Cervantes v.

CA knew there was a strong possibility that he could not use the subject
GR No. 125138 ticket, so much so that he bought a back-up ticket to ensure his
departure. Should there be a finding of bad faith, we are of the opinion
Facts: that it should be on the petitioner. What the employees of PAL did was
one of simple negligence. No injury resulted on the part of petitioner
On March 27, 1989, private respondent PAL issued to herein petitioner because he had a back-up ticket should PAL refuse to accommodate
Nicholas Cervantes a round trip ticket for Manila-Honolulu-Los him with the use of subject ticket.
Angeles-Honolulu-Manila, which is valid until March 27, 1990. On
March 23, 1990, petitioner used it. Upon his arrival in Los Angeles, he Neither can the claim for exemplary damages be upheld. Such kind of
immediately booked a flight to Manila, which was confirmed on April 2. damages is imposed by way of example or correction for the public
Upon learning that the plane would make a stop-over in San Francisco, good, and the existence of bad faith is established. The wrongful act
and because he would be there on April 2, petitioner made must be accompanied by bad faith, and an award of damages would
arrangements to board in San Francisco. On April 2, he was not allowed be allowed only if the guilty party acted in a wanton, fraudulent, reckless
to board due to the expiration of his ticket. He filed a complaint for or malevolent manner. Here, there is no showing that PAL acted in such
damages. It was not given due course by both the trial court and the a manner. An award for attorney's fees is also improper.
Court of Appeals.
Issues:
(1) Whether or not the act of the PAL agents in confirming subject ticket
extended the period of validity of petitioner's ticket
(2) Whether or not the denial of the award for damages was proper
Held:
(1) From the facts, it can be gleaned that the petitioner was fully aware
that there was a need to send a letter to the legal counsel of PAL for
the extension of the period of validity of his ticket. Under Article 1898
11 of the New Civil Code, the acts of an agent beyond the scope of his
authority do not bind the principal, unless the latter ratifies the same
expressly or impliedly. Furthermore, when the third person (herein
petitioner) knows that the agent was acting beyond his power or
authority, the principal cannot be held liable for the acts of the agent. If
the said third person is aware of such limits of authority, he is to blame,
and is not entitled to recover damages from the agent, unless the latter
undertook to secure the principal's ratification.
(2) An award of damages is improper because petitioner failed to show
that PAL acted in bad faith in refusing to allow him to board its plane in
San Francisco. In awarding moral damages for breach of contract of
carriage, the breach must be wanton and deliberately injurious or the
one responsible acted fraudulently or with malice or bad faith. Petitioner

1
Serona v. Court of Appeals criminal action, Serona is but liable only to pay Quilatan the value of the
G.R. No. 130423, 18 November 2002 unpaid pieces of jewelry.

FACTS:

During the period from July 1992 to September 1992, Leonida Quilatan
delivered pieces of jewelry to petitioner Virgie Serona to be sold on
commission basis. By oral agreement of the parties, petitioner shall
remit payment or return the pieces of jewelry if not sold to Quilatan,
both within 30 days from receipt of the items.

Upon failure of Virgie Serona to pay on September 24, 1992, Quilatan

required her to execute an acknowledgment receipt.

Unknown to Quilatan, Serona had earlier entrusted the jewelry to one

Marichu Labrador for the latter to sell on commission basis. Serona was
not able to collect payment from Labrador, which caused her to likewise
fail to pay her obligation to Quilatan.

ISSUES:

1. Whether or not that there was an abuse of confidence on the part of

Serona in entrusting the subject jewelries to Labrador for sale on
commission to prospective buyers.

2. Whether or not there was misappropriation or conversion on the part

of Serona when she failed to return the subject jewelries to Quilatan

RULING:

The court granted the petition of Virgie Serona and ACQUITTED her of
the crime of Estafa, but is held civilly liable in the amount of
P424,750.00 as actual damages, plus legal interest, without subsidiary
imprisonment in case of insolvency.

The court emphasize that an agent is not prohibited from appointing a

sub-agent but does so without express authority is responsible for the
acts of the sub-agent. Considering that the civil action for the recovery
of civil liability arising from the offense is deemed instituted with the

2
Austria vs. Court of Appeals NO, the law provides that except in case expressly specified by law, or
G.R. No. L-29640, June 10, 1971 when it is otherwise declared by stipulation, or when the nature of the
obligation require the assumption of risk, no person shall be responsible
for those events which could not be foreseen, or which, though
FACTS: foreseen, were inevitable.

On January 30, 1961, Maria G. Abad acknowledged that she received It must be noted that to avail of the exemption granted in the law, it is
from Guillermo Austria one (1) pendant with diamonds to be sold on a not necessary that the persons responsible for the occurrence should
commission basis or to be returned on demand. However, on February be punished; it would only be sufficient to establish that the enforceable
1, 1961, while walking home to her residence, Abad was said to have event, the robbery in this case did take place without any concurrent
been accosted by two men, one of whom hit her on the face, while the fault on the debtor`s part, and this can be done by preponderant
other snatched her purse containing jewelry and cash, and ran away. evidence.

Since Abad failed to return the jewelry or pay for its value It must also be noted that a court finding that a robbery has happened
notwithstanding demands, Austria brought in the Court of First Instance would not necessarily mean that those accused in the criminal action
of Manila an action against her and her husband for recovery of the should be found guilty of the crime; nor would be a ruling that those
pendant or of its value, and damages. On their answer, the defendant actually accused did not commit the robbery be inconsistent with a
spouses set up the defense that the alleged robbery had extinguished finding that a robbery did take place. The evidence to establish these
their obligation. facts would not necessarily be the same.

The trial court rendered judgment in favor for the plaintiff which is
Austria. It held that defendant failed to prove the fact of robbery, or, if
indeed it was committed, the defendant was guilty of negligence. The
defendants appealed to the Court of Appeals and secured a reversal of
judgment. It declared respondents not responsible for the loss of the
jewelry on account of fortuitous event, and relieved them from liability
for damages to the owner. Hence, this case contending that for robbery
to fall under the category of fortuitous event and relieve the obligor form
his obligation under a contract, there ought to be prior judgment on the
guilt of the persons responsible therefor.

ISSUE:

Whether in a contract of agency (consignment of goods for sale) it is

necessary that there be prior conviction for robbery before the loss of
the article shall exempt the consignee from liability for such loss.

RULING:
3
DOMINGO v. DOMINGO at P1.20 per square meter or a total in round figure of P109,000.00.
This gift of P1,000.00 was not disclosed by Gregorio to Vicente. Neither
G.R. No. L-30573; October 29, 1971 did Oscar pay Vicente the additional amount of P1,000.00 by way of
earnest money.

FACTS:
When the deed of sale was not executed on August 1, 1956 as
On June 2, 1956, Vicente M. Domingo granted Gregorio Domingo, a stipulated nor on August 16, 1956 as extended by Vicente, Oscar told
real estate broker, the exclusive agency to sell his lot No. 883 of Piedad Gregorio that he did not receive his money from his brother in the United
Estate with an area of about 88,477 square meters at the rate of P2.00 States, for which reason he was giving up the negotiation including the
per square meter (or for P176,954.00) with a commission of 5% on the amount of P 1,000 given as earnest money to Vicente and the P 1,000
total price, if the property is sold by Vicente or by anyone else during given to Gregorio as propina or gift.
the 30-day duration of the agency or if the property is sold by Vicente
within three months from the termination of the agency to a purchaser When Oscar did not see him after several weeks, Gregorio sensed
to whom it was submitted by Gregorio during the continuance of the something fishy. So, he went to Vicente and read a portion to the effect
agency with notice to Vicente. The said agency contract was in triplicate, that Vicente was still committed to pay him 5% commission. Vicente
one copy was given to Vicente, while the original and another copy grabbed the original of the document and tore it to pieces.
were retained by Gregorio.
From his meeting with Vicente, Gregorio proceeded to the office of the
On June 3, 1956, Gregorio authorized the intervenor Teofilo P. Register of Deeds of Quezon City, where he discovered a deed of sale
Purisima to look for a buyer, promising him one-half of the 5% executed on September 17, 1956 by Amparo Diaz.
commission.Thereafter, Teofilo Purisima introduced Oscar de Leon to
Gregorio as a prospective buyer. Upon thus learning that Vicente sold his property to the same buyer,
Oscar de Leon and his wife, he demanded in writing payment of his
commission on the sale price of P109,000.00.
Oscar de Leon submitted a written offer which was very much lower
than the price of P2.00 per square meter. Vicente directed Gregorio to
tell Oscar de Leon to raise his offer. After several conferences between Vicente stated that Gregorio is not entitled to the 5% commission
Gregorio and Oscar de Leon, the latter raised his offer to P109,000.00 because he sold the property not to Gregorio's buyer, Oscar de Leon,
on June 20 and Vicente agreed. but to another buyer, Amparo Diaz, wife of Oscar de Leon

ISSUE:
Upon demand of Vicente, Oscar de Leon issued to him a check in the Whether Gregorio was entitled to receive the 5% commission
amount of P1,000.00 as earnest money, after which Vicente advanced
to Gregorio the sum of P300.00. Oscar de Leon confirmed his former HELD:
offer to pay for the property at P1.20 per square meter in another letter.
Subsequently, Vicente asked for an additional amount of P1,000.00 as No, Gregorio is not entitled to receive the 5% commission.
earnest money, which Oscar de Leon promised to deliver to him.
The Supreme Court held that the law imposes upon the agent the
Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina absolute obligation to make a full disclosure or complete account to his
the sum of 1,000.00 for succeeding in persuading Vicente to sell his lot principal of all his transactions and other material facts relevant to the
4
agency, so much so that the law as amended does not countenance Bacaltos Coal Mines v. Court of Appeals
any stipulation exempting the agent from such an obligation and G.R. No. 114091, 29 June 1995
considers such an exemption as void.
FACTS:
Hence, by taking such profit or bonus or gift or propina from the vendee,
the agent thereby assumes a position wholly inconsistent with that of Under and by virtue of an Authorization issued by GERMAN A.
being an agent for his principal, who has a right to treat him, insofar as BACALTOS to RENE ROSEL SAVELLON, the Trip Charter Party was
his Commission is concerned, as if no agency had existed. The fact that executed “by and between BACALTOS COAL MINES, represented …
the principal may have been benefited by the valuable services of the by its Chief Operating Officer, RENE ROSEL SAVELLON” and private
said agent does not exculpate the agent who has only himself to blame respondent San Miguel Corporation (hereinafter SMC). Thereunder,
for such a result by reason of his treachery or perfidy. Savellon claims that Bacaltos Coal Mines is the owner of the vessel
M/V Premship II and that for P650,000.00 to be paid within seven days
after the execution of the contract, it “lets, demises” the vessel to
charterer SMC “for three round trips to Davao.”

