G.R. No.

L-39822 January 31, 1978

ANTONIO E. PRATS, doing business under the name of Philippine Real Estate Exchange, petitioner,
vs.
HON. COURT OF APPEALS, ALFONSO DORONILA and PHILIPPINE NATIONAL BANK, respondents.

FRNANDEZ, J.:

This is a petition for certiorari to review the decision of the Court of Appeals in CA-G.R. No. 45974-R entitled  "Antonio E. Prats, doing
business under the name of Philippine Real Estate Exchange, vs. Alfonso Doronila and the Philippine National  Bank", the dispositive part of
which reads:

In view of all the foregoing, it is our considered opinion and so hold that the decision of the lower court be, as it is hereby
reversed, and the complaint, dismissed. On appellant's counterclaim, judgment is hereby rendered directing appellee to
pay attorney's fees in the sum of P10,000 to appellant, no moral damages as therein claimed being awarded for lack of
evidence to justify the same. The injunction issued by the lower court on the P2,000,000.00 cash deposit of the appellant is
hereby lifted. No special pronouncement as to costs.

SO ORDERED. 1

On September 23, 1968 Antonio E. Prats, doing business under the name of "Philippine Real Estate Exchange" instituted against Alfonso
Doronila and Philippine National Bank Civil Case No. Q-12412 in the Court of First Instance of Rizal at Quezon City to recover a sum of
money and damages.

The complaint stated that defendant Alfonso Doronila was the registered owner of 300 hectares of land situated in Montalban, Rizal,
covered by Transfer Certificates of Title Nos. 77011, 77013, 216747 and 216750; that defendant Doronila had for sometime tried to sell his
aforesaid 300 hectares of land and for that purpose had designated several agents; that at one time, he had offered the same property to
the Social Security System but failed to consummate any sale; that his offer to sell to the Social Security System having failed, defendant
Doronila on February 14, 1968 gave the plaintiff an exclusive option and authority in writing to negotiate the sale of his aforementioned
property, which exclusive option and authority the plaintiff caused to be published in the Manila Times on February 22, 1968; that it was the
agreement between plaintiff and defendant Doronila that the basic price shall be P3.00 per square meter, that plaintiff shall be entitled to a
commission of 10% based on P2.10 per square meter or at any price finally agreed upon and if the property be sold over and above P3.00
per square meter, the excess shall be created and paid to the plaintiff in addition to his 10% commission based on P2.10 per square meter;
that as a result of the grant of the exclusive option and authority to negotiate the sale of his 300 hectares of land situated in Montalban, Rizal
in favor of the plaintiff, the defendant Doronila, on February 20, 1968, wrote a letter to the Social Security System withdrawing his previous
offer to sell the same land and requesting the return to him of all papers concerning his offered property that the Social Security System,
complying with said request of defendant Doronila, returned all the papers thereon and defendant Doronila, in turn gave them to the plaintiff
as his duly authorized real estate broker; that by virtue of the exclusive written option and authority granted him and relying upon the
announced policy of the President of the Philippines to promote low housing program the plaintiff immediately worked to negotiate the sale
of defendant Doronila's 300 hectares of land to the Social Security System, making the necessary contacts and representations to bring the
parties together, namely, the owner and the buyer, and bring about the ultimate sale of the land by defendant Doronila to the Social Security
System; that on February 27, 1968, after plaintiff had already contacted the Social Security System, its Deputy Administrator, Reynaldo J.
Gregorio, wrote a letter to defendant Doronila inviting the latter to a conference regarding the property in question with Administrator
Teodoro, Chairman Gaviola and said Reynaldo J. Gregorio on March 4, 1968 at 10:00 o'clock in the morning, stating that the SSS would like
to take up the offer of the lot; that having granted plaintiff the exclusive written option and authority to negotiate the sale of his 300 hectares
of land, defendant Doronila in a letter dated February 28, 1968 declined the invitation extended by the Social Security System to meet with
its Administrator and Chairman and requested them instead "to deal directly" with the plaintiff, that on March 16, 1968, at the suggestion of
defendant Doronila, the plaintiff wrote a letter to the Social Security System to the effect that plaintiff would be glad to sit with the officials of
the Social Security System to discuss the sale of the property of the defendant Doronila; that on March 18, 1968, the Social Security System
sent a telegram to defendant Doronila to submit certain documents regarding the property offered; that on May 6, 1968, a written offer to sell
the 300 hectares of land belonging to defendant Doronila was formally made by the plaintiff to the Social Security System and accordingly,
on May 7, 1968, the Social Security System Administrator dispatched the following telegram to defendant Doronila: "SSS considering
purchase your property for its housing project Administrator Teodoro"; that a few days thereafter, the plaintiff accompanied the defendant
Doronila to the China Banking Corporation to arrange the matter of clearing payment by chock and delivery of the titles over the property to
the Society Security System; that having been brought together by the plaintiff, the defendant Doronila and the offices of the Society
Security System, on May 29, 1968 and on June 4, 1968, met at the office of the SSS Administrator wherein the price for the purchase of the
defendant Doronila's 300 hectares of land was, among others, taken up; that on June 20, 1968, the Social Security Commission passed
Resolution No. 636 making a counter-offer of P3.25 per square meter subject to an appraise report; that on June 27, 1968, Resolution No.
662 was adopted by the Social Security Commission authorizing the Toples & Harding (Far East) Inc. to conduct an appraisal of the
property and to submit a report thereon; that pursuant thereto, the said company submitted its appraisal report specifying that the present
value of the property is P3.34 per square meter and that a housing program development would represent the highest and best use thereof,
that on July 18, 1968, the Social Security Commission, at its regular meeting, taking note of the favorable appraisal report of the Toples'&
Harding (Far East) Inc., passed Resolution No. 738, approving the purchase of defendant Doronila's 300 hectares of land in Montalban,
Rizal at a price of P3.25 per square meter or for a total purchase price of Nine Million Seven Hundred Fifty Thousand Pesos
(P9,750,000.00), appropriating the said amount for the purpose and authorizing the SSS Administrator to sign the necessary documents to
implement the said resolution; that on July 30, 1968, defendant Doronila and the Social Security System executed the corresponding deed
of absolute sale over the 300 hectares of land in Montalban, Rizal covered by Transfer Certificate of Title Nos. 77011, 77013, 216747 and
216750 under the terms of which the total price of P9,750,000.00 shall be payable as follows: (a) 60% of the agreed purchase price, or Five
Million Eight Hundred Fifty Thousand Pesos (P5,860,000.00) immediately after signing the deed of sale. and (b) the balance of 40% of the
agreed price, or Three Million Nine Hundred Thousand Pesos (P3,900,000.00) thirty days after the signing of the deed of absolute sale; that
on August 21, 1968, after payment of the purchase price, the deed absolute sale executed by defendant Doronila in favor of the Social
Security System was presented for registration in the Office of the Register of Deeds of Rizal, and Transfer Certificates of Title Nos. 926574,
226575, 226576 and 226577 in the name of the Social Security System were issued; that defendant Doronila has received the full purchase
price for his 300 hectares of land in the total amount of P9,750,000.00, which amount he deposited in his bank Account No. 0012-443 with
the defendant Philippine National Bank; that on September 17, 1968, the plaintiff presented his statement to, and demanded of defendant
Doronila the payment of his processional fee as real estate broker as computed under the agreement of February 14, 1968 in the total
amount of P1,380,000.00; that notwithstanding such demand, the defendant Doronila, in gross and evident bad faith after having availed of
the services of plaintiff as real estate broker, refused to pay the professional fees due him; that as a result of defendant Doronila's gross and
evident bad faith and unjustified refusal to pay plaintiff the professional fees due him under the agreement, the latter has suffered and
continues to suffer mental anguish, serious anxiety, and social humiliation for which defendant Doronila shall be held liable to pay moral
damages; and, that by reason likewise of the aforesaid act of defendant Doronila, the plaintiff has been compelled to file this action and to
engage the services of counsel at a stipulated professional fee of P250,000.00.

