EUROTECH INDUSTRIAL TECHNOLOGIES, INC.
, payment for the purchase of one unit
Petitioner,
- versus -
EDWIN CUIZON and ERWIN CUIZON,
Respondents.
G.R. No. 167552
April 23, 2007
CHICO-NAZARIO, J.:
Before Us is a petition for review
by certiorari assailing the Decision of the Court of
[1]
Appeals dated 10 August 2004 and its
Resolution dated 17 March 2005 in CA-G.R. SP No.
[2]
71397 entitled, Eurotech Industrial Technologies, Inc.
v. Hon. Antonio T. Echavez. The assailed Decision and
Resolution affirmed the Order[3] dated 29 January
2002rendered by Judge Antonio T. Echavez ordering
the dropping of respondent EDWIN Cuizon (EDWIN)
as a party defendant in Civil Case No. CEB-19672.
The generative facts of the case are as follows:
Petitioner is engaged in the business of importation
and distribution of various European industrial
equipment for customers here in the Philippines. It
has as one of its customers Impact Systems Sales
(Impact Systems) which is a sole proprietorship
owned by respondent ERWIN Cuizon
(ERWIN). Respondent EDWIN is the sales manager of
Impact Systems and was impleaded in the court a
quo in said capacity.
From January to April 1995, petitioner sold to Impact
Systems various products allegedly amounting to
ninety-one thousand three hundred thirty-eight
(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 fifty thousand pesos
(P50,000.00).[4] 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, the
pertinent part of which states:
1.) That ASSIGNOR[5] has an
outstanding receivables from Toledo
Power Corporation in the amount of
THREE HUNDRED SIXTY FIVE
THOUSAND (P365,000.00) PESOS as
of Selwood Spate 100D Sludge Pump;
2.) That said ASSIGNOR does
hereby ASSIGN, TRANSFER, and
CONVEY unto the ASSIGNEE[6] the said
receivables from Toledo Power
Corporation in the amount of THREE
HUNDRED SIXTY FIVE THOUSAND
(P365,000.00) PESOS which
receivables the ASSIGNOR is the lawful
recipient;
3.) That the ASSIGNEE does
hereby accept this assignment.[7]
Following the execution of the Deed of Assignment,
petitioner delivered to respondents the sludge pump
as shown by Invoice No. 12034 dated 30 June 1995.[8]
Allegedly unbeknownst to petitioner,
respondents, despite the existence of the Deed of
Assignment, proceeded to collect from Toledo Power
Company the amount of P365,135.29 as evidenced
by Check Voucher No. 0933[9] prepared by said
power company and an official receipt dated 15
August 1995 issued by Impact Systems.[10] 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, petitioners 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 attorneys
fees.[11] 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 before
the Regional Trial Court of Cebu City.[12]
On 8 January 1997, the trial court granted
petitioners prayer for the issuance of writ of
preliminary attachment.[13]
On 25 June 1997, respondent EDWIN filed his
Answer[14] wherein he admitted petitioners
allegations with respect to the sale transactions
entered into by Impact Systems and petitioner
between January and April 1995.[15] He, however,
disputed the total amount of Impact Systems
indebtedness to petitioner which, according to him,
amounted to only P220,000.00.[16]
 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. In
support of this argument, petitioner points to
paragraphs 1.2 and 1.3 of petitioners Complaint
stating
1.2. Defendant Erwin H. Cuizon, is of
legal age, married, a resident
of Cebu City. He is the proprietor of a
single proprietorship business known
as Impact Systems Sales (Impact
Systems for brevity), with office
located at 46-A del Rosario Street,
Cebu City, where he may be served
summons and other processes of the
Honorable Court.
1.3. Defendant Edwin B. Cuizon is of
legal age, Filipino, married, a resident
of Cebu City. He is the Sales Manager of
Impact Systems and is sued in this
action in such capacity.[17]
On 26 June 1998, petitioner filed a Motion to
Declare Defendant ERWIN in Default with Motion for
Summary Judgment. The trial court granted
petitioners motion to declare respondent ERWIN in
default for his failure to answer within the
prescribed period despite the opportunity
granted[18] but it denied petitioners motion for
summary judgment in its Order of 31 August
2001 and scheduled the pre-trial of the case on 16
October 2001.[19] However, the conduct of the pre-
trial conference was deferred pending the resolution
by the trial court of the special and affirmative
defenses raised by respondent EDWIN.[20]
After the filing of respondent EDWINs
Memorandum[21] in support of his special and
affirmative defenses and petitioners
opposition[22] thereto, the trial court rendered its
assailed Order dated 29 January 2002 dropping
respondent EDWIN as a party defendant in this
case. According to the trial court
A study of Annex G to the
complaint shows that in the Deed of
Assignment, defendant Edwin B.
Cuizon acted in behalf of or
represented [Impact] Systems Sales;
that [Impact] Systems Sale is a single
proprietorship entity and the
complaint shows that defendant Erwin
H. Cuizon is the proprietor; that
plaintiff corporation is represented by
its general manager Alberto de Jesus in
the contract which is dated June 28,
1995. A study of Annex H to the
complaint reveals that [Impact]
Systems Sales which is owned solely by
defendant Erwin H. Cuizon, made a
down payment of P50,000.00 that
Annex H is dated June 30, 1995 or two
days after the execution of Annex G,
thereby showing that [Impact] Systems
Sales ratified the act of Edwin B.
Cuizon; the records further show that
plaintiff knew that [Impact] Systems
Sales, the principal, ratified the act of
Edwin B. Cuizon, the agent, when it
accepted the down payment
of P50,000.00. Plaintiff, therefore,
cannot say that it was deceived by
defendant Edwin B. Cuizon, since in the
instant case the principal has ratified
the act of its agent and plaintiff knew
about said ratification. Plaintiff could
not say that the subject contract was
entered into by Edwin B. Cuizon in
excess of his powers since [Impact]
Systems Sales made a down payment
of P50,000.00 two days later.
In view of the Foregoing, the
Court directs that defendant Edwin B.
Cuizon be dropped as party
defendant.[23]
Aggrieved by the adverse ruling of the trial court,
petitioner brought the matter to the Court of Appeals
which, however, affirmed the 29 January 2002 Order
of the court a quo.The dispositive portion of the now
assailed Decision of the Court of Appeals states:
WHEREFORE, finding no viable legal
ground to reverse or modify the
conclusions reached by the public
respondent in his Order dated January
29, 2002, it is hereby AFFIRMED.[24]
Petitioners motion for reconsideration was denied
by the appellate court in its Resolution promulgated
on 17 March 2005. Hence, the present petition
raising, as sole ground for its allowance, the
following:
THE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR
WHEN IT RULED THAT RESPONDENT
EDWIN CUIZON, AS AGENT OF
IMPACT SYSTEMS SALES/ERWIN
CUIZON, IS NOT PERSONALLY
LIABLE, BECAUSE HE HAS NEITHER
ACTED BEYOND THE SCOPE OF HIS
AGENCY NOR DID HE PARTICIPATE
IN THE PERPETUATION OF A
FRAUD.[25]
To support its argument, petitioner points to Article
1897 of the New Civil Code which states:
Art. 1897. The agent who acts as such
is not personally liable to the party
with whom he contracts, unless he
expressly binds himself or exceeds the
limits of his authority without giving
such party sufficient notice of his
powers.
