recover the following commissions: 25%, as balance on the first
delivery and 30%, on the second delivery.
AGENCY, TRUST, AND
PARTNERSHIP ACADEMIC YEAR
2023
Ana Kristina R. Endaya
The trial court decided in favor of the respondent. The dispositive
portion of the decision reads as follows:
AGENCY
G.R. No. L-67889 October 10, 1985
PRIMITIVO SIASAT and MARCELINO SIASAT, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and TERESITA
NACIANCENO, respondents.
WHEREFORE, judgment is hereby rendered
sentencing Primitivo Siasat to pay to the plaintiff
the sum of P281,988.00, minus the sum
P23,900.00, with legal interest from the date of
this decision, and ordering the defendants to pay
jointly and solidarily the sum of P25,000.00 as
moral damages, and P25,000.00 as attorney's
fees, also with legal interest from the date of this
decision, and the costs.
Payawal, Jimenez & Associates for petitioners.
The decision was affirmed in toto by the Intermediate Appellate Court.
After their motion for reconsideration was denied, the petitioners went
to this Court on a petition for review on August 6, 1984.
Nelson A. Loyola for private respondent.
GUTIERREZ, JR., J.:
This is a petition for review of the decision of the Intermediate
Appellate Court affirming in toto the judgment of the Court of First
Instance of Manila, Branch XXI, which ordered the petitioner to pay
respondent the thirty percent (30%) commission on 15,666 pieces of
Philippine flags worth P936,960.00, moral damages, attorney's fees
and the costs of the suit.
Sometime in 1974, respondent Teresita Nacianceno succeeded in
convincing officials of the then Department of Education and Culture,
hereinafter called Department, to purchase without public bidding, one
million pesos worth of national flags for the use of public schools
throughout the country. The respondent was able to expedite the
approval of the purchase by hand-carrying the different indorsements
from one office to another, so that by the first week of September,
1974, all the legal requirements had been complied with, except the
release of the purchase orders. When Nacianceno was informed by
the Chief of the Budget Division of the Department that the purchase
orders could not be released unless a formal offer to deliver the flags in
accordance with the required specifications was first submitted for
approval, she contacted the owners of the United Flag Industry on
September 17, 1974. The next day, after the transaction was
discussed, the following document (Exhibit A) was drawn up:
Mrs. Tessie Nacianceno,
This is to formalize our agreement for you to
represent United Flag Industry to deal with any
entity or organization, private or government in
connection with the marketing of our productsflags and all its accessories.
For your service, you will be entitled to a
commission of thirty
In assailing the appellate court's decision, the petition tenders the
following arguments: first, the authorization making the respondent the
petitioner's representative merely states that she could deal with any
entity in connection with the marketing of their products for a
commission of 30%. There was no specific authorization for the sale of
15,666 Philippine flags to the Department; second, there were two
transactions involved evidenced by the separate purchase orders and
separate delivery receipts, Exhibit 6-C for the purchase and deliver on
October 16, 1974, and Exhibits 7 to 7-C, for the purchase and delivery
on November 6, 1974. The revocation of agency effected by the
parties with mutual consent on October 17, 1974, therefore, forecloses
the respondent's claim of 30% commission on the second transaction;
and last, there was no basis for the granting of attorney's fees and
moral damages because there was no showing of bad faith on the part
of the petitioner. It was respondent who showed bad faith in denying
having received her commission on the first delivery. The petitioner's
counterclaim, therefore, should have been granted.
This petition was initially dismissed for lack of merit in a minute
resolution.On a motion for reconsideration, however,this Court give
due course to the petition on November 14, 1984.
After a careful review of the records, we are constrained to sustain with
some modifications the decision of the appellate court.
We find respondent's argument regarding respondent's incapacity to
represent them in the transaction with the Department untenable.
There are several kinds of agents. To quote a commentator on the
matter:
An agent may be (1) universal: (2) general, or (3)
special. A universal; agent is one authorized to do
all acts for his principal which can lawfully be
delegated to an agent. So far as such a condition
is possible, such an agent may be said to have
universal authority. (Mec. Sec. 58).
(30%) percent.
Signed
Mr. Primitive Siasat
Owner and Gen. Manager
On October 16, 1974, the first delivery of 7,933 flags was made by the
United Flag Industry. The next day, on October 17, 1974, the
respondent's authority to represent the United Flag Industry was
revoked by petitioner Primitivo Siasat.
According to the findings of the courts below, Siasat, after receiving the
payment of P469,980.00 on October 23, 1974 for the first delivery,
tendered the amount of P23,900.00 or five percent (5%) of the amount
received, to the respondent as payment of her commission. The latter
allegedly protested. She refused to accept the said amount insisting on
the 30% commission agreed upon. The respondent was prevailed
upon to accept the same, however, because of the assurance of the
petitioners that they would pay the commission in full after they
delivered the other half of the order. The respondent states that she
later on learned that petitioner Siasat had already received payment for
the second delivery of 7,833 flags. When she confronted the
petitioners, they vehemently denied receipt of the payment, at the
same time claiming that the respondent had no participation
whatsoever with regard to the second delivery of flags and that the
agency had already been revoked.
The respondent originally filed a complaint with the Complaints and
Investigation Office in Malacañang but when nothing came of the
complaint, she filed an action in the Court of First Instance of Manila to
A general agent is one authorized to do all acts
pertaining to a business of a certain kind or at a
particular place, or all acts pertaining to a business
of a particular class or series. He has usually
authority either expressly conferred in general
terms or in effect made general by the usages,
customs or nature of the business which he is
authorized to transact.
An agent, therefore, who is empowered to transact
all the business of his principal of a particular kind
or in a particular place, would, for this reason, be
ordinarily deemed a general agent. (Mec Sec.
,30).
A special agent is one authorized to do some
particular act or to act upon some particular
occasion. lie acts usually in accordance with
specific instructions or under limitations
necessarily implied from the nature of the act to be
done. (Mec. Sec. 61) (Padilla, Civil Law The Civil
Code Annotated, Vol. VI, 1969 Edition, p. 204).
