G.R. No.

175366

August 11, 2008

through fraud, misrepresentation, or coercion. (Emphasis and underscoring supplied) In Olaybar v. NLRC,17 the Court, recognizing the conclusiveness of compromise settlements as a means to end labor disputes, held that Article 2037 of the Civil Code, which provides that "[a] compromise has upon the parties the effect and authority of res judicata," applies suppletorily to labor cases even if the compromise is not judicially approved.18 That respondent was not assisted by his counsel when he entered into the compromise does not render it null and void. Eurotech Hair Systems, Inc. v. Go19 so enlightens: A compromise agreement is valid as long as the consideration is reasonable and theemployee signed the waiver voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondents contention, the employees counsel need not be present at the time of the signing of the compromise agreement.20(Underscoring supplied) It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to before the Labor Arbiter. Respondents counsel nevertheless argues that "[t]he amount of Four Hundred Fifty Thousand Pesos (P450,000.00) given to respondent on April 4, 2007, as full and final settlement of judgment award, is unconscionably low, and un-[C]hristian, to say the least."21 Only respondent, however, can impugn the consideration of the compromise as being unconscionable. The relation of attorney and client is in many respects one of agency, and the general rules of agency apply to such relation.22 The acts of an agent are deemed the acts of the principal only if the agent acts within the scope of his authority.23 The circumstances of this case indicate that respondents counsel is acting beyond the scope of his authority in questioning the compromise agreement. That a client has undoubtedly the right to compromise a suit without the intervention of his lawyer24cannot be gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the fees justly due him, the compromise must be subject to the said fees.25 In the case at bar, there is no showing that respondent intended to defraud his counsel of his fees. In fact, the Quitclaim and Release, the execution of which was witnessed by petitioner J-Phils president Eulalio C. Candava and one Antonio C. Casim, notes that the 20% attorneys fees would be "paid 12 April 2007 P90,000." WHEREFORE, the petition is, in light of all the foregoing discussion, DISMISSED. Let a copy of this Decision be furnished respondent, Warlito E. Dumalaog, at his given address at No. 5B Illinois Street, Cubao, Quezon City. SO ORDERED. G.R. No. 151319 November 22, 2004

J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING SERVICES, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and WARLITO E. DUMALAOG, respondents. DECISION CARPIO MORALES, J.: Warlito E. Dumalaog (respondent), who served as cook aboard vessels plying overseas, filed on March 4, 2002 before the National Labor Relations Commission (NLRC) a pro-forma complaint1against petitioners manning agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping Services for unpaid money claims, moral and exemplary damages, and attorneys fees. Respondent thereafter filed two amended pro forma complaints2 praying for the award of overtime pay, vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which rendered him disabled. Respondents total claim against petitioners was P864,343.30 plus P117,557.60 representing interest and P195,928.66 representing attorneys fees.3 By Decision4 of August 29, 2003, Labor Arbiter Fe Superiaso-Cellan dismissed respondents complaint for lack of merit. On appeal,5 the NLRC, by Decision of September 27, 2004, reversed the Labor Arbiters decision and awarded US$50,000.00 disability benefit to respondent. It dismissed respondents other claims, however, for lack of basis or jurisdiction.6 Petitioners Motion for Reconsideration7 having been denied by the NLRC,8 they filed a petition for certiorari9 before the Court of Appeals. By Resolution10 of September 22, 2005, the Court of Appeals dismissed petitioners petition for, inter alia, failure to attach to the petition all material documents, and for defective verification and certification. Petitioners Motion for Reconsideration of the appellate courts Resolution was denied; 11 hence, they filed the present Petition for Review on Certiorari. During the pendency of the case before this Court, respondent, against the advice of his counsel, entered into a compromise agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor Arbiter.12 On May 8, 2007, petitioners filed before this Court a Manifestation13 dated May 7, 2007 informing that, inter alia, they and respondent had forged an amicable settlement. On July 2, 2007, respondents counsel filed before this Court a Comment and Opposition (to Petitioners Manifestation of May 7, 2007)14 interposing no objection to the dismissal of the petition but objecting to "the absolution" of petitioners from paying respondent the total amount of Fifty Thousand US Dollars (US$50,000.00) or approximately P2,300,000.00, the amount awarded by the NLRC, he adding that: There being already a payment of P450,000.00, and invoking the doctrine of parens patriae, we pray then [to] this Honorable Supreme Court that the said amount be deducted from the [NLRC] judgment award of US$50,000.00, or approximately P2,300,000.00, and petitioners be furthermore ordered to pay in favor of herein respondent [the] remaining balance thereof. x x x x15 (Emphasis in the original; underscoring supplied) Respondents counsel also filed before this Court, purportedly on behalf of respondent, a Comment16 on the present petition. The parties having forged a compromise agreement as respondent in fact has executed a Quitclaim and Release, the Court dismisses the petition. Article 227 of the Labor Code provides: Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained

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. This is a petition for review assailing the Decision1 of the Court of Appeals dated 22 June 2001, and its Resolution2 dated 12 December 2001 in CA G.R. CV No. 49802 entitled "Pedro L. Linsangan v. Manila Memorial Cemetery, Inc. et al.," finding Manila Memorial Park Cemetery, Inc. (MMPCI) jointly and severally liable with Florencia C. Baluyot to respondent Atty. Pedro L. Linsangan. The facts of the case are as follows: Sometime in 1984, Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to complete the down payment to MMPCI.3 Baluyot issued handwritten and typewritten receipts for these payments.4

Sometime in March 1985, Baluyot informed Atty. Linsangan that he would be issued Contract No. 28660, a new contract covering the subject lot in the name of the latter instead of old Contract No. 25012. Atty. Linsangan protested, but Baluyot assured him that he would still be paying the old price of P95,000.00 with P19,838.00 credited as full down payment leaving a balance of about P75,000.00.5

Subsequently, on 8 April 1985, Baluyot brought an Offer to Purchase Lot No. A11 (15), Block 83, Garden Estate I denominated as Contract No. 28660 and The dispositive portion of the decision reads: the Official Receipt No. 118912 dated 6 April 1985 for the amount of WHEREFORE, judgment by preponderance of evidence is hereby P19,838.00. Contract No. 28660 has a listed price of P132,250.00. Atty. rendered in favor of plaintiff declaring Contract No. 28660 as valid Linsangan objected to the new contract price, as the same was not the and subsisting and ordering defendants to perform their amount previously agreed upon. To convince Atty. Linsangan, Baluyot undertakings thereof which covers burial lot No. A11 (15), Block 6 executed a document confirming that while the contract price is 83, Section Garden I, Holy Cross Memorial Park located at P132,250.00, Atty. Linsangan would pay only the original price of Novaliches, Quezon City. All payments made by plaintiff to P95,000.00. defendants should be credited for his accounts. NO DAMAGES, The document reads in part: NO ATTORNEY'S FEES but with costs against the defendants. 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 Prepared by: (Signed) (MRS.) FLORENCIA C. BALUYOT Agency Manager Holy Cross Memorial Park 4/18/85 Dear Atty. Linsangan: This will confirm our agreement that while the offer to purchase under 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. 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 thereby leaving a balance of P75,162.00 on a monthly installment of P1,800.00 including interests (sic) charges for a period of five (5) years. (Signed) FLORENCIA C. BALUYOT The cross claim of defendant Manila Memorial Cemetery Incorporated as against defendant Baluyot is GRANTED up to the extent of the costs. SO ORDERED.15

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 was authorized to receive only the down payment, it allowed her to continue to receive postdated checks from Atty. Linsangan, which it in turn consistently encashed.14

MMPCI appealed the trial court's decision to the Court of Appeals.16 It claimed that Atty. Linsangan is bound by the written contract with MMPCI, the terms of which were clearly set forth therein and read, understood, and signed by the former.17 It also alleged that Atty. Linsangan, a practicing lawyer for over thirteen (13) years at the time he entered into the contract, is presumed to know his contractual obligations and is fully aware that he cannot belatedly and unilaterally change the terms of the contract without the consent, much less the knowledge of the other contracting party, which was MMPCI. And in this case, MMPCI did not agree to a change in the contract and in fact implemented the same pursuant to its clear terms. In view thereof, because of Atty. Linsangan's delinquency, MMPCI validly cancelled the contract. 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 Baluyot's acts. It added that it cannot be charged with making any misrepresentation, nor of having allowed Baluyot to act as though she had full powers as the written contract expressly stated the terms and conditions which Atty. Linsangan accepted and understood. In canceling the contract, MMPCI merely enforced the terms and conditions imposed therein. 18 Imputing negligence on the part of Atty. Linsangan, MMPCI claimed that it was the former's obligation, as a party knowingly dealing with an alleged agent, to determine the limitations of such agent's authority, particularly when such alleged agent's actions were patently questionable. According to MMPCI, Atty. Linsangan did not even bother to verify Baluyot's authority or ask copies of official receipts for his payments.19

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 of The Court of Appeals affirmed the decision of the trial court. It upheld the trial MMPCI. The next year, or on 29 April 1986, Atty. Linsangan again issued court's finding that Baluyot was an agent of MMPCI at the time the disputed twelve (12) postdated checks in favor of MMPCI. contract was entered into, having represented MMPCI's interest and acting On 25 May 1987, Baluyot verbally advised Atty. Linsangan that Contract No. on its behalf in the dealings with clients and customers. Hence, MMPCI is 28660 was cancelled for reasons the latter could not explain, and presented considered estopped when it allowed Baluyot to act and represent MMPCI to him another proposal for the purchase of an equivalent property. He even beyond her authority.20 The appellate court likewise found that the acts refused the new proposal and insisted that Baluyot and MMPCI honor their of Baluyot bound MMPCI when the latter allowed the former to act for and in undertaking. its behalf and stead. While Baluyot's authority "may not have been expressly For the alleged failure of MMPCI and Baluyot to conform to their agreement, conferred upon her, the same may have been derived impliedly by habit or custom, which may have been an accepted practice in the company for a Atty. Linsangan filed a Complaint7for Breach of Contract and Damages long period of time."21 Thus, the Court of Appeals noted, innocent third against the former. persons such as Atty. Linsangan should not be prejudiced where the Baluyot did not present any evidence. For its part, MMPCI alleged that principal failed to adopt the needed measures to prevent misrepresentation. Contract No. 28660 was cancelled conformably with the terms of the Furthermore, if an agent misrepresents to a purchaser and the principal contract8 because of non-payment of arrearages.9 MMPCI stated that accepts the benefits of such misrepresentation, he cannot at the same time Baluyot was not an agent but an independent contractor, and as such was deny responsibility for such misrepresentation.22 Finally, the Court of Appeals not authorized to represent MMPCI or to use its name except as to the declared: extent expressly stated in the Agency Manager Agreement.10 Moreover, There being absolutely nothing on the record that would show that the court MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in fact received a down payment and monthly installments a quo overlooked, disregarded, or misinterpreted facts of weight and significance, its factual findings and conclusions must be given great weight as indicated in the contract.11 Official receipts showing the application of and should not be disturbed by this Court on appeal. payment were turned over to Baluyot whom Atty. Linsangan had from the beginning allowed to receive the same in his behalf. Furthermore, whatever WHEREFORE, in view of the foregoing, the appeal is hereby misimpression that Atty. Linsangan may have had must have been rectified DENIED and the appealed decision in Civil Case No. 88-1253 of by the Account Updating Arrangement signed by Atty. Linsangan which the Regional Trial Court, National Capital Judicial Region, Branch states that he "expressly admits that Contract No. 28660 'on account of 57 of Makati, is hereby AFFIRMED in toto. serious delinquencyis now due for cancellation under its terms and SO ORDERED.23 conditions.'''12

MMPCI filed its Motion for Reconsideration,24 but the same was denied for lack of merit.25 In the instant Petition for Review, MMPCI claims that the Court of Appeals seriously erred in disregarding the plain terms of the written contract and Atty. Linsangan's failure to abide by the terms thereof, which justified its cancellation. In addition, even assuming that Baluyot was an 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 failing to consider that the facts and the applicable law do not support a judgment against Baluyot only "up to the extent of costs."26 Atty. Linsangan argues that he did not violate the terms and conditions of the contract, and in fact faithfully performed his contractual obligations and complied with them in good faith for at least two years.27 He claims that contrary to MMPCI's position, his profession as a lawyer is immaterial to the validity of the subject contract and the case at bar.28 According to him, 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

by the buyer and an authorized officer of MMPCI, becomes binding on both parties. The Offer to Purchase duly signed by Atty. Linsangan, and accepted and validated by MMPCI showed a total list price of P132,250.00. Likewise, it was clearly stated therein that "Purchaser agrees that he has read or has had read to him this agreement, that he understands its terms and conditions, and that there are no covenants, conditions, warranties or representations other than those contained herein."37 By signing the Offer to Purchase, Atty. Linsangan signified that he understood its contents. That he and Baluyot had an agreement different from that contained in the Offer to Purchase is of no moment, and should not affect MMPCI, as it was obviously made outside Baluyot's authority. To repeat, Baluyot's authority was limited only to soliciting purchasers. She had no authority to alter the terms of the written contract provided by MMPCI. The document/letter "confirming" the agreement that Atty. Linsangan would have 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.

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, We find for the petitioner MMPCI. 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 The jurisdiction of the Supreme Court in a petition for review under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not fact, unless must discover upon his peril the authority of the agent.39 If he does not make such an inquiry, he is chargeable with knowledge of the agent's authority and the factual findings complained of are devoid of support by the evidence on his ignorance of that authority will not be any excuse.40 record or the assailed judgment is based on misapprehension of facts.30 In 31 BPI Investment Corporation v. D.G. Carreon Commercial Corporation, this As noted by one author, the ignorance of a person dealing with an agent as Court ruled: to the scope of the latter's authority is no excuse to such person and the fault cannot be thrown upon the principal.41 A person dealing with an agent There are instances when the findings of fact of the trial court assumes the risk of lack of authority in the agent. He cannot charge the and/or Court of Appeals may be reviewed by the Supreme Court, principal by relying upon the agent's assumption of authority that proves to such as (1) when the conclusion is a finding grounded entirely on be unfounded. The principal, on the other hand, may act on the presumption speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there 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 is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are In the instant case, it has not been established that Atty. Linsangan even conflicting; (6) when the Court of Appeals, in making its findings, bothered to inquire whether Baluyot was authorized to agree to terms went beyond the issues of the case and the same is contrary to the contrary to those indicated in the written contract, much less bind MMPCI by admissions of both appellant and appellee; (7) when the findings her commitment with respect to such agreements. Even if Baluyot was Atty. are contrary to those of the trial court; (8) when the findings of fact Linsangan's friend and known to be an agent of MMPCI, her declarations are conclusions without citation of specific evidence on which they and actions alone are not sufficient to establish the fact or extent of her are based; (9) when the facts set forth in the petition as well as in authority.43 Atty. Linsangan as a practicing lawyer for a relatively long period the petitioners' main and reply briefs are not disputed by the of time when he signed the contract should have been put on guard when respondents; and (10) the findings of fact of the Court of Appeals their agreement was not reflected in the contract. More importantly, Atty. are premised on the supposed absence of evidence and Linsangan should have been alerted by the fact that Baluyot failed to effect contradicted by the evidence on record.32 the transfer of rights earlier promised, and was unable to make good her written commitment, nor convince MMPCI to assent thereto, as evidenced by 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 of several attempts to induce him to enter into other contracts for a higher consideration. As properly pointed out by MMPCI, as a lawyer, a greater evidentiary support, hence we review its findings of fact. degree of caution should be expected of Atty. Linsangan especially in By the contract of agency, a person binds himself to render some service or dealings involving legal documents. He did not even bother to ask for official to do something in representation or on behalf of another, with the consent receipts of his payments, nor inquire from MMPCI directly to ascertain the or authority of the latter.33 Thus, the elements of agency are (i) consent, real status of the contract, blindly relying on the representations of Baluyot. A express or implied, of the parties to establish the relationship; (ii) the object lawyer by profession, he knew what he was doing when he signed the written is the execution of a juridical act in relation to a third person; (iii) the agent contract, knew the meaning and value of every word or phrase used in the acts as a representative and not for himself; and (iv) the agent acts within the contract, and more importantly, knew the legal effects which said document scope of his authority.34 produced. He is bound to accept responsibility for his negligence. In an attempt to prove that Baluyot was not its agent, MMPCI pointed out The trial and appellate courts found MMPCI liable based on ratification and that under its Agency Manager Agreement; an agency manager such as estoppel. For the trial court, MMPCI's acts of accepting and encashing the Baluyot is considered an independent contractor and not an checks issued by Atty. Linsangan as well as allowing Baluyot to receive agent.35However, in the same contract, Baluyot as agency manager was checks drawn in the name of MMPCI confirm and ratify the contract of authorized to solicit and remit to MMPCI offers to purchase interment spaces agency. On the other hand, the Court of Appeals faulted MMPCI in failing to belonging to and sold by the latter.36 Notwithstanding the claim of MMPCI adopt measures to prevent misrepresentation, and declared that in view of that Baluyot was an independent contractor, the fact remains that she was MMPCI's acceptance of the benefits of Baluyot's misrepresentation, it can no authorized to solicit solely for and in behalf of MMPCI. As properly found longer deny responsibility therefor. both by the trial court and the Court of Appeals, Baluyot was an agent of The Court does not agree. Pertinent to this case are the following provisions MMPCI, having represented the interest of the latter, and having been of the Civil Code: allowed by MMPCI to represent it in her dealings with its clients/prospective buyers. Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not Nevertheless, contrary to the findings of the Court of Appeals, MMPCI ratify the contract, it shall be void if the party with whom the agent cannot be bound by the contract procured by Atty. Linsangan and solicited contracted is aware of the limits of the powers granted by the by Baluyot. principal. In this case, however, the agent is liable if he undertook Baluyot was authorized to solicit and remit to MMPCI offers to purchase to secure the principal's ratification. interment spaces obtained on forms provided by MMPCI. The terms of the Art. 1910. The principal must comply with all the obligations that offer to purchase, therefore, are contained in such forms and, when signed the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. 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 principal's ignorance of the material facts and circumstances was willful, or 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, ratification cannot be implied as against the principal who is ignorant of the facts.47 No ratification can be implied in the instant case. A perusal of Baluyot's Answer48 reveals that the real arrangement between her and Atty. Linsangan was for the latter to pay a monthly installment of P1,800.00 whereas Baluyot was to shoulder the counterpart amount of P1,455.00 to meet the P3,255.00 monthly installments as indicated in the contract. Thus, every time an installment falls due, payment was to be made through a check from Atty. Linsangan for P1,800.00 and a cash component of P1,455.00 from Baluyot.49 However, it appears that while Atty. Linsangan issued the post-dated checks, Baluyot failed to come up with her part of the bargain. This was supported by Baluyot's statements in her letter50 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. Linsangan's 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. Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer. The down payment of P19,838.00 given by Atty. Linsangan was in accordance with the contract as well. Payments of P3,235.00 for at least two installments were likewise in accord with the contract, albeit made through a check and partly in cash. In view of Baluyot's failure to give her share in the payment, MMPCI received only P1,800.00 checks, which were clearly insufficient payment. In fact, Atty. Linsangan would have incurred arrearages that could have caused the earlier cancellation of the contract, if not for MMPCI's application of some of the checks to his account. However, the checks alone were not sufficient to cover his obligations. If MMPCI was aware of the arrangement, it would have refused the latter's check payments for being insufficient. It would not have applied to his account the P1,800.00 checks. Moreover, the fact that Baluyot had to practically explain to MMPCI's Sales Manager the details of her "arrangement" with Atty. Linsangan and admit to having made an error in entering such arrangement confirm that MMCPI had no knowledge of the said agreement. It was only when Baluyot filed her Answer that she claimed that MMCPI was fully aware of the agreement.

