Bus Org Cases 3rd Exam

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G.R. No. 95641 September 22, 1994 SANTOS B. AREOLA and LYD A D. AREOLA, petitioners-appellants, vs.!O"RT O# A$$EALS and $R"DENT AL G"ARANTEE AND ASS"RAN!E, N!., respondents-appellees. On June 29, 1985, seven months after the issuance of petitioner Santos Areola's ersonal Accident !nsurance olic" #o. A-2$$15, respondent insurance compan" unilaterall" cancelled the same since compan" records revealed that petitioner-insured failed to pa" his premiums. On Au%ust &, 1985, respondent insurance compan" offered to reinstate same polic" it had previousl" cancelled and even proposed to e'tend its lifetime to (ecem)er 1*, 1985, upon a findin% that the cancellation +as erroneous and that the premiums +ere paid in full )" petitioner-insured )ut +ere not remitted )" ,eofilo -. -alapit, respondent insurance compan"'s )ranch mana%er. ,hese, in )rief, are the material facts that %ave rise to the action for dama%es due to )reach of contract instituted )" petitioner-insured )efore .ranch /$ 0,1, (a%upan 1it" a%ainst respondent insurance compan". ,here are t+o issues for resolution in this case2 314 (id the erroneous act of cancellin% su)5ect insurance polic" entitle petitioner-insured to pa"ment of dama%es6 324 (id the su)se7uent act of reinstatin% the +ron%full" cancelled insurance polic" )" respondent insurance compan", in an effort to rectif" such error, o)literate +hatever lia)ilit" for dama%es it ma" have to )ear, thus a)solvin% it therefrom6 8rom the factual findin%s of the trial court, it appears that petitionerinsured, Santos Areola, a la+"er from (a%upan 1it", )ou%ht, throu%h the .a%uio 1it" )ranch of rudential 9uarantee and Assurance, !nc. 3hereinafter referred to as rudential4, a personal accident insurance polic" coverin% the one-"ear period )et+een noon of #ovem)er 28, 198/ and noon of #ovem)er 28, 1985. 1 :nder the terms of the statement of account issued )" respondent insurance compan", petitioner-insured +as supposed to pa" the total amount of 1,;$9.;5 +hich included the premium of 1,/*$.$$, documentar" stamp of 11$.25 and 2< premium ta' of 29./$. 2 At the lo+er lefthand corner of the statement of account, the follo+in% is le%i)l" printed2 ,his Statement of Account must not )e considered a receipt. Official 0eceipt +ill )e issued to "ou upon pa"ment of this account. !f pa"ment is made to our representative, demand for a rovisional 0eceipt and if our Official 0eceipts is 3sic4 not received )" "ou +ithin * da"s please notif" us. !f pa"ment is made to our office, demand for an O88!1!A= 0>1>! ,. On (ecem)er 1*, 198/, respondent insurance compan" issued collector's provisional receipt #o. 9&$$ to petitioner-insured for the amount of 1,;$9.;5 % On the lo+er portion of the receipt the
follo+in% is +ritten in capital letters2 #ote2 ,his collector's provisional receipt +ill )e confirmed )" our official receipt. !f our official receipt is not received )" "ou +ithin * da"s, please notif" us. 4 On June 29, 1985, respondent insurance compan", throu%h its .a%uio 1it" mana%er, ,eofilo -. -alapit, sent petitioner-insured >ndorsement #o. .9-$$2?85 +hich @cancelled flat@ olic" #o. A .9-2$$15 @for non-pa"ment of premium effective as of inception dated.@ 5 ,he same endorsement also credited @a return premium of 1,;$9.;5 plus documentar" stamps and premium ta'@ to the account of the insured. ShocAed )" the cancellation of the polic", petitioner-insured confronted 1arlito An%, a%ent of respondent insurance compan", and demanded the issuance of an official receipt. An% told petitionerinsured that the cancellation of the polic" +as a mistaAe )ut he +ould personall" see to its rectification. Bo+ever, petitioner-insured failed to receive an" official receipt from rudential. Bence, on Jul" 15, 1985, petitioner-insured sent respondent insurance compan" a letter demandin% that he )e insured under the same terms and conditions as those contained in olic" #o. A-.92$$15 commencin% upon its receipt of his letter, or that the current commercial rate of increase on the pa"ment he had made under provisional receipt #o. 9&$$ )e returned +ithin five da"s. 6 Areola also +arned that should his demands )e unsatisfied, he +ould sue for dama%es. On Jul" 1*, 1985, he received a letter from production mana%er -alapit informin% him that the @partial pa"ment@ of 1,$$$.$$ he had made on the polic" had )een @e'hausted pursuant to the provisions of the Short eriod 0ate Scale@ printed at the )acA of the polic". -alapit +arned Areola that should )e fail to pa" the )alance, the compan"'s lia)ilit" +ould cease to operate. & !n repl" to the petitioner-insured's letter of Jul" 15, 1985, respondent insurance compan", throu%h its Assistant Cice- resident -ariano -. Ampil !!!, +rote Areola a letter dated Jul" 25, 1985 statin% that the compan" +as verif"in% +hether the pa"ment had in fact )een issued therefor. Ampil emphasiDed that the official receipt should have )een issued seven da"s from the issuance of the provisional receipt )ut )ecause no official receipt had )een issued in Areola's name, there +as reason to )elieve that no pa"ment had )een made. Apolo%iDin% for the inconvenience, Ampil e'pressed the compan"'s concern )" a%reein% @to hold "ou cover 3sic4 under the terms of the referenced polic" until such time that this matter is cleared.@ ' On Au%ust &, 1985, Ampil +rote Areola another letter confirmin% that the amount of 1,;$9.;5 covered )" provisional receipt #o. 9&$$ +as in fact received )" rudential on (ecem)er 1*, 198/. Bence, Ampil informed Areola that rudential +as @amena)le to e'tendin% 9A- A-.92$$15 up to (ecem)er 1*, 1985 or one "ear from the date +hen pa"ment +as received.@ Apolo%iDin% a%ain for the inconvenience caused Areola, Ampil e'horted him to indicate his conformit" to the proposal )" si%nin% on the space provided for in the letter. 9 ,he letter +as personall" delivered )" 1arlito An% to Areola on 1
Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)
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Au%ust 1&, 1985 )ut unfortunatel", Areola and his +ife, ="dia, as earl" as Au%ust ;, 1985 had filed a complaint for )reach of contract +ith dama%es )efore the lo+er court. !n its Ans+er, respondent insurance compan" admitted that the cancellation of petitioner-insured's polic" +as due to the failure of -alapit to turn over the premiums collected, for +hich reason no official receipt +as issued to him. Bo+ever, it ar%ued that, )" acAno+led%in% the inconvenience caused on petitioner-insured and after taAin% steps to rectif" its omission )" reinstatin% the cancelled polic" prior to the filin% of the complaint, respondent insurance compan" had complied +ith its o)li%ation under the contract. Bence, it concluded that petitioner-insured no lon%er has a cause of action a%ainst it. !t insists that it cannot )e held lia)le for dama%es arisin% from )reach of contract, havin% demonstrated full" +ell its fulfillment of its o)li%ation. ,he trial court, on June &$, 198*, rendered a 5ud%ment in favor of petitioner-insured, orderin% respondent insurance compan" to pa" the former the follo+in%2
a4 1,*$&.;5 as actual dama%esE )4 2$$,$$$.$$ as moral dama%esE and c4 5$,$$$.$$ as e'emplar" dama%esE 2. ,o pa" to the plaintiff, as and for attorne"'s fees the amount of 1$,$$$.$$E and &. ,o pa" the costs.
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3a4 the investi%ation conducted )" Alfredo .ustamante to verif" if petitioner-insured had indeed paid the premiumE 3)4 the letter of Au%ust &, 1985 confirmin% that the premium had )een paid on (ecem)er 1*, 198/E 3c4 the reinstatement of the polic" +ith a proposal to e'tend its effective period to (ecem)er 1*, 1985E and 3d4 respondent insurance compan"'s apolo%ies for the @inconvenience@ caused upon petitioner-insured. ,he appellate court added that respondent insurance compan" even relieved -alapit, its .a%uio 1it" mana%er, of his 5o) )" forcin% him to resi%n. etitioner-insured moved for the reconsideration of the said decision +hich the 1ourt of Appeals denied. Bence, this petition for revie+ on certiorari anchored on these ar%uments2 ! 0espondent 1ourt of Appeals is %uilt" of %rave a)use of discretion and committed a serious and reversi)le error in not holdin% 0espondent rudential lia)le for the cancellation of the insurance contract +hich +as admittedl" caused )" the fraudulent acts and )ad faith of its o+n officers. !! 0espondent 1ourt of Appeals committed serious and reversi)le error and a)used its discretion in rulin% that the defenses of %ood faith and honest mistaAe can co-e'ist +ith the admitted fraudulent acts and evident )ad faith. !!! 0espondent 1ourt of Appeals committed a reversi)le error in not findin% that even +ithout considerin% the fraudulent acts of its o+n officer in misappropriatin% the premium pa"ment, the act itself in cancellin% the insurance polic" +as done +ith )ad faith and?or %ross ne%li%ence and +anton attitude amountin% to )ad faith, )ecause amon% others, it +as -r. -alapit F the person +ho committed the fraud F +ho sent and si%ned the notice of cancellation. !C 0espondent 1ourt of Appeals has decided a 7uestion of su)stance contrar" to la+ and applica)le decision of the Supreme 1ourt +hen it refused to a+ard dama%es in favor of herein etitionerAppellants. !t is petitioner-insured's su)mission that the fraudulent act of -alapit, mana%er of respondent insurance compan"'s )ranch office in .a%uio, in misappropriatin% his premium pa"ments is the pro'imate cause of the cancellation of the insurance polic". etitioner-insured theoriDed that -alapit's act of si%nin% and even sendin% the notice of cancellation himself, not+ithstandin% his personal Ano+led%e of petitioner-insured's full pa"ment of premiums, further reinforces the alle%ation of )ad faith. Such fraudulent act committed )" -alapit, ar%ued petitioner-insured, is attri)uta)le to respondent insurance compan", an artificial corporate )ein% +hich can act onl" throu%h its officers or emplo"ees. -alapit's actuation, concludes petitionerinsured, is therefore not separate and distinct from that of respondent-insurance compan", contrar" to the vie+ held )" the 2
!n its decision, the court )elo+ declared that respondent insurance compan" acted in )ad faith in unilaterall" cancellin% su)5ect insurance polic", havin% done so onl" after seven months from the time that it had taAen force and effect and despite the fact of full pa"ment of premiums and other char%es on the issued insurance polic". 1ancellation from the date of the polic"'s inception, e'plained the lo+er court, meant that the protection sou%ht )" petitionerinsured from the risAs insured a%ainst +as never e'tended )" respondent insurance compan". Bad the insured met an accident at the time, the insurance compan" +ould certainl" have disclaimed an" lia)ilit" )ecause technicall", the petitioner could not have )een considered insured. 1onse7uentl", the trial court held that there +as )reach of contract on the part of respondent insurance compan", entitlin% petitioner-insured to an a+ard of the dama%es pra"ed for. ,his rulin% +as challen%ed on appeal )" respondent insurance compan", den"in% )ad faith on its part in unilaterall" cancellin% su)5ect insurance polic". After consideration of the appeal, the appellate court issued a reversal of the decision of the trial court, convinced that the latter had erred in findin% respondent insurance compan" in )ad faith for the cancellation of petitioner-insured's polic". Accordin% to the 1ourt of Appeals, respondent insurance compan" +as not motivated )" ne%li%ence, malice or )ad faith in cancellin% su)5ect polic". 0ather, the cancellation of the insurance polic" +as )ased on +hat the e'istin% records sho+ed, i.e., a)sence of an official receipt issued to petitioner-insured confirmin% pa"ment of premiums. .ad faith, said the 1ourt of Appeals, is some motive of self-interest or ill-+illE a furtive desi%n of ulterior purpose, proof of +hich must )e esta)lished convincin%l". On the contrar", it further o)served, the follo+in% acts indicate that respondent insurance compan" did not act precipitatel" or +illfull" to inflict a +ron% on petitioner-insured2
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1ourt of Appeals. !t must, therefore, )ear the conse7uences of the erroneous cancellation of su)5ect insurance polic" caused )" the non-remittance )" its o+n emplo"ee of the premiums paid. Su)se7uent reinstatement, accordin% to petitioner-insured, could not possi)l" a)solve respondent insurance compan" from lia)ilit", there )ein% an o)vious )reach of contract. After all, reasoned out petitioner-insured, dama%e had alread" )een inflicted on him and no amount of rectification could remed" the same. 0espondent insurance compan", on the other hand, ar%ues that +here reinstatement, the e7uita)le relief sou%ht )" petitioner-insured +as %ranted at an opportune moment, i.e. prior to the filin% of the complaint, petitioner-insured is left +ithout a cause of action on +hich to predicate his claim for dama%es. 0einstatement, it further e'plained, effectivel" restored petitioner-insured to all his ri%hts under the polic". Bence, +hatever cause of action there mi%ht have )een a%ainst it, no lon%er e'ists and the conse7uent a+ard of dama%es ordered )" the lo+er court in unsustaina)le. Ge uphold petitioner-insured's su)mission. -alapit's fraudulent act of misappropriatin% the premiums paid )" petitioner-insured is )e"ond dou)t directl" imputa)le to respondent insurance compan". A corporation, such as respondent insurance compan", acts solel" thru its emplo"ees. ,he latters' acts are considered as its o+n for +hich it can )e held to account. 11 ,he facts are clear as to the relationship )et+een private respondent insurance compan" and -alapit. As admitted )" private respondent insurance compan" in its ans+er, 12 -alapit +as the mana%er of its .a%uio )ranch. !t is )e"ond dou)t that he represented its interest and acted in its )ehalf. Bis act of receivin% the premiums collected is +ell +ithin the province of his authorit". ,hus, his receipt of said premiums is receipt )" private respondent insurance compan" +ho, )" provision of la+, particularl" under Article 191$ of the 1ivil 1ode, is )ound )" the acts of its a%ent. Article 191$ thus reads2 -alapit's failure to remit the premiums he received cannot constitute a defense for private respondent insurance compan"E no e'oneration from lia)ilit" could result therefrom. ,he fact that private respondent insurance compan" +as itself defrauded due to the anomalies that tooA place in its .a%uio )ranch office, such as the non-accrual of said premiums to its account, does not free the same from its o)li%ation to petitioner Areola. As held inPrudential Bank v. Court of Appeals 1% citin% the rulin% in McIntosh v. Dakota Trust Co.: 14 A )anA is lia)le for +ron%ful acts of its officers done in the interests of the )anA or in the course of dealin%s of the officers in their representative capacit" )ut not for acts outside the scope of their authorit". A )anA holdin% out its officers and a%ent as +orth" of confidence +ill not )e permitted to profit )" the frauds the" ma" thus )e ena)led to perpetrate in the apparent scope of their emplo"mentE nor +ill it )e permitted to shirA its responsi)ilit" for such frauds, even thou%h no )enefit ma" accrue to the )anA therefrom. Accordin%l", a )anAin% corporation is lia)le to innocent third persons +here the representation is made in the course of its )usiness )" an a%ent actin% +ithin the %eneral scope of his authorit" even thou%h, in the particular case, the a%ent is secretl" a)usin% his authorit" and attemptin% to perpetrate a fraud upon his principal or some other person, for his o+n ultimate )enefit. 1onse7uentl", respondent insurance compan" is lia)le )" +a" of
dama%es for the fraudulent acts committed )" -alapit that %ave occasion to the erroneous cancellation of su)5ect insurance polic". !ts earlier act of reinstatin% the insurance polic" can not o)literate the in5ur" inflicted on petitioner-insured. 0espondent compan" should )e reminded that a contract of insurance creates reciprocal o)li%ations for )oth insurer and insured. 0eciprocal o)li%ations are those +hich arise from the same cause and in +hich each part" is )oth a de)tor and a creditor of the other, such that the o)li%ation of one is dependent upon the o)li%ation of the other. 15 :nder the circumstances of instant case, the relationship as creditor and de)tor )et+een the parties arose from a common cause2 i.e., )" reason of their a%reement to enter into a contract of insurance under +hose terms, respondent insurance compan" promised to e'tend protection to petitioner-insured a%ainst the risA insured for a consideration in the form of premiums to )e paid )" the latter. :nder the la+ %overnin% reciprocal o)li%ations, particularl" the second para%raph of Article 1191, 16 the in5ured part", petitioner-insured in this case, is %iven a choice )et+een fulfillment or rescission of the o)li%ation in case one of the o)li%ors, such as respondent insurance compan", fails to compl" +ith +hat is incum)ent upon him. Bo+ever, said article entitles the in5ured part" to pa"ment of dama%es, re%ardless of +hether he demands fulfillment or rescission of the o)li%ation. :ntena)le then is reinstatement insurance compan"'s ar%ument, namel", that reinstatement )ein% e7uivalent to fulfillment of its o)li%ation, divests petitioner-insured of a ri%htful claim for pa"ment of dama%es. Such a claim finds no support in our la+s on o)li%ations and contracts. ,he nature of dama%es to )e a+arded, ho+ever, +ould )e in the form of nominal dama%es 1& contrar" to that %ranted )" the court )elo+. Althou%h the erroneous cancellation of the insurance polic" constituted a )reach of contract, private respondent insurance compan", +ithin a reasona)le time tooA steps to rectif" the +ron% committed )" reinstatin% the insurance polic" of petitioner. -oreover, no actual or su)stantial dama%e or in5ur" +as inflicted on petitioner Areola at the time the insurance polic" +as cancelled. #ominal dama%es are @recovera)le +here a le%al ri%ht is technicall" violated and must )e vindicated a%ainst an invasion that has produced no actual present loss of an" Aind, or +here there has )een a )reach of contract and no su)stantial in5ur" or actual dama%es +hatsoever have )een or can )e sho+n. 1' GB>0>8O0>, the petition for revie+ on certiorari is here)" 90A#,>( and the decision of the 1ourt of Appeals in 1A-9.0. #o. 1;9$2 on -a" &1, 199$, 0>C>0S>(. ,he decision of .ranch /$, 0,1 (a%upan 1it", in 1ivil 1ase #o. (-*9*2 rendered on June &$, 198* is here)" 0>!#S,A,>( su)5ect to the follo+in% modifications2 3a4 that nominal dama%es amountin% to &$,$$$.$$ )e a+arded petitioner in lieu of the dama%es ad5udicated )" court a quoE and 3)4 that in the satisfaction of the dama%es a+arded therein, respondent insurance compan" is O0(>0>( to pa" the le%al rate of interest computed from date of filin% of complaint until final pa"ment thereof.
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G.R. No. 94(5( No)ember 21, 1991 SYL* A +. BED A and +ONT *EROS , ASSO! ATED $ROD"!ERS $+ LS. Y ELDS, N!., petitioners, vs. E- LY A. .+ TE and +OL-AN T. .+ TE, respondents. ,he )asic issue )efore us is the capacit" in +hich petitioner S"lvia B. .edia entered into the su)5ect contract +ith private respondent >mil" A. Ghite. .oth the trial court and the respondent court held she +as actin% in her o+n personal )ehalf. She faults this findin% as reversi)le error and insists that she +as merel" actin% as an a%ent. ,he case arose +hen .edia and Ghite entered into a articipation 1ontract 1 readin% in full as follo+s2
,B> S,A,> 8A!0 O8 ,>HAS '8$ A0,!1! A,!O# 1O#,0A1, A0,!1! A#, 31O- A#I #A->4 >-!=I GB!,> >#,>0 0!S>S !?Ge, the a)ovementioned compan" here)" a%rees to participate in the 198$ (allas State 8air to )e held in (allas, ,e'as on Octo)er &, to Octo)er 19,198$. !?Ge re7uest for a 15 s7uare meter )ooth space +orth J2,25$.$$ :.S. (ollars. !?Ge further understand that this participation contract shall )e deemed non-cancella)le after pa"ment of the said do+n pa"ment, and that an" intention on our part to cancel the same shall render +hatever amount +e have paid forfeited in favor of BO#,!C>0OS K ASSO1!A,>( 0O(:1>0S B!=! !#> I!>=(S, !#1. 8O0 ,B> A.OC> 1O#S!(>0A,!O#, !?Ge understand the BO#,!C>0OS K ASSO1!A,>( 0O(:1>0S B!=. I!>=(S, !#1. shall2 0eserve said )ooth for our e'clusive perusalE Ge also understand that the a)ove cost includes overall e'terior )ooth decoration and materials )ut does not include interior desi%ns +hich +ill )e per our specifications and e'penses. A0,!1! A#,'S A0,!1! A,!O# A:,BO0!L>( S!9#A,:0>2 A11> ,>( .I2 3S9(.4 >-!=I GB!,> 3S9(.4 SI=C!A B. .>(!A (A,>2 8?1&?8$ (A,>2 Au%. 1, 198$
that the" had deceived her and e'plained that no displa" space +as re%istered in her name as she +as onl" supposed to share the space leased )" Bontiveros in its name. She +as not allo+ed to displa" her %oods in that space )ecause she had not paid her )alance of J1,*5$.$$, in violation of their contract. .edia also made the particular averment that she did not si%n the articipation 1ontract on her o+n )ehalf )ut as an a%ent of Bontiveros and that she had later returned the advance pa"ment of J5$$.$$ to the plaintiff. ,he defendants filed their o+n counterclaim and complained of malice on the part of the plaintiffs. % !n the course of the trial, the complaint a%ainst Bontiveros +as dismissed on motion of the plaintiffs. 4 !n his decision dated -a" 29, 198;, Jud%e 8ermin -artin, Jr. found .edia lia)le for fraud and a+arded the plaintiffs actual and moral dama%es plus attorne"'s fees and the costs. ,he court said2 !n claimin% to )e a mere a%ent of Bontiveros K Associated roducers hil. Iields, !nc., defendant S"lvia B. .edia evidentl" attempted to escape lia)ilit" for herself. :nfortunatel" for her, the @ articipation 1ontract@ is not actuall" in representation or in the name of said corporation. !t is a covenant entered into )" her in her personal capacit", for no one ma" contract in the name of another +ithout )ein% authoriDed )" the latter, or unless she has )" la+ a ri%ht to represent her. 3Art. 1&/*, ne+ 1ivil 1ode4 Sustainin% the trail court on this point, the respondent court 5 declared in its decision dated -arch &$, 199$2 ,he evidence, on the +hole, sho+s that she definitel" acted on her o+n. She represented herself asauthorized )" the State of ,e'as to solicit and assi%n )ooths at the ,e'as fairE she assured the appellee that she could give her )ooth. :nder Article 188& of the #e+ 1ivil 1ode, if the a%ent acts in his o+n name, the principal has no ri%ht of action a%ainst the persons +ith +hom the a%ent had contracted. Ge do not share these vie+s. !t is note+orth" that in her letter to the -inister of ,rade dated (ecem)er 2&,198/, >mil" Ghite )e%an2 ! am a local e'porter +ho +as recruited ! "ontiveros # Associated Producers Phil. $ields% Inc. to participate in the State 8air of (allas, ,e'as +hich +as held last Oct. & to 19, 198$. "ontiveros # Associated charged &e '()*+,.,, per square &eter for displa! ooth of said fair. ! have paid an advance of :SJ5$$.$$ as partial pa"ment for the total space of 15 s7uare meter of +hich is J2,25$.$$ 3,+o ,housand ,+o Bundred 8ift" (ollars4. 6 As the articipation 1ontract +as si%ned )" .edia, the a)ove statement +as an acAno+led%ment )" Ghite that .edia +as onl" actin% for Bontiveros +hen it recruited her as a participant in the ,e'as State 8air and char%ed her a partial pa"ment of J5$$.$$. ,his amount +as to )e fortified to Bontiveros in case of cancellation )" her of the a%reement. ,he fact that the contract +as t"pe+ritten on the letterhead stationer" of Bontiveros )olsters this conclusion in the a)sence of an" sho+in% that said stationer" had )een ille%all" used 4
On Au%ust 1$, 198;, Ghite and her hus)and filed a complaint in the 0e%ional ,rial 1ourt of asa" 1it" for dama%es a%ainst .edia and Bontiveros K Associated roducers hil. Iields, !nc. for dama%es caused )" their fraudulent violation of their a%reement. She averred that .edia had approached her and persuaded her to participate in the State of ,e'as 8air, and that she made a do+n pa"ment of J5$$.$$ to .edia on the a%reed displa" space. !n due time, she enplaned for (allas +ith her merchandise )ut +as disma"ed to learn later that the defendants had not paid for or re%istered an" displa" space in her name, nor +ere the" authoriDed )" the state fair director to recruit participants. She said she incurred losses as a result for +hich the defendants should )e held solidaril" lia)le. 2 !n their 5oint ans+er, the defendants denied the plaintiff's alle%ation
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)" .edia. Si%nificantl", Bontiveros itself has not repudiated .edia's a%enc" as it +ould have if she had reall" not si%ned in its name. !n the ans+er it filed +ith .edia, it did not den" the latter's alle%ation in ara%raph / thereof that she +as onl" actin% as its a%ent +hen she solicited Ghite's participation. !n fact, )" filin% the ans+er 5ointl" +ith .edia throu%h their common counsel, Bontiveros affir&ed this alle%ation. !f the plaintiffs had an" dou)t a)out the capacit" in +hich .edia +as actin%, +hat the" should have done +as verif" the matter +ith Bontiveros. ,he" did not. !nstead, the" simpl" accepted .edia's representation that she +as an a%ent of Bontiveros and dealt +ith her as such. :nder Article 191$ of the 1ivil 1ode, @the principal must compl" +ith all the o)li%ations +hich the a%ent ma" have contracted +ithin the scope of his authorit".@ Bence, the private respondents cannot no+ hold .edia lia)le for the acts performed )" her for, and imputa)le to, Bontiveros as her principal. ,he plaintiffs' position )ecame all the more untena)le +hen the" moved on June 5, 198/, for the dismissal of the complaint a%ainst Bontiveros, & leavin% .edia as the sole defendant. Bontiveros had admitted as earl" as +hen it filed its ans+er that .edia +as actin% as its a%ent. ,he effect of the motion +as to leave the plaintiffs +ithout a cause of action a%ainst .edia for the o)li%ation, if an", of Bontiveros. Our conclusion is that since it has not )een found that .edia +as actin% )e"ond the scope of her authorit" +hen she entered into the articipation 1ontract on )ehalf of Bontiveros, it is the latter that should )e held ans+era)le for an" o)li%ation arisin% from that a%reement. ." movin% to dismiss the complaint a%ainst Bontiveros, the plaintiffs virtuall" disarmed themselves and forfeited +hatever claims the" mi%ht have proved a%ainst the latter under the contract si%ned for it )" .edia. !t should )e o)vious that havin% +aived these claims a%ainst the principal, the" cannot no+ assert them a%ainst the a%ent. GB>0>8O0>, the appealed decision dated -arch &$, 199$, of the respondent court is 0>C>0S>( and a ne+ 5ud%ment is rendered dismissin% 1ivil 1ase #o. 92/;- in the 0e%ional ,rial 1ourt of asa" 1it".
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G.R. No. 1('95& /0ne 14, 199% $R"DENT AL BAN1, pet2t2oner, )3. !A, A"RORA !R"4, re3pondent3. Ge deal here +ith another controvers" involvin% the inte%rit" of a )anA. ,he complaint in this case arose +hen private respondent Aurora 8. 1ruD, 5 +ith her sister as co-depositor, invested 2$$,$$$.$$ in 1entral .anA )ills +ith the rudential .anA at its )ranch in MueDon Avenue, MueDon 1it", on June 2&, 198;. ,he placement +as for ;& da"s at 1&.*5< annual interest. 8or this purpose, the amount of 19;,122.88 +as +ithdra+n from the depositors' Savin%s Account #o. 25/; and applied to the investment. ,he difference of &,8**.$* represented the pre-paid interest. ,he transaction +as evidenced )" a 1onfirmation of Sale 1 delivered to 1ruD t+o da"s later, to%ether +ith a (e)it -emo 2 in the amount +ithdra+n and applied to the confirmed sale. ,hese documents +ere issued )" Susan Muim)o, the emplo"ee of the )anA to +hom 1ruD +as referred and +ho +as apparentl" in char%e of such transactions. % :pon maturit" of the placement on Au%ust 25, 198;, 1ruD returned to the )anA to @roll-over@ or rene+ her investment. Muim)o, +ho a%ain attended to her, prepared a 1redit -emo 4 creditin% the amount of 2$$,$$$.$$ in 1ruD's savin%s account pass)ooA. She also prepared a (e)it -emo for the amount of 19;,122.88 to cover the reinvestment of 2$$,$$$.$$ minus the prepaid interest of &,8**.$2. 5 ,his time, 1ruD +as asAed to si%n a Githdra+al Slip 6 for 19;,122.98, representin% the amount to )e re-invested after deduction of the prepaid interest. Muim)o e'plained this +as a ne+ re7uirement of the )anA. Several da"s later, 1ruD received another 1onfirmation of Sale & and a cop" of the (e)it -emo. ' On Octo)er 2*, 198;, 1ruD returned to the )anA and sou%ht to +ithdra+ her 2$$,$$$.$$. After verification of her records, ho+ever, she +as informed that the investment appeared to have )een alread" +ithdra+n )" her on Au%ust 25, 198;. ,here +as no cop" on file of the 1onfirmation of Sale and the (e)it -emo alle%edl" issued to her )" Muim)o. Muim)o herself +as not availa)le for 7uestionin% as she had not )een reportin% for the past +eeA. ShocAed )" this information, 1ruD )ecame h"sterical and )urst into tears. ,he )ranch mana%er, 0oman Santos, assured her that he +ould looA into the matter. 9 >ver" da" thereafter, 1ruD +ent to the )anA to in7uire a)out her re7uest to +ithdra+ her investment. She received no definite ans+er, not even to the letter she +rote the )anA +hich +as received )" Santos himself. 1(8inall", 1ruD sent the )anA a demand letter dated #ovem)er 12, 198; for the amount of 2$$,$$$.$$ plus interest. 11 !n a repl" dated #ovem)er 2$, 198;, the )anA's Cice resident =auro J. Jocson said that there appeared to )e an anomal" and re7uested 1ruD to defer court action as the" hoped to settle the matter amica)l". 12 !ncreasin%l" +orried, 1ruD sent another letter reiteratin% her demand. 1% ,his time the repl" of the )anA +as une7uivocal and ne%ative. She +as told that her re7uest had to )e denied )ecause she had alread" +ithdra+n the amount she +as claimin%. 14
1ruD's reaction +as to file a complaint for )reach of contract a%ainst rudential .anA in the 0e%ional ,rial 1ourt of MueDon 1it". She demanded the return of her mone" +ith interest, plus dama%es and attorne"'s fees. !n its ans+er, the )anA denied lia)ilit", insistin% that 1ruD had +ithdra+n her investment. ,he )anA also instituted a thirdpart" complaint a%ainst Muim)o, +ho did not file an ans+er and +as declared in default. 15 ,he )anA, ho+ever, did not present an" evidence a%ainst her. After trial, Jud%e 0odolfo A. OrtiD rendered 5ud%ment in favor of the plaintiffs and disposed as follo+s2
A11O0(!#9=I, 5ud%ment is here)" rendered orderin% the defendant?thirdpart" plaintiff to pa" to the plaintiffs the follo+in% amounts2 1. 2$$,$$$.$$, plus interest thereon at the rate of 1&.*5< per annum from Octo)er 2*, 198;, until full" paidE 2. &$,$$$.$$, as moral dama%esE &. 2$,$$$.$$, as e'emplar" dama%esE and /. 25,$$$.$$, as reasona)le attorne"'s fees. ,he counterclaim and the third-part" complaint of the defendant?third-part" plaintiff are dismissed. Gith costs a%ainst the defendant?third-part" plaintiff.
,he decision +as affirmed in toto on appeal to the respondent court. ,he 5ud%ment of the 1ourt of Appeals 16 is no+ faulted in this petition, mainl" on the %round that the )anA should not have )een found lia)le for a quasi-delict +hen it +as sued for )reach of contract. ,he petition shall fail. ,he petitioner is 7ui))lin%. !t appears to )e merel" temporiDin% to dela" enforcement of the lia)ilit" clearl" esta)lished a%ainst it. ,he )asic issues are factual. ,he private respondent claims she has not "et collected her investment of 2$$,$$$.$$ and has su)mitted in proof of their contention the 1onfirmation of Sale and the (e)it -emo issued to her )" Muim)o on the official forms of the )anA. ,he petitioner denies her claim and points to the Githdra+al Slip, +hich it sa"s 1ruD has not denied havin% si%ned. !t also contends that the 1onfirmation of Sale and the (e)it -emo are faAe and should not have )een %iven credence )" the lo+er courts. ,he findin%s of the trial court on these issues have )een affirmed )" the respondent court and +e see no reason to distur) them. ,he petitioner has not sho+n that the" have )een reached ar)itraril" or in disre%ard of the evidence of record. On the contrar", +e find su)stantial )asis for the conclusion that the private respondents si%ned the Githdra+al Slip onl" as part of the )anA's ne+ procedure of re-investment. She did not actuall" receive the amount indicated therein, +hich she +as made to understand +as )ein% re-invested in her name. ,he )anA itself so assured her in the 1onfirmation of Sale and the (e)it -emo later issued to her )" Muim)o. >speciall" persuasive are the follo+in% o)servations of the trial court2 1& Ghat is more, it could not )e that plaintiff Aurora 8. 1ruD +ithdre+ onl" the amount of 19;,122.98 from their savin%s account, if her onl" intention +as to maAe such a +ithdra+al. 8or, if, indeed, it +as the desire of the plaintiffs to +ithdra+ their mone" from the defendant?third-part" plaintiff, the" could have +ithdra+n an 6
AMDG
amount in round fi%ures. 1ertainl", it is un)elieva)le that their +ithdra+al +as in the irre%ular amount of 19;,122.98 if the" reall" received it. On the contrar", this amount, +hich is the price of the 1entral .anA )ills rolled over, indicates that, as claimed )" plaintiff Aurora 8. 1ruD, she did not receive this mone", )ut it +as left )" her +ith the defendant?third-part" plaintiff in order to )u" 1entral .anA )ills placement for another si't"-three 3;&4 da"s, for +hich she si%ned a +ithdra+al slip at the instance of third-part" defendant Susan Muim)o +ho told her that it +as a ne+ )anA re7uirement for the roll-over of a matured placement +hich she trustin%l" )elieved. !ndeed, the )anA has not e'plained the remarAa)le coincidence that the amount indicated in the +ithdra+al slip ise.actl! the same amount 1ruD +as re-investin% after deductin% therefrom the pre-paid interest. ,he )anA has also not, succeeded in impu%nin% the authenticit" of the 1onfirmation of Sale and the (e)it -emo +hich +ere made on its official, forms. ,hese are admittedl" not availa)le to the %eneral pu)lic or even its depositors and are handled onl" )" its personnel. >ven assumin% that the" +ere not si%ned )" its authoriDed officials, as it claims, there +as no o)li%ation on the part of 1ruD to verif" their authorit" )ecause she had the ri%ht to presume it. ,he documents had )een issued in the office of the )anA itself and )" its o+n emplo"ees +ith +hom she had previousl" dealt. Such dealin%s had not )een 7uestioned )efore, much leas invalidated. ,here +as a)solutel" no reason +h" she should not have accepted their authorit" to act on )ehalf of their emplo"er. !t is also +orth" of note F and +onder F that althou%h the )anA impleaded Muim)o in a third-part" complaint, it did not pursue its suit even +hen she failed to ans+er and +as declared in default. ,he )anA did not introduce evidence a%ainst her althou%h it could have done so under the rules. #o less remarAa)l", it did not call on her to testif" on its )ehalf, considerin% that under the circumstances claimed )" it, she +ould have )een the )est +itness to sho+ that 1ruD had actuall" +ithdra+n her 2$$,$$$.$$ placement. !nstead, the )anA chose to rel" on its other emplo"ees +hose testimon" +as less direct and cate%orical than the testimon" Muim)o could have %iven. Ge do not find that the 1ourt of Appeals held the )anA lia)le on a quasi-delict. ,he ar%ument of the petitioner on this issue is pallid, to sa" the least, consistin% as it does onl" of the o)servation that the article cited )" the respondent court on the a%ent's lia)ilit" falls under the headin% in the 1ivil 1ode on quasi-delicts. On the other hand, the respondent court clearl" declared that2 ,he defendant?third-part" plaintiff )ein% lia)le for the return of the 2$$,$$$.$$ placement of the plaintiffs, the e'tent of the lia)ilit" of the defendant?third-part" plaintiff for dama%es resultant thereof,/hich is contractual, is for all dama%es +hich ma" )e reasona)l" attri)uted to the non-performance of the o)li%ation, . . . ''' ''' ''' .ecause of the )ad faith of the defendant?third-
part" plaintiff in its reach of its contract +ith the plaintiffs, the latter are, therefore, entitled to an a+ard of moral dama%es . . . 3>mphasis supplied4 ,here is no 7uestion that the petitioner +as made lia)le for its failure or refusal to deliver to 1ruD the amount she had deposited +ith it and +hich she had a ri%ht to +ithdra+ upon its maturit". ,hat investment +as acAno+led%ed )" its o+n emplo"ees, +ho had the apparent authorit" to do so and so could le%all" )ind it )" its acts vis-a-vis1ruD. Ghatever mi%ht have happened to the investment F +hether it +as lost or stolen )" +hoever F +as not the concern of the depositor. !t +as the concern of the )anA. As far as 1ruD +as concerned, she had the ri%ht to +ithdra+ her 2$$,$$$.$$ placement +hen it matured pursuant to the terms of her investment as acAno+led%ed and reflected in the 1onfirmation of Sale. ,he failure of the )anA to deliver the amount to her pursuant to the 1onfirmation of Sale constituted its )reach of their contract, for +hich it should )e held lia)le. ,he lia)ilit" of the principal for the acts of the a%ent is not even de)ata)le. =a+ and 5urisprudence are clearl" and a)solutel" a%ainst the petitioner. Such lia)ilit" dates )acA to the 0oman =a+ ma'im, 0ui per aliu& facit per seipsu& facere videtur. @Be +ho does a thin% )" an a%ent is considered as doin% it himself.@ ,his rule is affirmed )" the 1ivil 1ode thus2 Art. 191$. ,he principal must compl" +ith all the o)li%ations +hich the a%ent ma" have contracted +ithin the scope of his authorit". Art. 1911. >ven +hen the a%ent has e'ceeded his authorit", the principal is solidaril" lia)le +ith the a%ent if the former allo+ed the latter to act as thou%h he had full po+ers. 1onforma)l", +e have declared in countless decisions that the principal is lia)le for o)li%ations contracted )" the a%ent. ,he a%ent's apparent representation "ields to the principal's true representation and the contract is considered as entered into )et+een the principal and the third person. 1' A )anA is lia)le for +ron%ful acts of its officers done in the interests of the )anA or in the course of dealin%s of the officers in their representative capacit" )ut not for acts outside the scope of their authorit". 39 c.7.s. p. /1*4 A )anA holdin% out its officers and a%ent as +orth" of confidence +ill not )e permitted to profit )" the frauds the" ma" thus )e ena)led to perpetrate in the apparent scope of their emplo"mentE nor +ill it )e permitted to shirA its responsi)ilit" for such frauds, even thou%h no )enefit ma" accrue to the )anA therefrom 31$ Am Jur 2d, p. 11/4. Accordin%l", a )anAin% corporation is lia)le to 7
AMDG
