiently show that the CA committed reversible order. [213] The
was followed.
Borlongan Group twice moved for the reconsideration of the denial of their
petition; but the Court nonetheless denied both motions for lack of merit.
[214]
injunction or stay order, it had no other option but to comply with the trial
courts Order for the transfer. Eventually, however, it could not effect the
transfer of one of the shares to Pea because a club share had already been
Meanwhile, another Rule 45 Petition (G. R. No. 145822) [216] was filed
by the De Leon Group, assailing the same Decisions of the appellate court.
The Court also preliminarily denied this petition on the ground that the De
Leon Group failed to file the appeal within the reglementary period and to
pay certain fees.[217]
previously registered in his name, and the clubs bylaws prohibited a natural
person from owning more than one share.[225] Meanwhile, one of the winning
bidders in the public auction sale of the MSCI shares wrote to the latter to
demand that the club share previously owned by Urban Bank be transferred
to him.[226]
Bank (through EIB) and the winning bidders of the club shares, MSCI filed a
the De Leon Group, the Court nonetheless ordered that the case be
pending appeal.[227]
[218]
[219]
In compliance with the Courts Order, [220] Urban Bank[221] and the De Leon
of Urban Banks motion for clarification intended for Pea was mistakenly
sent to the wrong counsel.
its earlier stay order prohibited the MSCI from transferring the shares, and
that the one-year period for redemption of the banks properties was
likewise suspended:
public auction. [224] In reply, MSCI explained that since there was no
appeared and was questioned by the then members of the Courts First
Division, namely retired Chief Justice Hilario Davide, Justices Jose Vitug,
Antonio Carpio and Adolfo Azcuna. Although the Petitions had earlier been
this case and this resulted in the re-raffling of the Petitions. The transfer
buyers,
also
Peas numerous motions for inhibition and/or re-raffle has likewise cause
Administrative Case.
is
SUSPENDED
[229]
OR
STAYED.
MSCI
is
(Emphasis supplied)
and to have the Courts same Resolution suspending the one-year period of
[230]
Interposing its objection, the bank argued that the error in mistakenly
inadvertence,
[231]
the
been transferred to the former at the time the Court issued the Resolution;
and, thus, there was no more execution to be suspended or stayed. Only
Courts clarification did not create or diminish his rights in any case.
[232]
units.[238]
Resolution dated 13 November 2002 and Peas Omnibus Motion praying for
the recall of the said Resolution became the subject of an administrative
case (Administrative Case No. 6332), which was treated as a separate
matter and later on de-consolidated with the instant Petitions.
[233]
The Court
that the intervenors title to the condominium units purchased at the public
had even called for an executive session [234] in which Pea, among others,
following: (a) the Petition of Pea (G. R. No. 162562) assailing the CAs
decision on the substantive merits of the case with respect to his claims of
the bank adopted its earlier Opposition to the intervention as its answer to
Unimegas petition-in-intervention.
[240]
Urban Bank (G. R. No. 145817) and the De Leon Group (G R. No. 145822)
questioning the propriety of the grant of execution pending appeal.
OUR RULING
I
Pea is entitled to payment for compensation for
services rendered as agent of Urban Bank, but
on
the
basis
of
the
principles
of
unjust
[249]
[251]
the basis of his successful and peaceful ejectment of the sub-tenants, who
relation to a third person; (c) agents act as representatives and not for
themselves; and (d) agents act within the scope of their authority. [252]
Based on the evidence on records and the proceedings
below, the Court concludes that Urban Bank constituted Atty. Pea
Whether or not an agency has been created is determined by the
fact that one is representing and acting for another.
[253]
context in which the agency was created lays the basis for the
amount of compensation Atty. Pea is entitled to.
With respect to the status of Atty. Peas relationship with Urban Bank,
the trial and the appellate courts made conflicting findings that shall be
The transactional history and context of the sale between ISCI and
reconciled by the Court. On one end, the appellate court made a definitive
Urban Bank of the Pasay property, and Atty. Peas participation in the
ruling that no agency relationship existed at all between Pea and the
bank, despite the services performed by Pea with respect to the Pasay
establish the nature of the relationship between the lawyer and the
landowner-bank.
against an award of agents compensation, it still saw fit to award Pea with
Ph3,000,000 for expenses incurred for his efforts in clearing the Pasay
property of tenants.[255] On the other extreme, the trial court heavily relied
on the sole telephone conversation between Pea and Urban Banks President
to establish that the principal-agent relationship created between them
included an agreement to pay Pea the huge amount of PhP24,000,000.
In its defense, Urban Bank insisted that Pea was never an agent of the
bank, but an agent of ISCI, since the latter, as seller of the Pasay property
committed to transferring it free from tenants. Meanwhile, Pea argues on
The evidence reveals that at the time that the Contract to Sell was
executed on 15 November 1994, and even when the Deed of Absolute Sale
was executed two weeks later on 29 November 1994, as far as Urban Bank
was concerned, Pea was nowhere in the picture. All discussions and
correspondences were between the President and Corporate Secretary of
Urban Bank, on one hand, and the President of ISCI, on the other. The title
to the Pasay property was transferred to Urban Bank on 5 December 1994.
Interestingly, Pea testifies that it was only on 19 December 1994 that he
learned that the land had already been sold by ISCI to Urban Bank,
notwithstanding the fact that Pea was a director of ISCI. Pea was not asked
to render any service for Urban Bank, neither did he perform any service for
Urban Bank at that point.
conditions of full and actual possession and control ..., free from tenants,
occupants, squatters or other structures or from any liens, encumbrances,
easements or any other obstruction or impediment to the free use and
occupancy by the buyer of the subject Property or its exercise of the rights
to ownership over the subject Property.... [257] To guarantee this undertaking,
Two days later, on 9 December 1994, ISCI sent Urban Bank another
letter that reads:
physically clean to Urban Bank, it was ISCIs president, Enrique Montilla who
authorization
immediately as
recover and take possession of the property upon expiration of the contract
[258]
director of ISCI who was constituted as its agent to recover the Pasay
property against the lessee as well as the sub-tenants who were occupying
the property in violation of the lease agreement. [259] He was able to obtain
possession of the property from the lessee on the following day, but the
unauthorized sub-tenants refused to vacate the property.
take
over
supplied)
[261]
from
the
Urban
Bank
tenants
possession
of
as
are
the
per
attached
questioning
property.
the
(Emphasis
It is clear from the above that ISCI was asking Urban Bank for help to
comply with ISCIs own contractual obligation with the bank under the terms
of the sale of the Pasay property. Urban Bank could have ignored the
deliver a clean property to Urban Bank without any help from the latter.
only knew of the sale between ISCI and Urban Bank at the time the RTCPasay City recalled the TRO and issued a break-open order:
ISCI and a sale of this significant and valuable property of ISCI requires the
approval of the board of directors of ISCI; and (2) that ISCI twice requested
Urban Bank for authority to be issued in his favor (07 and 9 December
Urban Bank called Pea and according to the latter, told him that Urban Bank
would continue retaining his services and for him to please continue with
officer of ISCI beforehand that a request for authority for him was being
sent to Urban Bank.
Fifth, this statement of Bejasa was not enough for Pea and he
insisted that he be enabled to talk with no less than the President of Urban
The sequence of fast-moving developments, edged with a sense of
panic, with respect to the decision of the RTC-Pasay City to recall the
Bank, Borlongan. At this point, Bejasa gave him the phone number of
Borlongan.
because the Pasay City policemen, who were sympathetic to the tenants,
were threatening to force their way through the property.
contests, what would have been the response of Borlongan? Any prudent
withdrawing his guards from the property because of the break-open order
would have agreed to the reasonable requests of Pea. Borlongan could also
have said that the problem of having the sub-tenants ejected is completely
ISCIs and ISCI should resolve the matter on its own that without bothering
and maintain possession of the Pasay property against the tenants. Under
the bank, with all its other problems. But the specter of violence, especially
the
not something that any publicly-listed bank would want publicized. To the
(b) to protect the same from former tenants, occupants or any other
person who are threatening to return to the said property and/or interfere
with your possession of the said property for and in our behalf; and (c) to
terms
of
the
letter,
petitioner-respondent
bank
confirmed
his
Bank whereby Borlongan agreed to retain the services of Pea directly; (2)
was given to Pea to act on behalf of the bank with respect to the latters
from Urban Bank; and (3) The agency fee of Pea was to be 10% of the
expenses of Pea from the time he took over the land until possession is
pretrial,[265] the bank is bound by the terms thereof and is subject to the
the property.
its agent by its acquiescence and acceptance of the benefits, namely, the
Both sides readily admit that it was Pea who was responsible for
clearing the property of the tenants and other occupants, and who turned
over possession of the Pasay property to petitioner-respondent bank.
[267]
When the latter received full and actual possession of the property from
him, it did not protest or refute his authority as an agent to do so. Neither
did Urban Bank contest Peas occupation of the premises, or his installation
of security guards at the site, starting from the expiry of the lease until the
property was turned over to the bank, by which time it had already been
vested with ownership thereof. Furthermore, when Pea filed the Second
Injunction Complaint in the RTC-Makati City under the name of petitionerrespondent bank, the latter did not interpose any objection or move to
dismiss the complaint on the basis of his lack of authority to represent its
interest as the owner of the property. When he successfully negotiated with
Even if, however, Pea was constituted as the agent of Urban Bank, it
does not necessarily preclude that a third party would be liable for the
payment of the agency fee of Pea. Nor does it preclude the legal fact that
Pea while an agent of Urban Bank, was also an agent of ISCI, and that his
agency from the latter never terminated. This is because the authority
given to Pea by both ISCI and Urban Bank was common to secure the clean
possession of the property so that it may be turned over to Urban Bank.
This is an ordinary legal phenomenon that an agent would be an agent for
the purpose of pursuing a shared goal so that the common objective of a
transferor and a new transferee would be met.
the tenants regarding their departure from its Pasay property, still no
protest was heard from it. After possession was turned over to the bank, the
intent
to
ratify
his
actions,
as
if
these
were
its
own.
agent of both ISCI and Urban Bank were engaged for one shared purpose or
transaction, which was to deliver the property free from unauthorized subtenants to the new owner a task that Pea was able to achieve and is
entitled to receive payment for.
Even
assuming arguendo that it issued no written authority, and that the oral
contract was not substantially established, the bank duly ratified his acts as
That the agency between ISCI and Pea continued, that ISCI is to
shoulder the agency fee and reimbursement for costs of Pea, and that
Urban Bank never agreed to pay him a 10% agency fee is established and
First, the initial agency relationship between ISCI and Pea persisted.
No proof was ever offered that the letter of 26 November 1994 of Mr.
Montilla of ISCI to Pea, for the latter to immediately recover and take
possession of the property upon expiration of the contract of lease on 29
November 1994 was terminated. It is axiomatic that the appointment of a
new agent for the same business or transaction revokes the previous
agency from the day on which notice thereof was given to the former
Bank alone, Pea should have demonstrated that his previous agency
relationship with ISCI is incompatible with his new relationship with Urban
which reads:
Third, Pea has never shown any written confirmation of his 10%
seriously imbued with public interest. There is nothing on record except the
self-serving testimony of Pea that Borlongan agreed to pay him this amount
in the controverted telephone conversation.
Amount of Compensation
Agency is presumed to be for compensation. But because in this
case we find no evidence that Urban Bank agreed to pay Pea a specific
amount or percentage of amount for his services, we turn to the principle
against unjust enrichment and on the basis of quantum meruit.
acts of ISCI, of Urban Bank and his own up to that point all indicated that he
must have known about the sale to Urban Bank; and (b) it is incredible that
Urban Bank will agree to add another PhP24,000,000 to the cost of the
property by agreeing to the agency fee demanded by Pea. No prudent and
reasonable person would agree to expose his corporation to a new liability
of PhP24,000,000 even if, in this case, a refusal would lead to the Pasay
City policemen and unauthorized sub-tenants entering the guarded
only. Surely, the legal services of Pea cannot be much more than what the
contracting lawyer may be allowed to collect, unless the court finds the
sub-tenants were willing to settle for in the first place. We therefore award
amount to be unconscionable.
[275]
him the equivalent amount of PhP1,500,000 for the legal and other related
professional services, the attorneys fees are fixed on the basis of quantum
meruit,[276] i.e., the reasonable worth of the attorneys services. [277] When an
property.
agent performs services for a principal at the latters request, the law will
normally imply a promise on the part of the principal to pay for the
The Court of Appeals correctly reversed the trial court and found it
[280]
peso award is highly irregular. Absent any clear basis for the amount of the
owner, and whose only authority to enter the premises was unlawfully
spurious justification.
given by a former tenant whose own tenancy has clearly expired. The 23
sub-tenants
operated
beer
houses
and
nightclubs,
ordinary
retail
now
come
to
the
reasonableness
of
the
market
value
which
defendants
claim
to
be
ejecting unwanted occupants. They may be inclusive of other costs, and not
only legal costs, with enough allowances for contingencies, and may take
into consideration other liabilities as well. The amount can even be entirely
arbitrary, and may have been caused by the practice followed by Urban
experience, and sounds like an argument being made to fit Peas demand
[281]
In any case, 10% of the purchase price of the Pasay property a staggering
PhP24,161,200 is an unconscionable amount, which we find reason to
reduce. Neither will the Court accede to the settlement offer of Pea to
Urban Bank of at least PhP38,000,000 for alleged legal expenses incurred
during the course of the proceedings, [282]an amount that he has not
substantiated at any time.
Lawyering is not a business; it is a profession in which duty to public
service,
In the first place, the Decision of Judge Catilo makes Peas demand of
an agency fee of PhP24 Million, an additional burden on Urban Bank. The
Decision does not make the retention money responsible for the same, or
acquit Urban Bank of any liability to ISCI if it pays the PhP24 Million directly
to Pena instead of ISCI. In the second place, the amount of money that is
retained by transferees of property transactions while the transferor is
undertaking acts to ensure a clean and peaceful transfer to the transferee
not
money,
is
the
primary
principle
lawyer on the basis of quantum meruit, one may consider factors such as
the time spent and extent of services rendered; novelty and difficulty of the
questions involved; importance of the subject matter; skill demanded;
bank directors and officers and its Decision should be absolutely reversed
the controversy and the resulting benefits for the client; certainty of
acts of the directors and officers as corporate agents are not their personal
liabilities but those of the corporation they represent. [287] To hold a director
concur: (1) the complainant must allege in the complaint that the director
II
must clearly and convincingly prove such unlawful acts, negligence or bad
debts of the corporation and, thus, pierce the veil of corporate fiction, bad
bank directors and officers assented to patently unlawful acts of the bank,
or that they were guilty of gross negligence or bad faith. Contrary to his
claim, the Complaint[290] in the lower court never alleged that individual
defendants acquiesced to an unlawful act or were grossly negligent or
acted in bad faith. [291] Neither is there any specific allegation of gross
In ruling for the solidary liability of the other bank directors, the
decision of the trial court hinged solely on the purported admission of
Arturo Manuel, Jr., that the transactions with Atty. Pea were approved by the
Board of Directors:
In any event, Pea did not adduce any proof that the eight individual
defendants performed unlawful acts or were grossly negligent or in bad
faith. Aside from the general allegation that they were corporate officers or
members of the board of directors of Urban Bank, no specific acts were
alleged and proved to warrant a finding of solidary liability. At most,
petitioners Borlongan, Bejasa and Manuel were identified as those who had
processed the agency agreement with Pea through their telephone
conversations with him and/or written authorization letter.
through
witness
Arturo
Manuel,
Jr., who
Gonzalez, Jr., Benjamin L. de Leon, P. Siervo H. Dizon, Eric L. Lee, and Ben T.
Lim, Jr., except for the fact that they were members of the Board of
supplied)
Directors of Urban Bank at that time. That the five other members of the
Board of Directors were excluded from Peas complaint highlights the
peculiarity of their inclusion. What is more, the complaint mistakenly
included Ben Y. Lim, Jr., who had not even been a member of the Board of
Directors of Urban Bank. In any case, his father and namesake, Ben T. Lim,
Sr., who had been a director of the bank at that time, had already passed
away in 1997.
with Urban Bank. It seems absurd that the trial court will hold the
impleaded selected members of the Board of Directors only, but not the
[295]
As the complainant on the trial court level, Pea carried the burden of
proving that the eight individual defendants performed specific acts that
would make them personally liable for the obligations of the corporation.
This he failed to do. He cannot capitalize on their alleged failure to offer a
defense, when he had not discharged his responsibility of establishing their
personal liabilities in the first place. This Court cannot sustain the individual
His
complaint
merely
asserts
that
defendant
liabilities of the bank officers when Pea, at the onset, has not persuasively
demonstrated their assent to patently unlawful acts of the bank, or that
they were guilty of gross negligence or bad faith, regardless of the
weaknesses of the defenses raised. This is too basic a requirement that this
Court must demand sufficient proof before we can disregard the separate
legal personality of the corporation from its offices.
agreements.
Favorably acting on Peas motion, the RTC-Bago City, through Judge Henry J.
III
this Special Order, Atty. Josephine Mutia-Hagad, the clerk of court and ex
said
Decision
is
likewise
completely
[305]
vacated.
The trial courts Special Order and Writ of Execution were the subjects of
Both the Special Order and Writ of Execution are nullified for two
reasons:
attendant thereto, as a result, no longer has any leg to stand on and is thus
completely vacated.
(1)
the
Decision,[298] which
had
awarded
him
total
of
Pea had no basis under the Rules of Court, and the same
creditor,
thereto.
[300]
who
was
demanding
payment
[299]
of
PhP3,000,000
loan.
According to him, he had used the proceeds of the loan for securing the
will ultimately hinge on the courts findings with respect to the decision in
the appeal on the merits is pending, the outcome of the main case will
greatly impact the execution pending appeal, especially in instances where
as in this case, there is a complete reversal of the trial courts decision.
Thus, if the decision on the merits is completely nullified, then the
concomitant execution pending appeal is likewise without any effect. In
fact, the Rules of Court expressly provide for the possibility of reversal,
complete or partial, of a final judgment which has been executed on appeal.
[310]
Precisely, the execution pending appeal does not bar the continuance of
the unjustified imposition of solidary liability against the eight bank officers,
the appeal on the merits, for the Rules of Court explicitly provide for
the Court is vacating the Decision of the RTC-Bago City Decision. The trial
court erroneously made solidarily liable Urban Banks directors and officers
reversed on appeal.[311]
without even any allegations, much less proof, of any acts of bad faith,
negligence or malice in the performance of their duties. In addition, the trial
court mistakenly anchored its astounding award of damages amounting
PhP28,500,000 on the basis of the mere account of Atty. Pea of a telephone
conversation, without even considering the surrounding circumstances and
the sheer disproportion to the legal services rendered to the bank.
appeal
is
likewise
annulled
and
is
also
without
effect.
[307]
In contemplation of law,
that void decision is deemed non-existent. [308] Quod nullum est, nullum
immediate
execution
lest
the
judgment
becomes
extraordinary remedy allowed only when there are reasons to believe that
the judgment debtor will not be able to satisfy the judgment debt if the
injury or damage that the losing party may suffer, should the appealed
judgment be reversed later.[313]Thus, the Court held that even the financial
a just debt.
and executory:
prevailing party in a final judgment which was still pending appeal may not
small-time
building
contractor
that
could
ill-afford
the
allegedly
precarious
financial
circumstance
warranting
immediate
execution of a
appeal
cannot
judgment
be
justified
in its
as
favor
Falcons
the same as its basis for finding good reason to grant the
motion. Only an appellate court can appreciate the dilatory
intent of an appeal as an additional good reason in upholding
an order for execution pending appeal which may have been
loan for the purpose of using the money to comply with the
The
other
cases
are
impending,
so
it
is
body
corporate
cannot
be
threatened
by
purpose of the loan was very specific and the same was
made known to defendant bank through defendant Teodoro
Borlongan. The loan was not secured for some other purpose.
Truth to tell, the plaintiff accomplished his mission in clearing
the property of tenants, intruders and squatters, long before
the deadline given him by the defendant bank. The plaintiff
was assured by no less than the President of defendant bank
of the availability of funds for his compensation and
reimbursement of his expenses. Had he been paid by
defendant bank soon after he had fulfilled his obligation, he
could have settled his loan obligation with his creditor.
