Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-30573 October 29, 1971
VICENTE M. OMINGO, re!re"e#te$ b% &'" &e'r",
(NTONIN( R()MUNO V(. E OMINGO, RIC(RO,
CES(R, (MELI(, VICENTE *R., S(LV(OR, IRENE +#$
*OSELITO, +,, "-r#+.e$ OMINGO, petitioners-
appellants,
vs.
GREGORIO M. OMINGO, respondent-appellee, TEO/ILO
P. PURISIM(, intervenor-respondent.
Teoflo Leonin for petitioners-appellants.
Osorio, Osorio & Osorio for respondent-appellee.
Teoflo P. Purisima in his own behalf as intervenor-
respondent.

M(0(SI(R, J.:
Petitioner-appellant Vicente M. Doin!o, no" deceased and
represented b# his heirs, Antonina Ra#undo vda. de
Doin!o, Ricardo, Cesar, Aelia, Vicente $r., %alvacion,
&rene and $oselito, all surnaed Doin!o, sou!ht the
reversal of the a'orit# decision dated, March (), (*+* of
the %pecial Division of ,ive of the Court of Appeals a-rin!
the 'ud!ent of the trial court, "hich sentenced the said
Vicente M. Doin!o to pa# .re!orio M. Doin!o P),/01.20
and the intervenor 3eo4lo P. Purisia P),+01.20 "ith interest
on both aounts fro the date of the 4lin! of the coplaint,
to pa# .re!orio Doin!o P(,000.00 as oral and e5eplar#
daa!es and P200.00 as attorne#6s fees plus costs.
3he follo"in! facts "ere found to be established b# the
a'orit# of the %pecial Division of ,ive of the Court of
Appeals7
&n a docuent E5hibit 8A8 e5ecuted on $une ), (*2+, Vicente
M. Doin!o !ranted .re!orio Doin!o, a real estate bro9er,
the e5clusive a!enc# to sell his lot No. ::/ of Piedad Estate
"ith an area of about ::,;11 s<uare eters at the rate of
P).00 per s<uare eter =or for P(1+,*2;.00> "ith a
coission of 2? on the total price, if the propert# is sold
b# Vicente or b# an#one else durin! the /0-da# duration of
the a!enc# or if the propert# is sold b# Vicente "ithin three
onths fro the terination of the a!enc# to apurchaser to
"ho it "as subitted b# .re!orio durin! the continuance
of the a!enc# "ith notice to Vicente. 3he said a!enc#
contract "as in triplicate, one cop# "as !iven to Vicente,
"hile the ori!inal and another cop# "ere retained b#
.re!orio.
@n $une /, (*2+, .re!orio authoriAed the intervenor 3eo4lo
P. Purisia to loo9 for a bu#er, proisin! hi one-half of the
2? coission.
3hereafter, 3eo4lo Purisia introduced @scar de Beon to
.re!orio as a prospective bu#er.
@scar de Beon subitted a "ritten oCer "hich "as ver#
uch lo"er than the price of P).00 per s<uare eter
=E5hibit 8B8>. Vicente directed .re!orio to tell @scar de Beon
to raise his oCer. After several conferences bet"een
.re!orio and @scar de Beon, the latter raised his oCer to
P(0*,000.00 on $une )0, (*2+ as evidenced b# E5hibit 8C8,
to "hich Vicente a!reed b# si!nin! E5hibit 8C8. Dpon
deand of Vicente, @scar de Beon issued to hi a chec9 in
the aount of P(,000.00 as earnest one#, after "hich
Vicente advanced to .re!orio the su of P/00.00. @scar de
Beon con4red his forer oCer to pa# for the propert# at
P(.)0 per s<uare eter in another letter, E5hibit 8D8.
%ubse<uentl#, Vicente as9ed for an additional aount of
P(,000.00 as earnest one#, "hich @scar de Beon proised
to deliver to hi. 3hereafter, E5hibit 8C8 "as aended to
the eCect that @scar de Beon "ill vacate on or about
%epteber (2, (*2+ his house and lot at Denver %treet,
EueAon Cit# "hich is part of the purchase price. &t "as a!ain
aended to the eCect that @scar "ill vacate his house and
lot on Deceber (, (*2+, because his "ife "as on the
fail# "a# and Vicente could sta# in lot No. ::/ of Piedad
Estate until $une (, (*21, in a docuent dated $une /0,
(*2+ =the #ear (*21 therein is a ere t#po!raphical error>
and ar9ed E5hibit 8D8. Pursuant to his proise to .re!orio,
@scar !ave hi as a !ift or propina the su of @ne
3housand Pesos =P(,000.00> for succeedin! in persuadin!
Vicente to sell his lot at P(.)0 per s<uare eter or a total in
round 4!ure of @ne Fundred Nine 3housand Pesos
=P(0*,000.00>. 3his !ift of @ne 3housand Pesos =P(,000.00>
"as not disclosed b# .re!orio to Vicente. Neither did @scar
pa# Vicente the additional aount of @ne 3housand Pesos
=P(,000.00> b# "a# of earnest one#. &n the deed of sale
"as not e5ecuted on Au!ust (, (*2+ as stipulated in E5hibit
8C8 nor on Au!ust (2, (*2+ as e5tended b# Vicente, @scar
told .re!orio that he did not receive his one# fro his
brother in the Dnited %tates, for "hich reason he "as !ivin!
up the ne!otiation includin! the aount of @ne 3housand
Pesos =P(,000.00> !iven as earnest one# to Vicente and
the @ne 3housand Pesos =P(,000.00> !iven to .re!orio
aspropina or !ift. Ghen @scar did not see hi after several
"ee9s, .re!orio sensed soethin! 4sh#. %o, he "ent to
Vicente and read a portion of E5hibit 8A8 ar9ed habit 8A-(8
to the eCect that Vicente "as still coitted to pa# hi 2?
coission, if the sale is consuated "ithin three onths
after the e5piration of the /0-da# period of the e5clusive
a!enc# in his favor fro the e5ecution of the a!enc#
contract on $une ), (*2+ to a purchaser brou!ht b# .re!orio
to Vicente durin! the said /0-da# period. Vicente !rabbed
the ori!inal of E5hibit 8A8 and tore it to pieces. .re!orio held
his peace, not "antin! to anta!oniAe Vicente further,
because he had still duplicate of E5hibit 8A8. ,ro his
eetin! "ith Vicente, .re!orio proceeded to the o-ce of
the Re!ister of Deeds of EueAon Cit#, "here he discovered
E5hibit 8.6 deed of sale e5ecuted on %epteber (1, (*2+ b#
Aparo DiaA, "ife of @scar de Beon, over their house and lot
No. ;0 Denver %treet, Cubao, EueAon Cit#, in favor Vicente
as do"n pa#ent b# @scar de Beon on the purchase price of
Vicente6s lot No. ::/ of Piedad Estate. Dpon thus learnin!
that Vicente sold his propert# to the sae bu#er, @scar de
Beon and his "ife, he deanded in "rittin! pa#ent of his
coission on the sale price of @ne Fundred Nine
3housand Pesos =P(0*,000.00>, E5hibit 8F8. Fe also
conferred "ith @scar de Beon, "ho told hi that Vicente
"ent to hi and as9ed hi to eliinate .re!orio in the
transaction and that he "ould sell his propert# to hi for
@ne Fundred ,our 3housand Pesos =P(0;,000.0 &n Vicente6s
repl# to .re!orio6s letter, E5hibit 8F8, Vicente stated that
.re!orio is not entitled to the 2? coission because he
sold the propert# not to .re!orio6s bu#er, @scar de Beon,
but to another bu#er, Aparo DiaA, "ife of @scar de Beon.
3he Court of Appeals found fro the evidence that E5hibit
8A8, the e5clusive a!enc# contract, is !enuineH that Aparo
DiaA, the vendee, bein! the "ife of @scar de Beon the sale
b# Vicente of his propert# is practicall# a sale to @scar de
Beon since husband and "ife have coon or identical
interestsH that .re!orio and intervenor 3eo4lo Purisia "ere
the e-cient cause in the consuation of the sale in favor
of the spouses @scar de Beon and Aparo DiaAH that @scar
de Beon paid .re!orio the su of @ne 3housand Pesos
=P(,000.00> as 8propina8 or !ift and not as additional
earnest one# to be !iven to the plaintiC, because E5hibit
8++8, Vicente6s letter addressed to @scar de Beon "ith
respect to the additional earnest one#, does not appear to
have been ans"ered b# @scar de Beon and therefore there
is no "ritin! or docuent supportin! @scar de Beon6s
testion# that he paid an additional earnest one# of @ne
3housand Pesos =P(,000.00> to .re!orio for deliver# to
Vicente, unli9e the 4rst aount of @ne 3housand Pesos
=P(,000.00> paid b# @scar de Beon to Vicente as earnest
one#, evidenced b# the letter E5hibit 8;8H and that Vicente
did not even ention such additional earnest one# in his
t"o replies E5hibits 8&8 and 8$8 to .re!orio6s letter of deand
of the 2? coission.
3he three issues in this appeal are =(> "hether the failure on
the part of .re!orio to disclose to Vicente the pa#ent to
hi b# @scar de Beon of the aount of @ne 3housand Pesos
=P(,000.00> as !ift or 8propina8 for havin! persuaded
Vicente to reduce the purchase price fro P).00 to P(.)0
per s<uare eter, so constitutes fraud as to cause a
forfeiture of his coission on the sale priceH =)> "hether
Vicente or .re!orio should be liable directl# to the
intervenor 3eo4lo Purisia for the latter6s share in the
e5pected coission of .re!orio b# reason of the saleH and
=/> "hether the a"ard of le!al interest, oral and
e5eplar# daa!es, attorne#6s fees and costs, "as proper.
Dnfortunatel#, the a'orit# opinion penned b# $ustice
Edilberto %oriano and concurred in b# $ustice $uan Enri<ueA
did not touch on these issues "hich "ere e5tensivel#
discussed b# $ustice Ma!no .ataitan in his dissentin!
opinion. Fo"ever, $ustice Es!uerra, in his concurrin!
opinion, a-red that it does not constitute breach of trust
or fraud on the part of the bro9er and re!arded sae as
erel# part of the "hole process of brin!in! about the
eetin! of the inds of the seller and the purchaser and
that the coitent fro the prospect bu#er that he "ould
!ive a re"ard to .re!orio if he could eCect better ters for
hi fro the seller, independent of his le!itiate
coission, is not fraudulent, because the principal can
re'ect the ters oCered b# the prospective bu#er if he
believes that such ters are onerous disadvanta!eous to
hi. @n the other hand, $ustice .ataitan, "ith "ho
$ustice Antonio Ca4Aares corner held the vie" that such an
act on the part of .re!orio "as fraudulent and constituted a
breach of trust, "hich should deprive hi of his ri!ht to the
coission.
3he duties and liabilities of a bro9er to his eplo#er are
essentiall# those "hich an a!ent o"es to his principal.
1
Conse<uentl#, the decisive le!al provisions are in found
Articles (:*( and (*0* of the Ne" Civil Code.
Art. (:*(. Ever# a!ent is bound to render an
account of his transactions and to deliver to
the principal "hatever he a# have received
b# virtue of the a!enc#, even thou!h it a#
not be o"in! to the principal.
Ever# stipulation e5eptin! the a!ent fro
the obli!ation to render an account shall be
void.
555 555 555
Art. (*0*. 3he a!ent is responsible not onl#
for fraud but also for ne!li!ence, "hich shall
be 'ud!ed "ith ore less ri!or b# the courts,
accordin! to "hether the a!enc# "as or "as
not for a copensation.
Article (:*( of the Ne" Civil Code aends Article (1 of the
old %panish Civil Code "hich provides that7
Art. (1)0. Ever# a!ent is bound to !ive an
account of his transaction and to pa# to the
principal "hatever he a# have received b#
virtue of the a!enc#, even thou!h "hat he
has received is not due to the principal.
3he odi4cation contained in the 4rst para!raph Article
(:*( consists in chan!in! the phrase 8to pa#8 to 8to
deliver8, "hich latter ter is ore coprehensive than the
forer.
Para!raph ) of Article (:*( is a ne" addition desi!ned to
stress the hi!hest lo#alt# that is re<uired to an a!ent I
condenin! as void an# stipulation e5eptin! the a!ent
fro the dut# and liabilit# iposed on hi in para!raph one
thereof.
Article (*0* of the Ne" Civil Code is essentiall# a
reinstateent of Article (1)+ of the old %panish Civil Code
"hich reads thus7
Art. (1)+. 3he a!ent is liable not onl# for
fraud, but also for ne!li!ence, "hich shall be
'ud!ed "ith ore or less severit# b# the
courts, accordin! to "hether the a!enc# "as
!ratuitous or for a price or re"ard.
3he aforecited provisions deand the utost !ood faith,
4delit#, honest#, candor and fairness on the part of the
a!ent, the real estate bro9er in this case, to his principal,
the vendor. 3he la" iposes upon the a!ent the absolute
obli!ation to a9e a full disclosure or coplete account to
his principal of all his transactions and other aterial facts
relevant to the a!enc#, so uch so that the la" as aended
does not countenance an# stipulation e5eptin! the a!ent
fro such an obli!ation and considers such an e5eption as
void. 3he dut# of an a!ent is li9ened to that of a trustee.
3his is not a technical or arbitrar# rule but a rule founded on
the hi!hest and truest principle of oralit# as "ell as of the
strictest 'ustice.
2
Fence, an a!ent "ho ta9es a secret pro4t in the nature of a
bonus, !ratuit# or personal bene4t fro the vendee, "ithout
revealin! the sae to his principal, the vendor, is !uilt# of a
breach of his lo#alt# to the principal and forfeits his ri!ht to
collect the coission fro his principal, even if the
principal does not suCer an# in'ur# b# reason of such breach
of 4delit#, or that he obtained better results or that the
a!enc# is a !ratuitous one, or that usa!e or custo allo"s
itH because the rule is to prevent the possibilit# of an#
"ron!, not to reed# or repair an actual daa!e.
3
B#
ta9in! such pro4t or bonus or !ift or propina fro the
vendee, the a!ent thereb# assues a position "holl#
inconsistent "ith that of bein! an a!ent for hisprincipal, "ho
has a ri!ht to treat hi, insofar as his coission is
concerned, as if no a!enc# had e5isted. 3he fact that the
principal a# have been bene4ted b# the valuable services
of the said a!ent does not e5culpate the a!ent "ho has onl#
hiself to blae for such a result b# reason of his treacher#
or per4d#.
3his Court has been consistent in the ri!orous application of
Article (1)0 of the old %panish Civil Code. 3hus, for failure to
deliver sus of one# paid to hi as an insurance a!ent for
the account of his eplo#er as re<uired b# said Article (1)0,
said insurance a!ent "as convicted estafa.
1
An
adinistrator of an estate "as li9e"ise under the sae
Article (1)0 for failure to render an account of his
adinistration to the heirs unless the heirs consented
thereto or are estopped b# havin! accepted the correctness
of his account previousl# rendered.
5
Because of his responsibilit# under the aforecited article
(1)0, an a!ent is li9e"ise liable for estafa for failure to
deliver to his principal the total aount collected b# hi in
behalf of his principal and cannot retain the coission
pertainin! to hi b# subtractin! the sae fro his
collections.
2
A la"#er is e<uall# liable unnder said Article (1)0 if he fails
to deliver to his client all the one# and propert# received
b# hi for his client despite his attorne#6s lien.
7
3he dut# of
a coission a!ent to render a full account his operations
to his principal "as reiterated in Duhart, etc. vs. Macias.
3
3he Aerican 'urisprudence on this score is "ell-ni!h
unanious.
Ghere a principal has paid an a!ent or bro9er
a coission "hile i!norant of the fact that
the latter has been unfaithful, the principal
a# recover bac9 the coission paid, since
an a!ent or bro9er "ho has been unfaithful is
not entitled to an# copensation.
555 555 555
&n discussin! the ri!ht of the principal to
recover coissions retained b# an unfaithful
a!ent, the court in Little vs. Phipps =(*((> )0:
Mass. //(, *; NE )+0, /; BRA =N%> (0;+, said7
8&t is "ell settled that the a!ent is bound to
e5ercise the utost !ood faith in his dealin!s
"ith his principal. As Bord Cairns said, this rule
8is not a technical or arbitrar# rule. &t is a rule
founded on the hi!hest and truest principles,
of oralit#.8 Parer vs. Mc!enna =(:1;> BR
(0,Ch=En!> *+,((: ... &f the a!ent does not
conduct hiself "ith entire 4delit# to"ards
his principal, but is !uilt# of ta9in! a secret
pro4t or coission in re!ard the atter in
"hich he is eplo#ed, he loses his ri!ht to
copensation on the !round that he has
ta9en a position "holl# inconsistent "ith that
of a!ent for his eplo#er, and "hich !ives his
eplo#er, upon discoverin! it, the ri!ht to
treat hi so far as copensation, at least, is
concerned as if no a!enc# had e5isted. 3his
a# operate to !ive to the principal the
bene4t of valuable services rendered b# the
a!ent, but the a!ent has onl# hiself to
blae for that result.8
555 555 555
3he intent "ith "hich the a!ent too9 a secret
pro4t has been held iaterial "here the
a!ent has in fact entered into a relationship
inconsistent "ith his a!enc#, since the la"
condens the corruptin! tendenc# of the
inconsistent relationship. Little vs.
Phipps =(*((> *; NE )+0.
9
As a !eneral rule, it is a breach of !ood faith
and lo#alt# to his principal for an a!ent, "hile
the a!enc# e5ists, so to deal "ith the sub'ect
atter thereof, or "ith inforation ac<uired
durin! the course of the a!enc#, as to a9e a
pro4t out of it for hiself in e5cess of his
la"ful copensationH and if he does so he
a# be held as a trustee and ma" be
compelled to account to his principal for all
profts, advanta#es, ri#hts, or privile#es
ac$uired b" him in such dealin#s, whether in
performance or in violation of his duties, and
be re$uired to transfer them to his principal
upon bein# reimbursed for his e%penditures
for the same, unless the principal has
consented to or ratifed the transaction
nowin# that beneft or proft would accrue or
had accrued, to the a#ent, or unless with such
nowled#e he has allowed the a#ent so as to
chan#e his condition that he cannot be put in
status $uo. The application of this rule is not
a&ected b" the fact that the principal did not
su&er an" in'ur" b" reason of the a#ent(s
dealin#s or that he in fact obtained better
results) nor is it a&ected b" the fact that
there is a usa#e or custom to the contrar" or
that the a#enc" is a #ratuitous one.
=Ephasis applied.>
10
&n the case at bar, defendant-appellee .re!orio Doin!o as
the bro9er, received a !ift or propina in the aount of @ne
3housand Pesos =P(,000.00> fro the prospective bu#er
@scar de Beon, "ithout the 9no"led!e and consent of his
principal, herein petitioner-appellant Vicente Doin!o. Fis
acceptance of said substantial onetar# !ift corrupted his
dut# to serve the interests onl# of his principal and
underined his lo#alt# to his principal, "ho !ave hi partial
advance of 3hree Fundred Pesos =P/00.00> on his
coission. As a conse<uence, instead of e5ertin! his best
to persuade his prospective bu#er to purchase the propert#
on the ost advanta!eous ters desired b# his principal,
the bro9er, herein defendant-appellee .re!orio Doin!o,
succeeded in persuadin! his principal to accept the counter-
oCer of the prospective bu#er to purchase the propert# at
P(.)0 per s<uare eter or @ne Fundred Nine 3housand
Pesos =P(0*,000.00> in round 4!ure for the lot of ::,;11
s<uare eters, "hich is ver# uch lo"er the the price of
P).00 per s<uare eter or @ne Fundred %event#-%i5
3housand Nine Fundred ,ift#-,our Pesos =P(1+,*2;.00> for
said lot ori!inall# oCered b# his principal.
3he dut# ebodied in Article (:*( of the Ne" Civil Code "ill
not appl# if the a!ent or bro9er acted onl# as a iddlean
"ith the tas9 of erel# brin!in! to!ether the vendor and
vendee, "ho theselves thereafter "ill ne!otiate on the
ters and conditions of the transaction. Neither "ould the
rule appl# if the a!ent or bro9er had infored the principal
of the !ift or bonus or pro4t he received fro the purchaser
and his principal did not ob'ect therto.
11
Ferein defendant-
appellee .re!orio Doin!o "as not erel# a iddlean of
the petitioner-appellant Vicente Doin!o and the bu#er
@scar de Beon. Fe "as the bro9er and a!ent of said
petitioner-appellant onl#. And therein petitioner-appellant
"as not a"are of the !ift of @ne 3housand Pesos
=P(,000.00> received b# .re!orio Doin!o fro the
prospective bu#erH uch less did he consent to his a!ent6s
acceptin! such a !ift.
3he fact that the bu#er appearin! in the deed of sale is
Aparo DiaA, the "ife of @scar de Beon, does not ateriall#
alter the situationH because the transaction, to be valid,
ust necessaril# be "ith the consent of the husband @scar
de Beon, "ho is the adinistrator of their con'u!al assets
includin! their house and lot at No. ;0 Denver %treet,
Cubao, EueAon Cit#, "hich "ere !iven as part of and
constituted the do"n pa#ent on, the purchase price of
herein petitioner-appellant6s lot No. ::/ of Piedad Estate.
Fence, both in la" and in fact, it "as still @scar de Beon "ho
"as the bu#er.
As a necessar# conse<uence of such breach of trust,
defendant-appellee .re!orio Doin!o ust forfeit his ri!ht
to the coission and ust return the part of the
coission he received fro his principal.
3eo4lo Purisia, the sub-a!ent of .re!orio Doin!o, can
onl# recover fro .re!orio Doin!o his one-half share of
"hatever aounts .re!orio Doin!o received b# virtue of
the transaction as his sub-a!enc# contract "as "ith
.re!orio Doin!o alone and not "ith Vicente Doin!o, "ho
"as not even a"are of such sub-a!enc#. %ince .re!orio
Doin!o received fro Vicente Doin!o and @scar de Beon
respectivel# the aounts of 3hree Fundred Pesos =P/00.00>
and @ne 3housand Pesos =P(,000.00> or a total of @ne
3housand 3hree Fundred Pesos =P(,/00.00>, one-half of the
sae, "hich is %i5 Fundred ,ift# Pesos =P+20.00>, should be
paid b# .re!orio Doin!o to 3eo4lo Purisia.
Because .re!orio Doin!o6s clearl# unfounded coplaint
caused Vicente Doin!o ental an!uish and serious
an5iet# as "ell as "ounded feelin!s, petitioner-appellant
Vicente Doin!o should be a"arded oral daa!es in the
reasonable aount of @ne 3housand Pesos =P(,000.00>
attorne#6s fees in the reasonable aount of @ne 3housand
Pesos =P(,000.00>, considerin! that this case has been
pendin! for the last 4fteen =(2> #ears fro its 4lin! on
@ctober /, (*2+.
GFERE,@RE, the 'ud!ent is hereb# rendered, reversin!
the decision of the Court of Appeals and directin!
defendant-appellee .re!orio Doin!o7 =(> to pa# to the
heirs of Vicente Doin!o the su of @ne 3housand Pesos
=P(,000.00> as oral daa!es and @ne 3housand Pesos
=P(,000.00> as attorne#6s feesH =)> to pa# 3eo4lo Purisia
the su of %i5 Fundred ,ift# Pesos =P+20.00>H and =/> to pa#
the costs.
*oncepcion, *.+., ,e"es, +.-.L., Maalintal, .aldivar, *astro,
/ernando, Teehanee, -arredo and 0illamor, ++., concur.