In his answer filed on November 18, 1968, the defendant Doronila alleged that when the plaintiff offered the answering defendant's property
to the Social Security System on May 6, 1968, said defendant had already offered his property to, and had a closed transaction or contract
of sale of, said property with the Social Security System; that the letter agreement had become null and void because defendant Doronila
had not received any written offer from any prospective buyers of the plaintiff during the agreed period of 60 days until the last day of the
authorization which was April 13, 1968 counting from February 14, 1968; that it is not true that plaintiff brought together defendant Doronila
and the officials of the Social Security System to take up the purchase price of defendant Doronila's property for the simple reason that the
plaintiff's offer was P6.00 per square meter and later on reduced to P4.50 per square meter because the SSS Chairman had already a
closed transaction with the defendant Doronila at the price of P3.25 per square meter and that the offer of the plaintiff was refused by the
officials of the Social Security System; and that defendant Doronila did not answer the statement of collection of the plaintiff because the
latter had not right to demand the payment for services not rendered according to the agreement of the parties. The answering defendant
interposed a counterclaim for damages and attorney's fees.

On January 18, 1969, the plaintiff and defendant Alfonso Doronila submitted the following stipulation of facts:

STIPULATION OF FACTS

COME NOW the plaintiff and defendant DORONILA, through their respective undersigned counsel, and to this Honorable
Court by way of abbreviating the proceeding i the case at bar, without prejudice to presentation of explanatory evidence,
respectfully submit the following STIPULATION OF FACTS.

1.

The defendant Doronila was the registered owner of 300 hectares of land, situated in Montalban, Rizal, covered by
Transfer Certificates of Title Nos. 77011, 77013, 216747 (formerly TCT No. 116631) and 216750 (formerly TCT No.
77012).

2.

That on July 3, 1967, defendant DORONILA under his letter (marked Annex "1" of the answer) addressed to the SSS
Chairman, offered his said property to the Social Security System (SSS) at P4.00 per square meter.

That on July 17, 1967 (Annex "2" of the Answer) the SSS Chairman, Mr. Ramon C. Gaviola, Jr., replied to defendant
DORONILA, as follows:

This will acknowledge your letter of July 3rd, 1967 relative to your offer for sale of your real estate
property.

In this regard, may I please be informed as to how many hectares, out of the total 300 hectares offered,
are located in Quezon City and how many hectares are located in Montalban, Rizal. Likewise, as regards
your offer of P4.00 per square meter, would there be any possibility that the same be reduced to P3.25
per square meter Finally and before I submit your proposal for process it is requested that the NAWASA
certify to the effect that they have no objection to having this parcel of land subdivided for residential
house purposes.

Thank you for your offer and may I hear from you at the earliest possible time.

2-a

That on July 19, 1967, defendant DORONILA wrote a letter (a xerox copy, attached hereto marked as Annex "2-a" for
DORONILA) to NAWASA, and that in reply thereto, on July 25, 1967, the NAWASA wrote the following letter (Xerox copy
attached hereto to be marked as Annex "2-b" for DORONILA) to defendant DORONILA.
 In connection with your proposed subdivision plan of your properties adjacent to our Novaliches
Watershed, this Office would like to impose the following conditions:

1. Since your property is an immediate boundary of our Novaliches Watershed, a 20-meter road should
be constructed along our common boundary.

2. That no waste or drainage water from the subdivision should flow towards the watershed.

3. That the liquid from the septic tanks or similar waste water should be treated before it is drained to the
Alat River above our Alat Dam.

The above conditions are all safeguards to the drinking water of the people of Manila and Suburbs. It is
therefore expected that we all cooperate to make our drinking water safer from any pollution.

3.

That on July 19, 1967, defendant DORONILA wrote another letter (marked as Annex '3' on his Answer) addressed to the
SSS Chairman, Mr. Ramon Gaviola Jr., stating, among others, the following:

In this connection, I have your counter-offer of P3.25 per square meter against my offer of P4.00 per
square meter, although your counter-offer is lower comparing to the prices of adjacent properties, I have
to consider the difference as my privilege and opportunity to contribute or support the Presidential policy
to promote low cost housing in this country particularly to the SSS members by accepting gladly your
counter-offer of P3.25 per square meter with the condition that it should be paid in cash and such
payment shall be made within a period of 30 days from the above stated date (2nd paragraph of letter
dated July 18, 1967, Annex "3" of the Answer).

3.a

That on August 10, 1967, the SSS Chairman, Mr. Ramon Gaviola Jr., wrote the following (Xerox copy attached hereto and
marked as Annex '2-c' for DORONILA: addressed to defendant DORONILA:

With reference to your letter, dated July 1967, please be informed that the same is now with the
Administrator for study and comment. The Commission will act on receipt of information re such studies.

With the assurance that you will be periodically informed of developments, we remain.

3-b

That on October 30, 1967, Mr. Pastor B. Sajorda, 'By authority of Atty. Alfonso Doronila, property owner', wrote the
following request (Xerox copy attached hereto and marked as Annex '2-d' for DORONILA) addressed to Realtor Vicente L.
Narciso for a certification regarding the actual prices of DORONILA's property, quoted as follows:

May I have the honor to request for your certification as a member of the Board of Realtor regarding the
actual prices of my real estate raw-land properties described as Lots 3-B-7, 26B, 6 and 4-C-3 all adjacent
to each other, containing a total area of 3,000,000 square meters, all registered in the name of Alfonso
Doronila, covered by T.C.T. Nos. 116631, 77013, 77011, and 77012, located at Montalban, Rizal, all
adjacent to the Northern portion of the NAWASA properties in Quezon City including those other
surrounding adjacent properties and even those properties located before reaching my own properties
coming from Manila.

This request is purposely made for my references in case I decided to sell my said properties mentioned
above.

3-c

That on November 3, 1967, Realtor Vicente Narciso wrote the following reply (Xerox copy attached hereto and marked as
Annex 2 for DORONILA) to Mr. Pastor B. Sajorda:

As per your request dated October 30, 1967, regarding prices of raw land, it is my finding that the fair
market value of raw land in the vicinity of the NAWASA properties at Quezon City and Montalban, Rizal.
including the properties of Atty. Alfonso Doronila. more particularly known as lots 3-B-7, 26-B, and 4-C-3
containing approximately 3,000,000 square meters is P3.00 to P3.50 per square meter.