Petitioner contends that the Court of Appeals failed
to appreciate the effect of ERWINs act of collecting
the receivables from the Toledo Power Corporation
notwithstanding the existence of the Deed of
Assignment signed by EDWIN on behalf of Impact
Systems. While said collection did not revoke the
agency relations of respondents, petitioner insists
that ERWINs action repudiated EDWINs power to
sign the Deed of Assignment. As EDWIN did not
sufficiently notify it of the extent of his powers as an
agent, petitioner claims that he should be made
personally liable for the obligations of his
principal.[26]
Petitioner also contends that it fell victim to the
fraudulent scheme of respondents who induced it
into selling the one unit of sludge pump to Impact
Systems and signing the Deed of
Assignment. Petitioner directs the attention of this
Court to the fact that respondents are bound not only
by their principal and agent relationship but are in
fact full-blooded brothers whose successive
contravening acts bore the obvious signs of
conspiracy to defraud petitioner.[27]
In his Comment,[28] respondent EDWIN again posits
the argument that he is not a real party in interest in
this case and it was proper for the trial court to have
him dropped as a defendant. He insists that he was a
mere agent of Impact Systems which is owned by
ERWIN and that his status as such is known even to
petitioner as it is alleged in the Complaint that he is
being sued in his capacity as the sales manager of the
said business venture. Likewise, respondent EDWIN
points to the Deed of Assignment which clearly
states that he was acting as a representative of
Impact Systems in said transaction.
We do not find merit in the petition.
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
latters consent.[29] The underlying principle of the
contract of agency is to accomplish results by using
the services of others to do a great variety of things
like selling, buying, manufacturing, and
transporting. Its purpose is to extend the
[30]
personality of the principal or the party for whom
another acts and from whom he or she derives the
authority to act.[31] 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.[32] By this legal fiction, the actual or real
absence of the principal is converted into his legal or
juridical presence qui facit per alium facit per se.[33]
The elements of the contract of agency are: (1)
consent, express or implied, of the parties to
establish the relationship; (2) the object is the
execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not
for himself; (4) the agent acts within the scope of his
authority.[34]
In this case, the parties do not dispute the existence
of the agency relationship between respondents
ERWIN as principal and EDWIN as agent. The only
cause of the present dispute is whether respondent
EDWIN exceeded his authority when he signed the
Deed of Assignment thereby binding himself
personally to pay the obligations to petitioner.
Petitioner firmly believes that respondent EDWIN
acted beyond the authority granted by his principal
and he should therefore bear the effect of his deed
pursuant to Article 1897 of the New Civil Code.
We disagree. NO
Article 1897 reinforces the familiar doctrine that an
agent, who acts as such, is not personally liable to the
party with whom he contracts. The same provision,
however, presents two instances when an agent
becomes personally liable to a third person. The first
is when he expressly binds himself to the obligation
and the second is when he exceeds his authority. In
the last instance, the agent can be held liable if he
does not give the third party sufficient notice of his
powers. We hold that respondent EDWIN does not
fall within any of the exceptions contained in this
provision.
The Deed of Assignment clearly states that
respondent EDWIN signed thereon as the sales
manager of Impact Systems. As discussed elsewhere,
the position of manager is unique in that it
presupposes the grant of broad powers with which
to conduct the business of the principal, thus:
The powers of an agent are
particularly broad in the case of one
acting as a general agent or manager;
such a position presupposes a degree
of confidence reposed and investiture
with liberal powers for the exercise of
judgment and discretion in
transactions and concerns which are
incidental or appurtenant to the
business entrusted to his care and
management. In the absence of an
agreement to the contrary, a managing
agent may enter into any contracts that
he deems reasonably necessary or
requisite for the protection of the
interests of his principal entrusted to
his management. x x x.[35]
Applying the foregoing to the present case, we hold
that Edwin Cuizon acted well-within his authority
when he signed the Deed of Assignment. To recall,
petitioner refused to deliver the one unit of sludge
pump unless it received, in full, the payment for
Impact Systems indebtedness.[36] We may very well
assume that Impact Systems desperately needed the
sludge pump for its business since after it paid the
amount of fifty thousand pesos (P50,000.00)
as down payment on 3 March 1995,[37] it still
persisted in negotiating with petitioner which
culminated in the execution of the Deed of
Assignment of its receivables from Toledo Power
Company on 28 June 1995.[38] The significant
amount of time spent on the negotiation for the sale
of the sludge pump underscores Impact Systems
perseverance to get hold of the said
equipment. There is, therefore, no doubt in our
mind that respondent EDWINs participation in the
Deed of Assignment was reasonably necessary or
was required in order for him to protect the
business of his principal. Had he not acted in the
way he did, the business of his principal would have
been adversely affected and he would have violated
his fiduciary relation with his principal.
We likewise take note of the fact that in this case,
petitioner is seeking to recover both from
respondents ERWIN, the principal, and EDWIN, the
agent. It is well to state here that Article 1897 of the
New Civil Code upon which petitioner anchors its
claim against respondent EDWIN does not hold that
in case of excess of authority, both the agent and the
principal are liable to the other contracting
party.[39] To reiterate, the first part of Article 1897
declares that the principal is liable in cases when the
agent acted within the bounds of his authority. Under
this, the agent is completely absolved of any
liability. The second part of the said provision
presents the situations when the agent himself
becomes liable to a third party when he expressly
binds himself or he exceeds the limits of his
authority without giving notice of his powers to the
third person. However, it must be pointed out that in
case of excess of authority by the agent, like what
petitioner claims exists here, the law does not say
that a third person can recover from both the
principal and the agent.[40]
As we declare that respondent EDWIN acted within
his authority as an agent, who did not acquire any
right nor incur any liability arising from the Deed of
Assignment, it follows that he is not a real party in
interest who should be impleaded in this case. A real
party in interest is one who stands to be benefited or
injured by the judgment in the suit, or the party
entitled to the avails of the suit.[41] In this respect, we
sustain his exclusion as a defendant in the suit before
the court a quo.
WHEREFORE, premises considered, the present
petition is DENIED and the Decision dated 10 August
2004 and Resolution dated 17 March 2005 of the
Court of Appeals in CA-G.R. SP No. 71397, affirming
the Order dated 29 January 2002 of the Regional
Trial Court, Branch 8, Cebu City, is AFFIRMED.
Let the records of this case be remanded to
the Regional Trial Court, Branch 8, Cebu City, for the
continuation of the proceedings against
respondent ERWIN CUIZON.
SO ORDERED.
G.R. No. L-24332 January 31, 1978
RAMON RALLOS, Administrator of the Estate of
CONCEPCION RALLOS, petitioner,
vs.
FELIX GO CHAN & SONS REALTY CORPORATION
and COURT OF APPEALS, respondents.
MUÑOZ PALMA, J.:
This is a case of an attorney-in-fact, Simeon Rallos,
who after of his death of his principal, Concepcion
Rallos, sold the latter's undivided share in a parcel of
land pursuant to a power of attorney which the
principal had executed in favor. The administrator of
the estate of the went to court to have the sale
declared uneanforceable and to recover the disposed
share. The trial court granted the relief prayed for,
but upon appeal the Court of Appeals uphold the
validity of the sale and the complaint.
Hence, this Petition for Review on certiorari.
