Professional Documents
Culture Documents
RAMON RALLOS, Administrator of The Estate of CONCEPCION RALLOS
RAMON RALLOS, Administrator of The Estate of CONCEPCION RALLOS
petitioner,
vs.
The following facts are not disputed. Concepcion and Gerundia both
surnamed Rallos were sisters and registered co-owners of a parcel of land
known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer
Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney in favor of their brother, Simeon
Rallos, authorizing him to sell for and in their behalf lot 5983. On March 3,
1955, Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold
the undivided shares of his sisters Concepcion and Gerundia in lot 5983 to
Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. The
deed of sale was registered in the Registry of Deeds of Cebu, TCT No. 11118
was cancelled, and a new transfer certificate of Title No. 12989 was issued in
the named of the vendee.
After trial the court a quo rendered judgment with the following dispositive
portion:
A. On Plaintiffs Complaint —
(1) Declaring the deed of sale, Exh. "C", null and void insofar as the one-half
pro-indiviso share of Concepcion Rallos in the property in question, — Lot
5983 of the Cadastral Survey of Cebu — is concerned;
(2) Ordering the Register of Deeds of Cebu City to cancel Transfer Certificate
of Title No. 12989 covering Lot 5983 and to issue in lieu thereof another in the
names of FELIX GO CHAN & SONS REALTY CORPORATION and the
Estate of Concepcion Rallos in the proportion of one-half (1/2) share each pro-
indiviso;
(3) Ordering Felix Go Chan & Sons Realty Corporation to deliver the
possession of an undivided one-half (1/2) share of Lot 5983 to the herein
plaintiff;
B. On GO CHANTS Cross-Claim:
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?
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 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:
ART. 1403. The following contracts are unenforceable, unless they are
justified:
(1) Those entered into in the name of another person by one who hi - been
given no authority or legal representation or who has acted beyond his
powers; ...
Out of the above given principles, sprung the creation and acceptance of the
relationship of agency whereby one party, caged the principal (mandante),
authorizes another, called the agent (mandatario), to act for and in his behalf
in transactions with third persons. The essential elements of agency are: (1)
there is consent, express or implied of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a third person; (3)
the agents acts as a representative and not for himself, and (4) the agent acts
within the scope of his authority. 5
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
law in this jurisdiction.8
Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the
rationale for the law is found in the juridical basis of agency which is
representation Them being an in. integration of the personality of the principal
integration that of the agent it is not possible for the representation to continue
to exist once the death of either is establish. Pothier agrees with Manresa that
by reason of the nature of agency, death is a necessary cause for its
extinction. Laurent says that the juridical tie between the principal and the
agent is severed ipso jure upon the death of either without necessity for the
heirs of the fact to notify the agent of the fact of death of the former. 9
The same rule prevails at common law — the death of the principal effects
instantaneous and absolute revocation of the authority of the agent unless the
Power be coupled with an interest. 10 This is the prevalent rule in American
Jurisprudence where it is well-settled that a power without an interest confer.
red upon an agent is dissolved by the principal's death, and any attempted
execution of the power afterward is not binding on the heirs or representatives
of the deceased. 11
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.
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
... 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)
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:
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. 19-21)
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:
... Here the precise point is, whether a payment to an agent when the Parties
are ignorant of the death is a good payment. in addition to the case in
Campbell before cited, the same judge Lord Ellenboruogh, has decided in 5
Esp. 117, the general question that a payment after the death of principal is
not good. Thus, a payment of sailor's wages to a person having a power of
attorney to receive them, has been held void when the principal was dead at
the time of the payment. If, by this case, it is meant merely to decide the
general proposition that by operation of law the death of the principal is a
revocation of the powers of the attorney, no objection can be taken to it. But if
it intended to say that his principle applies where there was 110 notice of
death, or opportunity of twice I must be permitted to dissent from it.
... That a payment may be good today, or bad tomorrow, from the accident
circumstance of the death of the principal, which he did not know, and which
by no possibility could he know? It would be unjust to the agent and unjust to
the debtor. In the civil law, the acts of the agent, done bona fide in ignorance
of the death of his principal are held valid and binding upon the heirs of the
latter. The same rule holds in the Scottish law, and I cannot believe the
common law is so unreasonable... (39 Am. Dec. 76, 80, 81; emphasis
supplied)
There are several cases which seem to hold that although, as a general
principle, death revokes an agency and renders null every act of the agent
thereafter performed, yet that where a payment has been made in ignorance
of the death, such payment will be good. The 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 of Dick 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 Ordered.
Having advertised the fact that Collantes was his agent and having given them
a special invitation to deal with such agent, it was the duty of the defendant on
the termination of the relationship of principal and agent to give due and timely
notice thereof to the plaintiffs. Failing to do so, he is responsible to them for
whatever goods may have been in good faith and without negligence sent to
the agent without knowledge, actual or constructive, of the termination of such
relationship.
ISSUE Whether the plaintiffs, acting in good faith and without knowledge,
having sent produce to sell on commission to the former agent of the
defendant, can recover of the defendant under the circumstances above set
forth
RULING Yes. We are of the opinion that the defendant is liable. Having
advertised the fact that Collantes was his agent and having given them a
special invitation to deal with such agent, it was the duty of the defendant on
the termination of the relationship of principal and agent to give due and timely
notice thereof to the plaintiffs. Failing to do so, he is responsible to them for
whatever goods may have been in good faith and without negligence sent to
the agent without knowledge, actual or constructive, of the termination of such
relationship.
ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner,
vs.
vs.
Francisco A. Lava, Jr. and Andresito X. Fornier for Orient Air Service and
Hotel Representatives, Inc.
PADILLA, J.:
WITNESSETH
(a) soliciting and promoting passenger traffic for the services of American and,
if necessary, employing staff competent and sufficient to do so;
(e) holding out a passenger reservation facility to sales agents and the general
public in the assigned territory.
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:
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.
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 sub-agents.
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.
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 x x x3
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 Order4 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 Answer6 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:
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;
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 resolution10 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."
As the designated exclusive General Sales Agent of American Air, Orient Air
was responsible for the promotion and marketing of American Air's services
for air passenger transportation, and the solicitation of sales therefor. In return
for such efforts and services, Orient Air was to be paid commissions of two (2)
kinds: first, a sales agency commission, ranging from 7-8% of tariff fares and
charges from sales by Orient Air when made on American Air ticket stock; and
second, an overriding commission of 3% of tariff fares and charges for all
sales of passenger transportation over American Air services. It is immediately
observed that the precondition attached to the first type of commission does
not obtain for the second type of commissions. The latter type of commissions
would accrue for sales of American Air services made not on its ticket stock
but on the ticket stock of other air carriers sold by such carriers or other
authorized ticketing facilities or travel agents. To rule otherwise, i.e., to limit
the basis of such overriding commissions to sales from American Air ticket
stock would erase any distinction between the two (2) types of commissions
and would lead to the absurd conclusion that the parties had entered into a
contract with meaningless provisions. Such an interpretation must at all times
be avoided with every effort exerted to harmonize the entire Agreement.
An additional point before finally disposing of this issue. It is clear from the
records that American Air was the party responsible for the preparation of the
Agreement. Consequently, any ambiguity in this "contract of adhesion" is to be
taken "contra proferentem", i.e., construed against the party who caused the
ambiguity and could have avoided it by the exercise of a little more care.
Thus, Article 1377 of the Civil Code provides that the interpretation of obscure
words or stipulations in a contract shall not favor the party who caused the
obscurity.14 To put it differently, when several interpretations of a provision are
otherwise equally proper, that interpretation or construction is to be adopted
which is most favorable to the party in whose favor the provision was made
and who did not cause the ambiguity. 15 We therefore agree with the
respondent appellate court's declaration that:
SO ORDERED.
PADILLA, J.:
Facts:
American Air, an air carrier offering passenger and air cargo transportation,
entered into a General Sales Agency Agreement with Orient Air, authorizing
the latter to act as its exclusive general sales agent for the sale of air
passenger transportation. Orient air failed to remit the net proceeds of sales
for several months prompting American Air to undertake the collection of the
proceeds of tickets sold originally by Orient Air and terminating their
agreement.
American air instituted suit against Orient Air for the settlement of past
outstanding funds in possession of the latter. Orient Air contended that
because of the unpaid overriding commissions it retained the sales proceeds
before remitting the balance to American Air. American Air contended that the
sale must be made by Orient Air and the sale must be done with the use of
American Air’s ticket stocks in order for it to be entitled to the overriding
commission. 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 because it was an exclusive General Sales Agent. CA held that
Orient Air is entitled to commissions and ordered American Air to reinstate
Orient Air as its General Sales Agent.
Issue:
Held:
1.) Yes. 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 Agreement—that 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 of the Agreement
was, therefore, without cause and basis, for which it should be held liable to
Orient Air.
2.) No. CA 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. In an agent-principal
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. Such a
relationship can only be effected with the consent of the principal, which must
not, in any way, be compelled by law or by any court.
DECISION
KAPUNAN, J.:
On February 14, 1989, the NHA Board passed Resolution No. 1632
approving the acquisition of said lands, with an area of 31.8231
hectares, at the cost of P23.867 million, pursuant to which the
parties executed a series of Deeds of Absolute Sale covering the
subject lands. Of the eight parcels of land, however, only five were
paid for by the NHA because of the report 1 it received from the
Land Geosciences Bureau of the Department of Environment and
Natural Resources (DENR) that the remaining area is located at an
active landslide area and therefore, not suitable for development
into a housing project.
The applicable substantive law in this case is Article 1311 of the Civil
Code, which states:chanrob1es virtual 1aw library
Contracts take effect only between the parties, their assigns, and
heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation,
or by provision of law. . .
Neither has there been any allegation, much less proof, that
petitioners are the heirs of their principals.
The fact that an agent who makes a contract for his principal will
gain or suffer loss by the performance or nonperformance of the
contract by the principal or by the other party thereto does not
entitle him to maintain an action on his own behalf against the other
party for its breach. An agent entitled to receive a commission from
his principal upon the performance of a contract which he has made
on his principal’s account does not, from this fact alone, have any
claim against the other party for breach of the contract, either in an
action on the contract or otherwise. An agent who is not a promisee
cannot maintain an action at law against a purchaser merely
because he is entitled to have his compensation or advances paid
out of the purchase price before payment to the principal. . .
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
In this case, the NHA did not rescind the contract. Indeed, it did not
have the right to do so for the other parties to the contract, the
vendors, did not commit any breach, much less a substantial
breach, 18 of their obligation. Their obligation was merely to deliver
the parcels of land to the NHA, an obligation that they fulfilled. The
NHA did not suffer any injury by the performance thereof.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
x x x
Were the lands indeed unsuitable for the housing as NHA claimed?
MEMORANDUM
Geologist II
x x x
(Emphasis supplied.)
SO ORDERED.
PRUDENTIAL BANK, petitioner,
vs.
THE COURT OF APPEALS, AURORA CRUZ, respondents.
