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– Shopper’s Paradise Realty and Development Corp. vs. Efren Roque, 419 SCRA 93, G.R. No.
148775, January13, 2004


[G.R. No. 148775. January 13, 2004]

CORPORATION, petitioner, vs. EFREN P. ROQUE, respondent.

On 23 December 1993, petitioner Shoppers Paradise Realty & Development
Corporation, represented by its president, Veredigno Atienza, entered into a twenty-five
year lease with Dr. Felipe C. Roque, now deceased, over a parcel of land, with an area
of two thousand and thirty six (2,036) square meters, situated at Plaza Novaliches,
Quezon City, covered by Transfer of Certificate of Title (TCT) No. 30591 of the Register
of Deeds of Quezon City in the name of Dr. Roque. Petitioner issued to Dr. Roque a
check for P250,000.00 by way of reservation payment. Simultaneously, petitioner and
Dr. Roque likewise entered into a memorandum of agreement for the construction,
development and operation of a commercial building complex on the
property.Conformably with the agreement, petitioner issued a check for another
P250,000.00 downpayment to Dr. Roque.
The contract of lease and the memorandum of agreement, both notarized, were to
be annotated on TCT No. 30591 within sixty (60) days from 23 December 1993 or until
23 February 1994.The annotations, however, were never made because of the untimely
demise of Dr. Felipe C. Roque. The death of Dr. Roque on 10 February 1994
constrained petitioner to deal with respondent Efren P. Roque, one of the surviving
children of the late Dr. Roque, but the negotiations broke down due to some
disagreements. In a letter, dated 3 November 1994, respondent advised petitioner to
desist from any attempt to enforce the aforementioned contract of lease and
memorandum of agreement. On 15 February 1995, respondent filed a case for
annulment of the contract of lease and the memorandum of agreement, with a prayer
for the issuance of a preliminary injunction, before Branch 222 of the Regional Trial
Court of Quezon City. Efren P. Roque alleged that he had long been the absolute owner
of the subject property by virtue of a deed of donation inter vivos executed in his favor
by his parents, Dr. Felipe Roque and Elisa Roque, on 26 December 1978, and that the
late Dr. Felipe Roque had no authority to enter into the assailed agreements with

petitioner. The donation was made in a public instrument duly acknowledged by the
donor-spouses before a notary public and duly accepted on the same day by
respondent before the notary public in the same instrument of donation. The title to the
property, however, remained in the name of Dr. Felipe C. Roque, and it was only
transferred to and in the name of respondent sixteen years later, or on 11 May 1994,
under TCT No. 109754 of the Register of Deeds of Quezon City.Respondent, while he
resided in the United States of America, delegated to his father the mere administration
of the property. Respondent came to know of the assailed contracts with petitioner only
after retiring to the Philippines upon the death of his father.
On 9 August 1996, the trial court dismissed the complaint of respondent; it

Ordinarily, a deed of donation need not be registered in order to be valid between the
parties. Registration, however, is important in binding third persons. Thus, when
Felipe Roque entered into a leased contract with defendant corporation, plaintiff Efren
Roque (could) no longer assert the unregistered deed of donation and say that his
father, Felipe, was no longer the owner of the subject property at the time the lease on
the subject property was agreed upon.
The registration of the Deed of Donation after the execution of the lease contract did
not affect the latter unless he had knowledge thereof at the time of the registration
which plaintiff had not been able to establish. Plaintiff knew very well of the existence
of the lease. He, in fact, met with the officers of the defendant corporation at least
once before he caused the registration of the deed of donation in his favor and
although the lease itself was not registered, it remains valid considering that no third
person is involved. Plaintiff cannot be the third person because he is the successor-ininterest of his father, Felipe Roque, the lessor, and it is a rule that contracts take effect
not only between the parties themselves but also between their assigns and heirs
(Article 1311, Civil Code) and therefore, the lease contract together with the
memorandum of agreement would be conclusive on plaintiff Efren Roque. He is
bound by the contract even if he did not participate therein. Moreover, the agreements
have been perfected and partially executed by the receipt of his father of the
downpayment and deposit totaling to P500,000.00.

The Trial court ordered respondent to surrender TCT No. 109754 to the Register of
Deeds of Quezon City for the annotation of the questioned Contract of Lease and
Memorandum of Agreement.
On appeal, the Court of Appeals reversed the decision of the trial court and held to
be invalid the Contract of Lease and Memorandum of Agreement. While it shared the
view expressed by the trial court that a deed of donation would have to be registered in
order to bind third persons, the appellate court, however, concluded that petitioner was
not a lessee in good faith having had prior knowledge of the donation in favor of
respondent, and that such actual knowledge had the effect of registration insofar as

petitioner was concerned. The appellate court based its findings largely on the
testimony of Veredigno Atienza during cross-examination, viz;
Q. Aside from these two lots, the first in the name of Ruben Roque and the second, the
subject of the construction involved in this case, you said there is another lot which
was part of development project?
A. Yes, this was the main concept of Dr. Roque so that the adjoining properties of his
two sons, Ruben and Cesar, will comprise one whole. The other whole property
belongs to Cesar.
Q. You were informed by Dr. Roque that this property was given to his three (3) sons;
one to Ruben Roque, the other to Efren, and the other to Cesar Roque?
A. Yes.
Q. You did the inquiry from him, how was this property given to them?
A. By inheritance.
Q. Inheritance in the form of donation?
A. I mean inheritance.
Q. What I am only asking you is, were you told by Dr. Felipe C. Roque at the time of
your transaction with him that all these three properties were given to his children
by way of donation?
A. What Architect Biglang-awa told us in his exact word: Yang mga yan pupunta sa
mga anak. Yong kay Ruben pupunta kay Ruben. Yong kay Efren palibhasa nasa
America sya, nasa pangalan pa ni Dr. Felipe C. Roque.

Q. When was the information supplied to you by Biglang-awa? Before the execution of
the Contract of Lease and Memorandum of Agreement?
A. Yes.
Q. That being the case, at the time of the execution of the agreement or soon before,
did you have such information confirmed by Dr. Felipe C. Roque himself?
A. Biglang-awa did it for us.
Q. But you yourself did not?
A. No, because I was doing certain things. We were a team and so Biglang-awa did it
for us.
Q. So in effect, any information gathered by Biglang-awa was of the same effect as if
received by you because you were members of the same team?
A. Yes.[2]

In the instant petition for review, petitioner seeks a reversal of the decision of the
Court of Appeals and the reinstatement of the ruling of the Regional Trial Court; it
argues that the presumption of good faith it so enjoys as a party dealing in registered
land has not been overturned by the aforequoted testimonial evidence, and that, in any
event, respondent is barred by laches and estoppel from denying the contracts.

The existence, albeit unregistered, of the donation in favor of respondent is
undisputed. The trial court and the appellate court have not erred in holding that the
non-registration of a deed of donation does not affect its validity. As being itself a mode
of acquiring ownership, donation results in an effective transfer of title over the property
from the donor to the donee. In donations of immovable property, the law requires for
its validity that it should be contained in a public document, specifying therein the
property donated and the value of the charges which the donee must satisfy. The Civil
Code provides, however, that titles of ownership, or other rights over immovable
property, which are not duly inscribed or annotated in the Registry of Property (now
Registry of Land Titles and Deeds) shall not prejudice third persons. It is enough,
between the parties to a donation of an immovable property, that the donation be made
in a public document but, in order to bind third persons, the donation must be registered
in the registry of Property (Registry of Land Titles and Deeds). Consistently, Section 50
of Act No. 496 (Land Registration Act), as so amended by Section 51 of P.D. No. 1529
(Property Registration Decree), states:




SECTION 51. Conveyance and other dealings by registered owner.- An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the same
in accordance with existing laws. He may use such forms of deeds, mortgages, leases
or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease,
or other voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds to
make registration.
The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where the
land lies. (emphasis supplied)
A person dealing with registered land may thus safely rely on the correctness of the
certificate of title issued therefore, and he is not required to go beyond the certificate to
determine the condition of the property but, where such party has knowledge of a prior
existing interest which is unregistered at the time he acquired a right thereto, his
knowledge of that prior unregistered interest would have the effect of registration as
regards to him.


The appellate court was not without substantial basis when it found petitioner to
have had knowledge of the donation at the time it entered into the two agreements with
Dr. Roque. During their negotiation, petitioner, through its representatives, was apprised
of the fact that the subject property actually belonged to respondent.
It was not shown that Dr. Felipe C. Roque had been an authorized agent of

In a contract of agency, the agent acts in representation or in behalf of another with
the consent of the latter. Article 1878 of the Civil Code expresses that a special power
of attorney is necessary to lease any real property to another person for more than one
year. The lease of real property for more than one year is considered not merely an act
of administration but an act of strict dominion or of ownership. A special power of
attorney is thus necessary for its execution through an agent.

The Court cannot accept petitioners argument that respondent is guilty of
laches. Laches, in its real sense, is the failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or
should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned or declined to assert it.

