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EUROTECH INDUSTRIAL TECHNOLOGIES, INC.

, payment for the purchase of one unit


Petitioner, of Selwood Spate 100D Sludge Pump;
- versus - 2.) That said ASSIGNOR does
EDWIN CUIZON and ERWIN CUIZON, hereby ASSIGN, TRANSFER, and
Respondents. CONVEY unto the ASSIGNEE[6] the said
G.R. No. 167552 receivables from Toledo Power
April 23, 2007 Corporation in the amount of THREE
CHICO-NAZARIO, J.: HUNDRED SIXTY FIVE THOUSAND
(P365,000.00) PESOS which
Before Us is a petition for review receivables the ASSIGNOR is the lawful
by certiorari assailing the Decision of the Court of
[1] recipient;
Appeals dated 10 August 2004 and its
Resolution dated 17 March 2005 in CA-G.R. SP No.
[2] 3.) That the ASSIGNEE does
71397 entitled, Eurotech Industrial Technologies, Inc. hereby accept this assignment.[7]
v. Hon. Antonio T. Echavez. The assailed Decision and Following the execution of the Deed of Assignment,
Resolution affirmed the Order[3] dated 29 January petitioner delivered to respondents the sludge pump
2002rendered by Judge Antonio T. Echavez ordering as shown by Invoice No. 12034 dated 30 June 1995.[8]
the dropping of respondent EDWIN Cuizon (EDWIN)
as a party defendant in Civil Case No. CEB-19672. Allegedly unbeknownst to petitioner,
respondents, despite the existence of the Deed of
The generative facts of the case are as follows: Assignment, proceeded to collect from Toledo Power
Company the amount of P365,135.29 as evidenced
Petitioner is engaged in the business of importation by Check Voucher No. 0933[9] prepared by said
and distribution of various European industrial power company and an official receipt dated 15
equipment for customers here in the Philippines. It August 1995 issued by Impact Systems.[10] Alarmed
has as one of its customers Impact Systems Sales by this development, petitioner made several
(Impact Systems) which is a sole proprietorship demands upon respondents to pay their
owned by respondent ERWIN Cuizon obligations. As a result, respondents were able to
(ERWIN). Respondent EDWIN is the sales manager of make partial payments to petitioner. On 7 October
Impact Systems and was impleaded in the court a 1996, petitioners counsel sent respondents a final
quo in said capacity. demand letter wherein it was stated that as of 11
June 1996, respondents total obligations stood
From January to April 1995, petitioner sold to Impact at P295,000.00 excluding interests and attorneys
Systems various products allegedly amounting to fees.[11] Because of respondents failure to abide by
ninety-one thousand three hundred thirty-eight said final demand letter, petitioner instituted a
(P91,338.00) pesos. Subsequently, respondents complaint for sum of money, damages, with
sought to buy from petitioner one unit of sludge application for preliminary attachment against
pump valued at P250,000.00 with respondents herein respondents before
making a down payment of fifty thousand pesos the Regional Trial Court of Cebu City.[12]
(P50,000.00).[4] When the sludge pump arrived from
the United Kingdom, petitioner refused to deliver the On 8 January 1997, the trial court granted
same to respondents without their having fully petitioners prayer for the issuance of writ of
settled their indebtedness to petitioner. Thus, on 28 preliminary attachment.[13]
June 1995, respondent EDWIN and Alberto de Jesus,
general manager of petitioner, executed a Deed of On 25 June 1997, respondent EDWIN filed his
Assignment of receivables in favor of petitioner, the Answer[14] wherein he admitted petitioners
pertinent part of which states: allegations with respect to the sale transactions
entered into by Impact Systems and petitioner
1.) That ASSIGNOR[5] has an between January and April 1995.[15] He, however,
outstanding receivables from Toledo disputed the total amount of Impact Systems
Power Corporation in the amount of indebtedness to petitioner which, according to him,
THREE HUNDRED SIXTY FIVE amounted to only P220,000.00.[16]
THOUSAND (P365,000.00) PESOS as
By way of special and affirmative defenses, Cuizon acted in behalf of or
respondent EDWIN alleged that he is not a real party represented [Impact] Systems Sales;
in interest in this case. According to him, he was that [Impact] Systems Sale is a single
acting as mere agent of his principal, which was the proprietorship entity and the
Impact Systems, in his transaction with petitioner complaint shows that defendant Erwin
and the latter was very much aware of this fact. In H. Cuizon is the proprietor; that
support of this argument, petitioner points to plaintiff corporation is represented by
paragraphs 1.2 and 1.3 of petitioners Complaint its general manager Alberto de Jesus in
stating the contract which is dated June 28,
1995. A study of Annex H to the
1.2. Defendant Erwin H. Cuizon, is of complaint reveals that [Impact]
legal age, married, a resident Systems Sales which is owned solely by
of Cebu City. He is the proprietor of a defendant Erwin H. Cuizon, made a
single proprietorship business known down payment of P50,000.00 that
as Impact Systems Sales (Impact Annex H is dated June 30, 1995 or two
Systems for brevity), with office days after the execution of Annex G,
located at 46-A del Rosario Street, thereby showing that [Impact] Systems
Cebu City, where he may be served Sales ratified the act of Edwin B.
summons and other processes of the Cuizon; the records further show that
Honorable Court. plaintiff knew that [Impact] Systems
Sales, the principal, ratified the act of
1.3. Defendant Edwin B. Cuizon is of Edwin B. Cuizon, the agent, when it
legal age, Filipino, married, a resident accepted the down payment
of Cebu City. He is the Sales Manager of of P50,000.00. Plaintiff, therefore,
Impact Systems and is sued in this cannot say that it was deceived by
action in such capacity.[17] defendant Edwin B. Cuizon, since in the
instant case the principal has ratified
the act of its agent and plaintiff knew
On 26 June 1998, petitioner filed a Motion to about said ratification. Plaintiff could
Declare Defendant ERWIN in Default with Motion for not say that the subject contract was
Summary Judgment. The trial court granted entered into by Edwin B. Cuizon in
petitioners motion to declare respondent ERWIN in excess of his powers since [Impact]
default for his failure to answer within the Systems Sales made a down payment
prescribed period despite the opportunity of P50,000.00 two days later.
granted[18] but it denied petitioners motion for
summary judgment in its Order of 31 August In view of the Foregoing, the
2001 and scheduled the pre-trial of the case on 16 Court directs that defendant Edwin B.
October 2001.[19] However, the conduct of the pre- Cuizon be dropped as party
trial conference was deferred pending the resolution defendant.[23]
by the trial court of the special and affirmative
defenses raised by respondent EDWIN.[20]
Aggrieved by the adverse ruling of the trial court,
After the filing of respondent EDWINs petitioner brought the matter to the Court of Appeals
Memorandum[21] in support of his special and which, however, affirmed the 29 January 2002 Order
affirmative defenses and petitioners of the court a quo.The dispositive portion of the now
opposition[22] thereto, the trial court rendered its assailed Decision of the Court of Appeals states:
assailed Order dated 29 January 2002 dropping
respondent EDWIN as a party defendant in this WHEREFORE, finding no viable legal
case. According to the trial court ground to reverse or modify the
conclusions reached by the public
A study of Annex G to the respondent in his Order dated January
complaint shows that in the Deed of 29, 2002, it is hereby AFFIRMED.[24]
Assignment, defendant Edwin B.