As payment of the aforesaid consideration, SMC issued a check

payable to “RENE SAVELLON IN TRUST FOR BACALTOS COAL
MINES” for which Savellon issued a receipt under the heading of
BACALTOS COAL MINES.

The vessel was able to make only one trip. Its demands to comply with
the contract having been unheeded, SMC filed against the petitioners
and Rene Savellon the complaint for specific performance and
damages.

In their Answer, the petitioners alleged that Savellon was not their Chief
Operating Officer and that the powers granted to him are only those
clearly expressed in the Authorization which do not include the power
to enter into any contract with SMC. They further claimed that if it is true
that SMC entered into a contract with them, it should have ISSUEd the
check in their favor.

RTC ruled in favor of SMC holding petitioners Bacaltos Coal Mines and
German A. Bacaltos and their co-defendant Rene R. Savellon jointly
and severally liable to private respondent SMC under a Trip Charter
Party. RTC ruled that the Authorization given by German Bacaltos to
5
Savellon necessarily included the power to enter into the Trip Charter In the instant case, since the agency of Savellon is based on a written
Party. document, the Authorization of 1 March 1988, the extent and scope of
his powers must be determined on the basis thereof.
CA affirmed RTC’s decision.
There is only one express power granted to Savellon, viz., to use the
ISSUE: coal operating contract for any legitimate purpose it may serve. The
enumerated “five prerogatives” — to employ the term used by the Court
Whether Savellon was duly authorized by the petitioners to enter into of Appeals — are nothing but the specific prerogatives subsumed under
the Trip Charter Party under and by virtue of an Authorization given by or classified as part or as examples of the power to use the coal
German Bacaltos. operating contract. The clause “but not by the way of limitation” which
precedes the enumeration could only refer to or contemplate other
RULING: prerogatives which must exclusively pertain or relate or be germane to
the power to use the coal operating contract. The conclusion then of
Every person dealing with an agent is put upon inquiry and must the Court of Appeals that the Authorization includes the power to enter
discover upon his peril the authority of the agent. If he does not make into the Trip Charter Party because the “five prerogatives” are prefaced
such inquiry, he is chargeable with knowledge of the agent’s authority, by such clause, is seriously flawed. It fails to note that the broadest
and his ignorance of that authority will not be any excuse. Person scope of Savellon’s authority is limited to the use of the coal operating
dealing with an assumed agent, whether the assumed agency be a contract and the clause cannot contemplate any other power not
general or special one, are bound at their peril, if they would hold the included in the enumeration or which are unrelated either to the power
principal, to ascertain not only the fact of the agency but also the nature to use the coal operating contract or to those already enumerated. In
and extent of the authority, and in case either is controverted, the short, while the clause allows some room for flexibility, it can
burden of the proof is upon them to establish it. comprehend only additional prerogatives falling within the primary
power and within the same class as those enumerated.
The person dealing with the agent must also act with ordinary prudence
and reasonable diligence. Obviously, if he knows or has good reason Wherefore, decision of CA is REVERSED and SET ASIDE.
to believe that the agent is exceeding his authority, he cannot claim
protection. So if the suggestions of probable limitations be of such a
clear and reasonable quality, or if the character assumed by the agent
is of such a suspicious or unreasonable nature, or if the authority which
he seeks to exercise is of such an unusual or improbable character, as
would suffice to put an ordinarily prudent man upon his guard, the party
dealing with him may not be shut his eyes to the real state of the case,
but should either refuse to deal with the agent at all, or should ascertain
from the principal the true conditions of affairs.

6
 ISSUE:
Green Valley v. Intermediate Appellate Court
Whether or not the agreement signed by the parties was a sales
G.R. No. L-49395, 26 December 1984
contract and thus Greeen Valley is liable for its unpaid obligations
against Squibb Veterinary Products.
FACTS:

On November 3, 1969, Squibb and Green Valley entered into a letter RULING:
agreement the text of which reads as follows:
The Supreme Court upheld the decision of the defunct Court of
Appeals. . By adopting Green Valley’s theory that the contract is an
“E.R. Squibb & Sons Philippine Corporation is pleased to appoint Green
agency to sell, it is liable because it sold on credit without authority from
Valley Poultry & Allied Products, Inc. as a non-exclusive distributor for
its principal. It further gives emphasis to the decision based on Article
Squibb Veterinary Products, as recommended by Dr. Leoncio D.
Rebong, Jr. and Dr. J.G. Cruz, Animal Health Division Sales 1905 of the Civil Code which reads:
Supervisor.”
“The commission agent cannot, without the express or implied consent
of the principal, sell on credit. Should he do so, the principal may
For goods delivered to Green Valley but unpaid, Squibb filed suit to
demand from him payment in cash, but the commission agent shall be
collect. The trial court as aforesaid gave judgment in favor of Squibb
entitled to any interest or benefit, which may result from such sale.”
which was affirmed by the Court of Appeals.

In both the trial court and the Court of Appeals, the parties advanced
their respective theories.

Green Valley claimed that the contract with Squibb was a mere agency
to sell; that it never purchased goods from Squibb; that the goods
received were on consignment only with the obligation to turn over the
proceeds, less its commission, or to return the goods ff not sold, and
since it had sold the goods but had not been able to collect from the
purchasers thereof, the action was premature.

Upon the other hand, Squibb claimed that the contract was one of sale
so that Green Valley was obligated to pay for the goods received upon
the expiration of the 60-day credit period.

Both courts below upheld the claim of Squibb that the agreement
between the parties was a sales contract.

7
DOMINION INSURANCE CORPORATION V. COURT OF APPEALS CONSTANTE AMOR DE CASTRO VS CA
G.R. No. 129919. February 6, 2002
GR No. 115838
FACTS:
Private Respondent, Rodolfo Guevarra filed a complaint for sum of
money againstthe petitioner Dominion Insurance Corporation (DIC), Facts:
seeking to recover the sum ofP 156,473.90, which he claimed to
private respondent Francisco Artigo... sued petitioners
have advanced in his capacity as manager of thepetitioner to satisfy the
claims filed by their clients.DIC however stated that they are not liable De Castro... to collect the unpaid balance of his broker's commission
to pay respondent because he had notacted within his authority as an from the De
agent for Dominion. They have instructed therespondent that the
payment for the claims of the insured should be taken from therev Castros.
olving fund, not from respondents’ personal money. were co-owners of four (4) lots located at EDSA... appellee... was
authorized by... appellants to act as real estate broker in the sale of
ISSUES: these properties for the amount of P23,000,000.00, five percent (5%)
Whether respondent have acted within his duties as the agent of of which will be given to the agent as commission.
petitionerWhether petitioner is liable to reimburse respondent.
It was appellee who first found Times Transit Corporation... as...
RULING: prospective buyer which desired to buy two (2) lots only,... Eventually,
sometime... the sale of lots 14 and 15 was consummated. Appellee
The court held that by contract of agency, a person a person binds received from appellants P48,893.76 as commission.
himself to rendersome service or to do something in representation or
on behalf of another, with theconsent or authority of the latter. The Appellee apparently felt short changed because according to him, his
basis for agency is representation. On the partof the principal, there total commission should be P352,500.00 which is five percent (5%) of
must be an actual intention to appoint or an intentionnaturally inferrable the agreed price of P7,050,000.00 paid by Times Transit Corporation...
from his words or actions; and on the part of the agent, theremust be to appellants for the two (2) lots
an intention to accept the appointment and act on it, and in the Hence, he sued below to collect the balance of P303,606.24 after
absence ofsuch intent, there is generally no agency.In the case at having received
bar, the respondent Guevarra was only given a general power in
theacts of administration, the payment of claims is not part of the P48,893.76 in advance.
general powergranted to him by DIC, hence under Article 1878
Although... appellants readily concede that it was appellee who first
a Special Power of Attorney isrequired to make such payments.Also,
introduced Times Transit Corp. to them, appellee was not designated
respondents actions is limited by the written standard authority to pay,
by them as their exclusive real estate agent but that in fact there were
wheresuch payment must be taken from the revolving fund, which the
more or less eighteen (18) others whose collective efforts in the long
respondent failed todo so. Hence the petitioner is not liable for the
run... dwarfed those of appellee's, considering that the first negotiation
expenses incurred by the agent.However, while the law on agency
for the sale where appellee took active participation failed and it was
prohibits respondent Guevarra from obtainingreimbursement, his right
these other agents who successfully brokered in the second negotiation
to recover may still be justified under the general law onobligations and
contracts

8
But despite this... appellee nevertheless was given the largest cut in the transaction. The solidarity arises from the common interest of the
commission (P48,893.76), although on the principle of quantum meruit principals, and not from the act of constituting the... agency. By virtue
of this solidarity, the agent can recover from any principal the whole
Furthermore, the purchase price for the two lots was only P3.6 million compensation and indemnity owing to him by the others. The parties,
as appearing in the deed of sale however, may, by express agreement, negate this solidary
Thus, even assuming that appellee is entitled to the entire commission, responsibility. The solidarity does not disappear by the... mere partition
he would only be getting 5% of the P3.6 million, or P180,000.00." effected by the principals after the accomplishment of the agency.