CRUZ, J.:
Upon maturity of the placement on August 25, 1986, Cruz returned to the
bank to "roll-over" or renew her investment. Quimbo, who again attended to
her, prepared a Credit Memo4 crediting the amount of P200,000.00 in Cruz's
savings account passbook. She also prepared a Debit Memo for the amount
of P196,122.88 to cover the re-investment of P200,000.00 minus the prepaid
interest of P3,877.02.5
This time, Cruz was asked to sign a Withdrawal Slip6 for P196,122.98,
representing the amount to be re-invested after deduction of the prepaid
interest. Quimbo explained this was a new requirement of the bank. Several
days later, Cruz received another Confirmation of Sale7 and a copy of the
Debit Memo.8
On October 27, 1986, Cruz returned to the bank and sought to withdraw her
P200,000.00. After verification of her records, however, she was informed that
the investment appeared to have been already withdrawn by her on August
25, 1986. There was no copy on file of the Confirmation of Sale and the Debit
Memo allegedly issued to her by Quimbo. Quimbo herself was not available
for questioning as she had not been reporting for the past week. Shocked by
this information, Cruz became hysterical and burst into tears. The branch
manager, Roman Santos, assured her that he would look into the matter.9
Cruz's reaction was to file a complaint for breach of contract against
Prudential Bank in the Regional Trial Court of Quezon City. She demanded
the return of her money with interest, plus damages and attorney's fees. In its
answer, the bank denied liability, insisting that Cruz had withdrawn her
investment. The bank also instituted a third-party complaint against Quimbo,
who did not file an answer and was declared in default. 15 The bank, however,
did not present any evidence against her.
After trial, Judge Rodolfo A. Ortiz rendered judgment in favor of the plaintiffs
and disposed as follows:
1. P200,000.00, plus interest thereon at the rate of 13.75% per annum from
October 27, 1986, until fully paid;
2. P30,000.00, as moral damages;
The judgment of the Court of Appeals 16 is now faulted in this petition, mainly
on the ground that the bank should not have been found liable for a quasi-
delict when it was sued for breach of contract.
The basic issues are factual. The private respondent claims she has not yet
collected her investment of P200,000.00 and has submitted in proof of their
contention the Confirmation of Sale and the Debit Memo issued to her by
Quimbo on the official forms of the bank. The petitioner denies her claim and
points to the Withdrawal Slip, which it says Cruz has not denied having
signed. It also contends that the Confirmation of Sale and the Debit Memo are
fake and should not have been given credence by the lower courts.
The findings of the trial court on these issues have been affirmed by the
respondent court and we see no reason to disturb them. The petitioner has
not shown that they have been reached arbitrarily or in disregard of the
evidence of record. On the contrary, we find substantial basis for the
conclusion that the private respondents signed the Withdrawal Slip only as
part of the bank's new procedure of re-investment. She did not actually
receive the amount indicated therein, which she was made to understand was
being re-invested in her name. The bank itself so assured her in the
Confirmation of Sale and the Debit Memo later issued to her by Quimbo.
What is more, it could not be that plaintiff Aurora F. Cruz withdrew only the
amount of P196,122.98 from their savings account, if her only intention was to
make such a withdrawal. For, if, indeed, it was the desire of the plaintiffs to
withdraw their money from the defendant/third-party plaintiff, they could have
withdrawn an amount in round figures. Certainly, it is unbelievable that their
withdrawal was in the irregular amount of P196,122.98 if they really received
it. On the contrary, this amount, which is the price of the Central Bank bills
rolled over, indicates that, as claimed by plaintiff Aurora F. Cruz, she did not
receive this money, but it was left by her with the defendant/third-party plaintiff
in order to buy Central Bank bills placement for another sixty-three (63) days,
for which she signed a withdrawal slip at the instance of third-party defendant
Susan Quimbo who told her that it was a new bank requirement for the roll-
over of a matured placement which she trustingly believed.
Indeed, the bank has not explained the remarkable coincidence that the
amount indicated in the withdrawal slip is exactly the same amount Cruz was
re-investing after deducting therefrom the pre-paid interest.
The bank has also not, succeeded in impugning the authenticity of the
Confirmation of Sale and the Debit Memo which were made on its official,
forms. These are admittedly not available to the general public or even its
depositors and are handled only by its personnel. Even assuming that they
were not signed by its authorized officials, as it claims, there was no obligation
on the part of Cruz to verify their authority because she had the right to
presume it. The documents had been issued in the office of the bank itself and
by its own employees with whom she had previously dealt. Such dealings had
not been questioned before, much leas invalidated. There was absolutely no
reason why she should not have accepted their authority to act on behalf of
their employer.
It is also worthy of note — and wonder — that although the bank impleaded
Quimbo in a third-party complaint, it did not pursue its suit even when she
failed to answer and was declared in default. The bank did not introduce
evidence against her although it could have done so under the rules. No less
remarkably, it did not call on her to testify on its behalf, considering that under
the circumstances claimed by it, she would have been the best witness to
show that Cruz had actually withdrawn her P200,000.00 placement. Instead,
the bank chose to rely on its other employees whose testimony was less direct
and categorical than the testimony Quimbo could have given.
We do not find that the Court of Appeals held the bank liable on a quasi-delict.
The argument of the petitioner on this issue is pallid, to say the least,
consisting as it does only of the observation that the article cited by the
respondent court on the agent's liability falls under the heading in the Civil
Code on quasi-delicts. On the other hand, the respondent court clearly
declared that:
There is no question that the petitioner was made liable for its failure or refusal
to deliver to Cruz the amount she had deposited with it and which she had a
right to withdraw upon its maturity. That investment was acknowledged by its
own employees, who had the apparent authority to do so and so could legally
bind it by its acts vis-a-vis Cruz. Whatever might have happened to the
investment — whether it was lost or stolen by whoever — was not the concern
of the depositor. It was the concern of the bank.
As far as Cruz was concerned, she had the right to withdraw her P200,000.00
placement when it matured pursuant to the terms of her investment as
acknowledged and reflected in the Confirmation of Sale. The failure of the
bank to deliver the amount to her pursuant to the Confirmation of Sale
constituted its breach of their contract, for which it should be held liable.
The liability of the principal for the acts of the agent is not even debatable.
Law and jurisprudence are clearly and absolutely against the petitioner.
Such liability dates back to the Roman Law maxim, Qui per alium facit per
seipsum facere videtur. "He who does a thing by an agent is considered as
doing it himself." This rule is affirmed by the Civil Code thus:
Art. 1910. The principal must comply with all the obligations which the agent
may have contracted within the scope of his authority.
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.
Conformably, we have declared in countless decisions that the principal is
liable for obligations contracted by the agent. The agent's apparent
representation yields to the principal's true representation and the contract is
considered as entered into between the principal and the third person. 18
A bank is liable for wrongful acts of its officers done in the interests of the
bank or in the course of dealings of the officers in their representative capacity
but not for acts outside the scope of their authority. (9 c.q.s. p. 417) A bank
holding out its officers and agent as worthy of confidence will not be permitted
to profit by the frauds they may thus be enabled to perpetrate in the apparent
scope of their employment; nor will it be permitted to shirk its responsibility for
such frauds, even though no benefit may accrue to the bank therefrom (10 Am
Jur 2d, p. 114). Accordingly, a banking corporation is liable to innocent third
persons where the representation is made in the course of its business by an
agent acting within the general scope of his authority even though, in the
particular case, the agent is secretly abusing his authority and attempting to
perpetrate a fraud upon his principal or some other person, for his own
ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40
ALR 1021.)
It would appear from the facts established in the case before us that the
petitioner was less than eager to present Quimbo at the trial or even to
establish her liability although it made the initial effort — which it did not
pursue — to hold her answerable in the third-party complaint. What ever
happened to her does not appear in the record. Her absence from the
proceedings feeds the suspicion of her possible misdeed, which the bank
seems to have studiously ignored by its insistence that the missing money had
been actually withdrawn by Cruz. By such insistence, the bank is absolving
not only itself but also, in effect and by extension, the disappeared Quimbo
who apparently has much to explain.
We agree with the lower courts that the petitioner acted in bad faith in denying
Cruz the obligation she was claiming against it. It was obvious that an
irregularity had been committed by the bank's personnel, but instead of
repairing the injury to Cruz by immediately restoring her money to her, it
sought to gloss over the anomaly in its own operations.
Cruz naturally suffered anxious moments and mental anguish over the loss of
the investment. The amount of P200,000.00 is not small even by present
standards. By unjustly withholding it from her on the unproved defense that
she had already withdrawn it, the bank violated the trust she had reposed in it
and thus subjected itself to further liability for moral and exemplary damages.
If a person dealing with a bank does not read the fine print in the contract, it is
because he trusts the bank and relies on its integrity. The ordinary customer
applying for a loan or even making a deposit (and so himself extending the
loan to the bank) does not bother with the red tape requirements and the
finicky conditions in the documents he signs. His feeling is that he does not
have to be wary of the bank because it will deal with him fairly and there is no
reason to suspect its motives. This is an attitude the bank must justify.
While this is not to say that bank regulations are meaningless or have no
binding effect, they should, however, not be used for covering up the fault of
bank employees when they blunder or, worse, intentionally cheat him. The
misdeeds of such employees must be readily acknowledged and rectified
without delay. The bank must always act in good faith. The ordinary customer
does not feel the need for a lawyer by his side every time he deals with a bank
because he is certain that it is not a predator or a potential adversary. The
bank should show that there is really no reason for any apprehension because
it truly deserves his faith in it.
Every day thereafter, Cruz went to the bank to inquire about her request to
withdraw her investment. She received no definite answer, not even to the
letter she wrote the bank which was received by Santos himself. 10 Finally,
Cruz sent the bank a demand letter dated November 12, 1986 for the amount
of P200,000.00 plus interest. 11 In a reply dated November 20, 1986, the
bank's Vice President Lauro J. Jocson said that there appeared to be an
anomaly
and requested Cruz to defer court action as they hoped to settle the matter
amicably. 12 Increasingly worried, Cruz sent another letter reiterating her
demand. 13 This time the reply of the bank was unequivocal and negative. She
was told that her request had to be denied because she had already
withdrawn the amount she was claiming. 14
vs.
On appeal via a Petition for Review on Certiorari is the Decision 1 of the Court
of Appeals (CA) in CA-G.R. CV No. 51022, which affirmed the Decision of the
Regional Trial Court (RTC), Pasig City, Branch 165, in Civil Case No. 54887,
as well as the Resolution 2 of the CA denying the motion for reconsideration
thereof.