One does not have to undertake a close scrutiny of the document
embodying the agreement between the petitioners and the respondent
to deduce that the 'latter was instituted as a general agent. Indeed, it
can easily be seen by the way general words were employed in the
agreement that no restrictions were intended as to the manner the
agency was to be carried out or in the place where it was to be
executed. The power granted to the respondent was so broad that it
practically covers the negotiations leading to, and the execution of, a
contract of sale of petitioners' merchandise with any entity or
organization.
There is no merit in petitioners' allegations that the contract of agency
between the parties was entered into under fraudulent representation
because respondent "would not disclose the agency with which she
was supposed to transact and made the petitioner believe that she
would be dealing with The Visayas", and that "the petitioner had known
of the transactions and/or project for the said purchase of the
Philippine flags by the Department of Education and Culture and
precisely it was the one being followed up also by the petitioner."
If the circumstances were as claimed by the petitioners, they would
have exerted efforts to protect their interests by limiting the
respondent's authority. There was nothing to prevent the petitioners
from stating in the contract of agency that the respondent could
represent them only in the Visayas. Or to state that the Department of
Education and Culture and the Department of National Defense, which
alone would need a million pesos worth of flags, are outside the scope
of the agency. As the trial court opined, it is incredible that they could
be so careless after being in the business for fifteen years.
A cardinal rule of evidence embodied in Section 7 Rule 130 of our
Revised Rules of Court states that "when the terms of an agreement
have been reduced to writing, it is to be considered as containing all
such terms, and, therefore, there can be between the parties and their
successors-in-interest, no evidence of the terms of the agreement
other than the contents of the writing", except in cases specifically
mentioned in the same rule. Petitioners have failed to show that their
agreement falls under any of these exceptions. The respondent was
given ample authority to transact with the Department in behalf of the
petitioners. Equally without merit is the petitioners' proposition that the
transaction involved two separate contracts because there were two
purchase orders and two deliveries. The petitioners' evidence is
overcome by other pieces of evidence proving that there was only one
transaction.
The indorsement of then Assistant Executive Secretary Roberto Reyes
to the Budget Commission on September 3, 1974 (Exhibit "C") attests
to the fact that out of the total budget of the Department for the fiscal
year 1975, "P1,000,000.00 is for the purchase of national flags." This is
also reflected in the Financial and Work Plan Request for Allotment
(Exhibit "F") submitted by Secretary Juan Manuel for fiscal year 1975
which however, divided the allocation and release of the funds into
three, corresponding to the second, third, and fourth quarters of the
said year. Later correspondence between the Department and the
Budget Commission (Exhibits "D" and "E") show that the first allotment
of P500.000.00 was released during the second quarter. However, due
to the necessity of furnishing all of the public schools in the country
with the Philippine flag, Secretary Manuel requested for the immediate
release of the programmed allotments intended for the third and fourth
quarters. These circumstances explain why two purchase orders and
two deliveries had to be made on one transaction.
The petitioners' evidence does not necessarily prove that there were
two separate transactions. Exhibit "6" is a general indorsement made
by Secretary Manuel for the purchase of the national flags for public
schools. It contains no reference to the number of flags to be ordered
or the amount of funds to be released. Exhibit "7" is a letter request for
a "similar authority" to purchase flags from the United Flag Industry.
This was, however, written by Dr. Narciso Albarracin who was
appointed Acting Secretary of the Department after Secretary Manuel's
tenure, and who may not have known the real nature of the
transaction.
If the contracts were separate and distinct from one another, the whole
or at least a substantial part of the government's supply procurement
process would have been repeated. In this case, what were issued
were mere indorsements for the release of funds and authorization for
the next purchase.
Since only one transaction was involved, we deny the petitioners'
contention that respondent Nacianceno is not entitled to the stipulated
commission on the second delivery because of the revocation of the
agency effected after the first delivery. The revocation of agency could
not prevent the respondent from earning her commission because as
the trial court opined, it came too late, the contract of sale having been
already perfected and partly executed.
the plaintiff company for the termination of the
negotiations, the defendant real estate agent had
already earned the commissions agreed upon,
and could not be deprived thereof by the arbitrary
action of the plaintiff company in declining to
execute the contract of sale for some reason
personal to itself.
The principal cannot deprive his agent of the commission agreed upon
by cancelling the agency and, thereafter, dealing directly with the
buyer. (Infante v. Cunanan, 93 Phil. 691).
The appellate courts citation of its previous ruling in Heimbrod et al. v.
Ledesma (C.A. 49 O.G. 1507) is correct:
The appellee is entitled to recovery. No citation is
necessary to show that the general law of
contracts the equitable principle of estoppel. and
the expense of another, uphold payment of
compensation for services rendered.
There is merit, however, in the petitioners' contention that the agent's
commission on the first delivery was fully paid. The evidence does not
sustain the respondent's claim that the petitioners paid her only 5%
and that their right to collect another 25% commission on the first
delivery must be upheld.
When respondent Nacianceno asked the Malacanang Complaints and
Investigation Office to help her collect her commission, her statement
under oath referred exclusively to the 30% commission on the second
delivery. The statement was emphatic that "now" her demand was for
the 30% commission on the (second) release of P469,980.00. The
demand letter of the respondent's lawyer dated November 13, 1984
asked petitioner Siasat only for the 30% commission due from the
second delivery. The fact that the respondent demanded only the
commission on the second delivery without reference to the alleged
unpaid balance which was only slightly less than the amount claimed
can only mean that the commission on the first delivery was already
fully paid, Considering the sizeable sum involved, such an omission is
too glaringly remiss to be regarded as an oversight.
Moreover, the respondent's authorization letter (Exhibit "5") bears her
signature with the handwritten words "Fully Paid", inscribed above it.
The respondent contested her signature as a forgery, Handwriting
experts from two government agencies testified on the matter. The
reason given by the trial court in ruling for the respondent is too flimsy
to warrant a finding of forgery.