innocent third persons +here the representation is made in the course of its )usiness )" an a%ent actin% +ithin the %eneral scope of his authorit" even thou%h, in the particular case, the a%ent is secretl" a)usin% his authorit" and attemptin% to perpetrate a fraud upon his principal or some other person, for his o+n ultimate )enefit 3-c!ntosh v. (aAota ,rust 1o., 52 #( *52, 2$/ #G 818, /$ A=0 1$21.4 Application of these principles in especiall" necessar" )ecause )anAs have a fiduciar" relationship +ith the pu)lic and their sta)ilit" depends on the confidence of the people in their honest" and efficienc". Such faith +ill )e eroded +here )anAs do not e'ercise strict care in the selection and supervision of its emplo"ees, resultin% in pre5udice to their depositors. !t +ould appear from the facts esta)lished in the case )efore us that the petitioner +as less than ea%er to present Muim)o at the trial or even to esta)lish her lia)ilit" althou%h it made the initial effort F +hich it did not pursue F to hold her ans+era)le in the third-part" complaint. Ghat ever happened to her does not appear in the record. Ber a)sence from the proceedin%s feeds the suspicion of her possi)le misdeed, +hich the )anA seems to have studiousl" i%nored )" its insistence that the missin% mone" had )een actuall" +ithdra+n )" 1ruD. ." such insistence, the )anA is a)solvin% not onl" itself )ut also, in effect and )" e'tension, the disappeared Muim)o +ho apparentl" has much to e'plain. Ge a%ree +ith the lo+er courts that the petitioner acted in )ad faith in den"in% 1ruD the o)li%ation she +as claimin% a%ainst it. !t +as o)vious that an irre%ularit" had )een committed )" the )anA's personnel, )ut instead of repairin% the in5ur" to 1ruD )" immediatel" restorin% her mone" to her, it sou%ht to %loss over the anomal" in its o+n operations. 1ruD naturall" suffered an'ious moments and mental an%uish over the loss of the investment. ,he amount of 2$$,$$$.$$ is not small even )" present standards. ." un5ustl" +ithholdin% it from her on the unproved defense that she had alread" +ithdra+n it, the )anA violated the trust she had reposed in it and thus su)5ected itself to further lia)ilit" for moral and e'emplar" dama%es. !f a person dealin% +ith a )anA does not read the fine print in the contract, it is )ecause he trusts the )anA and relies on its inte%rit". ,he ordinar" customer appl"in% for a loan or even maAin% a deposit 3and so himself e'tendin% the loan to the )anA4 does not )other +ith the red tape re7uirements and the finicA" conditions in the documents he si%ns. Bis feelin% is that he does not have to )e +ar" of the )anA )ecause it +ill deal +ith him fairl" and there is no reason to suspect its motives. ,his is an attitude the )anA must 5ustif". Ghile this is not to sa" that )anA re%ulations are meanin%less or have no )indin% effect, the" should, ho+ever, not )e used for coverin% up the fault of )anA emplo"ees +hen the" )lunder or, +orse, intentionall" cheat him. ,he misdeeds of such emplo"ees must )e readil" acAno+led%ed and rectified +ithout dela". ,he )anA must al+a"s act in %ood faith. ,he ordinar" customer does not feel the need for a la+"er )" his side ever" time he deals +ith a )anA )ecause he is certain that it is not a predator or a potential adversar". ,he )anA should sho+ that there is reall" no reason for an"
apprehension )ecause it trul" deserves his faith in it. GB>0>8O0>, the petition is (>#!>( and the appealed decision is A88!0->(, +ith costs a%ainst the petitioner. !t is so ordered.
AMDG
received /8,89&.*; in advance.*1/phi*.n2t 9.0. #o. 1158&8 Jul" 18, 2$$2 1O#S,A#,> A-O0 (> 1AS,0O and 1O0ALO# A-O0 (> 1AS,0O, petitioners, vs. 1O:0, O8 A >A=S and 80A#1!S1O A0,!9O, respondents. T6e !a3e .efore us is a etition for 0evie+ on 1ertiorari1 seeAin% to annul the (ecision of the 1ourt of Appeals2 dated -a" /, 199/ in 1A-9.0. 1C #o. &*99;, +hich affirmed in toto the decision& of the 0e%ional ,rial 1ourt of MueDon 1it", .ranch 8$, in 1ivil 1ase #o. M-89-2;&1. ,he trial court disposed as follo+s2 @GB>0>8O0>, the 1ourt finds defendants 1onstante and 1oraDon Amor de 1astro 5ointl" and solidaril" lia)le to plaintiff the sum of2 a4 &$&,;$;.2/ representin% unpaid commissionE )4 25,$$$.$$ for and )" +a" of moral dama%esE c4 /5,$$$.$$ for and )" +a" of attorne"'s feesE d4 ,o pa" the cost of this suit. MueDon 1it", -etro -anila, (ecem)er 2$, 1991.@ T6e Ante7edent #a7t3 On -a" 29, 1989, private respondent 8rancisco Arti%o 3@Arti%o@ for )revit"4 sued petitioners 1onstante A. (e 1astro 3@1onstante@ for )revit"4 and 1oraDon A. (e 1astro 3@1oraDon@ for )revit"4 to collect the unpaid )alance of his )roAer's commission from the (e 1astros./ ,he 1ourt of Appeals summariDed the facts in this +ise2 @' ' '. Appellants5 +ere co-o+ners of four 3/4 lots located at >(SA corner #e+ IorA and (enver Streets in 1u)ao, MueDon 1it". !n a letter dated Januar" 2/, 198/ 3>'hi)it @A1, p. 1//, 0ecords4, appellee; +as authoriDed )" appellants to act as real estate )roAer in the sale of these properties for the amount of 2&,$$$,$$$.$$, five percent 35<4 of +hich +ill )e %iven to the a%ent as commission. !t +as appellee +ho first found ,imes ,ransit 1orporation, represented )" its president -r. 0ondaris, as prospective )u"er +hich desired to )u" t+o 324 lots onl", specificall" lots 1/ and 15. >ventuall", sometime in -a" of 1985, the sale of lots 1/ and 15 +as consummated. Appellee received from appellants /8,89&.*; as commission. !t +as then that the rift )et+een the contendin% parties soon emer%ed. Appellee apparentl" felt short chan%ed )ecause accordin% to him, his total commission should )e &52,5$$.$$ +hich is five percent 35<4 of the a%reed price of *,$5$,$$$.$$ paid )" ,imes ,ransit 1orporation to appellants for the t+o 324 lots, and that it +as he +ho introduced the )u"er to appellants and unceasin%l" facilitated the ne%otiation +hich ultimatel" led to the consummation of the sale. Bence, he sued )elo+ to collect the )alance of &$&,;$;.2/ after havin% On the other hand, appellants completel" traverse appellee's claims and essentiall" ar%ue that appellee is selfishl" asAin% for more than +hat he trul" deserved as commission to the pre5udice of other a%ents +ho +ere more instrumental in the consummation of the sale. Althou%h appellants readil" concede that it +as appellee +ho first introduced ,imes ,ransit 1orp. to them, appellee +as not desi%nated )" them as their e'clusive real estate a%ent )ut that in fact there +ere more or less ei%hteen 3184 others +hose collective efforts in the lon% run d+arfed those of appellee's, considerin% that the first ne%otiation for the sale +here appellee tooA active participation failed and it +as these other a%ents +ho successfull" )roAered in the second ne%otiation. .ut despite this and out of appellants' @pure li)eralit", )eneficence and ma%nanimit"@, appellee nevertheless +as %iven the lar%est cut in the commission 3 /8,89&.*;4, althou%h on the principle of quantu& &eruit he +ould have certainl" )een entitled to less. So appellee should not have )een heard to complain of %ettin% onl" a pittance +hen he actuall" %ot the lion's share of the commission and +orse, he should not have )een allo+ed to %et the entire commission. 8urthermore, the purchase price for the t+o lots +as onl" &.; million as appearin% in the deed of sale and not *.$5 million as alle%ed )" appellee. ,hus, even assumin% that appellee is entitled to the entire commission, he +ould onl" )e %ettin% 5< of the &.; million, or 18$,$$$.$$.@ R082n9 o: t6e !o0rt o: Appea83 ,he 1ourt of Appeals affirmed in toto the decision of the trial court. 3irst. ,he 1ourt of Appeals found that 1onstante authoriDed Arti%o to act as a%ent in the sale of t+o lots in 1u)ao, MueDon 1it". ,he hand+ritten authoriDation letter si%ned )" 1onstante clearl" esta)lished a contract of a%enc" )et+een 1onstante and Arti%o. ,hus, Arti%o sou%ht prospective )u"ers and found ,imes ,ransit 1orporation 3@,imes ,ransit@ for )revit"4. Arti%o facilitated the ne%otiations +hich eventuall" led to the sale of the t+o lots. ,herefore, the 1ourt of Appeals decided that Arti%o is entitled to the 5< commission on the purchase price as provided in the contract of a%enc". (econd. ,he 1ourt of Appeals ruled that Arti%o's complaint is not dismissi)le for failure to implead as indispensa)le parties the other co-o+ners of the t+o lots. ,he 1ourt of Appeals e'plained that it is not necessar" to implead the other co-o+ners since the action is e'clusivel" )ased on a contract of a%enc" )et+een Arti%o and 1onstante.
Third. ,he 1ourt of Appeals liAe+ise declared that the trial court did not err in admittin% parol evidence to prove the true amount paid )" ,imes ,ransit to the (e 1astros for the t+o lots. ,he 1ourt of Appeals ruled that evidence aliunde could )e presented to prove that the actual purchase price +as *.$5 million and not &.; million as appearin% in the deed of sale. >vidence aliunde is admissi)le considerin% that Arti%o is not a part", )ut a mere +itness in the deed of sale )et+een the (e 1astros and ,imes ,ransit. ,he 1ourt of Appeals e'plained that, @the rule that oral evidence is inadmissi)le to Bus Org 1 summer (obligations of principal and modes of extinguishment of agency) 9
AMDG
var" the terms of +ritten instruments is %enerall" applied onl" in suits )et+een parties to the instrument and stran%ers to the contract are not )ound )" it.@ .esides, Arti%o +as not suin% under the deed of sale, )ut solel" under the contract of a%enc". ,hus, the 1ourt of Appeals upheld the trial court's findin% that the purchase price +as *.$5 million and not &.; million. Bence, the instant petition. T6e 330e3 Accordin% to petitioners, the 1ourt of Appeals erred in !. #O, O0(>0!#9 ,B> (!S-!SSA= O8 ,B> 1O- =A!#, 8O0 8A!=:0> ,O !- =>A( !#(!S >#SA.=> A0,!>S-!#-!#,>0>S,E !!. #O, O0(>0!#9 ,B> (!S-!SSA= O8 ,B> 1O- =A!#, O# ,B> 90O:#( ,BA, A0,!9O'S 1=A!BAS .>># >H,!#9:!SB>( .I 8:== AI->#,, GA!C>0, O0 A.A#(O#->#,E !!!. 1O#S!(>0!#9 !#1O- >,>#, >C!(>#1>E !C. 9!C!#9 10>(>#1> ,O A,>#,=I >0J:0>( ,>S,!-O#IE C. SA#1,!O#!#9 A# AGA0( O8 -O0A= (A-A9>S A#( A,,O0#>I'S 8>>SE C!. #O, AGA0(!#9 ,B> (> 1AS,0O'S -O0A= A#( >H>- =A0I (A-A9>S, A#( A,,O0#>I'S 8>>S. T6e !o0rt;3 R082n9 ,he petition is )ereft of merit. First Issue: whether the complaint merits dismissal for failure to implead other co-owners as indispensable parties ,he (e 1astros ar%ue that Arti%o's complaint should have )een dismissed for failure to implead all the co-o+ners of the t+o lots. ,he (e 1astros claim that Arti%o al+a"s Ane+ that the t+o lots +ere coo+ned )" 1onstante and 1oraDon +ith their other si)lin%s Jose and 1armela +hom 1onstante merel" represented. ,he (e 1astros contend that failure to implead such indispensa)le parties is fatal to the complaint since Arti%o, as a%ent of all the four co-o+ners, +ould )e paid +ith funds co-o+ned )" the four co-o+ners. ,he (e 1astros' contentions are devoid of le%al )asis. An indispensa)le part" is one +hose interest +ill )e affected )" the court's action in the liti%ation, and +ithout +hom no final determination of the case can )e had.* ,he 5oinder of indispensa)le parties is mandator" and courts cannot proceed +ithout their presence.8 Ghenever it appears to the court in the course of a proceedin% that an indispensa)le part" has not )een 5oined, it is the dut" of the court to stop the trial and order the inclusion of such part".9
Bo+ever, the rule on mandator" 5oinder of indispensa)le parties is not applica)le to the instant case. ,here is no dispute that 1onstante appointed Arti%o in a hand+ritten note dated Januar" 2/, 198/ to sell the properties of the (e 1astros for 2& million at a 5 percent commission. ,he authorit" +as on a first come, first serve )asis. ,he authorit" reads in full2 @2/ Jan. 8/ ,o Ghom !t -a" 1oncern2 ,his is to state that -r. 8rancisco Arti%o is authoriDed as our real estate )roAer in connection +ith the sale of our propert" located at >dsa 1orner #e+ IorA K (enver, 1u)ao, MueDon 1it". AsAin% price a%ent's fee. 1.1. de 1astro o+ner K representin% co-o+ners ,his authorit" is on a first-come 8irst serve )asis N1A1@ 1onstante si%ned the note as o+ner and as representative of the other co-o+ners. :nder this note, a contract of a%enc" +as clearl" constituted )et+een 1onstante and Arti%o. Ghether 1onstante appointed Arti%o as a%ent, in 1onstante's individual or representative capacit", or )oth, the (e 1astros cannot seeA the dismissal of the case for failure to implead the other co-o+ners as indispensa)le parties. The De Castros admit that the other co-owners are solidarily liable under the contract of agency ,1$ citin% Article 1915 of the 1ivil 1ode, +hich reads2 Art. 1915. !f t+o or more persons have appointed an a%ent for a common transaction or undertaAin%, the" shall )e solidaril" lia)le to the a%ent for all the conse7uences of the a%enc". ,he solidar" lia)ilit" of the four co-o+ners, ho+ever, militates a%ainst the (e 1astros' theor" that the other co-o+ners should )e impleaded as indispensa)le parties. A noted commentator e'plained Article 1915 thus N @,he rule in this article applies even +hen the appointments +ere made )" the principals in separate acts, provided that the" are for the same transaction. T6e 3o82dar2t< ar23e3 :rom t6e 7ommon 2ntere3t o: t6e pr2n72pa83, and not :rom t6e a7t o: 7on3t2t0t2n9 t6e a9en7<. B< )2rt0e o: t623 3o82dar2t<, t6e a9ent 7an re7o)er :rom an< pr2n72pa8 t6e =6o8e 7ompen3at2on and 2ndemn2t< o=2n9 to 62m b< t6e ot6er3.,he parties, ho+ever, ma", )" e'press a%reement, ne%ate this solidar" responsi)ilit". ,he 10 2&,$$$,$$$.$$ +ith 5< commission as
AMDG
solidarit" does not disappear )" the mere partition effected )" the principals after the accomplishment of the a%enc". !f the undertaAin% is one in +hich several are interested, )ut onl" some create the a%enc", onl" the latter are solidaril" lia)le, +ithout pre5udice to the effects of negotioru& gestio +ith respect to the others. And if the po+er %ranted includes various transactions some of +hich are common and others are not, onl" those interested in each transaction shall )e lia)le for it.@11 Ghen the la+ e'pressl" provides for solidarit" of the o)li%ation, as in the lia)ilit" of co-principals in a contract of a%enc", each o)li%or ma" )e compelled to pa" the entire o)li%ation.12 ,he a%ent ma" recover the +hole compensation from an" one of the co-principals, as in this case. !ndeed, Article 121; of the 1ivil 1ode provides that a creditor ma" sue any of the solidar" de)tors. ,his article reads2 Art. 121;. ,he creditor ma" proceed a%ainst an" one of the solidar" de)tors or some or all of them simultaneousl". ,he demand made a%ainst one of them shall not )e an o)stacle to those +hich ma" su)se7uentl" )e directed a%ainst the others, so lon% as the de)t has not )een full" collected. ,hus, the 1ourt has ruled in 4perators Incorporated vs. A&erican Biscuit Co.% Inc.1& that N @' ' ' solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor . Article 121; of the 1ivil 1ode sa"s that the creditor Oma" proceed a%ainst an"one of the solidar" de)tors or some or all of them simultaneousl"'.@ 3>mphasis supplied4 Second Issue: whether Artigo s claim has been e!tinguished by full payment" wai#er or abandonment ,he (e 1astros claim that Arti%o +as full" paid on June 1/, 1985, that is, Arti%o +as %iven @his proportionate share and no lon%er entitled to an" )alance.@ Accordin% to them, Arti%o +as 5ust one of the a%ents involved in the sale and entitled to a @proportionate share@ in the commission. ,he" assert that Arti%o did a)solutel" nothin% durin% the second ne%otiation )ut to si%n as a +itness in the deed of sale. Be did not even prepare the documents for the transaction as an active real estate )roAer usuall" does. ,he (e 1astros' ar%uments are flims". A contract of a%enc" +hich is not contrar" to la+, pu)lic order, pu)lic polic", morals or %ood custom is a valid contract, and constitutes the la+ )et+een the parties.1/ ,he contract of a%enc" entered into )" 1onstante +ith Arti%o is the la+ )et+een them and )oth are )ound to compl" +ith its terms and conditions in %ood faith. ,he mere fact that @other a%ents@ intervened in the consummation of the sale and +ere paid their respective commissions cannot var" the terms of the contract of a%enc" %rantin% Arti%o a 5 percent commission )ased on the sellin% price. ,hese @other a%ents@ turned out to )e emplo"ees of ,imes ,ransit, the )u"er Arti%o introduced to
the (e 1astros. ,his prompted the trial court to o)serve2 @,he alle%ed Osecond %roup' of a%ents came into the picture onl" durin% the so-called Osecond ne%otiation' and it is amusin% to note that these 3sic4 second %roup, prominent amon% +hom are Att". (el 1astillo and -s. rudencio, happened to )e emplo"ees of ,imes ,ransit, the )u"er of the properties. And their efforts +ere limited to convincin% 1onstante to 'part a+a"' +ith the properties )ecause the redemption period of the foreclosed properties is around the corner, so to speaA. 3tsn. June ;, 19914. ''' ,o accept 1onstante's version of the stor" is to open the flood%ates of fraud and deceit. A seller could al+a"s pretend re5ection of the offer and +ait for sometime for others to rene+ it +ho are much +illin% to accept a commission far less than the ori%inal )roAer. The immorality in the instant case easily presents itself if one has to consider that the alleged $second group are the employees of the buyer" Times Transit and they ha#e not bettered the offer secured by %r& Artigo for '( million& !t is to )e noted also that +hile 1onstante +as too particular a)out the unrene+ed real estate )roAer's license of -r. Arti%o, he did not )other at all to in7uire as to the licenses of rudencio and 1astillo. 3tsn, April 11, 1991, pp. &9-/$4.@15 3>mphasis supplied4 !n an" event, +e find that the 5 percent real estate )roAer's commission is reasona)le and +ithin the standard practice in the real estate industr" for transactions of this nature. ,he (e 1astros also contend that Arti%o's inaction as +ell as failure to protest estops him from recoverin% more than +hat +as actuall" paid him. ,he (e 1astros cite Article 12&5 of the 1ivil 1ode +hich reads2 Art. 12&5. Ghen the o)li%ee accepts the performance, Ano+in% its incompleteness and irre%ularit", and +ithout e'pressin% an" protest or o)5ection, the o)li%ation is deemed full" complied +ith. ,he (e 1astros' reliance on Article 12&5 of the 1ivil 1ode is misplaced. Arti%o's acceptance of partial pa"ment of his commission neither amounts to a +aiver of the )alance nor puts him in estoppel. ,his is the import of Article 12&5 +hich +as e'plained in this +ise2 @,he +ord accept, as used in Article 12&5 of the 1ivil 1ode, means to taAe as satisfactor" or sufficient, or a%ree to an incomplete or irre%ular performance. )ence" the mere receipt of a partial payment is not e*ui#alent to the re*uired acceptance of performance as would e!tinguish the whole obligation&+1; 3>mphasis supplied4 ,here is thus a clear distinction )et+een acceptance and mere receipt. !n this case, it is evident that Arti%o merel" received the partial pa"ment +ithout +aivin% the )alance. ,hus, there is no 11
AMDG
estoppel to speaA of. ,he (e 1astros further ar%ue that laches should appl" )ecause Arti%o did not file his complaint in court until -a" 29, 1989, or almost four "ears later. Bence, Arti%o's claim for the )alance of his commission is )arred )" laches. =aches means the failure or ne%lect, for an unreasona)le and une'plained len%th of time, to do that +hich )" e'ercisin% due dili%ence could or should have )een done earlier. !t is ne%li%ence or omission to assert a ri%ht +ithin a reasona)le time, +arrantin% a presumption that the part" entitled to assert it either has a)andoned it or declined to assert it.1* Arti%o disputes the claim that he ne%lected to assert his ri%hts. Be +as appointed as a%ent on Januar" 2/, 198/. ,he t+o lots +ere finall" sold in June 1985. As found )" the trial court, Arti%o demanded in April and Jul" of 1985 the pa"ment of his commission )" 1onstante on the )asis of the sellin% price of *.$5 million )ut there +as no response from 1onstante.18 After it )ecame clear that his demands for pa"ment have fallen on deaf ears, Arti%o decided to sue on -a" 29, 1989. Actions upon a +ritten contract, such as a contract of a%enc", must )e )rou%ht +ithin ten "ears from the time the ri%ht of action accrues.19 ,he ri%ht of action accrues from the moment the )reach of ri%ht or dut" occurs. 8rom this moment, the creditor can institute the action even as the ten-"ear prescriptive period )e%ins to run. 2$ ,he (e 1astros admit that Arti%o's claim +as filed +ithin the ten-"ear prescriptive period. ,he (e 1astros, ho+ever, still maintain that Arti%o's cause of action is )arred )" laches. =aches does not appl" )ecause onl" four "ears had lapsed from the time of the sale in June 1985. Arti%o made a demand in Jul" 1985 and filed the action in court on -a" 29, 1989, +ell +ithin the ten-"ear prescriptive period. ,his does not constitute an unreasona)le dela" in assertin% one's ri%ht. ,he 1ourt has ruled, +a delay within the prescripti#e period is sanctioned by law and is not considered to be a delay that would bar relief&+21 !n e'plainin% that laches applies onl" in the a)sence of a statutor" prescriptive period, the 1ourt has stated @=aches is recourse in e7uit". ,*uity" howe#er" is applied only in the absence" ne#er in contra#ention" of statutory law& Thus" laches" cannot" as a rule" be used to abate a collection suit filed within the prescripti#e period mandated by the Ci#il Code&+22 1learl", the (e 1astros' defense of laches finds no support in la+, e7uit" or 5urisprudence. Third issue: whether the determination of the purchase price was made in #iolation of the -ules on ,#idence ,he (e 1astros +ant the 1ourt to re-e'amine the pro)ative value of the evidence adduced in the trial court to determine +hether the actual sellin% price of the t+o lots +as *.$5 million and not &.; million. ,he (e 1astros contend that it is erroneous to )ase the 5 percent commission on a purchase price of *.$5 million as ordered )" the trial court and the appellate court. ,he (e 1astros insist that the purchase price is &.; million as e'pressl" stated in the deed of
sale, the due e'ecution and authenticit" of +hich +as admitted durin% the trial. ,he (e 1astros )elieve that the trial and appellate courts committed a mistaAe in considerin% incompetent evidence and disre%ardin% the )est evidence and parole evidence rules. ,he" claim that the 1ourt of Appeals erroneousl" affirmed su silentio the trial court's reliance on the various correspondences )et+een 1onstante and ,imes ,ransit +hich +ere mere photocopies that do not satisf" the )est evidence rule. 8urther, these letters covered onl" the first ne%otiations )et+een 1onstante and ,imes ,ransit +hich failedE hence, these are immaterial in determinin% the final purchase price. ,he (e 1astros further ar%ue that if there +as an undervaluation, Arti%o +ho si%ned as +itness )enefited therefrom, and )ein% e7uall" %uilt", should )e left +here he presentl" stands. ,he" liAe+ise claim that the 1ourt of Appeals erred in rel"in% on evidence +hich +ere not offered for the purpose considered )" the trial court. Specificall", >'hi)its @.@, @1@, @(@ and @>@ +ere not offered to prove that the purchase price +as *.$5 -illion. 8inall", the" ar%ue that the courts a quo erred in %ivin% credence to the per5ured testimon" of Arti%o. ,he" +ant the entire testimon" of Arti%o re5ected as a falsehood )ecause he +as l"in% +hen he claimed at the outset that he +as a licensed real estate )roAer +hen he +as not. Ghether the actual purchase price +as *.$5 -illion as found )" the trial court and affirmed )" the 1ourt of Appeals, or &.; -illion as claimed )" the (e 1astros, is a 7uestion of fact and not of la+. !nevita)l", this calls for an in7uir" into the facts and evidence on record. ,his +e can not do. !t is not the function of this 1ourt to re-e'amine the evidence su)mitted )" the parties, or anal"De or +ei%h the evidence a%ain.2& ,his 1ourt is not the proper venue to consider a factual issue as it is not a trier of facts. !n petitions for revie+ on certiorari as a mode of appeal under 0ule /5, a petitioner can onl" raise 7uestions of la+. Our pronouncement in the case of Cor&ero vs. Court of Appeals2/ )ears reiteration2 @At the outset, it is evident from the errors assi%ned that the petition is anchored on a plea to revie+ the factual conclusion reached )" the respondent court. Such tasA ho+ever is foreclosed )" the rule that in petitions for certiorari as a mode of appeal, liAe this one, onl" 7uestions of la+ distinctl" set forth ma" )e raised. ,hese 7uestions have )een defined as those that do not call for an" e'amination of the pro)ative value of the evidence presented )" the parties. 3:niland 0esources vs. (evelopment .anA of the hilippines, 2$$ S10A *51 P1991Q citin% 9oduco vs. 1ourt of appeals, et al., 119 hil. 5&1E BernandeD vs. 1ourt of Appeals, 1/9 S10A ;*4. And +hen this court is asAed to %o over the proof presented )" the parties, and anal"De, assess and +ei%h them to ascertain if the trial court and the appellate court +ere correct in accordin% superior credit to this or that piece of evidence and eventuall", to the totalit" of the evidence of one part" or the other, the court cannot and +ill not do the same. 3>la"da vs. 1ourt of Appeals, 199 S10A &/9 P1991Q4. ,hus, in the a)sence of an" sho+in% that the findin%s complained of are totall" devoid of support in the record, or that the" are so %larin%l" erroneous as to constitute serious a)use of discretion, such findin%s must stand, for this court is not e'pected or re7uired to e'amine or contrast the oral and documentar" evidence su)mitted )" the parties. 3-orales 12
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vs. 1ourt of Appeals, 19* S10A &91 P1991Q citin% Santa Ana vs. BernandeD, 18 S10A 9*& P19;;Q4.@ Ge find no reason to depart from this principle. ,he trial and appellate courts are in a much )etter position to evaluate properl" the evidence. Bence, +e find no other recourse )ut to affirm their findin% on the actual purchase price.*1/phi*.n2t Fourth Issue: whether award of moral damages and attorney s fees is proper ,he (e 1astros claim that Arti%o failed to prove that he is entitled to moral dama%es and attorne"'s fees. ,he (e 1astros, ho+ever, cite no concrete reason e'cept to sa" that the" are the ones entitled to dama%es since the case +as filed to harass and e'tort mone" from them. =a+ and 5urisprudence support the a+ard of moral dama%es and attorne"'s fees in favor of Arti%o. ,he a+ard of dama%es and attorne"'s fees is left to the sound discretion of the court, and if such discretion is +ell e'ercised, as in this case, it +ill not )e distur)ed on appeal.25 -oral dama%es ma" )e a+arded +hen in a )reach of contract the defendant acted in )ad faith, or in /anton disregard of his contractual o ligation.2; On the other hand, attorne"'s fees are a+arded in instances +here @the defendant acted in %ross and evident )ad faith in refusin% to satisf" the plaintiff's plainl" valid, 5ust and demanda)le claim.@2* ,here is no reason to distur) the trial court's findin% that @the defendants' lacA of %ood faith and unAind treatment of the plaintiff in refusin% to %ive his due commission deserve censure.@ ,his +arrants the a+ard of 25,$$$.$$ in moral dama%es and /5,$$$.$$ in attorne"'s fees. ,he amounts are, in our vie+, fair and reasona)le. Bavin% found a )u"er for the t+o lots, Arti%o had alread" performed his part of the )ar%ain under the contract of a%enc". ,he (e 1astros should have e'ercised fairness and %ood 5ud%ment in dealin% +ith Arti%o )" fulfillin% their o+n part of the )ar%ain - pa"in% Arti%o his 5 percent )roAer's commission )ased on the actual purchase price of the t+o lots. .+ERE#ORE, the petition is denied for lacA of merit. ,he (ecision of the 1ourt of Appeals dated -a" /, 199/ in 1A-9.0. 1C #o. &*99; is A## R-ED in toto.
13
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>G. R. No. 129919. #ebr0ar< 6, 2((2?
DO- N ON NS"RAN!E !OR$ORAT ON, petitioner" #s& !O"RT O# A$$EALS, RODOL#O S. G"E*ARRA, and #ERNANDO A"STR A, respondents. DE! S ON $ARDO, ..@
SOn -a" 22, 1992 the case +as a%ain called for pre-trial conference. Onl" plaintiff and counsel +ere present. (espite due notice, defendant and counsel did not appear, althou%h a messen%er, 0o" 9am)oa, su)mitted to the trial court a hand+ritten note sent to him )" defendantRs counsel +hich instructed him to re7uest for postponement. laintiffRs counsel o)5ected to the desired postponement and moved to have defendant declared as in default. ,his +as %ranted )" the trial court in the follo+in% order2 SO0(>0 SGhen this case +as called for pre-trial this afternoon onl" plaintiff and his counsel Att". 0omeo -a%lalan% appeared. Ghen sho+n a note dated -a" 21, 1992 addressed to a certain 0o" +ho +as re7uested to asA for postponement, Att".-a%lalan% vi%orousl" o)5ected to an" postponement on the %round that the note is )ut a mere scrap of paper and moved that the defendant corporation )e declared as in default for its failure to appear in court despite due notice. S8indin% the ver)al motion of plaintiffRs counsel to )e meritorious and considerin% that the pre-trial conference has )een repeatedl" postponed on motion of the defendant 1orporation, the defendant (ominion !nsurance 1orporation is here)" declared 3as4 in default and plaintiff is allo+ed to present his evidence on June 1;, 1992 at 92$$ oRclocA in the mornin%. S,he plaintiff and his counsel are notified of this order in open court.
T6e !a3e ,his is an appeal via certiorariP1Q from the decision of the 1ourt of AppealsP2Q affirmin% the decisionP&Q of the 0e%ional ,rial 1ourt, .ranch //, San 8ernando, ampan%a, +hich ordered petitioner (ominion !nsurance 1orporation 3(ominion4 to pa" 0odolfo S. 9uevarra 39uevarra4 the sum of 15;,/*&.9$ representin% the total amount advanced )" 9uevarra in the pa"ment of the claims of (ominionRs clients.
T6e #a7t3 SSO O0(>0>(. ,he facts, as found )" the 1ourt of Appeals, are as follo+s2 SOn Januar" 25, 1991, plaintiff 0odolfo S. 9uevarra instituted 1ivil 1ase #o. 8855 for sum of mone" a%ainst defendant (ominion !nsurance 1orporation. laintiff sou%ht to recover thereunder the sum of 15;,/*&.9$ +hich he claimed to have advanced in his capacit" as mana%er of defendant to satisf" certain claims filed )" defendantRs clients. S!n its traverse, defendant denied an" lia)ilit" to plaintiff and asserted a counterclaim for 2/9,;*2.5&, representin% premiums that plaintiff alle%edl" failed to remit. SOn Au%ust 8, 1991, defendant filed a third-part" complaint a%ainst 8ernando Austria, +ho, at the time relevant to the case, +as its 0e%ional -ana%er for 1entral =uDon area. S!n due time, third-part" defendant Austria filed his ans+er. S,hereafter the pre-trial conference +as set on the follo+in% dates2 Octo)er 18, 1991, #ovem)er 12, 1991, -arch 29, 1991, (ecem)er 12, 1991, Januar" 1*, 1992, Januar" 29, 1992, 8e)ruar" 28, 1992, -arch 1*, 1992 and April ;, 1992, in all of +hich dates no pre-trial conference +as held. ,he record sho+s that e'cept for the settin%s on Octo)er 18, 1991, Januar" 1*, 1992 and -arch 1*, 1992 +hich +ere cancelled at the instance of defendant, third-part" defendant and plaintiff, respectivel", the rest +ere postponed upon 5oint re7uest of the parties. S laintiff presented his evidence on June 1;, 1992. ,his +as follo+ed )" a +ritten offer of documentar" e'hi)its on Jul" 8 and a supplemental offer of additional e'hi)its on Jul" 1&, 1992. ,he e'hi)its +ere admitted in evidence in an order datedJul" 1*, 1992. SOn Au%ust *, 1992 defendant corporation filed a T-O,!O# ,O =!8, O0(>0 O8 (>8A:=,.R !t alle%ed therein that the failure of counsel to attend the pre-trial conference +as Tdue to an unavoida)le circumstanceR and that counsel had sent his representative on that date to inform the trial court of his ina)ilit" to appear. ,he -otion +as vehementl" opposed )" plaintiff. SOn Au%ust 25, 1992 the trial court denied defendantRs motion for reasons, amon% others, that it +as neither verified nor supported )" an affidavit of merit and that it further failed to alle%e or specif" the facts constitutin% his meritorious defense. SOn Septem)er 28, 1992 defendant moved for reconsideration of the aforesaid order. 8or the first time counsel revealed to the trial court that the reason for his nonappearance at the pre-trial conference +as his illness. An Affidavit of -erit e'ecuted )" its >'ecutive Ciceresident purportin% to e'plain its meritorious defense +as attached to the said -otion. Just the same, in an Order dated #ovem)er 1&, 1992, the trial court denied said -otion. SOn #ovem)er 18, 1992, the court a 7uo rendered 5ud%ment as follo+s2 SGB>0>8O0>, premises considered, 5ud%ment is here)" rendered 14
AMDG
orderin%2 S1. ,he defendant (ominion !nsurance 1orporation to pa" plaintiff the sum of 15;,/*&.9$ representin% the total amount advanced )" plaintiff in the pa"ment of the claims of defendantRs clientsE S2. ,he defendant to pa" plaintiff 1$,$$$.$$ as and )" +a" of attorne"Rs feesE S&. ,he dismissal of the counter-claim of the defendant and the thirdpart" complaintE S/. ,he defendant to pa" the costs of suit.UP/Q On (ecem)er 1/, 1992, (ominion appealed the decision to the 1ourt of Appeals.P5Q On Jul" 19, 199;, the 1ourt of Appeals promul%ated a decision affirmin% that of the trial court. P;Q On Septem)er &, 199;, (ominion filed +ith the 1ourt of Appeals a motion for reconsideration. P*Q On Jul" 1;, 199*, the 1ourt of Appeals denied the motion. P8Q Bence, this appeal.P9Q
5(6 6uevarra Insurance (ervices represented ! Mr. 5odolfo 6uevarra ''' to e our Agenc! Manager in San 8do., for our place and stead% to do and perfor& the follo/ing acts and things: S1. ,o conduct% sign% &anager 7sic8% carr! on and transact Bonding and Insurance usiness as usuall" pertain to a A%enc" Office, or 8!0>, -A0!#>, -O,O0 1A0, >0SO#A= A11!(>#,, and .O#(!#9 /ith the right% upon our prior /ritten consent% to appoint agents and su -agents. S2. ,o accept% under/rite and su scri ed 7sic8 cover notes or Policies of !nsurance and .onds for and on our )ehalf. S&. ,o de&and% sue% for 7sic8 collect% deposit% enforce pa!&ent% deliver and transfer for and receive and give effectual receipts and discharge for all mone" to +hich the 8!0S, 1O#,!#>#,A= ASS:0A#1> 1O- A#I, !#1.,P18Q ma" hereafter )ecome due, o+in% pa"a)le or transfera)le to said 1orporation )" reason of or in connection +ith the a)ove-mentioned appointment. S/. ,o receive notices% su&&ons% and legal processes for and in )ehalf of the 8!0S, 1O#,!#>#,A= ASS:0A#1> 1O- A#I, !#1., in connection +ith actions and all le%al proceedin%s a%ainst the said 1orporation.UP19Q P>mphasis suppliedQ ,he a%enc" comprises all the )usiness of the principal, P2$Q )ut, couched in %eneral terms, it is limited onl" to acts of administration. P21Q A %eneral po+er permits the a%ent to do all acts for +hich the la+ does not re7uire a special po+er. P22Q ,hus, the acts enumerated in or similar to those enumerated in the Special o+er of Attorne" do not re7uire a special po+er of attorne". Article 18*8, 1ivil 1ode, enumerates the instances +hen a special po+er of attorne" is re7uired. ,he pertinent portion that applies to this case provides that2 SArticle 18*8. Special po+ers of attorne" are necessar" in the follo+in% cases2 S314 ,o maAe such pa"ments as are not usuall" considered as acts of administrationE S''' ''' ''' S3154 An" other act of strict dominion.U ,he pa"ment of claims is not an act of administration. ,he settlement of claims is not included amon% the acts enumerated in the Special o+er of Attorne", neither is it of a character similar to the acts enumerated therein. A special po+er of attorne" is re7uired )efore respondent 9uevarra could settle the insurance claims of the insured. 0espondent 9uevarraRs authorit" to settle claims is em)odied in the -emorandum of -ana%ement A%reement P2&Q dated 8e)ruar" 18, 198* +hich enumerates the scope of respondent 9uevarraRs duties and responsi)ilities as a%enc" mana%er for San 8ernando, ampan%a, as follo+s2 15
T6e 330e3 ,he issues raised are2 314 +hether respondent 9uevarra acted +ithin his authorit" as a%ent for petitioner, and 324 +hether respondent 9uevarra is entitled to reim)ursement of amounts he paid out of his personal mone" in settlin% the claims of several insured.
T6e !o0rt;3 R082n9 ,he petition is +ithout merit. ." the contract of a%enc", a person )inds himself to render some service or to do somethin% in representation or on )ehalf of another, +ith the consent or authorit" of the latter. P1$Q ,he )asis for a%enc" is representation.P11Q On the part of the principal, there must )e an actual intention to appoint P12Qor an intention naturall" inferra)le from his +ords or actionsEP1&Q and on the part of the a%ent, there must )e an intention to accept the appointment and act on it,P1/Q and in the a)sence of such intent, there is %enerall" no a%enc".P15Q A perusal of the Special o+er of Attorne" P1;Q +ould sho+ that petitioner 3represented )" third-part" defendant Austria4 and respondent 9uevarraintended to enter into a principal-a%ent relationship. (espite the +ord SspecialU in the title of the document, the contents reveal that +hat +as constituted +as actuall" a %eneral a%enc". ,he terms of the a%reement read2 S,hat /e% 8!0S, 1O#,!#>#,A= ASS:0A#1> 1O- A#I, !#1., P1*Q a corporation dul" or%aniDed and e'istin% under and )" virtue of the la+s of the 0epu)lic of the hilippines, ''' represented )" the undersi%ned as 0e%ional -ana%er, ''' dohere ! appoint
AMDG
S''' ''' ''' S1. Iou are here)" %iven authorit" to settle and dispose of all &otor car clai&s in the a&ount of P+%,,,.,, /ith prior approval of the 5egional 4ffice. S2. 3ull authorit! is %iven "ou on TPPI clai&s settle&ent. S''' ''' '''UP2/Q !n settlin% the claims mentioned a)ove, respondent 9uevarraRs authorit" is further limited )" the +ritten standard authorit" to pa",P25Q +hich states that the pa"ment shall come from respondent 9uevarraRs revolvin% fund or collection. ,he authorit" to pa" is +orded as follo+s2 S,his is to authoriDe "ou to /ithdra/ fro& !our revolving fund9collection the amount of >SOS VVVVVVVVVVVVVVVVVV 3 4 representin% the pa"ment on the VVVVVVVVVVVVVVVVV claim of assured VVVVVVVVVVVVVVV under olic" #o. VVVVVV in that accident of VVVVVVVVVVV at VVVVVVVVVVVV. S!t is further e'pected, release papers +ill )e si%ned and authoriDed )" the concerned and attached to the correspondin% claim folder after effectin% pa"ment of the claim. S3s%d.4 8>0#A#(O 1. A:S,0!A 0e%ional -ana%erUP2;Q P>mphasis suppliedQ ,he instruction of petitioner as the principal could not )e an" clearer. 0espondent 9uevarra +as authoriDed to pa" the claim of the insured, )ut the pa"ment shall come from the revolvin% fund or collection in his possession. Bavin% deviated from the instructions of the principal, the e'penses that respondent 9uevarra incurred in the settlement of the claims of the insured ma" not )e reim)ursed from petitioner (ominion. ,his conclusion is in accord +ith Article 1918, 1ivil 1ode, +hich states that2 S,he principal is not lia)le for the e'penses incurred )" the a%ent in the follo+in% cases2 S314 !f the agent acted in contravention of the principal:s instructions% unless the latter should +ish to avail himself of the )enefits derived from the contractE S''' ''' '''U Bo+ever, +hile the la+ on a%enc" prohi)its respondent 9uevarra from o)tainin% reim)ursement, his ri%ht to recover ma" still )e 5ustified under the %eneral la+ on o)li%ations and contracts. Article 12&;, second para%raph, 1ivil 1ode, provides2 SGhoever pa"s for another ma" demand from the de)tor +hat he has paid, e'cept that if he paid /ithout the kno/ledge or against the /ill