Petitioners motion for reconsideration was denied contravening acts bore the obvious signs of
by the appellate court in its Resolution promulgated conspiracy to defraud petitioner.[27]
on 17 March 2005. Hence, the present petition
raising, as sole ground for its allowance, the In his Comment,[28] respondent EDWIN again posits
following: the argument that he is not a real party in interest in
this case and it was proper for the trial court to have
THE COURT OF APPEALS him dropped as a defendant. He insists that he was a
COMMITTED A REVERSIBLE ERROR mere agent of Impact Systems which is owned by
WHEN IT RULED THAT RESPONDENT ERWIN and that his status as such is known even to
EDWIN CUIZON, AS AGENT OF petitioner as it is alleged in the Complaint that he is
IMPACT SYSTEMS SALES/ERWIN being sued in his capacity as the sales manager of the
CUIZON, IS NOT PERSONALLY said business venture. Likewise, respondent EDWIN
LIABLE, BECAUSE HE HAS NEITHER points to the Deed of Assignment which clearly
ACTED BEYOND THE SCOPE OF HIS states that he was acting as a representative of
AGENCY NOR DID HE PARTICIPATE Impact Systems in said transaction.
IN THE PERPETUATION OF A
FRAUD.[25] We do not find merit in the petition.

In a contract of agency, a person binds himself to


To support its argument, petitioner points to Article render some service or to do something in
1897 of the New Civil Code which states: representation or on behalf of another with the
latters consent.[29] The underlying principle of the
Art. 1897. The agent who acts as such contract of agency is to accomplish results by using
is not personally liable to the party the services of others to do a great variety of things
with whom he contracts, unless he like selling, buying, manufacturing, and
expressly binds himself or exceeds the transporting. Its purpose is to extend the
[30]

limits of his authority without giving personality of the principal or the party for whom
such party sufficient notice of his another acts and from whom he or she derives the
powers. authority to act.[31] It is said that the basis of agency
is representation, that is, the agent acts for and on
Petitioner contends that the Court of Appeals failed behalf of the principal on matters within the scope of
to appreciate the effect of ERWINs act of collecting his authority and said acts have the same legal effect
the receivables from the Toledo Power Corporation as if they were personally executed by the
notwithstanding the existence of the Deed of principal.[32] By this legal fiction, the actual or real
Assignment signed by EDWIN on behalf of Impact absence of the principal is converted into his legal or
Systems. While said collection did not revoke the juridical presence qui facit per alium facit per se.[33]
agency relations of respondents, petitioner insists
that ERWINs action repudiated EDWINs power to The elements of the contract of agency are: (1)
sign the Deed of Assignment. As EDWIN did not consent, express or implied, of the parties to
sufficiently notify it of the extent of his powers as an establish the relationship; (2) the object is the
agent, petitioner claims that he should be made execution of a juridical act in relation to a third
personally liable for the obligations of his person; (3) the agent acts as a representative and not
principal.[26] for himself; (4) the agent acts within the scope of his
authority.[34]
Petitioner also contends that it fell victim to the
fraudulent scheme of respondents who induced it In this case, the parties do not dispute the existence
into selling the one unit of sludge pump to Impact of the agency relationship between respondents
Systems and signing the Deed of ERWIN as principal and EDWIN as agent. The only
Assignment. Petitioner directs the attention of this cause of the present dispute is whether respondent
Court to the fact that respondents are bound not only EDWIN exceeded his authority when he signed the
by their principal and agent relationship but are in Deed of Assignment thereby binding himself
fact full-blooded brothers whose successive personally to pay the obligations to petitioner.
Petitioner firmly believes that respondent EDWIN
acted beyond the authority granted by his principal persisted in negotiating with petitioner which
and he should therefore bear the effect of his deed culminated in the execution of the Deed of
pursuant to Article 1897 of the New Civil Code. Assignment of its receivables from Toledo Power
Company on 28 June 1995.[38] The significant
We disagree. NO amount of time spent on the negotiation for the sale
Article 1897 reinforces the familiar doctrine that an of the sludge pump underscores Impact Systems
agent, who acts as such, is not personally liable to the perseverance to get hold of the said
party with whom he contracts. The same provision, equipment. There is, therefore, no doubt in our
however, presents two instances when an agent mind that respondent EDWINs participation in the
becomes personally liable to a third person. The first Deed of Assignment was reasonably necessary or
is when he expressly binds himself to the obligation was required in order for him to protect the
and the second is when he exceeds his authority. In business of his principal. Had he not acted in the
the last instance, the agent can be held liable if he way he did, the business of his principal would have
does not give the third party sufficient notice of his been adversely affected and he would have violated
powers. We hold that respondent EDWIN does not his fiduciary relation with his principal.
fall within any of the exceptions contained in this
provision. We likewise take note of the fact that in this case,
petitioner is seeking to recover both from
The Deed of Assignment clearly states that respondents ERWIN, the principal, and EDWIN, the
respondent EDWIN signed thereon as the sales agent. It is well to state here that Article 1897 of the
manager of Impact Systems. As discussed elsewhere, New Civil Code upon which petitioner anchors its
the position of manager is unique in that it claim against respondent EDWIN does not hold that
presupposes the grant of broad powers with which in case of excess of authority, both the agent and the
to conduct the business of the principal, thus: principal are liable to the other contracting
party.[39] To reiterate, the first part of Article 1897
The powers of an agent are declares that the principal is liable in cases when the
particularly broad in the case of one agent acted within the bounds of his authority. Under
acting as a general agent or manager; this, the agent is completely absolved of any
such a position presupposes a degree liability. The second part of the said provision
of confidence reposed and investiture presents the situations when the agent himself
with liberal powers for the exercise of becomes liable to a third party when he expressly
judgment and discretion in binds himself or he exceeds the limits of his
transactions and concerns which are authority without giving notice of his powers to the
incidental or appurtenant to the third person. However, it must be pointed out that in
business entrusted to his care and case of excess of authority by the agent, like what
management. In the absence of an petitioner claims exists here, the law does not say
agreement to the contrary, a managing that a third person can recover from both the
agent may enter into any contracts that principal and the agent.[40]
he deems reasonably necessary or
requisite for the protection of the As we declare that respondent EDWIN acted within
interests of his principal entrusted to his authority as an agent, who did not acquire any
his management. x x x.[35] right nor incur any liability arising from the Deed of
Assignment, it follows that he is not a real party in
Applying the foregoing to the present case, we hold interest who should be impleaded in this case. A real
that Edwin Cuizon acted well-within his authority party in interest is one who stands to be benefited or
when he signed the Deed of Assignment. To recall, injured by the judgment in the suit, or the party
petitioner refused to deliver the one unit of sludge entitled to the avails of the suit.[41] In this respect, we
pump unless it received, in full, the payment for sustain his exclusion as a defendant in the suit before
Impact Systems indebtedness.[36] We may very well the court a quo.