The court stated that in thirteen documents presented as exhibits, the
private respondent signed her name as "Tessie Nacianceno" while in
this particular instance, she signed as "T. Nacianceno."
The stated basis is inadequate to sustain the respondent's allegation of
forgery. A variance in the manner the respondent signed her name can
not be considered as conclusive proof that the questioned signature is
a forgery. The mere fact that the respondent signed thirteen
documents using her full name does not rule out the possibility of her
having signed the notation "Fully Paid", with her initial for the given
came and the surname written in full. What she was signing was a
mere acknowledgment.
This leaves the expert testimony as the sole basis for the verdict of
forgery.
In support of their allegation of full payment as evidenced by the
signed authorization letter (Exhibit "5-A"), the petitioners presented as
witness Mr. Francisco Cruz. Jr., a senior document examiner of the
Philippine Constabulary Crime laboratory. In rebuttal, the respondent
presented Mr. Arcadio Ramos, a junior document examiner of the
National Bureau of Investigation.
While the experts testified in a civil case, the principles in criminal
cases involving forgery are applicable. Forgery cannot be presumed. It
must be proved.
In Borromeo v. Court of Appeals (131 SCRA 318, 326) we held that:
In Macondray & Co. v. Sellner (33 Phil. 370, 377), a case analogous to
this one in principle, this Court held:
We do not mean to question the general doctrine
as to the power of a principal to revoke the
authority of his agent at will, in the absence of a
contract fixing the duration of the agency (subject,
however, to some well defined exceptions). Our
ruling is that at the time fixed by the manager of
xxx xxx xxx
... Where the evidence, as here, gives rise to two
probabilities, one consistent with the defendant's
innocence and another indicative of his guilt, that
which is favorable to the accused should be
considered. The constitutional presumption of
innocence continues until overthrown by proof of
guilt beyond reasonable doubt, which requires
moral certainty which convinces and satisfies the
reason and conscience of those who are to act
upon it. (People v. Clores, et al., 125 SCRA 67;
People v. Bautista, 81 Phil. 78).
We ruled in another case that where the supposed expert's testimony
would constitute the sole ground for conviction and there is equally
convincing expert testimony to the contrary, the constitutional
presumption of innocence must prevail. (Lorenzo Ga. Cesar v. Hon.
Sandiganbayan and People of the Philippines, 134 SCRA 105). In the
present case, the circumstances earlier mentioned taken with the
testimony of the PC senior document examiner lead us to rule against
forgery.
We also rule against the respondent's allegation that the petitioners
acted in bad faith when they revoked the agency given to the
respondent.
Fraud and bad faith are matters not to be presumed but matters to be
alleged with sufficient facts. To support a judgment for damages, facts
which justify the inference of a lack or absence of good faith must be
alleged and proven. (Bacolod-Murcia Milling Co., Inc. vs. First Farmers
Milling Co., Inc., Etc., 103 SCRA 436).
There is no evidence on record from which to conclude that the
revocation of the agency was deliberately effected by the petitioners to
avoid payment of the respondent's commission. What appears before
us is only the petitioner's use in court of such a factual allegation as a
defense against the respondent's claim. This alone does not per se
make the petitioners guilty of bad faith for that defense should have
been fully litigated.
Moral damages cannot be awarded in the absence of a wrongful act or
omission or of fraud or bad faith. (R & B Surety & Insurance Co., Inc.
vs. Intermediate Appellate Court, 129 SCRA 736).
We therefore, rule that the award of P25,000.00 as moral damages is
without basis.
The additional award of P25,000.00 damages by way of attorney's
fees, was given by the courts below on the basis of Article 2208,
Paragraph 2, of the Civil Code, which provides: "When the defendant's
act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interests;" attorney's fees may be
awarded as damages. (Pirovano et al. v. De la Rama Steamship Co.,
96 Phil. 335).
The underlying circumstances of this case lead us to rule out any
award of attorney's fees. For one thing, the respondent did not come to
court with completely clean hands. For another, the petitioners
apparently believed they could legally revoke the agency in the manner
they did and deal directly with education officials handling the purchase
of Philippine flags. They had reason to sincerely believe they did not
have to pay a commission for the second delivery of flags.
We cannot close this case without commenting adversely on the
inexplicably strange procurement policies of the Department of
Education and Culture in its purchase of Philippine flags. There is no
reason why a shocking 30% of the taxpayers' money should go to an
agent or facilitator who had no flags to sell and whose only work was to
secure and handcarry the indorsements of education and budget
officials. There are only a few manufacturers of flags in our country
with the petitioners claiming to have supplied flags for our public
schools on earlier occasions. If public bidding was deemed
unnecessary, the Department should have negotiated directly with flag
manufacturers. Considering the sad plight of underpaid and
overworked classroom teachers whose pitiful salaries and allowances
cannot sometimes be paid on time, a P300,000.00 fee for a
P1,000,000.00 purchase of flags is not only clearly unnecessary but a
scandalous waste of public funds as well.
WHEREFORE, the decision of the respondent court is hereby
MODIFIED. The petitioners are ordered to pay the respondent the
amount of ONE HUNDRED FOURTY THOUSAND NINE HUNDRED
AND NINETY FOUR PESOS (P140,994.00) as her commission on the
second delivery of flags with legal interest from the date of the trial
court's decision. No pronouncement as to costs.
SO ORDERED.
G.R. No. 169442, October 14, 2015
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
PRIVATIZATION AND MANAGEMENT OFFICE
(PMO), Petitioner, v. ANTONIO V. BAÑEZ, LUISITA
BAÑEZ VALERA, NENA BAÑEZ HOJILLA, AND EDGARDO
B. HOJILLA, JR., Respondents.
DECISION
PEREZ, J.:
Assailed and sought to be annulled in this Petition for Review
on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure is the Decision1 of the Court of Appeals dated 23
August 2005 in CA-G.R. CV No. 70137, entitled "Cellophil
Resources Corporation v. Antonio V. Bañez, Luisita Bañez
Valera, Nena Bañez Hojilla and Edgar do B. Hojilla, Jr.," which
affirmed the Order2 of the Regional Trial Court (RTC), Branch
1, Bangued, Abra, dated 16 August 2000, that dismissed the
complaint of petitioner Republic of the Philippines,
represented by Privatization and Management Office (PMO),
for specific performance, recovery of possession, and
damages against respondents Antonio V. Bañez, Luisita Bañez
Valera, Nena Bañez Hojilla and Edgardo B. Hojilla, Jr.,
docketed as Civil Case No. 1853.