The Court of Appeals affirmed in toto the decision of the trial court. When the law expressly provides for solidarity of the obligation, as in
the liability of co-principals in a contract of agency, each obligor may be
The Court of Appeals found that Constante authorized Artigo to act as compelled to pay the entire obligation.[12] The agent may recover the
agent in the sale of two lots in Cubao, Quezon City. The handwritten whole compensation from any one of... the co-principals, as in this case.
authorization letter signed by Constante clearly established a contract
of agency between Constante and Artigo Thus, the Court has ruled in Operators Incorporated vs. American
Biscuit Co., Inc
Hence, the instant petition.
"x x x solidarity does not make a solidary obligor an indispensable party
Issues: in a suit filed by the creditor. Article 1216 of the Civil Code says that the
creditor `may proceed against anyone of the solidary debtors or some
Second Issue: whether Artigo's claim has been extinguished by full
or all of them... simultaneously'."
payment, waiver or abandonment
They assert that Artigo did absolutely nothing during the second
Ruling:
negotiation but to sign as a witness in the deed of sale. He did not even
The petition is bereft of merit. prepare the documents for the transaction as an active real estate
broker usually does.
There is no dispute that Constante appointed Artigo in a handwritten
note dated January 24, 1984 to sell the properties of the De Castros for The mere fact that "other agents" intervened in the consummation of
P23 million at a 5 percent commission. The authority was on a first the sale and were paid their respective commissions cannot vary the
come, first serve basis. terms of the contract of agency granting Artigo a 5 percent commission
based on the selling price. These "other agents" turned out to be...
Constante signed the note as owner and as representative of the other employees of Times Transit, the buyer Artigo introduced to the De
co-owners. Under this note, a contract of agency was clearly Castros.
constituted between Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constante's individual or representative In any event, we find that the 5 percent real estate broker's commission
capacity, or... both, the De Castros cannot seek the dismissal of the is reasonable and within the standard practice in the real estate industry
case for failure to implead the other co-owners as indispensable parties. for transactions of this nature.
The De Castros admit that the other co-owners are solidarily liable
The De Castros' reliance on Article 1235 of the Civil Code is misplaced.
under the contract of agency,... The solidary liability of the four co-
Artigo's acceptance of partial payment of his commission neither
owners, however, militates against the De Castros' theory that the other
amounts to a waiver of the balance nor puts him in estoppel.
co-owners should be impleaded as indispensable parties.
The rule in this article applies even when the appointments were made
by the principals in separate acts, provided that they are for the same

9
CUISON vs. CA and Valiant person to act as his agent, to the prejudice of innocent third parties
G.R. No. 88539 dealing with such person in good faith and in the honest belief that he
October 26, 1993 is what he appears to be

FACTS: Kue Cuison is a sole proprietorship engaged in the purchase

and sale of newsprint, bond paper and scrap. It matters not whether the representations are intentional or merely
Valiant Investment Associates delivered various kinds of paper negligent so long as innocent, third persons relied upon such
products to a certain Tan. The deliveries were made by Valiant representations in good faith and for value. Article 1911 of the Civil
pursuant to orders allegedly placed by Tiac who was then employed in Code provides:
the Binondo office of petitioner. Upon delivery, Tan paid for the
merchandise by issuing several checks payable to cash at the specific “Even when the agent has exceeded his authority, the principal is
request of Tiac. In turn, Tiac issued nine (9) postdated checks to Valiant solidarily liable with the agent if the former allowed the latter to act as
as payment for the paper products. Unfortunately, sad checks were though he had full powers.”
later dishonored by the drawee bank.

The above-quoted article is new. It is intended to protect the rights of

Thereafter, Valiant made several demands upon petitioner to pay for innocent persons. In such a situation, both the principal and the agent
the merchandise in question, claiming that Tiac was duly authorized by may be considered as joint tortfeasors whose liability is joint and
petitioner as the manager of his Binondo office, to enter into the solidary.
questioned transactions with Valiant and Tan. Petitioner denied any
involvement in the transaction entered into by Tiac and refused to pay
Valiant. It is evident from the records that by his own acts and admission,
petitioner held out Tiac to the public as the manager of his store in
Binondo. More particularly, petitioner explicitly introduced to Villanueva,
Left with no recourse, private respondent filed an action against Valiant’s manager, as his (petitioner’s) branch manager as testified to
petitioner for the collection of sum of money representing the price of by Villanueva. Secondly, Tan, who has been doing business with
the merchandise. After due hearing, the trial court dismissed the petitioner for quite a while, also testified that she knew Tiac to be the
complaint against petitioner for lack of merit. On appeal, however, the manager of the Binondo branch. Even petitioner admitted his close
decision of the trial court was modified, but was in effect reversed by relationship with Tiu Huy Tiac when he said that they are “like brothers”
the CA. CA ordered petitioner to pay Valiant with the sum plus interest, There was thus no reason for anybody especially those transacting
AF and costs. business with petitioner to even doubt the authority of Tiac as his
manager in the Binondo branch.
ISSUE: WON Tiac possessed the required authority from petitioner
sufficient to hold the latter liable for the disputed transaction

HELD:
Tiac, therefore, by petitioner’s own representations and manifestations,
YES became an agent of petitioner by estoppel, an admission or
As to the merits of the case, it is a well-established rule that one who representation is rendered conclusive upon the person making it, and
clothes another with apparent authority as his agent and holds him out cannot be denied or disproved as against the person relying thereon
to the public as such cannot be permitted to deny the authority of such (Article 1431, Civil Code of the Philippines). A party cannot be allowed

10
to go back on his own acts and representations to the prejudice of the THE MANILA REMNANT CO., INC vs. THE HONORABLE COURT
other party who, in good faith, relied upon them. Taken in this light,. OF APPEALS, OSCAR VENTANILLA, JR. and CARMEN GLORIA
petitioner is liable for the transaction entered into by Tiac on his behalf. DIAZ
Thus, even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to fact as
though he had full powers (Article 1911 Civil Code), as in the case at FACTS:
bar. Petitioner Manila Remnant Co., Inc. is the owns parcels of land
Finally, although it may appear that Tiac defrauded his principal situated in Quezon City and constituting the Capital Homes Subdivision
(petitioner) in not turning over the proceeds of the transaction to the Nos. I and II. Manila Remnant and A.U. Valencia & Co. Inc. entered into
latter, such fact cannot in any way relieve nor exonerate petitioner of a contract entitled "Confirmation of Land Development and Sales
his liability to private respondent. For it is an equitable maxim that as Contract" to formalize a prior verbal agreement whereby A.U. Valencia
between two innocent parties, the one who made it possible for the and Co., Inc. was to develop the aforesaid subdivision for a
wrong to be done should be the one to bear the resulting loss consideration of 15.5% commision. At that time the President of both
A.U. Valencia and Co. Inc. and Manila Remnant Co., Inc. was Artemio
U. Valencia. Manila Remnant thru A.U. Valencia and Co. executed two
"contracts to sell" covering Lots 1 and 2 of Block 17 in favor of Oscar C.
Ventanilla and Carmen Gloria Diaz. Ten days after the signing of the
contracts with the Ventanillas, Artemio U. Valencia, without the
knowledge of the Ventanilla couple, sold Lots 1 and 2 of Block 17 again,
to Carlos Crisostomo, one of his sales agents without any consideration.
Artemio Valencia then transmitted the fictitious Crisostomo contracts to
Manila Remnant while he kept in his files the contracts to sell in favor
of the Ventanillas. All the amounts paid by the Ventanillas were
deposited in Valencia's bank account. Upon orders of Artemio Valencia,
the monthly payments of the Ventanillas were remitted to Manila
Remnant as payments of Crisostomo for which the former issued
receipts in favor of Crisostomo.

General Manager Karl Landahl, wrote Artemio Valencia informing him

that Manila Remnant was terminating its existing collection agreement
with his firm on account of the considerable amount of discrepancies
and irregularities. As a consequence, Artemio Valencia was removed
as President by the Board of Directors of Manila Remnant. Therefore,
Valencia stopped transmitting Ventanilla's monthly installments. A.U.
Valencia and Co. sued Manila Remnant to impugn the abrogation of
their agency agreement. The court ordered all lot buyers to deposit their
monthly amortizations with the court. But A.U. Valencia and Co. wrote
the Ventanillas that it was still authorized by the court to collect the
monthly amortizations and requested them to continue remitting their
amortizations with the assurance that said payments would be
deposited later in court.
11
 Such being the case, the principal, Manila Remnant, would have been
in the clear pursuant to Article 1897 of the Civil Code which states that
Thereafter, the trial court issued an order prohibiting A.U. Valencia and "(t)he agent who acts as such is not personally liable to that party with
Co. from collecting the monthly installments. Valencia complied with the whom he contracts, unless he expressly binds himself or exceeds the
court's order of submitting the list of all his clients but said limits of his authority without giving such party sufficient notice of his
list excluded the name of the Ventanillas. Manila Remnant caused the powers." However, the unique relationship existing between the
publication in the Times Journal of a notice cancelling the contracts to principal and the agent at the time of the dual sale must be underscored.
sell of some lot buyers. To prevent the effective cancellation of their Bear in mind that the president then of both firms was Artemio U.
contracts, Artemio Valencia filed a complaint for specific performance Valencia, the individual directly responsible for the sale scam. Hence,
with damages against Manila Remnant despite the fact that the double sale was beyond the power of the agent,
Manila Remnant as principal was chargeable with the knowledge or
The Ventanillas, believing that they had already remitted enough constructive notice of that fact and not having done anything to correct
money went directly to Manila Remnant and offered to pay the entire such an irregularity was deemed to have ratified the same. More in
outstanding balance of the purchase price. Unfortunately, they point, we find that by the principle of estoppel, Manila Remnant is
discovered from Gloria Caballes that their names did not appear in the deemed to have allowed its agent to act as though it had plenary
records of A.U. Valencia and Co. as lot buyers. Also, Manila Remnant powers.
refused the offer of the Ventanillas to pay for the remainder of the
contract price. The Ventanillas then commenced an action for specific Article 1911 of the Civil Code provides: "Even when the
performance, annulment of deeds and damages against Manila agent has exceeded his authority, the principal is solidarily liable
Remnant, A.U. Valencia and Co. and Carlos Crisostomo. with the agent if the former allowed the latter to act as though he
had full powers." In such a situation, both the principal and the agent
The trial court found that Manila Remnant could have not been dragged may be considered as joint feasors whose liability is joint and solidary
into this suit without the fraudulent manipulations of Valencia. (Verzosa vs. Lim, 45 Phil. 416). In essence, therefore, the basis for
Subsequently, Manila Remnant and A.U. Valencia and Co. elevated the Manila Remnant's solidary liability is estoppel which, in turn, is rooted
lower court's decision to the Court of Appeals through separate appeals. in the principal's neglectfulness in failing to properly supervise and
On October 13, 1987, the Appellate Court affirmed in toto the decision control the affairs of its agent and to adopt the needed measures to
of the lower court. Reconsideration sought by petitioner Manila prevent further misrepresentation. As a consequence, Manila Remnant
Remnant was denied, hence the instant petition. is considered estopped from pleading the truth that it had no direct hand
in the deception employed by its agent. That the principal might not
ISSUE: have had actual knowledge of the agent's misdeed is of no moment.

