GREGORIO ARANETA, INC., plaintiff-appellant, vs.

PAZ TUASON DE PATERNO

and JOSE VIDAL, defendants-appellants. G.R. No. L-2886; August 22, 1952

FACTS:
Paz Tuason de Paterno, who is the registered owner of an approximately 40,703
square meter land, obtained from Jose Vidal several loans totaling P90,098 and
constituted a first mortgage on the aforesaid property to secure the debt. In January and
April, 1943, she obtained additional loans of P30,000 and P20,000 upon the same
security. On each of the last-mentioned occasions the previous contract of mortgage
was renewed and the amounts received were consolidated. In the first novated contract
the time of payment was fixed at two years and in the second and last at four years. In
1943 Paz Tuason decided to sell the entire property for the net amount of P400,000 to
Gregorio Araneta, who at that time Jose Araneta was said to be the president of the
same. Allegedly, Jose Araneta also acted as agent of Paz Tuason for the sale of the
latter’s land. Thus, the result of the negotiations was the execution on October 19, 1943,
of a contract called "Promesa de Compra y Venta". This contract also stated that Paz
Tuason would sell to Gregorio Araneta, Inc. for the said amount of P400,000 the entire
estate except for the mortgage to Jose Vidal. Paz Tuason had offered to Vidal the check
for P143,150 in full settlement of her mortgage obligation, but the mortgagee had
refused to receive that check or to cancel the mortgage. A case was filed against Vidal
but the action never came on for trial and the record and the checks were destroyed
during the war operations in January or February, 1945; and neither was the case
reconstituted afterward. After liberation, an instant action was begun by Gregorio
Araneta, Inc. to compel Paz Tuason to deliver to the plaintiff a clear title to the lots
described free from all liens and encumbrances, and a deed of cancellation of the
mortgage to Vidal. Vidal came into the case in virtue of a summon issued by order of
the court, and filed a cross-claim against Paz Tuazon to foreclose his mortgage.
The lower court's judgment was that deed of sale between Araneta and Tuason
was invalid, unless Vidal's mortgage was cancelled.

ISSUE: Whether or not Jose Araneta acted as agent of Paz Tuason de Paterno.

HELD:
No. Jose Araneta did not act as agent of Paz Tuason. Even if Paz Tuason have
known that Jose Araneta is the same as Gregorio Arantea Inc., she would still go with
sale of her property as Jose Araneta did not by way of being an agent performed such
act of being an agent for the sale was between the corporation and not that of with
Jose. Otherwise, greed would have set in in the heart of Jose, would Jose have been
the agent as well as the purchaser of the property of Paz, than to respect their trusted
and respected relationship as principal and agent. Moreover, Jose Araneta was not
given any authority to make a binding contract. He was not given the confidence to
administer, and act in behalf of Paz so there was no betrayal of thrust as Jose acted
only as a middle-man tasked only to look for a buyer and not to administer any sale
between any prospective buyers. Adding to this, Jose was not to make the terms of
payment. Therefore, Jose Araneta was left with no power or discretion whatsoever,
which he could abuse to his advantage and to the owner's prejudice. He is not entrusted
as an agent for the agent’s incapacity to buy principal’s property rests in the fact that the
agent and principal form one juridical person.