assume that Impact Systems desperately needed the
sludge pump for its business since after it paid the WHEREFORE, premises considered, the present
amount of fifty thousand pesos (P50,000.00) petition is DENIED and the Decision dated 10 August
as down payment on 3 March 1995,[37] it still 2004 and Resolution dated 17 March 2005 of the
Court of Appeals in CA-G.R. SP No. 71397, affirming complaint docketed as Civil Case No. R-4530 of the
the Order dated 29 January 2002 of the Regional Court of First Instance of Cebu, praying (1) that the
Trial Court, Branch 8, Cebu City, is AFFIRMED. sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be d unenforceable,
Let the records of this case be remanded to and said share be reconveyed to her estate; (2) that
the Regional Trial Court, Branch 8, Cebu City, for the the Certificate of 'title issued in the name of Felix Go
continuation of the proceedings against Chan & Sons Realty Corporation be cancelled and
respondent ERWIN CUIZON. another title be issued in the names of the
corporation and the "Intestate estate of Concepcion
SO ORDERED. 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
G.R. No. L-24332 January 31, 1978 Go Chan & Sons Realty Corporation, Simeon Rallos,
RAMON RALLOS, Administrator of the Estate of and the Register of Deeds of Cebu, but subsequently,
CONCEPCION RALLOS, petitioner, the latter was dropped from the complaint. The
vs. complaint was amended twice; defendant
FELIX GO CHAN & SONS REALTY CORPORATION Corporation's Answer contained a crossclaim against
and COURT OF APPEALS, respondents. its co-defendant, Simon Rallos while the latter filed
MUÑOZ PALMA, J.: third-party complaint against his sister, Gerundia
Rallos While the case was pending in the trial court,
This is a case of an attorney-in-fact, Simeon Rallos, both Simon and his sister Gerundia died and they
who after of his death of his principal, Concepcion were substituted by the respective administrators of
Rallos, sold the latter's undivided share in a parcel of their estates.
land pursuant to a power of attorney which the
principal had executed in favor. The administrator of After trial the court a quo rendered judgment with
the estate of the went to court to have the sale the following dispositive portion:
declared uneanforceable and to recover the disposed
share. The trial court granted the relief prayed for, A. On Plaintiffs Complaint —
but upon appeal the Court of Appeals uphold the
validity of the sale and the complaint. (1) Declaring the deed of sale, Exh. "C", null and void
insofar as the one-half pro-indiviso share of
Hence, this Petition for Review on certiorari. Concepcion Rallos in the property in question, — Lot
5983 of the Cadastral Survey of Cebu — is
The following facts are not disputed. Concepcion and concerned;
Gerundia both surnamed Rallos were sisters and
registered co-owners of a parcel of land known as (2) Ordering the Register of Deeds of Cebu City to
Lot No. 5983 of the Cadastral Survey of Cebu covered cancel Transfer Certificate of Title No. 12989
by Transfer Certificate of Title No. 11116 of the covering Lot 5983 and to issue in lieu thereof
Registry of Cebu. On April 21, 1954, the sisters another in the names of FELIX GO CHAN & SONS
executed a special power of attorney in favor of their REALTY CORPORATION and the Estate of
brother, Simeon Rallos, authorizing him to sell for Concepcion Rallos in the proportion of one-half (1/2)
and in their behalf lot 5983. On March 3, 1955, share each pro-indiviso;
Concepcion Rallos died. On September 12, 1955,
Simeon Rallos sold the undivided shares of his sisters (3) Ordering Felix Go Chan & Sons Realty
Concepcion and Gerundia in lot 5983 to Felix Go Corporation to deliver the possession of an
Chan & Sons Realty Corporation for the sum of undivided one-half (1/2) share of Lot 5983 to the
P10,686.90. The deed of sale was registered in the herein plaintiff;
Registry of Deeds of Cebu, TCT No. 11118 was
cancelled, and a new transfer certificate of Title No. (4) Sentencing the defendant Juan T. Borromeo,
12989 was issued in the named of the vendee. administrator of the Estate of Simeon Rallos, to pay
to plaintiff in concept of reasonable attorney's fees
On May 18, 1956 Ramon Rallos as administrator of the sum of P1,000.00; and
the Intestate Estate of Concepcion Rallos filed a
(5) Ordering both defendants to pay the costs jointly Before proceedings to the issues, We shall briefly
and severally. restate certain principles of law relevant to the
matter tinder consideration.
B. On GO CHANTS Cross-Claim:
1. It is a basic axiom in civil law embodied in our Civil
(1) Sentencing the co-defendant Juan T. Borromeo, Code that no one may contract in the name of
administrator of the Estate of Simeon Rallos, to pay another without being authorized by the latter, or
to defendant Felix Co Chan & Sons Realty unless he has by law a right to represent him. 3 A
Corporation the sum of P5,343.45, representing the contract entered into in the name of another by one
price of one-half (1/2) share of lot 5983; who has no authority or the legal representation or
who has acted beyond his powers, shall be
(2) Ordering co-defendant Juan T. Borromeo, unenforceable, unless it is ratified, expressly or
administrator of the Estate of Simeon Rallos, to pay impliedly, by the person on whose behalf it has been
in concept of reasonable attorney's fees to Felix Go executed, before it is revoked by the other
Chan & Sons Realty Corporation the sum of P500.00. contracting party.4 Article 1403 (1) of the same Code
also provides:
C. On Third-Party Complaint of defendant Juan T.
Borromeo administrator of Estate of Simeon Rallos, ART. 1403. The following contracts are
against Josefina Rallos special administratrix of the unenforceable, unless they are
Estate of Gerundia Rallos: justified:

(1) Dismissing the third-party complaint without (1) Those entered into in the name of
prejudice to filing either a complaint against the another person by one who hi - been
regular administrator of the Estate of Gerundia given no authority or legal
Rallos or a claim in the Intestate-Estate of Cerundia representation or who has acted
Rallos, covering the same subject-matter of the third- beyond his powers; ...
party complaint, at bar. (pp. 98-100, Record on
Appeal) Out of the above given principles, sprung the creation
and acceptance of the relationship of agency whereby
Felix Go Chan & Sons Realty Corporation appealed in one party, caged the principal (mandante),
due time to the Court of Appeals from the foregoing authorizes another, called the agent (mandatario), to
judgment insofar as it set aside the sale of the one- act for and in his behalf in transactions with third
half (1/2) share of Concepcion Rallos. The appellate persons. The essential elements of agency are: (1)
tribunal, as adverted to earlier, resolved the appeal there is consent, express or implied of the parties to
on November 20, 1964 in favor of the appellant establish the relationship; (2) the object is the
corporation sustaining the sale in question. 1 The execution of a juridical act in relation to a third
appellee administrator, Ramon Rallos, moved for a person; (3) the agents acts as a representative and
reconsider of the decision but the same was denied not for himself, and (4) the agent acts within the
in a resolution of March 4, 1965. 2 scope of his authority. 5

What is the legal effect of an act performed by an Agency is basically personal representative,
agent after the death of his principal? Applied more and derivative in nature. The authority of the agent to
particularly to the instant case, We have the query. is act emanates from the powers granted to him by his
the sale of the undivided share of Concepcion Rallos principal; his act is the act of the principal if done
in lot 5983 valid although it was executed by the within the scope of the authority. Qui facit per alium
agent after the death of his principal? What is the law facit se. "He who acts through another acts himself". 6
in this jurisdiction as to the effect of the death of the
principal on the authority of the agent to act for and 2. There are various ways of extinguishing
in behalf of the latter? Is the fact of knowledge of the agency, 7 but here We are concerned only with one
death of the principal a material factor in cause — death of the principal Paragraph 3 of Art.