The facts as culled from the records are as follows:
In 1976, Antonio V. Bañez, Luisita Bañez Valera, and Nena
Bañez Hojilla (collectively, respondents) offered for sale a
parcel of land (subject property), with an area of 20,000 sq m
in Barangay Calaba, Bangued, Abra to Cellophil Resources
Corporation (CRC). Pursuant to the offer to sell on 7
December 1981, respondents executed a Letter Agreement
irrevocably giving CRC the option to purchase the subject
property, which CRC accepted. The pertinent portion of the
Letter Agreement (hereinafter referred to as Contract), to wit:
1. The purchase price shall be Twenty Pesos xxx per square
meter or a total amount of Four Hundred Thousand Pesos
(P400,000.00).
2. The co-owners shall take all necessary steps to
cause the CRC Portion to be brought under the
operation of Republic Act No. 496, as amended, and to
cause the issuance in their name of the corresponding
original certificate of title, all of the foregoing to be
accomplished within a reasonable time from date
hereof. xxx
xxxx
7. The co-owners hereby confirm their agreement and
permission to CRC's entry into, construction of building[s] and
improvements, and occupancy of, any portion of the Property,
and xxx waive any right of action they may have against CRC
respecting such entry, construction, or occupancy by the
latter of any Portion of the Property.
8. An absolute deed of sale containing the above
provisions and standard warranties on conveyances of
real property shall be executed by the co-owners in
favor of CRC or its assignee/s and the same delivered to
the latter together with the original certificate of title upon
payment of the purchase price less the advances made by
CRC in accordance with Paragraphs 2 and 3 above; provided,
that payment shall be made by CRC only upon
presentation by the co-owners to CRC of certificate/s
and/or clearances, with corresponding receipts, issued
by the appropriate government office/s or agency/ies
to the effect that capital gains tax, real estate taxes on
the Property and local transfer tax and other taxes,
fees or charges due on the transaction and/or on the
Property have been paid.
9. This option shall be effective from [the] date of your
acceptance as indicated by your conformity below and for a
period of one (1) month from and after CRC shall have been
notified in writing by the co-owners that an original certificate
of title has been issued in their names and that they are
ready to execute the xxx deed of sale.3
Respondents asked for several cash advances which reached
the total amount of, more or less, Two Hundred Seventeen
Thousand Pesos (P217,000.00), to be deducted from the
purchase price of Four Hundred Thousand Pesos
(P400,000.00). After paying cash advances to respondents,
CRC constructed staff houses and introduced improvements
on the subject property. As respondents would be staying
abroad for a time, they executed a Special Power of Attorney
(SPA) in favor of Edgardo B. Hojilla (Hojilla). The SPA
authorized Hojilla to perform the following:
1. To take all steps necessary to cause a portion of the lot
covered by Tax Declaration No. 40185 in the name of Urbano
Bañez which is the subject of our "Offer to Sell" to Cellophil
Resources Corporation containing an area xxx to be brought
under the operation of Republic Act No. 496, as amended,
and to cause the issuance in our name of the corresponding
original certificate of title.
2. To do all acts and things and to execute all papers and
documents of whatever nature or kind required for the
accomplishments of the aforesaid purpose.
HEREBY GRANTING AND GIVING unto our said attorney full
power and authority whatsoever requisite or necessary or
proper to be done in or about the premises as fully to all
intents and purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our
said attorney shall do or cause to be done under and by virtue
of these presents.4ChanRoblesVirtualawlibrary
However, CRC stopped its operation. The Development Bank
of the Philippines and National Development Company took
over CRC's operation and turned over CRC's equity to Asset
Privatization Trust (APT), which is a government agency
created by virtue of Proclamation No. 50, as amended. The
APT's function is to take title to and possession of,
provisionally manage and dispose of nonperforming assets of
government financial institutions. Upon the expiration of
APT's term on 31 December 2000, the government issued
Executive Order (E.O.) No. 323, which created the
Privatization and Management Office (PMO). By virtue of E.O.
No. 323, the powers, functions, and duties of APT were
transferred to the PMO. Thus, the original party, CRC, is now
represented by the Republic of the Philippines through the
PMO (hereinafter referred to as petitioner), the successor of
the defunct APT.
As alleged by petitioner, respondents declared afterwards the
subject property as Urbano Bañez property, rented out to
third parties the staff houses petitioner constructed, and
ordered its guards to prohibit the petitioner from entering the
compound, which impelled petitioner to file a complaint for
specific performance, recovery of possession, and damages
against respondents, including Hojilla, on 10 April 2000.
