ATP Cases

B
 G.R. No. 115838 July 18, 2002

DE CASTRO, vs. COURT OF APPEALS

The Case

Before us is a Petition for Review on Certiorari1 seeking to annul the Decision of the
Court of Appeals2 dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed in
toto the decision3 of the Regional Trial Court of Quezon City, Branch 80, in Civil Case
No. Q-89-2631. The trial court disposed as follows:

"WHEREFORE, the Court finds defendants Constante and Corazon Amor de

Castro jointly and solidarily liable to plaintiff the sum of:

a) P303,606.24 representing unpaid commission;

b) P25,000.00 for and by way of moral damages;

c) P45,000.00 for and by way of attorney's fees;

d) To pay the cost of this suit.

Quezon City, Metro Manila, December 20, 1991."

The Antecedent Facts

On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued
petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De Castro
("Corazon" for brevity) to collect the unpaid balance of his broker's commission from
the De Castros.4 The Court of Appeals summarized the facts in this wise:

"x x x. Appellants5 were co-owners of four (4) lots located at EDSA corner New York and
Denver Streets in Cubao, Quezon City. In a letter dated January 24, 1984 (Exhibit "A-1, p. 144,
Records), appellee6 was authorized by appellants to act as real estate broker in the sale of
these properties for the amount of P23,000,000.00, five percent (5%) of which will be given to
the agent as commission. It was appellee who first found Times Transit Corporation,
represented by its president Mr. Rondaris, as prospective buyer which desired to buy two (2)
lots only, specifically lots 14 and 15. Eventually, sometime in May of 1985, the sale of lots 14
and 15 was consummated. Appellee received from appellants P48,893.76 as commission.

It was then that the rift between the contending parties soon emerged. Appellee apparently felt
short changed because according to him, his total commission should be P352,500.00 which is
five percent (5%) of the agreed price of P7,050,000.00 paid by Times Transit Corporation to
appellants for the two (2) lots, and that it was he who introduced the buyer to appellants and
unceasingly facilitated the negotiation which ultimately led to the consummation of the sale.
Hence, he sued below to collect the balance of P303,606.24 after having received P48,893.76
in advance.1âwphi1.nêt
 On the other hand, appellants completely traverse appellee's claims and essentially argue that
appellee is selfishly asking for more than what he truly deserved as commission to the
prejudice of other agents who were more instrumental in the consummation of the sale.
Although appellants readily concede that it was appellee who first introduced Times Transit
Corp. to them, appellee was not designated by them as their exclusive real estate agent but
that in fact there were more or less eighteen (18) others whose collective efforts in the long run
dwarfed those of appellee's, considering that the first negotiation for the sale where appellee
took active participation failed and it was these other agents who successfully brokered in the
second negotiation. But despite this and out of appellants' "pure liberality, beneficence and
magnanimity", appellee nevertheless was given the largest cut in the commission
(P48,893.76), although on the principle of quantum meruit he would have certainly been
entitled to less. So appellee should not have been heard to complain of getting only a pittance
when he actually got the lion's share of the commission and worse, he should not have been
allowed to get the entire commission. Furthermore, the purchase price for the two lots was
only P3.6 million as appearing in the deed of sale and not P7.05 million as alleged by appellee.
Thus, even assuming that appellee is entitled to the entire commission, he would only be
getting 5% of the P3.6 million, or P180,000.00."

Ruling of the Court of Appeals

The Court of Appeals affirmed in toto the decision of the trial court.

First. The Court of Appeals found that Constante authorized Artigo to act as agent in
the sale of two lots in Cubao, Quezon City. The handwritten authorization letter signed
by Constante clearly established a contract of agency between Constante and Artigo.
Thus, Artigo sought prospective buyers and found Times Transit Corporation ("Times
Transit" for brevity). Artigo facilitated the negotiations which eventually led to the sale
of the two lots. Therefore, the Court of Appeals decided that Artigo is entitled to the 5%
commission on the purchase price as provided in the contract of agency.

Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for failure
to implead as indispensable parties the other co-owners of the two lots. The Court of
Appeals explained that it is not necessary to implead the other co-owners since the
action is exclusively based on a contract of agency between Artigo and Constante.

Third. The Court of Appeals likewise declared that the trial court did not err in admitting
parol evidence to prove the true amount paid by Times Transit to the De Castros for
the two lots. The Court of Appeals ruled that evidence aliunde could be presented to
prove that the actual purchase price was P7.05 million and not P3.6 million as
appearing in the deed of sale. Evidence aliunde is admissible considering that Artigo is
not a party, but a mere witness in the deed of sale between the De Castros and Times
Transit. The Court of Appeals explained that, "the rule that oral evidence is
inadmissible to vary the terms of written instruments is generally applied only in suits
between parties to the instrument and strangers to the contract are not bound by it."
Besides, Artigo was not suing under the deed of sale, but solely under the contract of
agency. Thus, the Court of Appeals upheld the trial court's finding that the purchase
price was P7.05 million and not P3.6 million. Hence, the instant petition.
 The Issues

According to petitioners, the Court of Appeals erred in -

I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO

IMPLEAD INDISPENSABLE PARTIES-IN-INTEREST;

II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND

THAT ARTIGO'S CLAIM HAS BEEN EXTINGUISHED BY FULL PAYMENT,
WAIVER, OR ABANDONMENT;

III. CONSIDERING INCOMPETENT EVIDENCE;

IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;

V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEY'S

FEES;

VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY

DAMAGES, AND ATTORNEY'S FEES.

The Court's Ruling

The petition is bereft of merit.

First Issue: whether the complaint merits dismissal for failure to implead other
co-owners as indispensable parties

The De Castros argue that Artigo's complaint should have been dismissed for failure to
implead all the co-owners of the two lots. The De Castros claim that Artigo always
knew that the two lots were co-owned by Constante and Corazon with their other
siblings Jose and Carmela whom Constante merely represented. The De Castros
contend that failure to implead such indispensable parties is fatal to the complaint
since Artigo, as agent of all the four co-owners, would be paid with funds co-owned by
the four co-owners.

The De Castros' contentions are devoid of legal basis.

An indispensable party is one whose interest will be affected by the court's action in the
litigation, and without whom no final determination of the case can be had.7 The joinder
of indispensable parties is mandatory and courts cannot proceed without their
presence.8 Whenever it appears to the court in the course of a proceeding that an
indispensable party has not been joined, it is the duty of the court to stop the trial and
order the inclusion of such party.9
However, the rule on mandatory joinder of indispensable parties is not applicable to the
instant case.

There is no dispute that Constante appointed Artigo in a handwritten note dated

January 24, 1984 to sell the properties of the De Castros for P23 million at a 5 percent
commission. The authority was on a first come, first serve basis. The authority reads in
full:

"24 Jan. 84

To Whom It May Concern:

This is to state that Mr. Francisco Artigo is authorized as our real estate broker in connection
with the sale of our property located at Edsa Corner New York & Denver, Cubao, Quezon City.

Asking price P 23,000,000.00 with 5% commission as agent's fee.

C.C. de Castro
owner & representing
co-owners

This authority is on a first-come

First serve basis –CAC"

Constante signed the note as owner and as representative of the other co-owners.
Under this note, a contract of agency was clearly constituted between Constante and
Artigo. Whether Constante appointed Artigo as agent, in Constante's individual or
representative capacity, or both, the De Castros cannot seek the dismissal of the case
for failure to implead the other co-owners as indispensable parties. The De Castros
admit that the other co-owners are solidarily liable under the contract of
agency,10 citing Article 1915 of the Civil Code, which reads:

Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.

The solidary liability of the four co-owners, however, militates against the De Castros'
theory that the other co-owners should be impleaded as indispensable parties. A noted
commentator explained Article 1915 thus –

"The rule in this article applies even when the appointments were made by the principals in
separate acts, provided that they are for the same transaction. The solidarity arises from the
common interest of the principals, and not from the act of constituting the agency. By
virtue of this solidarity, the agent can recover from any principal the whole
compensation and indemnity owing to him by the others. The parties, however, may, by
 express agreement, negate this solidary responsibility. The solidarity does not disappear by
the mere partition effected by the principals after the accomplishment of the agency.

If the undertaking is one in which several are interested, but only some create the agency, only
the latter are solidarily liable, without prejudice to the effects of negotiorum gestio with respect
to the others. And if the power granted includes various transactions some of which are
common and others are not, only those interested in each transaction shall be liable for it."11

When the law expressly provides for solidarity of the obligation, as in the liability of co-
principals in a contract of agency, each obligor may be compelled to pay the entire
obligation.12 The agent may recover the whole compensation from any one of the co-
principals, as in this case.

Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads:

Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected.

Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co.,
Inc.13 that –

"x x x solidarity does not make a solidary obligor an indispensable party in a suit filed by
the creditor. Article 1216 of the Civil Code says that the creditor `may proceed against anyone
of the solidary debtors or some or all of them simultaneously'." (Emphasis supplied)

Second Issue: whether Artigo's claim has been extinguished by full payment,
waiver or abandonment

The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo was
given "his proportionate share and no longer entitled to any balance." According to
them, Artigo was just one of the agents involved in the sale and entitled to a
"proportionate share" in the commission. They assert that Artigo did absolutely nothing
during the second negotiation but to sign as a witness in the deed of sale. He did not
even prepare the documents for the transaction as an active real estate broker usually
does.

The De Castros' arguments are flimsy.

A contract of agency which is not contrary to law, public order, public policy, morals or
good custom is a valid contract, and constitutes the law between the parties.14 The
contract of agency entered into by Constante with Artigo is the law between them and
both are bound to comply with its terms and conditions in good faith.

The mere fact that "other agents" intervened in the consummation of the sale and were
paid their respective commissions cannot vary the terms of the contract of agency
granting Artigo a 5 percent commission based on the selling price. These "other
agents" turned out to be employees of Times Transit, the buyer Artigo introduced to the
De Castros. This prompted the trial court to observe:

"The alleged `second group' of agents came into the picture only during the so-called `second
negotiation' and it is amusing to note that these (sic) second group, prominent among whom
are Atty. Del Castillo and Ms. Prudencio, happened to be employees of Times Transit, the
buyer of the properties. And their efforts were limited to convincing Constante to 'part away'
with the properties because the redemption period of the foreclosed properties is around the
corner, so to speak. (tsn. June 6, 1991).

xxx

To accept Constante's version of the story is to open the floodgates of fraud and deceit. A
seller could always pretend rejection of the offer and wait for sometime for others to renew it
who are much willing to accept a commission far less than the original broker. 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 have not bettered the
offer secured by Mr. Artigo for P7 million.

It is to be noted also that while Constante was too particular about the unrenewed real estate
broker's license of Mr. Artigo, he did not bother at all to inquire as to the licenses of Prudencio
and Castillo. (tsn, April 11, 1991, pp. 39-40)."15 (Emphasis supplied)

In any event, we find that the 5 percent real estate broker's commission is reasonable
and within the standard practice in the real estate industry for transactions of this
nature.

The De Castros also contend that Artigo's inaction as well as failure to protest estops
him from recovering more than what was actually paid him. The De Castros cite Article
1235 of the Civil Code which reads:

Art. 1235. When the obligee accepts the performance, knowing its incompleteness and
irregularity, and without expressing any protest or objection, the obligation is deemed fully
complied with.

The De Castros' reliance on Article 1235 of the Civil Code is misplaced. Artigo's
acceptance of partial payment of his commission neither amounts to a waiver of the
balance nor puts him in estoppel. This is the import of Article 1235 which was
explained in this wise:

"The word accept, as used in Article 1235 of the Civil Code, means to take as satisfactory or
sufficient, or agree to an incomplete or irregular performance. Hence, the mere receipt of a
partial payment is not equivalent to the required acceptance of performance as would
extinguish the whole obligation."16(Emphasis supplied)

There is thus a clear distinction between acceptance and mere receipt. In this case, it
is evident that Artigo merely received the partial payment without waiving the balance.
Thus, there is no estoppel to speak of.
The De Castros further argue that laches should apply because Artigo did not file his
complaint in court until May 29, 1989, or almost four years later. Hence, Artigo's claim
for the balance of his commission is barred by laches.

Laches means the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been done
earlier. It is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or
declined to assert it.17

Artigo disputes the claim that he neglected to assert his rights. He was appointed as
agent on January 24, 1984. The two lots were finally sold in June 1985. As found by
the trial court, Artigo demanded in April and July of 1985 the payment of his
commission by Constante on the basis of the selling price of P7.05 million but there
was no response from Constante.18 After it became clear that his demands for payment
have fallen on deaf ears, Artigo decided to sue on May 29, 1989.

Actions upon a written contract, such as a contract of agency, must be brought within
ten years from the time the right of action accrues.19 The right of action accrues from
the moment the breach of right or duty occurs. From this moment, the creditor can
institute the action even as the ten-year prescriptive period begins to run.20

The De Castros admit that Artigo's claim was filed within the ten-year prescriptive
period. The De Castros, however, still maintain that Artigo's cause of action is barred
by laches. Laches does not apply because only four years had lapsed from the time of
the sale in June 1985. Artigo made a demand in July 1985 and filed the action in court
on May 29, 1989, well within the ten-year prescriptive period. This does not constitute
an unreasonable delay in asserting one's right. The Court has ruled, "a delay within
the prescriptive period is sanctioned by law and is not considered to be a delay
that would bar relief."21 In explaining that laches applies only in the absence of a
statutory prescriptive period, the Court has stated -

"Laches is recourse in equity. Equity, however, is applied only in the absence, never in
contravention, of statutory law. Thus, laches, cannot, as a rule, be used to abate a
collection suit filed within the prescriptive period mandated by the Civil Code."22

Clearly, the De Castros' defense of laches finds no support in law, equity or

jurisprudence.

Third issue: whether the determination of the purchase price was made in
violation of the Rules on Evidence

The De Castros want the Court to re-examine the probative value of the evidence
adduced in the trial court to determine whether the actual selling price of the two lots
was P7.05 million and not P3.6 million. The De Castros contend that it is erroneous to
base the 5 percent commission on a purchase price of P7.05 million as ordered by the
trial court and the appellate court. The De Castros insist that the purchase price is P3.6
million as expressly stated in the deed of sale, the due execution and authenticity of
which was admitted during the trial.

The De Castros believe that the trial and appellate courts committed a mistake in
considering incompetent evidence and disregarding the best evidence and parole
evidence rules. They claim that the Court of Appeals erroneously affirmed sub
silentio the trial court's reliance on the various correspondences between Constante
and Times Transit which were mere photocopies that do not satisfy the best evidence
rule. Further, these letters covered only the first negotiations between Constante and
Times Transit which failed; hence, these are immaterial in determining the final
purchase price.

The De Castros further argue that if there was an undervaluation, Artigo who signed as
witness benefited therefrom, and being equally guilty, should be left where he presently
stands. They likewise claim that the Court of Appeals erred in relying on evidence
which were not offered for the purpose considered by the trial court. Specifically,
Exhibits "B", "C", "D" and "E" were not offered to prove that the purchase price was
P7.05 Million. Finally, they argue that the courts a quo erred in giving credence to the
perjured testimony of Artigo. They want the entire testimony of Artigo rejected as a
falsehood because he was lying when he claimed at the outset that he was a licensed
real estate broker when he was not.

Whether the actual purchase price was P7.05 Million as found by the trial court and
affirmed by the Court of Appeals, or P3.6 Million as claimed by the De Castros, is a
question of fact and not of law. Inevitably, this calls for an inquiry into the facts and
evidence on record. This we can not do.

It is not the function of this Court to re-examine the evidence submitted by the parties,
or analyze or weigh the evidence again.23 This Court is not the proper venue to
consider a factual issue as it is not a trier of facts. In petitions for review on certiorari as
a mode of appeal under Rule 45, a petitioner can only raise questions of law. Our
pronouncement in the case of Cormero vs. Court of Appeals24 bears reiteration:

"At the outset, it is evident from the errors assigned that the petition is anchored on a plea to
review the factual conclusion reached by the respondent court. Such task however is
foreclosed by the rule that in petitions for certiorari as a mode of appeal, like this one, only
questions of law distinctly set forth may be raised. These questions have been defined as
those that do not call for any examination of the probative value of the evidence presented by
the parties. (Uniland Resources vs. Development Bank of the Philippines, 200 SCRA 751
[1991] citing Goduco vs. Court of appeals, et al., 119 Phil. 531; Hernandez vs. Court of
Appeals, 149 SCRA 67). And when this court is asked to go over the proof presented by the
parties, and analyze, assess and weigh them to ascertain if the trial court and the appellate
court were correct in according superior credit to this or that piece of evidence and eventually,
to the totality of the evidence of one party or the other, the court cannot and will not do the
same. (Elayda vs. Court of Appeals, 199 SCRA 349 [1991]). Thus, in the absence of any
showing that the findings complained of are totally devoid of support in the record, or that they
 are so glaringly erroneous as to constitute serious abuse of discretion, such findings must
stand, for this court is not expected or required to examine or contrast the oral and
documentary evidence submitted by the parties. (Morales vs. Court of Appeals, 197 SCRA 391
[1991] citing Santa Ana vs. Hernandez, 18 SCRA 973 [1966])."

We find no reason to depart from this principle. The trial and appellate courts are in a
much better position to evaluate properly the evidence. Hence, we find no other
recourse but to affirm their finding on the actual purchase price.1âwphi1.nêt

Fourth Issue: whether award of moral damages and attorney's fees is proper

The De Castros claim that Artigo failed to prove that he is entitled to moral damages
and attorney's fees. The De Castros, however, cite no concrete reason except to say
that they are the ones entitled to damages since the case was filed to harass and
extort money from them.