of the de tor% he can recover onl! insofar as the pa!&ent has een eneficial to the de tor.; !n this case, +hen the risA insured a%ainst occurred, petitionerRs lia)ilit" as insurer arose. ,his o)li%ation +as e'tin%uished +hen respondent9uevarra paid the claims and o)tained 0elease of 1laim =oss and Su)ro%ation 0eceipts from the insured +ho +ere paid. ,hus, to the e'tent that the o)li%ation of the petitioner has )een e'tin%uished, respondent 9uevarra ma" demand for reim)ursement from his principal. ,o rule other+ise +ould result in un5ust enrichment of petitioner. ,he e'tent to +hich petitioner +as )enefited )" the settlement of the insurance claims could )est )e proven )" the 0elease of 1laim =oss and Su)ro%ation 0eceiptsP2*Q +hich +ere attached to the ori%inal complaint as Anne'es 1-2, (-1, >-1, 8-1, 9-1, B-1, !-1 and J-l, in the total amount of 11;,2*;.95. Bo+ever, the amount of the revolvin% fund?collection that +as then in the possession of respondent 9uevarra as reflected in the statement of account dated Jul" 11, 199$ +ould )e deducted from the a)ove amount. ,he outstandin% )alance and the production?remittance for the period correspondin% to the claims +as &,;$/.8/. (eductin% this from 11;,2*;.95, +e %et 112,;*2.11. ,his is the amount that ma" )e reim)ursed to respondent 9uevarra.
T6e #a88o N * E. .+EREO#, +e (>#I the etition. Bo+ever, +e -O(!8I the decision of the 1ourt of AppealsP28Q and that of the 0e%ional ,rial 1ourt, .ranch //, San 8ernando, ampan%a,P29Q in that petitioner is ordered to pa" respondent 9uevarra the amount of 112,;*2.11 representin% the total amount advanced )" the latter in the pa"ment of the claims of petitionerRs clients. #o costs in this instance.
16
AMDG
G.R. No. 155541
/an0ar< 2&, 2((4
ESTATE O# T+E LATE /"L ANA D E4 *DA. DE GABR EL, petitioner, vs. !O-- SS ONER O# NTERNAL RE*EN"E, respondent. (>1!S!O# YNARESASANT AGO, .&@ ,his petition for revie+ on certiorari assails the decision of the 1ourt of Appeals in 1A-9.0. 1C #o. $91$*, dated Septem)er &$, 2$$2,1 +hich reversed the #ovem)er 19, 1995 Order of 0e%ional ,rial 1ourt of -anila, .ranch HHHC!!!, in Sp. roc. #o. 0-82-;99/, entitled @,estate >state of Juliana (ieD Cda. (e 9a)riel@. ,he petition +as filed )" the >state of the =ate Juliana (ieD Cda. (e 9a)riel, represented )" rudential .anA as its dul" appointed and 7ualified Administrator. As correctl" summariDed )" the 1ourt of Appeals, the relevant facts are as follo+s2 (urin% the lifetime of the decedent, Juliana Cda. (e 9a)riel, her )usiness affairs +ere mana%ed )" the hilippine ,rust 1ompan" 3 hiltrust4. ,he decedent died on April &, 19*9. ,+o da"s after her death, hiltrust, throu%h its ,rust Officer, Att". Antonio -. #u"les, filed her !ncome ,a' 0eturn for 19*8. ,he return did not indicate that the decedent had died. On -a" 22, 19*9, hiltrust also filed a verified petition for appointment as Special Administrator +ith the 0e%ional ,rial 1ourt of -anila, .ranch HHHC!!!, docAeted as Sp. roc. #o. 0-82-;99/. ,he court a 7uo appointed one of the heirs as Special Administrator. hiltrustRs motion for reconsideration +as denied )" the pro)ate court. On Januar" 2;, 1981, the court a 7uo issued an Order relievin% -r. (ieD of his appointment, and appointed Antonio =antin to taAe over as Special Administrator. Su)se7uentl", on Jul" &$, 1981, -r. =antin +as also relieved of his appointment, and Att". Cicente Onosa +as appointed in his stead. !n the meantime, the .ureau of !nternal 0evenue conducted an administrative investi%ation on the decedentRs ta' lia)ilit" and found a deficienc" income ta' for the "ear 19** in the amount of &18,2&&.9&. ,hus, on #ovem)er 18, 1982, the .!0 sent )" re%istered mail a demand letter and Assessment #otice #o. #A0(*8-82-$$5$1 addressed to the decedent @c?o hilippine ,rust 1ompan", Sta. 1ruD, -anila@ +hich +as the address stated in her 19*8 !ncome ,a' 0eturn. #o response +as made )" hiltrust. ,he .!0 +as not informed that the decedent had actuall" passed a+a". !n an Order dated Septem)er 5, 198&, the court a 7uo appointed Antonio Am)rosio as the 1ommissioner and Auditor ,a' 1onsultant of the >state of the decedent.
On June 18, 198/, respondent 1ommissioner of !nternal 0evenue issued +arrants of distraint and lev" to enforce collection of the decedentRs deficienc" income ta' lia)ilit", +hich +ere served upon her heir, 8rancisco 9a)riel. On #ovem)er 22, 198/, respondent filed a @-otion for Allo+ance of 1laim and for an Order of a"ment of ,a'es@ +ith the court a 7uo. On Januar" *, 1985, -r. Am)rosio filed a letter of protest +ith the =iti%ation (ivision of the .!0, +hich +as not acted upon )ecause the assessment notice had alle%edl" )ecome final, e'ecutor" and incontesta)le. On -a" 1;, 1985, petitioner, the >state of the decedent, throu%h -r. Am)rosio, filed a formal opposition to the .!0Rs -otion for Allo+ance of 1laim )ased on the %round that there +as no proper service of the assessment and that the filin% of the aforesaid claim had alread" prescri)ed. ,he .!0 filed its 0epl", contendin% that service to hilippine ,rust 1ompan" +as sufficient service, and that the filin% of the claim a%ainst the >state on #ovem)er 22, 198/ +as +ithin the five-"ear prescriptive period for assessment and collection of ta'es under Section &18 of the 19** #ational !nternal 0evenue 1ode 3#!014. On #ovem)er 19, 1985, the court a 7uo issued an Order den"in% respondentRs claim a%ainst the >state,2 after findin% that there +as no notice of its ta' assessment on the proper part".& On Jul" 2, 198;, respondent filed an appeal +ith the 1ourt of Appeals, docAeted as 1A-9.0. 1C #o. $91$*,/assailin% the Order of the pro)ate court dated #ovem)er 19, 1985. !t +as claimed that hiltrust, in filin% the decedentRs 19*8 income ta' return on April 5, 19*9, t+o da"s after the ta'pa"erRs death, had @constituted itself as the administrator of the estate of the deceased at least insofar as said return is concerned.@5 1itin% .asilan >state !nc. v. 1ommissioner of !nternal 0evenue,; respondent ar%ued that the le%al re7uirement of notice +ith respect to ta' assessments* re7uires merel" that the 1ommissioner of !nternal 0evenue release, mail and send the notice of the assessment to the ta'pa"er at the address stated in the return filed, )ut not that the ta'pa"er actuall" receive said assessment +ithin the five-"ear prescriptive period.8 1laimin% that hiltrust had )een remiss in not notif"in% respondent of the decedentRs death, respondent therefore ar%ued that the deficienc" ta' assessment had alread" )ecome final, e'ecutor" and incontesta)le, and that petitioner >state +as lia)le therefor. On Septem)er &$, 2$$2, the 1ourt of Appeals rendered a decision in favor of the respondent. Althou%h acAno+led%in% that the )ond of a%enc" )et+een hiltrust and the decedent +as severed upon the latterRs death, it +as ruled that the administrator of the >state had failed in its le%al dut" to inform respondent of the decedentRs death, pursuant to Section 1$/ of the #ational !nternal 0evenue 1ode of 19**. 1onse7uentl", the .!0Rs service to hiltrust of the demand letter and #otice of Assessment +as )indin% upon the >state, and, upon the lapse of the statutor" thirt"-da" period to 7uestion this claim, the assessment )ecame final, e'ecutor" and incontesta)le. ,he dispositive portion of said decision reads2 GB>0>8O0>, findin% merit in the appeal, the appealed decision is 0>C>0S>( A#( S>, AS!(>. Another one is entered orderin% the Administrator of the >state to pa" the 1ommissioner of !nternal 0evenue the follo+in%2 a. ,he amount of &18,22&.9&, representin% the 17
AMDG
deficienc" income ta' lia)ilit" for the "ear 19*8, plus 2$< interest per annum from #ovem)er 2, 1982 up to #ovem)er 2, 1985 and in addition thereto 1$< surchar%e on the )asic ta' of 1;9,155.&/ pursuant to Section 513e4324 and 3&4 of the ,a' 1ode as amended )" ( ;9 and 1*$5E and ). ,he costs of the suit. SO O0(>0>(.9 Bence, the instant petition, raisin% the follo+in% issues2 1. Ghether or not the 1ourt of Appeals erred in holdin% that the service of deficienc" ta' assessment a%ainst Juliana (ieD Cda. de 9a)riel throu%h the hilippine ,rust 1ompan" +as a valid service in order to )ind the >stateE 2. Ghether or not the 1ourt of Appeals erred in holdin% that the deficienc" ta' assessment and final demand +as alread" final, e'ecutor" and incontesta)le. etitioner >state denies that hiltrust had an" le%al personalit" to represent the decedent after her death. As such, petitioner ar%ues that there +as no proper notice of the assessment +hich, therefore, never )ecame final, e'ecutor" and incontesta)le.1$ etitioner further contends that respondentRs failure to file its claim a%ainst the >state +ithin the proper period prescri)ed )" the 0ules of 1ourt is a fatal error, +hich forever )ars its claim a%ainst the >state.11 0espondent, on the other hand, claims that )ecause hiltrust filed the decedentRs income ta' return su)se7uent to her death, hiltrust +as the de facto administrator of her >state.12 1onse7uentl", +hen the Assessment #otice and demand letter dated #ovem)er 18, 1982 +ere sent to hiltrust, there +as proper service on the >state.1&0espondent further asserts that hiltrust had the le%al o)li%ation to inform petitioner of the decedentRs death, +hich re7uirement is found in Section 1$/ of the #!01 of 19**. 1/ Since hiltrust did not, respondent contends that petitioner >state should not )e allo+ed to profit from this omission.15 0espondent further ar%ues that hiltrustRs failure to protest the aforementioned assessment +ithin the &$-da" period provided in Section &19-A of the #!01 of 19** meant that the assessment had alread" )ecome final, e'ecutor" and incontesta)le.1; ,he resolution of this case hin%es on the le%al relationship )et+een hiltrust and the decedent, and, )" e'tension, )et+een hiltrust and petitioner >state. Su)sumed under this primar" issue is the su)-issue of +hether or not service on hiltrust of the demand letter and Assessment #otice #o. #A0(-*8-82-$$5$1 +as valid service on petitioner, and the issue of +hether hiltrustRs inaction thereon could )ind petitioner. !f )oth su)-issues are ans+ered in the affirmative, respondentRs contention as to the finalit" of Assessment #otice #o. #A0(-*8-82-$$5$1 must )e ans+ered in the affirmative. ,his is )ecause Section &19-A of the #!01 of 19** provides a clear &$-da" period +ithin +hich to protest an assessment. 8ailure to file such a protest +ithin said period means that the assessment ipso 5ure )ecomes final and unappeala)le, as a conse7uence of +hich le%al
proceedin%s ma" then )e initiated for collection thereof. Ge find in favor of the petitioner. ,he first point to )e considered is that the relationship )et+een the decedent and hiltrust +as one of a%enc", +hich is a personal relationship )et+een a%ent and principal. :nder Article 1919 3&4 of the 1ivil 1ode, death of the a%ent or principal automaticall" terminates the a%enc". !n this instance, the death of the decedent on April &, 19*9 automaticall" severed the le%al relationship )et+een her and hiltrust, and such could not )e revived )" the mere fact that hiltrust continued to act as her a%ent +hen, on April 5, 19*9, it filed her !ncome ,a' 0eturn for the "ear 19*8. Since the relationship )et+een hiltrust and the decedent +as automaticall" severed at the moment of the ,a'pa"erRs death, none of hiltrustRs acts or omissions could )ind the estate of the ,a'pa"er. Service on hiltrust of the demand letter and Assessment #otice #o. #A0(-*8-82-$$5$1 +as improperl" done. !t must )e noted that hiltrust +as never appointed as the administrator of the >state of the decedent, and, indeed, that the court a 7uo t+ice re5ected hiltrustRs motion to )e thus appointed. As of #ovem)er 18, 1982, the date of the demand letter and Assessment #otice, the le%al relationship )et+een the decedent and hiltrust had alread" )een non-e'istent for three "ears. 0espondent claims that Section 1$/ of the #ational !nternal 0evenue 1ode of 19** imposed the le%al o)li%ation on hiltrust to inform respondent of the decedentRs death. ,he said Section reads2 S>1. 1$/. <otice of death to e filed. N !n all cases of transfers su)5ect to ta' or +here, thou%h e'empt from ta', the %ross value of the estate e'ceeds three thousand pesos, the e'ecutor, administrator, or an" of the le%al heirs, as the case ma" )e, +ithin t+o months after the decedentRs death, or +ithin a liAe period after 7ualif"in% as such e'ecutor or administrator, shall %ive +ritten notice thereof to the 1ommissioner of !nternal 0evenue. ,he fore%oin% provision falls in ,itle !!!, 1hapter ! of the #ational !nternal 0evenue 1ode of 19**, or the chapter on >state ,a', and pertains to @all cases of transfers su)5ect to ta'@ or +here the @%ross value of the estate e'ceeds three thousand pesos@. !t has a)solutel" no applica)ilit" to a case for deficienc" income ta', such as the case at )ar. !t further lacAs applica)ilit" since hiltrust +as never the e'ecutor, administrator of the decedentRs estate, and, as such, never had the le%al o)li%ation, )ased on the a)ove provision, to inform respondent of her death. Althou%h the administrator of the estate ma" have )een remiss in his le%al o)li%ation to inform respondent of the decedentRs death, the conse7uences thereof, as provided in Section 119 of the #ational !nternal 0evenue 1ode of 19**, merel" refer to the imposition of certain penal sanctions on the administrator. ,hese do not include the indefinite tollin% of the prescriptive period for maAin% deficienc" ta' assessments, or the +aiver of the notice re7uirement for such assessments. 18
AMDG
,hus, as of #ovem)er 18, 1982, the date of the demand letter and Assessment #otice #o. #A0(-*8-82-$$5$1, there +as a)solutel" no le%al o)li%ation on the part of hiltrust to either 314 respond to the demand letter and assessment notice, 324 inform respondent of the decedentRs death, or 3&4 inform petitioner that it had received said demand letter and assessment notice. ,his lacA of le%al o)li%ation +as implicitl" reco%niDed )" the 1ourt of Appeals, +hich, in fact, rendered its assailed decision on %rounds of @e7uit"@.1* Since there +as never an" valid notice of this assessment, it could not have )ecome final, e'ecutor" and incontesta)le, and, for failure to maAe the assessment +ithin the five-"ear period provided in Section &18 of the #ational !nternal 0evenue 1ode of 19**, respondentRs claim a%ainst the petitioner >state is )arred. Said Section 18 reads2 S>1. &18. Period of li&itation upon assess&ent and collection. N >'cept as provided in the succeedin% section, internal revenue ta'es shall )e assessed +ithin five "ears after the return +as filed, and no proceedin% in court +ithout assessment for the collection of such ta'es shall )e )e%un after the e'piration of such period. 8or the purpose of this section, a return filed )efore the last da" prescri)ed )" la+ for the filin% thereof shall )e considered as filed on such last da"2 rovided, ,hat this limitation shall not appl" to cases alread" investi%ated prior to the approval of this 1ode. 0espondent ar%ues that an assessment is deemed made for the purpose of %ivin% effect to such assessment +hen the notice is released, mailed or sent to the ta'pa"er to effectuate the assessment, and there is no le%al re7uirement that the ta'pa"er actuall" receive said notice +ithin the five-"ear period. 18 !t must )e noted, ho+ever, that the fore%oin% rule re7uires that the notice )e sent to the ta'pa"er, and not merel" to a disinterested part". Althou%h there is no specific re7uirement that the ta'pa"er should receive the notice +ithin the said period, due process re7uires at the ver" least that such notice actuall" )e received. !n 1ommissioner of !nternal 0evenue v. ascor 0ealt" and (evelopment 1orporation,19 +e had occasion to sa"2 An assessment contains not onl" a computation of ta' lia)ilities, )ut also a demand for pa"ment +ithin a prescri)ed period. !t also si%nals the time +hen penalties and interests )e%in to accrue a%ainst the ta'pa"er. ,o ena)le the ta'pa"er to determine his remedies thereon, due process re7uires that it must )e served on and received )" the ta'pa"er. !n 0epu)lic v. (e le 0ama,2$ +e clarified that, +hen an estate is under administration, notice must )e sent to the administrator of the estate, since it is the said administrator, as representative of the estate, +ho has the le%al o)li%ation to pa" and dischar%e all de)ts of the estate and to perform all orders of the court. !n that case, le%al notice of the assessment +as sent to t+o heirs, neither one of +hom had an" authorit" to represent the estate. Ge said2 ,he notice +as not sent to the ta'pa"er for the purpose of %ivin% effect to the assessment, and said notice could not
produce an" effect. !n the case of .autista and 1orrales ,an v. 1ollector of !nternal 0evenue W this 1ourt had occasion to state that @the assessment is deemed made +hen the notice to this effect is released, mailed or sent to the ta'pa"er for the purpose of %ivin% effect to said assessment.@ !t appearin% that the person lia)le for the pa"ment of the ta' did not receive the assessment, the assessment could not )ecome final and e'ecutor". 31itations omitted, emphasis supplied.4 !n this case, the assessment +as served not even on an heir of the >state, )ut on a completel" disinterested third part". ,his improper service +as clearl" not )indin% on the petitioner. ." ar%uin% that 314 the demand letter and assessment notice +ere served on hiltrust, 324 hiltrust +as remiss in its o)li%ation to respond to the demand letter and assessment notice, 3&4 hiltrust +as remiss in its o)li%ation to inform respondent of the decedentRs death, and 3/4 the assessment notice is therefore )indin% on the >state, respondent is ar%uin% in circles. ,he most crucial point to )e remem)ered is that hiltrust had a)solutel" no le%al relationship to the deceased, or to her >state. ,here +as therefore no assessment served on the >state as to the alle%ed underpa"ment of ta'. A)sent this assessment, no proceedin%s could )e initiated in court for the collection of said ta',21 and respondentRs claim for collection, filed +ith the pro)ate court onl" on #ovem)er 22, 198/, +as )arred for havin% )een made )e"ond the five-"ear prescriptive period set )" la+. .+ERE#ORE, the petition is 90A#,>(. ,he (ecision of the 1ourt of Appeals in 1A-9.0. 1C #o. $91$*, dated Septem)er &$, 2$$2, is 0>C>0S>( and S>, AS!(>. ,he Order of the 0e%ional ,rial 1ourt of -anila, .ranch HHHC!!!, in Sp. roc. #o. 0-82-;99/, dated #ovem)er 19, 1985, +hich denied the claim of the .ureau of !nternal 0evenue a%ainst the >state of Juliana (ieD Cda. (e 9a)riel for the deficienc" income ta' of the decedent for the "ear 19** in the amount of &18,22&.9&, is A88!0->(.
19
AMDG
G.R. No. LA1424'
Apr28 2', 196(
collect and receive from defendant 0epu)lic an" amount due or ma" )e due to said contractor as contract price for the pa"ment of the materials so supplied. Section one of u)lic Act #o. &;88, entitled @An Act for the protection of persons furnishin% material and la)or for the construction of pu)lic +orAs@, reads in part as follo+s2 S>1,!O# 1. An" person, partnership or corporation enterin% into a formal contract +ith the 9overnment of the hilippine !slands for the construction of an" pu)lic )uildin%, or the prosecution and completion of an" pu)lic +orA, or for repairs upon an" pu)lic )uildin% or pu)lic +orA, shall )e re7uired, )efore commencin% such +orA, to e'ecute the usual penal )ond, +ith %ood and sufficient sureties, +ith the additional o)li%ation that such contractor or his or its su)-contractors shall promptl" maAe pa"ments to all persons suppl"in% him or them +ith la)or and materials in the prosecution of the +orA provided for in such contractE and an" person, compan" or corporation +ho has furnished la)or or materials in the construction or repair of an" pu)lic )uildin% or pu)lic +orA, and pa"ment for +hich has not )een made, shall have the ri%ht to intervene and )e made a part" to an" action instituted )" the 9overnment of the hilippine !slands on the )ond of the contractor, and to have their ri%hts and claims ad5udicated in such action and 5ud%ment rendered thereon, su)5ect, ho+ever, to the priorit" of the claim and 5ud%ment of the 9overnment of the hilippine !slands. !f the full amount of the lia)ilit" of the suret" on said )ond is insufficient to pa" the full amount of said claims and demands, then, after pa"in% the full amount due the 9overnment, the remainder shall )e distri)uted pro rata amon% said intervenors. !f no suit should )e )rou%ht )" the 9overnment of the hilippine !slands +ithin si' months from the completion and final settlement of said contract, or if the 9overnment e'pressl" +aives its ri%ht to institute action on the penal )ond, then the person or persons suppl"in% the contractor +ith la)or and materials shall, upon application therefor, and furnishin% affidavit to the department under the direction of +hich said +orA has )een prosecuted, that la)or or materials for the prosecution of such +orA have )een supplied )" him or them, and pa"ment for +hich has not )een made, )e furnished +ith a certified cop" of said contract and )ond, upon +hich he or the" shall have a ri%ht of action, and shall )e, and are here)", authoriDed to )rin% suit in the name of the 9overnment of the hilippine !slands in the 1ourt of 8irst !nstance in the district in +hich said contract +as to )e performed and e'ecuted, and not else+here, for his or their use and )enefit, a%ainst said contractor and his sureties, and to prosecute the same to final 5ud%ment and e'ecution, . . . . !n the case at )ar, it is not disputed that defendant 0epu)lic has alread" instituted a suit a%ainst the contractor for the forfeiture of the latter's )ond posted to secure the faithful performance of stipulations in the construction contract +ith re%ards to one of the t+o school )uildin%s 31ivil 1ase #o. 2;815, 1ourt of 8irst !nstance of -anila4. ,he contractor has a similar )ond +ith respect to the other school )uildin%. ursuant to Act &;88, plaintiff's le%al remed" is, not to )rin% suit a%ainst the 9overnment, there )ein% no privit" of contract 20
NE. -AN LA L"-BER !O-$ANY, N!., plaintiff-appellant, vs. RE$"BL ! O# T+E $+ L $$ NES, defendant-appellee. (. 3. Alidio and Associates for appellant. 4ffice of the (olicitor 6eneral =dil erto Barot and (olicitor Ceferino (. 6addi for appellee. G"T ERRE4 DA* D, ..@ Appeal from an order of dismissal of the 1ourt of 8irst !nstance of -anila. On -a" 8, 1958, the plaintiff lum)er compan" filed in the court )elo+ a complaint a%ainst the defendant 0epu)lic of the hilippines for the recover" of a sum of mone". ,he complaint alle%es, amon% other thin%s, that defendant, thru the (irector of Schools, entered into a contract +ith one Alfonso -endoDa to )uild t+o school housesE that plaintiff furnished the lum)er materials in the construction of the said )uildin%sE that prior to the pa"ment )" defendant of an" amount due the contractor, the latter e'ecuted po+ers of attorne" in favor of the plaintiff @constitutin% it as his sole, true and la+ful attorne"-in-fact +ith specific and e'clusive authorit" to collect and receive from the defendant an" and all amounts due or ma" )e due to said contractor from the defendant in connection +ith the construction of the aforesaid school )uildin%s, as ma" )e necessar" to pa" materials supplied )" the plaintiff@E and that ori%inals of the po+ers of attorne" +ere received )" defendant 3thru the (irector of u)lic Schools4 +ho promised to pa" plaintiff, )ut that it, nevertheless, paid the contractor several amounts on different occasions +ithout first maAin% pa"ment to plaintiff. ,he complaint, therefore, pra"s that defendant )e ordered to pa" plaintiff the sum of 18,&2*.15, the unpaid )alance of the cost of lum)er supplied and used in the construction of the school )uildin%s, +ith interest at the le%al rate from the date same +as due, plus attorne"'s fees and costs. Served +ith a cop" of the complaint, the defendant 0epu)lic of the hilippines, throu%h the Solicitor 9eneral, moved to dismiss the same on the %rounds 314 that it does not alle%e a sufficient cause of action, 324 that plaintiff has no ri%ht to institute the action under Act #o. &;88, and 3&4 that the court is +ithout 5urisdiction to entertain the same a%ainst the defendant. ,he motion +as opposed )" plaintiff, )ut after hearin%, the court )elo+ F holdin% that @there is no 5uridical tie )et+een plaintiffsupplier and defendant-o+ner F sustained the motion to dismiss on the first %round, and on June 2&, 1958 issued an order dismissin% plaintiff's complaint. !ts motion for reconsideration havin% )een denied, plaintiff tooA the present appeal. ,he appeal is +ithout merit. .riefl" stated, plaintiff's complaint seeAs to enforce a%ainst the 0epu)lic of the hilippines a mone" claim for the pa"ment of materials it furnished for the construction of t+o pu)lic school )uildin%s undertaAen )" contractor Alfonso -endoDa, on the )asis of po+ers of attorne" e'ecuted )" the latter authoriDin% said plaintiff to
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)et+een them, )ut to intervene in the civil case a)ove-mentioned as an unpaid supplier of materials to the contractor, or file an action in the name of the 0epu)lic a%ainst said contractor on the latter's other )ond. laintiff ar%ues that an implied contract )et+een it and the defendant 0epu)lic arose, +hen the latter, thru the (irector of u)lic Schools, on )ein% furnished copies of the po+ers of attorne" e'ecuted )" the contractor, promised to maAe pa"ment to plaintiff for the materials supplied for the construction of the school )uildin%s. !t +ill )e o)served, ho+ever, that defendant +as not a part" to the e'ecution of the po+ers of attorne". .esides, the (irector of u)lic Schools had no authorit" to )ind defendant on the pa"ment. Ghile he +as the official +ho entered into contract +ith the contractor for the construction of the school )uildin%s, pa"ment of the contract price +as not +ithin his e'clusive control )ut su)5ect to approval under e'istin% la+s not onl" )" the (epartment Bead 3Sec. 5;8, 0ev. Adm, 1ode4, )ut also )" the Auditor 9eneral. At an" rate, under the facts alle%ed in the complaint, the po+ers of attorne" in 7uestion made plaintiff the contractor's a%ent in the collection of +hatever amounts ma" )e due the contractor from the defendant. And since it is also alle%ed that, after the e'ecution of the po+ers of attorne", the contractor 3principal4 demanded and collected from defendant the mone" the collection of +hich he entrusted to plaintiff, the a%enc" apparentl" has alread" )een revoAed. 3Articles 192$ and 192/, ne+ 1ivil 1ode.4 ,he point is made )" plaintiff that the po+ers of attorne" e'ecuted )" the contractor in its favor are irrevoca)le and are coupled +ith interest. .ut even supposin% that the" are, still their alle%ed irrevoca)ilit" cannot affect defendant +ho is not a part" thereto. ,he" are o)li%ator" onl" on the principal +ho e'ecuted the a%enc". laintiff also cites Article 1*29 of the ne+ 1ivil 1ode, +hich provides that F ,hose +ho put their la)or upon or furnish materials for a piece of +orA undertaAen )" the contractor have an action a%ainst the o+ner up to the amount o+in% from the latter to the contractor at the time the claim is made. . . . ,his article, ho+ever, as e'pressl" provided in its last para%raph, @is su)5ect to the provisions of special la+.@ ,he special la+ %overnin% in the present case, as alread" seen, is Act #o. &;88. ,here is another reason for upholdin% the order of dismissal complained of. laintiff's action )ein% a claim for sum of mone" arisin% from an alle%ed implied contract )et+een it and the 0epu)lic of the hilippines, the same should have )een lod%ed +ith the Auditor 9eneral. ,he state cannot )e sued +ithout its consent. !n vie+ of the fore%oin%, the order of dismissal appealed from is affirmed, +ith costs a%ainst plaintiff-appellant.
21
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G.R. No. &&2&9 Apr28 15, 19'' -AN"ELA S. !ATANB-.S. !ATAN $LA!E-ENT AGEN!Y, petitioners, vs. T+E NAT ONAL LABOR RELAT ONS !O-- SS ON, $+ L $$ NE O*ERSEAS E-$LOY-ENT AD- N STRAT ON and #RAN! S!O D. REYES, respondents. De&etria 5e!es% Merris # Associates for petitioners. The (olicitor 6eneral for pu lic respondents. Ba!ani 6. Di/a for private respondent.
:pon his return, he had his anAle treated for +hich he incurred further e'penses. On the )asis of the provision in the emplo"ment contract that the emplo"er shall compensate the emplo"ee if he is in5ured or permanentl" disa)led in the course of emplo"ment, private respondent filed a claim, docAeted as O>A 1ase #o. 8/-$98/*, a%ainst petitioner +ith respondent hilippine Overseas >mplo"ment Administration. On April 1$, 198;, the O>A rendered 5ud%ment in favor of private respondent, the dispositive portion of +hich reads2 GB>0>8O0>, 5ud%ment is here)" rendered in favor of the complainant and a%ainst the respondent, orderin% the latter to pa" to the complainant2 1. S>C># ,BO:SA#( #!#> B:#(0>( >!9B,I-8!C> >SOS and ;$?1$$ 3 *,985.;$4, hilippine currenc", representin% disa)ilit" )enefitsE 2. ,G>#,I-8!C> ,BO:SA#( #!#>,I-S!H hilippine pesos and 2$?1$$ 329,$9;.2$4 representin% reim)ursement for medical e'pensesE &. ,en percent 31$<4 of the a)ovementioned amounts as and for attorne"'s fees. P#=01 0esolution, p. 1E 0ollo, p. 1;Q. On appeal, respondent #=01 affirmed the decision of the O>A in a resolution dated (ecem)er 12, 198;. #ot satisfied +ith the resolution of the O>A, petitioner instituted the instant special civil action for certiorari, alle%in% %rave a)use of discretion on the part of the #=01. 1. etitioner claims that the #=01 %ravel" a)used its discretion +hen it ruled that petitioner +as lia)le to private respondent for disa)ilit" )enefits since at the time he +as in5ured his ori%inal emplo"ment contract, +hich petitioner facilitated, had alread" e'pired. 8urther, petitioner disclaims lia)ilit" on the %round that its a%enc" a%reement +ith the Saudi principal had alread" e'pired +hen the in5ur" +as sustained. ,here is no merit in petitioner's contention. rivate respondents contract of emplo"ment can not )e said to have e'pired on -a" 1/, 1982 as it +as automaticall" rene+ed since no notice of its termination +as %iven )" either or )oth of the parties at least a month )efore its e'piration, as so provided in the contract itself. ,herefore, private respondent's in5ur" +as sustained durin% the lifetime of the contract. A private emplo"ment a%enc" ma" )e sued 5ointl" and solidaril" +ith its forei%n principal for violations of the recruitment a%reement and the contracts of emplo"ment2 Sec. 1$. 5equire&ent efore recruit&ent. 22
!ORTES, .&: etitioner, in this special civil action for certiorari, alle%es %rave a)use of discretion on the part of the #ational =a)or 0elations 1ommission in an effort to nullif" the latters resolution and thus free petitioner from lia)ilit" for the disa)ilit" suffered )" a 8ilipino +orAer it recruited to +orA in Saudi Ara)ia. ,his 1ourt, ho+ever, is not persuaded that such an a)use of discretion +as committed. ,his petition must fail. ,he facts of the case are 7uite simple. etitioner, a dul" licensed recruitment a%enc", as a%ent of Ali and 8ahd Sha)oAshi 9roup, a Saudi Ara)ian firm, recruited private respondent to +orA in Saudi Ara)ia as a steelman. ,he term of the contract +as for one "ear, from -a" 15,1981 to -a" 1/, 1982. Bo+ever, the contract provided for its automatic rene+al2 8!8,B2 ,he validit" of this 1ontract is for O#> I>A0 commencin% from the date the S>1O#( A0,I assumes hill port. ,his 1ontract is rene+a)le automaticall" if neither of the A0,!>S notifies the other A0,I of his +ishes to terminate the 1ontract )" at least O#> -O#,B prior to the e'piration of the contractual period. P etition, pp. ;-*E 0ollo, pp. *-8Q. ,he contract +as automaticall" rene+ed +hen private respondent +as not repatriated )" his Saudi emplo"er )ut instead +as assi%ned to +orA as a crusher plant operator. On -arch &$, 198&, +hile he +as +orAin% as a crusher plant operator, private respondent's ri%ht anAle +as crushed under the machine he +as operatin%. On -a" 15, 198&, after the e'piration of the rene+ed term, private respondent returned to the hilippines. Bis anAle +as operated on at the Sta. -esa Bei%hts -edical 1enter for +hich he incurred e'penses. On Septem)er 9, 198&, he returned to Saudi Ara)ia to resume his +orA. On -a" 15,198/, he +as repatriated.
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> .efore recruitin% an" +orAer, the private emplo"ment a%enc" shall su)mit to the .ureau the follo+in% documents2 3a4 A formal appointment or a%enc" contract e'ecuted )" a forei%n-)ased emplo"er in favor of the license holder to recruit and hire personnel for the former ... ''' ''' ''' 2. o+er of the a%enc" to sue and )e sued 5ointl" and solidaril" +ith the principal or forei%n-)ased emplo"er for an" of the violations of the recruitment a%reement and the contracts of emplo"ment. PSection 1$3a4 324 0ule C, .ooA !, 0ules to !mplement the =a)or 1odeQ. ,hus, in the recent case of A& raque International Place&ent # (ervices v. <?5C P9.0. #o. **9*$, Januar" 28,1988Q, the 1ourt ruled that a recruitment a%enc" +as solidaril" lia)le for the unpaid salaries of a +orAer it recruited for emplo"ment in Saudi Ara)ia. >ven if indeed petitioner and the Saudi principal had alread" severed their a%enc" a%reement at the time private respondent +as in5ured, petitioner ma" still )e sued for a violation of the emplo"ment contract )ecause no notice of the a%enc" a%reement's termination +as %iven to the private respondent2 Art 1921. !f the a%enc" has )een entrusted for the purpose of contra +ith specified persons, its revocation shall not pre5udice the latter if the" +ere not %iven notice thereof. P1ivil 1odeQ. !n this connection the #=01 ela)orated2 Suffice it to state that al)eit local respondent -. S. 1atan A%enc" +as at the time of complainant's accident resultin% in his permanent partial disa)ilit" +as 3sic4 no lon%er the accredited a%ent of its forei%n principal, forei%n respondent herein, "et its responsi)ilit" over the proper implementation of complainant's emplo"ment?service contract and the +elfare of complainant himself in the forei%n 5o) site, still e'isted, the contract of emplo"ment in 7uestion not havin% e'pired "et. This &ust e so% ecause the o ligations covenanted in the recruit&ent agree&ent entered into ! and et/een the local agent and its foreign principal are not coter&inus /ith the ter& of such agree&ent so that if either or oth of the parties decide to end the agree&ent% the responsi ilities of such parties to/ards the contracted e&plo!ees under the agree&ent do not at all end% ut the sa&e e.tends up to and until the e.piration of the
e&plo!&ent contracts of the e&plo!ees recruited and e&plo!ed pursuant to the said recruit&ent agree&ent. 4ther/ise% this /ill render nugator! the ver! purpose for /hich the la/ governing the e&plo!&ent of /orkers for foreign @o s a road /as enacted. P#=01 0esolution, p. /E 0ollo, p. 18Q. 3>mphasis supplied4. 2. etitioner contends that even if it is lia)le for disa)ilit" )enefits, the #=01 %ravel" a)used its discretion +hen it affirmed the a+ard of medical e'penses +hen the said e'penses +ere the conse7uence of private respondent's ne%li%ence in returnin% to +orA in Saudi Ara)ia +hen he Ane+ that he +as not "et medicall" fit to do so. A%ain, there is no merit in this contention. #o evidence +as introduced to prove that private respondent +as not medicall" fit to +orA +hen he returned to Saudi Ara)ia. >'hi)it @.@, a certificate issued )" (r. Shaf7uat #iaDi, the camp doctor, on #ovem)er 1, 198&, merel" stated that private respondent +as @una)le to +alA properl", moreover he is still complainin% PofQ pain durin% +alAin% and different lo+er lim)s movement@ PAnne' @.@, 0epl"E 0ollo, p. 51Q. #o+here does it sa" that he +as not medicall" fit to +orA. 8urther, since petitioner even assisted private respondent in returnin% to +orA in Saudi Ara)ia )" purchasin% his ticAet for him P>'hi)it @>@E Anne' @A@, 0epl" to 0espondents' 1ommentsQ, it is as if petitioner had certified his fitness to +orA. ,hus, the #=01 found2 8urthermore, it has remained unrefuted )" respondent that complainant's su)se7uent departure or return to Saudi Ara)ia on Septem)er 9, 198& +as +ith the full Ano+led%e, consent and assistance of the former. As sho+n in >'hi)it @>@ of the record, it +as respondent +ho facilitated the travel papers of complainant. P#=01 0esolution, p. 5E 0ollo, p. 19Q. GB>0>8O0>, in vie+ of the fore%oin%, the petition is (!S-!SS>( for lacA of merit, +ith costs a%ainst petitioner.
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G.R. No. 111924 /an0ar< 2&, 199& ADORA! ON L"STAN, petitioner, vs. !O"RT O# A$$EALS, N !OLAS $ARANGAN and SOLEDAD $ARANGAN, $+ L $$ NE NAT ONAL BAN1,respondents.
2. (eclarin% the (eed of Pacto de 5etro Sale dated April 25, 19*8 and the (eed of (efinite Sale dated -a" ;, 19*9, )oth documents e'ecuted )" Adoracion =ustan in favor of #icolas aran%an over =ot 8$;9 in ,1, #o. ,-5;1 of the 0e%ister of (eeds of !loilo, as null and void, declarin% the same to )e (eeds of >7uita)le -ort%a%eE &. Orderin% defendant #icolas aran%an to pa" all the loans he secured from defendant #. usin% thereto as securit" ,1, #o. ,-5;1 of plaintiff and defendant #. to return ,1, #o. ,-5;1 to plaintiffE /. Orderin% defendant #icolas aran%an to return possession of the land in 7uestion, =ot 8$;9 of the 1alino% 1adastre, descri)ed in ,1, #o. ,-5;1 of the 0e%ister of (eeds of !loilo, to plaintiff upon pa"ment of the sum of *5,$$$.$$ )" plaintiff to defendant aran%an +hich pa"ment )" plaintiff must )e made +ithin ninet" 39$4 da"s from receipt of this decisionE other+ise, sale of the land +ill )e ordered )" the court to satisf" pa"ment of the amountE 5. Orderin% defendant #icolas aran%an to pa" plaintiff attorne"'s fees in the sum of 15,$$$.$$ and to pa" the costs of the suit. SO O0(>0>(. 4 :pon appeal to the 1ourt of Appeals 31A4, respondent court reversed the trial court's decision. Bence this petition contendin% that the 1A committed the follo+in% errors2 !# A00!C!#9 A, ,B> 1O#1=:S!O# ,BA, #O#> O8 ,B> 1O#(!,!O#S S,A,>( !# A0,. 1;$2 O8 ,B> #>G 1!C!= 1O(> BAS .>># 0OC># ,O >H!S, .I 0> O#(>0A#1> O8 >C!(>#1>E !# 1O#1=:(!#9 ,BA, >,!,!O#>0 S!9#>( ,B> (>>( O8 SA=> G!,B X#OG=>(9> AS ,O ,B> 1O#,>#,S ,B>0>O8E !# A00!C!#9 A, ,B> 1O#1=:S!O# ,BA, ,B> ,>S,!-O#I O8 G!,#>SS (>=!A 1A.!A= (>S>0C>S 8:== 8A!,B A#( 10>(!,E !# 8!#(!#9 ,BA, ,B> S >1!A= OG>0 O8 A,,O0#>I A:,BO0!L!#9 -O0,9A9> 8O0 @:#=!-!,>(@ =OA#S AS 0>=>CA#,. ,+o main issues confront us in this case, to +it2 +hether or not the (eed of (efinite Sale is in realit" an e7uita)le mort%a%e and +hether or not petitioner's propert" is lia)le to #. for the loans contracted )" aran%an )" virtue of the special po+er of attorne". ,he lo+er court and the 1A arrived at different factual findin%s thus necessitatin% a revie+ of the evidence on record. 5 After a thorou%h e'amination, +e note some errors, )oth in fact and in la+, committed )" pu)lic respondent 1A.