Among others, the complaint prayed for respondents to
surrender and deliver the title of the subject property, and
execute a deed of absolute sale in favor of petitioner upon full
payment. It mentioned three letters sent to respondents on
29 May 1991, 24 October 1991, and 6 July 1999.
In the Complaint, it was alleged that:
"[t]here is no justification, legal or otherwise for the
[respondents] to dispossess (sic) the [petitioner] from the
subject property. [Petitioner] is more than willing and able to
pay the [respondents] the balance of the purchase price of
the subject parcel of land but its inability to do so was due to
the [respondents'] failure to produce the original certificate of
title of the subject parcel of land and to execute the pertinent
deed of sale, as well as the unjustified occupation by the
[respondents] of the property and [of] the staff houses built
by [petitioner and that] such actions of the [respondents] are
contrary to their undertaking under condition no. 7 of the
subject letter agreement, that is, for [respondents] to permit
[petitioner's] entry into and occupancy of any portion of the
subject property and their waiver of any right of action they
may have against [petitioner] respecting such entry and
occupancy of any portion of the property. And despite
repeated demands made by [petitioner] upon the
[respondents] for them to vacate and turnover the subject
parcel of land and the staff houses to [petitioner], the last of
which was in a letter dated July 6, 1999, the said
[respondents] have failed and neglected and still fail and
neglect to do so up to the present
time."5ChanRoblesVirtualawlibrary
Ruling of the RTC
On 23 June 2000, Hojilla filed a Motion to Dismiss on the
grounds that he was not a real party-in-interest and that the
action was barred by the Statute of Limitations, which Motion
the RTC granted in an Order dated 16 August 2000 based on
Article 1144(1) of the Civil Code, which bars actions filed
beyond ten (10) years upon the execution of the written
contract. According to the RTC, the letters petitioner sent to
respondents were not demands for respondents to comply
with their obligation to deliver the title as to interrupt the
running of the prescriptive period. The pertinent portion of
the RTC Order reads:
In the instant case, the defendants were given [enough] time
from December 7, 1981 to comply with their obligation,
hence, after a reasonable period of time, the plaintiff should
have demanded compliance of defendants' undertakings or
initiated any other action to protect its interest without
waiting for the statute of limitations to bar their claim.6
The RTC resolved that because the written contract was
executed on 7 December 1981, then the complaint that was
filed more than eighteen (18) years since the contract was
executed was beyond the 10-year prescriptive period. Within
that 18-year period, there was no act on the part of
petitioner, whether judicial or extrajudicial, to interrupt
prescription.
While petitioner paid cash advances to respondents for the
processing of the registration of the title, "which totaled to
more or less P217,000.00 as of September 7, 1984 xxx to the
filing of this suit, [petitioner] has not demanded compliance
by [respondents] of their obligation, that is, the execution of
the absolute deed of sale and the delivery of the Original
Certificate of Title to the property to [petitioner] upon
payment of the purchase price stipulated. There were letters
addressed to [respondents] but these were not demands for
compliance of [respondents'] obligation and which is not
sufficient under the law to interrupt the prescriptive period."7
The RTC further stated that:
"[t]he parties could not have contemplated that the delivery
of the property and the payment thereof could be made
indefinitely and render uncertain the status of the land. The
failure of either [of the] parties to demand performance of the
obligation of the other for an unreasonable length of time
renders the contract ineffective."8
The motion for reconsideration was likewise denied in an
Order dated 5 January 2001.
On appeal, petitioner argued that the RTC erred when it
dismissed the complaint. Petitioner averred that: (1) its claim
was not yet barred by prescription; (2) the period of
prescription had been interrupted by extrajudicial demand;
(3) the Statute of Limitation did not run against the State; (4)
petitioner's claim not having prescribed, laches could not
have set in; (5) the laches of one nullified the laches of the
other; and (6) laches cannot be used to defeat justice or to
perpetuate fraud and injustice.chanrobleslaw
Ruling of the Court of Appeals
The Court of Appeals affirmed the ruling of the RTC in a
Decision dated 23 August 2005 on the ground that the
complaint was barred by the Statute of Limitations. Contrary
to petitioner's arguments, the Court of Appeals found that the
extrajudicial demand to respondents did not serve to toll the
running of the prescriptive period. The Court of Appeals ruled
that the record is bereft of evidence that would attest that
written extrajudicial demands were sent to respondents.
While petitioner sent demand letters dated 29 May 1991 and
24 October 1991, these demand letters were not considered
as demand letters because the letters simply called the
attention of Hojilla to return the properties and unlock the
gates. As regards the letter dated 6 July 1999, the Court of
Appeals ruled that because the letter was addressed to
Hojilla, who was only an attorney-in-fact authorized to
register the property, it was not binding upon the
respondents. The Court of Appeals also gave no probative
value to the 6 July 1999 letter for having no proof of service.
With regard to the issue of running of prescriptive period
against the State, the Court of Appeals opined that because
the subject property is a patrimonial property of the State
when APT became the controlling stockholder of CRC,
prescription may run against the State. Thus, the reasonable
period within which to register the property is three (3) years.
According to the Court of Appeals, the cause of action of
petitioner accrued three (3) years from the time the Contract
was executed on 7 December 1981 or, to say the least, on 15
August 1984 when Hojilla sent the acknowledgment letter
dated 15 August 1984, at which time it became clear that
respondents could no longer fulfill their obligation.
Hence, petitioner is before us raising the following
arguments:
A.
B.
C.
The Court of Appeals erred in ruling that the running
of the prescriptive period was not interrupted when
respondents acknowledged their still unfulfilled
obligation to initiate proceedings for the registration
of title of the subject property and at the same time
committed that they will only claim the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs as
stated in the letter dated August 15, 1984.
The Court of Appeals erred in affirming the outright
dismissal of petitioner's suit for specific performance,
recovery of possession and damages on the basis of
prescription even as it is evident that there is a need
to fix a period considering that the performance of
the condition or obligation is dependent upon the will
of respondents.
The Court of Appeals erred in ignoring certain
manifest equitable considerations which militate
against a resort to a purely mathematical
computation of the prescriptive period and in
disregarding the provision of the irrevocable offer
that the option remains effective for a period of one
month from and after notice that a certificate of title
has been issued.9
The main issue is whether or not the complaint for specific
performance was filed beyond the prescriptive
period.chanrobleslaw
Petitioner's Arguments
The petitioner argues that although there is a 10-year
limitation within which to file a case based on a written
contract, the period was interrupted due to a written
acknowledgment of respondents' obligation and demand by
petitioner. The argument is based on Article 1155 of the Civil
Code, which provides that the running of the prescriptive
period is interrupted when there is a written extrajudicial
demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor.