Law and jurisprudence support the award of moral damages and attorney's fees in
favor of Artigo. The award of damages and attorney's fees is left to the sound
discretion of the court, and if such discretion is well exercised, as in this case, it will not
be disturbed on appeal.25 Moral damages may be awarded when in a breach of
contract the defendant acted in bad faith, or in wanton disregard of his contractual
obligation.26 On the other hand, attorney's fees are awarded in instances where "the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim."27 There is no reason to disturb the trial court's
finding that "the defendants' lack of good faith and unkind treatment of the plaintiff in
refusing to give his due commission deserve censure." This warrants the award
of P25,000.00 in moral damages and P 45,000.00 in attorney's fees. The amounts are,
in our view, fair and reasonable. Having found a buyer for the two lots, Artigo had
already performed his part of the bargain under the contract of agency. The De
Castros should have exercised fairness and good judgment in dealing with Artigo by
fulfilling their own part of the bargain - paying Artigo his 5 percent broker's commission
based on the actual purchase price of the two lots.

WHEREFORE, the petition is denied for lack of merit. The Decision of the Court of
Appeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED in toto. SO
ORDERED
 G.R. No. 174978 July 31, 2013

SALLY YOSHIZAKI vs. JOY TRAINING CENTER OF AURORA, INC.

We resolve the petition for review on certiorari1 filed by petitioner Sally Yoshizaki to
challenge the February 14, 2006 Decision2 and the October 3, 2006 Resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 83773.

The Factual Antecedents

Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock, non-
profit religious educational institution. It was the registered owner of a parcel of land
and the building thereon (real properties) located in San Luis Extension Purok No. 1,
Barangay Buhangin, Baler, Aurora. The parcel of land was designated as Lot No. 125-
L and was covered by Transfer Certificate of Title (TCT) No. T-25334.4

On November 10, 1998, the spouses Richard and Linda Johnson sold the real
properties, a Wrangler jeep, and other personal properties in favor of the spouses Sally
and Yoshio Yoshizaki. On the same date, a Deed of Absolute Sale5 and a Deed of
Sale of Motor Vehicle6 were executed in favor of the spouses Yoshizaki. The spouses
Johnson were members of Joy Training’s board of trustees at the time of sale. On
December 7, 1998, TCT No. T-25334 was cancelled and TCT No. T-260527 was
issued in the name of the spouses Yoshizaki.

On December 8, 1998, Joy Training, represented by its Acting Chairperson Reuben V.

Rubio, filed an action for the Cancellation of Sales and Damages with prayer for the
issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction
against the spouses Yoshizaki and the spouses Johnson before the Regional Trial
Court of Baler, Aurora (RTC).8 On January 4, 1999, Joy Training filed a Motion to
Amend Complaint with the attached Amended Complaint. The amended complaint
impleaded Cecilia A. Abordo, officer-in-charge of the Register of Deeds of Baler,
Aurora, as additional defendant. The RTC granted the motion on the same date.9

In the complaint, Joy Training alleged that the spouses Johnson sold its properties
without the requisite authority from the board of directors.10 It assailed the validity of a
board resolution dated September 1, 199811 which purportedly granted the spouses
Johnson the authority to sell its real properties. It averred that only a minority of the
board, composed of the spouses Johnson and Alexander Abadayan, authorized the
sale through the resolution. It highlighted that the Articles of Incorporation provides that
the board of trustees consists of seven members, namely: the spouses Johnson,
Reuben, Carmencita Isip, Dominador Isip, Miraflor Bolante, and Abelardo Aquino.12

Cecilia and the spouses Johnson were declared in default for their failure to file an
Answer within the reglementary period.13 On the other hand, the spouses Yoshizaki
filed their Answer with Compulsory Counterclaims on June 23, 1999. They claimed that
Joy Training authorized the spouses Johnson to sell the parcel of land. They asserted
that a majority of the board of trustees approved the resolution. They maintained that
the actual members of the board of trustees consist of five members, namely: the
spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie Dayot, the
corporate secretary, issued a certification dated February 20, 199814 authorizing the
spouses Johnson to act on Joy Training’s behalf. Furthermore, they highlighted that
the Wrangler jeep and other personal properties were registered in the name of the
spouses Johnson.15 Lastly, they assailed the RTC’s jurisdiction over the case. They
posited that the case is an intra-corporate dispute cognizable by the Securities and
Exchange Commission (SEC).16

After the presentation of their testimonial evidence, the spouses Yoshizaki formally
offered in evidence photocopies of the resolution and certification, among others.17 Joy
Training objected to the formal offer of the photocopied resolution and certification on
the ground that they were not the best evidence of their contents.18 In an Order19dated
May 18, 2004, the RTC denied the admission of the offered copies.

The RTC Ruling

The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the
real properties. However, it held that the sale was valid because Joy Training
authorized the spouses Johnson to sell the real properties. It recognized that there
were only five actual members of the board of trustees; consequently, a majority of the
board of trustees validly authorized the sale. It also ruled that the sale of personal
properties was valid because they were registered in the spouses Johnson’s name.20

Joy Training appealed the RTC decision to the CA.

The CA Ruling

The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect
to the sale of real properties. It maintained that the present action is cognizable by the
RTC because it involves recovery of ownership from third parties.

It also ruled that the resolution is void because it was not approved by a majority of the
board of trustees. It stated that under Section 25 of the Corporation Code, the basis for
determining the composition of the board of trustees is the list fixed in the articles of
incorporation. Furthermore, Section 23 of the Corporation Code provides that the
board of trustees shall hold office for one year and until their successors are elected
and qualified. Seven trustees constitute the board since Joy Training did not hold an
election after its incorporation.

The CA did not also give any probative value to the certification. It stated that the
certification failed to indicate the date and the names of the trustees present in the
meeting. Moreover, the spouses Yoshizaki did not present the minutes that would
prove that the certification had been issued pursuant to a board resolution.21 The CA
also denied22 the spouses Yoshizaki’s motion for reconsideration, prompting Sally23 to
file the present petition.

The Petition

Sally avers that the RTC has no jurisdiction over the case. She points out that the
complaint was principally for the nullification of a corporate act. The transfer of the
SEC’s original and exclusive jurisdiction to the RTC24 does not have any retroactive
application because jurisdiction is a substantive matter.

She argues that the spouses Johnson were authorized to sell the parcel of land and
that she was a buyer in good faith because she merely relied on TCT No. T-25334.
The title states that the spouses Johnson are Joy Training’s representatives.

She also argues that it is a basic principle that a party dealing with a registered land
need not go beyond the certificate of title to determine the condition of the property. In
fact, the resolution and the certification are mere reiterations of the spouses Johnson’s
authority in the title to sell the real properties. She further claims that the resolution and
the certification are not even necessary to clothe the spouses Johnson with the
authority to sell the disputed properties. Furthermore, the contract of agency was
subsisting at the time of sale because Section 108 of Presidential Decree No. (PD)
1529 requires that the revocation of authority must be approved by a court of
competent jurisdiction and no revocation was reflected in the certificate of title.25

The Case for the Respondent

In its Comment26 and Memorandum,27 Joy Training takes the opposite view that the
RTC has jurisdiction over the case. It posits that the action is essentially for recovery of
property and is therefore a case cognizable by the RTC. Furthermore, Sally is
estopped from questioning the RTC’s jurisdiction because she seeks to reinstate the
RTC ruling in the present case.

Joy Training maintains that it did not authorize the spouses Johnson to sell its real
properties. TCT No. T-25334 does not specifically grant the authority to sell the parcel
of land to the spouses Johnson. It further asserts that the resolution and the
certification should not be given any probative value because they were not admitted in
evidence by the RTC. It argues that the resolution is void for failure to comply with the
voting requirements under Section 40 of the Corporation Code. It also posits that the
certification is void because it lacks material particulars.

The Issues

The case comes to us with the following issues:

1) Whether or not the RTC has jurisdiction over the present case; and
 2) Whether or not there was a contract of agency to sell the real properties
between Joy Training and the spouses Johnson.

3) As a consequence of the second issue, whether or not there was a valid

contract of sale of the real properties between Joy Training and the spouses
Yoshizaki.

Our Ruling

We find the petition unmeritorious.

The RTC has jurisdiction over disputes concerning the application of the Civil Code

Jurisdiction over the subject matter is the power to hear and determine cases of the
general class to which the proceedings before a court belong.28 It is conferred by law.
The allegations in the complaint and the status or relationship of the parties determine
which court has jurisdiction over the nature of an action.29 The same test applies in
ascertaining whether a case involves an intra-corporate controversy.30

The CA correctly ruled that the RTC has jurisdiction over the present case. Joy
Training seeks to nullify the sale of the real properties on the ground that there was no
contract of agency between Joy Training and the spouses Johnson. This was beyond
the ambit of the SEC’s original and exclusive jurisdiction prior to the enactment of
Republic Act No. 8799 which only took effect on August 3, 2000. The determination of
the existence of a contract of agency and the validity of a contract of sale requires the
application of the relevant provisions of the Civil Code. It is a well-settled rule that
"disputes concerning the application of the Civil Code are properly cognizable by
courts of general jurisdiction."31 Indeed, no special skill requiring the SEC’s technical
expertise is necessary for the disposition of this issue and of this case.

