Litonjua v.
Fernandez
G.R. No. 148116, 14 April
Article 1878 of the New Civil Code provides that a special power of attorney is necessary to enter
into any contract by which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration, or to create or convey real rights over immovable
property, or for any other act of strict dominion. Any sale of real property by one purporting to be
the agent of the registered owner without any authority therefor in writing from the said owner is
null and void.
FACTS:
Mrs. Lourdes Alimario and Agapito Fisico who worked as brokers, offered
to sell to the petitioners the parcels of land. The brokers told the petitioners that
they were authorized by respondent Fernandez to offer the property for sale.
The petitioners and respondent Fernandez agreed that the petitioners would buy
the property and that the owners were to shoulder the capital gains tax, transfer
tax and the expenses for the documentation of the sale.
The petitioners and respondent Fernandez also agreed to meet to
finalize the sale. It was also agreed upon that on the said date, respondent would
present a SPA executed by the owners of the property, authorizing her to sell the
property for and in their behalf and to execute a deed of absolute sale thereon.
The petitioners would also remit the purchase price to the owners, through
respondent Fernandez. However, only Agapito Fisico attended the meeting. He
informed the petitioners that respondent Fernandez was encountering some
problems with the tenants and was trying to work out a settlement with them.
After a few weeks of waiting, the petitioners wrote respondent Fernandez
demanding that their transaction be finalized.
When the petitioners received no response from respondent, the
petitioners sent her another letter, asking that the Deed of Absolute Sale
covering the property be executed in accordance with their verbal agreement.
The petitioners also demanded the turnover of the subject properties to them
within fifteen days from receipt of the said letter; otherwise, they would have no
option but to protect their interest through legal means.
Petitioner rejected the claims of the petitioner. The petitioners filed the
instant Complaint for specific performance with damages against respondent
Fernandez and the registered owners of the property. After trial on the merits,
the trial court rendered judgment in favor of the petitioners. The appellate court
promulgated its decision reversing and settling aside the judgment of the trial
court and dismissing the petitioners’ complaint, as well as the respondents’
counterclaim.
ISSUE:
Whether the lower court erred in not holding that a special power of
attorney was required in order that defendant-appellant Fernandez could
negotiate the sale on behalf of the other registered co-owners of the two lots.
NO
HELD:
There is no documentary evidence on record that the respondents-
owners specifically authorized respondent Fernandez to sell their properties to
another, including the petitioners. Article 1878 of the New Civil Code provides
that a special power of attorney is necessary to enter into any contract by which
the ownership of an immovable is transmitted or acquired either gratuitously or
for a valuable consideration, or to create or convey real rights over immovable
property, or for any other act of strict dominion. Any sale of real property by one
purporting to be the agent of the registered owner without any authority
therefor in writing from the said owner is null and void. The declarations of the
agent alone are generally insufficient to establish the fact or extent of her
authority. In this case, the only evidence adduced by the petitioners to prove
that respondent Fernandez was authorized by the respondents-owners is the
testimony of petitioner Antonio Litonjua that respondent Fernandez openly
represented herself to be the representative of the respondents-owners, and
that she promised to present to the petitioners on December 8, 1996 a written
authority to sell the properties. However, the petitioners’ claim was belied by
respondent Fernandez when she testified.
The petitioners cannot feign ignorance of respondent Fernandez’ lack of
authority to sell the properties for the respondents-owners. It must be stressed
that the petitioners are noted businessmen who ought to be very familiar with
the intricacies of business transactions, such as the sale of real property.
The settled rule is that persons dealing with an assumed agent are bound
at their peril, and if they would hold the principal liable, to ascertain not only the
fact of agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to prove it. In this case,
respondent Fernandez specifically denied that she was authorized by the
respondents-owners to sell the properties, both in her answer to the complaint
and when she testified. The Letter dated January 16, 1996 relied upon by the
petitioners was signed by respondent Fernandez alone, without any authority
from the respondents-owners. There is no evidence on record that the
respondents-owners ratified all the actuations of respondent Fernandez in
connection with her dealings with the petitioners. As such, said letter is not
binding on the respondents as owners of the subject properties.
 by respondent to borrow money on his behalf. The Court of Appeals reversed the
trial court’s decision and dismissed the complaint for lack of cause of action.
