FIRST DIVISION

G.R. NO. 129919

FEBRUARY 6, 2002
PARDO, J.

DOMINION INSURANCE CORPORATION v. COURT OF APPEALS

By the contract of agency, 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. The basis for agency is representation. On the part of the
principal, there must be an actual intention to appoint or an intention naturally
inferrable from his words or actions; and on the part of the agent, there must be an
intention to accept the appointment and act on it, and in the absence of such intent,
there is generally no agency.

FACTS:

On January 25, 1991, plaintiff Rodolfo S. Guevarra instituted Civil Case No.
8855 for sum of money against defendant Dominion Insurance Corporation. Plaintiff
sought to recover thereunder the sum of P156,473.90 which he claimed to have
advanced in his capacity as manager of defendant to satisfy certain claims filed by
defendant’s clients.

In its traverse, defendant denied any liability to plaintiff and asserted a

counterclaim for P249,672.53, representing premiums that plaintiff allegedly failed to
remit.

On August 8, 1991, defendant filed a third-party complaint against Fernando

Austria, who, at the time relevant to the case, was its Regional Manager for Central
Luzon area.

The trial court rendered judgment adverse to Dominion and ordered the latter to
pay the plaintiff. The Court of Appeals thereafter affirmed the decision of the trial
court.

Hence, the appeal to the Supreme Court.

ISSUE:

Whether or not respondent Guevarra acted within his authority as agent for
petitioner.
HELD:

Guevarra acted beyond his authority as agent for petitioner.

By the contract of agency, a person binds himself to render some service or to
do something in representation or on behalf of another, with the consent or authority

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of the latter. The basis for agency is representation. On the part of the principal, there
must be an actual intention to appoint or an intention naturally inferrable from his
words or actions; and on the part of the agent, there must be an intention to accept the
appointment and act on it, and in the absence of such intent, there is generally no
agency.

A perusal of the Special Power of Attorney would show that petitioner

(represented by third-party defendant Austria) and respondent Guevarra intended to
enter into a principal-agent relationship. Despite the word "special" in the title of the
document, the contents reveal that what was constituted was actually a general
agency.

The agency comprises all the business of the principal, but, couched in general
terms, it is limited only to acts of administration.

A general power permits the agent to do all acts for which the law does not
require a special power. Thus, the acts enumerated in or similar to those enumerated in
the Special Power of Attorney do not require a special power of attorney.

Article 1878 of the Civil Code enumerates the instances when a special power
of attorney is required.

The pertinent portion that applies to this case provides that:

"Article 1878. Special powers of attorney are necessary in the following cases:

"(1) To make such payments as are not usually considered as acts of

administration;

x       x       x

"(15) Any other act of strict dominion."

The payment of claims is not an act of administration. The settlement of claims

is not included among the acts enumerated in the Special Power of Attorney, neither is
it of a character similar to the acts enumerated therein. A special power of attorney is
required before respondent Guevarra could settle the insurance claims of the insured.

Respondent Guevarra was authorized to pay the claim of the insured, but the
payment shall come from the revolving fund or collection in his possession.

Having deviated from the instructions of the principal, the expenses that
respondent Guevarra incurred in the settlement of the claims of the insured may not be
reimbursed from petitioner Dominion.

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THIRD DIVISION
G.R. NO. 75875
DECEMBER 15, 1989
GUTIERREZ, JR., J.

WOLRGANG AURBACH v. SANITARY WARES MANUFACTURING

CORPORATION

The rule is that whether the parties to a particular contract have

thereby established among themselves a joint venture or some other relation
depends upon their actual intention which is determined in accordance with
the rules governing the interpretation and construction of contracts.

FACTS:

In 1961, Saniwares, a domestic corporation was incorporated for the primary

purpose of manufacturing and marketing sanitary wares. One of the incorporators, Mr.

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Baldwin Young went abroad to look for foreign partners, European or American who
could help in its expansion plans. On August 15, 1962, ASI, a foreign corporation
domiciled in Delaware, United States entered into an Agreement with Saniwares and
some Filipino investors whereby ASI and the Filipino investors agreed to participate
in the ownership of an enterprise which would engage primarily in the business of
manufacturing in the Philippines and selling here and abroad vitreous china and
sanitary wares. The parties agreed that the business operations in the Philippines shall
be carried on by an incorporated enterprise and that the name of the corporation shall
initially be "Sanitary Wares Manufacturing Corporation."