the standard contracts of the company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. One who claims the benefit of an estoppel on the ground that he has been misled by the representations of another must not have been misled through his own want of reasonable care and circumspection.52 Even assuming that Atty. Linsangan was misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract. Estoppel must be intentional and unequivocal, for when misapplied, it can easily become a most convenient and effective means of injustice.53 In view of the lack of sufficient proof showing estoppel, we refuse to hold MMPCI liable on this score. 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 by habit or custom which may have been an accepted practice in their 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, nor to assume a portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever presented to this 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 purchase of an interment space in the former's cemetery. The other is the agreement between Baluyot and Atty. Linsangan for the former to shoulder the amount P1,455.00, or the difference between P95,000.00, the original price, and P132,250.00, the actual contract price. 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 authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's 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. Being aware of the limits of Baluyot's authority, Atty. Linsangan cannot insist on what he claims to be the terms of Contract No. 28660. The agreement, insofar as the P95,000.00 contract price is concerned, is void and cannot be enforced as against MMPCI. Neither can he hold Baluyot liable for damages under the same contract, since there is no evidence showing that Baluyot undertook to secure MMPCI's ratification. At best, the "agreement" between Baluyot and Atty. Linsangan bound only the two of them. As far as MMPCI is concerned, it bound itself to sell its interment space to Atty. Linsangan for P132,250.00 under Contract No. 28660, and had in fact received several payments in accordance with the same contract. If the contract was cancelled due to arrearages, Atty. Linsangan's recourse should only be against Baluyot who personally undertook to pay the difference between the true contract price of P132,250.00 and the original proposed price of P95,000.00. To surmise that Baluyot was acting on behalf of MMPCI when she promised to shoulder the said difference would be to conclude that MMPCI undertook to pay itself the difference, a conclusion that is very illogical, if not antithetical to its business interests.

However, this does not preclude Atty. Linsangan from instituting a separate action to recover damages from Baluyot, not as an agent of MMPCI, but in view of the latter's breach of their separate agreement. To review, Baluyot obligated herself to pay P1,455.00 in addition to Atty. Linsangan's P1,800.00 to complete the monthly installment payment under the contract, which, by her own admission, she was unable to do due to personal financial difficulties. It is undisputed that Atty. Linsangan issued the P1,800.00 as Neither is there estoppel in the instant case. The essential elements of agreed upon, and were it not for Baluyot's failure to provide the balance, estoppel are (i) conduct of a party amounting to false representation or concealment of material facts or at least calculated to convey the impression Contract No. 28660 would not have been cancelled. Thus, Atty. Linsangan that the facts are otherwise than, and inconsistent with, those which the party has a cause of action against Baluyot, which he can pursue in another case. WHEREFORE, the instant petition is GRANTED. The Decision of the Court subsequently attempts to assert; (ii) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (iii) of Appeals dated 22 June 2001 and its Resolution dated 12 December 2001 in CA- G.R. CV No. 49802, as well as the Decision in Civil Case No. 88-1253 knowledge, actual or constructive, of the real facts.51 of the Regional Trial Court, Makati City Branch 57, are hereby REVERSED While there is no more question as to the agency relationship between and SET ASIDE. The Complaint in Civil Case No. 88-1253 is DISMISSED for Baluyot and MMPCI, there is no indication that MMPCI let the public, or lack of cause of action. No pronouncement as to costs. SO ORDERED. specifically, Atty. Linsangan to believe that Baluyot had the authority to alter

G.R. No. 76969 June 9, 1997 INLAND REALTY INVESTMENT SERVICE, INC. and ROMAN M. DE LOS REYES, petitioners, vs HON. COURT OF APPEALS, GREGORIO ARANETA, INC. and J. ARMANDO EDUQUE, respondents. HERMOSISIMA, JR., J.: Herein petitioners Inland Realty Investment Service, Inc. (hereafter, "Inland Realty") and Roman M. de los Reyes seek the reversal of the Decision 1 of the Intermediate Appellate Court (now Court of Appeals) 2 which affirmed the trial court's dismissal 3 of petitioners' claim for unpaid agent's commission for brokering the sales transaction involving 9,800 shares of stock in Architects' Bldg., Inc. (hereafter, "Architects"') between private respondent Gregorio Araneta, Inc. (hereafter, "Araneta, Inc.") as seller and Stanford Microsystems, Inc. (hereafter, "Stanford") as buyer. Petitioners come to us with a two-fold agenda: (1) to obtain from us a declaration that the trial court and the respondent appellate court gravely erred when appreciating the facts of the case by disregarding Exhibits "L," a Letter dated October 28, 1976 signed by Gregorio Araneta II, renewing petitioners' authority to act as sales agent for a period of thirty (30) days from same date, and Exhibit "M," a Letter dated November 16, 1976 signed by petitioner de los Reyes, naming four (4) other prospective buyers, respectively; and (2) to obtain from us a categorical ruling that a broker is automatically entitled to the stipulated commission merely upon securing for, and introducing to, the seller the particular buyer who ultimately purchases from the former the object of the sale, regardless of the expiration of the broker's contract of agency and authority to sell. Before we proceed to address petitioners' objectives, there is a need to unfold the facts of the case. For that purpose, we quote hereunder the findings of fact of the Court of Appeals with which petitioners agree, except as to the respondent appellate court's non-inclusion of the aforementioned Exhibits "L" and "M": From the evidence, the following facts appear undisputed: On September 16, 1975, defendant corporation thru its co-defendant Assistant General Manager J. Armando Eduque, granted to plaintiffs a 30day authority to sell its . . . 9,800 shares of stock in Architects' Bldg., Inc. as follows: September 16, 1975 TO WHOM IT MAY CONCERN: This is to authorize Mr. R.M. de los Reyes, representing Inland Realty, to sell on a first come first served basis the total holdings of Gregorio Araneta, Inc. in Architects' [Bldg.], Inc. equivalent to 98% or 9,800 shares of stock at the price of P1,500.00 per share for a period of 30 days. (SGD.) J. ARMANDO EDUQUE Asst. General Manager' Plaintiff Inland Realty Investment Service, Inc. (Inland Realty for short) is a corporation engaged [in], among others . . . the real estate business [and] brokerages, duly licensed by the Bureau of Domestic Trade . . . [Inland Realty] planned their sales campaign, sending proposal letters to prospective buyers. One such prospective buyer to whom a proposal letter was sent to was Stanford Microsystems, Inc. . . . [that] counterproposed to buy 9,800 shares offered at P1,000.00 per share or for a total of P9,800,000.00, P4,900,000.00 payable in five years at 12% per annuminterest until fully paid. Upon plaintiffs' receipt of the said counter-proposal, it immediately [sic] wrote defendant a letter to register Stanford Microsystems, Inc. as one of its prospective buyers . . . Defendant Araneta, Inc., thru its Assistant General Manager J. Armando Eduque, replied that the price offered by Stanford was too low and suggested that plaintiffs see if the price and terms of payment can be improved upon by Stanford . . . Other prospective buyers were submitted to defendants among whom were Atty.

Maximo F. Belmonte and Mr. Joselito Hernandez. The authority to sell given to plaintiffs by defendants was extended several times: the first being on October 2, 1975, for 30 days from said date (Exh. "J"), the second on October 28, 1975 for 30 days from said date (Exh. "L") and on December 2, 1975 for 30 days from said date (Exh. "K"). Plaintiff Roman de los Reyes, manager of Inland Realty's brokerage division, who by contract with Inland Realty would be entitled to 1/2 of the claim asserted herein, testified that when his company was initially granted the authority to sell, he asked for an exclusive authority and for a longer period but Armando Eduque would not give, but according to this witness, the life of the authority could always be extended for the purpose of negotiation that would be continuing. On July 8, 1977, plaintiffs finally sold the 9,800 shares of stock [in] Architects' [Bldg.], Inc. to Stanford Microsystems, Inc. for P13,500,000.00 . . . On September 6, 1977, plaintiffs demanded formally [from] defendants, through a letter of demand, for payment of their 5% broker['s] commission at P13,500,000.00 or a total amount of P675,000.00 . . . which was declined by [defendants] on the ground that the claim has no factual or legal basis. 4 Ascribing merit to private respondents' defense that, after their authority to sell expired thirty (30) days from December 2, 1975, or on January 1, 1976, petitioners abandoned the sales transaction and were no longer privy to the consummation and documentation thereof, the trial court dismissed petitioners' complaint for collection of unpaid broker's commission. Petitioners appealed, but the Court of Appeals was unswayed in the face of evidence of the expiration of petitioners' agency contract and authority to sell on January 1, 1976 and the consummation of the sale to Stanford on July 8, 1977 or more than one (1) year and five (5) months after petitioners' agency contract and authority to sell expired. Respondent appellate court dismissed petitioners' appeal in this wise: . . . The resolution would seem to hinge on the question of whether plaintiff was instrumental in the final consummation of the sale to Stanford which was the same name of the company submitted to defendants as a prospective buyer although their price was considered by defendant to be too low and defendants wrote to plaintiff if the price may be improved upon by Stanford . . . This was on October 13, 1975. After that, there was an extension for 30 days from October 28, 1975 of the authority (Exh. "L") and another on December 2, 1975 for another 30 days from the said date . . . . There is nothing in the record or in the testimonial evidence that the authority extended 30 days from the last date of extension was ever reserved nor extended, nor has there been any communication made to defendants that the plaintiff was actually negotiating with Stanford a better price than what was previously offered by it . . . . In fact there was no longer any agency after the last extension. Certainly, the length of time which had transpired from the date of last extension of authority to the final consummation of the sale with Stanford of about one (1) year and five (5) months without any communication at all from plaintiffs to defendants with respect to the suggestion or defendants that Stanford's offer was too low and suggested if plaintiffs may make it better. We have a case of proposal and counter-proposal which would not constitute a definite closing of the transaction just because it was plaintiff who solely suggested to defendants the name of Stanford as buyer . . . .5 Unable to accept the dismissal of its claim for unpaid broker's commission, petitioners filed the instant petition for review asking us (1) to pass upon the factual issue of the alleged extension of their agency contract and authority to sell and (2) to rule in favor of a broker's automatic entitlement to the stipulated commission merely upon securing for, and introducing to, the seller, the particular buyer who ultimately purchases from the former the

object of the sale, regardless of the expiration of the broker's contract of agency and authority to sell. We find for private respondents. I Petitioners take exception to the finding of the respondent Court of Appeals that their contract of agency and authority to sell expired thirty (30) days from its last renewal on December 2, 1975. They insist that, in the Letter dated October 28, 1976, Gregorio Araneta III, in behalf of Araneta, Inc., renewed petitioner Inland Realty's authority to act as agent to sell the former's 9,800 shares in Architects' for another thirty (30) days from same date. This Letter dated October 28, 1976, petitioners claim, was marked as Exhibit "L" during the trial proceedings before the trial court. This claim is a blatant lie. In the first place, petitioners have conspicuously failed to attach a certified copy of this Letter dated October 28, 1976. They have, in fact, not attached even a machine copy thereof. All they gave this court is their word that said Letter dated October 28, 1976 does exist, and on that basis, they expect us to accordingly rule in their favor. Such naivety, this court will not tolerate. We will not treat lightly petitioners' attempt to mislead this court by claiming that the Letter dated October 28, 1976 was marked as Exhibit "L" by the trial court, when the truth is that the trial court marked as Exhibit "L", and the respondent Court of Appeals considered as Exhibit "L," private respondent Araneta, Inc.'s Letter dated October 28, 1975, not 1976. Needless to say, this blatant attempt to mislead this court, is contemptuous conduct that we sternly condemn. II The Letter dated November 16, 1976, claimed by petitioners to have been marked as Exhibit "M", has no probative value, considering that its very existence remains under a heavy cloud of doubt and that hypothetically assuming its existence, its alleged content, namely, a listing of four (4) other prospective buyers, does not at all prove that the agency contract and authority to sell in favor of petitioners was renewed or revived after it expired on January 1, 1976. As in the case of the Letter dated October 28, 1976, petitioners have miserably failed to attach any copy of the Letter dated November 16, 1976. A copy thereof would not help petitioners' failing cause, anyway, especially considering that said letter was signed by petitioner De los Reyes and would therefore take on the nature of a self-serving document that has no evidentiary value insofar as petitioners are concerned. III Finally, petitioners asseverate that, regardless of whether or not their agency contract and authority to sell had expired, they are automatically entitled to their broker's commission merely upon securing for and introducing to private respondent Araneta, Inc. the buyer in the person of Stanford which ultimately acquired ownership over Araneta, Inc.'s 9,800 shares in Architects'. Petitioners' asseverations are devoid of merit. It is understandable, though, why petitioners have resorted to a campaign for an automatic and blanket entitlement to brokerage commission upon doing nothing but submitting to private respondent Araneta, Inc., the name of Stanford as prospective buyer of the latter's shares in Architects'. Of course petitioners would advocate as such because precisely petitioners did nothing but submit Stanford's name as prospective buyer. Petitioners did not succeed in outrightly selling said shares under the predetermined terms and conditions set out by Araneta, Inc., e.g., that the price per share is P1,500.00. They admit that they could not dissuade Stanford from haggling for the price of P1,000.00 per share with the balance of 50% of the total purchase price payable in five (5) years at 12% interest per annum. From September 16, 1975 to January 1, 1976, when petitioners' authority to sell was subsisting, if at all, petitioners had nothing to show that they actively served their principal's interests, pursued to sell the shares in accordance with their principal's terms and conditions, and performed substantial acts that proximately and causatively led to the consummation of the sale to Stanford of Araneta, Inc.'s 9,800 shares in Architects'. The Court of Appeals cannot be faulted for emphasizing the lapse of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale to Stanford, to be a significant index of petitioners' non-participation in the really critical events leading to the consummation of said sale, i.e., the negotiations to convince Stanford to sell at Araneta, Inc.'s asking price, the finalization of the terms and conditions of the sale, the drafting of the deed of sale, the processing of pertinent documents, and the delivery of the shares of stock to Stanford. Certainly, when the lapse of the period of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the

consummation of the sale, is viewed in the context of the utter lack of evidence of petitioners' involvement in the negotiations between Araneta, Inc. and Stanford during that period and in the subsequent processing of the documents pertinent to said sale, it becomes undeniable that the respondent Court of Appeals did not at all err in affirming the trial court's dismissal of petitioners' claim for unpaid brokerage commission. Petitioners were not the efficient procuring cause 6 in bringing about the sale in question an July 8, 1977 and are, therefore, not entitled to the stipulated broker's commission of "5% on the total price."WHEREFORE, the instant petition is HEREBY DISMISSED. Costs against petitioners. SO ORDERED. G.R. No. 94753. April 7, 1993. MANOTOK BROTHERS, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, THE HONORABLE JUDGE OF THE REGIONAL TRIAL COURT OF MANILA (Branch VI), and SALVADOR SALIGUMBA, respondents. DECISION CAMPOS, JR., J p: Petitioner Manotok Brothers., Inc., by way of the instant Petition docketed as G.R. No. 94753 sought relief from this Court's Resolution dated May 3, 1989, which reads: "G.R. No. 78898 (Manotok Brothers, Inc. vs. Salvador Saligumba and Court of Appeals). Considering the manifestation of compliance by counsel for petitioner dated April 14, 1989 with the resolution of March 13, 1989 which required the petitioner to locate private respondent and to inform this Court of the present address of said private respondent, the Court Resolved to DISMISS this case, as the issues cannot be joined as private respondent's and counsel's addresses cannot be furnished by the petitioner to this court." 1 In addition, petitioner prayed for the issuance of a preliminary injunction to prevent irreparable injury to itself pending resolution by this Court of its cause. Petitioner likewise urged this Court to hold in contempt private respondent for allegedly adopting sinister ploy to deprive petitioner of its constitutional right to due process. Acting on said Petition, this Court in a Resolution 2 dated October 1, 1990 set aside the entry of judgment made on May 3, 1989 in case G.R. No. 78898; admitted the amended petition; and issued a temporary restraining order to restrain the execution of the judgment appealed from. The amended petition 3 admitted, by this Court sought relief from this Court's Resolution abovequoted. In the alternative, petitioner begged leave of court to re-file its Petition for Certiorari 4 (G.R. No. 78898) grounded on the allegation that petitioner was deprived of its opportunity to be heard. The facts as found by the appellate court, revealed that petitioner herein (then defendant-appellant) is the owner of a certain parcel of land and building which were formerly leased by the City of Manila and used by the Claro M. Recto High School, at M.F. Jhocson Street, Sampaloc Manila. By means of a letter 5 dated July 5, 1966, petitioner authorized herein private respondent Salvador Saligumba to negotiate with the City of Manila the sale of the aforementioned property for not less than P425,000.00. In the same writing, petitioner agreed to pay private respondent a five percent (5%) commission in the event the sale is finally consummated and paid. Petitioner, on March 4, 1967, executed another letter 6 extending the authority of private respondent for 120 days. Thereafter, another extension was granted to him for 120 more days, as evidenced by another letter 7 dated June 26, 1967. Finally, through another letter 8 dated November 16, 1967, the corporation with Rufino Manotok, its President, as signatory, authorized private respondent to finalize and consummate the sale of the property to the City of Manila for not less than P410,000.00. With this letter came another extension of 180 days. The Municipal Board of the City of Manila eventually, on April 26, 1968, passed Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the property which private respondent was authorized to sell. Said ordinance however, was signed by the City Mayor only on May 17, 1968, one hundred eighty three (183) days after the last letter of authorization. On January 14, 1969, the parties signed the deed of sale of the subject property. The initial payment of P200,000.00 having been made, the purchase price was fully satisfied with a second payment on April 8, 1969 by a check in the amount of P210,816.00.