Whether or not petitioner Manila Remnant should be held

solidarily liable together with A.U. Valencia and Co. and Carlos
Crisostomo for the payment of moral, exemplary damages and
attorney's fees in favor of the Ventanillas

HELD:

YES. In the case at bar, the Valencia realty firm had clearly
overstepped the bounds of its authority as agent — and for that matter,
even the law — when it undertook the double sale of the disputed lots.
12
MANUEL BUASON and LOLITA M. REYES, vs. MARIANO Caram v. Laureta
PANUYAS G.R. No. L-28740, 24 February 1981
G.R. No. L-11415 May 25, 1959
FACTS:

FACTS: Marcos Mata conveyed a parcel of land in favor of Claro Laureta. The
Spouses Dayao acquired a homestead patent over a parcel of land deed of absolute sale was not registered because it was not
(14hec) in Nueva Ecija. In 1930, they executed a power of attorney acknowledged before a notary public or any authorized officer.
authorizing Bayuga to engage the services of an attorney to prosecute Nonetheless, Mata delivered to Laureta possession of the property
their case against Gambito for annulment of a contract of sale of the together with pertinent papers (OCT, tax declaration etc.)
parcel of land and after the termination of the case in their favor to sell
it, and from the proceeds of the sale to deduct whatever expenses he Subsequently, the same parcel of land was sold by Mata to Fermin
had incurred in the litigation. In 1934, Dayao-husband died leaving his Caram. The deed of sale in favor of Caram was acknowledged before
wife and 4 children and in 1939, the 4 children executed a deed of sale Atty. Aportadera. Mata, through Aportadera and Arcilla, filed with the
over 12 hec in favor of Buason. The Dayao-wife affixed her thumbmark CFI Davao a petition for the issuance of a new owner’s duplicate of the
as witness. Buason took possession of the land through their tenants OCT, alleging loss of said document. The court issued a new title and
that same year. In 1944, Bayuga sold 8 hec to Panuyas and Cruz. declared the loss title null and void
Bayuga died in 1946 and Dayao-wife in 1954. Buason and Panuyas
claimed ownership over the same parcel of land. RTC ruled in favor of Laureta, then, filed before CFI Davao an action for nullity, recovery of
Panuyas, declaring that Buason was barred by prescription. ownership and/or reconveyance against Mata and Caram.
ISSUE:
Mata, in his answer, alleged that he signed the sale in favor of Laureta
W/N the death of Dayao (principal) ended the authority of the agent as he was subjected to duress, threat and intimidation since Laureta
was the commanding officer of the USFIP in Davao. Caram, on the
HELD: other hand, denied that he had any knowledge or information of any
NO. It was not shown that Bayuga knew about the death of his principal, previous encumbrance, transaction or alienation in favor of Laureta until
Dayao. Art. 1931 states that anything done by the agent, without the the filing of the complaints
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 The trial court held in favor of Laureta and declared the sale in favor of
to third persons who may have contracted with him in good faith. Caram null and void
Therefore, since the sale by the agent to Panuyas was registered, while
the sale to Buason was not, the former has a better right over the parcel Petitioner Caram assailed the trial court finding that the second sale of
of land than the latter. the property was made through his representatives, Irespe and
Aportadera. Caram contended that Irespe merely acted as a broker with
the specific task and duty to pay Mata P1,000 for the property and to
ensure that the deed of sale was executed by Mata, and that

13
Aportadera only acted as notary public in the execution of the deed of NELITA M. BACALING vs FELOMINA MUYA
sale
GR Nos. 148404-05
ISSUE: Facts:
Bacaling and her spouse Ramon Bacaling were the owners of three (3)
WON Irespe and Aportadera were agents of Caram for the purpose of
parcels of land
buying the subject property?
In 1955 the landholding was subdivided into one hundred ten (110) sub-
RULING: lots covered by TCT Nos. T-10664 to T-10773, inclusive of the Registry
of Deeds of... the City of Iloilo.
YES. The facts show that Mata and Caram had never met. During the To secure the repayment of the loan,... the Bacalings executed in favor
trial Mata testified that he knew Aportadera but he did not know Caram. of the GSIS a real estate mortgage over their parcels of land including
Thus, the sale of the property could only have been through Caram’s the one hundred ten (110) sub-lots
representatives, Irespe and Aportadera.
Out of the approved loan of Six Hundred Thousand Pesos
Even if Irespe and Aportadera did not have actual knowledge of the first (P600,000.00), only Two Hundred Forty Thousand Pesos
sale, still their actions have not satisfied the requirement of good faith.
(P240,000.00) was released to them
In the instant Case, Irespe and Aportadera had knowledge of
circumstances which ought to have put them on inquiry. Both of them The Bacalings failed to pay the amortizations on the loan and
knew that Mata’s OCT together with other papers pertaining to the land consequently the mortgage constituted on the one hundred ten (110)
were taken by Laureta. sub-lots was foreclosed by the GSIS
According to the findings of the Office of the President, in 1972 and
There is no doubt then that Irespe and Aportadera, acting as agents of
thereafter, respondents Felomino Muya, Crispin Amor, Wilfredo Jereza,
Caram, purchased the property of Mata in bad faith. Applying the
Rodolfo Lazarte and Nemesio Tonocante clandestinely entered and
principle of agency, Caram as principal, should also be deemed to have
occupied the entire one hundred ten (110) sub-lots (formerly known as
acted in bad faith.
Lot No. 2103-A, Lot No. 2103-B-12 and Lot No. 2295) and grabbed
exclusively for themselves the said 9.9631 hectare landholding
They sowed the lots as if the same were their own, and altered the
roads, drainage, boundaries and monuments established thereon.[17]
Respondents, on the other hand, claim that in 1964 they were legally
instituted by Bacaling's administrator/overseer as tenant-tillers of the
subject parcels of land on sharing basis with two and a half (2½)
hectares each for respondents Muya, Amor, Tonocante and Lazarte,
and... one and a half (1½) hectares for respondent Jereza.
In 1974, their relationship with the landowner was changed to one of
leasehold. They religiously delivered their rental payments to Bacaling
as agricultural lessor.
14
the City Council of Iloilo enacted Zoning Ordinance No. 212 declaring (110) sub-lots under individual certificates of title, and the establishment
the one hundred ten (110) sub-lots as "residential" and "non- of residential communities adjacent to the subject property, which
agricultural," which was consistent with the conversion effected in 1955 indubitably proved the intention of Nelita and
by the NUPC and the Bureau of Lands... petitioner Jose Juan Tong,
together with Vicente Juan and Victoria Siady, bought from Nelita Ramon Bacaling to develop a residential subdivision thereon
Bacaling the subject one hundred ten (110) sub-lots for One Million Respondents elevated the OP Decision to the Court of Appeals on a
Seven Hundred Thousand Pesos (P1,700,000.00). petition for review under Rule 43 of the Rules of Civil Procedure.[28]
The said sale was effected... after Bacaling has repurchased the Before the petition was resolved, or on December 2, 1999, Nelita
subject property from the Government Service Insurance System. To Bacaling manifested to the appellate court... that she was revoking the
secure performance of the contract of absolute sale and facilitate the irrevocable power of attorney in favor of Jose Juan Tong and that she
transfer of title of the lots to Jose Juan Tong, Bacaling appointed him in was admitting the status of respondents as her tenants of the one
1992 as her... attorney-in-fact, under an irrevocable special power of hundred ten (110) sub-lots which allegedly were agricultural in
attorney... with the following mandate- character.

To assume full control, prosecute, terminate and enter into an amicable The appellate court refused to recognize the 1955 NUPC and Bureau
settlement and compromise agreement of all cases now pending before of Lands classification of the subject lots as residential
the DARAB, Region VI, Iloilo City, which involved portion of Lots 1 to subdivision. Tong moved for reconsideration of the CA Decision which
110, covered by TCT Nos. T-10664 to T-10773 of the Register of Bacaling did not oppose despite her manifestation.

Deeds of Iloilo City, which were purchased by Jose Juan Tong, Vicente Long after issues were joined in the instant proceedings, or on October
Juan Tong and Victoria Siady; 8, 2001, petitioner Nelita Bacaling resurrected her manifestation with
the Court of Appeals and moved to withdraw/dismiss the present
It is significant to note that ten (10) years after the perfection and petition on the ground that the irrevocable power of attorney in favor
execution of the sale, or on April 26, 2000, Bacaling filed a complaint to of... petitioner Jose Juan Tong had been nullified by her and that Tong
nullify the contract of sale. consequently lacked the authority to appear before this Court.
Following the sale of the one hundred ten (110) sub-lots and using the Issues:
irrevocable special power of attorney executed in his favor, petitioner
Tong (together with Bacaling) filed a petition for cancellation of the Does petitioner Tong have the requisite interest to litigate this petition
certificates of land transfer against respondents and a certain for review on certiorari?

