ELEMENTS:
during pendency of case) juan T. Borromeo, administrator of the Estate of
1.Rallos vs. Felix Go Chan
Facts: Concepcion and Gerundia Rallos were sisters and registered co-
owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of
Cebu covered by Transfer Certificate of Title No. 11116 of the Registry
of Cebu.They executed a special power of attorney in favor of their brother,
Simeon Rallos, authorizing him to sell such land for and in their behalf. After
Concepcion died, Simeon Rallos sold the undivided shares of his sisters
Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for the
sum of P10,686.90. New TCTs were issued to the latter. Petitioner Ramon
Rallos, administrator of the Intestate Estate of Concepcion filed a complaint
praying (1) that the sale of the undivided share of the deceased Concepcion
Rallos in lot 5983 be unenforceable, and said share be reconveyed to her
estate; (2) that the Certificate of ‘title issued in the name of Felix Go Chan &
Sons Realty Corporation be cancelled and another title be issuedin the names
of the corporation and the “Intestate estate of Concepcion Rallos” in equal
undivided and (3) that plaintiff be indemnified by way of attorney’s fees and
payment of costs of suit.
Issues:
1) WON sale was valid although it was executed after the death of the
principal, Concepcion.
2) WON sale fell within the exception to the general rule that death
extinguishes the authority of the
agent
3) WON agent’s knowledge of the principal’s death is a material factor.
4) WON petitioner must suffer the consequence of failing to annotate a notice
of death in the title
(thus there was good faith on the part of the Respondent vendee)
5) WON good faith on the part of the respondent in this case should be treated
parallel to that of an
CFI: Sale of land was null and void insofar as the one-half pro-indiviso share
of Concepcion Rallos Ordered the issuance of new TCTs to respondent
corporation and the estate of Concepcion in theproportion of ½ share each
pro-indiviso and the payment of attorney’s fees and cost of litigation
Respondent filed cross claim against Simon Rallos(*Simon and Gerundia died
Simeon Rallos was ordered to pay defendant the price of the ½ share of the
land (P5,343.45) plus attorney’s fees [Borromeo filed a third party complaint
against Josefina Rallos, special administratrix of the Estate
of Gerundia] Dismissed without prejudice to filing either a complaint against
the regular administrator of the Estate of Gerundia Rallos or a claim in the
Intestate-Estate of Cerundia Rallos, covering the same subject-matter
CA: CFI Decision reversed, upheld the sale of Concepcion’s share.MR:
denied.innocent purchaser for a value of a land.
2. Urban Bank vs. Pena
FACTS: In 1994, Isabel Sugar Company, Inc. (ISCI) sold a parcel of land to
Urban Bank, Inc. (UBI). The land was sold for P240 million. As the land was
occupied by unauthorized sub-tenants, ISCI’s lawyer, Atty. Magdaleno Peña
had to negotiate with them for them to relocate. But the said occupants,
knowing that the land was already transferred to UBI, refused to recognize
Peña. ISCI then communicated with UBI so that the latter may authorize Peña
to negotiate with the tenants. Peña had to barricade himself inside the property
to keep the tenants out who were forcing their way in especially so that the
local cops are now sympathetic to them. Peña then had a phone conversation
with Teodoro Borlongan, president of UBI, where Peña explained to him the
situation. In said conversation, Peña asked authorization from Borlongan to
negotiate with the tenants. Peña also asked that he be paid 10% of the
purchase price or (P24 million) for his efforts. Borlongan agreed over the
phone on the condition that Peña should be able to settle with the tenants
otherwise he forfeits said 10% fee. Peña also asked that said authorization be
put into writing.
The authorization was put into writing but no mention was made as regards
the 10% fee, (in short, that part was not written in the written authorization
released by UBI). Peña was able to settle and relocate the tenants. After
everything was settled and the property is now formally under the possession
of UBI, Peña began sending demands to UBI for the latter to pay him the P24
million fee agreed upon, plus his expenses for the relocation of the tenants
and the hiring of security guards or an additional P3 million. But UBI refused
to make payment hence Peña filed a complaint for recovery against UBI.
The trial court ruled in favor of Peña as it found there indeed was a contract of
agency created between and UBI and that Peña is entitled to the 10% fee plus
the expenses he incurred including litigation expenses. In sum, the trial court
awarded him P28 million.