Marquez thereafter offered the parcels of land and the improvements thereon
to Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. In a Letter dated
September 12, 1986, Marquez declared that he was authorized to sell the
properties for P27,000,000.00 and that the terms of the sale were subject to
negotiation.4
Eduardo Litonjua, Jr. responded to the offer. Marquez showed the property to
Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The Litonjua
siblings offered to buy the property for P20,000,000.00 cash. Marquez
apprised Glanville of the Litonjua siblings’ offer and relayed the same to
Delsaux in Belgium, but the latter did not respond. On October 28, 1986,
Glanville telexed Delsaux in Belgium, inquiring on his position/
counterproposal to the offer of the Litonjua siblings. It was only on February
12, 1987 that Delsaux sent a telex to Glanville stating that, based on the
"Belgian/Swiss decision," the final offer was "US$1,000,000.00 and
P2,500,000.00 to cover all existing obligations prior to final liquidation." 5
Marquez furnished Eduardo Litonjua, Jr. with a copy of the telex sent by
Delsaux. Litonjua, Jr. accepted the counterproposal of Delsaux. Marquez
conferred with Glanville, and in a Letter dated February 26, 1987, confirmed
that the Litonjua siblings had accepted the counter-proposal of Delsaux. He
also stated that the Litonjua siblings would confirm full payment within 90 days
after execution and preparation of all documents of sale, together with the
necessary governmental clearances.6
Sometime later, Marquez and the Litonjua brothers inquired from Glanville
when the sale would be implemented. In a telex dated April 22, 1987, Glanville
informed Delsaux that he had met with the buyer, which had given him the
impression that "he is prepared to press for a satisfactory conclusion to the
sale."8 He also emphasized to Delsaux that the buyers were concerned
because they would incur expenses in bank commitment fees as a
consequence of prolonged period of inaction.9
Delsaux himself later sent a letter dated May 22, 1987, confirming that the
ESAC Regional Office had decided not to proceed with the sale of the subject
land, to wit:
Philippines
Dear Sir:
Re: Land of Eternit Corporation
I would like to confirm officially that our Group has decided not to
proceed with the sale of the land which was proposed to you.
The Committee for Asia of our Group met recently (meeting every
six months) and examined the position as far as the Philippines are
(sic) concerned. Considering [the] new political situation since the
departure of MR. MARCOS and a certain stabilization in the
Philippines, the Committee has decided not to stop our operations
in Manila. In fact, production has started again last week, and (sic)
to recognize the participation in the Corporation.
We regret that we could not make a deal with you this time, but in
case the policy would change at a later state, we would consult you
again.
xxx
Yours sincerely,
(Sgd.)
C.F. DELSAUX
When apprised of this development, the Litonjuas, through counsel, wrote EC,
demanding payment for damages they had suffered on account of the aborted
sale. EC, however, rejected their demand.
The Litonjuas then filed a complaint for specific performance and damages
against EC (now the Eterton Multi-Resources Corporation) and the Far East
Bank & Trust Company, and ESAC in the RTC of Pasig City. An amended
complaint was filed, in which defendant EC was substituted by Eterton Multi-
Resources Corporation; Benito C. Tan, Ruperto V. Tan, Stock Ha T. Tan and
Deogracias G. Eufemio were impleaded as additional defendants on account
of their purchase of ESAC shares of stocks and were the controlling
stockholders of EC.
On July 3, 1995, the trial court rendered judgment in favor of defendants and
dismissed the amended complaint.12 The fallo of the decision reads:
WHEREFORE, the complaint against Eternit Corporation now Eterton Multi-
Resources Corporation and Eteroutremer, S.A. is dismissed on the ground
that there is no valid and binding sale between the plaintiffs and said
defendants.
The complaint as against Far East Bank and Trust Company is likewise
dismissed for lack of cause of action.
The trial court declared that since the authority of the agents/realtors was not
in writing, the sale is void and not merely unenforceable, and as such, could
not have been ratified by the principal. In any event, such ratification cannot
be given any retroactive effect. Plaintiffs could not assume that defendants
had agreed to sell the property without a clear authorization from the
corporation concerned, that is, through resolutions of the Board of Directors
and stockholders. The trial court also pointed out that the supposed sale
involves substantially all the assets of defendant EC which would result in the
eventual total cessation of its operation.14
The Litonjuas appealed the decision to the CA, alleging that "(1) the lower
court erred in concluding that the real estate broker in the instant case needed
a written authority from appellee corporation and/or that said broker had no
such written authority; and (2) the lower court committed grave error of law in
holding that appellee corporation is not legally bound for specific performance
and/or damages in the absence of an enabling resolution of the board of
directors."15 They averred that Marquez acted merely as a broker or go-
between and not as agent of the corporation; hence, it was not necessary for
him to be empowered as such by any written authority. They further claimed
that an agency by estoppel was created when the corporation clothed
Marquez with apparent authority to negotiate for the sale of the properties.
However, since it was a bilateral contract to buy and sell, it was equivalent to
a perfected contract of sale, which the corporation was obliged to
consummate.
In reply, EC alleged that Marquez had no written authority from the Board of
Directors to bind it; neither were Glanville and Delsaux authorized by its board
of directors to offer the property for sale. Since the sale involved substantially
all of the corporation’s assets, it would necessarily need the authority from the
stockholders.
On June 16, 2000, the CA rendered judgment affirming the decision of the
RTC. 16 The Litonjuas filed a motion for reconsideration, which was also
denied by the appellate court.
The CA ruled that Marquez, who was a real estate broker, was a special agent
within the purview of Article 1874 of the New Civil Code. Under Section 23 of
the Corporation Code, he needed a special authority from EC’s board of
directors to bind such corporation to the sale of its properties. Delsaux, who
was merely the representative of ESAC (the majority stockholder of EC) had
no authority to bind the latter. The CA pointed out that Delsaux was not even a
member of the board of directors of EC. Moreover, the Litonjuas failed to
prove that an agency by estoppel had been created between the parties.
II
III
Petitioners maintain that, based on the facts of the case, there was a
perfected contract of sale of the parcels of land and the improvements thereon
for "US$1,000,000.00 plus P2,500,000.00 to cover obligations prior to final
liquidation." Petitioners insist that they had accepted the counter-offer of
respondent EC and that before the counter-offer was withdrawn by
respondents, the acceptance was made known to them through real estate
broker Marquez.
Petitioners assert that there was no need for a written authority from the Board
of Directors of EC for Marquez to validly act as
broker/middleman/intermediary. As broker, Marquez was not an ordinary
agent because his authority was of a special and limited character in most
respects. His only job as a broker was to look for a buyer and to bring together
the parties to the transaction. He was not authorized to sell the properties or to
make a binding contract to respondent EC; hence, petitioners argue, Article
1874 of the New Civil Code does not apply.
In any event, petitioners aver, what is important and decisive was that
Marquez was able to communicate both the offer and counter-offer and their
acceptance of respondent EC’s counter-offer, resulting in a perfected contract
of sale.
Dear Sir,
I would like to confirm officially that our Group has decided not to
proceed with the sale of the land which was proposed to you.
The Committee for Asia of our Group met recently (meeting every
six months) and examined the position as far as the Philippines are
(sic) concerned. Considering the new political situation since the
departure of MR. MARCOS and a certain stabilization in the
Philippines, the Committee has decided not to stop our operations
in Manila[.] [I]n fact production started again last week, and (sic) to
reorganize the participation in the Corporation.
We regret that we could not make a deal with you this time, but in
case the policy would change at a later stage we would consult you
again.
Yours sincerely,
C.F. DELSAUX19
Petitioners further emphasize that they acted in good faith when Glanville and
Delsaux were knowingly permitted by respondent EC to sell the properties
within the scope of an apparent authority. Petitioners insist that respondents
held themselves to the public as possessing power to sell the subject
properties.
By way of comment, respondents aver that the issues raised by the petitioners
are factual, hence, are proscribed by Rule 45 of the Rules of Court. On the
merits of the petition, respondents EC (now EMC) and ESAC reiterate their
submissions in the CA. They maintain that Glanville, Delsaux and Marquez
had no authority from the stockholders of respondent EC and its Board of
Directors to offer the properties for sale to the petitioners, or to any other
person or entity for that matter. They assert that the decision and resolution of
the CA are in accord with law and the evidence on record, and should be
affirmed in toto.
Anent the first issue, we agree with the contention of respondents that the
issues raised by petitioner in this case are factual. Whether or not Marquez,
Glanville, and Delsaux were authorized by respondent EC to act as its agents
relative to the sale of the properties of respondent EC, and if so, the
boundaries of their authority as agents, is a question of fact. In the absence of
express written terms creating the relationship of an agency, the existence of
an agency is a fact question.20 Whether an agency by estoppel was created or
whether a person acted within the bounds of his apparent authority, and
whether the principal is estopped to deny the apparent authority of its agent
are, likewise, questions of fact to be resolved on the basis of the evidence on
record.21 The findings of the trial court on such issues, as affirmed by the CA,
are conclusive on the Court, absent evidence that the trial and appellate
courts ignored, misconstrued, or misapplied facts and circumstances of
substance which, if considered, would warrant a modification or reversal of the
outcome of the case.22
It must be stressed that issues of facts may not be raised in the Court under
Rule 45 of the Rules of Court because the Court is not a trier of facts. It is not
to re-examine and assess the evidence on record, whether testimonial and
documentary. There are, however, recognized exceptions where the Court
may delve into and resolve factual issues, namely:
We have reviewed the records thoroughly and find that the petitioners failed to
establish that the instant case falls under any of the foregoing exceptions.
Indeed, the assailed decision of the Court of Appeals is supported by the
evidence on record and the law.
It was the duty of the petitioners to prove that respondent EC had decided to
sell its properties and that it had empowered Adams, Glanville and Delsaux or
Marquez to offer the properties for sale to prospective buyers and to accept
any counter-offer. Petitioners likewise failed to prove that their counter-offer
had been accepted by respondent EC, through Glanville and Delsaux. It must
be stressed that when specific performance is sought of a contract made with
an agent, the agency must be established by clear, certain and specific
proof.24
xxxx
While a corporation may appoint agents to negotiate for the sale of its real
properties, the final say will have to be with the board of directors through its
officers and agents as authorized by a board resolution or by its by-laws.30 An
unauthorized act of an officer of the corporation is not binding on it unless the
latter ratifies the same expressly or impliedly by its board of directors. Any
sale of real property of a corporation by a person purporting to be an agent
thereof but without written authority from the corporation is null and void. The
declarations of the agent alone are generally insufficient to establish the fact
or extent of his/her authority.31
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that
another person is acting on his behalf without authority. Acceptance by the
agent may be expressed, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. 34 Agency may
be oral unless the law requires a specific form. 35 However, to create or convey
real rights over immovable property, a special power of attorney is
necessary.36 Thus, when a sale of a piece of land or any portion thereof is
through an agent, the authority of the latter shall be in writing, otherwise, the
sale shall be void.37
Moreover, the evidence of petitioners shows that Adams and Glanville acted
on the authority of Delsaux, who, in turn, acted on the authority of respondent
ESAC, through its Committee for Asia, 38 the Board of Directors of respondent
ESAC,39 and the Belgian/Swiss component of the management of respondent
ESAC.40 As such, Adams and Glanville engaged the services of Marquez to
offer to sell the properties to prospective buyers. Thus, on September 12,
1986, Marquez wrote the petitioner that he was authorized to offer for sale the
property for P27,000,000.00 and the other terms of the sale subject to
negotiations. When petitioners offered to purchase the property for
P20,000,000.00, through Marquez, the latter relayed petitioners’ offer to
Glanville; Glanville had to send a telex to Delsaux to inquire the position of
respondent ESAC to petitioners’ offer. However, as admitted by petitioners in
their Memorandum, Delsaux was unable to reply immediately to the telex of
Glanville because Delsaux had to wait for confirmation from respondent
ESAC.41 When Delsaux finally responded to Glanville on February 12, 1987,
he made it clear that, based on the "Belgian/Swiss decision" the final offer of
respondent ESAC was US$1,000,000.00 plus P2,500,000.00 to cover all
existing obligations prior to final liquidation. 42 The offer of Delsaux emanated
only from the "Belgian/Swiss decision," and not the entire management or
Board of Directors of respondent ESAC. While it is true that petitioners
accepted the counter-offer of respondent ESAC, respondent EC was not a
party to the transaction between them; hence, EC was not bound by such
acceptance.