The following facts are not disputed. Concepcion and
Gerundia both surnamed Rallos were sisters and
registered co-owners of a parcel of land known as
Lot No. 5983 of the Cadastral Survey of Cebu covered
by Transfer Certificate of Title No. 11116 of the
Registry of Cebu. On April 21, 1954, the sisters
executed a special power of attorney in favor of their
brother, Simeon Rallos, authorizing him to sell for
and in their behalf lot 5983. On March 3, 1955,
Concepcion Rallos died. On September 12, 1955,
Simeon Rallos sold the undivided shares of his sisters
Concepcion and Gerundia in lot 5983 to Felix Go
Chan & Sons Realty Corporation for the sum of
P10,686.90. The deed of sale was registered in the
Registry of Deeds of Cebu, TCT No. 11118 was
cancelled, and a new transfer certificate of Title No.
12989 was issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as administrator of
the Intestate Estate of Concepcion Rallos filed a
complaint docketed as Civil Case No. R-4530 of the
Court of First Instance of Cebu, praying (1) that the
sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be d unenforceable,
and said share be reconveyed to her estate; (2) that
the Certificate of 'title issued in the name of Felix Go
Chan & Sons Realty Corporation be cancelled and
another title be issued in the names of the
corporation and the "Intestate estate of Concepcion
Rallos" in equal undivided and (3) that plaintiff be
indemnified by way of attorney's fees and payment
of costs of suit. Named party defendants were Felix
Go Chan & Sons Realty Corporation, Simeon Rallos,
and the Register of Deeds of Cebu, but subsequently,
the latter was dropped from the complaint. The
complaint was amended twice; defendant
Corporation's Answer contained a crossclaim against
its co-defendant, Simon Rallos while the latter filed
third-party complaint against his sister, Gerundia
Rallos While the case was pending in the trial court,
both Simon and his sister Gerundia died and they
were substituted by the respective administrators of
their estates.
After trial the court a quo rendered judgment with
the following dispositive portion:
A. On Plaintiffs Complaint —
(1) Declaring the deed of sale, Exh. "C", null and void
insofar as the one-half pro-indiviso share of
Concepcion Rallos in the property in question, — Lot
5983 of the Cadastral Survey of Cebu — is
concerned;
(2) Ordering the Register of Deeds of Cebu City to
cancel Transfer Certificate of Title No. 12989
covering Lot 5983 and to issue in lieu thereof
another in the names of FELIX GO CHAN & SONS
REALTY CORPORATION and the Estate of
Concepcion Rallos in the proportion of one-half (1/2)
share each pro-indiviso;
(3) Ordering Felix Go Chan & Sons Realty
Corporation to deliver the possession of an
undivided one-half (1/2) share of Lot 5983 to the
herein plaintiff;
(4) Sentencing the defendant Juan T. Borromeo,
administrator of the Estate of Simeon Rallos, to pay
to plaintiff in concept of reasonable attorney's fees
the sum of P1,000.00; and
(5) Ordering both defendants to pay the costs jointly
and severally.
B. On GO CHANTS Cross-Claim:
(1) Sentencing the co-defendant Juan T. Borromeo,
administrator of the Estate of Simeon Rallos, to pay
to defendant Felix Co Chan & Sons Realty
Corporation the sum of P5,343.45, representing the
price of one-half (1/2) share of lot 5983;
(2) Ordering co-defendant Juan T. Borromeo,
administrator of the Estate of Simeon Rallos, to pay
in concept of reasonable attorney's fees to Felix Go
Chan & Sons Realty Corporation the sum of P500.00.
C. On Third-Party Complaint of defendant Juan T.
Borromeo administrator of Estate of Simeon Rallos,
against Josefina Rallos special administratrix of the
Estate of Gerundia Rallos:
(1) Dismissing the third-party complaint without
prejudice to filing either a complaint against the
regular administrator of the Estate of Gerundia
Rallos or a claim in the Intestate-Estate of Cerundia
Rallos, covering the same subject-matter of the third-
party complaint, at bar. (pp. 98-100, Record on
Appeal)
Felix Go Chan & Sons Realty Corporation appealed in
due time to the Court of Appeals from the foregoing
judgment insofar as it set aside the sale of the one-
half (1/2) share of Concepcion Rallos. The appellate
tribunal, as adverted to earlier, resolved the appeal
on November 20, 1964 in favor of the appellant
corporation sustaining the sale in question. 1 The
appellee administrator, Ramon Rallos, moved for a
reconsider of the decision but the same was denied
in a resolution of March 4, 1965. 2
What is the legal effect of an act performed by an
agent after the death of his principal? Applied more
particularly to the instant case, We have the query. is
the sale of the undivided share of Concepcion Rallos
in lot 5983 valid although it was executed by the
agent after the death of his principal? What is the law
in this jurisdiction as to the effect of the death of the
principal on the authority of the agent to act for and
in behalf of the latter? Is the fact of knowledge of the
death of the principal a material factor in
determining the legal effect of an act performed after
such death?
Before proceedings to the issues, We shall briefly
restate certain principles of law relevant to the
matter tinder consideration.
1. It is a basic axiom in civil law embodied in our Civil
Code that no one may contract in the name of
another without being authorized by the latter, or
unless he has by law a right to represent him. 3 A
contract entered into in the name of another by one
who has no authority or the legal representation or
who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other
contracting party.4 Article 1403 (1) of the same Code
also provides:
ART. 1403. The following contracts are
unenforceable, unless they are
justified:
(1) Those entered into in the name of
another person by one who hi - been
given no authority or legal
representation or who has acted
beyond his powers; ...
Out of the above given principles, sprung the creation
and acceptance of the relationship of agency whereby
one party, caged the principal (mandante),
authorizes another, called the agent (mandatario), to
act for and in his behalf in transactions with third
persons. The essential elements of agency are: (1)
there is consent, express or implied of the parties to
establish the relationship; (2) the object is the
execution of a juridical act in relation to a third
person; (3) the agents acts as a representative and
not for himself, and (4) the agent acts within the
scope of his authority. 5
Agency is basically personal representative,
and derivative in nature. The authority of the agent to
act emanates from the powers granted to him by his
principal; his act is the act of the principal if done
within the scope of the authority. Qui facit per alium
facit se. "He who acts through another acts himself". 6
2. There are various ways of extinguishing
agency, 7 but here We are concerned only with one
cause — death of the principal Paragraph 3 of Art.
1919 of the Civil Code which was taken from Art.
1709 of the Spanish Civil Code provides:
 ART. 1919. Agency is extinguished.
xxx xxx xxx
3. By the death, civil interdiction,
insanity or insolvency of the principal
or of the agent; ... (Emphasis supplied)
By reason of the very nature of the relationship
between Principal and agent, agency is extinguished
by the death of the principal or the agent. This is the
law in this jurisdiction.8
Manresa commenting on Art. 1709 of the Spanish
Civil Code explains that the rationale for the law is
found in the juridical basis of agency which
is representation Them being an integration of the
personality of the principal integration that of the
agent it is not possible for the representation to
continue to exist once the death of either is
establish. Pothier agrees with Manresa that by reason
of the nature of agency, death is a necessary cause for
its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso
jure upon the death of either without necessity for
the heirs of the fact to notify the agent of the fact of
death of the former. 9
The same rule prevails at common law — the death
of the principal effects instantaneous and absolute
revocation of the authority of the agent unless the
Power be coupled with an interest. 10 This is the
prevalent rule in American Jurisprudence where it is
well-settled that a power without an interest confer.
red upon an agent is dissolved by the principal's
death, and any attempted execution of the power
afterward is not binding on the heirs or
representatives of the deceased. 11
3. Is the general rule provided for in Article 1919 that
the death of the principal or of the agent extinguishes
the agency, subject to any exception, and if so, is the
instant case within that exception? That is the
determinative point in issue in this litigation. It is the
contention of respondent corporation which was
sustained by respondent court that notwithstanding
the death of the principal Concepcion Rallos the act
of the attorney-in-fact, Simeon Rallos in selling the
former's sham in the property is valid and
enforceable inasmuch as the corporation acted in
good faith in buying the property in question.