The petitioner referred to the letter sent by Hojilla to the
former dated 15 August 1984, and letters given by petitioner
to Hojilla dated 29 May 1991, 24 October 1991, and 6 July
1999. In the letter dated 15 August 1984, respondents
affirmed their undertaking that they will claim full payment of
the property upon presentation of a clean title and the
execution of the Absolute Deed of Sale, which reads, "[t]he
Bañez heirs will only claim for the full payment of the
property upon presentation of a clean title and execution of a
Deed of Sale signed by the heirs."10
Based on Hojilla's representation as stated in the letter dated
15 August 1984, petitioner argues that Hojilla is estopped by
his own acts and for misleading petitioner because
"respondents not only failed to comply with their commitment
to deliver a certificate of title but where [sic] they also
[misled] petitioner into believing that they were working on
the title of subject property even as they had[,] at the back of
their mind[s], the running of the statute of limitations as an
arsenal once petitioner demands the fulfillment of their
obligation."11
The petitioner further added that because there was no period
fixed for the fulfillment or performance of the obligation to
deliver the title, the least the court should have done was to
fix the period pursuant to Article 1197 of the Civil Code.
Finally, the petitioner posits that pursuant to paragraph 9 of
the Contract, its obligation is conditioned upon respondents'
obligation, which is to deliver the title. Thus, because the
respondents failed to deliver such, the obligation of petitioner
never ripened.chanrobleslaw
Respondents' Arguments
The arguments of respondents, which are aligned with the
reasons of the lower courts, rely on Article 1144 of the Civil
Code, which provides that actions upon a written contract
must be brought within ten (10) years from execution.
Because the complaint was filed beyond the 10-year
prescriptive period, the action was already barred by the
Statute of Limitations. Further, during such period, petitioner
failed to act either judicially or extrajudicially to effectively
interrupt the running of the prescriptive period. Thus, the
complaint must be dismissed for having been extinguished by
the Statute of Limitations.chanrobleslaw
Our Ruling
We rule in favor of the petitioner.
We deem material, for the resolution of the issues in this
case, the letters that were exchanged by the parties.
We shall discuss each letter in seriatim.
Hojilla 's letter dated 15 August 1984
In Hojilla's letter to petitioner dated 15 August 1984, Hojilla
updated petitioner of the status of the subject property's title,
in this wise:
The preparation of the advance survey plan, technical
description and Engineer's Certificate pursuant to Land
Administrative Order No. 10-4 has been submitted to the
Regional Land Office, and approved by the Regional Director.
Atty. Valera is now in the process of preparing the petition
papers of the Calaba property for submission to the local
court.12
There is no other logical conclusion but that the 15 August
1984 letter is an acknowledgment of respondents'
commitment under the Contract. The letter served to update
petitioner of the status of the subject property's title, an
obligation agreed upon by the parties in the Contract. It
would be specious to argue that respondents did not
acknowledge the existence of the Contract and yet, send
correspondence to petitioner updating it of the status of the
application for title on the subject property. Therefore, the
letter dated 15 August 1984 served as a written
acknowledgment of debt or obligation of respondents.
In Philippine National Railways v. NLRC,13 it was stated that a
written acknowledgment of debt or obligation effectively
interrupts the running of the prescriptive period and sets the
same running anew.14 Hence, because Hojilla's letter dated 15
August 1984 served as a written acknowledgement of the
respondents' debt or obligation, it interrupted the running of
the prescriptive period and set the same running anew with a
new expiry period of 15 August 1994.
Petitioner's letters dated 29 May
1991 and 24 October 1991
With regard to the letters petitioner sent to Hojilla dated 29
May 1991 and 24 October 1991, the RTC ruled that these
letters were insufficient under the law to interrupt the
prescriptive period because these were not demand letters.
We lift the pertinent portion from the letter dated 29 May
1991, which demanded respondents to return the properties
and to unlock the gates:
Under the agreement to purchase the lot, APT-CRC shall pay
the whole of the purchase price thereof when the certificate of
title and other documents enumerated therein are presented
to it. Clearly, the consummation of the sale is within your
control, x x x
In view of the foregoing, demand is hereby made upon
you and your principals, the heirs of Urbano Bañez, to
return the properties withdrawn and to unlock the
gates leading to the staffhouses (sic), within fifteen
(15) days from receipt thereof, otherwise we will be
constrained to institute the necessary action to protect
the interest of APT-CRC.15 (Emphasis and underscoring
ours)
In the same vein, the letter dated 24 October 1991
demanded respondents to discontinue the construction,
repair, demolition, and occupancy of several staff houses. A
pertinent portion of the 24 October 1991 letter reads:
Considering that these action (sic) are unauthorized, they
constitute violations of the irrevocable option to purchase
dated December 7, 1981, which remains valid, binding and
effective to this day. Demand is hereby made upon you to
discontinue such unauthorized acts and vacate the
premises within fifteen (15) days from receipt
hereof.16 x x x (Emphasis and underscoring ours)
We do not agree with the lower courts. Clearly, the 29 May
1991 and 24 October 1991 letters demanded respondents to
return the properties, discontinue the construction, repair,
demolition and occupancy of several staff houses, and unlock
the gates, which is to enforce respondents' obligations
pursuant to paragraph 7 of the Contract which reads:
7. The co-owners hereby confirm their agreement and
permission to CRC's entry into, construction of building and
improvements, and occupancy of, any portion of the Property,
and hereby accordingly waive any right of action they may
have against CRC respecting such entry, construction, or
occupancy by the latter of any Portion of the Property.17
The letters dated 29 May 1991 and 24 October 1991 are
deemed demand letters as contemplated under Article 1155.
They are demand letters to enforce respondents' obligation
under the Contract, which is to cede possession to petitioner.
The letters interrupted the running of the prescriptive period
which commenced to run anew.
Petitioner's letter dated 6 July 1999
Compared to the letters dated 29 May and 24 October 1991,
which demanded Hojilla to surrender possession of the
subject property, this time, in petitioner's letter to Hojilla
dated 6 July 1999, petitioner demanded Hojilla to produce the
title of the subject property. However, despite the fact that
the letter was a clear demand of the nature contemplated by
law that would interrupt the prescriptive period, the Court of
Appeals found that (1) the letter did not effectively interrupt
the prescriptive period because the complaint had long
prescribed; (2) the letter was addressed to the wrong party;
and, finally, (3) the letter did not bear any proof of service or
receipt.