Jaime Ruel with the Department of Agrarian Reform (DAR) Ruling:

The DAR, however, dismissed the petition on the ground that there had We hold that petitioner Jose Juan Tong possesses adequate and
been no legitimate conversion of the classification of the 110 sub-lots legitimate interest to file the instant petition. Under our rules of
from agricultural to... residential prior to October 21, 1972 when procedure, interest means material interest, that is, an interest in issue
Operation Land Transfer under P.D. No. 72 took effect and to be affected by the judgment... while... a real party in interest is
the party who would be benefited or injured by the judgment or the party
The OP Decision found that the one hundred ten (110) parcels of land entitled to the avails of the suit.
had been completely converted from agricultural to residential lots as a
result of the declarations of the NUPC and the Bureau of Lands and the There should be no doubt that as transferee of the one hundred ten
factual circumstances, i.e., the GSIS loan with real estate... mortgage, (110) sub-lots through a contract of sale and as... the attorney-in-fact
the division of the original three (3) parcels of land into one hundred ten of Nelita Bacaling, former owner of the subject lots, under an

15
irrevocable special power of attorney, petitioner Tong stands to be the unilateral authority of determining the existence and gravity of
benefited or injured by the judgment in the instant case as well as the grounds to justify the rescission of the irrevocable special power of
orders and decisions in the proceedings a... quo attorney.
The deed of sale categorically states that petitioner Tong and his co- The requirement of a judicial process all the more assumes significance
sellers have fully paid for the subject parcels of land. The said payment in light of the dismissal with prejudice, hence, res judicata, of Bacaling's
has been duly received by Bacaling. Hence, it stands to reason that he complaint to annul the contract of sale which in turn gave rise to the
has adequate and material interest to... pursue the present petition to irrevocable special power of attorney
finality.
It is... clear that prima facie there are more than sufficient reasons to
It appears that the motion to dismiss is a crude and belated attempt deny the revocation of the said special power of attorney which is
long after the dismissal of the civil case to divest Tong of his indubitable coupled with interest. Inasmuch as no judgment has set aside the
right of ownership over the one hundred ten (110) sub-lots through the agency relationship between Bacaling and Tong, we rule that...
pretext of... revoking the irrevocable special power of attorney which petitioner Tong maintains material interest to prosecute the instant
Bacaling had executed in his favor hoping that in the process that her petition with or without the desired cooperation of Bacaling.
act would cause the assailed orders of the DAR to become final and
executory.
The records also bear out the fact that Bacaling's design to dispossess
petitioner Tong of material interest in the subject matter of the instant
petition appears to be subtly coordinated with respondents' legal
maneuvers when it began as a side pleading
Substantively, we rule that Bacaling cannot revoke at her whim and
pleasure the irrevocable special power of attorney which she had duly
executed in favor of petitioner Jose Juan Tong and duly acknowledged
before a notary public. The agency, to stress, is one coupled with...
interest which is explicitly irrevocable since the deed of agency was
prepared and signed and/or accepted by petitioner Tong
and Bacaling with a view to completing the performance of the contract
of sale of the one hundred ten (110) sub-lots.
The fiduciary relationship inherent in ordinary contracts of agency is...
replaced by material consideration which in the type of agency herein
established bars the removal or dismissal of petitioner Tong as
Bacaling's attorney-in-fact on the ground of alleged loss of trust and
confidence.
While Bacaling alleges fraud in the performance of the contract of
agency to justify its revocation, it is significant to note that allegations
are not proof, and that proof requires the intervention of the courts
where both petitioners Tong and Bacaling are heard. Stated...
otherwise, Bacaling cannot vest in herself just like in ordinary contracts
16
Valenzuela v. CA Under Section 77 of the Insurance Code, the remedy for the non-
payment of premiums is to put an end to and render the insurance
policy not binding.
FACTS
Philippine Phoenix Surety and Insurance v. Woodworks (1979)
Arturo Valenzuela [Valenzuela] is a general agent of Philippine
American General Insurance Company [Philamgen] since 1965. As • The non-payment of premium does not merely suspend but puts
such, he was authorized to solicit and sell in behalf of Philamgen all an end to an insurance contract since the time of the payment is
kinds of non-life insurance, and in consideration of services rendered peculiarly of the essence of the contract.
was entitled to receive the full agent's commission of 32.5% from • An insurer cannot treat a contract as valid for the purpose of
Philamgen. From 1973 to 1975, Valenzuela solicited marine insurance collecting premiums and invalid for the purpose of indemnity. (Citing
from Delta Motors. However, Valenzuela did not receive his full Insurance Law and Practice by John Alan Appleman)
commission.
• The foregoing findings are buttressed by Section 776 of the
In 1977, Philamgen started to become interested in and Insurance Code (PD 612), which now provides that no contract of
expressed its intent to share in the commission due Valenzuela on a insurance by an insurance company is valid and binding unless and
50-50 basis, but he refused. In 1978, Philamgen and its President until the premium thereof has been paid, notwithstanding any
[Aragon] insisted on the sharing of the commission with Valenzuela, but agreement to the contrary
he firmly reiterated his objection to the proposals. Because of the
refusal of Valenzuela, Philamgen and its officers took drastic action. Arce v. The Capital Insurance and Surety
They reversed the commission due him by not crediting in his account
the commission earned from the Delta Motors insurance, placed • Unless premium is paid, an insurance contract does not take
agency transactions on a cash and carry basis, threatened the effect.
cancellation of policies issued by his agency, and started to leak out • Delgado (Capital Insurance & Surety Co., Inc. v. Delgado) was
news that Valenzuela has a substantial account with Philamgen. This decided in the light of the Insurance Act before Sec. 72 was amended
resulted in the decline of his business as insurance agent. Philamgen by the underscored portion. Prior to the Amendment, an insurance
terminated the General Agency Agreement of Valenzuela in December contract was effective even if the premium had not been paid so that
1978. an insurer was obligated to pay indemnity in case of loss and
correlatively he had also the right to sue for payment of the
Valenzuela filed a complaint against Philamgen, and the RTC premium. But the amendment to Sec. 72 has radically changed the
ruled in his favor, as his termination was found to be unjustified. legal regime in that unless the premium is paid there is no insurance.
However, the CA ruled in favor of Philamgen, as CA ordered
Valenzuela to pay Philamgen the amount corresponding to the unpaid
Since the premiums have not been paid, the policies issued have
and uncollected premiums.
lapsed. The insurance coverage did not go into effect or did not
continue and the obligation of Philamgen as insurer
ISSUE & HOLDING ceased. Hence, for Philamgen which had no more liability under the
lapsed and inexistent policies to demand, much less sue Valenzuela for
WON Valenzuela should be held liable for unpaid and uncollected
the unpaid premiums would be the height of injustice and unfair dealing.
premiums. NO.
In this instance, with the lapsing of the policies through the nonpayment
of premiums by the insured there were no more insurance contracts to
RATIO speak of.
17
VICENTE M. COLEONGCO v. EDUARDO L. CLAPAROLS, GR No. and papers covering transactions; - to represent appellee and the nail
L-18616, 1964-03-31 factory; - and to accept payments and cash advances from dealers and
distributors. Coleongco also became the assistant manager of the
factory, and took over its business transactions, while Claparols
Doctrine: devoted most of his time to the nail manufacture processes.

• It must not be forgotten that a power of attorney although coupled with Around mid-November of 1956, Claparols was surprised by service of
interest in a partnership can be revoked for a just cause, such as when an alias writ of execution to enforce a judgment obtained against him
the attorney-in-fact betrays the interest of the principal, as happened in by the Philippine National Bank, despite the fact that on the preceding
this case. It is not open to serious doubt that the irrevocability of the September he had submitted an amortization plan to settle the account.
power of attorney may not be used to shield the perpetration of acts in Upon conferring with bank authorities, he learned that the execution
bad faith, breach of confidence, or betrayal of trusts, by the agents for had been procured because of derogatory information against him had
that would amount to holding that a power coupled with an interest reached the bank from Coleongco.
authorizes the agent to commit frauds against the principal. Coleongco wrote to the bank of his acquisition of the whole interest of
Claparols in the factory and also stated that Claparols is not serious in
meeting his obligations with the bank. Claparols revoked the power of
Facts: attorney and informed Coleongco demanding a full accounting at the
same time. Claparols also wrote a letter to Coleongco dismissing him
Since 1951, defendant-appellee, Eduardo L. Claparols, operated a
as assistant manager of the plant and asked auditors to go over the
factory manufacturing nails in Talisay, Occidental Negros, under the
books and records of the business with a view to adjusting the accounts
style of "Claparols Steel & Nail Plant". The raw material, nail wire, was
of the associates. These last steps were taken in view of the revelation
imported from foreign sources such as Belgium. Claparols had a
made by his machinery superintendent that Coleongco had drawn him
regular dollar allocation granted by the Import Control Commission and
aside and proposed that the latter should pour acid on the machinery
the Central Bank. The marketing of the nails was handled by the "ABCD
to paralyze the factory. In this appeal, it is first contended by the
Commercial" of Bacolod, which was owned by a Chinaman named Kho
appellant Coleongco that the power of attorney was made to protect his
To. Kho To introduced Vicente Coleongco to help finance the factory of
interest under the financing agreement and was one coupled with an
Claparols. Claparols and Coleongco executed a financing contract
interest that the appellee Claparols had no legal power to revoke. This
whereby Coleongco undertook to finance and put up the funds
point can not be sustained. The financing agreement itself already
necessary for the importation of nail wire, which Claparols will convert
contained clauses for the protection of appellant's interest, and did not
to nails. The terms of the contract were as follows: - Coleongco would
call for the execution of any power of attorney in favor of Coleongco.
have the exclusive distribution of the product, and the "absolute care in
the marketing of these nails and the promotion of sales all over the Issues:
Philippines", except the Davao Agency; - Coleongco would "share the
control of all the cash" from sales or deposited in banks; that he would In this appeal, it is first contended by the appellant Coleongeo that the
have a representative in the management; - that all contracts and power of attorney (Exhibit "C") was made to protect his interest under
transactions should be jointly approved by both parties; - that proper the financing agreement (Exhibit "B"), and was one coupled with an
books would be kept and annual accounts rendered; - and that profits interest that the appellee Claparols had no legal power to... revoke.
and losses would be shared "on a 50-50 basis".
Two days after the execution of the basic agreement, Claparols
executed in favor of Coleongco, a special power of attorney: - to open
and negotiate letters of credit, to sign contracts, bills of lading, invoices,
18
Ruling: Appellant attempts to justify his letters to the Philippine National Bank...
claiming that Claparols' mal-administration of the business endangered
This point can not be sustained. The financing agreement itself already the security for the advances that he had made under the financing
contained clauses for the protection of appellant's interest, and did not contract
call for the execution of any power of attorney in favor of Coleongco.
But if that were... the case, it is to be expected that Coleongeo would
But granting appellant's view, it must not be... forgotten that a power of have first protested to Claparols himself, which he never did. Appellant
attorney can be made irrevocable by contract only in the sense that the likewise denies the authorship of the letter to Kho (Exhibit 32) as well
principal may not recall it at his pleasure; but coupled with interest or as the attempt to induce Agsam to damage the machinery of the factory.
not, the authority certainly can be revoked for a just cause, such as Between... the testimony of Agsam and Claparols and that of
when the attorney-in- fact betrays... the interest of the principal, as Coleongeo, the court befow chose to believe the former, and we see
happened in this case. no reason to alter the lower court's conclusion on the value of the
Our new Civil Code, in Article 1172, expressly provides the contrary in evidence before it, considering that Kho's letter to Claparols
prescribing that responsibility arising from fraud is demandable in all
obligations, and that any waiver of action for future fraud is void.
It is also on this principle that the Civil Code, in its Article 1800, declares
that the powers of a partner, appointed as manager, in the articles of
copartnership are irrevocable without just or lawful cause; and an agent
with power coupled with an interest can not... stand on better ground
than such a partner in so far as irrevocability of the power is concerned.
That the appellant Coleongco acted in bad faith towards his principal
Claparols is, on the record, unquestionable. His letters to the Philippine
National Bank... attempting to undermine the credit of the principal and
to acquire the factory of the latter,... without the principal's knowledge;
Coleongco's letter to his cousin, Kho To... instructing the latter to reduce
to one-half the usual monthly advances to Claparols on account of nail
sales in order to squeeze said appellee and compel him to extend the
contract... entitling Coleongeo to share in the profits of the nail factory
in better terms, and ultimately "own his factory", a plan carried out by
Kho's letter... educing the advances to Claparols; Coleongco's attempt
to have Romulo Agsam pour acid on the machinery; his... illegal
diversion of the profits of the factory to his own benefit; and the
subreptitious disposition of the Yates band resaw machine in favor of
his cousin's Hong Shing Lumber Yard, made while Claparols was in
Baguio in July and August of 1956, are plain acts of deliberate...
sabotage by the agent that fully justified the revocation of the power of
attorney... by Claparols and his demand for an accounting from his
agent Coleongeo.