Respondent learned of the contracts only in February 1994 after the death of his
father, and in the same year, during November, he assailed the validity of the
agreements. Hardly, could respondent then be said to have neglected to assert his case
for unreasonable length of time.
Neither is respondent estopped from repudiating the contracts. The essential
elements of estoppel in pais, in relation to the party sought to be estopped, are: 1) a
clear conduct amounting to false representation or concealment of material facts or, at
least, calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; 2) an intent or,
at least, an expectation, that this conduct shall influence, or be acted upon by, the other
party; and 3) the knowledge, actual or constructive, by him of the real facts. With
respect to the party claiming the estoppel, the conditions he must satisfy are: 1) lack of
knowledge or of the means of knowledge of the truth as to the facts in question; 2)
reliance, in good faith, upon the conduct or statements of the party to be estopped; and
3) action or inaction based thereon of such character as to change his position or status
calculated to cause him injury or prejudice. It has not been shown that respondent
intended to conceal the actual facts concerning the property; more importantly,
petitioner has been shown not to be totally unaware of the real ownership of the subject


Altogether, there is no cogent reason to reverse the Court of Appeals in its assailed
WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals
declaring the contract of lease and memorandum of agreement entered into between
Dr. Felipe C. Roque and Shoppers Paradise Realty & Development Corporation not to
be binding on respondent is AFFIRMED. No costs.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.


Rollo, p. 37.


Rollo, pp. 40-41.


Article 712, New Civil Code.


Article 749, New Civil Code.


Article 709, New Civil Code.


See Gonzales v. Court of Appeals, G.R. No. 110335, 18 June 2001, 358 SCRA 598.


Santos v. Court of Appeals, G.R. No. 90380, 13 September 1990, 189 SCRA 550.


Lagandaon v. Court of Appeals, G.R. No. 102526-31, 21 May 1998, 290 SCRA 330; Fernandez v. Court
of Appeals, G.R. No. 83141, 21 September 1990, 189 SCRA 780.


Article 1868, New Civil Code.


Tolentino, Civil Code of the Philippines, vol. IV, 1990-1991, p. 661.


Kalalo v. Luz, G.R. No. L-27782, 31 July 1970, 34 SCRA 337.



Page 13
viii. Art. 1889 – not to prefer own interests (see also Art. 1491)
- Olaguer vs. Purugganan, 515 SCRA 460 (2007)


G.R. No. 158907

- versus -



February 12, 2007

This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court,
assailing the Decision,[1] dated 30 June 2003, promulgated by the Court of Appeals,
affirming the Decision of the Regional Trial Court, dated 26 July 1995, dismissing
the petitioners suit.
The parties presented conflicting accounts of the facts.

Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of
stock of Businessday Corporation (Businessday) with a total par value
of P600,000.00, with Certificates of Stock No. 005, No. 028, No. 034, No. 070,
and No. 100.[2] At the time he was employed with the corporation as Executive
Vice-President of Businessday, and President of Businessday Information Systems
and Services and of Businessday Marketing Corporation, petitioner, together with
respondent Raul Locsin (Locsin) and Enrique Joaquin (Joaquin), was active in the
political opposition against the Marcos dictatorship. [3] Anticipating the possibility
that petitioner would be arrested and detained by the Marcos military, Locsin,
Joaquin, and Hector Holifea had an unwritten agreement that, in the event that
petitioner was arrested, they would support the petitioners family by the continued
payment of his salary.[4] Petitioner also executed a Special Power of Attorney
(SPA), on 26 May 1979, appointing as his attorneys-in-fact Locsin, Joaquin
and Hofilea for the purpose of selling or transferring petitioners shares of stock
with Businessday. During the trial, petitioner testified that he agreed to execute the
SPA in order to cancel his shares of stock, even before they are sold, for the
purpose of concealing that he was a stockholder of Businessday, in the event of a
military crackdown against the opposition.[5] The parties acknowledged the SPA
before respondent Emilio Purugganan, Jr., who was then the Corporate Secretary
of Businessday, and at the same time, a notary public for QuezonCity.[6]

On 24 December 1979, petitioner was arrested by the Marcos military by virtue of
an Arrest, Search and Seizure Order and detained for allegedly committing
arson. During the petitioners detention, respondent Locsin ordered fellow
respondent Purugganan to cancel the petitioners shares in the books of the
corporation and to transfer them to respondentLocsins name.[7]
As part of his scheme to defraud the petitioner, respondent Locsin sent Rebecca
Fernando, an employee of Businessday, to Camp Crame where the petitioner was
detained, to pretend to borrow Certificate of Stock No. 100 for the purpose of
using it as additional collateral for Businessdays then outstanding loan with the
National Investment and Development Corporation. When Fernando returned the
borrowed stock certificate, the word cancelled was already written therein. When
the petitioner became upset, Fernando explained that this was merely a mistake
committed by respondent Locsins secretary.[8]
During the trial, petitioner also agreed to stipulate that from 1980 to
1982, Businessday made regular deposits, each amounting to P10,000.00, to the
Metropolitan Bank and Trust Company accounts of Manuel and Genaro Pantig,
petitioners in-laws. The deposits were made on every 15th and 30th of the month.
Petitioner alleged that these funds consisted of his monthly salary,
which Businessday agreed to continue paying after his arrest for the financial
support of his family.[10] After receiving a total of P600,000.00, the payments
stopped. Thereafter, respondent Locsin and Fernando went to ask petitioner to
endorse and deliver the rest of his stock certificates to respondent Locsin, but
petitioner refused.[11]
On 16 January 1986, petitioner was finally released from detention. He then
discovered that he was no longer registered as stockholder of Businessday in its
corporate books. He also learned that Purugganan, as the Corporate Secretary
of Businessday, had already recorded the transfer of shares in favor of
respondent Locsin, while petitioner was detained.When petitioner demanded that
respondents restore to him full ownership of his shares of stock, they refused to do
so. On 29 July 1986, petitioner filed a Complaint before the trial court against
respondents Purugganan and Locsin to declare as illegal the sale of the shares of
stock, to restore to the petitioner full ownership of the shares, and payment of

In his version of the facts, respondent Locsin contended that petitioner approached
him and requested him to sell, and, if necessary, buy petitioners shares of stock
inBusinessday, to assure support for petitioners family in the event that something
should happen to him, particularly if he was jailed, exiled or forced to go
underground.[13] At the time petitioner was employed with Businessday,
respondent Locsin was unaware that petitioner was part of a group, Light-a-Fire
Movement, which actively sought the overthrow of the Marcos government
through an armed struggle.[14] He denied that he made any arrangements to
continue paying the petitioners salary in the event of the latters imprisonment.[15]
When petitioner was detained, respondent Locsin tried to sell petitioners shares,
but nobody wanted to buy them. Petitioners reputation as an oppositionist resulted
in the poor financial condition of Businessday and discouraged any buyers for the
shares of stock.[16] In view of petitioners previous instructions,
respondent Locsin decided to buy the shares himself. Although the capital
deficiency suffered by Businessday caused the book value of the shares to plummet
below par value, respondent Locsin, nevertheless, bought the shares at par value.
However, he had to borrow from Businessday the funds he used in purchasing
the shares from petitioner, and had to pay the petitioner in installments
of P10,000.00 every 15th and 30th of each month.[18]
The trial court in its Decision, dated 26 July 1995, dismissed the Complaint filed
by the petitioner. It ruled that the sale of shares between petitioner and
respondent Locsin was valid. The trial court concluded that petitioner had intended
to sell the shares of stock to anyone, including respondent Locsin, in order to
provide for the needs of his family should he be jailed or forced to go underground;
and that the SPA drafted by the petitioner empowered respondent Locsin, and two
other agents, to sell the shares for such price and under such terms and conditions
that the agents may deem proper. It further found that petitioner consented to have
respondent Locsin buy the shares himself. It also ruled that petitioner, through his
wife, received from respondent Locsin the amount of P600,000.00 as payment for
the shares of stock.[19] The dispositive part of the trial courts Decision reads:
WHEREFORE, for failure of the [herein petitioner] to prove by preponderance of
evidence, his causes of action and of the facts alleged in his complaint, the instant
suit is hereby ordered DISMISSED, without pronouncement as to costs.
[Herein respondents] counterclaims, however, are hereby DISMISSED, likewise,
for dearth of substantial evidentiary support.[20]

On appeal, the Court of Appeals affirmed the Decision of the trial court that there
was a perfected contract of sale.[21] It further ruled that granting that there was no
perfected contract of sale, petitioner, nevertheless, ratified the sale to
respondent Locsin by his receipt of the purchase price, and his failure to raise any
protest over the said sale.[22] The Court of Appeals refused to credit the petitioners
allegation that the money his wife received constituted his salary
from Businessday since the amount he received as his salary,P24,000.00 per
month, did not correspond to the amount he received during his
detention, P20,000.00 per month (deposits of P10,000.00 on every 15th and 30th of
each month in the accounts of the petitioners in-laws). On the other hand, the total
amount received, P600,000.00, corresponds to the aggregate par value of
in Businessday.Moreover,
of Businessday prevented it from granting any form of financial assistance in favor
of the petitioner, who was placed in an indefinite leave of absence, and, therefore,
not entitled to any salary. [23]
The Court of Appeals also ruled that although the manner of the cancellation of the
petitioners certificates of stock and the subsequent issuance of the new certificate
of stock in favor of respondent Locsin was irregular, this irregularity will not
relieve petitioner of the consequences of a consummated sale.[24]
Finally, the Court of Appeals affirmed the Decision of the trial court disallowing
respondent Locsins claims for moral and exemplary damages due to lack of
supporting evidence.[25]
Hence, the present petition, where the following issues were raised:


The petition is without merit.
The first issue that the petitioner raised is that there was no valid sale since
respondent Locsin exceeded his authority under the SPA[27] issued in his, Joaquin
and Holifenas favor.He alleged that the authority of the afore-named agents to sell
the shares of stock was limited to the following conditions: (1) in the event of the
petitioners absence and incapacity; and (2) for the limited purpose of applying the
proceeds of the sale to the satisfaction of petitioners subsisting obligations with the
companies adverted to in the SPA.[28]
Petitioner sought to impose a strict construction of the SPA by limiting the
definition of the word absence to a condition wherein a person disappears from his
domicile, his whereabouts being unknown, without leaving an agent to administer
his property,[29] citing Article 381 of the Civil Code, the entire provision hereunder
ART 381. When a person disappears from his domicile, his whereabouts being
unknown, and without leaving an agent to administer his property, the judge, at
the instance of an interested party, a relative, or a friend, may appoint a person to
represent him in all that may be necessary.
This same rule shall be observed when under similar circumstances the power
conferred by the absentee has expired.