Republic of the Philippines
SUPREME COURT
Manila
3F&RD D&V&%&@N
G.R. No. 127552 (!r', 23, 2007
EUROTEC4 INUSTRI(L TEC4NOLOGIES,
INC., Petitioner,
vs.
E5IN CUI6ON +#$ ER5IN CUI6ON, Respondents.
D E C & % & @ N
C4ICO-N(6(RIO, J.:
Before Ds is a petition for revie" b# certiorari assailin! the
Decision
(
of the Court of Appeals dated (0 Au!ust )00; and
its Resolution
)
dated (1 March )002 in CA-..R. %P No. 1(/*1
entitled, 8Eurotech &ndustrial 3echnolo!ies, &nc. v. Fon.
Antonio 3. EchaveA.8 3he assailed Decision and Resolution
a-red the @rder
/
dated )* $anuar# )00) rendered b#
$ud!e Antonio 3. EchaveA orderin! the droppin! of
respondent EDG&N CuiAon =EDG&N> as a part# defendant in
Civil Case No. CEB-(*+1).
3he !enerative facts of the case are as follo"s7
Petitioner is en!a!ed in the business of iportation and
distribution of various European industrial e<uipent for
custoers here in the Philippines. &t has as one of its
custoers &pact %#stes %ales =8&pact %#stes8> "hich
is a sole proprietorship o"ned b# respondent ERG&N CuiAon
=ERG&N>. Respondent EDG&N is the sales ana!er of &pact
%#stes and "as ipleaded in the court a <uo in said
capacit#.
,ro $anuar# to April (**2, petitioner sold to &pact
%#stes various products alle!edl# aountin! to ninet#-one
thousand three hundred thirt#-ei!ht =P*(,//:.00> pesos.
%ubse<uentl#, respondents sou!ht to bu# fro petitioner
one unit of slud!e pup valued at P)20,000.00 "ith
respondents a9in! a do"n pa#ent of 4ft# thousand
pesos =P20,000.00>.
;
Ghen the slud!e pup arrived fro
the Dnited Jin!do, petitioner refused to deliver the sae
to respondents "ithout their havin! full# settled their
indebtedness to petitioner. 3hus, on ): $une (**2,
respondent EDG&N and Alberto de $esus, !eneral ana!er of
petitioner, e5ecuted a Deed of Assi!nent of receivables in
favor of petitioner, the pertinent part of "hich states7
(.> 3hat A%%&.N@R
2
has an outstandin! receivables fro
3oledo Po"er Corporation in the aount of 3FREE FDNDRED
%&K3L ,&VE 3F@D%AND =P/+2,000.00> PE%@% as pa#ent for
the purchase of one unit of %el"ood %pate (00D %lud!e
PupH
).> 3hat said A%%&.N@R does hereb# A%%&.N, 3RAN%,ER,
and C@NVEL unto the A%%&.NEE
+
the said receivables fro
3oledo Po"er Corporation in the aount of 3FREE FDNDRED
%&K3L ,&VE 3F@D%AND =P/+2,000.00> PE%@% "hich
receivables the A%%&.N@R is the la"ful recipientH
/.> 3hat the A%%&.NEE does hereb# accept this assi!nent.
1
,ollo"in! the e5ecution of the Deed of Assi!nent,
petitioner delivered to respondents the slud!e pup as
sho"n b# &nvoice No. ()0/; dated /0 $une (**2.
:
Alle!edl# unbe9no"nst to petitioner, respondents, despite
the e5istence of the Deed of Assi!nent, proceeded to
collect fro 3oledo Po"er Copan# the aount
of P/+2,(/2.)* as evidenced b# Chec9 Voucher No.
0*//
*
prepared b# said po"er copan# and an o-cial
receipt dated (2 Au!ust (**2 issued b# &pact
%#stes.
(0
Alared b# this developent, petitioner ade
several deands upon respondents to pa# their obli!ations.
As a result, respondents "ere able to a9e partial pa#ents
to petitioner. @n 1 @ctober (**+, petitionerMs counsel sent
respondents a 4nal deand letter "herein it "as stated that
as of (( $une (**+, respondentsM total obli!ations stood
at P)*2,000.00 e5cludin! interests and attorne#Ms
fees.
((
Because of respondentsM failure to abide b# said 4nal
deand letter, petitioner instituted a coplaint for su of
one#, daa!es, "ith application for preliinar#
attachent a!ainst herein respondents before the Re!ional
3rial Court of Cebu Cit#.
()
@n : $anuar# (**1, the trial court !ranted petitionerMs
pra#er for the issuance of "rit of preliinar# attachent.
(/
@n )2 $une (**1, respondent EDG&N 4led his
Ans"er
(;
"herein he aditted petitionerMs alle!ations "ith
respect to the sale transactions entered into b# &pact
%#stes and petitioner bet"een $anuar# and April
(**2.
(2
Fe, ho"ever, disputed the total aount of &pact
%#stesM indebtedness to petitioner "hich, accordin! to
hi, aounted to onl# P))0,000.00.
(+
B# "a# of special and a-rative defenses, respondent
EDG&N alle!ed that he is not a real part# in interest in this
case. Accordin! to hi, he "as actin! as ere a!ent of his
principal, "hich "as the &pact %#stes, in his transaction
"ith petitioner and the latter "as ver# uch a"are of this
fact. &n support of this ar!uent, petitioner points to
para!raphs (.) and (./ of petitionerMs Coplaint statin! N
(.). Defendant Er"in F. CuiAon, is of le!al a!e, arried, a
resident of Cebu Cit#. Fe is the proprietor of a sin!le
proprietorship business 9no"n as &pact %#stes %ales
=8&pact %#stes8 for brevit#>, "ith o-ce located at ;+-A
del Rosario %treet, Cebu Cit#, "here he a# be served
suons and other processes of the Fonorable Court.
(./. Defendant Ed"in B. CuiAon is of le!al a!e, ,ilipino,
arried, a resident of Cebu Cit#. Fe is the %ales Mana!er of
&pact %#stes and is sued in this action in such capacit#.
(1
@n )+ $une (**:, petitioner 4led a Motion to Declare
Defendant ERG&N in Default "ith Motion for %uar#
$ud!ent. 3he trial court !ranted petitionerMs otion to
declare respondent ERG&N in default 8for his failure to
ans"er "ithin the prescribed period despite the opportunit#
!ranted8
(:
but it denied petitionerMs otion for suar#
'ud!ent in its @rder of /( Au!ust )00( and scheduled the
pre-trial of the case on (+ @ctober )00(.
(*
Fo"ever, the
conduct of the pre-trial conference "as deferred pendin! the
resolution b# the trial court of the special and a-rative
defenses raised b# respondent EDG&N.
)0
After the 4lin! of respondent EDG&NMs Meorandu
)(
in
support of his special and a-rative defenses and
petitionerMs opposition
))
thereto, the trial court rendered its
assailed @rder dated )* $anuar# )00) droppin! respondent
EDG&N as a part# defendant in this case. Accordin! to the
trial court N
A stud# of Anne5 8.8 to the coplaint sho"s that in the
Deed of Assi!nent, defendant Ed"in B. CuiAon acted in
behalf of or represented O&pactP %#stes %alesH that
O&pactP %#stes %ale is a sin!le proprietorship entit# and
the coplaint sho"s that defendant Er"in F. CuiAon is the
proprietorH that plaintiC corporation is represented b# its
!eneral ana!er Alberto de $esus in the contract "hich is
dated $une ):, (**2. A stud# of Anne5 8F8 to the coplaint
reveals that O&pactP %#stes %ales "hich is o"ned solel#
b# defendant Er"in F. CuiAon, ade a do"n pa#ent
of P20,000.00 that Anne5 8F8 is dated $une /0, (**2 or t"o
da#s after the e5ecution of Anne5 8.8, thereb# sho"in! that
O&pactP %#stes %ales rati4ed the act of Ed"in B. CuiAonH
the records further sho" that plaintiC 9ne" that O&pactP
%#stes %ales, the principal, rati4ed the act of Ed"in B.
CuiAon, the a!ent, "hen it accepted the do"n pa#ent
of P20,000.00. PlaintiC, therefore, cannot sa# that it "as
deceived b# defendant Ed"in B. CuiAon, since in the instant
case the principal has rati4ed the act of its a!ent and
plaintiC 9ne" about said rati4cation. PlaintiC could not sa#
that the sub'ect contract "as entered into b# Ed"in B.
CuiAon in e5cess of his po"ers since O&pactP %#stes %ales
ade a do"n pa#ent of P20,000.00 t"o da#s later.
&n vie" of the ,ore!oin!, the Court directs that defendant
Ed"in B. CuiAon be dropped as part# defendant.
)/
A!!rieved b# the adverse rulin! of the trial court, petitioner
brou!ht the atter to the Court of Appeals "hich, ho"ever,
a-red the )* $anuar# )00) @rder of the court a <uo. 3he
dispositive portion of the no" assailed Decision of the Court
of Appeals states7
GFERE,@RE, 4ndin! no viable le!al !round to reverse or
odif# the conclusions reached b# the public respondent in
his @rder dated $anuar# )*, )00), it is hereb# A,,&RMED.
);
PetitionerMs otion for reconsideration "as denied b# the
appellate court in its Resolution proul!ated on (1 March
)002. Fence, the present petition raisin!, as sole !round for
its allo"ance, the follo"in!7
3FE C@DR3 @, APPEAB% C@MM&33ED A REVER%&BBE ERR@R
GFEN &3 RDBED 3FA3 RE%P@NDEN3 EDG&N CD&Q@N, A%
A.EN3 @, &MPAC3 %L%3EM% %ABE%RERG&N CD&Q@N, &% N@3
PER%@NABBL B&ABBE, BECAD%E FE FA% NE&3FER AC3ED
BEL@ND 3FE %C@PE @, F&% A.ENCL N@R D&D FE
PAR3&C&PA3E &N 3FE PERPE3DA3&@N @, A ,RADD.
)2
3o support its ar!uent, petitioner points to Article (:*1 of
the Ne" Civil Code "hich states7
Art. (:*1. 3he a!ent "ho acts as such is not personall#
liable to the part# "ith "ho he contracts, unless he
e5pressl# binds hiself or e5ceeds the liits of his authorit#
"ithout !ivin! such part# su-cient notice of his po"ers.
Petitioner contends that the Court of Appeals failed to
appreciate the eCect of ERG&NMs act of collectin! the
receivables fro the 3oledo Po"er Corporation
not"ithstandin! the e5istence of the Deed of Assi!nent
si!ned b# EDG&N on behalf of &pact %#stes. Ghile said
collection did not revo9e the a!enc# relations of
respondents, petitioner insists that ERG&NMs action
repudiated EDG&NMs po"er to si!n the Deed of Assi!nent.
As EDG&N did not su-cientl# notif# it of the e5tent of his
po"ers as an a!ent, petitioner clais that he should be
ade personall# liable for the obli!ations of his principal.
)+
Petitioner also contends that it fell victi to the fraudulent
schee of respondents "ho induced it into sellin! the one
unit of slud!e pup to &pact %#stes and si!nin! the
Deed of Assi!nent. Petitioner directs the attention of this
Court to the fact that respondents are bound not onl# b#
their principal and a!ent relationship but are in fact full-
blooded brothers "hose successive contravenin! acts bore
the obvious si!ns of conspirac# to defraud petitioner.
)1
&n his Coent,
):
respondent EDG&N a!ain posits the
ar!uent that he is not a real part# in interest in this case
and it "as proper for the trial court to have hi dropped as
a defendant. Fe insists that he "as a ere a!ent of &pact
%#stes "hich is o"ned b# ERG&N and that his status as
such is 9no"n even to petitioner as it is alle!ed in the
Coplaint that he is bein! sued in his capacit# as the sales
ana!er of the said business venture. Bi9e"ise, respondent
EDG&N points to the Deed of Assi!nent "hich clearl#
states that he "as actin! as a representative of &pact
%#stes in said transaction.
Ge do not 4nd erit in the petition.
&n a contract of a!enc#, a person binds hiself to render
soe service or to do soethin! in representation or on
behalf of another "ith the latterMs consent.
)*
3he underl#in!
principle of the contract of a!enc# is to accoplish results
b# usin! the services of others N to do a !reat variet# of
thin!s li9e sellin!, bu#in!, anufacturin!, and
transportin!.
/0
&ts purpose is to e5tend the personalit# of the
principal or the part# for "ho another acts and fro "ho
he or she derives the authorit# to act.
/(
&t is said that the
basis of a!enc# is representation, that is, the a!ent acts for
and on behalf of the principal on atters "ithin the scope of
his authorit# and said acts have the sae le!al eCect as if
the# "ere personall# e5ecuted b# the principal.
/)
B# this
le!al 4ction, the actual or real absence of the principal is
converted into his le!al or 'uridical presence N <ui facit per
aliu facit per se.
//
3he eleents of the contract of a!enc# are7 =(> consent,
e5press or iplied, of the parties to establish the
relationshipH =)> the ob'ect is the e5ecution of a 'uridical act
in relation to a third personH =/> the a!ent acts as a
representative and not for hiselfH =;> the a!ent acts "ithin
the scope of his authorit#.
/;
&n this case, the parties do not dispute the e5istence of the
a!enc# relationship bet"een respondents ERG&N as
principal and EDG&N as a!ent. 3he onl# cause of the present
dispute is "hether respondent EDG&N e5ceeded his
authorit# "hen he si!ned the Deed of Assi!nent thereb#
bindin! hiself personall# to pa# the obli!ations to
petitioner. Petitioner 4rl# believes that respondent EDG&N
acted be#ond the authorit# !ranted b# his principal and he
should therefore bear the eCect of his deed pursuant to
Article (:*1 of the Ne" Civil Code.
Ge disa!ree.
Article (:*1 reinforces the failiar doctrine that an a!ent,
"ho acts as such, is not personall# liable to the part# "ith
"ho he contracts. 3he sae provision, ho"ever, presents
t"o instances "hen an a!ent becoes personall# liable to a
third person. 3he 4rst is "hen he e5pressl# binds hiself to
the obli!ation and the second is "hen he e5ceeds his
authorit#. &n the last instance, the a!ent can be held liable if
he does not !ive the third part# su-cient notice of his
po"ers. Ge hold that respondent EDG&N does not fall "ithin
an# of the e5ceptions contained in this provision.
3he Deed of Assi!nent clearl# states that respondent
EDG&N si!ned thereon as the sales ana!er of &pact
%#stes. As discussed else"here, the position of ana!er is
uni<ue in that it presupposes the !rant of broad po"ers "ith
"hich to conduct the business of the principal, thus7
3he po"ers of an a!ent are particularl# broad in the case of
one actin! as a !eneral a!ent or ana!erH such a position
presupposes a de!ree of con4dence reposed and investiture
"ith liberal po"ers for the e5ercise of 'ud!ent and
discretion in transactions and concerns "hich are incidental
or appurtenant to the business entrusted to his care and
ana!eent. &n the absence of an a!reeent to the
contrar#, a ana!in! a!ent a# enter into an# contracts
that he dees reasonabl# necessar# or re<uisite for the
protection of the interests of his principal entrusted to his
ana!eent. 5 5 5.
/2
Appl#in! the fore!oin! to the present case, "e hold that
Ed"in CuiAon acted "ell-"ithin his authorit# "hen he si!ned
the Deed of Assi!nent. 3o recall, petitioner refused to
deliver the one unit of slud!e pup unless it received, in
full, the pa#ent for &pact %#stesM indebtedness.
/+
Ge
a# ver# "ell assue that &pact %#stes desperatel#
needed the slud!e pup for its business since after it paid
the aount of 4ft# thousand pesos =P20,000.00> as do"n
pa#ent on / March (**2,
/1
it still persisted in ne!otiatin!
"ith petitioner "hich culinated in the e5ecution of the
Deed of Assi!nent of its receivables fro 3oledo Po"er
Copan# on ): $une (**2.
/:
3he si!ni4cant aount of tie
spent on the ne!otiation for the sale of the slud!e pup
underscores &pact %#stesM perseverance to !et hold of
the said e<uipent. 3here is, therefore, no doubt in our
ind that respondent EDG&NMs participation in the Deed of
Assi!nent "as 8reasonabl# necessar#8 or "as re<uired in
order for hi to protect the business of his principal. Fad he
not acted in the "a# he did, the business of his principal
"ould have been adversel# aCected and he "ould have
violated his 4duciar# relation "ith his principal.
Ge li9e"ise ta9e note of the fact that in this case, petitioner
is see9in! to recover both fro respondents ERG&N, the
principal, and EDG&N, the a!ent. &t is "ell to state here that
Article (:*1 of the Ne" Civil Code upon "hich petitioner
anchors its clai a!ainst respondent EDG&N 8does not hold
that in case of e5cess of authorit#, both the a!ent and the
principal are liable to the other contractin! part#.8
/*
3o
reiterate, the 4rst part of Article (:*1 declares that the
principal is liable in cases "hen the a!ent acted "ithin the
bounds of his authorit#. Dnder this, the a!ent is copletel#
absolved of an# liabilit#. 3he second part of the said
provision presents the situations "hen the a!ent hiself
becoes liable to a third part# "hen he e5pressl# binds
hiself or he e5ceeds the liits of his authorit# "ithout
!ivin! notice of his po"ers to the third person. Fo"ever, it
ust be pointed out that in case of e5cess of authorit# b#
the a!ent, li9e "hat petitioner clais e5ists here, the la"
does not sa# that a third person can recover fro both the
principal and the a!ent.
;0
As "e declare that respondent EDG&N acted "ithin his
authorit# as an a!ent, "ho did not ac<uire an# ri!ht nor
incur an# liabilit# arisin! fro the Deed of Assi!nent, it
follo"s that he is not a real part# in interest "ho should be
ipleaded in this case. A real part# in interest is one "ho
8stands to be bene4ted or in'ured b# the 'ud!ent in the
suit, or the part# entitled to the avails of the suit.8
;(
&n this
respect, "e sustain his e5clusion as a defendant in the suit
before the court a <uo.
GFERE,@RE, preises considered, the present petition is
DEN&ED and the Decision dated (0 Au!ust )00; and
Resolution dated (1 March )002 of the Court of Appeals in
CA-..R. %P No. 1(/*1, a-rin! the @rder dated )* $anuar#
)00) of the Re!ional 3rial Court, Branch :, Cebu Cit#, is
A,,&RMED.
Bet the records of this case be reanded to the Re!ional
3rial Court, Branch :, Cebu Cit#, for the continuation of the
proceedin!s a!ainst respondent Er"in CuiAon.
%@ @RDERED.
T4IR IVISION


