FIRST DIVISION [ G.R. No.L-24332, January 31, 1978 ]RAMON
RALLOS, ADMINISTRATOR OF THE ESTATE OF CONCEPCION RALLOS,
PETITIONER, VS. FELIX GO CHAN AND SONS REALTY CORPORATION AND COURT
OF APPEALS, RESPONDENTS.
D E C I S I O NMUOZ PALMA, J.:This is a case of an
attorney-in-fact, Simeon Rallos, who after the death of his
principal, Concepcion Rallos, sold the latter's undivided share in
a parcel of land pursuant to a special power of attorney which the
principal had executed in his favor. The administrator of the
estate of the deceased principal went to court to have the sale
declared unenforceable and to recover the disposed share. The trial
court granted the relief prayed for, but upon appeal, the Court of
Appeals upheld the validity of the sale and dismissed the
complaint.Hence, this Petition for Review oncertiorari.The
following facts are not disputed. Concepcion and Gerundia both
surnamed Rallos were sisters and registered co-owners of a parcel
of land known as Lot No. 5983 of the Cadastral Survey of Cebu
covered by Transfer Certificate of Title No. 11118 of the Registry
of Cebu. On April 21, 1954, the sisters executed a special power of
attorney in favor of their brother, Simeon Rallos, authorizing him
to sell for and in their behalf lot 5983. On March 3, 1955,
Concepcion Rallos died. On September 12, 1955, Simeon Rallos sold
the undivided shares of his sisters Concepcion and Gerundia in lot
5983 to Felix Go Chan & Sons Realty Corporation for the sum of
P10,686.90. The deed of sale was registered in the Registry of
Deeds of Cebu, TCT No. 11118 was cancelled, and a new Transfer
Certificate of Title No. 12989 was issued in the name of the
vendee.On May 18, 1956 Ramon Rallos as administrator of the
Intestate Estate of Concepcion Rallos filed a complaint docketed as
Civil Case No. R-4530 of the Court of First Instance of Cebu,
praying (1) that the sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be declared unenforceable, and said
share be reconveyed to her estate; (2) that the Certificate of
Title issued in the name of Felix Go Chan & Sons Realty
Corporation be cancelled and another title be issued in the names
of the corporation and the "Intestate estate of Concepcion Rallos"
in equal undivided shares; and (3) that plaintiff be indemnified by
way of attorney's fees and payment of costs of suit. Named party
defendants were Felix Go Chan & Sons Realty Corporation, Simeon
Rallos, and the Register of Deeds of Cebu, but subsequently, the
latter was dropped from the complaint. The complaint was amended
twice; defendant Corporation's Answer con-tained a cross-claim
against its co-defendant, Simeon Rallos, while the latter filed a
third-party complaint against his sister, Gerundia Rallos. While
the case was pending in the trial court, both Simeon and his sister
Gerundia died and they were substituted by the respective
administrators of their estates.After trial, the courta quorendered
judgment with the following dispositive portion:"A. On Plaintiff's
Complaint -(1) Declaring the deed of sale, Exh. 'C', null and void
insofar as the one-half pro-indiviso share of Concepcion Rallos in
the property in question, - Lot 5983 of the Cadastral Survey of
Cebu - is concerned;(2) Ordering the Register of Deeds of Cebu City
to cancel Transfer Certificate of Title No. 12989 covering Lot 5983
and to issue in lieu thereof another in the names of FELIX GO CHAN
& SONS REALTY CORPORATION and the Estate of Concepcion Rallos
in the proportion of one-half (1/2) share each pro-indiviso;(3)
Ordering Felix Go Chan & Sons Realty Corporation to deliver the
possession of an undivided one-half (1/2) share of Lot 5983 to the
herein plaintiff;(4) Sentencing the defendant Juan T. Borromeo,
administrator of the Estate of Simeon Rallos, to pay to plaintiff
in concept of reasonable attorney's fees the sum of P1,000.00;
and(5) Ordering both defendants to pay the costs jointly and
severally."B. On GO CHAN'S Cross-Claim:(1) Sentencing the
co-defendant Juan T. Borromeo, administrator of the Estate of
Simeon Rallos, to pay to defendant Felix Go Chan & Sons Realty
Corporation the sum of P5,343.45, representing the price of
one-half (1/2) share of lot 5983;(2) Ordering co-defendant Juan T.
Borromeo, administrator of the Estate of Simeon Rallos, to pay in
concept of reasonable attorney's fees to Felix Go Chan & Sons
Realty Corporation the sum of P500.00."C. On Third-Party Complaint
of defendant Juan T. Borromeo, administrator of Estate of Simeon
Rallos, against Josefina Rallos, special administratrix of the
Estate of Gerundia Rallos:(1) Dismissing the third-party complaint
without prejudice to filing either a complaint against the regular
administrator of the Estate of Gerundia Rallos or a claim in the
Intestate-Estate of Gerundia Rallos, covering the same
subject-matter of the third-party complaint, at bar." (pp. 98-100,
Record on Appeal)Felix Go Chan & Sons Realty Corporation
appealed in due time to the Court of Appeals from the foregoing
judgment insofar as it set aside the sale of the one-half (1/2)
share of Concepcion Rallos. The appellate tribunal, as adverted to
earlier, resolved the appeal on November 20, 1964 in favor of the
appellant corpo-ration sustaining the sale in question.[1]The
appellee-administrator, Ramon Rallos, moved for a reconsideration
of the decision but the same was denied in a resolution of March 4,
1965.[2]What is the legal effect of an act performed by an agent
after the death of his principal? Applied more particularly to the
instant case, We have the query: is the sale of the undivided share
of Concepcion Rallos in lot 5983 valid although it was executed by
the agent after the death of his principal? What is the law in this
jurisdiction as to the effect of the death of the principal on the
authority of the agent to act for and in behalf of the latter? Is
the fact of knowledge of the death of the principal a material
factor in determining the legal effect of an act performed after
such death?Before proceeding to the issues, We shall briefly
restate certain principles of law relevant to the matter under
consideration.1. It is a basic axiom in civil law embodied in our
Civil Code that no one may contract in the name of another without
being authorized by the latter, or unless he has by law a right to
represent him.[3] A contract entered into in the name of another by
one who has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting
party.[4]Article 1403 (1) of the same Code also provides:"ART.
1403. The following contracts are unenforceable, unless they are
ratified:"(1) Those entered into in the name of another person by
one who has been given no authority or legal representation or who
has acted beyond his powers; x x x."Out of the above given
principles, sprung the creation and acceptance of therelationship
of agencywhereby one party, called the principal (mandante),
authorizes another, called the agent (mandatario), to act for and
in his behalf in transactions with third persons. The essential
elements of agency are: (1) there is consent, express or implied,
of the parties to establish the relationship; (2) the object is the
execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; and (4) the
agent acts within the scope of his authority.[5]Agency is
basicallypersonal, representative, andderivative in nature. The
authority of the agent to act emanates from the powers granted to
him by his principal; his act is the act of the principal if done
within the scope of the authority.Qui facit per alium facit per se.
"He who acts through another acts himself."[6]2. There are various
ways of extinguishing agency,[7] but here We are concerned only
with one cause-death of the principal. Paragraph 3 of Art. 1919 of
the Civil Code which was taken from Art. 1709 of the Spanish Civil
Code provides:"ART. 1919. Agency is extinguished:xx xx xx"3. By the
death, civil interdiction, insanity or insolvency of the principal
or of the agent; x x x." (Underline supplied)By reason of the very
nature of the relationship between principal and agent, agency is
extinguished by the death of the principal or of the agent. This is
the law in this jurisdiction.[8]Manresacommenting on Art. 1709 of
the Spanish Civil Code explains that the rationale for the law is
found in thejuridical basisof agency which isrepresentation. There
being an integration of the personality of the principal into that
of the agent it is not possible for the representation to continue
to exist once the death of either is established.Pothieragrees with
Manresa that by reason of the nature of agency, death is a
necessary cause for its extinction.Laurentsays that the juridical
tie between the principal and the agent is severedipso jure upon
the death of either without necessity for the heirs of the
principal to notify the agent of the fact of death of the
former.[9]The same rule prevails at common law - the death of the
principal effects instantaneous and absolute revocation of the
authority of the agent unless the power be coupled with an
interest.[10] This is the prevalent rule in American Jurisprudence
where it is well-settled that a power without an interest conferred
upon an agent is dissolved by the principal's death, and any
attempted execution of the power afterwards is not binding on the
heirs or representatives of the deceased.[11]3. Is the general rule
provided for in Article 1919 that the death of the principal or of
the agent extinguishes the agency, subject to any exception, and if
so, is the instant, case within that exception? That is the
determinative point in issue in this litigation. It is the
contention of respondent corporation which was sustained by
respondent court that notwithstanding the death of the principal,
Concepcion Rallos, the act of the attorney-in-fact, Simeon Rallos,
in selling the former's share in the property is valid and
enforceable inasmuch as the corporation acted in good faith in
buying the property in question.Articles 1930 and 1931 of the Civil
Code provide the exceptions to the general rule aforementioned.ART.