Notwithstanding the realization of the sale, private respondent never received any commission, which should have amounted to P20,554.50. This was due to the refusal of petitioner to pay private respondent said amount as the former does not recognize the latter's role as agent in the transaction.

Consequently, on June 29, 1969, private respondent filed a complaint against petitioner, alleging that he had successfully negotiated the sale of the property. He claimed that it was because of his efforts that the Municipal Subsequently, this Court issued a Resolution dated May 3, 1989 dismissing Board of Manila passed Ordinance No. 6603 which appropriated the sum for petitioner's case on the ground that the issues raised in the case at bar the payment of the property subject of the sale. cannot be joined. Thus, the above-entitled case became final and executory by the entry of judgment on May 3, 1989. Petitioner claimed otherwise. It denied the claim of private respondent on the following grounds: (1) private respondent would be entitled to a commission Thereafter, on January 9, 1990 private respondent filed a Motion to Execute only if the sale was consummated and the price paid within the period given the said judgment before the court of origin. Upon discovery of said in the respective letters of authority; and (2) private respondent was not the development, petitioner verified with the court of origin the circumstances by person responsible for the negotiation and consummation of the sale, which private respondent obtained knowledge of the resolution of this Court. instead it was Filomeno E. Huelgas, the PTA president for 1967-1968 of the Sensing a fraudulent scheme employed by private respondent, petitioner Claro M. Recto High School. As a counterclaim, petitioner (then defendantthen instituted this instant Petition for Relief, on August 30, 1990. On appellant) demanded the sum of P4,000.00 as attorney's fees and for moral September 13, 1990, said petition was amended to include, in the damages. alternative, its petition to re-file its Petition for Certiorari (G.R. No. 78898). Thereafter, trial ensued. Private respondent, then plaintiff, testified as to the efforts undertaken by him to ensure the consummation of the sale. He recounted that it first began at a meeting with Rufino Manotok at the office of Fructuoso Ancheta, principal of C.M. Recto High School. Atty. Dominador Bisbal, then president of the PTA, was also present. The meeting was set precisely to ask private respondent to negotiate the sale of the school lot and building to the City of Manila. Private respondent then went to Councilor Mariano Magsalin, the author of the Ordinance which appropriated the money for the purchase of said property, to present the project. He also went to the Assessor's Office for appraisal of the value of the property. While these transpired and his letters of authority expired, Rufino Manotok always renewed the former's authorization until the last was given, which was to remain in force until May 14, 1968. After securing the report of the appraisal committee, he went to the City Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila. The latter office approved the report and so private respondent went back to the City Mayor's Office, which thereafter indorsed the same to the Municipal Board for appropriation. Subsequently, on April 26, 1968, Ordinance No. 6603 was passed by the Municipal Board for the appropriation of the sum corresponding to the purchase price. Petitioner received the full payment of the purchase price, but private respondent did not receive a single centavo as commission. Fructuoso Ancheta and Atty. Dominador Bisbal both testified acknowledging the authority of private respondent regarding the transaction. Petitioner presented as its witnesses Filomeno Huelgas and the petitioner's President, Rufino Manotok. Huelgas testified to the effect that after being inducted as PTA president in August, 1967 he followed up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17, 1968. He. also said that he came to know Rufino Manotok only in August, 1968, at which meeting the latter told him that he would be given a "gratification" in the amount of P20,000.00 if the sale was expedited. Rufino Manotok confirmed that he knew Huelgas and that there was an agreement between the two of them regarding the "gratification". On rebuttal, Atty. Bisbal said that Huelgas was present in the PTA meetings from 1965 to 1967 but he never offered to help in the acquisition of said property. Moreover, he testified that Huelgas was aware of the fact that it was private respondent who was negotiating the sale of the subject property. Thereafter, the then Court of First Instance (now, Regional Trial Court) rendered judgment sentencing petitioner and/or Rufino Manotok to pay unto private respondent the sum of P20,540.00 by way of his commission fees with legal interest thereon from the date of the filing of the complaint until payment. The lower court also ordered petitioner to pay private respondent the amount of P4,000.00 as and for attorney's fees. 9 Petitioner appealed said decision, but to no avail. Respondent Court of Appeals affirmed the said ruling of the trial court. 10 Its Motion for Reconsideration having been denied by respondent appellate court in a Resolution dated June 22, 1987, petitioner seasonably elevated its case on Petition for Review on Certiorari on August 10, 1987 before this Court, docketed as G.R. No. 78898. The sole issue to be addressed in this petition is whether or not private respondent is entitled to the five percent (5%) agent's commission.

dated March 13, 1989, required petitioner to locate private respondent and to inform this Court of the present address of private respondent within ten (10) days from notice. As petitioner was unsuccessful in its efforts to locate private respondent, it opted to manifest that private respondent's last address was the same as that address to which this. Court's Resolution was forwarded.

It is petitioner's contention that as a broker, private respondent's job is to bring together the parties to a transaction. Accordingly, if the broker does not succeed in bringing the minds of the purchaser and the vendor to an agreement with respect to the sale, he is not entitled to a commission. Private respondent, on the other hand, opposes petitioner's position maintaining that it was because of his efforts that a purchase actually materialized between the parties. We rule in favor of private respondent. At first sight, it would seem that private respondent is not entitled to any commission as he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired. By this alone, one might be misled to believe that this case squarely falls within the ambit of the established principle that a broker or agent is not entitled to any commission until he has successfully done the job given to him. 13 Going deeper however into the case would reveal that it is within the coverage of the exception rather than of the general rule, the exception being that enunciated in the case of Prats vs. Court of Appeals. 14 In the said case, this Court ruled in favor of claimant-agent, despite the expiration of his authority, when a sale was finally consummated. In its decision in the abovecited case, this Court said, that while it was respondent court's (referring to the Court of Appeals) factual findings that petitioner Prats (claimant-agent) was not the efficient procuring cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority), still petitioner was awarded compensation for his services. And We quote: "In equity, however, the Court notes that petitioner had diligently taken steps to bring back together respondent Doronila and the SSS,. xxx xxx xxx The court has noted on the other hand that Doronila finally sold the property to the Social Security System at P3.25 per square meter which was the very same price counter-offered by the Social Security System and accepted by him in July, 1967 when he alone was dealing exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats' efforts somehow were instrumental in bringing them together again and finally consummating the transaction at the same price of P3.25 per square meter, although such finalization was after the expiration of Prats' extended exclusive authority. xxx xxx xxx Under the circumstances, the Court grants in equity the sum of One hundred Thousand Pesos (P100,000.00) by way of compensation for his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his exclusive authority . . ." 15 (Emphasis supplied.).

From the foregoing, it follows then that private respondent herein, with more reason, should be paid his commission, While in Prats vs. Court of Appeals, Acting on said Petition, this Court issued a Minute Resolution 11 dated the agent was not even the efficient procuring cause in bringing about the August 31, 1987 ordering private respondent to comment on said Petition. sale, unlike in the case at bar, it was still held therein that the agent was It appearing that the abovementioned Resolution was returned unserved with entitled to compensation. In the case at bar, private respondent is the the postmaster's notation "unclaimed", this Court in another Resolution 12

efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve. In an earlier case, 16 this Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission. We agree with respondent Court that the City of Manila ultimately became the purchaser of petitioner's property mainly through the efforts of private respondent. Without discounting the fact that when Municipal Ordinance No. 6603 was signed by the City Mayor on May 17, 1968, private respondent's authority had already expired, it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's authorization was still in force. Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's authority. It is also worth emphasizing that from the records, the only party given a written authority by petitioner to negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent. Contrary to what petitioner advances, the case of Danon vs. Brimo, 17 on which it heavily anchors its justification for the denial of private respondent's claim, does not apply squarely to the instant petition. Claimant-agent in said case fully comprehended the possibility that he may not realize the agent's commission as he was informed that another agent was also negotiating the sale and thus, compensation will pertain to the one who finds a purchaser and eventually effects the sale. Such is not the case herein. On the contrary, private respondent pursued with his goal of seeing that the parties reach an agreement, on the belief that he alone was transacting the business with the City Government as this was what petitioner made it to appear. While it may be true that Filomeno Huelgas followed up the matter with Councilor Magsalin, the author of Municipal Ordinance No. 6603 and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed when the buyer has already agreed to the purchase and to the price for which said property is to be paid. Without the efforts of private respondent then, Mayor Villegas would have nothing to approve in the first place. It was actually private respondent's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated. WHEREFORE, in the light of the foregoing and finding no reversible error committed by respondent Court, the decision of the Court of Appeals is hereby AFFIRMED. The temporary restraining order issued by this Court in its Resolution dated October 1, 1990 is hereby lifted. SO ORDERED. G.R. No. L-39822 January 31, 1978 ANTONIO E. PRATS, doing business under the name of Philippine Real Estate Exchange, petitioner, vs.HON. COURT OF APPEALS, ALFONSO DORONILA and PHILIPPINE NATIONAL BANK, respondents. FERNANDEZ, J.: This is a petition for certiorari to review the decision of the Court of Appeals in CA-G.R. No. 45974-R entitled"Antonio E. Prats, doing business under the name of Philippine Real Estate Exchange, vs. Alfonso Doronila and the Philippine National Bank", the dispositive part of which reads: In view of all the foregoing, it is our considered opinion and so hold that the decision of the lower court be, as it is hereby reversed, and the complaint, dismissed. On appellant's counterclaim, judgment is hereby rendered directing appellee to pay attorney's fees in the sum of P10,000 to appellant, no moral damages as therein claimed being awarded for lack of evidence to justify the same. The injunction issued by the lower court on the P2,000,000.00 cash deposit of the appellant is hereby lifted. No special pronouncement as to costs. SO ORDERED. 1 On September 23, 1968 Antonio E. Prats, doing business under the name of "Philippine Real Estate Exchange" instituted against Alfonso Doronila and Philippine National Bank Civil Case No. Q-12412 in the Court of First Instance of Rizal at Quezon City to recover a sum of money and damages. The complaint stated that defendant Alfonso Doronila was the registered owner of 300 hectares of land situated in Montalban, Rizal, covered by Transfer Certificates of Title Nos. 77011, 77013, 216747 and 216750; that defendant Doronila had for sometime tried to sell his aforesaid 300 hectares of land and for that purpose had designated several agents; that at one time, he had offered the same property to the Social Security System but failed to consummate any sale; that his offer to sell to the Social Security System having failed, defendant Doronila on February 14, 1968 gave the plaintiff an

exclusive option and authority in writing to negotiate the sale of his aforementioned property, which exclusive option and authority the plaintiff caused to be published in the Manila Times on February 22, 1968; that it was the agreement between plaintiff and defendant Doronila that the basic price shall be P3.00 per square meter, that plaintiff shall be entitled to a commission of 10% based on P2.10 per square meter or at any price finally agreed upon and if the property be sold over and above P3.00 per square meter, the excess shall be created and paid to the plaintiff in addition to his 10% commission based on P2.10 per square meter; that as a result of the grant of the exclusive option and authority to negotiate the sale of his 300 hectares of land situated in Montalban, Rizal in favor of the plaintiff, the defendant Doronila, on February 20, 1968, wrote a letter to the Social Security System withdrawing his previous offer to sell the same land and requesting the return to him of all papers concerning his offered property that the Social Security System, complying with said request of defendant Doronila, returned all the papers thereon and defendant Doronila, in turn gave them to the plaintiff as his duly authorized real estate broker; that by virtue of the exclusive written option and authority granted him and relying upon the announced policy of the President of the Philippines to promote low housing program the plaintiff immediately worked to negotiate the sale of defendant Doronila's 300 hectares of land to the Social Security System, making the necessary contacts and representations to bring the parties together, namely, the owner and the buyer, and bring about the ultimate sale of the land by defendant Doronila to the Social Security System; that on February 27, 1968, after plaintiff had already contacted the Social Security System, its Deputy Administrator, Reynaldo J. Gregorio, wrote a letter to defendant Doronila inviting the latter to a conference regarding the property in question with Administrator Teodoro, Chairman Gaviola and said Reynaldo J. Gregorio on March 4, 1968 at 10:00 o'clock in the morning, stating that the SSS would like to take up the offer of the lot; that having granted plaintiff the exclusive written option and authority to negotiate the sale of his 300 hectares of land, defendant Doronila in a letter dated February 28, 1968 declined the invitation extended by the Social Security System to meet with its Administrator and Chairman and requested them instead "to deal directly" with the plaintiff, that on March 16, 1968, at the suggestion of defendant Doronila, the plaintiff wrote a letter to the Social Security System to the effect that plaintiff would be glad to sit with the officials of the Social Security System to discuss the sale of the property of the defendant Doronila; that on March 18, 1968, the Social Security System sent a telegram to defendant Doronila to submit certain documents regarding the property offered; that on May 6, 1968, a written offer to sell the 300 hectares of land belonging to defendant Doronila was formally made by the plaintiff to the Social Security System and accordingly, on May 7, 1968, the Social Security System Administrator dispatched the following telegram to defendant Doronila: "SSS considering purchase your property for its housing project Administrator Teodoro"; that a few days thereafter, the plaintiff accompanied the defendant Doronila to the China Banking Corporation to arrange the matter of clearing payment by chock and delivery of the titles over the property to the Society Security System; that having been brought together by the plaintiff, the defendant Doronila and the offices of the Society Security System, on May 29, 1968 and on June 4, 1968, met at the office of the SSS Administrator wherein the price for the purchase of the defendant Doronila's 300 hectares of land was, among others, taken up; that on June 20, 1968, the Social Security Commission passed Resolution No. 636 making a counter-offer of P3.25 per square meter subject to an appraise report; that on June 27, 1968, Resolution No. 662 was adopted by the Social Security Commission authorizing the Toples & Harding (Far East) Inc. to conduct an appraisal of the property and to submit a report thereon; that pursuant thereto, the said company submitted its appraisal report specifying that the present value of the property is P3.34 per square meter and that a housing program development would represent the highest and best use thereof, that on July 18, 1968, the Social Security Commission, at its regular meeting, taking note of the favorable appraisal report of the Toples'& Harding (Far East) Inc., passed Resolution No. 738, approving the purchase of defendant Doronila's 300 hectares of land in Montalban, Rizal at a price of P3.25 per square meter or for a total purchase price of Nine Million Seven Hundred Fifty Thousand Pesos (P9,750,000.00), appropriating the said amount for the purpose and authorizing the SSS Administrator to sign the necessary documents to implement the said resolution; that on July 30, 1968, defendant Doronila and the Social Security System executed the corresponding deed of absolute sale over the 300 hectares of land in Montalban, Rizal covered by Transfer Certificate of Title Nos. 77011, 77013, 216747 and 216750 under the terms of which the total price of P9,750,000.00 shall be payable as follows: (a) 60% of the agreed purchase price, or Five Million Eight Hundred Fifty Thousand Pesos (P5,860,000.00) immediately after signing the deed of sale. and (b) the balance of 40% of the agreed price, or Three Million Nine Hundred Thousand Pesos

(P3,900,000.00) thirty days after the signing of the deed of absolute sale; that on August 21, 1968, after payment of the purchase price, the deed absolute sale executed by defendant Doronila in favor of the Social Security System was presented for registration in the Office of the Register of Deeds of Rizal, and Transfer Certificates of Title Nos. 926574, 226575, 226576 and 226577 in the name of the Social Security System were issued; that defendant Doronila has received the full purchase price for his 300 hectares of land in the total amount of P9,750,000.00, which amount he deposited in his bank Account No. 0012-443 with the defendant Philippine National Bank; that on September 17, 1968, the plaintiff presented his statement to, and demanded of defendant Doronila the payment of his processional fee as real estate broker as computed under the agreement of February 14, 1968 in the total amount of P1,380,000.00; that notwithstanding such demand, the defendant Doronila, in gross and evident bad faith after having availed of the services of plaintiff as real estate broker, refused to pay the professional fees due him; that as a result of defendant Doronila's gross and evident bad faith and unjustified refusal to pay plaintiff the professional fees due him under the agreement, the latter has suffered and continues to suffer mental anguish, serious anxiety, and social humiliation for which defendant Doronila shall be held liable to pay moral damages; and, that by reason likewise of the aforesaid act of defendant Doronila, the plaintiff has been compelled to file this action and to engage the services of counsel at a stipulated professional fee of P250,000.00. In his answer filed on November 18, 1968, the defendant Doronila alleged that when the plaintiff offered the answering defendant's property to the Social Security System on May 6, 1968, said defendant had already offered his property to, and had a closed transaction or contract of sale of, said property with the Social Security System; that the letter agreement had become null and void because defendant Doronila had not received any written offer from any prospective buyers of the plaintiff during the agreed period of 60 days until the last day of the authorization which was April 13, 1968 counting from February 14, 1968; that it is not true that plaintiff brought together defendant Doronila and the officials of the Social Security System to take up the purchase price of defendant Doronila's property for the simple reason that the plaintiff's offer was P6.00 per square meter and later on reduced to P4.50 per square meter because the SSS Chairman had already a closed transaction with the defendant Doronila at the price of P3.25 per square meter and that the offer of the plaintiff was refused by the officials of the Social Security System; and that defendant Doronila did not answer the statement of collection of the plaintiff because the latter had not right to demand the payment for services not rendered according to the agreement of the parties. The answering defendant interposed a counterclaim for damages and attorney's fees. On January 18, 1969, the plaintiff and defendant Alfonso Doronila submitted the following stipulation of facts: STIPULATION OF FACTS COME NOW the plaintiff and defendant DORONILA, through their respective undersigned counsel, and to this Honorable Court by way of abbreviating the proceeding i the case at bar, without prejudice to presentation of explanatory evidence, respectfully submit the following STIPULATION OF FACTS. 1. The defendant Doronila was the registered owner of 300 hectares of land, situated in Montalban, Rizal, covered by Transfer Certificates of Title Nos. 77011, 77013, 216747 (formerly TCT No. 116631) and 216750 (formerly TCT No. 77012). 2. That on July 3, 1967, defendant DORONILA under his letter (marked Annex "1" of the answer) addressed to the SSS Chairman, offered his said property to the Social Security System (SSS) at P4.00 per square meter. That on July 17, 1967 (Annex "2" of the Answer) the SSS Chairman, Mr. Ramon C. Gaviola, Jr., replied to defendant DORONILA, as follows: This will acknowledge your letter of July 3rd, 1967 relative to your offer for sale of your real estate property. In this regard, may I please be informed as to how many hectares, out of the total 300 hectares offered,

are located in Quezon City and how many hectares are located in Montalban, Rizal. Likewise, as regards your offer of P4.00 per square meter, would there be any possibility that the same be reduced to P3.25 per square meter Finally and before I submit your proposal for process it is requested that the NAWASA certify to the effect that they have no objection to having this parcel of land subdivided for residential house purposes. Thank you for your offer and may I hear from you at the earliest possible time. 2-a That on July 19, 1967, defendant DORONILA wrote a letter (a xerox copy, attached hereto marked as Annex "2-a" for DORONILA) to NAWASA, and that in reply thereto, on July 25, 1967, the NAWASA wrote the following letter (Xerox copy attached hereto to be marked as Annex "2-b" for DORONILA) to defendant DORONILA. In connection with your proposed subdivision plan of your properties adjacent to our Novaliches Watershed, this Office would like to impose the following conditions: 1. Since your property is an immediate boundary of our Novaliches Watershed, a 20-meter road should be constructed along our common boundary. 2. That no waste or drainage water from the subdivision should flow towards the watershed. 3. That the liquid from the septic tanks or similar waste water should be treated before it is drained to the Alat River above our Alat Dam. The above conditions are all safeguards to the drinking water of the people of Manila and Suburbs. It is therefore expected that we all cooperate to make our drinking water safer from any pollution. 3. That on July 19, 1967, defendant DORONILA wrote another letter (marked as Annex '3' on his Answer) addressed to the SSS Chairman, Mr. Ramon Gaviola Jr., stating, among others, the following: In this connection, I have your counter-offer of P3.25 per square meter against my offer of P4.00 per square meter, although your counteroffer is lower comparing to the prices of adjacent properties, I have to consider the difference as my privilege and opportunity to contribute or support the Presidential policy to promote low cost housing in this country particularly to the SSS members by accepting gladly your counter-offer of P3.25 per square meter with the condition that it should be paid in cash and such payment shall be made within a period of 30 days from the above stated date (2nd paragraph of letter dated July 18, 1967, Annex "3" of the Answer).