Defendants were benefitted by the services rendered
by the plaintiff. While plaintiff has complied with the
undertaking, the defendants, however, failed to perform their
obligation to the plaintiff.
matter how flimsy.[316] As quoted above, the trial court noted Atty. Peas total
the plaintiff from freely exercising his rights over his property
1999 itself, which spawned the collection suit included only a prayer for
payment of PhP3,500,000 with attorneys fees of PhP100,000. [317] It seems
absurd that Atty. Pea would agree to obtaining a loan from his own friend,
when the Promissory Notes provided for a penalty of 5% interest per month
or 60% per annum for delay in the payment. [318] It sounds more like a
creative justification of the immediate execution of the PhP28.5 Million
judgment notwithstanding the appeal.
In fact, the Court of Appeals noted Atty. Peas admission of sufficient
The mere fact that Atty. Pea was already subjected to a collection
suit for payment of the loan proceeds he used to perform his services for
Urban Bank is not an acceptable reason to order the execution pending
appeal against the bank. Financial distress arising from a lone collection suit
and not due to the advanced age of the party is not an urgent or compelling
reason that would justify the immediate levy on the properties of Urban
Bank pending appeal. That Pea would made liable in the collection suit filed
by his creditor-friend would not reasonably result in rendering illusory the
final judgment in the instant action for agents compensation.
Peas purported difficulty in paying the loan proceeds used to
perform his services does not outweigh the injury or damages that might
result should Urban Bank obtain a reversal of the judgment, as it did in this
case. Urban Bank even asserts that the collection suit filed against Pea was
properties to answer for any liability arising from the collection suit arising
from his creditor-friend. In initially denying the execution pending appeal,
the appellate court held that:
On the other hand, private respondents claim that the
only way he could pay his indebtedness to Roberto Ignacio is
through the money that he expects to receive
from
to abscond was ever raised by Atty. Pea and yet, the trial court granted
execution pending appeal.
Hence, to rule that a pending collection suit against Atty. Pea, which
has not been shown to result in his insolvency, would be to encourage
judgment creditors to indirectly and indiscriminately instigate collection
suits or cite pending actions, related or not, as a good reason to routinely
Since the original order granting execution pending appeal was completely
void for containing no justifiable reason, it follows that any affirmance of
the same by the Court of Appeals is likewise void.
Neither will the Court accept the trial courts unfounded assumption
that Urban Banks appeal was merely dilatory, as in fact, the PhP28,500,000
award given by the trial court was overturned by the appellate court and
the
BSP[322] and
PhP2,036,878.
[323]
reportedly
had
liquid
assets
amounting
to
[326]
aforesaid
rationale
for
discretionary
Pacific Meat Company, Inc., (Pacific Meat) were found by the trial court
therein to be
its
solidarily liable
to Flexo Manufacturing,
Inc.,
(Flexo
co-defendant
PNB
is
not. It
cannot,
court also granted execution pending appeal on the basis of the insolvency
Affirming the reversal ordered by the Court of Appeals, this Court ruled that
since there was another party who was solidarily liable to pay for the
the
judgment debt, aside from the insolvent Columbus Food, there was no good
may
nullify
all
chances
portion
of
the
judgment
diminish
dispositive
for
Similarly, the trial court in this case found Urban Bank and all eight
individual bank officers solidarily liable to Atty. Pea for the payment of the
insolvent
several such
Atty. Pea could have demanded payment from any of the nine defendants.
or there
were
Thus, it was a mistake for the Court of Appeals to have affirmed execution
gather and take charge of all the assets and liabilities of the bank and
pending appeal based solely on the receivership of Urban Bank, when there
administer the same for the benefit of its creditors and all of the banks
were eight other individual defendants, who were solidarily liable but were
assets shall be considered as under custodial legis and exempt from any
not shown to have been insolvent. Since Urban Banks co-defendants were
not found to have been insolvent, there was no good reason for the Court of
Resolution of the Monetary Board of the BSP, Urban Bank was not only
prevented from doing business in the Philippines but its asset and affairs
award could have been satisfied by the eight other defendants, especially
were placed under receivership as provided for under the same law. [328] In
fact, even Pea himself assured the PDIC, as receiver of Urban Bank, that he
would not schedule or undertake execution sales of the banks assets for as
long as the bank remains in receivership. [329]Until the approval of the
rehabilitation or the initiation of the liquidation proceedings, all creditors of
the bank under receivership shall stand on equal footing with respect to
demanding satisfaction of their debts, and cannot be extended preferred
status by an execution pending appeal with respect to the banks assets:
of the eight other individual defendants, who were never shown to have
been incapable of paying the judgment debt in the first place. The
disposition on the execution pending appeal may have been different had
Atty. Pea filed suit against Urban Bank alone minus the bank officers and
the same bank was found solely liable for the award and later on declared
becomes the trustee of its assets for the equal benefit of all
under receivership.
rehabilitation
or
the
initiation
of
the
equal
footing
with
respect
to
demanding
[330]
(Emphasis supplied)
Bank meant that any execution pending appeal can be granted only if EIB
the main case will render moot and academic a petition questioning the
PhP28,500,000. That is not at all the case. In just one particular sale on
77.57% of Peas total award from the trial court. [332] The fact that EIBs offer
Pending Appeal
to take over Urban Bank means it was able to satisfy the BSPs concern that
all legitimate liabilities of Urban Bank be duly discharged.
Assuming that the Special Order granting execution pending appeal
As an exception to the general rule that only final judgments may be
executed,[333] the grant of execution pending appeal must perforce be based
on good reasons. These reasons must consist of compelling or superior
circumstances demanding urgency which will outweigh the injury or
damages suffered, should the losing party secure a reversal of the
judgment or final order.[334] The circumstances that would reasonably justify
superior urgency, demanding interim execution of Peas claims for
compensation and/or damages, have already been settled by the financial
were valid, issues have been raised on alleged irregularities that mar the
levy and sale on execution of the properties of Urban Bank and its officers
and directors. Many of the facts have not been sufficiently litigated before
the trial and appellate courts for us to fully rule on the issue, nevertheless,
from what is on record, the following are the observations of this Court:
levied
herein
by
the
sheriff
amounting
to
more
Second, assuming that Urban Bank and its officers did not possess
sufficient cash or funds to pay for the judgment debt pending appeal, they
should have been given the option to choose which of their properties to be
garnished and/or levied. In this case, Urban Bank exercised its option by
more than PhP76,882,925 and were sufficient to satisfy the judgment debt.
reason was offered by the trial court[340] or the sheriff[341] for rejecting the
[337]
Tagaytay was levied upon by the sheriff.[338] No sufficient reason was raised
to the
why the banks chosen properties were rejected or inadequate for purposes
of securing the judgment debt pending appeal. Worse, the Sheriff
proceeded with garnishing and levying on as many properties of Urban
Bank and its officers, in disregard of their right to choose under the rules.
Finally, the Court cannot turn a blind eye to the fact that there was
already a sufficient supersedeas bond given to answer for whatever
monetary award will be given in the end. To recall, the De Leon Group had
for the purpose of correcting the injustice that has been committed herein,
by allowing the Court to pursue the question of who was responsible for
such gross violation of the rules on execution, and for the Court to find
awarded to Atty. Pea. That execution sales over the properties of judgment
for this reason that the Office of the Court Administrator will be given a
the amount of the award indicates bad faith, if not malice, with respect to
special task by the Court on this matter. Judge Henry Trocino of RTC-Bago
City, who issued the Special Order and had supervisory authority over the
proceedings of the execution pending appeal, would have been included
under such administrative investigation by the Office of the Court
Administrator, were it not for his retirement from the judicial service.
independent finding has been made by this Court of the complete nullity of
the order granting execution pending appeal, it follows that all acts
pursuant to such order and its writ are also void. It does not follow however,
that the Courts Decision in Co v. Sillador,[342] is nullified, inasmuch as an
equally-important legal doctrine the immutability of Supreme Court final
Acting on Atty. Peas Omnibus Motion dated 09 December 2002 [344] and
spouses of Teodoro Borlongan, Corazon Bejasa and Arturo Manuel, Jr. [343] It
does not encompass other specific events and acts committed in the course
respect to the Courts Order dated 13 November 2002 [346] that clarified the
earlier stay order against the execution pending appeal, [347] the Court
disciplinary actions. Having said that, this Court leaves it to the parties to
hereby denies both motions. The Court is fully correct in suspending the
period for the running of the redemption period of the properties of Urban
Bank and its officers and directors that were levied and subject of execution
sale to satisfy the judgment debt in favor of Atty. Pea, the Court having
conclusively determined that the supersedeas bond filed was sufficient and
the corresponding request from each justice. Each justice is in fact, required
considering the subsequent finding that the said execution pending appeal
As to the theory of Atty. Pea that the actuations of Justice Carpio, the
then ponente of
this
case,
in
drafting
the
questioned
Order should
Thirdly, his insinuation (which he denies) that Justice Carpio may have been
positively impact his motion for reconsideration of the same, the Court finds
bribed because the latter has a new Mercedes Benz [349] is highly offensive
and has no place where his points should have been confined to legal
reasons and arguments.
In the first place, that questioned Order was not the decision of only a
single member of the Court, Justice Carpio, but of the entire division to
Incidentally, Atty. Pea has voiced the fear in the Letter of Complaint filed in
the Courts Committee on Ethics and Ethical Standards, [350] which he brought
Justices Jose Vitug, Consuelo Ynares-Santiago and Adolfo Azcuna. This Order
to this, the affirmation by the Division of this Order demonstrates that there
is no truth to Atty. Peas claim that Justice Carpio fabricated the Order.
fear, this Decision is frontally disposing of this claim by stating that there is
no basis to believe that the questioned Order was anything than the joint
decision of the five members of the then First Division, and that his
In the second place, Atty. Peas claim of undue interest against Justice
Carpio specifically with respect to the latter having the instant case
transferred to his new Division, is based on ignorance of the system of
arguments in his motion to reconsider does not persuade this Court to vary
in any form the questioned order. Moreover, our disposition of this case
renders moot his motion to reconsider the order.
their case assignments but bring the latter with them to their new Divisions.
[348]
execution pending appeal is due in no small part to the delays arising from
The cases are then transferred to the Justices new Divisions, by way of
Peas peculiar penchant for filing successive motions for inhibition and reraffle.
[351]
property lead to the loss or the impairment of use of more than PhP181
inhibition of members of the Court based on the sole ground of his own self-
serving allegations of lack of faith and trust, and would like to reiterate, at
this point, the policy of the Court not to tolerate acts of litigants who, for
just about any conceivable reason, seek to disqualify a judge (or justice) for
their own purpose, under a plea of bias, hostility, prejudice or prejudgment.
[352]
The Court cannot allow the unnecessary and successive requests for
The Court is still confronted with the supervening acts related to the
execution pending appeal and the reversal of the award of damages, which
affect the rights of the parties as well as of the intervenors to the case,
totally reversed the staggering amount of damages given by the trial court,
claims and performing its educational function, the Court shall briefly
appeal when there has been a reversal of the trial courts Decision on the
award of damages in order to guide the parties as well as the bench and
bar in general. The necessity of making these detailed instructions is
prompted by the most natural question an ordinary person with a sense of
justice will ask after reading the facts: How can an obligation to pay for the
whom have not been found individually or solidarily liable, are entitled to
full restitution of all their properties levied upon and garnished, since they
have been exonerated from corporate liability with respect to the banks
agency relationship with Pea.
possibly be reversed. Until the judgment on the main case on which the
execution pending appeal hinges is rendered final and executory in favor of
the prevailing judgment creditor, it is incumbent on the purchasers in the
execution sale to preserve the levied properties. They shall be personally
liable for their failure to do so, especially if the judgment is reversed, as in
this case.[361] In fact, if specific restitution becomes impracticable such as
when the properties pass on to innocent third parties the losing party in the
execution even becomes liable for the full value of the property at the time
of its seizure, with interest. The Court has ruled:
Due to the complete reversal of the trial courts award for damages,
which was the basis of the Special Order and Writ of Execution allowing
execution pending appeal, intervenor Unimega and other bidders who
participated in the public auction sales are liable to completely restore to
petitioner-respondent bank all of the properties sold and purchased therein.
Although execution pending appeal is sanctioned under the rules and
jurisprudence, when the executed decision is reversed, the premature
execution is considered to have lost its legal bases. The situation
necessarily requires equitable restitution to the party prejudiced thereby.
[359]
sale. If
impracticable,
the
specific
losing
restitution
party
in
the
becomes
execution
private
respondents.
It cannot be
gainsaid that it is
by
the
Rules.
required
to
restore
the
remained under the name of the bank, owing to the supersedeas bond it
is
annotation of the sale and levied on the titles to those units, the titles have
Unimega
condominium units to Urban Bank. Although the intervenor has caused the
properties
intervenor
had filed and the Courts own orders that timely suspended the transfer of
(Emphasis
supplied)[362]
this
case,
the
rights
of
intervenor
Unimega
to
the
10
condominium units bought during the public auction sale under the Special
Order
are
rendered
nugatory
by
the
reversal
of
the
award
of
of
the
main
Decision
Unimega to the return of the PhP10,000,000 the latter paid for the
condominium units, which Pea received as judgment creditor in satisfaction
of the trial courts earlier Decision.[364]Consequently, intervenors earlier
request for the issuance of a writ of possession [365] over those units no
longer has any leg to stand on. Not being entitled to a writ of possession
under
the
present
circumstances,
Unimegas ex
parte petition
is
consequently denied.
would
Upon the reversal of the main Decision, the levied properties itself,
trial courts Special Orders are conditional on the final outcome of the
appeal in the main case. Unlike in auction sales arising from final and
executory judgments, both the judgment creditor and the third parties who
creditor, plus compensation to the former for the deprivation and the use
the excess received over and above that to which the former
reversal of the award of damages, upon the payment of the judgment debt
herein amounting to PhP4,500,000, with interest as indicated in the
Considering the foregoing points, the Court adopts with modification
[367]
restitution has become impossible, in which case Pea shall be liablefor the
full value of the property at the time of its seizure, with interest. Whether
Urban Bank and the bank officers and directors are entitled to any claim for
damages against Pea and his indemnity bond is best ventilated before the
earlier.
[368]
shall pay the full value of the property at the time of its
6% per annum from 28 May 1999, without prejudice to the right of Urban
Bank to invoke payment of this sum under a right of set-off against the
amount of PhP25,000,000 that has been placed in escrow for the benefit of
Isabela Sugar Company, Inc. The Complaint against the eight other
individual petitioners, namely Teodoro Borlongan (+), Delfin C. Gonzales, Jr.,
Benjamin L. de Leon, P. Siervo G. Dizon, Eric L. Lee, Ben Y. Lim, Jr., Corazon
Bejasa, and Arturo Manuel, Jr., is hereby DISMISSED.
c.
d.
Bank (G. R. No. 145817) and Benjamin L. de Leon, Delfin Gonzalez, Jr., and
Eric L. Lee (G. R. No. 145822) are hereby GRANTED under the following
conditions:
The Omnibus Motion dated 09 December 2002 filed by Atty. Pea and
b.
the then Deputy Sheriff of Bago City, for the irregularities attending the
The Regional Trial Court of Makati City, to which the case shall be
raffled, is hereby designated as the court that will fully implement the
submit a report thereon within 120 days from receipt of this Decision.
The
Office
of
the
Court
Administrator
is
also
directed
to
make
the implementation of this part of the Decision to the sala to which the case
will be raffled.
RODOLFO
S.
GUEVARRA,
and
FERNANDO
AUSTRIA,respondents.
The Presiding Judge of RTC Bago City shall make a full report on all incidents
PARDO, J.:
related to the execution in this case, including all returns on the writ of
execution herein.
Because so much suspicious circumstances have attended the
The Case
execution in this case by the Regional Trial Court of Bago City, the
proceedings with respect to any restitution due and owing under the
Appeals[2] affirming the decision[3] of the Regional Trial Court, Branch 44, San
National Capital Region, Makati City, a court with venue to hear cases
Fernando, Pampanga,
located in Makati City. The Executive Judge of the Regional Trial Court of
Makati City is ordered to include the execution of the Decision and the
proceedings for the restitution of the case in the next available raffle.
which
ordered
petitioner
Dominion
Insurance
The Facts
On May 22, 1992 the case was again called for pre-trial conference. Only
On January 25, 1991, plaintiff Rodolfo S. Guevarra instituted Civil Case No.
plaintiff and counsel were present. Despite due notice, defendant and
the trial court a handwritten note sent to him by defendants counsel which
for
P249,672.53,
representing
premiums
that
plaintiff
ORDER
When this case was called for pre-trial this afternoon only plaintiff and his
counsel Atty. Romeo Maglalang appeared. When shown a note dated May
Fernando Austria, who, at the time relevant to the case, was its Regional
21, 1992 addressed to a certain Roy who was requested to ask for
Thereafter the pre-trial conference was set on the following dates: October
18, 1991, November 12, 1991, March 29, 1991, December 12, 1991,
January 17, 1992, January 29, 1992, February 28, 1992, March 17, 1992 and
April 6, 1992, in all of which dates no pre-trial conference was held. The
record shows that except for the settings on October 18, 1991, January 17,
1992 and March 17, 1992 which were cancelled at the instance of
present his evidence on June 16, 1992 at 9:00 oclock in the morning.
The plaintiff and his counsel are notified of this order in open court.
SO ORDERED.
Plaintiff presented his evidence on June 16, 1992. This was followed by a
additional exhibits on July 13, 1992. The exhibits were admitted in evidence
fees;
OF DEFAULT. It alleged therein that the failure of counsel to attend the pretrial conference was due to an unavoidable circumstance and that counsel
had sent his representative on that date to inform the trial court of his
complaint;
On August 25, 1992 the trial court denied defendants motion for reasons,
among others, that it was neither verified nor supported by an affidavit of
merit and that it further failed to allege or specify the facts constituting his
meritorious defense.
Court of Appeals a motion for reconsideration. [7] On July 16, 1997, the Court
aforesaid order. For the first time counsel revealed to the trial court that the
reason for his nonappearance at the pre-trial conference was his illness. An
The Issues
Motion.
The issues raised are: (1) whether respondent Guevarra acted within
authority
as
agent
for
petitioner,
and
(2)
whether
San Fdo.,for our place and stead, to do and perform the following acts and
things:
by
third-party
defendant Austria)
and
duly organized and existing under and by virtue of the laws of the Republic
of the Philippines, xxx represented by the undersigned as Regional
xxx
CAR,
PERSONAL
ACCIDENT,
and
Manager,
MOTOR
A perusal of the Special Power of Attorney [16] would show that petitioner
(represented
MARINE,
do hereby
appoint
Services
The agency comprises all the business of the principal, [20] but, couched
in general terms, it is limited only to acts of administration. [21]
A general power permits the agent to do all acts for which the law does
not require a special power. [22] Thus, the acts enumerated in or similar to
1. You are hereby given authority to settle and dispose of all motor car
power of attorney.
1878.
Special
powers
of
attorney
are
necessary
in
Office.
2. Full authority is given you on TPPI claims settlement.
xxx xxx xxx[24]
the
In
following cases:
settling
the
claims
mentioned
above,
special
authority to pay,[25] which states that the payment shall come from
power
of
attorney
is
required
before
In this case, when the risk insured against occurred, petitioners liability
Respondent Guevarra was authorized to pay the claim of the insured, but
as
insurer
arose.
This
obligation
was
extinguished
when
the payment shall come from the revolving fund or collection in his
respondent Guevarra paid the claims and obtained Release of Claim Loss
possession.
Thus, to the extent that the obligation of the petitioner has been
petitioner.
The principal is not liable for the expenses incurred by the agent in the
following cases:
Annexes C-2, D-1, E-1, F-1, G-1, H-1, I-1 and J-l, in the total amount of
the latter should wish to avail himself of the benefits derived from the
P116,276.95.
contract;
debtor, he can recover only insofar as the payment has been beneficial to
the debtor.
the
claims
was
P3,604.84.