The Court of Appeals however reversed the order of the trial court. It ruled that
no agency was formed but for his legal services, Peña is entitled to payment
but applying the principle of unjust enrichment and quantum meruit, Peña
should only be paid P3 million.
ISSUE: Whether or not Atty. Magdaleno Peña is entitled to receive the P28
million.
HELD: No. The Supreme Court ruled that said amount is unconscionable.
Peña is entitled to payment for compensation for services rendered as agent
of Urban Bank, but on the basis of the principles of unjust enrichment and
quantum meruit. In the first place, other than the self-serving testimony of
Peña, there was no other evidence presented to support his claim that
Borlongan agreed to pay him that 10% over the phone. The written
authorization later issued merely confirms the power granted him to negotiate
with the tenants. The written authorization proved the existence of agency but
not the existence of any agreement as to how much Peña should be paid.
Absent any such agreement, the principle of quantum meruit should be
applied. In this case, Peña is entitled to receive what he merit for his services,
or as much as he has earned. In dealing with the tenants, Peña didn’t have to
perform any extraordinary acts or legal maneuvering. Hence, he is entitled to
receive P1.5 million for his legal services. He is also entitled to reimbursement
for his expenses in securing the property, to wit, P1.5 million for the security
guards he had to hire and another P1.5 million for settling and relocating the
23 tenants. Total of P4.5 million.
The Supreme Court emphasized that lawyering is not a business; it is a
profession in which duty to public service, not money, is the primary
consideration.
ESSENTIAL CHARACTERISTICS OF AGENCY
3. Bordador vs. Luz –
FACTS:Petitioners were engaged in the business of purchase and sale of
jewelry and respondent Brigida Luz, also known as Aida Luz, was their regular
customer.
On several occasions, respondent Deganos, brother of Luz, received several
pieces of gold and jewelry from petitioners amounting to P382, 816. These
items and their prices were indicated in seventeen receipts covering the same.
11 of the receipts stated that they were received for a certain Aquino, a niece
of Deganos, and the remaining 6 receipts indicated that they were received for
Luz.
Deganos was supposed to sell the items at a profit and thereafter remit the
proceeds and return the unsold items to Bordador. Deganos remitted only the
sum of P53, 207. He neither paid the balance of the sales proceeds, nor did
he return any unsold item to petitioners.
The total of his unpaid account to Bordador, including interest, reached the
sum of P725, 463.98. Petitioners eventually filed a complaint in the barangay
court against Deganos to recover said amount.
In the barangay proceedings, Luz, who was not impleaded in the caes,
appeared as a witness for Deganos and ultimately, she and her husband,
together with Deganos signed a compromise agreement with petitioners.
In that compromise agreement, Deganos obligated himself to pay petitioners,
on installment basis , the balance of his account plus interest thereon.
However, he failed to comply with his aforestated undertakings.
Petitioners instituted a complaint for recovery of sum of money and damages,
with an application for preliminary attachment against Deganos and Luz.
Deganos and Luz was also charged with estafa
During the trial of the civil cae, petitioners claimed that Deganos acted as agent
of Luz when received the subject items of jewelry, and because he failed to
pay for the same, Luz, as principal, and her spouse are solidarily liable with
him
Trial court ruled that only Deganos was liable to Bordador for the amount and
damages claimed. It held that while Luz did have transactions with petitioners
in the past, the items involved were already paid for and all that Luz owed
Bordador was the sum or P21, 483 representing interest on the principal
account which she had previously paid for.
CA affirmed TC’s decision
ISSUE: W/N Luz are liable to petitioners for the latter’s claim for money and
damages in the sum of P725,463.98, plus interests and attorney’s fees,
despite the fact that the evidence does not show that they signed any of the
subject receipts or authorized Deganos to receive the items of jewelry on their
behalf
RULING: No
Evidence does not support the theory of Bordador that Deganos was an agent
of Luz and that the latter should consequently be held solidarily liable with
Deganos in his obligation to petitioners.
The basis for agency is representation. Here, there is no showing that Luz
consented to the acts of Deganos or authorized him to act on her behalf, much
less with respect to the particular transactions involved.
It was grossly and inexcusably negligent of petitioner to entrust to Deganos,
not once or twice but on at least six occasions as evidenced by 6 receipts,
several pieces of jewelry of substantial value without requiring a written
authorization from his alleged principal. A person dealing with an agent is
put upon inquiry and must discover upon his peril the authority of the
agent.