While Glanville was the President and General Manager of respondent EC,
and Adams and Delsaux were members of its Board of Directors, the three
acted for and in behalf of respondent ESAC, and not as duly authorized
agents of respondent EC; a board resolution evincing the grant of such
authority is needed to bind EC to any agreement regarding the sale of the
subject properties. Such board resolution is not a mere formality but is a
condition sine qua non to bind respondent EC. Admittedly, respondent ESAC
owned 90% of the shares of stocks of respondent EC; however, the mere fact
that a corporation owns a majority of the shares of stocks of another, or even
all of such shares of stocks, taken alone, will not justify their being treated as
one corporation.43
The petitioners cannot feign ignorance of the absence of any regular and valid
authority of respondent EC empowering Adams, Glanville or Delsaux to offer
the properties for sale and to sell the said properties to the petitioners. A
person dealing with a known agent is not authorized, under any
circumstances, blindly to trust the agents; statements as to the extent of his
powers; such person must not act negligently but must use reasonable
diligence and prudence to ascertain whether the agent acts within the scope
of his authority.45 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.46 In this case, the petitioners failed to discharge their burden;
hence, petitioners are not entitled to damages from respondent EC.
It appears that Marquez acted not only as real estate broker for the petitioners
but also as their agent. As gleaned from the letter of Marquez to Glanville, on
February 26, 1987, he confirmed, for and in behalf of the petitioners, that the
latter had accepted such offer to sell the land and the improvements thereon.
However, we agree with the ruling of the appellate court that Marquez had no
authority to bind respondent EC to sell the subject properties. A real estate
broker is one who negotiates the sale of real properties. His business,
generally speaking, is only to find a purchaser who is willing to buy the land
upon terms fixed by the owner. He has no authority to bind the principal by
signing a contract of sale. Indeed, an authority to find a purchaser of real
property does not include an authority to sell.47
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioners.
SO ORDERED.
DIGEST:
A partnership may be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a public
instrument shall be necessary.
Annex ' A-1 ', on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling
that Annex ' A-1 does not meet the public instrumentation requirements
exacted under Article 1771 of the Civil Code. Moreover, being unsigned and
doubtless referring to a partnership involving more than P3,000.00 in money
or property, Annex ' A-1 cannot be presented for notarization, let alone
registered with the Securities and Exchange Commission (SEC), as called for
under the Article 1772 of the Code. And inasmuch as the inventory
requirement under the succeeding Article 1773 goes into the matter of validity
when immovable property is contributed to the partnership, the next logical
point of inquiry turns on the nature of petitioner's contribution, if any, to the
supposed partnership. Considering thus the value and nature of petitioner's
alleged contribution to the purported partnership, the Court, even if so
disposed, cannot plausibly extend Annex ' A-1 the legal effects that petitioner
so desires and pleads to be given. Annex ' A-1 , in fine, cannot support the
existence of the partnership sued upon and sought to be enforced. The legal
and factual milieu of the case calls for this disposition. A partnership may be
constituted in any form, save when immovable property or real rights are
contributed thereto or when the partnership has a capital of at least
P3,000.00, in which case a public instrument shall be necessary.
vs.
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from the
January 30, 2009 Decision1 of the Special Thirteenth Division of the Court of
Appeals (CA) in CA-G.R. CV No. 88586 entitled "Spouses Fernando and
Lourdes Viloria v. Continental Airlines, Inc.," the dispositive portion of which
states:
WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03
April 2006, awarding US$800.00 or its peso equivalent at the time of payment,
plus legal rate of interest from 21 July 1997 until fully paid, [₱]100,000.00 as
moral damages, [₱]50,000.00 as exemplary damages, [₱]40,000.00 as
attorney’s fees and costs of suit to plaintiffs-appellees is hereby REVERSED
and SET ASIDE.
SO ORDERED.2
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC)
rendered a Decision, giving due course to the complaint for sum of money and
damages filed by petitioners Fernando Viloria (Fernando) and Lourdes Viloria
(Lourdes), collectively called Spouses Viloria, against respondent Continental
Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise
to such complaint.
On or about July 21, 1997 and while in the United States, Fernando
purchased for himself and his wife, Lourdes, two (2) round trip airline tickets
from San Diego, California to Newark, New Jersey on board Continental
Airlines. Fernando purchased the tickets at US$400.00 each from a travel
agency called "Holiday Travel" and was attended to by a certain Margaret
Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the
said tickets after Mager informed them that there were no available seats at
Amtrak, an intercity passenger train service provider in the United States. Per
the tickets, Spouses Viloria were scheduled to leave for Newark on August 13,
1997 and return to San Diego on August 21, 1997.
From Amtrak, Fernando went to Holiday Travel and confronted Mager with the
Amtrak tickets, telling her that she had misled them into buying the
Continental Airlines tickets by misrepresenting that Amtrak was already fully
booked. Fernando reiterated his demand for a refund but Mager was firm in
her position that the subject tickets are non-refundable.
In a letter dated June 21, 1999, Fernando demanded for the refund of the
subject tickets as he no longer wished to have them replaced. In addition to
the dubious circumstances under which the subject tickets were issued,
Fernando claimed that CAI’s act of charging him with US$1,867.40 for a round
trip ticket to Los Angeles, which other airlines priced at US$856.00, and
refusal to allow him to use Lourdes’ ticket, breached its undertaking under its
March 24, 1998 letter.6
CAI interposed the following defenses: (a) Spouses Viloria have no right to
ask for a refund as the subject tickets are non-refundable; (b) Fernando
cannot insist on using the ticket in Lourdes’ name for the purchase of a round
trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is
not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its
employees and agents did not act in bad faith as to entitle Spouses Viloria to
moral and exemplary damages and attorney’s fees. CAI also invoked the
following clause printed on the subject tickets:
3. To the extent not in conflict with the foregoing carriage and other services
performed by each carrier are subject to: (i) provisions contained in this ticket,
(ii) applicable tariffs, (iii) carrier’s conditions of carriage and related regulations
which are made part hereof (and are available on application at the offices of
carrier), except in transportation between a place in the United States or
Canada and any place outside thereof to which tariffs in force in those
countries apply.8
Following a full-blown trial, the RTC rendered its April 3, 2006 Decision,
holding that Spouses Viloria are entitled to a refund in view of Mager’s
misrepresentation in obtaining their consent in the purchase of the subject
tickets.9 The relevant portion of the April 3, 2006 Decision states:
Continental Airlines agent Ms. Mager was in bad faith when she was less
candid and diligent in presenting to plaintiffs spouses their booking options.
Plaintiff Fernando clearly wanted to travel via AMTRAK, but defendant’s agent
misled him into purchasing Continental Airlines tickets instead on the
fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant
Airline did not specifically denied (sic) this allegation.
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is
CAI’s agent, hence, bound by her bad faith and misrepresentation. As far as
the RTC is concerned, there is no issue as to whether Mager was CAI’s agent
in view of CAI’s implied recognition of her status as such in its March 24, 1998
letter.
The act of a travel agent or agency being involved here, the following are the
pertinent New Civil Code provisions on agency:
Art. 1868. 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.
Art. 1869. Agency may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority.
As its very name implies, a travel agency binds itself to render some service
or to do something in representation or on behalf of another, with the consent
or authority of the latter. This court takes judicial notice of the common
services rendered by travel agencies that represent themselves as such,
specifically the reservation and booking of local and foreign tours as well as
the issuance of airline tickets for a commission or fee.
The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff
spouses on July 21, 1997 were no different from those offered in any other
travel agency. Defendant airline impliedly if not expressly acknowledged its
principal-agent relationship with Ms. Mager by its offer in the letter dated
March 24, 1998 – an obvious attempt to assuage plaintiffs spouses’ hurt
feelings.11
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its
undertaking to replace the subject tickets within two (2) years from their date
of issue when it charged Fernando with the amount of US$1,867.40 for a
round trip ticket to Los Angeles and when it refused to allow Fernando to use
Lourdes’ ticket. Specifically:
Tickets may be reissued for up to two years from the original date of issue.
When defendant airline still charged plaintiffs spouses US$1,867.40 or more
than double the then going rate of US$856.00 for the unused tickets when the
same were presented within two (2) years from date of issue, defendant airline
exhibited callous treatment of passengers.12
On appeal, the CA reversed the RTC’s April 3, 2006 Decision, holding that
CAI cannot be held liable for Mager’s act in the absence of any proof that a
principal-agent relationship existed between CAI and Holiday Travel.
According to the CA, Spouses Viloria, who have the burden of proof to
establish the fact of agency, failed to present evidence demonstrating that
Holiday Travel is CAI’s agent. Furthermore, contrary to Spouses Viloria’s
claim, the contractual relationship between Holiday Travel and CAI is not an
agency but that of a sale.
The CA also ruled that refund is not available to Spouses Viloria as the word
"non-refundable" was clearly printed on the face of the subject tickets, which
constitute their contract with CAI. Therefore, the grant of their prayer for a
refund would violate the proscription against impairment of contracts.
Finally, the CA held that CAI did not act in bad faith when they charged
Spouses Viloria with the higher amount of US$1,867.40 for a round trip ticket
to Los Angeles. According to the CA, there is no compulsion for CAI to charge
the lower amount of US$856.00, which Spouses Viloria claim to be the fee
charged by other airlines. The matter of fixing the prices for its services is
CAI’s prerogative, which Spouses Viloria cannot intervene. In particular:
In this Petition, this Court is being asked to review the findings and
conclusions of the CA, as the latter’s reversal of the RTC’s April 3, 2006
Decision allegedly lacks factual and legal bases. Spouses Viloria claim that
CAI acted in bad faith when it required them to pay a higher amount for a
round trip ticket to Los Angeles considering CAI’s undertaking to re-issue new
tickets to them within the period stated in their March 24, 1998 letter. CAI
likewise acted in bad faith when it disallowed Fernando to use Lourdes’ ticket
to purchase a round trip to Los Angeles given that there is nothing in Lourdes’
ticket indicating that it is non-transferable. As a common carrier, it is CAI’s
duty to inform its passengers of the terms and conditions of their contract and
passengers cannot be bound by such terms and conditions which they are not
made aware of. Also, the subject contract of carriage is a contract of
adhesion; therefore, any ambiguities should be construed against CAI.