Deducting
this
from
Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the
to
The Fallo
[28]
SLDR No. 1214M, which gave rise to the instant case. Dated October
16, 1989, SLDR No. 1214M covers 25,000 bags of sugar. Each bag
clients.
order VMC Marketing No. 042 dated October 16, 1989." [1] The
transaction it covered was a "direct sale." [2] The SLDR also contains
an additional note which reads: "subject for (sic) availability of a (sic)
stock at NAWACO (warehouse)."[3]
On October 25, 1989, STM sold to private respondent Consolidated
Sugar Corporation (CSC) its rights in SLDR No. 1214M for P
14,750,000.00. CSC issued one check dated October 25, 1989 and
three checks postdated November 13, 1989 in payment. That same
day, CSC wrote petitioner that it had been authorized by STM to
Court assailing the decision of the Court of Appeals dated February 24,
letter were a copy of SLDR No. 1214M and a letter of authority from
STM authorizing CSC "to withdraw for and in our behalf the refined
resolution amended the judgment dated February 13, 1991, of the Regional
No. 1214 dated October 16, 1989 in the total quantity of 25,000
Trial Court of Makati City, Branch 147, in Civil Case No. 90-118.
bags."[4]
The facts of this case as found by both the trial and appellate courts are as
follows:
SLDR No. 1214M, said checks also covered SLDR No. 1213.
then sent petitioner a letter dated January 23, 1990 informing it that
summons, the case proceeded only against the latter. During the
SLDR No. 1214M had been "sold and endorsed" to it but that it had
trial, it was discovered that Teresita Ng Go who testified for CSC was
been
petitioner's
warehouse despite the fact that only 2,000 bags had been
summons.[7] CSC, however, did not bother topursue its case against
refused
further
withdrawals
of
sugar
from
had already dwithdrawn all the sugar covered by the cleared checks.
[6]
days
later,
petitioner
reiterated
that
all
the
sugar
for the 23,000 bags.[8] Since STM had already drawn in full all the
Petitioner explained that the SLDRs, which it had issued, were not
documents of title, but mere delivery receipts issued pursuant to a
series of transactions entered into between it and STM. The SLDRs
did not authorize the transfer of said party's rights and interests.
Petitioner also alleged that CSC did not pay for the SLDR and was
actually
undelivered
STM's
co-conspirator
to
defraud
it
through
bags
of
refined
sugar
in
the
amount
of
following
sums:
P10,000,000.00
as
moral
damages;
"SO ORDERED."[9]
1213 on the same date, October 16, 1989 (date of the two
SLDR No. 1214 the same has been fully paid as indicated by
cleared checks of STM. SLDR No. 21214M was only one of 22 SLDRs
issued to STM and since the latter had already withdrawn its full
payment.'
quota of sugar under the said SLDR, CSC was already precluded
from seeking delivery of the 23,000 bags of sugar.
involving
No. 1214 has not been fully paid is supported only by the
purchase
purchase.
price
corroborated
by
has
any
not
been
positive
fully
paid
evidence.
and
There
is
is
not
an
SLDR
No.
1214M
were
separate
and
independent
the
Court
assailed
The appellate court explained the rationale for the modification as
follows:
"1) Deliver to plaintiff-appellee 12,586 bags of sugar covered
by SLDR No. 1214M;
fees;
the basis for such a finding. The rule is explicit that courts
should consider the evidence only for the purpose for which it
"SO ORDERED."
Both
parties
then
[11]
seasonably
filed
separate
motions
for
reconsideration.
the
Court
hereby
modifies
the
assailed
Rules of Court) and estopped from doing so. (Art. 1431, Civil
Code).
3.
The
Court
of
Appeals
misapplied
the
law
on
for review:
"1. The Court of Appeals erred in not holding that STM's and
private
that
respondent's
specially
informing
petitioner
in the original).
year did not render Exh. `F' an account stated and its
balance binding.
subject matter being generic, and (b) the sale of sugar being
"6. The Court of Appeals erred in not holding that the "clean
was not raised during the trial in the court below could not be raised
reliefs (sic) from petitioner, its only remedy being against its
basic rules of fair play, justice, and due process. [15] Nonetheless, the
assignor."[14]
to withdraw sugar against SLDR No. 1214M to show that the latter
[16]
the agency, to show not only the fact of its existence, but
also its nature and extent(Antonio vs. Enriquez [CA], 51 O.G.
3536].
Here,
defendant-appellant
failed
to
sufficiently
Article
1868
that
the
basis of
agency
is
informed
defendant-appellant
that
SLDFR
No.
deliver said commodity to STM or its assignee. Since said sugar had
CSC was a buyer of the SLDFR form, and not an agent of STM.
been fully paid for, petitioner and CSC, as assignee of STM, were not
the intention of the parties as gathered from the whole scope and
refused to apply Article 1279 of the Civil Code to the present case.
Regarding the third issue, petitioner contends that the sale of sugar
title to the sugar still remaining with the vendor. Noteworthy, SLDR
that SLDR No. 1214M had been "sold and endorsed" to it. [27] The use
of the words "sold and endorsed" means that STM and CSC intended
a contract of sale, and not an agency. Hence, on this score, no error
was committed by the respondent appellate court when it held that
CSC was not STM's agent and could independently sue petitioner.
On
the second
issue, proceeding
from
the
theory
that
"It
is
understood
and
agreed
that
by
payment
by
the
buyer/trader
representative, title
to
personally
refined
sugar
or
is
through
transferred
a
to
transactions entered into between petitioner and STM are but serial
parts of one account, petitioner insists that its debt has been offset
by its claim for STM's unpaid purchases, pursuant to Article 1279 of
the Civil Code.[28] However, the trial court found, and the Court of
Appeals concurred, that the purchase of sugar covered by SLDR No.
1214M was a separate and independent transaction; it was not a
serial part of a single transaction or of one account contrary to
petitioner's insistence. Evidence on record shows, without being
rebutted, that petitioner had been paid for the sugar purchased
under SLDR No. 1214M. Petitioner clearly had the obligation to
[31]
reconsideration thereof.
sugar. This conspiracy is allegedly evidenced by: (a) the fact that
STM's selling price to CSC was below its purchasing price; (b) CSC's
refusal to pursue its case against Teresita Ng Go; and (c) the
authority given by the latter to other persons to withdraw sugar
against SLDR No. 1214M after she had sold her rights under said
SLDR to CSC. Petitioner prays that the doctrine of "clean hands"
should be applied to preclude CSC from seeking judicial relief.
However, despite careful scrutiny, we find here the records bare of
convincing
evidence
whatsoever
to
support
the
petitioner's
that the properties could be offered for sale to prospective buyers. Glanville
later showed the properties to Marquez.
Marquez
thereafter
offered
the
parcels
of
land
and
the
Sometime later, Marquez and the Litonjua brothers inquired from Glanville
when the sale would be implemented. In a telex dated April 22, 1987,
he was authorized to sell the properties for P27,000,000.00 and that the
Glanville informed Delsaux that he had met with the buyer, which had
[4]
same to Delsaux in Belgium, but the latter did not respond. On October 28,
of
Glanville, advising that the sale would no longer proceed. Glanville followed
12, 1987 that Delsaux sent a telex to Glanville stating that, based on the
Belgian/Swiss
US$1,000,000.00
instructed by his principal to inform Marquez that the decision has been
[5]
decision,
the
final
offer
was
the
Republic
of
the Philippines,
the
political
situation
in
Corporation is situated.[10]
Marquez furnished Eduardo Litonjua, Jr. with a copy of the telex sent
by Delsaux. Litonjua, Jr. accepted the counterproposal of Delsaux. Marquez
Delsaux himself later sent a letter dated May 22, 1987, confirming
conferred with Glanville, and in a Letter dated February 26, 1987, confirmed
that the ESAC Regional Office had decided not to proceed with the sale of
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.
[6]
xxx
Philippines
Yours sincerely,
Dear Sir:
(Sgd.)
C.F. DELSAUX
Far East Bank & Trust Company, and ESAC in the RTC of Pasig City. An
Corporation.
resolutions of the Board of Directors and stockholders. The trial court also
Marquez to sell the same; and the telex dated October 28, 1986 of Jack
pointed out that the supposed sale involves substantially all the assets of
Glanville was his own personal making which did not bind EC.
The Litonjuas appealed the decision to the CA, alleging that (1) the
lower court erred in concluding that the real estate broker in the instant
case needed a written authority from appellee corporation and/or that said
WHEREFORE,
the
complaint
against
Eternit
broker had no such written authority; and (2) the lower court committed
grave error of law in holding that appellee corporation is not legally bound
defendants.
[13]
trial
court
declared
that
since
the
authority
of
the
Board of Directors to bind it; neither were Glanville and Delsaux authorized
agents/realtors was not in writing, the sale is void and not merely
by its board of directors to offer the property for sale. Since the sale
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
III
The CA ruled that Marquez, who was a real estate broker, was a
special agent within the purview of Article 1874 of the New Civil Code.
from ECs board of directors to bind such corporation to the sale of its
pointed out that Delsaux was not even a member of the board of directors
Petitioners maintain that, based on the facts of the case, there was a
perfected contract of sale of the parcels of land and the improvements
broker Marquez.
Board
of
Directors
of
EC
for
Marquez
to
validly
act
as
agent because his authority was of a special and limited character in most
respects. 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
PERFECTED.
4. The GOOD
FAITH of
Petitioners
in
believing
that Marquez was able to communicate both the offer and counter-offer and
their acceptance of respondent ECs counter-offer, resulting in a perfected
contract of sale.
6. Glanvilles
telex
to
Delsaux
inquiring
Manager of respondent EC, and Delsaux, who was the Managing Director
for ESAC Asia, had the necessary authority to sell the subject property or, at
AND SELL;
that Delsaux confirmed his authority to sell the properties in his letter to
Marquez, to wit:
Dear Sir,
Re: Land of Eternit Corporation
Petitioners further emphasize that they acted in good faith when Glanville
I would like to confirm officially that our Group has decided
not to proceed with the sale of the land which was proposed
to you.
(sic)
concerned. Considering
the
new
Court. On the merits of the petition, respondents EC (now EMC) and ESAC
reiterate their submissions in the CA. They maintain that Glanville, Delsaux
its Board of Directors to offer the properties for sale to the petitioners, or to
any other person or entity for that matter.They assert that the decision and
resolution of the CA are in accord with law and the evidence on record, and
Yours sincerely,
on June 1, 1997. Given the significance of their positions and their duties in
respondent EC at the time of the transaction, and the fact that respondent
C.F. DELSAUX[19]
thereof. There was no time that they acted without the knowledge of
respondents. In fact, respondent EC never repudiated the acts of Glanville,
speculations,
inference
surmises,
made
is
or
conjectures;
manifestly
(2)
mistaken,
when
absurd,
the
or
Anent the first issue, we agree with the contention of respondents that the
(5) when the findings of fact are conflicting; (6) when the
issues raised by petitioner in this case are factual. Whether or not Marquez,
agents relative to the sale of the properties of respondent EC, and if so, the
[20]
was created or whether a person acted within the bounds of his apparent
basis of the evidence on record.[21] The findings of the trial court on such
issues, as affirmed by the CA, are conclusive on the Court, absent evidence
record.[23]
We have reviewed the records thoroughly and find that the petitioners
failed to establish that the instant case falls under any of the foregoing
It must be stressed that issues of facts may not be raised in the Court under
Rule 45 of the Rules of Court because the Court is not a trier of facts. It is
decided to sell its properties and that it had empowered Adams, Glanville
corporation
and
its
officers
or
agents,
subject
to
the
articles
of
[26]
[24]
Section
23
of Batas
Pambansa
Bilang 68,
otherwise
known
as
the
in
this
Code,
the
corporate
powers
of
all
xxxx
shall hold office for one (1) year and until their successors are
board of directors or, when authorized either by its by-laws or by its board
authority from the board of directors. [27] Physical acts, like the offering of
business. The general principles of agency govern the relation between the
offer of prospective buyers of such properties and the execution of the deed
of sale covering such property, can be performed by the corporation only
[28]
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
director relating to the affairs of the corporation, but not in the course of,
the agent may be expressed, or implied from his acts which carry out the
or
[34]
Agency may be oral unless the law requires a specific form. [35] However,
properties, the final say will have to be with the board of directors through
unless the latter ratifies the same expressly or impliedly by its board of
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 respondent EC
null and void. The declarations of the agent alone are generally insufficient
including the improvements thereon. The bare fact that Delsaux may have
Moreover, the evidence of petitioners shows that Adams and Glanville acted
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
respondent ESAC, through its Committee for Asia,[38] the Board of Directors
of
between them.[33]
respondent
ESAC,[39] and
the
Belgian/Swiss
component
of
the
was authorized to offer for sale the property for P27,000,000.00 and the
or even all of such shares of stocks, taken alone, will not justify their being
the principal is extended through the facility of the agent. In so doing, the
agent, by legal fiction, becomes the principal, authorized to perform all acts
which the latter would have him do. Such a relationship can only be
[41]
effected with the consent of the principal, which must not, in any way, be
compelled by law or by any court.[44]
The petitioners cannot feign ignorance of the absence of any regular and
to offer the properties for sale and to sell the said properties to the
of his powers; such person must not act negligently but must use
reasonable diligence and prudence to ascertain whether the agent acts
While Glanville was the President and General Manager of respondent EC,
within the scope of his authority.[45] The settled rule is that, persons dealing
and Adams and Delsaux were members of its Board of Directors, the three
with an assumed agent are bound at their peril, and if they would hold the
acted for and in behalf of respondent ESAC, and not as duly authorized
principal liable, to ascertain not only the fact of agency but also the nature
proof is upon them to prove it. [46] In this case, the petitioners failed to
discharge their burden; hence, petitioners are not entitled to damages from
condition sine qua non to bind respondent EC. Admittedly, respondent ESAC
respondent EC.
owned 90% of the shares of stocks of respondent EC; however, the mere
fact that a corporation owns a majority of the shares of stocks of another,
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
petitioners, that the latter had accepted such offer to sell the land and the
subject properties. A real estate broker is one who negotiates the sale of
ratification.
DOLES v ANGELES
to sell.
[47]
(2)
the
third
person,
in
good
faith,
relied
upon
such
representation; (3) relying upon such representation, such third person has
JOCELYN
B.
DOLES, Petitioner,
vs.
MA. AURA TINA ANGELES, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This refers to the Petition for Review on Certiorari under Rule 45 of the
the representations, and that, in turn, needs proof that the representations
Rules of Court questioning the Decision 1dated April 30, 2001 of the Court of
predated the action taken in reliance. [49] Such proof is lacking in this case. In
Appeals (CA) in C.A.-G.R. CV No. 66985, which reversed the Decision dated
July 29, 1998 of the Regional Trial Court (RTC), Branch 21, City of Manila;
and unequivocally declared that they were acting for and in behalf of
respondent ESAC.
On April 1, 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a
Complaint, denied that she borrowed money from respondent, and averred
that from June to September 1995, she referred her friends to respondent
exchange for personal checks through her capitalist Arsenio Pua. She
alleged that her friends, namely, Zenaida Romulo, Theresa Moratin, Julia
respondent and issued personal checks in payment of the loan; that the
checks bounced for insufficiency of funds; that despite her efforts to assist
respondent to collect from the borrowers, she could no longer locate them;
her personal loan with respondent; that this property was mortgaged to
National
secure
that if the accounts were not settled, a criminal case will be filed against
her; that she was forced to issue eight checks amounting to P350,000 to
condition for the foregoing sale, respondent shall assume the undue
answer for the bounced checks of the borrowers she referred; that prior to
balance of the mortgage and pay the monthly amortization of P4,748.11 for
the issuance of the checks she informed respondent that they were not
the remainder of the 25 years which began on September 3, 1994; that the
sufficiently funded but the latter nonetheless deposited the checks and for
property was at that time being occupied by a tenant paying a monthly rent
of penalties and interest; that upon informing the petitioner of her arrears,
petitioner denied that she incurred them and refused to pay the same; that
criminal prosecution; that the said deed had no valid consideration; that
she did not appear before a notary public; that the Community Tax
Certificate number on the deed was not hers and for which respondent may
NHMFC to effect the transfer of the title over the property; that petitioner
be prosecuted for falsification and perjury; and that she suffered damages
collected rent over the property for the month of January 1997 and refused
Home
Mortgage
Finance
Corporation
(NHMFC)
to
The RTC identified the issues as follows: first, whether the Deed of Absolute
The rule under the Civil Code is that contracts without a cause or
execute the necessary documents to effect the transfer of her rights over
the property to the respondent; and third, whether petitioner is liable for
damages.
On July 29, 1998, the RTC rendered a decision the dispositive portion of
which states:
On April 30, 2001, the CA promulgated its Decision, the dispositive portion
of which reads:
SO ORDERED.
WHEREFORE, IN VIEW OF THE FOREGOING, this appeal is hereby GRANTED.
The RTC held that the sale was void for lack of cause or consideration:
The Decision of the lower court dated July 29, 1998 is REVERSED and SET
ASIDE. A new one is entered ordering defendant-appellee to execute all
Plaintiff Angeles admission that the borrowers are the friends of defendant
Doles and further admission that the checks issued by these borrowers in
appellant with the arrearages of the formers loan with the NHMFC, at the
SO ORDERED.
The CA concluded that petitioner was the borrower and, in turn, would "relend" the amount borrowed from the respondent to her friends. Hence, the
covering the share of Teodorico Doles on the parcel of land described in this
The CA took into account the following circumstances in their entirety: the
the respondent and, hence, she cannot be made to sign the documents to
and that all transactions were made by and between petitioner and
respondent; that the money borrowed was deposited with the bank
account of the petitioner, while payments made for the loan were deposited
On August 6, 2001, the CA issued its Resolution denying the motion on the
ground that the foregoing matters had already been passed upon.
in open court that she was "re-lending" the money loaned from respondent
to other individuals for profit;9 and that the documentary evidence shows
that the actual borrowers, the friends of petitioner, consider her as their
creditor and not the respondent.10
Furthermore, the CA held that the alleged threat or intimidation by
respondent did not vitiate consent, since the same is considered just or
legal if made to enforce ones claim through competent authority under
Article 133511 of the Civil Code;12 that with respect to the arrearages of
petitioner on her monthly amortization with the NHMFC in the sum
13
III.
On May 29, 2001, petitioner filed her Motion for Reconsideration with the
CA, arguing that respondent categorically admitted in open court that she
CAUSE.14
and, hence, she had no legal capacity to sue petitioner; and that the CA
failed to consider the fact that petitioners father, who co-owned the
Although, as a rule, it is not the business of this Court to review the findings
consideration in the form of a price certain in money 16 and that this sum
exceptions, at least three of which are present in the instant case, namely:
indisputably pertains to the debt in issue. This Court has consistently held
that a contract of sale is null and void and produces no effect whatsoever
findings of facts of the courts a quo are conflicting; and when the CA
where the same is without cause or consideration. 17 The question that has
15
To arrive
To restate, the CA cited four instances in the record to support its holding
case.
respondent and that all transactions were made by and between petitioner
and respondent;18 second; the money passed through the bank accounts of
petitioner and respondent;19 third, petitioner herself admitted that she was
valid consideration.
"re-lending" the money loaned to other individuals for profit; 20 and fourth,
the documentary evidence shows that the actual borrowers, the friends of
petitioner, consider her as their creditor and not the respondent. 21
of Sale executed between her and the respondent in their own names,
On the first, third, and fourth points, the CA cites the testimony of the
consideration.
Atty. Diza:
q. You also mentioned that you were not the one indebted to the
plaintiff?
witness:
a. Yes, sir.
Atty. Diza:
Atty. Diza:
q. Did the plaintiff personally see the transactions with your friends?
witness:
a. No, sir.
witness:
Atty. Diza:
a. Inocencio and Moraquin are my friends while [as to] Jacob and
witness:
a. Yes, sir.
Atty. Diza:
q. You are intermediaries?
witness:
a. We are both intermediaries. As evidenced by the checks of the
debtors they were deposited to the name of Arsenio Pua because
the money came from Arsenio Pua.
witness:
xxxx
a. To refer those persons to Aura and to refer again to Arsenio Pua,
sir.
Atty. Diza:
q. Did the plaintiff knew [sic] that you will lend the money to your
witness:
Atty. Villacorta:
witness:
a. Yes, sir.
witness:
Atty. Diza:
Atty. Villacorta:
witness:
a. Yes, sir.
witness:
Atty. Diza:
q. How much?
witness:
considered:24
Atty. Villacorta:
witness:
xxxx
a. Yes, sir.
Atty. Villacorta:
Court:
q. And is it not also a fact Madam witness that everytime that the
defendant borrowed money from you her friends who [are] in need
witness:
a. I am aware of that.
witness:
Atty. Villacorta:
Atty. Villacorta:
defendant?
q. By the friends of the defendant, am I correct?
witness:
witness:
a. Yes, sir.
a. Yes, sir.
Atty. Villacorta:
Atty. Villacorta:
witness:
are in need of money were able to obtain loan to [sic] Arsenio Pua
through your assistance?
witness:
a. Yes, sir.
Respondent is estopped to deny that she herself acted as agent of a certain
Arsenio Pua, her disclosed principal. She is also estopped to deny that
a. Yes, sir.
petitioner acted as agent for the alleged debtors, the friends whom she
(petitioner) referred.
Atty. Villacorta:
This Court has affirmed that, under Article 1868 of the Civil Code, the basis
q. So that occasion lasted for more than a year?
witness:
a. Yes, sir.