Articles 1930 and 1931 of the Civil Code provide the
exceptions to the general rule afore-mentioned.
ART. 1930. The agency shall remain in
full force and effect even after the
death of the principal, if it has been
constituted in the common interest of
the latter and of the agent, or in the
interest of a third person who has
accepted the stipulation in his favor.
ART. 1931. Anything done by the
agent, without knowledge of the death
of the principal or of any other cause
which extinguishes the agency, is valid
and shall be fully effective with respect
to third persons who may have
contracted with him in good faith.
Article 1930 is not involved because admittedly the
special power of attorney executed in favor of
Simeon Rallos was not coupled with an interest.
Article 1931 is the applicable law. Under this
provision, an act done by the agent after the death of
his principal is valid and effective only under two
conditions, viz: (1) that the agent acted without
knowledge of the death of the principal and (2) that
the third person who contracted with the agent
himself acted in good faith. Good faith here means
that the third person was not aware of the death of
the principal at the time he contracted with said
agent. These two requisites must concur the absence
of one will render the act of the agent invalid and
unenforceable.
In the instant case, it cannot be questioned that the
agent, Simeon Rallos, knew of the death of his
principal at the time he sold the latter's share in Lot
No. 5983 to respondent corporation. The knowledge
of the death is clearly to be inferred from the
pleadings filed by Simon Rallos before the trial
court. 12 That Simeon Rallos knew of the death of his
sister Concepcion is also a finding of fact of the court
a quo 13 and of respondent appellate court when the
latter stated that Simon Rallos 'must have known of
the death of his sister, and yet he proceeded with the
sale of the lot in the name of both his sisters
Concepcion and Gerundia Rallos without informing
appellant (the realty corporation) of the death of the
former. 14
On the basis of the established knowledge of
Simon Rallos concerning the death of his
principal Concepcion Rallos, Article 1931 of the Civil
Code is inapplicable. The law expressly requires for
its application lack of knowledge on the part of the
agent of the death of his principal; it is not enough
that the third person acted in good faith. Thus in
Buason & Reyes v. Panuyas, the Court applying
Article 1738 of the old Civil rode now Art. 1931 of
the new Civil Code sustained the validity , of a sale
made after the death of the principal because it was
not shown that the agent knew of his principal's
demise. 15 To the same effect is the case of Herrera, et
al., v. Luy Kim Guan, et al., 1961, where in the words
of Justice Jesus Barrera the Court stated:
... even granting arguemendo that Luis
Herrera did die in 1936, plaintiffs
presented no proof and there is no
indication in the record, that the agent
Luy Kim Guan was aware of the death
of his principal at the time he sold the
property. The death 6f the principal
does not render the act of an agent
unenforceable, where the latter had no
knowledge of such extinguishment of
the agency. (1 SCRA 406, 412)
4. In sustaining the validity of the sale to
respondent consideration the Court of Appeals
reasoned out that there is no provision in the Code
which provides that whatever is done by an agent
having knowledge of the death of his principal is
void even with respect to third persons who may
have contracted with him in good faith and without
knowledge of the death of the principal. 16
We cannot see the merits of the foregoing argument
as it ignores the existence of the general rule
enunciated in Article 1919 that the death of the
principal extinguishes the agency. That being the
general rule it follows a fortiori that any act of an
agent after the death of his principal is void ab
initio unless the same fags under the exception
provided for in the aforementioned Articles 1930
and 1931. Article 1931, being an exception to the
general rule, is to be strictly construed, it is not to be
given an interpretation or application beyond the
clear import of its terms for otherwise the courts will
be involved in a process of legislation outside of their
judicial function.
5. Another argument advanced by respondent court
is that the vendee acting in good faith relied on
the power of attorney which was duly registered
on the original certificate of title recorded in the
Register of Deeds of the province of Cebu, that no
notice of the death was aver annotated on said
certificate of title by the heirs of the principal and
accordingly they must suffer the consequences of
such omission. 17
To support such argument reference is made to a
portion in Manresa's Commentaries which We quote:
If the agency has been granted for the
purpose of contracting with certain
persons, the revocation must be
made known to them. But if the
agency is general in nature, without
reference to particular person with
whom the agent is to contract, it is
sufficient that the principal exercise
due diligence to make the revocation of
the agency publicity known.
In case of a general power which does
not specify the persons to whom
represents' on should be made, it is the
general opinion that all acts, executed
with third persons who contracted in
good faith, Without knowledge of the
revocation, are valid. In such case, the
principal may exercise his right against
the agent, who, knowing of the
revocation, continued to assume a
personality which he no longer had.
(Manresa Vol. 11, pp. 561 and 575; pp.
15-16, rollo)
The above discourse however, treats of revocation by
an act of the principal as a mode of terminating an
agency which is to be distinguished from revocation
by operation of law such as death of the principal
which obtains in this case. On page six of this Opinion
We stressed that by reason of the very nature of the
relationship between principal and agent, agency is
extinguished ipso jure upon the death of either
principal or agent. Although a revocation of a power
of attorney to be effective must be communicated to
the parties concerned, 18 yet a revocation by
operation of law, such as by death of the principal is,
as a rule, instantaneously effective inasmuch as "by
legal fiction the agent's exercise of authority is
regarded as an execution of the principal's continuing
will. 19 With death, the principal's will ceases or is the
of authority is extinguished.
The Civil Code does not impose a duty on the heirs to
notify the agent of the death of the principal What
the Code provides in Article 1932 is that, if the agent
die his heirs must notify the principal thereof, and in
the meantime adopt such measures as the
circumstances may demand in the interest of the
latter. Hence, the fact that no notice of the death of
the principal was registered on the certificate of
title of the property in the Office of the Register of
Deeds, is not fatal to the cause of the estate of the
principal
6. Holding that the good faith of a third person in said
with an agent affords the former sufficient
protection, respondent court drew a "parallel"
between the instant case and that of an innocent
purchaser for value of a land, stating that if a
person purchases a registered land from one who
acquired it in bad faith — even to the extent of
foregoing or falsifying the deed of sale in his favor —
the registered owner has no recourse against such
innocent purchaser for value but only against the
forger. 20
To support the correctness of this respondent
corporation, in its brief, cites the case of Blondeau, et
al., v. Nano and Vallejo, 61 Phil. 625. We quote from
the brief:
In the case of Angel Blondeau et al. v. Agustin Nano et
al., 61 Phil. 630, one Vallejo was a co-owner of lands
with Agustin Nano. The latter had a power of
attorney supposedly executed by Vallejo Nano in his
favor. Vallejo delivered to Nano his land titles. The
power was registered in the Office of the Register of
Deeds. When the lawyer-husband of Angela
Blondeau went to that Office, he found all in order
including the power of attorney. But Vallejo denied
having executed the power The lower court
sustained Vallejo and the plaintiff Blondeau
appealed. Reversing the decision of the court a quo,
the Supreme Court, quoting the ruling in the case
of Eliason v. Wilborn, 261 U.S. 457, held:
But there is a narrower ground on which the
defenses of the defendant- appellee must be
overruled. Agustin Nano had possession of Jose
Vallejo's title papers. Without those title papers
handed over to Nano with the acquiescence of
Vallejo, a fraud could not have been perpetuated.