Current prices before reaching Doronila's property range from P6.00 to P7.00 per square meter.

4.
That on February 14, 1968, defendant DORONILA granted plaintiff an exclusive option and authority (Annex 'A' of the
complaint), under the following terms and conditions:

1. The price of the property is THREE (P3.00) PESOS per square meter.

2. A commission of TEN (10%) PERCENT will be paid to us based on P2.10 per square meter, or at any
price that you DORONILA finally agree upon, and all expenses shall be for our account, including
preparation of the corresponding deed of conveyance, documentary stamps and registration fee, whether
the sale is causes directly or indirectly by us within the time of this option. If the property is sold over and
above P3.00 per square meter, the excess amount shall be credited and paid to the herein workers. In
addition to the 10% commission based on P2.10 per square meter, provided the brokers shall pay the
corresponding taxes to the owner of the excess amount over P3.00 per square meter, unless paid by
check which would then be deductible as additional expenses.

3. This exclusive option and authority is good for a period of sixty (60) days from the date of your
conformity; provided, however, that should negotiations have been started with a buyer, said period is
automatically extended until said negotiations is terminated, but not more than fifteen (15) days;

4. The written offers must be made by the prospective buyers, unless they prefer to have us take the offer
for and in their behalf some buyers do not want to be known in the early stages of the negotiations:

5. If no written offer is made to you until the last day of this authorization, this option and authority shall
expire and become null and void;

6. It is clearly understood that prospective buyers and all parties interested in this property shall be
referred to us, and that you will not even quote a price directly to any agent or buyer. You agree to refer
all agents or brokers to us DURING the time this option is in force; and

7. There are some squatters occupying small portions of the property, which fact will be reported to the
prospective buyers, and said squatters will be removed at our expense. (Annex "A" of the complaint)

Very truly yours,’

PHILIPPINE REAL ESTATE EXCHANCE

(Sgd) ANTONIO E. PRATS

General manager

CONFORME:

(Sgt.) ALFONSO DORONILA

Date: February 14, 1968

5.

That on February 19, 1968, plaintiff wrote the following letter to defendant DORONILA (Annex "4" of the Answer), quoted
as follows:

February 19, 1968

Don Alfonso Doronila

Plaza Ferguzon

Ermita, Manila

Dear Don Alfonso:

In view of the exclusive option extended to us for the sale of your property consisting 300 hectares located at Montalban,
Rizal, we earnestly request that you take immediate steps to withdraw any and all papers pertaining to this property offered
to the SOCIAL SECURITY SYSTEM

Very truly yours,

PHILIPPINE REAL
 ESTATE EXCHANGE

(Sgd) ANTONIO E. PRATS

General Manager

AEP/acc

RECEIVED ORIGINAL

By: (Sgd.) ROGELIO DAPITAN

6.

That on February 20, 1968, pursuant to the letter dated February 19, 1968 of plaintiff, defendant DORONILA wrote a letter
(Annex 'B' of the complaint) to the SSS Administrator stating:

In as much as the SSS has not acted on my offer to sell a 300 hectare lot located in Montalban, Rizal, for
the last five (5) months I respectfully requested for the return of all my papers concerning this offered
property.

7.

That on February 27, 1968, defendant DORONILA received the following letter (Annex "C" of the complaint) from the SSS
Deputy Administrator, Mr. Reynaldo J. Gregorio, to wit:

May I take this opportunity of inviting you in behalf of Administrator Teodoro, to meet with him, Chairman Gaviola and
myself on Friday, March 4, 10:00 A.M. lot offer.

Thanks and regards.

8.

That on February 28, 1968, defendant DORONILA wrote the following letter (Annex "D" of the complaint) to the SSS
Deputy Administrator:

Thank you for your invitation to meet Administrator Teodoro, Chairman Gaviola and your goodself, to take
up my former offer to sell my property to the Social Security System.

Since the SSS had not acted on my offer dated July 19, 1967, more than seven (7) months ago, I have
asked for the return of my papers, as per my letter of February 20, 1968, and which you have kindly
returned to me.

As of February 20, 1968, I gave the Philippine Real Estate Exchange an exclusive option and authority to
negotiate the sale of this 300 hectare land, and I am no longer at liberty to negotiate its sale personally; I
shall therefore request you communicate directly with the Philippine Real Estate Exchange, P. O. Box 84,
Quezon City, and deal with them directly if you are still interested in my property.

With my kind personal regards, I am

9.

That on March 16, 1968, plaintiff, acting upon the letter of defendant DORONILA dated February 28, 1968 (Annex 'D' for
plaintiff), wrote the following letter to SSS Administrator:

Don Alfonso Doronila, owner of the 300 hectare land located at Montalban, Rizal, adjoining the Quezon
City boundary, has informed us that the Administrator of the SOCIAL SECURITY' SYSTEM, through Mr.
Reynaldo J. Gregorio, has invited him to meet with the Administrator and Chairman Gaviola to take up the
former offer to sell his property to the SSS.

In his letter to the Administrator dated February 20, 1968 (which has been received by the SSS on the
same day), Mr. Doronila advised you that as of February 20,1968, he gave the PHILIPPINE REAL
ESTATE EXCHANGE (PHILREX) the exclusive option and authority to negotiate the sale of his 300
hectare land in Montalban, and that he is no longer at liberty to negotiate its sale personally, and that, if
you are still interested in the property, the SSS should communicate directly with the PHILIPPINE REAL
ESTATE EXCHANGE.
 It is by virtue of this arrangement that Mr. Doronila now refers to us invitation and his reply to the SSS and
has requested us to get in touch with you.

While, at present we have several prospective buyers interested in this property, we shall, in compliance
with the request of Mr. Doronila, be happy to sit down with you and Chairman Ramon Gaviola, Jr.

Please let us know when it will be convenient to hold the conference.

10.

That on April 18, 1968, defendant DORONILA extended the plaintiff exclusive option and authority to expire May 18, 1968.
(annex 'B' — Reply letter of Doronila to SSS Deputy Administrator dated May 8, 1968).

11.

That on May 6,1968, plaintiff made a formal written offer to the Social Security System to sell the 300 hectares land of
defendant DORONILA at the price of P6.00 per square meter, Xerox copy of which bearing the stamp or receipt of Social
Security System is attached hereof as Annex "D" — plaintiff.

12.

That on May 16, 1968 the defendant DORONILA received the following telegram (Annex 'E' of the complaint) form the SSS
Administrative, reading:

SSS CONSIDERING PURCHASE YOUR PROPERTY FOR ITS HOUSING PROJECT

13.

That on May 18, 1968, after plaintiff exclusive option and authority had been extended, plaintiff wrote the following letter
(Annex "A"— Reply' of plaintiff's REPLY TO ANSWER) to defendant DORONILA, to wit:

CONFIDENTIAL

In our conference last Monday, May 13, 1968, you have been definitely advised by responsible parties
that the SOCIAL SECURITY SYSTEM is acquiring your 300-hectare land at Montalban, Rizal, adjoining
the Quezon City Boundary — and that said property will be acquired in accordance with the exclusive
option and authority you gave the PHILIPPINE REAL ESTATE EXCHANCE. You were assured in that
conference that the property will be acquired definitely, but, as it has been mentioned during the
conference, it may take from 30 to 60 days to have all the papers prepared and to effect the
corresponding payment. The telegram from the SSS confirming these negotiations has already been
received by you, a copy of which you yourself have kindly furnished us.

