Murao, Jose Pepito G.

III Topic: Appointment of a New Agent

Benito Legarda v. Mariano Zarate

G.R. No. L-11437 | February 13, 1997

Torres, J.:

FACTS:

 Plaintiff Benito Legarda owned Nagtahan Hacienda in Manila. In 1910, Dr. Benito Valdez, as
Legarda’s attorney-in-fact and administrator of his estate, leased 3 lots inside the Hacienda to 3
Japanese women. 5 months later, the 3 lessees conveyed their rights to defendant Mariano
Zarate who began paying rent over the 3 lots.
 The problem started when Zarate refused to pay rents for a year and a half (the whole 1914 to
May 1915). Thus, counsel for Legarda filed a suit to collect the rent in arrears amounting to
1,166.65.
 For his part, Zarate asserted that he had negotiated with Ramon Gavito, the administrator of
Nagtahan Hacienda, that the rent he should pay would be based on 10% of the assessed
valuation of the lots, which should not exceed 1 peso per square meter. That when the valuation
was raised to 2 pesos per square meter in 1914, he protested and appealed before the board of
tax revision but the board raised the valuation to 4 pesos per square meter for 1914 and 3 pesos
in 1915. Zarate expressed his readiness to pay at the agreed 1 peso rate but Valdez refused to
accept his payment.
 Meanwhile, Dr. Valdez as the administrator of Legarda’s estate asserted that paragraph 3 in the
contract of lease clearly indicated that Zarate should pay 10% of the assessed valuation in any
period of time. Dr. Valdez also questioned the authority of Ramon Gavito to enter or interfere into
any contract as Valdez had the exclusive right to contract regarding the estate.
 Tomas Arguelles, who facilitated the transfer of the lease from the Japanese women to Zarate,
testified that he was initially unsure as to the meaning of ‘10% of the assessed valuation’ but
Ramon Gavito assured him that the 10% would not exceed the rate of 1 peso per square meter.
 The lower court held Zarate as liable for only 5% of the assessed valuation of the leased
premises or 583 pesos. Both parties protested and an Appeal by bill of exceptions.

ISSUE:

. W/N the Zarate should be held liable for 10% of the assessed valuation despite the valuation
exceeding 1 peso per square meter?

HELD

1. YES. It is implied from the fact that rents over the leased property was payable annually, that the
assessed value are also subject to change in value. The 25-year term of the lease contract also
implied that the rent was to be raised or altered accordingly as when Zarate paid 6.5 centavos per
square meter for the first year but paid 1 peso per square meter in the second year.
2. Moreover, Ramon Gavito was appointed as administrator of the Nagtahan Hacienda in 1905 but
2 years later, Dr. Benito Valdez and Benito Legarda (son of deceased) were conferred unlimited
power of attorney. Thus, Gavito’s authority was impliedly revoked with the appointment of new
agents. Court REVERSED the lower court decision and ORDERED ZARATE to pay 1,166.65 for
rent in arrears.