Records show that neither an express nor an implied agency was proven to
have existed between Deganos and Luz. Evidently, Bordador who were
negligent in their transactions with Deganos cannot seek relief from the effects
of their negligence by conjuring a supposed agency relation between the two
respondents where no evidence supports such claim
4. Victoria Milling vs. CA
FACTS: St. Therese Merchandising (STM) regularly bought sugar from
Victorias Milling Co (VMC). In the course of their dealings, VMC issued several
Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases.
Among these was SLDR No. 1214M. SLDR No. 1214M, dated October 16,
1989, covers 25,000 bags of sugar. Each bag contained 50 kg and priced at
P638.00 per bag. The transaction covered was a “direct sale”.
On October 25, 1989, STM sold to private respondent Consolidated Sugar
Corporation (CSC) its rights in the same SLDR for P14,750,000.00. CSC
issued checks in payment. That same day, CSC wrote petitioner that it had
been authorized by STM to withdraw the sugar covered by the said SLDR.
Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority
from STM authorizing CSC to “withdraw for and in our behalf the refined sugar
covered by the SLDR” 
On Oct. 27, 1989, STM issued checks to VMC as
payment for 50,000 bags, covering SLDR No. 1214M. 
CSC surrendered the
SLDR No. 1214M and to VMC’s NAWACO Warehouse and was allowed to
withdraw sugar. But only 2,000 bags had been released because VMC refused
to release the other 23,000 bags.
Therefore, CSC informed VMC that SLDR No. 1214M had been “sold and
endorsed” to it. But VMC replied that it could not allow any further withdrawals
of sugar against SLDR No. 1214M because STM had already withdrawn all
the sugar covered by the cleared checks. VMC also claimed that CSC was
only representing itself as STM’s agent as it had withdrawn the 2,000 bags
against SLDR No. 1214M “for and in behalf” of STM. Hence, CSC filed a
complaint for specific performance against Teresita Ng Sy (doing business
under STM's name) and VMC. However, the suit against Sy was discontinued
because later became a witness. RTC ruled in favor of CSC and ordered VMC
to deliver the 23,000 bags left. CA concurred. Hence this appeal.
ISSUES: W/N CA erred in not ruling that CSC was an agent of STM and hence,
estopped to sue upon SLDR No. 1214M as assignee.
HELD:
NO. CSC was not an agent of STM. VMC heavily relies on STM’s letter of
authority that said CSC is authorized to withdraw sugar “for and in our behalf”.
It is clear from Art. 1868 that the: basis of agency is representation. On the
part of the principal, there must be an actual intention to appoint or an intention
naturally inferable from his words or actions, and on the part of the agent, there
must be an intention to accept the appointment and act on it, and in the
absence of such intent, there is generally NO agency. One factor, which most
clearly distinguishes agency from other legal concepts, is control; one person
– the agent – agrees to act under the control or direction of another – the
principal. Indeed, the very word “agency” has come to connote control by the
principal. The control factor, more than any other, has caused the courts to put
contracts between principal and agent in a separate category. Where the
relation of agency is dependent upon the acts of the parties, the law makes no
presumption of agency and it is always a fact to be proved, with the burden of
proof resting upon the persons alleging the agency, to show not only the fact
of its existence but also its nature and extent. It appears that CSC was a buyer
and not an agent of STM. CSC was not subject to STM’s control. The terms
“for and in our behalf” should not be eyed as pointing to the existence of an
agency relation. Whether or not a contract is one of sale or agency depends
on the intention of the parties as gathered from the whole scope and effect of
the language employed. Ultimately, what is decisive is the intention of the
parties. (In fact, CSC even informed VMC that the SLDR was sold and
endorsed to it.)
Agency distinguished from sale.

In an agency to sell, the agent, in dealing with the thing received, is bound to
act according to the instructions of his principal, while in a sale, the buyer can
deal with the thing as he pleases, being the owner. The elementary notion of
sale is the transfer of title to a thing from one to another, while the essence of
agency involves the idea of an appointment of one to act for another. Agency
is a relationship which often results in a sale, but the sale is a subsequent step
in the transaction. (Teller, op. cit., p. 26; see Commissioner of Internal
Revenue vs. Manila Machinery & Supply Co., 135 SCRA 8 [1985].) An
authorization given to another containing the phrase “for and in our behalf’’
does not necessarily establish an agency, as ultimately what is decisive is the
intention of the parties. Thus, the use of the words “sold and endorsed’’ may
mean that the parties intended a contract of sale, and not a contract of agency.