Notably, the petitioners are no longer questioning the validity of the subject
contracts and limited its claim for a refund on CAI’s alleged breach of its
undertaking in its March 24, 1998 letter.
In its Comment, CAI claimed that Spouses Viloria’s allegation of bad faith is
negated by its willingness to issue new tickets to them and to credit the value
of the subject tickets against the value of the new ticket Fernando requested.
CAI argued that Spouses Viloria’s sole basis to claim that the price at which
CAI was willing to issue the new tickets is unconscionable is a piece of
hearsay evidence – an advertisement appearing on a newspaper stating that
airfares from Manila to Los Angeles or San Francisco cost US$818.00. 15 Also,
the advertisement pertains to airfares in September 2000 and not to airfares
prevailing in June 1999, the time when Fernando asked CAI to apply the value
of the subject tickets for the purchase of a new one. 16 CAI likewise argued that
it did not undertake to protect Spouses Viloria from any changes or
fluctuations in the prices of airline tickets and its only obligation was to apply
the value of the subject tickets to the purchase of the newly issued tickets.
With respect to Spouses Viloria’s claim that they are not aware of CAI’s
restrictions on the subject tickets and that the terms and conditions that are
printed on them are ambiguous, CAI denies any ambiguity and alleged that its
representative informed Fernando that the subject tickets are non-transferable
when he applied for the issuance of a new ticket. On the other hand, the word
"non-refundable" clearly appears on the face of the subject tickets.
CAI also denies that it is bound by the acts of Holiday Travel and Mager and
that no principal-agency relationship exists between them. As an independent
contractor, Holiday Travel was without capacity to bind CAI.
Issues
To determine the propriety of disturbing the CA’s January 30, 2009 Decision
and whether Spouses Viloria have the right to the reliefs they prayed for, this
Court deems it necessary to resolve the following issues:
c. Assuming that CAI is bound by the acts of Holiday Travel’s agents and
employees, can the representation of Mager as to unavailability of seats at
Amtrak be considered fraudulent as to vitiate the consent of Spouse Viloria in
the purchase of the subject tickets?
d. Is CAI justified in insisting that the subject tickets are non-transferable and
non-refundable?
e. Is CAI justified in pegging a different price for the round trip ticket to Los
Angeles requested by Fernando?
f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses
Viloria to apply the value of the subject tickets in the purchase of new ones
when it refused to allow Fernando to use Lourdes’ ticket and in charging a
higher price for a round trip ticket to Los Angeles?
With respect to the first issue, which is a question of fact that would
require this Court to review and re-examine the evidence presented
by the parties below, this Court takes exception to the general rule
that the CA’s findings of fact are conclusive upon Us and our
jurisdiction is limited to the review of questions of law. It is well-
settled to the point of being axiomatic that this Court is authorized to
resolve questions of fact if confronted with contrasting factual
findings of the trial court and appellate court and if the findings of
the CA are contradicted by the evidence on record.17
II. In actions based on quasi-delict, a principal can only be held liable for
the tort committed by its agent’s employees if it has been established by
preponderance of evidence that the principal was also at fault or
negligent or that the principal exercise control and supervision over
them.
It may seem unjust at first glance that CAI would consider Spouses
Viloria bound by the terms and conditions of the subject contracts,
which Mager entered into with them on CAI’s behalf, in order to
deny Spouses Viloria’s request for a refund or Fernando’s use of
Lourdes’ ticket for the re-issuance of a new one, and
simultaneously claim that they are not bound by Mager’s supposed
misrepresentation for purposes of avoiding Spouses Viloria’s claim
for damages and maintaining the validity of the subject contracts. It
may likewise be argued that CAI cannot deny liability as it benefited
from Mager’s acts, which were performed in compliance with
Holiday Travel’s obligations as CAI’s agent.
However, a person’s vicarious liability is anchored on his
possession of control, whether absolute or limited, on the tortfeasor.
Without such control, there is nothing which could justify extending
the liability to a person other than the one who committed the tort.
As this Court explained in Cangco v. Manila Railroad Co.:25
In Belen v. Belen, this Court ruled that it was enough for defendant
to deny an alleged employment relationship. The defendant is
under no obligation to prove the negative averment. This Court
said:
"It is an old and well-settled rule of the courts that the burden of
proving the action is upon the plaintiff, and that if he fails
satisfactorily to show the facts upon which he bases his claim, the
defendant is under no obligation to prove his exceptions. This [rule]
is in harmony with the provisions of Section 297 of the Code of Civil
Procedure holding that each party must prove his own affirmative
allegations, etc."29 (citations omitted)
III. Even on the assumption that CAI may be held liable for the acts of
Mager, still, Spouses Viloria are not entitled to a refund. Mager’s
statement cannot be considered a causal fraud that would justify the
annulment of the subject contracts that would oblige CAI to indemnify
Spouses Viloria and return the money they paid for the subject tickets.
After meticulously poring over the records, this Court finds that the
fraud alleged by Spouses Viloria has not been satisfactorily
established as causal in nature to warrant the annulment of the
subject contracts. In fact, Spouses Viloria failed to prove by clear
and convincing evidence that Mager’s statement was fraudulent.
Specifically, Spouses Viloria failed to prove that (a) there were
indeed available seats at Amtrak for a trip to New Jersey on August
13, 1997 at the time they spoke with Mager on July 21, 1997; (b)
Mager knew about this; and (c) that she purposely informed them
otherwise.
This Court finds the only proof of Mager’s alleged fraud, which is
Fernando’s testimony that an Amtrak had assured him of the
perennial availability of seats at Amtrak, to be wanting. As CAI
correctly pointed out and as Fernando admitted, it was possible that
during the intervening period of three (3) weeks from the time
Fernando purchased the subject tickets to the time he talked to said
Amtrak employee, other passengers may have cancelled their
bookings and reservations with Amtrak, making it possible for
Amtrak to accommodate them. Indeed, the existence of fraud
cannot be proved by mere speculations and conjectures. Fraud is
never lightly inferred; it is good faith that is. Under the Rules of
Court, it is presumed that "a person is innocent of crime or wrong"
and that "private transactions have been fair and regular." 35
Spouses Viloria failed to overcome this presumption.
The injured party may choose between the fulfilment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
In its March 24, 1998 letter, CAI stated that "non-refundable tickets
may be used as a form of payment toward the purchase of another
Continental ticket for $75.00, per ticket, reissue fee ($50.00, per
ticket, for tickets purchased prior to October 30, 1997)."
CAI’s refusal to accept Lourdes’ ticket for the purchase of a new ticket
for Fernando is only a casual breach.
While CAI’s refusal to allow Fernando to use the value of Lourdes’ ticket as
payment for the purchase of a new ticket is unjustified as the non-
transferability of the subject tickets was not clearly stipulated, it cannot,
however be considered substantial. The endorsability of the subject tickets is
not an essential part of the underlying contracts and CAI’s failure to comply is
not essential to its fulfillment of its undertaking to issue new tickets upon
Spouses Viloria’s surrender of the subject tickets. This Court takes note of
CAI’s willingness to perform its principal obligation and this is to apply the
price of the ticket in Fernando’s name to the price of the round trip ticket
between Manila and Los Angeles. CAI was likewise willing to accept the ticket
in Lourdes’ name as full or partial payment as the case may be for the
purchase of any ticket, albeit under her name and for her exclusive use. In
other words, CAI’s willingness to comply with its undertaking under its March
24, 1998 cannot be doubted, albeit tainted with its erroneous insistence that
Lourdes’ ticket is non-transferable.
Art. 1192. In case both parties have committed a breach of the obligation,
the liability of the first infractor shall be equitably tempered by the
courts. If it cannot be determined which of the parties first violated the
contract, the same shall be deemed extinguished, and each shall bear his own
damages. (emphasis supplied)
Therefore, CAI’s liability for damages for its refusal to accept Lourdes’ ticket
for the purchase of Fernando’s round trip ticket is offset by Spouses Viloria’s
liability for their refusal to pay the amount, which is not covered by the subject
tickets. Moreover, the contract between them remains, hence, CAI is duty
bound to issue new tickets for a destination chosen by Spouses Viloria upon
their surrender of the subject tickets and Spouses Viloria are obliged to pay
whatever amount is not covered by the value of the subject tickets.
This Court made a similar ruling in Central Bank of the Philippines v. Court of
Appeals.46 Thus:
Article 1192 of the Civil Code provides that in case both parties have
committed a breach of their reciprocal obligations, the liability of the first
infractor shall be equitably tempered by the courts. WE rule that the liability of
Island Savings Bank for damages in not furnishing the entire loan is offset by
the liability of Sulpicio M. Tolentino for damages, in the form of penalties and
surcharges, for not paying his overdue ₱17,000.00 debt. x x x.47
Another consideration that militates against the propriety of holding CAI liable
for moral damages is the absence of a showing that the latter acted
fraudulently and in bad faith. Article 2220 of the Civil Code requires evidence
of bad faith and fraud and moral damages are generally not recoverable in
culpa contractual except when bad faith had been proven. 48 The award of
exemplary damages is likewise not warranted. Apart from the requirement that
the defendant acted in a wanton, oppressive and malevolent manner, the
claimant must prove his entitlement to moral damages.49
SO ORDERED.
Spouses Fernando Viloria and Lourdes
Viloria vs Continental Airlines, Inc.
On September 23, 2012
Business Organization – Partnership, Agency, Trust – Elements of Agency –
Estoppel
In 1997, while the spouses Viloria were in the United States, they approached
Holiday Travel, a
travel agency working for Continental Airlines, to purchase tickets from
Newark to San Diego.
The travel agent, Margaret Mager, advised the couple that they cannot travel
by train because it Is fully booked; that they must purchase plane tickets for
Continental Airlines; that if they won’t
purchase plane tickets; they’ll never reach their destination in time. The couple
believed Mager’s
representations and so they purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train trip isn’t fully booked and
so they purchased
train tickets and went to their destination by train instead. Then they called up
Mager to request
for a refund for the plane tickets. Mager referred the couple to Continental
Airlines. As the
couple are now in the Philippines, they filed their request with Continental
Airline’s office in
Ayala. The spouses Viloria alleged that Mager misled them into believing that
the only way to
travel was by plane and so they were fooled into buying expensive tickets.
Continental Airlines refused to refund the amount of the ticket and so the
spouses sued the airline company. In its defense, Continental Airlines claimed
that the ticket sold to them by Mager is non -refundable; that, if any, they are
not bound by the misrepresentations of Mager because there’s no agency
existing between Continental Airlines and Mager. The trial court ruled in favor
of spouses Viloria but the Court of Appeals reversed the ruling of the RTC.
ISSUE:
HELD:
Yes. All the elements of agency are present, to wit:
1. there is consent, express or implied of the parties to establish the
relationship;
2. the object is the execution of a juridical act in relation to a third person;
3.the agent acts as a representative and not for himself, and
4. the agent acts within the scope of his authority.