SORI(MONT STE(MS4IP
(GENCIES, INC., +#$ P(TRIC0
RON(S,
Petitioners,


- versus -


SPRINT TR(NSPORT SERVICES,
INC., RIC(RO CRU6 P(P(,
$o'#7 b-"'#e"" -#$er t&e "t%,e
P(P( TR(NSPORT SERVICES,
Respondents.
G.R. No. 171210

Present7

LNARE%-%AN3&A.@,
Chairperson,
CARP&@ M@RABE%,
CF&C@-NAQAR&@,
VEBA%C@, $R., and
NACFDRA, ++.


Proul!ated7


$ul# (;, )00*
5 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - 5


D E C & % & @ N


CF&C@-NAQAR&@, +.7


Assailed in this Petition for Revie" on *ertiorari, under
Rule ;2 of the Revised Rules of Court, is the
Decision
O(P
dated )) $une )00+ and Resolution
O)P
dated 1
%epteber )00+ of the Court of Appeals in CA-..R. CV No.
1;*:1. 3he appellate court a-red "ith odi4cation the
Decision
O/P
dated )) April )00) of the Re!ional 3rial Court
=R3C>, Branch ;+, of Manila, in Civil Case No. *:-:*0;1,
!rantin! the Coplaint for %u of Mone# of herein
respondent %print 3ransport %ervices, &nc. =%print> after the
alle!ed failure of herein petitioner %oriaont %teaship
A!encies, &nc. =%oriaont> to return the chassis units it
leased fro %print and pa# the accuulated rentals for the
sae.

3he follo"in! are the factual and procedural
antecedents7

%oriaont is a doestic corporation providin! services as a
receivin! a!ent for line load contractor vessels. Patric9
Ronas =Ronas> is its !eneral ana!er.

@n the other hand, %print is a doestic corporation en!a!ed
in transport services. &ts co-respondent Ricardo CruA Papa
=Papa> is en!a!ed in the truc9in! business under the
business nae SPapa 3ransport %ervicesT =P3%>.

%print 4led "ith the R3C on ) $une (**: a Coplaint
O;P
for
%u of Mone# a!ainst %oriaont and Ronas, doc9eted
as Civil Case No. *:-:*0;1. %print alle!ed in its Coplaint
that7 =a> on (1 Deceber (**/, it entered into a lease
a!reeent, denoinated as E<uipent Bease A!reeent
=EBA> "ith %oriaont, "herein the forer a!reed to lease a
nuber of chassis units to the latter for the transport of
container vansH =b> "ith authoriAation letters dated (* $une
(**+ issued b# Ronas on behalf of %oriaont, P3% and
another truc9er, Rebson 3ruc9in!, "ere able to "ithdra"
on )) and )2 $une (**+, fro the container #ard of %print,
t"o chassis units =sub'ect e<uipent>,
O2P
evidenced b#
E<uipent &nterchan!e Receipts No. (;)(2 and No. (;)))H
=c> %oriaont and Ronas failed to pa# rental fees for the
sub'ect e<uipent since (2 $anuar# (**1H =d> %print "as
subse<uentl# infored b# Ronas, throu!h a letter dated (1
$une (**1, of the purported loss of the sub'ect e<uipent
soetie in $une (**1H and =e> despite deands, %oriaont
and Ronas failed to pa# the rental fees for the sub'ect
e<uipent, and to replace or return the sae to %print.

%print, thus, pra#ed for the R3C to render 'ud!ent7

(. @rderin! O%oriaont and RonasP to pa# O%printP, 'ointl#
and severall#, actual daa!es, in the aount of ,ive
Fundred 3hirt#-%even 3housand Ei!ht Fundred Pesos
=P2/1,:00.00> representin! unpaid rentals and the
replaceent cost for the lost chassis units.

). @rderin! O%oriaont and RonasP, 'ointl# and severall#,
to pa# O%printP the aount of ,ift#-3hree 3housand ,ive
Fundred ,our Pesos and ,ort#-3"o centavos =P2/,20;.;)> as
interest and penalties accrued as of March /(, (**: and
until full satisfaction thereof.

/. @rderin! O%oriaont and RonasP, 'ointl# and severall#,
to pa# O%printP the aount e<uivalent to t"ent#-4ve percent
=)2?> of the total aount claied for and as attorne#Ms fees
plus 3"o 3housand Pesos =P),000.00> per court appearance.

;. @rderin! O%oriaont and RonasP to pa# the cost of the
suit.
O+P


%oriaont and Ronas 4led "ith the R3C their Ans"er "ith
Copulsor# Counterclai.
O1P
%oriaont aditted therein to
havin! a lease a!reeent "ith %print, but onl# for the
period )( @ctober (**/ to )( $anuar# (**;. &t denied
enterin! into an EBA "ith respondent %print on (1
Deceber (**/ as alle!ed in the Coplaint. %oriaont
further ar!ued that it "as not a part#-in-interest in Civil
Case No. *:-:*0;1, since it "as P3% and Rebson 3ruc9in!
that "ithdre" the sub'ect e<uipent fro the container
#ard of %print. Ronas "as li9e"ise not a part#-in-interest in
the case since his actions, assailed in the Coplaint, "ere
e5ecuted as part of his re!ular functions as an o-cer of
%oriaont.

Consistent "ith their stance, %oriaont and Ronas 4led a
3hird-Part# Coplaint
O:P
a!ainst Papa, "ho "as doin!
business under the nae P3%. %oriaont and Ronas
averred in their 3hird-Part# Coplaint that it "as P3% and
Rebson 3ruc9in! that "ithdre" the sub'ect e<uipents fro
the container #ard of %print, and failed to return the sae.
%ince Papa failed to 4le an ans"er to the 3hird-Part#
Coplaint, he "as declared b# the R3C to be in default.
O*P

After trial, the R3C rendered its Decision in Civil Case No. *:-
:*0;1 on )) April )00), 4ndin! %oriaont liable for the
clai of %print, "hile absolvin! Ronas and Papa fro an#
liabilit#. Accordin! to the R3C, %oriaont authoriAed P3% to
"ithdra" the sub'ect e<uipent. 3he dispositive portion of
the R3C Decision reads7

GFERE,@RE, 'ud!ent is hereb# rendered in favor of
Oherein respondentP %print 3ransport %ervices, &nc. and
a!ainst Oherein petitionerP %oriaont %teaship A!encies,
&nc., orderin! the latter to pa# the forer the follo"in!7

U 3hree hundred t"ent# thousand pesos =P/)0,000>
representin! the value of the t"o chassis units "ith interest
at the le!al rate fro the 4lin! of the coplaintH

U 3"o hundred sevent# thousand one hundred t"ent#
four V ;)R(00 pesos =P)10,();.;)> representin! unpaid
rentals "ith interest at the le!al rate fro the 4lin! of the
coplaintH

U P)0,000.00 as attorne#Ms fees.

3he rate of interest shall be increased to ()? per annu
once this decision becoes 4nal and e5ecutor#.

Defendant Patric9 Ronas and Oherein respondentP Ricardo
CruA Papa are absolved fro liabilit#.
O(0P


%oriaont 4led an appeal of the fore!oin! R3C Decision to
the Court of Appeals, doc9eted as CA-..R. CV No. 1;*:1.