We do not agree.
Hojilla's SPA
We refer to the SPA, which granted the authority of Hojilla.
When respondents went abroad pending the performance of
their obligations in the Contract, they authorized Hojilla to
register the subject property— a single obligation in the whole
range of obligations in the Contract. The SPA appeared to
have left no representative to fulfill respondents' obligations
in the Contract on their behalf except for Hojilla's authority to
register the subject property. The pertinent portion of the SPA
reads:
1. To take all steps necessary to cause a portion of the
lot covered by Tax Declaration No. 40185 in the name
of Urbano Baflez which is the subject of our "Offer to
Sell" to Cellophil Resources Corporation containing an
area xxx to be brought under the operation of Republic
Act No. 496, as amended, and to cause the issuance in
our name of the corresponding original certificate of
title.
2. To do all acts and things and to execute all papers and
documents of whatever nature or kind required for the
accomplishments of the aforesaid purpose.
HEREBY GRANTING AND GIVING unto our said attorney full
power and authority whatsoever requisite or necessary or
proper to be done in or about the premises as fully to all
intents and purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our
said attorney shall do or cause to be done under and by virtue
of these presents.18 (Emphasis and underscoring ours)
This was read simply by the lower courts as limiting Hojilla's
authority to the registration of the subject property under the
name of his principal, and all the necessary acts for such
purpose. It observed that nowhere in the SPA was Hojilla
authorized as administrator or agent of respondents with
respect to the execution of the Contract.
In the case at bar, the reliefs prayed for by petitioner include
the execution of the Contract such as delivery of the subject
title, recovery of possession of the subject property,
execution of the deed of sale or transfer of absolute
ownership upon full payment of the balance, and damages for
alleged violation of respondents of the Contract for nondelivery of the title and refusal to vacate the subject property.
Indeed, following the reading of the lower courts of the scope
of Hojilla's authority, Hojilla is neither the proper party to
execute the Contract nor the proper party to receive the
demand letters on behalf of respondents.
This strict construction of the tenor of the SPA will render the
obligatory force of the Contract ineffective. Construction is
not a tool to prejudice or commit fraud or to obstruct, but to
attain justice. Ea Est Accipienda Interpretatio Quae Vitio
Caret. To favor the lower court's interpretation of the scope of
Hojilla's power is to defeat the juridical tie of the Contract—
the vinculum juris of the parties. As no one was authorized to
represent respondents in the Contract, then petitioner cannot
enforce the Contract, as it were. This is an absurd
interpretation of the SPA. It renders the Contract ineffective
for lack of a party to execute the Contract.
Contrary to the findings of the lower court, the present case is
a case of an express agency, where, Hojilla, the agent, binds
himself to represent another, the principal, who are herein
respondents, with the latter's express consent or
authority.19 In a contract of agency, the agent acts for and in
behalf of the principal on matters within the scope of the
authority conferred upon him, such that, the acts of the agent
have the same legal effect as if they were personally done by
the principal.20 Because there is an express authority granted
upon Hojilla to represent the respondents as evidenced by the
SPA, Hojilla's actions bind the respondents.
As agent, the representations and guarantees of Hojilla are
considered representations and guarantees of the principal.
This is the principle of agency by promissory estoppel. We
refer to the evidence on record. It was Hojilla who
administered and/or managed the subject property.21 Based
on Hojilla's letter dated 15 August 1984 to petitioner, Hojilla
made the representation that besides being the attorney-infact of the respondents with limited authority to register the
property, he was also their agent with regard to respondents'
other obligations related to the Contract. The pertinent
portion of the 15 August 1984 letter of Hojilla to petitioner
reads:
Regarding our loan with the National Electrification
Administration (NEA), Hon. Mel Mathay who is helping the
Bafiez heirs has initiated negotiations with NEA for Abreco to
purchase our lot in front of the Provincial Jail to offset our
loan with NEA.22
Also, one glaring fact that cannot escape us is Hojilla's
representation and guarantee that petitioner's obligation will
only arise upon presentation of a clean title and execution of
a Deed of Sale signed by the respondents' heirs, which reads,
"[t]he Bañez heirs will only claim for the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs."23
If Hojilla knew that he had no authority to execute the
Contract and receive the letters on behalf of respondents, he
should have opposed petitioner's demand letters. However,
having received the several demand letters from petitioner,
Hojilla continuously represented himself as the duly
authorized agent of respondents, authorized not only to
administer and/or manage the subject property, but also
authorized to register the subject property and represent the
respondents with regard to the latter's obligations in the
Contract. Hojilla also assured petitioner that petitioner's
obligation to pay will arise only upon presentation of the title.
Clearly, the respondents are estopped by the acts and
representations of their agent. Falling squarely in the case at
bar is our pronouncement in Philippine National Bank v. IAC
(First Civil Cases Div.),24 "[h]aving given that assurance,
[Hojilla] may not turn around and do the exact opposite of
what [he] said [he] would do. One may not take inconsistent
positions. A party may not go back on his own acts and
representations to the prejudice of the other party who relied
upon them."25cralawred
Assuming further that Hojilla exceeded his authority, the
respondents are still solidarity liable because they allowed
Hojilla to act as though he had full powers by impliedly
ratifying Hojilia's actions—through action by omission.26 This
is the import of the principle of agency by estoppel or the
doctrine of apparent authority.
In an agency by estoppel or apparent authority, "[t]he
principal is bound by the acts of his agent with the apparent
authority which he knowingly permits the agent to assume, or
which he holds the agent out to the public as possessing."27
The respondents' acquiescence of Hojilla's acts was made
when they failed to repudiate the latter's acts. They
knowingly permitted Hojilla to represent them and petitioners
were clearly misled into believing Hojilla's authority. Thus, the
respondents are now estopped from repudiating Hojilla's
authority, and Hojilla's actions are binding upon the
respondents.