1930. The agency shall remain in full force and effect even after
the death of the principal, if it has been constituted in the
common interest of the latter and of the agent, or in the interest
of a third person who has accepted the stipulation in his
favor.ART. 1931. Anything done by the agent, without knowledge of
the death of the principal or of any other cause which extinguishes
the agency, is valid and shall be fully effective with respect to
third persons who may have contracted with him in good
faith.Article 1930 is not involved because admittedly the special
power of attorney executed in favor of Simeon Rallos was not
coupled with an interest.Article 1931 is the applicable law. Under
this provision, an act done by the agent after the death of his
principal is valid and effectiveonly under two conditions, viz:
(1)that the agent acted without knowledge of the death of the
principal, and (2) that thethird person who contracted with the
agent himself acted in good faith. Good faith here means that the
third personwas notaware of the death of the principal at the time
he contracted with said agent.These two requisites must concur: the
absence of one will render the act of the agent invalid and
unenforceable.In the instant case, it cannot be questioned that the
agent, Simeon Rallos, knew of the death of his principal at the
time he sold the latter's share in Lot No. 5983 to respondent
corporation. The knowledge of the death is clearly to be inferred
from the pleadings filed by Simeon Rallos before the trial
court.[12]That Simeon Rallos knew of the death of his sister
Concepcion is also a finding of fact of the courta quo[13] and of
respondent appellate court when the latter stated that Simeon
Rallos "must have known of the death of his sister, and yet he
proceeded with the sale of the lot in the name of both his sisters
Concepcion and Gerundia Rallos without informing appellant (the
realty corporation) of the death of the former."[14]On the basis of
the established knowledge of Simeon Rallos concerning the death of
his principal, Concepcion Rallos,Article 1931 of the Civil Code is
inapplicable. The law expressly requires for its application lack
of knowledge on the part of the agent of the death of his
principal; it is not enough that the third person acted in good
faith. Thus inBuason & Reyes v. Panuyas, the Court applying
Article 1738 of the old Civil Code now Art. 1931 of the new Civil
Code sustained the validity of a sale made after the death of the
principalbecause it was not shown that the agent knew of his
principal's demise.[15]To the same effect is the case ofHerrera, et
al. v. Luy Kim Guan, et al., 1961, where in the words of Justice
Jesus Barrera the Court stated:"x x x even grantingarguendothat
Luis-Herrera did die in 1936, plaintiffs presented no proof and
there is no indication in the record, that the agent Luy Kim Guan
was aware of the death of his principal at the time he sold the
property. The death of the principal does not render the act of an
agent unenforceable, where the latter had no knowledge of such
extinguishment of the agency." (1 SCRA 406, 412)4. In sustaining
the validity of the sale to respondent corporation, the Court of
Appeals reasoned out that there is no provision in the Code which
provides that whatever is done by an agent having knowledge of the
death of his principal is void even with respect to third persons
who may have contracted with him in good faith and without
knowledge of the death of the principal.[16]We cannot see the
merits of the foregoing argument as it ignores the existence of the
general rule enunciated in Article 1919 that the death of the
principal extinguishes the agency. That being the general rule it
followsa fortiorithat any act of an agent after the death of his
principal is voidab initio unless the same falls under the
exceptions provided for in the aforementioned Articles 1930 and
1931. Article 1931, being an exception to the general rule, is to
be strictly construed; it is not to be given an interpretation or
application beyond the clear import of its terms for otherwise the
courts will be involved in a process of legislation outside of
their judicial function.5. Another argument advanced by respondent
court is that the vendee acting in good faith relied on the power
of attorney which was duly registered on the original certificate
of title recorded in the Register of Deeds of the Province of Cebu,
that no notice of the death was ever annotated on said certificate
of title by the heirs of the principal and accordingly they must
suffer the consequences of such omission.[17]To support such
argument reference is made to a portion inManresa'sCommentaries
which We quote:"If the agency has been granted for the purpose of
contracting with certain persons, the revocation must be made known
to them. But if the agency is general in nature, without reference
to particular persons with whom the agent is to contract, it is
sufficient that the principal exercise due diligence to make the
revocation of the agency publicly known."In case of a general power
which does not specify the persons to whom representation should be
made, it is the general opinion that all acts executed with third
persons who contracted in good faith, without knowledge of the
revocation, are valid. In such case, the principal may exercise his
right against the agent, who, knowing of the revocation, continued
to assume a personality which he no longer had." (Manresa, Vol. 11,
pp. 561 and 575; pp. 15-16, rollo)The above discourse, however,
treats of revocation by an act of the principal as a mode of
terminating an agency which is to be distinguished from revocation
byoperation of lawsuch as death of the principal which obtains in
this case. On page six of this Opinion We stressed that by reason
of the very nature of the relationship between principal and agent,
agency is extinguishedipso jure upon the death of either principal
or agent. Although a revocation of a power of attorney to be
effective must be communicated to the parties concerned,[18]yet a
revocation by operation of law, such as by death of the principal
is, as a rule, instantaneously effective inasmuch as "by legal
fiction the agent's exercise of authority is regarded as an
execution of the principal'scontinuing will."[19]With death, the
principal's will ceases or is terminated; the source of authority
is extinguished.The Civil Code does not impose a duty on the heirs
to notify the agent of the death of the principal. What the Code
provides in Article 1932 is that, ifthe agent dies,his heirs must
notify the principal thereof, and in the meantime adopt such
measures as the circumstances may demand in the interest of the
latter. Hence, the fact that no notice of the death of the
principal was registered on the certificate of title of the
property in the Office of the Register of Deeds, is not fatal to
the cause of the estate of the principal.6. Holding that the good
faith of a third person in dealing with an agent affords the former
sufficient protection, respondent court drew a "parallel" between
the instant case and that of an innocent purchaser for value of a
registered land, stating that if a person purchases a registered
land from one who acquired it in bad faith - even to the extent of
forging or falsifying the deed of sale in his favor - the
registered owner has no recourse against such innocent purchaser
for value but only against the forger.[20]To support the
correctness of this "parallelism", respondent corporation, in its
brief, cites the case ofBlondeau, et al. v. Nano and Vallejo, 61
Phil. 625. We quote from the brief:"In the case ofAngela Blondeau
et al. v. Agustin Nano et al., 61 Phil. 630, one Vallejo was a
co-owner of lands with Agustin Nano. The latter had a power of
attorney supposedly executed by Vallejo in his favor. Vallejo
delivered to Nano his land titles. The power was registered in the
Office of the Register of Deeds. When the lawyer husband of Angela
Blondeau went to that Office, he found all in order including the
power of attorney. But Vallejo denied having executed the power.
The lower court sustained Vallejo and the plaintiff Blondeau
appealed. Reversing the decision of the courta quo, the Supreme
Court, quoting the ruling in the case ofEliason v. Wilborn, 261
U.S. 457, held:'But there is a narrower ground on which the
defenses of the defendant-appellee must be overruled. Agustin Nano
had possession of Jose Vallejo's title papers. Without those title
papers handed over to Nano with the acquiescence of Vallejo, a
fraud could not have been perpetuated. When Fernando de la Cantera,
a member of the Philippine Bar and the husband of Angela Blondeau,
the principal plaintiff, searched the registration record, he found
them in due form including the power of attorney of Vallejo in
favor of Nano. If this had not been so and if thereafter the proper
notation of the encumbrance could not have been made, Angela
Blondeau would not have lent P12,000.00 to the defendant Vallejo.'
An executed transfer of registered lands placed by the registered
owner thereof in the hands of another operates as a representation
to a third party that the holder of the transfer is authorized to
deal with the land.'As between two innocent persons, one of whom
must suffer the consequence of a breach of trust, the one who made
it possible by his act of confidence bear the loss.' " (pp.
19-21)TheBlondeaudecision, however, is not on all fours with the
case before Us because here We are confronted with one who
admittedly was an agent of his sister and who sold the property of
the latter after her death with full knowledge of such death. The
situation is expressly covered by a provision of law on agency the
terms of which are clear and unmistakable leaving no room for an
interpretation contrary to its tenor, in the same manner that the
ruling inBlondeauand the cases cited therein found a basis in
Section 55 of the Land Registration Law which in part provides:xxx
xxx xxx"The production of the owner's duplicate certificate
whenever any voluntary instrument is presented for registration
shall be conclusive authority from the registered owner to the
register of deeds to enter a new certificate or to make a
memorandum of registration in accordance with such instrument, and
the new certificate or memorandum shall be binding upon the
registered owner and upon all persons claiming under him in favor
of every purchaser for value and in good faith: Provided, however,
That in all cases of registration procured by fraud the owner may
pursue all his legal and equitable remedies against the parties to
such fraud, without prejudice, however, to the rights of any
innocent holder for value of a certificate of title. xx xx xx "
(Act No. 496 as amended)7. One last point raised by respondent
corporation in support of the appealed decision is an 1842 rulings
of the Supreme Court of Pennsylvania inCassiday v. McKenziewherein
payments made to an agent after the death of the principal were
held to be "good", "the parties being ignorant of the death". Let
us take note that the Opinion of Justice Rogers was premised on the
statement that the parties were ignorant of the death of
theprincipal. We quote from that decision the following:"x x x Here
the precise point is, whether a payment to an agent when the
parties are ignorant of the death is a good payment. In addition to
the case in Campbell before cited, the same judge Lord
Ellenborough, has decided in 5 Esp. 117, the general question that
a payment after the death of principal is not good. Thus, a payment
of sailor's wages to a person having a power of attorney to receive
them, has been held void when the principal was dead at the time of
the payment. If, by this case, it is meant merely to decide the
general proposition that by operation of law the death of the
principal is a revocation of the powers of the attorney, no
objection can be taken to it. But if it is intended to say that
this principle applieswhere there was no notice of death, or
opportunity of notice, I must be permitted to dissent from it."x x
x That a payment may be good today, or bad tomorrow, from
accidental circumstance of the death of the principal which he did
not know, and which by no possibility could he know? It would be
unjust to the agent and unjust to the debtor. In the civil law, the
acts of the agent, donebona fideinignorance of the death of his
principal, are held valid and binding upon the heirs of the latter.
The same rule holds in the Scottish law, and I cannot believe the
common law is so unreasonable. . . . (39 Am. Dec. 76, 80, 81;
italics supplied)To avoid any wrong impression which the Opinion
inCassiday v. McKenziemay evoke, mention may be made that the above
represents the minority view in American jurisprudence. Thus
inClayton v. Merrett, the Court said:" 'There are several cases
which seem to hold that although, as a general principle, death
revokes an agency and renders null every act of the agent
thereafter performed, yet that where a payment has been made in
ignorance of the death, such payment will be good. The leading case
so holding is that ofCassiday v. McKenzie, 4 Watts & S. (Pa.)