determining the legal effect of an act performed after 1919 of the Civil Code which was taken from Art.
such death? 1709 of the Spanish Civil Code provides:
ART. 1919. Agency is extinguished. Articles 1930 and 1931 of the Civil Code provide the
exceptions to the general rule afore-mentioned.
xxx xxx xxx
ART. 1930. The agency shall remain in
3. By the death, civil interdiction, full force and effect even after the
insanity or insolvency of the principal death of the principal, if it has been
or of the agent; ... (Emphasis supplied) constituted in the common interest of
the latter and of the agent, or in the
By reason of the very nature of the relationship interest of a third person who has
between Principal and agent, agency is extinguished accepted the stipulation in his favor.
by the death of the principal or the agent. This is the
law in this jurisdiction.8 ART. 1931. Anything done by the
agent, without knowledge of the death
Manresa commenting on Art. 1709 of the Spanish of the principal or of any other cause
Civil Code explains that the rationale for the law is which extinguishes the agency, is valid
found in the juridical basis of agency which and shall be fully effective with respect
is representation Them being an integration of the to third persons who may have
personality of the principal integration that of the contracted with him in good faith.
agent it is not possible for the representation to
continue to exist once the death of either is Article 1930 is not involved because admittedly the
establish. Pothier agrees with Manresa that by reason special power of attorney executed in favor of
of the nature of agency, death is a necessary cause for Simeon Rallos was not coupled with an interest.
its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso Article 1931 is the applicable law. Under this
jure upon the death of either without necessity for provision, an act done by the agent after the death of
the heirs of the fact to notify the agent of the fact of his principal is valid and effective only under two
death of the former. 9 conditions, viz: (1) that the agent acted without
knowledge of the death of the principal and (2) that
The same rule prevails at common law — the death the third person who contracted with the agent
of the principal effects instantaneous and absolute himself acted in good faith. Good faith here means
revocation of the authority of the agent unless the that the third person was not aware of the death of
Power be coupled with an interest. 10 This is the the principal at the time he contracted with said
prevalent rule in American Jurisprudence where it is agent. These two requisites must concur the absence
well-settled that a power without an interest confer. of one will render the act of the agent invalid and
red upon an agent is dissolved by the principal's unenforceable.
death, and any attempted execution of the power
afterward is not binding on the heirs or In the instant case, it cannot be questioned that the
representatives of the deceased. 11 agent, Simeon Rallos, knew of the death of his
principal at the time he sold the latter's share in Lot
3. Is the general rule provided for in Article 1919 that No. 5983 to respondent corporation. The knowledge
the death of the principal or of the agent extinguishes of the death is clearly to be inferred from the
the agency, subject to any exception, and if so, is the pleadings filed by Simon Rallos before the trial
instant case within that exception? That is the court. 12 That Simeon Rallos knew of the death of his
determinative point in issue in this litigation. It is the sister Concepcion is also a finding of fact of the court
contention of respondent corporation which was a quo 13 and of respondent appellate court when the
sustained by respondent court that notwithstanding latter stated that Simon Rallos 'must have known of
the death of the principal Concepcion Rallos the act the death of his sister, and yet he proceeded with the
of the attorney-in-fact, Simeon Rallos in selling the sale of the lot in the name of both his sisters
former's sham in the property is valid and Concepcion and Gerundia Rallos without informing
enforceable inasmuch as the corporation acted in appellant (the realty corporation) of the death of the
good faith in buying the property in question. former. 14
On the basis of the established knowledge of 5. Another argument advanced by respondent court
Simon Rallos concerning the death of his is that the vendee acting in good faith relied on
principal Concepcion Rallos, Article 1931 of the Civil the power of attorney which was duly registered
Code is inapplicable. The law expressly requires for on the original certificate of title recorded in the
its application lack of knowledge on the part of the Register of Deeds of the province of Cebu, that no
agent of the death of his principal; it is not enough notice of the death was aver annotated on said
that the third person acted in good faith. Thus in certificate of title by the heirs of the principal and
Buason & Reyes v. Panuyas, the Court applying accordingly they must suffer the consequences of
Article 1738 of the old Civil rode now Art. 1931 of such omission. 17
the new Civil Code sustained the validity , of a sale
made after the death of the principal because it was To support such argument reference is made to a
not shown that the agent knew of his principal's portion in Manresa's Commentaries which We quote:
demise. 15 To the same effect is the case of Herrera, et
al., v. Luy Kim Guan, et al., 1961, where in the words If the agency has been granted for the
of Justice Jesus Barrera the Court stated: purpose of contracting with certain
persons, the revocation must be
... even granting arguemendo that Luis made known to them. But if the
Herrera did die in 1936, plaintiffs agency is general in nature, without
presented no proof and there is no reference to particular person with
indication in the record, that the agent whom the agent is to contract, it is
Luy Kim Guan was aware of the death sufficient that the principal exercise
of his principal at the time he sold the due diligence to make the revocation of
property. The death 6f the principal the agency publicity known.
does not render the act of an agent
unenforceable, where the latter had no In case of a general power which does
knowledge of such extinguishment of not specify the persons to whom
the agency. (1 SCRA 406, 412) represents' on should be made, it is the
general opinion that all acts, executed
4. In sustaining the validity of the sale to with third persons who contracted in
respondent consideration the Court of Appeals good faith, Without knowledge of the
reasoned out that there is no provision in the Code revocation, are valid. In such case, the
which provides that whatever is done by an agent principal may exercise his right against
having knowledge of the death of his principal is the agent, who, knowing of the
void even with respect to third persons who may revocation, continued to assume a
have contracted with him in good faith and without personality which he no longer had.
knowledge of the death of the principal. 16 (Manresa Vol. 11, pp. 561 and 575; pp.
15-16, rollo)
We cannot see the merits of the foregoing argument
as it ignores the existence of the general rule The above discourse however, treats of revocation by
enunciated in Article 1919 that the death of the an act of the principal as a mode of terminating an
principal extinguishes the agency. That being the agency which is to be distinguished from revocation
general rule it follows a fortiori that any act of an by operation of law such as death of the principal
agent after the death of his principal is void ab which obtains in this case. On page six of this Opinion
initio unless the same fags under the exception We stressed that by reason of the very nature of the
provided for in the aforementioned Articles 1930 relationship between principal and agent, agency is
and 1931. Article 1931, being an exception to the extinguished ipso jure upon the death of either
general rule, is to be strictly construed, it is not to be principal or agent. Although a revocation of a power
given an interpretation or application beyond the of attorney to be effective must be communicated to
clear import of its terms for otherwise the courts will the parties concerned, 18 yet a revocation by
be involved in a process of legislation outside of their operation of law, such as by death of the principal is,
judicial function. 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 When Fernando de la Canters, a member of the
of authority is extinguished. Philippine Bar and the husband of Angela Blondeau,
the principal plaintiff, searched the registration
The Civil Code does not impose a duty on the heirs to record, he found them in due form including the
notify the agent of the death of the principal What power of attorney of Vallajo in favor of Nano. If this
the Code provides in Article 1932 is that, if the agent had not been so and if thereafter the proper notation
die his heirs must notify the principal thereof, and in of the encumbrance could not have been made,
the meantime adopt such measures as the Angela Blondeau would not have sent P12,000.00 to
circumstances may demand in the interest of the the defendant Vallejo.' An executed transfer of
latter. Hence, the fact that no notice of the death of registered lands placed by the registered owner
the principal was registered on the certificate of thereof in the hands of another operates as a
title of the property in the Office of the Register of representation to a third party that the holder of the
Deeds, is not fatal to the cause of the estate of the transfer is authorized to deal with the land.