When Fernando de la Canters, a member of the
Philippine Bar and the husband of Angela Blondeau,
the principal plaintiff, searched the registration
record, he found them in due form including the
power of attorney of Vallajo in favor of Nano. If this
had not been so and if thereafter the proper notation
of the encumbrance could not have been made,
Angela Blondeau would not have sent P12,000.00 to
the defendant Vallejo.' An executed transfer of
registered lands placed by the registered owner
thereof in the hands of another operates as a
representation to a third party that the holder of the
transfer is authorized to deal with the land.
As between two innocent persons, one of whom must
suffer the consequence of a breach of trust, the one
who made it possible by his act of coincidence bear
the loss. (pp. 19-21)
The Blondeau decision, however, is not on all fours
with the case before Us because here We are
confronted with one who admittedly was an agent of
his sister and who sold the property of the latter
after her death with full knowledge of such death.
The situation is expressly covered by a provision of
law on agency the terms of which are clear and
unmistakable leaving no room for an interpretation
contrary to its tenor, in the same manner that the
ruling in Blondeau and the cases cited therein found
a basis in Section 55 of the Land Registration Law
which in part provides:
xxx xxx xxx
The production of the owner's duplicate certificate
whenever any voluntary instrument is presented for
registration shall be conclusive authority from the
registered owner to the register of deeds to enter a
new certificate or to make a memorandum of
registration in accordance with such instruments,
and the new certificate or memorandum Shall be
binding upon the registered owner and upon all
persons claiming under him in favor of every
purchaser for value and in good faith: Provided
however, That in all cases of registration provided by
fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud
without prejudice, however, to the right, of any
innocent holder for value of a certificate of title. ...
(Act No. 496 as amended)
7. One last point raised by respondent corporation in
support of the appealed decision is an 1842 ruling of
the Supreme Court of Pennsylvania in Cassiday v.
McKenzie wherein payments made to an agent
after the death of the principal were held to be
"good", "the parties being ignorant of the death".
Let us take note that the Opinion of Justice Rogers
was premised on the statement that the parties were
ignorant of the death of the principal. We quote from
that decision the following:
... Here the precise point is, whether a
payment to an agent when the Parties
are ignorant of the death is a good
payment. in addition to the case in
Campbell before cited, the same judge
Lord Ellenboruogh, has decided in 5
Esp. 117, the general question that a
payment after the death of principal is
not good. Thus, a payment of sailor's
wages to a person having a power of
attorney to receive them, has been held
void when the principal was dead at
the time of the payment. If, by this case,
it is meant merely to decide the
general proposition that by operation
of law the death of the principal is a
revocation of the powers of the
attorney, no objection can be taken to
it. But if it intended to say that his
principle applies where there was 110
notice of death, or opportunity of twice
I must be permitted to dissent from it.
... That a payment may be good today,
or bad tomorrow, from the accident
circumstance of the death of the
principal, which he did not know, and
which by no possibility could he know?
It would be unjust to the agent and
unjust to the debtor. In the civil law,
the acts of the agent, done bona fide in
ignorance of the death of his
principal are held valid and binding
upon the heirs of the latter. The same
rule holds in the Scottish law, and I
cannot believe the common law is so
unreasonable... (39 Am. Dec. 76, 80, 81;
emphasis supplied)
To avoid any wrong impression which the Opinion
in Cassiday v. McKenzie may evoke, mention may be
made that the above represents the minority view in
American jurisprudence. Thus in Clayton v. Merrett,
the Court said.—
There are several cases which seem to
hold that although, as a general
principle, death revokes an agency
and renders null every act of the agent
thereafter performed, yet that where a
payment has been made in ignorance
of the death, such payment will be
good. The leading case so holding is
that of Cassiday v. McKenzie, 4 Watts &
S. (Pa) 282, 39 Am. 76, where, in an
elaborate opinion, this view ii broadly
announced. It is referred to, and seems
to have been followed, in the case
of Dick v. Page, 17 Mo. 234, 57 AmD
267; but in this latter case it appeared
that the estate of the deceased
principal had received the benefit of
the money paid, and therefore the
representative of the estate might well
have been held to be estopped from
suing for it again. . . . These cases, in so
far, at least, as they announce the
doctrine under discussion, are
exceptional. The Pennsylvania
Case, supra (Cassiday v. McKenzie 4
Watts & S. 282, 39 AmD 76), is believed
to stand almost, if not quite, alone in
announcing the principle in its
broadest scope. (52, Misc. 353, 357,
cited in 2 C.J. 549)
So also in Travers v. Crane, speaking of Cassiday v.
McKenzie, and pointing out that the opinion, except
so far as it related to the particular facts, was a
mere dictum, Baldwin J. said:
The opinion, therefore, of the learned Judge may be
regarded more as an extrajudicial indication of his
views on the general subject, than as the adjudication
of the Court upon the point in question. But
accordingly all power weight to this opinion, as the
judgment of a of great respectability, it stands alone
among common law authorities and is opposed by an
array too formidable to permit us to following it. (15
Cal.
G.R. No. L-18058 January 16, 1923
FABIOLA SEVERINO, plaintiff-appellee,
vs.
GUILLERMO SEVERINO, defendant-appellant.
FELICITAS VILLANUEVA, intervenor-appellee.
OSTRAND, J.:
This is an action brought by the plaintiff as the
alleged natural daughter and sole heir of one Melecio
Severino, deceased, to compel the defendant
Guillermo Severino to convey to her four parcels of
land described in the complaint, or in default thereof
to pay her the sum of P800,000 in damages for
wrongfully causing said land to be registered in his
own name. Felicitas Villanueva, in her capacity as
administratrix of the estate of Melecio Severino, has
filed a complaint in intervention claiming in the same
relief as the original plaintiff, except in so far as she
prays that the conveyance be made, or damages paid,
to the estate instead of to the plaintiff Fabiola
Severino. The defendant answered both complaints
with a general denial.
The lower court rendered a judgment recognizing
the plaintiff Fabiola Severino as the acknowledged
natural child of the said Melecio Severino and
ordering the defendant to convey 428 hectares of the
land in question to the intervenor as administratrix
of the estate of the said Melecio Severino, to deliver
to her the proceeds in his possession of a certain
mortgage placed thereon by him and to pay the costs.
From this judgment only the defendant appeals.
The land described in the complaint forms one
continuous tract and consists of lots Nos. 827, 828,
834, and 874 of the cadaster of Silay, Province of
Occidental Negros, which measure, respectively, 61
hectares, 74 ares, and 79 centiares; 76 hectares, 34
ares, and 79 centiares; 52 hectares, 86 ares, and 60
centiares and 608 hectares, 77 ares and 28 centiares,
or a total of 799 hectares, 75 ares, and 46 centiares.
The evidence shows that Melecio Severino died on
the 25th day of May, 1915; that some 428 hectares of
the land were recorded in the Mortgage Law Register
in his name in the year 1901 by virtue of possessory
information proceedings instituted on the 9th day of
May of that year by his brother Agapito Severino in
his behalf; that during the lifetime of Melecio
Severino the land was worked by the defendant,
Guillermo Severino, his brother, as administrator for
and on behalf of the said Melecio Severino; that after
Melecio's death, the defendant Guillermo Severino
continued to occupy the land; that in 1916 a parcel
survey was made of the lands in the municipality of
Silay, including the land here in question, and
cadastral proceedings were instituted for the
registration of the lands titles within the surveyed
area; that in the cadastral proceedings the land here
in question was described as four separate lots
numbered as above stated; that Roque Hofileña, as
lawyer for Guillermo Severino, filed answers in
behalf of the latter in said proceedings claiming the
lots mentioned as the property of his client; that no
opposition was presented in the proceedings to the
claims of Guillermo Severino and the court therefore
decreed the title in his favor, in pursuance of which
decree certificates of title were issued to him in the
month of March, 1917.