The first and second elements are present as Continental Airlines does not
deny that it
concluded an agreement with Holiday Travel to which Mager is part of,
whereby Holiday Travel would enter into contracts of carriage with third
persons on the airlines’ behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and it
is Continental Airlines and not Holiday Travel who is bound by the contracts of
carriage
entered into by Holiday Travel on its behalf. The fourth element is also present
considering that
Continental Airlines has not made any allegation that Holiday Travel exceeded
the authority that
was granted to it.
DECISION
GARCIA, J.:
The facts:
For this reason, I have given her the original copy of the award,
dated May 5, 1980 and O.R. No. 8706855 dated May 20, 1980
which will indicate my waiver of rights, interests and participation in
favor of LIZETTE R. WIJANCO.
Thank you for your cooperation.
On August 10, 1988, the spouses Angeles filed suit against the PNR
and its corporate secretary, Rodolfo Flores, among others, for
specific performance and damages before the Regional Trial Court of
Quezon City. In it, they prayed that PNR be directed to deliver 46
metric tons of scrap/unserviceable rails and to pay them damages
and attorney's fees.
Issues having been joined following the filing by PNR, et al., of their
answer, trial ensued. Meanwhile, Lizette W. Angeles passed away
and was substituted by her heirs, among whom is her husband,
herein petitioner Laureno T. Angeles.
On April 16, 1996, the trial court, on the postulate that the spouses
Angeles are not the real parties-in-interest, rendered judgment
dismissing their complaint for lack of cause of action. As held by the
court, Lizette was merely a representative of Romualdez in the
withdrawal of scrap or unserviceable rails awarded to him and not
an assignee to the latter's rights with respect to the award.
At the crux of the issue is the matter of how the aforequoted May
26, 1980 letter of Romualdez to Atty. Dizon of the PNR should be
taken: was it meant to designate, or has it the effect of designating,
Lizette W. Angeles as a mere agent or as an assignee of his
(Romualdez's) interest in the scrap rails awarded to San Juanico
Enterprises? The CA's conclusion, affirmatory of that of the trial
court, is that Lizette was not an assignee, but merely an agent
whose authority was limited to the withdrawal of the scrap rails,
hence, without personality to sue.
Where agency exists, the third party's (in this case, PNR's) liability
on a contract is to the principal and not to the agent and the
relationship of the third party to the principal is the same as that in
a contract in which there is no agent. Normally, the agent has
neither rights nor liabilities as against the third party. He cannot
thus sue or be sued on the contract. Since a contract may be
violated only by the parties thereto as against each other, the real
party-in-interest, either as plaintiff or defendant in an action upon
that contract must, generally, be a contracting party.
that when one has a right assigned to him, he is then the real party-
in-interest and may maintain an action upon such claim or right. 4
For this reason, I have given her the original copy of the award,
dated May 5, 1980 and O.R. No. 8706855 dated May 20, 1980
which will indicate my waiver of rights, interests and participation in
favor of LIZETTE R. WIJANCO. (Emphasis added)
If Lizette was without legal standing to sue and appear in this case,
there is more reason to hold that her petitioner husband, either as
her conjugal partner or her heir, is also without such standing.
Article 1374 of the Civil Code provides that the various stipulations
of a contract shall be read and interpreted together, attributing to
the doubtful ones that sense which may result from all of them
taken jointly. In fine, the real intention of the parties is primarily to
be determined from the language used and gathered from the whole
instrument. When put into the context of the letter as a whole, it is
abundantly clear that the rights which Romualdez waived or ceded
in favor of Lizette were those in furtherance of the agency relation
that he had established for the withdrawal of the rails.
SO ORDERED.
The Lizette R. Wijanco was petitioner's now deceased wife. That very same
day, Lizette requested the PNR to transfer the location of withdrawal for the
reason that the scrap/unserviceable rails located in Del Carmen and Lubao,
Pampanga were not ready for hauling.The PNR granted said request and
allowed Lizette to withdraw scrap/unserviceable rails in Murcia, Capas and
San Miguel, Tarlac instead.
Lizette W. Angeles passed away and was substituted by her heirs, among
whom is her husband, herein petitioner Laureno T. Angeles. The trial court, on
the postulate that the spouses Angeles are not the real parties-in-interest,
rendered judgment dismissing their complaint for lack of cause of action. As
held by the court, Lizette was merely a representative of Romualdez in the
withdrawal of scrap or unserviceable rails awarded to him and not an assignee
to the latter's rights with respect to the award. Petitioner appealed with the
Court of Appeals which dismissed the appeal and affirmed that of the trial
court.
Issue:
Whether or not the CA erred in affirming the trial court's holding that petitioner
and his spouse, as plaintiffs a quo, had no cause of action as they were not
the real parties-in-interest in this case.
Held: No.The CA’s conclusion, affirmatory of that of the trial court, is that
Lizette was not an assignee, but merely an agent whose authority was limited
to the withdrawal of the scrap rails, hence, without personality to sue.Where
agency exists, the third party's (in this case, PNR's) liability on a contract is to
the principal and not to the agent and the relationship of the third party to the
principal is the same as that in a contract in which there is no agent. Normally,
the agent has neither rights nor liabilities as against the third party. He cannot
thus sue or be sued on the contract.
Since a contract may be violated only by the parties thereto as against each
other, the real party-in-interest, either as plaintiff or defendant in an action
upon that contract must, generally, be a contracting party. The legal situation
is, however, different where an agent is constituted as an assignee. In such a
case, the agent may, in his own behalf, sue on a contract made for his
principal, as an assignee of such contract. The rulerequiring every action to be
prosecuted in the name of the real partyin-interest recognizes the assignment
of rights of action and also recognizesthat when one has a right assigned to
him, he is then the real party-in-interest and may maintain an action upon
such claim or right. WHEREFORE, the petition is DENIED and the assailed
decision of the CA is AFFIRMED.Costs against the petitioner.
vs.
This action was instituted by the plaintiff, Gregorio Jimenez, to recover from
the defendant, Pedro Rabot, a parcel of land situated in the municipality of
Alaminos, in the Province of Pangasinan, and described in the complaint as
follows:
Approximate area of three hectares; bounded on the north and west with land
of Pedro Reynoso, on the south with land of Nicolasa Jimenez, and on the
east with land of Calixta Apostol before, at present with that of Juan
Montemayor and Simon del Barrio. It is situated in Dinmayat Tancaran, barrio
of Alos of this same municipality of Alaminos, Pangasinan.
From a judgment rendered in favor of the plaintiff, Pedro Rabot has appealed;
but his co-defendants, Nicolasa Jimenez and her husband, who were cited by
the defendant for the purpose of holding her liable upon her warranty in case
of his eviction, have not appealed.
It is admitted that the parcel of land in question, together with two other
parcels in the same locality originally belonged of the heirs in the division of
the estate of his father. It is further appears that while Gregorio was staying at
Vigan, in the Province of Ilocos Sur, during the year 1911, his property in
Alaminos was confided by him to the care of his elder sister Nicolasa Jimenez.
On February 7 of that year he wrote this sister a letter from Vigan in which he
informed her that he was pressed for money and requested her to sell one of
his parcels of land and send him the money in order that he might pay his
debts. This letter contains no description of the land to be sold other than is
indicated in the words "one of my parcels of land" ("uno de mis terrenos").
Acting upon this letter Nicolasa approached the defendant Pedro Rabot, and
the latter agreed to buy the parcel in question for the sum of P500. Two
hundred and fifty peso were paid at once, with the understanding that a deed
of conveyance would be executed when the balance should be paid. Nicolasa
admits having received this payment of P250 at the time stated; but there is
no evidence that she sent any of it to her brother.
About one year later Gregorio came down to Alaminos and demanded that his
sister should surrender this piece of land to him, it being then in her
possession. She refused upon some pretext or other to do so; and as a result
Gregorio, in conjunction with others of his brothers and sisters, whose
properties were also in the hands of Nicolasa, instituted an action in the Court
of First Instance for the purpose of recovering their land from her control. This
action was decided favorably to the plaintiffs upon August 12, 1913; and no
appeal was taken from the judgment.
Meanwhile, upon May 31, 1912, Nicolasa Jimenez executed and delivered to
Pedro Rabot a deed purporting to convey to him the parcel of land which is
the subject of this controversy. The deed recites that the sale was made in
consideration of the sum of P500, the payment of which is acknowledged.
Pedro Rabot went into possession, and the property was found in his hands at
the time when final judgment was entered in favor of the plaintiffs in the action
above mentioned. It will thus be seen that Pedro Rabot acquired possession
under the deed from Nicolasa during the pendency of the litigation appear that
he was at the time cognizant of that circumstance.
The principal question for consideration therefore in the end resolves itself into
this, whether the authority conferred on Nicolasa by the letter of February 7,
1911, was sufficient to enable her to bind her brother. The only provisions of
law bearing on this point are contained in article 1713 of the Civil Code and in
section 335 of the Code of Civil Procedure. Article 1713 of the Civil Code
requires that the authority to alienate land shall be contained in an express
mandate; while subsection 5 of section 335 of the Code of Civil Procedure
says that the authority of the agent must be in writing and subscribed by the
party to be charged. We are of the opinion that the authority expressed in the
letter is a sufficient compliance with both requirements.
It has been urged here that in order for the authority to be sufficient under
section 335 of the Code of Civil Procedure the authorization must contain a
particular description of the property which the agent is to be permitted to sell.
There is no such requirement in subsection 5 of section 335; and we do not
believe that it would be legitimate to read such a requirement into it. The
purpose in giving a power of attorney is to substitute the mind and hand of the
agent for the mind and hand of the principal; and if the character and extent of
the power is so far defined as to leave no doubt as to the limits within which
the agent is authorized to act, and he acts within those limits, the principal
cannot question the validity of his act. It is not necessary that the particular act
to be accomplished should be predestinated by the language of the power.
The question to be answered always, after the power has been exercised, is
rather this: Was the act which the agent performed within the scope of his
authority? In the case before us, if the question is asked whether the act
performed by Nicolasa Jimenez was within the scope of the authority which
had been conferred upon her, the answer must be obviously in the affirmative.
It should not escape observation that the problem with which we are here
concerned relates to the sufficiency of the power of attorney under subsection
5 of section 335 of the Code of Civil Procedure and not to the sufficiency of
the note or memorandum of the contract, or agreement of sale, required by
the same subsection, in connection with the first paragraph of the same
section. It is well-settled in the jurisprudence of England and the United States
that when the owner, or his agent, comes to make a contract to sell, or a
conveyance to effect a transfer, there must be a description of the property
which is the subject of the sale or conveyance. This is necessary of course to
define the object of the contract. (Brockway vs. Frost, 40 Minn., 155; Carr vs.
Passaic Land etc. Co., 19 N. J. Eq., 424; Lippincott vs. Bridgewater, 55 N. J.
Eq., 208; Craig vs. Zelian, 137 Cal., 105; 20 Cyc., 271.)
The general rule here applicable is that the description must be sufficiently
definite to identify the land either from the recitals of the contract or deed or
from external facts referred to in the document, thereby enabling one to
determine the identity of the land and if the description is uncertain on its face
or is shown to be applicable with equal plausibility to more than one tract, it is
insufficient. The principle embodied in these decisions is not, in our opinion,
applicable to the present case, which relates to the sufficiency of the
authorization, not to the sufficiency of the contract or conveyance. It is
unquestionable that the deed which Nicolasa executed contains a proper
description of the property which she purported to convey.