3he Court of Appeals, in its Decision dated )) $une
)00+, found the follo"in! facts to be borne out b# the
records7 =(> %print and %oriaont entered into an EBA
"hereb# the forer leased chassis units to the latter for the
speci4ed dail# rates. 3he EBA covered the period )(
@ctober (**/ to )( $anuar# (**;, but it contained an
SautoaticT rene"al clauseH =)> on )) and )2 $une (**+,
%oriaont, throu!h P3% and Rebson 3ruc9in!, "ithdre"
%print Chassis )-01 "ith Plate No. NDP-)+( %erial No. &CAQ-
(+2((:, and %print Chassis )-22 "ith Plate No. NDP-2//
%erial M@3Q-(+00:0, fro the container #ard of %printH =/>
%oriaont authoriAed the "ithdra"al b# P3% and Rebson
3ruc9in! of the sub'ect e<uipent fro the container #ard of
%printH and =;> the sub'ect pieces of e<uipent "ere never
returned to %print. &n a letter to %print dated (* $une (**1,
%oriaont rela#ed that it "as still tr#in! to locate the
sub'ect e<uipent, and re<uested the forer to refrain fro
releasin! ore e<uipent to respondent P3% and Rebson
3ruc9in!.

Fence, the Court of Appeals decreed7

GFERE,@RE, the appealed Decision dated April )),
)00) of the trial court is a-red, sub'ect to the
odi4cation that the speci4c rate of le!al interest per
annu on both the P/)0,000.00 representin! the value of
the t"o chassis units, and on the P)10,();.;) representin!
the unpaid rentals, is si5 percent =+?>, to be increased to
t"elve percent =()?> fro the 4nalit# of this Decision until
its full satisfaction.
O((P


&n a Resolution dated 1 %epteber )00+, the Court of
Appeals denied the Motion for Reconsideration of %oriaont
for failin! to present an# co!ent and substantial atter that
"ould "arrant a reversal or odi4cation of its earlier
Decision.

A!!rieved, %oriaont
O()P
4led the present Petition for Revie"
"ith the follo"in! assi!nent of errors7

&.

3FE F@N@RABBE C@DR3 @, APPEAB% C@MM&33ED %ER&@D%
ERR@R &N B&M&3&N. A% %@BE &%%DE ,@R RE%@BD3&@N @,
GFE3FER @R N@3 AN A.ENCL REBA3&@N%F&P EK&%3ED
BE3GEEN PR&VA3E RE%P@NDEN3 %PR&N3 3RAN%P@R3 AND
FERE&N PE3&3&@NER% %@R&AM@N3 %3EAM%F&P A.ENC&E%
AND PR&VA3E RE%P@NDEN3 PAPA 3RDCJ&N. BD3 3@3ABBL
D&%RE.ARD&N. AND ,A&B&N. 3@ RDBE @N 3FE B&AB&B&3L @,
PR&VA3E RE%P@NDEN3 PAPA 3RDCJ&N. 3@ FERE&N
PE3&3&@NER%. 3FE B&AB&B&3L @, PR&VA3E RE%P@NDEN3 PAPA
3RDCJ&N. 3@ FERE&N PE3&3&@NER% %DB$EC3 @, 3FE 3F&RD-
PAR3L C@MPBA&N3 GA% 3@3ABBL &.N@REDH

&&.

3FE F@N@RABBE C@DR3 @, APPEAB% C@MM&33ED %ER&@D%
ERR@R &N F@BD&N. FERE&N PE3&3&@NER% %3EAM%F&P
A.ENC&E% %@BEBL B&ABBE. EV&DENCE @N REC@RD %F@G
3FA3 &3 GA% PR&VA3E RE%P@NDEN3 PAPA 3RDCJ&N. GF&CF
G&3FDREG 3FE %DB$EC3 CFA%%&%. PR&VA3E RE%P@NDEN3
PAPA 3RDCJ&N. GA% 3FE BA%3 &N P@%%E%%&@N @, 3FE %A&D
%DB$EC3 CFA%%&% AND &3 %F@DBD BE FEBD %@BEBL B&ABBE
,@R 3FE B@%% 3FERE@,H

&&&.

3FE F@N@RABBE C@DR3 @, APPEAB% C@MM&33ED %ER&@D%
ERR@R GFEN &3 &.N@RED A MA3ER&AB &NC@N%&%3ENCL &N
3FE 3E%3&M@NL @, PR&VA3E RE%P@NDEN3 %PR&N3
3RAN%P@R3M% G&3NE%%, MR. ENR&C@ .. VABENC&A. 3FE
3E%3&M@NL @, MR. VABENC&A GA% ERR@NE@D%BL MADE
3FE BA%&% ,@R F@BD&N. FERE&N PE3&3&@NER% B&ABBE ,@R
3FE B@%% @, 3FE %DB$EC3 CFA%%&%.


Ge 4nd the Petition to be "ithout erit.

3he Court of Appeals and the R3C sustained the contention
of %print that P3% "as authoriAed b# %oriaont to secure
possession of the sub'ect e<uipent fro %print, pursuant
to the e5istin! EBA bet"een %oriaont and %print. 3he
authoriAation issued b# %oriaont to P3% established an
a!enc# relationship, "ith %oriaont as the principal and P3%
as an a!ent. Resultantl#, the actions ta9en b# P3% as
re!ards the sub'ect e<uipent "ere bindin! on %oriaont,
a9in! the latter liable to %print for the unpaid rentals for
the use, and daa!es for the subse<uent loss, of the
sub'ect e<uipent.

%oriaont anchors its defense on its denial that it issued
an authoriAation to P3% to "ithdra" the sub'ect e<uipent
fro the container #ard of %print. Althou!h %oriaont
adits that the authoriAation letter dated (* $une (**+ "as
under its letterhead, said letter "as actuall# eant for and
sent to Faran ,oods as shipper. &t "as then Faran ,oods
that tas9ed P3% to "ithdra" the sub'ect e<uipent fro
%print. %oriaont insists that the Court of Appeals erel#
presued that an a!enc# relationship e5isted bet"een
%oriaont and P3%, since there "as nothin! in the records
to evidence the sae. Mean"hile, there is undisputed
evidence that it "as P3% that "ithdre" and "as last in
possession of the sub'ect e<uipent. %oriaont further
calls attention to the testion# of Enrico Valencia =Valencia>,
a "itness for %print, actuall# supportin! the position of
%oriaont that P3% did not present an# authoriAation fro
%oriaont "hen it "ithdre" the sub'ect e<uipent fro the
container #ard of %print. Assuin!, for the sa9e of
ar!uent that an a!enc# relationship did e5ist bet"een
%oriaont and P3%, the latter should not have been
e5onerated fro an# liabilit#. 3he acts of P3% that resulted
in the loss of the sub'ect e<uipent "ere be#ond the scope
of its authorit# as supposed a!ent of %oriaont. %oriaont
never rati4ed, e5pressl# or ipliedl#, such acts of P3%.

%oriaont is essentiall# challen!in! the su-cienc# of the
evidence on "hich the Court of Appeals based its conclusion
that P3% "ithdre" the sub'ect e<uipent fro the container
#ard of %print as an a!ent of %oriaont. &n eCect,
%oriaont is raisin! <uestions of fact, the resolution of
"hich re<uires us to re-e5aine and re-evaluate the
evidence presented b# the parties belo".

Basic is the rule in this 'urisdiction that onl# <uestions of la"
a# be raised in a petition for revie" under Rule ;2 of the
Revised Rules of Court. 3he 'urisdiction of the %upree
Court in cases brou!ht to it fro the Court of Appeals is
liited to revie"in! errors of la", the 4ndin!s of fact of the
appellate court bein! conclusive. Ge have ephaticall#
declared that it is not the function of this Court to anal#Ae or
"ei!h such evidence all over a!ain, its 'urisdiction bein!
liited to revie"in! errors of la" that a# have been
coitted b# the lo"er court.
O(/P

3hese <uestions of fact "ere threshed out and decided b#
the trial court, "hich had the 4rsthand opportunit# to hear
the partiesM conWictin! clais and to carefull# "ei!h their
respective sets of evidence. 3he 4ndin!s of the trial court
"ere subse<uentl# a-red b# the Court of Appeals. Ghere
the factual 4ndin!s of both the trial court and the Court of
Appeals coincide, the sae are bindin! on this Court. Ge
stress that, sub'ect to soe e5ceptional instances, onl#
<uestions of la" N not <uestions of fact N a# be raised
before this Court in a petition for revie" under Rule ;2 of
the Revised Rules of Court.
O(;P

.iven that %oriaont is precisel# assertin! in the instant
Petition that the 4ndin!s of fact of the Court of Appeals are
preised on the absence of evidence and are contradicted
b# the evidence on record,
O(2P
"e accoodate %oriaont
b# !oin! over the sae evidence considered b# the Court of
Appeals and the R3C.

&n ,epublic v. *ourt of 1ppeals,
O(+P
"e e5plained that7

&n civil cases, the part# havin! the burden of proof ust
establish his case b# a preponderance of evidence. %tated
diCerentl#, the !eneral rule in civil cases is that a part#
havin! the burden of proof of an essential fact ust produce
a preponderance of evidence thereon =& Moore on ,acts, ;,
cited in Vicente $. ,rancisco, 3he Revised Rules of Court in
the Philippines, Vol. V&&, Part &&, p. 2;), (*1/ Edition>. B#
preponderance of evidence is eant sipl# evidence "hich
is of !reater "ei!ht, or ore convincin! than that "hich is
oCered in opposition to it =/) C.$.%., (02(>, 3he ter
6preponderance of evidence6 eans the "ei!ht, credit and
value of the a!!re!ate evidence on either side and is
usuall# considered to be s#non#ous "ith the ters
X!reater "ei!ht of evidence6 or 6!reater "ei!ht, of the
credible evidence.6 Preponderance of the evidence is a
phrase "hich, in the last anal#sis, eans probabilit# of the
truth. Preponderance of the evidence eans evidence "hich
is ore convincin! to the court as "orth# of belief than that
"hich is oCered in opposition thereto. 5 5 5.8 =)0 A. $ur.,
((00-((0(>


After a revie" of the evidence on record, "e rule that the
preponderance of evidence indeed supports the e5istence of
an a!enc# relationship bet"een %oriaont and P3%.

&t is true that a person dealin! "ith an a!ent is not
authoriAed, under an# circustances, to trust blindl# the
a!entMs stateents as to the e5tent of his po"ers. %uch
person ust not act ne!li!entl# but ust use reasonable
dili!ence and prudence to ascertain "hether the a!ent acts
"ithin the scope of his authorit#. 3he settled rule is that
persons dealin! "ith an assued a!ent are bound at their
perilH and if the# "ould hold the principal liable, the# ust
ascertain not onl# the fact of a!enc#, but also the nature
and e5tent of authorit#, and in case either is controverted,
the burden of proof is upon the to prove it. %print has
successfull# dischar!ed this burden.

3he EBA e5ecuted on (1 Deceber (**/ bet"een %print, as
lessor, and %oriaont, as lessee, of chassis units, e5plicitl#
authoriAed the latter to appoint a representative "ho shall
"ithdra" and return the leased chassis units to %print, to
"it7

EED&PMEN3 BEA%E A.REEMEN3
bet"een
%PR&N3 3RAN%P@R3 %ERV&CE%, &NC. =BE%%@R>
And
%@R&AM@N3 %3EAM%F&P A.ENC&E%, &NC.
=BE%%EE>
3ERM% and C@ND&3&@N%

5 5 5 5

;. E<uipent &nterchan!e Receipt =E&R> as entioned
herein is a docuent accoplished ever# tie a chassis is
"ithdra"n and returned to a desi!nated depot. 3he E&R
relates the condition of the chassis at the point of on-
hireRoC-hire dul# ac9no"led!ed b# the BE%%@R, Propert#
Custodian +#$ t&e LESSEE8S +-t&or'9e$
re!re"e#t+t':e.

5 5 5 5

2. Chassis Githdra"alRReturn %lip as entioned herein
is that docuent "here the LESSEE +-t&or'9e" &'"
re!re"e#t+t':e to ;'t&$r+;<ret-r# t&e c&+""'" o# &'"
be&+,=. @nl# persons "ith a dul# accoplished and si!ned
authoriAation slip shall be entertained b# the BE%%@R for
purposes of "ithdra"alRreturn of the chassis. 3he si!nator#
in the Githdra"alRReturn %lip has to be the si!nator# of the
correspondin! Bease A!reeent or t&e LESSEE8" $-,%
+-t&or'9e$ re!re"e#t+t':e>"?.
O(1P
=Ephases ours.>


%oriaont, thou!h, avers that the afore<uoted EBA "as onl#
for )( @ctober (**/ to )( $anuar# (**;, and no lon!er in
eCect at the tie the sub'ect pieces of e<uipent "ere
reportedl# "ithdra"n and lost b# P3%. 3his contention of
%oriaont is "ithout erit, !iven that the sae EBA
e5pressl# provides for the SautoaticT rene"al thereof in
para!raph );, "hich reads7

3here shall be an autoatic rene"al of the contract sub'ect
to the sae ters and conditions as stipulated in the
ori!inal contract unless terinated b# either part# in
accordance "ith para!raph no. )/ hereof. Fo"ever, in this
case, terination "ill ta9e eCect iediatel#.
O(:P


3here bein! no sho"in! that the EBA "as terinated b#
either part#, then it "as bein! autoaticall# rene"ed in
accordance "ith the afore-<uoted para!raph );.

&t "as, therefore, totall# re!ular and in conforit# "ith the
EBA that P3% and Rebson 3ruc9in! should appear before
%print in $une (**+ "ith authoriAation letters, issued b#
%oriaont, for the "ithdra"al of the sub'ect e<uipent.
O(*P
@n the "itness stand, Valencia testi4ed, as the
operations ana!er of %print, as follo"s7

Att#. Porciuncula7

E. Mr. Gitness, as operation ana!er, are #ou a"are of
an# transactions bet"een %print 3ransport %ervices, &nc. and
the defendant %oriaont %teaship A!encies, &nc.Y

A. Les, %ir.

E. Ghat transactions are these, Mr. GitnessY

A. 3he# !ot fro us chassis, %ir.

Court7

E. Gho aon! the t"o, "ho "ithdre"Y

A. 3he representative of %oriaont %teaship A!encies,
&nc., Lour Fonor.

Att#. Porciuncula7

E. And "hen "ere these chassis "ithdra"n, Mr.
GitnessY

A. $une (**+, %ir.

E. Gill #ou 9indl# tell this Fonorable Court "hat do #ou
ean b# "ithdra"in! the chassis units fro #our container
#ardY

Gitness7

Before the# can "ithdra" the chassis the# have to
present "ithdra"al authorit#, %ir.

Att#. Porciuncula7

And "hat is this "ithdra"al authorit#Y

A. 3his is to prove that the# are authoriAin! their
representative to !et fro us a chassis unit.

E. And "ho is this authoriAation send to #ou, Mr.
GitnessY

A. %oetie a representative brin! to our o-ce the
letter or the authoriAation or soetie thru fa5, %ir.

E. &n this particular incident, Mr. Gitness, ho" "as it
sentY

A. B# fa5, %ir.

E. &s this standard operatin! procedure of %print
3ransport %ervices, &nc.Y

A. Les, %ir, if the truc9in! could not brin! to our o-ce
the ori!inal cop# of the authoriAation the# have to send us
thru fa5, but the ori!inal cop# of the authoriAation "ill be
follo"ed.

Att#. Porciuncula7

E. Mr. Gitness, & a sho"in! to #ou t"o docuents of
%oriaont %teaship A!encies, &nc. letter head "ith the
headin!s AuthoriAation, are these the sae "ithdra"al
authorit# that #ou entioned a"hile a!oY

A. Les, %ir.

Att#. Porciuncula7

Lour Fonor, at this point a# "e re<uest that these
docuents identi4ed b# the "itness be ar9ed as E5hibits $$
and JJ, Lour Fonor.

Court7

Mar9 the.

5 5 5 5

E. Ga# bac9 Mr. Gitness, "ho "ithdre" the chassis
units )-01 and )-22Y

A. 3he representative of %oriaont %teaship A!encies,
&nc., the Papa 3ruc9in!, %ir.

E. And are these truc9in! copanies authoriAed to
"ithdra" these chassis unitsY

A. Les, %ir, it "as stated in the "ithdra"al authorit#.

Att#. Porciuncula7

E. %ho"in! #ou a!ain Mr. Gitness, this authoriAation
previousl# ar9ed as E5hibits $$ and JJ, could #ou please !o
over the sae and tell this Fonorable Court "here states
there that the truc9in! copanies "hich #ou entioned
a"hile a!o authoriAed to "ithdra"Y

A. Les, %ir, it is stated in this "ithdra"al authorit#.

Att#. Porciuncula7

At this 'uncture, Lour Fonor, a# "e re<uest that the
Papa truc9in! and Rebson truc9in! identi4ed b# the "itness
be brac9eted and ar9 as our E5hibits $$-( and JJ-(, Lour
Fonor.

Court7

Mar9 the. Are these docuents have datesY

Att#. Porciuncula7

Les, Lour Fonor, both docuents are dated $une (*,
(**+.