It may be further observed that at the time of the
cadastral proceedings the plaintiff Fabiola Severino
was a minor; that Guillermo Severino did not appear
personally in the proceedings and did not there
testify; that the only testimony in support of his
claims was that of his attorney Hofileña, who swore
that he knew the land and that he also knew that
Guillermo Severino inherited the land from his father
and that he, by himself, and through his predecessors
in interest, had possessed the land for thirty years.
The appellant presents the following nine
assignments of error:
1. The trial court erred in admitting the
evidence that was offered by plaintiff in order
to establish the fact that said plaintiff was the
legally acknowledged natural child of the
deceased Melecio Severino.
2. The trial court erred in finding that, under
the evidence presented, plaintiff was the
legally acknowledged natural child of Melecio
Severino.
3. The trial court erred in rejecting the
evidence offered by defendant to establish the
absence of fraud on his part in securing title to
the lands in Nacayao.
4. The trial court erred in concluding that the
evidence adduced by plaintiff and intervenor
established that defendant was guilty of fraud
in procuring title to the lands in question in
his name.
5. The trial court erred in declaring that the
land that was formerly placed in the name of
Melecio Severino had an extent of either 434
or 428 hectares at the time of his death.
6. The trial court erred in declaring that the
value of the land in litigation is P500 per
hectare.
7. The trial court erred in granting the petition
of the plaintiff for an attachment without first
giving the defendant an opportunity to be
heard.
 8. The trial court erred in ordering the
conveyance of 428 hectares of land by
defendant to the administratrix.
9. The trial court erred in failing or refusing to
make any finding as to the defendant's
contention that the petition for attachment
was utterly devoid of any reasonable ground.
In regard to the first two assignments of error, we
agree with the appellant that the trial court erred in
making a declaration in the present case as to the
recognition of Fabiola Severino as the natural child of
Melecio Severino. We have held in the case of Briz vs.
Briz and Remigio (43 Phil., 763), that "The legitimate
heirs or kin of a deceased person who would be
prejudiced by a declaration that another person is
entitled to recognition as the natural child of such
decedent, are necessary and indispensable parties to
any action in which a judgment declaring the right to
recognition is sought." In the present action only the
widow, the alleged natural child, and one of the
brothers of the deceased are parties; the other
potential heirs have not been included. But,
inasmuch as the judgment appealed from is in favor
of the intervenor and not of the plaintiff, except to
the extent of holding that the latter is a recognized
natural child of the deceased, this question is, from
the view we take of the case, of no importance in its
final disposition. We may say, however, in this
connection, that the point urged in appellant's brief
that it does not appear affirmatively from the
evidence that, at the time of the conception of
Fabiola, her mother was a single woman, may be
sufficiently disposed of by a reference to article 130
of the Civil Code and subsection 1 of section 334 of
the Code of Civil Procedure which create the
presumption that a child born out of wedlock is
natural rather than illegitimate. The question of the
status of the plaintiff Fabiola Severino and her right
to share in the inheritance may, upon notice to all the
interested parties, be determined in the probate
proceedings for the settlement of the estate of the
deceased.
The fifth assignment of error relates to the finding of
the trial court that the land belonging to Melecio
Severino had an area of 428 hectares. The
appellant contends that the court should have found
that there were only 324 hectares inasmuch as one
hundred hectares of the original area were given to
Melecio's brother Donato during the lifetime of the
father Ramon Severino. As it appears that Ramon
Severino died in 1896 and that the possessory
information proceedings, upon which the finding of
the trial court as to the area of the land is principally
based, were not instituted until the year 1901, we are
not disposed to disturb the conclusions of the trial
court on this point. Moreover, in the year 1913, the
defendant Guillermo Severino testified under oath, in
the case of Montelibano vs. Severino, that the area of
the land owned by Melecio Severino and of which he
(Guillermo) was the administrator, embraced an area
of 424 hectares. The fact that Melecio Severino, in
declaring the land for taxation in 1906, stated that
the area was only 324 hectares and 60 ares while
entitled to some weight is not conclusive and is not
sufficient to overcome the positive statement of the
defendant and the recitals in the record of the
possessory information proceedings.
The sixth assignment of error is also of minor
importance in view of the fact that in the dispositive
part of the decision of the trial court, the only relief
given is an order requiring the appellant to
convey to the administratrix the land in question,
together with such parts of the proceeds of the
mortgage thereon as remain in his hands. We may
say further that the court's estimate of the value of
the land does not appear unreasonable and that,
upon the evidence before us, it will not be disturbed.
The seventh and within assignments of error relate
to the ex parte granting by the trial court of a
preliminary attachment in the case and the refusal of
the court to dissolve the same. We find no merit
whatever in these assignments and a detailed
discussion of them is unnecessary.
The third, fourth, and eight assignments of error
involve the vital points in the case, are inter-related
and may be conveniently considered together.
The defendant argues that the gist of the instant
action is the alleged fraud on his part in causing
the land in question to be registered in his name;
that the trial court therefore erred in rejecting his
offer of evidence to the effect that the land was
owned in common by all the heirs of Ramon Severino
and did not belong to Melecio Severino exclusively;
that such evidence, if admitted, would have shown
that he did not act with fraudulent intent in taking
title to the land; that the trial court erred in holding
him estopped from denying Melecio's title; that more
than a year having elapsed since the entry of the final
decree adjudicating the land to the defendant, said
decree cannot now be reopened; that the ordering of
the defendant to convey the decreed land to the
administratrix is, for all practical purposes,
equivalent to the reopening of the decree of
registration; that under section 38 of the Land
Registration Act the defendant has an indefeasible
title to the land; and that the question of ownership
of the land being thus judicially settled, the question
as to the previous relations between the parties
cannot now be inquired into.
Upon no point can the defendant's contentions be
sustained. It may first be observed that this is not an
action under section 38 of the Land Registration Act
to reopen or set aside a decree; it is an action in
personam against an agent to compel him to return,
or retransfer, to the heirs or the estate of its
principal, the property committed to his custody as
such agent, to execute the necessary documents of
conveyance to effect such retransfer or, in default
thereof, to pay damages.
That the defendant came into the possession of the
property here in question as the agent of the
deceased Melecio Severino in the administration of
the property, cannot be successfully disputed. His
testimony in the case of Montelibano vs.
Severino (civil case No. 902 of the Court of First
Instance of Occidental Negros and which forms a part
of the evidence in the present case) is, in fact,
conclusive in this respect. He there stated under oath
that from the year 1902 up to the time the testimony
was given, in the year 1913, he had been
continuously in charge and occupation of the land as
the encargado or administrator of Melecio Severino;
that he had always known the land as the property of
Melecio Severino; and that the possession of the
latter had been peaceful, continuous, and exclusive.
In his answer filed in the same case, the same
defendant, through his attorney, disclaimed all
personal interest in the land and averred that it was
wholly the property of his brother Melecio.