#RAN! S!O, .&: etitioner Adoracion =ustan is the re%istered o+ner of a parcel of land other+ise Ano+n as =ot 8$;9 of the 1adastral Surve" of 1alino%, !loilo containin% an area of 1$.$$5* hectares and covered )" ,1, #o. ,-5;1. On 8e)ruar" 25, 19;9, petitioner leased the a)ove descri)ed propert" to private respondent #icolas aran%an for a term of ten 31$4 "ears and an annual rent of One ,housand 3 1,$$$.$$4 esos. (urin% the period of lease, aran%an +as re%ularl" e'tendin% loans in small amounts to petitioner to defra" her dail" e'penses and to finance her dau%hter's education. On Jul" 29, 19*$, petitioner e'ecuted a Special o+er of Attorne" in favor of aran%an to secure an a%ricultural loan from private respondent hilippine #ational .anA 3 #.4 +ith the aforesaid lot as collateral. On 8e)ruar" 18, 19*2, a second Special o+er of Attorne" +as e'ecuted )" petitioner, )" virtue of +hich, aran%an +as a)le to secure four 3/4 additional loans, to +it2 the sums of 2/,$$$.$$, &8,$$$.$$, &8,;$$.$$ and 25,$$$.$$ on (ecem)er 15, 19*5, Septem)er ;, 19*;, Jul" 2, 19*9 and June 2, 198$, respectivel". ,he last three loans +ere +ithout the Ano+led%e of herein petitioner and all the proceeds therefrom +ere used )" aran%an for his o+n )enefit. 1 ,hese encum)rances +ere dul" annotated on the certificate of title. On April 1;, 19*&, petitioner si%ned a (eed of Pacto de 5etro Sale 2 in favor of aran%an +hich +as superseded )" the (eed of (efinite Sale % dated -a" /, 19*9 +hich petitioner si%ned upon aran%an's representation that the same merel" evidences the loans e'tended )" him unto the former. 8or fear that her propert" mi%ht )e pre5udiced )" the continued )orro+in% of aran%an, petitioner demanded the return of her certificate of title. !nstead of compl"in% +ith the re7uest, aran%an asserted his ri%hts over the propert" +hich alle%edl" had )ecome his )" virtue of the aforementioned (eed of (efinite Sale. :nder said document, petitioner conve"ed the su)5ect propert" and all the improvements thereon unto aran%an a)solutel" for and in consideration of the sum of Sevent" 8ive ,housand 3 *5,$$$.$$4 esos. A%%rieved, petitioner filed an action for cancellation of liens, 7uietin% of title, recover" of possession and dama%es a%ainst aran%an and #. in the 0e%ional ,rial 1ourt of !loilo 1it". After trial, the lo+er court rendered 5ud%ment, disposin% as follo+s2 GB>0>8O0> and in vie+ of the fore%oin%, a decision is rendered as follo+s2 1. Orderin% cancellation )" the 0e%ister of (eeds of the rovince of !loilo, of the unauthoriDed loans, the liens and encum)rances appearin% in the ,ransfer 1ertificate of ,itle #o. ,-5;1, especiall" entries nos. 28;2&1E &&8;&8E and &52*9/E
,he court a quo ruled that the (eed of (efinite Sale is in realit" an e7uita)le mort%a%e as it +as sho+n )e"ond dou)t that the intention Bus Org 1 summer (obligations of principal and modes of extinguishment of agency) 24
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of the parties +as one of a loan secured )" petitioner's land. Ge a%ree. A contract is perfected )" mere consent. & -ore particularl", a contract of sale is perfected at the moment there is a meetin% of minds upon the thin% +hich is the o)5ect of the contract and upon the price. ' ,his meetin% of the minds speaAs of the intent of the parties in enterin% into the contract respectin% the su)5ect matter and the consideration thereof. !f the +ords of the contract appear to )e contrar" to the evident intention of the parties, the latter shall prevail over the former. 9 !n the case at )ench, the evidence is sufficient to +arrant a findin% that petitioner and aran%an merel" intended to consolidate the former's inde)tedness to the latter in a sin%le instrument and to secure the same +ith the su)5ect propert". >ven +hen a document appears on its face to )e a sale, the o+ner of the propert" ma" prove that the contract is reall" a loan +ith mort%a%e )" raisin% as an issue the fact that the document does not e'press the true intent of the parties. !n this case, parol evidence then )ecomes competent and admissi)le to prove that the instrument +as in truth and in fact %iven merel" as a securit" for the repa"ment of a loan. And upon proof of the truth of such alle%ations, the court +ill enforce the a%reement or understandin% in consonance +ith the true intent of the parties at the time of the e'ecution of the contract. 1( Articles 1;$2 and 1;$/ of the 1ivil 1ode respectivel" provide2 ,he contract shall )e presumed to )e an e7uita)le mort%a%e in an" of the follo+in% cases2 14 Ghen the price of a sale +ith ri%ht to repurchase is unusuall" inade7uateE 24 Ghen the vendor remains in possession as lessor or other+iseE &4 Ghen upon or after the e'piration of the ri%ht to repurchase, another instrument e'tendin% the period of redemption or %rantin% a ne+ period is e'ecutedE /4 Ghen the vendor )inds himself to pa" the ta'es on the thin% soldE 54 Ghen the purchaser retains for himself a part of the purchase priceE ;4 !n an" other case +here it ma" )e fairl" inferred that the real intention of the parties is that the transaction shall secure the pa"ment of a de)t or the performance of an" other o)li%ation. Art. 1;$/. ,he provisions of Article 1;$2 shall also appl" to a contract purportin% to )e an a)solute sale. 8rom a readin% of the a)ove-7uoted provisions, for a presumption of an e7uita)le mort%a%e to arise, +e must first satisf" t+o re7uisites namel"2 that the parties entered into a contract denominated as a contract of sale and that their intention +as to secure an e'istin% de)t )" +a" of mort%a%e. :nder Art. 1;$/ of the 1ivil 1ode, a contract purportin% to )e an a)solute sale shall )e presumed to )e an e7uita)le mort%a%e should an" of the conditions in Art. 1;$2 )e present. ,he e'istence of an" of the circumstances therein, not a concurrence nor an over+helmin% num)er of such circumstances,
suffices to %ive rise to the presumption that the contract is an e7uita)le mort%a%e.11 Art. 1;$2, 3;4, in relation to Art 1;$/ provides that a contract of sale is presumed to )e an e7uita)le mort%a%e in an" other case +here it ma" )e fairl" inferred that the real intention of the parties is that the transaction shall secure the pa"ment of a de)t or the performance of an" other o)li%ation. ,hat the case clearl" falls under this cate%or" can )e inferred from the circumstances surroundin% the transaction as herein set forth2 etitioner had no Ano+led%e that the contract 12 she si%ned is a deed of sale. ,he contents of the same +ere not read nor e'plained to her so that she ma" intelli%i)l" formulate in her mind the conse7uences of her conduct and the nature of the ri%hts she +as cedin% in favor of aran%an. etitioner is illiterate and her condition constrained her to merel" rel" on aran%an's assurance that the contract onl" evidences her inde)tedness to the latter. Ghen one of the contractin% parties is una)le to read, or if the contract is in a lan%ua%e not understood )" him, and mistaAe or fraud is alle%ed, the person enforcin% the contract must sho+ that the terms thereof have )een full" e'plained to the former. 1% Settled is the rule that +here a part" to a contract is illiterate or cannot read or cannot understand the lan%ua%e in +hich the contract is +ritten, the )urden is on the part" interested in enforcin% the contract to prove that the terms thereof are full" e'plained to the former in a lan%ua%e understood )" him. 14 ,o our mind, this )urden has not )een satisfactoril" dischar%ed. Ge do not find the testimon" of aran%an and (elia 1a)ial that the contract +as dul" read and e'plained to petitioner +orth" of credit. ,he assessment )" the trial court of the credi)ilit" of +itnesses is entitled to %reat respect and +ei%ht for havin% had the opportunit" of o)servin% the conduct and demeanor of the +itnesses +hile testif"in%. 15 ,he lo+er court ma" not have cate%oricall" declared 1a)ial's testimon" as dou)tful )ut this fact is readil" apparent +hen it ruled on the )asis of petitioner's evidence in total disre%ard of the positive testimon" on aran%an's side. Ge have su)5ected the records to a thorou%h e'amination, and a readin% of the transcript of steno%raphic notes +ould )ear out that the court a quo is correct in its assessment. ,he 1A committed a reversi)le error +hen it relied on the testimon" of 1a)ial in upholdin% the validit" of the (eed of (efinite Sale. 8or one, there are noted ma5or contradictions )et+een the testimonies of 1a)ial and Jud%e =e)a7uin, +ho notariDed the purported (eed of (efinite Sale. Ghile the former testified that receipts +ere presented )efore Jud%e =e)a7uin, +ho in turn made an accountin% to determine the price of the land 16, the latter cate%oricall" denied the alle%ation. 1& ,his contradiction casts dou)t on the credi)ilit" of 1a)ial as it is ostensi)le that her version of the stor" is concocted. On the other hand, petitioner's +itness 1elso amplona, testified that the contract +as not read nor e'plained to petitioner. Ge )elieve that this +itness %ave a more accurate account of the circumstances surroundin% the transaction. Be has no motive to prevaricate or concoct a stor" as he +itnessed the e'ecution of the document at the )ehest of aran%an himself +ho, at the outset, informed him that he +ill +itness a document consolidatin% petitioner's de)ts. Be thus testified2
M2 !n 3sic4 -a" /, 19*9, "ou remem)er havin% +ent 3sic4 to the -unicipalit"
25
AMDG of 1alino%6 A2 Ies, sir. M2 Gho invited "ou to %o there6 A2 aran%an. M2 Iou mean #icolas aran%an6 A2 Ies, sir. M2 Ghat did #icolas tell "ou +h" he invited "ou to %o there6 A2 Be told me that ! +ill +itness on the inde)tedness of Adoracion to aran%an. M2 .efore Adoracion =ustan si%ned her name in this >'h. @/@, +as this document read to her6 A2 #o, sir. M2 (id #icolas aran%an ri%ht in that ver" room tell Adoracion +hat she +as si%nin%6 A2 #o, sir. ''' ''' ''' M2 Ghat did "ou have in mind +hen "ou +ere si%nin% this document, >'h. @/@6 A2 ,o sho+ that Adoracion =ustan has de)ts +ith #icolas aran%an. 18
8urthermore, +e note the a)sence of an" 7uestion propounded to Jud%e =e)a7uin to esta)lish that the deed of sale +as read and e'plained )" him to petitioner. Ghen asAed if +itness has an" Ano+led%e +hether petitioner Ano+s ho+ to read or +rite, he ans+ered in the ne%ative. 19 ,his latter admission impresses upon us that the contract +as not at all read or e'plained to petitioner for had he Ano+n that petitioner is illiterate, his assistance +ould not have )een necessar". ,he fore%oin% s7uares +ith the si'th instance +hen a presumption of e7uita)le mort%a%e prevails. ,he contract of definite sale, +here petitioner purportedl" ceded all her ri%hts to the su)5ect lot in favor of aran%an, did not em)od" the true intention of the parties. ,he evidence speaAs clearl" of the nature of the a%reement F it +as one e'ecuted to secure some loans. Anent the issue of +hether the outstandin% mort%a%es on the su)5ect propert" can )e enforced a%ainst petitioner, +e rule in the affirmative. ,hird persons +ho are not parties to a loan ma" secure the latter )" pled%in% or mort%a%in% their o+n propert".2( So lon% as valid consent +as %iven, the fact that the loans +ere solel" for the )enefit of aran%an +ould not invalidate the mort%a%e +ith respect to petitioner's propert". !n consentin% thereto, even %rantin% that petitioner ma" not )e assumin% personal lia)ilit" for the de)t, her propert" shall nevertheless secure and respond for the performance of the principal o)li%ation. 21 !t is admitted that petitioner is the o+ner of the parcel of land mort%a%ed to #. on five 354 occasions )" virtue of the Special o+ers of Attorne" e'ecuted )" petitioner in favor of aran%an. etitioner ar%ues that the last three mort%a%es +ere void for lacA of authorit". She totall" failed to consider that said Special o+ers of Attorne" are a continuin% one and a)sent a valid revocation dul" furnished to the mort%a%ee, the same continues to have force and effect as a%ainst third persons +ho had no Ano+led%e of such lacA of authorit". Article 1921 of the 1ivil 1ode provides2 Art. 1921. !f the a%enc" has )een entrusted for the purpose of contractin% +ith specified persons, its revocation shall not pre5udice the latter if the" +ere not %iven notice thereof. ,he Special o+er of Attorne" e'ecuted )" petitioner in favor of
aran%an dul" authoriDed the latter to represent and act on )ehalf of the former. Bavin% done so, petitioner clothed aran%an +ith authorit" to deal +ith #. on her )ehalf and in the a)sence of an" proof that the )anA had Ano+led%e that the last three loans +ere +ithout the e'press authorit" of petitioner, it cannot )e pre5udiced there)". As far as third persons are concerned, an act is deemed to have )een performed +ithin the scope of the a%ent's authorit" if such is +ithin the terms of the po+er of attorne" as +ritten even if the a%ent has in fact e'ceeded the limits of his authorit" accordin% to the understandin% )et+een the principal and the a%ent. 22 ,he Special o+er of Attorne" particularl" provides that the same is %ood not onl" for the principal loan )ut also for su)se7uent commercial, industrial, a%ricultural loan or credit accommodation that the attorne"-in-fact ma" o)tain and until the po+er of attorne" is revoAed in a pu)lic instrument and a cop" of +hich is furnished to #.. 2% >ven +hen the a%ent has e'ceeded his authorit", the principal is solidaril" lia)le +ith the a%ent if the former allo+ed the latter to act as thou%h he had full po+ers 3Article 1911, 1ivil 1ode4. 24 ,he mort%a%e directl" and immediatel" su)5ects the propert" upon +hich it is imposed. 25 ,he propert" of third persons +hich has )een e'pressl" mort%a%ed to %uarantee an o)li%ation to +hich the said persons are forei%n, is directl" and 5ointl" lia)le for the fulfillment thereofE it is therefore su)5ect to e'ecution and sale for the purpose of pa"in% the amount of the de)t for +hich it is lia)le. 26 Bo+ever, petitioner has an un7uestiona)le ri%ht to demand proportional indemnification from aran%an +ith respect to the sum paid to #. from the proceeds of the sale of her propert" 2& in case the same is sold to satisf" the unpaid de)ts. GB>0>8O0>, premises considered, the 5ud%ment of the lo+er court is here)" 0>!#S,A,>( +ith the follo+in% -O(!8!1A,!O#S2 1. (>1=A0!#9 ,B> (>>( O8 (>8!#!,> SA=> AS A# >M:!,A.=> -O0,9A9>E 2. O0(>0!#9 0!CA,> 0>S O#(>#, #!1O=AS A0A#9A# ,O 0>,:0# ,B> OSS>SS!O# O8 ,B> S:.J>1, =A#( :#,O >,!,!O#>0 : O# ,B> =A,,>0'S AI->#, O8 ,B> S:- O8 *5,$$$.$$ G!,B!# #!#>,I 39$4 (AIS 80O- 0>1>! , O8 ,B!S (>1!S!O#E &. (>1=A0!#9 ,B> -O0,9A9>S !# 8ACO0 O8 #. AS CA=!( A#( S:.S!S,!#9 A#( -AI ,B>0>8O0> .> S:.J>1,>( ,O >H>1:,!O# SA=>. /. O0(>0!#9 0!CA,> 0>S O#(>#, A0A#9A# ,O AI >,!,!O#>0 ,B> A-O:#, O8 15,$$$.$$ .I GAI O8 A,,O0#>I'S 8>>S A#( ,O AI ,B> 1OS,S O8 ,B> S:!,.
26
AMDG
G.R. No. '5494 -a< &, 1991 !+O T+RA- /ET+-AL RA-NAN ANDBOR N R-LA *. RA-NAN and -OT G. RA-NAN , petitioners, vs. !O"RT O# A$$EALS, S$O"SES S+.AR /ET+-AL RA-NAN , SONYA /ET+-AL RA-NAN and O*ERSEAS +OLD NG !O., LTD., respondents. G.R. No. '5496 -a< &, 1991 S$O"SES S+.AR /ET+-AL RA-NAN AND SONYA /ET RA-NAN , petitioners, vs. T+E +ONORABLE !O"RT O# A$$EALS, ORT GAS , !O., LTD. $ARTNERS+ $, and O*ERSEAS +OLD NG !O., LTD., respondents. ,his case involves the )itter 7uarrel of t+o )rothers over t+o 324 parcels of land and its improvements no+ +orth a fortune. ,he )one of contention is the apparentl" conflictin% factual findin%s of the trial court and the appellate court, the resolution of +hich +ill materiall" affect the result of the contest. ,he follo+in% facts are not disputed. !sh+ar, 1hoithram and #avalrai, all surnamed Jethmal 0amnani, are )rothers of the full )lood. !sh+ar and his spouse Son"a had their main )usiness )ased in #e+ IorA. 0ealiDin% the difficult" of mana%in% their investments in the hilippines the" e'ecuted a %eneral po+er of attorne" on Januar" 2/, 19;; appointin% #avalrai and 1hoithram as attorne"s-in-fact, empo+erin% them to mana%e and conduct their )usiness concern in the hilippines. 1 On 8e)ruar" 1, 19;; and on -a" 1;, 19;;, 1hoithram, in his capacit" as aforesaid attorne"-in-fact of !sh+ar, entered into t+o a%reements for the purchase of t+o parcels of land located in .arrio :%on%, asi%, 0iDal, from Orti%as K 1ompan", =td. artnership 3Orti%as for short4 +ith a total area of appro'imatel" 1$,$/8 s7uare meters.2 er a%reement, 1hoithram paid the do+n pa"ment and installments on the lot +ith his personal checAs. A )uildin% +as constructed thereon )" 1hoithram in 19;; and this +as occupied and rented )" Jethmal !ndustries and a +ardro)e shop called >ppie's 1reation. ,hree other )uildin%s +ere )uilt thereon )" 1hoithram throu%h a loan of 1$$,$$$.$$ o)tained from the -erchants .anA as +ell as the income derived from the first )uildin%. ,he )uildin%s +ere leased out )" 1hoithram as attorne"-in-fact of !sh+ar. ,+o of these )uildin%s +ere later )urned. Sometime in 19*$ !sh+ar asAed 1hoithram to account for the income and e'penses relative to these properties durin% the period 19;* to 19*$. 1hoithram failed and refused to render such accountin%. As a conse7uence, on 8e)ruar" /, 19*1, !sh+ar revoAed the %eneral po+er of attorne". 1hoithram and Orti%as +ere dul" notified of such revocation on April 1, 19*1 and -a" 2/, 19*1, respectivel". % Said notice +as also re%istered +ith the Securities and >'chan%e 1ommission on -arch 29, 19*1 4 and +as pu)lished in the April 2, 19*1 issue of The Manila Ti&es for the information of the %eneral pu)lic. 5
#evertheless, 1hoithram as such attorne"-in-fact of !sh+ar, transferred all ri%hts and interests of !sh+ar and Son"a in favor of his dau%hter-in-la+, #irmla 0amnani, on 8e)ruar" 19, 19*&. Ber hus)and is -oti, son of 1hoithram. :pon complete pa"ment of the lots, Orti%as e'ecuted the correspondin% deeds of sale in favor of #irmla. 6 ,ransfer 1ertificates of ,itle #os. /$&15$ and /$&152 of the 0e%ister of (eeds of 0iDal +ere issued in her favor. ,hus, on Octo)er ;, 1982, !sh+ar and Son"a 3spouses !sh+ar for short4 filed a complaint in the 1ourt of 8irst !nstance of 0iDal a%ainst 1hoithram and?or spouses #irmla and -oti 31hoithram et al. for )revit"4 and Orti%as for reconve"ance of said properties or pa"ment of its value and dama%es. An amended complaint for dama%es +as thereafter filed )" said spouses. After the issues +ere 5oined and the trial on the merits, a decision +as rendered )" the trial court on (ecem)er &, 1985 dismissin% the complaint and counterclaim. A motion for reconsideration thereof filed )" spouses !sh+ar +as denied on -arch &, 198;. An appeal therefrom +as interposed )" spouses !sh+ar to the 1ourt of Appeals +herein in due course a decision +as promul%ated on -arch 1/, 1988, the dispositive part of +hich reads as follo+s2 GB>0>8O0>, 5ud%ment is here)" rendered reversin% and settin% aside the appealed decision of the lo+er court dated (ecem)er &, 1985 and the Order dated -arch &, 198; +hich denied plaintiffs-appellants' -otion for 0econsideration from aforesaid decision. A ne+ decision is here)" rendered sentencin% defendants- appellees 1hoithram Jethmal 0amnani, #irmla C. 0amnani, -oti 1. 0amnani, and Orti%as and 1ompan" =imited artnership to pa", 5ointl" and severall", plaintiffs-appellants the follo+in%2 1. Actual or compensator" dama%es to the e'tent of the fair marAet value of the properties in 7uestion and all improvements thereon covered )" ,ransfer 1ertificate of ,itle #o. /$&15$ and ,ransfer 1ertificate of ,itle #o. /$&152 of the 0e%istr" of (eeds of 0iDal, prevailin% at the time of the satisfaction of the 5ud%ment )ut in no case shall such dama%es )e less than the value of said properties as appraised )" Asian Appraisal, !nc. in its Appraisal 0eport dated Au%ust 1985 3>'hi)its , to ,-1/, inclusive4. 2. All rental incomes paid or ou%ht to )e paid for the use and occupanc" of the properties in 7uestion and all improvements thereon consistin% of )uildin%s, and to )e computed as follo+s2 a4 On .uildin% 1 occupied )" >ppie's 1reation and Jethmal !ndustries from 19;* to 19*&, inclusive, )ased on the 19;* to 19*& monthl" rentals paid )" >ppie's 1reationE )4 Also on .uildin% 1 a)ove, occupied )" Jethmal !ndustries and =avine from 19*/ to 19*8, the rental incomes )ased on then rates prevailin% as sho+n under >'hi)it @ @E and from 19*9 to 1981, )ased on then prevailin% rates as indicated under >'hi)it @M@E c4 On .uildin% A occupied )" ,rans+orld Xnittin% -ills from 19*2 to 19*8, the rental incomes )ased upon then prevailin% 27
AMDG
rates sho+n under >'hi)it @ @, and from 19*9 to 1981, )ased on prevailin% rates per >'hi)it @M@E d4 On the t+o .a"s .uildin%s occupied )" Si%ma--ari+asa from 19*2 to 19*8, the rentals )ased on the =ease 1ontract, >'hi)it @ @, and from 19*9 to 198$, the rentals )ased on the =ease 1ontract, >'hi)it @M@, and thereafter commencin% 1982, to account for and turn over the rental incomes paid or ou%ht to )e paid for the use and occupanc" of the properties and all improvements totallin% 1$,$/8 s7. m )ased on the rate per s7uare meter prevailin% in 1981 as indicated annuall" cumulative up to 198/. ,hen, commencin% 1985 and up to the satisfaction of the 5ud%ment, rentals shall )e computed at ten percent 31$<4 annuall" of the fair marAet values of the properties as appraised )" the Asian Appraisal, !nc. in Au%ust 1985 3>'hi)its , to ,-1/, inclusive.4
&. -oral dama%es in the sum of 2$$,$$$.$$E /. >'emplar" dama%es in the sum of 1$$,$$$.$$E 5. Attorne"'s fees e7uivalent to 1$< of the a+ard herein madeE ;. =e%al interest on the total amount a+arded computed from first demand in 19;* and until the full amount is paid and satisfiedE and *. ,he cost of suit. *
.I 1BO!,B0A- !# ,B> ,0!A= 1O:0, >S,A.=!SB!#9 ,BA, ,B> 0O >0,!>S G>0> :01BAS>( G!,B >0SO#A= 8:#(S O8 >,!,!O#>0 1BO!,B0A- A#( #O, G!,B -O#>I A==>9>(=I 0>-!,,>( .I 0>S O#(>#, !SBGA0. !!! ,B> 1O:0, O8 A >A=S A1,>( !# >H1>SS O8 J:0!S(!1,!O# !# AGA0(!#9 (A-A9>S .AS>( O# ,B> CA=:> O8 ,B> 0O >0,!>S A#( ,B> 80:!,S O8 ,B> !- 0OC>->#,S ,B>0>O#. 9 Similarl", spouses !sh+ar filed a petition for revie+ of said amended decision of the appellate court e'culpatin% Orti%as of lia)ilit" )ased on the follo+in% assi%ned errors ! ,B> 0>S O#(>#, BO#O0A.=> 1O:0, O8 A >A=S 1O--!,,>( 90AC> >00O0 A#( BAS (>1!(>( A M:>S,!O# O8 S:.S,A#1> #O, !# A11O0( G!,B =AG A#(?O0 G!,B A =!1A.=> (>1!S!O#S O8 ,B!S BO#O0A.=> 1O:0,F
0O-:=9A,!#9 ,B> M:>S,!O#>( A->#(>( (>1!S!O# 3A##>H @A@4 0>=!>C!#9 0>S O#(>#, O0,!9AS 80O- =!A.!=!,I A#( (!S-!SS!#9 >,!,!O#>0S' A->#(>( 1O- =A!#, !# 1!C!= 1AS> #O. 5&/- , AS A9A!#S, SA!( 0>S O#(>#, O0,!9ASE .4 !# BO=(!#9 !# SA!( A->#(>( (>1!S!O# ,BA, A, A#I 0A,> #O O#> >C>0 ,>S,!8!>( ,BA, O0,!9AS GAS A S:.S10!.>0 ,O ,B> -A#!=A ,!->S :.=!1A,!O# O0 ,BA, A#I O8 !,S O88!1>0S 0>A( ,B> #O,!1> AS :.=!SB>( !# ,B> -A#!=A ,!->S, ,B>0>.I >00O#>O:S=I 1O#1=:(!#9 ,BA, 8O0 0>S O#(>#, O0,!9AS ,O 1hoithram, et al. thereafter filed a petition for revie+ of said 5ud%ment .> 1O#S,0:1,!C>=I .O:#( .I ,B> :.=!SB>( #O,!1> O8 of the appellate court alle%in% the follo+in% %rounds2 0>CO1A,!O#, O0,!9AS A#(?O0 A#I O8 !,S O88!1>0S -:S, .> A S:.S10!.>0 A#(?O0 ,BA, A#I O8 !,S O88!1>0S SBO:=( 0>A( ,B> #O,!1> AS A1,:A==I :.=!SB>(E 1. ,he 1ourt of Appeals %ravel" a)used its discretion in maAin% a 14 !# BO=(!#9 !# SA!( A->#(>( (>1!S!O# ,BA, O0,!9AS 1O:=( factual findin% not supported )" and contrar", to the evidence #O, .> B>=( =!A.=> JO!#,=I A#( S>C>0A==I G!,B ,B> presented at the ,rial 1ourt. (>8>#(A#,S-A >==>>S 1BO!,B0A-, -O,! A#( #!0-=A 0A-#A#!, AS O0,!9AS 0>=!>( O# ,B> GO0( O8 1BO!,B0A- ,BA, A== A=O#9 B> GAS A1,!#9 8O0 A#( !# .>BA=8 O8 B!S .0O,B>0 2. ,he 1ourt of Appeals acted in e'cess of 5urisdiction in a+ardin% !SBGA0 GB># !, ,0A#S8>00>( ,B> 0!9B,S O8 ,B> =A,,>0 ,O dama%es )ased on the value of the real properties in 7uestion #!0-=A C. 0A-#A#!E +here the cause of action of private respondents is recover" of a (4 !# !9#O0!#9 ,B> >C!(>#1> (:=I 0>S>#,>( A#( A(-!,,>( sum of mone". (:0!#9 ,B> ,0!A= ,BA, O0,!9AS GAS 0O >0=I #O,!8!>( O8 ,B> #O,!1> O8 0>CO1A,!O# O8 ,B> 9>#>0A= OG>0 O8 A,,O0#>I A09:->#,S 9!C># ,O 1BO!,B0A-, >C!(>#1>( .I ,B> :.=!1A,!O# !# ,B> -A#!=A ,!->S !SS:> O8 A 0!= 2, 19*1 3>HB. 84 GB!1B 1O#S,!,:,>S #O,!1> ,O ,B> GBO=> GO0=(E ,B> 0>1>! , O8 ,B> #O,!1> O8 ! S:1B 0>CO1A,!O# GB!1B GAS S>#, ,O O0,!9AS O# -AI 22, 19*1 .I A,,I. -A0!A#O . -A01OS A#( 0>1>!C>( .I O0,!9AS O# -AI ,B> 1O:0, O8 A >A=S A1,>( !# 90AC> A.:S> O8 !,S 2/, 19*1 3>HB. 94 A#( ,B> 8!=!#9 O8 ,B> #O,!1> G!,B ,B> (!S10>,!O# !# -AX!#9 A 8A1,:A= 8!#(!#9 ,BA, 0!CA,> S>1:0!,!>S A#( >H1BA#9> 1O--!SS!O# O# -A01B 29,19*1 3>HB. B4E 0>S O#(>#, !SBGA0 0>-!,,>( ,B> A-O:#, O8 :S >4 !# (!S1A0(!#9 !,S 8!#(!#9S 1O#,A!#>( !# !,S (>1!S!O# O8 1/ J15$,$$$.$$ ,O >,!,!O#>0 1BO!,B0A- !# ,B> A.S>#1> -A01B 1988 3A##>H .4 ,BA, O0,!9AS GAS (:=I #O,!8!>( O8 ,B> O8 0OO8 O8 S:1B 0>-!,,A#1>. 0>CO1A,!O# O8 ,B> OG>0 O8 A,,O0#>I O8 1BO!,B0A-, B>#1> O0,!9AS A1,>( !# .A( 8A!,B !# >H>1:,!#9 ,B> (>>( O8 SA=> ,O !! ,B> 0O >0,!>S !# M:>S,!O# !# 8ACO0 O8 #!0-=A C. 0A-#A#!E 84 !# S:S,A!#!#9 0>S O#(>#, O0,!9AS CA1:O:S 0>BASB>( A09:->#,S !# !,S -O,!O# 8O0 0>1O#S!(>0A,!O# ,BA, !, ,B> 1O:0, O8 A >A=S A1,>( G!,B 90AC> A.:S> O8 GO:=( #O, 9A!# O#> 1>#,ACO -O0> 80O- 1BO!,B0A- 8O0 ,B> (!S10>,!O# A#( -A#!8>S, A0,!A=!,I !# (!S0>9A0(!#9 SA=> O8 SA!( =O,S A#( ,B> S:.S>M:>#, ,0A#S8>0 O8 ,B> ,B> ,0!A= 1O:0,S 8!#(!#9S .AS>( O# ,B> (!0>1, SA-> ,O ,B> -A,,>0'S (A:9B,>0-!#-=AG, A#( ,BA, !, GAS !# (O1:->#,A0I A#( ,>S,!-O#!A= >C!(>#1> 0>S>#,>( 9OO( 8A!,B GB># !, ,0A#S8>00>( !SBGA0'S 0!9B,S ,O ,B> Bus Org 1 summer (obligations of principal and modes of extinguishment of agency) 28
Actin% on a motion for reconsideration filed )" 1hoithram, et al. and Orti%as, the appellate court promul%ated an amended decision on Octo)er 1*, 1988 %rantin% the motion for reconsideration of Orti%as )" affirmin% the dismissal of the case )" the lo+er court as a%ainst Orti%as )ut den"in% the motion for reconsideration of 1hoithram, et al. '
A4 !#
AMDG =O,S !# M:>S,!O#.
!! ,B> 0>S O#(>#, BO#O0A.=> 1O:0, O8 A >A=S BAS SO 8A0 (> A0,>( 80O- ,B> A11> ,>( A#( :S:A= 1O:0S> O8 J:(!1!A= 0O1>>(!#9 GB># !, B>=( !# ,B> M:>S,!O#>( A->#(>( (>1!S!O# O8 1* #OC>-.>0 1988 3A##>H A4 ,BA, 0>S O#(>#, O0,!9AS K 1O., =,(., !S #O, JO!#,=I A#( S>C>0A==I =!A.=> G!,B (>8>#(A#,SA >==>>S 1BO!,B0A-, -O,! A#( #!0-=A 0A-#A#! !# S !,> O8 !,S O0!9!#A= (>1!S!O# O8 1/ -A01B 1988 ,BA, O0,!9AS GAS (:=I #O,!8!>( O8 ,B> 0>CO1A,!O# O8 ,B> OG>0 O8 A,,O0#>I O8 1BO!,B0A- 0A-#A#!. 1( ,he center of controvers" is the testimon" of !sh+ar that durin% the latter part of 19;5, he sent the amount of :S J15$,$$$.$$ to 1hoithram in t+o )anA drafts of :SJ;5,$$$.$$ and :SJ85,$$$.$$ for the purpose of investin% the same in real estate in the hilippines. ,he trial court considered this lone testimon" un+orth" of faith and credit. On the other hand, the appellate court found that the trial court misapprehended the facts in complete disre%ard of the evidence, documentar" and testimonial. Another crucial issue is the claim of 1hoithram that )ecause he +as then a .ritish citiDen, as a temporar" arran%ement, he arran%ed the purchase of the properties in the name of !sh+ar +ho +as an American citiDen and +ho +as then 7ualified to purchase propert" in the hilippines under the then arit" Amendment. ,he trial court )elieved this account )ut it +as de)unAed )" the appellate court. As to the issue of +hether of not spouses !sh+ar actuall" sent :SJ15$,$$$.$$ to 1hoithram precisel" to )e used in the real estate )usiness, the trial court made the follo+in% dis7uisition F After a careful, considered and conscientious e'amination of the evidence adduced in the case at )ar, plaintiff !sh+ar Jethmal 0amanani's main evidence, +hich centers on the alle%ed pa"ment )" sendin% throu%h re%istered mail from #e+ IorA t+o 324 :SJ drafts of J85,$$$.$$ and J;5,$$$.$$ in the latter part of 19;5 3,S# 28 8e). 198/, p. 1$-114. ,he sendin% of these mone"s +ere )efore the e'ecution of that 9eneral o+er of Attorne", +hich +as dated in #e+ IorA, on Januar" 2/, 19;;. .ecause of these alle%ed remittances of :S J15$,$$$.$$ and the su)se7uent ac7uisition of the properties in 7uestion, plaintiffs averred that the" constituted a trust in favor of defendant 1hoithram Jethmal 0amnani. This Court can e in full agree&ent if the plaintiffs /ere onl! a le to prove preponderantl! these re&ittances. ,he entire record of this case is )ereft of even a shred of proof to that effect. !t is completel" )arren. Bis uncorro)orated testimon" that he remitted these amounts in the @later part of *AB+@ does not en%ender enou%h faith and credence. !nade7uac" of details of such remittance on the t+o 324 :S dollar drafts in such )i% amounts is completel" not positive, credi)le, pro)a)le and entirel" not in accord +ith human e'perience. ,his is a classic situation, plaintiffs not e'hi)itin% an" commercial document or an" document and?or paper as re%ard to these alle%ed remittances. laintiff !sh+ar 0amnani is not an ordinar" )usinessman in the strict sense of the +ord. 0emem)er his main )usiness is )ased in #e+ IorA, and he should Ano+ )etter ho+ to send these alle%ed
remittances. Gorst, plaintiffs did not present even a scum of proof, that defendant 1hoithram 0amnani received the alle%ed t+o :S dollar drafts. Si%nificantl", he does not Ano+ even the )anA +here these t+o 324 :S dollar drafts +ere purchased. !ndeed, plaintiff !sh+ar 0amnani's lone testimon" is un+orth" of faith and credit and, therefore, deserves scant consideration, and since the plaintiffs' theor" is )uilt or )ased on such testimon", their cause of action collapses or falls +ith it. 8urther, the rate of e'chan%e that time in 19;; +as /.$$ to J1.$$. ,he alle%ed t+o :S dollar drafts amounted to J15$,$$$.$$ or a)out ;$$,$$$.$$. Assumin% the cash price of the t+o 324 lots +as onl" 5&$,$$$.$$ 3A=,BO:9B he said2 @Based on &! kno/ledge I have no evidence,@ +hen asAed if he even Ano+s the cash price of the t+o lots4. !f he +ere reall" the true and )onafide investor and purchaser for profit as he asserted, he could have paid the price in full in cash directl" and o)tained the title in his name and not thru @1ontracts ,o Sell@ in installments pa"in% interest and thru an attorne"-in fact 3,S# of -a" 2, 198/, pp. 1$-114 and, a%ain, plaintiff !sh+ar 0amnani told this 1ourt that he does not kno/ /hether or not his late father-in-la/ orro/ed the t/o '( dollar drafts fro& the (/iss Bank or /hether or not his late father-in-la/ had an! de it &e&o fro& the (/iss Bank 3,S# of -a" 2, 198/, pp. 9-1$4. 11 On the other hand, the appellate court, in %ivin% credence to the version of !sh+ar, had this to sa" F Ghile it is true, that %enerall" the findin%s of fact of the trial court are )indin% upon the appellate courts, said rule admits of e'ceptions such as +hen 314 the conclusion is a findin% %rounded entirel" on speculations, surmises and con5ecturesE 324 +hen the inferences made is manifestl" mistaAen, a)surd and impossi)leE 3&4 +hen there is %rave a)use of discretionE 3/4 +hen the 5ud%ment is )ased on a misapprehension of facts and +hen the court, in maAin% its findin%s, +ent )e"ond the issues of the case and the same are contrar" to the admissions of )oth appellant and appellee 30amos vs. 1ourt of Appeals, ;& S10A &&E hilippine American =ife Assurance 1o. vs. Santamaria, &1 S10A *98E Alda)a vs. 1ourt of Appeals, 2/ S10A 1894. ,he evidence on record sho+s that the t court acted under a misapprehension of facts and the inferences made on the evidence palpa)l" a mistaAe. The trial courtCs o servation that Dthe entire records of the case is ereft of even a shred of proofD that plaintiff-appellants have re&itted to defendant-appellee Choithra& 5a&nani the a&ount of '( ) *+,,,,,.,, for invest&ent in real estate in the Philippines, is not orne ! the evidence on record and sho/s the trial courtCs &isapprehension of the facts if not a co&plete disregard of the evidence, oth docu&entar! and testi&onial. laintiff-appellant !sh+ar Jethmal 0amnani testif"in% in his o+n )ehalf, declared that durin% the latter part of 19;5, he sent the amount of :S J15$,$$$.$$ to his )rother 1hoithram in t+o )anA drafts of :S J;5,$$$.$$ and :S J85,$$$.$$ for the purpose of investin% the same in real estate in the hilippines. Bis testimon" is as follo+s2
A,,I. -A0A AO2 Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)
29
AMDG -r. Gitness, "ou said that "our attorne"-in-fact paid in "our )ehalf. 1an "ou tell this Bonora)le 1ourt +here "our attorne"-in-fact %ot the mone" to pa" this propert"6 A,,I. 10:L2 Gait. !t is no+ clear it )ecomes incompetent or hearsa". 1O:0,2 Gitness can ans+er. A ! paid throu%h m" attorne"-in-fact. ! am the one +ho %ave him the mone". A,,I. -A0A AO2 M Iou %ave him the mone"6 A ,hat's ri%ht. M Bo+ much mone" did "ou %ive him6 A :S J 15$,$$$.$$. M Bo+ +as it %iven then6 A ,hrou%h .anA drafts. :S J;5,$$$.$$ and :S J85,$$$.$$ )anA drafts. ,he total amount +hich is J 15$,$$$.$$ 3,S#, 28 8e)ruar" 198/, p. 1$E >mphasis supplied.4 ''' ''' ''' A,,I. 10:L2 M ,he t+o )anA drafts +hich "ou sent ! assume "ou )ou%ht that from some )anAs in #e+ IorA6 A #o, sir. M .ut there is no 7uestion those t+o )anA drafts +ere for the purpose of pa"in% do+n pa"ment and installment of the t+o parcels of land6 A (o+n pa"ment, installment and to put up the )uildin%. M ! thou%ht "ou said that the )uildin%s +ere constructed . . . su)5ect to our continuin% o)5ection from rentals of first )uildin%6 A,,I. -A0A AO2 Iour Bonor, that is misleadin%. 1O:0,E Gitness 3ma"4 ans+er. A Ies, the first )uildin% +as immediatel" put up after the purchase of the t+o parcels of land that +as in 19;; and the finds +ere used for the construction of the )uildin% from the :S J15$,$$$.$$ 3,S#, * -arch 198/, pa%e 1/E >mphasis supplied.4 ''' ''' ''' M ,hese t+o )anA drafts +hich "ou mentioned and the use for it "ou sent them )" re%istered mail, did "ou send them from #e+ Iour6 A ,hat is ri%ht. M And the t+o )anA drafts +hich +ere put in the re%istered mail, the re%istered mail +as addressed to +hom6 A 1hoithram 0amnani. 3,S#, * -arch 198/, pp. 1/-154.
+itness +ill remem)er +hat never happened 3:nderhill's 1r. 9uidance, 5th >d., Col. 1, pp. 1$-114. ,hat is not all. (hortl! thereafter, plaintiff-appellant Ish/ar 5a&nani e.ecuted a 6eneral Po/er of Attorne! 7=.hi it @A@8 dated Fanuar! EG, *ABB appointing his rothers, defendantsappellees <avalrai and Choithra& as attorne!-in-fact e&po/ering the latter to conduct and &anage plaintiffs-appellants ' usiness affairs in the Philippines and specificall!> #o. 1/. ,o ac7uire, purchase for us, real estates and improvements for the purpose of real estate )usiness an"+here in the hilippines and to develop, su)divide, improve and to resell to )u"in% pu)lic 3individual, firm or corporation4E to enter in an" contract of sale in oar )ehalf and to enter mort%a%es )et+een the vendees and the herein %rantors that ma" )e needed to finance the real estate )usiness )ein% undertaAen. ursuant thereto, on 3e ruar! *, *ABB and Ma! *B, *ABB, Choithra& Feth&al 5a&nani entered into Agree&ents 7=.hi its @B' and @C@4 /ith the other defendant. 4rtigas and Co&pan!, ?td., for the purchase of t/o 7E8 parcels of land situated at Barrio 'gong, Pasig, 5izal, /ith said defendantappellee signing the Agree&ents in his capacit! as Attorne!-infact of Ish/ar Feth&al 5a&nani. Again, on Fanuar! +, *AHE, almost seven 3*4 "ears after !sh+ar sent the :S J 15$,$$$.$$ in 19;5, 1hoithram 0amnani, as attorne!-in fact of Ish/ar entered into a Contract of ?ease /ith (ig&a-Mari/asa 7=.hi it @P@8 there ! re-affir&ing the o/nership of Ish/ar over the disputed propert! and the trust relationship et/een the latter as principal and Choithra& as attorne!-in-fact of Ish/ar. All of these facts indicate that if plaintiff-appellant !sh+ar had not earlier sent the :S J 15$,$$$.$$ to his )rother, 1hoithram, there +ould )e no purpose for him to e'ecute a po+er of attorne" appointin% his )rothers as s attorne"-in-fact in )u"in% real estate in the hilippines. As a%ainst 1hoithram's denial that he did not receive the :S J15$,$$$.$$ remitted )" !sh+ar and that the o+er of Attorne", as +ell as the A%reements entered into +ith Orti%as K 1o., +ere onl" temporar" arran%ements, !sh+ar's testimon" that he did send the )anA drafts to 1hoithram and +as received )" the latter, is the more credi)le version since it is natural, reasona)le and pro)a)le. !t is in accord +ith the common e'perience, Ano+led%e and o)servation of ordinar" men 39ardner vs. Gentors 18 !o+a 5&&4. And in determinin% +here the superior +ei%ht of the evidence on the issues involved lies, the court ma" consider the pro)a)ilit" or impro)a)ilit" of the testimon" of the +itness 3Sec. 1, 0ule 1&&, 0ules of 1ourt4. 1ontrar", therefore, to the trial court's s+eepin% o)servation that 'the entire records of the case is )ereft of even a shred of proof that 1hoithram received the alle%ed )anA drafts amountin% to :S J 15$,$$$.$$, +e have not onl" testimonial evidence )ut also documentar" and circumstantial evidence provin% said remittance of the mone" and the fiduciar" relationship )et+een the former and !sh+ar. 12 30
On cross-e'amination, the +itness reiterated the remittance of the mone" to his )rother 1hoithram, +hich +as sent to him )" his fatherin-la+, 0ochiram =. -ulchandoni from S+itDerland, a man of immense +ealth, +hich even defendants-appellees' +itness #avalrai 0amnani admits to )e so 3tsn., p. 1;, S. Oct. 1&, 19854. ,hus, on cross-e'amination, !sh+ar testified as follo+s2
M Bo+ did "ou receive these t+o )anA drafts from the )anA the name of +hich "ou cannot remem)er6 A ! %ot it from m" father-in-la+. M 8rom +here did "our father- in-la+ sent these t+o )anA drafts6 A 8rom S+itDerland. M Be +as in S+itDerland. A ro)a)l", the" sent out these t+o drafts from S+itDerland.
3,S#, * -arch 198/, pp. 1;-1*E >mphasis supplied.4 This positive and affir&ative testi&on! of plaintiff-appellant that he sent the t/o 7E8 ank drafts totalling '( ) *+,,,,,.,, to his rother, is proof of said re&ittance. (uch positive testi&on! has greater pro ative force than defendant-appelleeCs denial of receipt of said ank drafts, for a +itness +ho testifies affirmativel" that somethin% did happen should )e )elieved for it is unliAel" that a
AMDG
,he 1ourt a%rees. ,he environmental circumstances of this case )uttress the claim of !sh+ar that he did entrust the amount of :S J 15$,$$$.$$ to his )rother, 1hoithram, +hich the latter invested in the real propert" )usiness su)5ect of this liti%ation in his capacit" as attorne"-in-fact of !sh+ar. ,rue it is that there is no receipt +hatever in the possession of !sh+ar to evidence the same, )ut it is not unusual amon% )rothers and close famil" mem)ers to entrust mone" and valua)les to each other +ithout an" formalities or receipt due to the special relationship of trust )et+een them. And another proof thereof is the fact that !sh+ar, out of frustration +hen 1hoithram failed to account for the realt" )usiness despite his demands, revoAed the %eneral po+er of attorne" he e'tended to 1hoithram and #avalrai. ,hereafter, 1hoithram +rote a letter to !sh+ar pleadin% that the po+er of attorne" )e rene+ed or another authorit" to the same effect )e e'tended, +hich reads as follo+s2