Petitioner also puts forward that the word incapacity would be limited to mean
minority, insanity, imbecility, the state of being deaf-mute, prodigality and civil
interdiction.[30] He cites Article 38 of the Civil Code, in support of this definition,
which is hereunder quoted:
ART. 38 Minority, insanity or imbecility, the state of being a deaf-mute,
prodigality and civil interdiction are mere restrictions on capacity to act, and do
not exempt the incapacitated person, from certain obligations, as when the latter
arise from his acts or from property relations, such as easements.

Petitioner, thus, claims that his arrest and subsequent detention are not among the
instances covered by the terms absence or incapacity, as provided under the SPA he
executed in favor of respondent Locsin.
Petitioners arguments are unpersuasive. It is a general rule that a power of attorney
must be strictly construed; the instrument will be held to grant only those powers
that are specified, and the agent may neither go beyond nor deviate from the power
of attorney. However, the rule is not absolute and should not be applied to the
extent of destroying the very purpose of the power. If the language will permit, the
construction that should be adopted is that which will carry out instead of defeat
the purpose of the appointment.Clauses in a power of attorney that are repugnant to
each other should be reconciled so as to give effect to the instrument in accordance
with its general intent or predominant purpose. Furthermore, the instrument should
always be deemed to give such powers as essential or usual in effectuating the
express powers.[31]
In the present case, limiting the definitions of absence to that provided under
Article 381 of the Civil Code and of incapacity under Article 38 of the same Code
negates the effect of the power of attorney by creating absurd, if not impossible,
legal situations. Article 381 provides the necessarily stringent standards that would
justify the appointment of a representative by a judge. Among the standards the
said article enumerates is that no agent has been appointed to administer the
property. In the present case, petitioner himself had already authorized agents to do
specific acts of administration and thus, no longer necessitated the appointment of
one by the court. Likewise, limiting the construction of incapacity to minority,
insanity, imbecility, the state of being a deaf-mute, prodigality and civil
interdiction, as provided under Article 38, would render the SPA
ineffective. Article 1919(3) of the Civil Code provides that the death, civil
interdiction, insanity or insolvency of the principal or of the agent extinguishes the

agency. It would be equally incongruous, if not outright impossible, for the
petitioner to require himself to qualify as a minor, an imbecile, a deaf-mute, or a
prodigal before the SPA becomes operative. In such cases, not only would he be
prevented from appointing an agent, he himself would be unable to administer his
On the other hand, defining the terms absence and incapacity by their everyday
usage makes for a reasonable construction, that is, the state of not being present
and the inability to act, given the context that the SPA authorizes the agents to
attend stockholders meetings and vote in behalf of petitioner, to sell the shares of
stock, and other related acts. This construction covers the situation wherein
petitioner was arrested and detained. This much is admitted by petitioner in his
Petitioners contention that the shares may only be sold for the sole purpose of
applying the proceeds of the sale to the satisfaction of petitioners subsisting
obligations to the company is far-fetched. The construction, which will carry out
the purpose, is that which should be applied. Petitioner had not submitted evidence
that he was in debt withBusinessday at the time he had executed the SPA. Nor
could he have considered incurring any debts since he admitted that, at the time of
its execution, he was concerned about his possible arrest, death and
disappearance. The language of the SPA clearly enumerates, as among those acts
that the agents were authorized to do, the act of applying the proceeds of the sale
of the shares to any obligations petitioner might have against
the Businessday group of companies. This interpretation is supported by the use of
the word and in enumerating the authorized acts, instead of phrases such as only
for, for the purpose of, in order to or any similar terms to indicate that the
petitioner intended that the SPA be used only for a limited purpose, that of paying
any liabilities with the Businessday group of companies.
Secondly, petitioner argued that the records failed to show that he gave his consent
to the sale of the shares to respondent Locsin for the price of P600,000.00. This
argument is unsustainable. Petitioner received from respondent Locsin, through his
wife and in-laws, the installment payments for a total of P600,000.00 from 1980 to
1982, without any protest or complaint. It was only four years after 1982 when
petitioner demanded the return of the shares. The petitioners claim that he did not
instruct respondent Locsin to deposit the money to the bank accounts of his in-laws
fails to prove that petitioner did not give his consent to the sale since
respondent Locsin was authorized, under the SPA, to negotiate the terms and
conditions of the sale including the manner of payment. Moreover, had

respondent Locsin given the proceeds directly to the petitioner, as the latter
suggested in this petition, the proceeds were likely to have been included among
petitioners properties which were confiscated by the military. Instead,
respondent Locsin deposited the money in the bank accounts of petitioners in-laws,
and consequently, assured that the petitioners wife received these amounts. Article
1882 of the Civil Code provides that the limits of an agents authority shall not be
considered exceeded should it have been performed in a manner more
advantageous to the principal than that specified by him.
In addition, petitioner made two inconsistent statements when he alleged that (1)
respondent Locsin had not asked the petitioner to endorse and deliver the shares of
stock, and (2) when Rebecca Fernando asked the petitioner to endorse and deliver
the certificates of stock, but petitioner refused and even became upset.[33] In either
case, both statements only prove that petitioner refused to honor his part as seller
of the shares, even after receiving payments from the buyer. Had the petitioner not
known of or given his consent to the sale, he would have given back the payments
as soon as Fernando asked him to endorse and deliver the certificates of stock, an
incident which unequivocally confirmed that the funds he received, through his
wife and his in-laws, were intended as payment for his shares of stocks. Instead,
petitioner held on to the proceeds of the sale after it had been made clear to him
that respondent Locsin had considered the P600,000.00 as payment for the shares,
and asked petitioner, through Fernando, to endorse and deliver the stock
certificates for cancellation.
As regards the third issue, petitioners allegation that the installment payments he
was adjudged to have received for the shares were actually salaries
which Businessday promised to pay him during his detention is unsupported and
implausible. Petitioner received P20,000.00 per month through his in-laws; this
amount does not correspond to his monthly salary at P24,000.00.[34] Nor does the
amount received correspond to the amount which Businessday was supposed to be
obliged to pay petitioner, which was only P45,000.00 toP60,000.00 per annum.
Secondly, the petitioners wife did not receive funds from
respondent Locsin or Businessday for the entire duration of petitioners
detention. Instead, when the total amount received by the petitioner reached the
aggregate amount of his shares at par value -- P600,000.00 -- the payments
stopped. Petitioner even testified that when respondent Locsin denied knowing the
petitioner soon after his arrest, he believed respondent Locsins commitment to pay
his salaries during his detention to be nothing more than lip-service.[36]

Granting that petitioner was able to prove his allegations, such an act of gratuity,
on the part of Businessday in favor of petitioner, would be void. An arrangement
whereby petitioner will receive salaries for work he will not perform, which is not
a demandable debt since petitioner was on an extended leave of absence,
constitutes a donation under Article 726[37] of the Civil Code. Under Article 748 of
the Civil Code, if the value of the personal property donated exceeds P5,000.00,
the donation and the acceptance shall have to be made in writing. Otherwise, the
donation will be void. In the present case, petitioner admitted in his
testimony[38] that such arrangement was not made in writing and, hence, is void.
The fact that some of the deposit slips and communications made to petitioners
wife contain the phrase household expenses does not disprove the sale of the
shares. The money was being deposited to the bank accounts of the petitioners inlaws, and not to the account of the petitioner or his wife, precisely because some of
his property had already been confiscated by the military. Had they used the phrase
sale of shares, it would have defeated the purpose of not using their own bank
accounts, which was to conceal from the military any transaction involving the
petitioners property.
Petitioner raised as his fourth issue that granting that there was a sale, Businessday,
and not respondent Locsin, was the party to the transaction. The curious facts that
the payments were received on the 15th and 30th of each month and that
the payor named in the checks was Businessday, were adequately explained by
respondent Locsin.Respondent Locsin had obtained cash advances from the
company, paid to him on the 15th and 30th of the month, so that he can pay
petitioner for the shares. To support his claim, he presented Businessdays financial
records and the testimony of Leo Atienza, the Companys Accounting
Manager. When asked why the term shares of stock was used for the entries,
instead of cash advances, Atienza explained that the term shares of stock was more
specific rather than the broader phrase cash advances. [39] More to the point, had the
entries been for shares of stock, the issuance of shares should have been reflected
in the stock and transfer books of Businessday, which the petitioner presented as
evidence.Instead the stock and transfer books reveal that the increase in
respondent Locsins shares was a result of the cancellation and transfer of
petitioners shares in favor of respondentLocsin.
Petitioner alleges that the purported sale between himself and respondent Locsin of
the disputed shares of stock is void since it contravenes Article 1491 of the Civil
Code, which provides that:

ART. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(2) Agents, the property whose administration or sale may have been entrusted to
them, unless the consent of the principal has been given; x x x.