Pursuant to paragraph 3 of the terms of the option that you have kindly extended, we still have fifteen days more from
today, May 18, 1968, within which to finish the negotiations for the sale of your property to the SSS. For your convenience,
we quote the pertinent portion of paragraph 3 of the option:

... provided, however, that should negotiation have been started with a buyer, said period is automatically
extended until said negotiation is terminated, but no more than fifteen (15) days.

Please be assured that we will do our very best to complete these negotiations for the sale of your
property within this fifteen-day period. In the meantime' we hope you will also observe the provisions of
paragraph 6 of the exclusive option you have extended to us.

14.

That on May 18, 1968, plaintiff wrote the following letter (Xerox copy attached and marked hereof as Annex 'H' for plaintiff)
addressed defendant DORONILA, to wit:

By virtue of the exclusive option and authority you have granted the PHILIPPINE REAL ESTATE
EXCHANGE to negotiate the sale of your 300-hectare land located at Montalban, Rizal, adjoining the
Quezon City boundary, which properties are covered by Transfer Certificate of Titles Nos. 116631,
77011, 77012 and 77013, of the Registry of Deeds for the Province of Rizal, we hereby make a firm offer,
for and in behalf of our buyer, to purchase said property at the price of FOUR PESOS AND FIFTY
CENTAVOS (P4.50) per square meter, or the total amount of THIRTEEN MILLION FIVE HUNDRED
THOUSAND (P13,500,000.00) PESOS, Philippine Currency, payable in Cash and D.B.P. Progress
Bonds, on a ratio to be decided between you and our principal.
 To expedite the negotiations, we suggest that we sit down sometime early next week with our principal to
take up the final arrangement and other details in connection with the purchase of the subject property.

To give you further assurance of the validity of this offer, we refer you to the CHINA BANKING
CORPORATION (Trust Department) who has already been apprised of these negotiations, to which ]sank
we strongly recommend that this transaction be coursed through, for your own security and protection.

15.

That on May 30, 1968, plaintiff wrote the following letter (Xerox copy attached hereto, and marked as Annex 'I' for plaintiff)
to defendant DORONILA, quoted as follows:

This is to advise you that the SOCIAL SECURITY SYSTEM agreed to purchase your 300-hectare land
located at Montalban, Rizal, which purchase can be conformed by the Chairman of the SOCIAL
SECURITY COMMISSION. The details will have to be taken up between you and the Chairman, and we
suggest that you communicate with the Chairman at your earliest convenience.

This negotiation was made by virtue of the exclusive option and authority you have granted the
PHILIPPINE REAL ESTATE EXCHANGE, which option is in full force and effect, and covers the
transaction referred above.

16.

That on June 6,1968, defendant DORONILA wrote the following letter (Annex" 7" for DORONILA), to the plaintiff, to wit:

I have to inform you officially, that I have not received any written offer from the SSS or others, to
purchase my Montalban property of which you were given an option and exclusive authority as appearing
in your letter- contract dated February 14, 1968, during the 60 days of your exclusive authority which
expired on April 14, 1968, nor during the extension which was properly a new exclusive authority of 30
days from April 18, which expired on May 18, 1968, nor during the provided 15 days grace, in case that
you have closed any transaction to terminate it during that period, which also expired on June 3, 1968.

As stated in said letter, we have the following condition:

5. If no written offer is made to you until the last day of this authorization, this option and authority shall
expire and becomes null and void.

As I have informed you, that on April 16, 1968 or two days after your option expired I have signed an
agreement to sell my property to a group of buyers to whom I asked later that the effectivity of said
agreement will be after your new authority has expired will be on June 2, 1968, and they have accepted;
As your option has expired, and they know that there was no written offer made by the SSS for any price
of my property, aside of their previous letter announcing me that they are ready to pay, I was notified on
June 4, 1968 by their representative, calling my attention but our agreement; that is why I am writing you,
that having expired your option and exclusive authority to offer for sale my said property, I notified only
this afternoon said to comply our agreement.

Hoping for your consideration on the matter, as we have to be guided by contracts that we have to
comply, I hereby express to you my sincere sentiments.

17.

That on June 19, 1968, defendant DORONILA wrote the following letter (Annex "5" of the Answer) to the SSS
Administrator, renewing his offer to sell his 300 hectare land to the SSS at P4.00 per square meter, to wit:

This is to renew my offer to sell my properties located at Montalban, Rizal Identified as Lot Nos. 3-B-7,
26-8, 6, and 4-C-3 registered in my name in the office of the Registry of Deeds of Rizal under T.C.T. Nos.
116631, 77013, 77011 and 216750, containing a total area of 300 hectares or 3,000,000 square meters.

You will recall that last year, I offered to the Social Security System the same properties at the price of
Four (P4.00) pesos per square meter. After 3 ocular inspection of Chairman Gaviola one of said
inspections accompanied by Commissioner Arroyo and after receiving the written apprisal report of
Manila realtor Vicente L. Narciso, the System then made a counter-offer of Three pesos and twenty-five
(P3.25) per square meter which I accepted under the condition that the total amount be paid within a
period of thirty (30) days from the date of my acceptance (July 19, 1967). My acceptance was motivated
by the fact that within said period of time I had hoped to purchase my sugarcane hacienda in Iloilo with
the proceeds I expected from the sale. No action was however taken by the System thereon.
 Recently the same properties were offered by Antonio E. Prats of the Philippine Real Estate Exchange to
the Presidential Assistant on Housing, at the price of six pesos (p6.00) per square meter, who referred it
to the System, but against no action had been taken by the System.

Considering the lapse of time since our original offer during which prices of real estate have increased
considerably, on the one hand and in cooperation with the System's implementation of our government's
policy to provide low cost houses to its members, on the other hand, I am renewing my offer to sell my
properties to the system only at the same price of P4.00 per square meter, or for a total amount of twelve
million pesos (P12,000,000.00), provided the total amount is paid in cash within a period of fifteen (15)
days from this date.

18.

That on June 20, 1968, the Social Security Commission passed Resolution No. 636 by which the SSS formalized its
counter-offer of P3.25 per square meter. (See Annex 'F' of the complaint)

19.

That on June 25, 1968, the SSS Administrator, Mr. Gilberto Teodoro, wrote the following reply letter (Annex '6' of the
Answer) to defendant DORONILA, to wit:

This has reference to your letter dated June 19, 1966 renewing your offer to sell your
property located at Montalban, Rizal containing an area of 300 hectares at P4.00 per
square meter. Please be informed that the said letter was submitted for the
consideration of the Social Security Commission at its last meeting on June 20, 1968
and pursuant to its Resolution No. 636, current series, it decided that the System
reiterate its counter-offer for P3.25 per square meter subject to a favorable appraisal
report by a reputable appraisal entity as regards particularly to price and housing project
feasibility. Should this counter-offer be acceptable to you, kindly so indicate by signing
hereunder your conformity thereon.