19
20
Rallos vs. Felix Go Chan & Sons Realty
G.R. No. 117228 June 19, 1997
G.R. No. L-24332, January 31, 1978
RODOLFO MORALES, represented by his heirs, and PRISCILA
MORALES, vs. COURT OF APPEALS
FACTS:
An SPA was executed by sisters Concepcion and Gerundia in favor of
their brother Simeon for the sale of a parcel of land co-owned by the FACTS:
two. Months after Conception died, Simeon sold the undivided shares
of his sisters to herein respondent Felix Go Chan & Realty Corp. The evidence adduced by the Plaintiffs discloses that the Plaintiffs are
Petitioner Ramon Rallos, administrator of the late Concepcion’s estate, the absolute and exclusive owners of the premises in question having
prayed that the sale of the undivided share of the deceased be purchased the same from Celso Avelino. They later caused the transfer
invalidated and a new certificate be issued in the name of respondent of its tax declaration in the name of the female plaintiff and paid the
corporation and Concepion’s intestate estate, plus damages. CFI ruled realty taxes thereon. Celso Avelino (Plaintiffs' predecessor in interest)
in favor of petitioner and granted the payers but CA reversed the purchased the land in question consisting of two adjoining parcels while
decision. Respondent’s MR was further denied. he was still a bachelor and the City Fiscal of Calbayog City from
Alejandra Mendiola and Celita Bartolome, through a "Escritura de
Venta". After the purchase, he caused the transfer of the tax
ISSUE: declarations of the two parcels in his name as well as consolidated into
Whether the sale entered into by an agent is valid although executed one the two tax declarations in his name. With the knowledge of the
after death of the principal. Intervenor and the defendant, Celso Avelino caused the survey of the
premises in question, in his name, by the Bureau of Lands. He also built
HELD: his residential house therein with Marcial Aragon (now dead) as his
No, the sale is void because Simeon’s authority as an agent of master carpenter who was even scolded by him for constructing the
Concepcion was extinguished upon her death. ceiling too low. When the two-storey residential house was finished, he
took his parents, Rosendo Avelino and Juana Ricaforte, and his sister,

Article 1317 provides that no one may contract in the name of another Aurea, who took care of the couple, to live there until their deaths. He
without being authorized or unless he has, by law, a right to represent also declared this residential house in his tax declaration to the
him. Article 1919 furthers that the death of the principal terminates the premises in question and paid the corresponding realty taxes, keeping
agency. intact the receipts which he comes to get or Aurea would go to Cebu to
give it to him. After being the City Fiscal of Calbayog, Celso Avelino
became an Immigration Officer and later as Judge of the Court of First
The case at bar is also not among the exceptions whereby an agent’s
Instance in Cebu with his sister, Aurea, taking care of the premises in
acts bind the principal even after the latter’s death because of Simeon’s
question. While he was already in Cebu, the defendant, without the
knowledge of Concepion’s death is material. Hence, the sale was null
knowledge and consent of the former, constructed a small beauty shop
and void.
in the premises in question. Inasmuch as the Plaintiffs are the
purchasers of the other real properties of Celso Avelino, one of which
is at Acedillo (now Sen. J.D. Avelino) street, after they were offered by
Celso Avelino to buy the premises in question, they examined the
21
premises in question and talked with the defendant about that fact, the property to deal with it for the benefit of another; and it arises as a result
latter encouraged them to purchase the premises in question rather of a manifestation of intention to create the relationship. Trusts are
than the property going to somebody else they do not know and that he either express or implied. Express trusts are created by the intention of
will vacate the premises as soon as his uncle will notify him to do so. the trustor or of the parties, while implied trusts come into being by
Thus, they paid the purchase price and Exh. "C" was executed in their operation of law, either through implication of an intention to create a
favor. However, despite due notice from his uncle to vacate the trust as a matter of law or through the imposition of the trust irrespective
premises in question, the defendant refused to vacate or demolish the of, and even contrary to, any such intention. In turn, implied trusts are
beauty shop unless he is reimbursed P35,000.00 for it although it was either resulting or constructive trusts. Resulting trusts are based on the
valued at less than P5,000.00. So, the Plaintiffs demanded, orally and equitable doctrine that valuable consideration and not legal title
in writing to vacate the premises. The defendant refused. As the determines the equitable title or interest and are presumed always to
plaintiffs were about to undertake urgent repairs on the dilapidated have been contemplated by the parties. They arise from the nature or
residential building, the defendant had already occupied the same, circumstances of the consideration involved in a transaction whereby
taking in paying boarders and claiming already ownership of the one person thereby becomes invested with legal title but is obligated in
premises in question, thus they filed this case. Plaintiffs, being the equity to hold his legal title for the benefit of another. On the other hand,
neighbors of Celso Avelino, of their own knowledge are certain that the constructive trusts are created by the construction of equity in order to
premises in question is indeed owned by their predecessor-in-interest satisfy the demands of justice and prevent unjust enrichment. They
because the male plaintiff used to play in the premises when he was arise contrary to intention against one who, by fraud, duress or abuse
still in his teens while the female plaintiff resided with the late Judge of confidence, obtains or holds the legal right to property which he ought
Avelino. Besides, their inquiries and documentary evidence shown to not, in equity and good conscience, to hold.
them by Celso Avelino confirm this fact. Likewise, the defendant and
Intervenor did not reside in the premises in question because they
reside respectively in Brgy. Tarobucan and Brgy. Trinidad (Sabang),
both of Calbayog City with their own residential houses there. Due to
the damages they sustained as a result of the filing of this case, the
plaintiffs are claiming P50,000.00 for mental anguish; monthly rental of
the premises in question of P1,500.00 starting from March 1987;
litigation expenses of P5,000.00 and P10,000.00 for Attorney's fees.

ISSUE: Whether or not the property acquired is a trust property?

RULING:

NO. A trust is the legal relationship between one person having an

equitable ownership in property and another person owning the legal
title to such property, the equitable ownership of the former entitling him
to the performance of certain duties and the exercise of certain powers
by the latter. The characteristics of a trust are: It is a relationship; it is a
relationship of fiduciary character; it is a relationship with respect to
property, not one involving merely personal duties; it involves the
existence of equitable duties imposed upon the holder of the title to the
22
Heirs of Valentin Basbas, et al. vs. Ricardo Basbas as represented purported heir of Severo can no longer be established, Nicolas’ right
by Eugenio Basbas thereto expiring upon his death. Glaringly, there is no pretension from
respondent’s end that Nicolas was born of a valid marriage, only that
G.R. 188773, 10 September 2014 he is Severo’s son. Nonetheless, even if respondents were minded to
Facts: establish the status of Nicolas, whether he is a legitimate or an
illegitimate child of Severo, such can no longer be done.
Petitioners filed an Action for Annulment of Title, Reconveyance with
Damages against Crispiniano and respondent Ricardo. Countering
petitioners’ allegations, Crispiniano and Ricardo denied petitioners’
ownership over Lot No. 39 and contended that upon Severo’s death,
he was survived by two heirs, Valentin (grandfather of petitioners) and
Nicolas Basbas (Nicolas) (paternal grandfather of Crispiniano and
Ricardo) who evenly divided Severo’s estate. With both parties claiming
to be the heirs of Severo Basbas, it is but proper to thresh out this issue
in a special proceeding, since [Crispiniano and respondent Ricardo]
seeks to establish his status as one of the heirs entitled to the property
in dispute. Before the action for annulment of title, reconveyance with
damages can be resolved, this Court opines that the matter of heirship
should be adjudicated upon first. It was reiterated by the lower courts,
through the resolutions issued, that the question of who are the heirs of
Severo Basbas should be adjudged first in a probate court prior to the
resolution of the action for annulment of title and reconveyance.
Issue:
Whether or not the petitioners’ claim as heirs of the decedent are valid.
Held:
Yes the Heirs of Valentin, as found by the trial courts that petitioners
fully established their filiation with the decedent Severo, the original
titleholder of subject property and from whom all parties trace their
claim of ownership over the subject property. Not only is the petitioners’
heirship to Severo uncontroverted. The status of Valentin as a
compulsory heir of Severo and of petitioners’ statuses as heirs of
Valentin and Severo are stipulated facts agreed to by Crispiniano and
respondent Ricardo. In all, Valentin’s long-possessed status as a
legitimate child and thus, heir of Severo, need no longer be the subject
of a special proceeding for declaration of heirship as envisioned by the
Court of Appeals. There is no need to re-declare his status as an heir
of Severo. And, contraposed to the fact that Valentin’s status as a
legitimate child of Severo is already established, Nicolas’ status as a