It is, indeed, a familiar and universally recognized doctrine that a person who
undertakes to act as agent for another cannot be permitted to deal in the agency
matter on his own account and for his own benefit without the consent of his
principal, freely given, with full knowledge of every detail known to the agent
which might affect the transaction.[40] The prohibition against agents purchasing
property in their hands for sale or management is, however, clearly, not absolute. It
does not apply where the principal consents to the sale of the property in the hands
of the agent or administrator.[41]
In the present case, the parties have conflicting allegations. While
respondent Locsin averred that petitioner had permitted him to purchase petitioners
shares, petitioner vehemently denies having known of the transaction. However,
records show that petitioners position is less credible than that taken by
respondent Locsin given petitioners contemporaneous and subsequent acts.[42] In
1980, when Fernando returned a stock certificate she borrowed from the petitioner,
it was marked cancelled. Although the petitioner alleged that he was furious when
he saw the word cancelled, he had not demanded the issuance of a new certificate
in his name. Instead of having been put on his guard, petitioner remained silent
over this obvious red flag and continued receiving, through his wife, payments
which totalled to the aggregate amount of the shares of stock valued at par. When
the payments stopped, no demand was made by either petitioner or his wife for
further payments.
From the foregoing, it is clear that petitioner knew of the transaction, agreed to the
purchase price of P600,000.00 for the shares of stock, and had in fact facilitated the
implementation of the terms of the payment by providing respondent Locsin,
through petitioners wife, with the information on the bank accounts of his inlaws. Petitioners wife and his son even provided receipts for the payments that
were made to them by respondent Locsin,[43] a practice that bespeaks of an onerous
transaction and not an act of gratuity.
Lastly, petitioner claims that the cancellation of the shares and the subsequent
transfer thereof were fraudulent, and, therefore, illegal. In the present case, the
shares were transferred in the name of the buyer, respondent Locsin, without the

petitioner delivering to the buyer his certificates of stock. Section 63 of the
Corporation Code provides that:
Sec.63. Certificate of stock and transfer of shares. xxx Shares of stock so issued
are personal property and may be transferred by delivery of the certificate or
certificates indorsed by the owner or his attorney-in-fact or other person legally
authorized to make the transfer. No transfer, however, shall be valid, except as
between the parties, until the transfer is recorded in the books of the corporation
showing the names of the parties to the transaction, the date of the transfer, the
number of the certificate or certificates and the number of shares transferred.
(Emphasis provided.)

The aforequoted provision furnishes the procedure for the transfer of shares the
delivery of the endorsed certificates, in order to prevent the fraudulent transfer of
shares of stock.However, this rule cannot be applied in the present case without
causing the injustice sought to be avoided. As had been amply demonstrated, there
was a valid sale of stocks.Petitioners failure to deliver the shares to their rightful
buyer is a breach of his duty as a seller, which he cannot use to unjustly profit
himself by denying the validity of such sale.Thus, while the manner of the
cancellation of petitioners certificates of stock and the issuance of the new
certificates in favor of respondent Locsin was highly irregular, we must,
nonetheless, declare the validity of the sale between the parties. Neither does this
irregularity prove that the transfer was fraudulent. In his testimony, petitioner
admitted that they had intended to conceal his being a stockholder of Businessday.
The cancellation of his name from the stock and transfer book, even before the
shares were actually sold, had been done with his consent. As earlier explained,
even the subsequent sale of the shares in favor of Locsin had been done with his
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This
Court AFFIRMS the assailed Decision of the Court of Appeals, promulgated
on 30 June 2003, affirming the validity of the sale of the shares of stock in favor of
respondent Locsin. No costs.
Associate Justice


Associate Justice

Associate Justice Associate Justice
On Leave
Associate Justice

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

Associate Justice
Chairperson, Third Division

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

Chief Justice


On leave.
Penned by Associate Justice Ruben T. Reyes with Associate Justices Elvi John S. Assuncion and Lucas
P. Bersamin, concurring; rollo, pp. 70-86.
Id. at 71.
Id. at 18-19.
Id. at 19.
Records, Volume 1, pp. 217-218.
Rollo, p. 19.
Id. at 20
Id. at 20-21.
Records, Volume II, pp. 519-520.
Rollo, pp. 21-22.
Id. at 23.
Id. at 23-24.
Id. at 925-926.
Id. at 927-928.
Id. at 928.
Id. at 929-930.
Id. at 930-931.
Id. at 933.
CA rollo, pp. 818-822.
Records, Vol. II, p. 822.
Rollo, pp. 76-79.
Id. at 80.
Id. at 81-82.


Id. at 83-84.
Id. at 85.
Id. at 29-30.
Id. at 199-200. The Special Power of Attorney executed by petitioner on 26 May 1979 reads:
THAT I, EDUARDO B. OLAGUER, of legal age, xxx, have named, appointed and constituted, and by these
presents, do hereby name, constitute and appoint Messers. RAUL L. LOCSIN, ENRIQUE M. JOAQUIN, and
HECTOR HOFILEA, all of legal age and with business address c/o Businessday Corporation, 113 West
Avenue, Quezon City, jointly and individually, to be my true and lawful attorneys-in-fact, for me and in my name,
place and stead, in the event of my absence or incapacity, to do or perform any or all of the following acts and
things, to wit:
1. For me and in my stead to attend and vote my stock at any stockholders meeting of the Businessday Group of
Companies, consisting of the Businessday Corporation, Businessday Information Systems & Services, Inc.,
and Businessday Marketing Corporation, of all of which I am a stockholder, and to take such action as may be in my
interest as fully as I could do if personally present, and for this purpose to sign and execute any proxies or other
instruments in my name or on my behalf, appointing my said attorneys, or any one of them, or any other person
as my proxy or proxies;
2. To sell, assign, transfer, endorse and deliver, for such price or prices, and under such terms and conditions, as my
said attorneys-in-fact may deem proper, any and all shares of stock now held or which may hereafter be held by me
in the aforesaid companies; to receive payment or payments from the buyer; buyers thereof; to make, execute and
deliver receipts for such payments; and to apply the net proceeds of any such sale, assignment and transfer to the
liquidation of and satisfaction for any and all obligations that I may have with the said companies.
Rollo, p. 31.
Id. at 31-32.


3 Am. Jur. 2d, 536-537.


Records, Volume I, p. 188.
Q: In other words Mr. Witness, it is not correct to conclude that when you executed that special power of attorney,
you contemplated your possible arrest at that time?
A: Arrest, death and disappearance.
Rollo, pp. 34, 1929.
Records, Volume I, p. 196. Petitioner confirmed the Court of Appeals factual finding that he received a monthly
salary of P24,000.00 when he testified receiving an equivalent amount estimated at P250,000.00 to P300,000.00 per
Id. at 194-195.
Id. at 240.
ART. 726. When a person gives to another a thing or right on account of the latters merits or of the services
rendered by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon
the donee a burden which is less than the value of the thing given, there is also a donation.
Records, Volume I, p. 243.
Records, TSN Duplicate, p. 2087.

3 Am. Jur. 2d, pp. 727-728.


Distajo v. Court of Appeals, 393 Phil. 426, 433 (2000); Pelayo v. Perez, G.R. No. 141323, 8 June 2005, 459
SCRA 475, 487-488.
Article 1371 of the Civil Code provides that:
ART. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered.
TSN, 28 January 1992, pp. 2208-2209.
Records, Volume I, pp. 217-218.

ix. Art. 1890 – not to loan to himself; Art. 1878(7).

x. Art. 1891 – to render accounts
- In re Bamberger, 49 Phil. 962;
April 7, 1924
H. V. Bamberger in his own behalf.
Attorney-General Villa-Real for the Government.
At the instance of the Attorney-General, disbarment proceedings have been instituted against
Attorney H. V. Bamberger for alleged malpractice in his profession. The matter has been
investigated by the provincial fiscal of Iloilo, aided by an assistant attorney of the Bureau of Justice,
and after receiving considerable testimony and other evidence, and after hearing the respondent, the
fiscal summarizes the facts found as follows:
First. That Mr. H. V. Bamberger was attorney for the plaintiff in the case No. 4076 of the
Court of First Instance of Iloilo "S. M. Berger, plaintiff vs. Enrique de Valera, defendant"
regarding a certain sum of money.
Second. That Mr. Bemberger took possession of the personal property attached by the
plaintiff in said case, as well as other personal property not attached, and the respondent
disposed of a certain amount of steel bars which the defendant Enrique de Valera had
deposited with the Chairman King Chio.
Third. That Mr. Bamberger, as he admitted in his answer and statement, has disposed of a
lot 83 tins of canned peas at the price of 10 centavos per tin and one case of catchup at the
price P10, without due authorization.
Fourth. That while all the merchandise was in the possession of Mr. H. V. Bamberger, the
respondent, he collected and received the amount of P2,178.82 as he admitted, either from
debtor of Enrique de Valera, especially the Chinaman King Chio, or for having disposed of
some merchandise. It is also an admitted fact by him that he is accountable fro P1,187 to S.
M. Berger & Co.
Fifth. That Mr. Bamberger has, on various occasions, required either by Mr. Block, in the
name of S. M. Berger & Co., or by Messrs. S. M. Berger & Co. themselves, to render an
immediate accounting which he has disregarded without any reasonable cause.
Sixth. That Mr. H. V. Bamberger, since the civil case No. 4076 above referred to has been
decided, on July 22, 1921, and completely determinated as per the stipulation and
agreement, Exhibit T and the answer of the defendant admitting all and every one of the
allegations in the amended complaint of the plaintiff, has not made any effort to render an