7. Eurotech Industrial
FACTS:
From January to April 1995, petitioner sold to Impact Systems various
products allegedly amounting to P91,338.00 pesos. Subsequently,
respondents sought to buy from petitioner one unit of sludge pump valued at
P250,000.00 with respondents making a down payment of P50,000.00. When
the sludge pump arrived from the United Kingdom, petitioner refused to deliver
the same to respondents without their having fully settled their indebtedness
to petitioner. Thus, on 28 June 1995, respondent EDWIN and Alberto de
Jesus, general manager of petitioner, executed a Deed of Assignment of
receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.
Despite the existence of the Deed of Assignment, respondents proceeded to
collect from Toledo Power Company the amount of P365,135.29. Alarmed by
this development, petitioner made several demands upon respondents to pay
their obligations. As a result, respondents were able to make partial payments
to petitioner. On 7 October 1996, petitioner's counsel sent respondents a final
demand letter wherein it was stated that as of 11 June 1996, respondents' total
obligations stood at P295,000.00 excluding interests and attorney's fees.
Because of respondents' failure to abide by said final demand letter, petitioner
instituted a complaint for sum of money, damages, with application for
preliminary attachment against herein respondents
By way of special and affirmative defenses, respondent EDWIN alleged that
he is not a real party in interest in this case. According to him, he was acting
as mere agent of his principal, which was the Impact Systems, in his
transaction with petitioner and the latter was very much aware of this fact.
ISSUE: Whether the act of Edwin in signing the Deed of Assignment binds his
principal Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems
The Supreme Court held that in a contract of agency, a person binds himself
to render some service or to do something in representation or on behalf of
another with the latter's consent. Its purpose is to extend the personality of the
principal or the party for whom another acts and from whom he or she derives
the authority to act. It is said that the basis of agency is representation, that is,
the agent acts for and on behalf of the principal on matters within the scope of
his authority and said acts have the same legal effect as if they were personally
executed by the principal.
In this case at hand, the parties do not dispute the existence of the agency
relationship between respondents ERWIN as principal and EDWIN as
agent.Tech vs Cuizon
6. Orient Air Services vs. CA
FACTS:
Lino Olaguer died on October 3, 1957 so Special Proceedings No. 528 for
probate of will was filed in the then Court of First Instance of Albay. Defendant
Olivia P. Olaguer was appointed as administrator pursuant to the will. Later,
defendant Eduardo Olaguer was appointed as co-administrator.
In the order of the probate court dated April 4, 1961, some properties of the
estate were authorized to be sold to pay obligations of the estate.
Relying upon the order, but without prior notice or permission from the Probate
Court, defendants Olivia P. Olaguer and Eduardo Olaguer on November 1,
1965 sold to Estanislao Olaguer 10 parcels of land. The sale to was approved
by the Probate Court on November 12, 1965.
On July 7, 1966, defendant Olivia P. Olaguer executed a Special Power of
Attorney in favor of defendant Jose A. Olaguer, authorizing the latter to "sell,
mortgage, assign, transfer, endorse and deliver" of 6 properties.
On July 7, 1966, Estanislao Olaguer executed a Special Power of Attorney in
favor of Jose A. Olaguer authorizing the latter to "sell, mortgage, assign,
transfer, endorse and deliver" the 9 properties.
By virtue of this Special Power of Attorney, on March 1, 1967, Jose A. Olaguer
as Attorney-in-Fact of Estanislao Olaguer mortgaged Lots 7589, 7593 and
7396 to defendant PNB as security for a loan of 10,000 Pesos. The mortgage
was foreclosed by the PNB on June 13, 1973 and the properties mortgage
were sold at public auction to PNB. On December 10, 1990, the PNB
transferred the properties to the Republic of the Philippines pursuant to Exec.
Order No. 407 dated June 14, 1990 for agrarian reform purposes.
On October 29, 1966, Estanislao Olaguer executed a General Power of
Attorney in favor of Jose A. Olaguer, authorizing the latter to exercise general
control and supervision over all of his business and properties, and among
others, to sell or mortgage any of his properties.