Atty. Villacorta:
q. And some of the checks that were issued by the friends of the
one professes to act as agent for another, she may be estopped to deny her
agency both as against the asserted principal and the third persons
interested in the transaction in which he or she is engaged. 28
witness:
In this case, petitioner knew that the financier of respondent is Pua; and
The CA is incorrect when it considered the fact that the "supposed friends
essential nature one of agency, the former is the agent of the latter
sufficient that petitioner disclosed to respondent that the former was acting
determined by the fact that one represents and is acting for another, and if
in behalf of her principals, her friends whom she referred to respondent. For
encounter the third person with whom the agent interacts. The law in fact
contemplates, and to a great degree, impersonal dealings where the
That both parties acted as mere agents is shown by the undisputed fact
principal need not personally know or meet the third person with whom her
that the friends of petitioner issued checks in payment of the loan in the
name of Pua. If it is true that petitioner was "re-lending", then the checks
should have been drawn in her name and not directly paid to Pua.
With respect to the second point, particularly, the finding of the CA that the
disclosed to each other that they are representing someone else, and so
disbursements and payments for the loan were made through the bank
both of them are estopped to deny the same. It is evident from the record
that petitioner merely refers actual borrowers and then collects and
disburses the amounts of the loan upon which she received a commission;
suffice it to say that in the normal course of commercial dealings and for
that the facilities of the agent, such as a bank account, may be employed,
personally know each other, such ignorance does not affect their juridical
and that a sub-agent be appointed, such as the bank itself, to carry out the
extend the personality of the principal through the facility of the agent.
In view of the two agency relationships, petitioner and respondent are not
Although the record shows that petitioner admitted at the time of trial that
privy to the contract of loan between their principals. Since the sale is
she owned the property described in the TCT, 35 the Court must stress that
predicated on that loan, then the sale is void for lack of consideration.
the Transfer Certificate of Title No. 382532 36 on its face shows that the
owner of the property which admittedly forms the subject matter of the
2. A further scrutiny of the record shows, however, that the sale might have
Deed of Absolute Sale refers neither to the petitioner nor to her father,
Teodorico Doles, the alleged co-owner. Rather, it states that the property is
the debt: respondent averred in her complaint and testified that the parties
had agreed that as a condition for the conveyance of the property the
there is an entry to the effect that the petitioner had been granted a special
respondent shall assume the balance of the mortgage loan which petitioner
allegedly owed to the NHMFC.33 This Court in the recent past has declared
notation, nor from any other evidence on the record, that the petitioner or
for a sale.
34
the issue of whether duress or intimidation had been foisted upon petitioner
Cemetery, Inc. et al., finding Manila Memorial Park Cemetery, Inc. (MMPCI)
jointly and severally liable with Florencia C. Baluyot to respondent Atty.
Moreover, even assuming the mortgage validly exists, the Court notes
Pedro L. Linsangan.
respondents allegation that the mortgage with the NHMFC was for 25 years
which began September 3, 1994. Respondent filed her Complaint for
Specific Performance in 1997. Since the 25 years had not lapsed, the prayer
of respondent to compel petitioner to execute necessary documents to
Contract No. 25012 was no longer interested in acquiring the lot and had
ASIDE. The
complaint of
paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan
that once reimbursement is made to the former buyer, the contract would
SO ORDERED.
MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L.
LINSANGAN, respondent.
DECISION
TINGA, J.:
For resolution in this case is a classic and interesting texbook question
in the law on agency.
Lot No. A11 (15), Block 83, Garden Estate I denominated as Contract No.
28660 and the Official Receipt No. 118912 dated 6 April 1985 for the
This will confirm our agreement that while the offer to purchase under
amount
price
Contract No. 28660 states that the total price of P132,250.00 your
undertaking is to pay only the total sum of P95,000.00 under the old price.
same was not the amount previously agreed upon. To convince Atty.
Further the total sum of P19,838.00 already paid by you under O.R. #
118912 dated April 6, 1985 has been credited in the total purchase price
contract price is P132,250.00, Atty. Linsangan would pay only the original
thereby
price of P95,000.00.
of P1,800.00 including interests (sic) charges for a period of five (5) years.
of P19,838.00.
Contract
No.
28660
has
listed
leaving a balance
ofP75,162.00
on a monthly installment
(Signed)
FLORENCIA C. BALUYOT
The monthly installment will start April 6, 1985; the amount of P1,800.00
and the difference will be issued as discounted to conform to the previous
price as previously agreed upon. ---P95,000.00
By virtue of this letter, Atty. Linsangan signed Contract No. 28660 and
accepted Official Receipt No. 118912. As requested by Baluyot, Atty.
Linsangan issued twelve (12) postdated checks of P1,800.00 each in favor
Prepared by:
of MMPCI. The next year, or on 29 April 1986, Atty. Linsangan again issued
(Signed)
Agency Manager
Holy Cross Memorial Park
4/18/85
The trial court held MMPCI and Baluyot jointly and severally liable. [13] It
found that Baluyot was an agent of MMPCI and that the latter was estopped
from denying this agency, having received and enchased the checks issued
by Atty. Linsangan and given to it by Baluyot. While MMPCI insisted that
Baluyot did not present any evidence. For its part, MMPCI alleged that
Baluyot was authorized to receive only the down payment, it allowed her to
Contract No. 28660 was cancelled conformably with the terms of the
consistently encashed.[14]
Baluyot was not an agent but an independent contractor, and as such was
not authorized to represent MMPCI or to use its name except as to the
extent expressly stated in the Agency Manager Agreement.
[10]
Moreover,
MMPCI was not aware of the arrangements entered into by Atty. Linsangan
in favor of plaintiff declaring Contract No. 28660 as valid and subsisting and
burial lot No. A11 (15), Block 83, Section Garden I, Holy Cross Memorial Park
had from the beginning allowed to receive the same in his behalf.
Atty. Linsangan which states that he expressly admits that Contract No.
28660 on account of serious delinquencyis now due for cancellation under
its terms and conditions.[12]
and acting on its behalf in the dealings with clients and customers. Hence,
cannot belatedly and unilaterally change the terms of the contract without
the consent, much less the knowledge of the other contracting party, which
MMPCI even beyond her authority.[20] The appellate court likewise found that
was MMPCI. And in this case, MMPCI did not agree to a change in the
the acts of Baluyot bound MMPCI when the latter allowed the former to act
contract and in fact implemented the same pursuant to its clear terms. In
for and in its behalf and stead. While Baluyots authority may not have been
expressly conferred upon her, the same may have been derived impliedly
MMPCI further alleged that it cannot be held jointly and solidarily liable
with Baluyot as the latter exceeded the terms of her agency, neither did
MMPCI ratify Baluyots acts. It added that it cannot be charged with making
had full powers as the written contract expressly stated the terms and
at the same time deny responsibility for such misrepresentation. [22] Finally,
contract, MMPCI merely enforced the terms and conditions imposed therein.
[18]
There being absolutely nothing on the record that would show that the
court a quo overlooked, disregarded, or misinterpreted facts of weight and
Imputing negligence on the part of Atty. Linsangan, MMPCI claimed that
significance, its factual findings and conclusions must be given great weight
and should not be disturbed by this Court on appeal.
MMPCI, Atty. Linsangan did not even bother to verify Baluyots authority or
the appealed decision in Civil Case No. 88-1253 of the Regional Trial Court,
[19]
National
Capital
Judicial
SO ORDERED.[23]
Region,
Branch
57
of
Makati,
is
MMPCI filed its Motion for Reconsideration,[24] but the same was denied
for lack of merit.
[25]
fact, unless the factual findings complained of are devoid of support by the
evidence on record or the assailed judgment is based on misapprehension
of facts.[30] In BPI Investment Corporation v. D.G. Carreon Commercial
In the instant Petition for Review, MMPCI claims that the Court of
There are instances when the findings of fact of the trial court and/or Court
of Appeals may be reviewed by the Supreme Court, such as (1) when the
agent of MMPCI, she clearly exceeded her authority and Atty. Linsangan
knew or should have known about this considering his status as a long-
practicing lawyer. MMPCI likewise claims that the Court of Appeals erred in
impossible; (3) where there is a grave abuse of discretion; (4) when the
failing to consider that the facts and the applicable law do not support a
[26]
fact are conflicting; (6) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is contrary to the
Atty. Linsangan argues that he did not violate the terms and conditions
admissions of both appellant and appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings of fact are
and complied with them in good faith for at least two years.
[27]
He claims
(9) when the facts set forth in the petition as well as in the petitioners main
the validity of the subject contract and the case at bar. [28] According to him,
and reply briefs are not disputed by the respondents; and (10) the findings
MMPCI had practically admitted in its Petition that Baluyot was its agent,
and thus, the only issue left to be resolved is whether MMPCI allowed
Baluyot to act as though she had full powers to be held solidarily liable with
the latter.[29]
In the case at bar, the Court of Appeals committed several errors in the
apprehension of the facts of the case, as well as made conclusions devoid
Rule 45 of the Rules of Court is limited to reviewing only errors of law, not
the consent or authority of the latter.[33] Thus, the elements of agency are (i)
the object is the execution of a juridical act in relation to a third person; (iii)
offer to purchase, therefore, are contained in such forms and, when signed
the agent acts as a representative and not for himself; and (iv) the agent
[34]
parties.
In an attempt to prove that Baluyot was not its agent, MMPCI pointed
The Offer to Purchase duly signed by Atty. Linsangan, and accepted and
out that under its Agency Manager Agreement; an agency manager such as
was clearly stated therein that Purchaser agrees that he has read or has
[35]
had read to him this agreement, that he understands its terms and
MMPCI that Baluyot was an independent contractor, the fact remains that
she was authorized to solicit solely for and in behalf of MMPCI. As properly
found both by the trial court and the Court of Appeals, Baluyot was an
agent of MMPCI, having represented the interest of the latter, and having
clients/prospective buyers.
authority to alter the terms of the written contract provided by MMPCI. The
[36]
to pay the old price was executed by Baluyot alone. Nowhere is there any
indication that the same came from MMPCI or any of its officers.
by Baluyot.
It is a settled rule that persons dealing with an agent are bound at their
peril, 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 establish it. [38] The basis
for agency is representation and a person dealing with an agent is put upon
inquiry and must discover upon his peril the authority of the agent. [39] If he
agents authority and his ignorance of that authority will not be any excuse.
[40]
directly to ascertain the real status of the contract, blindly relying on the
[41]
doing when he signed the written contract, knew the meaning and value of
every word or phrase used in the contract, and more importantly, knew the
that proves to be unfounded. The principal, on the other hand, may act on
the presumption that third persons dealing with his agent will not be
negligent in failing to ascertain the extent of his authority as well as the
existence of his agency.[42]
The trial and appellate courts found MMPCI liable based on ratification
and estoppel. For the trial court, MMPCIs acts of accepting and encashing
the checks issued by Atty. Linsangan as well as allowing Baluyot to receive
In the instant case, it has not been established that Atty. Linsangan
checks drawn in the name of MMPCI confirm and ratify the contract of
agency. On the other hand, the Court of Appeals faulted MMPCI in failing to
contrary to those indicated in the written contract, much less bind MMPCI
declarations and actions alone are not sufficient to establish the fact or
extent of her authority. [43] Atty. Linsangan as a practicing lawyer for a
relatively long period of time when he signed the contract should have
The Court does not agree. Pertinent to this case are the following
provisions of the Civil Code:
been put on guard when their agreement was not reflected in the contract.
More importantly, Atty. Linsangan should have been alerted by the fact that
Art. 1898. If the agent contracts in the name of the principal, exceeding the
Baluyot failed to effect the transfer of rights earlier promised, and was
scope of his authority, and the principal does not ratify the contract, it shall
be void if the party with whom the agent contracted is aware of the limits of
the powers granted by the principal. In this case, however, the agent is
that the principal chooses to act in ignorance of the facts. [46]However, in the
absence of circumstances putting a reasonably prudent man on inquiry,
Art. 1910. The principal must comply with all the obligations that the agent
facts.[47]
As for any obligation wherein the agent has exceeded his power, the
between her and Atty. Linsangan was for the latter to pay a monthly
solidarily liable with the agent if the former allowed the latter to act as
Thus, the acts of an agent beyond the scope of his authority do not
bind the principal, unless he ratifies them, expressly or impliedly. Only the
principal can ratify; the agent cannot ratify his own unauthorized acts.
Moreover, the principal must have knowledge of the acts he is to ratify. [44]
Ratification in agency is the adoption or confirmation by one person of
an act performed on his behalf by another without authority. The substance
of the doctrine is confirmation after conduct, amounting to a substitute for
a prior authority. Ordinarily, the principal must have full knowledge at the
time of ratification of all the material facts and circumstances relating to
the unauthorized act of the person who assumed to act as agent. Thus, if
material facts were suppressed or unknown, there can be no valid
ratification and this regardless of the purpose or lack thereof in concealing
such facts and regardless of the parties between whom the question of
ratification may arise.[45] Nevertheless, this principle does not apply if the
and
cash
component
of P1,455.00
from
Baluyot.
checks, Baluyot failed to come up with her part of the bargain. This was
supported by Baluyots statements in her letter [50] to Mr. Clyde Williams, Jr.,
Sales Manager of MMPCI, two days after she received the copy of
the Complaint. In the letter, she admitted that she was remiss in her duties
when she consented to Atty. Linsangans proposal that he will pay the old
price while the difference will be shouldered by her. She likewise admitted
that the contract suffered arrearages because while Atty. Linsangan issued
the agreed checks, she was unable to give her share of P1,455.00 due to
her own financial difficulties. Baluyot even asked for compassion from
MMPCI for the error she committed.
As
far
as
MMPCI
is
concerned,
the
contract
price
expectation, that this conduct shall be acted upon by, or at least influence,
the other party; and (iii) knowledge, actual or constructive, of the real facts.
[51]
with the contract, albeit made through a check and partly in cash. In view
Baluyot and MMPCI, there is no indication that MMPCI let the public, or
alter the standard contracts of the company. Neither is there any showing
Atty. Linsangan would have incurred arrearages that could have caused the
that prior to signing Contract No. 28660, MMPCI had any knowledge of
the checks to his account. However, the checks alone were not sufficient to
another must not have been misled through his own want of reasonable
care and circumspection.[52] Even assuming that Atty. Linsangan was misled
latters check payments for being insufficient. It would not have applied to
was clearly negligent in his dealings with Baluyot, and could have easily
his account the P1,800.00 checks. Moreover, the fact that Baluyot had to
determined, had he only been cautious and prudent, whether said agent
was clothed with the authority to change the terms of the principals written
with Atty. Linsangan and admit to having made an error in entering such
contract.
It was only when Baluyot filed her Answer that she claimed that MMCPI was
Estoppel
must
be
intentional
and
unequivocal,
for
when
Likewise, this Court does not find favor in the Court of Appeals findings
that the authority of defendant Baluyot may not have been expressly
conferred upon her; however, the same may have been derived impliedly
impression that the facts are otherwise than, and inconsistent with, those
company in a long period of time. A perusal of the records of the case fails
to show any indication that there was such a habit or custom in MMPCI that
allows its agents to enter into agreements for lower prices of its interment
spaces sold at such lower price. No evidence was ever presented to this
liable for damages under the same contract, since there is no evidence
effect.
As the Court sees it, there are two obligations in the instant case. One
is the Contract No. 28660 between MMPCI and by Atty. Linsangan for the
space to Atty. Linsangan for P132,250.00 under Contract No. 28660, and
agreement between Baluyot and Atty. Linsangan for the former to shoulder
the difference between the true contract price of P132,250.00 and the
To repeat, the acts of the agent beyond the scope of his authority do
not bind the principal unless the latter ratifies the same. It also bears
emphasis that when the third person knows that the agent was acting
beyond his power or authority, the principal cannot be held liable for the
acts of the agent. If the said third person was aware of such limits of
agent, unless the latter undertook to secure the principals ratification. [54]
This Court finds that Contract No. 28660 was validly entered into both
by MMPCI and Atty. Linsangan. By affixing his signature in the contract, Atty.
Linsangan assented to the terms and conditions thereof. When Atty.
Linsangan incurred delinquencies in payment, MMCPI merely enforced its
rights under the said contract by canceling the same.
Thus, Atty. Linsangan has a cause of action against Baluyot, which he can
PADILLA, J.:
decision
Court of Appeals dated 22 June 2001 and its Resolution dated 12 December
"American Airlines, Inc. vs. Orient Air Services and Hotel Representatives,
2001 in CA- G.R. CV No. 49802, as well as the Decision in Civil Case No. 88-
1253 of the Regional Trial Court, Makati City Branch 57, are hereby
Court of Manila, Branch IV, which dismissed the complaint and granted
REVERSED and SET ASIDE. The Complaint in Civil Case No. 88-1253 is
damages.
ORIENT
AIR
SERVICES
&
HOTEL
REPRESENTATIVES, petitioner,
vs.
COURT
OF
APPEALS
and
AMERICAN
AIR-LINES
INCORPORATED, respondents.
AMERICAN
AIRLINES,
INCORPORATED, petitioner,
vs.
COURT
authorized the latter to act as its exclusive general sales agent within the
Philippines for the sale of air passenger transportation. Pertinent provisions
OF
APPEALS
and
ORIENT
AIR
SERVICES
&
HOTEL
REPRESENTATIVES, INCORPORATED,respondents.
WITNESSETH
Francisco A. Lava, Jr. and Andresito X. Fornier for Orient Air Service and
Hotel
Representatives,
Inc.
nor its sub-agents will perform services for any other air carrier
shall include:
and continued consent from American, Orient Air Services may sell
air passenger transportation to be performed within the United
involved.
xxx
xxx
xxx
4. Remittances
xxx
xxx
xxx
bankrupt or make any assignment for the benefit of or enter into any
over
air
American's
services
and
any
connecting
through
its rights under this Agreement, take possession of any ticket forms,
belonging to American.
Conference of America.
11. IATA and ATC Rules
(ii) For transportation included in a through ticket covering
transportation between points other than those described
xxx
xxx
13. Termination
were untenable, Orient Air claiming that American Air's precipitous conduct
cable.
Finding that the record and the evidence substantiated the allegations of
xxx
xxx
x x x3
the defendant, the trial court ruled in its favor, rendering a decision dated
16 July 1984, the dispositive portion of which reads:
On 11 May 1981, alleging that Orient Air had reneged on its obligations
under the Agreement by failing to promptly remit the net proceeds of sales
latter as affecting the GSA agreement illegal and improper and order
on 15 May 1981, American Air instituted suit against Orient Air with the
Court of First Instance of Manila, Branch 24, for Accounting with Preliminary
Attachment
Restraining
period from March 16, 1977 to December 31, 1980 in the amount of
Order
or
Garnishment,
Mandatory
Injunction
and
In its Answer
entitlement
after
Further, the defendant contended that the actions taken by American Air in
to
alleged
unremitted
amounts,
contending
that
court a quo on their material points but with some modifications with
attorney's fees.
assailing the substance thereof and arguing for its reversal. The appellate
court's decision was also the subject of a Motion for Partial Reconsideration
by Orient Air which prayed for the restoration of the trial court's ruling with
rate of exchange legally prevailing on July 10, 1981, the date the
1)
American
is
ordered
to
pay
Orient
the
prevailing on July 10, 1981, the date the counterclaim was filed
July 10, 1981 the date the answer with counterclaim was filed, until
full payment;
respondent court, Orient Air as petitioner in G.R. No. 76931 and American
Orient Air and the sale must be done with the use of American Air's ticket
10
stocks.
March 1987 both petitions were consolidated, hence, the case at bar.
On the other hand, Orient Air contends that the contractual stipulation of a
The principal issue for resolution by the Court is the extent of Orient Air's
3% overriding commission covers the total revenue of American Air and not
merely that derived from ticketed sales undertaken by Orient Air. The latter,
in
the exclusive General Sales Agent of American Air, with the corresponding
obligations arising from such agency, such as, the promotion and
justification
of
its
submission,
invokes
its
designation
as
a) . . .
b) Overriding Commission
In addition to the above commission, American will pay Orient Air
Services an overriding commission of 3% of the tariff fees and
charges for all sales of transportation over American's services by
Orient Air Services or itssub-agents. (Emphasis supplied)
Since Orient Air was allowed to carry only the ticket stocks of American Air,
and the former not having opted to appoint any sub-agents, it is American
Air's contention that Orient Air can claim entitlement to the disputed
overriding commission based only on ticketed sales. This is supposed to be
the clear meaning of the underscored portion of the above provision. Thus,
11
12
13
the Court finds merit in the contention of Orient Air that the Agreement,
when interpreted in accordance with the foregoing principles, entitles it to
the 3% overriding commission based on total revenue, or as referred to by
the parties, "total flown revenue."