Trusting that the foregoing sufficiently advises you on the matter, I remain

Very truly yours,

GILBERTO TEODORO

Administrator

CONFORME: With condition that the sale will be consummated within Twenty (20) days from this date.

ALFONSO DORONILA

Returned and received the original by

June 25/68

Admtr's Office

20.

That on June 27, 1968, the Social Security Commission passed Resolution No. 662 authorizing the Toples & Harding (Far
East) to conduct an appraisal of the property of defendant DORONILA and to submit a report thereon. (See Annex 'F' of
the complaint)

21.

That on July 17, 1968, the Social Security Commission taking note of the report of Toples & Harding (Far East), passed
Resolution No. 736, approving the purchase of the 300 hectare land of defendant DORONILA, at the price of P3.25 per
square meter, for a total purchase price of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS
(P9,750,000.00), and appropriating the said amount of money for the purpose. (See Annex 'F' of the complaint).

22.

That on July 30, 1968, defendant DORONILA executed the deed of absolute sale (Annex "C" of the complaint) over his
300-hectare land, situated in Montalban, Rizal, covered by TCT Nos. 77011, 77013, 216747 (formerly TCT No. 116631)
and 216750 (formerly TCT No. 77012), in favor of the Social Security System, for the total purchase price of NINE
 MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS (P9,750,000.00), Philippine currency, which deed of sale was
presented for registration in the Office of the Register of Deeds of Fiscal on August 21, 1968.

23.

That defendant DORONILA had received the full purchase price of NINE MILLION SEVEN HUNDRED FIFTY THOUSAND
PESOS (P9,750,000.00), Philippine Currency, in two installments.

24.

That on September 17, 1968, plaintiff presented his STATEMENT OF ACCOUNT, dated September 16, 1968 (Xerox copy
of which is attached hereto and marked as Annex plaintiff' to defendant DORONILA for the payment of his professional
services as real estate broker in the amount of P1,380,000.00, as computed on the basis of the letter-agreement, Annex
"A" of the complaint, which defendant failed to pay. Manila, for Quezon City, January 18,1968.

Respectfully submitted:

CRISPIN D. BAIZAS & ASSOCIATES

and A.N. BOLINAO, JR.

By: (Sgd.)

Counsel for the plaintiff

Suite 305, ShurdutBldg.

Intramuros, Manila

(Sgd.) E. V. Obon

Atty. EUGENIO V. OBON

Counsel for the defendant

9 West Point Street

Quezon City

ALFONSO DORONILA

Counsel for the defendant

428 Plaza de Ferguson

Ermita, Manila 2

The trial court rendered its decision dated December 12, 1969, the initiative part of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff, ordering defendant Alfonso Doronila, under the first cause
of action, to pay to plaintiff the sum of P1,380,000.00 with interest thereon at the rate of 6% per annum from September
23, 1968 until fully paid; and under the second Cause of Action, to pay plaintiff the sum of P200,000.00 as moral damages;
the sum of P100,000.00 as exemplary damages; the sum of P150,000.00 as attorney's fees, including the expenses of.
litigation and costs of this suit.

The writ of preliminary injunction issued in this case is hereby made permanent; and the defendant Philippine National
Bank is hereby ordered to pay to the plaintiff the amount of P1,380,000.00 and interest on the P1,380,000.00 to be
computed separately out of the P2,000,000.00 which it presently holds under a fixed time deposit.

SO ORDERED.

December 12, 1969, Quezon City, Philippines.

(SGD.) LOURDES P. SAN DIEGO

J
u
 d
g
e 
3

The defendant appealed to the Court of Appeals where the appeal was docketed as CA-G.R. No. 45974-R.

In a decision promulgated on September 19, 1974, the Court of Appeals reversed the derision of the trial court and dismissed the complaint
because:

In any event, since it has been found that the authority of appellee expired on June 2, 1968, rather than June 12, 1968 as
the lower court opined, the inquiry would be whether up to that time, a written offer was made by appellee in behalf of the
SSS. The stipulation is clear on this point. There should be a written offer by the prospective buyer or by appellee for or in
their behalf, and that if no such written offer is made until the last day of the authorization, the option and authority shall
expire and become null and void. Note that the emphasis is placed on the need of a written offer to save the authority from
an automatic termination on the last day of the authorization. We note such emphasis with special significance in receive of
the condition relative to automatic extension of not more than 15 days if negotiations have been started. The question then
is when are negotiations deemed started In the light of the provisions just cited, it should be when a response is given by
the prospective buyer showing fits interest to buy the property when an offer is made by the seller or broker and make an
offer of the price. Strictly, therefore, prior to May 29, 1968, there were no negotiations yet started within contemplation of
the letter-agreement of brokerage (Exh. A). Nevertheless appellant extended appellee's exclusive authority to on May 18,
1968 (par. 10, Stipulation of Facts; R.A. p. 89), which was automatically extended by 15 days under their agreement, to
expire on June 2, 1968, if the period extended up to May 18, 1968 a necessary authority. For, it may even be considered
as taking the of the 15-days automatic extension, since appellee's pretension is that negotiations have been started within
the original period of 60 days. Appellant in fixing the expiry date on June 2, 1968, has thus made a liberal concession in
favor of appellee, when he chose not to the extension up to May 18, 1968 as the automatic extension which ougth to have
been no more than 15 days, but which he stretched twice as long. 4

The petitioner assigned the following errors:

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PETITIONER WAS NOT THE EFFICIENT
PROCURING CAUSE IN BRING ABOUT THE SALE OF PRIVATE RESPONDENT DORONILA'S LAND TO THE SSS.

II

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THERE WAS FAILURE ON THE PART OF
HEREIN PETITIONER TO COMPLY WITH THE TERMS AND CONDITIONS OF HIS CONTRACT WITH PRIVATE
RESPONDENT.

III

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PETITIONER IS NOT ENTITLED TO HIS
COMMISSION.

IV

THE RESPONDENT COURT OF APPEALS ERRED IN AWARDING ATTORNEY'S FEES TO PRIVATE RESPONDENT
DORONILA INSTEAD OF AFFIRMING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AS WELL As
ATTORNEY FEES TO PETITIONER. 5

The Court in its Resolution of May 23, 1975 originally denied the petition for lack of merit but upon petitioner's motion for reconsideration
and supplemental petition invoking equity, resolved in its Resolution of August 20, 1975 to give due course thereto.