On December 29, 1966, Estanislao Olaguer sold to Jose A. Olaguer for 15,000
the 10 parcels of land he bought from Olivia P. Olaguer and Eduardo Olaguer.
On March 16, 1968, Estanislao Olaguer sold to Jose A. Olaguer for 1 Peso
and other valuable consideration 2 parcels of land which have a total area of
2.5 hectares.
On June 5, 1968, Estanislao Olaguer sold another 2 lots to Jose A. Olaguer
for 1 Peso and other valuable consideration.
On May 13, 1971, Jose A. Olaguer in his capacity as Attorney in-Fact of
Estanislao Olaguer sold to his son Virgilio Olaguer for 1 Peso and other
valuable consideration.
On July 15, 1974, Jose A. Olaguer sold to his son Virgilio Olaguer Lot No.
4521 and Lot No. 4522 for 1,000 Pesos.
On September 16, 1978 Virgilio Olaguer executed a General Power of
Attorney in favor of Jose A. Olaguer authorizing the latter to exercise general
control and supervision over all of his business and properties and among
others, to sell or mortgage the same.
Olivia P. Olaguer and Eduardo Olaguer were removed as administrators of the
estate and on February 12, 1980, plaintiff Ma. Linda Olaguer Montayre was
appointed administrator by the Probate Court.
The decedent Lino Olaguer have had three marriages. He was first married to
Margarita Ofemaria who died April 6, 1925. His second wife was Gloria
Buenaventura who died on July 2, 1937. The third wife was the defendant
Olivia P. Olaguer.
Jose Olaguer acting upon the general power of attorney sold 8 parcels of land
to Emilio Ongjoco.
On 28 January 1980, the Estate of Lino Olaguer filed an action for the
Annulment of Sales of Real Property and/or Cancellation of Titles in the then
Court of First Instance of Albay. The plaintiffs therein alleged that the sales of
the following properties belonging to the Estate of Lino Olaguer to Estanislao
Olaguer were absolutely simulated or fictitious, the plaintiffs likewise prayed
that the resulting Transfer Certificates of Title issued to Jose Olaguer, Virgilio
Olaguer, Cipriano Duran and the PNB be annulled.
ISSUE:
Whether General Power of Attorney was sufficient to effect the sale of the
subject properties
HELD:
Yes, the general power of attorney was sufficient
The Supreme Court held that while the law requires a special power of
attorney, the general power of attorney was sufficient in this case, as Jose A.
Olaguer was expressly empowered to sell any of Virgilio's properties; and to
sign, execute, acknowledge and deliver any agreement therefor. Even if a
document is designated as a general power of attorney, the requirement of a
special power of attorney is met if there is a clear mandate from the principal
specifically authorizing the performance of the act. The special power of
attorney can be included in the general power when the act or transaction for
which the special power is required is specified therein.
On its face, the written power of attorney contained the signature of Virgilio
Olaguer and was duly notarized. As such, the same is considered a public
document and it has in its favor the presumption of authenticity and due
execution, which can only be contradicted by clear and convincing evidence.
KINDS OF AGENCY
7.Dominion Insurance Corp. vs. CA
FACTS Rodolfo Guevarra (Guevarra) filed a civil case for sum of money
against Dominion Insurance Corp. (Dominion) for the amount advanced by
Guevarra in his capacity as manager of defendant to satisfy certain claims filed
by defendant’s client.
The pre-trial was always postponed, and during one of the pre-trial conference
dominion failed to arrive therefore the court declared them to be in default.
Dominion filed several Motions to Lift Order of Default but was always denied
by the court. The RTC rendered its decision making Dominion liable to repay
Guevarra for the sum advanced and other damages and fees. Dominion
appealed but CA affirmed the decision of RTC and denied the appeal of
Dominion.
ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.
HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was
with the word “special” the contents of the document was actually a general
agency. A general power permits the agent to do all acts for which the law
does not require a special power and the contents in the document did not
require a special power of attorney.
Art 1878 of the civil code provides instances when a special power of attorney
is required.:
1) To make such payment as are not usually considered as acts of
administration.
15) any other act of dominion
The payment of claims is not an act of administration which requires a special
power of attorney before Guevarra could settle the insurance claims of the
insured.
Also Guevarra was instructed that the payment for the insured must come from
the revolving fund or collection in his possession, Gueverra should not have
paid the insured through his own capacity. Under 1918 of civil code an agent
who acted in contravention of the principal’s instruction the principal will not be
liable for the expenses incurred by the agent.