The Agreement has the following provisions relevant to the issues in these
cases on the nomination and election of the directors of the corporation: 

3. Articles of Incorporation
(a) The Articles of Incorporation of the Corporation shall be substantially in
the form annexed hereto as Exhibit A and, insofar as permitted under
Philippine law, shall specifically provide for 

(1) Cumulative voting for directors: 

xxx xxx xxx

5. Management
(a) The management of the Corporation shall be vested in a Board of
Directors, which shall consist of nine individuals. As long as American-
Standard shall own at least 30% of the outstanding stock of the Corporation,
three of the nine directors shall be designated by American-Standard, and the
other six shall be designated by the other stockholders of the Corporation.

The joint enterprise thus entered into by the Filipino investors and the
American corporation prospered. Unfortunately, with the business successes, there
came a deterioration of the initially harmonious relations between the two groups.
According to the Filipino group, a basic disagreement was due to their desire to
expand the export operations of the company to which ASI objected as it apparently
had other subsidiaries of joint joint venture groups in the countries where Philippine
exports were contemplated. On March 8, 1983, the annual stockholders' meeting was
held. The meeting was presided by Baldwin Young. The minutes were taken by the
Secretary, Avelino Cruz. After disposing of the preliminary items in the agenda, the
stockholders then proceeded to the election of the members of the board of directors.
The ASI group nominated three persons namely; Wolfgang Aurbach, John Griffin and
David P. Whittingham. The Philippine investors nominated six, namely; Ernesto
Lagdameo, Sr., Raul A. Boncan, Ernesto R. Lagdameo, Jr., George F. Lee, and
Baldwin Young. Mr. Eduardo R, Ceniza then nominated Mr. Luciano E. Salazar, who
in turn nominated Mr. Charles Chamsay. The chairman, Baldwin Young ruled the last
two nominations out of order on the basis of section 5 (a) of the Agreement, the
consistent practice of the parties during the past annual stockholders' meetings to

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nominate only nine persons as nominees for the nine-member board of directors, and
the legal advice of Saniwares' legal counsel.

These incidents triggered off the filing of separate petitions by the parties with
the Securities and Exchange Commission (SEC).

ISSUE:

What was the nature of the business established by the parties whether it was a
joint venture or a corporation.

HELD:

The business established by the parties is a joint venture and not a corporation

The rule is that whether the parties to a particular contract have thereby
established among themselves a joint venture or some other relation depends upon
their actual intention which is determined in accordance with the rules governing the
interpretation and construction of contracts.

The Supreme Court’s examination of important provisions of the Agreement as

well as the testimonial evidence presented by the Lagdameo and Young Group shows
that the parties agreed to establish a joint venture and not a corporation.

The legal concept of a joint venture is of common law origin. It has no precise
legal definition but it has been generally understood to mean an organization formed
for some temporary purpose. (Gates v. Megargel, 266 Fed. 811 [1920]) It is in fact
hardly distinguishable from the partnership, since their elements are similar
community of interest in the business, sharing of profits and losses, and a mutual right
of control. Blackner v. Mc Dermott, 176 F. 2d. 498, [1949]; Carboneau v. Peterson,
95 P. 2d., 1043 [1939]; Buckley v. Chadwick, 45 Cal. 2d. 183, 288 P. 2d. 12 289 P.
2d. 242 [1955]). The main distinction cited by most opinions in common law
jurisdictions is that the partnership contemplates a general business with some degree
of continuity, while the joint venture is formed for the execution of a single
transaction, and is thus of a temporary nature. (Tufts v. Mann 116 Cal. App. 170, 2 P.
2d. 500 [1931]; Harmon v. Martin, 395 111. 595, 71 NE 2d. 74 [1947]; Gates v.
Megargel 266 Fed. 811 [1920]). This observation is not entirely accurate in this
jurisdiction, since under the Civil Code, a partnership may be particular or universal,
and a particular partnership may have for its object a specific undertaking. (Art.
1783, Civil Code). It would seem therefore that under Philippine law, a joint venture
is a form of partnership and should thus be governed by the law of partnerships. The
Supreme Court has however recognized a distinction between these two business

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forms, and has held that although a corporation cannot enter into a partnership
contract, it may however engage in a joint venture with others. (At p. 12, Tuazon v.
Bolanos, 95 Phil. 906 [1954]) (Campos and Lopez-Campos Comments, Notes and
Selected Cases, Corporation Code 1981)

FIRST DIVISION
G.R. NO. 58010
MARCH 31, 1993
BELLOSILLO, J.