E. Mr. Gitness, after this "hat happened ne5tY

A. After the# presented to us the "ithdra"al authorit#,
"e called up %oriaont %teaship A!encies, &nc. to verif#
"hether the one sent to us throu!h truc9 and the one sent
to us throu!h fa5 are one and the sae.

E. 3hen "hat happened ne5t, Mr. GitnessY

A. 3hen after the veri4cation "hether it is true, then "e
as9ed the to choose the chassis units then # chec9er
"ould see to it "hether the chassis units are in !ood
condition, then after that "e prepared the out!oin!
E<uipent &nterchan!e Receipt, %ir.

E. Mr. Gitness, could #ou tell this Fonorable Court "hat
an out!oin! E<uipent &nterchan!e Receipt eansY

A. 3his is a docuent provin! that the representative of
%oriaont %teaship A!encies, &nc. reall# "ithdra" =sic> the
chassis units, %ir.

5 5 5 5

Att#. Porciuncula7

E. .oin! bac9 Mr. Gitness, #ou entioned a"hile a!o
that #our copan# issued out!oin! E<uipent &nterchan!e
ReceiptY

A. Les, %ir.

E. Are there incoin! E<uipent &nterchan!e Receipt
Mr. GitnessY

A. Ge have not ade &ncoin! E<uipent &nterchan!e
Receipt "ith respect to %oriaont %teaship A!encies, &nc.,
%ir.

E. And "h# not, Mr. GitnessY

A. Because the# have not returned to us the t"o chassis
units.
O)0P


&n his candid and strai!htfor"ard testion#, Valencia "as
able to clearl# describe the standard operatin! procedure
follo"ed in the "ithdra"al b# %oriaont or its authoriAed
representative of the leased chassis units fro the container
#ard of %print. &n the transaction involved herein,
authoriAation letters dated (* $une (**+ in favor of P3% and
Rebson 3ruc9in! "ere fa5ed b# %print to %oriaont, and
"ere further veri4ed b# %print throu!h a telephone call to
%oriaont. ValenciaMs testion# established that %print
e5ercised due dili!ence in its dealin!s "ith P3%, as the a!ent
of %oriaont.

%oriaont cannot rel# on the out!oin! E<uipent
&nterchan!e Receipts as proof that the "ithdra"al of the
sub'ect e<uipent "as not authoriAed b# it, but b# the
shipperRconsi!nee, Faran ,oods, "hich actuall#
desi!nated P3% and Rebson 3ruc9in! as truc9ers. Fo"ever,
a scrutin# of the E<uipent &nterchan!e Receipts "ill sho"
that these docuents erel# identi4ed Faran ,oods as
the shipperRconsi!nee, and the location of said shippin!
line. &t bears to stress that it "as %oriaont that had an
e5istin! EBA "ith %print, not Faran ,oods, for the lease of
the sub'ect e<uipent. Moreover, as stated in the EBA, the
out!oin! E<uipent &nterchan!e Receipts shall be si!ned,
upon the "ithdra"al of the leased chassis units, b# the
lessee, %oriaont, or its authoriAed representative. &n this
case, "e can onl# hold that the driver of P3% si!ned the
receipts for the sub'ect e<uipent as the authoriAed
representative of %oriaont, and no other.

,inall#, the letter
O)(P
dated (1 $une (**1, sent to %print b#
Ronas, on behalf of %oriaont, "hich stated7

As "e are currentl# havin! a proble "ith re!ards to the
"hereabouts of the sub'ect trailers, a# "e re<uest #our
9ind assistance in refrainin! fro issuin! an# e<uipent to
the above truc9in! copanies.


reveals that P3% did have previous authorit# fro %oriaont
to "ithdra" the leased chassis units fro %print, hence,
necessitatin! an e5press re<uest fro %oriaont for %print
to discontinue reco!niAin! said authorit#.

Alternativel#, if P3% is found to be its a!ent, %oriaont
ar!ues that P3% is liable for the loss of the sub'ect
e<uipent, since P3% acted be#ond its authorit# as
a!ent. %oriaont cites Article (:*1 of the Civil Code, "hich
provides7

Art. (:*1. 3he a!ent "ho acts as such is not personall#
liable to the part# "ith "ho he contracts, unless he
e5pressl# binds hiself or e5ceeds the liits of his authorit#
"ithout !ivin! such part# su-cient notice of his po"ers.


3he burden falls upon %oriaont to prove its a-rative
alle!ation that P3% acted in an# anner in e5cess of its
authorit# as a!ent, thus, resultin! in the loss of the sub'ect
e<uipent. 3o recall, the sub'ect e<uipent "as "ithdra"n
and used b# P3% "ith the authorit# of %oriaont. And for
P3% to be personall# liable, as a!ent, it is vital that
%oriaont be able to prove that P3% daa!ed or lost the
said e<uipent because it acted contrar# to or in e5cess of
the authorit# !ranted to it b# %oriaont. As the Court of
Appeals and the R3C found, ho"ever, %oriaont did not
adduce an# evidence at all to prove said alle!ation. .iven
the lac9 of evidence that P3% "as in an# "a# responsible for
the loss of the sub'ect e<uipent, then, it cannot be held
liable to %print, or even to %oriaont as its a!ent. &n the
absence of evidence sho"in! that P3% acted contrar# to or
in e5cess of the authorit# !ranted to it b# its principal,
%oriaont, this Court cannot erel# presue P3% liable to
%oriaont as its a!ent. 3he onl# thin! proven "as that
%oriaont, throu!h P3%, "ithdre" the t"o chassis units fro
%print, and that these have never been returned to %print.

Considerin! our precedin! discussion, there is no reason for
us to depart fro the !eneral rule that the 4ndin!s of fact of
the Court of Appeals and the R3C are alread# conclusive and
bindin! upon us.

,inall#, the ad'ustent b# the Court of Appeals "ith respect
to the applicable rate of le!al interest on the P/)0,000.00,
representin! the value of the sub'ect e<uipent, and on
theP)10,();.;), representin! the unpaid rentals a"arded in
favor of %print, is proper and "ith le!al basis. Dnder Article
))0* of the Civil Code, "hen an obli!ation not constitutin! a
loan or forbearance of one# is breached, then an interest
on the aount of daa!es a"arded a# be iposed at the
discretion of the court at the rate of +? per annu. Clearl#,
the onetar# 'ud!ent in favor of %print does not involve a
loan or forbearance of one#H hence, the proper iposable
rate of interest is si5 =+?> percent. ,urther, as declared
in 2astern 3hippin# Lines, 4nc. v. *ourt of 1ppeals,
O))P
the
interi period fro the 4nalit# of the 'ud!ent a"ardin! a
onetar# clai until pa#ent thereof is deeed to be
e<uivalent to a forbearance of credit. 2astern 3hippin#
Lines, 4nc. v. *ourt of 1ppeals
O)/P
e5plained, to "it7

&. Ghen an obli!ation, re!ardless of its source, i.e.,
la", contracts, <uasi-contracts, delicts or <uasi-delicts is
breached, the contravenor can be held liable for
daa!es. 3he provisions under 3itle KV&&& on SDaa!esT of
the Civil Code !overn in deterinin! the easure of
recoverable daa!es.

&&. Gith re!ard particularl# to an a"ard of interest in the
concept of actual and copensator# daa!es, the rate of
interest, as "ell as the accrual thereof, is iposed, as
follo"s7

(. Ghen the obli!ation is breached, and it consists in
the pa#ent of a su of one#, i.e., a loan or forbearance
of one#, the interest due should be that "hich a# have
been stipulated in "ritin!. ,urtherore, the interest due
shall itself earn le!al interest fro the tie it is 'udiciall#
deanded. &n the absence of stipulation, the rate of
interest shall be ()? per annu to be coputed fro
default, i.e., fro 'udicial or e5tra'udicial deand under and
sub'ect to the provisions of Article ((+* of the Civil Code.

). Ghen an obli!ation, not constitutin! a loan or
forbearance of one#, is breached, an interest on the
aount of daa!es a"arded a# be iposed at the
discretion of the court at the rate of +? per annu. No
interest, ho"ever, shall be ad'ud!ed on unli<uidated clais
or daa!es e5cept "hen or until the deand can be
established "ith reasonable certaint#. Accordin!l#, "here
the deand is established "ith reasonable certaint#, the
interest shall be!in to run fro the tie the clai is ade
'udiciall# or e5tra'udiciall# =Art. ((+*, Civil Code> but "hen
such certaint# cannot be so reasonabl# established at the
tie the deand is ade, the interest shall be!in to run
onl# fro the date the 'ud!ent of the court is ade =at
"hich tie the <uanti4cation of daa!es a# be deeed
to have been reasonabl# ascertained>. 3he actual base for
the coputation of le!al interest shall, in an# case, be on
the aount 4nall# ad'ud!ed.

/. Ghen the 'ud!ent of the court a"ardin! a su of
one# becoes 4nal and e5ecutor#, the rate of le!al
interest, "hether the case falls under para!raph ( or
para!raph ), above, shall be ()? per annu fro such
4nalit# until its satisfaction, this interi period bein!
deeed to be b# then an e<uivalent to a forbearance of
credit.


Consistent "ith the fore!oin! 'urisprudence, and later on
a-red in ore recent cases,
O);P
"hen the 'ud!ent
a"ardin! a su of one# becoes 4nal and e5ecutor#, the
rate of le!al interest shall be ()? per annu fro such
4nalit# until its satisfaction, this interi period bein!
deeed to be b# then an e<uivalent of a forbearance of
credit. 3hus, fro the tie the 'ud!ent becoes 4nal until
its full satisfaction, the applicable rate of le!al interest shall
be t"elve percent =()?>.

54ERE/ORE, preises considered, the instant Petition for
Revie" on *ertiorari is hereb# ENIE. 3he Decision
dated )) $une )00+ and Resolution dated 1 %epteber
)00+of the Court of Appeals in CA-..R. CV No. 1;*:1 are
hereb# (//IRME. Costs a!ainst petitioner %oriaont
%teaship A!encies, &nc.




SO ORERE.