As the designated exclusive General Sales Agent of American Air, Orient Air
was responsible for the promotion and marketing of American Air's services
for air passenger transportation, and the solicitation of sales therefor. In
return for such efforts and services, Orient Air was to be paid commissions
15
of two (2) kinds: first, a sales agency commission, ranging from 7-8% of
ambiguity.
tariff fares and charges from sales by Orient Air when made on American
declaration that:
first type of commission does not obtain for the second type of
commissions. The latter type of commissions would accrue for sales of
American Air services made not on its ticket stock but on the ticket stock of
other air carriers sold by such carriers or other authorized ticketing facilities
or travel agents. To rule otherwise, i.e., to limit the basis of such overriding
commissions to sales from American Air ticket stock would erase any
distinction between the two (2) types of commissions and would lead to the
absurd conclusion that the parties had entered into a contract with
meaningless provisions. Such an interpretation must at all times be avoided
with every effort exerted to harmonize the entire Agreement.
records that American Air was the party responsible for the preparation of
the Agreement. Consequently, any ambiguity in this "contract of adhesion"
is to be taken "contra proferentem", i.e., construed against the party who
caused the ambiguity and could have avoided it by the exercise of a little
more care. Thus, Article 1377 of the Civil Code provides that the
interpretation of obscure words or stipulations in a contract shall not favor
interpretations
of
provision
14
are
equally
An additional point before finally disposing of this issue. It is clear from the
16
proper,
that
of the Agreement was, therefore, without cause and basis, for which it
aside the portion of the ruling of the respondent appellate court reinstating
reduction the trial court's award of exemplary damages and attorney's fees.
This Court sees no error in such modification and, thus, affirms the same.
17
(emphasis supplied) In an
DECISION
REGALADO, J.:
In this appeal by certiorari, petitioners assail the judgment of the Court
of Appeals in CA-G.R. CV No. 49175 affirming the adjudication of the
Regional Trial Court of Malolos, Bulacan which found private respondent
Narciso Deganos liable to petitioners for actual damages, but absolved
respondent spouses Brigida D. Luz and Ernesto M. Luz of liability. Petitioners
likewise belabor the subsequent resolution of the Court of Appeals which
denied their motion for reconsideration of its challenged decision.
court. The Agreement itself between the parties states that "either party
jewelry and respondent Brigida D. Luz, also known as Aida D. Luz, was their
regular customer. On several occasions during the period from April 27,
Brigida D. Luz, received several pieces of gold and jewelry from petitioners
of Brigida.
amounting to P382,816.00.
[1]
in seventeen receipts covering the same. Eleven of the receipts stated that
Four years later, or on March 29, 1994, Deganos and Brigida D. Luz
they were received for a certain Evelyn Aquino, a niece of Deganos, and the
were charged with estafa[5] in the Regional Trial Court of Malolos, Bulacan,
remaining six indicated that they were received for Brigida D. Luz.
[2]
which was docketed as Criminal Case No. 785-M-94. That criminal case
appears to be still pending in said trial court.
Deganos was supposed to sell the items at a profit and thereafter remit
the proceeds and return the unsold items to petitioners. Deganos remitted
During the trial of the civil case, petitioners claimed that Deganos
only the sum ofP53,207.00. He neither paid the balance of the sales
acted as the agent of Brigida D. Luz when he received the subject items of
proceeds, nor did he return any unsold item to petitioners. By January 1990,
jewelry and, because he failed to pay for the same, Brigida, as principal,
[3]
the case, appeared as a witness for Deganos and ultimately, she and her
alone who was involved in the transaction with the petitioners; that he
Brigida D. Luz, notwithstanding the fact that six of the receipts indicated
that the items were received by him for the latter. He further claimed that
undertakings.
Brigida, on her part, denied that she had anything to do with the
On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in the
transactions between petitioners and Deganos. She claimed that she never
Regional Trial Court of Malolos, Bulacan against Deganos and Brigida D. Luz
authorized Deganos to receive any item of jewelry in her behalf and, for
that matter, neither did she actually receive any of the articles in question.
After trial, the court below found that only Deganos was liable to
petitioners for the amount and damages claimed. It held that while Brigida
respondent spouses are liable to petitioners for the latters claim for money
D. Luz did have transactions with petitioners in the past, the items involved
and damages in the sum ofP725,463.98, plus interests and attorneys fees,
were already paid for and all that Brigida owed petitioners was the sum
despite the fact that the evidence does not show that they signed any of
on their behalf.
The trial court also found that it was petitioner Lydia Bordador who
indicated in the receipts that the items were received by Deganos for
findings of the court a quo that respondent spouses are not liable to them,
[7]
D. Luz was behind Deganos, but because there was no memorandum to this
the appellate court that (Deganos) acted as agent of his sister (Brigida
effect, the agreement between the parties was unenforceable under the
Luz).
Statute of Frauds.
[8]
[12]
document connecting the respondent Luz spouses with the subject receipts,
petitioners and requested for more time to fulfill the same. They likewise
aver that Brigida testified in the trial court that Deganos took some gold
Both the Court of Appeals and the trial court, however, found as a fact
plus legal interest thereon from June 25, 1990, and attorneys fees. Brigida
personal loan. She and her co-defendant spouse were absolved from any
recovered in the instant case. Such concurrent factual findings are entitled
[9]
for
dismissed,
[11]
reconsideration
filed
by
petitioners
was
[10]
The
subsequently
statement referred to the items which are the subject matter of this case. It
Art. 1868. By the contract of agency a person binds himself to render some
cannot, therefore, be validly said that she admitted her liability regarding
the same.
Petitioners insist that Deganos was the agent of Brigida D. Luz as the
latter clothed him with apparent authority as her agent and held him out to
the public as such, hence Brigida can not be permitted to deny said
behalf,
authority to innocent third parties who dealt with Deganos under such
belief.
[13]
[14]
much
less
with
respect
to
the
particular
transactions
through the supposed agency relation with Deganos is groundless and illadvised.
The evidence does not support the theory of petitioners that Deganos
was an agent of Brigida D. Luz and that the latter should consequently be
held solidarily liable with Deganos in his obligation to petitioners. While the
person dealing with an agent is put upon inquiry and must discover upon
[16]
(Brigida Luz) never authorized her brother (Deganos) to act for and in her
It is clear, therefore, that
The records show that neither an express nor an implied agency was
latter never authorized him to act on her behalf with regard to the
[15]
such claim.
Petitioners next allege that the Court of Appeals erred in ignoring the
fact that the decision of the court below, which it affirmed, is null and void
which provides that in cases involving alleged fraudulent acts, a civil action
the pending criminal case. They further aver that said appellate court erred
for damages, entirely separate and distinct from the criminal action, may
in ruling against them in this civil action since the same would result in an
be
inevitable conflict of decisions should the trial court convict the accused in
preponderance of evidence.
By
way
backdrop
action
shall
proceed
consolidate
which
petition
court. Consequently, it was the duty of the two branches of the Regional
for certiorari in the Court of Appeals to set aside the denial of their
Trial Court concerned to independently proceed with the civil and criminal
demurrer and motion for reconsideration but, as just stated, their petition
court. They
petitioners,
civil
of
party. Such
criminal case for estafa was filed, and that although there was a move to
the
argument
injured
this
the
It is worth noting that this civil case was instituted four years before the
denied
for
by
herein
were
of
brought
then
filed
action.
both
cases,
the
same
was
denied
by
the
trial
[19]
same facts, the quantum of proof required for holding the parties liable
petitioners theorize that the decision and resolution of the Court of Appeals
now being impugned in the case at bar would result in a possible conflict
the present decision and resolution under review, so they suggest, the
possible conflict between the disposition of this civil case and the outcome
Court of Appeals should have awaited the decision in the criminal case, so
as not to render academic or preempt the same or, worse, create two
conflicting rulings.
[18]
Petitioners surprisingly postulate that the Court of Appeals had lost its
jurisdiction to issue the denial resolution dated August 18, 1997, as the
same was tainted with irregularities and badges of fraud perpetrated by its
court officers.
[21]
and fraud on the part of its officers, gravely abused its discretion in issuing
that resolution denying their motion for reconsideration. They claim that
the
Court
of
Appeals
[23]
respondents
[24]
to
file
and petitioners
[25]
said resolution was drafted by the ponente, then signed and issued by the
The Eleventh
members of the Eleventh Division of said court within one and a half days
from the elevation thereof by the division clerk of court to the office of
the ponente.
It is ironic that while some litigants malign the judiciary for being
It is the thesis of petitioners that there was undue haste in issuing the
resolution as the same was made without waiting for the lapse of the ten-
calling out for justice because the Court of Appeals issued a resolution
day period for respondents to file their comment and for petitioners to file
disposing of a case sooner than expected of it. They would even deny the
their reply. It was allegedly impossible for the Court of Appeals to resolve
the issue in just one and a half days, especially because itsponente, the
declogging its dockets. It is definitely not for the parties to determine and
[22]
dictate when and how a tribunal should act upon those cases since they are
not even aware of the status of the dockets and the internal rules and
The fact that a resolution was issued by said court within a relatively
as already found by both the trial and intermediate appellate courts, are
short period of time after the records of the case were elevated to the office
to tarnish the image of the intermediate appellate tribunal and its judicial
whatsoever that the resolution was issued without considering the reply
filed by petitioners. In fact, that brief pleading filed by petitioners does not
we are inclined to let that pass with a strict admonition that petitioners
[27]
judicial tribunal are regular and valid, and that judicial acts and duties have
been and will be duly and properly performed.
[28]
in affirming the judgment of the court a quo, its challenged decision and
resolution are hereby AFFIRMED and the instant petition is DENIED, with
double costs against petitioners
Lastly, petitioners fault the trial courts holding that whatever contract
of agency was established between Brigida D. Luz and Narciso Deganos is
[29]
A.
DIZON,
GERARD
A.
DIZON,
JR., petitioners,
to partially executed ones. From there, they move on to claim that the
contract involved in this case was an executed contract as the items had
already been delivered by petitioners to Brigida D. Luz, hence, such
delivery resulted in the execution of the contract and removed the same
from the coverage of the Statute of Frauds.
that neither the trial court nor the appellate court categorically stated that
there was such a contractual relation between these two respondents. The
trial court merely said that if there was such an agency existing between
them, the same is unenforceable as the contract would fall under the
of
Frauds
which
requires
the
OF
APPEALS
JOSE
and
A.
DIZON,
OVERLAND
Statute
vs. COURT
and
presentation
of
note
or
A.
DIZON,
GERARD
A.
DIZON,
and
JOSE
A.
DIZON,
and
INC., respondents.
DECISION
MARTINEZ, J.:
OVERLAND
EXPRESS
LINES,
Two consolidated petitions were filed before us seeking to set aside and
interest per annum from November 18, 1976, the date of filing of the
complaint, until fully paid, the sum of P8,000.00 a month starting December
G. R. NO. 122544:
On September 26, 1984, the then Intermediate Appellate Court [3] (now
Court of Appeals) rendered a decision[4] stating that:
Quezon City. The term of the lease was for one (1) year commencing from
May 16, 1974 up to May 15, 1975. During this period, private respondent
was granted an option to purchase for the amount of P3,000.00 per square
meter. Thereafter, the lease shall be on a per month basis with a monthly
rental of P3,000.00.
For failure
of private
respondent to pay
the
increased rental
of P8,000.00 per month effective June 1976, petitioners filed an action for
price, are all merely incidental and do not remove the unlawful
ejectment (Civil Case No. VIII-29155) on November 10, 1976 before the
detainer
then City Court (now Metropolitan Trial Court) of Quezon City, Branch
consonance with the ruling in the case of Teodoro, Jr. vs. Mirasol
[2]
case
from
the
jurisdiction
of
respondent
court. In
ordering
private respondent to vacate the leased premises and to pay the sum
38-39)."
premises during the period of illegal detainer from June 1976 to November
1982 at the monthly rental of P8,000.00, less payments made, plus 12%
The two cases were thereafter consolidated before the RTC of Quezon
dismissed the petition in a resolution dated June 19, 1985 and likewise
City, Branch 77. On April 28, 1989, a decision [7] was rendered dismissing
[5]
performance case) and denying its motion for reconsideration in Civil Case
No.
46487
(annulment
of
the
ejectment
case). The
motion
for
rendered
Court (RTC) of Quezon City (Civil Case No. Q-45541) an action for Specific
Performance and Fixing of Period for Obligation with prayer for the issuance
appeal,[8] respondent
On
[9]
Court
of
Appeals
decision
pursuant to the option to purchase and the receipt of the partial payment,
sale between the parties on the leased premises and that pursuant to the
and to fix the period to pay the balance. In an Order dated October 25,
1985, the trial court denied the issuance of a writ of preliminary injunction
on the ground that the decision of the then City Court for the ejectment of
leased property, which petitioners accepted (through Alice A. Dizon) and for
Appellate Court and the Supreme Court, has become final and executory.
which an official receipt was issued, was the operative act that gave rise to
a perfected contract of sale, and that for failure of petitioners to deny
RTC of Quezon City, Branch 102 (Civil Case No. Q-46487) on November 15,
1985 a complaint for Annulment of and Relief from Judgment with injunction
money in their behalf. The Court of Appeals went further by stating that in
and damages. In its decision[6] dated May 12, 1986, the trial court dismissed
fact, what was entered into was a "conditional contract of sale" wherein
the complaint for annulment on the ground of res judicata, and the writ of
ownership over the leased property shall not pass to the private respondent
until it has fully paid the purchase price. Since private respondent did not
consign to the court the balance of the purchase price and continued to
of
preliminary
occupy the subject premises, it had the obligation to pay the amount
private
respondent's
motion
for
reconsideration,
the
AFFIRMED. The appealed decision in Case No. 45541 is, on the other
the records of Civil Case No. 38-29155 (ejectment case) to the Metropolitan
Trial Court (MTC), then City Court of Quezon City, Branch 38, for execution
with preliminary injunction and/or restraining order with this Court (G.R.
per month from June 1976, plus 6% interest per annum, until
1992 on the ground that the same was a refiled case previously dismissed
for lack of merit. On November 26, 1992, entry of judgment was issued by
this Court.
SO ORDERED."
On July 14, 1993, petitioners filed an urgent ex-parte motion for
Upon denial of the motion for partial reconsideration (Civil Case No. Q45541) by respondent Court of Appeals,
[10]
execution of the decision in Civil Case No. 38-29155 with the MTC of
Quezon City, Branch 38. On September 13, 1993, the trial court ordered the
case via petition for certiorari questioning the authority of Alice A. Dizon as
On December 22, 1993, private respondent filed with the Regional Trial
Court (RTC) of Quezon City, Branch 104 a petition for certiorari and
prohibition with preliminary injunction/restraining order (SP. PROC. No. 93-
G. R. NO. 124741:
order
Assailing the aforequoted order after denial of their motion for partial
reconsideration, petitioners filed a petition
[13]
of
the
private
respondent
to
possess
the
subject
[14]
SO ORDERED."[17]
the expiration thereof, the lease was for P3,000.00 per month.
Second. Having failed to exercise the option within the stipulated one-
agreed upon by petitioners and private respondent. However, since the rent
anymore. Moreover, even assuming arguendo that the right to exercise the
month to month in accordance with Article 1687 of the New Civil Code.
option still subsists at the time private respondent tendered the amount on
[18]
Where the rentals are paid monthly, the lease, even if verbal may be
June 20, 1975, the suit for specific performance to enforce the option to
purchase was filed only on October 7, 1985 or more than ten (10) years
[19]
In
such case, a demand to vacate is not even necessary for judicial action
after accrual of the cause of action as provided under Article 1144 of the
New Civil Code.[21]
private
respondent
failed to
pay
the
increased
rental
of P8,000.00 per month in June 1976, the petitioners had a cause of action
as
lessee,
purchasing
to institute an ejectment suit against the former with the then City Court. In
this regard, the City Court (now MTC) had exclusive jurisdiction over the
monthly basis. The other terms of the original contract of lease which are
ejectment suit. The filing by private respondent of a suit with the Regional
revived in the implied new lease under Article 1670 of the New Civil
Trial Court for specific performance to enforce the option to purchase did
Code[22] are only those terms which are germane to the lessees right of
not divest the then City Court of its jurisdiction to take cognizance over the
ejectment case. Of note is the fact that the decision of the City Court was
lease does not ipso facto carry with it any implied revival of private
respondent's
option
to
the
property
purchase
(as
but
remained
lessee
in
thereof)
possession
the
leased
premises. The provision entitling the lessee the option to purchase the
leased premises is not deemed incorporated in the impliedly renewed
contract because it is alien to the possession of the lessee. Private
respondents right to exercise the option to purchase expired with the
termination of the original contract of lease for one year. The rationale of
this Court is that:
presumption that when the lessor allows the lessee to continue enjoying
the law governing the form of contracts. Thus, the elements of a contract of
possession of the property for fifteen days after the expiration of the
sale are consent, object, and price in money or its equivalent. It bears
contract he is willing that such enjoyment shall be for the entire period
stressing that the absence of any of these essential elements negates the
end of the month because the rent was paid monthly. Necessarily, if the
possession, such as the amount of rental, the date when it must be paid,
the care of the property, the responsibility for repairs, etc. But no such
contract of sale pursuant to the contract of lease with option to buy. There
contract of lease.[24]
representation and a person dealing with an agent is put upon inquiry and
must discover upon his peril the authority of the agent. [26] As provided in
Article 1868 of the New Civil Code,[27] there was no showing that petitioners
consented to the act of Alice A. Dizon nor authorized her to act on their
behalf with regard to her transaction with private respondent. The most
ejectment case against it based on the contract of lease with option to buy
prudent thing private respondent should have done was to ascertain the
Every person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent. If he does not make such inquiry,
20, 1975.
of that authority will not be any excuse. Persons dealing with an assumed
agent, whether the assumed agency be a general or special one, are bound
at their peril, if they would hold the principal, to ascertain not only the fact
of the agency but also the nature and extent of the authority, and in case
SO ORDERED.
TAN v ENGINEERING SERVICES
AUSTRIA-MARTINEZ, J.:
write finis to this controversy and shun further delay so as to ensure that
this case would really attain finality.
WHEREFORE,
in
view
of
Assailed in the present petition for review on certiorari under Rule 45 of the
the
foregoing,
both
petitions
are
GRANTED. The decision dated March 29, 1994 and the resolution dated
October 19, 1995 in CA-G.R. CV No. 25153-54, as well as the decision dated
December 11, 1995 and the resolution dated April 23, 1997 in CA-G.R. SP
No. 33113 of the Court of Appeals are hereby REVERSED and SET ASIDE.
Let the records of this case be remanded to the trial court for
Rules of Court is the June 29, 2001 Decision[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 59699 affirming with modification the Decision of the
Regional Trial Court (RTC) of Quezon City, Branch 81 in Civil Case No. Q-907405;
and
its
Resolution[2] promulgated
on April
10,
2002 denying
On October 18, 1989, the spouses George and Susan Tan (spouses Tan)
Case No. VIII-29155 of the then City Court (now Metropolitan Trial Court) of
entered into a contract with G.V.T. Engineering Services (G.V.T.), through its
Quezon City, Branch VIII as affirmed in the decision dated September 26,
1984 of the then Intermediate Appellate Court (now Court of Appeals) and
residential house at Ifugao St., La Vista, Quezon City. The contract price
(Cadag)
to
supervise
the
said
construction. In
the
course
of
the
construction, the spouses Tan caused several changes in the plans and
work. This brought about differences between the spouses Tan and Cadag,
documentary
on one hand, and Tactaquin, on the other. Subsequently, the latter stopped
evidence
on
record
shows
that
plaintiff,
on time of the materials on the project site (Exhs. D, G, H, HOn December 4, 1990, G.V.T., through Tactaquin, filed a Complaint for
specific performance and damages against the spouses Tan and Cadag with
the RTC of Quezon City contending that by reason of the changes in the
plans and specifications of the construction project ordered by Cadag and
xxxx
the spouses Tan, it was forced to borrow money from third persons at
exorbitant interest; that several portions of their contract were deleted but
delay in the completion of the project brought about by the spouses Tans
delay in the delivery of construction materials on the jobsite; that all the
In their Answer with Counterclaims, the spouses Tan and Cadag alleged,
among others, that G.V.T. performed several defective works; that to avert
further losses, the spouses Tan deleted some portions of the project
contractor; that the changes ordered by the spouses Tan were agreed upon
by the parties; that G.V.T., being a mere single proprietorship has no legal
Trial ensued and the court a quo made the following factual findings:
faulty work was called for the first time only on November 16,
plaintiff are unsupported and without basis and that their act
xxxx
the
other
supervising
representatives
[3]
d)
On the basis of the foregoing findings, the trial court concluded thus:
fees; and
e)
the amount
expenses.
of P17,000.00
as
litigation
IT IS ORDERED.