3.a That on August 10, 1967, the SSS Chairman, Mr. Ramon Gaviola Jr., wrote the following (Xerox copy attached hereto and marked as Annex '2-c' for DORONILA: addressed to defendant DORONILA: With reference to your letter, dated July 1967, please be informed that the same is now with the Administrator for study and comment. The Commission will act on receipt of information re such studies. With the assurance that you will be periodically informed of developments, we remain. 3-b That on October 30, 1967, Mr. Pastor B. Sajorda, 'By authority of Atty. Alfonso Doronila, property owner', wrote the following request (Xerox copy attached hereto and marked as Annex '2-d' for DORONILA) addressed to Realtor Vicente L. Narciso for a certification regarding the actual prices of DORONILA's property, quoted as follows: May I have the honor to request for your certification as a member of the Board of Realtor regarding the actual prices of my real estate raw-land properties described as Lots 3-B-7, 26B, 6 and 4-C-3 all adjacent to each other, containing a total area of 3,000,000 square meters, all registered in the name of Alfonso Doronila, covered by T.C.T. Nos. 116631, 77013, 77011, and 77012, located at Montalban, Rizal, all adjacent to the Northern portion of the NAWASA properties in Quezon City including those other surrounding adjacent properties and even those properties located before reaching my own properties coming from Manila. This request is purposely made for my references in case I decided to sell my said properties mentioned above. 3-c That on November 3, 1967, Realtor Vicente Narciso wrote the following reply (Xerox copy attached hereto and marked as Annex 2 for DORONILA) to Mr. Pastor B. Sajorda: As per your request dated October 30, 1967, regarding prices of raw land, it is my finding that the fair market value of raw land in the vicinity of the NAWASA properties at Quezon City and Montalban, Rizal. including the properties of Atty. Alfonso Doronila. more particularly known as lots 3-B-7, 26-B, and 4-C-3 containing approximately 3,000,000 square meters is P3.00 to P3.50 per square meter. Current prices before reaching Doronila's property range from P6.00 to P7.00 per square meter. 4. That on February 14, 1968, defendant DORONILA granted plaintiff an exclusive option and authority (Annex 'A' of the complaint), under the following terms and conditions:

1. The price of the property is THREE (P3.00) PESOS per square meter. 2. A commission of TEN (10%) PERCENT will be paid to us based on P2.10 per square meter, or at any price that you DORONILA finally agree upon, and all expenses shall be for our account, including preparation of the corresponding deed of conveyance, documentary stamps and registration fee, whether the sale is causes directly or indirectly by us within the time of this option. If the property is sold over and above P3.00 per square meter, the excess amount shall be credited and paid to the herein workers. In addition to the 10% commission based on P2.10 per square meter, provided the brokers shall pay the corresponding taxes to the owner of the excess amount over P3.00 per square meter, unless paid by check which would then be deductible as additional expenses. 3. This exclusive option and authority is good for a period of sixty (60) days from the date of your conformity; provided, however, that should negotiations have been started with a buyer, said period is automatically extended until said negotiations is terminated, but not more than fifteen (15) days; 4. The written offers must be made by the prospective buyers, unless they prefer to have us take the offer for and in their behalf some buyers do not want to be known in the early stages of the negotiations: 5. If no written offer is made to you until the last day of this authorization, this option and authority shall expire and become null and void; 6. It is clearly understood that prospective buyers and all parties interested in this property shall be referred to us, and that you will not even quote a price directly to any agent or buyer. You agree to refer all agents or brokers to us DURING the time this option is in force; and 7. There are some squatters occupying small portions of the property, which fact will be reported to the prospective buyers, and said squatters will be removed at our expense. (Annex "A" of the complaint) Very truly yours, PHILIPPINE REAL ESTATE EXCHANCE (Sgd) ANTONIO E. PRATS General manager CONFORME: (Sgt.) ALFONSO DORONILA Date: February 14, 1968 5.

That on February 19, 1968, plaintiff wrote the following letter to defendant DORONILA (Annex "4" of the Answer), quoted as follows: February 19, 1968 Don Alfonso Doronila Plaza Ferguzon Ermita, Manila Dear Don Alfonso: In view of the exclusive option extended to us for the sale of your property consisting 300 hectares located at Montalban, Rizal, we earnestly request that you take immediate steps to withdraw any and all papers pertaining to this property offered to the SOCIAL SECURITY SYSTEM Very truly yours, PHILIPPINE REAL ESTATE EXCHANGE (Sgd) ANTONIO E. PRATS General Manager AEP/acc RECEIVED ORIGINAL By: (Sgd.) ROGELIO DAPITAN 6. That on February 20, 1968, pursuant to the letter dated February 19, 1968 of plaintiff, defendant DORONILA wrote a letter (Annex 'B' of the complaint) to the SSS Administrator stating: In as much as the SSS has not acted on my offer to sell a 300 hectare lot located in Montalban, Rizal, for the last five (5) months I respectfully requested for the return of all my papers concerning this offered property. 7. That on February 27, 1968, defendant DORONILA received the following letter (Annex "C" of the complaint) from the SSS Deputy Administrator, Mr. Reynaldo J. Gregorio, to wit: May I take this opportunity of inviting you in behalf of Administrator Teodoro, to meet with him, Chairman Gaviola and myself on Friday, March 4, 10:00 A.M. lot offer. Thanks and regards. 8. That on February 28, 1968, defendant DORONILA wrote the following letter (Annex "D" of the complaint) to the SSS Deputy Administrator: Thank you for your invitation to meet Administrator Teodoro, Chairman Gaviola and your goodself, to take up my former offer to sell my property to the Social Security System. Since the SSS had not acted on my offer dated July 19, 1967, more than seven (7) months ago, I have asked for the return of my papers, as per my letter of February 20, 1968, and which you have kindly returned to me. As of February 20, 1968, I gave the Philippine Real Estate Exchange an exclusive option and authority to negotiate the sale of this 300 hectare

land, and I am no longer at liberty to negotiate its sale personally; I shall therefore request you communicate directly with the Philippine Real Estate Exchange, P. O. Box 84, Quezon City, and deal with them directly if you are still interested in my property. With my kind personal regards, I am 9. That on March 16, 1968, plaintiff, acting upon the letter of defendant DORONILA dated February 28, 1968 (Annex 'D' for plaintiff), wrote the following letter to SSS Administrator: Don Alfonso Doronila, owner of the 300 hectare land located at Montalban, Rizal, adjoining the Quezon City boundary, has informed us that the Administrator of the SOCIAL SECURITY' SYSTEM, through Mr. Reynaldo J. Gregorio, has invited him to meet with the Administrator and Chairman Gaviola to take up the former offer to sell his property to the SSS. In his letter to the Administrator dated February 20, 1968 (which has been received by the SSS on the same day), Mr. Doronila advised you that as of February 20,1968, he gave the PHILIPPINE REAL ESTATE EXCHANGE (PHILREX) the exclusive option and authority to negotiate the sale of his 300 hectare land in Montalban, and that he is no longer at liberty to negotiate its sale personally, and that, if you are still interested in the property, the SSS should communicate directly with the PHILIPPINE REAL ESTATE EXCHANGE. It is by virtue of this arrangement that Mr. Doronila now refers to us invitation and his reply to the SSS and has requested us to get in touch with you. While, at present we have several prospective buyers interested in this property, we shall, in compliance with the request of Mr. Doronila, be happy to sit down with you and Chairman Ramon Gaviola, Jr. Please let us know when it will be convenient to hold the conference. 10. That on April 18, 1968, defendant DORONILA extended the plaintiff exclusive option and authority to expire May 18, 1968.(annex 'B' Reply letter of Doronila to SSS Deputy Administrator dated May 8, 1968). 11. That on May 6,1968, plaintiff made a formal written offer to the Social Security System to sell the 300 hectares land of defendant DORONILA at the price of P6.00 per square meter, Xerox copy of which bearing the stamp or receipt of Social Security System is attached hereof as Annex "D" plaintiff. 12. That on May 16, 1968 the defendant DORONILA received the following telegram (Annex 'E' of the complaint) form the SSS Administrative, reading:

SSS CONSIDERING PURCHASE YOUR PROPERTY FOR ITS HOUSING PROJECT 13. That on May 18, 1968, after plaintiff exclusive option and authority had been extended, plaintiff wrote the following letter (Annex "A" Reply' of plaintiff's REPLY TO ANSWER) to defendant DORONILA, to wit: CONFIDENTIAL In our conference last Monday, May 13, 1968, you have been definitely advised by responsible parties that the SOCIAL SECURITY SYSTEM is acquiring your 300-hectare land at Montalban, Rizal, adjoining the Quezon City Boundary and that said property will be acquired in accordance with the exclusive option and authority you gave the PHILIPPINE REAL ESTATE EXCHANCE. You were assured in that conference that the property will be acquired definitely, but, as it has been mentioned during the conference, it may take from 30 to 60 days to have all the papers prepared and to effect the corresponding payment. The telegram from the SSS confirming these negotiations has already been received by you, a copy of which you yourself have kindly furnished us. Pursuant to paragraph 3 of the terms of the option that you have kindly extended, we still have fifteen days more from today, May 18, 1968, within which to finish the negotiations for the sale of your property to the SSS. For your convenience, we quote the pertinent portion of paragraph 3 of the option: ... provided, however, that should negotiation have been started with a buyer, said period is automatically extended until said negotiation is terminated, but no more than fifteen (15) days. Please be assured that we will do our very best to complete these negotiations for the sale of your property within this fifteen-day period. In the meantime' we hope you will also observe the provisions of paragraph 6 of the exclusive option you have extended to us. 14. That on May 18, 1968, plaintiff wrote the following letter (Xerox copy attached and marked hereof as Annex 'H' for plaintiff) addressed defendant DORONILA, to wit: By virtue of the exclusive option and authority you have granted the PHILIPPINE REAL ESTATE EXCHANGE to negotiate the sale of your 300-hectare land located at Montalban, Rizal, adjoining the Quezon City boundary, which properties are covered by Transfer Certificate of Titles Nos. 116631, 77011, 77012 and 77013, of the Registry of Deeds for the Province of Rizal, we hereby make a firm offer, for and in behalf of our buyer, to purchase said property at the price of FOUR PESOS AND FIFTY CENTAVOS (P4.50) per square

meter, or the total amount of THIRTEEN MILLION FIVE HUNDRED THOUSAND (P13,500,000.00) PESOS, Philippine Currency, payable in Cash and D.B.P. Progress Bonds, on a ratio to be decided between you and our principal. To expedite the negotiations, we suggest that we sit down sometime early next week with our principal to take up the final arrangement and other details in connection with the purchase of the subject property. To give you further assurance of the validity of this offer, we refer you to the CHINA BANKING CORPORATION (Trust Department) who has already been apprised of these negotiations, to which ]sank we strongly recommend that this transaction be coursed through, for your own security and protection. 15. That on May 30, 1968, plaintiff wrote the following letter (Xerox copy attached hereto, and marked as Annex 'I' for plaintiff) to defendant DORONILA, quoted as follows: This is to advise you that the SOCIAL SECURITY SYSTEM agreed to purchase your 300-hectare land located at Montalban, Rizal, which purchase can be conformed by the Chairman of the SOCIAL SECURITY COMMISSION. The details will have to be taken up between you and the Chairman, and we suggest that you communicate with the Chairman at your earliest convenience. This negotiation was made by virtue of the exclusive option and authority you have granted the PHILIPPINE REAL ESTATE EXCHANGE, which option is in full force and effect, and covers the transaction referred above. 16. That on June 6,1968, defendant DORONILA wrote the following letter (Annex" 7" for DORONILA), to the plaintiff, to wit: I have to inform you officially, that I have not received any written offer from the SSS or others, to purchase my Montalban property of which you were given an option and exclusive authority as appearing in your lettercontract dated February 14, 1968, during the 60 days of your exclusive authority which expired on April 14, 1968, nor during the extension which was properly a new exclusive authority of 30 days from April 18, which expired on May 18, 1968, nor during the provided 15 days grace, in case that you have closed any transaction to terminate it during that period, which also expired on June 3, 1968. As stated in said letter, we have the following condition: 5. If no written offer is made to you until the last day of this authorization,

this option and authority shall expire and becomes null and void. As I have informed you, that on April 16, 1968 or two days after your option expired I have signed an agreement to sell my property to a group of buyers to whom I asked later that the effectivity of said agreement will be after your new authority has expired will be on June 2, 1968, and they have accepted; As your option has expired, and they know that there was no written offer made by the SSS for any price of my property, aside of their previous letter announcing me that they are ready to pay, I was notified on June 4, 1968 by their representative, calling my attention but our agreement; that is why I am writing you, that having expired your option and exclusive authority to offer for sale my said property, I notified only this afternoon said to comply our agreement. Hoping for your consideration on the matter, as we have to be guided by contracts that we have to comply, I hereby express to you my sincere sentiments. 17. That on June 19, 1968, defendant DORONILA wrote the following letter (Annex "5" of the Answer) to the SSS Administrator, renewing his offer to sell his 300 hectare land to the SSS at P4.00 per square meter, to wit: This is to renew my offer to sell my properties located at Montalban, Rizal Identified as Lot Nos. 3-B-7, 26-8, 6, and 4-C-3 registered in my name in the office of the Registry of Deeds of Rizal under T.C.T. Nos. 116631, 77013, 77011 and 216750, containing a total area of 300 hectares or 3,000,000 square meters. You will recall that last year, I offered to the Social Security System the same properties at the price of Four (P4.00) pesos per square meter. After 3 ocular inspection of Chairman Gaviola one of said inspections accompanied by Commissioner Arroyo and after receiving the written apprisal report of Manila realtor Vicente L. Narciso, the System then made a counteroffer of Three pesos and twenty-five (P3.25) per square meter which I accepted under the condition that the total amount be paid within a period of thirty (30) days from the date of my acceptance (July 19, 1967). My acceptance was motivated by the fact that within said period of time I had hoped to purchase my sugarcane hacienda in Iloilo with the proceeds I expected from the sale. No action was however taken by the System thereon. Recently the same properties were offered by Antonio E. Prats of the Philippine Real Estate Exchange to the Presidential Assistant on Housing, at the price of six pesos (p6.00) per square meter, who referred it to the System, but against no action had been taken by the System. Considering the lapse of time since our original offer during which prices of real estate have increased considerably, on the one hand and in cooperation with the System's implementation of our government's policy to provide low cost houses to its members, on the other hand, I am

renewing my offer to sell my properties to the system only at the same price of P4.00 per square meter, or for a total amount of twelve million pesos (P12,000,000.00), provided the total amount is paid in cash within a period of fifteen (15) days from this date. 18. That on June 20, 1968, the Social Security Commission passed Resolution No. 636 by which the SSS formalized its counter-offer of P3.25 per square meter. (See Annex 'F' of the complaint) 19. That on June 25, 1968, the SSS Administrator, Mr. Gilberto Teodoro, wrote the following reply letter (Annex '6' of the Answer) to defendant DORONILA, to wit: This has reference to your letter dated June 19, 1966 renewing your offer to sell your property located at Montalban, Rizal containing an area of 300 hectares at P4.00 per square meter. Please be informed that the said letter was submitted for the consideration of the Social Security Commission at its last meeting on June 20, 1968 and pursuant to its Resolution No. 636, current series, it decided that the System reiterate its counteroffer for P3.25 per square meter subject to a favorable appraisal report by a reputable appraisal entity as regards particularly to price and housing project feasibility. Should this counter-offer be acceptable to you, kindly so indicate by signing hereunder your conformity thereon. Trusting that the foregoing sufficiently advises you on the matter, I remain Very truly yours, GILBERTO TEODORO Administrator CONFORME: With condition that the sale will be consummated within Twenty (20) days from this date. ALFONSO DORONILA Returned and received the original by June 25/68 Admtr's Office 20. That on June 27, 1968, the Social Security Commission passed Resolution No. 662 authorizing the Toples & Harding (Far East) to conduct an appraisal of the property of defendant DORONILA and to submit a report thereon. (See Annex 'F' of the complaint) 21. That on July 17, 1968, the Social Security Commission taking note of the report of Toples & Harding (Far East), passed Resolution No. 736, approving the purchase of the 300 hectare land of defendant DORONILA, at the price of P3.25 per square meter, for a total purchase price of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS (P9,750,000.00), and appropriating the said amount of money for the purpose. (See Annex 'F' of the complaint). 22. That on July 30, 1968, defendant DORONILA executed the deed of absolute sale (Annex "C" of the complaint) over his 300-hectare land, situated in Montalban, Rizal, covered by TCT Nos. 77011, 77013, 216747 (formerly TCT No. 116631) and 216750 (formerly TCT No. 77012), in favor of the Social Security System, for the total

purchase price of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS (P9,750,000.00), Philippine currency, which deed of sale was presented for registration in the Office of the Register of Deeds of Fiscal on August 21, 1968. 23. That defendant DORONILA had received the full purchase price of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS (P9,750,000.00), Philippine Currency, in two installments. 24. That on September 17, 1968, plaintiff presented his STATEMENT OF ACCOUNT, dated September 16, 1968 (Xerox copy of which is attached hereto and marked as Annex plaintiff' to defendant DORONILA for the payment of his professional services as real estate broker in the amount of P1,380,000.00, as computed on the basis of the letter-agreement, Annex "A" of the complaint, which defendant failed to pay. Manila, for Quezon City, January 18,1968. Respectfully submitted: CRISPIN D. BAIZAS & ASSOCIATES and A.N. BOLINAO, JR. By: (Sgd.) Counsel for the plaintiff Suite 305, ShurdutBldg.Intramuros, Manila (Sgd.) E. V. Obon Atty. EUGENIO V. OBON Counsel for the defendant 9 West Point Street Quezon City ALFONSO DORONILA Counsel for the defendant 428 Plaza de Ferguson Ermita, Manila 2 The trial court rendered its decision dated December 12, 1969, the initiative part of which reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff, ordering defendant Alfonso Doronila, under the first cause of action, to pay to plaintiff the sum of P1,380,000.00 with interest thereon at the rate of 6% per annum from September 23, 1968 until fully paid; and under the second Cause of Action, to pay plaintiff the sum of P200,000.00 as moral damages; the sum of P100,000.00 as exemplary damages; the sum of P150,000.00 as attorney's fees, including the expenses of. litigation and costs of this suit. The writ of preliminary injunction issued in this case is hereby made permanent; and the defendant Philippine National Bank is hereby ordered to pay to the plaintiff the amount of P1,380,000.00 and interest on the P1,380,000.00 to be computed separately out of the P2,000,000.00 which it presently holds under a fixed time deposit. SO ORDERED. December 12, 1969, Quezon City, Philippines. (SGD.) LOURDES P. SAN DIEGO Judge3 The defendant appealed to the Court of Appeals where the appeal was docketed as CA-G.R. No. 45974-R. In a decision promulgated on September 19, 1974, the Court of Appeals reversed the derision of the trial court and dismissed the complaint because:

In any event, since it has been found that the authority of appellee expired on June 2, 1968, rather than June 12, 1968 as the lower court opined, the inquiry would be whether up to that time, a written offer was made by appellee in behalf of the SSS. The stipulation is clear on this point. There should be a written offer by the prospective buyer or by appellee for or in their behalf, and that if no such written offer is made until the last day of the authorization, the option and authority shall expire and become null and void. Note that the emphasis is placed on the need of a written offer to save the authority from an automatic termination on the last day of the authorization. We note such emphasis with special significance in receive of the condition relative to automatic extension of not more than 15 days if negotiations have been started. The question then is when are negotiations deemed started In the light of the provisions just cited, it should be when a response is given by the prospective buyer showing fits interest to buy the property when an offer is made by the seller or broker and make an offer of the price. Strictly, therefore, prior to May 29, 1968, there were no negotiations yet started within contemplation of the letter-agreement of brokerage (Exh. A). Nevertheless appellant extended appellee's exclusive authority to on May 18, 1968 (par. 10, Stipulation of Facts; R.A. p. 89), which was automatically extended by 15 days under their agreement, to expire on June 2, 1968, if the period extended up to May 18, 1968 a necessary authority. For, it may even be considered as taking the of the 15-days automatic extension, since appellee's pretension is that negotiations have been started within the original period of 60 days. Appellant in fixing the expiry date on June 2, 1968, has thus made a liberal concession in favor of appellee, when he chose not to the extension up to May 18, 1968 as the automatic extension which ougth to have been no more than 15 days, but which he stretched twice as long. 4 The petitioner assigned the following errors: I THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PETITIONER WAS NOT THE EFFICIENT PROCURING CAUSE IN BRING ABOUT THE SALE OF PRIVATE RESPONDENT DORONILA'S LAND TO THE SSS. II THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THERE WAS FAILURE ON THE PART OF HEREIN PETITIONER TO COMPLY WITH THE TERMS AND CONDITIONS OF HIS CONTRACT WITH PRIVATE RESPONDENT. III THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PETITIONER IS NOT ENTITLED TO HIS COMMISSION. IV THE RESPONDENT COURT OF APPEALS ERRED IN AWARDING ATTORNEY'S FEES TO PRIVATE RESPONDENT DORONILA INSTEAD OF AFFIRMING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AS WELL As ATTORNEY FEES TO PETITIONER. 5 The Court in its Resolution of May 23, 1975 originally denied the petition for lack of merit but upon petitioner's motion for reconsideration and supplemental petition invoking equity, resolved in its Resolution of August 20, 1975 to give due course thereto. From the stipulation of facts and the evidence of record, it is clear that the offer of defendant Doronila to sell the 300 hectares of land in question to the Social Security System was formally accepted by the System only on June 20, 1968 after the exclusive authority, Exhibit A, in favor of the plaintiff, petitioner herein, had expired. The respondent court's factual findings that petitioner was not the efficient procuring cause in bringing about the sale

proceeding from the fact of expiration of his exclusive authority) which are admittedly final for purposes of the present petition, provide no basis law to grant relief to petitioner. The following pertinent excerpts from respondent court's extensive decision amply demonstrate this: It is noted, however, that even in his brief, when he said

show that for being ignored by the SSS, he gave up all effort to deal with the SSS. ... 8 xxx xxx xxx ... For him to claim that it was he who aroused the interest of the SSS in buying appellant's property is to ignore the fact that as early as June, (July) 1967, the SSS had directly dealt with appellant to such an extent that the price of P3.25 as offered by the SSS was accepted by appellant, the latter imposing only the condition that the price should be paid in cash, and within 30 days from the date of the acceptance. It can truly be said then that the interest of SSS to acquire the property had been sufficiently aroused for there to be any need for appellee to stimulate it further. Appellee should know this fact for according to him, the 10-day grace period was agreed upon to give the SSS a chance to pay the price of the land at P3.25 per sq. m., as a "compromise" to appellant's insistence that the SSS be excluded from appellee's option or authority to sell the land. 9

According to the testimony of the plaintiff-appellee a few days before May 29, 1968, he arranged with Mr. Gilberto Teodoro, SSS Administrator, a meeting with the defendant Manila. He talked with Mr. Teodoro over the telephone and fixed the date of the meeting with defendant-appellant Doronila for May 29, 1968, and that he was specifically requested by Mr. Teodoro not to be present at the meeting, as he, Teodoro, wanted to deal directly with the defendantappellant alone. (Tsn., pp. 4446, March 1, 1969). Finding nothing ... There should be a written offer by the prospective wrong with such a request, as the buyer or by appellee for or in their behalf, and that if no sale could be caused directly or such written offer is made until the last day of the indirectly (Exh. 'A'), and believing authorization, the option and authority shall expired and that as a broker all that he needed to become null and void. ... Yet, no such written offer was do to be entitled to his commission made. ... 10 was to bring about a meeting between the buyer and the seller as In equity, however, the Court notes that petitioner had Monthly taken steps to to ripen into a sale, plaintiff-appellee bring back together respondent Doronila and the SSS, among which may be readily acceded to the request. mentioned the following: appellee is not categorical that it was through his efforts that the meeting took place on inlay 29, 1968. He refers to a telephone call he made "a few days before May 29, 1968," but in the conversation he had with Mr. Teodoro, the latter requested him not to be present in the meeting. From these facts, it is manifest that the SSS officials never wanted to be in any way guided by, or otherwise subject to, the mediation or intervention of, appellee relative to the negotiation for the purchase of the property. It is thus more reasonable to conclude that if a meeting was held on May 29, 1968, it was done independently, and not by virtue of, appellee's wish or efforts to hold such meeting. 6 xxx xxx xxx ... It is even doubtful if he tried to make any arrangement for meeting at all, because on May 18, 1968, he told appellant: ... we hereby make a firm offer, for and in behalf of our buyer, to purchase said property at the price of Four Pesos and Fifty Centavos (P4.50) per square meter .... As this offer is evidently made in behalf of buyer other than the SSS which had never offered the price of P4.50 per square meter, appellee could not have at the same time arranged a meeting between the SSS officials and appellant with a view to consummating the sale in favor of the SSS which had made an offer of only PS.25 per sq. m. and thus lose the much bigger profit he would realize with a higher price of P4.50 per sq. meter. This 'firm offer' of P4.50 per sq. m. made by appellee betrayed his lack of any efficient intervention in the negotiations with the SSS for the purchase by it of appellant's property ... 7 xxx xxx xxx ... This becomes more evident when it is considered that on May 6, 1968 he was making his first offer to sell the property at P6.00 per sq. m. to the SSS to which offer he received no answer. It is this cold indifference of the SSS to him that must have prompted him to look for other buyers, resulting in his making the firm offer of 714.50 per sq. m. on May 18, 1968, a fact which only goes to In July, 1967, prior to February 14, 1968, respondent Doronila had offered to sell the land in question to the Social Security System Direct negotiations were made by Doronila with the SSS. The SSS did not then accept the offer of Doronila. Thereafter, Doronila executed the exclusive authority in favor of petitioner Prats on February 14, 1968. Prats communicated with the Office of the Presidential Housing Commission on February 23, 1968 offering the Doronila property. Prats wrote a follow-up letter on April is, 1968 which was answered by the Commission with the suggestion that the property be offered directly to the SSS. Prats wrote the SSS on March 16, 1968, inviting Chairman Ramon Gaviola, Jr. to discuss the offer of the sale of the property in question to the SSS. On May 6, 1968, Prats made a formal written offer to the Social Security System to self the 300 hectare land of Doronila at the price of P6.00 per square meter. Doronila received on May 17, 1968 from the SSS Administrator a telegram that the SSS was considering the purchase of Doronilas property for its housing project. Prats and his witness Raagas testified that Prats had several dinner and lunch meetings with Doronila and/or his nephew, Atty. Manuel D. Asencio, regarding the progress of the negotiations with the SSS. Atty. Asencio had declared that he and his uncle, Alfonso Doronila, were invited several times by Prats, sometimes to luncheons and sometimes to dinner. On a Sunday, June 2, 1968, Prats and Raagas had luncheon in Sulu Hotel in Quezon City and they were joined later by Chairman Gaviola of the SSS. The Court has noted on the other hand that Doronila finally sold the property to the Social Security System at P3.25 per square meter which was the very same price counter-offered by the Social Security System and accepted by him in July, 1967 when he alone was dealing exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats' efforts somehow were instrumental in bringing them together again and finally consummating the transaction at the same price of P3.25 square meter, although such finalization was after the expiration of Prats' extended exclusive authority. Still such price was higher than that stipulated in the exclusive authority granted by Doronila to Prats. Under the circumstances, the Court grants in equity the sum of One Hundred Thousand Pesos (P100,000.00) by way of compensation for his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his exclusive authority and sets aside the P10,000.00 attorneys' fees award adjudged against him by respondent court. WHEREFORE, the derision appealed from is hereby affirmed, with the modification that private respondent Alfonso Doronila in equity is ordered to pay petitioner or his heirs the amount of One Hundred Thousand Pesos (P100,000.00) and that the portion of the said decision sell petitioner Prats to

pay respondent Doronila attorneys' fees in the sum of P10,000.00 is set aside. The lifting of the injunction issued by the lower court on the P2,000,000.00 cash deposit of respondent Doronila as ordered by respondent court is hereby with the exception of the sum of One Hundred Thousand Pesos (P100,000.00) which is ordered segregated therefrom to satisfy the award herein given to petitioner, the lifting of said injunction, as herein ordered, is immediately executory upon promulgation hereof. No pronouncement as to costs. G.R. No. 115838 July 18, 2002

CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE CASTRO, petitioners, vs.COURT OF APPEALS and FRANCISCO ARTIGO, respondents. CARPIO, J.: The Case Before us is a Petition for Review on Certiorari1 seeking to annul the Decision of the Court of Appeals2 dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed in toto the decision3 of the Regional Trial Court of Quezon City, Branch 80, in Civil Case No. Q-89-2631. The trial court disposed as follows: "WHEREFORE, the Court finds defendants Constante and Corazon Amor de Castro jointly and solidarily liable to plaintiff the sum of: a) P303,606.24 representing unpaid commission; b) P25,000.00 for and by way of moral damages; c) P45,000.00 for and by way of attorney's fees; d) To pay the cost of this suit. Quezon City, Metro Manila, December 20, 1991." The Antecedent Facts On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De Castro ("Corazon" for brevity) to collect the unpaid balance of his broker's commission from the De Castros.4 The Court of Appeals summarized the facts in this wise: "x x x. Appellants5 were co-owners of four (4) lots located at EDSA corner New York and Denver Streets in Cubao, Quezon City. In a letter dated January 24, 1984 (Exhibit "A-1, p. 144, Records), appellee6 was authorized by appellants to act as real estate broker in the sale of these properties for the amount of P23,000,000.00, five percent (5%) of which will be given to the agent as commission. It was appellee who first found Times Transit Corporation, represented by its president Mr. Rondaris, as prospective buyer which desired to buy two (2) lots only, specifically lots 14 and 15. Eventually, sometime in May of 1985, the sale of lots 14 and 15 was consummated. Appellee received from appellants P48,893.76 as commission. It was then that the rift between the contending parties soon emerged. Appellee apparently felt short changed because according to him, his total commission should be P352,500.00 which is five percent (5%) of the agreed price of P7,050,000.00 paid by Times Transit Corporation to appellants for the two (2) lots, and that it was he who introduced the buyer to appellants and unceasingly facilitated the negotiation which ultimately led to the consummation of the sale. Hence, he sued below to collect the balance ofP303,606.24 after having received P48,893.76 in advance.1wphi1.nt On the other hand, appellants completely traverse appellee's claims and essentially argue that appellee is selfishly asking for more than what he truly deserved as commission to the prejudice of other agents who were more instrumental in the consummation of the sale. Although appellants readily concede that it was appellee who first introduced Times Transit Corp. to them, appellee was not designated by them as their exclusive real estate agent but that in fact there were more or less eighteen (18) others whose collective efforts in the long run dwarfed those of appellee's, considering that the first negotiation for the sale where appellee took active participation failed and it was these other agents who successfully brokered in the second negotiation. But despite this

and out of appellants' "pure liberality, beneficence and magnanimity", appellee nevertheless was given the largest cut in the commission (P48,893.76), although on the principle of quantum meruit he would have certainly been entitled to less. So appellee should not have been heard to complain of getting only a pittance when he actually got the lion's share of the commission and worse, he should not have been allowed to get the entire commission. Furthermore, the purchase price for the two lots was only P3.6 million as appearing in the deed of sale and not P7.05 million as alleged by appellee. Thus, even assuming that appellee is entitled to the entire commission, he would only be getting 5% of the P3.6 million, or P180,000.00." Ruling of the Court of Appeals The Court of Appeals affirmed in toto the decision of the trial court. First. The Court of Appeals found that Constante authorized Artigo to act as agent in the sale of two lots in Cubao, Quezon City. The handwritten authorization letter signed by Constante clearly established a contract of agency between Constante and Artigo. Thus, Artigo sought prospective buyers and found Times Transit Corporation ("Times Transit" for brevity). Artigo facilitated the negotiations which eventually led to the sale of the two lots. Therefore, the Court of Appeals decided that Artigo is entitled to the 5% commission on the purchase price as provided in the contract of agency. Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for failure to implead as indispensable parties the other co-owners of the two lots. The Court of Appeals explained that it is not necessary to implead the other co-owners since the action is exclusively based on a contract of agency between Artigo and Constante. Third. The Court of Appeals likewise declared that the trial court did not err in admitting parol evidence to prove the true amount paid by Times Transit to the De Castros for the two lots. The Court of Appeals ruled that evidence aliunde could be presented to prove that the actual purchase price was P7.05 million and not P3.6 million as appearing in the deed of sale. Evidence aliunde is admissible considering that Artigo is not a party, but a mere witness in the deed of sale between the De Castros and Times Transit. The Court of Appeals explained that, "the rule that oral evidence is inadmissible to vary the terms of written instruments is generally applied only in suits between parties to the instrument and strangers to the contract are not bound by it." Besides, Artigo was not suing under the deed of sale, but solely under the contract of agency. Thus, the Court of Appeals upheld the trial court's finding that the purchase price was P7.05 million and not P3.6 million. Hence, the instant petition. The Issues According to petitioners, the Court of Appeals erred in I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO IMPLEAD INDISPENSABLE PARTIES-ININTEREST; II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND THAT ARTIGO'S CLAIM HAS BEEN EXTINGUISHED BY FULL PAYMENT, WAIVER, OR ABANDONMENT; III. CONSIDERING INCOMPETENT EVIDENCE; IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY; V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEY'S FEES; VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY DAMAGES, AND ATTORNEY'S FEES. The Court's Ruling The petition is bereft of merit. First Issue: whether the complaint merits dismissal for failure to implead other co-owners as indispensable parties The De Castros argue that Artigo's complaint should have been dismissed for failure to implead all the co-owners of the two lots. The De Castros claim that Artigo always knew that the two lots were co-owned by Constante and Corazon with their other siblings Jose and Carmela whom Constante merely represented. The De Castros contend that failure to implead such

indispensable parties is fatal to the complaint since Artigo, as agent of all the four co-owners, would be paid with funds co-owned by the four co-owners. The De Castros' contentions are devoid of legal basis. An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had.7 The joinder of indispensable parties is mandatory and courts cannot proceed without their presence.8 Whenever it appears to the court in the course of a proceeding that an indispensable party has not been joined, it is the duty of the court to stop the trial and order the inclusion of such party.9 However, the rule on mandatory joinder of indispensable parties is not applicable to the instant case. There is no dispute that Constante appointed Artigo in a handwritten note dated January 24, 1984 to sell the properties of the De Castros for P23 million at a 5 percent commission. The authority was on a first come, first serve basis. The authority reads in full: "24 Jan. 84 To Whom It May Concern: This is to state that Mr. Francisco Artigo is authorized as our real estate broker in connection with the sale of our property located at Edsa Corner New York & Denver, Cubao, Quezon City. Asking price P 23,000,000.00 with 5% commission as agent's fee. C.C. de Castro owner & representing co-owners This authority is on a first-come First serve basis CAC" Constante signed the note as owner and as representative of the other coowners. Under this note, a contract of agency was clearly constituted between Constante and Artigo. Whether Constante appointed Artigo as agent, in Constante's individual or representative capacity, or both, the De Castros cannot seek the dismissal of the case for failure to implead the other co-owners as indispensable parties. The De Castros admit that the other co-owners are solidarily liable under the contract of agency ,10 citing Article 1915 of the Civil Code, which reads: Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. The solidary liability of the four co-owners, however, militates against the De Castros' theory that the other co-owners should be impleaded as indispensable parties. A noted commentator explained Article 1915 thus "The rule in this article applies even when the appointments were made by the principals in separate acts, provided that they are for the same transaction. The solidarity arises from the common interest of the principals, and not from the act of constituting the agency. By virtue of this solidarity, the agent can recover from any principal the whole compensation and indemnity owing to him by the others. The parties, however, may, by express agreement, negate this solidary responsibility. The solidarity does not disappear by the mere partition effected by the principals after the accomplishment of the agency. If the undertaking is one in which several are interested, but only some create the agency, only the latter are solidarily liable, without prejudice to the effects of negotiorum gestio with respect to the others. And if the power granted includes various transactions some of which are common and others are not, only those interested in each transaction shall be liable for it."11 When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency, each obligor may be compelled to pay the entire obligation.12 The agent may recover the whole compensation from any one of the co-principals, as in this case. Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the solidary debtors. This article reads:

Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co., Inc.13 that "x x x solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor. Article 1216 of the Civil Code says that the creditor `may proceed against anyone of the solidary debtors or some or all of them simultaneously'." (Emphasis supplied) Second Issue: whether Artigo's claim has been extinguished by full payment, waiver or abandonment The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo was given "his proportionate share and no longer entitled to any balance." According to them, Artigo was just one of the agents involved in the sale and entitled to a "proportionate share" in the commission. They assert that Artigo did absolutely nothing during the second negotiation but to sign as a witness in the deed of sale. He did not even prepare the documents for the transaction as an active real estate broker usually does. The De Castros' arguments are flimsy. A contract of agency which is not contrary to law, public order, public policy, morals or good custom is a valid contract, and constitutes the law between the parties.14 The contract of agency entered into by Constante with Artigo is the law between them and both are bound to comply with its terms and conditions in good faith. The mere fact that "other agents" intervened in the consummation of the sale and were paid their respective commissions cannot vary the terms of the contract of agency granting Artigo a 5 percent commission based on the selling price. These "other agents" turned out to be employees of Times Transit, the buyer Artigo introduced to the De Castros. This prompted the trial court to observe: "The alleged `second group' of agents came into the picture only during the so-called `second negotiation' and it is amusing to note that these (sic) second group, prominent among whom are Atty. Del Castillo and Ms. Prudencio, happened to be employees of Times Transit, the buyer of the properties. And their efforts were limited to convincing Constante to 'part away' with the properties because the redemption period of the foreclosed properties is around the corner, so to speak. (tsn. June 6, 1991). xxx To accept Constante's version of the story is to open the floodgates of fraud and deceit. A seller could always pretend rejection of the offer and wait for sometime for others to renew it who are much willing to accept a commission far less than the original broker. The immorality in the instant case easily presents itself if one has to consider that the alleged `second group' are the employees of the buyer, Times Transit and they have not bettered the offer secured by Mr. Artigo for P7 million. It is to be noted also that while Constante was too particular about the unrenewed real estate broker's license of Mr. Artigo, he did not bother at all to inquire as to the licenses of Prudencio and Castillo. (tsn, April 11, 1991, pp. 39-40)."15 (Emphasis supplied) In any event, we find that the 5 percent real estate broker's commission is reasonable and within the standard practice in the real estate industry for transactions of this nature. The De Castros also contend that Artigo's inaction as well as failure to protest estops him from recovering more than what was actually paid him. The De Castros cite Article 1235 of the Civil Code which reads: Art. 1235. When the obligee accepts the performance, knowing its incompleteness and irregularity, and without expressing any protest or objection, the obligation is deemed fully complied with. The De Castros' reliance on Article 1235 of the Civil Code is misplaced. Artigo's acceptance of partial payment of his commission neither amounts to a waiver of the balance nor puts him in estoppel. This is the import of Article 1235 which was explained in this wise:

"The word accept, as used in Article 1235 of the Civil Code, means to take as satisfactory or sufficient, or agree to an incomplete or irregular performance. Hence, the mere receipt of a partial payment is not equivalent to the required acceptance of performance as would extinguish the whole obligation."16 (Emphasis supplied) There is thus a clear distinction between acceptance and mere receipt. In this case, it is evident that Artigo merely received the partial payment without waiving the balance. Thus, there is no estoppel to speak of. The De Castros further argue that laches should apply because Artigo did not file his complaint in court until May 29, 1989, or almost four years later. Hence, Artigo's claim for the balance of his commission is barred by laches. Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.17 Artigo disputes the claim that he neglected to assert his rights. He was appointed as agent on January 24, 1984. The two lots were finally sold in June 1985. As found by the trial court, Artigo demanded in April and July of 1985 the payment of his commission by Constante on the basis of the selling price of P7.05 million but there was no response from Constante.18 After it became clear that his demands for payment have fallen on deaf ears, Artigo decided to sue on May 29, 1989. Actions upon a written contract, such as a contract of agency, must be brought within ten years from the time the right of action accrues.19 The right of action accrues from the moment the breach of right or duty occurs. From this moment, the creditor can institute the action even as the ten-year prescriptive period begins to run.20 The De Castros admit that Artigo's claim was filed within the ten-year prescriptive period. The De Castros, however, still maintain that Artigo's cause of action is barred by laches. Laches does not apply because only four years had lapsed from the time of the sale in June 1985. Artigo made a demand in July 1985 and filed the action in court on May 29, 1989, well within the ten-year prescriptive period. This does not constitute an unreasonable delay in asserting one's right. The Court has ruled, "a delay within the prescriptive period is sanctioned by law and is not considered to be a delay that would bar relief."21 In explaining that laches applies only in the absence of a statutory prescriptive period, the Court has stated -

not offered to prove that the purchase price was P7.05 Million. Finally, they argue that the courts a quo erred in giving credence to the perjured testimony of Artigo. They want the entire testimony of Artigo rejected as a falsehood because he was lying when he claimed at the outset that he was a licensed real estate broker when he was not. Whether the actual purchase price was P7.05 Million as found by the trial court and affirmed by the Court of Appeals, or P3.6 Million as claimed by the De Castros, is a question of fact and not of law. Inevitably, this calls for an inquiry into the facts and evidence on record. This we can not do. It is not the function of this Court to re-examine the evidence submitted by the parties, or analyze or weigh the evidence again.23 This Court is not the proper venue to consider a factual issue as it is not a trier of facts. In petitions for review on certiorari as a mode of appeal under Rule 45, a petitioner can only raise questions of law. Our pronouncement in the case of Cormero vs. Court of Appeals24 bears reiteration: "At the outset, it is evident from the errors assigned that the petition is anchored on a plea to review the factual conclusion reached by the respondent court. Such task however is foreclosed by the rule that in petitions for certiorari as a mode of appeal, like this one, only questions of law distinctly set forth may be raised. These questions have been defined as those that do not call for any examination of the probative value of the evidence presented by the parties. (Uniland Resources vs. Development Bank of the Philippines, 200 SCRA 751 [1991] citing Goduco vs. Court of appeals, et al., 119 Phil. 531; Hernandez vs. Court of Appeals, 149 SCRA 67). And when this court is asked to go over the proof presented by the parties, and analyze, assess and weigh them to ascertain if the trial court and the appellate court were correct in according superior credit to this or that piece of evidence and eventually, to the totality of the evidence of one party or the other, the court cannot and will not do the same. (Elayda vs. Court of Appeals, 199 SCRA 349 [1991]). Thus, in the absence of any showing that the findings complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand, for this court is not expected or required to examine or contrast the oral and documentary evidence submitted by the parties. (Morales vs. Court of Appeals, 197 SCRA 391 [1991] citing Santa Ana vs. Hernandez, 18 SCRA 973 [1966])."

We find no reason to depart from this principle. The trial and appellate courts are in a much better position to evaluate properly the evidence. Hence, we find no other recourse but to affirm their finding on the actual purchase "Laches is recourse in equity. Equity, however, is applied only in price.1wphi1.nt the absence, never in contravention, of statutory law. Thus, Fourth Issue: whether award of moral damages and attorney's fees is laches, cannot, as a rule, be used to abate a collection suit proper filed within the prescriptive period mandated by the Civil Code."22 The De Castros claim that Artigo failed to prove that he is entitled to moral damages and attorney's fees. The De Castros, however, cite no concrete Clearly, the De Castros' defense of laches finds no support in law, equity or reason except to say that they are the ones entitled to damages since the jurisprudence. case was filed to harass and extort money from them. Third issue: whether the determination of the purchase price was made Law and jurisprudence support the award of moral damages and attorney's in violation of the Rules on Evidence fees in favor of Artigo. The award of damages and attorney's fees is left to The De Castros want the Court to re-examine the probative value of the the sound discretion of the court, and if such discretion is well exercised, as evidence adduced in the trial court to determine whether the actual selling in this case, it will not be disturbed on appeal.25 Moral damages may be price of the two lots was P7.05 million and not P3.6 million. The De Castros awarded when in a breach of contract the defendant acted in bad faith, or in contend that it is erroneous to base the 5 percent commission on a purchase wanton disregard of his contractual obligation.26 On the other hand, price of P7.05 million as ordered by the trial court and the appellate court. attorney's fees are awarded in instances where "the defendant acted in gross The De Castros insist that the purchase price is P3.6 million as expressly and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and stated in the deed of sale, the due execution and authenticity of which was demandable claim."27 There is no reason to disturb the trial court's finding admitted during the trial. that "the defendants' lack of good faith and unkind treatment of the plaintiff in refusing to give his due commission deserve censure." This warrants the The De Castros believe that the trial and appellate courts committed a award of P25,000.00 in moral damages and P45,000.00 in attorney's fees. mistake in considering incompetent evidence and disregarding the best The amounts are, in our view, fair and reasonable. Having found a buyer for evidence and parole evidence rules. They claim that the Court of Appeals the two lots, Artigo had already performed his part of the bargain under the erroneously affirmed sub silentio the trial court's reliance on the various contract of agency. The De Castros should have exercised fairness and correspondences between Constante and Times Transit which were mere good judgment in dealing with Artigo by fulfilling their own part of the bargain photocopies that do not satisfy the best evidence rule. Further, these letters - paying Artigo his 5 percent broker's commission based on the actual covered only the first negotiations between Constante and Times Transit purchase price of the two lots. WHEREFORE, the petition is denied for lack which failed; hence, these are immaterial in determining the final purchase of merit. The Decision of the Court of Appeals dated May 4, 1994 in CA-G.R. price. CV No. 37996 is AFFIRMED in toto. SO ORDERED. The De Castros further argue that if there was an undervaluation, Artigo who G.R. No. 76931 May 29, 1991 signed as witness benefited therefrom, and being equally guilty, should be left where he presently stands. They likewise claim that the Court of Appeals erred in relying on evidence which were not offered for the purpose considered by the trial court. Specifically, Exhibits "B", "C", "D" and "E" were

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner, vs. COURT OF APPEALS and AMERICAN AIR-LINES INCORPORATED, respondents. G.R. No. 76933 May 29, 1991 AMERICAN AIRLINES, INCORPORATED, petitioner, vs. COURT OF APPEALS and ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, INCORPORATED,respondents. PADILLA, J.:p This case is a consolidation of two (2) petitions for review on certiorari of a decision 1 of the Court of Appeals in CA-G.R. No. CV-04294, entitled "American Airlines, Inc. vs. Orient Air Services and Hotel Representatives, Inc." which affirmed, with modification, the decision 2 of the Regional Trial Court of Manila, Branch IV, which dismissed the complaint and granted therein defendant's counterclaim for agent's overriding commission and damages. The antecedent facts are as follows: On 15 January 1977, American Airlines, Inc. (hereinafter referred to as American Air), an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air Services and Hotel Representatives (hereinafter referred to as Orient Air), entered into a General Sales Agency Agreement (hereinafter referred to as the Agreement), whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. Pertinent provisions of the agreement are reproduced, to wit: WITNESSETH In consideration of the mutual convenants herein contained, the parties hereto agree as follows: 1. Representation of American by Orient Air Services Orient Air Services will act on American's behalf as its exclusive General Sales Agent within the Philippines, including any United States military installation therein which are not serviced by an Air Carrier Representation Office (ACRO), for the sale of air passenger transportation. The services to be performed by Orient Air Services shall include: (a) soliciting and promoting passenger traffic for the services of American and, if necessary, employing staff competent and sufficient to do so; (b) providing and maintaining a suitable area in its place of business to be used exclusively for the transaction of the business of American; (c) arranging for distribution of American's timetables, tariffs and promotional material to sales agents and the general public in the assigned territory; (d) servicing and supervising of sales agents (including such sub-agents as may be appointed by Orient Air Services with the prior written consent of American) in the assigned territory including if required by American the control of remittances and commissions retained; and (e) holding out a passenger reservation facility to sales agents and the general public in the assigned territory. In connection with scheduled or non-scheduled air passenger transportation within the United States, neither Orient Air Services nor its sub-agents will perform services for any other air carrier similar to those to be performed hereunder for American without the prior written consent of American. Subject to periodic instructions and continued consent from American,

Orient Air Services may sell air passenger transportation to be performed within the United States by other scheduled air carriers provided American does not provide substantially equivalent schedules between the points involved. xxx xxx xxx 4. Remittances Orient Air Services shall remit in United States dollars to American the ticket stock or exchange orders, less commissions to which Orient Air Services is entitled hereunder, not less frequently than semi-monthly, on the 15th and last days of each month for sales made during the preceding half month. All monies collected by Orient Air Services for transportation sold hereunder on American's ticket stock or on exchange orders, less applicable commissions to which Orient Air Services is entitled hereunder, are the property of American and shall be held in trust by Orient Air Services until satisfactorily accounted for to American. 5. Commissions American will pay Orient Air Services commission on transportation sold hereunder by Orient Air Services or its sub-agents as follows: (a) Sales agency commission American will pay Orient Air Services a sales agency commission for all sales of transportation by Orient Air Services or its sub-agents over American's services and any connecting through air transportation, when made on American's ticket stock, equal to the following percentages of the tariff fares and charges: (i) For transportation solely between points within the United States and between such points and Canada: 7% or such other rate(s) as may be prescribed by the Air Traffic Conference of America. (ii) For transportation included in a through ticket covering transportation between points other than those described above: 8% or such other rate(s) as may be prescribed by the International Air Transport Association. (b) Overriding commission In addition to the above commission American will pay Orient Air Services an overriding commission of 3% of the tariff fares and charges for all sales of transportation over American's service by Orient Air Service or its subagents. xxx xxx xxx 10. Default If Orient Air Services shall at any time default in observing or performing any of the provisions of this Agreement or shall become bankrupt or make any assignment for the benefit of or enter into any agreement or promise with its creditors or go into liquidation, or suffer any of its goods to be taken in execution, or if it ceases to be in business, this Agreement may, at the option of American, be terminated forthwith and American may, without prejudice to any of its rights under this Agreement, take possession of any ticket forms, exchange orders, traffic material or other property or funds belonging to American. 11. IATA and ATC Rules The provisions of this Agreement are subject to any applicable rules or resolutions of the International Air Transport Association and the Air Traffic Conference of

America, and such rules or resolutions shall control in the event of any conflict with the provisions hereof. xxx xxx xxx 13. Termination American may terminate the Agreement on two days' notice in the event Orient Air Services is unable to transfer to the United States the funds payable by Orient Air Services to American under this Agreement. Either party may terminate the Agreement without cause by giving the other 30 days' notice by letter, telegram or cable. xxx xxx xxx 3 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 for the months of January to March 1981 in the amount of US $254,400.40, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement in accordance with Paragraph 13 thereof (Termination). Four (4) days later, or 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 or Garnishment, Mandatory Injunction and Restraining Order 4 averring the aforesaid basis for the termination of the Agreement as well as therein defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff." 5 In its Answer 6 with counterclaim dated 9 July 1981, defendant Orient Air denied the material allegations of the complaint with respect to plaintiff's entitlement to alleged unremitted amounts, contending that after application thereof to the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions. Further, the defendant contended that the actions taken by American Air in the course of terminating the Agreement as well as the termination itself were untenable, Orient Air claiming that American Air's precipitous conduct had occasioned prejudice to its business interests. Finding that the record and the evidence substantiated the allegations of the defendant, the trial court ruled in its favor, rendering a decision dated 16 July 1984, the dispositive portion of which reads: WHEREFORE, all the foregoing premises considered, judgment is hereby rendered in favor of defendant and against plaintiff dismissing the complaint and holding the termination made by the latter as affecting the GSA agreement illegal and improper and order the plaintiff to reinstate defendant as its general sales agent for passenger tranportation in the Philippines in accordance with said GSA agreement; plaintiff is ordered to pay defendant the balance of the overriding commission on total flown revenue covering the period from March 16, 1977 to December 31, 1980 in the amount of US$84,821.31 plus the additional amount of US$8,000.00 by way of proper 3% overriding commission per month commencing from January 1, 1981 until such reinstatement or said amounts in its Philippine peso equivalent legally prevailing at the time of payment plus legal interest to commence from the filing of the counterclaim up to the time of payment. Further, plaintiff is directed to pay defendant the amount of One Million Five Hundred Thousand (Pl,500,000.00) pesos as and for exemplary damages; and the amount of Three Hundred Thousand (P300,000.00) pesos as and by way of attorney's fees. Costs against plaintiff. 7 On appeal, the Intermediate Appellate Court (now Court of Appeals) in a decision promulgated on 27 January 1986, affirmed the findings of the court a quo on their material points but with some modifications with respect to the monetary awards granted. The dispositive portion of the appellate court's decision is as follows: WHEREFORE, with the following modifications 1) American is ordered to pay Orient the sum of US$53,491.11 representing the balance of the latter's overriding commission covering the period March 16, 1977 to December 31, 1980, or its Philippine peso

equivalent in accordance with the official rate of exchange legally prevailing on July 10, 1981, the date the counterclaim was filed; 2) American is ordered to pay Orient the sum of US$7,440.00 as the latter's overriding commission per month starting January 1, 1981 until date of termination, May 9, 1981 or its Philippine peso equivalent in accordance with the official rate of exchange legally prevailing on July 10, 1981, the date the counterclaim was filed 3) American is ordered to pay interest of 12% on said amounts from July 10, 1981 the date the answer with counterclaim was filed, until full payment; 4) American is ordered to pay Orient exemplary damages of P200,000.00; 5) American is ordered to pay Orient the sum of P25,000.00 as attorney's fees. the rest of the appealed decision is affirmed. Costs against American. 8 American Air moved for reconsideration of the aforementioned decision, 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 respect to the monetary awards. The Court of Appeals, by resolution promulgated on 17 December 1986, denied American Air's motion and with respect to that of Orient Air, ruled thus: Orient's motion for partial reconsideration is denied insofar as it prays for affirmance of the trial court's award of exemplary damages and attorney's fees, but granted insofar as the rate of exchange is concerned. The decision of January 27, 1986 is modified in paragraphs (1) and (2) of the dispositive part so that the payment of the sums mentioned therein shall be at their Philippine peso equivalent in accordance with the official rate of exchange legally prevailing on the date of actual payment. 9 Both parties appealed the aforesaid resolution and decision of the respondent court, Orient Air as petitioner in G.R. No. 76931 and American Air as petitioner in G.R. No. 76933. By resolution 10 of this Court dated 25 March 1987 both petitions were consolidated, hence, the case at bar. The principal issue for resolution by the Court is the extent of Orient Air's right to the 3% overriding commission. It is the stand of American Air that such commission is based only on sales of its services actually negotiated or transacted by Orient Air, otherwise referred to as "ticketed sales." As basis thereof, primary reliance is placed upon paragraph 5(b) of the Agreement which, in reiteration, is quoted as follows: 5. Commissions 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 its sub-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, to be entitled to the 3% overriding commission, the sale must be made by Orient Air and the sale must be done with the use of American Air's ticket stocks. On the other hand, Orient Air contends that the contractual stipulation of a 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 justification of its submission, invokes its designation as the exclusive General Sales Agent of American Air, with the corresponding obligations arising from such agency, such as, the promotion and solicitation for the services of its principal. In effect, by virtue of such exclusivity, "all

sales of transportation over American Air's services are necessarily by Orient Air." 11 It is a well settled legal principle that in the interpretation of a contract, the entirety thereof must be taken into consideration to ascertain the meaning of its provisions. 12 The various stipulations in the contract must be read together to give effect to all. 13 After a careful examination of the records, 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."

agent for passenger transportation in the Philippines in accordance with said GSA Agreement."