principal
As between two innocent persons, one of whom must
6. Holding that the good faith of a third person in said suffer the consequence of a breach of trust, the one
with an agent affords the former sufficient who made it possible by his act of coincidence bear
protection, respondent court drew a "parallel" the loss. (pp. 19-21)
between the instant case and that of an innocent
purchaser for value of a land, stating that if a The Blondeau decision, however, is not on all fours
person purchases a registered land from one who with the case before Us because here We are
acquired it in bad faith — even to the extent of confronted with one who admittedly was an agent of
foregoing or falsifying the deed of sale in his favor — his sister and who sold the property of the latter
the registered owner has no recourse against such after her death with full knowledge of such death.
innocent purchaser for value but only against the The situation is expressly covered by a provision of
forger. 20 law on agency the terms of which are clear and
unmistakable leaving no room for an interpretation
To support the correctness of this respondent contrary to its tenor, in the same manner that the
corporation, in its brief, cites the case of Blondeau, et ruling in Blondeau and the cases cited therein found
al., v. Nano and Vallejo, 61 Phil. 625. We quote from a basis in Section 55 of the Land Registration Law
the brief: which in part provides:

In the case of Angel Blondeau et al. v. Agustin Nano et xxx xxx xxx
al., 61 Phil. 630, one Vallejo was a co-owner of lands
with Agustin Nano. The latter had a power of The production of the owner's duplicate certificate
attorney supposedly executed by Vallejo Nano in his whenever any voluntary instrument is presented for
favor. Vallejo delivered to Nano his land titles. The registration shall be conclusive authority from the
power was registered in the Office of the Register of registered owner to the register of deeds to enter a
Deeds. When the lawyer-husband of Angela new certificate or to make a memorandum of
Blondeau went to that Office, he found all in order registration in accordance with such instruments,
including the power of attorney. But Vallejo denied and the new certificate or memorandum Shall be
having executed the power The lower court binding upon the registered owner and upon all
sustained Vallejo and the plaintiff Blondeau persons claiming under him in favor of every
appealed. Reversing the decision of the court a quo, purchaser for value and in good faith: Provided
the Supreme Court, quoting the ruling in the case however, That in all cases of registration provided by
of Eliason v. Wilborn, 261 U.S. 457, held: fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud
But there is a narrower ground on which the without prejudice, however, to the right, of any
defenses of the defendant- appellee must be innocent holder for value of a certificate of title. ...
overruled. Agustin Nano had possession of Jose (Act No. 496 as amended)
Vallejo's title papers. Without those title papers
handed over to Nano with the acquiescence of 7. One last point raised by respondent corporation in
Vallejo, a fraud could not have been perpetuated. support of the appealed decision is an 1842 ruling of
the Supreme Court of Pennsylvania in Cassiday v. There are several cases which seem to
McKenzie wherein payments made to an agent hold that although, as a general
after the death of the principal were held to be principle, death revokes an agency
"good", "the parties being ignorant of the death". and renders null every act of the agent
Let us take note that the Opinion of Justice Rogers thereafter performed, yet that where a
was premised on the statement that the parties were payment has been made in ignorance
ignorant of the death of the principal. We quote from of the death, such payment will be
that decision the following: good. The leading case so holding is
that of Cassiday v. McKenzie, 4 Watts &
... Here the precise point is, whether a S. (Pa) 282, 39 Am. 76, where, in an
payment to an agent when the Parties elaborate opinion, this view ii broadly
are ignorant of the death is a good announced. It is referred to, and seems
payment. in addition to the case in to have been followed, in the case
Campbell before cited, the same judge of Dick v. Page, 17 Mo. 234, 57 AmD
Lord Ellenboruogh, has decided in 5 267; but in this latter case it appeared
Esp. 117, the general question that a that the estate of the deceased
payment after the death of principal is principal had received the benefit of
not good. Thus, a payment of sailor's the money paid, and therefore the
wages to a person having a power of representative of the estate might well
attorney to receive them, has been held have been held to be estopped from
void when the principal was dead at suing for it again. . . . These cases, in so
the time of the payment. If, by this case, far, at least, as they announce the
it is meant merely to decide the doctrine under discussion, are
general proposition that by operation exceptional. The Pennsylvania
of law the death of the principal is a Case, supra (Cassiday v. McKenzie 4
revocation of the powers of the Watts & S. 282, 39 AmD 76), is believed
attorney, no objection can be taken to to stand almost, if not quite, alone in
it. But if it intended to say that his announcing the principle in its
principle applies where there was 110 broadest scope. (52, Misc. 353, 357,
notice of death, or opportunity of twice cited in 2 C.J. 549)
I must be permitted to dissent from it.
So also in Travers v. Crane, speaking of Cassiday v.
... That a payment may be good today, McKenzie, and pointing out that the opinion, except
or bad tomorrow, from the accident so far as it related to the particular facts, was a
circumstance of the death of the mere dictum, Baldwin J. said:
principal, which he did not know, and
which by no possibility could he know? The opinion, therefore, of the learned Judge may be
It would be unjust to the agent and regarded more as an extrajudicial indication of his
unjust to the debtor. In the civil law, views on the general subject, than as the adjudication
the acts of the agent, done bona fide in of the Court upon the point in question. But
ignorance of the death of his accordingly all power weight to this opinion, as the
principal are held valid and binding judgment of a of great respectability, it stands alone
upon the heirs of the latter. The same among common law authorities and is opposed by an
rule holds in the Scottish law, and I array too formidable to permit us to following it. (15
cannot believe the common law is so Cal.
unreasonable... (39 Am. Dec. 76, 80, 81;
emphasis supplied) G.R. No. L-18058 January 16, 1923
FABIOLA SEVERINO, plaintiff-appellee,
To avoid any wrong impression which the Opinion vs.
in Cassiday v. McKenzie may evoke, mention may be GUILLERMO SEVERINO, defendant-appellant.
made that the above represents the minority view in FELICITAS VILLANUEVA, intervenor-appellee.