letter ecause &! conscience is clear. I do not have an!thing in &! &ind. I should not e /riting !ou this, ut ecause &! conscience is clear do !ou kno/ that if I had predated papers /hat could !ou have done6 4r do !ou kno/ that I have &an! paper signed ! !ou and if had done an!thing or do then /hat can !ou do a out it6 It is not necessar! to /rite further a out this . It does not &atter if !ou have cancelled the po/er. At that ti&e if I had predated and done so&ething a out it /hat could !ou have done6 $ou do not kno/ &e. I a& not after &one!. I can earn &one! an!ti&e. !t has )een ten months since ! have not received a sin%le penn" for e'penses from (ada 3elder )rother4. Gh" there are no e'penses6 Ge can not dra+ a sin%le penn" from Anittin% 3factor"4. Gell ! am not %oin% to +rite "ou further, nor there is an" need for it. ,his much ! am +ritin% "ou )ecause of the +a" "ou have conducted "ourself. But re&e& er, /henever I hale the &one! I /ill not keep it &!self 5ight no/ I have not got an!thing at all. ! am not %oin% to +rite an" further.
-0. !SBGA0 J>,B-A= #>G IO0X 314 Send po+er of Att". immediatel", )ecause the case has )een postponed for t+o +eeAs. ,he same +a" as it has )een send )efore in favor of )oth names. Send it immediatel" other+ise ever"thin% +ill )e lost unnecessaril", and then it +ill taAe us in liti%ation. #o+ that +e have %one ahead +ith a case and +ould liAe to end it immediatel" other+ise s7uatters +ill taAe the entire land. ,herefore, send it immediatel". 324 Orti%as also has sued us )ecause +e are holdin% the installments, )ecause the" have refused to %ive a re)ate of 5.$$ per meter +hich the" have to %ive us as per contract. ,he" have filed the la+ suit that since +e have not paid the installment the" should %et )acA the land. ,he hearin% of this case is in the month of Jul". ,herefore, please send the po+er immediatel". !n one case (A(A 3>lder .rother4 +ill represent and in another one, ! shall. 3&4 !n case if "ou do not +ant to %ive po+er then maAe one letter in favor of (ada and the other one in m" favor sho+in% that in an" liti%ation +e can represent "ou and "our +ife, and +hatever the court decide it +ill )e accepta)le )" me. Iou can asA an" la+"er, he +ill )e a)le to prepare these letters. After that "ou can have these letters ratif" )efore .!. 1onsulate. !t should )e dated April 15, 19*1. 3/4 ,r" to send the po+er )ecause it +ill )e more useful. -aAe it in an" manner +hatever +a" "ou have confident in it. .ut please send it immediatel". Iou have cancelled the po+er. ,herefore, "ou have lost "our reputation ever"+here. Ghat can ! further +rite "ou a)out it. ! have told ever")od" that due to certain reasons ! have +ritten "ou to do this that is +h" "ou have done this. ,his +a" "our reputation have )een Aept intact. 4ther/ise if I /ant to do so&ething a out it, I can sho/ !ou that inspite of the po/er !ou have cancelled !ou can not do an!thing. $ou can keep this
Xeep "our )usiness clean +ith #aru. Other+ise he +ill discontinue )ecause he liAes to Aeep his )usiness ver" clean. 1% ,he said letter +as in Sindhi lan%ua%e. !t +as translated to >n%lish )" the 8irst Secretar" of the >m)ass" of aAistan, +hich translation +as verified correct )" the 1hairman, (epartment of Sindhi, :niversit" of Xarachi. 14 8rom the fore%oin% letter +hat could )e %leaned is thatF 1. 1hoithram asAed for the issuance of another po+er of attorne" in their favor so the" can continue to represent !sh+ar as Orti%as has sued them for unpaid installments. !t also appears therefrom that Orti%as learned of the revocation of the po+er of attorne" so the re7uest to issue another. 2. 1hoithram reassured !sh+ar to have confidence in him as he +as not after mone", and that he +as not interested in !sh+ar's mone". &. ,o demonstrate that he can )e relied upon, he said that he could have ante-dated the sales a%reement of the Orti%as lots )efore the issuance of the po+ers of attorne" and ac7uired the same in his name, if he +anted to, )ut he did not do so. /. Be said he had not received a sin%le penn" for e'penses from (ada 3their elder )rother #avalrai4. ,hus, confirmin% that if he +as not %iven mone" )" !sh+ar to )u" the Orti%as lots, he could not have consummated the sale. 5. !t is important to note that in said letter 1hoithram never claimed o+nership of the propert" in 7uestion. Be affirmed the fact that he )ou%ht the same as mere a%ent and in )ehalf of !sh+ar. #either did he mention the alle%ed temporar" arran%ement +here)" !sh+ar, )ein% an American citiDen, shall appear to )e the )u"er of the said propert", )ut that after 1hoithram ac7uires hilippine citiDenship, its o+nership shall )e transferred to 1hoithram. ,his )rin%s us to this temporar" arran%ement theor" of 1hoithram. 31
AMDG
,he appellate court disposed of this matter in this +ise 1hoithram's claim that he purchased the t+o parcels of land for himself in 19;; )ut placed it in the name of his "oun%er )rother, !sh+ar, +ho is an American citiDen, as a temporar" arran%ement,' )ecause as a .ritish su)5ect he is dis7ualified under the 19&5 1onstitution to ac7uire real propert" in the hilippines, +hich is not so +ith respect to American citiDens in vie+ of the Ordinance Appended to the 1onstitution %rantin% them parit" ri%hts, there is nothing in the records sho/ing that Ish/ar ever agreed to such a te&porar! arrange&ent. During the entire period fro& *AB+, /hen the '( ) *+,,,,,. ,, /as trans&itted to Choithra&, and until Ish/ar filed a co&plaint against hi& in *AIE, or over *B !ears, Choithra& never &entioned of a te&porar! arrange&ent nor can he present an! &e&orandu& or /riting evidencing such te&porar! arrange&ent, promptin% plaintiff-appellant to o)serve2 ,he properties in 7uestion +hich are located in a prime industrial site in :%on%, asi%, -etro -anila have a present fair marAet value of no less than 22,&;/,$$$.$$ 3>'hi)its , to ,1/, inclusive4, and "et for such valua)le pieces of propert", 1hoithram +ho no+ )elatedl" that he purchased the same for himself did not document in +ritin% or in a memorandum the alle%ed temporar" arran%ement +ith !sh+ar' 3pp. /-/1, Appellant's .rief4. Such ver)al alle%ation of a temporar" arran%ement is simpl" impro)a)le and inconsistent. !t has repeatedl" )een held that important contracts made +ithout evidence are hi%hl" impro)a)le. The i&pro a ilit! of such te&porar! arrange&ent is rought to fore /hen /e consider that Choithra& has a son 7"aresh Feth&al 5a&nani8 /ho is an A&erican citizen under /hose na&e the properties in question could e registered, oth during the ti&e the contracts to sell /ere e.ecuted and at the ti&e a solute title over the sa&e /as to e delivered. At the time the A%reements +ere entered into +ith defendant Orti%as K 1o. in 19;;, Baresh, +as alread" 18 "ears old and conse7uentl", 1hoithram could have e'ecuted the deeds in trust for his minor son. .ut, he did not do this. ,hree 3&4 "ears, thereafter, or in 19;8 after Baresh had attained the a%e of 21, 1hoithram should have terminated the temporar" arran%ement +ith !sh+ar, +hich accordin% to him +ould )e effective onl" pendin% the ac7uisition of citiDenship papers. A%ain, he did not do an"thin%. >vidence to )e )elieved, said Cice 1hancellor Can 8leet of #e+ Jerse", must not onl" proceed from the mouth of a credi)le +itness, )ut it must )e credi)le in itselfFsuch as the common e'perience and o)servation of manAind can approve as pro)a)le under the circumstances. Ge have no test of the truth of human testimon", e'cept its conformit" to our Ano+led%e, o)servation and e'perience. Ghatever is repu%nant to these )elon%s to the miraculous and is outside of 5udicial co%niDance. 3(a%%ers vs. Can ("eA &* -.J. >7. 1&$, 1&24. Another factor that can )e counted a%ainst the temporar" arran%ement e'cuse is that upon the revocation on 3e ruar! G, *AH* of the Po/er of attorne! dated Fanuar! EG, *ABB in favor
of <avalrai and Choithra& ! Ish/ar, Choithra& /rote 7tsn, p. E*, (. Ful! *A, *AI+8 a letter dated Fune E+, *AH* 7=.hi its 5, 5-*, 5-E and 5-J8 i&ploring Ish/ar to e.ecute a ne/ po/er of attorne! in their favor.That if he did not /ant to give po/er, then Ish/ar could &ake a letter in favor of Dada and another in his favor so that in an! litigation involving the properties in question, oth of the& could represent Ish/ar and his /ife. Choithra& tried to convince Ish/ar to issue the po/er of attorne! in /hatever &anner he &a! /ant. In said letter no &ention /as &ade at all of an! te&porar! arrange&ent . On the contrar", said letter reco%niDe3s4 the e'istence of principal and attorne"-in-fact relationship )et+een !sh+ar and himself. 1hoithram +rote2 . . . do "ou Ano+ that if ! had predated papers +hat could "ou have done6 Or do "ou Ano+ that ! have man" papers si%ned )" "ou and if ! had done an"thin% or do then +hat can "ou do a)out it6' 1hoithram +as sa"in% that he could have repudiated the trust and ran a+a" +ith the properties of !sh+ar )" predatin% documents and !sh+ar +ould )e entirel" helpless. Be +as )itter as a result of !sh+ar's revocation of the po+er of attorne" )ut no mention +as made of an" temporar" arran%ement or a claim of o+nership over the properties in 7uestion nor +as he a)le to present an" memorandum or document to prove the e'istence of such temporar" arran%ement. Choithra& is also estopped in pais or ! deed fro& clai&ing an interest over the properties in question adverse to that of Ish/ar. Section &3a4 of 0ule 1&1 of the 0ules of 1ourt states that +henever a part" has, )" his o+n declaration, act, or omission intentionall" and deli)eratel" led another to )elieve a particular thin% true and act upon such )elief, he cannot in an" liti%ation arisin% out of such declaration, act or omission )e permitted to falsif" it.' Ghile estoppel )" deed is a )ar +hich precludes a part" to a deed and his privies from assertin% as a%ainst the other and his privies an" ri%ht of title in dero%ation of the deed, or fro& den!ing the truth of an! &aterial fact asserted in it 3&1 1.J.S. 195E 19 Am. Jur. ;$&4. Thus, defendants-appellees are not per&itted to repudiate their ad&issions and representations or to assert an! right or title in derogation of the deeds or fro& den!ing the truth of an! &aterial fact asserted in the 7*8 po/er of attorne! dated Fanuar! EG, *ABB 7=.hi it A8E 7E8 the Agree&ents of 3e ruar! *, *ABB and Ma! *B, *ABB 7=.hi its B and C8E and 7J8 the Contract of ?ease dated Fanuar! +, *AHE 7=.hi it P8. . . . ,he doctrine of estoppel is )ased upon the %rounds of pu)lic polic", fair dealin%, %ood faith and 5ustice, and its purpose is to for)id one to speaA a%ainst his o+n act, representations, or commitments to the in5ur" of one to +hom the" +ere directed and +ho reasona)l" relied thereon. ,he doctrine of estoppel sprin%s from e7uita)le principles and the e7uities in the case. !t is desi%ned to aid the la+ in the administration of 5ustice +here +ithout its aid in5ustice mi%ht result. !t has )een applied )" court +herever and +henever special circumstances of a case so demands' 3 hilippine #ational .anA vs. 1ourt of Appeals, 9/ S10A &5*, &;8 P19*9Q4. It /as onl! after the services of counsel has een o tained that Choithra& alleged for the first ti&e in his Ans/er that the 6eneral Po/er of attorne! 7Anne. A8 /ith the Contracts to (ell 7Anne.es B 32
AMDG
and C8 /ere &ade onl! for the sole purpose of assuring defendantsC acquisition and o/nership of the lots descri ed thereon in due ti&e under the la/E that said instru&ents do not reflect the true intention of the parties 7par. E, Ans/er dated Ma! J,, *AIJ8, seventeen 7*H8 long !ears fro& the ti&e he received the &one! trans&itted to hi& ! his rother , Ish/ar. Moreover, Choithra&Cs Cte&porar! arrange&ent,C ! /hich he clai&ed purchasing the t/o 7E8 parcels in question in *ABB and placing the& in the na&e of Ish/ar /ho is an A&erican citizen , to circu&vent the disqualification provision of aliens acquiring real properties in the Philippines under the *AJ+ Philippine Constitution, as Choithra& /as then a British su @ect, sho/ a palpa le disregard of the la/ of the land and to sustain the supposed Dte&porar! arrange&entD /ith Ish/ar /ould e sanctioning the perpetration of an illegal act and culpa le violation of the Constitution. Defendants-appellees like/ise violated the Anti-Du&&! ?a/ 7Co&&on/ealth Act *,I, as a&ended8,/hich provides in (ection * thereof that2 !n all cases in +hich an" constitutional or le%al provision re7uires hilippine or an" other specific citiDenship as a re7uisite for the e'ercise or en5o"ment of a ri%ht, franchise or privile%e, . . . an" alien or forei%ner profitin% there)", shall )e punished . . . )" imprisonment . . . and of a fine of not less than the value of the ri%ht, franchise or privile%es, +hich is en5o"ed or ac7uired in violation of the provisions hereof . . . "aving co&e to court /ith unclean hands, Choithra& &ust not e per&itted foist his Cte&porar! arrange&entC sche&e as a defense efore this court. Being in delicto, he does not have an! right /hatsoever eing shielded fro& his o/n /rong-doing , /hich is not so /ith respect to Ish/ar, /ho /as not a part! to such an arrange&ent. The falsit! of Choithra&Cs defense is further aggravated ! the &aterial inconsistencies and contradictions in his testi&on!. Ghile on Januar" 2&, 1985 he testified that he purchased the land in 7uestion on his o+n )ehalf 3tsn, p. /, S. Jan. 2&, 19854, in the Jul" 18, 1985 hearin%, for%ettin% pro)a)l" +hat he stated )efore, 1hoithram testified that he +as onl" an attorne"-in-fact of !sh+ar 3tsn, p. 5, S. Jul" 18, 19854. Also in the hearin% of Januar" 2&, 1985, 1hoithram declared that no)od" rented the )uildin% that +as constructed on the parcels of land in 7uestion 3tsn, pp. 5 and ;4, onl" to admit in the hearin% of Octo)er &$, 1985, that he +as in fact rentin% the )uildin% for 12,$$$. $$ per annu& 3tsn, p. &4. A%ain, in the hearin% of Jul" 19, 1985, 1hoithram testified that he had no Ano+led%e of the revocation of the o+er of Attorne" 3tsn, pp. 2$- 214, onl" to )acAtracA +hen confronted +ith the letter of June 25, 19*1 3>'hi)its 0 to 0-&4, +hich he admitted to )e in @his o+n +ritin%,@ indicatin% Ano+led%e of the revocation of the o+er of Attorne". ,hese inconsistencies are not minor )ut %o into the entire credi)ilit" of the testimon" of 1hoithram and the rule is that contradictions on a ver" crucial point )" a +itness, renders s testimon" incredi)le eople vs. 0afallo, 8$ hil. 224. #ot onl" this the doctrine of falsus in uno, falsus in o&ni us is full" applica)le as far as the testimon" of 1hoithram is concerned. ,he cardinal
rule, +hich has served in all a%es, and has )een applied to all conditions of men, is that a +itness +illfull" falsif"in% the truth in one particular, +hen upon oath, ou%ht never to )e )elieved upon the stren%th of his o+n testimon", +hatever he ma" assert 3:.S. vs. Os%ood 2* 8e). 1ase #o. 159*1-a, p. &;/4E 9onDales vs. -auricio, 52 hil, *284, for +hat %round of 5udicial relief can there )e left +hen the part" has sho+n such %ross insensi)ilit" to the difference )et+een ri%ht and +ron%, )et+een truth and falsehood6 3,he Santisima ,rinidad, * Gheat, 28&, 5 :.S. P=. ed.Q /5/4. ,rue, that 1hoithram's testimon" finds corro)oration from the testimon" of his )rother, #avalrai, )ut the same +ould not )e of much help to 1hoithram. #ot onl" is #avalrai an interested and )iased +itness, havin% admitted his close relationship +ith 1hoithram and that +henever he or 1hoithram had pro)lems, the" ran to each other 3tsn, pp. 1*-18, S. Sept. 2$, 19854, #avalrai has a pecuniar" interest in the success of 1hoithram in the case in 7uestion. .oth he and 1hoithram are )usiness partners in Jethmal and Sons and?or Jethmal !ndustries, +herein he o+ns ;$< of the compan" and 1hoithram, /$< 3p. ;2, Appellant's .rief4. Since the ac7uisition of the properties in 7uestion in 19;;, #avalrai +as occup"in% 1,2$$ s7uare meters thereof as a factor" site plus the fact that his son 3#avalrais4 +as occup"in% the apartment on top of the factor" +ith his famil" rent free e'cept the amount of l,$$$.$$ a month to pa" for ta'es on said properties 3tsn, p. 1*, S. Oct. &, 19854. !nherent contradictions also marAed #avalrai testimon". @Ghile the latter +as ver" meticulous in Aeepin% a receipt for the 1$,$$$.$$ that he paid !sh+ar as settlement in Jethmal !ndustries, "et in the alle%ed pa"ment of 1$$,$$$.$$ to !sh+ar, no receipt or voucher +as ever issued )" him 3tsn, p. 1*, S. Oct. &, 198&4. 15 Ge concur. ,he fore%oin% findin%s of facts of the 1ourt of Appeals +hich are supported )" the evidence is conclusive on this 1ourt. ,he 1ourt finds that !sh+ar entrusted :SJ15$,$$$.$$ to 1hoithram in 19;5 for investment in the realt" )usiness. Soon thereafter, a %eneral po+er of attorne" +as e'ecuted )" !sh+ar in favor of )oth #avalrai and 1hoithram. !f it is true that the purpose onl" is to ena)le 1hoithram to purchase realt" temporaril" in the name of !sh+ar, +h" the inclusion of their elder )rother #avalrai as an attorne"-in-fact6 ,hen, actin% as attorne"-in-fact of !sh+ar, 1hoithram purchased t+o parcels of land located in .arrio :%on% asi%, 0iDal, from Orti%as in 19;;. Gith the )alance of the mone" of !sh+ar, 1hoithram erected a )uildin% on said lot. Su)se7uentl", +ith a loan o)tained from a )anA and the income of the said propert", 1hoithram constructed three other )uildin%s thereon. Be mana%ed the )usiness and collected the rentals. (ue to their relationship of confidence it +as onl" in 19*$ +hen !sh+ar demanded for an accountin% from 1hoithram. And even as !sh+ar revoAed the %eneral po+er of attorne" on 8e)ruar" /, 19*1, of +hich 1hoithram +as dul" notified, 1hoithram +rote to !sh+ar on June 25, 19*1 re7uestin% that he e'ecute a ne+ po+er of attorne" in their favor. 16 Ghen !sh+ar did not respond thereto, 1hoithram nevertheless proceeded as such attorne"-in-fact to assi%n all the ri%hts and interest of !sh+ar to his dau%hter-in-la+ #irmla in 19*& +ithout the Ano+led%e and consent of !sh+ar. Orti%as in turn e'ecuted the correspondin% deeds of sale in favor of #irmla after full pa"ment of the purchase accomplice of the lots. 33
AMDG
!n the prefator" statement of their petition, 1hoithram pictured !sh+ar to )e so motivated )" %reed and un%ratefulness, +ho s7uandered the famil" )usiness in #e+ IorA, +ho had to turn to his +ife for support, accustomed to livin% in ostentation and +ho resorted to )lacAmail in filin% several criminal and civil suits a%ainst them. ,hese statements find no support and should )e stricAen from the records. !ndeed, the" are irrelevant to the proceedin%. -oreover, assumin% !sh+ar is of such a lo+ character as 1hoithram proposes to maAe this 1ourt to )elieve, +h" is it that of all persons, under his temporar" arran%ement theor", 1hoithram opted to entrust the purchase of valua)le real estate and )uilt four )uildin%s thereon all in the name of !sh+ar6 !s it not an unconscious emer%ence of the truth that this other+ise +a"+ard )rother of theirs +as on the contrar" a)le to raise enou%h capital throu%h the %enerosit" of his father-in-la+ for the purchase of the ver" properties in 7uestion6 As the appellate court aptl" o)served if trul" this temporar" arran%ement stor" is the onl" motivation, +h" !sh+ar of all people6 Gh" not the o+n son of 1hoithram, Baresh +ho is also an American citiDen and +ho +as alread" 18 "ears old at the time of purchase in 19;;6 ,he 1ourt a%rees +ith the o)servation that this theor" is an afterthou%ht +hich surfaced onl" +hen 1hoithram, #irmla and -oti filed their ans+er. Ghen !sh+ar asAed for an accountin% in 19*$ and revoAed the %eneral po+er of attorne" in 19*1, 1hoithram had a total chan%e of heart. Be decided to claim the propert" as his. Be caused the transfer of the ri%hts and interest of !sh+ar to #irmla. On his representation, Orti%as e'ecuted the deeds of sale of the properties in favor of #irmla. 1hoithram o)viousl" surmised !sh+ar cannot staAe a valid claim over the propert" )" so doin%. 1learl", this transfer to #irmla is fictitious and, as admitted )" 1hoithram, +as intended onl" to place the propert" in her name until 1hoithram ac7uires hilippine citiDenship. 1& Ghat appears certain is that it appears to )e a scheme of 1hoithram to place the propert" )e"ond the reach of !sh+ar should he successfull" claim the same. ,hus, it must )e strucA do+n. Gorse still, on Septem)er 2*, 199$ spouses !sh+ar filed an ur%ent motion for the issuance of a +rit of preliminar" attachment and to re7uire 1hoithram, et al. to su)mit certain documents, invitin% the attention of this 1ourt to the follo+in%2 a4 (onation )" 1hoithram of his 2,5$$ shares of stocA in 9eneral 9arments 1orporation in favor of his children on (ecem)er 29, 1989E 1' )4 Sale on Au%ust 2, 199$ )" 1hoithram of his 1$$ shares in .ifle' 3 hils.4, !nc., in favor of his childrenE 19 and c4 -ort%a%e on June 2$, 1989 )" #irmla throu%h her attorne"-infact, 1hoithram, of the properties su)5ect of this liti%ation, for the amount of J& -illion in favor of Overseas Boldin%, 1o. =td., 3Overseas for )revit"4, a corporation +hich appears to )e or%aniDed and e'istin% under and )" virtue of the la+s of 1a"man !slands, +ith a capital of onl" J1$$.$$ divided into 1$$ shares of J1.$$ each, and +ith address at .O. .o' 1*9$, 9rand 1a"man, 1a"man !slands. 2(
An opposition thereto +as filed )" 1hoithram, et al. )ut no documents +ere produced. A manifestation and repl" to the opposition +as filed )" spouses !sh+ar. All these acts of 1hoithram, et al. appear to )e fraudulent attempts to remove these properties to the detriment of spouses !sh+ar should the latter prevail in this liti%ation. On (ecem)er 1$, 199$ the court issued a resolution that su)stantiall" reads as follo+s2 1onsiderin% the alle%ations of petitioners !sh+ar Jethmal 0amnani and Son"a 0amnani that respondents 1hoithram Jethmal 0amnani, #irmla 0amnani and -oti 9. 0amnani have fraudulentl" e'ecuted a simulated mort%a%e of the properties su)5ect of this liti%ation dated June 2$, 1989, in favor of Overseas Boldin% 1o., =td. +hich appears to )e a corporation or%aniDed in 1a"man !slands, for the amount of J &,$$$,$$$.$$, +hich is much more than the value of the properties in liti%ationE that said alle%ed mort%a%ee appears to )e a @shell@ corporation +ith a capital of onl" J1$$.$$E and that this alle%ed transaction appears to )e intended to defraud petitioners !sh+ar and Son"a Jethmal 0amnani of an" favora)le 5ud%ment that this 1ourt ma" render in this caseE Gherefore the 1ourt 0esolved to issue a +rit of preliminar" in5unction en5oinin% and prohi)itin% said respondents 1hoithram Jethmal 0amnani, #irmla C. 0amnani, -oti 9. 0amnani and the Overseas Boldin% 1o., =td. from encum)erin%, sellin% or other+ise disposin% of the properties and improvements su)5ect of this liti%ation until further orders of the 1ourt. etitioners !sh+ar and Son"a Jethmal 0amnani are here)" re7uired to post a )ond of 1$$,$$$.$$ to ans+er for an" dama%es d respondents ma" suffer )" +a" of this in5unction if the 1ourt finall" decides the said petitioners are not entitled thereto. ,he Overseas Boldin% 1o., =td. +ith address at .O. .o' 1*9$ 9rand 1a"man, 1a"man !slands, is here)" !- =>A(>( as a respondent in these cases, and is here)" re7uired to S:.-!, its comment on the :r%ent -otion for the !ssuance of a Grit of reliminar" Attachment and -otion for roduction of (ocuments, the -anifestation and the 0epl" to the Opposition filed )" said petitioners, +ithin Si't" 3;$4 da"s after service )" pu)lication on it in accordance +ith the provisions of Section 1*, 0ule 1/ of the 0ules of 1ourt, at the e'pense of petitioners !sh+ar and Son"a Jethmal 0amnani. =et copies of this resolution )e served on the 0e%ister of (eeds of asi%, 0iDal, and the rovincial Assessor of asi%, 0iDal, )oth in -etro -anila, for its annotation on the transfer 1ertificates of ,itles #os. /$&15$ and /$&152 re%istered in the name of respondent #irmla C. 0amnani, and on the ta' declarations of the said properties and its improvements su)5ect of this liti%ation. 21 ,he re7uired in5unction )ond in the amount of 1$$,$$$.$$ +as filed )" the spouses !sh+ar +hich +as approved )" the 1ourt. ,he a)ove resolution of the 1ourt +as pu)lished in the -anila .ulletin issue of (ecem)er 1*, 199$ at the e'pense of said spouses. 22 On (ecem)er 19, 199$ the said resolution and petition for revie+ +ith anne'es in 9.0. #os. 85/9/ and 85/9; +ere transmitted to respondent Overseas, 9rand 1a"man !slands at its address c?o 1a"man 34
AMDG
Overseas ,rust 1o. =td., throu%h the :nited arcel Services .ill of =adin% 2% and it +as actuall" delivered to said compan" on Januar" 2&, 1991. 24 On Januar" 22, 1991, 1hoithram, et al., filed a motion to dissolve the +rit of preliminar" in5unction alle%in% that there is no )asis therefor as in the amended complaint +hat is sou%ht is actual dama%es and not a reconve"ance of the propert", that there is no reason for its issuance, and that acts alread" e'ecuted cannot )e en5oined. ,he" also offered to file a counter)ond to dissolve the +rit. A comment?opposition thereto +as filed )" spouses !sh+ar that there is )asis for the in5unction as the alle%ed mort%a%e of the propert" is simulated and the other donations of the shares of 1hoithram to his children are fraudulent schemes to ne%ate an" 5ud%ment the 1ourt ma" render for petitioners. #o comment or ans+er +as filed )" Overseas despite due notice, thus it is and must )e considered to )e in default and to have lost the ri%ht to contest the representations of spouses !sh+ar to declare the aforesaid alle%ed mort%a%e nun and void. ,his purported mort%a%e of the su)5ect properties in liti%ation appears to )e fraudulent and simulated. ,he stated amount of J& -illion for +hich it +as mort%a%ed is much more than the value of the mort%a%ed properties and its improvements. ,he alle%ed mort%a%eecompan" 3Overseas4 +as or%aniDed onl" on June 2;,1989 )ut the mort%a%e +as e'ecuted much earlier, on June 2$, 1989, that is si' 3;4 da"s )efore Overseas +as or%aniDed. Overseas is a @shelf@ compan" +orth onl" J1$$.$$. 25 !n the manifestation of spouses !sh+ar dated April 1, 1991, the 1ourt +as informed that this matter +as )rou%ht to the attention of the 1entral .anA 31.4 for investi%ation, and that in a letter of -arch 2$, 1991, the 1. informed counsel for spouses !sh+ar that said alle%ed forei%n loan of 1hoithram, et al. from Overseas has not )een previousl" approved?re%istered +ith the 1.. 26 O)viousl", this is another plo" of 1hoithram, et al. to place these properties )e"ond the reach of spouses !sh+ar should the" o)tain a favora)le 5ud%ment in this case. ,he 1ourt finds and so declares that this alle%ed mort%a%e should )e as it is here)" declared null and void. All these contemporaneous and su)se7uent acts of 1hoithram, et al., )etra" the +eaAness of their cause so the" had to taAe an steps, even as the case +as alread" pendin% in 1ourt, to render ineffective an" 5ud%ment that ma" )e rendered a%ainst them. ,he pro)lem is compounded in that respondent Orti%as is cau%ht in the +e) of this )itter fi%ht. !t had all the time )een dealin% +ith 1hoithram as attorne"-in-fact of !sh+ar. Bo+ever, evidence had )een adduced that notice in +ritin% had )een served not onl" on 1hoithram, )ut also on Orti%as, of the revocation of 1hoithram's po+er of attorne" )" !sh+ar's la+"er, on -a" 2/, 19*1. 2& A pu)lication of said notice +as made in the April 2, 19*1 issue of The Manila Ti&es for the information of the %eneral pu)lic. 2' Such notice of revocation in a ne+spaper of %eneral circulation is sufficient +arnin% to third persons includin% Orti%as. 29 A notice of revocation +as also re%istered +ith the Securities and >'chan%e 1ommission on -arch 29, 1 9*1. %(
!ndeed in the letter of 1hoithram to !sh+ar of June 25, 19*1, 1hoithram +as pleadin% that !sh+ar e'ecute another po+er of attorne" to )e sho+n to Orti%as +ho apparentl" learned of the revocation of 1hoithram's po+er of attorne". %1 (espite said notices, Orti%as nevertheless acceded to the representation of 1hoithram, as alle%ed attorne"-in-fact of !sh+ar, to assi%n the ri%hts of petitioner !sh+ar to #irmla. Ghile the primar" )lame should )e laid at the doorstep of 1hoithram, Orti%as is not entirel" +ithout fault. !t should have re7uired 1hoithram to secure another po+er of attorne" from !sh+ar. 8or recAlessl" )elievin% the pretension of 1hoithram that his po+er of attorne" +as still %ood, it must, therefore, share in the latter's lia)ilit" to !sh+ar. !n the ori%inal complaint, the spouses !sh+ar asAed for a reconve"ance of the properties and?or pa"ment of its present value and dama%es. %2 !n the amended complaint the" asAed, amon% others, for actual dama%es of not less than the present value of the real properties in liti%ation, moral and e'emplar" dama%es, attorne"s fees, costs of the suit and further pra"ed for @such other reliefs as ma" )e deemed 5ust and e7uita)le in the premises .%% ,he amended complaint contain the follo+in% positive alle%ations2 *. (efendant 1hoithram 0amnani, in evident )ad faith and despite due notice of the revocation of the 9eneral o+er of Attorne", Anne' '(@ hereof, caused the transfer of the ri%hts over the said parcels of land to his dau%hter-in-la+, defendant #irmla 0amnani in connivance +ith defendant Orti%as K 1o., the latter havin% a%reed to the said transfer despite receivin% a letter from plaintiffs' la+"er informin% them of the said revocationE cop" of the letter is hereto attached and made an inte%ral part hereof as Anne' @B@E 8. Defendant <ir&la 5a&nani having acquired the aforesaid propert! ! fraud is, ! force of la/,considered a trustee of an i&plied trust for the enefit of plaintiff and is o liged to return the sa&e to the latter2 9. Several efforts +ere made to settle the matter +ithin the famil" )ut defendants 31hoithram 0amnani, #irmla 0amnani and -oti 0amnani4 refused and up to no+ fail and still refuse to cooperate and respond to the sameE thus, the present caseE 1$. !n addition to havin% )een deprived of their ri%hts over the properties 3descri)ed in par. & hereof4, plaintiffs, )" reason of defendants' fraudulent act, suffered actual dama%es ! /a! of lost rental on the propert! +hich defendants 31hoithram 0amnani, #irmla 0amnani and -oti 0amnani have collected for themselvesE %4 !n said amended complaint, spouses !sh+ar, amon% others, pra" for pa"ment of actual dama%es in an amount no less than the value of the properties in liti%ation instead of a reconve"ance as sou%ht in the ori%inal complaint. Apparentl" the" opted not to insist on a reconve"ance as the" are American citiDens as alle%ed in the amended complaint. ,he alle%ations of the amended complaint a)ove reproduced clearl" spelled out that the transfer of the propert" to #irmla +as fraudulent and that it should )e considered to )e held in trust )" #irmla for spouses !sh+ar. As a)ove-discussed, this alle%ation is +ell-taAen and the transfer of the propert" to #irmla should )e considered to 35
AMDG
have created an implied trust )" #irmla as trustee of the propert" for the )enefit of spouses !sh+ar. %5 ,he motion to dissolve the +rit of preliminar" in5unction filed )" 1hoithram, et al. should )e denied. !ts issuance )" this 1ourt is proper and +arranted under the circumstances of the case. :nder Section &3c4 0ule 58 of the 0ules of 1ourt, a +rit of preliminar" in5unction ma" )e %ranted at an" time after commencement of the action and )efore 5ud%ment +hen it is esta)lished2 3c4 that the defendant is doin%, threatens, or is a)out to do, or is procurin% or sufferin% to )e done, some act pro)a)l" in violation of plaintiffs's ri%hts respectin% the su)5ect of the action, and tendin% to render the 5ud%ment ineffectual. As a)ove e'tensivel" discussed, 1hoithram, et al. have committed and threaten to commit further acts of disposition of the properties in liti%ation as +ell as the other assets of 1hoithram, apparentl" desi%ned to render ineffective an" 5ud%ment the 1ourt ma" render favora)le to spouses !sh+ar. ,he purpose of the provisional remed" of preliminar" in5unction is to preserve the status quo of the thin%s su)5ect of the liti%ation and to protect the ri%hts of the spouses !sh+ar respectin% the su)5ect of the action durin% the pendenc" of the Suit %6 and not to o)struct the administration of 5ustice or pre5udice the adverse part". %& !n this case for dama%es, should 1hoithram, et al. continue to commit acts of disposition of the properties su)5ect of the liti%ation, an a+ard of dama%es to spouses !sh+ar +ould there)" )e rendered ineffectual and meanin%less. %' 1onse7uentl", if onl" to protect the interest of spouses !sh+ar, the 1ourt here)" finds and holds that the motion for the issuance of a +rit of preliminar" attachment filed )" spouses !sh+ar should )e %ranted coverin% the properties su)5ect of this liti%ation. Section 1, 0ule 5* of the 0ules of 1ourt provides that at the commencement of an action or at an" time thereafter, the plaintiff or an" proper part" ma" have the propert" of the adverse part" attached as securit" for the satisfaction of an" 5ud%ment that ma" )e recovered, in, amon% others, the follo+in% cases2 3d4 !n an action a%ainst a part" +ho has )een %uilt" of a fraud in contractin% the de)t or incurrin% the o)li%ation upon +hich the action is )rou%ht, or in concealin% or disposin% of the propert" for the taAin%, detention or conversion of +hich the action is )rou%htE 3e4 !n an action a%ainst a part" +ho has removed or disposed of his propert", or is a)out to do so, +ith intent to defraud his creditorsE . . . Ceril", the acts of 1hoithram, et al. of disposin% the properties su)5ect of the liti%ation disclose a scheme to defraud spouses !sh+ar so the" ma" not )e a)le to recover at all %iven a 5ud%ment in their favor, the re7uirin% the issuance of the +rit of attachment in this instance. #evertheless, under the peculiar circumstances of this case and despite the fact that 1hoithram, et al., have committed acts +hich demonstrate their )ad faith and scheme to defraud spouses !sh+ar and Son"a of their ri%htful share in the properties in liti%ation, the
1ourt cannot i%nore the fact that 1hoithram must have )een motivated )" a stron% conviction that as the industrial partner in the ac7uisition of said assets he has as much claim to said properties as !sh+ar, the capitalist partner in the 5oint venture. ,he scenario is clear. Spouses !sh+ar supplied the capital of J15$,$$$.$$ for the )usiness. ,he" entrusted the mone" to 1hoithram to invest in a profita)le )usiness venture in the hilippines. 8or this purpose the" appointed 1hoithram as their attorne"-in-fact. 1hoithram in turn decided to invest in the real estate )usiness. Be )ou%ht the t+o 324 parcels of land in 7uestion from Orti%as as attorne"-in-fact of !sh+ar- !nstead of pa"in% for the lots in cash, he paid in installments and used the )alance of the capital entrusted to him, plus a loan, to )uild t+o )uildin%s. Althou%h the )uildin%s +ere )urned later, 1hoithram +as a)le to )uild t+o other )uildin%s on the propert". Be rented them out and collected the rentals. ,hrou%h the industr" and %enius of 1hoithram, !sh+ar's propert" +as developed and improved into +hat it is no+Fa valua)le asset +orth millions of pesos. As of the last estimate in 1985, +hile the case +as pendin% )efore the trial court, the marAet value of the properties is no less than 22,&$/,$$$.$$. %9 !t should )e +orth much more toda". Ge have a situation +here t+o )rothers en%a%ed in a )usiness venture. One furnished the capital, the other contri)uted his industr" and talent. Justice and e7uit" dictate that the t+o share e7uall" the fruit of their 5oint investment and efforts. erhaps this Solomonic solution ma" pave the +a" to+ards their reconciliation. .oth +ould stand to %ain. #o one +ould end up the loser. After all, )lood is thicAer than +ater. Bo+ever, the 1ourt cannot 5ust close its e"es to the devious machinations and schemes that 1hoithram emplo"ed in attemptin% to dispose of, if not dissipate, the properties to deprive spouses !sh+ar of an" possi)le means to recover an" a+ard the 1ourt ma" %rant in their favor. Since 1hoithram, et al. acted +ith evident )ad faith and malice, the" should pa" moral and e'emplar" dama%es as +ell as attorne"'s fees to spouses !sh+ar. GB>0>8O0>, the petition in 9.0. #o. 85/9/ is (>#!>(, +hile the petition in 9.0. #o. 85/9; is here)" %iven due course and 90A#,>(. ,he 5ud%ment of the 1ourt of Appeals dated Octo)er 18, 1988 is here)" modified as follo+s2 1. (ividin% e7uall" )et+een respondents spouses !sh+ar, on the one hand, and petitioner 1hoithram 0amnani, on the other, 3in 9.0. #o. 85/9/4 the t+o parcels of land su)5ect of this liti%ation, includin% all the improvements thereon, presentl" covered )" transfer 1ertificates of ,itle #os. /$&15$ and /$&152 of the 0e%istr" of (eeds, as +ell as the rental income of the propert" from 19;* to the present. 2. etitioner 1hoithram Jethmal 0amnani, #irmla C. 0amnani, -oti 1. 0amnani and respondent Orti%as and 1ompan", =imited artnership 3in 9.0. #o. 85/9;4 are ordered solidaril" to pa" in cash the value of said one-half 31?24 share in the said land and improvements pertainin% to respondents spouses !sh+ar and Son"a at their fair marAet value at the time of the satisfaction of this 5ud%ment )ut in no case less than their value as appraised )" the Asian Appraisal, !nc. in its Appraisal 0eport dated Au%ust 1985 36
AMDG
3>'hi)its , to ,-1/, inclusive4. &. etitioners 1hoithram, #irmla and -oti 0amnani and respondent Orti%as K 1o., =td. artnership shall also )e 5ointl" and severall" lia)le to pa" to said respondents spouses !sh+ar and Son"a 0amnani one-half 31?24 of the total rental income of said properties and improvements from 19;* up to the date of satisfaction of the 5ud%ment to )e computed as follo+s2 a. On .uildin% 1 occupied )" >ppie's 1reation and Jethmal !ndustries from 19;* to 19*&, inclusive, )ased on the 19;* to 19*& monthl" rentals paid )" >ppie's 1reationE ). Also on .uildin% 1 a)ove, occupied )" Jethmal !ndustries and =avine from 19*/ to 19*8, the rental incomes )ased on then rates prevailin% as sho+n under >'hi)it @ @E and from 19*9 to 1981, )ased on then prevailin% rates as indicated under >'hi)it @M@E c. On .uildin% A occupied )" ,rans+orld Xnittin% -ills from 19*2 to 19*8, the rental incomes )ased upon then prevailin% rates sho+n under >'hi)it @ @, and from 19*9 to 1981, )ased on prevailin% rates per >'hi)it @M@E d. On the t+o .a"s .uildin%s occupied )" Si%ma--ari+asa from 19*2 to 19*8, the rentals )ased on the =ease 1ontract, >'hi)it @ @, and from 19*9 to 198$, the rentals )ased on the =ease 1ontract, >'hi)it @M@. and thereafter commencin% 1982, to account for and turn over the rental incomes paid or ou%ht to )e paid for the use and occupanc" of the properties and all improvements totallin% 1$,$/8 s7. m., )ased on the rate per s7uare meter prevailin% in 1981 as indicated annuall" cumulative up to 198/. ,hen, commencin% 1985 and up to the satisfaction of the 5ud%ment, rentals shall )e computed at ten percent 31$<4 annuall" of the fair marAet values of the properties as appraised )" the Asian Appraisals, !nc. in Au%ust 1985. 3>'hi)its , to ,-1/, inclusive.4 /. ,o determine the marAet value of the properties at the time of the satisfaction of this 5ud%ment and the total rental incomes thereof, the trial court is here)" directed to hold a hearin% +ith deli)erate dispatch for this purpose onl" and to have the 5ud%ment immediatel" e'ecuted after such determination. 5. etitioners 1hoithram, #irmla and -oti, all surnamed 0amnani, are also 5ointl" and severall" lia)le to pa" respondents !sh+ar and Son"a 0amnani the amount of 5$$,$$$.$$ as moral dama%es, 2$$,$$$.$$ as e'emplar" dama%es and attorne"'s fees e7ual to 1$< of the total a+ard. to said respondents spouses. ;. ,he motion to dissolve the +rit of preliminar" in5unction dated (ecem)er 1$, 199$ filed )" petitioners 1hoithram, #irmla and -oti, all surnamed 0amnani, is here)" (>#!>( and the said in5unction is here)" made permanent. =et a +rit of attachment )e issued and levied a%ainst the properties and improvements su)5ect of this liti%ation to secure the pa"ment of the a)ove a+ards to spouses !sh+ar and Son"a. *. ,he mort%a%e constituted on the su)5ect propert" dated June 2$,