The Supreme Court may review questions of fact in a petition for review on certiorari
when the findings of fact by the lower courts are conflicting

We are aware that the issues at hand require us to review the pieces of evidence
presented by the parties before the lower courts. As a general rule, a petition for review
on certiorari precludes this Court from entertaining factual issues; we are not duty-
bound to analyze again and weigh the evidence introduced in and considered by the
lower courts. However, the present case falls under the recognized exception that a
review of the facts is warranted when the findings of the lower courts are
conflicting.32 Accordingly, we will examine the relevant pieces of evidence presented to
the lower court.

There is no contract of agency between Joy Training and the spouses Johnson to sell
the parcel of land with its improvements
Article 1868 of the Civil Code defines a contract of agency as a contract whereby a
person "binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter." It may be express, or
implied from the acts of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his behalf without
authority.

As a general rule, a contract of agency may be oral. However, it must be written when
the law requires a specific form.33 Specifically, Article 1874 of the Civil Code provides
that the contract of agency must be written for the validity of the sale of a piece of land
or any interest therein. Otherwise, the sale shall be void. A related provision, Article
1878 of the Civil Code, states that special powers of attorney are necessary to convey
real rights over immovable properties.

The special power of attorney mandated by law must be one that expressly mentions a
sale or that includes a sale as a necessary ingredient of the authorized act. We
unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals34 that a
special power of attorneymust express the powers of the agent in clear and
unmistakable language for the principal to confer the right upon an agent to sell real
estate. When there is any reasonable doubt that the language so used conveys such
power, no such construction shall be given the document. The purpose of the law in
requiring a special power of attorney in the disposition of immovable property is to
protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another and to caution the buyer to assure himself of the specific
authorization of the putative agent.35

In the present case, Sally presents three pieces of evidence which allegedly prove that
Joy Training specially authorized the spouses Johnson to sell the real properties: (1)
TCT No. T-25334, (2) the resolution, (3) and the certification. We quote the pertinent
portions of these documents for a thorough examination of Sally’s claim. TCT No. T-
25334, entered in the Registry of Deeds on March 5, 1998, states:

A parcel of land x x x is registered in accordance with the provisions of the Property

Registration Decree in the name of JOY TRAINING CENTER OF AURORA, INC., Rep.
by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON, both of legal age, U.S.
Citizen, and residents of P.O. Box 3246, Shawnee, Ks 66203, U.S.A.36 (emphasis
ours)

On the other hand, the fifth paragraph of the certification provides:

Further, Richard A. and Linda J. Johnson were given FULL AUTHORITY for ALL
SIGNATORY purposes for the corporation on ANY and all matters and decisions
regarding the property and ministry here. They will follow guidelines set forth according
to their appointment and ministerial and missionary training and in that, they will
formulate and come up with by-laws which will address and serve as governing papers
over the center and corporation. They are to issue monthly and quarterly statements to
all members of the corporation.37 (emphasis ours)

The resolution states:

We, the undersigned Board of Trustees (in majority) have authorized the sale of land
and building owned by spouses Richard A. and Linda J. Johnson (as described in the
title SN No. 5102156 filed with the Province of Aurora last 5th day of March, 1998.
These proceeds are going to pay outstanding loans against the project and the
dissolution of the corporation shall follow the sale. This is a religious, non-profit
corporation and no profits or stocks are issued.38 (emphasis ours)

The above documents do not convince us of the existence of the contract of agency to
sell the real properties. TCT No. T-25334 merely states that Joy Training is
represented by the spouses Johnson. The title does not explicitly confer to the spouses
Johnson the authority to sell the parcel of land and the building thereon. Moreover, the
phrase "Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON"39 only
means that the spouses Johnson represented Joy Training in land registration.

The lower courts should not have relied on the resolution and the certification in
resolving the case.1âwphi1 The spouses Yoshizaki did not produce the original
documents during trial. They also failed to show that the production of pieces of
secondary evidence falls under the exceptions enumerated in Section 3, Rule 130 of
the Rules of Court.40 Thus, the general rule – that no evidence shall be admissible
other than the original document itself when the subject of inquiry is the contents of a
document – applies.41

Nonetheless, if only to erase doubts on the issues surrounding this case, we declare
that even if we consider the photocopied resolution and certification, this Court will still
arrive at the same conclusion.

The resolution which purportedly grants the spouses Johnson a special power of
attorney is negated by the phrase "land and building owned by spouses Richard A. and
Linda J. Johnson."42 Even if we disregard such phrase, the resolution must be given
scant consideration. We adhere to the CA’s position that the basis for determining the
board of trustees’ composition is the trustees as fixed in the articles of incorporation
and not the actual members of the board. The second paragraph of Section 2543 of the
Corporation Code expressly provides that a majority of the number of trustees as fixed
in the articles of incorporation shall constitute a quorum for the transaction of corporate
business.

Moreover, the certification is a mere general power of attorney which comprises all of
Joy Training’s business.44Article 1877 of the Civil Code clearly states that "an agency
couched in general terms comprises only acts of administration, even if the principal
should state that he withholds no power or that the agent may execute such acts as he
may consider appropriate, or even though the agency should authorize a general and
unlimited management."45

The contract of sale is unenforceable

Necessarily, the absence of a contract of agency renders the contract of sale

unenforceable;46 Joy Training effectively did not enter into a valid contract of sale with
the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She
misapprehended the rule that persons dealing with a registered land have the legal
right to rely on the face of the title and to dispense with the need to inquire further,
except when the party concerned has actual knowledge of facts and circumstances
that would impel a reasonably cautious man to make such inquiry.47This rule applies
when the ownership of a parcel of land is disputed and not when the fact of agency is
contested.

At this point, we reiterate the established principle that persons dealing with an agent
must ascertain not only the fact of agency, but also the nature and extent of the agent’s
authority.48 A third person with whom the agent wishes to contract on behalf of the
principal may require the presentation of the power of attorney, or the instructions as
regards the agency.49 The basis for agency is representation and a person dealing with
an agent is put upon inquiry and must discover on his own peril the authority of the
agent.50 Thus, Sally bought the real properties at her own risk; she bears the risk of
injury occasioned by her transaction with the spouses Johnson.

WHEREFORE, premises considered, the assailed Decision dated February 14, 2006
and Resolution dated October 3, 2006 of the Court of Appeals are hereby AFFIRMED
and the petition is hereby DENIED for lack of merit. SO ORDERED
 [G.R. No. 130148. December 15, 1997]

BORDADOR v. LUZ

In this appeal by certiorari, petitioners assail the judgment of the Court of Appeals in
CA-G.R. CV No. 49175 affirming the adjudication of the Regional Trial Court of
Malolos, Bulacan which found private respondent Narciso Deganos liable to petitioners
for actual damages, but absolved respondent spouses Brigida D. Luz and Ernesto M.
Luz of liability. Petitioners likewise belabor the subsequent resolution of the Court of
Appeals which denied their motion for reconsideration of its challenged decision.

Petitioners were engaged in the business of purchase and sale of jewelry and
respondent Brigida D. Luz, also known as Aida D. Luz, was their regular customer. On
several occasions during the period from April 27, 1987 to September 4, 1987,
respondent Narciso Deganos, the brother of Brigida D. Luz, received several pieces of
gold and jewelry from petitioners amounting to P382,816.00. 1 These items and their
prices were indicated in seventeen receipts covering the same. Eleven of the receipts
stated that they were received for a certain Evelyn Aquino, a niece of Deganos, and
the remaining six indicated that they were received for Brigida D. Luz. 2

Deganos was supposed to sell the items at a profit and thereafter remit the proceeds
and return the unsold items to petitioners. Deganos remitted only the sum
of P53,207.00. He neither paid the balance of the sales proceeds, nor did he return
any unsold item to petitioners. By January 1990, the total of his unpaid account to
petitioners, including interest, reached the sum of P725,463.98. 3 Petitioners eventually
filed a complaint in the barangay court against Deganos to recover said amount.

In the barangay proceedings, Brigida D. Luz, who was not impleaded in the case,
appeared as a witness for Deganos and ultimately, she and her husband, together with
Deganos, signed a compromise agreement with petitioners. In that compromise
agreement, Deganos obligated himself to pay petitioners, on installment basis, the
balance of his account plus interest thereon. However, he failed to comply with his
aforestated undertakings.

On June 25, 1990, petitioners instituted Civil Case No. 412-M-90 in the Regional Trial
Court of Malolos, Bulacan against Deganos and Brigida D. Luz for recovery of a sum of
money and damages, with an application for preliminary attachment.4 Ernesto Luz was
impleaded therein as the spouse of Brigida. Four years later, or on March 29, 1994,
Deganos and Brigida D. Luz were charged with estafa5 in the Regional Trial Court of
Malolos, Bulacan, which was docketed as Criminal Case No. 785-M-94. That criminal
case appears to be still pending in said trial court.