American jurisprudence. Thus in Clayton v. Merrett, OSTRAND, J.:
the Court said.—
This is an action brought by the plaintiff as the numbered as above stated; that Roque Hofileña, as
alleged natural daughter and sole heir of one Melecio lawyer for Guillermo Severino, filed answers in
Severino, deceased, to compel the defendant behalf of the latter in said proceedings claiming the
Guillermo Severino to convey to her four parcels of lots mentioned as the property of his client; that no
land described in the complaint, or in default thereof opposition was presented in the proceedings to the
to pay her the sum of P800,000 in damages for claims of Guillermo Severino and the court therefore
wrongfully causing said land to be registered in his decreed the title in his favor, in pursuance of which
own name. Felicitas Villanueva, in her capacity as decree certificates of title were issued to him in the
administratrix of the estate of Melecio Severino, has month of March, 1917.
filed a complaint in intervention claiming in the same
relief as the original plaintiff, except in so far as she It may be further observed that at the time of the
prays that the conveyance be made, or damages paid, cadastral proceedings the plaintiff Fabiola Severino
to the estate instead of to the plaintiff Fabiola was a minor; that Guillermo Severino did not appear
Severino. The defendant answered both complaints personally in the proceedings and did not there
with a general denial. testify; that the only testimony in support of his
claims was that of his attorney Hofileña, who swore
The lower court rendered a judgment recognizing that he knew the land and that he also knew that
the plaintiff Fabiola Severino as the acknowledged Guillermo Severino inherited the land from his father
natural child of the said Melecio Severino and and that he, by himself, and through his predecessors
ordering the defendant to convey 428 hectares of the in interest, had possessed the land for thirty years.
land in question to the intervenor as administratrix
of the estate of the said Melecio Severino, to deliver The appellant presents the following nine
to her the proceeds in his possession of a certain assignments of error:
mortgage placed thereon by him and to pay the costs. 1. The trial court erred in admitting the
From this judgment only the defendant appeals. evidence that was offered by plaintiff in order
to establish the fact that said plaintiff was the
The land described in the complaint forms one legally acknowledged natural child of the
continuous tract and consists of lots Nos. 827, 828, deceased Melecio Severino.
834, and 874 of the cadaster of Silay, Province of 2. The trial court erred in finding that, under
Occidental Negros, which measure, respectively, 61 the evidence presented, plaintiff was the
hectares, 74 ares, and 79 centiares; 76 hectares, 34 legally acknowledged natural child of Melecio
ares, and 79 centiares; 52 hectares, 86 ares, and 60 Severino.
centiares and 608 hectares, 77 ares and 28 centiares, 3. The trial court erred in rejecting the
or a total of 799 hectares, 75 ares, and 46 centiares. evidence offered by defendant to establish the
absence of fraud on his part in securing title to
The evidence shows that Melecio Severino died on the lands in Nacayao.
the 25th day of May, 1915; that some 428 hectares of 4. The trial court erred in concluding that the
the land were recorded in the Mortgage Law Register evidence adduced by plaintiff and intervenor
in his name in the year 1901 by virtue of possessory established that defendant was guilty of fraud
information proceedings instituted on the 9th day of in procuring title to the lands in question in
May of that year by his brother Agapito Severino in his name.
his behalf; that during the lifetime of Melecio 5. The trial court erred in declaring that the
Severino the land was worked by the defendant, land that was formerly placed in the name of
Guillermo Severino, his brother, as administrator for Melecio Severino had an extent of either 434
and on behalf of the said Melecio Severino; that after or 428 hectares at the time of his death.
Melecio's death, the defendant Guillermo Severino 6. The trial court erred in declaring that the
continued to occupy the land; that in 1916 a parcel value of the land in litigation is P500 per
survey was made of the lands in the municipality of hectare.
Silay, including the land here in question, and 7. The trial court erred in granting the petition
cadastral proceedings were instituted for the of the plaintiff for an attachment without first
registration of the lands titles within the surveyed giving the defendant an opportunity to be
area; that in the cadastral proceedings the land here heard.
in question was described as four separate lots
8. The trial court erred in ordering the information proceedings, upon which the finding of
conveyance of 428 hectares of land by the trial court as to the area of the land is principally
defendant to the administratrix. based, were not instituted until the year 1901, we are
9. The trial court erred in failing or refusing to not disposed to disturb the conclusions of the trial
make any finding as to the defendant's court on this point. Moreover, in the year 1913, the
contention that the petition for attachment defendant Guillermo Severino testified under oath, in
was utterly devoid of any reasonable ground. the case of Montelibano vs. Severino, that the area of
the land owned by Melecio Severino and of which he
In regard to the first two assignments of error, we (Guillermo) was the administrator, embraced an area
agree with the appellant that the trial court erred in of 424 hectares. The fact that Melecio Severino, in
making a declaration in the present case as to the declaring the land for taxation in 1906, stated that
recognition of Fabiola Severino as the natural child of the area was only 324 hectares and 60 ares while
Melecio Severino. We have held in the case of Briz vs. entitled to some weight is not conclusive and is not
Briz and Remigio (43 Phil., 763), that "The legitimate sufficient to overcome the positive statement of the
heirs or kin of a deceased person who would be defendant and the recitals in the record of the
prejudiced by a declaration that another person is possessory information proceedings.
entitled to recognition as the natural child of such
decedent, are necessary and indispensable parties to The sixth assignment of error is also of minor
any action in which a judgment declaring the right to importance in view of the fact that in the dispositive
recognition is sought." In the present action only the part of the decision of the trial court, the only relief
widow, the alleged natural child, and one of the given is an order requiring the appellant to
brothers of the deceased are parties; the other convey to the administratrix the land in question,
potential heirs have not been included. But, together with such parts of the proceeds of the
inasmuch as the judgment appealed from is in favor mortgage thereon as remain in his hands. We may
of the intervenor and not of the plaintiff, except to say further that the court's estimate of the value of
the extent of holding that the latter is a recognized the land does not appear unreasonable and that,
natural child of the deceased, this question is, from upon the evidence before us, it will not be disturbed.
the view we take of the case, of no importance in its
final disposition. We may say, however, in this The seventh and within assignments of error relate
connection, that the point urged in appellant's brief to the ex parte granting by the trial court of a
that it does not appear affirmatively from the preliminary attachment in the case and the refusal of
evidence that, at the time of the conception of the court to dissolve the same. We find no merit
Fabiola, her mother was a single woman, may be whatever in these assignments and a detailed
sufficiently disposed of by a reference to article 130 discussion of them is unnecessary.
of the Civil Code and subsection 1 of section 334 of
the Code of Civil Procedure which create the The third, fourth, and eight assignments of error
presumption that a child born out of wedlock is involve the vital points in the case, are inter-related
natural rather than illegitimate. The question of the and may be conveniently considered together.