282, 39 AmD 76, where, in an elaborate opinion, this view is
broadly announced. It is referred to, and seems to have been
followed, in the case ofDick v. Page, 17 Mo. 234, 57 AmD 267; but
in this latter case it appeared that the estate of the deceased
principal had received the benefit of the money paid, and therefore
the representative of the estate might well have been held to be
estopped from suing for it again. . . . These cases, in so far, at
least, as they announce the doctrine under discussion, are
exceptional. The Pennsylvania Case,supra(Cassiday v. McKenzie, 4
Watts & S. 282, 39 AmD 76), is believed to stand almost, if not
quite, alone in announcing the principle in its broadest scope.' "
(52 Misc. 353, 357, cited in 2 C.J. 549)So also inTravers v. Crane,
speaking ofCassiday v. McKenzie, and pointing out that the opinion,
except so far as it related to the particular facts, was a
meredictum, Baldwin, J. said:" 'The opinion, therefore, of the
learned Judge may be regarded more as an extrajudicial indication
of his views on the general subject, than as the adjudication of
the Court upon the point in question. But according all proper
weight to this opinion, as the judgment of a Court of great
respectability, it stands alone among common law authorities, and
is opposed by an array too formidable to permit us to follow it.' "
(15 Cal. 12, 17, cited in 2 C.J. 549)Whatever conflict of legal
opinion was generated byCassiday v. McKenzie in American
jurisprudence, no such conflict exists in our own for the simple
reason that our statute, the Civil Code, expressly provides for two
exceptions to the general rule that death of the principal
revokesipso jure the agency, to wit: (1) that the agency is coupled
with an interest (Art. 1930), and (2) that the act of the agent was
executed without knowledge of the death of the principal and the
third person who contracted with the agent acted also in good faith
(Art. 1931). Exception No. 2 is the doctrine followed inCassiday,
and again We stress the indispensable requirement - that the agent
acted without knowledge or notice of the death of the principal. In
the case before Us the agent Ramon Rallos executed the sale
notwithstanding notice of the death of his principal. Accordingly,
the agent's act is unenforceable against the estate of his
principal.IN VIEW OF ALL THE FOREGOING, We set aside the decision
of respondent appellate court, and We affirm en toto the judgment
rendered by then Hon. Amador E. Gomez of the Court of First
Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with
costs against respondent realty corporation at all instances.SO
ORDERED.Teehankee, (Chairman), Makasiar, Fernandez, andGuerrero,
JJ., concur.
FIRST DIVISION[G.R. No. 123560. March 27, 2000]SPOUSES YU ENG
CHO and FRANCISCO TAO YU,petitioners,vs. PAN AMERICAN WORLD
AIRWAYS, INC., TOURIST WORLD SERVICES, INC., JULIETA CANILAO and
CLAUDIA TAGUNICAR,respondents.D E C I S I O NPUNO,J.:This petition
for review seeks a reversal of the 31 August 1995 Decision[1]and 11
January 1998 Resolution[2]of the Court of Appeals holding private
respondent Claudia Tagunicar solely liable for moral and exemplary
damages and attorneys fees, and deleting the trial courts award for
actual damages.The facts as found by the trial court are as
follows:Kycalr"Plaintiff Yu Eng Cho is the owner of Young Hardware
Co. and Achilles Marketing. In connection with [this] business, he
travels from time to time to Malaysia, Taipei and Hongkong. On July
10, 1976, plaintiffs bought plane tickets (Exhs. A & B) from
defendant Claudia Tagunicar who represented herself to be an agent
of defendant Tourist World Services, Inc. (TWSI). The
destination[s] are Hongkong, Tokyo, San Francisco, U.S.A., for the
amount of P25,000.00 per computation of said defendant Claudia
Tagunicar (Exhs. C & C-1). The purpose of this trip is to go to
Fairfield, New Jersey, U.S.A. to buy two (2) lines of infrared
heating system processing textured plastic article (Exh. K)."On
said date, only the passage from Manila to Hongkong, then to Tokyo,
were confirmed. [PAA] Flight 002 from Tokyo to San Francisco was on
"RQ" status, meaning "on request". Per instruction of defendant
Claudia Tagunicar, plaintiffs returned after a few days for the
confirmation of the Tokyo-San Francisco segment of the trip. After
calling up Canilao of TWSI, defendant Tagunicar told plaintiffs
that their flight is now confirmed all the way. Thereafter, she
attached the confirmation stickers on the plane tickets (Exhs. A
& B)."A few days before the scheduled flight of plaintiffs,
their son, Adrian Yu, called the Pan Am office to verify the status
of the flight. According to said Adrian Yu, a personnel of
defendant Pan Am told him over the phone that plaintiffs booking[s]
are confirmed."On July 23, 1978, plaintiffs left for Hongkong and
stayed there for five (5) days. They left Hongkong for Tokyo on
July 28, 1978. Upon their arrival in Tokyo, they called up Pan-Am
office for reconfirmation of their flight to San Francisco. Said
office, however, informed them that their names are not in the
manifest. Since plaintiffs were supposed to leave on the 29thof
July, 1978, and could not remain in Japan for more than 72 hours,
they were constrained to agree to accept airline tickets for Taipei
instead, per advise of JAL officials. This is the only option left
to them because Northwest Airlines was then on strike, hence, there
was no chance for the plaintiffs to obtain airline seats to the
United States within 72 hours. Plaintiffs paid for these
tickets."Upon reaching Taipei, there were no flight[s] available
for plaintiffs, thus, they were forced to return back to Manila on
August 3, 1978, instead of proceeding to the United States. [Japan]
Air Lines (JAL) refunded the plaintiffs the difference of the price
for Tokyo-Taipei [and] Tokyo-San Francisco (Exhs. I & J) in the
total amount of P2,602.00."In view of their failure to reach
Fairfield, New Jersey, Radiant Heat Enterprises, Inc. cancelled Yu
Eng Chos option to buy the two lines of infra-red heating system
(Exh. K). The agreement was for him to inspect the equipment and
make final arrangement[s] with the said company not later than
August 7, 1978. From this business transaction, plaintiff Yu Eng
Cho expected to realize a profit of P300,000.00 to
P400,000.00.""[A] scrutiny of defendants respective evidence
reveals the following:"Plaintiffs, who were intending to go to the
United States, were referred to defendant Claudia Tagunicar, an
independent travel solicitor, for the purchase of their plane
tickets. As such travel solicitor, she helps in the processing of
travel papers like passport, plane tickets, booking of passengers
and some assistance at the airport. She is known to defendants
Pan-Am, TWSI/Julieta Canilao, because she has been dealing with
them in the past years. Defendant Tagunicar advised plaintiffs to
take Pan-Am because Northwest Airlines was then on strike and
plaintiffs are passing Hongkong, Tokyo, then San Francisco and
Pan-Am has a flight from Tokyo to San Francisco. After verifying
from defendant TWSI, thru Julieta Canilao, she informed plaintiffs
that the fare would be P25,093.93 giving them a discount of P738.95
(Exhs. C, C-1). Plaintiffs, however, gave her a check in the amount
of P25,000.00 only for the two round trip tickets. Out of this
transaction, Tagunicar received a 7% commission and 1% commission
for defendant TWSI.Defendant Claudia Tagunicar purchased the two
round-trip Pan-Am tickets from defendant Julieta Canilao with the
following schedules:OriginDestinationAirlineDateTime/TravelManila
Hongkong CX900 7-23-78 1135/1325hrsHongkong Tokyo CS500 7-28-78
1615/2115hrsTokyo San Francisco PA002 7-29-78 1930/1640hrsThe use
of another airline, like in this case it is Cathay Pacific out of
Manila, is allowed, although the tickets issued are Pan-Am tickets,
as long as it is in connection with a Pan-Am flight. When the two
(2) tickets (Exhs. A & B) were issued to plaintiffs, the letter
"RQ" appears below the printed word "status" for the flights from
Tokyo to San Francisco which means "under request," (Exh. 3-A, 4-A
Pan-Am). Before the date of the scheduled departure, defendant
Tagunicar received several calls from the plaintiffs inquiring
about the status of their bookings. Tagunicar in turn called up
TWSI/Canilao to verify; and if Canilao would answer that the
bookings are not yet confirmed, she would relate that to the
plaintiffs.Calrky"Defendant Tagunicar claims that on July 13, 1978,
a few days before the scheduled flight, plaintiff Yu Eng Cho
personally went to her office, pressing her about their flight. She
called up defendant Julieta Canilao, and the latter told her "o
sige Claudia, confirm na." She even noted this in her index card
(Exh. L), that it was Julieta who confirmed the booking (Exh. L-1).
It was then that she allegedly attached the confirmation stickers
(Exhs. 2, 2-B TWSI) to the tickets. These stickers came from
TWSI.Defendant Tagunicar alleges that it was only in the first week
of August, 1978 that she learned from Adrian Yu, son of plaintiffs,
that the latter were not able to take the flight from Tokyo to San
Francisco, U.S.A. After a few days, said Adrian Yu came over with a
gentleman and a lady, who turned out to be a lawyer and his
secretary. Defendant Tagunicar claims that plaintiffs were asking
for her help so that they could file an action against Pan-Am.