[6]
SO ORDERED.[7]
Both parties filed their respective Motions for Partial Reconsideration but
these were denied by the CA in its Resolution of April 10, 2002.[8]
Hence, herein petition by the spouses Tan based on the following
assignments of errors:
1.
PRICE
AND P49,578.56
OF P1,700,000.00
2.
be held liable because they merely relied upon and followed the advice and
house.
xxxx
Anent the last assigned error, petitioners argue that G.V.T., being a sole
proprietorship, is not a juridical person and, hence, has no legal personality
to institute the complaint with the trial court. Consequently, the trial court
did not acquire jurisdiction over the case and all proceedings conducted by
it are null and void. Petitioners contend that they raised this issue in their
[9]
with G.V.T., the latter agreed to employ only labor in the construction of the
changes and alterations made in the plan of the subject house he cannot
subject house and that petitioners shall supply the materials; that it was
error on the part of the CA and the trial court to award the remaining
assert that it would be highly unfair and unjust for them to be required to
balance of the contract price in favor of respondent despite the fact that
pay the amount representing the cost of the remaining unfinished portion of
some items from the latters scope of work were deleted with its
the latter to unjustly enrich himself at their expense. With respect to the
deleted, it follows that respondent should not be compensated for the work
retention fee, petitioners argue that this amount is payable only after the
which it has not accomplished. Petitioners went further to claim that the
value of the deleted items should, in fact, be deducted from the original
completed the construction of the subject house, petitioners claim that they
should not be required to pay the retention fee. Petitioners also contend
failed to pay the wages of its workers who, in turn, refused to continue
working; that petitioners were even forced to pay the workers wages for the
construction to continue.
In its Comment, respondent contends that the CA and the trial court are
one in finding that petitioners are the ones responsible for breach of
contract, for unjustifiably deleting items agreed upon and delaying delivery
of construction materials, and that these findings were never rebutted by
contrary evidence. Respondent asserts that findings of fact of the trial court
especially when affirmed by the CA are conclusive on the Supreme Court
The Court finds it proper to discuss first the issue regarding G.V.T.s
lack of legal personality to sue.
when supported by the evidence on record and that the Supreme Courts
jurisdiction in cases brought before it from the CA via Rule 45 of the Rules
of Court is limited to reviewing errors of law.
Services
acting
through
its
owner/manager
Gerino
V.
Tactaquin. In fact, the first paragraph of the complaint refers to G.V.T. as the
plaintiff. On this basis, it can be inferred that G.V.T. was the one which filed
the complaint and that it is only acting through its proprietor. However,
subsequent allegations in the complaint show that the suit is actually
brought by Tactaquin.Averments therein refer to the plaintiff as a natural
person. In fact, one of the prayers in the complaint is for the recovery of
moral damages by reason of his sufferings, mental anguish, moral shock,
sleepless nights, serious anxiety and besmirch[ed] reputation as an
Engineer and Contractor. It is settled that, as a rule, juridical persons are
not entitled to moral damages because, unlike a natural person, it cannot
experience physical suffering or such sentiments as wounded feelings,
serious anxiety, mental anguish or moral shock. [12] From these, it can be
inferred that it was actually Tactaquin who is the complainant. As such, the
proper caption should have been Gerino Tactaquin doing business under the
and the Court finds the defect merely technical, which does not, in any way,
Thus, dismissal of
viewed as mere tools designed to aid the courts in the speedy, just and
injustice
of
the
rules
and
the
pleadings
[14]
is
the
controlling
principle
to
the
parties,
giving
a false
impression
of
resulted in any prejudice on the part of petitioners. Thus, this Court held as
this case back for amendment and new trial, there would be
the
same
would
The Court upholds the factual findings of the trial and appellate
constitute the only difference between the old trial and the
courts with respect to petitioners liability for breach of their contract with
respondent. Questions of facts are beyond the pale of Rule 45 of the Rules
such action.
evidence. The
name
of
the
plaintiff
[20]
by the Court of Appeals, are generally binding on this Court. [24] More so, as
In the same manner, it would be an unjustifiable abandonment of the
in this case, where petitioners have failed to show that the courts below
principles laid down in the above-mentioned cases if the Court would nullify
the proceedings had in the present case by the lower and appellate courts
would have altered the outcome of the case. [25] The Court, thus, finds no
on the simple ground that the complaint filed with the trial court was not
properly captioned.
Coming to the merits of the case, the Court finds for the respondent.
An examination of the records shows that respondent, indeed,
As to the first assigned error, respondent did not refute petitioners
contention that he gave his consent and acquiesced to the decision of
his
[27]
letters
datedNovember
10,
23,
1990
contract. Both the trial and appellate courts gave credence to respondents
contention when they ruled that petitioners were guilty of deleting several
the
delivery
of
construction
forcing
next
question
is
whether
they
are
liable
to
pay
the
amounts
both the trial and appellate courts made categorical findings that
respectively.
The Court finds no cogent reason to depart from the ruling of the
having breached their contract with respondent. Article 1170 of the Civil
trial court, as affirmed by the CA, that since petitioners are guilty of breach
Code provides that those who in the performance of their obligations are
contravene the tenor thereof are liable for damages. Moreover, the Court
agrees with the trial court that under Article 1234 of the Civil Code, if the
obligation has been substantially performed in good faith, the obligor may
recover as though there had been a strict and complete fulfillment less
damages suffered by the obligee. In the present case, it is not disputed that
or P1,632,000.00. The
respondent withdrew from the project on November 23, 1990. Prior to such
nd
Court
agrees
with
the
trial
court
that
since
was
not
disputed
by
petitioners. Hence,
petitioners do not deny that they have retained the same in their
entitled to recover this fee because it is stipulated under their contract that
petitioners shall only give them to respondent upon completion of the
project and the same is turned over to them. In the present case,
respondent was not able to complete the project. However, his failure to
petitioners from his scope of work and awarded to other contractors, thus,
complete his obligation under the contract was not due to his fault but
forcing him to withdraw from the contract. These works include the
cement tiles; 12) skylights; 13) Fixtures electrical works; and, 14) Fixtures
fault, the law provides that he is entitled to recover as though there has
[31]
been a strict and complete fulfillment of his obligation. [33] On this basis, the
Court finds no error in the ruling of the trial and appellate courts that
respondent is entitled to the recovery of 5% retention fee.
The Court finds that respondent was only able to establish the
amount of P20,772.05, which is the sum of all the retention fees appearing
in the bills presented by respondent in evidence. [34] Settled is the rule that
and on the basis of the best evidence obtainable as to the actual amount
thereof.[36] It must point out specific facts that could provide the gauge for
[37]
did
regarding
he
the
enter
into
any
construction
of
contract
the
with
subject
CHICO-NAZARIO, J.:
Court of Appeals dated 10 August 2004 and its Resolution[2] dated 17 March
principal for the acts of his agent performed within the limits of
his authority that is equivalent to the performance by the
various
the Philippines. It has as one of its customers Impact Systems Sales (Impact
his principal, the spouses Tan, who are, therefore, the ones
European
industrial
equipment
for
customers
here
in
WHEREFORE,
Decision
and
the
petition
Resolution
is
of
Court
of
appealed
Appeals
petitioners
are
ordered
to
pay
is
reduced
products allegedly amounting to ninety-one thousand three hundred thirtyeight (P91,338.00) pesos. Subsequently, respondents sought to buy from
petitioner one unit of sludge pump valued at P250,000.00 with respondents
making a down payment of fifty thousand pesos (P50,000.00).[4] When the
sludge pump arrived from the United Kingdom, petitioner refused to deliver
the
same
to
respondents
without
their
having
fully
settled
their
states:
[5]
1996,
respondents
total
obligations
stood
at P295,000.00
excluding
said final demand letter, petitioner instituted a complaint for sum of money,
Sludge Pump;
2.) That
said
ASSIGNOR
does
hereby
ASSIGN,
[6]
the said
which
On 8 January 1997, the trial court granted petitioners prayer for the
issuance of writ of preliminary attachment.[13]
receivables
the
ASSIGNOR
is
the
lawful
recipient;
3.) That
the
ASSIGNEE does
hereby
accept
this
assignment.[7]
to
only P220,000.00.
petitioner
which,
according
to
him,
amounted
to
[16]
respondents the sludge pump as shown by Invoice No. 12034 dated 30 June
1995.[8]
he was acting as mere agent of his principal, which was the Impact
Systems, in his transaction with petitioner and the latter was very much
[9]
[10]
Alarmed by this
of Cebu City. He
is
the
proprietor
of
single
[17]
Erwin
H.
Cuizon,
made
down
payment
ERWIN in Default with Motion for Summary Judgment. The trial court
October 2001.
[19]
deferred pending the resolution by the trial court of the special and
case the principal has ratified the act of its agent and plaintiff
[20]
knew about said ratification. Plaintiff could not say that the
subject contract was entered into by Edwin B. Cuizon in
[22]
thereto,
the trial court rendered its assailed Order dated 29 January 2002 dropping
respondent EDWIN as a party defendant in this case. According to the trial
court
2002 Order of the court a quo. The dispositive portion of the now assailed
Decision of the Court of Appeals states:
Petitioner contends that the Court of Appeals failed to appreciate the effect
of ERWINs act of collecting the receivables from the Toledo Power
signed by EDWIN on behalf of Impact Systems. While said collection did not
[24]
respondents who induced it into selling the one unit of sludge pump to
Impact Systems and signing the Deed of Assignment. Petitioner directs the
attention of this Court to the fact that respondents are bound not only by
BEYOND
their principal and agent relationship but are in fact full-blooded brothers
THE
SCOPE
OF
HIS
AGENCY
NOR
DID
HE
[25]
To support its argument, petitioner points to Article 1897 of the New Civil
not a real party in interest in this case and it was proper for the trial court
to have him dropped as a defendant. He insists that he was a mere agent
of Impact Systems which is owned by ERWIN and that his status as such is
In this case, the parties do not dispute the existence of the agency
agent. The only cause of the present dispute is whether respondent EDWIN
firmly believes that respondent EDWIN acted beyond the authority granted
by his principal and he should therefore bear the effect of his deed
We disagree.
Article 1897 reinforces the familiar doctrine that an agent, who acts as
[30]
Its purpose
such, is not personally liable to the party with whom he contracts. The
is to extend the personality of the principal or the party for whom another
[31]
It is said that
the basis of agency is representation, that is, the agent acts for and on
behalf of the principal on matters within the scope of his authority and said
authority. In the last instance, the agent can be held liable if he does not
acts have the same legal effect as if they were personally executed by the
give the third party sufficient notice of his powers. We hold that respondent
principal.
[32]
EDWIN does not fall within any of the exceptions contained in this provision.
is converted into his legal or juridical presence qui facit per alium facit per
se.[33]
The elements of the contract of agency are: (1) consent, express or implied,
of the parties to establish the relationship; (2) the object is the execution of
[34]
We likewise take note of the fact that in this case, petitioner is seeking to
recover both from respondents ERWIN, the principal, and EDWIN, the
agent. It is well to state here that Article 1897 of the New Civil Code upon
which petitioner anchors its claim against respondent EDWIN does not hold
that in case of excess of authority, both the agent and the principal are
liable to the other contracting party. [39] To reiterate, the first part of Article
1897 declares that the principal is liable in cases when the agent acted
management. x x x.[35]
within the bounds of his authority. Under this, the agent is completely
absolved of any liability. The second part of the said provision presents the
Applying the foregoing to the present case, we hold that Edwin Cuizon
situations when the agent himself becomes liable to a third party when he
recall, petitioner refused to deliver the one unit of sludge pump unless it
giving notice of his powers to the third person. However, it must be pointed
received, in full, the payment for Impact Systems indebtedness. [36] We may
out that in case of excess of authority by the agent, like what petitioner
very well assume that Impact Systems desperately needed the sludge
claims exists here, the law does not say that a third person can recover
pump for its business since after it paid the amount of fifty thousand pesos
agent, who did not acquire any right nor incur any liability arising from the
1995.[38] The significant amount of time spent on the negotiation for the
should be impleaded in this case. A real party in interest is one who stands
hold of the said equipment. There is, therefore, no doubt in our mind that
to the avails of the suit. [41] In this respect, we sustain his exclusion as a
business of his principal. Had he not acted in the way he did, the business
of his principal would have been adversely affected and he would have
the Decision dated 10 August 2004 and Resolution dated 17 March 2005 of
the Court of Appeals in CA-G.R. SP No. 71397, affirming the Order dated 29
January
2002 of
the
Regional
Trial
Court,
Branch
8, Cebu City,
is AFFIRMED.
damages.
Let the records of this case be remanded to the Regional Trial Court,
Sometime in February, 1970, the late Jose G. Gana and his family,
numbering nine (the GANAS), purchased from AIR FRANCE through Imperial
AIR FRANCE v CA
AIR
FRANCE, petitioner,
vs.
tickets were bought at the then prevailing exchange rate of P3.90 per
US$1.00. The GANAS also paid travel taxes of P100.00 for each passenger.
On
24
April
1970,
AIR
FRANCE
exchanged
or
substituted
the
aforementioned tickets with other tickets for the same route. At this time,
the GANAS were booked for the Manila/Osaka segment on AIR FRANCE
Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip on AIR
FRANCE Flight 187 on 22 May 1970. The aforesaid tickets were valid until 8
May 1971, the date written under the printed words "Non valuable apres de
MELENCIO-HERRERA, J.:
In this petition for review on certiorari, petitioner AIR FRANCE assails the
Decision of then respondent Court of Appeals
promulgated on 15
December 1980 in CA-G.R. No. 58164-R, entitled "Jose G. Gana, et al. vs.
Sociedad Nacionale Air France", which reversed the Trial Court's judgment
Manucdoc, a Secretary of the Sta. Clara Lumber Company where Jose Gana
was the Director and Treasurer, for the extension of the validity of their
tickets, which were due to expire on 8 May 1971. Teresita enlisted the help
of Lee Ella Manager of the Philippine Travel Bureau, who used to handle
travel arrangements for the personnel of the Sta. Clara Lumber Company.
Ella sent the tickets to Cesar Rillo, Office Manager of AIR FRANCE. The
afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka, Japan.
tickets were returned to Ella who was informed that extension was not
possible unless the fare differentials resulting from the increase in fares
triggered by an increase of the exchange rate of the US dollar to the
However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused
Philippine peso and the increased travel tax were first paid. Ella then
to honor the tickets because of their expiration, and the GANAS had to
purchase new tickets. They encountered the same difficulty with respect to
extension.
their return trip to Manila as AIR FRANCE also refused to honor their tickets.
They were able to return only after pre-payment in Manila, through their
In the meantime, the GANAS had scheduled their departure on 7 May 1971
or one day before the expiry date. In the morning of the very day of their
separate Air France Frights on 19 May 1971 for Jose Gana and 26 May 1971
scheduled departure on the first leg of their trip, Teresita requested travel
agent Ella to arrange the revalidation of the tickets. Ella gave the same
negative answer and warned her that although the tickets could be used by
On 25 August 1971, the GANAS commenced before the then Court of First
the GANAS if they left on 7 May 1971, the tickets would no longer be valid
Instance of Manila, Branch III, Civil Case No. 84111 for damages arising
for the rest of their trip because the tickets would then have expired on 8
May 1971. Teresita replied that it will be up to the GANAS to make the
arrangements. With that assurance, Ella on his own, attached to the tickets
validating stickers for the Osaka/Tokyo flight, one a JAL. sticker and the
other an SAS (Scandinavian Airways System) sticker. The SAS sticker
indicates thereon that it was "Reevaluated by: the Philippine Travel Bureau,
Branch No. 2" (as shown by a circular rubber stamp) and signed "Ador", and
the date is handwritten in the center of the circle. Then appear under
printed headings the notations: JL. 108 (Flight), 16 May (Date), 1040 (Time),
OK (status). Apparently, Ella made no more attempt to contact AIR FRANCE
as there was no more time.
AIR FRANCE traversed the material allegations of the Complaint and alleged
that the GANAS brought upon themselves the predicament they found
themselves in and assumed the consequential risks; that travel agent Ella's
affixing of validating stickers on the tickets without the knowledge and
consent of AIR FRANCE, violated airline tariff rules and regulations and was
beyond the scope of his authority as a travel agent; and that AIR FRANCE
was not guilty of any fraudulent conduct or bad faith.
On 29 May 1975, the Trial Court dismissed the Complaint based on Partial
Pursuant
to
tariff
rules
and
regulations
of
the
International
Air
testimonial evidence.
the Stipulations of Fact between the parties in the Trial Court, dated 31
March 1973, an airplane ticket is valid for one year. "The passenger must
undertake the final portion of his journey by departing from the last point at
which he has made a voluntary stop before the expiry of this limit (parag.
3.1.2. ) ... That is the time allowed a passenger to begin and to complete
his trip (parags. 3.2 and 3.3.). ... A ticket can no longer be used for travel if
its validity has expired before the passenger completes his trip (parag.
3.5.1.) ... To complete the trip, the passenger must purchase a new ticket
for the remaining portion of the journey" (ibid.)
From the foregoing rules, it is clear that AIR FRANCE cannot be faulted for
breach of contract when it dishonored the tickets of the GANAS after 8 May
1971 since those tickets expired on said date; nor when it required the
GANAS to buy new tickets or have their tickets re-issued for the
Tokyo/Manila segment of their trip. Neither can it be said that, when upon
The crucial issue is whether or not, under the environmental milieu the
GANAS have made out a case for breach of contract of carriage entitling
Aeronautics Board (CAB) in April, 1971. This procedure is well in accord with
6. TARIFF RULES
ruling thereon.
7. APPLICABLE FARE ON THE DATE OF DEPARTURE
purposes, Teresita was the agent of the GANAS and notice to her of the
since
rejection of the request for extension of the validity of the tickets was
the
evidence
bears
out
that
Teresita,
who
handled
travel
arrangements for the GANAS, was duly informed by travel agent Ella of the
advice of Reno, the Office Manager of Air France, that the tickets in
question could not be extended beyond the period of their validity without
paying the fare differentials and additional travel taxes brought about by
the increased fare rate and travel taxes.
ATTY. VALTE
explained, he did so upon Teresita's assurance that for the onward flight
Q What did you tell Mrs. Manucdoc, in turn
from Osaka and return, the GANAS would make other arrangements.
the arrangement.
of yours?
The circumstances that AIR FRANCE personnel at the ticket counter in the
Osaka.
The conclusion is inevitable that the GANAS brought upon themselves the
This is a petition for certiorari to review the decision of the Court of Appeals
predicament they were in for having insisted on using tickets that were due
to expire in an effort, perhaps, to beat the deadline and in the thought that
by commencing the trip the day before the expiry date, they could
complete the trip even thereafter. It should be recalled that AIR FRANCE
was even unaware of the validating SAS and JAL. stickers that Ella had
affixed spuriously. Consequently, Japan Air Lines and AIR FRANCE merely
acted within their contractual rights when they dishonored the tickets on
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of
the remaining segments of the trip and when AIR FRANCE demanded
payment of the adjusted fare rates and travel taxes for the Tokyo/Manila
with damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin
flight.
WHEREFORE, the judgment under review is hereby reversed and set aside,
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land
plaintiff, the respondent herein. The deed of absolute sale in favor of the
G.R. No. L-28740 February 24, 1981
FERMIN
Z.
CARAM,
JR., petitioner,
executed, there was no authorized officer before whom the sale could be
vs.
FERNANDEZ, J.:
the peaceful and lawful possession of the premises of the land together
with the pertinent papers thereof such as the Owner's Duplicate Original
Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and
other papers related thereto.
taxes due thereon and had introduced improvements worth not less than
P20,000.00 at the time of the filing of the complaint.
requests were laws; that although the defendant Mata did not like to sell his
property or sign the document without even understanding the same, he
was ordered to accept P650.00 Mindanao Emergency notes; and that due to
On May 5, 1947, the same land covered by Original Certificate of Title No.
his fear of harm or danger that will happen to him or to his family, if he
3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner
herein. The deed of sale in favor of Caram was acknowledged before Atty.
Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys.