Neither is it disputed that the possession enjoyed by
the defendant at the time of obtaining his decree was
of the same character as that held during the lifetime
of his brother, except in so far as shortly before the
trial of the cadastral case the defendant had secured
from his brothers and sisters a relinguishment in his
favor of such rights as they might have in the land.
The relations of an agent to his principal are
fiduciary and it is an elementary and very old
rule that in regard to property forming the
subject-matter of the agency, he is estopped from
acquiring or asserting a title adverse to that of
the principal. His position is analogous to that of a
trustee and he cannot consistently, with the
principles of good faith, be allowed to create in
himself an interest in opposition to that of his
principal or cestui que trust. Upon this ground, and
substantially in harmony with the principles of the
Civil Law (see sentence of the supreme court of Spain
of May 1, 1900), the English Chancellors held that in
general whatever a trustee does for the advantage of
the trust estate inures to the benefit of the cestui que
trust. (Greenlaw vs. King, 5 Jur., 18; Ex parte Burnell,
7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex
parte James, 8 Ves., 337; Oliver vs. Court, 8 Price,
127.) The same principle has been consistently
adhered to in so many American cases and is so well
established that exhaustive citations of authorities
are superfluous and we shall therefore limit
ourselves to quoting a few of the numerous judicial
expressions upon the subject. The principle is well
stated in the case of Gilbert vs. Hewetson (79 Minn.,
326):
A receiver, trustee, attorney, agent, or any
other person occupying fiduciary relations
respecting property or persons, is utterly
disabled from acquiring for his own benefit
the property committed to his custody for
management. This rule is entirely
independent of the fact whether any fraud has
intervened. No fraud in fact need be shown,
and no excuse will be heard from the trustee.
It is to avoid the necessity of any such inquiry
that the rule takes so general a form. The rule
stands on the moral obligation to refrain from
placing one's self in positions which ordinarily
excite conflicts between self-interest and
integrity. It seeks to remove the temptation
that might arise out of such a relation to serve
one's self-interest at the expense of one's
integrity and duty to another, by making it
impossible to profit by yielding to temptation.
It applies universally to all who come within
its principle.
In the case of Massie vs. Watts (6 Cranch, 148), the
United States Supreme Court, speaking through Chief
Justice Marshall, said:
But Massie, the agent of Oneale, has entered
and surveyed a portion of that land for
himself and obtained a patent for it in his own
 name. According to the clearest and best
established principles of equity, the agent
who so acts becomes a trustee for his
principal. He cannot hold the land under an
entry for himself otherwise than as trustee for
his principal.
In the case of Felix vs. Patrick (145 U. S., 317), the
United States Supreme Court, after examining the
authorities, said:
The substance of these authorities is that,
wherever a person obtains the legal title to
land by any artifice or concealment, or by
making use of facilities intended for the
benefit of another, a court of equity will
impress upon the land so held by him a trust
in favor of the party who is justly entitled to
them, and will order the trust executed by
decreeing their conveyance to the party in
whose favor the trust was created.
(Citing Bank of Metropolis vs. Guttschlick, 14
Pet., 19, 31; Moses vs. Murgatroyd, 1 Johns.
Ch., 119; Cumberland vs.Codrington, 3 Johns.
Ch., 229, 261; Neilson vs. Blight, 1 Johns. Cas.,
205; Weston vs. Barker, 12 Johns., 276.)
The same doctrine has also been adopted in the
Philippines. In the case of Uy Aloc vs. Cho Jan Ling (19
Phil., 202), the facts are stated by the court as
follows:
From the facts proven at the trial it appears
that a number of Chinese merchants raised a
fund by voluntary subscription with which
they purchased a valuable tract of land and
erected a large building to be used as a sort of
club house for the mutual benefit of the
subscribers to the fund. The subscribers
organized themselves into an irregular
association, which had no regular articles of
association, and was not incorporated or
registered in the commercial registry or
elsewhere. The association not having any
existence as a legal entity, it was agreed to
have the title to the property placed in the
name of one of the members, the defendant,
Cho Jan Ling, who on his part accepted the
trust, and agreed to hold the property as the
agent of the members of the association. After
the club building was completed with the
funds of the members of the association, Cho
Jan Ling collected some P25,000 in rents for
which he failed and refused to account, and
upon proceedings being instituted to compel
him to do so, he set up title in himself to the
club property as well as to the rents accruing
therefrom, falsely alleging that he had bought
the real estate and constructed the building
with his own funds, and denying the claims of
the members of the association that it was
their funds which had been used for that
purpose.
The decree of the court provided, among other
things, for the conveyance of the club house and the
land on which it stood from the defendant, Cho Jan
Ling, in whose name it was registered, to the
members of the association. In affirming the decree,
this court said:
In the case at bar the legal title of the holder of
the registered title is not questioned; it is
admitted that the members of the association
voluntarily obtained the inscription in the
name of Cho Jan Ling, and that they had no
right to have that inscription cancelled; they
do not seek such cancellation, and on the
contrary they allege and prove that the duly
registered legal title to the property is in Cho
Jan Ling, but they maintain, and we think that
they rightly maintain, that he holds it under
an obligation, both express and implied, to
deal with it exclusively for the benefit of the
members of the association, and subject to
their will.
In the case of Camacho vs. Municipality of Baliuag (28
Phil., 466), the plaintiff, Camacho, took title to the
land in his own name, while acting as agent for the
municipality. The court said:
There have been a number of cases before this
court in which a title to real property was
acquired by a person in his own name, while
acting under a fiduciary capacity, and who
afterwards sought to take advantage of the
confidence reposed in him by claiming the
ownership of the property for himself. This
court has invariably held such evidence
competent as between the fiduciary and
the cestui que trust.
xxx xxx xxx
 What judgment ought to be entered in this
case? The court below simply absolved the
defendant from the complaint. The defendant
municipality does not ask for a cancellation of
the deed. On the contrary, the deed is relied
upon the supplement the oral evidence
showing that the title to the land is in the
defendant. As we have indicated in Consunji
vs. Tison, 15 Phil., 81, and Uy Aloc vs. Cho Jan
Ling, 19 Phil., 202, the proper procedure in
such a case, so long as the rights of innocent
third persons have not intervened, is to
compel a conveyance to the rightful owner.
This ought and can be done under the issues
raised and the proof presented in the case at
bar.
The case of Sy-Juco and Viardo vs. Sy-Juco (40 Phil.,
634) is also in point.
As will be seen from the authorities quoted, and
agent is not only estopped from denying his
principal's title to the property, but he is also disable
from acquiring interests therein adverse to those of
his principal during the term of the agency. But the
defendant argues that his title has become res
adjudicata through the decree of registration and
cannot now be disturbed.
This contention may, at first sight, appear to possess
some force, but on closer examination it proves
untenable. The decree of registration determined the
legal title to the land as the date of the decree; as to
that there is no question. That, under section 38 of
the Land Registration Act, this decree became
conclusive after one year from the date of the entry is
not disputed and no one attempts to disturb the
decree or the proceedings upon which it is based; the
plaintiff in intervention merely contends that in
equity the legal title so acquired inured to the benefit
of the estate of Melecio Severino, the defendant's
principal and cestui que trust and asks that this
superior equitable right be made effective by
compelling the defendant, as the holder of the legal
title, to transfer it to the estate.
We have already shown that before the issuance of
the decree of registration it was the undoubted duty
of the defendant to restore the property committed
to his custody to his principal, or to the latter's
estate, and that the principal had a right of action in
personam to enforce the performance of this duty
and to compel the defendant to execute the
necessary conveyance to that effect. The only
question remaining for consideration is, therefore,
whether the decree of registration extinguishing this
personal right of action.