During the trial of the civil case, petitioners claimed that Deganos acted as the agent of
Brigida D. Luz when he received the subject items of jewelry and, because he failed to
pay for the same, Brigida, as principal, and her spouse are solidarily liable with him
therefor.

On the other hand, while Deganos admitted that he had an unpaid obligation to
petitioners, he claimed that the same was only in the sum of P382,816.00 and
not P725,463.98. He further asserted that it was he alone who was involved in the
transaction with the petitioners; that he neither acted as agent for nor was he
authorized to act as an agent by Brigida D. Luz, notwithstanding the fact that six of the
receipts indicated that the items were received by him for the latter. He further claimed
that he never delivered any of the items he received from petitioners to Brigida.

Brigida, on her part, denied that she had anything to do with the transactions between
petitioners and Deganos. She claimed that she never authorized Deganos to receive
any item of jewelry in her behalf and, for that matter, neither did she actually receive
any of the articles in question.

After trial, the court below found that only Deganos was liable to petitioners for the
amount and damages claimed. It held that while Brigida D. Luz did have transactions
with petitioners in the past, the items involved were already paid for and all that Brigida
owed petitioners was the sum of P21,483.00 representing interest on the principal
account which she had previously paid for.6

The trial court also found that it was petitioner Lydia Bordador who indicated in the
receipts that the items were received by Deganos for Evelyn Aquino and Brigida D.
Luz. 7 Said court was persuaded that Brigida D. Luz was behind Deganos, but because
there was no memorandum to this effect, the agreement between the parties was
unenforceable under the Statute of Frauds. 8 Absent the required memorandum or any
written document connecting the respondent Luz spouses with the subject receipts, or
authorizing Deganos to act on their behalf, the alleged agreement between petitioners
and Brigida D. Luz was unenforceable.

Deganos was ordered to pay petitioners the amount of P725,463.98, plus legal interest
thereon from June 25, 1990, and attorneys fees. Brigida D. Luz was ordered to
pay P21,483.00 representing the interest on her own personal loan. She and her co-
defendant spouse were absolved from any other or further liability. 9 As stated at the
outset, petitioners appealed the judgment of the court a quoto the Court of Appeals
which affirmed said judgment. 10 The motion for reconsideration filed by petitioners was
subsequently dismissed, 11 hence the present recourse to this Court.

The primary issue in the instant petition is whether or not herein respondent spouses
are liable to petitioners for the latters claim for money and damages in the sum
of P725,463.98, plus interests and attorneys fees, despite the fact that the evidence
does not show that they signed any of the subject receipts or authorized Deganos to
receive the items of jewelry on their behalf.
Petitioners argue that the Court of Appeals erred in adopting the findings of the court a
quo that respondent spouses are not liable to them, as said conclusion of the trial court
is contradicted by the finding of fact of the appellate court that (Deganos) acted as
agent of his sister (Brigida Luz). 12 In support of this contention, petitioners quoted
several letters sent to them by Brigida D. Luz wherein the latter acknowledged her
obligation to petitioners and requested for more time to fulfill the same. They likewise
aver that Brigida testified in the trial court that Deganos took some gold articles from
petitioners and delivered the same to her.

Both the Court of Appeals and the trial court, however, found as a fact that the
aforementioned letters concerned the previous obligations of Brigida to petitioners, and
had nothing to do with the money sought to be recovered in the instant case. Such
concurrent factual findings are entitled to great weight, hence, petitioners cannot
plausibly claim in this appellate review that the letters were in the nature of
acknowledgments by Brigida that she was the principal of Deganos in the subject
transactions. On the other hand, with regard to the testimony of Brigida admitting
delivery of the gold to her, there is no showing whatsoever that her statement referred
to the items which are the subject matter of this case. It cannot, therefore, be validly
said that she admitted her liability regarding the same.

Petitioners insist that Deganos was the agent of Brigida D. Luz as the latter clothed
him with apparent authority as her agent and held him out to the public as such, hence
Brigida can not be permitted to deny said authority to innocent third parties who dealt
with Deganos under such belief. 13 Petitioners further represent that the Court of
Appeals recognized in its decision that Deganos was an agent of Brigida.14

The evidence does not support the theory of petitioners that Deganos was an agent of
Brigida D. Luz and that the latter should consequently be held solidarily liable with
Deganos in his obligation to petitioners. While the quoted statement in the findings of
fact of the assailed appellate decision mentioned that Deganos ostensibly acted as an
agent of Brigida, the actual conclusion and ruling of the Court of Appeals categorically
stated that, (Brigida Luz) never authorized her brother (Deganos) to act for and in her
behalf in any transaction with Petitioners x x x. 15 It is clear, therefore, that even
assuming arguendo that Deganos acted as an agent of Brigida, the latter never
authorized him to act on her behalf with regard to the transactions subject of this case.

The Civil Code provides:

Art. 1868. By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter.

The basis for agency is representation. Here, there is no showing that Brigida
consented to the acts of Deganos or authorized him to act on her behalf, much less
with respect to the particular transactions involved. Petitioners attempt to foist liability
on respondent spouses through the supposed agency relation with Deganos is
groundless and ill-advised. Besides, it was grossly and inexcusably negligent of
petitioners to entrust to Deganos, not once or twice but on at least six occasions as
evidenced by six receipts, several pieces of jewelry of substantial value without
requiring a written authorization from his alleged principal. A person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent. 16
The records show that neither an express nor an implied agency was proven to have
existed between Deganos and Brigida D. Luz. Evidently, Petitioners, who were
negligent in their transactions with Deganos, cannot seek relief from the effects of their
negligence by conjuring a supposed agency relation between the two respondents
where no evidence supports such claim.

Petitioners next allege that the Court of Appeals erred in ignoring the fact that the
decision of the court below, which it affirmed, is null and void as it contradicted its
ruling in CA-G.R. SP No. 39445 holding that there is sufficient evidence/proof against
Brigida D. Luz and Deganos for estafa in the pending criminal case. They further aver
that said appellate court erred in ruling against them in this civil action since the same
would result in an inevitable conflict of decisions should the trial court convict the
accused in the criminal case.

By way of backdrop for this argument of petitioners, herein respondents Brigida D. Luz
and Deganos had filed a demurrer to evidence and a motion for reconsideration in the
aforestated criminal case, both of which were denied by the trial court. They then filed
a petition for certiorari in the Court of Appeals to set aside the denial of their demurrer
and motion for reconsideration but, as just stated, their petition therefor was
dismissed.17

Petitioners now claim that the aforesaid dismissal by the Court of Appeals of the
petition in CA-G.R. SP No. 39445 with respect to the criminal case is equivalent to a
finding that there is sufficient evidence in the estafa case against Brigida D. Luz and
Deganos. Hence, as already stated, petitioners theorize that the decision and
resolution of the Court of Appeals now being impugned in the case at bar would result
in a possible conflict with the prospective decision in the criminal case. Instead of
promulgating the present decision and resolution under review, so they suggest, the
Court of Appeals should have awaited the decision in the criminal case, so as not to
render academic or preempt the same or, worse, create two conflicting rulings. 18

Petitioners have apparently lost sight of Article 33 of the Civil Code which provides that
in cases involving alleged fraudulent acts, a civil action for damages, entirely separate
and distinct from the criminal action, may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution and shall require only a
preponderance of evidence.

It is worth noting that this civil case was instituted four years before the criminal case
for estafa was filed, and that although there was a move to consolidate both cases, the
same was denied by the trial court. Consequently, it was the duty of the two branches
of the Regional Trial Court concerned to independently proceed with the civil and
criminal cases. It will also be observed that a final judgment rendered in a civil action
absolving the defendant from civil liability is no bar to a criminal action. 19

It is clear, therefore, that this civil case may proceed independently of the criminal
case 20 especially because while both cases are based on the same facts, the quantum
of proof required for holding the parties liable therein differ. Thus, it is improvident of
petitioners to claim that the decision and resolution of the Court of Appeals in the
present case would be preemptive of the outcome of the criminal case. Their fancied
fear of possible conflict between the disposition of this civil case and the outcome of
the pending criminal case is illusory.

Petitioners surprisingly postulate that the Court of Appeals had lost its jurisdiction to
issue the denial resolution dated August 18, 1997, as the same was tainted with
irregularities and badges of fraud perpetrated by its court officers. 21 They charge that
said appellate court, through conspiracy and fraud on the part of its officers, gravely
abused its discretion in issuing that resolution denying their motion for reconsideration.
They claim that said resolution was drafted by the ponente, then signed and issued by
the members of the Eleventh Division of said court within one and a half days from the
elevation thereof by the division clerk of court to the office of the ponente.