The defendants Marcos Mata and Codidi Mata also admit the existence of a
Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First
him in favor of his co-defendant Fermin Caram, Jr. but denies that he ever
Original Certificate of Title No. 3019, alleging as ground therefor the loss of
signed the document for he knew before hand that he had signed a deed of
sale in favor of the plaintiff and that the plaintiff was in possession of the
Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao issued
certificate of title; that if ever his thumb mark appeared in the document
purportedly alienating the property to Fermin Caram, did his consent was
Duplicate Certificate of Title No. 3019 in favor of Marcos Mata and declaring
the lost title as null and void. On December 9, 1947, the second sale
illiterate and ignorant and did not know what he was signing; and that he
between Marcos Mata and Fermin Caram, Jr. was registered with the
Register of Deeds. On the same date, Transfer Certificate of Title No. 140
was issued in favor of Fermin Caram Jr.
The defendant Fermin Caram Jr. filed his answer on October 23, 1959
alleging that he has no knowledge or information about the previous
On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed
absolute deed of sale of his only property in favor of Claro L. Laureta but
alleging that he signed the same as he was subjected to duress, threat and
The trial court rendered a decision dated February 29, 1964, the dispositive
intimidation for the plaintiff was the commanding officer of the 10th division
SO ORDERED.
The
11
I
THE
RESPONDENT
CONCLUDING
THAT
ATTORNEYS-IN-FACT
COURT
OF
IRESPE
AND
OF
APPEALS
PETITIONER
ERRED
APORTADERA
CARAM
FOR
IN
WERE
THE
THE
RESPONDENT
COURT
OF
APPEALS
ERRED
IN
The contention of the petitioner has no merit. The facts of record show that
PETITIONER.
Mata, the vendor, and Caram, the second vendee had never met. During
the trial, Marcos Mata testified that he knows Atty. Aportadera but did not
III
know Caram.
12
Thus, the sale of the property could have only been through
answer, admitted that Atty. Aportadera acted as his notary public and
13
PROPERTY
ATTRIBUTABLE
TO
PETITIONER
AND
IV
The Court of Appeals, in affirming the decision of the trial court, said:
14
The trial court, in holding that appellant Caram. Jr. was not a
purchaser in good faith, at the time he bought the same
The petitioner assails the finding of the trial court that the second sale of
the property was made through his representatives, Pedro Irespe and Atty.
decision:
broker or intermediary with the specific task and duty to pay Marcos Mata
the sum of P1,000.00 for the latter's property and to see to it that the
Marcos Mata; that the Identity of the property to be bought and the price of
the purchase had already been agreed upon by the parties; and that the
question
to
Laureta
on
the
day
Mata
and
Irespe,
the trial court command great weight, and second, the same
Even if Irespe and Aportadera did not have actual knowledge of the first
the land of Mata, for the two properties had been sold on the
sale, still their actions have not satisfied the requirement of good faith. Bad
faith is not based solely on the fact that a vendee had knowledge of the
defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong
guardian ad
litem of
Leaning
Mansaca,
at
the
15
16
Added to
this is the fact that at the time of the second sale Laureta was already in
possession of the land. Irespe and Aportadera should have investigated the
expected of a buyer of real estate they must suffer the consequences. The
title of the vendor and one who buys without checking the vendor's title
takes all the risks and losses consequent to such failure.
17
The principle that a person dealing with the owner of the registered land is
not bound to go behind the certificate and inquire into transactions the
should not apply in this case. It
was of common knowledge that at the time the soldiers of Laureta took the
the person who in good faith was first in the possession; and,
documents from Mata, the civil government of Tagum was not yet
established and that there were no officials to ratify contracts of sale and
18
make them registerable. Obviously, Aportadera and Irespe knew that even
if Mata previously had sold t he Disputed such sale could not have been
registered.
There is no doubt then that Irespe and Aportadera, acting as agents of
Caram, purchased the property of Mata in bad faith. Applying the principle
of agency, Caram as principal, should also be deemed to have acted in bad
faith.
Article 1544 of the New Civil Code provides that:
Since Caram was a registrant in bad faith, the situation is as if there was no
registration at all.
19
The question to be determined now is, who was first in possession in good
faith? A possessor in good faith is one who is not aware that there exists in
his title or mode of acquisition any flaw which invalidates it.
20
Laureta was
21
of four years from the time the intimidation ceased, Marcos Mata lost both
his rights to file an action for annulment or to set up nullity of the contract
as a defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the second
Since the second deed of sale is not a voidable contract, Article 1391, Civil
Code of the Philippines which provides that the action for annulment shall
the action for annulment of the same on the ground of fraud must be
be brought within four (4) years from the time of the discovery of fraud
brought within four (4) years from the discovery of the fraud. In the case at
does not apply. Moreover, Laureta has been in continuous possession of the
bar, Laureta is deemed to have discovered that the land in question has
been sold to Caram to his prejudice on December 9, 1947, when the Deed
of Sale, Exhibit "F" was recorded and entered in the Original Certificate of
A more important reason why Laureta's action could not have prescribed is
Title by the Register of Deeds and a new Certificate of Title No. 140 was
that the second contract of sale, having been registered in bad faith, is null
issued in the name of Caram. Therefore, when the present case was filed on
and void. Article 1410 of the Civil Code of the Philippines provides that any
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a
22
voidable contract is not correct. I n order that fraud can be a ground for the
In a Memorandum of Authorities
1978, the petitioner insists that the action of Laureta against Caram has
the, consent or creation of the contract. The fraud or dolo causante must be
prescribed because the second contract of sale is not void under Article
1409
contracts which are considered void. Moreover, Article 1544 of the New Civil
in Article 1338 of the New Civil Code of the Philippines as "insidious words
Code of the Philippines does not declare void a second sale of immovable
to enter into a contract, and "without them, he would not have agreed to".
23
The fact that the second contract is not considered void under Article 1409
and that Article 1544 does not declare void a deed of sale registered in bad
evidence
or
faith does not mean that said contract is not void. Article 1544 specifically
property. To give full effect to this provision, the status of the two contracts
whatsoever
was
shown
that
through
insidious
words
must be declared valid so that one vendee may contract must be declared
void to cut off all rights which may arise from said contract. Otherwise,
and, instead, offered a wash out settlement, whereby the coconut oil
The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the Court of
Appeals sought to be reviewed is affirmed, without pronouncement as to
costs.
SO ORDERED.
SAFIC ALCAN & CIE, petitioner, vs. IMPERIAL VEGETABLE OIL CO.,
INC., respondent.
DECISION
IVO bound itself to pay to Safic the difference between the said prevailing
price and the contract price of the 2,000 long tons of crude coconut oil,
which amounted to US$293,500.00. IVO failed to pay this amount despite
repeated oral and written demands.
Under its second cause of action, Safic alleged that on eight occasions
between April 24, 1986 and October 31, 1986, it placed purchase orders
with IVO for a total of 4,750 tons of crude coconut oil, covered by Purchase
Contract Nos.
A601297A/B,
A601384,
A601385,
A601391,
A601415,
YNARES-SANTIAGO, J.:
higher price. IVO failed to make the prescribed marginal deposits on the
filed with the Regional Trial Court of Manila, Branch XXV, a complaint dated
February 26, 1987 against private respondent Imperial Vegetable Oil Co.,
demand therefor.
Inc. (hereinafter, IVO), docketed as Civil Case No. 87-39597. Petitioner Safic
alleged that on July 1, 1986 and September 25, 1986, it placed purchase
The demand for marginal deposits was based on the customs of the
orders with IVO for 2,000 long tons of crude coconut oil, valued at
claim shall be liable to account for under this contract (sic). Should either
under the contract, the other party may from time to time demand
such demand, such deposits not to exceed the difference between the
contract price and the market price of the goods covered by the contract on
the day upon which such demand is made, such deposit to bear interest at
the prime rate plus one percent (1%) per annum. Failure to make such
deposit within the time specified shall constitute a breach of contract by the
party upon whom demand for deposit is made, and all losses and expenses
resulting from such breach shall be for the account of the party upon whom
such demand is made. (Underscoring ours.)[1]
FOSFA Contract, Rule 54 BANKRUPTCY/INSOLVENCY: If before the fulfillment
of this contract either party shall suspend payment, commit an act of
bankruptcy, notify any of his creditors that he is unable to meet his debts or
that he has suspended payment or that he is about to suspend payment of
his debts, convene, call or hold a meeting either of his creditors or to pass a
resolution to go into liquidation (except for a voluntary winding up of a
solvent company for the purpose of reconstruction or amalgamation) or
shall apply for an official moratorium, have a petition presented for winding
up or shall have a Receiver appointed, the contract shall forthwith be
closed, either at the market price then current for similar goods or, at the
option of the other party at a price to be ascertained by repurchase or
resale and the difference between the contract price and such closing-out
price shall be the amount which the other party shall be entitled to
Upon Safics posting of the requisite bond, the trial court issued a writ of
preliminary attachment. Subsequently, the trial court ordered that the
assets of IVO be placed under receivership, in order to ensure the
preservation of the same.
In
its
answer,
IVO
raised
the
following
special
affirmative
defenses: Safic had no legal capacity to sue because it was doing business
in the Philippines without the requisite license or authority; the subject
contracts were speculative contracts entered into by IVOs then President,
Dominador Monteverde, in contravention of the prohibition by the Board of
Directors against engaging in speculative paper trading, and despite IVOs
lack of the necessary license from Central Bank to engage in such kind of
trading activity; and that under Article 2018 of the Civil Code, if a contract
which purports to be for the delivery of goods, securities or shares of stock
is entered into with the intention that the difference between the price
stipulated and the exchange or market price at the time of the pretended
delivery shall be paid by the loser to the winner, the transaction is null and
void.
Dominador Monteverde sold the crude coconut oil. As such, the 1986
contracts constituted trading in futures or in mere expectations.
The lower court further held that the subject contracts were ultra
its business normally because of the arrest of most of its physical assets;
that its suppliers were driven away; and that its major creditors have
where
inundated it with claims for immediate payment of its debts, and China
presumably authorized to bind IVO, and the 1986 contracts, which were
Banking Corporation had foreclosed its chattel and real estate mortgages.
Safic
likewise
dealt
with
Dominador
Monteverde,
who
was
transfers, which were nothing more than mere promises to pay once the
the contracts sued upon, the parties had entered into and consummated a
shipments became ready. For these reasons, the lower court held that Safic
number of contracts for the sale of crude coconut oil. In those transactions,
cannot invoke the 1985 contracts as an implied corporate sanction for the
Safic placed several orders and IVO faithfully filled up those orders by
shipping out the required crude coconut oil to Safic, totalling 3,500 metric
tons. Anent the 1986 contracts being sued upon, the trial court refused to
declare the same as gambling transactions, as defined in Article 2018 of
The trial court ruled that Safic failed to substantiate its claim for actual
the Civil Code, although they involved some degree of speculation. After all,
damages. Likewise,
the court noted, every business enterprise carries with it a certain measure
counterclaim.
it
rejected
IVOs
counterclaim
and
supplemental
Thus, on August 28, 1992, the trial court rendered judgment as follows:
WHEREFORE, judgment is hereby rendered dismissing the complaint of
plaintiff Safic Alcan & Cie, without prejudice to any action it might
subsequently institute against Dominador Monteverde, the former President
of Imperial Vegetable Oil Co., Inc., arising from the subject matter of this
THE TRIAL COURT ERRED IN NOT HOLDING THAT IVO IS LIABLE UNDER THE
defendant
are
likewise
hereby
dismissed
for
lack
of
merit.
No
pronouncement as to costs.
On September 12, 1996, the Court of Appeals rendered the assailed
The writ of preliminary attachment issued in this case as well as the order
placing Imperial Vegetable Oil Co., Inc. under receivership are hereby
from in toto.[4]
substantially reiterating the errors it raised before the Court of Appeals and
maintaining that the Court of Appeals grievously erred when:
a. it declared that the 1986 forward contracts (i.e., Contracts Nos. A601446
and A60155 (sic) involving 2,000 long tons of crude coconut oil, and
THE TRIAL COURT ERRED IN HOLDING THAT THE ISSUANCE OF THE WRIT OF
A601683 and A601770A/B/C involving 4,500 tons of crude coconut oil) were
SUCH DAMAGES.
whose name they were entered into. In this connection, the Court of
Appeals erred when (i) it ignored its own finding that (a) Dominador
Monteverde, as IVOs President, had an implied authority to make any
contract necessary or appropriate to the contract of the ordinary business
of the company; and (b) Dominador Monteverde had validly entered into
similar forward contracts for and on behalf of IVO in 1985; (ii) it
distinguished between the 1986 forward contracts despite the fact that the
THE TRIAL COURT ERRED IN HOLDING THAT SAFIC WAS UNABLE TO PROVE
Manila RTC has struck down IVOs objection to the 1986 forward contracts
(i.e. that they were highly speculative paper trading which the IVO Board of
Directors had prohibited Dominador Monteverde from engaging in because
it is a form of gambling where the parties do not intend actual delivery of
the coconut oil sold) and instead found that the 1986 forward contracts
In fine, Safic insists that the appellate court grievously erred when it
were not gambling; (iii) it relied on the testimony of Mr. Rodrigo Monteverde
did not declare that IVOs President, Dominador Monteverde, validly entered
in concluding that the IVO Board of Directors did not authorize its President,
Dominador Monteverde, to enter into the 1986 forward contracts; and (iv) it
We disagree.
did not find IVO, in any case, estopped from denying responsibility for, and
liability under, the 1986 forward contracts because IVO had recognized
itself bound to similar forward contracts which Dominador Monteverde
entered into (for and on behalf of IVO) with Safic in 1985 notwithstanding
that Dominador Monteverde was (like in the 1986 forward contracts) not
expressly authorized by the IVO Board of Directors to enter into such
forward contracts;
b. it declared that Safic was not able to prove damages suffered by it,
despite the fact that Safic had presented not only testimonial, but also
Article III, Section 3 [g] of the By-Laws[5] of IVO provides, among others,
that
Section 3. Powers and Duties of the President. The President shall be
elected by the Board of Directors from their own number.
He shall have the following duties:
xxxxxxxxx
documentary, evidence which proved the higher amount it had to pay for
crude coconut oil (vis--vis the contract price it was to pay to IVO) when IVO
[g] Have direct and active management of the business and operation of
refused to deliver the crude coconut oil bought by Safic under the 1986
and instruction of the Board of Directors and according to his own discretion
whenever and wherever the same is not expressly limited by such orders,
c. it failed to resolve the issue of whether or not IVO is liable to Safic under
the wash out contracts involving Contracts Nos. A601446 and A60155 (sic),
despite the fact that Safic had properly raised the issue on its appeal, and
It can be clearly seen from the foregoing provision of IVOs By-laws that
the evidence and the law support Safics position that IVO is so liable to
Safic.
shows
that
the
IVO
Board
knew
nothing
of
the
1986
Under Article 1898[12] of the Civil Code, the acts of an agent beyond the
scope of his authority do not bind the principal unless the latter ratifies the
company engage in such transactions but the IVO Board rejected his
same expressly or impliedly. It also bears emphasizing that when the third
proposal.
[8]
person knows that the agent was acting beyond his power or authority, the
IVO transactions, Safic should have obtained from Monteverde the prior
principal can not be held liable for the acts of the agent. If the said third
authorization of the IVO Board. Safic can not rely on the doctrine of implied
agency because before the controversial 1986 contracts, IVO did not enter
entitled to recover damages from the agent, unless the latter undertook to
into identical contracts with Safic. The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent. [9] In the case of Bacaltos Coal
into the speculative contracts with Safic, he did not secure the Boards
agent thus:
approval.[14] He also did not submit the contracts to the Board after their
consummation so there was, in fact, no occasion at all for ratification. The
Every person dealing with an agent is put upon inquiry and must discover
contracts were not reported in IVOs export sales book and turn-out book.
upon his peril the authority of the agent. If he does not make such inquiry,
[15]
of that authority will not be any excuse. Persons dealing with an assumed
agent, whether the assumed agency be a general or special one, are bound
contracts with Safic never bound IVO and Safic can not therefore enforce
at their peril, if they would hold the principal, to ascertain not only the fact
of the agency but also the nature and extent of the authority, and in case
either is controverted, the burden of proof is upon them to establish it. [11]
To bolster its cause, Safic raises the novel point that the IVO Board of
Directors did not set limitations on the extent of Monteverdes authority to
The most prudent thing petitioner should have done was to ascertain
sell coconut oil. It must be borne in mind in this regard that a question that
was never raised in the courts below can not be allowed to be raised for the
regard, petitioner can not seek relief on the basis of a supposed agency.
first time on appeal without offending basic rules of fair play, justice and
due process.[18] Such an issue was not brought to the fore either in the trial
court or the appellate court, and would have been disregarded by the latter
tribunal for the reasons previously stated. With more reason, the same does
Directors did not set limitations on Monteverdes authority to sell coconut oil
is belied by what appears on the record.Rodrigo Monteverde, who
succeeded Dominador Monteverde as IVO President, testified that the IVO
Board had set down the policy of engaging in purely physical trading thus:
Q. Now you said that IVO is engaged in trading. With whom does it
usually trade its oil?
A. I am not too familiar with trading because as of March 1987, I was not
yet an officer of the corporation, although I was at the time already
a stockholder, I think IVO is engaged in trading oil.
Q. As far as you know, what kind of trading was IVO engaged with?
A. It was purely on physical trading.
Q. How did you know this?
A. As a stockholder, rather as member of [the] Board of Directors, I
frequently visited the plant and from my observation, as I have to
supervise and monitor purchases of copras and also the sale of the
same, I observed that the policy of the corporation is for the
Atty. Abad
Atty. Abad.
A. There was a meeting held in the office at the factory and it was
Atty. Fernando
No basis, your Honor. What we are talking is about 1985.
Atty. Abad
Q. When you mentioned about the meeting in 1985 wherein the Board of
Directors rejected the future[s] contract[s], were you already a
member of the Board of Directors at that time?
A. Yes, sir.
Q. Do you know the reason why the said proposal of Mr. Dominador
Monteverde to engage in future[s] contract[s] was rejected by the
Board of Directors?
A. Because this future[s] contract is too risky and it partakes of
gambling.
Q. Do you keep records of the Board meetings of the company?
A. Yes, sir.
Q. What do you mean by that the future[s] contracts were not entered
into the books of accounts of the company?
[19]
xxxxxxxxx
Atty. Abad
Q. You said the Board of Directors were against the company engaging in
future[s] contracts. As far as you know, has this policy of the Board
Witness
Q. What else?
A. Yes, sir.
Q. How far has this Dominador Monteverde been using the name of I.V.O.
in selling future contracts without the proper authority and consent
of the companys Board of Directors?
A. Dominador Monteverde never records those transactions he entered
into in connection with these future[s] contracts in the companys
books of accounts.
Rejecting IVOs position, SAFIC claims that there is no distinction between
Atty. Abad
the 1985 and 1986 contracts, both of which groups of contracts were
IVO. Since the buyers letter of credit guarantees payment to the seller as
contracts, SAFIC would bewail, were similarly with their 1985 predecessors,
soon as the latter is able to present the shipping documents covering the
forward sales contracts in which IVO had undertaken to deliver the crude
cargo, its opening usually mark[s] the fact that the transaction would be
coconut oil months after such contracts were entered into. The lead time
consummated.On the other hand, seven out of the ten 1986 contracts were
between the closing of the deal and the delivery of the oil supposedly
allowed the seller to accumulate enough copra to mill and to build up its
inventory and so meet its delivery commitment to its foreign buyers. SAFIC
transfer
concludes that the 1986 contracts were equally binding, as the 1985
gives
no
assurance
of
[the]
buyers
compliance
with
its
contracts, IVO faithfully complied with Central Bank Circular No. 151 dated
contract with a foreign buyer of coconut oil. But with respect to the
from the date of the sale. On the other hand, the 1986 contracts were to be
disputed 1986 contracts, the parties stipulated during the hearing that
performed within an average of eight and a half months from the dates of
none of these contracts were ever reported to the Central Bank, in violation
the sale. All the supposed performances fell in 1987. Indeed, the contract
4. It is not disputed that, unlike the 1985 contacts, the 1986 contracts were
never recorded either in the 1986 accounting books of IVO or in its annual
financial statement for 1986, a document that was prepared prior to the
for oil were not yet on their trees when Dominador Monteverde sold the
books nor reported to the Central Bank. What is more, in those unreported
cases where profits were made, such profits were ordered remitted to
with respect to quantity, price and date of delivery? 2.] Did Safic pay
damages to its buyers?Where were the receipts? Did Safic have to procure
the equivalent oil from other sources? If so, who were these sources? Where
xxxxxxxxx
Evidently, Dominador Monteverde made business for himself, using the
name of IVO but concealing from it his speculative transactions.