23
 document, Rosaida Viloria immediately executed a deed of revocation
of the sale.
VILORIA VS CA Trial Court held that title over the commercial lot was not transferred
in the name of Ruperto for the parties to the deed of sale merely
FACTS: intended to create an express trust. By admitting the trust and assuring
his sisters Nicolasa and Rosaida as well as private respondents that
In December 1980 Nicolasa Viloria passed away, followed by her sister they would remain as co-owners, an express trust had been
Rosaida in June 1989. Both died single, survived by their brothers created. Petitioner Ruperto Viloria thus became only a trustee to an
Ruperto Viloria, Anastacio Viloria, the heirs of their sister Felicitacion express trust which incapacitated him from acquiring for his own benefit
Cacanando, who predeceased them, Lida Aquino and the property committed to his custody although titled in his
Manuel Cacanando, and the heirs of their other sister Josefina Ancheta, name. Nicolasa and Rosaida remained as co-owners of the commercial
who likewise predeceased them, Rodolfo Ancheta, Estrella Ancheta lot, which upon their demise passed on to their heirs.
and Carmen Nicolasura. The trial court likewise declared that there was no effective conveyance
In February 1991 the heirs of Rosaida and Nicolasa Viloria filed an of the one thitd share of Rosaida over the orchard in Nalasin since the
action for partition with the Regional Trial Court of La Union, against document of conveyance was in effect nullified when Rosaida executed
their co-heir Rupero. The heirs claims that during the lifetime of the deed of revocation. Neither did the “Catulagan” allegedly executed
Nicolasa and Rosaida they were co-owners in equal shares and pro- by Nicolasa convey her share of the orchard to Ruperto since she had
indiviso with Ruperto of a commercial lot and an orchard. After already disposed of the property in favor of Rodolfo Ancheta by virtue
Nicolasa and Rosaida died, their heirs demanded from Ruperto, who of a deed of donation. Consequently, the trial court declared Ruperto
was in possession of the properties, to partition the same among them portion titled in the name of Rodolfo, Aurora and Estrella Ancheta) and
but he refused claiming that during their lifetime Nicolasa and Rosaida the entire orchard, and ordered a partition of the properties such that
sold and conveyed to him all their shares, interests and participation the commercial lot and the orchard would be divided into four (4) equal
over the properties in question. Ruperto alleged that Nicolasa and parts each, one fourth for Ruperto Viloria and three-fourths for the other
Rosaida sold the commercial lot to him by virtue of a deed of sale heirs.
executed in August 1965 and duly registered in the Office of the Ruperto filed a case to the Court of Appeals. The court affirmed the
Register of Deeds, while the heirs of Josefina sold and relinquished to findings of the trial court with the modification that petitioner and private
him all their claims and ownership over the commercial lot. Ruperto respondents should be declared co-owners of the commercial lot only
further alleged that the orchard came to his possession when Nicolasa to the extent of two-thirds of the property and co-owners of one third of
sold to him her share of the land and the ancestral house standing the orchard. Therefore, with regard to the commercial lot, what should
thereon by virtue of a private agreement written in Ilocano, referred to be divided into four (4) equal parts should only be the two-thirds share
as “Catulagan,” in June 1978. of Nicolasa and Rosaida Viloria. The court further held that the deed
The heirs of Nicolasa and Rosaida maintained that the transfer of title of revocation executed by Rosaida did not rescind the 1987 deed of
of the commercial lot in the name of Ruperto was only for loan purposes sale over the orchard since it was duly notarized and hence enjoyed
and not to convey and relinquish ownership over the property, and that the presumption of validity which could only be annulled through proper
Ruperto assured Nicolasa and Rosaida that they would remain as co- judicial action. In the absence thereof, the 1987 deed of sale remained
owners and the deed of sale returned to them. valid. Therefore only the one third share of Rosaida in the orchard
Through their co-heirs Lida and Atty. Gerardo Viloria, private should be divided among petitioner and private respondents.
respondents also asserted that while Rosaida executed a deed of sale
conveying her share of the orchard to Ruperto, it was without any ISSUE: Whether or not the 1965 deed of sale of the commercial lot was
consideration. Thereafter upon realization of the iniquitous nature of the an express trust and not a true conveyance of the real property.

24
Whether or not the prescription did not run against the private not openly repudiate the claims of his co-owners but continued to
respondents. assure them of their rights regarding the property. Hence, prescriptive
period did not commence to run against private respondents.
HELD: The Court held that the 1965 deed of sale was in fact an
express trust and hence no actual conveyance took place. The parties Therefore, the decision of the Court of Appeals declaring petitioner and
in the case freely gave their consent to the deed of sale but intended private respondents as co-owners of the two-thirds portion of the
the same to be merely a trust agreement between them and not commercial lot in the name of Ruperto, Nicolasa and Rosaida,
alienation of the property in litigation. In the present case, by admitting is AFFIRMED.
the trust and assuring his sisters Nicolasa and Rosaida as well as
private respondents that they would remain as co-owners, an express
trust had been created. Deceased owners, Nicolasa and Rosaida, did
not relinquish their claim of ownership over the commercial lot but
continued to exercise acts of administration and dominion over it. The
property continued to form part of their estate and devolved upon their
demise on their heirs.
The allegation that the sale was notarized does not affect the nature of
the contract which both parties are bound. Notarization creates a
presumption that there is a consummated sale, however if the intention
of the parties states otherwise, the instrument is binding according to
the intent of the parties.
On the allegation that Ruperto owns the property and there is no trust
since the property was already registered in the name of Ruperto, the
court held that under the Torrens system registration is the operative
act that gives validity to the transfer or creates a lien upon the land.
However petitioner cannot rely on the registration of the land subject of
the 1965 sale and the corresponding issuance of a certificate of title in
his name as vesting ownership on him because the trial court found the
deed of sale is in fact an express trust. It has been held that a trustee
who obtains a Torrens title over property held in trust by him for another
cannot repudiate the trust by relying on the registration.

With respect to the second issue, the court held that the prescriptive
period for an action of reconveyance of real property based on implied
or constructive trust which is counted from the date of registration of
property which applies when the plaintiff is not in possession of the
contested property. Likewise, an action to compel the trustee to convey
property registered in his name for the benefit of the cestui
que trust does not prescribe unless the trustee repudiates the trust. In
the present case, Nicolasa and Rosaida were in possession of the land
and were exercising acts of ownership and administration over the
property consistent with their responsibility as co-owners. Ruperto did
25
 Sale over an undivided one-half portion of Lot No. 77-A in favor of
G.R.No. 127005. July19, 1999 petitioner Herminia without any consideration and for the purpose of
SPS. JOSE ROSARIO AND HERMINIA ROSARIO, complying with GSIS requirements. Respondents contend that
vs C O U R T O F A P P E A L S , under such arrangement, the ½ undivided share of petitioner
spouses was merely held in trust, all for the benefit of principal
FACTS: borrower and trustor, Filomena. The trial court ruled in favor of
Petitioner spouses Jose C. Rosario and Herminia Lariosa-Rosario filed
petitioners. The Court of Appeals reversed the decision of the trial court.
an action for legal redemption with damages against Lourdes,
Aida, Rodulfo, Natividad, and Jesus, all surnamed
Villahermosa, respondents herein, alleging that Herminia is ISSUES:
the registered owner of one-half undivided share of Lot No. 77-A, 1. Whether or not there is an implied trust that existed between Emilio
with Filomena Lariosa as the owner of the other one-half share. Villahermosa and Filomena Lariosa over the subject property
According to petitioners, Filomena obtained a loan from the
Government Service Insurance System (GSIS) and had the said Ruling:
parcel of land mortgaged as guarantee for payment of such loan, with
Herminia as a co-signer of the promissory note. Upon the When Emilio Villahermosa and his children, the respondents herein
death of Filomena, Herminia then settled the balance of Filomena’s conveyed Lot No. 77-A in favor of Filomena Lariosa in order to enable
GSIS loan. Believing that she is the only heir of Filomena, Herminia the latter build a house thereon with a GSIS loan, an implied if not
express trust was created in favor of the original registered owners of
began to possess the other half of the subject property until the
the subject lot, Emilio Villahermosa, together with his children, in view
respondents disturbed her peaceful possession by claiming the of Filomenas declared intention to hold the lot for them and her promise
undivided one-half of the property on the basis of a to return it back to Emilio and private respondents; in fact, Filomena,
deed of sale allegedly executed by Filomena in favor of their father, E before her death, returned the lot with its improvements by virtue of the
milio Villahermosa. Deed of Sale dated July 28, 1976 precisely pursuant to the trust agreed
upon.
Respondents insistedon taking possessionof the property, de
spite offer from petitioners to redeem the one-half portion of Lot No.
77-A from them. In their defense, respondents allege that there exists
an express or implied trust between petitioners and Filomena, and the A constructive trust, otherwise known as a trust ex maleficio, a trust
latter with the respondents. They claim that the whole Lot No.77 ex delicto, a trust de son tort, an involuntary trust, or an implied trust,
originally belong to respondents’ parents and that is a trust by operation of law which arises contrary to intention and in
respondents’ parents agreed to a request that Filomena be invitum, against one who, by fraud, actual or constructive, by duress
allowed to occupy one-half of Lot No. 77 for a consideration, or abuse of confidence, by commission of wrong, or by any form of
unconscionable conduct, artifice, concealment, or questionable
subject to the condition that the said lot would be held in trust by
means, or who in any way against equity and good conscience, either
Filomena to be returned to the Villa hermosas before her death. Emilio
has obtained or holds the legal right to property which he ought not,
and respondents then allegedly executed a deed of sale over one-half in equity and good conscience, hold and enjoy. It is raised by equity
of Lot No. 77 to enable Filomena to comply with the GSIS loan to satisfy the demands of justice. However, a constructive trust does
requirement, and accordingly, Lot No. 77 was subdivided into Lot No. not arise on every moral wrong in acquiring or holding property or on
77-A belonging to Filomena, and Lot No. 77-B belonging to Rodulfo. every abuse of confidence in business or other affairs; ordinarily such
Thereafter, Filomena allegedly executed a simulated Deed of a trust arises and will be declared only on wrongful acquisitions or
26
retentions of property of which equity, in accordance with its
fundamental principles and the traditional exercise of its jurisdiction
or in accordance with statutory provision, takes cognizance. It has
been broadly ruled that a breach of confidence, although in business
or social relations, rendering an acquisition or retention of property by
one person unconscionable against another, raises a constructive
trust.

And specifically applicable to the case at bar is the doctrine that A

constructive trust is substantially an appropriate remedy against
unjust enrichment. It is raised by equity in respect of property, which
has been acquired by fraud, or where although acquired originally
without fraud, it is against equity that it should be retained by the
person holding it.