Receipt of the Letters
Time and time again, this Court has reiterated it is not a trier
of facts and parties may raise only questions of law. The
jurisdiction of the Court is limited to reviewing errors of law
and findings of fact of the Court of Appeals are conclusive
because it is not the Court's function to review, examine, and
evaluate or weigh the evidence all over again.28 The rule,
however, is not without exceptions, viz.:
(1) [W]hen the [conclusion is a finding] grounded entirely on
speculations, surmises [and] conjectures;cralawlawlibrary
(2) [W]hen the inference made is manifestly mistaken,
absurd or impossible;cralawlawlibrary
(3) [W]hen there is grave abuse of discretion;cralawlawlibrary
(4) [W]hen the judgment is based on a
misapprehension of facts;cralawlawlibrary
(5) [W]hen the findings of fact are conflicting;
(6) [W]hen xxx the Court of Appeals[, in making its findings,]
went beyond the issues of the case [and the same is]
contrary to the admissions of both the appellant and the
appellee;cralawlawlibrary
(7) [W]hen the findings are contrary to [those] of the
trial court;
(8) [W]hen the findings [of fact] are conclusions without
citation of specific evidence on which they are
based;cralawlawlibrary
(9) [W]hen the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondents;cralawlawlibrary
(10) [w]hen the findings of fact [of the Court of
Appeals] are premised on the supposed absence of
evidence and contradicted by the evidence on record
and
(11) [When] the Court of Appeals manifestly overlooked
certain irrelevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.29
In the case at bar, the findings of the RTC and the Court of
Appeals are contradictory: the RTC did not make any finding
on the receipt of the demand letters by Hojilla, while the
Court of Appeals resolved that assuming arguendo that the
letters were demand letters contemplated under Article 1155
of the Civil Code, the same are unavailing because the letters
do not bear any proof of service of receipt by respondents.
A perusal of the records reveals that only the 24 October
1991 letter has no proof of receipt.30 The demand letters
dated 29 May 199131 and 6 July 199932 contain proofs of
receipt.
Thus, the core issue of whether or not the action has
prescribed.
An action based on a written contract must be brought within
ten (10) years from the time the right of action accrued.
Accordingly, a cause of action on a written contract accrues
only when an actual breach or violation thereof occurs.33 A
cause of action has three elements, to wit: (1) a right in favor
of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the
named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative
of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff.34
By the contract between the herein parties, the cause of
action accrued at the point when the reasonable time within
which to present the title lapsed. The parties did not
determine the date when the respondents must present the
title and other documents to the petitioner. The parties only
agreed that the respondents must present the same within a
"reasonable time." Reasonable time means "so much time as
is necessary under the circumstances for a reasonably
prudent and diligent man to do, conveniently, what the
contract or duty requires that should be done, having a
regard for the rights and possibility of loss, if any, to the
other party."35 Such reasonable time was determined by the
respondents through the letter dated 15 August 1984. The
respondents acknowledged their obligation to deliver the title
and asked for a new period to do so. It states:
The preparation of the advance survey plan, technical
description and Engineer's Certificate pursuant to Land
Administrative Order No. 10-4 has been submitted to the
Regional Land Office, and approved by the Regional Director.
Arty. Valera is now in the process of preparing the petition
papers of the Calaba property for submission to the local
court.
xxxx
The Bañez heirs will only claim for the full payment of the
property upon presentation of a clean title and execution of a
Deed of Sale signed by the heirs.36
The accrual of the cause of action to demand the titling of the
land cannot be earlier than 15 August 1984. So that, the
petitioner can sue on the contract until 15 August 1994. Prior
to the expiration of the aforesaid period, the petitioner sent a
demand letter to Hojilla dated 29 May 1991. A few months
thereafter, petitioner sent another demand letter to Hojilla
dated 24 October 1991.37 The prescriptive period was
interrupted on 29 May 1991.
The consequence is stated in Article 1155 of the Civil Code. It
states, "[t]he prescription of actions is interrupted when they
are filed before the court, when there is a written extrajudicial
demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor."
Following the law, the new ten-year period for the filing of a
case by the petitioner should be counted from 29 May 1991,
ending on 29 May 2001. The complaint at bar was filed on 10
April 2000, well within the required period.
Notably, before the expiration of the new prescriptive period,
the petitioner again sent a new demand letter on 6 July 1999,
which again caused the same to run anew, which will expire
on 6 July 2009. The complaint filed on 10 April 2000 was
timely.
The Contract and True Intent of the Parties
Based on the stipulation in the Contract, the parties agreed
that payment shall be made only upon presentation of the
title and other documents of the subject property to
petitioner. Paragraph 8 of the Contract reads:
8. An absolute deed of sale containing the above provisions
and standard warranties on conveyances of real property shall
be executed by the co-owners in favor of CRC or its
assignee/s and the same delivered to the latter together with
the original certificate of title upon payment of the purchase
price less the advances made by CRC in accordance with
Paragraphs 2 and 3 above; provided, that payment shall
be made by CRC only upon presentation by the coowners to CRC of certificate/s and/or clearances, with
corresponding receipts, issued by the appropriate
government office/s or agency/ies to the effect that
capital gains tax, real estate taxes on the Property and
local transfer tax and other taxes, fees or charges due
on the transaction and/or on the Property have been
paid.38 (Emphasis and underscoring ours)
The true intent of the parties is further enunciated in Hojilla's
letter to petitioner dated 15 August 1984, which stated,
"[t]he Bañez heirs will only claim for the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs."39
To rule in favor of respondents despite their failure to perform
their obligations is the height of injustice. Respondents cannot
benefit from their own inaction and failure to comply with
their obligations in the Contract and let the petitioner suffer
from respondents' own default.
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals dated 23 August 2005 in CA-G.R. CV No.
70137, affirming the Order of the Regional Trial Court, which
ruled that the action has prescribed, is reversed and set
aside. Let the records of this case be REMANDED to the
court of origin, which is DIRECTED to admit the Answer with
Counterclaim of the petitioner for further trial on the merits.
The respondents are further ordered to return possession of
the subject property to petitioner. No pronouncement as to
costs.
SO ORDERED.chanroblesvirtuallawlibrary