From the stipulation of facts and the evidence of record, it is clear that the offer of defendant Doronila to sell the 300 hectares of land in
question to the Social Security System was formally accepted by the System only on June 20, 1968 after the exclusive authority, Exhibit A,
in favor of the plaintiff, petitioner herein, had expired. The respondent court's factual findings that petitioner was not the efficient procuring
cause in bringing about the sale proceeding from the fact of expiration of his exclusive authority) which are admittedly final for purposes of
the present petition, provide no basis law to grant relief to petitioner. The following pertinent excerpts from respondent court's extensive
decision amply demonstrate this:

It is noted, however, that even in his brief, when he said —

According to the testimony of the plaintiff-appellee a few days before May 29, 1968, he arranged with Mr.
Gilberto Teodoro, SSS Administrator, a meeting with the defendant Manila. He talked with Mr. Teodoro
over the telephone and fixed the date of the meeting with defendant-appellant Doronila for May 29, 1968,
 and that he was specifically requested by Mr. Teodoro not to be present at the meeting, as he, Teodoro,
wanted to deal directly with the defendant-appellant alone. (Tsn., pp. 4446, March 1, 1969). Finding
nothing wrong with such a request, as the sale could be caused directly or indirectly (Exh. 'A'), and
believing that as a broker all that he needed to do to be entitled to his commission was to bring about a
meeting between the buyer and the seller as to ripen into a sale, plaintiff-appellee readily acceded to the
request.

appellee is not categorical that it was through his efforts that the meeting took place on inlay 29, 1968. He refers to a
telephone call he made "a few days before May 29, 1968," but in the conversation he had with Mr. Teodoro, the latter
requested him not to be present in the meeting. From these facts, it is manifest that the SSS officials never wanted to be in
any way guided by, or otherwise subject to, the mediation or intervention of, appellee relative to the negotiation for the
purchase of the property. It is thus more reasonable to conclude that if a meeting was held on May 29, 1968, it was done
independently, and not by virtue of, appellee's wish or efforts to hold such meeting. 6

xxx xxx xxx

... It is even doubtful if he tried to make any arrangement for meeting at all, because on May 18, 1968, he told appellant:

... we hereby make a firm offer, for and in behalf of our buyer, to purchase said property at the price of
Four Pesos and Fifty Centavos (P4.50) per square meter ....

As this offer is evidently made in behalf of buyer other than the SSS which had never offered the price of P4.50 per square
meter, appellee could not have at the same time arranged a meeting between the SSS officials and appellant with a view
to consummating the sale in favor of the SSS which had made an offer of only PS.25 per sq. m. and thus lose the much
bigger profit he would realize with a higher price of P4.50 per sq. meter. This 'firm offer' of P4.50 per sq. m. made by
appellee betrayed his lack of any efficient intervention in the negotiations with the SSS for the purchase by it of appellant's
property ... 7

xxx xxx xxx

... This becomes more evident when it is considered that on May 6, 1968 he was making his first offer to sell the property
at P6.00 per sq. m. to the SSS to which offer he received no answer. It is this cold indifference of the SSS to him that must
have prompted him to look for other buyers, resulting in his making the firm offer of 714.50 per sq. m. on May 18, 1968, a
fact which only goes to show that for being ignored by the SSS, he gave up all effort to deal with the SSS. ... 8

xxx xxx xxx

... For him to claim that it was he who aroused the interest of the SSS in buying appellant's property is to ignore the fact
that as early as June, (July) 1967, the SSS had directly dealt with appellant to such an extent that the price of P3.25 as
offered by the SSS was accepted by appellant, the latter imposing only the condition that the price should be paid in cash,
and within 30 days from the date of the acceptance. It can truly be said then that the interest of SSS to acquire the property
had been sufficiently aroused for there to be any need for appellee to stimulate it further. Appellee should know this fact for
according to him, the 10-day grace period was agreed upon to give the SSS a chance to pay the price of the land at P3.25
per sq. m., as a "compromise" to appellant's insistence that the SSS be excluded from appellee's option or authority to sell
the land. 9

... There should be a written offer by the prospective buyer or by appellee for or in their behalf, and that if no such written
offer is made until the last day of the authorization, the option and authority shall expired and become null and void. ... Yet,
no such written offer was made. ... 10

In equity, however, the Court notes that petitioner had Monthly taken steps to bring back together respondent Doronila and the SSS, among
which may be mentioned the following:

In July, 1967, prior to February 14, 1968, respondent Doronila had offered to sell the land in question to the Social Security System Direct
negotiations were made by Doronila with the SSS. The SSS did not then accept the offer of Doronila. Thereafter, Doronila executed the
exclusive authority in favor of petitioner Prats on February 14, 1968.

Prats communicated with the Office of the Presidential Housing Commission on February 23, 1968 offering the Doronila property. Prats
wrote a follow-up letter on April is, 1968 which was answered by the Commission with the suggestion that the property be offered directly to
the SSS. Prats wrote the SSS on March 16, 1968, inviting Chairman Ramon Gaviola, Jr. to discuss the offer of the sale of the property in
question to the SSS. On May 6, 1968, Prats made a formal written offer to the Social Security System to self the 300 hectare land of
Doronila at the price of P6.00 per square meter. Doronila received on May 17, 1968 from the SSS Administrator a telegram that the SSS
was considering the purchase of Doronilas property for its housing project. Prats and his witness Raagas testified that Prats had several
dinner and lunch meetings with Doronila and/or his nephew, Atty. Manuel D. Asencio, regarding the progress of the negotiations with the
SSS.
Atty. Asencio had declared that he and his uncle, Alfonso Doronila, were invited several times by Prats, sometimes to luncheons and
sometimes to dinner. On a Sunday, June 2, 1968, Prats and Raagas had luncheon in Sulu Hotel in Quezon City and they were joined later
by Chairman Gaviola of the SSS.

The Court has noted on the other hand that Doronila finally sold the property to the Social Security System at P3.25 per square meter which
was the very same price counter-offered by the Social Security System and accepted by him in July, 1967 when he alone was dealing
exclusively with the said buyer long before Prats came into the picture but that on the other hand Prats' efforts somehow were instrumental
in bringing them together again and finally consummating the transaction at the same price of P3.25 square meter, although such
finalization was after the expiration of Prats' extended exclusive authority. Still such price was higher than that stipulated in the exclusive
authority granted by Doronila to Prats.

Under the circumstances, the Court grants in equity the sum of One Hundred Thousand Pesos (P100,000.00) by way of compensation for
his efforts and assistance in the transaction, which however was finalized and consummated after the expiration of his exclusive authority
and sets aside the P10,000.00 — attorneys' fees award adjudged against him by respondent court.

WHEREFORE, the derision appealed from is hereby affirmed, with the modification that private respondent Alfonso Doronila in equity is
ordered to pay petitioner or his heirs the amount of One Hundred Thousand Pesos (P100,000.00) and that the portion of the said decision
sell petitioner Prats to pay respondent Doronila attorneys' fees in the sum of P10,000.00 is set aside.

The lifting of the injunction issued by the lower court on the P2,000,000.00 cash deposit of respondent Doronila as ordered by respondent
court is hereby with the exception of the sum of One Hundred Thousand Pesos (P100,000.00) which is ordered segregated therefrom to
satisfy the award herein given to petitioner, the lifting of said injunction, as herein ordered, is immediately executory upon promulgation
hereof.

No pronouncement as to costs.
G.R. No. L-23352        December 31, 1925

THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., LTD., INC., plaintiff-appellee,

vs.
JUAN M. POIZAT, ET AL., defendants.
GABRIELA ANDREA DE COSTER, appellant.

Antonio M. Opisso for appellant.

Eusebio Orense and Fisher, DeWitt, Perkins & Brady for appellee.