Because of plaintiffs promise she will not be involved, she agreed
to sign the affidavit (Exh. M) prepared by the
lawyer.MesmDefendants TWSI/Canilao denied having confirmed the
Tokyo-San Francisco segment of plaintiffs flight because flights
then were really tight because of the on-going strike at Northwest
Airlines. Defendant Claudia Tagunicar is very much aware that
[said] particular segment was not confirmed, because on the very
day of plaintiffs departure, Tagunicar called up TWSI from the
airport; defendant Canilao asked her why she attached stickers on
the tickets when in fact that portion of the flight was not yet
confirmed. Neither TWSI nor Pan-Am confirmed the flight and never
authorized defendant Tagunicar to attach the confirmation stickers.
In fact, the confirmation stickers used by defendant Tagunicar are
stickers exclusively for use of Pan-Am only. Furthermore, if it is
the travel agency that confirms the booking, the IATA number of
said agency should appear on the validation or confirmation
stickers. The IATA number that appears on the stickers attached to
plaintiffs tickets (Exhs. A & B) is 2-82-0770 (Exhs. 1, 1-A
TWSI), when in fact TWSIs IATA number is 2-83-0770 (Exhs. 5, 5-A
TWSI)."[3]A complaint for damages was filed by petitioners against
private respondents Pan American World Airways, Inc.(Pan Am),
Tourist World Services, Inc. (TWSI), Julieta Canilao (Canilao), and
Claudia Tagunicar (Tagunicar) for expenses allegedly incurred such
as costs of tickets and hotel accommodations when petitioners were
compelled to stay in Hongkong and then in Tokyo by reason of the
non-confirmation of their booking with Pan-Am. In a Decision dated
November 14, 1991, the Regional Trial Court of Manila, Branch 3,
held the defendants jointly and severally liable, except defendant
Julieta Canilao, thus:Scslx"WHEREFORE, judgment is hereby rendered
for the plaintiffs and ordering defendants Pan American World
Airways, Inc., Tourist World Services, Inc. and Claudia Tagunicar,
jointly and severally, to pay plaintiffs the sum of P200,000.00 as
actual damages, minus P2,602.00 already refunded to the plaintiffs;
P200,000.00 as moral damages; P100,000.00 as exemplary damages; an
amount equivalent to 20% of the award for and as attorneys fees,
plus the sum of P30,000.00 as litigation expenses.Defendants
counterclaims are hereby dismissed for lack of merit.SO
ORDERED."Only respondents Pan Am and Tagunicar appealed to the
Court of Appeals. On 11 August 1995, the appellate court rendered
judgment modifying the amount of damages awarded, holding private
respondent Tagunicar solely liable therefor, and absolving
respondents Pan Am and TWSI from any and all liability, thus:Slxs
c"PREMISES CONSIDERED, the decision of the Regional Trial Court is
herebySET ASIDEand a new one entered declaring appellant Tagunicar
solely liable for:1) Moral damages in the amount of P50,000.00;2)
Exemplary damages in the amount of P25,000.00; and3) Attorneys fees
in the amount of P10,000.00 plus costs of suit.The award of actual
damages is hereby DELETED.SO ORDERED."In so ruling, respondent
court found that Tagunicar is an independent travel solicitor and
is not a duly authorized agent or representative of either Pan Am
or TWSI. It held that their business transactions are not
sufficient to consider Pan Am as the principal, and Tagunicar and
TWSI as its agent and sub-agent, respectively. It further held that
Tagunicar was not authorized to confirm the bookings of, nor issue
validation stickers to, herein petitioners and hence, Pan Am and
TWSI cannot be held responsible for her actions. Finally, it
deleted the award for actual damages for lack of proof.Hence this
petition based on the following assignment of errors:slx mis1. the
Court of Appeals, in reversing the decision of the trial court,
misapplied the ruling in Nicos Industrial Corporation vs. Court of
Appeals, et. al. [206 SCRA 127]; and2. the findings of the Court of
Appeals that petitioners ticket reservations in question were not
confirmed and that there is no agency relationship among PAN-AM,
TWSI and Tagunicar are contrary to the judicial admissions of
PAN-AM, TWSI and Tagunicar and likewise contrary to the findings of
fact of the trial court.We affirm.I. The first issue deserves scant
consideration. Petitioners contend that contrary to the ruling of
the Court of Appeals, the decision of the trial court conforms to
the standards of an ideal decision set inNicos Industrial
Corporation, et. al. vs. Court of Appeals, et. al.,[4]as "that
which, with welcome economy of words, arrives at the factual
findings, reaches the legal conclusions, renders its ruling and,
having done so, ends." It is averred that the trial courts decision
contains a detailed statement of the relevant facts and evidence
adduced by the parties which thereafter became the bases for the
courts conclusions.A careful scrutiny of the decision rendered by
the trial court will show that after narrating the evidence of the
parties, it proceeded to dispose of the case with a one-paragraph
generalization, to wit:Missdaa"On the basis of the foregoing facts,
the Court is constrained to conclude that defendant Pan-Am is the
principal, and defendants TWSI and Tagunicar, its authorized agent
and sub-agent, respectively. Consequently, defendants Pan-Am, TWSI
and Claudia Tagunicar should be held jointly and severally liable
to plaintiffs for damages. Defendant Julieta Canilao, who acted in
her official capacity as Office Manager of defendant TWSI should
not be held personally liable."[5]The trial courts finding of facts
is but a summary of the testimonies of the witnesses and the
documentary evidence presented by the parties. It did not
distinctly and clearly set forth, nor substantiate, the factual and
legal bases for holding respondents TWSI, Pan Am and Tagunicar
jointly and severally liable. InDel Mundo vs. CA, et al.[6]where
the trial court, after summarizing the conflicting asseverations of
the parties, disposed of the kernel issue in just two (2)
paragraphs, we held:Sda adsc"It is understandable that courts, with
their heavy dockets and time constraints, often find themselves
with little to spare in the preparation of decisions to the extent
most desirable. We have thus pointed out that judges might learn to
synthesize and to simplify their pronouncements. Nevertheless,
concisely written such as they may be, decisions must still
distinctly and clearly express, at least in minimum essence, its
factual and legal bases."For failing to explain clearly and well
the factual and legal bases of its award of moral damages, we set
it aside in said case. Once more, we stress that nothing less than
Section 14 of Article VIII of the Constitution requires that "no
decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is based."
This is demanded by the due process clause of the Constitution. In
the case at bar, the decision of the trial court leaves much to be
desired both in form and substance. Even while said decision
infringes the Constitution, we will not belabor this infirmity and
rather examine the sufficiency of the evidence submitted by the
petitioners.Rtc sppedII. Petitioners assert that Tagunicar is a
sub-agent of TWSI while TWSI is a duly authorized ticketing agent
of Pan Am. Proceeding from this premise, they contend that TWSI and
Pan Am should be held liable as principals for the acts of
Tagunicar. Petitioners stubbornly insist that the existence of the
agency relationship has been established by the judicial admissions
allegedly made by respondents herein, to wit: (1) the admission
made by Pan Am in its Answer that TWSI is its authorized ticket
agent; (2) the affidavit executed by Tagunicar where she admitted
that she is a duly authorized agent of TWSI; and (3) the admission
made by Canilao that TWSI received commissions from ticket sales
made by Tagunicar.KorteWe do not agree. By the contract of agency,
a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or
authority of the latter.[7]The elements of agency are: (1) consent,
express or implied, of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for
himself; (4) the agent acts within the scope of his authority.[8]It
is a settled rule that persons dealing with an assumed agent are
bound at their peril, if they would hold the principal liable, to
ascertain not only the fact of agency but also the nature and
extent of authority, and in case either is controverted, the burden
of proof is upon them to establish it.[9]In the case at bar,
petitioners rely on the affidavit of respondent Tagunicar where she
stated that she is an authorized agent of TWSI. This affidavit,
however, has weak probative value in light of respondent Tagunicars
testimony in court to the contrary. Affidavits, being takenex
parte, are almost always incomplete and often inaccurate, sometimes
from partial suggestion, or for want of suggestion and inquiries.
Their infirmity as a species of evidence is a matter of judicial
experience and are thus considered inferior to the testimony given
in court.[10]Further, affidavits are not complete reproductions of
what the declarant has in mind because they are generally prepared
by the administering officer and the affiant simply signs them
after the same have been read to her.[11]Respondent Tagunicar
testified that her affidavit was prepared and typewritten by the
secretary of petitioners lawyer, Atty. Acebedo, who both came with
Adrian Yu, son of petitioners, when the latter went to see her at
her office. This was confirmed by Adrian Yu who testified that
Atty. Acebedo brought his notarial seal and notarized the affidavit
of the same day.[12]The circumstances under which said affidavit
was prepared put in doubt petitioners claim that it was executed
voluntarily by respondent Tagunicar. It appears that the affidavit
was prepared and was based on the answers which respondent
Tagunicar gave to the questions propounded to her by Atty.
Acebedo.[13]They never told her that the affidavit would be used in
a case to be filed against her.[14]They even assured her that she
would not be included as defendant if she agreed to execute the
affidavit.[15]Respondent Tagunicar was prevailed upon by
petitioners son and their lawyer to sign the affidavit despite her
objection to the statement therein that she was an agent of TWSI.
They assured her that "it is immaterial"[16]and that "if we file a
suit against you we cannot get anything from you."[17]This
purported admission of respondent Tagunicar cannot be used by
petitioners to prove their agency relationship. At any rate, even
if such affidavit is to be given any probative value, the existence
of the agency relationship cannot be established on its sole basis.