1989 )" petitioners 1hoithram and #irmla, )oth surnamed 0amnani in favor of respondent Overseas Boldin%, 1o. =td. 3in 9.0. #o. 85/9;4 for the amount of J&-- is here)" declared null and void. ,he 0e%ister of (eeds of asi%, 0iDal, is directed to cancel the annotation of d mort%a%e on the titles of the properties in 7uestion. 8. Should respondent Orti%as 1o., =td. artnership pa" the a+ards to !sh+ar and Son"a 0amnani under this 5ud%ment, it shall )e entitled to reim)ursement from petitioners 1hoithram, #irmla and -oti, all surnamed 0amnani. 9. ,he a)ove a+ards sha% )ear le%al rate of interest of si' percent 3;<4 per annu& from the time this 5ud%ment )ecomes final until the" are full" paid )" petitioners 1hoithram 0amnani, #irmla C. 0amnani, -oti 1. 0amnani and Orti%as, 1o., =td. artnership. Said petitioners 1hoithram, et al. and respondent Orti%as shall also pa" the costs.
37
AMDG
G.R. No. LA2'6%% -ar76 %(, 19&1 !ENTRAL S"RETY and NS"RAN!E !O-$ANY, petitioner, vs. !. N. +ODGES and T+E !O"RT O# A$$EALS, respondents. Appeal )" certiorari from a decision of the 1ourt of Appeals, the dispositive part of +hich reads as follo+s2 GB>0>8O0>, in vie+ of the fore%oin% considerations, the decision appealed from is modified and 5ud%ment is here)" rendered a%ainst 1entral Suret" K !nsurance 1ompan"2 3a4 ,o pa" plaintiff 1. #. Bod%es the sum of 1*,82;.$8 +ith interest thereon at the rate of 12< per annum from Octo)er 2/, 1955 until full" paidE 3)4 ,o pa" plaintiff 1. #. Bod%es the sum of 1,551.;$ as attorne"'s feesE and 3c4 ,o pa" the costs. ,he main facts are not disputed. rior to Januar" 15, 195/, lots #os. 122; and 1182 of the 1adastral Surve" of ,alisa", #e%ros Occidental, had )een sold )" 1. #. Bod%es to Cicente -. =a"son, for the sum of /&,$$$.9$, pa"a)le on installments. As of Januar" 15, 195/, the outstandin% )alance of =a"son's de)t, after deductin% the installments paid )" him prior thereto, amounted to 15,51;.$$. !n order that he could use said lots as securit" for a loan he intended to appl" from a )anA, =a"son persuaded Bod%es to e'ecute in his 3=a"son's4 favor a deed of a)solute sale over the properties, +ith the understandin% that he +ould put up a suret" )ond to %uarantee the pa"ment of said )alance. Accordin%l", on the date a)ove-mentioned, =a"son e'ecuted, in favor of Bod%es, a promissor" note for 15,51;.$$, +ith interest thereon at the rate of 1< per month, and the sum of 1,551.;$, for attorne"'s fees and costs, in case of default in the pa"ment of the principal or interest of said note. ,o %uarantee the same, on Januar" 2&, 195/, the 1entral Suret" and !nsurance 1ompan" F hereinafter referred to as petitioner F throu%h the mana%er of its )ranch office in !loilo, -rs. 0osita -esa, e'ecuted in favor of Bod%es the suret" )ond Anne' ., +hich +as %ood for t+elve 3124 months from the date thereof. Ghen =a"son defaulted in the dischar%e of his aforesaid o)li%ation, Bod%es demanded pa"ment from the petitioner, +hich, despite repeated e'tensions of time %ranted thereto, at its re7uest, failed to honor its commitments under the suret" )ond. On Octo)er 2/, 1955, Bod%es commenced, therefore. the present action, in the 1ourt of 8irst !nstance of !loilo, a%ainst =a"son and petitioner herein, to recover from them, 5ointl" and severall", the sums of 1*,82;.$8, representin% the principal and interest due up to said date, and 1,551.;$, as attorne"'s fees. !n his ans+er to the complaint, =a"son admitted the formal alle%ations and denied the other alle%ations thereof. Bavin% failed to file its ans+er +ithin the re%lementar" period, the petitioner +as, on Januar" 18, 195;, declared in default. Ghen the case +as called for trial, insofar as =a"son +as concerned, the latter did not appear, and Bod%es +as allo+ed to introduce his evidence.
,hen the trial court rendered a partial decision a%ainst =a"son, petitioner havin%, in the meantime, filed a motion to set aside the order of default, +hich motion +as still pendin% resolution.l1/phK*.LMt ,hereafter, said motion +as denied, and upon presentation of the evidence of Bod%es a%ainst herein petitioner, 5ud%ment +as rendered a%ainst the latter as pra"ed for in the complaint. ,hereupon, petitioner filled a motion for reconsideration and a motion for relief under 0ule &8. Actin% thereon, Bis Bonor, the trial Jud%e, later set aside its decision a%ainst the petitioner and admitted its ans+er, attached to the motion to set aside the order of default. !n its ans+er, petitioner disclaimed lia)ilit" under the suret" )ond in 7uestion, upon the %round 3a4 that the same is null and void, it havin% )een issued )" -rs. 0osita -esa after her authorit" therefor had )een +ithdra+n on -arch 15, 1952E 3)4 that even under her ori%inal authorit" -rs. -esa could not issue suret" )onds in e'cess of 8,$$$.$$ +ithout the approval of petitioner's main office +hich +as not %iven to the suret" )ond in favor of Bod%esE and 3c4 that the present action is )arred )" the provision in the suret" )ond to the effect that all claims and actions thereon should )e filed +ithin three 3&4 months from the date of its e'piration on Januar" 2&, 1955. etitioner, moreover, set up a counterclaim for dama%es. !n due course, thereafter, the trial court rendered a decision2 a4 1ondenando a la demandada 1entral Suret" K !nsurance 1o. 7ue pa%ue al demandante la desde la 8,$$$.$$ con intereses le%ales a contar desde la fecha de la demanda F 2/ de Octu)re de 1955E )4 1ondenando a la misma demandada 7ue pa%ue al de mindante la suma de ;$$.$$ en concepto de honorarios de a)o%adoE " c4 1ondenindo ademas a la misma demandada 7ue pa%ue las costas del 5uicio. Bod%es appealed to the 1ourt of Appeals 31A-9.0. #o. =-2/;8/-04 from this decision, insofar as it limited petitioners lia)ilit" to 8,$$$.$$. etitioner, also, appealed to said 1ourt upon the %round that the trial court had erred2 3a4 in holdin% petitioner lia)le under a contract entered into )" its a%ent in e'cess of her authorit"E 3)4 in sentencin% petitioner to pa" Bod%es the sum of 8,$$$.$$ +ith interest thereon, in addition to attorne"'s fees and the costsE and 3c4 in @not a+ardin%@ petitioner's counterclaim. After appropriate proceedin%s, the 1ourt of Appeals rendered the decision a)ove referred to, from +hich petitioner has appealed to this 1ourt, alle%in% that the 1ourt of Appeals has erred2 314 in findin% that petitioner @+as lia)le on a )ond issued )" an a%ent +hose authorit" ... had alread" )een +ithdra+n and revoAed@E 324 @in appl"in% the rule on implied admission )" reason of failure to den" under oath the authenticit" of a pleaded document@E and 3&4 @in not considerin% the le%al effect of the +aiver contained in the disputed )ond and in not disposin% of this case under the li%ht of such +aiver.@ ,he first assi%nment of error is predicated upon the fact that prior to Januar" 2&, 195/, +hen the suret" )ond involved in this case +as e'ecuted, or on -arch 15, 1952, petitioner herein had +ithdra+n the authorit" of its )ranch mana%er in the 1it" of !loilo, -rs. 0osita -esa, to issue, inter alia, suret" )onds and that, accordin%l", the suret" 38
AMDG
)ond, cop" of +hich +as attached to the complaint as Anne' ., is null and void. On this point, the 1ourt of Appeals had the follo+in% to sa"2 ... +e are of the opinion that said suret" )ond is valid. !n the first place, there appears to )e no sho+in% that the revocation of authorit" +as made Ano+n to the pu)lic in %eneral )" pu)lication, nor +as Bod%es notified of such revocation despite the fact that he +as a re%ular client of the firm. And even if Bod%es +ould have in7uired from -rs. -esa as to her authorit" to issue said )ond, +e dou)t if she +ould disclose the contents of the letter of -arch 15, 1952 in vie+ of 1entral Suret"'s claim that she +as committin% irre%ularities in her remittances to the main office. Secondl", some suret" )onds issued )" -rs. -esa in favor of Bod%es after her authorit" had alle%edl" )een curtailed, +ere honored )" the 1entral Suret" despite the fact that these +ere not reported to the main office at the time of their issuance. ,hese accounts +ere paid on Januar" &1, 195*, to +it2 8elicito and =i)ertad arra issued on Au%ust 1;, 1952E >strella Aua"an issued on #ovem)er 1;, 195&E (ominador Jordan issued on Au%ust 2;, 195&E and =adislao =achica issued on 8e)ruar" 28, 195&. 3>'hs. 8, 9, B, ! and J4. ." these acts 1entral Suret" ratified -rs. -esa's unauthoriDed acts and as such it is no+ estopped from settin% forth -rs. -esa's lacA of authorit" to issue suret" )onds after -arch 15, 1952. !t has )een held that althou%h the a%ent ma" have acted )e"ond the scope of his authorit", or ma" have acted +ithout authorit" at all, the principal ma" "et su)se7uentl" see fit to reco%niDe and adopt the act as his o+n. 0atification )ein% a matter of assent to and approval of the act as done on account of the person ratif"in% an" +ords or acts +hich sho+ such assent and approval are ordinaril" sufficient. 3Sta. 1atalina vs. >spitero, 1A-9.0. #o. 2*$*5-0, April 28, 19;/, citin% !C adilla, 1!C!= 1O(>. 1959 ed., pp. /*8-/*9E 0o'as vs. Cillanueva, 1A-9.0. #o. 18928-0, June 2$, 19584. -oreover, the relocation of a%enc" does not pre5udice third persons +ho acted in %ood faith +ithout Ano+led%e of the revocation. 3Joson vs. 9arcia, 1A-9.0. #o. 29&&;-0. #ov. 19, 19;24. !ndeed, Article 1922 of our 1ivil 1ode provides2 !f the a%ent had %eneral po+ers, revocation of the a%enc" does not pre5udice third persons +ho acted in %ood faith and +ithout Ano+led%e of the revocation. #otice of the revocation in a ne+spaper of %eneral circulation is a sufficient +arnin% to third persons. !t is not disputed that petitioner has not caused to )e pu)lished an" notice of the revocation of -rs. -esa's authorit" to issue suret"
)onds on its )ehalf, not+ithstandin% the fact that the po+ers of -rs. -esa, as its )ranch mana%er in !loilo, +ere of a %eneral nature, for she had e'clusive authorit", in the 1it" of !loilo, to represent petitioner herein, not +ith a particular person, )ut +ith the pu)lic in %eneral, @in all the ne%otiations, transactions, and )usiness in +herein the 1ompan" ma" la+full" transact or en%a%e on su)5ect onl" to the restrictions specified in their a%reement, cop" of +hich +as attached to petitioner's ans+er as Anne' &. 1 1ontrar" to petitioner's claim, Article 1922 applies +henever an a%ent has %eneral po+ers, not merel" +hen the principal has pu)lished the same, apart from the fact that the openin% of petitioner's )ranch office amounted to a pu)lication of the %rant of po+ers to the mana%er of said office. ,hen, a%ain, )" honorin% several suret" )onds issued in its )ehalf )" -rs. -esa su)se7uentl" to -arch 15, 1952, petitioner induced the pu)lic to )elieve that she had authorit" to issue such )onds. As a conse7uence, petitioner is no+ estopped from pleadin%, particularl" a%ainst a re%ular customer thereof, liAe Bod%es, the a)sence of said authorit". =et us no+ taAe up the third assi%nment of error and defer, until after the same has )een disposed of, the consideration of the second assi%nment of error. :nder the third assi%nment of error, petitioner maintains that, havin% )een instituted on Octo)er 2/, 1955 F or nine 394 months after the e'piration of petitioner's suret" )ond on Januar" 2&, 1955 F the present action is )arred )" the provision in said )ond to the effect that it2 ...+ill not )e lia)le for an" claim not discovered and presented to the 1ompan" +ithin three 3&4 months from the e'piration of this )ond and that the o)li%ee here)" +aives his ri%ht to file an" court action a%ainst the suret" after the termination of the period of three months a)ovementioned. !nterpretin% an identical provision, 2 court has, ho+ever, held @that the three-month period@ prescri)ed therein @esta)lished onl" a condition precedent, F not a limitation of action,@ and that, +hen a claim has )een presented +ithin said period, the action to enforce the claim ma" )e @filed +ithin the statutor" time of prescription.@ ,his vie+ +as clarified in a su)se7uent case, % in the sense that the a)ove-7uoted provision +as @... merel" interpreted to mean that presentation of the claim +ithin three months +as a condition precedent to the filin% of a court action. Since the o)li%ee in said case presented his claim seasona)l" althou%h it did not file the action +ithin the same period, this 1ourt ruled that the stipulation in the )ond concernin% the limitation )ein% am)i%uous, the am)i%uit" should )e resolved a%ainst the suret", +hich drafted the a%reement, and that the action could e filed /ithin the statutor! period of prescription.@ 4 !n the case at )ar, it is not contended that Bod%es had not presented his claim +ithin three 3&4 months from Januar" 2&, 1955. !n fact, he had repeatedl" demanded from petitioner herein compliance +ith its o)li%ations under the suret" )ond in 7uestion, and, in repl" to such demands, petitioner asAed e'tensions of time, on Januar" 29, 8e)ruar" 1;, -arch 15, -a" &, June 1;, Jul" 1 and 15, and Octo)er 15, 1955. 5 After thus securin% e'tensions of time, even )e"ond three 3&4 months from Januar" 2&, 1955, petitioner cannot plead the lapse of said period to )ar the present action. ,he second assi%nment of error assails the findin% of the 1ourt of 39
AMDG
Appeals to the effect that the petitioner is lia)le for the full amount of suret" )ond F despite the fact that it e'ceeded the sum of 8,$$$.$$ and hence, re7uired, for its validit" and )indin% effect as a%ainst petitioner herein, the e'press approval and confirmation of its -anila office, +hich +ere not secured F in vie+ of petitioner's failure to den" under oath the %enuineness and due e'ecution of said )ond, cop" of +hich +as attached to the complaint. !t is true that, pursuant to section 8 of 0ule 8 of the 0ules of 1ourt2 Ghen an action or defense is founded upon a +ritten instrument, copied in or attached to the correspondin% pleadin% as provided in the precedin% section, the %enuineness and due e'ecution of the instrument shall )e deemed admitted unless the adverse part", under oath, specificall" denies them, and sets forth +hat he claims to )e the factsE )ut this provision does not appl" +hen the adverse part" does not appear to )e a part" to the instrument or +hen compliance +ith an order for an inspection of the ori%inal instrument is refused. Ge have ho+ever, held that2 ... +here a case has )een tried in complete disre%ard of the rule and the plaintiff havin% pleaded a document )" cop", presents oral evidence to prove the due e'ecution of the document as +ell as the a%ent's authorit" and no o)5ections are made to the defendant's evidence in refutation, the rule +ill )e considered +aived. 6 ,he reason for such vie+ +as e'plained )" this 1ourt as follo+s2 .efore enterin% upon a discussion of the 7uestions raised )" the assi%nments of error, +e ma" dra+ attention to a matter +hich has not )een mentioned either )" counsel or )" the court )elo+, )ut +hich, to prevent misunderstandin%, should )e )riefl" e'plained2 !t is averred in the complaint that it is accompanied )" a cop" of the contract )et+een the parties 3>'hi)it A4 +hich cop", )" the terms of the complaint, is made a part thereof. ,he cop" is not set forth in the )ill of e'ceptions and aside from said averment, there is no indication that the cop" actuall" accompanied the complaint, )ut an e'amination of the record of the case in the 1ourt of 8irst !nstance sho+s that a translation of the contract +as attached to the complaint and served upon the defendant. As this translation ma" )e considered a cop" and as the defendant failed to den" its authenticit" under oath, it +ill perhaps )e said that under section 1$& of the 1ode of 1ivil rocedure the omission to so den" it constitutes an admission of the %enuineness and due e'ecution of the document as +ell as of the a%ent's authorit" to )ind the defendant. 3-erchant vs. !nternational .anAin% 1orporation, ; hil. &1/.4
!n ordinar" circumstances that +ould )e true. .ut this case appears to have )een tried upon the theor" that the rule did not appl"E at least, it +as +holl" overlooAed or disre%arded )" )oth parties.l1/phK*.LMt ,he plaintiffs at the )e%innin% of the trial presented a num)er of +itnesses to prove the due e.ecution of the docu&ent as /ell as the agentCs authorit!N no o @ection /ere &ade to the defendantCs evidence in refutationN all no e.ceptions takenN and the &atter is not &entioned in the decision of the trial court. ,he o)5ect of the rule is 'to relieve a part" of the trou)le and e'pense of provin% in the first instance an alle%ed fact, the e'istence or none'istence of +hich is necessaril" +ithin the Ano+led%e of the adverse part", and of the necessit" 3to his opponent's case4 of esta)lishin% +hich such adverse part" is notified )" his opponent's pleadin%.' 3#er" =im-1hin%co vs. ,erarira", 5 hil., at p. 12/.4 ,he plaintiff ma", of course, +aive the rule and that is +hat he must )e considered to have done in the present case )" introducin% evidence as to the e'ecution of the document and failin% to o)5ect to the defendant's evidence in refutationE all this evidence is no+ competent and the case must )e decided thereupon. .... #othin% of +hat has here )een said is in conflict +ith former decisions of this courtE it +ill )e found upon e'amination that in all cases +here the applica)ilit" of the rule has )een sustained the part" invoAin% it has relied on it in the court )elo+ and conducted his case accordin%l".@ & !n the case at )ar, the parties acted in complete disre%ard of or +holl" overlooAed the rule a)ove-7uoted. Bod%es had neither o)5ected to the evidence introduced )" petitioner herein in order to prove that -rs. -esa had no authorit" to issue a suret" )ond, much less one in e'cess of 8,$$$.$$, and tooA no e'ception to the admission of said evidence. Bence, Bod%es must )e deemed to have +aived the )enefits of said rule and petitioner herein cannot )e held lia)le in e'cess of the sum of 8,$$$.$$. GB>0>8O0>, +ith the modification that petitioner's lia)ilit" to Bod%es is limited to said sum of 8,$$$.$$ the period, the petitioner +as, on Januar" 18, 195;, declared it is here)" affirmed in all other respects, +ithout costs. !t is so ordered.
40
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G.R. No. 141525 September 2, 2((5 !ARLOS SAN!+E4, etitioners, vs. -ED !ARD $+ L $$ NES, N!., DR. N !ANOR -ONTOYA and !ARLOS E/ER! TO, 0espondent. (>1!S!O# SANDO*ALAG"T ERRE4, .&2 ,his petition for revie+ on certiorari seeAs to reverse the (ecision of the 1ourt of Appeals dated 8e)ruar" 2/, 1999 and its 0esolution dated Januar" 12, 2$$$ in 1A-9.0. 1C #o. /*;81. ,he facts, as esta)lished )" the trial court and affirmed )" the 1ourt of Appeals, follo+2 Sometime in 198*, -edicard hilippines, !nc. 3-edicard4, respondent, appointed petitioner as its special corporate a%ent. As such a%ent, -edicard %ave him a commission )ased on the @cash )rou%ht in.@ !n Septem)er, 1988, throu%h petitionerRs efforts, -edicard and :nited =a)oratories 9roup of 1ompanies 3:nila)4 e'ecuted a Bealth 1are ro%ram 1ontract. :nder this contract, :nila) shall pa" -edicard a fi'ed monthl" premium for the health insurance of its personnel. :nila) paid -edicard /,1/8,$$5.$$ representin% the premium for one 314 "ear. -edicard then handed petitioner 18< of said amount or */;,;/$.9$ representin% his commission. A%ain, throu%h petitionerRs initiative, the a%enc" contract )et+een -edicard and :nila) +as rene+ed for another "ear, or from Octo)er 1, 1989 to Septem)er &$, 199$, incorporatin% therein the increase of premium from /,1/8,$$5.$$ to *,/5;,89;.$$. -edicard paid petitioner 1,&/2,2/1.$$ as his commission. rior to the e'piration of the rene+ed contract, -edicard proposed to :nila), throu%h petitioner, an increase of the premium for the ne't "ear. :nila) re5ected the proposal @for the reason that it +as too hi%h,@ promptin% (r. #icanor -onto"a 3-edicardRs president and %eneral mana%er4, also a respondent, to re7uest petitioner to reduce his commission, )ut the latter refused. !n a letter dated Octo)er &, 199$, :nila), throu%h 1arlos >5ercito, another respondent, confirmed its decision not to rene+ the health pro%ram contract +ith -edicard. -ean+hile, in order not to pre5udice its personnel )" the termination of their health insurance, :nila), throu%h respondent >5ercito, ne%otiated +ith (r. -onto"a and other officers of -edicard, to discuss +a"s in order to continue the insurance covera%e of those personnel. :nder the ne+ scheme, :nila) shall pa" -edicard onl" the amount correspondin% to the actual hospitaliDation e'penses incurred )" each personnel plus 15< service fee for usin% -edicard facilities, +hich amount shall not )e less than *8$,$$$.$$.
1
-edicard did not %ive petitioner an" commission under the ne+ scheme. !n a letter dated -arch 15, 1991, petitioner demanded from -edicard pa"ment of &&8,$$$.$$ as his commission plus dama%es, )ut the latter refused to heed his demand. ,hus, petitioner filed +ith the 0e%ional ,rial 1ourt 30,14, .ranch ;;, -aAati 1it", a complaint for sum of mone" a%ainst -edicard, (r. #icanor -onto"a and 1arlos >5ercito, herein respondents. After hearin%, the 0,1 rendered its (ecision dismissin% petitionerRs complaint and respondentsR counterclaim. On appeal, the 1ourt of Appeals affirmed the trial courtRs assailed (ecision. ,he Appellate 1ourt held that there is no proof that the e'ecution of the ne+ contract )et+een the parties under the @cost plus@ s"stem is a strate%" to deprive petitioner of his commissionE that -edicard did not commit an" fraudulent act in revoAin% its a%enc" contract +ith SancheDE that +hen :nila) re5ected -edicardRs proposal for an increase of premium, their Bealth 1are ro%ram 1ontract on its third "ear +as effectivel" revoAedE and that +here the contract is ineffectual, then the a%ent is not entitled to a commission. etitioner filed a motion for reconsideration, )ut this +as denied )" the 1ourt of Appeals on Januar" 12, 2$$$. Bence, the instant petition for revie+ on certiorari. ,he )asic issue for our resolution is +hether the 1ourt of Appeals erred in holdin% that the contract of a%enc" has )een revoAed )" -edicard, hence, petitioner is not entitled to a commission. !t is dictum that in order for an a%ent to )e entitled to a commission, he must )e the procurin% cause of the sale, +hich simpl" means that the measures emplo"ed )" him and the efforts he e'erted must result in a sale.2 !n other +ords, an a%ent receives his commission onl" upon the successful conclusion of a sale.& 1onversel", it follo+s that +here his efforts are unsuccessful, or there +as no effort on his part, he is not entitled to a commission. !n Prats vs. Court of Appeals,/ this 1ourt held that for the purpose of e7uit", an a%ent +ho is not the efficient procurin% cause is nonetheless entitled to his commission, +here said a%ent, not+ithstandin% the e'piration of his authorit", nonetheless, tooC d2829ent 3tep3 to br2n9 ba7C to9et6er t6e part2e3, 3076 t6at a 3a8e =a3 :2na82Ded and 7on30mmated bet=een t6em. !n Manotok Borthers vs. Court of Appeals,5 +here the (eed of Sale +as onl" e'ecuted after the a%entRs e'tended authorit" had e'pired, this 1ourt, appl"in% its rulin% in Prats, held that the a%ent 3in Manotok4 is entitled to a commission since he +as the efficient procurin% cause of the sale, not+ithstandin% that the sale tooA place after his authorit" had lapsed. ,he pro'imate, close, and causal connection )et+een the a%entRs efforts and the principalRs sale of his propert" can not )e i%nored. !t ma" )e recalled that throu%h petitionerRs efforts, -edicard +as a)le to enter into a one-"ear Bealth 1are ro%ram 1ontract +ith :nila). As a result, -edicard paid petitioner his commission. A%ain, throu%h his efforts, the contract +as rene+ed and once more, he received his 41
AMDG
commission. .efore the e'piration of the rene+ed contract, -edicard, throu%h petitioner, proposed an increase in premium, )ut :nila) re5ected this proposal. -edicard then re7uested petitioner to reduce his commission should the contract )e rene+ed on its third "ear, )ut he +as o)stinate. -eantime, on Octo)er &, 199$, :nila) informed -edicard it +as no lon%er rene+in% the Bealth 1are ro%ram contract. !n order not to pre5udice its personnel, :nila), throu%h respondent >5ercito, ne%otiated +ith respondent (r. -onto"a of -edicard, in order to find mutuall" )eneficial +a"s of continuin% the Bealth 1are ro%ram. ,he ne%otiations resulted in a ne+ contract +herein :nila) shall pa" -edicard the hospitaliDation e'penses actuall" incurred )" each emplo"ees, plus a service fee. :nder the @cost plus@ s"stem +hich replaced the premium scheme, petitioner +as not %iven a commission. !t is clear that since petitioner refused to reduce his commission, -edicard directl" ne%otiated +ith :nila), thus revoAin% its a%enc" contract +ith petitioner. Ge hold that such revocation is authoriDed )" Article 192/ of the 1ivil 1ode +hich provides2 @Art. 192/. ,he a%enc" is revoAed if the principal directl" mana%es the )usiness entrusted to the a%ent, dealin% directl" +ith third persons.@ -oreover, as found )" the lo+er courts, petitioner did not render services to -edicard, his principal, to entitle him to a commission. ,here is no indication from the records that he e'erted an" effort in order that :nila) and -edicard, after the e'piration of the Bealth 1are ro%ram 1ontract, can rene+ it for the third time. !n fact, his refusal to reduce his commission constrained -edicard to ne%otiate directl" +ith :nila). Ge find no reason in la+ or in e7uit" to rule that he is entitled to a commission. O)viousl", he +as not the a%ent or the @procurin% cause@ of the third Bealth 1are ro%ram 1ontract )et+een -edicard and :nila). .+ERE#ORE, the petition is DEN ED. ,he challen%ed (ecision and 0esolution of the 1ourt of Appeals in 1A-9.0. 1C #o. /*;81 are A## R-ED I/ T0T0. 1osts a%ainst petitioner.
42
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G.R. No. LA4142( /08< 1(, 1992 !-S LOGG NG, N!., petitioner, vs. T+E !O"RT O# A$$EALS and D.R. AG" NALDO !OR$ORAT ON, respondents.
)ased on 8.O... invoice value +hich commission shall )e deducted from the proceeds of an" and?or all mone"s received )" (0A1O0 for and in )ehalf and for the account of S!SO#E ." virtue of the aforesaid a%reement, 1-S +as a)le to sell throu%h (0A1O0 a total of **,2;/,;*2 )oard feet of lo%s in Japan, from Septem)er 2$, 195* to April /, 19;2. A)out si' months prior to the e'piration of the a%reement, +hile on a trip to ,oA"o, Japan, 1-S's president, Att". 1arlos -oran Sison, and %eneral mana%er and le%al counsel, Att". ,eodoro 0. (omin%ueD, discovered that (0A1O0 had used ShinAo ,radin% 1o., =td. 3ShinAo for )revit"4 as a%ent, representative or liaison officer in sellin% 1-S's lo%s in Japan for +hich ShinAo earned a commission of :.S. J1.$$ per 1,$$$ )oard feet from the )u"er of the lo%s. :nder this arran%ement, ShinAo +as a)le to collect a total of :.S. J**,2;/.;*. % 1-S claimed that this commission paid to ShinAo +as in violation of the a%reement and that it 31-S4 is entitled to this amount as part of the proceeds of the sale of the lo%s. 1-S contended that since (0A1O0 had )een paid the 5< commission under the a%reement, it is no lon%er entitled to the additional commission paid to ShinAo as this tantamount to (0A1O0 receivin% dou)le compensation for the services it rendered. After this discover", 1-S sold and shipped lo%s valued at :.S. J*&9,&21.1& or 2,88&,&51.9$, 4 directl" to several firms in Japan +ithout the aid or intervention of (0A1O0. 1-S sued (0A1O0 for the commission received )" ShinAo and for moral and e'emplar" dama%es, +hile (0A1O0 counterclaimed for its commission, amountin% to 1//,1;*.59, from the sales made )" 1-S of lo%s to Japanese firms. !n its repl", 1-S averred as a defense to the counterclaim that (0A1O0 had retained the sum of 1$1,1;*.59 as part of its commission for the sales made )" 1-S. 5 ,hus, as its counterclaim to (0A1O0's counterclaim, 1-S demanded (0A1O0 return the amount it unla+full" retained. (0A1O0 later filed an amended counterclaim, alle%in% that the )alance of its commission on the sales made )" 1-S +as /2,;&$.82, 6thus impliedl" admittin% that it retained the amount alle%ed )" 1-S. !n dismissin% the complaint, the trial court ruled that no evidence +as presented to sho+ that ShinAo received the commission of :.S. J**,2;/.;* arisin% from the sale of 1-S's lo%s in Japan, thou%h the trial court stated that @ShinAo +as a)le to collect the total amount of J**,2;/.;* :S (ollars 3>'hs. - and --14.@ & ,he counterclaim +as liAe+ise dismissed, as it +as sho+n that (0A1O0 had +aived its ri%hts to the )alance of its commission in a letter dated 8e)ruar" 2, 19;& to Att". 1arlos -oran Sison, president of 1-S. ' 8rom said decision, onl" 1-S appealed to the 1ourt of Appeals. ,he 1ourt of Appeals, in a & to 2 decision, 9 affirmed the dismissal of the complaint since @PtQhe trial court could not have made a cate%orical findin% that ShinAo collected commissions from the )u"ers of Sison's lo%s in Japan, and could not have held that Sison is entitled to recover from (racor the amount collected )" ShinAo as commissions, plaintiff-appellant havin% failed to prove )" competent evidence its claims.@ 1( 43
NO!ON, .&: ,his is a petition for revie+ on certiorari from the decision dated Jul" &1, 19*5 of the 1ourt of Appeals in 1A-9.0. #o. /**;&-0 +hich affirmed in toto the decision of the 1ourt of 8irst !nstance of -anila, .ranch C!!, in 1ivil 1ase #o. 5;&55 dismissin% the complaint filed )" petitioner 1-S =o%%in%, !nc. 31-S, for )revit"4 a%ainst private respondent (.0. A%uinaldo 1orporation 3(0A1O0, for )revit"4 and orderin% the former to pa" the latter attorne"'s fees in the amount of 1,$$$.$$ and the costs. ,he facts of the case are as follo+s2 etitioner 1-S is a forest concessionaire en%a%ed in the lo%%in% )usiness, +hile private respondent (0A1O0 is en%a%ed in the )usiness of e'portin% and sellin% lo%s and lum)er. On Au%ust 28, 195*, 1-S and (0A1O0 entered into a contract of a%enc" 1 +here)" the former appointed the latter as its e'clusive e'port and sales a%ent for all lo%s that the former ma" produce, for a period of five 354 "ears. ,he pertinent portions of the a%reement, +hich +as dra+n up )" (0A1O0, 2 are as follo+s2 1. S!SO# P1-SQ here)" appoints (0A1O0 as his sole and e'clusive e'port sales a%ent +ith full authorit", su)5ect to the conditions and limitations hereinafter set forth, to sell and e'port under a firm sales contract accepta)le to S!SO#, all lo%s produced )" S!SO# for a period of five 354 "ears commencin% upon the e'ecution of the a%reement and upon the terms and conditions hereinafter provided and (0A1O0 here)" accepts such appointmentE ''' ''' ''' &. !t is e'pressl" a%reed that (0A1O0 shall handle e'clusivel" all ne%otiations of all e'port sales of S!SO# +ith the )u"ers and arran%e the procurement and schedules of the vessel or vessels for the shipment of S!SO#'s lo%s in accordance +ith S!SO#'s +ritten re7uests, )ut (0A1O0 shall not in an"+a" PsicQ )e lia)le or responsi)le for an" dela", default or failure of the vessel or vessels to compl" +ith the schedules a%reed uponE ''' ''' ''' 9. !t is e'pressl" a%reed )" the parties hereto that (0A1O0 shall receive five 35<4 per cent commission of the %ross sales of lo%s of S!SO#
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-oreover, the appellate court held2 ,here is reason to )elieve that ShinAo ,radin% 1o. =td., +as paid )" defendant-appellee out of its o+n commission of 5<, as indicated in the letter of its president to the president of Sison, dated 8e)ruar" 2, 19;& 3>'hi)it @#@4, and in the A%reement )et+een A%uinaldo (evelopment 1orporation 3A(>1O04 and ShinAo ,radin% 1o., =td. 3>'hi)it @9@4. (aniel 0. A%uinaldo stated in his said letter2 . . . , ! informed "ou that if "ou +anted to pa" me for the service, then it +ould )e no more than at the standard rate of 5< commission )ecause in our o+n case, +e pa" our Japanese a%ents 21?2<. Accordin%l", +e +ould onl" add a similar amount of 2-1?2< for the service +hich +e +ould render "ou in the hilippines.11 A%%rieved, 1-S appealed to this 1ourt )" +a" of a petition for revie+ on certiorari% alle%in% 314 that the 1ourt of Appeals erred in not maAin% a complete findin%s of factE 324 that the testimon" of Att". ,eodoro 0. (omin%ueD, re%ardin% the admission )" ShinAo's president and director that it collected a commission of :.S. J1.$$ per 1,$$$ )oard feet of lo%s from the Japanese )u"ers, is admissi)le a%ainst (0A1O0E 3&4 that the statement of (0A1O0's chief le%al counsel in his memorandum dated -a" &1, 19;5, >'hi)it @X@, is an admission that ShinAo +as a)le to collect the commission in 7uestionE 3/4 that the fact that ShinAo received the 7uestioned commissions is deemed admitted )" (0A1O0 )" its silence under Section 2&, 0ule 1&$ of the 0ules of 1ourt +hen it failed to repl" to Att". 1arlos -oran Sison's letter dated 8e)ruar" ;, 19;2E 354 that (0A1O0 is not entitled to its 5< commission arisin% from the direct sales made )" 1-S to )u"ers in JapanE and 3;4 that (0A1O0 is %uilt" of fraud and )ad faith in its dealin%s +ith 1-S. Gith re%ard to 1-S's ar%uments concernin% +hether or not ShinAo received the commission in 7uestion, Ge find the same unmeritorious. ,o )e%in +ith, these ar%uments 7uestion the findin%s of fact made )" the 1ourt of Appeals, +hich are final and conclusive and can not )e revie+ed on appeal to the Supreme 1ourt. 12 -oreover, +hile it is true that the evidence adduced esta)lishes the fact that ShinAo is (0A1O0's a%ent or liaison in Japan, 1% there is no evidence +hich esta)lished the fact that ShinAo did receive the amount of :.S. J**,2;/.;* as commission arisin% from the sale of 1-S's lo%s to various Japanese firms. ,he fact that ShinAo received the commissions in 7uestion +as not esta)lished )" the testimon" of Att". ,eodoro 0. (omin%ueD to the effect that ShinAo's president and director told him that ShinAo received a commission of :.S. J1.$$ for ever" 1,$$$ )oard feet of lo%s sold, since the same is hearsa". Similarl", the letter of -r. X. Shi)ata of ,o"o -enAa Xaisha, =td. 14 is also hearsa" since -r. Shi)ata +as not presented to testif" on his letter. 1-S's other evidence have little or no pro)ative value at all. ,he
statements made in the memorandum of Att". Simplicio 0. 1iocon to (0A1O0 dated -a" &1, 19;5, 15 the letter dated 8e)ruar" 2, 19;& of (aniel 0. A%uinaldo, 16 president of (0A1O0, and the repl"-letter dated Januar" 9, 19;/ 1& )" (0A1O0's counsel Att". C. >. (el 0osario to 1-S's demand letter dated Septem)er 25, 19;& can not )e cate%oriDed as admissions that ShinAo did receive the commissions in 7uestion. ,he alle%ed admission made )" Att". 1iocon, to +it F 8urthermore, as per our records, our shipment of lo%s to ,o"o -enAa Xaisha, =td., is onl" for a net volume of ;*,*/*,*&2 )oard feet +hich should ena)le ShinAo to collect a commission of :S J;*,*/*.*& onl" can not )e considered as such since the statement +as made in the conte't of 7uestionin% 1-S's tall" of lo%s delivered to various Japanese firms. Similarl", the statement of (aniel 0. A%uinaldo, to +it F . . . Xno+in% as +e do that ,o"o -enAa is a lar%e and reputa)le compan", it is o)vious that the" paid ShinAo for certain services +hich ShinAo must have satisfactoril" performed for them in Japan other+ise the" +ould not have paid ShinAo and that of Att". C. >. (el 0osario, . . . !t does not seem proper, therefore, for 1-S =o%%in%, !nc., as principal, to concern itself +ith, much less 7uestion, the ri%ht of ShinAo ,radin% 1o., =td. +ith +hich our client de)t directl", to +hatever )enefits it mi%ht have derived form the ultimate consumer?)u"er of these lo%s, ,o"o -enAa Xaisha, =td. ,here appears to )e no 5ustification for "our client's contention that these )enefits, +hether the" can )e considered as commissions paid )" ,o"o -enAa Xaisha to ShinAo ,radin%, are to )e re%arded part of the %ross sales. can not )e considered admissions that ShinAo received the 7uestioned commissions since neither statements declared cate%oricall" that ShinAo did in fact receive the commissions and that these arose from the sale of 1-S's lo%s. As correctl" stated )" the appellate court2 !t is a rule that @a statement is not competent as an admission +here it does not, under a reasona)le construction, appear to admit or acAno+led%e the fact +hich is sou%ht to )e proved )" it@. An admission or declaration to )e competent must have )een e'pressed in definite, certain and une7uivocal lan%ua%e 3.anA of the hilippine !slands vs. 8idelit" K Suret" 1o., 51 44
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hil. 5*, ;/4.
1'
1-S's contention that (0A1O0 had admitted )" its silence the alle%ation that ShinAo received the commissions in 7uestion +hen it failed to respond to Att". 1arlos -oran Sison's letter dated 8e)ruar" ;, 19;&, is not supported )" the evidence. (0A1O0 did in fact repl" to the letter of Att". Sison, throu%h the letter dated -arch 5, 19;& of 8.A. #ovenario, 19 +hich stated2 ,his is to acAno+led%e receipt of "our letter dated 8e)ruar" ;, 19;&, and addressed to -r. (. 0. A%uinaldo, +ho is at present out of the countr". ''' ''' ''' Ge have no record or Ano+led%e of an" such pa"ment of commission made )" ,o"o -enAa to ShinAo. !f the pa"ment +as made )" ,o"o -enAa to ShinAo, as stated in "our letter, +e Ane+ nothin% a)out it and had nothin% to do +ith it. ,he findin% of fact made )" the trial court, i.e., that @ShinAo +as a)le to collect the total amount of J**,2;/.;* :S (ollars,@ can not )e %iven +ei%ht since this +as )ased on the summar" prepared )" 1-S itself, >'hi)its @-@ and @--1@. -oreover, even if it +as sho+n that ShinAo did in fact receive the commissions in 7uestion, 1-S is not entitled thereto since these +ere apparentl" paid ! the u!ers to ShinAo for arran%in% the sale. ,his is therefore not part of the %ross sales of 1-S's lo%s. Bo+ever, Ge find merit in 1-S's contention that the appellate court erred in holdin% that (0A1O0 +as entitled to its commission from the sales made )" 1-S to Japanese firms. ,he principal ma" revoAe a contract of a%enc" at +ill, and such revocation ma" )e e'press, or implied, 2( and ma" )e availed of even if the period fi'ed in the contract of a%enc" as not "et e'pired. 21 As the principal has this a)solute ri%ht to revoAe the a%enc", the a%ent can not o)5ect theretoE neither ma" he claim dama%es arisin% from such revocation, 22 unless it is sho+n that such +as done in order to evade the pa"ment of a%ent's commission.2% !n the case at )ar, 1-S appointed (0A1O0 as its a%ent for the sale of its lo%s to Japanese firms. Iet, durin% the e'istence of the contract of a%enc", (0A1O0 admitted that 1-S sold its lo%s directl" to several Japanese firms. ,his act constituted an implied revocation of the contract of a%enc" under Article 192/ of the 1ivil 1ode, +hich provides2 Art. 192/ ,he a%enc" is revoAed if the principal directl" mana%es the )usiness entrusted to the a%ent, dealin% directl" +ith third persons. !n <e/ Manila ?u& er Co&pan!% Inc. vs. 5epu lic of the Philippines% 24 this 1ourt ruled that the act of a contractor, +ho, after e'ecutin% po+ers of attorne" in favor of another empo+erin% the latter to collect +hatever amounts ma" )e due to him from the 9overnment, and thereafter demanded and collected from the