It is the thesis of petitioners that there was undue haste in issuing the resolution as the
same was made without waiting for the lapse of the ten-day period for respondents to
file their comment and for petitioners to file their reply. It was allegedly impossible for
the Court of Appeals to resolve the issue in just one and a half days, especially
because its ponente, the late Justice Maximiano C. Asuncion, was then recuperating
from surgery and, that, additionally, hundreds of more important cases were
pending. 22

These lamentable allegation of irregularities in the Court of Appeals and in the conduct
of its officers strikes us as a desperate attempt of petitioners to induce this Court to
give credence to their arguments which, as already found by both the trial and
intermediate appellate courts, are devoid of factual and legal substance. The
regrettably irresponsible attempt to tarnish the image of the intermediate appellate
tribunal and its judicial officers through ad hominemimputations could well be
contumacious, but we are inclined to let that pass with a strict admonition that
petitioners refrain from indulging in such conduct in litigations.

On July 9, 1997, the Court of Appeals rendered judgment in this case affirming the trial
courts decision. 23 Petitioners moved for reconsideration and the Court of Appeals
ordered respondents to file a comment. Respondents filed the same on August 5,
1997 24 and petitioners filed their reply to said comment on August 15, 1997. 25 The
Eleventh Division of said court issued the questioned resolution denying petitioners
motion for reconsideration on August 18, 1997.26
It is ironic that while some litigants malign the judiciary for being supposedly slothful in
disposing of cases, petitioners are making a show of calling out for justice because the
Court of Appeals issued a resolution disposing of a case sooner than expected of it.
They would even deny the exercise of discretion by the appellate court to prioritize its
action on cases in line with the procedure it has adopted in disposing thereof and in
declogging its dockets. It is definitely not for the parties to determine and dictate when
and how a tribunal should act upon those cases since they are not even aware of the
status of the dockets and the internal rules and policies for acting thereon.

The fact that a resolution was issued by said court within a relatively short period of
time after the records of the case were elevated to the office of the ponente cannot, by
itself, be deemed irregular. There is no showing whatsoever that the resolution was
issued without considering the reply filed by petitioners. In fact, that brief pleading filed
by petitioners does not exhibit any esoteric or ponderous argument which could not be
analyzed within an hour. It is a legal presumption, born of wisdom and experience, that
official duty has been regularly performed; 27 that the proceedings of a judicial tribunal
are regular and valid, and that judicial acts and duties have been and will be duly and
properly performed. 28 The burden of proving irregularity in official conduct is on the
part of petitioners and they have utterly failed to do so. It is thus reprehensible for them
to cast aspersions on a court of law on the bases of conjectures or surmises,
especially since one of the petitioners appears to be a member of the Philippine Bar.

Lastly, petitioners fault the trial courts holding that whatever contract of agency was
established between Brigida D. Luz and Narciso Deganos is unenforceable under the
Statute of Frauds as that aspect of this case allegedly is not covered thereby. 29 They
proceed on the premise that the Statute of Frauds applies only to executory contracts
and not to executed or to partially executed ones. From there, they move on to claim
that the contract involved in this case was an executed contract as the items had
already been delivered by petitioners to Brigida D. Luz, hence, such delivery resulted
in the execution of the contract and removed the same from the coverage of the
Statute of Frauds.

Petitioners claim is speciously unmeritorious. It should be emphasized that neither the trial court nor
the appellate court categorically stated that there was such a contractual relation between these two
respondents. The trial court merely said that if there was such an agency existing between them, the
same is unenforceable as the contract would fall under the Statute of Frauds which requires the
presentation of a note or memorandum thereof in order to be enforceable in court. That was merely a
preparatory statement of a principle of law. What was finally proven as a matter of fact is that there
was no such contract between Brigida D. Luz and Narciso Deganos, executed or partially executed,
and no delivery of any of the items subject of this case was ever made to the former.

WHEREFORE, no error having been committed by the Court of Appeals in affirming the judgment of
the court a quo, its challenged decision and resolution are hereby AFFIRMED and the instant petition
is DENIED,with double costs against petitioners SO ORDERED
 [G.R. No. 18058. January 16, 1923. ]

FABIOLA SEVERINO, v. GUILLERMO SEVERINO

This is an action brought by the plaintiff as the alleged natural daughter and sole heir of
one Melecio Severino, deceased, to compel the defendant Guillermo Severino to
convey to her four parcels of land described in the complaint, or in default there of to
pay her the sum of P800,000 in damages for wrongfully causing said land to be
registered in his own name. Felicitas Villanueva, in her capacity as administratrix of the
estate of Melecio Severino, has filed a complaint in intervention claiming the same
relief as the original plaintiff, except in so far as she prays that the conveyance be
made, or damages paid, to the estate instead of to the plaintiff Fabiola Severino. The
defendant answered both complaints with a general denial.

The lower court rendered a judgment recognizing the plaintiff Fabiola Severino as the
acknowledged natural child of the said Melecio Severino and ordering the defendant to
convey 428 hectares of the land in question to the intervenor as administratrix of the
estate of the said Melecio Severino, to deliver to her the proceeds in his possession of
a certain mortgage placed thereon by him and to pay the costs. From this judgment
only the defendant appeals.

The land described in the complaint forms one continuous tract and consists of lots
Nos. 827, 828, and 874 of the cadaster of Silay, Province of Occidental Negros, which
measure, respectively, 61 hectares, 74 ares and 79 centiares; 76 hectares, 34 ares,
and 79 centiares; 52 hectares, 86 ares and 60 centiares and 608 hectares, 77 ares
and 28 centiares, or a total of 799 hectares, 75 ares, and 46 centiares.
The evidence shows that Melecio Severino died on the 25th day of May, 1915; that
some 428 hectares of the land were recorded in the Mortgage Law Register in his
name in the year 1901 by virtue of possessory information proceedings instituted on
the 9th day of May of that year by his brother Agapito Severino in his behalf; that
during the lifetime of Melecio Severino the land was worked by the defendant,
Guillermo Severino, his brother, as administrator for and on behalf of the said Melecio
Severino; that after Melencio’s death, the defendant Guillermo Severino continued to
occupy the land; that in 1916 a parcel survey was made of the lands in the municipality
of Silay, including the land here in question, and cadastral proceedings were instituted
for the registration of the land titles within the surveyed area; that in the cadastral
proceedings the land here in question was described as four separate lots numbered
as above stated; that Roque Hofileña, as lawyer for Guillermo Severino, filed answers
in behalf of the latter in said proceedings claiming the lots mentioned as the property of
his client; that no opposition was presented in the proceedings to the claims of
Guillermo Severino and the court therefore decreed the title in his favor, in pursuance
of which decree certificates of title were issued to him in the month of March, 1917.
It may be further observed that at the time of the cadastral proceedings the plaintiff
Fabiola Severino was a minor; that Guillermo Severino did not appear personally in
proceedings and did not there testify; that the only testimony in support of his claim
was that of his attorney Hofileña, who swore that he knew the land and that he also
knew that Guillermo Severino inherited the land from his father and that he, by himself,
and through his predecessors in interest, had possessed the land for thirty years.

The appellant presents the following nine assignments of error:jgc:chanrobles.com.ph

"1. The trial court erred in admitting the evidence that was offered by plaintiff in order to establish the
fact that said plaintiff was the legally acknowledged natural child of the deceased Melecio Severino.

"2. The trial court erred in finding that, under the evidence presented, plaintiff was the legally
acknowledged natural child of Melecio Severino.

"3. The trial court erred in rejecting the evidence offered by defendant to establish the absence of
fraud on his part in securing title to the lands in Nacayao.

"4. The trial court erred in concluding that the evidence adduced by plaintiff and intervenor
established that defendant was guilty of fraud in procuring title to the lands in question in his name.

"5. The trial court erred in declaring that land that was formerly placed in the name of Melecio
Severino had an extent of either placed in the name of Melecio Severino had an extent of either 434
hectares at the time of his death.

"6. The trial court erred in declaring that the value of the land in litigation is P500 per hectare.

"7. The trial court erred in granting the petition of plaintiff for an attachment without first giving the
defendant an opportunity to be heard.

"8. The trial court erred in ordering the conveyance of 428 hectares of land by defendant to the
administratrix.

"9. The trial court erred in failing or refusing to make any finding as to the defendant’s contention that
the petition for attachment was utterly devoid of any reasonable ground."

