Topic – contract of agency coupled with interest cannot be revoked at the sole will of the principal

Ching vs. Bantolo, G.R. No. 177086, December 05, 2012

DEL CASTILLO, J.:

FACTS:
The case is a petition for certiorari to assail the decision of the Court of Appeals, which held that
petitioners were not entitled to the payment of damages and reimbursement of their expenses due to the
revocation of the Special Power of Attorney between him and respondents. The facts of the case were as
follows:
 On April 3, 2000, respondents executed in favor of petitioners Albert Ching (Ching) and Romeo J.
Bautista a Special Power of Attorney (SPA) authorizing petitioners to obtain a loan using
respondents’ properties as collateral. Said SPA however was revoked by respondents, without
notifying petitioner on July 17, 2000. When a loan of P25M was approved by Philippine Veterans
Bank as applied by petitioner Ching, the latter informed respondents of the approval. However,
upon learning of the revocation of the SPA, they demanded that respondents comply with the
agreement by annulling the revocation of the SPA.
 Apparently, respondents alleged that they executed the SPA in favor of petitioners because of
their assurance that they would be able to get a loan in the amount of P50 million and that P30
million would be given to respondents within a month’s time. And when the one-month period
expired, respondents complained to petitioner Ching and asked him to advance the amount of
P500,000.00. Petitioner Ching acceded to their request on the condition that they hand over to
him the original titles for safekeeping. Respondents, in turn, asked petitioner Ching to give them
P1 million in exchange for the titles. Petitioner Ching agreed and so they gave him the titles.
However, he never gave them the money. They asked him to return the titles, but he refused.
Later, they were informed that the loan was approved in the amount of P25 million and that their
share would be P6M. Since it was not the amount agreed upon, respondents revoked the SPA and
demanded the return of the titles.
 Consequently, petitioners filed before the RTC a Complaint for Annulment of Revocation of SPA,
Enforcement of SPA and/or interest in the properties covered by said SPA and Damages against
respondents, and later modified w/ a prayer that they be declared as the owners of one-half of
the properties covered by the SPA.
 The RTC in its decision ruled in favor petitioners and held that the revocation was unjust and
illegal. But as the SPA could no longer be enforced, it then found respondents liable for damages,
specifically P500K for actual damages as actual damages for the amount paid out to the
[respondents] in exchange for the original certificates of title;
another P500K as moral damages and P100k for exemplary damages, as well as payment of
attorney’s fees. The RTC also declared petitioners to be the owner of one-half of the subject
properties.
 On appeal by respondents, the CA modified the decision of the RTC and ruled that petitioners
were not entitled to reimbursement of the P500K because they failed to show that the receipts
presented in evidence were incurred in relation to the loan application. As to the award of
exemplary damages, the CA deleted the same because respondents did not act in a wanton,
fraudulent, reckless, oppressive or malevolent manner.

ISSUE/S:
Was the Special Power of Attorney executed by respondents revoked in bad faith, thus entitling petitioner
to payment of damages?

RULING:
No. But the court qualifies. The court ruled that petitioner was entitled to actual damages, but not to
exemplary damages since the Special Power of Attorney was not revoked by respondents in bad faith.

The court held that the Special Power of Attorney executed by respondents in favor of
petitioners was a contract of agency coupled with interest. Thus, it cannot be revoked at the
sole will of the principal. This is because their bilateral contract depends upon the agency.
Hence, it “cannot be revoked at the sole will of the principal.

As a result thereof, petitioner Ching, should be entitled to actual damages in the amount of P500,000. In
exchange for his possession of the titles, petitioner Ching advanced the amount of P500,000.00 to
respondents. Considering that the loan application with PVB did not push through, respondents are liable
to return the said amount to petitioner Ching. The return of the amount of P500,000.00 should not depend
on the happening of a future event. Whether or not a loan was obtained by petitioners, respondents were
liable to pay the amount of P500,000.00 as actual damages.

Article 2229 of the Civil Code provides that exemplary damages may be imposed “by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.”
They are, however, not recoverable as a matter of right. They are awarded only if the guilty party acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner. In this case, although the revocation
was ne in bad faith, respondents did not act in a wanton, fraudulent, reckless, oppressive or malevolent

By Alena Icao-Anotado pg. 1

Topic – contract of agency coupled with interest cannot be revoked at the sole will of the principal
manner. They revoked the SPA because they were not satisfied with the amount of the loan approved.
Thus, petitioners are not entitled to exemplary damages.

In view of the foregoing, the court moved to partially grant the petition and AFFIRMED with
MODIFICATION the decision of the Court of Appeals that respondents were ordered to pay petitioner Ching
actual damages in the amount of P500.000.00.

By Alena Icao-Anotado pg. 2