Gozun v. Mercado
G.R. NO. 167812; December 19, 2006 ISSUE:
Whether or not the respondent is liable to the cash advanced by Lilian.
Generally, the agency may be oral, unless the law requires a specific form. However, a special
power of attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent DECISION:
and indispensable for the preservation of the things which are under administration.
By the contract of agency, a person binds himself to render some service
to do something in representation or on behalf of another, with the consent or
FACTS:
authority of the latter. Contracts entered into in the name of another person by
In the local elections of 1995, respondent vied for the gubernatorial post
one who has been given no authority or legal representation or who has acted
in Pampanga. Upon respondent’s request, the petitioner owner of JMG
beyond his powers are classified as unauthorized contracts and are declared
Publishing House was commissioned to print the campaign materials.
unenforceable, unless they are ratified.
Meanwhile, on March 31, 1995, respondent’s sister-in-law, Lilian Soriano (Lilian)
obtained from the petitioner a "cash advance" of+P253,000 allegedly for the
Generally, the agency may be oral, unless the law requires a specific
allowances of poll watchers who were attending a seminar and for other related
form. However, a special power of attorney is necessary for an agent to, as in this
expenses. Lilian acknowledged on petitioner’s 1995 diary receipt of the amount.
case, borrow money, unless it be urgent and indispensable for the preservation
of the things which are under administration.
Petitioner later sent respondent a Statement of Account in the total
amount to P2,177,906 whichP253,000 represents the "cash advance" obtained
Since nothing in this case involves the preservation of things
by Lilian. The respondent’s wife partially paid P1,000,000 to petitioner who
under administration, a determination of whether Soriano had the special
issued a receipt therefor.
authority to borrow money on behalf of respondent is in order. Lim Pin v. Liao
Tian, et al. held that the requirement of a special power of attorney refers to the
Despite repeated demands, respondent failed to settle the balance. Thus
nature of the authorization and not to its form.
the petitioner filed with the Regional Trial Court a complaint against respondent
to collect the remaining amount of P1,177,906 plus "inflationary adjustment"
In Strong v. Gutierrez-Repide (6 Phil. 680). The requirements are met if
and attorney’s fees.
there is a clear mandate from the principal specifically authorizing the
performance of the act. If the special authority is not written, then it must be
In his Answer with the Compulsory Counterclaim, respondent denied
duly established by evidence. But nowhere in the note can it be inferred that
having transacted with the petitioner. He alleged that the various campaign
defendant-appellant was connected with the said transaction.
materials delivered to him were donations from his family, friends and political
supporters.
Under Article1317 of the New Civil Code, a person cannot be
bound by contracts he did not authorize to be entered into his behalf. As a
On petitioner’s claim that Lilian, on his behalf, obtained from him a cash
general rule in the law of agency, it must, upon its face, purport to be made,
advance of+P253,000, respondent denied having given her authority to do
signed and sealed in the name of the principal, otherwise, it will bind the
so and having received the same. Upon questioning by the trial court,
agent only.
respondent could not, confirm if it was his understanding that the campaign
materials delivered by petitioner were donations from third parties.
Lilian signed in the receipt in her name alone, without indicating therein
that she was acting for and in behalf of respondent. She thus bound herself in
The trial court rendered judgment in favor of petitioner. In reversing the
her personal capacity and not as an agent of respondent or anyone for that
trial court’s decision, the Court of Appeals held that other than petitioner’s
matter.
testimony, there was no evidence to support his claim that Lilian was authorized

Fabiola Severino v. Guillermo Severino
G.R. No. 18058 January 16, 1923
The relations of an agent to his principal are fiduciary.
FACTS:
Fabiola Severino is a recognized natural daughter of the late Melencio
Severino. She filed an action to compel the defendant Guillermo Severino to
convey to her four parcels of land owned by her late father, or in default thereof
to pay her the sum of P800,000 in damages for wrongfully causing said land to be
registered in his own name.