There is ample authority to the effect that a person may by a general power of
attorney an agent to sell "all" the land possessed by the principal, or all that he
possesses in a particular city, county, or state. (Roper vs. McFadden, 48 Cal.,
346; Rownd vs. Davidson, 113 La., 1047; Carson vs. Ray, 52 N. C., 609; 78
Am. Dec., 267; 31 Cyc., 1229.) It is also held that where a person authorizes
an agent to sell a farm ("my farm") in a certain county, this is sufficient, if it be
shown that such party has only one farm in that country. (Marriner vs.
Dennison, 78 Cal., 202.) In Linton vs. Moorhead (209 Pa. St., 646), the power
authorized the agent to sell or convey "any or all tracts, lots, or parcels" of
land belonging to the plaintiff. It was held that this was adequate. In Lyon vs.
Pollock (99 U.S., 668), the owner in effect authorized an agent to sell
everything he had in San Antonio Texas. The authority was held sufficient. In
Linan vs. Puno (31 Phil. Rep., 259), the authority granted was to the effect
that the agent might administer "the interests" possessed by the principal in
the municipality of Tarlac and to that end he was authorized to purchase, sell,
collect, and pay, etc. It was held that this was a sufficient power.
In the present case the agent was given the power to sell either of the parcels
of land belonging to the plaintiff. We can see no reason why the performance
of an act within the scope of this authority should not bind the plaintiff to the
same extent as if he had given the agent authority to sell "any or all" and she
had conveyed only one.
From what have been said it is evident that the lower court should have
absolved the defendant Pedro Rabot from the complaint. Judgment will
accordingly be reversed, without any express adjudication of costs this
instance. So ordered.
vs.
BELLOSILLO, J.:
The front portion consisting of 9,192 square meters is the subject of this
litigation.
MELDIN AL G. ROY
On 26 September 1991 CITY-LITE's officers and Atty. Mamaril met with Roy
at the Manila Mandarin Hotel in Makati to consummate the transaction. After
some discussions, the parties finally reached an agreement and Roy agreed
to sell the property to CITY-LITE provided only that the latter submit its
acceptance in writing to the terms and conditions of the sale as contained in
his letter of 25 September 1991. Later that afternoon after meeting with Roy at
the Manila Mandarin Hotel, Atty. Mamaril and Antonio Teng of CITY-LITE
conveyed their formal acceptance of the terms and conditions set forth by Roy
in separate letters both dated 26 September 1991.
However, for some reason or another and despite demand, respondent F.P.
HOLDINGS refused to execute the corresponding deed of sale in favor of
CITY-LITE of the front lot of the property. Upon its claim of protecting its
interest as vendee of the property in suit, CITY-LITE registered an adverse
claim to the title of the property with the Register of Deeds of Quezon City
which was annotated in the Memorandum of Encumbrance of Transfer
Certificate of Title No. T-19599 under Entry No. PE-1001 dated 27 September
1991.
Following the dismissal of F.P. HOLDINGS' petition for the cancellation of the
adverse claim, CITY-LITE instituted a complaint against F.P. HOLDINGS
originally for specific performance and damages and caused the annotation of
the second notice of lis pendens on the new certificate of title. After the
annotation of the second lis pendens, the property was transfered to
defendant VIEWMASTER CONSTRUCTION CORP. (VIEWMASTER) for
which Transfer Certificate of Title No. T-52398 was issued. However the
notice of lis pendens was carried over and annotated on the new certificate of
title.
In view of the conveyance during the pendency of the suit, the original
complaint for specific performance and damages was amended with leave of
court to implead VIEWMASTER as a necessary party and the Register of
Deeds of Quezon City as nominal defendant with the additional prayer for the
cancellation of VIEWMASTER's certificate of title. The case was thereafter
raffled to Br. 85 of the Regional Trial Court of Quezon City.
On 4 October 1995 the court a quo rendered its decision in favor of CITY-LITE
ordering F.P. HOLDINGS to execute a deed of sale of the property in favor of
CITY-LITE for the total consideration of P55,056,250.00 payable as follows:
P15 Million as downpayment to be payable immediately upon execution of the
deed of sale and the balance within six (6) months from downpayment,
without interest. The court also directed the Register of Deeds of of Quezon
City to cancel Transfer Certificate of Title No. T-52398 or any subsequent title
it had issued affecting the subject property, and to issue a new one in the
name of CITY-LITE upon the presentation of the deed of sale and other
requirements for the transfer. It likewise ordered the defendants, except
VIEWMASTER and the Register of Deeds of Quezon City, to pay CITY-LITE
jointly and severally P800,000.00 by way of nominal damage, P250,000.00 for
attorney's fees, and to pay the costs.
SO ORDERED.
The "Compromise Agreement" was approved by the trial court and judgment
was rendered in accordance therewith.
Although the decision became final and executory it was not executed within
the 5-year period from date of its finality allegedly due to the failure of Cosmic
Lumber to produce the owner's duplicate copy of Title No. 37649 needed to
segregate from Lot No. 443 the portion sold by the attorney-in-fact, Paz G.
Villamil-Estrada, to Perez under the compromise agreement. Perez filed a
complaint to revive the judgment.
CA
1. No.
Court of Appeals dismissed the complaint on the basis of its finding that not
one of the grounds for annulment, namely, lack of jurisdiction, fraud or
illegality was shown to exist.
It also denied the motion for reconsideration filed by petitioner, discoursing
that the alleged nullity of the compromise judgment on the ground that
petitioner's attorney-in-fact Villamil-Estrada was not authorized to sell the
subject property may be raised as a defense in the execution of the
compromise judgment as it does not bind petitioner, but not as a ground for
annulment of judgment because it does not affect the jurisdiction of the trial
court over the action nor does it amount to extrinsic fraud.
SC
1. Yes.
The authority granted Villamil-Estrada under the special power of attorney was
explicit and exclusionary: for her to institute any action in court to eject all
persons found on Lots Nos. 9127 and 443 so that petitioner could take
material possession thereof, and for this purpose, to appear at the pretrial and
enter into any stipulation of facts and/or compromise agreement but only
insofar as this was protective of the rights and interests of petitioner in the
property. Nowhere in this authorization was Villamil-Estrada granted expressly
or impliedly any power to sell the subject property nor a portion thereof.
Neither can a conferment of the power to sell be validly inferred from the
specific authority "to enter into a compromise agreement" because of the
explicit limitation fixed by the grantor that the compromise entered into shall
only be "so far as it shall protect the rights and interest of the corporation in
the aforementioned lots."
2. Yes.
It would also appear, and quite contrary to the finding of the appellate court,
that the highly reprehensible conduct of attorney-in-fact Villamil-Estrada in
Civil Case No. 7750 constituted an extrinsic or collateral fraud by reason of
which the judgment rendered thereon should have been struck down. Not all
the legal semantics in the world can becloud the unassailable fact that
petitioner was deceived and betrayed by its attorney-infact, Villamil-Estrada
deliberately concealed from petitioner, her principal, that a compromise
agreement had been forged with the end-result that a portion of petitioner's
property was sold to the deforciant, literally for a song. Thus completely kept
unaware of its agent's artifice, petitioner was not accorded even a fighting
chance to repudiate the settlement so much so that the judgment based
thereon became final and executory.
SAN JUAN STRUCTURAL FABRICATORS VS CA (296 SCRA 631)
Issues: Whether or not the corporation’s treasurer act can bind the
corporation.
The statutorily granted privilege of a corporate veil may be used only for
legitimate purposes. On equitable consideration,the veil can be
disregarded when it is utilized as a shield to commit fraud, illegality or
inequity, defeat public convenience; confuse legitimate issues; or serve as
a mere alter ego or business conduit of a person or an instrumentality,
agency or adjunct of another corporation.
We stress that the corporate fiction should be set aside when it becomes a
shield against liability for fraud, or an illegal act on inequity committed on
third person. The question of piercing the veil of corporate fiction is
essentially, then a matter of proof. In the present case, however, the court
finds no reason to pierce the corporate veil of respondent Motorich.
Petitioner utterly failed to establish the said corporation was formed, or
that it is operated for the purpose of shielding any alleged fraudulent or
illegal activities of its officers or stockholders; or that the said veil was
used to conceal fraud, illegality or inequity at the expense of third persons
like petitioner.
vs.
THE HON. COURT OF APPEALS and DALUYONG GABRIEL, substituted
by his heirs, namely: MARIA LUISA G. ESTEBAN, MARIA RITA G.
BARTOLOME & RENATO GABRIEL, respondents.
GONZAGA-REYES, J.:
In this petition for review on certiorari, petitioners seek to set aside the
Decision 1 of the Court of Appeals 2 in CA-G.R. CV No. 36955 reversing the
consolidated Decision 3 of the Regional Trial Court, Branch I, Tagum, Davao
del Norte in Civil Case Nos. 2326 and 2327.
This petition was originally filed with the Court on June 16, 1997. In a
Resolution (of the Third Division) dated October 13, 1997, 4 the petition was
denied for failure to show that the respondent Court of Appeals committed any
reversible error. However, the motion for reconsideration filed by petitioners
on November 14, 1997 was granted by the Court in its Resolution dated
December 03, 1997 5 and the petition was reinstated.
The antecedents are:
Not satisfied with the decision of the Court of Appeals, petitioners came to this
Court by way of petition for review, alleging that:
a. The Court of Appeals gravely abused its discretion in overlooking facts
extant in the record;
b. The Court of Appeals erred in not finding the document of sale and receipts
(exhibits for the herein Petitioners), as valid and enforceable;
c. The Court of Appeals erred in its apprehension and appreciation of the
undisputed facts for the Petitioners;
d. The Court of Appeals erred in making speculative conclusions on the facts
of the case;
e. The Court of Appeals erred in reversing the Decision of the Regional Trial
Court based on credible, relevant and material evidence adduced by the
Petitioners in the lower court. 11
Petitioners aver that respondent Court of Appeals gravely abused its
discretion when it totally disregarded the oral and documentary evidence
adduced by appellees, and in giving credence to the oral testimonies of
appellants, which are replete with inconsistencies and contradictions.
Petitioners cite specifically Exhibits "1" to "19" consisting of a contract of lease
involving the subject property and certain official receipts with the letterhead
"Gabriel Building" showing payments received (by Renato Gabriel) for the
lease and/or sale of portions of subject real property of Daluyong Gabriel e.g.
sale by installment of portion (700 square meters) of land to spouses Ruben
Carriedo and Abdula Sanducan (Exhs. 13, 14, 15 & 16) and lease (Exhs. 3-3-
BBBB, 5, 6 & 7) and sale (Exhs. 8, 9, 10, 11 & 12) of land made by Renato
Gabriel to petitioners-spouses. In other words, respondent Court of Appeals
"gravely abused its discretion" in the misapprehension and misappreciation of
the facts of the case and in going beyond the issues involved contrary to the
admissions of both the appellants and appellees. And since the appellate
court's findings of facts contradict that of the trial court a thorough review
thereof by the Supreme Court is necessary.