The declarations of the agent alone are generally insufficient to
establish the fact or extent of his authority.[18]In addition, as
between the negative allegation of respondents Canilao and
Tagunicar that neither is an agent nor principal of the other, and
the affirmative allegation of petitioners that an agency
relationship exists, it is the latter who have the burden of
evidence to prove their allegation,[19]failing in which, their
claim must necessarily fail.SclawWe stress that respondent
Tagunicar categorically denied in open court that she is a duly
authorized agent of TWSI, and declared that she is an independent
travel agent.[20]We have consistently ruled that in case of
conflict between statements in the affidavit and testimonial
declarations, the latter command greater weight.[21]As further
proofs of agency, petitioners call our attention to TWSIs Exhibits
"7", "7-A", and "8" which show that Tagunicar and TWSI received
sales commissions from Pan Am. Exhibit "7"[22]is the Ticket Sales
Report submitted by TWSI to Pan Am reflecting the commissions
received by TWSI as an agent of Pan Am. Exhibit "7-A"[23]is a
listing of the routes taken by passengers who were audited to TWSIs
sales report. Exhibit "8"[24]is a receipt issued by TWSI covering
the payment made by Tagunicar for the tickets she bought from TWSI.
These documents cannot justify the deduction that Tagunicar was
paid a commission either by TWSI or Pan Am. On the contrary,
Tagunicar testified that when she pays TWSI, she already deducts in
advance her commission and merely gives the net amount to
TWSI.[25]From all sides of the legal prism, the transaction is
simply a contract of sale wherein Tagunicar buys airline tickets
from TWSI and then sells it at a premium to her clients.Sc lexIII.
Petitioners included respondent Pan Am in the complaint on the
supposition that since TWSI is its duly authorized agent, and
respondent Tagunicar is an agent of TWSI, then Pan Am should also
be held responsible for the acts of respondent Tagunicar. Our
disquisitions above show that this contention lacks factual and
legal bases. Indeed, there is nothing in the records to show that
respondent Tagunicar has been employed by Pan Am as its agent,
except the bare allegation of petitioners. The real motive of
petitioners in suing Pan Am appears in its Amended Complaint that
"[d]efendants TWSI, Canilao and Tagunicar may not be financially
capable of paying plaintiffs the amounts herein sought to be
recovered, and in such event, defendant Pan Am, being their
ultimate principal, is primarily and/or subsidiarily liable to pay
said amounts to plaintiffs."[26]This lends credence to respondent
Tagunicars testimony that she was persuaded to execute an affidavit
implicating respondents because petitioners knew they would not be
able to get anything of value from her. In the past, we have warned
that this Court will not tolerate an abuse of the judicial process
by passengers in order to pry on international airlines for damage
awards, like "trophies in a safari."[27]This meritless suit against
Pan Am becomes more glaring with petitioners inaction after they
were bumped off in Tokyo. If petitioners were of the honest belief
that Pan Am was responsible for the misfortune which beset them,
there is no evidence to show that they lodged a protest with Pan
Ams Tokyo office immediately after they were refused passage for
the flight to San Francisco, or even upon their arrival in Manila.
The testimony of petitioner Yu Eng Cho in this regard is of little
value,viz.:"Atty. Jalandoni: x x xq Upon arrival at the Tokyo
airport, what did you do if any in connection with your schedule[d]
trip?a I went to the Hotel, Holiday Inn and from there I
immediately called up Pan Am office in Tokyo to reconfirm my
flight, but they told me that our names were not listed in the
manifest, so next morning, very early in the morning I went to the
airport, Pan Am office in the airport to verify and they told me
the same and we were not allowed to leave.q You were scheduled to
be in Tokyo for how long Mr. Yu?a We have to leave the next day
29th.q In other words, what was your status as a passenger?a
Transient passengers. We cannot stay there for more than 72 hours.x
x x x x x x x xq As a consequence of the fact that you claimed that
the Pan Am office in Tokyo told you that your names were not in the
manifest, what did you do, if any?a I ask[ed] them if I can go
anywhere in the States? They told me I can go to LA via Japan
Airlines and I accepted it.q Do you have the tickets with you that
they issued for Los Angeles?a It was taken by the Japanese Airlines
instead they issue[d] me a ticket to Taipei.x x x x x x x x xq Were
you able to take the trip to Los Angeles via Pan Am tickets that
was issued to you in lieu of the tickets to San Francisco?a No,
sir.q Why not?a The Japanese Airlines said that there were no more
available seats.q And as a consequence of that, what did you do, if
any?aI am so much scared and worried, so the Japanese Airlines
advised us to go to Taipei and I accepted it.x x x x x x x x xq Why
did you accept the Japan Airlines offer for you to go to Taipei?a
Because there is no chance for us to go to the United States within
72 hours because during that time Northwest Airlines [was] on
strike so the seats are very scarce. So they advised me better left
(sic) before the 72 hours otherwise you will have trouble with the
Japanese immigration.q As a consequence of that you were force[d]
to take the trip to Taipei?a Yes, sir."[28](emphasis supplied)It
grinds against the grain of human experience that petitioners did
not insist that they be allowed to board, considering that it was
then doubly difficult to get seats because of the ongoing Northwest
Airlines strike. It is also perplexing that petitioners readily
accepted whatever the Tokyo office had to offer as an alternative.
Inexplicably too, no demand letter was sent to respondents TWSI and
Canilao.[29]Nor was a demand letter sent to respondent Pan Am. To
say the least, the motive of petitioners in suing Pan Am is
suspect.x lawWe hasten to add that it is not sufficient to prove
that Pan Am did not allow petitioners to board to justify
petitioners claim for damages. Mere refusal to accede to the
passengers wishes does not necessarily translate into damages in
the absence of bad faith.[30]The settled rule is that the law
presumes good faith such that any person who seeks to be awarded
damages due to acts of another has the burden of proving that the
latter acted in bad faith or with ill motive.[31]In the case at
bar, we find the evidence presented by petitioners insufficient to
overcome the presumption of good faith. They have failed to show
any wanton, malevolent or reckless misconduct imputable to
respondent Pan Am in its refusal to accommodate petitioners in its
Tokyo-San Francisco flight. Pan Am could not have acted in bad
faith because petitioners did not have confirmed tickets and more
importantly, they were not in the passenger manifest.ScIn not a few
cases, this Court did not hesitable to hold an airline liable for
damages for having acted in bad faith in refusing to accommodate a
passenger who had a confirmed ticket and whose name appeared in the
passenger manifest. InOrtigas Jr. v. Lufthansa German Airlines
Inc.[32]we ruled that there was a valid and binding contract
between the airline and its passenger after finding that validating
sticker on the passengers ticket had the letters "O.K." appearing
in the Res. Status box which means "space confirmed" and that the
ticket is confirmed or validated. InPan American World Airways Inc.
v. IAC, et al.[33]where a would-be-passenger had the necessary
ticket, baggage claim and clearance from immigration all clearly
showing that she was a confirmed passenger and included in the
passenger manifest and yet was denied accommodation in said flight,
we awarded damages. InArmovit, et al. v. CA, et al.,[34]we upheld
the award of damages made against an airline for gross negligence
committed in the issuance of tickets with erroneous entries as to
the time of flight. InAlitalia Airways v. CA, et al.,[35]we held
that when airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage
arises, and the passenger has every right to expect that he would
fly on that flight and on that date. If he does not, then the
carrier opens itself to a suit for breach of contract of carriage.
And finally, an award of damages was held proper in the case
ofZalamea, et al. v. CA, et al.,[36]where a confirmed passenger
included in the manifest was denied accommodation in such
flight.ScmisOn the other hand, the respondent airline inSarreal,
Sr. v. Japan Airlines Co., Ltd.,[37]was held not liable for damages
where the passenger was not allowed to board the plane because his
ticket had not been confirmed. We ruled that "[t]he stub that the
lady employee put on the petitioners ticket showed among other
coded items, under the column "status" the letters "RQ" which was
understood to mean "Request." Clearly, this does not mean a
confirmation but only a request. JAL Traffic Supervisor explained
that it would have been different if what was written on the stub
were the letter "ok" in which case the petitioner would have been
assured of a seat on said flight. But in this case, the petitioner
was more of a wait-listed passenger than a regularly booked
passenger."Mis scIn the case at bar, petitioners ticket were on
"RQ" status. They were not confirmed passengers and their names
were not listed in the passenger manifest. In other words, this is
not a case where Pan Am bound itself to transport petitioners and
thereafter reneged on its obligation. Hence, respondent airline
cannot be held liable for damages.Mis sppedIV. We hold that
respondent Court of Appeals correctly ruled that the tickets were
never confirmed for good reasons: (1) The persistent calls made by
respondent Tagunicar to Canilao, and those made by petitioners at
the Manila, Hongkong and Tokyo offices of Pan Am, are eloquent
indications that petitioners knew that their tickets have not been
confirmed. For, as correctly observed by Pan Am, why would one
continually try to have ones ticket confirmed if it had already
been confirmed? (2) The validation stickers which respondent
Tagunicar attached to petitioners tickets were those intended for
the exclusive use of airline companies. She had no authority to use
them. Hence, said validation stickers, wherein the word "OK"
appears in the status box, are not valid and binding. (3) The names
of petitioners do not appear in the passenger manifest. (4)
Respondent Tagunicars "Exhibit 1"[38]shows that the status of the
San Francisco-New York segment was "Ok", meaning it was confirmed,
but that the status of the Tokyo-San Francisco segment was still
"on request". (5) Respondent Canilao testified that on the day that
petitioners were to depart for Hongkong, respondent Tagunicar
called her from the airport asking for confirmation of the
Tokyo-San Francisco flight, and that when she told respondent
Tagunicar that she should not have allowed petitioners to leave
because their tickets have not been confirmed, respondent Tagunicar
merely said "Bahala na."[39]This was never controverted nor refuted
by respondent Tagunicar. (6) To prove that it really did not
confirm the bookings of petitioners, respondent Canilao pointed out
that the validation stickers which respondent Tagunicar attached to
the tickets of petitioners had IATA No. 2-82-0770 stamped on it,
whereas the IATA number of TWSI is 28-30770.[40]Undoubtedly,
respondent Tagunicar should be liable for having acted in bad faith
in misrepresenting to petitioners that their tickets have been
confirmed. Her culpability, however, was properly mitigated.