%overnment the mone" the collection of +hich he entrusted to his attorne"-in-fact, constituted revocation of the a%enc" in favor of the attorne"-in-fact. Since the contract of a%enc" +as revoAed )" 1-S +hen it sold its lo%s to Japanese firms +ithout the intervention of (0A1O0, the latter is no lon%er entitled to its commission from the proceeds of such sale and is not entitled to retain +hatever mone"s it ma" have received as its commission for said transactions. #either +ould (0A1O0 )e entitled to collect dama%es from 1-S, since dama%es are %enerall" not a+arded to the a%ent for the revocation of the a%enc", and the case at )ar is not one fallin% under the e'ception mentioned, +hich is to evade the pa"ment of the a%ent's commission. 0e%ardin% 1-S's contention that the 1ourt of Appeals erred in not findin% that (0A1O0 had committed acts of fraud and )ad faith, Ge find the same unmeritorious. =iAe the contention involvin% ShinAo and the 7uestioned commissions, the findin%s of the 1ourt of Appeals on the matter +ere )ased on its appreciation of the evidence, and these findin%s are )indin% on this 1ourt. !n fine, Ge affirm the rulin% of the 1ourt of Appeals that there is no evidence to support 1-S's contention that ShinAo earned a separate commission of :.S. J1.$$ for ever" 1,$$$ )oard feet of lo%s from the )u"er of 1-S's lo%s. Bo+ever, Ge reverse the rulin% of the 1ourt of Appeals +ith re%ard to (0A1O0's ri%ht to retain the amount of 1$1,5&;.** as part of its commission from the sale of lo%s )" 1-S, and hold that (0A1O0 has no ri%ht to its commission. 1onse7uentl", (0A1O0 is here)" ordered to remit to 1-S the amount of 1$1,5&;.**. GB>0>8O0>, the decision appealed from is here)" -O(!8!>( as stated in the precedin% para%raph. 1osts de officio. SO O0(>0>(.
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G.R. No. 16%&2( De7ember 16, 2((4 GENE* E*E L -, pet2t2oner, )3.#LOREN! O SABAN, re3pondent3. .efore the 1ourt is a etition for 0evie+ on 1ertiorari assailin% the Decision1 dated Octo)er 2*, 2$$& of the 1ourt of Appeals, Seventh (ivision, in 1A-9.0. C #o. ;$&92.2 ,he late >duardo I)aYeD 3I)aYeD4, the o+ner of a 1,$$$-s7uare meter lot in 1e)u 1it" 3the @lot@4, entered into an Agree&ent and Authorit! to <egotiate and (ell 3A%enc" A%reement4 +ith respondent 8lorencio Sa)an 3Sa)an4 on 8e)ruar" 8, 199/. :nder the A%enc" A%reement, I)aYeD authoriDed Sa)an to looA for a )u"er of the lot for ,+o Bundred ,housand esos 3 2$$,$$$.$$4 and to marA up the sellin% price to include the amounts needed for pa"ment of ta'es, transfer of title and other e'penses incident to the sale, as +ell as Sa)anRs commission for the sale.& ,hrou%h Sa)anRs efforts, I)aYeD and his +ife +ere a)le to sell the lot to the petitioner 9enevieve =im 3=im4 and the spouses .en5amin and =ourdes =im 3the Spouses =im4 on -arch 1$, 199/. ,he price of the lot as indicated in the Deed of A solute (ale is ,+o Bundred ,housand esos 3 2$$,$$$.$$4./ !t appears, ho+ever, that the vendees a%reed to purchase the lot at the price of Si' Bundred ,housand esos 3 ;$$,$$$.$$4, inclusive of ta'es and other incidental e'penses of the sale. After the sale, =im remitted to Sa)an the amounts of One Bundred ,hirteen ,housand ,+o Bundred 8ift" Seven esos 3 11&,25*.$$4 for pa"ment of ta'es due on the transaction as +ell as 8ift" ,housand esos 3 5$,$$$.$$4 as )roAerRs commission.5 =im also issued in the name of Sa)an four postdated checAs in the a%%re%ate amount of ,+o Bundred ,hirt" Si' ,housand Seven Bundred 8ort" ,hree esos 3 2&;,*/&.$$4. ,hese checAs +ere .anA of the hilippine !slands 3. !4 1hecA #o. 1112;/5 dated June 12, 199/ for 25,$$$.$$E . ! 1hecA #o. 1112;/* dated June 19, 199/ for 18,*/&.$$E . ! 1hecA #o. 1112;/; dated June 2;, 199/ for 25,$$$.$$E and >7uita)le 1! .anA 1hecA #o. $21/91. dated June 2$, 199/ for 1;8,$$$.$$. Su)se7uentl", I)aYeD sent a letter dated June 1$, 199/ addressed to =im. !n the letter I)aYeD asAed =im to cancel all the checAs issued )" her in Sa)anRs favor and to @e'tend another partial pa"ment@ for the lot in his 3I)aYeDRs4 favor.; After the four checAs in his favor +ere dishonored upon presentment, Sa)an filed a Co&plaint for collection of sum of mone" and dama%es a%ainst I)aYeD and =im +ith the 0e%ional ,rial 1ourt 30,14 of 1e)u 1it" on Au%ust &, 199/.* ,he case +as assi%ned to .ranch 2$ of the 0,1. !n his Co&plaint% Sa)an alle%ed that =im and the Spouses =im a%reed to purchase the lot for ;$$,$$$.$$, i.e.%+ith a marA-up of 8our Bundred ,housand esos 3 /$$,$$$.$$4 from the price set )" I)aYeD. Of the total purchase price of ;$$,$$$.$$, 2$$,$$$.$$ +ent to I)aYeD, 5$,$$$.$$ alle%edl" +ent to =imRs a%ent, and 11&,25*.$$ +as %iven to Sa)an to cover ta'es and other e'penses incidental to the sale. =im also issued four 3/4 postdated checAs8 in favor of Sa)an for the remainin% 2&;,*/&.$$.9 Sa)an alle%ed that I)aYeD told =im that he 3Sa)an4 +as not entitled to an" commission for the sale since he concealed the actual sellin%
price of the lot from I)aYeD and )ecause he +as not a licensed real estate )roAer. I)aYeD +as a)le to convince =im to cancel all four checAs. Sa)an further averred that I)aYeD and =im connived to deprive him of his sales commission )" +ithholdin% pa"ment of the first three checAs. Be also claimed that =im failed to maAe %ood the fourth checA +hich +as dishonored )ecause the account a%ainst +hich it +as dra+n +as closed. !n his Ans/er, I)aYeD claimed that Sa)an +as not entitled to an" commission )ecause he concealed the actual sellin% price from him and )ecause he +as not a licensed real estate )roAer. =im, for her part, ar%ued that she +as not priv" to the a%reement )et+een I)aYeD and Sa)an, and that she issued stop pa"ment orders for the three checAs )ecause I)aYeD re7uested her to pa" the purchase price directl" to him, instead of coursin% it throu%h Sa)an. She also alle%ed that she a%reed +ith I)aYeD that the purchase price of the lot +as onl" 2$$,$$$.$$. I)aYeD died durin% the pendenc" of the case )efore the 0,1. :pon motion of his counsel, the trial court dismissed the case onl" a%ainst him +ithout an" o)5ection from the other parties.1$ On -a" 1/, 199*, the 0,1 rendered its Decision11 dismissin% Sa)anRs complaint, declarin% the four 3/4 checAs issued )" =im as stale and non-ne%otia)le, and a)solvin% =im from an" lia)ilit" to+ards Sa)an. Sa)an appealed the trial courtRs Decision to the 1ourt of Appeals. On Octo)er 2*, 2$$&, the appellate court promul%ated its Decision12 reversin% the trial courtRs rulin%. !t held that Sa)an +as entitled to his commission amountin% to 2&;,*/&.$$.1& ,he 1ourt of Appeals ruled that I)aYeDRs revocation of his contract of a%enc" +ith Sa)an +as invalid )ecause the a%enc" +as coupled +ith an interest and I)aYeD effected the revocation in )ad faith in order to deprive Sa)an of his commission and to Aeep the profits for himself.1/ ,he appellate court found that I)aYeD and =im connived to deprive Sa)an of his commission. !t declared that =im is lia)le to pa" Sa)an the amount of the purchase price of the lot correspondin% to his commission )ecause she issued the four checAs Ano+in% that the total amount thereof corresponded to Sa)anRs commission for the sale, as the a%ent of I)aYeD. ,he appellate court further ruled that, in issuin% the checAs in pa"ment of Sa)anRs commission, =im acted as an accommodation part". She si%ned the checAs as dra+er, +ithout receivin% value therefor, for the purpose of lendin% her name to a third person. As such, she is lia)le to pa" Sa)an as the holder for value of the checAs.15 =im filed a Motion for 5econsideration of the appellate courtRs Decision, )ut her Motion +as denied )" the 1ourt of Appeals in a 5esolution dated -a" ;, 2$$/.1;
#ot satisfied +ith the decision of the 1ourt of Appeals, =im filed the present petition. Bus Org 1 summer (obligations of principal and modes of extinguishment of agency) 46
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=im ar%ues that the appellate court i%nored the fact that after pa"in% her a%ent and remittin% to Sa)an the amounts due for ta'es and transfer of title, she paid the )alance of the purchase price directl" to I)aYeD.1* She further contends that she is not lia)le for I)aYeDRs de)t to Sa)an under the A%enc" A%reement as she is not priv" thereto, and that Sa)an has no one )ut himself to )lame for consentin% to the dismissal of the case a%ainst I)aYeD and not movin% for his su)stitution )" his heirs.18 =im also assails the findin%s of the appellate court that she issued the checAs as an accommodation part" for I)aYeD and that she connived +ith the latter to deprive Sa)an of his commission. 19 =im pra"s that should she )e found lia)le to pa" Sa)an the amount of his commission, she should onl" )e held lia)le to the e'tent of onethird 31?&4 of the amount, since she had t+o co-vendees 3the Spouses =im4 +ho should share such lia)ilit".2$ !n his Co&&ent, Sa)an maintains that =im a%reed to purchase the lot for ;$$,$$$.$$, +hich consisted of the 2$$,$$$.$$ +hich +ould )e paid to I)aYeD, the 5$,$$$.$$ due to her )roAer, the 11&,25*.$$ earmarAed for ta'es and other e'penses incidental to the sale and Sa)anRs commission as )roAer for I)aYeD. Accordin% to Sa)an, =im assumed the o)li%ation to pa" him his commission. Be insists that =im and I)aYeD connived to un5ustl" deprive him of his commission from the ne%otiation of the sale.21 ,he issues for the 1ourtRs resolution are +hether Sa)an is entitled to receive his commission from the saleE and, assumin% that Sa)an is entitled thereto, +hether it is =im +ho is lia)le to pa" Sa)an his sales commission. ,he 1ourt %ives due course to the petition, )ut a%rees +ith the result reached )" the 1ourt of Appeals. ,he 1ourt affirms the appellate courtRs findin% that the a%enc" +as not revoAed since I)aYeD re7uested that =im maAe stop pa"ment orders for the checAs pa"a)le to Sa)an onl" after the consummation of the sale on -arch 1$, 199/. At that time, Sa)an had alread" performed his o)li%ation as I)aYeDRs a%ent +hen, throu%h his 3Sa)anRs4 efforts, I)aYeD e'ecuted the Deed of A solute (ale of the lot +ith =im and the Spouses =im. ,o deprive Sa)an of his commission su)se7uent to the sale +hich +as consummated throu%h his efforts +ould )e a )reach of his contract of a%enc" +ith I)aYeD +hich e'pressl" states that Sa)an +ould )e entitled to an" e'cess in the purchase price after deductin% the 2$$,$$$.$$ due to I)aYeD and the transfer ta'es and other incidental e'penses of the sale.22 !n Macondra! # Co. v. (ellner,2& the 1ourt reco%niDed the ri%ht of a )roAer to his commission for findin% a suita)le )u"er for the sellerRs propert" even thou%h the seller himself consummated the sale +ith the )u"er.2/,he 1ourt held that it +ould )e in the hei%ht of in5ustice to permit the principal to terminate the contract of a%enc" to the pre5udice of the )roAer +hen he had alread" reaped the )enefits of the )roAerRs efforts.
!n Infante v. Cunanan% et al.%25 the 1ourt upheld the ri%ht of the )roAers to their commissions althou%h the seller revoAed their authorit" to act in his )ehalf after the" had found a )u"er for his properties and ne%otiated the sale directl" +ith the )u"er +hom he met throu%h the )roAersR efforts. ,he 1ourt ruled that the sellerRs +ithdra+al in )ad faith of the )roAersR authorit" cannot un5ustl" deprive the )roAers of their commissions as the sellerRs dul" constituted a%ents. ,he pronouncements of the 1ourt in the aforecited cases are applica)le to the present case, especiall" considerin% that Sa)an had completel" performed his o)li%ations under his contract of a%enc" +ith I)aYeD )" findin% a suita)le )u"er to preparin% the Deed of A solute (ale )et+een I)aYeD and =im and her co-vendees. -oreover, the contract of a%enc" ver" clearl" states that Sa)an is entitled to the e'cess of the marA-up of the price of the lot after deductin% I)aYeDRs share of 2$$,$$$.$$ and the ta'es and other incidental e'penses of the sale. Bo+ever, the 1ourt does not a%ree +ith the appellate courtRs pronouncement that Sa)anRs a%enc" +as one coupled +ith an interest. :nder Article 192* of the 1ivil 1ode, an a%enc" cannot )e revoAed if a )ilateral contract depends upon it, or if it is the means of fulfillin% an o)li%ation alread" contracted, or if a partner is appointed mana%er of a partnership in the contract of partnership and his removal from the mana%ement is un5ustifia)le. Stated differentl", an a%enc" is deemed as one coupled +ith an interest +here it is esta)lished for the mutual )enefit of the principal and of the a%ent, or for the interest of the principal and of third persons, and it cannot )e revoAed )" the principal so lon% as the interest of the a%ent or of a third person su)sists. !n an a%enc" coupled +ith an interest, the a%entRs interest must )e in the su)5ect matter of the po+er conferred and not merel" an interest in the e'ercise of the po+er )ecause it entitles him to compensation. Ghen an a%entRs interest is confined to earnin% his a%reed compensation, the a%enc" is not one coupled +ith an interest, since an a%entRs interest in o)tainin% his compensation as such a%ent is an ordinar" incident of the a%enc" relationship. 2; Sa)anRs entitlement to his commission havin% )een settled, the 1ourt must no+ determine +hether =im is the proper part" a%ainst +hom Sa)an should address his claim. Sa)anRs ri%ht to receive compensation for ne%otiatin% as )roAer for I)aYeD arises from the A%enc" A%reement )et+een them. =im is not a part" to the contract. Bo+ever, the record reveals that she had Ano+led%e of the fact that I)aYeD set the price of the lot at 2$$,$$$.$$ and that the ;$$,$$$.$$Fthe price a%reed upon )" her and Sa)anF+as more than the amount set )" I)aYeD )ecause it included the amount for pa"ment of ta'es and for Sa)anRs commission as )roAer for I)aYeD. Accordin% to the trial court, =im made the follo+in% pa"ments for the lot2 11&,25*.$$ for ta'es, 5$,$$$.$$ for her )roAer, and /$$.$$$.$$ directl" to I)aYeD, or a total of 8ive Bundred Si't" ,hree ,housand ,+o Bundred 8ift" Seven esos 3 5;&,25*.$$4.2* =im, on the other hand, claims that on -arch 1$, 199/, the date of e'ecution of the Deed of A solute (ale% she paid directl" to I)aYeD the amount of One Bundred ,housand esos 3 1$$,$$$.$$4 onl", and %ave to Sa)an 11&,25*.$$ for pa"ment of ta'es and 5$,$$$.$$ as his commission,28and One Bundred ,hirt" ,housand esos 3 1&$,$$$.$$4 on June 28, 199/,29 or a total of 47
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,hree Bundred #inet" ,hree ,housand ,+o Bundred 8ift" Seven esos 3 &9&,25*.$$4. I)aYeD, for his part, acAno+led%ed that =im and her co-vendees paid him /$$,$$$.$$ +hich he said +as the full amount for the sale of the lot.&$ !t thus appears that he received 1$$,$$$.$$ on -arch 1$, 199/, acAno+led%ed receipt 3throu%h Sa)an4 of the 11&,25*.$$ earmarAed for ta'es and 5$,$$$.$$ for commission, and received the )alance of 1&$,$$$.$$ on June 28, 199/. ,hus, a total of 2&$,$$$.$$ +ent directl" to I)aYeD. Apparentl", althou%h the amount actuall" paid )" =im +as &9&,25*.$$, I)aYeD rounded off the amount to /$$,$$$.$$ and +aived the difference. =imRs act of issuin% the four checAs amountin% to 2&;,*/&.$$ in Sa)anRs favor )elies her claim that she and her co-vendees did not a%ree to purchase the lot at ;$$,$$$.$$. !f she did not a%ree thereto, there +ould )e no reason for her to issue those checAs +hich is the )alance of ;$$,$$$.$$ less the amounts of 2$$,$$$.$$ 3due to I)aYeD4, 5$,$$$.$$ 3commission4, and the 11&,25*.$$ 3ta'es4. ,he onl" lo%ical conclusion is that =im chan%ed her mind a)out a%reein% to purchase the lot at ;$$,$$$.$$ after talAin% to I)aYeD and ultimatel" realiDin% that Sa)anRs commission is even more than +hat I)aYeD received as his share of the purchase price as vendor. O)viousl", this chan%e of mind resulted to the pre5udice of Sa)an +hose efforts led to the completion of the sale )et+een the latter, and =im and her co-vendees. ,his the 1ourt cannot countenance. ,he rulin% of the 1ourt in Infante v. Cunanan% et al.% cited earlier, is enli%htenin% for the facts therein are similar to the circumstances of the present case. !n that case, 1onse5o !nfante asAed Jose 1unanan and Juan -i5ares to find a )u"er for her t+o lots and the house )uilt thereon for ,hirt" ,housand esos 3 &$,$$$.$$4 . She promised to pa" them five percent 35<4 of the purchase price plus +hatever overprice the" ma" o)tain for the propert". 1unanan and -i5ares offered the properties to io #oche +ho in turn e'pressed +illin%ness to purchase the properties. 1unanan and -i5ares thereafter introduced #oche to !nfante. Bo+ever, the latter told 1unanan and -i5ares that she +as no lon%er interested in sellin% the propert" and asAed them to si%n a document statin% that their +ritten authorit" to act as her a%ents for the sale of the properties +as alread" cancelled. Su)se7uentl", !nfante sold the properties directl" to #oche for ,hirt" One ,housand esos 3 &1,$$$.$$4. ,he 1ourt upheld the ri%ht of 1unanan and -i5ares to their commission, e'plainin% thatF WP!nfanteQ had chan%ed her mind even if respondent had found a )u"er +ho +as +illin% to close the deal, is a matter that +ould not %ive rise to a le%al conse7uence if P1unanan and -i5aresQ a%reed to call off the transaction in deference to the re7uest of P!nfanteQ. .ut the situation varies if one of the parties taAes advanta%e of the )enevolence of the other and acts in a manner that +ould promote his o+n selfish interest. ,his act is unfair as +ould amount to )ad faith. ,his act cannot )e sanctioned +ithout accordin% the part" pre5udiced the re+ard +hich is due him. ,his is the situation in +hich P1unanan and -i5aresQ +ere placed )" P!nfanteQ. P!nfanteQ tooA advanta%e of the services rendered )" P1unanan and -i5aresQ, )ut )elievin% that she could evade pa"ment of their commission, she made use of a ruse )" inducin% them to si%n the deed of cancellationW.,his act of su)version cannot )e sanctioned and cannot serve as )asis for P!nfanteQ to escape pa"ment of the commission a%reed upon.&1
,he appellate court therefore had sufficient )asis for concludin% that I)aYeD and =im connived to deprive Sa)an of his commission )" dealin% +ith each other directl" and reducin% the purchase price of the lot and leavin% nothin% to compensate Sa)an for his efforts. 1onsiderin% the circumstances surroundin% the case, and the undisputed fact that =im had not "et paid the )alance of 2$$,$$$.$$ of the purchase price of ;$$,$$$.$$, it is 5ust and proper for her to pa" Sa)an the )alance of 2$$,$$$.$$. 8urthermore, since I)aYeD received a total of 2&$,$$$.$$ from =im, or an e'cess of &$,$$$.$$ from his asAin% price of 2$$,$$$.$$, Sa)an ma" claim such e'cess from I)aYeDRs estate, if that remed" is still availa)le,&2 in vie+ of the trial courtRs dismissal of Sa)anRs complaint as a%ainst I)aYeD, +ith Sa)anRs e'press consent, due to the latterRs demise on #ovem)er 11, 199/.&& ,he appellate court ho+ever erred in rulin% that =im is lia)le on the checAs )ecause she issued them as an accommodation part". Section 29 of the #e%otia)le !nstruments =a+ defines an accommodation part" as a person @+ho has si%ned the ne%otia)le instrument as maAer, dra+er, acceptor or indorser, +ithout receivin% value therefor, for the purpose of lendin% his name to some other person.@ ,he accommodation part" is lia)le on the instrument to a holder for value even thou%h the holder at the time of taAin% the instrument Ane+ him or her to )e merel" an accommodation part". ,he accommodation part" ma" of course seeA reim)ursement from the part" accommodated.&/ As %leaned from the te't of Section 29 of the #e%otia)le !nstruments =a+, the accommodation part" is one +ho meets all these three re7uisites, viz2 314 he si%ned the instrument as maAer, dra+er, acceptor, or indorserE 324 he did not receive value for the si%natureE and 3&4 he si%ned for the purpose of lendin% his name to some other person. !n the case at )ar, +hile =im si%ned as dra+er of the checAs she did not satisf" the t+o other remainin% re7uisites. ,he a)sence of the second re7uisite )ecomes pellucid +hen it is noted at the outset that =im issued the checAs in 7uestion on account of her transaction, alon% +ith the other purchasers, +ith I)aYeD +hich +as a sale and, therefore, a reciprocal contract. Specificall", she dre+ the checAs in pa"ment of the )alance of the purchase price of the lot su)5ect of the transaction. And she had to pa" the a%reed purchase price in consideration for the sale of the lot to her and her co-vendees. !n other +ords, the amounts covered )" the checAs form part of the cause or consideration from I)aYeDRs end, as vendor, +hile the lot represented the cause or consideration on the side of =im, as vendee.&5 =rgo, =im received value for her si%nature on the checAs. #either is there an" indication that =im issued the checAs for the purpose of ena)lin% I)aYeD, or an" other person for that matter, to o)tain credit or to raise mone", there)" totall" de)unAin% the presence of the third re7uisite of an accommodation part".
WHEREFORE, in view of the foregoing, the etition i! "#$%#$$E".
48
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G.R. No. L-10881
September 30, 1958
On 25 Octo)er 195/, after the parties had su)mitted the case upon a stipulation of facts, the 1ourt rendered 5ud%ment, the dispositive part of +hich is2 GB>0>8O0>, the deed of sale e'ecuted )" rimitivo A)ad in favor of ,eodorica A)ad, Anne' 1, is here)" declared null and voidE and ,eodorico A)ad is here)" ordered to e'ecute a deed of reconve"ance of the land ori%inall" +ith O1, #o. /82$, no+ covered )" ,ransfer 1ertificate of ,itle #o. 188$, in favor of the plaintiffs. #o pronouncement as to costs. ,he defendants appealed to the 1ourt of Appeals, +hich certified the case to this 1ourt as no 7uestion of fact is involved. Section 11; of the u)lic =and Act 3Act #o. 28*/4, under +hich the homestead +as %ranted to the appellees' father, provides2 =ands ac7uired under the free patent or homestead provisions shall not )e su)5ect to encum)rance or alienation from the date of the approval of the application and for a term of five "ears from and after the date of the issuance of the patent or %rant, nor shall the" )ecome lia)le to the satisfaction of an" de)t contracted prior to the e'piration of said periodE )ut the improvements or crops on the land ma" )e mort%a%ed or pled%ed to 7ualified persons, associations, or corporations. ,he encum)rance or alienation of lands ac7uired )" free patent or homestead in violation of this section is null and void. 1 ,here is no 7uestion that the mort%a%e on the improvements of the parcel of land e'ecuted )" ,i)urcio del 0osario in favor of rimitivo A)ad 3Anne' ., complaint, pp. 1$-1&, 0ec. on App.4 is valid. ,he po+er of attorne" e'ecuted )" ,i)urcio del 0osario in favor of rimitivo A)ad 3Anne' A, complaint, pp. *-9, 0ec. on App.4 providin%, amon% others, that is coupled +ith an interest in the su)5ect matter thereof in favor of the said attorne" and are therefore irrevoca)le, and . . . conferrin% upon m" said attorne" full and ample po+er and authorit" to do and perform all thin%s reasona)l" necessar" and proper for the due carr"in% out of the said po+ers accordin% to the true tenor and purport of the same, . . .@ does not create an a%enc" coupled +ith an interest nor does it clothe the a%enc" +ith an irrevoca)le character. A mere statement in the po+er of attorne" that it is coupled +ith an interest is not enou%h. !n +hat does such interest consist must )e stated in the po+er of attorne". ,he fact that ,i)urcio del 0osario, the principal, had mort%a%ed the improvements of the parcel of land to rimitivo A)ad, the a%ent, 3Anne' ., complaint, pp. 1$-1&, 0ec. on App.4 is not such an interest as could render irrevoca)le the po+er of attorne" e'ecuted )" the principal in favor of the a%ent. !n fact no mention of it is made in the po+er of attorne". ,he mort%a%e on the improvements of the parcel of land has nothin% to do +ith the po+er of attorne" and ma" )e foreclosed )" the mort%a%ee upon failure of the mort%a%or to compl" +ith his o)li%ation. As the a%enc" +as not coupled +ith an interest, it +as terminated upon the death of ,i)urcio del 0osario, the principal, sometime in (ecem)er 19/5, and rimitivo A)ad, the a%ent, could no lon%er validl" conve" the parcel of land to ,eodorico A)ad on 9 June 19/*. ,he sale, therefore, to the later +as null and void. .ut 49
E"LOG O DEL ROSAR O, A"REL O DEL ROSAR O, BEN TO DEL ROSAR O, BERNARDO DEL ROSAR O, S DRA DEL ROSAR O, DO- NGA DEL ROSAR O and !ON!E$! ON BORRO-EO, plaintiff-appellees, vs. $R - T *O ABAD and TEODOR !O ABAD, defendants-appellants. Baustita and Bautista for appellees. Agustin C. Bagasao for appellants. $AD LLA, .&: Appeal from a 5ud%ment rendered )" the 1ourt of 8irst !nstance of #ueva >ci5a in civil case #o. 1$8/. ,he facts are undisputed, the parties havin% entered into an a%reed statement thereof, the pertinent and materials part of +hich are2 ,he plaintiffs are the children and heirs of the late ,i)urcio del 0osario. On 12 (ecem)er 19&;, the Secretar" of A%riculture and 1ommerce, )" authorit" of the resident of the 1ommon+ealth of the hilippines, issued under the provisions of the u)lic =and Act 3Act #o. 28*/4 homestead patent #o. /$59; to ,i)urcio del 0osario. ,he homestead +ith an area of 9 hectares, /& ares and 1/ centares is situated in )arrio San -auricio, municipalit" of San Jose, province of #ueva >ci5a. On 11 8e)ruar" 19&*, the 0e%istrar of (eeds in and for the province of #ueva >ci5a issued ori%inal certificate of title #o. /82$ in the name of the homesteader 3Anne' A, stipulation of facts, pp. 25&$, 0ec. on App.4. On 2/ 8e)ruar" 19&*, ,i)urcio del 0osario o)tained a loan from rimitivo A)ad in the sum of 2,$$$ +ith interest at the rate of 12< per annum, pa"a)le on &1 (ecem)er 19/1. As securit" for the pa"ment thereof he mort%a%ed the improvements of the parcel of land in favor of the creditor 3Anne' ., complaint, pp. 1$-1&, 0ec. on App.4. On the same da", 2/ 8e)ruar", the mort%a%or e'ecuted an @irrevoca)le special po+er of attorne" coupled +ith interest@ in favor of the mort%a%ee, authoriDin% him, amon% others, to sell and conve" the parcel of land 3Anne' A, complaint, pp. *-9, 0ec. on App.4. ,hereafter the mort%a%or and his famil" moved to Santia%o, !sa)ela, and there esta)lished a ne+ residence. Sometime in (ecem)er 19/5 the mort%a%or died leavin% the mort%a%e de)t unpaid. On 9 June 19/*, rimitivo A)ad, actin% as attorne"-in-fact of ,i)urcio del 0osario, sold the parcel of land to his son ,eodorico A)ad for and in consideration of the toAen sum of 1.$$ and the pa"ment )" the vendee of the mort%a%e de)t of ,i)urcio del 0osario to rimitivo A)ad 3Anne' 1, complaint, pp. 1&1;, 0ec. on App.4. ,he vendee tooA possession of the parcel of land. :pon the filin% and re%istration of the last deed of sale, the 0e%istrar of (eeds in and for the province of #ueva >ci5a cancelled ori%inal certificate of title #o. /82$ in the name of ,i)urcio del 0osario and in lieu thereof issued transfer certificate of title #o. 1882 in favor of the vendee ,eodorico A)ad. On 29 (ecem)er 1952 the plaintiffs )rou%ht suit a%ainst the defendants to recover possession and o+nership of the parcel of land, dama%es, attorne"'s fees and costs. ,he defendants ans+ered the complaint and pra"ed for the dismissal thereof, dama%es, attorne"'s fees and costs.
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%rantin% that the irrevoca)le po+er of attorne" +as la+ful and valid it +ould su)5ect the parcel of land to an encum)rance. As the homestead patent +as issued on 12 (ecem)er 19&; and the po+er of attorne" +as e'ecuted on 2/ 8e)ruar" 19&*, it +as in violation of the la+ that prohi)its the alienation or encum)rance of land ac7uired )" homestead from the date of the approval of the application and for a term of five "ears from and after the issuance of the patent or %rant. Appellants contend that the po+er of attorne" +as to )e availed of )" the a%ent after the lapse of the prohi)ition period of five "ears, and that in fact rimitivo A)ad sold the parcel of land on 9 June 19/*, after the lapse of such period. #othin% to that effect is found in the po+er of attorne". Appellants claim that the trial court should have directed the appellees to reim)urse ,eodorico A)ad for +hat he had paid to rimitivo A)ad to dischar%e the mort%a%e in the latter's favor as part of the consideration of the sale. As the sale to ,eodorico A)ad is null and void, the appellees can not )e compelled to reim)urse ,eodorico A)ad for +hat he had paid to rimitivo A)ad. ,he former's ri%ht of action is a%ainst the latter, +ithout pre5udice to the ri%ht of rimitive A)ad to foreclose the mort%a%e on the improvements of the parcel of land if the mort%a%e de)t is not paid )" the appellees, as heirs and successors-in-interest of the mort%a%or. ,he 5ud%ment appealed from is affirmed, +ith costs a%ainst the appellants.
50
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G.R. No. &462% A0903t %1, 19'& B SAYA LAND TRANS$ORTAT ON !O., N!., ANTON O *. !"EN!O and BEN/A- N G. ROA, petitioners, vs. -AR! ANO !. SAN!+E4 AND T+E +ON. NTER-ED ATE A$$ELLATE !O"RT, respondents.
$AD LLA, .&@ ,his is a petition for certiorari to revie+ the decision 5 of respondent !ntermediate Appellate 1ourt, dated 25 April 198;, in A1-9.0. #o. 1C-$1&$$ +hich affirmed the decision 55 of the 0e%ional ,rial 1ourt, *th Judicial 0e%ion, .ranch H!!, 1e)u 1it", dated 1/ 8e)ruar" 198&, in 1ivil 1ase #o. 0-188&$ +hich +as a suit for Specific erformance +ith reliminar" !n5unction and (ama%es. etitioner .isa"a =and ,ransportation 1ompan", !nc. 3.!S,0A#1O, for short4 has )een en%a%ed in the shippin% )usiness, operatin% several passen%er-car%o vessels, and amon% the ports of call of these vessels has )een .utuan 1it". As earl" as 195/, private respondent -arciano SancheD 3SancheD, for short4 +as an emplo"ee of .!S,0A#1O, specificall", a 7uartermaster in one of its vessels, !n 1959, he ceased to )e an emplo"ee as he en%a%ed in stevedorin% services in the port of .utuan 1it" and rendered steverdorin% services for the vessels of .!S,0A#1O. 1 !n -a" 19*5, SancheD +as appointed )" .!S,0A#1O as shippin% a%ent in .utuan 1it" for the vessel -?C (on -ariano. 2 ,he ne+ .utuan 1it" A%ent % referred to in the letter @>'hi)it @1@ +as -arciano SancheD. =ater, on 12 -arch 19*;, +hen .!S,0A#1O +as under receivership, SancheD +as appointed )" its 0eceiver, Att". Adolfo C. Amor, as actin% shippin% a%ent, also for -?C (oYa 0emedies, in addition to -?C (oYa 8ilomena, in the port of .utuan 1it" @pendin% the e'ecution of the formal contract of a%enc". 4 Ghen SancheD +as constituted as actin% shippin% a%ent, he received the same commission as his predecessor, one O#9 I:! +ho received 1$< for all frei%ht and passen%er revenues comin% from .utuan 1it" and 5 < for all frei%ht %oin% to .utuan. 5 ,hereafter, or on 2* Jul" 19*;, a formal 1ontract of A%enc", marAed as >'hi)it @8@, +as e'ecuted )et+een .!S,0A#1O, represented )" 0eceiver Att". Adolfo C. Amor and -arciano 1. SancheD, represented )" his authoriDed representative >'e7uiel Aranas. On &$ Jul" 19*;, after SancheD found that ara%raph 1; of the 1ontract of a%enc" +as 7uite pre5udicial to him, he e'ecuted +ith .!S,0A#1O a Supplemental Shippin% A%enc" 1ontract, marAed as >'hi)it @9@, +hich +as dul" si%ned )" 0eceiver Att". Adolfo C. Amor on )ehalf of .!S,0A#1O and -arciano 1. SancheD himself. 6 .ut, )oth the 1ontract of A%enc" and the Supplemental Shippin% A%enc" 1ontract +ere never su)mitted )" Att". Adolfo Amor to the receivership court for its approval. ." virtue of the 1ontract of A%enc" and the Supplemental Shippin% A%enc" 1ontract 3hereinafter referred to as 1ontracts4, SancheD performed his duties as shippin% a%ent of .!S,0A#1O, and he received his correspondin% commissions as such shippin% a%ent.
ursuant to the 1ontracts, SancheD leased a parcel of land o+ned )" Jose S. -onde5ar +hich +as used as the +harf and )erthin% facilities of .!S,0A#1O. & At an e'pense of more than 1$$,$$$.$$, SancheD constructed the +harf on the land he leased and the +harf +as used to facilitate the loadin% and unloadin% of car%oes of the .!S,0A#1O vessels at the port of .utuan 1it" from 19*; to (ecem)er 19*9. SancheD also constructed a odega at his +harf for use in connection +ith the shippin% )usiness of .!S,0A#1O. Be constructed an office for the a%enc" and, as of (ecem)er 19*9, he had an office force of 1& emplo"ees, all paid and maintained )" him. SancheD operated si' 3;4 car%o trucAs and one 314 5eep for the service of the shippin% a%enc". As shippin% a%ent, SancheD put up )ill)oards and other forms of advertisement to enhance the shippin% )usiness of .!S,0A#1O. Be esta)lished %ood )usiness relations +ith the )usiness communit" of .utuan 1it". ' !n these endeavors, SancheD succeeded in increasin% the volume of the shippin% )usiness of .!S,0A#1O at the .utuan 1it" port, so much so that his earnin%s on frei%ht alone increased from an avera%e of 8,5&5.$$ a month in 19*5 to an avera%e of a)out &2,$$$.$$ a month in the last seven months of 19*9. 9 Ghile the shippin% )usiness of .!S,0A#1O in .utuan 1it" flourished, evidentl" to the mutual )enefit of )oth parties, on 2; (ecem)er 19*9, co-petitioner .en5amin 9. 0oa, as >'ecutive Ciceresident of .!S,0A#1O, +rote SancheD a letter 1( advisin% him that, effective 1 Januar" 198$, .!S,0A#1O +ould commence operatin% its )ranch office in .utuan 1it". rior to this, on 11 (ecem)er 19*9, SancheD +as invited to attend a meetin% of the .oard of (irectors of .!S,0A#1O +herein he +as told )" copetitioner Antonio C. 1uenco that the .oard +as to open a )ranch office in .utuan 1it" and he +as asAed +hat +ould )e his proposals. SancheD su)mitted his proposals in +ritin%, marAed as >'hi)it @##@, )ut these +ere not accepta)le to .!S,0A#1O. 11 0ealiDin% that the letter, marAed as >'hi)it @88@, +as in effect a repudiation of the 1ontracts, SancheD filed an action for specific performance +ith preliminar" in5unction and dama%es +ith the 0e%ional ,rial 1ourt of 1e)u 1it" on 28 (ecem)er 19*9. ursuant to the letter 3>'hi)it @88@4, .!S,0A#1O actuall" opened and operated a )ranch office in .utuan 1it" on 15 Januar" 198$. .!S,0A#1O throu%h its ne+ representative contacted the shippers in .utuan 1it" and nei%h)orin% to+ns, advisin% them to transact their )usiness directl" +ith its ne+ )ranch office in .utuan 1it". :nder these circumstances, the )usiness of SancheD, as shippin% a%ent of .!S,0A#1O in .utuan 1it", +as seriousl" impaired and undermined Be could not solicit as man" passen%ers as he used to, )ecause the passen%er ticAets issued to him )" .!S,0A#1O +ere limited. ,he car%oes solicited )" SancheD +ere loaded on a @chance )asis@ )ecause those that +ere solicited )" the )ranch office +ere %iven priorit". 12 After due hearin% and their respective memorandum filed, the trial court rendered 5ud%ment in favor of SancheD, the dispositive portion of +hich is 7uoted hereunder2 1% GB>0>8O0>, 5ud%ment is here)" rendered declarin% the contracts, >'hi)its @8@ and @9@, as valid and )indin% )et+een the plaintiff and defendant .!S,0A#1O up to its e'pir" date on Jul" 2*, 1981, and orderin% the defendant 51
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.!S,0A#1O to pa" the plaintiff the total sum of 8!C> B:#(0>( >!9B,I >!9B, ,BO:SA#( >SOS 3 588,$$$.$$4 in concept of unearned commissions as +ell as dama%es, +ith interest at the le%al rate counted from Jul" 28, 1981 up to the time the amount is full" paid, and the further sum of 15,$$$.$$ as attorne"'s fees, and the costs of this action. ,hereafter, .!S,0A#1O appealed to the 1ourt of Appeals +hich, as heretofore stated, affirmed the decision of the trial court in toto. Bence this etition for certiorari )rou%ht to this 1ourt, +ith the petitioners raisin% the follo+in% issues2 14 ! 1A# A 1O:0, A O!#,>( 0>1>!C>0 CA=!(=I >#,>0 !#,O A 1O#,0A1, G!,BO:, 1O:0, A 0OCA=6 !! !S ,B> O >#!#9 .I .!S,0A#1O O8 A .0A#1B O88!1> !# .:,:A# 1!,I A C!O=A,!O# O8 ,B> 1O#,0A1, O8 A9>#1I A#( S: =>->#,A= SB! !#9 A9>#1I 1O#,0A1, >HB!.!,S @8@ and @9@4 ASS:-!#9 ,B>- ,O .> CA=!(6 !!! GBA, >88>1, (!( ,B> GO0X!#9 A90>>->#,S 3>HB!.!,S @S@ and @:@4 BAC> O# A8O0>SA!( M:>S,!O#>( 1O#,0A1,S6 !C !S ,B> AGA0( 8O0 :#>A0#>( 1O--!SS!O# A#( (A-A9>S J:S,!8!>(6 ,he %eneral po+ers of a court-appointed receiver are provided in Section *, 0ule 59 of the 0ules of 1ourt. :nder such rule, the receiver is @su)5ect to the control of the court in +hich the action is pendin%@ and he can @%enerall" do such acts respectin% the propert" as the court ma" authoriDe@. ,he act of 0eceiver Amor in enterin% into a contract of a%enc" +ith SancheD is not one of the acts specificall" allo+ed in the mentioned rule. Ghile such act of Amor ma" )e ar%ua)l" implied from the po+er of the receiver to @taAe and Aeep possession of the propert" in controvers"@, and that the act of Amor is covered )" the )road phrase that a receiver can @%enerall" do such acts respectin% the propert" as the court ma" authoriDe@, still, it is necessar" that the acts of the receiver have the approval or authoriDation of the court +hich appointed him as a receiver. As held in one case, 15 a court-appointed receiver cannot validl" enter into a contract +ithout the approval of the court.