In regard to the first two assignments of error, we agree with the appellant that the trial
court erred in making a declaration in the present case as to the recognition of Fabiola
Severino as the natural child of Melecio Severino. We have held in the case of Briz and
Remigio (43 Phil., 763), that "The legitimate heirs or kin of a deceased person who
would be prejudiced by a declaration that another person in entitled to recognition as
the natural child of such decedent, are necessary and indispensable parties to any
action in which a judgment declaring the right to recognition is sought." In the present
action only the widow, the alleged natural child, and one of the brothers have not been
included. But, inasmuch as the judgment appealed from is in favor of the intervenor
and not of the plaintiff, except to the extent of holding that the latter is a recognized
natural child of deceased, this question is, from the view we take of the case, of no
importance in its final disposition. We may say, however, in this connection, that the
point urged in appellant’s brief that it does not appear affirmatively from the time of the
conception of Fabiola, her mother was a single woman, may be sufficiently disposed of
by a reference to article 130 of the Civil Code and subsection 1 of section 1 of section
334 of the Code of Civil Procedure which create the presumption that a child born out
of wedlock is natural rather than illegitimate. The question of the status of the plaintiff
Fabiola Severino and her right to share in the inheritance may, upon notice to all the
interested parties, be determined in the probate proceedings for the settlement of the
estate of the deceased.

The fifth assignment of error relates to the finding of the trial court that the land
belonging to Melecio Severino had an area of 428 hectares. The appellant contends
that the court should have found that there were only 324 hectares inasmuch as one
hundred hectares of the original area were given to Melecio’s brother Donato during
the lifetime of the father Ramon Severino. As it appears that Ramon Severino died in
1896 and that the possessory in formation proceedings, upon which the finding of the
trial court as to the area of the land is principally based, were not instituted until the
year 1901, we are not disposed to disturb the conclusions if the trial court on this point.
Moreover, in the year 1913, the defendant Guillermo Severino testified under oath, in
the case of Montelibano v. Severino, that the area of the land by Melecio Severino and
of which he (Guillermo) was the administrator, embraced an area of 424 hectares. The
fact that Melecio Severino, in declaring the land for taxation in 1906, stated that the
area was only 324 hectares and 60 ares while entitled to some weight is not conclusive
and is not sufficient to overcome the positive statement of the defendant and the
recitals in the record of the possessory information proceedings.

The sixth assignment of error is also of minor importance in view of the fact that in the
dispositive part of the decision of the trial court, the only relief given is an order
requiring the appellant to convey to the administratrix the land in question, together
with such parts of the proceeds of the mortgage thereon as remain in his hands. We
may say further that the court’s estimate of the value of the land does not appear
unreasonable and that, upon the evidence before us, it will not be disturbed.

The seventh and ninth assignments of error relate to the ex parte granting by the trial
court of a preliminary attachment in the case and the refusal of the court to dissolve the
same. We find no merit whatever in these assignments and a detailed discussion of
them is unnecessary.

The third, fourth, and eighth assignments of error involve the vital points in the case,
are inter-related and may be conveniently considered together.

The defendant argues that the gist of the instant action is the alleged fraud on his part
in causing the land in question to be registered in his name; that the trial court
therefore erred in rejecting his offer of evidence to the effect that the land was owned
in common by all the heirs of Ramon Severino and did not belong to Melecio Severino
exclusively; that such evidence, if admitted, would have shown that he did not act with
fraudulent intent in taking title to the land; that the trial court erred in holding him
estopped from denying Melecio’s title; that more than a year having elapsed since the
entry of the final decree adjudicating the land to the defendant, said decree cannot now
be re-opened; that the ordering of the defendant to convey the decreed land to the
administratrix is, for all practical purposes, equivalent to the reopening of the decree of
registration; that under section 38 of the Land Registration Act the defendant has an
indefeasible title to the land; and that the question of ownership of the land being thus
judicially settled, the question as to the previous relations between the parties cannot
now be inquired into.

Upon no point can the defendant’s contentions be sustained. It may first be observed
that this is not an action under section 38 of the Land Registration Act to reopen or set
aside a decree; it is an action in personam against an agent to compel him to return, or
retransfer, to the heirs or the estate of its principal, the property committed to his
custody as such agent, to execute the necessary documents thereof, to pay damages.

That the defendant came into the possession of the property here in question as the
agent of the deceased Melecio Severino in the administration of the property, cannot
be successfully disputed. His testimony in the case of Montelibano v. Severino (civil
case No. 902 of the Court of First Instance of Occidental Negros and which forms a
part of the evidence in the present case) is, in fact, conclusive in this respect. He there
stated under oath that from the year 1902 up to the time the testimony was given, in
the year 1913, he had been continuously in charge and occupation of the land as the
encargado or administrator of Melecio Severino; that he had always known the land as
the property of Melecio Severino; and that the possession of the latter had been
peaceful, continuous, and exclusive. In his answer filed in the same case, the same
defendant, through his attorney, disclaimed all personal interest in the land and
averred that it was wholly the property of this brother Melecio.

Neither is it disputed that the possession enjoyed by the defendant at the time of
obtaining his decree was of the same character as that held during the lifetime of his
brother, except in so far as shortly before the trial of the cadastral case the defendant
had secured from his brothers and sisters a relinquishment in his favor of such rights
as they might have in the land.

The relations of an agent to his principal are fiduciary and it is an elementary and very
old rule that in regard to property forming the subject-matter of the agency, he is
estopped from acquiring or asserting a title adverse to that of the principal. His position
is analogous to that of a trustee and he cannot consistently, with the principles of good
faith, be allowed to create in himself an interest in opposition to that of his principal or
cestui que trust. Upon this ground, and substantially in harmony with the principles of
the Civil Law (see sentence of the supreme court of Spain of May 1, 1900), the English
Chancellors held that in general whatever a trustee does for the advantage of the trust
estate inures to the benefit of the cestui que trust. (Greenlaw v. King, 5 Jur., 18; Ex
parte Burnell, 7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex parte James, 8 Ves., 337;
Oliver v. Court, 8 price, 127.) The same principle has been consistently adhered to in
so many American cases and is so well established that exhaustive citations of
authorities are superfluous and we shall therefore limit ourselves to quoting a few of
the numerous judicial expressions upon the subject. The principle is well stated in the
case of Gilber v. Hewetson (79 Minn., 326):jgc:chanrobles.com.ph

"A receiver, trustee, attorney, agent, or any other person occupying fiduciary relations respecting
property or persons, is utterly disabled from acquiring for his own benefit the property committed to
his custody for management. This rule is entirely independent of the fact whether any fraud has
intervened. No fraud in fact need be shown, and no excuse will be heard from the trustee. It is to
avoid the necessity of any such inquiry that the rule takes so general a form. The rule stands on the
moral obligation to refrain from placing one’s self in positions which ordinarily excite conflicts between
self-interest and integrity. It seeks to remove the temptation that might arise out of such a relation to
serve one’s self-interest at the expense of one’s integrity and duty to another, by making it impossible
to profit by yielding to temptation. It applies universally to all who come within its principle."

In the case of Massie v. Watts (6 Cranch, 148), the United States Supreme Court,
speaking through Chief Justice Marshall, said:jgc:chanrobles.com.ph

"But Massie, the agent of Oneale, has entered and surveyed a portion of that land for himself and
obtained a patent for it in his own name. According to the clearest and best established principles of
equity, the agent who so acts becomes a trustee for his principal. He cannot hold the land under an
entry for himself otherwise than as trustee for his principal."

In the case of Felix v. Patrick (145 U. S., 317), the United States Supreme Court, after
examining the authorities, said:jgc:chanrobles.com.ph

"The substance of these authorities is that, wherever a person obtains the legal title to land by any
artifice or concealment, or by making use of facilities intended for the benefit of another, a court of
equity will impress upon the land so held by him a trust in favor of the party who is justly entitled to
them, and will order the trust executed by decreeing their conveyance to the party in whose favor the
trust was created." (Citing Bank of Metropolis v. Guttschlick, 14 Pet., 19, 31; Moses v. Murgatroyd, 1
Johns. Ch., 119; Cumberland v. Codrington, 3 Johns. Ch., 229, 261; Neilson v. Blight, 1 Johns. Cas.,
205; Weston v. Barker, 12 Johns., 276.)

The same doctrine has also been adopted in the Philippines. In the of Uy Aloc v. Cho
Jan Ling (19 Phil., 202), the facts are stated by the court as
follows:jgc:chanrobles.com.ph

"From the facts proven at the trial it appears that a number of Chinese merchants raised a fund by
voluntary subscription with which they purchased a valuable tract of land and erected a large building
to be used as a sort of club house for the mutual benefit of the subscribers to the fund. The
subscribers organized themselves into an irregular association, which had no regular articles of
association, and was not incorporated or registered in the commercial registry or elsewhere. The
association not having any existence as a legal entity, it was agreed to have the title to the property
placed in the name of one of the members, the defendant, Cho Jan Ling, who on his part accepted
the trust, and agreed to hold the property as the agent of the members of the association. After the
club building was completed with the funds of the members of the association, Cho Jan Ling collected
some 25,000 in rests for which he failed and refused to account, and upon proceedings being
instituted to compel him to do so, he set up title in himself to the club property as well as to the rents
accruing therefrom, falsely alleging that he had bought the real estate and constructed the building
with his own funds, and denying the claims of the association that it was their funds which had been
used for that purpose."