status of the plaintiff Fabiola Severino and her right
to share in the inheritance may, upon notice to all the The defendant argues that the gist of the instant
interested parties, be determined in the probate action is the alleged fraud on his part in causing
proceedings for the settlement of the estate of the the land in question to be registered in his name;
deceased. that the trial court therefore erred in rejecting his
offer of evidence to the effect that the land was
The fifth assignment of error relates to the finding of owned in common by all the heirs of Ramon Severino
the trial court that the land belonging to Melecio and did not belong to Melecio Severino exclusively;
Severino had an area of 428 hectares. The that such evidence, if admitted, would have shown
appellant contends that the court should have found that he did not act with fraudulent intent in taking
that there were only 324 hectares inasmuch as one title to the land; that the trial court erred in holding
hundred hectares of the original area were given to him estopped from denying Melecio's title; that more
Melecio's brother Donato during the lifetime of the than a year having elapsed since the entry of the final
father Ramon Severino. As it appears that Ramon decree adjudicating the land to the defendant, said
Severino died in 1896 and that the possessory decree cannot now be reopened; that the ordering of
the defendant to convey the decreed land to the subject-matter of the agency, he is estopped from
administratrix is, for all practical purposes, acquiring or asserting a title adverse to that of
equivalent to the reopening of the decree of the principal. His position is analogous to that of a
registration; that under section 38 of the Land trustee and he cannot consistently, with the
Registration Act the defendant has an indefeasible principles of good faith, be allowed to create in
title to the land; and that the question of ownership himself an interest in opposition to that of his
of the land being thus judicially settled, the question principal or cestui que trust. Upon this ground, and
as to the previous relations between the parties substantially in harmony with the principles of the
cannot now be inquired into. Civil Law (see sentence of the supreme court of Spain
of May 1, 1900), the English Chancellors held that in
Upon no point can the defendant's contentions be general whatever a trustee does for the advantage of
sustained. It may first be observed that this is not an the trust estate inures to the benefit of the cestui que
action under section 38 of the Land Registration Act trust. (Greenlaw vs. King, 5 Jur., 18; Ex parte Burnell,
to reopen or set aside a decree; it is an action in 7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex
personam against an agent to compel him to return, parte James, 8 Ves., 337; Oliver vs. Court, 8 Price,
or retransfer, to the heirs or the estate of its 127.) The same principle has been consistently
principal, the property committed to his custody as adhered to in so many American cases and is so well
such agent, to execute the necessary documents of established that exhaustive citations of authorities
conveyance to effect such retransfer or, in default are superfluous and we shall therefore limit
thereof, to pay damages. ourselves to quoting a few of the numerous judicial
expressions upon the subject. The principle is well
That the defendant came into the possession of the stated in the case of Gilbert vs. Hewetson (79 Minn.,
property here in question as the agent of the 326):
deceased Melecio Severino in the administration of
the property, cannot be successfully disputed. His A receiver, trustee, attorney, agent, or any
testimony in the case of Montelibano vs. other person occupying fiduciary relations
Severino (civil case No. 902 of the Court of First respecting property or persons, is utterly
Instance of Occidental Negros and which forms a part disabled from acquiring for his own benefit
of the evidence in the present case) is, in fact, the property committed to his custody for
conclusive in this respect. He there stated under oath management. This rule is entirely
that from the year 1902 up to the time the testimony independent of the fact whether any fraud has
was given, in the year 1913, he had been intervened. No fraud in fact need be shown,
continuously in charge and occupation of the land as and no excuse will be heard from the trustee.
the encargado or administrator of Melecio Severino; It is to avoid the necessity of any such inquiry
that he had always known the land as the property of that the rule takes so general a form. The rule
Melecio Severino; and that the possession of the stands on the moral obligation to refrain from
latter had been peaceful, continuous, and exclusive. placing one's self in positions which ordinarily
In his answer filed in the same case, the same excite conflicts between self-interest and
defendant, through his attorney, disclaimed all integrity. It seeks to remove the temptation
personal interest in the land and averred that it was that might arise out of such a relation to serve
wholly the property of his brother Melecio. one's self-interest at the expense of one's
integrity and duty to another, by making it
Neither is it disputed that the possession enjoyed by impossible to profit by yielding to temptation.
the defendant at the time of obtaining his decree was It applies universally to all who come within
of the same character as that held during the lifetime its principle.
of his brother, except in so far as shortly before the
trial of the cadastral case the defendant had secured In the case of Massie vs. Watts (6 Cranch, 148), the
from his brothers and sisters a relinguishment in his United States Supreme Court, speaking through Chief
favor of such rights as they might have in the land. Justice Marshall, said:

The relations of an agent to his principal are But Massie, the agent of Oneale, has entered
fiduciary and it is an elementary and very old and surveyed a portion of that land for
rule that in regard to property forming the himself and obtained a patent for it in his own
name. According to the clearest and best which he failed and refused to account, and
established principles of equity, the agent upon proceedings being instituted to compel
who so acts becomes a trustee for his him to do so, he set up title in himself to the
principal. He cannot hold the land under an club property as well as to the rents accruing
entry for himself otherwise than as trustee for therefrom, falsely alleging that he had bought
his principal. the real estate and constructed the building
with his own funds, and denying the claims of
In the case of Felix vs. Patrick (145 U. S., 317), the the members of the association that it was
United States Supreme Court, after examining the their funds which had been used for that
authorities, said: purpose.

The substance of these authorities is that, The decree of the court provided, among other
wherever a person obtains the legal title to things, for the conveyance of the club house and the
land by any artifice or concealment, or by land on which it stood from the defendant, Cho Jan
making use of facilities intended for the Ling, in whose name it was registered, to the
benefit of another, a court of equity will members of the association. In affirming the decree,
impress upon the land so held by him a trust this court said:
in favor of the party who is justly entitled to
them, and will order the trust executed by In the case at bar the legal title of the holder of
decreeing their conveyance to the party in the registered title is not questioned; it is
whose favor the trust was created. admitted that the members of the association
(Citing Bank of Metropolis vs. Guttschlick, 14 voluntarily obtained the inscription in the
Pet., 19, 31; Moses vs. Murgatroyd, 1 Johns. name of Cho Jan Ling, and that they had no
Ch., 119; Cumberland vs.Codrington, 3 Johns. right to have that inscription cancelled; they
Ch., 229, 261; Neilson vs. Blight, 1 Johns. Cas., do not seek such cancellation, and on the
205; Weston vs. Barker, 12 Johns., 276.) contrary they allege and prove that the duly
registered legal title to the property is in Cho
The same doctrine has also been adopted in the Jan Ling, but they maintain, and we think that
Philippines. In the case of Uy Aloc vs. Cho Jan Ling (19 they rightly maintain, that he holds it under
Phil., 202), the facts are stated by the court as an obligation, both express and implied, to
follows: deal with it exclusively for the benefit of the
members of the association, and subject to
From the facts proven at the trial it appears their will.
that a number of Chinese merchants raised a
fund by voluntary subscription with which In the case of Camacho vs. Municipality of Baliuag (28
they purchased a valuable tract of land and Phil., 466), the plaintiff, Camacho, took title to the
erected a large building to be used as a sort of land in his own name, while acting as agent for the
club house for the mutual benefit of the municipality. The court said:
subscribers to the fund. The subscribers
organized themselves into an irregular There have been a number of cases before this
association, which had no regular articles of court in which a title to real property was
association, and was not incorporated or acquired by a person in his own name, while
registered in the commercial registry or acting under a fiduciary capacity, and who
elsewhere. The association not having any afterwards sought to take advantage of the
existence as a legal entity, it was agreed to confidence reposed in him by claiming the
have the title to the property placed in the ownership of the property for himself. This
name of one of the members, the defendant, court has invariably held such evidence
Cho Jan Ling, who on his part accepted the competent as between the fiduciary and
trust, and agreed to hold the property as the the cestui que trust.