,&R%3 D&V&%&@N
@G.R. No. 120125. Se!te.ber 9, 1999A
5ILLI(M U) +#$ ROEL ROB(S, petitioners, vs.
COURT O/ (PPE(LS, 4ON. ROCERT C(L(O +#$
N(TION(L 4OUSING (UT4ORIT), respondents.
E C I S I O N
0(PUN(N, J.D
Petitioners Gillia D# and Rodel Ro5as are a!ents
authoriAed to sell ei!ht parcels of land b# the o"ners
thereof. B# virtue of such authorit#, petitioners oCered to
sell the lands, located in 3uba, 3adian!an, Ben!uet to
respondent National Fousin! Authorit# =NFA> to be utiliAed
and developed as a housin! pro'ect.
@n ,ebruar# (;, (*:*, the NFA Board passed Resolution No.
(+/) approvin! the ac<uisition of said lands, "ith an area of
/(.:)/( hectares, at the cost of P)/.:+1 illion, pursuant to
"hich the parties e5ecuted a series of Deeds of Absolute
%ale coverin! the sub'ect lands. @f the ei!ht parcels of
land, ho"ever, onl# 4ve "ere paid for b# the NFA because
of the report
O(P
it received fro the Band .eosciences Bureau
of the Departent of Environent and Natural Resources
=DENR> that the reainin! area is located at an active
landslide area and therefore, not suitable for developent
into a housin! pro'ect.
@n )) Noveber (**(, the NFA issued Resolution No. )/2)
cancellin! the sale over the three parcels of land. 3he NFA,
throu!h Resolution No. )/*;, subse<uentl# oCered the
aount of P(.))2 illion to the lando"ners as da5os
per'uicios.
@n * March (**), petitioners 4led before the Re!ional 3rial
Court =R3C> of EueAon Cit# a Coplaint for Daa!es a!ainst
NFA and its .eneral Mana!er Robert Balao.
After trial, the R3C rendered a decision declarin! the
cancellation of the contract to be 'usti4ed. 3he trial court
nevertheless a"arded daa!es to plaintiCs in the su of
P(.)22 illion, the sae aount initiall# oCered b# NFA to
petitioners as daa!es.
Dpon appeal b# petitioners, the Court of Appeals reversed
the decision of the trial court and entered a ne" one
disissin! the coplaint. &t held that since there "as
Ssu-cient 'usti4able basisT in cancellin! the sale, Sit sa" no
reasonT for the a"ard of daa!es. 3he Court of Appeals
also noted that petitioners "ere ere attorne#s-in-fact and,
therefore, not the real parties-in-interest in the action before
the trial court.
555 &n para!raph ; of the coplaint, plaintiCs alle!ed
theselves to be SsellersM a!entsT for several o"ners of the
: lots sub'ect atter of the case. @bviousl#, Gillia D# and
Rodel Ro5as in 4lin! this case acted as attorne#s-in-fact of
the lot o"ners "ho are the real parties in interest but "ho
"ere oitted to be pleaded as part#-plaintiCs in the
case. 3his oission is fatal. Ghere the action is brou!ht b#
an attorne#-in-fact of a land o"ner in his nae, =as in our
present action> and not in the nae of his principal, the
action "as properl# disissed =,errer vs. Villaor, +0 %CRA
;0+ O(*1;PH Marcelo vs. de Beon, (02 Phil. ((12> because
the rule is that ever# action ust be prosecuted in the nae
of the real parties-in-interest =%ection ), Rule /, Rules of
Court>.
Ghen plaintiCs D# and Ro5as sou!ht pa#ent of daa!es in
their favor in vie" of the partial rescission of Resolution No.
(+/) and the Deed of Absolute %ale coverin! 3C3 Nos.
(0**:, (0*** and (()*) =Pra#er coplaint, pa!e 2, R3C
records>, it becoes obviousl# indispensable that the lot
o"ners be included, entioned and naed as part#-
plaintiCs, bein! the real part#-in-interest. D# and Ro5as, as
attorne#s-in-fact or apoderados, cannot b# theselves
la"full# coence this action, ore so, "hen the supposed
special po"er of attorne#, in their favor, "as never
presented as an evidence in this case. Besides, even if
herein plaintiCs D# and Ro5as "ere authoriAed b# the lot
o"ners to coence this action, the sae ust still be 4led
in the nae of the pricipal, =,ilipino &ndustrial
Corporation vs. %an Die!o, )/ %CRA 10+ O(*+:P>. As such
indispensable part#, their 'oinder in the action is andator#
and the coplaint a# be disissed if not so ipleaded
=NDC vs. CA, )(( %CRA ;)) O(**)P>.
O)P
3heir otion for reconsideration havin! been denied,
petitioners see9 relief fro this Court contendin! that7
&. C@MPBA&N3 ,&ND&N. 3FE RE%P@NDEN3 CA ERRED &N
DECBAR&N. 3FA3 RE%P@NDEN3 NFA FAD ANL BE.AB BA%&%
,@R RE%C&ND&N. 3FE %ABE &NV@BV&N. 3FE BA%3 3FREE =/>
PARCEB% C@VERED BL NFA RE%@BD3&@N N@. (+/).
&&. .RAN3&N. AR.DEND@ 3FA3 3FE RE%P@NDEN3 NFA FAD
BE.AB BA%&% 3@ RE%C&ND 3FE %DB$EC3 %ABE, 3FE
RE%P@NDEN3 CA N@NE3FEBE%% ERRED &N DENL&N. FERE&N
PE3&3&@NER%M CBA&M 3@ DAMA.E%, C@N3RARL 3@ 3FE
PR@V&%&@N% @, AR3. ((*( @, 3FE C&V&B C@DE.
&&&. 3FE RE%P@NDEN3 CA ERRED &N D&%M&%%&N. 3FE
%DB$EC3 C@MPBA&N3 ,&ND&N. 3FA3 3FE PE3&3&@NER%
,A&BED 3@ $@&N A% &ND&%PEN%ABBE PAR3L PBA&N3&,, 3FE
%EBB&N. B@3-@GNER%.
O/P
Ge 4rst resolve the issue raised in the third assi!nent of
error.
Petitioners clai that the# lod!ed the coplaint not in
behalf of their principles but in their o"n nae as a!ents
directl# daa!ed b# the terination of the contract. 3he
daa!es pra#ed for "ere intended not for the bene4t of
their principals but to indenif# petitioners for the losses
the# theselves alle!edl# incurred as a result of such
terination. 3hese daa!es consist ainl# of Sunearned
incoeT and advances.
O;P
Petitioners, thus, attept to
distin!uish the case at bar fro those involvin! a!ents
or apoderados institutin! actions in their o"n nae but in
behalf of their principals.
O2P
Petitioners in this case
purportedl# brou!ht the action for daa!es in their o"n
nae and in their own behalf.
Ge 4nd this contention uneritorious.
%ection ), Rule / of the Rules of Court re<uires that ever#
action ust be prosecuted and defended in the nae of the
real part#-in-interest. 3he real part#-in-interest is the part#
"ho stands to be bene4ted or in'ured b# the 'ud!ent or
the part# entitled to the avails of the suit. S&nterest,T "ithin
the eanin! of the rule, eans aterial interest, an interest
in the issue and to be aCected b# the decree, as
distin!uished fro ere interest in the <uestion involved, or
a ere incidental interest.
O+P
Cases construin! the real part#-
in-interest provision can be ore easil# understood if it is
borne in ind that the true eanin! of real part#-in-interest
a# be suariAed as follo"s7 An action shall be
prosecuted in the nae of the part# "ho, b# the substantive
la", has the ri!ht sou!ht to be enforced.
O1P
Do petitioners, under substantive la", possess the ri!ht the#
see9 to enforceY Ge rule in the ne!ative.
3he applicable substantive la" in this case is Article (/(( of
the Civil Code, "hich states7
Contracts ta9e eCect onl# bet"een the !+rt'e" ,
their +""'7#" , and &e'r" , e5cept in case "here the ri!hts
and obli!ations arisin! fro the contract are not
transissible b# their nature, or b# stipulation, or b#
provision of la". 5 5 5.
&f a contract should contain soe stipulation in favor of
a t&'r$ !er"o# , he a# deand its ful4llent provided he
counicated his acceptance to the obli!or before its
revocation. A ere incidental bene4t or interest of a person
is not su-cient. 3he contractin! parties ust have clearl#
and deliberatel# conferred a favor upon a third
person. =Dnderscorin! supplied.>
Petitioners are not !+rt'e" to the contract of sale bet"een
their principals and NFA. 3he# are ere +7e#t" of the
o"ners of the land sub'ect of the sale. As a!ents, the# onl#
render soe service or do soethin! in
representation or on behalf of their principals.
O:P
3he
renderin! of such service did not a9e the parties to the
contracts of sale e5ecuted in behalf of the latter. %ince a
contract a# be violated onl# b# the parties thereto as
a!ainst each other, the real parties-in-interest, either as
plaintiC or defendant, in an action upon that contract ust,
!enerall#, either be parties to said contract.
O*P
Neither has there been an# alle!ation, uch less proof, that
petitioners are the &e'r" of their principals.
Are petitioners +""'7#ee" to the ri!hts under the contracts
of saleY &n McMicin# vs. -anco 2spa5ol-/ilipino,
O(0P
"e held
that the rule re<uirin! ever# action to be prosecuted in the
nae of the real part#-in-interest
5 5 5 reco!niAes the assi!nents of ri!hts of action and also
reco!niAes that "hen one has a ri!ht of action assi!ned to
hi he is then the real part# in interest and a# aintain
an action upon such clai or ri!ht. 3he purpose of Othis
ruleP is to re<uire the plaintiC to be the real part# in interest,
or, in other "ords, he ust be the person to "ho the
proceeds of the action shall belon!, and to prevent actions
b# persons "ho have no interest in the result of the
sae. 555
3hus, an a!ent, in his o"n behalf, a# brin! an action
founded on a contract ade for his principal, as an assi!nee
of such contract. Ge 4nd the follo"in! declaration in
%ection /1) =(> of the Restateent of the Ba" on A!enc#
=%econd>7
O((P
%ection /1). A!ent as @"ner of Contract Ri!ht
=(> Dnless other"ise a!reed, an a!ent "ho has or "ho
ac<uires an interest in a contract "hich he a9es on behalf
of his principal can, althou!h not a proisee, aintain such
action thereon as i!ht a transferee havin! a siilar
interest.
3he Coent on subsection =(> states7
a. 1#ent a transferee. @ne "ho has ade a contract on
behalf of another a# becoe an assi!nee of the contract
and brin! suit a!ainst the other part# to it, as an# other
transferee. 3he custos of business or the course of
conduct bet"een the principal and the a!ent a# indicate
that an a!ent "ho ordinaril# has erel# a securit# interest is
a transferee of the principals ri!hts under the contract and
as such is peritted to brin! suit. &f the a!ent has settled
"ith his principal "ith the understandin! that he is to collect
the clai a!ainst the obli!or b# "a# of reibursin! hiself
for his advances and coissions, the a!ent is in the
position of an assi!nee "ho is the bene4cial o"ner of the
chose in action. Fe has an irrevocable po"er to sue in his
principalMs nae. 5 5 5. And, under the statutes "hich
perit the real part# in interest to sue, he can aintain an
action in his o"n nae. 3his po"er to sue is not aCected b#
a settleent bet"een the principal and the obli!or if the
latter has notice of the a!entMs interest. 5 5 5. Even thou!h
the a!ent has not settled "ith his principal, he a#, b#
a!reeent "ith the principal, have a ri!ht to receive
pa#ent and out of the proceeds to reiburse hiself for
advances and coissions before turnin! the balance over
to the principal. &n such a case, althou!h there is no foral
assi!nent, the a!ent is in the position of a transferee of
the "hole clai for securit#H he has an irrevocable po"er to
sue in his principalMs nae and, under statutes "hich perit
the real part# in interest to sue, he can aintain an action in
his o"n nae.
Petitioners, ho"ever, have not sho"n that the# are
assi!nees of their principals to the sub'ect contracts. Ghile
the# alle!ed that the# ade advances and that the#
suCered loss of coissions, the# have not established an#
a!reeent !rantin! the Sthe ri!ht to receive pa#ent and
out of the proceeds to reiburse OtheselvesP for advances
and coissions before turnin! the balance over to the
principalOsP.T
,inall#, it does not appear that petitioners are be#eEc'+r'e"
o= + "t'!-,+t'o# pour autrui under the second para!raph
of Article (/(( of the Civil Code. &ndeed, there is no
stipulation in an# of the Deeds of Absolute %ale Sclearl# and
deliberatel#T conferrin! a favor to an# third person.
3hat petitioners did not obtain their coissions or recoup
their advances because of the non-perforance of the
contract did not entitle the to 4le the action belo" a!ainst
respondent NFA. %ection /1) =)> of the Restateent of the
Ba" on A!enc# =%econd> states7
=)> An a!ent does not have such an interest in a contract as
to entitle hi to aintain an action at la" upon it in his o"n
nae erel# because he is entilted to a portion of the
proceeds as copensation for a9in! it or because he is
liable for its breach.
3he follo"in! Coent on the above subsection is
illuinatin!7
3he fact that an a!ent "ho a9es a contract for his
principal "ill !ain or suCer loss b# the perforance or
nonperforance of the contract b# the principal or b# the
other part# thereto does not entitle hi to aintain an
action on his o"n behalf a!ainst the other part# for its
breach. An a!ent entitled to receive a coission fro his
principal upon the perforance of a contract "hich he has
ade on his principalMs account does not, fro this fact
alone, have an# clai a!ainst the other part# for breach of
the contract, either in an action on the contract or
other"ise. An a!ent "ho is not a proisee cannot aintain
an action at la" a!ainst a purchaser erel# because he is
entitled to have his copensation or advances paid out of
the purchase price before pa#ent to the principal. 5 5 5.
3hus, in 6opins vs. 4ves,
O()P
the %upree Court of Ar9ansas,
citin! %ection /1) =)> above, denied the clai of a real
estate bro9er to recover his alle!ed coission a!ainst the
purchaser in an a!reeent to purchase propert#.
&n 7oduco vs. *ourt of 1ppeals,
O(/P
this Court held that7
5 5 5 !rantin! that appellant had the authorit# to sell the
propert#, the sae did not a9e the bu#er liable for the
coission she claied. At ost, the o"ner of the
propert# and the one "ho proised to !ive her a
coission should be the one liable to pa# the sae and to
"ho the clai should have been directed. 555
As petitioners are not parties, heirs, assi!nees, or
bene4ciaries of a stipulation pour autrui under the contracts
of sale, the# do not, under substantive la", possess the
ri!ht the# see9 to enforce. 3herefore, the# are not the real
parties-in-interest in this case.
Petitioners not bein! the real parties-in-interest, an#
decision rendered herein "ould be pointless since the sae
"ould not bind the real parties-in-interest.
O(;P
Nevertheless, to forestall further liti!ation on the
substantive aspects of this case, "e shall proceed to rule on
the erits.
O(2P
Petitioners subit that respondent NFA had no le!al basis
to SrescindT the sale of the sub'ect three parcels of
land. 3he e5istence of such le!al basis, not"ithstandin!,
petitioners ar!ue that the# are still entitled to an a"ard of
daa!es.
Petitioners confuse the cancellation of the contract b# the
NFA as a rescission of the contract under Article ((*( of the
Civil Code. 3he ri!ht of rescission or, ore accuratel#,
resolution, of a part# to an obli!ation under Article ((*( is
predicated on a breach of faith b# the other part# that
violates the reciprocit# bet"een the.
O(+P
3he po"er to
rescind, therefore, is !iven to the in'ured part#.
O(1P
Article
((*( states7
3he po"er to rescind obli!ations is iplied in reciprocal
ones, in case one of the obli!ors should not copl# "ith
"hat is incubent upon hi.
3he in'ured part# a# choose bet"een the ful4llent and
the rescission of the obli!ation, "ith the pa#ent of
daa!es in either case. Fe a# also see9 rescission, even
after he has chosen ful4llent, if the latter should becoe
ipossible.
&n this case, the NFA did not rescind the contract. &ndeed, it
did not have the ri!ht to do so for the other parties to the
contract, the vendors, did not coit an# breach, uch less
a substantial breach,
O(:P
of their obli!ation. 3heir obli!ation
"as erel# to deliver the parcels of land to the NFA, an
obli!ation that the# ful4lled. 3he NFA did not suCer an#
in'ur# b# the perforance thereof.
3he cancellation, therefore, "as not a rescission under
Article ((*(. Rather, the cancellation "as based on the
ne!ation of the cause arisin! fro the realiAation that the
lands, "hich "ere the ob'ect of the sale, "ere not suitable
for housin!.
Cause is the essential reason "hich oves the contractin!
parties to enter into it.
O(*P
&n other "ords, the cause is the
iediate, direct and pro5iate reason "hich 'usti4es the
creation of an obli!ation throu!h the "ill of the contractin!
parties.
O)0P
Cause, "hich is the essential reason for the
contract, should be distin!uished fro otive, "hich is the
particular reason of a contractin! part# "hich does not
aCect the other part#.
O)(P
,or e5aple, in a contract of sale of a piece of land, such as
in this case, the cause of the vendor =petitionerMs principals>
in enterin! into the contract is to obtain the price. ,or the
vendee, NFA, it is the ac<uisition of the land.
O))P
3he motive of the NFA, on the other hand, is to use said
lands for housin!. 3his is apparent fro the portion of the
Deeds of Absolute %ale
O)/P
statin!7
GFEREA%, under the E5ecutive @rder No. *0 dated
Deceber (1, (*:+, the VENDEE is andated to focus and
concentrate its eCorts and resources in providin! housin!
assistance to the lo"est thirt# percent =/0?> of urban
incoe earners, thru slu up!radin! and developent of
sites and services pro'ectsH
GFEREA%, Betters of &nstructions Nos. 222 and 221 OasP
aended b# Better of &nstruction No. +/0, prescribed slu
iproveent and up!radin!, as "ell as the developent of
sites and services as the principal housin! strate!# for
dealin! "ith slu, s<uatter and other bli!hted counitiesH
5 5 5
GFEREA%, the VENDEE, in pursuit of and in copliance "ith
the above-stated purposes oCers to bu# and the VEND@R%,
in a !esture of their "illin! to cooperate "ith the above
polic# and coitents, a!ree to sell the aforesaid