27
Mallilin vs. Castillo HELD:
GR No. 136803, June 16, 2000 The Court ruled that trial court erred that parties who are not
capacitated to marry each other and were living together could not have
owned properties in common. Under Article 148, if the parties are
FACTS: incapacitated to marry each other, properties acquired by them through
their joint contribution, property or industry, shall be owned by them in
common in proportion to their contributions which, in the absence of
Eustaquio Mallilin Jr. and Ma. Elvira Castillo were alleged to be both proof to the contrary, is presumed to be equal. Hence, there is co-
married and with children but separated from their respective spouses ownership even though the couples in union are not capacitated to
and cohabited in 1979 while respective marriages still subsist. They marry each other.
established Superfreight Customs Brokerage Corporation during their
union of which petitioner was the President and Chairman and
respondent as Vice President and Treasurer. They likewise acquired Furthermore, when CA dismissed petitioner’s complaint for partition on
real and personal properties which were registered solely in grounds of due process and equity, his right to prove ownership over
respondent’s name. Due to irreconcilable conflict, the couple the claimed properties was denied. Such dismissal is unjustified since
separated in 1992. Petitioner then demanded his share from both ends may be served by simply excluding from the action for
respondent in the subject properties but the latter refused alleging that partition the properties registered in the name of Steelhouse Realty and
said properties had been registered solely in her name. Furthermore, Eloisa Castillo, not parties in the case.
respondent denied that she and petitioner lived as husband and wife
because they were still legally married at the time of cohabitation.
The case was remanded to lower court for further proceedings.

Petitioner filed complaint for partition of co-ownership shares while

respondent filed a motion for summary judgment. Trial court dismissed
the former and granted the latter.

ISSUE:
WON petitioner can validly claim his share in the acquired properties
registered under the name of the respondent considering they both
have subsisting relationship when they started living together.

28
 the alleged property rights of Richard E. Enchuan and the leasehold...
of DPWH.
HEIRS OF TIMOTEO MORENO v. MACTAN - CEBU
INTERNATIONAL AIRPORT AUTHORITY, GR No. 156273, 2003-10- Respondent MCIAA appealed the Decision of the trial court to the Court
15 of Appeals
On 20 December 2001 the Court of Appeals reversed the assailed
Decision on the ground that the judgment of condemnation in Civil Case
Facts: No. R-1881 was unconditional so that the rights gained therefrom by
THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners respondent MCIAA were indicative of ownership in fee... simple.
herein, are the successors-in-interest of the former registered owners Issues:
of two (2) parcels of land situated in Lahug, Cebu City,... In 1949 the
National Airport Corporation as the predecessor agency of respondent Petitioners argue that Fery v. Municpality of Cabanatuan does not apply
Mactan-Cebu International Airport Authority (MCIAA) wanted to acquire to the case at bar since what was involved therein was the "right of
Lots Nos. 916 and 920 above described among other parcels of land reversion" and not the "right of repurchase" which they are invoking.
for the proposed expansion of Lahug Airport.
Respondent asserts that the Decision in Civil Case No. R-1881 is
To entice the landowners to cede their properties, the government absolute and without conditions, thus, no repurchase could be validly...
assured them that they could repurchase their lands once Lahug Airport exercised.
was closed or its operations transferred to Mactan Airport.
Ruling:
On 29 December 1961 the trial court promulgated its Decision in Civil
Case No. R-1881 condemning Lots Nos. 916 and 920 and other lots for In Mactan-Cebu International Airport Authority, respondent Chiongbian
public use upon payment of just compensation. sought to enforce an alleged right of repurchase over her properties
that had been expropriated in Civil Case No. R-1881. This Court did not
At the end of 1991, or soon after the transfer of Lots Nos. 916 and 920 allow her to adduce evidence of her claim, for to do so would... unsettle
to MCIAA, Lahug Airport ceased operations as the Mactan Airport was as to her properties the judgment of condemnation in the eminent
opened for incoming and outgoing flights. domain proceedings.
In fact, no expansion of Lahug Airport was undertaken by MCIAA and Mactan-Cebu International Airport Authority[36] is correct in stating that
its predecessors-in-interest.[10] Hence, petitioners wrote then one would not find an express statement in the Decision in Civil Case
President Fidel V. Ramos and the airport manager begging them for... No. R-1881 to the effect that "the [condemned] lot would return to [the
the exercise of their alleged right to repurchase Lots Nos. 916 and landowner] or that [the landowner]... had a right to repurchase the same
920.[11] Their pleas were not heeded. if the purpose for which it was expropriated is ended or abandoned or
if the property was to be used other than as the Lahug Airport."
On 11 March 1997 petitioners filed a complaint for reconveyance and
damages with RTC of Cebu City against respondent MCIAA to compel No doubt, the return or repurchase of the condemned properties of
the repurchase of Lots Nos. 916 and 920, docketed as Civil Case No. petitioners could be readily justified as the manifest legal effect or
CEB-20015. consequence... of the trial court's underlying presumption that "Lahug
Airport will continue to be in operation" when it granted the complaint
On 12 April 1999 the trial court found merit in the claims of petitioners for eminent domain and the airport discontinued its activities.
and granted them the right to repurchase the properties at the amount
pegged as just compensation in Civil Case No. R-1881 but subject to In the case at bar, petitioners conveyed Lots Nos. 916 and

29
920 to the government with the latter obliging itself to use the realties
for the expansion of Lahug Airport; failing to keep its bargain, the
government can be compelled by petitioners to reconvey the parcels of
land to them, otherwise, petitioners would be denied the use of... their SOLEDAD CAÑEZO vs. CONCEPCION ROJAS
properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized. G.R. No. 148788, November 23, 2007
Hence, respondent MCIAA as representative of the State is obliged to
reconvey Lots Nos. 916 and 920 to petitioners who shall hold the same
FACTS:
subject to existing liens thereon, i.e., leasehold right of DPWH.
The subject property is an unregistered land with an area of
WHEREFORE, the instant Petition for Review is GRANTED. The
4,169 square meters situated at Naval, Biliran. In a complaint on 1997,
Decision of the Court of Appeals in CA-G.R. CV No. 64456 dated 20
petitioner Soledad Cañezo alleged that she bought such parcel of land
December 2001 and its Resolution of 28 November 2002 denying
in 1939 from Crisogono Limpiado, although the sale was not reduced
reconsideration of the Decision are REVERSED and SET
into writing. Thereafter, she immediately took possession of the
property. In 1948, she and her husband left for Mindanao and entrusted
the said land to her father, Crispulo Rojas, who took possession of, and
cultivated the property. In 1980, she found out that the respondent,
Concepcion Rojas, her stepmother, was in possession of the property
and was cultivating the same. She also discovered that the tax
declaration over the property was already in the name of his father.
Respondent asserted that it was her husband who bought the property
from Limpiado, which accounts for the tax declaration being in
Crispulo’s name.
After the hearing, MTC rendered a decision in favor of the
petitioner, making her the real and lawful owner of the land.
Respondent appealed to the RTC of Naval, Biliran, which reversed the
MTC decision on the ground that the action had already prescribed and
acquisitive prescription had set in. However, acting on petitioner’s
motion for reconsideration, the RTC amended its original decision and
held that the action had not yet prescribed considering that the
petitioner merely entrusted the property to her father. The ten-year
prescriptive period for the recovery of a property held in trust would
commence to run only from the time the trustee repudiates the trust.
The RTC found no evidence on record showing that Crispulo Rojas
ever ousted the petitioner from the property. Petitioner filed a petition
for review with the CA, which reversed the amended decision of the
RTC. The CA held that, assuming that there was a trust between the
petitioner and her father over the property, her right of action to recover
the same would still be barred by prescription since 49 years had

30
already lapsed since Crispulo adversely possessed the contested required for the creation of an express trust, a clear intention to create
property in 1948.Hence, this petition for review. a trust must be shown; and the proof of fiduciary relationship must be
clear and convincing. The creation of an express trust must be
manifested with reasonable certainty and cannot be inferred from loose
and vague declarations or from ambiguous circumstances susceptible
of other interpretations.In the case at bench, an intention to create a
ISSUE: trust cannot be inferred from the petitioner’s testimony and the
attendant facts and circumstances. The petitioner testified only to the
Whether or not there is an existence of trust over the property – express
effect that her agreement with her father was that she will be given a
or implied – between the petitioner and her father
share in the produce of the property. This allegation, standing alone as
it does, is inadequate to establish the existence of a trust because
profit-sharing per se, does not necessarily translate to a trust relation.In
HELD: light of the disquisitions, we hold that there was no express trust or
resulting trust established between the petitioner and her father. Thus,
in the absence of a trust relation, we can only conclude that Crispulo’s
NONE. A trust is the legal relationship between one person having an
uninterrupted possession of the subject property for 49 years,coupled
equitableownership of property and another person owning the legal
with the performance of acts of ownership, such as payment of real
title to such property, the equitableownership of the former entitling him
estate taxes, ripened into ownership.Petition denied. Decision of the
to the performance of certain duties and the exercise of certain powers
CA affirmed
by the latter. Trusts are either express or implied. Express trusts are
those whichare created by the direct and positive acts of the parties, by
some writing or deed, or will, or bywords evincing an intention to create
a trust. Implied trusts are those which, without beingexpressed, are
deducible from the nature of the transaction as matters of intent or,
independently,of the particular intention of the parties, as being
superinduced on the transaction by operation of law basically by reason
of equity. As a rule, the burden of proving the existence of a trust is on
the party asserting its existence, and such proof must be clear and
satisfactorily show the existence of the trust and its elements. The
presence of the following elements must be proved: (1) a trustor or
settlor who executes the instrument creating the trust; (2) a trustee, who
is the person expressly designated tocarry out the trust; (3) the trust res,
consisting of duly identified and definite real properties; and(4) the
cestui que trust, or beneficiaries whose identity must be clear.
Accordingly, it was incumbent upon petitioner to prove the existence of
the trust relationship. And petitioner sadly failed to discharge that
burden.The existence of express trusts concerning real property may
not be established by parol evidence. It must be proven by some writing
or deed. In this case, the only evidence to support the claim that an
express trust existed between the petitioner and her father was the self-
serving testimony of the petitioner.Although no particular words are

31