etition, 1& the" la)elled the contracts as unenforcea)le under Article 1/$&3l4 of the 1ivil 1ode. ,he determination, therefore, of +hether the 7uestioned contracts are void or merel" unenforcea)le is important, )ecause of the settled distinction that a void and ine'istent contract can not )e ratified and )ecome enforcea)le, +hereas an unenforcea)le contract ma" still )e ratified and, thereafter, enforced. ,he petitioners alle%e that the 1ontracts are void, citin% Article 1/$93l4 of the 1ivil 1ode +hich provides that contracts +hose cause, o)5ect or purpose is contrar" to la+, morals, %ood customs, pu)lic order or pu)lic polic", are ine'istent and void from the )e%innin%. !n the case at )ar, the contracts of a%enc" +ere entered into for the mana%ement and operation of .!S,0A#1O's )usiness in .utuan 1it". Said 1ontracts necessaril" imposed o)li%ations and lia)ilities on the contractin% parties, there)" affectin% the disposition of the assets and )usiness of the compan" under receivership. .ut a perusal of the 1ontracts in 7uestion +ould sho+ that there is nothin% in their cause, o)5ect or purpose +hich renders them void. ,he purpose of the 1ontracts +as to create an a%enc" for .!S,0A#1O +ith -arciano SancheD as its a%ent in .utuan 1it". >ven as to the other provisions of the 1ontracts, there is nothin% in their cause or o)5ect +hich can )e said as contrar" to la+, morals, %ood customs, pu)lic order or pu)lic polic" so as to render them void. On the other hand, para%raph 1. Article 1/$& of the 1ivil 1ode provides that contracts @entered into in the name of another person )" one +ho has )een %iven no authorit" or le%al representation, or +ho has acted )e"ond his po+ers@ are unenforcea)le, unless the" are ratified. !n the case at )ar, it is undisputed that Att". Adolfo Amor +as entrusted, as receiver, +ith the administration of .!S,0A#1O and it )usiness. .ut the act of enterin% into a contract is one +hich re7uires the authoriDation of the court +hich appointed him receiver. 1onse7uentl", the 7uestioned 1ontracts can ri%htfull" )e classified as unenforcea)le for havin% )een entered into )" one +ho had acted )e"ond his po+ers, due to 0eceiver Amor's failure to secure the court's approval of said 1ontracts. ,hese unenforcea)le 1ontracts +ere nevertheless deemed ratified in the case at )ar, )ased upon the facts and circumstances on record +hich have led this 1ourt to conclude that .!S,0A#1O had actuall" ratified the 7uestioned 1ontracts.
rivate respondent SancheD filed his complaint in the lo+er court on 28 (ecem)er 19*9. .ut on 1$ Januar" 198$, copetitioner .en5amin 9. 0oa, as >'ecutive Cice- resident of .!S,0A#1O, still sent SancheD three 3&4 separate letters +ith the follo+in% contents2 3&4 reducin% his passa%e commission from 1$<, as he used to receive in the previous "ears, to *-1?2< @as stated in the agenc! contract dated EH Ful! *AHB, 1' 324 advisin% SancheD that in vie+ of @his failure to post a )ond or such other securities accepta)le to the compan" in the sum of 5,$$$.$$pursuant to par. I of the Contract e.ecuted ! Ghat then is the status of the 1ontracts +hich 0eceiver Amor (anchez the plaintiff /ith BI(T5A<C4 on EH Ful! *AHB , +e are entered into +ith SancheD, +ithout the approval of the court +hich recallin% all unused passa%e ticAets issued "our a%enc"@ and appointed him receiver6 >ven the petitioners noticea)l" +aver as to remindin% him 3SancheD4 also that Dpursuant to par. E of the e'act status of these 1ontracts. ,he petitioners alle%e in their afore&entioned Contract, solicitation of car%o and passen%ers shall -emorandum 16 su)mitted to this 1ourt that the" are void contracts )e undertaAen )" "ou strictl" in accordance +ith the scheduled rates under Article 1/$93l4 of the 1ivil 1ode, +hereas, in their of the 1ompan"E 19 and 3&4 informin% SancheD that @+e Bus Org 1 summer (obligations of principal and modes of extinguishment of agency) 52
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3petitioners4 are a iding strictl! /ith the ter&s of the contracts e.ecuted et/een Marciano C (anchez% and Att!. Adolfo O A&or in ehalf of BI(T5A<C4% etc. etc. 2( ,he three 3&4 letters of .en5amin 9. 0oa in effect reco%niDed and %ave efficac" to the 1ontracts in 7uestion. ,he declaration of .en5amin 9. 0oa that .!S,0A#1O did not have an" Ano+led%e a)out the 1ontracts )efore the complaint +as filed on 28 (ecem)er 19*9 is contradicted )" his o+n testimon" that, as earl" as 1/ (ecem)er 19*9, he +as alread" looAin% for the contract, after he sa+ >'hi)it @##@, +herein SancheD re7uested the compan" @to a)ide +ith the terms of the contract +hich +ill e'pire on Jul" 1981E 21 .esides, the pretended lacA +hich +ill e'pire on Jul" 1981 of Ano+led%e of .en5amin 9. 0oa can not )e e7uated +ith .!S,0A#1O's. !t should )e noted that 0oa started to +orA for .!S,0A#1O onl" on 2* April 19*9, 22 +hereas, the 1ontracts +ere e'ecuted in 19*;. ,he people +ho +ere more in a position to Ano+ a)out the 1ontracts, liAe the compan" officers and mem)ers of the )oard of directors at the time the 1ontracts +ere entered into, especiall" Antonio C. 1uenco, +ere never presented as +itnesses. Aside from this, the compan" cannot den" its ratification of the 1ontracts even )efore the time of .en5amin 9. 0oa, )ecause +hen Att". 8ulveo elaeD succeeded Att". Adolfo Amor as 0eceiver, he +as represented )" .!S,0A#1O's shippin% mana%er as havin% taAen co%niDance of these 1ontracts and sanctioned the acts of SancheD as shippin% a%ent of .!S,0A#1O in .utuan 1it". ,his is sho+n )" a letter, 2% dated 15 8e)ruar" 19**, +ritten )" 1apt. 8ederico 0e"es, 24 the shippin% mana%er of .!S,0A#1O at that time. ,he letter states that @the 0eceiver 3Att". 8ulveo elaeD4 maintains that the previous a%enc" contract remains and 3sic4 )asicall" the same e'cept that the rates of the a%enc" commission +ere modified. 8urthermore, it is clear that .!S,0A#1O received material )enefits from the contracts of a%enc" of SancheD, )ased upon the monthl" statements of income of .!S,0A#1O, upon +hich the commissions of SancheD +ere )ased. 25 A perusal of the 1ontracts +ill also sho+ that there is no sin%le provision therein that can )e said as pre5udicial or not )eneficial to .!S,0A#1O. As held in (avings v. Ball-Bearing Chain Co. 12 #ot ever" act +ithin the letter of an order can )e sanctioned, nor ever"thin% done +ithout the direction of the court condemned. ,he tests to )e applied are2 314 +as the act under investi%ation +ithin the authorit" conferred )" an order of court6 324 !f so, +as it performed +ith reference to the preservation of the estate, as a man of ordinar" sa%acit" and prudence +ould have performed it under liAe circumstances6 3&4 !f +ithout authorit", +as it )eneficial to the estate6 .esides, in our considered opinion, the doctrine of estoppel precludes .!S,0A#1O from repudiatin% an o)li%ation voluntaril" assumed )" it, after havin% accepted )enefits therefrom. ,o countenance such, repudiation +ould )e contrar" to e7uit" and +ould put a premium on fraud or misrepresentation, 2& +hich this 1ourt +ill not sanction. Anent the issue of +hether the -emorandum of A%reement and the
GorAin% A%reement 3>'hi)its @S@ and @:@4 +hich +ere e'ecuted )" the parties in this case on / 8e)ruar" 19** and 28 -a" 19*9, respectivel", novated the 7uestioned 1ontracts, the ans+er is also in the ne%ative. .!S,0A#1O avers that >'hi)it @S@ su)stantiall" altered or chan%ed the principal terms and conditions of >'hi)its @8@ and @9@ on material points, such as, reduction of the rate of commission for frei%ht and passa%e 3from 1$< to *-1?2<4, the manner of li7uidation and remittance of collections of the a%ent, the mode of pa"ment of the a%ent's commissions, and the term of the 1ontract +hich is from a period of 5 "ears to a term of 1 "ear rene+a)le "earl" upon mutual consentE and that >'hi)it @:@ ,furthermore, )olstered this novation theor". #ovation is not e7uivalent or s"non"mous to mere alteration, modification or amendment. #ovation is the su)stitution of a ne+ o)li%ation for an e'istin% or old one, +hich is there)" e'tin%uished. #ovation taAes place +hen the o)5ect or principal condition of an o)li%ation is chan%ed or altered. 2' #ovation is never presumedE it must )e e'plicitl" stated or there must )e a manifest incompati)ilit" )et+een the old and the ne+ o)li%ations in ever" aspect. 29 ,he test of incompati)ilit" )et+een t+o o)li%ations or contracts, is +hether or not the" can stand to%ether, each one havin% an independent e'istence. !f the" cannot, the" are incompati)le, and the later o)li%ation novates the first. !n the case at )ar, it can )e deduced that the A%reements, >'hi)its @S@ and @:@, +ere not meant to novate the herein 7uestioned contracts. 0ather, the intent of the parties +as to suspend some of the provisions of the 1ontracts for a period of one 314 "ear, durin% +hich, the provisions of the A%reements +ill prevail. As par. 8 of the -emorandum of A%reement provides2 @!t is in this spirit of cooperation +ith the 0eceiver to ena)le him to pa" hu%e o)li%ations of the compan" that the a%ent -arciano SancheD has acceded to the re7uest of -essrs. -i%uel 1uenco and Antonio 1uenco to accept the reduction of his commissions.@ !t +ould not )e e7uita)le to SancheD to sa" no+ that the 1ontracts +ere e'tin%uished and su)stituted )" the A%reements. !t +ould )e tantamount to punishin% SancheD for the concessions he e'tended to .!S,0A#1O. .esides, the chan%es +ere not reall" su)stantial to )rin% a)out a novation. ,he chan%es pointed out )" .!S,0A#1O )et+een the 1ontracts and the A%reements do not %o into the essence of the cause or o)5ect of the former. :nder the A%reements, SancheD remains the a%ent of .!S,0A#1O in .utuan 1it". ,here is reall" no clear proof of incompati)ilit". !n fact, the 1ontracts and the A%reements can )e reconciled. ,he provisions of the A%reements +hich +ere more of chan%es on ho+ to enforce the a%enc", prevailed durin% the period provided in them, )ut after their e'piration, the conditions under the 1ontracts +ere implemented a%ain. ,he term of the a%enc" contract +hich +as for a period of five 354 "ears still continued, until 2* Jul" 1981. 1onsiderin% that the contract of a%enc" and the supplemental shippin% a%enc" contract are valid and )indin% )et+een .!S,0A#1O and SancheD, the former's openin% of a )ranch in .utuan 1it" +as, in effect, a violation of the 1ontracts. SancheD entered into the a%enc" 1ontract )ecause of the e'pected income and profits for himself. ,here could )e no other motive from a )usinessman's point of vie+. A provision in the Supplemental Shippin% A%enc" 1ontract reads2 ;. ,hat in consideration of the fore%oin% 53
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additional particular o)li%ations of the A9>#,, the 1O- A#I a%rees not to appoint or emplo" another a%ent in .utuan 1it" or in an" of the 1it"'s nei%h)orin% to+ns +ithout the +ritten consent of the A9>#, first o)tained. 3>'hi)it @9 @4 ,he additional particular o)li%ations referred to in >'hi)it @9@ +ere the puttin% up of an ade7uate a%enc" office in .utuan 1it", the emplo"ment of canvassers of passen%ers and solicitors of car%oes, that the A%ent shall provide at least t+o 324 car%o trucAs and a private docAin% and )erthin% facilities for the vessels of the compan", at the e'pense of SancheD. Aside from this, SancheD also had to spend for the lease of the +harf and the construction of the odega at the +harf. !t ma" )e true that there is no e'press prohi)ition for .!S,0A#1O to open its )ranch in .utuan 1it". .ut, the ver" reason +h" .!S,0A#1O a%reed not to emplo" or appoint another a%ent in .utuan 1it" +as to prevent competition a%ainst SancheD' a%enc", in order that he mi%ht recover +hat he invested and eventuall" ma'imiDe his profits. ,he openin% )" .!S,0A#1O of a )ranch in .utuan 1it" virtuall" resulted in conse7uences to SancheD +orse than if another a%ent had )een appointed. !n effect, the openin% of a )ranch office in .utuan 1it" +as a violation of the 1ontracts of a%enc". Article 1&15 of the 1ivil 1ode provides2 1ontracts are perfected )" mere consent, and from that moment the parties are )ound not onl" to the fulfillment of +hat has )een e'pressl" stipulated )ut also to all the conse7uences +hich, accordin% to their nature, ma" )e in Aeepin% +ith %ood faith, usa%e and la+. !n the case at )ar, %ood faith re7uired that .!S,0A#1O refrain from openin% its )ranch in .utuan 1it" durin% the effectivit" of the a%enc" contract +ith SancheD, or until 2* Jul" 1981. -oreover, the openin% of the )ranch office +hich, in effect, +as a revocation of the contracts of a%enc" is not sanctioned )" la+ )ecause the a%enc" +as the means )" +hich SancheD could fulfill his o)li%ations under >'hi)its @8@ and @9@. Article 192* of the 1ivil 1ode, amon% others, provides2 @An a%enc" cannot )e revoAed if a )ilateral contract depends upon it, or if it is the means of fulfillin% an o)li%ation alread" contracted@. As to the issue of +hether the a+ard of 588,$$$.$$ to SancheD for unearned commissions and dama%es is 5ustified, the ans+er is also in the affirmative, considerin% that .!S,0A#1O violated the 1ontracts of a%enc" and that SancheD, )efore the )reach )" .!S,0A#1O of said a%enc" 1ontracts, +as alread" earnin% an avera%e monthl" commission of &2,$$$.$$, as sho+n )" the statements of commissions prepared )" .!S,0A#1O itself. GB>0>8O0>, the petition is denied. ,he decision of the respondent 1ourt is affirmed.
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administrators of their estates. G.R. No. LA24%%2 /an0ar< %1, 19&' RA-ON RALLOS, Adm2n23trator o: t6e E3tate o: !ON!E$! ON RALLOS, petitioner, vs. #EL E GO !+AN , SONS REALTY !OR$ORAT ON and !O"RT O# A$$EALS, respondents. (eno% Mendoza # Associates for petitioner. 5a&on Duterte for private respondent. After trial the court a quo rendered 5ud%ment +ith the follo+in% dispositive portion2 A. On laintiffs 1omplaint F 314 (eclarin% the deed of sale, >'h. @1@, null and void insofar as the one-half proindiviso share of 1oncepcion 0allos in the propert" in 7uestion, F =ot 598& of the 1adastral Surve" of 1e)u F is concernedE 324 Orderin% the 0e%ister of (eeds of 1e)u 1it" to cancel ,ransfer 1ertificate of ,itle #o. 12989 coverin% =ot 598& and to issue in lieu thereof another in the names of 8>=!H 9O 1BA# K SO#S 0>A=,I 1O0 O0A,!O# and the >state of 1oncepcion 0allos in the proportion of one-half 31?24 share each pro-indivisoE 3&4 Orderin% 8eli' 9o 1han K Sons 0ealt" 1orporation to deliver the possession of an undivided one-half 31?24 share of =ot 598& to the herein plaintiffE 3/4 Sentencin% the defendant Juan ,. .orromeo, administrator of the >state of Simeon 0allos, to pa" to plaintiff in concept of reasona)le attorne"'s fees the sum of 1,$$$.$$E and 354 Orderin% )oth defendants to pa" the costs 5ointl" and severall". .. On 9O 1BA#,S 1ross-1laim2 314 Sentencin% the codefendant Juan ,. .orromeo, administrator of the >state of Simeon 0allos, to pa" to defendant 8eli' 1o 1han K Sons 0ealt" 1orporation the sum of 5,&/&./5, representin% the price of onehalf 31?24 share of lot 598&E 55
-"FO4 $AL-A, .&: ,his is a case of an attorne"-in-fact, Simeon 0allos, +ho after of his death of his principal, 1oncepcion 0allos, sold the latter's undivided share in a parcel of land pursuant to a po+er of attorne" +hich the principal had e'ecuted in favor. ,he administrator of the estate of the +ent to court to have the sale declared uneanforcea)le and to recover the disposed share. ,he trial court %ranted the relief pra"ed for, )ut upon appeal the 1ourt of Appeals uphold the validit" of the sale and the complaint. Bence, this etition for 0evie+ on certiorari. ,he follo+in% facts are not disputed. 1oncepcion and 9erundia )oth surnamed 0allos +ere sisters and re%istered co-o+ners of a parcel of land Ano+n as =ot #o. 598& of the 1adastral Surve" of 1e)u covered )" ,ransfer 1ertificate of ,itle #o. 1111; of the 0e%istr" of 1e)u. On April 21, 195/, the sisters e'ecuted a special po+er of attorne" in favor of their )rother, Simeon 0allos, authoriDin% him to sell for and in their )ehalf lot 598&. On -arch &, 1955, 1oncepcion 0allos died. On Septem)er 12, 1955, Simeon 0allos sold the undivided shares of his sisters 1oncepcion and 9erundia in lot 598& to 8eli' 9o 1han K Sons 0ealt" 1orporation for the sum of 1$,;8;.9$. ,he deed of sale +as re%istered in the 0e%istr" of (eeds of 1e)u, ,1, #o. 11118 +as cancelled, and a ne+ transfer certificate of ,itle #o. 12989 +as issued in the named of the vendee. On -a" 18, 195; 0amon 0allos as administrator of the !ntestate >state of 1oncepcion 0allos filed a complaint docAeted as 1ivil 1ase #o. 0-/5&$ of the 1ourt of 8irst !nstance of 1e)u, pra"in% 314 that the sale of the undivided share of the deceased 1oncepcion 0allos in lot 598& )e d unenforcea)le, and said share )e reconve"ed to her estateE 324 that the 1ertificate of 'title issued in the name of 8eli' 9o 1han K Sons 0ealt" 1orporation )e cancelled and another title )e issued in the names of the corporation and the @!ntestate estate of 1oncepcion 0allos@ in e7ual undivided and 3&4 that plaintiff )e indemnified )" +a" of attorne"'s fees and pa"ment of costs of suit. #amed part" defendants +ere 8eli' 9o 1han K Sons 0ealt" 1orporation, Simeon 0allos, and the 0e%ister of (eeds of 1e)u, )ut su)se7uentl", the latter +as dropped from the complaint. ,he complaint +as amended t+iceE defendant 1orporation's Ans+er contained a crossclaim a%ainst its co-defendant, Simon 0allos +hile the latter filed third-part" complaint a%ainst his sister, 9erundia 0allos Ghile the case +as pendin% in the trial court, )oth Simon and his sister 9erundia died and the" +ere su)stituted )" the respective
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324 Orderin% co-defendant Juan ,. .orromeo, administrator of the >state of Simeon 0allos, to pa" in concept of reasona)le attorne"'s fees to 8eli' 9o 1han K Sons 0ealt" 1orporation the sum of 5$$.$$. 1. On ,hird- art" 1omplaint of defendant Juan ,. .orromeo administrator of >state of Simeon 0allos, a%ainst Josefina 0allos special administratri' of the >state of 9erundia 0allos2 314 (ismissin% the third-part" complaint +ithout pre5udice to filin% either a complaint a%ainst the re%ular administrator of the >state of 9erundia 0allos or a claim in the !ntestate->state of 1erundia 0allos, coverin% the same su)5ectmatter of the third-part" complaint, at )ar. 3pp. 98-1$$, 0ecord on Appeal4 8eli' 9o 1han K Sons 0ealt" 1orporation appealed in due time to the 1ourt of Appeals from the fore%oin% 5ud%ment insofar as it set aside the sale of the one-half 31?24 share of 1oncepcion 0allos. ,he appellate tri)unal, as adverted to earlier, resolved the appeal on #ovem)er 2$, 19;/ in favor of the appellant corporation sustainin% the sale in 7uestion. 1 ,he appellee administrator, 0amon 0allos, moved for a reconsider of the decision )ut the same +as denied in a resolution of -arch /, 19;5. 2 Ghat is the le%al effect of an act performed )" an a%ent after the death of his principal6 Applied more particularl" to the instant case, Ge have the 7uer". is the sale of the undivided share of 1oncepcion 0allos in lot 598& valid althou%h it +as e'ecuted )" the a%ent after the death of his principal6 Ghat is the la+ in this 5urisdiction as to the effect of the death of the principal on the authorit" of the a%ent to act for and in )ehalf of the latter6 !s the fact of Ano+led%e of the death of the principal a material factor in determinin% the le%al effect of an act performed after such death6 .efore proceedin%s to the issues, Ge shall )riefl" restate certain principles of la+ relevant to the matter tinder consideration. 1. !t is a )asic a'iom in civil la+ em)odied in our 1ivil 1ode that no one ma" contract in the name of another +ithout )ein% authoriDed )" the latter, or unless he has )" la+ a ri%ht to represent him. % A contract entered into in the name of another )" one +ho has no authorit" or the le%al representation or +ho has acted )e"ond his po+ers, shall )e unenforcea)le, unless it is ratified, e'pressl" or impliedl", )" the person on +hose )ehalf it has )een e'ecuted, )efore it is revoAed )" the other contractin% part". 4 Article 1/$& 314 of the same 1ode also provides2 A0,. 1/$&. ,he follo+in% contracts are unenforcea)le, unless the" are 5ustified2 314 ,hose entered into in the name of another person )" one +ho hi - )een %iven no authorit" or
le%al representation or +ho has acted )e"ond his po+ersE ... Out of the a)ove %iven principles, sprun% the creation and acceptance of the relationship of agenc! +here)" one part", ca%ed the principal 3&andante4, authoriDes another, called the a%ent 3&andatario4, to act for and in his )ehalf in transactions +ith third persons. ,he essential elements of a%enc" are2 314 there is consent, e'press or implied of the parties to esta)lish the relationshipE 324 the o)5ect is the e'ecution of a 5uridical act in relation to a third personE 3&4 the a%ents acts as a representative and not for himself, and 3/4 the a%ent acts +ithin the scope of his authorit". 5 A%enc" is )asicall" personal representative, and derivative in nature. ,he authorit" of the a%ent to act emanates from the po+ers %ranted to him )" his principalE his act is the act of the principal if done +ithin the scope of the authorit". 0ui facit per aliu& facit se. @Be +ho acts throu%h another acts himself@. 6 2. ,here are various +a"s of e'tin%uishin% a%enc", & )ut her Ge are concerned onl" +ith one cause F death of the principal ara%raph & of Art. 1919 of the 1ivil 1ode +hich +as taAen from Art. 1*$9 of the Spanish 1ivil 1ode provides2 A0,. 1919. Agenc! is e.tinguished. ''' ''' ''' &. B! the death, civil interdiction, insanit" or insolvenc" of the principal or of the a%entE ... 3>mphasis supplied4 ." reason of the ver" nature of the relationship )et+een rincipal and a%ent, a%enc" is e'tin%uished )" the death of the principal or the a%ent. ,his is the la+ in this 5urisdiction. ' Manresa commentin% on Art. 1*$9 of the Spanish 1ivil 1ode e'plains that the rationale for the la+ is found in the @uridical asis of a%enc" +hich is representation ,hem )ein% an in. inte%ration of the personalit" of the principal inte%ration that of the a%ent it is not possi)le for the representation to continue to e'ist once the death of either is esta)lish. Pothier a%rees +ith -anresa that )" reason of the nature of a%enc", death is a necessar" cause for its e'tinction. ?aurent sa"s that the 5uridical tie )et+een the principal and the a%ent is severed ipso 5ure upon the death of either +ithout necessit" for the heirs of the fact to notif" the a%ent of the fact of death of the former. 9 ,he same rule prevails at common la+ F the death of the principal effects instantaneous and a)solute revocation of the authorit" of the a%ent unless the o+er )e coupled +ith an interest. 1( ,his is the prevalent rule in American Jurisprudence +here it is +ell-settled that a po+er +ithout an interest confer. red upon an a%ent is dissolved )" the principal's death, and an" attempted e'ecution of the po+er after+ard is not )indin% on the heirs or representatives of the deceased. 11 &. !s the %eneral rule provided for in Article 1919 that the death of the principal or of the a%ent e'tin%uishes the a%enc", su)5ect to an" e'ception, and if so, is the instant case +ithin that e'ception6 ,hat is 56
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the determinative point in issue in this liti%ation. !t is the contention of respondent corporation +hich +as sustained )" respondent court that not+ithstandin% the death of the principal 1oncepcion 0allos the act of the attorne"-in-fact, Simeon 0allos in sellin% the former's sham in the propert" is valid and enforcea)le inasmuch as the corporation acted in %ood faith in )u"in% the propert" in 7uestion. Articles 19&$ and 19&1 of the 1ivil 1ode provide the e'ceptions to the %eneral rule afore-mentioned. A0,. 19&$. ,he a%enc" shall remain in full force and effect even after the death of the principal, if it has )een constituted in the common interest of the latter and of the a%ent, or in the interest of a third person +ho has accepted the stipulation in his favor. A0,. 19&1. An"thin% done )" the a%ent, +ithout Ano+led%e of the death of the principal or of an" other cause +hich e'tin%uishes the a%enc", is valid and shall )e full" effective +ith respect to third persons +ho ma" have contracted +ith him in %ood. faith. Article 19&$ is not involved )ecause admittedl" the special po+er of attorne" e'ecuted in favor of Simeon 0allos +as not coupled +ith an interest. Article 19&1 is the applica)le la+. :nder this provision, an act done )" the a%ent after the death of his principal is valid and effective onl" under t+o conditions, viD2 314 that the agent acted /ithout kno/ledge of the death of the principal and 7E8 that the third person /ho contracted /ith the agent hi&self acted in good faith . 9ood faith here means that the third person +as not a+are of the death of the principal at the time he contracted +ith said a%ent. ,hese t+o re7uisites must concur the a)sence of one +ill render the act of the a%ent invalid and unenforcea)le. !n the instant case, it cannot )e 7uestioned that the a%ent, Simeon 0allos, Ane+ of the death of his principal at the time he sold the latter's share in =ot #o. 598& to respondent corporation. ,he Ano+led%e of the death is clearl" to )e inferred from the pleadin%s filed )" Simon 0allos )efore the trial court. 12 ,hat Simeon 0allos Ane+ of the death of his sister 1oncepcion is also a findin% of fact of the court a 7uo 1% and of respondent appellate court +hen the latter stated that Simon 0allos 'must have Ano+n of the death of his sister, and "et he proceeded +ith the sale of the lot in the name of )oth his sisters 1oncepcion and 9erundia 0allos +ithout informin% appellant 3the realt" corporation4 of the death of the former. 14 On the )asis of the esta)lished Ano+led%e of Simon 0allos concernin% the death of his principal 1oncepcion 0allos, Article *AJ* of the Civil Code is inapplica le. ,he la+ e'pressl" re7uires for its application lacA of Ano+led%e on the part of the a%ent of the death of his principalE it is not enou%h that the third person acted in %ood faith. ,hus in .uason K 0e"es v. anu"as, the 1ourt appl"in% Article 1*&8 of the old 1ivil rode no+ Art. 19&1 of the ne+ 1ivil 1ode sustained the validit" , of a sale made after the death of the principal ecause it /as not sho/n that the agent kne/ of his principalCs de&ise . 15 ,o the same effect is the case of "errera% et al.% v. ?u! Pi& 6uan% et al.,
19;1, +here in the +ords of Justice Jesus .arrera the 1ourt stated2 ... even %rantin% ar%uemendo that =uis Berrera did die in 19&;, plaintiffs presented no proof and there is no indication in the record, that the a%ent =u" Xim 9uan +as a+are of the death of his principal at the time he sold the propert". ,he death ;f the principal does not render the act of an a%ent unenforcea)le, +here the latter had no Ano+led%e of such e'tin%uishment of the a%enc". 31 S10A /$;, /124 /. !n sustainin% the validit" of the sale to respondent consideration the 1ourt of Appeals reasoned out that there is no provision in the 1ode +hich provides that +hatever is done )" an a%ent havin% Ano+led%e of the death of his principal is void even +ith respect to third persons +ho ma" have contracted +ith him in %ood faith and +ithout Ano+led%e of the death of the principal. 16 Ge cannot see the merits of the fore%oin% ar%ument as it i%nores the e'istence of the %eneral rule enunciated in Article 1919 that the death of the principal e'tin%uishes the a%enc". ,hat )ein% the %eneral rule it follo+s a fortiorithat an" act of an a%ent after the death of his principal is void a initio unless the same fa%s under the e'ception provided for in the aforementioned Articles 19&$ and 19&1. Article 19&1, )ein% an e'ception to the %eneral rule, is to )e strictl" construed, it is not to )e %iven an interpretation or application )e"ond the clear import of its terms for other+ise the courts +ill )e involved in a process of le%islation outside of their 5udicial function. 5. Another ar%ument advanced )" respondent court is that the vendee actin% in %ood faith relied on the po+er of attorne" +hich +as dul" re%istered on the ori%inal certificate of title recorded in the 0e%ister of (eeds of the province of 1e)u, that no notice of the death +as aver annotated on said certificate of title )" the heirs of the principal and accordin%l" the" must suffer the conse7uences of such omission. 1& ,o support such ar%ument reference is made to a portion in ManresaCs 1ommentaries +hich Ge 7uote2 !f the a%enc" has )een %ranted for the purpose of contractin% +ith certain persons, the revocation must )e made Ano+n to them. .ut if the a%enc" is %eneral iii nature, +ithout reference to particular person +ith +hom the a%ent is to contract, it is sufficient that the principal e'ercise due dili%ence to maAe the revocation of the a%enc" pu)licit" Ano+n. !n case of a %eneral po+er +hich does not specif" the persons to +hom represents' on should )e made, it is the %eneral opinion that all acts, e'ecuted +ith third persons +ho contracted in %ood faith, Githout Ano+led%e of the revocation, are valid. !n such case, the principal ma" e'ercise his ri%ht a%ainst the a%ent, +ho, Ano+in% of the revocation, continued to assume a personalit" +hich he no lon%er had. 3-anresa Col. 11, pp. 5;1 and 5*5E pp. 15-1;, rollo4 57
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,he a)ove discourse ho+ever, treats of revocation )" an act of the principal as a mode of terminatin% an a%enc" +hich is to )e distin%uished from revocation )" operation of la/ such as death of the principal +hich o)tains in this case. On pa%e si' of this Opinion Ge stressed that )" reason of the ver" nature of the relationship )et+een principal and a%ent, a%enc" is e'tin%uished ipso @ure upon the death of either principal or a%ent. Althou%h a revocation of a po+er of attorne" to )e effective must )e communicated to the parties concerned, 1' "et a revocation )" operation of la+, such as )" death of the principal is, as a rule, instantaneousl" effective inasmuch as @)" le%al fiction the a%ent's e'ercise of authorit" is re%arded as an e'ecution of the principal's continuing /ill.19 Gith death, the principal's +ill ceases or is the of authorit" is e'tin%uished. ,he 1ivil 1ode does not impose a dut" on the heirs to notif" the a%ent of the death of the principal Ghat the 1ode provides in Article 19&2 is that, if the agent die his heirs &ust notif! the principal thereof , and in the meantime adopt such measures as the circumstances ma" demand in the interest of the latter. Bence, the fact that no notice of the death of the principal +as re%istered on the certificate of title of the propert" in the Office of the 0e%ister of (eeds, is not fatal to the cause of the estate of the principal ;. Boldin% that the %ood faith of a third person in said +ith an a%ent affords the former sufficient protection, respondent court dre+ a @parallel@ )et+een the instant case and that of an innocent purchaser for value of a land, statin% that if a person purchases a re%istered land from one +ho ac7uired it in )ad faith F even to the e'tent of fore%oin% or falsif"in% the deed of sale in his favor F the re%istered o+ner has no recourse a%ainst such innocent purchaser for value )ut onl" a%ainst the for%er. 2( ,o support the correctness of this respondent corporation, in its )rief, cites the case of Blondeau% et al.% v. <ano and Oalle@o, ;1 hil. ;25. Ge 7uote from the )rief2 !n the case of An%el .londeau et al. v. A%ustin #ano et al., ;1 hil. ;&$, one Calle5o +as a coo+ner of lands +ith A%ustin #ano. ,he latter had a po+er of attorne" supposedl" e'ecuted )" Calle5o #ano in his favor. Calle5o delivered to #ano his land titles. ,he po+er +as re%istered in the Office of the 0e%ister of (eeds. Ghen the la+"er-hus)and of An%ela .londeau +ent to that Office, he found all in order includin% the po+er of attorne". .ut Calle5o denied havin% e'ecuted the po+er ,he lo+er court sustained Calle5o and the plaintiff .londeau appealed. 0eversin% the decision of the court a 7uo, the Supreme 1ourt, 7uotin% the rulin% in the case of =liason v. Qil orn% 2;1 :.S. /5*, held2 .ut there is a narro+er %round on +hich the defenses of the defendantappellee must )e overruled. A%ustin #ano had possession of Jose Calle5o's title papers. Githout those title papers handed over to #ano +ith the ac7uiescence
of Calle5o, a fraud could not have )een perpetuated. Ghen 8ernando de la 1anters, a mem)er of the hilippine .ar and the hus)and of An%ela .londeau, the principal plaintiff, searched the re%istration record, he found them in due form includin% the po+er of attorne" of Calla5o in favor of #ano. !f this had not )een so and if thereafter the proper notation of the encum)rance could not have )een made, An%ela .londeau +ould not have sent 12,$$$.$$ to the defendant Calle5o.' An e'ecuted transfer of re%istered lands placed )" the re%istered o+ner thereof in the hands of another operates as a representation to a third part" that the holder of the transfer is authoriDed to deal +ith the land. As )et+een t+o innocent persons, one of +hom must suffer the conse7uence of a )reach of trust, the one +ho made it possi)le )" his act of coincidence )ear the loss. 3pp. 19-214 ,he Blondeau decision, ho+ever, is not on all fours +ith the case )efore :s )ecause here Ge are confronted +ith one +ho admittedl" +as an a%ent of his sister and +ho sold the propert" of the latter after her death +ith full Ano+led%e of such death. ,he situation is e'pressl" covered )" a provision of la+ on a%enc" the terms of +hich are clear and unmistaAa)le leavin% no room for an interpretation contrar" to its tenor, in the same manner that the rulin% in .londeau and the cases cited therein found a )asis in Section 55 of the =and 0e%istration =a+ +hich in part provides2 ''' ''' ''' ,he production of the o+ner's duplicate certificate +henever an" voluntar" instrument is presented for re%istration shall )e conclusive authorit" from the re%istered o+ner to the re%ister of deeds to enter a ne+ certificate or to maAe a memorandum of re%istration in accordance +ith such instruments, and the ne+ certificate or memorandum Shall )e )indin% upon the re%istered o+ner and upon all persons claimin% under him in favor of ever" purchaser for value and in %ood faith2 Provided ho/ever, ,hat in all cases of re%istration provided )" fraud, the o+ner ma" pursue all his le%al and e7uita)le remedies a%ainst the parties to such fraud +ithout 58
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pre5udice, ho+ever, to the ri%ht, of an" innocent holder for value of a certificate of title. ... 3Act #o. /9; as amended4 *. One last point raised )" respondent corporation in support of the appealed decision is an 18/2 rulin% of the Supreme 1ourt of enns"lvania in Cassida! v. McPenzie +herein pa"ments made to an a%ent after the death of the principal +ere held to )e @%ood@, @the parties )ein% i%norant of the death@. =et us taAe note that the Opinion of Justice 0o%ers +as premised on the statement that the parties /ere ignorant of the death of the principal. Ge 7uote from that decision the follo+in%2 ... Bere the precise point is, +hether a pa"ment to an a%ent +hen the arties are i%norant of the death is a %ood pa"ment. in addition to the case in 1amp)ell )efore cited, the same 5ud%e =ord >llen)oruo%h, has decided in 5 >sp. 11*, the %eneral 7uestion that a pa"ment after the death of principal is not %ood. ,hus, a pa"ment of sailor's +a%es to a person havin% a po+er of attorne" to receive them, has )een held void +hen the principal +as dead at the time of the pa"ment. !f, )" this case, it is meant merel" to decide the %eneral proposition that )" operation of la+ the death of the principal is a revocation of the po+ers of the attorne", no o)5ection can )e taAen to it. .ut if it intended to sa" that his principle applies +here there +as 11$ notice of death, or opportunit" of t+ice ! must )e permitted to dissent from it. ... ,hat a pa"ment ma" )e %ood toda", or )ad tomorro+, from the accident circumstance of the death of the principal, +hich he did not Ano+, and +hich )" no possi)ilit" could he Ano+6 !t +ould )e un5ust to the a%ent and un5ust to the de)tor. !n the civil la+, the acts of the a%ent, done ona fide in ignorance of the death of his principal are held valid and )indin% upon the heirs of the latter. ,he same rule holds in the Scottish la+, and ! cannot )elieve the common la+ is so unreasona)le... 3&9 Am. (ec. *;, 8$, 81E emphasis supplied4 ,o avoid an" +ron% impression +hich the Opinion in Cassida! v. McPenzie ma" evoAe, mention ma" )e made that the a)ove represents the minorit" vie+ in American 5urisprudence. ,hus in Cla!ton v. Merrett, the 1ourt said.F ,here are several cases +hich seem to hold that althou%h, as a %eneral principle, death revoAes an a%enc" and renders null ever" act of the a%ent thereafter performed, "et that +here a pa"ment has )een made in i%norance of the death, such pa"ment +ill )e %ood. ,he leadin% case so holdin% is that of Cassida! v. McPenzie, / Gatts K S. 3 a4 282, &9 Am. *;, +here, in an ela)orate opinion, this vie+ ii )roadl" announced. !t is referred to, and seems to have )een follo+ed, in the case of Dick v. Page%1* -o. 2&/, 5* Am(
2;*E )ut in this latter case it appeared that the estate of the deceased principal had received the )enefit of the mone" paid, and therefore the representative of the estate mi%ht +ell have )een held to )e estopped from suin% for it a%ain. . . . ,hese cases, in so far, at least, as the" announce the doctrine under discussion, are e'ceptional. ,he enns"lvania 1ase, supra 31assida" v. -cXenDie / Gatts K S. 282, &9 Am( *;4, is )elieved to stand almost, if not 7uite, alone in announcin% the principle in its )roadest scope. 352, -isc. &5&, &5*, cited in 2 1.J. 5/94 So also in Travers v. Crane, speaAin% of Cassida! v. McPenzie, and pointin% out that the opinion, e'cept so far as it related to the particular facts, +as a mere dictu&, .ald+in J. said2 ,he opinion, therefore, of the learned Jud%e ma" )e re%arded more as an e'tra5udicial indication of his vie+s on the %eneral su)5ect, than as the ad5udication of the 1ourt upon the point in 7uestion. .ut accordin%l" all po+er +ei%ht to this opinion, as the 5ud%ment of a of %reat respecta)ilit", it stands alone amon% common la+ authorities and is opposed )" an arra" too formida)le to permit us to follo+in% it. 315 1al. 12,1*, cited in 2 1.J. 5/94 Ghatever conflict of le%al opinion +as %enerated )" Cassida! v. McPenzie in American 5urisprudence, no such conflict e'ists in our o+n for the simple reason that our statute, the 1ivil 1ode, e'pressl" provides for t+o e'ceptions to the %eneral rule that death of the principal revoAes ipso 5ure the a%enc", to +it2 314 that the a%enc" is coupled +ith an interest 3Art 19&$4, and 324 that the act of the a%ent +as e'ecuted +ithout Ano+led%e of the death of the principal and the third person +ho contracted +ith the a%ent acted also in %ood faith 3Art. 19&14. >'ception #o. 2 is the doctrine follo+ed in 1assida", and a%ain Ge stress the indispensa)le re7uirement that the a%ent acted +ithout Ano+led%e or notice of the death of the principal !n the case )efore :s the a%ent 0amon 0allos e'ecuted the sale not+ithstandin% notice of the death of his principal Accordin%l", the a%ent's act is unenforcea)le a%ainst the estate of his principal. !# C!>G O8 A== ,B> 8O0>9O!#9, Ge set aside the ecision of respondent appellate court, and Ge affirm en toto the 5ud%ment rendered )" then Bon. Amador >. 9omeD of the 1ourt of 8irst !nstance of 1e)u, 7uoted in pa%es 2 and & of this Opinion, +ith costs a%ainst respondent realt" corporation at all instances.
59
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AMDG

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

>G. R. No. 129919. #ebr0ar< 6, 2((2?

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

G.R. No. 155541

/an0ar< 2&, 2((4

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

G.R. No. LA1424'

Apr28 2', 196(

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

AMDG =O,S !# M:>S,!O#.

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

hil. 5*, ;/4.

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

G.R. No. L-10881

September 30, 1958

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)

Bus Org 1 summer (obligations of principal and modes of extinguishment of agency)