In their Comment, private respondents restated their arguments to support the
appellate court's conclusion that the alleged sale made by Renato Gabriel to
the petitioners in 1987 without authority from Daluyong Gabriel is not valid and
therefore unenforceable.
Petitioners submitted their Reply to the Comment contending that the assailed
decision of the Court of Appeals is "patently fallacious" in that while
petitioners' payment to Renato Gabriel of the amount of P90,000.00 as
purchase price of the three hundred (300) square meter portion of subject land
was neither denied nor controverted, the appellate court's decision failed to
order private respondent Renato Gabriel to refund or reimburse petitioners the
said amount together with the value of the improvements and the two-storey
commercial building which petitioners constructed thereon in violation of
Articles 2142, 2143 and 2154 of the Civil Code and the time-honored principle
of substantial justice and equity.
Petitioners allege further that even if Renato Gabriel was not (yet) the owner
of the subject portion of land when he sold the same to petitioners, after the
death of his parents Daluyong and Fe Gabriel, he, as heir, inherited and
succeeded to the ownership of said portion of land by operation of law thereby
rendering valid and effective the sale he executed in favor of petitioners.
Petitioners also maintain that on the basis of the facts proven and admitted
during the trial, Daluyong Gabriel appears to have not only authorized his son
Renato Gabriel to sell the subject portion of land but also ratified the
transaction by his contemporaneous conduct and actuations shown during his
lifetime.
In their respective memorandum submitted by petitioners and private
respondents, substantially the same arguments/contentions were raised.
Petitioners maintain that the sale is valid or validated pursuant to Articles 1433
and 1434 of the Civil Code and identified the legal issues involved as follows:
1. Whether or not the sale by respondent Renato Gabriel of the land
registered in the name of his deceased father Daluyong Gabriel, during the
lifetime of the latter, in favor of the herein petitioners, by operation of law,
automatically vests title on the latter under the principle of estoppel as
provided for in Arts. 1433 and 1434 of the New Civil Code;
2. Whether or not the sale by Renato Gabriel of the land registered in the
name of his deceased father during the lifetime of the latter, to the herein
petitioners is null and void. 12
On the other hand, private respondents contend that the petition has no legal
or factual basis. It is argued that petitioners changed their theory of the case in
that while in the regional trial court, petitioners claim that the subject property
was sold to them by the late Daluyong Gabriel through his son Renato
Gabriel, in the instant petition, they claim that it was Renato Gabriel who sold
the property to them and that although at that time, Renato was not yet the
owner of the property, he is nonetheless obligated to honor the sale and to
convey the property to the petitioners because after the death of Daluyong
Gabriel, Renato became the owner of the subject property by way of
hereditary succession. According to private respondents, litigants are barred
from changing their theory, more especially so in the appeal, and that the only
issue to be resolved in the instant petition is whether or not Renato Gabriel
can be compelled to convey the subject property to petitioners. Private
respondents maintain that Renato Gabriel cannot be compelled to convey
subject property (to petitioners) because the land never passed on to Renato
either before or after the death of Daluyong Gabriel and that the whole
property is now owned by Ma. Rita G. Bartolome per Transfer Certificate of
Title No. T-68674 entered in the Registry of Deeds of Davao del Norte on
January 10, 1991. 13 In short, Renato Gabriel cannot convey that which does
not belong to him. 14
Essentially, the issue here is whether or not the verbal agreement which
petitioners entered into with private respondent Renato Gabriel in 1987
involving the sale of the three hundred (300) square meter portion of land
registered in the name of Renato's late father Daluyong Gabriel is a valid and
enforceable contract of sale of real property.
The trial court held that the oral contract of sale was valid and enforceable
stating that while it is true that at the time of the sale, Renato Gabriel was not
the owner and that it was Daluyong Gabriel who was the registered owner of
the subject property, Daluyong Gabriel knew about the transaction and tacitly
authorized his son Renato Gabriel (whom he earlier designated as
administrator of his 5,010 square meter registered property) to enter into it.
The receipt by Renato Gabriel of the P90,000.00 paid by petitioner spouses
as purchase price of subject portion of land 25 and also of the amount of
P14,000.00 paid by petitioners as advance rental fee for the lease of one
hundred seventy six (176) square meters thereof, in accordance with the then
still existing Contract of Lease (Exh. 10) entered into by Renato Gabriel as
Lessor and Lydia delos Reyes as lessee on September 26, 1985 which was to
expire only on June 15, 1991 was also known not only to Daluyong Gabriel
but also to his late wife Fe Salazar Gabriel and his two other children, Maria
Luisa Gabriel Esteban and Maria Rita Gabriel Bartolome. And even assuming
that Daluyong Gabriel did not expressly authorize Renato Gabriel to enter into
such contract of sale with petitioners in 1988, he (Daluyong Gabriel)
confirmed/ratified the same by his contemporaneous conduct and actuations
shown during his lifetime. More importantly, the trial court noted that Daluyong
never presented Renato during the entire proceedings, despite evidence 26
which tends to show that Renato Gabriel was not missing nor were his
whereabouts unknown as Daluyong wanted to impress the trial court, but had
all the while been staying at the Daluyong Gabriel residence at 185 I. Lopez
St., Mandaluyong City but was deliberately prevented (by Daluyong) from
testifying or shedding light on the transactions involved in the two cases then
at bar. Hence, the decision of the trial court ordered Daluyong Gabriel, Renato
Gabriel, Maria Luisa G. Esteban and Maria Rita G. Bartolome to execute a
Deed of Conveyance and other necessary documents in favor of petitioners
covering subject area of 300 square meters to be taken from the 5,010 square
meters covered by TCT No. T-17932 under the name of Daluyong Gabriel
which portion is actually occupied by petitioners Delos Reyes couple.
The Court of Appeals, on the other hand, ruled that the contract of sale cannot
be upheld, mainly because Renato Gabriel, as vendor, did not have the legal
capacity to enter and to give consent to the agreement, he, being neither the
authorized agent (of Daluyong Gabriel) nor the owner of the property subject
of the sale. It was pointed out that three theories were advanced by appellees
to prove that the transaction they had with Renato concerning the sale of the
portion in question was regular, valid and enforceable. First theory is that
Renato acted as the duly authorized representative or agent of Daluyong.
Second, that the portion in dispute was already given to Renato as his share,
hence, he validly sold the same to appellees. And third, that the portion being
litigated was part of Renato's inheritance from the estate of her deceased
mother which he validly disposed of to appellees. These reasons, according to
the appellate court, cannot go together, or even complement each other, to
establish the regularity, validity or enforceability of the sale made by Renato. It
could not be possible for Renato to have acted in three different capacities —
as agent, owner, and heir — when he dealt with appellees, as the legal
consequences for each situation would be different. Thus, it was incumbent
upon appellees to explain what actually convinced them to buy the land from
Renato, and because they failed to do so, no proper basis can be found to
uphold the alleged sale made by Renato as it cannot be determined with
certainty in what capacity Renato acted. And even assuming that he (Renato)
already succeeded to whatever hereditary right or participation he may have
over the estate of his father, he is still considered a co-owner with his two
sisters of the subject property and that prior to its partition, Renato cannot
validly sell or alienate a specific or determinate part of the property owned in
common. Besides, the entire lot covered by TCT No. T-17932 was
subsequently donated by Daluyong Gabriel to his daughter Marie Rita G.
Bartolome on October 1, 1990 and is now covered by TCT No. T-68674 in her
name. 27 Hence, the appellate court's decision ordered appellees (petitioners)
spouses Claudio and Lydia delos Reyes to immediately vacate the 300 square
meter portion of that land covered by TCT No. T-17932 which they are
occupying and to turn-over possession thereof to the appellants, private
respondents herein.
We agree with the conclusion of the Court of Appeals that Renato Gabriel was
neither the owner of the subject property nor a duly designated agent of the
registered owner (Daluyong Gabriel) authorized to sell subject property in his
behalf, and there was also no sufficient evidence adduced to show that
Daluyong Gabriel subsequently ratified Renato's act. In this connection it must
be pointed out that pursuant to Article 1874 of the Civil Code, when the sale of
a piece of land or any interest therein is through an agent, the authority of the
latter shall be in writing; otherwise the sale shall be void. In other words, for
want of capacity (to give consent) on the part of Renato Gabriel, the oral
contract of sale lacks one of the essential requisites for its validity prescribed
under Article 1318, supra and is therefore null and void ab initio.
Petitioners' contention that although at the time of the alleged sale, Renato
Gabriel was not yet the owner of the subject portion of land, after the death of
Daluyong Gabriel, he (Renato) became the owner and acquired title thereto by
way of hereditary succession which title passed by operation of law to
petitioners pursuant to Article 1434 of the Civil Code 32 is not tenable. Records
show that on October 1, 1990 Daluyong Gabriel donated the entire lot covered
by TCT No. T-17932 to his daughter Maria Rita G. Bartolome and the property
is now covered by TCT No. T-68674 in her name. This means that when
Daluyong Gabriel died on September 14, 1995, he was no longer the owner of
the subject property. Accordingly, Renato Gabriel never acquired ownership or
title over any portion of said property as one of the heirs of Daluyong Gabriel.
However, petitioners' claim for the refund to them of P1,000,000.00
representing the alleged value and cost of the two-storey commercial building
they constructed on subject portion of land cannot be favorably considered as
no sufficient evidence was adduced to prove and establish the same.
WHEREFORE, the decision of the Court of Appeals dated April 30, 1997 in
CA-G.R. CV No. 36955 is hereby AFFIRMED in so far as it declared the oral
contract of sale entered into by Renato Gabriel of portion of the 5,010 square
meter parcel of land registered in the name of Daluyong Gabriel in favor of
petitioners, null and void. Renato Gabriel is hereby ordered to refund to
petitioners the amount of P90,000.00 which was given in payment for subject
land. No pronouncement as to costs.
SO ORDERED.
As a general rule, the findings of fact of the Court of Appeals are binding upon
this Court. 28 When such findings of fact are the same and confirmatory of
those of the trial court, they are final and conclusive and may not be reviewed
on appeal. 29 In such cases, the authority of the Supreme Court is confined to
correcting errors of law, if any, that might have been committed below. 30 In
the instant case, it is noted that the trial court and the Court of Appeals are not
at variance in their factual findings that sometime in 1988, an oral contract of
sale was entered into by Renato Gabriel, (as vendor) with petitioners De los
Reyes couple (as vendees) involving a 300 square meter portion of a 5,010
square meter parcel of land located in Barrio Magugpo, Tagum, Davao del
Norte owned and registered under Transfer Certificate of Title No. T-17932 in
the name of Daluyong Gabriel, father of Renato. Thus, this Court is tasked to
review and determine whether or not respondent Court of Appeals committed
an error of law 31 in its legal conclusion that at the time the parties entered into
said oral agreement of sale, Renato Gabriel as the purported vendor, did not
have the legal capacity to enter and/or to give consent to the sale.