By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality to Orient Air. Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . 17 (emphasis supplied) In an agentprincipal relationship, the personality of 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. As the designated exclusive General Sales Agent of American Air, Orient Air Such a relationship can only be effected with the consent of the principal, was responsible for the promotion and marketing of American Air's services which must not, in any way, be compelled by law or by any court. The for air passenger transportation, and the solicitation of sales therefor. In Agreement itself between the parties states that "either party may terminate return for such efforts and services, Orient Air was to be paid commissions of the Agreement without cause by giving the other 30 days' notice by letter, two (2) kinds: first, a sales agency commission, ranging from 7-8% of tariff telegram or cable." (emphasis supplied) We, therefore, set aside the portion fares and charges from sales by Orient Air when made on American Air of the ruling of the respondent appellate court reinstating Orient Air as ticket stock; and second, an overriding commission of 3% of tariff fares and general sales agent of American Air. WHEREFORE, with the foregoing charges for allsales of passenger transportation over American Air services. modification, the Court AFFIRMS the decision and resolution of the It is immediately observed that the precondition attached to the first type of respondent Court of Appeals, dated 27 January 1986 and 17 December commission does not obtain for the second type of commissions. The latter 1986, respectively. Costs against petitioner American Air. SO ORDERED. 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 G.R. No. L-24332 January 31, 1978 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 RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS, petitioner, vs. FELIX GO CHAN & SONS REALTY American Air ticket stock would erase any distinction between the two (2) CORPORATION and COURT OF APPEALS, respondents. types of commissions and would lead to the absurd conclusion that the parties had entered into a contract with meaningless provisions. Such an MUOZ PALMA, J.: interpretation must at all times be avoided with every effort exerted to This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of harmonize the entire Agreement. his principal, Concepcion Rallos, sold the latter's undivided share in a parcel An additional point before finally disposing of this issue. It is clear from the of land pursuant to a power of attorney which the principal had executed in records that American Air was the party responsible for the preparation of the favor. The administrator of the estate of the went to court to have the sale Agreement. Consequently, any ambiguity in this "contract of adhesion" is to declared uneanforceable and to recover the disposed share. The trial court be taken "contra proferentem", i.e., construed against the party who caused granted the relief prayed for, but upon appeal the Court of Appeals uphold the ambiguity and could have avoided it by the exercise of a little more care. the validity of the sale and the complaint. Thus, Article 1377 of the Civil Code provides that the interpretation of Hence, this Petition for Review on certiorari. obscure words or stipulations in a contract shall not favor the party who caused the The following facts are not disputed. Concepcion and Gerundia both obscurity. 14 To put it differently, when several interpretations of a provision surnamed Rallos were sisters and registered co-owners of a parcel of land are otherwise equally proper, that interpretation or construction is to be known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer adopted which is most favorable to the party in whose favor the provision Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the was made and who did not cause the ambiguity. 15 We therefore agree with sisters executed a special power of attorney in favor of their brother, Simeon the respondent appellate court's declaration that: Rallos, authorizing him to sell for and in their behalf lot 5983. On March 3, Any ambiguity in a contract, whose terms are susceptible 1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 5983 to of different interpretations, must be read against the Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. The party who drafted it. 16 deed of sale was registered in the Registry of Deeds of Cebu, TCT No. We now turn to the propriety of American Air's termination of the Agreement. 11118 was cancelled, and a new transfer certificate of Title No. 12989 was The respondent appellate court, on this issue, ruled thus: issued in the named of the vendee. It is not denied that Orient withheld remittances but such action finds justification from paragraph 4 of the Agreement, Exh. F, which provides for remittances to American less commissions to which Orient is entitled, and from paragraph 5(d) which specifically allows Orient to retain the full amount of its commissions. Since, as stated ante, Orient is entitled to the 3% override. American's premise, therefore, for the cancellation of the Agreement did not exist. . . ." On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a complaint docketed as Civil Case No. R-4530 of 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 Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of suit. 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 complaint was amended twice; defendant Corporation's Answer contained a crossclaim against its co-defendant, Simon Rallos while the latter filed third-party complaint against his sister, Gerundia Rallos While the case was pending in the trial court, both Simon and his sister Gerundia died and they were substituted by the respective administrators of their estates.

We agree with the findings of the respondent appellate court. As earlier established, Orient Air was entitled to an overriding commission based on total flown revenue. American Air's perception that Orient Air was remiss or in default of its obligations under the Agreement was, in fact, a situation where the latter acted in accordance with the Agreementthat of retaining from the sales proceeds its accrued commissions before remitting the balance to American Air. Since the latter was still obligated to Orient Air by way of such commissions. Orient Air was clearly justified in retaining and refusing to remit the sums claimed by American Air. The latter's termination After trial the court a quo rendered judgment with the following dispositive of the Agreement was, therefore, without cause and basis, for which it should portion: be held liable to Orient Air. A. On Plaintiffs Complaint On the matter of damages, the respondent appellate court modified by (1) Declaring the deed of sale, Exh. reduction the trial court's award of exemplary damages and attorney's fees. "C", null and void insofar as the oneThis Court sees no error in such modification and, thus, affirms the same. half pro-indiviso share of Concepcion It is believed, however, that respondent appellate court erred in affirming the Rallos in the property in question, rest of the decision of the trial court. We refer particularly to the lower court's decision ordering American Air to "reinstate defendant as its general sales

Lot 5983 of the Cadastral Survey of Cebu is concerned;

(2) Ordering the Register of Deeds of Cebu City to cancel Transfer ART. 1403. The following contracts are unenforceable, Certificate of Title No. 12989 unless they are justified: covering Lot 5983 and to issue in lieu (1) Those entered into in the name of another person by thereof another in the names of one who hi - been given no authority or legal FELIX GO CHAN & SONS REALTY representation or who has acted beyond his powers; ... CORPORATION and the Estate of Concepcion Rallos in the proportion Out of the above given principles, sprung the creation and acceptance of of one-half (1/2) share each prothe relationship of agency whereby one party, caged the principal indiviso; (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. The essential elements of (3) Ordering Felix Go Chan & Sons agency are: (1) there is consent, express or implied of the parties to Realty Corporation to deliver the establish the relationship; (2) the object is the execution of a juridical act in possession of an undivided one-half relation to a third person; (3) the agents acts as a representative and not for (1/2) share of Lot 5983 to the herein himself, and (4) the agent acts within the scope of his authority. 5 plaintiff; Agency is basically personal representative, and derivative in nature. The (4) Sentencing the defendant Juan T. authority of the agent to act emanates from the powers granted to him by his Borromeo, administrator of the principal; his act is the act of the principal if done within the scope of the Estate of Simeon Rallos, to pay to authority. Qui facit per alium facit se. "He who acts through another acts plaintiff in concept of reasonable himself". 6 attorney's fees the sum of P1,000.00; and 2. There are various ways of extinguishing agency, 7 but her We are concerned only with one cause death of the principal Paragraph 3 of Art. (5) Ordering both defendants to pay 1919 of the Civil Code which was taken from Art. 1709 of the Spanish Civil the costs jointly and severally. Code provides: B. On GO CHANTS Cross-Claim: ART. 1919. Agency is extinguished. (1) Sentencing the co-defendant xxx xxx xxx Juan T. Borromeo, administrator of the Estate of Simeon Rallos, to pay 3. By the death, civil interdiction, insanity or insolvency of to defendant Felix Co Chan & Sons the principal or of the agent; ... (Emphasis supplied) Realty Corporation the sum of P5,343.45, representing the price of By reason of the very nature of the relationship between Principal and agent, agency is extinguished by the death of the principal or the agent. This is the one-half (1/2) share of lot 5983; law in this jurisdiction. 8 (2) Ordering co-defendant Juan T. Manresa commenting on Art. 1709 of the Spanish Civil Code explains that Borromeo, administrator of the the rationale for the law is found in the juridical basis of agency which Estate of Simeon Rallos, to pay in is representation Them being an in. integration of the personality of the concept of reasonable attorney's fees to Felix Go Chan & Sons Realty principal integration that of the agent it is not possible for the representation to continue to exist once the death of either is establish. Pothier agrees with Corporation the sum of P500.00. Manresa that by reason of the nature of agency, death is a necessary cause C. On Third-Party Complaint of defendant Juan T. for its extinction. Laurent says that the juridical tie between the principal and Borromeo administrator of Estate of Simeon Rallos, the agent is severed ipso jure upon the death of either without necessity for against Josefina Rallos special administratrix of the the heirs of the fact to notify the agent of the fact of death of the former. 9 Estate of Gerundia Rallos: The same rule prevails at common law the death of the principal effects (1) Dismissing the third-party complaint without prejudice instantaneous and absolute revocation of the authority of the agent unless to filing either a complaint against the regular the Power be coupled with an interest. 10 This is the prevalent rule in administrator of the Estate of Gerundia Rallos or a claim American Jurisprudence where it is well-settled that a power without an in the Intestate-Estate of Cerundia Rallos, covering the interest confer. red upon an agent is dissolved by the principal's death, and same subject-matter of the third-party complaint, at bar. any attempted execution of the power afterward is not binding on the heirs or (pp. 98-100, Record on Appeal) representatives of the deceased. 11 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 one-half (1/2) share of Concepcion Rallos. The appellate tribunal, as adverted to earlier, resolved the appeal on November 20, 1964 in favor of the appellant corporation sustaining the sale in question. 1 The appellee administrator, Ramon Rallos, moved for a reconsider of the decision but the same was denied in a resolution of March 4, 1965. 2 What is the legal effect of an act performed by an agent after the death of his principal? Applied more particularly to the instant case, We have the query. is the sale of the undivided share of Concepcion Rallos in lot 5983 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 principal on the authority of the agent to act for and in behalf of the latter? Is the fact of knowledge of the death of the principal a material factor in determining the legal effect of an act performed after such death? Before proceedings to the issues, We shall briefly restate certain principles of law relevant to the matter tinder consideration. 1. It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. 3 A contract entered into in the name of another by one who has no authority or the legal representation or who has acted beyond his powers, shall be unenforceable, unless it is 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 determinative point in issue in this litigation. It is the contention of respondent corporation which was sustained by respondent court that 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 buying the property in question. Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore-mentioned. ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good. faith.

ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. 4 Article 1403 (1) of the same Code also provides:

Article 1930 is not involved because admittedly the special power of attorney executed in favor of Simeon Rallos was not coupled with an interest. Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of his principal is valid and effective only under two conditions, viz: (1) that the agent acted without knowledge of the death of the principal and (2) that the third person who contracted with the agent himself acted in good faith. Good faith here means that the third person was not aware of the death of the principal at the time he contracted with said agent. These two requisites must concur the absence of one will render the act of the agent invalid and unenforceable. In the instant case, 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 Lot No. 5983 to respondent corporation. The knowledge of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the trial court. 12 That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact of the court a quo 13 and of respondent appellate 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 name of both his sisters Concepcion and Gerundia Rallos without informing appellant (the realty corporation) of the death of the former. 14 On the basis of the established knowledge of Simon Rallos concerning the death of his principal Concepcion Rallos, Article 1931 of the Civil Code is inapplicable. The law expressly requires for its application lack of knowledge on the part of the agent of the death of his principal; it is not enough that the third person acted in good faith. Thus in Buason & Reyes v. 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 of the principal because it was not shown that the agent knew of his principal's demise. 15 To the same effect is the case of Herrera, et al., v. Luy Kim Guan, et al., 1961, where in the words of Justice Jesus Barrera the Court stated: ... even granting arguemendo that Luis Herrera did die in 1936, plaintiffs presented no proof and there is no indication 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 death 6f the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment of the agency. (1 SCRA 406, 412) 4. In sustaining the validity of the sale to respondent consideration the Court of Appeals reasoned out that there is no provision in the Code which provides that whatever is done by an agent having knowledge of the death of his principal is void even with respect to third persons who may have contracted with him in good faith and without knowledge of the death of the principal. 16 We cannot see the merits of the foregoing argument as it ignores the existence of the general rule enunciated in Article 1919 that the death of the principal extinguishes the agency. That being the general rule it follows afortiori that 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 aforementioned Articles 1930 and 1931. Article 1931, being an exception to the general rule, is to be strictly construed, it is not to be given an interpretation or application beyond the clear import of its terms for otherwise the courts will be involved in a process of legislation outside of their judicial function. 5. Another argument advanced by respondent court is that the vendee acting in good faith relied on the power of attorney which was duly registered on the original certificate of title recorded in the Register of Deeds of the province of Cebu, that no notice of the death was aver annotated on said certificate of title by the heirs of the principal and accordingly they must suffer the consequences of such omission. 17 To support such argument reference is made to a portion in Manresa's Commentaries which We quote: If the agency has been granted for the purpose of contracting with certain persons, the revocation must be made known to them. But if the agency is general iii nature, without reference to particular person with whom the agent is to contract, it is sufficient that the principal exercise due diligence to make the revocation of the agency publicity known. In case of a general power which does not specify the persons to whom represents' on should be made, it is the general opinion that all acts, executed with third persons

who contracted in good faith, Without knowledge of the revocation, are valid. In such case, the principal may exercise his right against the agent, who, knowing of the revocation, continued to assume a personality which he no longer had. (Manresa Vol. 11, pp. 561 and 575; pp. 15-16, rollo) The above discourse however, treats of revocation by an act of the principal as a mode of terminating an agency which is to be distinguished from revocation by operation of law such as death of the principal which obtains in this case. On page six of this Opinion We stressed that by reason of the very nature of the relationship between principal and agent, agency is extinguished ipso jure upon the death of either principal or agent. Although a revocation of a power of attorney to be effective must be communicated to the parties concerned, 18 yet a revocation by operation of law, such as by death of the principal is, as a rule, instantaneously effective inasmuch as "by legal fiction the agent's exercise of authority is regarded as an execution of the principal's continuing will. 19 With death, the principal's will ceases or is the of authority is extinguished. The Civil Code does not impose a duty on the heirs to notify the agent of the death of the principal What the Code provides in Article 1932 is that, 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 principal was registered on the certificate of title of the property in the Office of the Register of Deeds, is not fatal to the cause of the estate of the principal 6. Holding that the good faith of a third person in said with an agent affords the former sufficient protection, respondent court drew a "parallel" between 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 it in bad faith even to the extent of foregoing or falsifying the deed of sale in his favor the registered owner has no recourse against such innocent purchaser for value but only against the forger. 20 To support the correctness of this respondent corporation, in its brief, cites the case of Blondeau, et al., v. Nano and Vallejo, 61 Phil. 625. We quote from the brief: In the case of Angel Blondeau et al. v. Agustin Nano et al., 61 Phil. 630, one Vallejo was a co-owner of lands with Agustin Nano. The latter had a power of attorney supposedly executed by Vallejo Nano in his favor. Vallejo delivered to Nano his land titles. The power was registered in the Office of the Register of Deeds. When the lawyer-husband of Angela Blondeau went to that Office, he found all in order including the power of attorney. But Vallejo denied having executed the power The lower court sustained Vallejo and the plaintiff Blondeau appealed. Reversing the decision of the court a quo, the Supreme Court, quoting the ruling in the case of Eliason v. Wilborn,261 U.S. 457, held: But there is a narrower ground on which the defenses of the defendantappellee must be overruled. Agustin Nano had possession of Jose Vallejo's title papers. Without those title papers handed over to Nano with the acquiescence of Vallejo, a fraud could not have been perpetuated. When Fernando de la Canters, a member of the Philippine Bar and the husband of Angela Blondeau, the principal plaintiff, searched the registration record, he found them in due form including the power of attorney of Vallajo in favor of Nano. If this had not been so and if thereafter the proper notation of the encumbrance could not have been made, Angela Blondeau would not have sent P12,000.00 to the defendant Vallejo.' An executed transfer of registered lands placed by the registered owner thereof in the hands of another operates as a representation to a third party that

the holder of the transfer is authorized to deal with the land. As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of coincidence bear the loss. (pp. 1921) 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 knowledge of such death. The situation is expressly covered by a provision of law on agency the terms of which are clear and unmistakable leaving no 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 55 of the Land Registration Law which in part provides: xxx xxx xxx The production of the owner's duplicate certificate whenever any voluntary instrument is presented for registration shall be conclusive authority from the registered owner to the register of deeds to enter a new certificate or to make a memorandum of registration in accordance with such instruments, and the new certificate or memorandum Shall be binding upon the registered owner and upon all persons claiming under him in favor of every purchaser for value and in good faith:Provided however, That in all cases of registration provided by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the right, of any innocent holder for value of a certificate of title. ... (Act No. 496 as amended)

leading case so holding is that of Cassiday v. McKenzie, 4 Watts & S. (Pa) 282, 39 Am. 76, where, in an elaborate opinion, this view ii broadly announced. It is referred to, and seems to have been followed, in the case ofDick v. Page, 17 Mo. 234, 57 AmD 267; but in this latter case it appeared that the estate of the deceased principal had received the benefit of the money paid, and therefore the representative of the estate might well have been held to be estopped from suing for it again. . . . These cases, in so far, at least, as they announce the doctrine under discussion, are exceptional. The Pennsylvania Case, supra (Cassiday v. McKenzie 4 Watts & S. 282, 39 AmD 76), is believed to stand almost, if not quite, alone in announcing the principle in its broadest scope. (52, Misc. 353, 357, cited in 2 C.J. 549) So also in Travers v. Crane, speaking of Cassiday v. McKenzie, and pointing out that the opinion, except so far as it related to the particular facts, was a mere dictum, Baldwin J. said: The opinion, therefore, of the learned Judge may be regarded more as an extrajudicial indication of his views on the general subject, than as the adjudication of the Court upon the point in question. But accordingly all power weight to this opinion, as the judgment of a of great respectability, it stands alone among common law authorities and is opposed by an array too formidable to permit us to following it. (15 Cal. 12,17, cited in 2 C.J. 549)