Petitioner Yu Eng Cho testified that he repeatedly tried to follow
up on the confirmation of their tickets with Pan Am because he
doubted the confirmation made by respondent Tagunicar.[41]This is
clear proof that petitioners knew that they might be bumped off at
Tokyo when they decided to proceed with the trip. Aware of this
risk, petitioners exerted efforts to confirm their tickets in
Manila, then in Hongkong, and finally in Tokyo. Resultantly, we
find the modification as to the amount of damages awarded just and
equitable under the circumstances.SppedWHEREFORE, the decision
appealed from is hereby AFFIRMED. Cost against petitioners.Jo
sppedSO ORDERED.Davide, Jr., C.J., (Chairman), Kapunan,andPardo,
JJ.,concur.Ynares-Santiago, J.,no part.
FIRST DIVISION[G.R. No. 120465.September 9, 1999]WILLIAM UY and
RODEL ROXAS,petitioners,vs. COURT OF APPEALS, HON. ROBERT BALAO and
NATIONAL HOUSING AUTHORITY,respondents.D E C I S I O
NKAPUNAN,J.:Petitioners William Uy and Rodel Roxas are agents
authorized to sell eight parcels of land by the owners thereof.By
virtue of such authority, petitioners offered to sell the lands,
located in Tuba, Tadiangan, Benguet to respondent National Housing
Authority (NHA) to be utilized and developed as a housing
project.On February 14, 1989, the NHA Board passed Resolution No.
1632 approving the acquisition of said lands, with an area of
31.8231 hectares, at the cost ofP23.867 million, pursuant to which
the parties executed a series of Deeds of Absolute Sale covering
the subject lands.Of the eight parcels of land, however, only five
were paid for by the NHA because of the report[1]it received from
the Land Geosciences Bureau of the Department of Environment and
Natural Resources (DENR) that the remaining area is located at an
active landslide area and therefore, not suitable for development
into a housing project.On 22 November 1991, the NHA issued
Resolution No. 2352 cancelling the sale over the three parcels of
land.The NHA, through Resolution No. 2394, subsequently offered the
amount ofP1.225 million to the landowners asdaos perjuicios.On 9
March 1992, petitioners filed before the Regional Trial Court (RTC)
of Quezon City a Complaint for Damages against NHA and its General
Manager Robert Balao.After trial, the RTC rendered a decision
declaring the cancellation of the contract to be justified.The
trial court nevertheless awarded damages to plaintiffs in the sum
of P1.255 million, the same amount initially offered by NHA to
petitioners as damages.Upon appeal by petitioners, the Court of
Appeals reversed the decision of the trial court and entered a new
one dismissing the complaint.It held that since there was
sufficient justifiable basis in cancelling the sale, it saw no
reason for the award of damages.The Court of Appeals also noted
that petitioners were mere attorneys-in-fact and, therefore, not
the real parties-in-interest in the action before the trial
court.xxx In paragraph 4 of the complaint, plaintiffs alleged
themselves to besellers agents for several owners of the 8
lotssubject matter of the case.Obviously, William Uy and Rodel
Roxas in filing this case acted as attorneys-in-fact of the lot
owners who are the real parties in interest but who were omitted to
be pleaded as party-plaintiffs in the case.This omission is
fatal.Where the action is brought by an attorney-in-fact of a land
owner in his name, (as in our present action) and not in the name
of his principal, the action was properly dismissed (Ferrervs.
Villamor, 60 SCRA 406 [1974]; Marcelovs. de Leon, 105 Phil. 1175)
because the rule is that every action must be prosecuted in the
name of the real parties-in-interest (Section 2, Rule 3, Rules of
Court).When plaintiffs Uy and Roxas sought payment of damages in
their favor in view of the partial rescission of Resolution No.
1632 and the Deed of Absolute Sale covering TCT Nos. 10998, 10999
and 11292 (Prayer complaint, page 5, RTC records), it becomes
obviously indispensable that the lot owners be included, mentioned
and named as party-plaintiffs, being the real party-in-interest.Uy
and Roxas, as attorneys-in-fact or apoderados, cannot by themselves
lawfully commence this action, more so, when the supposed special
power of attorney, in their favor, was never presented as an
evidence in this case.Besides, even if herein plaintiffs Uy and
Roxas were authorized by the lot owners to commence this action,
the same must still be filed in the name of the pricipal, (Filipino
Industrial Corporationvs.San Diego, 23 SCRA 706 [1968]).As such
indispensable party, their joinder in the action is mandatory and
the complaint may be dismissed if not so impleaded (NDCvs. CA, 211
SCRA 422 [1992]).[2]Their motion for reconsideration having been
denied, petitioners seek relief from this Court contending
that:I.COMPLAINT FINDING THE RESPONDENT CA ERRED IN DECLARING THAT
RESPONDENT NHA HAD ANY LEGAL BASIS FOR RESCINDING THE SALE
INVOLVING THE LAST THREE (3) PARCELS COVERED BY NHA RESOLUTION NO.
1632.II.GRANTING ARGUENDO THAT THE RESPONDENT NHA HAD LEGAL BASIS
TO RESCIND THE SUBJECT SALE, THE RESPONDENT CA NONETHELESS ERRED IN
DENYING HEREIN PETITIONERS CLAIM TO DAMAGES, CONTRARY TO THE
PROVISIONS OF ART. 1191 OF THE CIVIL CODE.III.THE RESPONDENT CA
ERRED IN DISMISSING THE SUBJECT COMPLAINT FINDING THAT THE
PETITIONERS FAILED TO JOIN AS INDISPENSABLE PARTY PLAINTIFF THE
SELLING LOT-OWNERS.[3]We first resolve the issue raised in the
third assignment of error.Petitioners claim that they lodged the
complaint not in behalf of their principles but in their own name
as agents directly damaged by the termination of the contract.The
damages prayed for were intended not for the benefit of their
principals but to indemnify petitioners for the losses they
themselves allegedly incurred as a result of such termination.These
damages consist mainly of unearned income and
advances.[4]Petitioners, thus, attempt to distinguish the case at
bar from those involving agents orapoderadosinstituting actions in
their own name butin behalf of their principals.[5]Petitioners in
this case purportedly brought the action for damages in their own
name andin their own behalf.We find this contention
unmeritorious.Section 2, Rule 3 of the Rules of Court requires that
every action must be prosecuted and defended in the name of the
real party-in-interest.The real party-in-interest is the party who
stands to be benefited or injured by the judgment or the party
entitled to the avails of the suit.Interest, within the meaning of
the rule, means material interest, an interest in the issue and to
be affected by the decree, as distinguished from mere interest in
the question involved, or a mere incidental interest.[6]Cases
construing the real party-in-interest provision can be more easily
understood if it is borne in mind that the true meaning of real
party-in-interest may be summarized as follows:An action shall be
prosecuted in the name of the party who, by the substantive law,
has the right sought to be enforced.[7]Do petitioners, under
substantive law, possess the right they seek to enforce?We rule in
the negative.The applicable substantive law in this case is Article
1311 of the Civil Code, which states:Contracts take effect only
between theparties, theirassigns, andheirs,except in case where the
rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation, or by provision
of law.x x x.If a contract should contain some stipulation in favor
of athird person, he may demand its fulfillmentprovided he
communicated his acceptance to the obligor before its revocation.A
mere incidental benefit or interest of a person is not
sufficient.The contracting parties must have clearly and
deliberately conferred a favor upon a third person.(Underscoring
supplied.)Petitioners are notpartiesto the contract of sale between
their principals and NHA.They are mereagentsof the owners of the
land subject of the sale.As agents, they only render some service
or do somethingin representationoron behalfof their
principals.[8]The rendering of such service did not make them
parties to the contracts of sale executed in behalf of the
latter.Since a contract may be violated only by the parties thereto
as against each other, the real parties-in-interest, either as
plaintiff or defendant, in an action upon that contract must,
generally, either be parties to said contract.[9]Neither has there
been any allegation, much less proof, that petitioners are
theheirsof their principals.Are petitionersassigneesto the rights
under the contracts of sale?InMcMicking vs. Banco
Espaol-Filipino,[10]we held that the rule requiring every action to
be prosecuted in the name of the real party-in-interestx x x
recognizes the assignments of rights of action and also recognizes
that when one has a right of action assigned to him he is then the
real party in interest and may maintain an action upon such claim
or right.The purpose of [this rule] is to require the plaintiff to
be the real party in interest, or, in other words, he must be the
person to whom the proceeds of the action shall belong, and to
prevent actions by persons who have no interest in the result of
the same.xxxThus, an agent, in his own behalf, may bring an action
founded on a contract made for his principal, as an assignee of
such contract.We find the following declaration in Section 372 (1)
of the Restatement of the Law on Agency (Second):[11]Section
372.Agent as Owner of Contract Right(1)Unless otherwise agreed, an
agent who has or who acquires an interest in a contract which he
makes on behalf of his principal can, although not a promisee,
maintain such action thereon as might a transferee having a similar
interest.The Comment on subsection (1) states:a.Agent a
transferee.One who has made a contract on behalf of another may
become an assignee of the contract and bring suit against the other
party to it, as any other transferee.The customs of business or the
course of conduct between the principal and the agent may indicate
that an agent who ordinarily has merely a security interest is a
transferee of the principals rights under the contract and as such
is permitted to bring suit.If the agent has settled with his
principal with the understanding that he is to collect the claim
against the obligor by way of reimbursing himself for his advances
and commissions, the agent is in the position of an assignee who is
the beneficial owner of the chose in action.He has an irrevocable
power to sue in his principals name.x x x.And, under the statutes
which permit the real party in interest to sue, he can maintain an
action in his own name.This power to sue is not affected by a
settlement between the principal and the obligor if the latter has
notice of the agents interest.x x x.Even though the agent has not
settled with his principal, he may, by agreement with the
principal, have a right to receive payment and out of the proceeds
to reimburse himself for advances and commissions before turning
the balance over to the principal.In such a case, although there is