accounting to S. M. Berger nor has he been willing to send or deliver to his client the money
collected at any time.
Seventh. That the excuse of the respondent that he could not render an accounting to his
client because Mr. Cedrum did not give him a list of the merchandise taken by the latter and
because Mr. Berger took with him the receipt of King Chio, Exhibit H, and certain notes in
connection with King Chio's account, is not admissible:
(a) Because Mr. Cendrum declared that he furnished Mr. Bemberger with the list in
question, and the respondent made a note in his book of the merchandise turned
(b) Because the evidence of the complaint shows clearly that Mr. Bamberger never
asked Mr. Berger for Exhibit H and other notes he needed to render his account and
if Mr. Berger [Bamberger] had written to Mr. Berger for the papers he needed for his
accounting, Mr. Berger would have, of course, given them to him with pleasure.
(c) Because if we were true that he could not give a complete accounting in regard to
King Chio's account without such papers and notes, it is not understood why he
prepared and acknowledge before a notary the document Exhibit 2, which is an
assignment of the account owed to King Chio by the Talisay-Silay Milling Co.
amounting to P5,390. This document was executed on April 25, 1922.
Upon the facts stated the fiscal recommends that the respondent be suspended from the practice of
The findings quoted are amply supported by the evidence. Whether the respondent, after deducting
proper attorney's fees, owes his client any considerable sum of money, we need not here decide;
that must be determined an another and different proceeding. But attorneys are bound to promptly
account to their clients for money or property received by them as such, and the fact that an attorney
has a lien for fees on money in his hands does not relieve him from liability. (6 C. J., 693.)
Notwithstanding repeated demands on the part of his client, the defendant has for several years
failed to render an accounting of the money received by him on behalf of his client and the excuses
offered for his failure to do so are so inadequate as to merit no consideration. The respondent is
clearly guilty of professional misconduct in falling to account to S. M. Berger & Co. for money
received by him as attorney for the latter.
It is therefore ordered that H. V. Bamberger be and he hereby is suspended from his office of lawyer
for the period of six months beginning with the date upon which he is notified of this order.
Araullo, C. J., Johnson, Street, Avanceña, Johns and Romualdez, JJ., concur.

- Domingo vs. Domingo, 42 SCRA 131.


[G.R. No. 150897. April 11, 2005]


This is a petition for review under Rule 45 of the Rules of Court of
the Decision[1] dated November 26, 2001 in CA-G.R. CV No. 59331, of the Court of
Appeals, which affirmed the Judgment dated January 6, 1998 of the Regional Trial
Court (RTC) of Quezon City, Branch 90, in Civil Case No. Q-89-3820. The trial court
dismissed herein petitioners complaint in Civil Case No. Q-89-3820 for declaration of
the nullity of a deed of absolute sale over a house and lot located at Project 4, Quezon
Petitioner is the oldest of the five children of the late Bruno B. Domingo, formerly the
registered owner of the properties subject of this dispute. Private respondents Leonora
Domingo-Castro, Nuncia Domingo-Balabis, Abella Domingo, and Jose Domingo are
petitioners siblings. A family quarrel arose over the validity of the purported sale of the
house and lot in Project 4 by their father to private respondents.
The facts of this case, as synthesized from the findings of the trial court and
affirmed by the court a quo, are as follows:
Bruno B. Domingo, a widower and retired military man, was the registered owner,
as shown by Transfer Certificate of Title (TCT) No. 128297, issued by the Register of
Deeds of Quezon City, of a house and lot with an area of 269.50 square meters, located
at 34 H. Honrubia St., Project 4, Quezon City.
In December 1970, Bruno needed money for his medical expenses, so he sold said
properties. On December 28, 1970, he signed a Deed of Absolute Sale conveying the
abovementioned properties to his children Leonora, Nuncia, Abella, and Jose for a
consideration of P10,000. The deed was witnessed by Concesa Ibaez and Linda Noroa
and notarized by Atty. Rosauro V. Noroa. [3]
Jose then brought the deed to the Register of Deeds of Quezon City, as a result of
which TCT No. 128297 was cancelled and a new title, TCT No. 247069 was issued in
the names of the vendees.
Bruno Domingo died on April 6, 1975.[4]
Sometime in 1981 petitioner, who by then was residing on the disputed property,
received a notice from the Quezon City Hall declaring him a squatter and directing him

to demolish his shanty on the lot. Petitioner found out that the planned demolition was at
the instance of his brother, Jose and sister, Leonora.
Sometime in 1986, petitioner learned of the existence of the assailed Deed of
Absolute Sale when an ejectment suit was filed against him. Upon advice of his
counsel, he had the then Philippine Constabulary-Integrated National Police (PC-INP,
now Philippine National Police or PNP) Crime Laboratory in Camp Crame, Quezon City
compare the signature of Bruno on the said deed against specimen signatures of his
father. As a result, the police issued him Questioned Document Report No. 192-86 to
the effect that the questioned signature and the standard signatures were written by two
different persons. Another Questioned Document Report, No. 007-89, subsequently
issued by the police came up with the same conclusion.
Petitioner filed a complaint for forgery, falsification by notary public, and falsification
by private individuals against his siblings and Atty. Noroa before the public prosecutor of
Quezon City. But after it conducted an examination of the questioned documents, the
National Bureau of Investigation (NBI) came up with the conclusion that the questioned
signature and the specimen signatures were written by one and the same person,
Bruno B. Domingo. The public prosecutor dismissed the criminal complaint on June 22,
1989. Petitioner appealed the order of dismissal to the Department of Justice (DOJ) but
the latter affirmed the prosecutors action. A similar criminal complaint filed by petitioner
before the public prosecutor of Manila was likewise dismissed.
On October 23, 1989, petitioner instituted Civil Case No. Q-89-3820 before the RTC
of Quezon City for the declaration of the nullity of the Deed of Sale, reconveyance of the
disputed property, and cancellation of TCT No. 247069. Petitioner alleged that Bruno B.
Domingos signature on the deed in question was forged. He likewise averred that the
sale was done in violation of the restriction annotated at the back of Brunos title, to the
effect that prior approval of the Peoples Homesite and Housing Corporation (PHHC)
was needed to effect any sale.
In their answer, private respondents relied heavily on the findings of the NBI that
Bruno B. Domingos signature on the deed was genuine, and hence, the Deed of
Absolute Sale was not a forgery.
On January 6, 1998, the trial court disposed of Civil Case No. Q-89-3820 in this

IN VIEW OF THE FOREGOING, judgment is rendered DISMISSING the complaint
in this case.
All other claim/s including counterclaim/s are dismissed for lack of legal and/or
factual basis.
In dismissing the complaint, the trial court disregarded the conflicting reports of the
police crime laboratory and the NBI for failure of the offering party or parties to show

that the standard or specimen signatures were indeed those of Bruno B. Domingo.
The trial court likewise found that petitioner failed to substantiate his claim that prior
PHHC approval was needed before a valid sale of the properties in dispute could be
Dissatisfied, petitioner elevated the case to the Court of Appeals, which docketed
his appeal as CA-G.R. CV No. 59331. He contended that the lower court erred in ruling
that the vendors signature on the Deed of Absolute Sale of December 28, 1970 was not
a forgery.
On January 11, 2000, petitioner filed a motion for new trial with the appellate court
on the ground of newly discovered evidence consisting of a letter of Bruno B. Domingo
dated February 1, 1972 purportedly requesting from PHHC permission to mortgage the
house and lot in Project 4, Quezon City. Also on March 22, 2000, petitioner filed a
supplemental motion for new trial with the Court of Appeals, attaching the letter dated
February 2, 1972, of PHHC to Bruno B. Domingo, granting the latters request on July 6,
2000. Petitioner moved that the appellate court grant him authority to put up a sarisari store on a portion of the disputed lot, allegedly to augment his meager pension.
In its resolution dated December 29, 2000, the appellate court denied all foregoing
motions.[8] In denying the motions for new trial, the appellate court noted that there was
no showing whatsoever that the letter-request could not have been discovered and
produced prior to the trial below by the exercise of reasonable diligence andis of such a
character as would probably change the result. [9] It likewise pointed out that both the
motion for new trial and the supplemental motion for new trial were not accompanied by
affidavits showing the facts constituting the grounds therefor and the newly discovered
On November 26, 2001, the appellate court decided CA-G.R. CV No. 59331 as

WHEREFORE, the appeal is DISMISSED and the appealed decision is
AFFIRMED en toto.
Hence, the instant petition for review interposed by petitioner grounded on the
following reasons for allowance of writ:

The declaration that the Deed of Absolute Sale dated December 28, 1970 was
executed by Bruno B. Domingo over the properties covered by TCT No. 128297, is
not valid, proper and legal, because said Deed of Absolute Sale was not executed by
said Bruno B. Domingo, as per findings of the [PC-INP] in its laboratory examination,
and that the said Deed of Absolute Sale was in violation of the prohibition annotated
at the back of said title, and that the sale was done within the prohibited period of five
(5) years. Moreover, said Bruno B. Domingo should [not have] requested for authority

to mortgage the property in question from the Peoples Homesite [and] Housing
Authority on February 1, 1972, if he really sold the same in 1970. [12]
The crucial issue for our resolution is: Did the court a quo err when it held that the
trial court correctly applied the rules of evidence in disregarding the conflicting PC-INP
and NBI questioned document reports?
Before this Court, petitioner insists that both the trial court and the appellate court
should have considered the PC-INP questioned document report as reliable, without
showing any cogent reason or sufficient arguments why said report should be deemed
Under the Rules of Court, the genuineness of a handwriting may be proved by the
(1) A witness who actually saw the person writing the instrument;[13]
(2) A witness familiar with such handwriting and who can give his opinion thereon,
such opinion being an exception to the opinion rule;[15]
(3) A comparison by the court of the questioned handwriting and admitted genuine
specimen thereof;[16] and
(4) Expert evidence.[17]

The law makes no preference, much less distinction among and between the
different means stated above in proving the handwriting of a person. [18] It is likewise
clear from the foregoing that courts are not bound to give probative value or evidentiary
value to the opinions of handwriting experts, as resort to handwriting experts is not
In finding that the trial court correctly disregarded the PC-INP Crime Laboratory
questioned document report, the appellate court observed:

The PC-INP used as standards of comparison the alleged signatures of Bruno in two
documents, namely: letter to the Bureau of Treasury dated April 1, 1958 and Republic
Bank Check No. 414356 dated November 2, 1962. These documents precede by more
than eight years the questioned Deed which was executed on December 30, 1970. This
circumstance makes the PC-INPs finding questionable. [20]
We find no reason to disagree with the Court of Appeals. The passage of time and a
persons increase in age may have decisive influence in his handwriting characteristics.
Thus, in order to bring about an accurate comparison and analysis, the standards of
comparison must be as close as possible in point of time to the suspected signature.
As correctly found by the appellate court, the examination conducted by the PC-INP
Crime Laboratory did not conform to the foregoing standard. Recall that in the case, the
signatures analyzed by the police experts were on documents executed several years
apart. A signature affixed in 1958 or in 1962 may involve characteristics different from
those borne by a signature affixed in 1970. Hence, neither the trial court nor the

appellate court may be faulted for refusing to place any weight whatsoever on the PCINP questioned document report.
We likewise sustain the trial court and the Court of Appeals concerning the
testimonies of Clerma Domingo, Leonora, and Jose to the effect that they saw Bruno
affixing his signature to the questioned deed. [22] They were unrebutted. Genuineness of
a handwriting may be proven, under Rule 132, Section 22, by anyone who actually saw
the person write or affix his signature on a document. Petitioner has shown no reason
why the ruling made by the trial court on the credibility of the respondents witnesses
below should be disturbed by us. Findings by the trial court as to the credibility of
witnesses are accorded the greatest respect, and even finality by appellate courts, since
the former is in a better position to observe their demeanor as well as their deportment
and manner of testifying during the trial. [23]
Finally, the questioned Deed of Absolute Sale in the present case is a notarized
document. Being a public document, it is prima facie evidence of the facts therein
expressed.[24] It has the presumption of regularity in its favor and to contradict all these,
evidence must be clear, convincing, and more than merely preponderant. [25] Petitioner
has failed to show that such contradictory evidence exists in this case.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals
dated November 26, 2001 in CA-G.R. CV No. 59331 is AFFIRMED. Costs against
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.


CA Rollo, pp. 130-136. Penned by Associate Justice Edgardo P. Cruz, with Associate Justices Ma.
Alicia Austria-Martinez (now a member of this Court), and Hilarion L. Aquino concurring.


Records, Vol. II, pp. 714-718.


CA Rollo, pp. 104-105, 108-109; Rollo, p. 22.


CA Rollo, p. 35.


Now the National Housing Authority (NHA).


Rollo, p. 23.


Id. at 22.


CA Rollo, pp. 127-128.


Id. at 127.


Supra, note 8.


Id. at 135.


Rollo, p. 9.


Rule 132, SEC. 22. How genuineness of handwriting proved. The handwriting of a person may be
proved by any witness who believes it to be the handwriting of such person because he has seen

the person write, or has seen writing purporting to be his upon which the witness has acted or
been charged, and has thus acquired knowledge of the handwriting of such person. Evidence
respecting the handwriting may also be given by a comparison, made by the witness or the court,
with writings admitted or treated as genuine by the party against whom the evidence is offered, or
proved to be genuine to the satisfaction of the judge.



Rule 130, SEC. 50. Opinion of ordinary witnesses. The opinion of a witness for which proper basis is
given, may be received in evidence regarding

(b) A handwriting with which he has sufficient familiarity;

Supra, note 13.


Rule 130, SEC. 49. Opinion of expert witness. The opinion of a witness on a matter requiring special
knowledge, skill, experience or training which he is shown to possess, may be received in


Lopez v. Court of Appeals, No. L-31494, 23 January 1978, 81 SCRA 153, 162.


See Bautista v. Castro, G.R. No. 61260, 17 February 1992, 206 SCRA 305, 312; See also Lopez v.
Court of Appeals, supra.


CA Rollo, p. 133.


Causapin v. Court of Appeals, G.R. No. 107432, 4 July 1994, 233 SCRA 615, 624 citing Reyes v.
Vidal, No. L-2862, 21 April 1952, 91 Phil. 126, 131.


CA Rollo, p. 133.


Philippine National Bank v. Court of Appeals, G.R. No. 81524, 4 February 2000, 324 SCRA 714, 724.


Caoili v. Court of Appeals, G.R. No. 128325, 14 September 1999, 314 SCRA 345, 361.


Zambo v. Court of Appeals, G.R. No. 104166, 30 July 1993, 224 SCRA 855, 859.

xi. Art. 1892 – responsibility of acts of his substitute.
- Escueta vs. Lim, 512 SCRA 411 (2007)

CORAZON L. ESCUETA, assisted by
her husband EDGAR ESCUETA,
LUZ R. BALOLOY, namely,

G.R. No. 137162


- versus -

PUNO, C.J., Chairperson,
January 24, 2007

x --------------------------------------------------------------------------------------- x

This is an appeal by certiorari [1] to annul and set aside the Decision and Resolution
of the Court of Appeals (CA) dated October 26, 1998 and January 11, 1999,
respectively, in CA-G.R. CV No. 48282, entitled Rufina Lim v. Corazon L.
Escueta, etc., et. al.
The facts[2] appear as follows:
Respondent Rufina Lim filed an action to remove cloud on, or quiet title
to, real property, with preliminary injunction and issuance of [a holddeparture
the Philippines against
Rubio.Respondent amended her complaint to include specific
performance and damages.
In her amended complaint, respondent averred inter alia that she bought
the hereditary shares (consisting of 10 lots) of Ignacio Rubio [and] the
heirs of Luz Baloloy, namely: Alejandrino, Bayani, and other co-heirs;
that said vendors executed a contract of sale dated April 10, 1990 in her
favor; that Ignacio Rubio and the heirs of Luz Baloloy received [a down
payment] or earnest money in the amount ofP102,169.86 and P450,000,

respectively; that it was agreed in the contract of sale that the vendors
would secure certificates of title covering their respective hereditary
shares; that the balance of the purchase price would be paid to each heir
upon presentation of their individual certificate[s] of [title]; that Ignacio
Rubio refused to receive the other half of the down payment which
is P[100,000]; that Ignacio Rubio refused and still refuses to deliver to
[respondent] the certificates of title covering his share on the two lots;
that with respect to the heirs of Luz Baloloy, they also refused and still
refuse to perform the delivery of the two certificates of title covering
their share in the disputed lots; that respondent was and is ready and
willing to pay Ignacio Rubio and the heirs of Luz Baloloy upon
presentation of their individual certificates of title, free from whatever
lien and encumbrance;
As to petitioner Corazon Escueta, in spite of her knowledge that the
disputed lots have already been sold by Ignacio Rubio to respondent, it is
alleged that a simulated deed of sale involving said lots was effected by
Ignacio Rubio in her favor; and that the simulated deed of sale by Rubio
to Escueta has raised doubts and clouds over respondents title.
In their separate amended answers, petitioners denied the material
allegations of the complaint and alleged inter alia the following:
For the heirs of Luz Baloloy (Baloloys for brevity):
Respondent has no cause of action, because the subject contract of sale
has no more force and effect as far as the Baloloys are concerned, since
they have withdrawn their offer to sell for the reason that respondent
failed to pay the balance of the purchase price as orally promised on or
before May 1, 1990.
For petitioners Ignacio Rubio (Rubio for brevity) and Corazon Escueta
(Escueta for brevity):
Respondent has no cause of action, because Rubio has not entered into a
contract of sale with her; that he has appointed his daughter Patricia
Llamas to be his attorney-in-fact and not in favor of Virginia Rubio
Laygo Lim (Lim for brevity) who was the one who represented him in
the sale of the disputed lots in favor of respondent; that the P100,000
respondent claimed he received as down payment for the lots is a simple
transaction by way of a loan with Lim.