STATEMENT

August 25, 1905, the appellant, with his consent executed to and in favor of her husband, Juan M. Poizat, a general power of attorney,
which among other things, authorized him to do in her name, place and stead, and making use of her rights and actions, the following
things:

To loan or borrow any amount in cash or fungible conditions he may deem convenient collecting or paying the principal or interest,
for the time, and under the principal of the interest, when they respectively should or private documents, and making there
transactions with or without mortgage, pledge or personal securities.

November 2, 1912, Juan M. Poizat applied for and obtained from the plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on
the" Banco Espanol del Rio de la Plata" in London not later than January, 1913. Later, to secure the payment of the loan, he executed a
mortgage upon the real property of his wife, the material portions of which are as follows:

This indenture entered into the City of Manila, P.I., by and between Juan M. Poizat, merchant, of legal age, married and residing in
the City of Manila, in his own behalf and in his capacity also as attorney in fact of his wife Dona Gabriela Andrea de Coster by virtue
of the authority vested in him by the power of attorney duly executed and acknowledge in this City of Manila, etc.

First. That in the name of Dona Gabriela Andrea de Coster, wife of Don Juan M. Poizat, there is registered on page 89 (back) of
Book 3, Urban Property consisting of a house and six adjacent warehouse, all of strong material and constructed upon her own
land, said property being Nos. 5, 3, and 1 of Calle Urbiztondo, and No. 13 of Calle Barraca in the District of Binondo in the City of
Manila, etc.

Second. That the marriage of Don Juan M. Poizat and Dona Gabriela Andrea de Coster being subsisting and undissolved, and with
the object of constructing a new building over the land hereinabove described, the aforesaid house with the six warehouse thereon
constructed were demolished and in their stead a building was erected, by permission of the Department of Engineering and Public
Works of this City issued November 10, 1902, said building being of strong material which, together with the land, now forms only
one piece of real estate, etc; which property must be the subject of a new description in which it must appear that the land belongs
in fee simple and in full ownership as paraphernal property to the said Dona Gabriela Andrea de Coster and the new building
thereon constructed to the conjugal partnership of Don Juan M. Poizat and the said Dona Gabriela Andrea de Coster, etc.

Third. That the Philippine Sugar Estates Development Company, Ltd., having granted to Don Juan M. Poizat a credit of Ten
Thousand Pounds Sterling with a mortgage upon the real property above described, etc.

(a) That the Philippine sugar Estated Development Company, Ltd. hereby grants Don Juan M. Poizat a credit in the amount of Ten
Thousand Pounds sterling which the said Mr. Poizat may use within the entire month of January of the coming year, 1913, upon the
bank established in the City of London, England, known as 'Banco Espanol del Rio de la Plata, which shall be duly advised, so as
to place upon the credit of Mr. Poizat the said amount of Ten Thousand Pounds Sterling, after executing the necessary receipts
therefore.

(c) That Don Juan M. Poizat personally binds himself and also binds his principal Dona Gabriela Andrea de Coster to pay the
Philippine Sugar Estates Development Company, Ltd., for the said amount of Ten Thousand Pounds Sterling at the yearly interest
of 9 per cent which shall be paid at the end of each quarter, etc.

(d) Don Juan M. Poizat also binds himself personally and his principal Dona Gabriela Andrea de Coster to return to the Philippine
Sugar Estates Development Company, Ltd., the amount of Ten Thousand Pounds Sterling within four years from the date that the
said Mr. Poizat shall receive the aforesaid sum as evidenced by the receipt that he shall issue to the 'BAnco Espanol del Rio de la
Plata.'

(e) As security for the payment of the said credit, in the case Mr. Poizat should receive the money, together with its interest hereby
constitutes a voluntary especial mortgage upon the Philippine Sugar Estates Development Company, Ltd., f the urban property
above described, etc.

(f) Don Juan M. Poizat in the capacity above mentioned binds himself, should he receive the amount of the credit, and while he may
not return the said amount of Ten thousand Pounds Sterling to the Philippine Sugar Estates Development Company, Ltd., to insure
against fire the mortgaged property in an amount not less than One hundred Thousand Pesos, etc.
 Fourth. Don Buenaventura Campa in the capacity that he holds hereby accepts this indenture in the form, manner, and condition
executed by Don Juan M. Poizat by himself personally and in representation of his wife Dona Gabriela Andrea de Coster, in favor of
the Philippine Sugar Estates Development Company, Ltd.,

In witness whereof, we have signed these presents in Manila, this November 2, 1912.

(Sgd.) JUAN M. POIZAT

THE PHILIPPINE SUGAR ESTATES
DEVELOPMENT COMPANY, LTD.
The President
BUENAVENTURA CAMPA

Signed in the presence of:

(Sgd.) MANUEL SAPSANO

JOSE SANTOS

UNITED STATES OF AMERICA

PHILIPPINE ISLANDS
CITY OF MANILA

In the City of Manila P.I., this November 2, 1912, before me Enrique Barrera y Caldes, a Notary Public for said city, personally
appeared before me Don Juan M. Poizat and Don Buenaventura Campa, whom i know to be the persons who executed the
foregoing document and acknowledged same before me as an act of their free will and deed; the first exhibited to me his certificate
of registry No. 14237, issued in Manila, February 6, 1912, the second did not exhibit any cedula, being over sixty years old; this
document bears No. 495, entered on page 80 of my Notarial registry.

Before me:
(Sgd.) Dr. ENRIQUE BARRERA Y CALDES
[NOTARIAL SEAL]

Notary Public
Up to the 31st of December , 1912

For failure to pay the loan, on November 12, 1923, the plaintiff brought an action against the defendants to foreclose the mortgage. In this
action, the summons was served upon the defendant Juan M. Poizat only, who employed the services of Antonio A. Sanz to represent the
defendants. The attorneys filed a general appearance for all of them, and later an answer in the nature of a general denial.

February 18, 1924, when the case was called for trial, Jose Galan y Blanco in open court admitted all of the allegations made in the
compliant, and consented that judgment should be rendered as prayed for . Later, Juan M. Poizat personally, for himself and his
codefendants, file an exception to the judgment and moved for a new trial, which was denied March 31, 1924.

August 22, 1924, execution was issued directing the sale of the mortgaged property to satisfy the judgment. itc@alf

September 18, 1924, the property, which had an assessed value of P342,685, was sold to the plaintiff for the sum of P100,000.

September 23, 1924, and for the first time, the appellant personally appeared by her present attorney, and objected to the confirmation of
the sale, among other things, upon illegally executed, and is null and void, because the agent of this defendant was not authorized to
execute it. That there was no consideration. That the plaintiff, with full knowledge that J. M. Poizat was acting beyond the scope of his
authority, filed this action to subject the property of this defendant to the payment of the debt which, as to appellant, was not a valid contract.
That the judgment was rendered by confession when the plaintiff and J. M. Poizat knew that Poizat was not authorized to confess judgment,
and that the proceeding was a constructive fraud. That at the time the action was filed and the judgment rendered, this defendant was
absent from the Philippine Islands, and had no knowledge of the execution of the mortgage. That after the judgment of foreclosure became
final and order of the sale of the property was made, that this defendant for the first time learned that he mortgage contract was tainted with
fraud, and that she first knew and learned of such things on the 11th of September, 1924. That J. M. Poizat was not authorized to bind her
property to secure the payment of his personal debts. That the plaintiff knew that the agent of the defendant was not authorized to bind her
or her property. That the mortgage was executed to secure a loan of 10,000 Pounds which was not made to this defendant or for her
benefit, but was made to him personally and for the personal use and benefit of J. M. Poizat.