no formal assignment, the agent is in the position of a transferee
of the whole claim for security; he has an irrevocable power to sue
in his principals name and, under statutes which permit the real
party in interest to sue, he can maintain an action in his own
name.Petitioners, however, have not shown that they are assignees
of their principals to the subject contracts.While they alleged
that they made advances and that they suffered loss of commissions,
they have not established any agreement granting them the right to
receive payment and out of the proceeds to reimburse [themselves]
for advances and commissions before turning the balance over to the
principal[s].Finally, it does not appear that petitioners
arebeneficiaries of a stipulationpour autruiunder the second
paragraph of Article 1311 of the Civil Code.Indeed, there is no
stipulation in any of the Deeds of Absolute Sale clearly and
deliberately conferring a favor to any third person.That
petitioners did not obtain their commissions or recoup their
advances because of the non-performance of the contract did not
entitle them to file the action below against respondent
NHA.Section 372 (2) of the Restatement of the Law on Agency
(Second) states:(2)An agent does not have such an interest in a
contract as to entitle him to maintain an action at law upon it in
his own name merely because he is entilted to a portion of the
proceeds as compensation for making it or because he is liable for
its breach.The following Comment on the above subsection is
illuminating:The fact that an agent who makes a contract for his
principal will gain or suffer loss by the performance or
nonperformance of the contract by the principal or by the other
party thereto does not entitle him to maintain an action on his own
behalf against the other party for its breach.An agent entitled to
receive a commission from his principal upon the performance of a
contract which he has made on his principals account does not, from
this fact alone, have any claim against the other party for breach
of the contract, either in an action on the contract or
otherwise.An agent who is not a promisee cannot maintain an action
at law against a purchaser merely because he is entitled to have
his compensation or advances paid out of the purchase price before
payment to the principal.x x x.Thus, inHopkins vs. Ives,[12]the
Supreme Court of Arkansas, citing Section 372 (2) above, denied the
claim of a real estate broker to recover his alleged commission
against the purchaser in an agreement to purchase property.InGoduco
vs. Court of Appeals,[13]this Court held that:x x x granting that
appellant had the authority to sell the property, the same did not
make the buyer liable for the commission she claimed.At most, the
owner of the property and the one who promised to give her a
commission should be the one liable to pay the same and to whom the
claim should have been directed.xxxAs petitioners are not parties,
heirs, assignees, or beneficiaries of a stipulationpour autruiunder
the contracts of sale, they do not, under substantive law, possess
the right they seek to enforce.Therefore, they are not the real
parties-in-interest in this case.Petitioners not being the real
parties-in-interest, any decision rendered herein would be
pointless since the same would not bind
therealparties-in-interest.[14]Nevertheless, to forestall further
litigation on the substantive aspects of this case, we shall
proceed to rule on the merits.[15]Petitioners submit that
respondent NHA had no legal basis to rescind the sale of the
subject three parcels of land.The existence of such legal basis,
notwithstanding, petitioners argue that they are still entitled to
an award of damages.Petitioners confuse the cancellation of the
contract by the NHA as a rescission of the contract under Article
1191 of the Civil Code.The right of rescission or, more accurately,
resolution, of a party to an obligation under Article 1191 is
predicated on a breach of faith by the other party that violates
the reciprocity between them.[16]The power to rescind, therefore,
is given to the injured party.[17]Article 1191 states:The power to
rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.The
injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case.He
may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.In this case, the NHA did not
rescind the contract.Indeed, it did not have the right to do so for
the other parties to the contract, the vendors, did not commit any
breach, much less a substantial breach,[18]of their
obligation.Their obligation was merely to deliver the parcels of
land to the NHA, an obligation that they fulfilled.The NHA did not
suffer any injury by the performance thereof.The cancellation,
therefore, was not a rescission under Article 1191.Rather, the
cancellation was based on the negation of the cause arising from
the realization that the lands, which were the object of the sale,
were not suitable for housing.Cause is the essential reason which
moves the contracting parties to enter into it.[19]In other words,
the cause is the immediate, direct and proximate reason which
justifies the creation of an obligation through the will of the
contracting parties.[20]Cause, which is the essential reason for
the contract, should be distinguished from motive, which is the
particular reason of a contracting party which does not affect the
other party.[21]For example, in a contract of sale of a piece of
land, such as in this case, the cause of the vendor (petitioners
principals) in entering into the contract is to obtain the
price.For the vendee, NHA, it is the acquisition of the
land.[22]Themotiveof the NHA, on the other hand, is to use said
lands for housing.This is apparent from the portion of the Deeds of
Absolute Sale[23]stating:WHEREAS, under the Executive Order No. 90
dated December 17, 1986, the VENDEE is mandated to focus and
concentrate its efforts and resources in providing housing
assistance to the lowest thirty percent (30%) of urban income
earners, thru slum upgrading and development of sites and services
projects;WHEREAS, Letters of Instructions Nos. 555 and 557 [as]
amended by Letter of Instruction No. 630, prescribed slum
improvement and upgrading, as well as the development of sites and
services as the principal housing strategy for dealing with slum,
squatter and other blighted communities;x x xWHEREAS, the VENDEE,
in pursuit of and in compliance with the above-stated purposes
offers to buy and the VENDORS, in a gesture of their willing to
cooperate with the above policy and commitments, agree to sell the
aforesaid property together with all the existing improvements
there or belonging to the VENDORS;NOW, THEREFORE, for and in
consideration of the foregoing premises and the terms and
conditions hereinbelow stipulated, the VENDORS hereby, sell,
transfer, cede and convey unto the VENDEE, its assigns, or
successors-in-interest, a parcel of land located at Bo. Tadiangan,
Tuba, Benguet containing a total area of FIFTY SIX THOUSAND EIGHT
HUNDRED NINETEEN (56,819) SQUARE METERS, more or less x x
x.Ordinarily, a partys motives for entering into the contract do
not affect the contract.However, when the motive predetermines the
cause, the motive may be regarded as the cause.InLiguez vs. Court
of Appeals,[24]this Court, speaking through Justice J.B.L. Reyes,
held:xxx It is well to note, however, that Manresa himself (Vol. 8,
pp. 641-642) while maintaining the distinction and upholding the
inoperativeness of the motives of the parties to determine the
validity of the contract, expressly excepts from the rule those
contracts that are conditioned upon the attainment of the motives
of either party.The same view is held by the Supreme Court of
Spain, in its decisions of February 4, 1941, and December 4, 1946,
holding that the motive may be regarded ascausawhen it
predetermines the purpose of the contract.In this case, it is
clear, and petitioners do not dispute, that NHA would not have
entered into the contract were the lands not suitable for
housing.In other words, the quality of the land was an implied
condition for the NHA to enter into the contract.On the part of the
NHA, therefore, the motive was the cause for its being a party to
the sale.Were the lands indeed unsuitable for the housing as NHA
claimed?We deem the findings contained in the report of the Land
Geosciences Bureau dated 15 July 1991 sufficient basis for the
cancellation of the sale, thus:In Tadiangan, Tuba, the housing site
is situated in an area of moderate topography.There [are] more
areas of less sloping ground apparently habitable.The site is
underlain by x x x thick slide deposits (4-45m) consisting of huge
conglomerate boulders (see Photo No. 2) mix[ed] with silty clay
materials.These clay particles when saturated have some swelling
characteristics which is dangerous for any civil structures
especially mass housing development.[25]Petitioners content that
the report was merely preliminary, and not conclusive, as indicated
in its title:MEMORANDUMTO:EDWIN G. DOMINGOChief, Lands Geology
DivisionFROM:ARISTOTLE A. RILLONGeologist IISUBJECT:Preliminary
Assessmentof Tadiangan Housing Project in Tuba, Benguet[26]Thus,
page 2 of the report states in part:x x xActually there is a need
to conduct further geottechnical [sic] studies in the NHA
property.Standard Penetration Test (SPT) must be carried out to
give an estimate of the degree of compaction (the relative density)
of the slide deposit and also the bearing capacity of the soil
materials.Another thing to consider is the vulnerability of the
area to landslides and other mass movements due to thick soil
cover.Preventive physical mitigation methods such as surface and
subsurface drainage and regrading of the slope must be done in the
area.[27]We read the quoted portion, however, to mean only that
further tests are required to determine the degree of compaction,
the bearing capacity of the soil materials, and vulnerability of
the area to landslides, since the tests already conducted were
inadequate to ascertain such geological attributes.It is only in
this sense that the assessment was preliminary.Accordingly, we hold
that the NHA was justified in cancelling the contract.The
realization of the mistake as regards the quality of the land
resulted in the negation of the motive/cause thus rendering the
contract inexistent.[28]Article 1318 of the Civil Code states
that:Art. 1318.There is no contract unless the following requisites
concur:(1)Consent of the contracting parties;(2)Object certain
which is the subject matter of the contract;(3)Causeof the
obligation which is established. (Underscoring supplied.)Therefore,
assuming that petitioners are parties, assignees or beneficiaries
to the contract of sale, they would not be entitled to any award of
damages.WHEREFORE, the instant petition is hereby DENIED.SO
ORDERED.Davide, C.J., (Chairman),on leave.Puno,
Pardo,andYnares-Santiago, JJ.,concur.