The Baloloys failed to appear at the pre-trial. Upon motion of
respondent, the trial court declared the Baloloys in default. They then
filed a motion to lift the order declaring them in default, which was
denied by the trial court in an order dated November 27,
1991. Consequently, respondent was allowed to adduce evidence ex
parte. Thereafter, the trial court rendered a partial decision dated July 23,
1993against the Baloloys, the dispositive portion of which reads as
IN VIEW OF THE FOREGOING, judgment is hereby
rendered in favor of [respondent] and against [petitioners,
heirs] of Luz R. Balolo[y], namely: Alejandrino Baloloy
and Bayani Baloloy. The [petitioners] Alejandrino Baloloy
and Bayani Baloloy are ordered to immediately execute an
[Absolute] Deed of Sale over their hereditary share in the
properties covered by TCT No. 74392 and TCT No. 74394,
after payment to them by [respondent] the amount
of P[1,050,000] or consignation of said amount in
Court. [For] failure of [petitioners] Alejandrino Baloloy and
Bayani Baloloy to execute the Absolute Deed of Sale over
their hereditary share in the property covered by TCT No.
T-74392 and TCT No. T-74394 in favor of [respondent], the
Clerk of Court is ordered to execute the necessary Absolute
Deed of Sale in behalf of the Baloloys in favor of
of P[1,500,000]. Further[,]
Baloloy and Bayani Baloloy are ordered to jointly and
severally pay [respondent] moral damages in the amount
of P[50,000] and P[20,000] for attorneys fees. The adverse
claim annotated at the back of TCT No. T-74392 and TCT
No. T-74394[,] insofar as the shares of Alejandrino Baloloy
and Bayani Baloloy are concerned[,] [is] ordered cancelled.
With costs against [petitioners] Alejandrino Baloloy and
Bayani Baloloy.
The Baloloys filed a petition for relief from judgment and order
dated July 4, 1994 and supplemental petition dated July 7, 1994. This

was denied by the trial court in an order dated September 16,
1994.Hence, appeal to the Court of Appeals was taken challenging the
order denying the petition for relief.
Trial on the merits ensued between respondent and Rubio and
Escueta. After trial, the trial court rendered its assailed Decision, as

IN VIEW OF THE FOREGOING, the complaint [and]
amended complaint are dismissed against [petitioners]
Corazon L. Escueta, Ignacio E. Rubio[,] and the Register
of Deeds. The counterclaim of [petitioners] [is] also
dismissed. However, [petitioner] Ignacio E. Rubio is
ordered to return to the [respondent], Rufina Lim[,] the
amount of P102,169.80[,] with interest at the rate of six
percent (6%) per annum from April 10, [1990] until the
same is fully paid. Without pronouncement as to costs.

On appeal, the CA affirmed the trial courts order and partial decision, but reversed
the later decision. The dispositive portion of its assailed Decision reads:
WHEREFORE, upon all the foregoing premises considered, this Court
1. the appeal of the Baloloys from the Order denying the Petition for
Relief from Judgment and Orders dated July 4, 1994 and Supplemental
Petition dated July 7, 1994 is DISMISSED. The Order appealed from
2. the
dismissing [respondents] complaint
is REVERSED and SET ASIDE and a new one is entered. Accordingly,
a. the validity of the subject contract of sale in favor of [respondent] is
b. Rubio is directed to execute a Deed of Absolute Sale conditioned upon
the payment of the balance of the purchase price by [respondent] within
30 days from the receipt of the entry of judgment of this Decision.
c. the contracts of sale between Rubio and Escueta involving Rubios
share in the disputed properties is declared NULL and VOID.
d. Rubio and Escueta are ordered to pay jointly and severally
the [respondent] the amount of P[20,000] as moral damages
and P[20,000] as attorneys fees.

3. the appeal of Rubio and Escueta on the denial of their counterclaim


Petitioners Motion for Reconsideration of the CA Decision was denied. Hence, this
The issues are:


Briefly, the issue is whether the contract of sale between petitioners and respondent
is valid.
Petitioners argue, as follows:
First, the CA did not consider the circumstances surrounding petitioners failure to
appear at the pre-trial and to file the petition for relief on time.
As to the failure to appear at the pre-trial, there was fraud, accident and/or
excusable neglect, because petitioner Bayani was in the United States. There was
no service of the notice of pre-trial or order. Neither did the former counsel of
record inform him. Consequently, the order declaring him in default is void, and all
subsequent proceedings, orders, or decision are void.
Furthermore, petitioner Alejandrino was not clothed with a power of attorney to
appear on behalf of Bayani at the pre-trial conference.
Second, the sale by Virginia to respondent is not binding. Petitioner Rubio did not
authorize Virginia to transact business in his behalf pertaining to the property. The
Special Power of Attorney was constituted in favor of Llamas, and the latter was
not empowered to designate a substitute attorney-in-fact. Llamas even disowned
her signature appearing on the Joint Special Power of Attorney, which
constituted Virginia as her true and lawful attorney-in-fact in selling Rubios
Dealing with an assumed agent, respondent should ascertain not only the fact of
authority. Besides, Virginia exceeded the authority for failing to comply with her
obligations under the Joint Special Power of Attorney.
The amount encashed by Rubio represented not the down payment, but the
payment of respondents debt. His acceptance and encashment of the check was not
a ratification of the contract of sale.
Third, the contract between respondent and Virginia is a contract to sell, not a
contract of sale. The real character of the contract is not the title given, but the

intention of the parties. They intended to reserve ownership of the property to
petitioners pending full payment of the purchase price. Together with taxes and
other fees due on the properties, these are conditions precedent for the perfection
of the sale. Even assuming that the contract is ambiguous, the same must be
resolved against respondent, the party who caused the same.
Fourth, Respondent failed to faithfully fulfill her part of the obligation. Thus,
Rubio had the right to sell his properties to Escueta who exercised due diligence in
ascertaining ownership of the properties sold to her. Besides, a purchaser need not
inquire beyond what appears in a Torrens title.
The petition lacks merit. The contract of sale between petitioners and respondent is
Bayani Baloloy was represented by his attorney-in-fact, Alejandrino Baloloy. In
the Baloloys answer to the original complaint and amended complaint, the
allegations relating to the personal circumstances of the Baloloys are clearly
An admission, verbal or written, made by a party in the course of the proceedings
in the same case, does not require proof.[6] The factual admission in the pleadings
on record [dispenses] with the need x x x to present evidence to prove the admitted
fact.[7] It cannot,
therefore, be
controverted by
the party making
admission, and [is] conclusive as to them. All proofs submitted by them contrary
thereto or inconsistent therewith should be ignored whether objection is interposed
by a party or not.[9] Besides, there is no showing that a palpable mistake has been
committed in their admission or that no admission has been made by them.
Pre-trial is mandatory.[10] The notices of pre-trial had been sent to both the
Baloloys and their former counsel of record. Being served with notice,
he is charged with the duty of notifying the party represented by him. [11] He must
see to it that his client receives such notice and attends the pre-trial. [12] What the
Baloloys and their former counsel have alleged instead in their Motion to Lift
Order of As In Default dated December 11, 1991 is the belated receipt of Bayani
Baloloys special power of attorney in favor of their former counsel, not that
they have not received the notice or been informed of the scheduled pre-

trial. Not having raised the ground of lack of a special power of attorney in
their motion, they are now deemed to have waived it. Certainly, they cannot raise it
at this late stage of the proceedings. For lack of representation, Bayani
Baloloy was properly declared in default.
Section 3 of Rule 38 of the Rules of Court states:
SEC. 3. Time for filing petition; contents and verification. A petition
provided for in either of the preceding sections of this Rule must be
verified, filed within sixty (60) days after the petitioner learns of the
judgment, final order, or other proceeding to be set aside, and not more
than six (6) months after such judgment or final order was entered, or
such proceeding was taken; and must be accompanied with affidavits
showing the fraud, accident, mistake, or excusable negligence relied
upon, and the facts constituting the petitioners good and substantial
cause of action or defense, as the case may be.
There is no reason for the Baloloys to ignore the effects of the above-cited
rule. The 60-day period is reckoned from the time the party acquired knowledge of
the order, judgment or proceedings and not from the date he actually read the same.
As aptly put by the appellate court:
The evidence on record as far as this issue is concerned shows that Atty.
Arsenio Villalon, Jr., the former counsel of record of the Baloloys
received a copy of the partial decision dated June 23, 1993 onApril 5,
1994. At that time, said former counsel is still their counsel of
record. The reckoning of the 60 day period therefore is the date when the
said counsel of record received a copy of the partial decision which was
on April 5, 1994. The petition for relief was filed by the new counsel
on July 4, 1994 which means that 90 days have already lapsed or 30 days
beyond the 60 day period. Moreover, the records further show that the
Baloloys received the partial decision on September 13, 1993 as
evidenced by Registry return cards which bear the numbers 02597 and
02598 signed by Mr. Alejandrino Baloloy.
The Baloloys[,] apparently in an attempt to cure the lapse of the
aforesaid reglementary period to file a petition for relief from
judgment[,] included in its petition the two Orders dated May 6,
1994 and June 29, 1994. The first Order denied Baloloys motion to fix
the period within which plaintiffs-appellants pay the balance of the
purchase price. The second Order refers to the grant of partial

execution, i.e. on the aspect of damages. These Orders are only
consequences of the partial decision subject of the petition for relief, and
thus, cannot be considered in the determination of the reglementary
period within which to file the said petition for relief.

Furthermore, no fraud, accident, mistake, or excusable negligence exists in order
that the petition for relief may be granted. [14] There is no proof of extrinsic
fraud that prevents a party from having a trial x x x or from presenting all of his
case to the court[15] or an accident x x x which ordinary prudence could not have
guarded against, and by reason of which the party applying has probably been
impaired in his rights.[16] There is also no proof of either a mistake x x x of
law[17] or an excusable negligence caused by failure to receive notice of x x x the
trial x x x that it would not be necessary for him to take an active part in the case x
x x by relying on another person to attend to the case for him, when such other
person x x x was chargeable with that duty x x x, or by other circumstances not
involving fault of the moving party.[18]
Article 1892 of the Civil Code provides:
Art. 1892. The agent may appoint a substitute if the principal has not
prohibited him from doing so; but he shall be responsible for the acts of
the substitute:
(1) When he was not given the power to appoint one x x x.