The decree of the court provided, among other things, for the conveyance of the club
house and the land on which it stood from the defendant, Cho Jan Ling, in whose
name it was registered, to the members of the association. In affirming the decree, this
court said:jgc:chanrobles.com.ph

"In the case at bar the legal title of the holder of the registered title is not question; it is admitted that
the members of the association voluntarily obtained the inscription in the name of Cho Jan Ling, and
that they had no right to have that inscription cancelled; they do not seek such cancellation, and on
the contrary they allege and prove that the duly registered legal title to the property is in Cho Jan
Ling, but they maintain, and we think that they rightly maintain, that he holds it under an obligation,
both express and implied, to deal with it exclusively for the benefit of the members of the association,
and subject to their will."

In the case of Camacho v. Municipality of Baliuag (28 Phil., 466), the plaintiff,
Camacho, took title to the land in his own name, while acting as agent for the
municipality. The court said:jgc:chanrobles.com.ph

"There have been a number of cases before this court in which a title to real property was acquired by
a person in his own name, while acting under a fiduciary capacity, and who afterwards sought to take
advantage of the confidence reposed in him by claiming the ownership of the property for himself.
This court has invariably held such evidence competent as between the fiduciary and the cestui que
trust.

x x x

"What judgment ought to be entered in this case? The court below simply absolved the defendant
from the complaint. The defendant municipality does not ask for a cancellation of the deed. On the
contrary, the deed is relied upon to supplement the oral evidence showing that the title to the land is
in the defendant. As we have indicated in Consunji v. Tison, 15 Phil., 81, Uy Aloc v. Cho Jan Ling, 19
Phil., 202, the proper procedure in such a case, so long as the rights of innocent third persons have
not intervened, is to compel a conveyance to the rightful owner. This ought and can be done under
the issues raised and the proof presented in the case at bar."

The case of Sy-Juco and Viardo v. Sy-Juco (40 Phil., 634) is also in point.

As will be seen from the authorities quoted, an agent is not only estopped from denying
hi principal’s title to the property, but he is also disable from acquiring interests therein
adverse to those of his principal during the term of the agency. But the defendant
argues that his title has become res adjudicata through the decree of registration and
cannot now be disturbed.
This contention may, at first sight, appear to possess some force, but on closer
examination it proves untenable. The decree of registration determined the legal title to
the land as of the date of the decree; as to that there is no question. That, under
section 38 of the Land Registration Act, this decree became conclusive after one year
from the date of the entry is not disputed and no one attempts to disturb the decree of
the proceedings upon which it is based; the plaintiff in intervention merely contends
that in equity the legal title so acquired inured to the benefit of the estate of Melecio
Severino, the defendant’s principal and cestui que trust and asks that this superior
equitable right be made effective by compelling the defendant, as the holder of the
legal title, to transfer it to the estate.

We have already shown that before the issuance of the decree of registration it was
the undoubted duty of the defendant to restore the property committed to his custody
to his principal, or to the latter’s estate, and that the principal had a right of action in
personam to enforce the performance of this duty and to compel the defendant to
execute the necessary conveyance to that effect. The only question remaining for
consideration is, therefore, whether the decree of registration extinguished this
personal right of action.

In Australia and New Zealand, under statutes in this respect similar to ours, courts of
equity exercise general jurisdiction in matters of fraud and error with reference to
Torrens registered lands, and giving attention to the special provisions of the Torrens
acts, will issue such orders and directions to all the parties to the proceedings as may
seem just and proper under the circumstances. They may order parties to make deeds
of conveyance and if the order is disobeyed, they may cause proper conveyances to
be made by a Master in Chancery or Commissioner in accordance with the practice in
equity (Hogg, Australian Torrens System, p. 847).

In the United States courts have even gone so far in the exercise of their equity
jurisdiction as to set aside final decrees after the expiration of the statutory period of
limitation for the reopening of such decrees (Baart v. Martin, 99 Minn., 197). But,
considering that equity follows the law and that our statutes expressly prohibit the
reopening of a decree after one year from the date of its entry, this practice would
probably be out of question here, especially so as the ends of justice may be attained
by other equally effective, and less objectionable means.

Turning to our own Land Registration Act, we find no indication there of an intention to
cut off, through the issuance of a decree of registration, equitable rights or remedies
such as those here in question. On the contrary, section 70 of the Act
provides:jgc:chanrobles.com.ph

"Registered lands and ownership therein, shall in all respects be subject to the same burdens and
incidents attached by law to unregistered land. Nothing contained in this Act shall in any way be
construed to relieve registered land or the owners thereof from any rights incident to the relation of
husband and wife, or from liability to attachment on mesne process or levy on execution, or from
liability to any lien of any description established by law on land and the buildings thereon, or the
interest of the owner in such land or buildings, or to change the laws of descent, or the rights of
partition between copartners, joint tenants and other cotenants, or the right to take the same by
eminent domain, or to relieve such land from liability to be appropriated in any lawful manner for the
payment of debts, or to change or affect in any other way any other rights or liabilities created by law
and applicable to unregistered land, except as otherwise expressly provided in this Act or in the
amendments hereof."

Section 102 of the Act, after providing for actions for damages in which the Insular
Treasurer, as the Custodian of the Assurance Fund is a party, contains the following
proviso:

"Provided, however, That nothing in this Act shall be construed to deprive the plaintiff of any action
which he may have against any person for such loss or damage or deprivation of land or of any
estate or interest therein without joining the Treasurer of the Philippine Archipelago as a defendant
therein."

That an action such as the present one is covered by this proviso can hardly admit of
doubt. Such was also the view taken by this court in the case of Medina One-Quingco
v. Imaz and Warner, Barnes & Co. (27 Phil., 314), in which the plaintiff was seeking to
take advantage of his possession of a certificate of title to deprive the defendant of
land included in that certificate and sold to him by the former owner before the land
was registered. The court decided adversely to plaintiff and in so doing said:j

"As between them no question as to the indefeasibility of a Torrens title could arise. Such an action
could have been maintained at any time while the property remained in the hands of the purchaser.
The peculiar force of a Torrens title would have been brought into play only when the purchaser had
sold to an innocent third person for value the lands described in his conveyance . . . Generally
speaking, as between the vendor and the purchaser the same rights and remedies exists with
reference to land registered under Act No. 496, as exist in relation to land not so
registered."virtua1aw library

In Cabanos v. Register of Deeds of Laguna and Obinana (40 Phil., 620), it was held
that, while a purchaser of land under a pacto de retro cannot institute a real action for
the recovery thereof where the vendor under said sale has caused such lands to be
registered in his name without said vendee’s consent, yet he may have his personal
action based on the contract of sale to compel the execution of an unconditional deed
for the said lands when the period for repurchase has passed.

Torrens titles being based on judicial decrees there is, of course, a strong presumption
in favor of their regularity or validity, and in order to maintain an action such as the
present the proof as to the fiduciary relation of the parties and of the breach of trust
must be clear and convincing. Such proof is, as we have seen, not lacking in this
case.

But once the relation and the breach of trust on the part of the fiduciary is thus
established, there is no reason, neither practical nor legal, why he should not be
compelled to make such reparation as may lie within his power for the injury caused by
his wrong, and as long as the land stands registered in the name of the party who is
guilty of the breach of trust and no rights of innocent third parties are adversely
affected, there can be no reason why such reparation should not, in the proper case,
take the form of a conveyance or transfer of the title to the cestui que trust. No reasons
of public policy demand that a person guilty of fraud or breach of trust be permitted to
use his certificate of title as a shield against the consequences of his own wrong.

The judgment of the trial court is in accordance with the facts and the law. In order to
prevent unnecessary delay and further litigation it may, however, be well to attach
some additional directions to its dispositive clauses. It will be observed that lots Nos.
827, 828, and 834 of a total area of approximately 191 hectares, lie wholly within the
area to be conveyed to the plaintiff in intervention and these lots may, therefore, be so
conveyed without subdivision. The remaining 237 hectares to be conveyed lie within
the western part of lot No. 874 and before a conveyance of this portion can be affected
a subdivision of that lot must be made and a technical description of the portion to be
conveyed, as well as of the remaining portion of the lot, must be prepared. The
subdivision shall be made by an authorized surveyor and in accordance with the
provisions of Circular No. 31 of the General Land Registration Office, and the
subdivision and technical descriptions shall be submitted t the Chief of that office for
his approval. Within thirty days after being notified of the approval of said subdivision
and technical descriptions, the defendant Guillermo Severino shall execute good and
sufficient deed or deeds of conveyance in favor of the administratrix of the estate of the
deceased Melecio Severino for said lots Nos. 827, 828, 834, and the 237 hectares
segregated from the western part of lot No. 874 and shall deliver to the register of
deeds his duplicate certificates may be cancelled and new certificates issued. The cost
of the subdivision and the fees of the register of deeds will be paid by the plaintiff in
intervention. It is so ordered.

With these additional directions the judgment appealed from is affirmed, with the costs
against the appellant. The right of the plaintiff Fabiola Severino to establish in the
probate proceedings of the estate of Melecio Severino her status as his recognized
natural child is reserved.