SECOND DIVISION[G.R. No. 130148.December 15, 1997]JOSE BORDADOR
and LYDIA BORDADOR,petitioners, vs.BRIGIDA D. LUZ, ERNESTO M. LUZ
and NARCISO DEGANOS,respondents.D E C I S I O NREGALADO,J.:In this
appeal bycertiorari, petitioners assail the judgment of the Court
of Appeals in CA-G.R. CV No. 49175 affirming the adjudication ofthe
Regional Trial Court of Malolos, Bulacan which found private
respondent Narciso Deganos liable to petitioners for actual
damages, but absolved respondent spouses Brigida D. Luz and Ernesto
M. Luz of liability. Petitioners likewise belabor the subsequent
resolution of the Court of Appeals which denied their motion for
reconsideration of its challenged decision.Petitioners were engaged
in the business of purchase and sale of jewelry and respondent
Brigida D. Luz, also known as Aida D. Luz, was their regular
customer.On several occasions during the period from April 27, 1987
to September 4, 1987, respondent Narciso Deganos, the brother of
Brigida D. Luz, received several pieces of gold and jewelry from
petitioners amounting toP382,816.00.[1]These items and their prices
were indicated in seventeen receipts covering the same.Eleven of
the receipts stated that they were received for a certain Evelyn
Aquino, a niece of Deganos, and the remaining six indicated that
they were received for Brigida D. Luz.[2]Deganos was supposed to
sell the items at a profit and thereafter remit the proceeds and
return the unsold items to petitioners.Deganos remitted only the
sum ofP53,207.00.He neither paid the balance of the sales proceeds,
nor did he return any unsold item to petitioners.By January 1990,
the total of his unpaid account to petitioners, including interest,
reached the sum ofP725,463.98.[3]Petitioners eventually filed a
complaint in thebarangaycourt against Deganos to recover said
amount.In thebarangayproceedings, Brigida D. Luz, who was not
impleaded in the case, appeared as a witness for Deganos and
ultimately, she and her husband, together with Deganos, signed a
compromise agreement with petitioners.In that compromise agreement,
Deganos obligated himself to pay petitioners, on installment basis,
the balance of his account plus interest thereon.However, he failed
to comply with his aforestated undertakings.On June 25, 1990,
petitioners instituted Civil Case No. 412-M-90 in the Regional
Trial Court of Malolos, Bulacan against Deganos and Brigida D. Luz
for recovery of a sum of money and damages, with an application for
preliminary attachment.[4]Ernesto Luz was impleaded therein as the
spouse of Brigida.Four years later, or on March 29, 1994, Deganos
and Brigida D. Luz were charged with estafa[5]in the Regional Trial
Court of Malolos, Bulacan, which was docketed as Criminal Case No.
785-M-94.That criminal case appears to be still pending in said
trial court.During the trial of the civil case, petitioners claimed
that Deganos acted as the agent of Brigida D. Luz when he received
the subject items of jewelry and, because he failed to pay for the
same, Brigida, as principal, and her spouse are solidarily liable
with him therefor.On the other hand, while Deganos admitted that he
had an unpaid obligation to petitioners, he claimed that the same
was only in the sum ofP382,816.00 and notP725,463.98.He further
asserted that it was he alone who was involved in the transaction
with the petitioners; that he neither acted as agent for nor was he
authorized to act as an agent by Brigida D. Luz, notwithstanding
the fact that six of the receipts indicated that the items were
received by him for the latter.He further claimed that he never
delivered any of the items he received from petitioners to
Brigida.Brigida, on her part, denied that she had anything to do
with the transactions between petitioners and Deganos.She claimed
that she never authorized Deganos to receive any item of jewelry in
her behalf and, for that matter, neither did she actually receive
any of the articles in question.After trial, the court below found
that only Deganos was liable to petitioners for the amount and
damages claimed.It held that while Brigida D. Luz did have
transactions with petitioners in the past, the items involved were
already paid for and all that Brigida owed petitioners was the sum
ofP21,483.00 representing interest on the principal account which
she had previously paid for.[6]The trial court also found that it
was petitioner Lydia Bordador who indicated in the receipts that
the items were received by Deganos for Evelyn Aquino and Brigida D.
Luz.[7]Said court was persuaded that Brigida D. Luz was behind
Deganos, but because there was no memorandum to this effect, the
agreement between the parties was unenforceable under the Statute
of Frauds.[8]Absent the required memorandum or any written document
connecting the respondent Luz spouses with the subject receipts, or
authorizing Deganos to act on their behalf, the alleged agreement
between petitioners and Brigida D. Luz was unenforceable.Deganos
was ordered to pay petitioners the amount ofP725,463.98, plus legal
interest thereon from June 25, 1990, and attorneys fees.Brigida D.
Luz was ordered to payP21,483.00 representing the interest on her
own personal loan.She and her co-defendant spouse were absolved
from any other or further liability.[9]As stated at the outset,
petitioners appealed the judgment of the courta quoto the Court of
Appeals which affirmed said judgment.[10]The motion for
reconsideration filed by petitioners was subsequently
dismissed,[11]hence the present recourse to this Court.The primary
issue in the instant petition is whether or not herein respondent
spouses are liable to petitioners for the latters claim for money
and damages in the sum ofP725,463.98, plus interests and attorneys
fees, despite the fact that the evidence does not show that they
signed any of the subject receipts or authorized Deganos to receive
the items of jewelry on their behalf.Petitioners argue that the
Court of Appeals erred in adopting the findings of the courta
quothat respondent spouses are not liable to them, as said
conclusion of the trial court is contradicted by the finding of
fact of the appellate court that (Deganos) acted as agent of his
sister (Brigida Luz).[12]In support of this contention, petitioners
quoted several letters sent to them by Brigida D. Luz wherein the
latter acknowledged her obligation to petitioners and requested for
more time to fulfill the same.They likewise aver that Brigida
testified in the trial court that Deganos took some gold articles
from petitioners and delivered the same to her.Both the Court of
Appeals and the trial court, however, found as a fact that the
aforementioned letters concerned the previous obligations of
Brigida to petitioners, and had nothing to do with the money sought
to be recovered in the instant case.Such concurrent factual
findings are entitled to great weight, hence, petitioners cannot
plausibly claim in this appellate review that the letters were in
the nature of acknowledgments by Brigida that she was the principal
of Deganos in the subject transactions.On the other hand, with
regard to the testimony of Brigida admitting delivery of the gold
to her, there is no showing whatsoever that her statement referred
to the items which are the subject matter of this case.It cannot,
therefore, be validly said that she admitted her liability
regarding the same.Petitioners insist that Deganos was the agent of
Brigida D. Luz as the latter clothed him with apparent authority as
her agent and held him out to the public as such, hence Brigida can
not be permitted to deny said authority to innocent third parties
who dealt with Deganos under such belief.[13]Petitioners further
represent that the Court of Appeals recognized in its decision that
Deganos was an agent of Brigida.[14]The evidence does not support
the theory of petitioners that Deganos was an agent of Brigida D.
Luz and that the latter should consequently be held solidarily
liable with Deganos in his obligation to petitioners.While the
quoted statement in the findings of fact of the assailed appellate
decision mentioned that Deganos ostensibly acted as an agent of
Brigida, the actual conclusion and ruling of the Court of Appeals
categorically stated that, (Brigida Luz) never authorized her
brother (Deganos) to act for and in her behalf in any transaction
with Petitioners xxx.[15]It is clear, therefore, that even
assumingarguendothat Deganos acted as an agent of Brigida, the
latter never authorized him to act on her behalfwith regard to the
transactions subject of this case.The Civil Code provides:Art.
1868. By the contract of agency a person binds himself to render
some service or to do something in representation or on behalf of
another, with the consent or authority of the latter.The basis for
agency is representation.Here, there is no showing that Brigida
consented to the acts of Deganos or authorized him to act on her
behalf, much less with respect to the particular transactions
involved.Petitioners attempt to foist liability on respondent
spouses through the supposed agency relation with Deganos is
groundless and ill-advised.Besides, it was grossly and inexcusably
negligent of petitioners to entrust to Deganos, not once or twice
but on at least six occasions as evidenced by six receipts, several
pieces of jewelry of substantial value without requiring a written
authorization from his alleged principal.A person dealing with an
agent is put upon inquiry and must discover upon his peril the
authority of the agent.[16]The records show that neither an express
nor an implied agency was proven to have existed between Deganos
and Brigida D. Luz.Evidently, petitioners, who were negligent in
their transactions with Deganos, cannot seek relief from the
effects of their negligence by conjuring a supposed agency relation
between the two respondents where no evidence supports such
claim.Petitioners next allege that the Court of Appeals erred in
ignoring the fact that the decision of the court below, which it
affirmed, is null and void as it contradicted its ruling in CA-G.R.
SP No. 39445 holding that there is sufficient evidence/proof
against Brigida D. Luz and Deganos for estafa in the pending
criminal case.They further aver that said appellate court erred in
ruling against them in this civil action since the same would
result in an inevitable conflict of decisions should the trial
court convict the accused in the criminal case.By way of backdrop
for this argument of petitioners, herein respondents Brigida D. Luz
and Deganos had filed a demurrer to evidence and a motion for
reconsideration in the aforestated criminal case, both of which
were denied by the trial court.They then filed a petition
forcertiorariin the Court of Appeals to set aside the denial of
their demurrer and motion for reconsideration but, as just stated,
their petition therefor was dismissed.[17]Petitioners now claim
that the aforesaid dismissal by the Court of Appeals of the
petition in CA-G.R. SP No. 39445 with respect to the criminal case
is equivalent to a finding that there is sufficient evidence in the
estafa case against Brigida D. Luz and Deganos.Hence, as already
stated, petitioners theorize that the decision and resolution of
the Court of Appeals now being impugned in the case at bar would
result in a possible conflict with the prospective decision in the
criminal case.Instead of promulgating the present decision and
resolution under review, so they suggest, the Court of Appeals
should have awaited the decision in the criminal case, so as not to
render academic or preempt the same or, worse, create two
conflicting rulings.[18]Petitioners have apparently lost sight of
Article 33 of the Civil Code which provides that in cases involving
alleged fraudulent acts, a civil