Whatever conflict of legal opinion was generated by Cassiday v. McKenzie in American jurisprudence, no such conflict exists in our own for the simple reason that our statute, the Civil Code, expressly provides for two exceptions to the general rule that death of the principal revokes ipso jure the agency, to wit: (1) that the agency is coupled with an interest (Art 1930), and (2) that the act of the agent was executed without knowledge of the death of the 7. One last point raised by respondent corporation in support of the appealed principal and the third person who contracted with the agent acted also in decision is an 1842 ruling of the Supreme Court of Pennsylvania in Cassiday good faith (Art. 1931). Exception No. 2 is the doctrine followed in Cassiday, and again We stress the indispensable requirement that the agent acted v. McKenzie wherein payments made to an agent after the death of the principal were held to be "good", "the parties being ignorant of the death". Let without knowledge or notice of the death of the principal In the case before Us the agent Ramon Rallos executed the sale notwithstanding notice of the us take note that the Opinion of Justice Rogers was premised on the death of his principal Accordingly, the agent's act is unenforceable against statement that the parties were ignorant of the death of the principal. We the estate of his principal. IN VIEW OF ALL THE FOREGOING, We set quote from that decision the following: aside the ecision of respondent appellate court, and We affirm en toto the ... Here the precise point is, whether a payment to an judgment rendered by then Hon. Amador E. Gomez of the Court of First agent when the Parties are ignorant of the death is a Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with costs against good payment. in addition to the case in Campbell before respondent realty corporation at all instances. So Ordered. cited, the same judge Lord Ellenboruogh, has decided in November 8, 1919 5 Esp. 117, the general question that a payment after the G.R. No. L-15568 death of principal is not good. Thus, a payment of sailor's W. G. PHILPOTTS, petitioner, vs. PHILIPPINE MANUFACTURING wages to a person having a power of attorney to receive COMPANY and F. N. BERRY, respondents. them, has been held void when the principal was dead at the time of the payment. If, by this case, it is meant STREET, J.: merely to decide the general proposition that by The petitioner, W. G. Philpotts, a stockholder in the Philippine operation of law the death of the principal is a revocation Manufacturing Company, one of the respondents herein, seeks by this of the powers of the attorney, no objection can be taken proceeding to obtain a writ of mandamus to compel the respondents to to it. But if it intended to say that his principle applies permit the plaintiff, in person or by some authorized agent or attorney, to where there was 110 notice of death, or opportunity of inspect and examine the records of the business transacted by said twice I must be permitted to dissent from it. company since January 1, 1918. The petition is filed originally in this court ... That a payment may be good today, or bad tomorrow, under the authority of section 515 of the Code of Civil Procedure, which from the accident circumstance of the death of the gives to this tribunal concurrent jurisdiction with the Court of First Instance in principal, which he did not know, and which by no cases, among others, where any corporation or person unlawfully excludes possibility could he know? It would be unjust to the agent the plaintiff from the use and enjoyment of some right to which he is entitled. and unjust to the debtor. In the civil law, the acts of the The respondents interposed a demurrer, and the controversy is now before agent, done bona fide in ignorance of the death of his us for the determination of the questions thus presented. principal are held valid and binding upon the heirs of the The first point made has reference to a supposed defect of parties, latter. The same rule holds in the Scottish law, and I and it is said that the action can not be maintained jointly against the cannot believe the common law is so unreasonable... (39 corporation and its secretary without the addition of the allegation that the Am. Dec. 76, 80, 81; emphasis supplied) latter is the custodian of the business records of the respondent company. To avoid any wrong impression which the Opinion in Cassiday v. By the plain language of sections 515 and 222 of our Code of Civil McKenzie may evoke, mention may be made that the above represents the Procedure, the right of action in such a proceeding as this is given against minority view in American jurisprudence. Thus in Clayton v. Merrett, the the corporation; and the respondent corporation in this case was the only Court said. absolutely necessary party. In the Ohio case of Cincinnati Volksblatt There are several cases which seem to hold that Co. vs. Hoffmister (61 Ohio St., 432; 48 L. R. A., 735), only the corporation although, as a general principle, death revokes an was named as defendant, while the complaint, in language almost identical agency and renders null every act of the agent thereafter with that in the case at bar, alleged a demand upon and refusal by the performed, yet that where a payment has been made in corporation. ignorance of the death, such payment will be good. The

Nevertheless the propriety of naming the secretary of the corporation as a codefendant cannot be questioned, since such official is customarily charged with the custody of all documents, correspondence, and records of a corporation, and he is presumably the person against whom the personal orders of the court would be made effective in case the relief sought should be granted. Certainly there is nothing in the complaint to indicate that the secretary is an improper person to be joined. The petitioner might have named the president of the corporation as a respondent also; and this official might be brought in later, even after judgment rendered, if necessary to the effectuation of the order of the court. Section 222 of our Code of Civil Procedure is taken from the California Code, and a decision of the California Supreme Court Barber vs. Mulford (117 Cal., 356) is quite clear upon the point that both the corporation and its officers may be joined as defendants. The real controversy which has brought these litigants into court is upon the question argued in connection with the second ground of demurrer, namely, whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by the stockholder in person. There is no pretense that the respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petition prays for a peremptory order commanding the respondents to place the records of all business transactions of the company, during a specified period, at the disposal of the plaintiff or his duly authorized agent or attorney, it being evident that the petitioner desires to exercise said right through an agent or attorney. In the argument in support of the demurrer it is conceded by counsel for the respondents that there is a right of examination in the stockholder granted under section 51 of the Corporation Law, but it is insisted that this right must be exercised in person. The pertinent provision of our law is found in the second paragraph of section 51 of Act No. 1459, which reads as follows: "The record of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member or stockholder of the corporation at reasonable hours." This provision is to be read of course in connecting with the related provisions of sections 51 and 52, defining the duty of the corporation in respect to the keeping of its records. Now it is our opinion, and we accordingly hold, that the right of inspection given to a stockholder in the provision above quoted can be exercised either by himself or by any proper representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another; and we find nothing in the statute that would justify us in qualifying the right in the manner suggested by the respondents. This conclusion is supported by the undoubted weight of authority in the United States, where it is generally held that the provisions of law conceding the right of inspection to stockholders of corporations are to be liberally construed and that said right may be exercised through any other properly authorized person. As was said in Foster vs. White (86 Ala., 467), "The right may be regarded as personal, in the sense that only a stockholder may enjoy it; but the inspection and examination may be made by another. Otherwise it would be unavailing in many instances." An observation to the same effect is contained in Martin vs. Bienville Oil Works Co. (28 La., 204), where it is said: "The possession of the right in question would be futile if the possessor of it, through lack of knowledge necessary to exercise it, 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 of the corporation, taking minutes from the same, at all reasonable times, and may be aided in this by experts and counsel, so as to make the inspection valuable to them, is a principle too well settled to need discussion." Authorities on this point could be accumulated in great abundance, but as they may be found cited in any legal encyclopedia or treaties devoted to the subject of corporations, it is unnecessary here to refer to other cases announcing the same rule.

petitioner in this case is seeking to discover anything which the corporation is entitled to keep secret; and if anything of the sort is involved in the case it may be brought out at a more advanced stage of the proceedings.lawphil.net The demurrer is overruled; and it is ordered that the writ of mandamus shall issue as prayed, unless within 5 days from notification hereof the respondents answer to the merits. So ordered. G.R. No. 156262 July 14, 2005 MARIA TUAZON, ALEJANDRO P. TUAZON, MELECIO P. TUAZON, Spouses ANASTACIO and MARY T. BUENAVENTURA, Petitioners, vs. HEIRS OF BARTOLOME RAMOS, Respondents. DECISION PANGANIBAN, J.: Stripped of nonessentials, the present case involves the collection of a sum of money. Specifically, this case arose from the failure of petitioners to pay respondents predecessor-in-interest. This fact was shown by the nonencashment of checks issued by a third person, but indorsed by herein Petitioner Maria Tuazon in favor of the said predecessor. Under these circumstances, to enable respondents to collect on the indebtedness, the check drawer need not be impleaded in the Complaint. Thus, the suit is directed, not against the drawer, but against the debtor who indorsed the checks in payment of the obligation. The Case Before us is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the July 31, 2002 Decision2of the Court of Appeals (CA) in CAGR CV No. 46535. The decretal portion of the assailed Decision reads: "WHEREFORE, the appeal is DISMISSED and the appealed decision is AFFIRMED." On the other hand, the affirmed Decision3 of Branch 34 of the Regional Trial Court (RTC) of Gapan, Nueva Ecija, disposed as follows: "WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, ordering the defendants spouses Leonilo Tuazon and Maria Tuazon to pay the plaintiffs, as follows: "1. The sum of P1,750,050.00, with interests from the filing of the second amended complaint; "2. The sum of P50,000.00, as attorneys fees; "3. The sum of P20,000.00, as moral damages "4. And to pay the costs of suit. x x x x x x x x x"4 The Facts The facts are narrated by the CA as follows: "[Respondents] alleged that between the period of May 2, 1988 and June 5, 1988, spouses Leonilo and Maria Tuazon purchased a total of 8,326 cavans of rice from [the deceased Bartolome] Ramos [predecessor-in-interest of respondents]. That of this [quantity,] x x x only 4,437 cavans [have been paid for so far], leaving unpaid 3,889 cavans valued at P1,211,919.00. In payment therefor, the spouses Tuazon issued x x x [several] Traders Royal Bank checks. xxxxxxxxx [B]ut when these [checks] were encashed, all of the checks bounced due to insufficiency of funds. [Respondents] advanced that before issuing said checks[,] spouses Tuazon already knew that they had no available fund to support the checks, and they failed to provide for the payment of these despite repeated demands made on them.

"[Respondents] averred that because spouses Tuazon anticipated that they would be sued, they conspired with the other [defendants] to defraud them as creditors by executing x x x fictitious sales of their properties. They In order that the rule above stated may not be taken in too sweeping a executed x x x simulated sale[s] [of three lots] in favor of the x x x spouses sense, we deem it advisable to say that there are some things which a Buenaventura x x x[,] as well as their residential lot and the house thereon[,] corporation may undoubtedly keep secret, notwithstanding the right of all located at Nueva Ecija, and another simulated deed of sale dated July 12, 1988 of a Stake Toyota registered with the Land Transportation Office of inspection given by law to the stockholder; as for instance, where a corporation, engaged in the business of manufacture, has acquired a formula Cabanatuan City on September 7, 1988. [Co-petitioner] Melecio Tuazon, a son of spouses Tuazon, registered a fictitious Deed of Sale on July 19, 1988 or process, not generally known, which has proved of utility to it in the x x x over a residential lot located at Nueva Ecija. Another simulated sale of manufacture of its products. It is not our intention to declare that the authorities of the corporation, and more particularly the Board of Directors, a Toyota Willys was executed on January 25, 1988 in favor of their other son, [co-petitioner] Alejandro Tuazon x x x. As a result of the said sales, the might not adopt measures for the protection of such process form publicity. There is, however, nothing in the petition which would indicate that the titles of these properties issued in the names of spouses Tuazon were

cancelled and new ones were issued in favor of the [co-]defendants spouses Buenaventura, Alejandro Tuazon and Melecio Tuazon. Resultantly, by the said ante-dated and simulated sales and the corresponding transfers there was no more property left registered in the names of spouses Tuazon answerable to creditors, to the damage and prejudice of [respondents]. "For their part, defendants denied having purchased x x x rice from [Bartolome] Ramos. They alleged that it was Magdalena Ramos, wife of said deceased, who owned and traded the merchandise and Maria Tuazon was merely her agent. They argued that it was Evangeline Santos who was the buyer of the rice and issued the checks to Maria Tuazon as payments therefor. In good faith[,] the checks were received [by petitioner] from Evangeline Santos and turned over to Ramos without knowing that these were not funded. And it is for this reason that [petitioners] have been insisting on the inclusion of Evangeline Santos as an indispensable party, and her non-inclusion was a fatal error. Refuting that the sale of several properties were fictitious or simulated, spouses Tuazon contended that these were sold because they were then meeting financial difficulties but the disposals were made for value and in good faith and done before the filing of the instant suit. To dispute the contention of plaintiffs that they were the buyers of the rice, they argued that there was no sales invoice, official receipts or like evidence to prove this. They assert that they were merely agents and should not be held answerable."5 The corresponding civil and criminal cases were filed by respondents against Spouses Tuazon. Those cases were later consolidated and amended to include Spouses Anastacio and Mary Buenaventura, with Alejandro Tuazon and Melecio Tuazon as additional defendants. Having passed away before the pretrial, Bartolome Ramos was substituted by his heirs, herein respondents. Contending that Evangeline Santos was an indispensable party in the case, petitioners moved to file a third-party complaint against her. Allegedly, she was primarily liable to respondents, because she was the one who had purchased the merchandise from their predecessor, as evidenced by the fact that the checks had been drawn in her name. The RTC, however, denied petitioners Motion. Since the trial court acquitted petitioners in all three of the consolidated criminal cases, they appealed only its decision finding them civilly liable to respondents. Ruling of the Court of Appeals Sustaining the RTC, the CA held that petitioners had failed to prove the existence of an agency between respondents and Spouses Tuazon. The appellate court disbelieved petitioners contention that Evangeline Santos should have been impleaded as an indispensable party. Inasmuch as all the checks had been indorsed by Maria Tuazon, who thereby became liable to subsequent holders for the amounts stated in those checks, there was no need to implead Santos. Hence, this Petition.6 Issues Petitioners raise the following issues for our consideration: "1. Whether or not the Honorable Court of Appeals erred in ruling that petitioners are not agents of the respondents. "2. Whether or not the Honorable Court of Appeals erred in rendering judgment against the petitioners despite x x x the failure of the respondents to include in their action Evangeline Santos, an indispensable party to the suit."7 The Courts Ruling The Petition is unmeritorious. First Issue: Agency Well-entrenched is the rule that the Supreme Courts role in a petition under Rule 45 is limited to reviewing errors of law allegedly committed by the Court of Appeals. Factual findings of the trial court, especially when affirmed by the CA, are conclusive on the parties and this Court.8 Petitioners have not given us sufficient reasons to deviate from this rule. In a contract of agency, one binds oneself to render some service or to do something in representation or on behalf of another, with the latters consent or authority.9 The following are the elements of agency: (1) the parties consent, express or implied, to establish the relationship; (2) the object, which is the execution of a juridical act in relation to a third

person; (3) the representation, by which the one who acts as an agent does so, not for oneself, but as a representative; (4) the limitation that the agent acts within the scope of his or her authority.10 As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency.11 This Court finds no reversible error in the findings of the courts a quo that petitioners were the rice buyers themselves; they were not mere agents of respondents in their rice dealership. The question of whether a contract is one of sale or of agency depends on the intention of the parties.12 The declarations of agents alone are generally insufficient to establish the fact or extent of their authority.13The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it.14 In the present case, petitioners raise the fact of agency as an affirmative defense, yet fail to prove its existence. The Court notes that petitioners, on their own behalf, sued Evangeline Santos for collection of the amounts represented by the bounced checks, in a separate civil case that they sought to be consolidated with the current one. If, as they claim, they were mere agents of respondents, petitioners should have brought the suit against Santos for and on behalf of their alleged principal, in accordance with Section 2 of Rule 3 of the Rules on Civil Procedure.15 Their filing a suit against her in their own names negates their claim that they acted as mere agents in selling the rice obtained from Bartolome Ramos. Second Issue: Indispensable Party Petitioners argue that the lower courts erred in not allowing Evangeline Santos to be impleaded as an indispensable party. They insist that respondents Complaint against them is based on the bouncing checks she issued; hence, they point to her as the person primarily liable for the obligation. We hold that respondents cause of action is clearly founded on petitioners failure to pay the purchase price of the rice. The trial court held that Petitioner Maria Tuazon had indorsed the questioned checks in favor of respondents, in accordance with Sections 31 and 63 of the Negotiable Instruments Law.16 That Santos was the drawer of the checks is thus immaterial to the respondents cause of action. As indorser, Petitioner Maria Tuazon warranted that upon due presentment, the checks were to be accepted or paid, or both, according to their tenor; and that in case they were dishonored, she would pay the corresponding amount.17 After an instrument is dishonored by nonpayment, indorsers cease to be merely secondarily liable; they become principal debtors whose liability becomes identical to that of the original obligor. The holder of a negotiable instrument need not even proceed against the maker before suing the indorser.18 Clearly, Evangeline Santos -- as the drawer of the checks -- is not an indispensable party in an action against Maria Tuazon, the indorser of the checks. Indispensable parties are defined as "parties in interest without whom no final determination can be had."19 The instant case was originally one for the collection of the purchase price of the rice bought by Maria Tuazon from respondents predecessor. In this case, it is clear that there is no privity of contract between respondents and Santos. Hence, a final determination of the rights and interest of the parties may be made without any need to implead her. WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.