Applying the above-quoted provision to the special power of attorney executed by
Ignacio Rubio in favor of his daughter Patricia Llamas, it is clear that she is
not prohibited from appointing a substitute. By authorizing Virginia Lim to sell the
subject properties, Patricia merely acted within the limits of the authority given by
her father, but she will have to beresponsible for the acts of the sub-agent,
among which is precisely the sale of the subject properties in favor of

Even assuming that Virginia Lim has no authority to sell the subject properties, the
contract she executed in favor of respondent is not void, but simply unenforceable,
under the second paragraph of Article 1317 of the Civil Code which reads:
Art. 1317. x x x
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers,
shall be unenforceable, unless it is ratified, expressly or impliedly, by the
person on whose behalf it has been executed, before it is revoked by the
other contracting party.

Ignacio Rubio merely denies the contract of sale. He claims, without
substantiation, that what he received was a loan, not the down payment for the sale
of the subject properties.His acceptance and encashment of the check, however,
constitute ratification of the contract of sale and produce the effects of an express
power of agency.[20] [H]is action necessarily implies that he waived his right of
action to avoid the contract, and, consequently, it also implies the tacit, if not
express, confirmation of the said sale effected by Virginia Lim in favor of
Similarly, the Baloloys have ratified the contract of sale when they accepted and
enjoyed its benefits. The doctrine of estoppel applicable to petitioners here is not
only that which prohibits a party from assuming inconsistent positions, based on
the principle of election, but that which precludes him from repudiating an
obligation voluntarily assumed after having accepted benefits therefrom. To
countenance such repudiation would be contrary to equity, and would put a
premium on fraud or misrepresentation.[21]
Indeed, Virginia Lim and respondent have entered into a contract of sale. Not only
has the title to the subject properties passed to the latter upon delivery of the thing
sold, butthere is also no stipulation in the contract that states the ownership is to
be reserved in or retained by the vendor until full payment of the price.[22]
Applying Article 1544 of the Civil Code, a second buyer of the property who may
have had actual or constructive knowledge of such defect in the sellers title, or at

least was charged with the obligation to discover such defect, cannot be a registrant
in good faith. Such second buyer cannot defeat the first buyers title. In case a title
is issued to the second buyer, the first buyer may seek reconveyance of the
property subject of the sale.[23] Even the argument that a purchaser need not inquire
beyond what appears in aTorrens title does not hold water. A perusal of the
certificates of title alone will reveal that the subject properties are registered in
common, not in the individual names of the heirs.
Nothing in the contract prevents the obligation of the vendor to convey title from
becoming effective[24] or gives the vendor the right to unilaterally resolve the
contract the moment the buyer fails to pay within a fixed period. [25] Petitioners
themselves have failed to deliver their individual certificates of title, for which
reason it is obvious that respondent cannot be expected to pay the stipulated taxes,
fees, and expenses.
[A]ll the elements of a valid contract of sale under Article 1458 of the Civil
Code are present, such as: (1) consent or meeting of the minds; (2) determinate
subject matter; and (3) price certain in money or its equivalent. [26] Ignacio Rubio,
the Baloloys, and their co-heirs sold their hereditary shares for a price certain to
which respondent agreed to buy andpay for the subject properties. The offer and
the acceptance are concurrent, since the minds of the contracting parties meet in
the terms of the agreement.[27]
In fact, earnest money has been given by respondent. [I]t shall be considered as
part of the price and as proof of the perfection of the contract.[28] It constitutes an
advance payment to be deducted from the total price.[29]
Article 1477 of the same Code also states that [t]he ownership of the thing sold
shall be transferred to the vendee upon actual or constructive delivery thereof. [30] In
the presentcase, there is actual delivery as manifested by acts simultaneous with
and subsequent to the contract of sale when respondent not only took possession of
the subject propertiesbut also allowed their use as parking terminal for jeepneys
and buses. Moreover, the execution itself of the contract of sale is constructive

Consequently, Ignacio Rubio could no longer sell the subject properties to Corazon
Escueta, after having sold them to respondent. [I]n a contract of sale, the vendor
loses ownership over the property and cannot recover it until and unless the
contract is resolved or rescinded x x x.[31] The records do not show that Ignacio
Rubio asked for a rescission of the contract. What he adduced was a belated
revocation of the special power of attorney he executed in favor of Patricia
Llamas. In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the rescission
of the contract shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission of the contract has
been made upon him either judicially or by a notarial act.[32]
is DENIED. The
Resolution of the Court of Appeals in CA-G.R. CV No. 48282, dated
- Baltazar vs. Ombudsman, et al., 510 SCRA 74 (2006)

510 SCRA 74 December 6, 2006
(How subject matter or nature of
the action determined)


Paciencia Regala owns a seven
(7)-hectare fishpond located at
Sasmuan, Pampanga. Her
Attorney-in-Fact Faustino R.
leased the fishpond to Eduardo
Lapid for a three (3)-year period.
Lessee Eduardo Lapid in turn subleased the fishpond to Rafael
Lopez during the last seven (7)
months of the original lease.
Ernesto Salenga was hired by
Eduardo Lapid as fishpond
(bante-encargado). In the sublease, Rafael Lopez rehired
respondent Salenga. Ernesto
Salenga Salenga, sent the
demand letter to

Rafael Lopez and Lourdes Lapid
for unpaid salaries and nonpayment of the 10% share in the
harvest. Salenga was promted to
file a
before the Provincial Agrarian
Reform Adjudication Board
(PARAB), Region III, San Fernando,
Pampanga docketed as
DARAB Case No. 552-P’93 entitled
Ernesto R. Salenga v. Rafael L.
Lopez and Lourdes L. Lapid for
Maintenance of Peaceful
Possession, Collection of Sum of
Money and Supervision of
Pending resolution of the agrarian
case, the instant case was

instituted by petitioner Antonio
Baltazar, an alleged nephew of
Mercado, through a ComplaintAffidavit
against private respondents
before the Office of the
Ombudsman which was docketed
as OMB1-94-3425 entitled Antonio B.
Baltazar v. Eulogio Mariano, Jose
Jimenez, Jr., Toribio Ilao, Jr. and
Ernesto Salenga for violation of
Petitioner maintains that
respondent Ilao, Jr. had no
jurisdiction to hear and act on
DARAB Case No. 552-P’93 filed by

respondent Salenga as there was
no tenancy relation between
respondent Salenga and Rafael L.
Lopez, and thus, the complaint
dismissible on its face.
Whether or not the petitioner has
legal standing to pursue the
instant petition?
Whether or not the Ombudsman
likewise erred in reversing his own
resolution where it was resolved
that accused as
Provincial Agrarian Adjudicator
has no jurisdiction over a
complaint where there exist no
tenancy relationship?

The "real-party-in interest" is "the
party who stands to be benefited
or injured by the judgment in the
suit or the party entitled to the
avails of the suit. The ComplaintAffidavit filed before the Office of
the Ombudsman, there is no
question on his authority and
standing. The Ombudsman can
act on anonymous complaints and
motu proprio inquire into alleged
improper official acts or omissions
from whatever source, e.g., a
Faustino Mercado, is an agent
himself and as such cannot
further delegate his agency to

another. An agent cannot
delegate to another
the same agency. Re-delegation
of the agency would be
detrimental to the principal as the
second agent has no privity of
contract with
the former. In the instant case,
petitioner has no privity of
contract with Paciencia Regala,
owner of the fishpond and
principal of
Faustino Mercado.
The facts clearly show that it was
not the Ombudsman through the
OSP who allowed respondent Ilao,
Jr. to submit his CounterAffidavit. It was the
Sandiganbayan who granted the

prayed for re-investigation and
ordered the OSP to conduct the
re-investigation .
The OSP simply followed the graft
court’s directive to conduct the
re-investigation after the CounterAffidavit of respondent Ilao, Jr.
filed. Indeed, petitioner did not
contest nor question the August
29, 1997 Order of the graft court.
Moreover, petitioner did not file
reply-affidavit in the reinvestigation despite notice.
The nature of the case is
determined by the settled rule
that jurisdiction over the subject
matter is determined by the

allegations of the complaint. The
nature of an action is determined
by the material averments in the
complaint and the
character of the relief sought not
by the defenses asserted in the
answer or motion to dismiss.
Respondent Salenga’s complaint
and its attachment clearly spells
out the jurisdictional allegations
that he is an agricultural
tenant in possession of the
fishpond and is about to be
ejected from it, clearly,
respondent Ilao, Jr. could not be
faulted in
assuming jurisdiction as said
allegations characterize an

agricultural dispute. Besides,
whatever defense asserted in an
answer or motion to dismiss is not
to be considered in resolving the
issue on jurisdiction as it cannot
be made dependent
upon the allegations of the
WHEREFORE, the instant petition
is DENIED for lack of merit, and
the Order and the October 30,
1998 Memorandum of the Office
the Special Prosecutor in Criminal
Case No. 23661 (OMB-1-94-3425)
are hereby AFFIRMED IN TOTO,
with costs against petitioner.