agent of the members of the association. After
the club building was completed with the xxx xxx xxx
funds of the members of the association, Cho
Jan Ling collected some P25,000 in rents for
What judgment ought to be entered in this necessary conveyance to that effect. The only
case? The court below simply absolved the question remaining for consideration is, therefore,
defendant from the complaint. The defendant whether the decree of registration extinguishing this
municipality does not ask for a cancellation of personal right of action.
the deed. On the contrary, the deed is relied
upon the supplement the oral evidence In Australia and New Zealand, under statutes in this
showing that the title to the land is in the respect similar to ours, courts of equity exercise
defendant. As we have indicated in Consunji general jurisdiction in matters of fraud and error
vs. Tison, 15 Phil., 81, and Uy Aloc vs. Cho Jan with reference to Torrens registered lands, and
Ling, 19 Phil., 202, the proper procedure in giving attention to the special provisions of the
such a case, so long as the rights of innocent Torrens acts, will issue such orders and direction to
third persons have not intervened, is to all the parties to the proceedings as may seem just
compel a conveyance to the rightful owner. and proper under the circumstances. They may order
This ought and can be done under the issues parties to make deeds of conveyance and if the order
raised and the proof presented in the case at is disobeyed, they may cause proper conveyances to
bar. be made by a Master in Chancery or Commissioner in
accordance with the practice in equity (Hogg,
The case of Sy-Juco and Viardo vs. Sy-Juco (40 Phil., Australian Torrens System, p. 847).
634) is also in point.
In the Untied States courts have even gone so far in
As will be seen from the authorities quoted, and the exercise of their equity jurisdiction as to set aside
agent is not only estopped from denying his final decrees after the expiration of the statutory
principal's title to the property, but he is also disable period of limitation for the reopening of such decrees
from acquiring interests therein adverse to those of (Baart vs. Martin, 99 Minn., 197). But, considering
his principal during the term of the agency. But the that equity follows the law and that our statutes
defendant argues that his title has become res expressly prohibit the reopening of a decree after
adjudicata through the decree of registration and one year from the date of its entry, this practice
cannot now be disturbed. would probably be out of question here, especially so
as the ends of justice may be attained by other
This contention may, at first sight, appear to possess equally effective, and less objectionable means.
some force, but on closer examination it proves
untenable. The decree of registration determined the Turning to our own Land Registration Act, we find no
legal title to the land as the date of the decree; as to indication there of an intention to cut off, through the
that there is no question. That, under section 38 of issuance of a decree of registration, equitable rights
the Land Registration Act, this decree became or remedies such as those here in question. On the
conclusive after one year from the date of the entry is contrary, section 70 of the Act provides:
not disputed and no one attempts to disturb the
decree or the proceedings upon which it is based; the Registered lands and ownership therein, shall
plaintiff in intervention merely contends that in in all respects be subject to the same burdens
equity the legal title so acquired inured to the benefit and incidents attached by law to unregistered
of the estate of Melecio Severino, the defendant's land. Nothing contained in this Act shall in any
principal and cestui que trust and asks that this way be construed to relieve registered land or
superior equitable right be made effective by the owners thereof from any rights incident to
compelling the defendant, as the holder of the legal the relation of husband and wife, or from
title, to transfer it to the estate. liability to attachment on mesne process or
levy on execution, or from liability to any lien
We have already shown that before the issuance of of any description established by law on land
the decree of registration it was the undoubted duty and the buildings thereon, or the interest of
of the defendant to restore the property committed the owner in such land or buildings, or to
to his custody to his principal, or to the latter's change the laws of descent, or the rights of
estate, and that the principal had a right of action in partition between coparceners, joint tenants
personam to enforce the performance of this duty and other cotenants, or the right to take the
and to compel the defendant to execute the same by eminent domain, or to relieve such
land from liability to be appropriated in any consent, yet he may have his personal action based
lawful manner for the payment of debts, or to on the contract of sale to compel the execution of an
change or affect in any other way any other unconditional deed for the said lands when the
rights or liabilities created by law and period for repurchase has passed.
applicable to unregistered land, except as
otherwise expressly provided in this Act or in Torrens titles being on judicial decrees there is, of
the amendments hereof. course, a strong presumption in favor of their
regularity or validity, and in order to maintain an
Section 102 of the Act, after providing for actions for action such as the present the proof as to the
damages in which the Insular Treasurer, as the fiduciary relation of the parties and of the breach of
Custodian of the Assurance Fund is a party, contains trust must be clear and convincing. Such proof is, as
the following proviso: we have seen, not lacking in this case.

Provided, however, That nothing in this Act But once the relation and the breach of trust on the
shall be construed to deprive the plaintiff part of the fiduciary in thus established, there is no
of any action which he may have against any reason, neither practical nor legal, why he should not
person for such loss or damage or deprivation be compelled to make such reparation as may lie
of land or of any estate or interest therein within his power for the injury caused by his wrong,
without joining the Treasurer of the and as long as the land stands registered in the name
Philippine Archipelago as a defendant therein. of the party who is guilty of the breach of trust and
no rights of innocent third parties are adversely
That an action such as the present one is covered by affected, there can be no reason why such reparation
this proviso can hardly admit of doubt. Such was also should not, in the proper case, take the form of a
the view taken by this court in the case of Medina conveyance or transfer of the title to the cestui que
Ong-Quingco vs. Imaz and Warner, Barnes & Co. (27 trust. No reasons of public policy demand that a
Phil., 314), in which the plaintiff was seeking to take person guilty of fraud or breach of trust be permitted
advantage of his possession of a certificate of title to to use his certificate of title as a shield against the
deprive the defendant of land included in that consequences of his own wrong.
certificate and sold to him by the former
owner before the land was registered. The court The judgment of the trial court is in accordance with
decided adversely to plaintiff and in so doing said: the facts and the law. In order to prevent
unnecessary delay and further litigation it may,
As between them no question as to the however, be well to attach some additional directions
indefeasibility of a Torrens title could arise. to its dipositive clauses. It will be observed that lots
Such an action could have been maintained at Nos. 827, 828, and 834 of a total area of
any time while the property remained in the approximately 191 hectares, lie wholly within the
hands of the purchaser. The peculiar force of a area to be conveyed to the plaintiff in intervention
Torrens title would have been brought into and these lots may, therefore, be so conveyed
play only when the purchaser had sold to an without subdivision. The remaining 237 hectares to
innocent third person for value the lands be conveyed lie within the western part of lot No.
described in his conveyance. . . . Generally 874 and before a conveyance of this portion can be
speaking, as between the vendor and the effected a subdivision of that lot must be made and a
purchaser the same rights and remedies exist technical description of the portion to be conveyed,
with reference to land registered under Act as well as of the remaining portion of the lot, must be
No. 496, as exist in relation to land not so prepared. The subdivision shall be made by an
registered. authorized surveyor and in accordance with the
provisions of Circular No. 31 of the General Land
In Cabanos vs. Register of Deeds of Laguna and Registration Office, and the subdivision and technical
Obiñana (40 Phil., 620), it was held that, while a descriptions shall be submitted to the Chief of that
purchaser of land under a pacto de retro cannot office for his approval. Within thirty days after being
institute a real action for the recovery thereof where notified of the approval of said subdivision and
the vendor under said sale has caused such lands to technical descriptions, the defendant Guillermo
be registered in his name without said vendee's 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.