In Australia and New Zealand, under statutes in this
respect similar to ours, courts of equity exercise
general jurisdiction in matters of fraud and error
with reference to Torrens registered lands, and
giving attention to the special provisions of the
Torrens acts, will issue such orders and direction to
all the parties to the proceedings as may seem just
and proper under the circumstances. They may order
parties to make deeds of conveyance and if the order
is disobeyed, they may cause proper conveyances to
be made by a Master in Chancery or Commissioner in
accordance with the practice in equity (Hogg,
Australian Torrens System, p. 847).
In the Untied States courts have even gone so far in
the exercise of their equity jurisdiction as to set aside
final decrees after the expiration of the statutory
period of limitation for the reopening of such decrees
(Baart vs. Martin, 99 Minn., 197). But, considering
that equity follows the law and that our statutes
expressly prohibit the reopening of a decree after
one year from the date of its entry, this practice
would probably be out of question here, especially so
as the ends of justice may be attained by other
equally effective, and less objectionable means.
Turning to our own Land Registration Act, we find no
indication there of an intention to cut off, through the
issuance of a decree of registration, equitable rights
or remedies such as those here in question. On the
contrary, section 70 of the Act provides:
Registered lands and ownership therein, shall
in all respects be subject to the same burdens
and incidents attached by law to unregistered
land. Nothing contained in this Act shall in any
way be construed to relieve registered land or
the owners thereof from any rights incident to
the relation of husband and wife, or from
liability to attachment on mesne process or
levy on execution, or from liability to any lien
of any description established by law on land
and the buildings thereon, or the interest of
the owner in such land or buildings, or to
change the laws of descent, or the rights of
partition between coparceners, joint tenants
and other cotenants, or the right to take the
same by eminent domain, or to relieve such
 land from liability to be appropriated in any
lawful manner for the payment of debts, or to
change or affect in any other way any other
rights or liabilities created by law and
applicable to unregistered land, except as
otherwise expressly provided in this Act or in
the amendments hereof.
Section 102 of the Act, after providing for actions for
damages in which the Insular Treasurer, as the
Custodian of the Assurance Fund is a party, contains
the following proviso:
Provided, however, That nothing in this Act
shall be construed to deprive the plaintiff
of any action which he may have against any
person for such loss or damage or deprivation
of land or of any estate or interest therein
without joining the Treasurer of the
Philippine Archipelago as a defendant therein.
That an action such as the present one is covered by
this proviso can hardly admit of doubt. Such was also
the view taken by this court in the case of Medina
Ong-Quingco vs. Imaz and Warner, Barnes & Co. (27
Phil., 314), in which the plaintiff was seeking to take
advantage of his possession of a certificate of title to
deprive the defendant of land included in that
certificate and sold to him by the former
owner before the land was registered. The court
decided adversely to plaintiff and in so doing said:
As between them no question as to the
indefeasibility of a Torrens title could arise.
Such an action could have been maintained at
any time while the property remained in the
hands of the purchaser. The peculiar force of a
Torrens title would have been brought into
play only when the purchaser had sold to an
innocent third person for value the lands
described in his conveyance. . . . Generally
speaking, as between the vendor and the
purchaser the same rights and remedies exist
with reference to land registered under Act
No. 496, as exist in relation to land not so
registered.
In Cabanos vs. Register of Deeds of Laguna and
Obiñana (40 Phil., 620), it was held that, while a
purchaser of land under a pacto de retro cannot
institute a real action for the recovery thereof where
the vendor under said sale has caused such lands to
be registered in his name without said vendee's
consent, yet he may have his personal action based
on the contract of sale to compel the execution of an
unconditional deed for the said lands when the
period for repurchase has passed.
Torrens titles being on judicial decrees there is, of
course, a strong presumption in favor of their
regularity or validity, and in order to maintain an
action such as the present the proof as to the
fiduciary relation of the parties and of the breach of
trust must be clear and convincing. Such proof is, as
we have seen, not lacking in this case.
But once the relation and the breach of trust on the
part of the fiduciary in thus established, there is no
reason, neither practical nor legal, why he should not
be compelled to make such reparation as may lie
within his power for the injury caused by his wrong,
and as long as the land stands registered in the name
of the party who is guilty of the breach of trust and
no rights of innocent third parties are adversely
affected, there can be no reason why such reparation
should not, in the proper case, take the form of a
conveyance or transfer of the title to the cestui que
trust. No reasons of public policy demand that a
person guilty of fraud or breach of trust be permitted
to use his certificate of title as a shield against the
consequences of his own wrong.
The judgment of the trial court is in accordance with
the facts and the law. In order to prevent
unnecessary delay and further litigation it may,
however, be well to attach some additional directions
to its dipositive clauses. It will be observed that lots
Nos. 827, 828, and 834 of a total area of
approximately 191 hectares, lie wholly within the
area to be conveyed to the plaintiff in intervention
and these lots may, therefore, be so conveyed
without subdivision. The remaining 237 hectares to
be conveyed lie within the western part of lot No.
874 and before a conveyance of this portion can be
effected a subdivision of that lot must be made and a
technical description of the portion to be conveyed,
as well as of the remaining portion of the lot, must be
prepared. The subdivision shall be made by an
authorized surveyor and in accordance with the
provisions of Circular No. 31 of the General Land
Registration Office, and the subdivision and technical
descriptions shall be submitted to the Chief of that
office for his approval. Within thirty days after being
notified of the approval of said subdivision and
technical descriptions, the defendant Guillermo
Severino shall execute good and sufficient deed or
deeds of conveyance in favor of the administratrix of
the estate of the deceased Melecio Severino for said
lots Nos. 827, 828, 834, and the 237 hectares
segregated from the western part of lot No. 874 and
shall deliver to the register of deeds his duplicate
certificates of title for all of the four lots in order that
said certificates may be cancelled and new
certificates issued. The cost of the subdivision and
the fees of the register of deeds will be paid by the
plaintiff in intervention. It is so ordered

With these additional directions the judgment

appealed from is affirmed, with the costs against the
appellant. The right of the plaintiff Fabiola Severino
to establish in the probate proceedings of the estate
of Melecio Severino her status as his recognized
natural child is reserved.

Whatever conflict of legal opinion was generated

by Cassiday v. McKenzie in American jurisprudence,
no such conflict exists in our own for the simple
reason that our statute, the Civil Code, expressly
provides for two exceptions to the general rule that
death of the principal revokes ipso jure the agency, to
wit: (1) that the agency is coupled with an interest
(Art 1930), and (2) that the act of the agent was
executed without knowledge of the death of the
principal and the third person who contracted with
the agent acted also in good faith (Art. 1931).
Exception No. 2 is the doctrine followed in Cassiday,
and again We stress the indispensable requirement
that the agent acted without knowledge or notice of
the death of the principal In the case before Us the
agent Ramon Rallos executed the sale
notwithstanding notice of the death of his principal
Accordingly, the agent's act is unenforceable against
the estate of his principal.

IN VIEW OF ALL THE FOREGOING, We set aside the

ecision of respondent appellate court, and We affirm
en toto the judgment rendered by then Hon. Amador
E. Gomez of the Court of First Instance of Cebu,
quoted in pages 2 and 3 of this Opinion, with costs
against respondent realty corporation at all
instances.

So Ordered.