Petitioner further contends that both the trial and appellate courts
erred in concluding that Safic was not able to prove its claim for
damages. Petitioner first points out that its wash out agreements with
Monteverde where IVO allegedly agreed to pay US$293,500.00 for some of
the failed contracts was proof enough and, second, that it presented
purchases of coconut oil it made from others during the period of IVOs
default.
We remain unconvinced. The so-called wash out agreements are
clearly ultra vires and not binding on IVO. Furthermore, such agreements
did not prove Safics actual losses in the transactions in question. The fact is
that Safic did not pay for the coconut oil that it supposedly ordered from
IVO through Monteverede. Safic only claims that, since it was ready to pay
when IVO was not ready to deliver, Safic suffered damages to the extent
that they had to buy the same commodity from others at higher prices.
The foregoing claim of petitioner is not, however, substantiated by the
evidence and only raises several questions, to wit: 1.] Did Safic commit to
deliver the quantity of oil covered by the 1986 contracts to its own
buyers? Who were these buyers? What were the terms of those contracts
were their contracts and what were the terms of these contracts as to
quantity, price and date of delivery?
The records disclose that during the course of the proceedings in the
trial court, IVO filed an amended motion [22] for production and inspection of
the following documents: a.] contracts of resale of coconut oil that Safic
bought from IVO; b.] the records of the pooling and sales contracts covering
the oil from such pooling, if the coconut oil has been pooled and sold as
general oil; c.] the contracts of the purchase of oil that, according to Safic, it
had to resort to in order to fill up alleged undelivered commitments of IVO;
d.] all other contracts, confirmations, invoices, wash out agreements and
other documents of sale related to (a), (b) and (c). This amended motion
was opposed by Safic.[23] The trial court, however, in its September 16, 1988
Order,[24] ruled that:
From the analysis of the parties respective positions, conclusion can easily
be drawn therefrom that there is materiality in the defendants move: firstly,
plaintiff seeks to recover damages from the defendant and these are
intimately related to plaintiffs alleged losses which it attributes to the
default of the defendant in its contractual commitments; secondly, the
documents are specified in the amended motion. As such, plaintiff would
entertain no confusion as to what, which documents to locate and produce
considering plaintiff to be (without doubt) a reputable going concern in the
management of the affairs which is serviced by competent, industrious,
if produced, the documents would have been adverse to Safics cause. In its
witness (Donald OMeara) who admitted, in open court, that they are
average price it paid for certain quantities of coconut oil that it allegedly
described, are available, reason there would be none for the same witness
bought in 1987 and deducting this from the average price of the 1986
to say later that they could not be produced, even after they have been
clearly described.
Besides, if the Court may additionally dwell on the issue of damages, the
coconut oil needed to make up for the failed 1986 contracts. There is also
no evidence that Safic had contracted to supply third parties with coconut
oil from the 1986 contracts and that Safic had to buy such oil from others to
Along the same vein, it is worthy to note that the quantities of oil
OMeara) testified to, and as, by this nature of the plaintiffs claim for
covered by its 1987 contracts with third parties do not match the quantities
damages, proof thereof is a must which can be better served, if not amply
of oil provided under the 1986 contracts. Had Safic produced the
documents
unfortunately, was not the case. Suffice it to state in this regard that [T]he
that
the
trial
court
required,
substantially
correct
power of the courts to grant damages and attorneys fees demands factual,
The interest of justice will be served best, if there would be a full disclosure
legal and equitable justification; its basis cannot be left to speculation and
conjecture.[25]
litigation.
WHEREFORE, in view of all the foregoing, the petition is DENIED for
Notwithstanding the foregoing ruling of the trial court, Safic did not
produce the required documents, prompting the court a quo to assume that
lack of merit.
SO ORDERED.
FABIOLA
SEVERINO, plaintiff-appellee,
vs.
GUILLERMO
SEVERINO, defendant-appellant.
P.
Hilado
and
A.
P.
mortgage placed thereon by him and to pay the costs. From this judgment
only the defendant appeals.
The land described in the complaint forms one continuous tract and
consists of lots Nos. 827, 828, 834, and 874 of the cadaster of Silay,
Seva
for
appellant.
Jose Ma. Arroyo, Jose Lopez Vito, and Fisher and DeWitt for appellees.
OSTRAND, J.:
The evidence shows that Melecio Severino died on the 25th day of May,
and sole heir of one Melecio Severino, deceased, to compel the defendant
1915; that some 428 hectares of the land were recorded in the Mortgage
information proceedings instituted on the 9th day of May of that year by his
for wrongfully causing said land to be registered in his own name. Felicitas
brother Agapito Severino in his behalf; that during the lifetime of Melecio
Severino the land was worked by the defendant, Guillermo Severino, his
the original plaintiff, except in so far as she prays that the conveyance be
occupy the land; that in 1916 a parcel survey was made of the lands in the
was described as four separate lots numbered as above stated; that Roque
latter in said proceedings claiming the lots mentioned as the property of his
It may be further observed that at the time of the cadastral proceedings the
5. The trial court erred in declaring that the land that was formerly
plaintiff Fabiola Severino was a minor; that Guillermo Severino did not
appear personally in the proceedings and did not there testify; that the only
testimony in support of his claims was that of his attorney Hofilea, who
swore that he knew the land and that he also knew that Guillermo Severino
inherited the land from his father and that he, by himself, and through his
predecessors in interest, had possessed the land for thirty years.
1. The trial court erred in admitting the evidence that was offered by
plaintiff in order to establish the fact that said plaintiff was the
acknowledged
natural
child
of
the
deceased
Melecio
Severino.
2. The trial court erred in finding that, under the evidence presented,
plaintiff was the legally acknowledged natural child of Melecio
Severino.
legally
6. The trial court erred in declaring that the value of the land in
given to Melecio's brother Donato during the lifetime of the father Ramon
We have held in the case of Briz vs. Briz and Remigio (43 Phil., 763), that
Severino. As it appears that Ramon Severino died in 1896 and that the
court as to the area of the land is principally based, were not instituted until
the year 1901, we are not disposed to disturb the conclusions of the trial
court on this point. Moreover, in the year 1913, the defendant Guillermo
the present action only the widow, the alleged natural child, and one of the
Severino testified under oath, in the case of Montelibano vs. Severino, that
brothers of the deceased are parties; the other potential heirs have not
the area of the land owned by Melecio Severino and of which he (Guillermo)
was the administrator, embraced an area of 424 hectares. The fact that
the intervenor and not of the plaintiff, except to the extent of holding that
Melecio Severino, in declaring the land for taxation in 1906, stated that the
the latter is a recognized natural child of the deceased, this question is,
area was only 324 hectares and 60 ares while entitled to some weight is not
from the view we take of the case, of no importance in its final disposition.
We may say, however, in this connection, that the point urged in appellant's
brief that it does not appear affirmatively from the evidence that, at the
proceedings.
time of the conception of Fabiola, her mother was a single woman, may be
sufficiently disposed of by a reference to article 130 of the Civil Code and
The sixth assignment of error is also of minor importance in view of the fact
subsection 1 of section 334 of the Code of Civil Procedure which create the
that in the dispositive part of the decision of the trial court, the only relief
illegitimate. The question of the status of the plaintiff Fabiola Severino and
land in question, together with such parts of the proceeds of the mortgage
her right to share in the inheritance may, upon notice to all the interested
thereon as remain in his hands. We may say further that the court's
estimate of the value of the land does not appear unreasonable and that,
The fifth assignment of error relates to the finding of the trial court that the
The seventh and within assignments of error relate to the ex parte granting
by the trial court of a preliminary attachment in the case and the refusal of
appellant contends that the court should have found that there were only
324 hectares inasmuch as one hundred hectares of the original area were
The third, fourth, and eight assignments of error involve the vital points in
That the defendant came into the possession of the property here in
question
as
the
agent
of
the
deceased
Melecio
Severino
in
the
testimony in the case ofMontelibano vs. Severino (civil case No. 902 of the
on his part in causing the land in question to be registered in his name; that
Court of First Instance of Occidental Negros and which forms a part of the
the trial court therefore erred in rejecting his offer of evidence to the effect
evidence in the present case) is, in fact, conclusive in this respect. He there
that the land was owned in common by all the heirs of Ramon Severino and
stated under oath that from the year 1902 up to the time the testimony
was given, in the year 1913, he had been continuously in charge and
admitted, would have shown that he did not act with fraudulent intent in
taking title to the land; that the trial court erred in holding him estopped
Severino; that he had always known the land as the property of Melecio
from denying Melecio's title; that more than a year having elapsed since
Severino; and that the possession of the latter had been peaceful,
the entry of the final decree adjudicating the land to the defendant, said
continuous, and exclusive. In his answer filed in the same case, the same
defendant, through his attorney, disclaimed all personal interest in the land
convey the decreed land to the administratrix is, for all practical purposes,
and averred that it was wholly the property of his brother Melecio.
the land; and that the question of ownership of the land being thus
time of obtaining his decree was of the same character as that held during
the lifetime of his brother, except in so far as shortly before the trial of the
cadastral case the defendant had secured from his brothers and sisters a
relinguishment in his favor of such rights as they might have in the land.
elementary and very old rule that in regard to property forming the subject-
agent to compel him to return, or retransfer, to the heirs or the estate of its
or cestui que trust. Upon this ground, and substantially in harmony with the
In the case of Massie vs. Watts (6 Cranch, 148), the United States Supreme
principles of the Civil Law (see sentence of the supreme court of Spain of
But Massie, the agent of Oneale, has entered and surveyed a portion
the cestui que trust. (Greenlaw vs. King, 5 Jur., 18; Ex parte Burnell, 7 Jur.,
of that land for himself and obtained a patent for it in his own name.
116;Ex
337;
Oliver vs. Court, 8 Price, 127.) The same principle has been consistently
the agent who so acts becomes a trustee for his principal. He cannot
hold the land under an entry for himself otherwise than as trustee
parte Hughes,
Ves.,
617; Ex
parte James,
Ves.,
In the case of Felix vs. Patrick (145 U. S., 317), the United States Supreme
Court, after examining the authorities, said:
The substance of these authorities is that, wherever a person
obtains the legal title to land by any artifice or concealment, or by
making use of facilities intended for the benefit of another, a court
of equity will impress upon the land so held by him a trust in favor of
the party who is justly entitled to them, and will order the trust
executed by decreeing their conveyance to the party in whose favor
the trust was created. (Citing Bank of Metropolis vs. Guttschlick, 14
Pet.,
19,
31;
Johns.
Ch.,
119;
In the case at bar the legal title of the holder of the registered title is
voluntarily obtained the inscription in the name of Cho Jan Ling, and
that they had no right to have that inscription cancelled; they do not
seek such cancellation, and on the contrary they allege and prove
that the duly registered legal title to the property is in Cho Jan Ling,
association,
the
but they maintain, and we think that they rightly maintain, that he
and
was
not
incorporated
or
registered
in
Cho Jan Ling, who on his part accepted the trust, and agreed to hold
the property as the agent of the members of the association. After
In the case of Camacho vs. Municipality of Baliuag (28 Phil., 466), the
the club building was completed with the funds of the members of
plaintiff, Camacho, took title to the land in his own name, while acting as
the association, Cho Jan Ling collected some P25,000 in rents for
There have been a number of cases before this court in which a title
to real property was acquired by a person in his own name, while
acting under a fiduciary capacity, and who afterwards sought to take
advantage of the confidence reposed in him by claiming the
ownership of the property for himself. This court has invariably held
such evidence competent as between the fiduciary and the cestui
que trust.
xxx
xxx
xxx
contrary, the deed is relied upon the supplement the oral evidence
and that the principal had a right of action in personam to enforce the
done under the issues raised and the proof presented in the case at
bar.
The case of Sy-Juco and Viardo vs. Sy-Juco (40 Phil., 634) is also in point.
As will be seen from the authorities quoted, and agent is not only estopped
In Australia and New Zealand, under statutes in this respect similar to ours,
from denying his principal's title to the property, but he is also disable from
acquiring interests therein adverse to those of his principal during the term
of the agency. But the defendant argues that his title has become res
special provisions of the Torrens acts, will issue such orders and direction to
all the parties to the proceedings as may seem just and proper under the
circumstances. They may order parties to make deeds of conveyance and if
This contention may, at first sight, appear to possess some force, but on
determined the legal title to the land as the date of the decree; as to that
In the Untied States courts have even gone so far in the exercise of their
not disputed and no one attempts to disturb the decree or the proceedings
equity jurisdiction as to set aside final decrees after the expiration of the
statutory
equity the legal title so acquired inured to the benefit of the estate of
(Baart vs. Martin, 99 Minn., 197). But, considering that equity follows the
Melecio Severino, the defendant's principal and cestui que trust and asks
law and that our statutes expressly prohibit the reopening of a decree after
period
of
limitation
for
the
reopening
of
such
decrees
one year from the date of its entry, this practice would probably be out of
Section 102 of the Act, after providing for actions for damages in which the
deprive the plaintiff of any action which he may have against any
That an action such as the present one is covered by this proviso can hardly
admit of doubt. Such was also the view taken by this court in the case
of Medina Ong-Quingco vs. Imaz and Warner, Barnes & Co. (27 Phil., 314),
certificate and sold to him by the former owner before the land was
title could arise. Such an action could have been maintained at any
time while the property remained in the hands of the purchaser. The
peculiar force of a Torrens title would have been brought into play
only when the purchaser had sold to an innocent third person for
hereof.
as between the vendor and the purchaser the same rights and
remedies exist with reference to land registered under Act No. 496,
as exist in relation to land not so registered.
In Cabanos vs. Register of Deeds of Laguna and Obiana (40 Phil., 620), it
The judgment of the trial court is in accordance with the facts and the law.
was held that, while a purchaser of land under a pacto de retro cannot
institute a real action for the recovery thereof where the vendor under said
sale has caused such lands to be registered in his name without said
clauses. It will be observed that lots Nos. 827, 828, and 834 of a total area
vendee's consent, yet he may have his personal action based on the
an action such as the present the proof as to the fiduciary relation of the
parties and of the breach of trust must be clear and convincing. Such proof
But once the relation and the breach of trust on the part of the fiduciary in
thus established, there is no reason, neither practical nor legal, why he
should not be compelled to make such reparation as may lie within his
power for the injury caused by his wrong, and as long as the land stands
registered in the name of the party who is guilty of the breach of trust and
no rights of innocent third parties are adversely affected, there can be no
reason why such reparation should not, in the proper case, take the form of
a conveyance or transfer of the title to the cestui que trust. No reasons of
public policy demand that a person guilty of fraud or breach of trust be
permitted to use his certificate of title as a shield against the consequences
of his own wrong.
technical descriptions shall be submitted to the Chief of that office for his
approval. Within thirty days after being notified of the approval of said
subdivision and technical descriptions, the defendant Guillermo Severino
shall execute good and sufficient deed or deeds of conveyance in favor of
the administratrix of the estate of the deceased Melecio Severino for said
lots Nos. 827, 828, 834, and the 237 hectares segregated from the western
part of lot No. 874 and shall deliver to the register of deeds his duplicate
certificates of title for all of the four lots in order that said certificates may
be cancelled and new certificates issued. The cost of the subdivision and
the fees of the register of deeds will be paid by the plaintiff in intervention.
It is so ordered
With these additional directions the judgment appealed from is affirmed,
with the costs against the appellant. The right of the plaintiff Fabiola
the Intelligence Service of the Armed Forces of the Philippines and the
Presidential Security Group, entered into a Memorandum of Agreement
(MOA) with one Ciriaco Reyes. The MOA granted Reyes a permit to hunt for
represented
by
his
attorney-in-fact,
Paul
Gutierrez, respondents.
PUNO, J.:
The case at bar stems from a complaint for damages, with prayer for
the issuance of a writ of preliminary injunction, filed by private respondent
Legaspi,
in-fact. Gutierrez was given the power to deal with the treasure hunting
DECISION
Dante
through
his
attorney-in-fact
Paul
Gutierrez,
against
petitioners Gen. Jose M. Calimlim, Ciriaco Reyes and Maj. David Diciano
before the Regional Trial Court (RTC) of Quezon City.[1]
The Complaint alleged that private respondent Legaspi is the owner of
a land located in Bigte, Norzagaray, Bulacan. In November 1999, petitioner
enjoining
the
defendants
as
well
as
their
associates,
agents
or
plaintiff LEGASPI as well as the vicinity thereof; from digging, tunneling and
blasting the said land of plaintiff LEGASPI; from removing whatever treasure
may be found on the said land; from preventing and threatening the
plaintiffs and their representatives from entering the said land and
[7]
On even date,
the
trial
court issued
alleged armed men guarding the area were acting on orders of petitioners.
[8]
of the
inhibition.[11]
On appeal, the Court of Appeals affirmed the decision of the trial court.
[12]
the diggings and blastings appear to have been made on the land of
Legaspi, hence, there is an urgent need to maintain the status quo to
prevent serious damage to Legaspis land; and, (2) the SPA granted to
Gutierrez continues to be valid.[9] The trial court ordered thus:
WHEREFORE, in view of all the foregoing, the Court hereby resolves to
GRANT plaintiffs application for a writ of preliminary injunction. Upon
plaintiffs filing of an injunction bond in the amount of ONE HUNDRED
I
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE
RESPONDENT GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.
II
WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.
the agency.[15] The reason for its irrevocability is because the agency
III
of the principal but also that of the agent and third persons which are
affected. Hence, the law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate
courts that the agency granted by Legaspi to Gutierrez is coupled with
interest as a bilateral contract depends on it. It is clear from the records
that Gutierrez was given by Legaspi, inter alia, the power to
manage the treasure hunting activities in the subject land; to file
any case against anyone who enters the land without authority
Art. 1868 of the Civil Code provides that by the contract of agency, an
agent binds himself to render some service or do
something in
agency; and, to dig for any treasure within the land and enter into
agreements
relative
thereto. It
was
likewise
agreed
upon
found in the land. Pursuant to this authority and to protect Legaspis land
from the alleged illegal entry of petitioners, agent Gutierrez hired the
services of Atty. Adaza to prosecute the case for damages and injunction
his agent. As the power of the agent to act depends on the will and license
of the principal he represents, the power of the agent ceases when the will
treasure that may be found in the land is the subject matter of the agency;
[14]
that under the SPA, Gutierrez can enter into contract for the legal services
of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the
subject matter of the agency, i.e., in the treasures that may be found in the
land. This bilateral contract depends on the agency and thus renders it as
one coupled with interest, irrevocable at the sole will of the principal
Legaspi.
[16]
perpetually;
contract, that is, when the agency is inserted in another agreement, the
agency ceases to be revocable at the pleasure of the principal as the
[17]
effect. The authority of Gutierrez to file and continue with the prosecution
of the case at bar is unaffected.
preserve his rights or interests and for no other purpose during the
pendency of the principal action.[18] It is issued by the court to prevent
threatened or continuous irremediable injury to the applicant before his
claim can be thoroughly studied and adjudicated. [19] Its aim is to preserve
the status quo ante until the merits of the case can be heard fully, upon the
applicants showing of two important conditions, viz.: (1) the right to be
protected prima facie exists; and, (2) the acts sought to be enjoined are
violative of that right.[20]
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a
writ of preliminary injunction may be issued when it is established:
(a) that the applicant is entitled to the relief demanded, the whole or
Legaspi
has
right
to
peaceful
possession
of
his
land, pendente lite. Legaspi had title to the subject land. It was likewise
vs. People,[25] the adverse and erroneous rulings of a judge on the various
issue still subject to litigation and proof by the parties in the main
case for damages. It was necessary for the trial court to issue the writ of
on some basis other than what the judge learned from his participation in
Gutierrez.
On the third issue, petitioners charge that the respondent judge lacked
the neutrality of an impartial judge. They fault the respondent judge for not
amount to bias and prejudice which can be a bases for the disqualification
of a judge.
giving credence to the testimony of their surveyor that the diggings were
conducted outside the land of Legaspi. They also claim that respondent
damages has become moot and academic in view of the latters death
them.
during the pendency of the case. The main case for damages shall now be
heard and tried before another judge.
Case No. Q-00-40115, dated March 23 and April 4, 2000, are AFFIRMED. The
presiding judge of the Regional Trial Court of Quezon City to whom Civil
will overcome the presumption that the judge dispensed justice without
fear or favor.
[24]