(b) YES. Even if the law on agency prohibits Gueverra from obtaining
reimbursement his right to recover may be justified under the article 1236 of
the civil code.[1] Thus Guevarra must be reimbursed but only to the extent that
Dominion has benefited without interest or demand for damages.
8. Litonjua vs. Fernandez
Facts:
Mrs. Lourdes Alimario and Agapito Fisico who worked as brokers, offered to
sell to the petitioners, Antonio K. Litonjua and Aurelio K. Litonjua, Jr., the
parcels of land.
The owners of the properties were represented by Mary Mediatrix Fernandez
and Gregorio T. Eleosida, respectively. The brokers told the petitioners that
they were authorized by respondent Fernandez to offer the property for sale.
The petitioners and respondent Fernandez agreed that the petitioners would
buy the property consisting of 36,742 square meters, for the price of P150 per
square meter, or the total sum of P5,098,500. They also agreed that the
owners would shoulder the capital gains tax, transfer tax and the expenses for
the documentation of the sale.
The petitioners and respondent Fernandez also agreed to meet on December
8, 1995 to finalize the sale. It was also agreed upon that on the said date,
respondent Fernandez would present a special power of attorney executed by
the owners of the property, authorizing her to sell the property for and in their
behalf, and to execute a deed of absolute sale thereon. The petitioners would
also remit the purchase price to the owners, through respondent Fernandez.
However, only Agapito Fisico attended the meeting. He informed the
petitioners that respondent Fernandez was encountering some problems with
the tenants and was trying to work out a settlement with them.[7] After a few
weeks of waiting, the petitioners wrote respondent Fernandez on January 5,
1995, demanding that their transaction be finalized by January 30, 1996.
When the petitioners received no response from respondent Fernandez, the
petitioners sent her another Letter[9] dated February 1, 1996, asking that the
Deed of Absolute Sale covering the property be executed in accordance with
their verbal agreement dated November 27, 1995. The petitioners also
demanded the turnover of the subject properties to them within fifteen days
from receipt of the said letter; otherwise, they would have no option but to
protect their interest through legal means.
Fernandez, however rejected the claims of the petitioner.
On April 12, 1996, the petitioners filed the instant Complaint for specific
performance with damages[13] against respondent Fernandez and the
registered owners of the property.
After trial on the merits, the trial court rendered judgment in favor of the
petitioners .
The appellate court promulgated its decision reversing and setting aside the
judgment of the trial court and dismissing the petitioners’ complaint, as well as
the respondents’ counterclaim.
Issue/s: Whether or not there was a perfected contract of sale between the
parties.
Whether or not the contract falls under the coverage of the statute of frauds.
Held:
- the petitioners assert that there was a perfected contract of sale
between the petitioners as buyers and the respondents-owners, through
respondent Fernandez, as sellers. The petitioners contend that the perfection
of the said contract is evidenced by the January 16, 1996 Letter of respondent
Fernandez.
- The petitioners argue that the letter is a sufficient note or
memorandum of the perfected contract, thus, removing it from the coverage of
the statute of frauds. The letter specifically makes reference to a sale which
respondent Fernandez agreed to initially, but which the latter withdrew
because of the emergence of some people who claimed to be tenants on both
parcels of land.
- The petitioners’ contention is bereft of merit. In its decision, the
appellate court ruled that the Letter of respondent Fernandez dated January
16, 1996 is hardly the note or memorandum contemplated under Article
1403(2)(e) of the New Civil Code.
- In this case, we agree with the findings of the appellate court that there
was no perfected contract of sale between the respondents-owners, as sellers,
and the petitioners, as buyers.
- There is no documentary evidence on record that the respondents-
owners specifically authorized respondent Fernandez to sell their properties to
another, including the petitioners. Article 1878 of the New Civil Code provides
that a special power of attorney is necessary to enter into any contract by
which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration,[37] or to create or convey real
rights over immovable property,[38] or for any other act of strict dominion.[39]
Any sale of real property by one purporting to be the agent of the registered
owner without any authority therefor in writing from the said owner is null and
void.[40] The declarations of the agent alone are generally insufficient to
establish the fact or extent of her authority.[41] In this case, the only evidence
adduced by the petitioners to prove that respondent Fernandez was
authorized by the respondents-owners is the testimony of petitioner Antonio
Litonjua that respondent Fernandez openly represented herself to be the
representative of the respondents-owner.