EMILIA O’LACO v. VALENTIN CO CHO CHIT

By definition, trust relations between parties may either be express or

implied. Express trusts are those which are created by the direct and positive acts of
the parties, by some writing or deed, or will, or by words evincing an intention to
create a trust. Implied trusts are those which, without being express, are deducible
from the nature of the transaction as matters of intent, or which are superinduced
on the transaction by operation of law as matters of equity, independently of the
particular intention of the parties.

FACTS:

This case involves half-sisters each claiming ownership over a parcel of land.
While petitioner Emilia O'Laco asserts that she merely left the certificate of title
covering the property with private respondent O Lay Kia for safekeeping, the latter
who is the former's older sister insists that the title was in her possession because she
and her husband bought the property from their conjugal funds. To be resolved
therefore is the issue of whether a resulting trust was intended by them in the
acquisition of the property. The trial court declared that there was no trust relation of
any sort between the sisters. The Court of Appeals ruled otherwise. Hence, the instant
petition for review on certiorari of the decision of the appellate court together with its
resolution denying reconsideration.

ISSUE:

Whether or not a resulting trust was intended by them in the acquisition of the
property.

HELD:

There is a trust relation between the parties.

Trust relations between parties may either be express or implied. Express

trusts are those which are created by the direct and positive acts of the parties, by
some writing or deed, or will, or by words evincing an intention to create a trust.

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Implied trusts are those which, without being express, are deducible from the nature
of the transaction as matters of intent, or which are superinduced on the transaction
by operation of law as matters of equity, independently of the particular intention of
the parties. Implied trusts may either be resulting or constructive trusts, both coming
into being by operation of law.
Resulting trusts are based on the equitable doctrine that valuable consideration and
not legal title determines the equitable title or interest and are presumed always to
have been contemplated by the parties. They arise from the nature or circumstances
of the consideration involved in a transaction whereby one person thereby becomes
invested with legal title but is obligated in equity to hold his legal title for the benefit
of another. On the other hand, constructive trusts are created by the construction of
equity in order to satisfy the demands of justice and prevent unjust enrichment. They
arise contrary to intention against one who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in equity and good
conscience, to hold. 

Unlike express trusts concerning immovables or any interest therein which

cannot be proved by parol evidence, implied trusts may be established by oral
evidence. However, in order to establish an implied trust in real property by parol
evidence, the proof should be as fully convincing as if the acts giving rise to the trust
obligation were proven by an authentic document. It cannot be established upon
vague and inconclusive proof.

After a thorough review of the evidence on record, We hold that a resulting

trust was indeed intended by the parties under Art. 1448 of the New Civil Code which
states —

"ARTICLE 1448. There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose
of having the beneficial interest of the property. The former is the trustee, while
the latter is the beneficiary . . ."

First, as stipulated by the parties, the document of sale, the owner's duplicate
copy of the certificate of title, insurance policies, receipt of initial premium of
insurance coverage and real estate tax receipts ware all in the possession of
respondent spouses which they offered in evidence. As emphatically asserted by
respondent O Lay Kia, the reason why these documents of ownership remained with
her is that the land in question belonged to her.

Indeed, there can be no persuasive rationalization for the possession of these

documents of ownership by respondent-spouses for seventeen (17) years after the
Oroquieta property was purchased in 1943 than that of precluding its possible sale,
alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This
continued possession of the documents, together with other corroborating evidence
spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta
property in trust for respondent-spouses.

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 Second, it may be worth to mention that before buying the Oroquieta property,
respondent-spouses purchased another property situated in Kusang-Loob, Sta. Cruz,
Manila, where the certificate of title was placed in the name of Ambrosio O'Laco,
older brother of Emilia, under similar or identical circumstances.

Third, the circumstances by which Emilia O'Laco obtained a new title by

reason of the alleged loss of the old title then in the possession of respondent-spouses
cast serious doubt on the veracity of her ownership.

Fourth. Until the sale of the Oroquieta property to the Roman Catholic
Archbishop of Manila, petitioner Emilia O'Laco actually recognized the trust.

Fifth. The trial court itself determined that "Valentin Co Cho Chit and O Lay
Kia had some money with which they could buy the property.

Having established a resulting trust between the parties, the next question is
whether prescription has set in.

As differentiated from constructive trusts, where the settled rule is that

prescription may supervene, in resulting trust, the rule of imprescriptibility may apply
for as long as the trustee has not repudiated the trust. Once the resulting trust is
repudiated, however, it is converted into a constructive trust and is subject to
prescription.

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