propert# to!ether "ith all the e5istin! iproveents there
or belon!in! to the VEND@R%H
N@G, 3FERE,@RE, for and in consideration of the fore!oin!
preises and the ters and conditions hereinbelo"
stipulated, the VEND@R% hereb#, sell, transfer, cede and
conve# unto the VENDEE, its assi!ns, or successors-in-
interest, a parcel of land located at Bo. 3adian!an, 3uba,
Ben!uet containin! a total area of ,&,3L %&K 3F@D%AND
E&.F3 FDNDRED N&NE3EEN =2+,:(*> %EDARE ME3ER%, ore
or less 5 5 5.
@rdinaril#, a part#Ms otives for enterin! into the contract
do not aCect the contract. Fo"ever, "hen the otive
predeterines the cause, the otive a# be re!arded as
the cause. &n Li#ue8 vs. *ourt of 1ppeals,
O);P
this Court,
spea9in! throu!h $ustice $.B.B. Re#es, held7
555 &t is "ell to note, ho"ever, that Manresa hiself =Vol. :,
pp. +;(-+;)> "hile aintainin! the distinction and
upholdin! the inoperativeness of the otives of the parties
to deterine the validit# of the contract, e5pressl# e5cepts
fro the rule those contracts that are conditioned upon the
attainent of the otives of either part#.
3he sae vie" is held b# the %upree Court of %pain, in its
decisions of ,ebruar# ;, (*;(, and Deceber ;, (*;+,
holdin! that the otive a# be re!arded as causa "hen it
predeterines the purpose of the contract.
&n this case, it is clear, and petitioners do not dispute, that
NFA "ould not have entered into the contract "ere the
lands not suitable for housin!. &n other "ords, the <ualit# of
the land "as an iplied condition for the NFA to enter into
the contract. @n the part of the NFA, therefore, the otive
"as the cause for its bein! a part# to the sale.
Gere the lands indeed unsuitable for the housin! as NFA
claiedY
Ge dee the 4ndin!s contained in the report of the Band
.eosciences Bureau dated (2 $ul# (**( su-cient basis for
the cancellation of the sale, thus7
&n 3adian!an, 3uba, the housin! site is situated in an area of
oderate topo!raph#. 3here OareP ore areas of less
slopin! !round apparentl# habitable. 3he site is underlain
b# 5 5 5 thic9 slide deposits =;-;2> consistin! of hu!e
con!loerate boulders =see Photo No. )> i5OedP "ith silt#
cla# aterials. 3hese cla# particles "hen saturated have
soe s"ellin! characteristics "hich is dan!erous for an#
civil structures especiall# ass housin! developent.
O)2P
Petitioners content that the report "as erel# Spreliinar#,T
and not conclusive, as indicated in its title7
MEM@RANDDM
3@7 EDG&N .. D@M&N.@
Chief, Bands .eolo!# Division
,R@M7 AR&%3@3BE A. R&BB@N
.eolo!ist &&
%DB$EC37 Preliinar# Assessent of 3adian!an
Fousin! Pro'ect in 3uba, Ben!uet
O)+P
3hus, pa!e ) of the report states in part7
5 5 5
Actuall# there is a need to conduct further !eottechnical
OsicP studies in the NFA propert#. %tandard Penetration 3est
=%P3> ust be carried out to !ive an estiate of the de!ree
of copaction =the relative densit#> of the slide deposit and
also the bearin! capacit# of the soil aterials. Another
thin! to consider is the vulnerabilit# of the area to landslides
and other ass oveents due to thic9 soil
cover. Preventive ph#sical iti!ation ethods such as
surface and subsurface draina!e and re!radin! of the slope
ust be done in the area.
O)1P
Ge read the <uoted portion, ho"ever, to ean onl# that
further tests are re<uired to deterine the Sde!ree of
copaction,T Sthe bearin! capacit# of the soil aterials,T
and Svulnerabilit# of the area to landslides,T since the tests
alread# conducted "ere inade<uate to ascertain such
!eolo!ical attributes. &t is onl# in this sense that the
assessent "as Spreliinar#.T
Accordin!l#, "e hold that the NFA "as 'usti4ed in cancellin!
the contract. 3he realiAation of the ista9e as re!ards the
<ualit# of the land resulted in the ne!ation of the
otiveRcause thus renderin! the contract ine5istent.
O):P
Article (/(: of the Civil Code states that7
Art. (/(:. 3here is no contract unless the follo"in!
re<uisites concur7
=(> Consent of the contractin! partiesH
=)> @b'ect certain "hich is the sub'ect atter of the
contractH
=/> Cause of the obli!ation "hich is established.
=Dnderscorin! supplied.>
3herefore, assuin! that petitioners are parties, assi!nees
or bene4ciaries to the contract of sale, the# "ould not be
entitled to an# a"ard of daa!es.
54ERE/ORE, the instant petition is hereb# DEN&ED.
SO ORERE.
%EC@ND D&V&%&@N
@G.R. No. 151319. No:e.ber 22, 2001A
M(NIL( MEMORI(L P(R0 CEMETER), INC., petitioner,
vs. PERO L. LINS(NG(N, respondent.
E C I S I O N
TING(, J.D
,or resolution in this case is a classic and interestin!
te5boo9 <uestion in the la" on a!enc#.
3his is a petition for revie" assailin! the Decision
O(P
of the
Court of Appeals dated )) $une )00(, and
its ,esolution
O)P
dated () Deceber )00( in CA ..R. CV No.
;*:0) entitled SPedro L. Linsan#an v. Manila Memorial
*emeter", 4nc. et al.,T 4ndin! Manila Meorial Par9
Ceeter#, &nc. =MMPC&> 'ointl# and severall# liable "ith
,lorencia C. Balu#ot to respondent Att#. Pedro B. Binsan!an.
3he facts of the case are as follo"s7
%oetie in (*:;, ,lorencia Balu#ot oCered Att#. Pedro B.
Binsan!an a lot called .arden %tate at the Fol# Cross
Meorial Par9 o"ned b# petitioner =MMPC&>. Accordin! to
Balu#ot, a forer o"ner of a eorial lot under Contract
No. )20() "as no lon!er interested in ac<uirin! the lot and
had opted to sell his ri!hts sub'ect to reiburseent of the
aounts he alread# paid. 3he contract "as for P*2,000.00.
Balu#ot reassured Att#. Binsan!an that once reiburseent
is ade to the forer bu#er, the contract "ould be
transferred to hi. Att#. Binsan!an a!reed and !ave
Balu#otP/2,)*2.00 representin! the aount to be
reibursed to the ori!inal bu#er and to coplete the do"n
pa#ent to MMPC&.
O/P
Balu#ot issued hand"ritten and
t#pe"ritten receipts for these pa#ents.
O;P
%oetie in March (*:2, Balu#ot infored Att#. Binsan!an
that he "ould be issued Contract No. ):++0, a ne" contract
coverin! the sub'ect lot in the nae of the latter instead of
old Contract No. )20(). Att#. Binsan!an protested, but
Balu#ot assured hi that he "ould still be pa#in! the old
price of P*2,000.00 "ith P(*,:/:.00 credited as full do"n
pa#ent leavin! a balance of aboutP12,000.00.
O2P
%ubse<uentl#, on : April (*:2, Balu#ot brou!ht an @Cer to
Purchase Bot No. A(( =(2>, Bloc9 :/, .arden Estate &
denoinated as Contract No. ):++0 and the @-cial Receipt
No. ((:*() dated + April (*:2 for the aount
of P(*,:/:.00. Contract No. ):++0 has a listed price
of P(/),)20.00. Att#. Binsan!an ob'ected to the ne"
contract price, as the sae "as not the aount previousl#
a!reed upon. 3o convince Att#. Binsan!an, Balu#ot e5ecuted
a docuent
O+P
con4rin! that "hile the contract price
is P(/),)20.00, Att#. Binsan!an "ould pa# onl# the ori!inal
price of P*2,000.00.
3he docuent reads in part7
3he onthl# installent "ill start April +, (*:2H the aount
of P(,:00.00 and the diCerence "ill be issued as discounted
to confor to the previous price as previousl# a!reed upon.
--- P*2,000.00
Prepared b#7
=%i!ned>
=MR%.> ,B@RENC&A C. BABDL@3
A!enc# Mana!er
Fol# Cross Meorial Par9
;R(:R:2
Dear Att#. Binsan!an7
3his "ill con4r our a!reeent that "hile the oCer to
purchase under Contract No. ):++0 states that the total
price of P(/),)20.00 #our underta9in! is to pa# onl# the
total su of P*2,000.00 under the old price. ,urther the
total su of P(*,:/:.00 alread# paid b# #ou under @.R. Z
((:*() dated April +, (*:2 has been credited in the total
purchase price thereb# leavin! a balance of P12,(+).00 on a
onthl# installent ofP(,:00.00 includin! interests =sic>
char!es for a period of 4ve =2> #ears.
=%i!ned>
,B@RENC&A C. BABDL@3
B# virtue of this letter, Att#. Binsan!an si!ned Contract No.
):++0 and accepted @-cial Receipt No. ((:*(). As
re<uested b# Balu#ot, Att#. Binsan!an issued t"elve =()>
postdated chec9s ofP(,:00.00 each in favor of MMPC&. 3he
ne5t #ear, or on )* April (*:+, Att#. Binsan!an a!ain issued
t"elve =()> postdated chec9s in favor of MMPC&.
@n )2 Ma# (*:1, Balu#ot verball# advised Att#. Binsan!an
that Contract No. ):++0 "as cancelled for reasons the latter
could not e5plain, and presented to hi another proposal for
the purchase of an e<uivalent propert#. Fe refused the ne"
proposal and insisted that Balu#ot and MMPC& honor their
underta9in!.
,or the alle!ed failure of MMPC& and Balu#ot to confor to
their a!reeent, Att#. Binsan!an 4led a *omplaint
O1P
for
Breach of Contract and Daa!es a!ainst the forer.
Balu#ot did not present an# evidence. ,or its part, MMPC&
alle!ed that Contract No. ):++0 "as cancelled conforabl#
"ith the ters of the contract
O:P
because of non-pa#ent of
arreara!es.
O*P
MMPC& stated that Balu#ot "as not an a!ent
but an independent contractor, and as such "as not
authoriAed to represent MMPC& or to use its nae e5cept as
to the e5tent e5pressl# stated in the A!enc# Mana!er
A!reeent.
O(0P
Moreover, MMPC& "as not a"are of the
arran!eents entered into b# Att#. Binsan!an and Balu#ot,
as it in fact received a do"n pa#ent and onthl#
installents as indicated in the contract.
O((P
@-cial receipts
sho"in! the application of pa#ent "ere turned over to
Balu#ot "ho Att#. Binsan!an had fro the be!innin!
allo"ed to receive the sae in his behalf. ,urtherore,
"hatever isipression that Att#. Binsan!an a# have had
ust have been recti4ed b# the Account Dpdatin!
Arran!eent si!ned b# Att#. Binsan!an "hich states that he
Se5pressl# adits that Contract No. ):++0 [on account of
serious delin<uenc#\is no" due for cancellation under its
ters and conditions.MMM
O()P
3he trial court held MMPC& and Balu#ot 'ointl# and severall#
liable.
O(/P
&t found that Balu#ot "as an a!ent of MMPC& and
that the latter "as estopped fro den#in! this a!enc#,
havin! received and enchased the chec9s issued b# Att#.
Binsan!an and !iven to it b# Balu#ot. Ghile MMPC& insisted
that Balu#ot "as authoriAed to receive onl# the do"n
pa#ent, it allo"ed her to continue to receive postdated
chec9s fro Att#. Binsan!an, "hich it in turn consistentl#
encashed.
O(;P
3he dispositive portion of the decision reads7
GFERE,@RE, 'ud!ent b# preponderance of evidence is
hereb# rendered in favor of plaintiC declarin! Contract No.
):++0 as valid and subsistin! and orderin! defendants to
perfor their underta9in!s thereof "hich covers burial lot
No. A(( =(2>, Bloc9 :/, %ection .arden &, Fol# Cross
Meorial Par9 located at Novaliches, EueAon Cit#. All
pa#ents ade b# plaintiC to defendants should be
credited for his accounts. N@ DAMA.E%, N@ A33@RNELM%
,EE% but "ith costs a!ainst the defendants.
3he cross clai of defendant Manila Meorial Ceeter#
&ncorporated as a!ainst defendant Balu#ot is .RAN3ED up
to the e5tent of the costs.
%@ @RDERED.
O(2P
MMPC& appealed the trial courtMs decision to the Court of
Appeals.
O(+P
&t claied that Att#. Binsan!an is bound b# the
"ritten contract "ith MMPC&, the ters of "hich "ere clearl#
set forth therein and read, understood, and si!ned b# the
forer.
O(1P
&t also alle!ed that Att#. Binsan!an, a practicin!
la"#er for over thirteen =(/> #ears at the tie he entered
into the contract, is presued to 9no" his contractual
obli!ations and is full# a"are that he cannot belatedl# and
unilaterall# chan!e the ters of the contract "ithout the
consent, uch less the 9no"led!e of the other contractin!
part#, "hich "as MMPC&. And in this case, MMPC& did not
a!ree to a chan!e in the contract and in fact ipleented
the sae pursuant to its clear ters. &n vie" thereof,
because of Att#. Binsan!anMs delin<uenc#, MMPC& validl#
cancelled the contract.
MMPC& further alle!ed that it cannot be held 'ointl# and
solidaril# liable "ith Balu#ot as the latter e5ceeded the
ters of her a!enc#, neither did MMPC& ratif# Balu#otMs
acts. &t added that it cannot be char!ed "ith a9in! an#
isrepresentation, nor of havin! allo"ed Balu#ot to act as
thou!h she had full po"ers as the "ritten contract e5pressl#
stated the ters and conditions "hich Att#. Binsan!an
accepted and understood. &n cancelin! the contract, MMPC&
erel# enforced the ters and conditions iposed therein.
O(:P
&putin! ne!li!ence on the part of Att#. Binsan!an, MMPC&
claied that it "as the forerMs obli!ation, as a part#
9no"in!l# dealin! "ith an alle!ed a!ent, to deterine the
liitations of such a!entMs authorit#, particularl# "hen such
alle!ed a!entMs actions "ere patentl# <uestionable.
Accordin! to MMPC&, Att#. Binsan!an did not even bother to
verif# Balu#otMs authorit# or as9 copies of o-cial receipts for
his pa#ents.
O(*P
3he Court of Appeals a-red the decision of the trial court.
&t upheld the trial courtMs 4ndin! that Balu#ot "as an a!ent
of MMPC& at the tie the disputed contract "as entered into,
havin! represented MMPC&Ms interest and actin! on its behalf
in the dealin!s "ith clients and custoers. Fence, MMPC& is
considered estopped "hen it allo"ed Balu#ot to act and
represent MMPC& even be#ond her authorit#.
O)0P
3he
appellate court li9e"ise found that the acts of Balu#ot
bound MMPC& "hen the latter allo"ed the forer to act for
and in its behalf and stead. Ghile Balu#otMs authorit# Sa#
not have been e5pressl# conferred upon her, the sae a#
have been derived ipliedl# b# habit or custo, "hich a#
have been an accepted practice in the copan# for a lon!
period of tie.T
O)(P
3hus, the Court of Appeals noted,
innocent third persons such as Att#. Binsan!an should not be
pre'udiced "here the principal failed to adopt the needed
easures to prevent isrepresentation. ,urtherore, if an
a!ent isrepresents to a purchaser and the principal
accepts the bene4ts of such isrepresentation, he cannot at
the sae tie den# responsibilit# for such
isrepresentation.
O))P
,inall#, the Court of Appeals declared7
3here bein! absolutel# nothin! on the record that "ould
sho" that the court a $uo overloo9ed, disre!arded, or
isinterpreted facts of "ei!ht and si!ni4cance, its factual
4ndin!s and conclusions ust be !iven !reat "ei!ht and
should not be disturbed b# this Court on appeal.
54ERE/ORE, in vie" of the fore!oin!, the appeal is hereb#
DEN&ED and the appealed decision in Civil Case No. ::-()2/
of the Re!ional 3rial Court, National Capital $udicial Re!ion,
Branch 21 of Ma9ati, is hereb# (//IRME in toto.
SO ORERE.
O)/P
MMPC& 4led its Motion for ,econsideration,
O);P
but the sae
"as denied for lac9 of erit.
O)2P
&n the instant Petition for ,eview, MMPC& clais that the
Court of Appeals seriousl# erred in disre!ardin! the plain
ters of the "ritten contract and Att#. Binsan!anMs failure to
abide b# the ters thereof, "hich 'usti4ed its cancellation.
&n addition, even assuin! that Balu#ot "as an a!ent of
MMPC&, she clearl# e5ceeded her authorit# and Att#.
Binsan!an 9ne" or should have 9no"n about this
considerin! his status as a lon!-practicin! la"#er. MMPC&
li9e"ise clais that the Court of Appeals erred in failin! to
consider that the facts and the applicable la" do not
support a 'ud!ent a!ainst Balu#ot onl# Sup to the e5tent
of costs.T
O)+P
Att#. Binsan!an ar!ues that he did not violate the ters and
conditions of the contract, and in fact faithfull# perfored
his contractual obli!ations and coplied "ith the in !ood
faith for at least t"o #ears.
O)1P
Fe clais that contrar# to
MMPC&Ms position, his profession as a la"#er is iaterial to
the validit# of the sub'ect contract and the case at bar.
O):P
Accordin! to hi, MMPC& had practicall# aditted in
its Petition that Balu#ot "as its a!ent, and thus, the onl#
issue left to be resolved is "hether MMPC& allo"ed Balu#ot
to act as thou!h she had full po"ers to be held solidaril#
liable "ith the latter.
O)*P
Ge 4nd for the petitioner MMPC&.
3he 'urisdiction of the %upree Court in a petition for revie"
under Rule ;2 of the Rules of Court is liited to revie"in!
onl# errors of la", not fact, unless the factual 4ndin!s
coplained of are devoid of support b# the evidence on
record or the assailed 'ud!ent is based on
isapprehension of facts.
O/0P
&n -P4 4nvestment *orporation
v. D.7. *arreon *ommercial *orporation,
O/(P
this Court ruled7
3here are instances "hen the 4ndin!s of fact of the trial
court andRor Court of Appeals a# be revie"ed b# the
%upree Court, such as =(> "hen the conclusion is a 4ndin!
!rounded entirel# on speculation, surises and con'ecturesH
=)> "hen the inference ade is anifestl# ista9en, absurd
or ipossibleH =/> "here there is a !rave abuse of discretionH
=;> "hen the 'ud!ent is based on a isapprehension of
factsH =2> "hen the 4ndin!s of fact are conWictin!H =+> "hen
the Court of Appeals, in a9in! its 4ndin!s, "ent be#ond
the issues of the case and the sae is contrar# to the
adissions of both appellant and appelleeH =1> "hen the
4ndin!s are contrar# to those of the trial courtH =:> "hen
the 4ndin!s of fact are conclusions "ithout citation of
speci4c evidence on "hich the# are basedH =*> "hen the
facts set forth in the petition as "ell as in the petitionersM
ain and repl# briefs are not disputed b# the respondentsH
and =(0> the 4ndin!s of fact of the Court of Appeals are
preised on the supposed absence of evidence and
contradicted b# the evidence on record.
O/)P
&n the case at bar, the Court of Appeals coitted several
errors in the apprehension of the facts of the case, as "ell
as ade conclusions devoid of evidentiar# support, hence