9. Aggabao vs. Parulan
DOCTRINE(S):
The sale was made on March 18, 1991, or after Au-gust 3, 1988, the effectivity
of the Family Code. The proper law to apply is, therefore, Article 124 of the
Family Code, for it is settled that any alienation or encumbrance of conjugal
property made during the effectivity of the Family Code is governed by Article
124 of the Family Code.
According to Article 256 of the Family Code, the pro-visions of the Family Code
may apply retroactively provided no vested rights are impaired. In Tumlos v.
Fernandez, 330 SCRA 718 (2000), the Court rejected the petitioner’s
argument that the Family Code did not apply because the acquisition of the
contested property had occurred prior to the effectivity of the Family Code, and
pointed out that Article 256 pro-vided that the Family Code could apply
retroactively if the application would not prejudice vested or ac-quired rights
existing before the effectivity of the Family Code. Herein, however, the
petitioners did not show any vested right in the property acquired prior to
August 3, 1988 that exempted their situation from the retroactive application
of the Family Code.
FACTS:
In January 1991, real estate broker Marta K.Atanacio offered 2 lots located in
Parañaque to the petitioners. On February 2, 1991, the petitioners met up with
Elena Parulan at the site of the property and showed them the following
documents: (a.) Owner’s original copy of the TCT of the 2 lots; (b.) tax
declarations; (c.) a copy of the special power of attorney dated January 7, 1991
executed by Dionisio authorizing Elena to sell the property. The petitioners
paid P200,000.00 as earnest money for which Elena executed a handwritten
Receipt of Earnest Money which stipulated that the peitioners would pay an
additional payment of P130, 000.00 on February 4, 1991; P650,000.00 on or
before February 15, 1991 and P700, 000.00 on March 31, 1991 once Elena
turned over the property.
On February 4, 1991, the petitioners, accompanied by the broker, went to the
Office of the Register of Deeds to verify the TCTs shown by Elena. There they
discovered that one of the lots had been encumbered to Banco Filipino, but
that the encumbrance had been cancelled due to the full payment of the
obligation. They noticed that the loan was effected through and SPA executed
by Dionisio in favor of Elena. The other lot on the other hand had an annotation
of an existing mortgage in favor of Los Baños Rural Bank, with the same SPA
with a court order authorizing Elena to mortgage the lot to secure the loan.
The petitioners and the broker next inquired about the mortgage and the court
order at the Los Baños Rural Bank. There, they met with Atty. Zarate, related
that the bank had asked for the court order because the lot involved was
conjugal property.
Following their verification, the petitioners delivered P130,000.00 as additional
down payment on February 4, 1991; and P650,000.00 to the Los Baños Rural
Bank on February 12, 1991, which then released the owner’s duplicate copy
of TCT to them.
On March 18, 1991, the petitioners delivered the final amount of P700,000.00
to Elena, who executed a deed of absolute sale in their favor. However, Elena
did not turn over the owner’s duplicate copy of the TCT claiming that said copy
was in the possession of a relative who was then in Hongkong. She assured
them that the owner’s duplicate copy of TCT would be turned over after a
week.
On March 19, 1991, TCT was cancelled and a new one was issued in the
name of the petitioners. Elena did not turn over the duplicate owner’s copy of
TCT as promised. In due time, the petitioners learned that the duplicate
owner’s copy of TCT had been all along in the custody of Atty. Jeremy Z.
Parulan, who appeared to hold an SPA executed by his brother Dionisio
authorizing him to sell both lots. At Atanacio’s instance, the petitioners met on
March 25, 1991 with Atty. Parulan at the Manila Peninsula. They were
accompanied by one Atty. Olandesca. They recalled that Atty. Parulan “smugly
demanded P800,000.00” in exchange for the duplicate owner’s copy of TCT,
because Atty. Parulan represented the current value of the property to be P1.5
million. As a counter-offer, however, they tendered P250,000.00, which Atty.
Parulan declined, giving them only until April 5, 1991 to decide. Hearing
nothing more from the petitioners, Atty. Parulan decided to call them on April
5, 1991, but they informed him that they had already fully paid to Elena.
Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action
(Civil Case No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by
Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena Parulan, Sps. Rex and
Coney Aggabao), praying for the declaration of the nullity of the deed of
absolute sale executed by Ma. Elena, and the cancellation of the title issued
to the petitioners by virtue thereof. In turn, the petitioners filed on July 12, 1991
their own action for specific performance with damages against the
respondents. Both cases were consolidated for trial and judgment in the RTC.
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City
annulled the deed of absolute sale executed in favor of the petitioners covering
two parcels of registered land the respondents owned for want of the written
consent of respondent husband Dionisio Parulan, Jr. The CA affirmed the RTC
decision.
ISSUE: Which between Article 173 of the Civil Code and Article 124 of the
Family Code should apply to the sale of the conjugal property executed without
the consent of Dionisio?
HELD: Article 124, Family Code, applies to sale of conjugal properties made
after the effectivity of the Family Code
RATIO:
The petitioners submit that Article 173 of the CivilCode, not Article 124 of the
Family Code, governed the property relations of the respondents because they
had been married prior to the effectivity of the Family Code; and that the
second paragraph of Article 124 of the Family Code should not apply because
the other spouse held the administration over the conjugal property. They
argue that notwithstanding his absence from the country Dionisio still held the
administration of the conjugal property by virtue of his execution of the SPA in
favor of his brother; and that even assuming that Article 124 of the Family Code
properly applied, Dionisio ratified the sale through Atty. Parulan’s counter-offer
during the March 25, 1991 meeting.
To start with, Article 25427 the Family Code has expressly repealed several
titles under the Civil Code, among them the entire Title VI in which the
provisions on the property relations between husband and wife, Article 173 did not present in court the SPA granting to Atty. Parulan the authority for the
included, are found. administration.

Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the
effectivity of the Family Code. The proper law to apply is, therefore, Article 124
of the Family Code, for it is settled that any alienation or encumbrance of
conjugal property made during the effectivity of the Family Code is governed
by Article 124 of the Family Code.
Article 124 of the Family Code provides:
“Article 124. The administration and enjoyment of the conjugal partnership
property shall belong to both spouses jointly. In case of disagreement, the
husband’s decision shall prevail, subject to recourse to the court by the wife
for proper remedy, which must be availed of within five years from the date of
the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate
in the administration of the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not include disposition or
encumbrance without authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other
spouse or authorization by the court before the offer is withdrawn by either or
both offerors.”
Nonetheless, we stress that the power of administration does not include acts
of disposition or encumbrance, which are acts of strict ownership. As such, an
authority to dispose cannot proceed from an authority to administer, and vice
versa, for the two powers may only be exercised by an agent by following the
provisions on agency of the Civil Code (from Article 1876 to Article 1878).
Specifically, the apparent authority of Atty. Parulan, being a special agency,
was limited to the sale of the property in question, and did not include or extend
to the power to administer the property.
Lastly, the petitioners’ insistence that Atty. Parulan’s making of a counter-offer
during the March 25, 1991 meeting ratified the sale merits no consideration.
Under Article 124 of the Family Code, the transaction executed sans the
written consent of Dionisio or the proper court order was void; hence,
ratification did not occur, for a void contract could not be ratified. On the other
hand, we agree with Dionisio that the void sale was a continuing offer from the
petitioners and Ma. Elena that Dionisio had the option of accepting or rejecting
before the offer was withdrawn by either or both Ma. Elena and the petitioners.
The last sentence of the second paragraph of Article 124 of the Family Code
makes this clear, stating that in the absence of the other spouse’s consent, the
transaction should be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or upon authorization by
the court before the offer is withdrawn by either or both offerors.

Thirdly, according to Article 256 of the Family Code, the provisions of the
Family Code may apply retroactively provided no vested rights are impaired.
In Tumlos v. Fernandez, the Court rejected the petitioner’s argument that the
Family Code did not apply because the acquisition of the contested property
had occurred prior to the effectivity of the Family Code, and pointed out that
Article 256 provided that the Family Code could apply retroactively if the
application would not prejudice vested or acquired rights existing before the
effectivity of the Family Code. Herein, however, the petitioners did not show
any vested right in the property acquired prior to August 3, 1988 that exempted
their situation from the retroactive application of the Family Code.

Fourthly, the petitioners failed to substantiate their contention that Dionisio,

while holding the administration over the property, had delegated to his
brother, Atty. Parulan, the administration of the property, considering that they