During the lifetime of Melencio Severino the land was worked by the
defendant, Guillermo Severino, his brother, as administrator for and on behalf of
Melencio. After Melencio’s death, the defendant Guillermo Severino continued
to occupy the land and in 1916, a parcel survey was made of the lands in the
municipality of Silay, including the land here in question, and cadastral
proceedings were instituted for the registration of the lands titles within the
surveyed area.
In the cadastral proceedings the land in question was described as four
separate lots. Roque Hofileña, lawyer for Guillermo, filed answers claiming the
lots mentioned as the property of his client and that no opposition was
presented in the proceedings to the claims of Guillermo Severino.
The court therefore decreed the title in his favor, which at this time, the
plaintiff Fabiola Severino was a minor.
ISSUE:
Whether or not Guillermo can be compelled to convey the land to Fabiola, even
if there is already a title in Guillermo’s name.
RULING:
Yes. The relations of an agent to his principal are fiduciary. Guillermo’s position
as agent is analogous to that of a trustee and he cannot consistently, with the
principles of good faith, be allowed to create in himself an interest in opposition
to that of his principal or cestui que trust. Whatever a trustee does for the
advantage of the trust estate inures to the benefit of the cestui que trust.
SC cited the following jurisprudence:
A receiver, trustee, attorney, agent, or any other person occupying fiduciary
relations respecting property or persons, is utterly disabled from acquiring for his own
benefit the property committed to his custody for management. This rule is entirely
independent of the fact whether any fraud has intervened. No fraud in fact need be
shown, and no excuse will be heard from the trustee. It is to avoid the necessity of any
such inquiry that the rule takes so general a form. The rule stands on the moral obligation
to refrain from placing one’s self in positions which ordinarily excite conflicts between
self-interest and integrity. It seeks to remove the temptation that might arise out of such
a relation to serve one’s self-interest at the expense of one’s integrity and duty to
another, by making it impossible to profit by yielding to temptation. It applies universally
to all who come within its principle.
SC reiterated that an agent, who has entered and surveyed a portion of that land for
himself and obtained a patent for it in his own name, becomes a trustee for his principal.
He cannot hold the land under an entry for himself otherwise than as trustee for his
principal.
The substance of these authorities is that, wherever a person obtains the legal title to
land by any artifice or concealment, or by making use of facilities intended for the benefit
of another, a court of equity will impress upon the land so held by him a trust in favor of
the party who is justly entitled to them, and will order the trust executed by decreeing
their conveyance to the party in whose favor the trust was created.
There have been a number of cases before this court in which a title to real property was
acquired by a person in his own name, while acting under a fiduciary capacity, and who
afterwards sought to take advantage of the confidence reposed in him by claiming the
ownership of the property for himself. This court has invariably held such evidence
competent as between the fiduciary and the cestui que trust. What judgment ought to be
entered in this case? The court simply absolved the defendant from the complaint. The
proper procedure in such a case, so long as the rights of innocent third persons have not
intervened, is to compel a conveyance to the rightful owner.
The Land Registration Act cannot cut off, through an issuance of title, equitable
rights or remedies. Torrens titles carries a strong presumption in favor of their
regularity or validity, and in order to maintain an action such as the present, the
proof as to the fiduciary relation of the parties and of the breach of trust must be
clear and convincing. Such proof is not lacking in this case. But once the relation
and the breach of trust on the part of the fiduciary is thus established, there is no
reason, neither practical nor legal, why he should not be compelled to make such
reparation as may lie within his power for the injury caused by his wrong, and as
long as the land stands registered in the name of the party who is guilty of the
breach of trust and no rights of innocent third parties are adversely affected,
there can be no reason why such reparation should not, in the proper case, take
the form of a conveyance or transfer of the title to the cestui que trust. No
reasons of public policy demand that a person guilty of fraud or breach of trust
be permitted to use his certificate of title as a shield against the consequences of
his own wrong.