"e revie" its 4ndin!s of fact.
B# the contract of a!enc#, a person binds hiself to render
soe service or to do soethin! in representation or on
behalf of another, "ith the consent or authorit# of the latter.
O//P
3hus, the eleents of a!enc# are =i> consent, e5press or
iplied, of the parties to establish the relationshipH =ii> the
ob'ect is the e5ecution of a 'uridical act in relation to a third
personH =iii> the a!ent acts as a representative and not for
hiselfH and =iv> the a!ent acts "ithin the scope of his
authorit#.
O/;P
&n an attept to prove that Balu#ot "as not its a!ent,
MMPC& pointed out that under its A!enc# Mana!er
A!reeentH an a!enc# ana!er such as Balu#ot is
considered an independent contractor and not an a!ent.
O/2P
Fo"ever, in the sae contract, Balu#ot as a!enc#
ana!er "as authoriAed to solicit and reit to MMPC& oCers
to purchase interent spaces belon!in! to and sold b# the
latter.
O/+P
Not"ithstandin! the clai of MMPC& that Balu#ot
"as an independent contractor, the fact reains that she
"as authoriAed to solicit solel# for and in behalf of MMPC&.
As properl# found both b# the trial court and the Court of
Appeals, Balu#ot "as an a!ent of MMPC&, havin!
represented the interest of the latter, and havin! been
allo"ed b# MMPC& to represent it in her dealin!s "ith its
clientsRprospective bu#ers.
Nevertheless, contrar# to the 4ndin!s of the Court of
Appeals, MMPC& cannot be bound b# the contract procured
b# Att#. Binsan!an and solicited b# Balu#ot.
Balu#ot "as authoriAed to solicit and reit to MMPC& oCers
to purchase interent spaces obtained on fors provided
b# MMPC&. 3he ters of the oCer to purchase, therefore, are
contained in such fors and, "hen si!ned b# the bu#er and
an authoriAed o-cer of MMPC&, becoes bindin! on both
parties.
3he @Cer to Purchase dul# si!ned b# Att#. Binsan!an, and
accepted and validated b# MMPC& sho"ed a total list price
of P(/),)20.00. Bi9e"ise, it "as clearl# stated therein that
SPurchaser a!rees that he has read or has had read to hi
this a!reeent, that he -#$er"t+#$" 't" ter." +#$
co#$'t'o#", +#$ t&+t t&ere +re #o co:e#+#t",
co#$'t'o#", ;+rr+#t'e" or re!re"e#t+t'o#" ot&er t&+#
t&o"e co#t+'#e$ &ere'#.T
O/1P
B# si!nin! the @Cer to
Purchase, Att#. Binsan!an si!ni4ed that he understood its
contents. 3hat he and Balu#ot had an a!reeent diCerent
fro that contained in the @Cer to Purchase is of no
oent, and should not aCect MMPC&, as it "as obviousl#
ade outside Balu#otMs authorit#. 3o repeat, Balu#otMs
authorit# "as liited onl# to solicitin! purchasers. %he had
no authorit# to alter the ters of the "ritten contract
provided b# MMPC&. 3he docuentRletter Scon4rin!T the
a!reeent that Att#. Binsan!an "ould have to pa# the old
price "as e5ecuted b# Balu#ot alone. No"here is there an#
indication that the sae cae fro MMPC& or an# of its
o-cers.
&t is a settled rule that persons dealin! "ith an a!ent are
bound at their peril, if the# "ould hold the principal liable, to
ascertain not onl# the fact of a!enc# but also the nature and
e5tent of authorit#, and in case either is controverted, the
burden of proof is upon the to establish it.
O/:P
3he basis for
a!enc# is representation and a person dealin! "ith an a!ent
is put upon in<uir# and ust discover upon his peril the
authorit# of the a!ent.
O/*P
&f he does not a9e such an
in<uir#, he is char!eable "ith 9no"led!e of the a!entMs
authorit# and his i!norance of that authorit# "ill not be an#
e5cuse.
O;0P
As noted b# one author, the i!norance of a person dealin!
"ith an a!ent as to the scope of the latterMs authorit# is no
e5cuse to such person and the fault cannot be thro"n upon
the principal.
O;(P
A person dealin! "ith an a!ent assues the
ris9 of lac9 of authorit# in the a!ent. Fe cannot char!e the
principal b# rel#in! upon the a!entMs assuption of
authorit# that proves to be unfounded. 3he principal, on the
other hand, a# act on the presuption that third persons
dealin! "ith his a!ent "ill not be ne!li!ent in failin! to
ascertain the e5tent of his authorit# as "ell as the e5istence
of his a!enc#.
O;)P
&n the instant case, it has not been established that Att#.
Binsan!an even bothered to in<uire "hether Balu#ot "as
authoriAed to a!ree to ters contrar# to those indicated in
the "ritten contract, uch less bind MMPC& b# her
coitent "ith respect to such a!reeents. Even if
Balu#ot "as Att#. Binsan!anMs friend and 9no"n to be an
a!ent of MMPC&, her declarations and actions alone are not
su-cient to establish the fact or e5tent of her authorit#.
O;/P
Att#. Binsan!an as a practicin! la"#er for a relativel# lon!
period of tie "hen he si!ned the contract should have
been put on !uard "hen their a!reeent "as not reWected
in the contract. More iportantl#, Att#. Binsan!an should
have been alerted b# the fact that Balu#ot failed to eCect
the transfer of ri!hts earlier proised, and "as unable to
a9e !ood her "ritten coitent, nor convince MMPC& to
assent thereto, as evidenced b# several attepts to induce
hi to enter into other contracts for a hi!her consideration.
As properl# pointed out b# MMPC&, as a la"#er, a !reater
de!ree of caution should be e5pected of Att#. Binsan!an
especiall# in dealin!s involvin! le!al docuents. Fe did not
even bother to as9 for o-cial receipts of his pa#ents, nor
in<uire fro MMPC& directl# to ascertain the real status of
the contract, blindl# rel#in! on the representations of
Balu#ot. A la"#er b# profession, he 9ne" "hat he "as
doin! "hen he si!ned the "ritten contract, 9ne" the
eanin! and value of ever# "ord or phrase used in the
contract, and ore iportantl#, 9ne" the le!al eCects
"hich said docuent produced. Fe is bound to accept
responsibilit# for his ne!li!ence.
3he trial and appellate courts found MMPC& liable based on
rati4cation and estoppel. ,or the trial court, MMPC&Ms acts of
acceptin! and encashin! the chec9s issued b# Att#.
Binsan!an as "ell as allo"in! Balu#ot to receive chec9s
dra"n in the nae of MMPC& con4r and ratif# the contract
of a!enc#. @n the other hand, the Court of Appeals faulted
MMPC& in failin! to adopt easures to prevent
isrepresentation, and declared that in vie" of MMPC&Ms
acceptance of the bene4ts of Balu#otMs isrepresentation, it
can no lon!er den# responsibilit# therefor.
3he Court does not a!ree. Pertinent to this case are the
follo"in! provisions of the Civil Code7
Art. (:*:. &f the a!ent contracts in the nae of the
principal, e5ceedin! the scope of his authorit#, and the
principal does not ratif# the contract, it shall be void if the
part# "ith "ho the a!ent contracted is a"are of the liits
of the po"ers !ranted b# the principal. &n this case,
ho"ever, the a!ent is liable if he undertoo9 to secure the
principalMs rati4cation.
Art. (*(0. 3he principal ust copl# "ith all the obli!ations
that the a!ent a# have contracted "ithin the scope of his
authorit#.
As for an# obli!ation "herein the a!ent has e5ceeded his
po"er, the principal is not bound e5cept "hen he rati4es it
e5pressl# or tacitl#.
Art. (*((. Even "hen the a!ent has e5ceeded his authorit#,
the principal is solidaril# liable "ith the a!ent if the forer
allo"ed the latter to act as thou!h he had full po"ers.
3hus, the acts of an a!ent be#ond the scope of his authorit#
do not bind the principal, unless he rati4es the, e5pressl#
or ipliedl#. @nl# the principal can ratif#H the a!ent cannot
ratif# his o"n unauthoriAed acts. Moreover, the principal
ust have 9no"led!e of the acts he is to ratif#.
O;;P
Rati4cation in a!enc# is the adoption or con4ration b# one
person of an act perfored on his behalf b# another "ithout
authorit#. 3he substance of the doctrine is con4ration
after conduct, aountin! to a substitute for a prior
authorit#. @rdinaril#, the principal ust have full 9no"led!e
at the tie of rati4cation of all the aterial facts and
circustances relatin! to the unauthoriAed act of the person
"ho assued to act as a!ent. 3hus, if aterial facts "ere
suppressed or un9no"n, there can be no valid rati4cation
and this re!ardless of the purpose or lac9 thereof in
concealin! such facts and re!ardless of the parties bet"een
"ho the <uestion of rati4cation a# arise.
O;2P
Nevertheless,
this principle does not appl# if the principalMs i!norance of
the aterial facts and circustances "as "illful, or that the
principal chooses to act in i!norance of the facts.
O;+P
Fo"ever, in the absence of circustances puttin! a
reasonabl# prudent an on in<uir#, rati4cation cannot be
iplied as a!ainst the principal "ho is i!norant of the facts.
O;1P
No rati4cation can be iplied in the instant case.
A perusal of Balu#otMs 1nswer
O;:P
reveals that the real
arran!eent bet"een her and Att#. Binsan!an "as for the
latter to pa# a onthl# installent of P(,:00.00 "hereas
Balu#ot "as to shoulder the counterpart aount
of P(,;22.00 to eet the P/,)22.00 onthl# installents as
indicated in the contract. 3hus, ever# tie an installent
falls due, pa#ent "as to be ade throu!h a chec9 fro
Att#. Binsan!an for P(,:00.00 and a cash coponent
of P(,;22.00 fro Balu#ot.
O;*P
Fo"ever, it appears that "hile
Att#. Binsan!an issued the post-dated chec9s, Balu#ot failed
to coe up "ith her part of the bar!ain. 3his "as supported
b# Balu#otMs stateents in her letter
O20P
to Mr. Cl#de
Gillias, $r., %ales Mana!er of MMPC&, t"o da#s after she
received the cop# of the *omplaint. &n the letter, she
aditted that she "as reiss in her duties "hen she
consented to Att#. Binsan!anMs proposal that he "ill pa# the
old price "hile the diCerence "ill be shouldered b# her. %he
li9e"ise aditted that the contract suCered arreara!es
because "hile Att#. Binsan!an issued the a!reed chec9s, she
"as unable to !ive her share of P(,;22.00 due to her o"n
4nancial di-culties. Balu#ot even as9ed for copassion
fro MMPC& for the error she coitted.
Att#. Binsan!an failed to sho" that MMPC& had 9no"led!e of
the arran!eent. As far as MMPC& is concerned, the contract
price "as P(/),)20.00, as stated in the @Cer to Purchase
si!ned b# Att#. Binsan!an and MMPC&Ms authoriAed o-cer.
3he do"n pa#ent of P(*,:/:.00 !iven b# Att#. Binsan!an
"as in accordance "ith the contract as "ell. Pa#ents
of P/,)/2.00 for at least t"o installents "ere li9e"ise in
accord "ith the contract, albeit ade throu!h a chec9 and
partl# in cash. &n vie" of Balu#otMs failure to !ive her share
in the pa#ent, MMPC& received onl# P(,:00.00 chec9s,
"hich "ere clearl# insu-cient pa#ent. &n fact, Att#.
Binsan!an "ould have incurred arreara!es that could have
caused the earlier cancellation of the contract, if not for
MMPC&Ms application of soe of the chec9s to his account.
Fo"ever, the chec9s alone "ere not su-cient to cover his
obli!ations.
&f MMPC& "as a"are of the arran!eent, it "ould have
refused the latterMs chec9 pa#ents for bein! insu-cient. &t
"ould not have applied to his account the P(,:00.00
chec9s. Moreover, the fact that Balu#ot had to practicall#
e5plain to MMPC&Ms %ales Mana!er the details of her
Sarran!eentT "ith Att#. Binsan!an and adit to havin!
ade an error in enterin! such arran!eent con4r that
MMCP& had no 9no"led!e of the said a!reeent. &t "as onl#
"hen Balu#ot 4led her Ans"er that she claied that MMCP&
"as full# a"are of the a!reeent.
Neither is there estoppel in the instant case. 3he essential
eleents of estoppel are =i> conduct of a part# aountin! to
false representation or concealent of aterial facts or at
least calculated to conve# the ipression that the facts are
other"ise than, and inconsistent "ith, those "hich the part#
subse<uentl# attepts to assertH =ii> intent, or at least
e5pectation, that this conduct shall be acted upon b#, or at
least inWuence, the other part#H and =iii> 9no"led!e, actual
or constructive, of the real facts.
O2(P
Ghile there is no ore <uestion as to the a!enc#
relationship bet"een Balu#ot and MMPC&, there is no
indication that MMPC& let the public, or speci4call#, Att#.
Binsan!an to believe that Balu#ot had the authorit# to alter
the standard contracts of the copan#. Neither is there an#
sho"in! that prior to si!nin! Contract No. ):++0, MMPC&
had an# 9no"led!e of Balu#otMs coitent to Att#.
Binsan!an. @ne "ho clais the bene4t of an estoppel on
the !round that he has been isled b# the representations
of another ust not have been isled throu!h his o"n "ant
of reasonable care and circuspection.
O2)P
Even assuin!
that Att#. Binsan!an "as isled b# MMPC&Ms actuations, he
still cannot invo9e the principle of estoppel, as he "as
clearl# ne!li!ent in his dealin!s "ith Balu#ot, and could
have easil# deterined, had he onl# been cautious and
prudent, "hether said a!ent "as clothed "ith the authorit#
to chan!e the ters of the principalMs "ritten contract.
Estoppel ust be intentional and une<uivocal, for "hen
isapplied, it can easil# becoe a ost convenient and
eCective eans of in'ustice.
O2/P
&n vie" of the lac9 of
su-cient proof sho"in! estoppel, "e refuse to hold MMPC&
liable on this score.
Bi9e"ise, this Court does not 4nd favor in the Court of
AppealsM 4ndin!s that Sthe authorit# of defendant Balu#ot
a# not have been e5pressl# conferred upon herH ho"ever,
the sae a# have been derived ipliedl# b# habit or
custo "hich a# have been an accepted practice in their
copan# in a lon! period of tie.T A perusal of the records
of the case fails to sho" an# indication that there "as such
a habit or custo in MMPC& that allo"s its a!ents to enter
into a!reeents for lo"er prices of its interent spaces, nor
to assue a portion of the purchase price of the interent
spaces sold at such lo"er price. No evidence "as ever
presented to this eCect.
As the Court sees it, there are t"o obli!ations in the instant
case. @ne is the Contract No. ):++0 bet"een MMPC& and b#
Att#. Binsan!an for the purchase of an interent space in
the forerMs ceeter#. 3he other is the a!reeent bet"een
Balu#ot and Att#. Binsan!an for the forer to shoulder the
aount P(,;22.00, or the diCerence bet"een P*2,000.00,
the ori!inal price, andP(/),)20.00, the actual contract
price.
3o repeat, the acts of the a!ent be#ond the scope of his
authorit# do not bind the principal unless the latter rati4es
the sae. &t also bears ephasis that "hen the third
person 9no"s that the a!ent "as actin! be#ond his po"er
or authorit#, the principal cannot be held liable for the acts
of the a!ent. &f the said third person "as a"are of such
liits of authorit#, he is to blae and is not entitled to
recover daa!es fro the a!ent, unless the latter
undertoo9 to secure the principalMs rati4cation.
O2;P
3his Court 4nds that Contract No. ):++0 "as validl# entered
into both b# MMPC& and Att#. Binsan!an. B# a-5in! his
si!nature in the contract, Att#. Binsan!an assented to the
ters and conditions thereof. Ghen Att#. Binsan!an
incurred delin<uencies in pa#ent, MMCP& erel# enforced
its ri!hts under the said contract b# cancelin! the sae.
Bein! a"are of the liits of Balu#otMs authorit#, Att#.
Binsan!an cannot insist on "hat he clais to be the ters of
Contract No. ):++0. 3he a!reeent, insofar as
the P*2,000.00 contract price is concerned, is void and
cannot be enforced as a!ainst MMPC&. Neither can he hold
Balu#ot liable for daa!es under the sae contract, since
there is no evidence sho"in! that Balu#ot undertoo9 to
secure MMPC&Ms rati4cation. At best, the Sa!reeentT
bet"een Balu#ot and Att#. Binsan!an bound onl# the t"o of
the. As far as MMPC& is concerned, it bound itself to sell its
interent space to Att#. Binsan!an for P(/),)20.00 under
Contract No. ):++0, and had in fact received several
pa#ents in accordance "ith the sae contract. &f the
contract "as cancelled due to arreara!es, Att#. Binsan!anMs
recourse should onl# be a!ainst Balu#ot "ho personall#
undertoo9 to pa# the diCerence bet"een the true contract
price of P(/),)20.00 and the ori!inal proposed price
of P*2,000.00. 3o surise that Balu#ot "as actin! on behalf
of MMPC& "hen she proised to shoulder the said diCerence
"ould be to conclude that MMPC& undertoo9 to pa# itself the
diCerence, a conclusion that is ver# illo!ical, if not
antithetical to its business interests.
Fo"ever, this does not preclude Att#. Binsan!an fro
institutin! a separate action to recover daa!es fro
Balu#ot, not as an a!ent of MMPC&, but in vie" of the latterMs
breach of their separate a!reeent. 3o revie", Balu#ot
obli!ated herself to pa# P(,;22.00 in addition to Att#.
Binsan!anMs P(,:00.00 to coplete the onthl# installent
pa#ent under the contract, "hich, b# her o"n adission,
she "as unable to do due to personal 4nancial di-culties. &t
is undisputed that Att#. Binsan!an issued the P(,:00.00 as
a!reed upon, and "ere it not for Balu#otMs failure to provide
the balance, Contract No. ):++0 "ould not have been
cancelled. 3hus, Att#. Binsan!an has a cause of action
a!ainst Balu#ot, "hich he can pursue in another case.
54ERE/ORE, the instant petition is .RAN3ED.
3he Decision of the Court of Appeals dated )) $une )00(
and its ,esolution dated () Deceber )00( in CA- ..R. CV
No. ;*:0), as "ell as theDecision in Civil Case No. ::-()2/
of the Re!ional 3rial Court, Ma9ati Cit# Branch 21, are
hereb# REVER%ED and %E3 A%&DE. 3he *omplaint in Civil
Case No. ::-()2/ is D&%M&%%ED for lac9 of cause of action.
No pronounceent as to costs.
SO ORERE.