Among other things, the mortgage in question, marked Exhibit B, was introduced in evidence, and made a part of the record.

All of such objections to the confirmation of the sale were overruled, from which Gabriela Andrea de Coster appealed and assigns the
following errors:

I. The lower court erred in finding that Juan M. Poizat was, under the power of attorney which he had from Gabriela Andrea de
Coster, authorized to mortgage her paraphernal property as security for a loan made to him personally by the Philippine Sugar
Estates Development Company, Ltd., to him;
 II. The lower court erred in not finding that under the power of attorney, Juan M. Poizat had no authority to make Gabriela Andrea
de Coster jointly liable with him for a loan of 10,000 pound made by the Philippine Sugar Estates Development Co., Ltd., to him;

III. The lower court erred in not finding that the Philippine Sugar Estates Development Company, Ltd., had knowledge and notice of
the lack of authority of Don Juan M. Poizat to execute the mortgage deed Exhibit A of the plaintiff;

IV. The lower court erred in holding that Gabriela Andrea de Coster was duly summoned in this case; and in holding that Attorney
Jose Galan y Blanco could lawfully represent her or could, without proof of express authority, confess judgment against Gabriela
Andrea de Coster;

V. The court erred in holding that the judgment in this case has become final and res judicata;

VI. The court erred in approving the judicial sale made by the sheriff at an inadequate price;

VII. The lower court erred in not declaring these proceedings, the judgment and the sale null and void.

JOHNS, J.:

For the reasons stated in the decision of this court in the Bank of the Philippine Islands vs. De Coster, the alleged service of the summons in
the foreclosure suit upon the appellant was null and void. In fact, it was made on J. M. Poizat only, and there is no claim or pretense that
any service of summons was ever made upon her. After service was made upon him, the attorneys in question entered their appearance for
all of the defendants in the action, including the appellant upon whom no service was ever made, and file an answer for them. Later, in open
court, it was agreed that judgment should be entered for the plaintiff as prayed for in its complaint.

The appellant contends that the appearance made by the attorneys for her was collusive and fraudulent, and that it was made without her
authority, and there maybe some truth in that contention. It is very apparent that t the attorneys made no effort to protect or defend her legal
rights, but under our view of the case, that question is not material to this decision.

The storm center of this case is the legal force and effect of the real mortgage in question , by whom and for whom it was executed, and
upon whom is it binding, and whether or not it is null and void as to the appellant.

It is admitted that the appellant gave her husband, J. M. Poizat, the power of attorney in question, and that it is in writing and speaks for
itself. If the mortgage was legally executed by her attorney in fact for her and in her name as her act and deed, it would be legal and binding
upon her and her property. If not so executed, it is null and void.

It appears upon the face of the instrument that J. M. Poizat as the husband of the wife, was personally a party to the mortgage, and that he
was the only persona who signed the mortgage. and the he was the only person who signed the mortgage. It does not appear from his
signature that he signed it for his wife or as her agent or attorney in fact, and there is nothing in his signature that would indicate that in the
signing of it by him, he intended that his signature should bind his wife. It also appears from the acknowledgment of the instrument that he
executed it as his personal act and deed only, and there is nothing to show that he acknowledge it as the agent or attorney in fact of his
wife, or as her act and deed.

The mortgage recites that it was entered into by and between Juan M. Poizat in his own behalf and as attorney in fact of his wife. That the
record title of the mortgaged property is registered in the name of his wife, Dona Gabriela Andrea de Coster. That they were legally married,
and that the marriage between them has never been dissolved. That with the object of constructing a new building on the land. the six
warehouses thereon were demolished, and that a new building was erected. That the property is the subject of a new registration in which it
must be made to appear that the land belongs in fee simple and in full ownership as the paraphernal property of the wife, and that the new
building thereon is the property of the conjugal partnership. "That the Philippine Sugar Estates Development Company, Ltd., having granted
to Don Juan M. Poizat a credit of 10,000 Pounds Sterling with the mortgage upon the real property above described," that the Development
Company "hereby grants Don Juan M. Poizat a credit in the amount of 10,000 Pounds Sterling which the said Mr. Poizat may use, etc." That
should he personally or on behalf of his wife use the credit he acknowledges, that he and his principal are indebted to the Development
Company in the sum of 10,000 Pounds Sterling which "they deem to have received as a loan from the said commercial entity." That he
binds himself and his wife to pay that amount with a yearly interest of 9 per cent, payable quarterly. That as security for the payment of said
credit in the case Mr. Poizat should receive the money at any time, with its interest, "the said Mr. Poizat in the dual capacity that above
mentioned binds himself, should he receive the amount of the credit."

It thus appears that at the time the power of attorney and the mortgage were executed, Don Juan M. Poizat and Gabriela Andrea de Coster
were husband and wife, and that the real property upon which the mortgage was her sole property before her marriage, and that it was her
paraphernal property at the time the mortgage was executed, and that the new building constructed on the land was the property of the
conjugal partnership.

The instrument further recites that the Development Company "hereby grants Don Juan M. Poizat a credit in the amount of 10,000 Pounds
Sterling which the said Mr. Poizat may use within the entire month of January of the coming year, 1913." In other words, it appears upon the
face of the mortgage that the loan was made to the husband with authority to use the money for his sole use and benefit. With or without a
power of attorney, the signature of the husband would be necessary to make the instrument a valid mortgage upon the property of the wife,
even though she personally signed the mortgage.

It is contended that the instrument upon its face shows that its purpose and intent was to bind the wife. But it also shows upon its face that
the credit was granted to Don Juan M. Poizat which he might use within the "entire month of January."

Any authority which he had to bind his wife should be confined and limited to his power of attorney.

Giving to it the very broadest construction, he would not have any authority to mortgage her property, unless the mortgage was executed for
her "and in her name, place or stead," and as her act and deed. The mortgage in question was not so executed. it was signed by Don Juan
M. Poizat in his own name, his own proper person, and by him only, and it was acknowledge by him in his personal capacity, and there is
nothing in either the signature or acknowledgment which shows or tends to show that it was executed for or on behalf of his wife or "in her
name, place or stead."

It is contended that the instrument shows upon its face that it was intended to make the wife liable for his debt, and to mortgage her property
to secure its payment, and that his personal signature should legally be construed as the joined or dual signature of both the husband and
that of the wife as her agent. That is to say, construing the recitals in the mortgage and the instrument as a whole, his lone personal
signature should be construed in a double capacity and binding equally and alike both upon the husband and the wife. No authority has
been cited, and none will ever be found to sustain such a construction.

As the husband of the wife, his signature was necessary to make the mortgage valid. In other words, to make it valid, it should have been
signed by the husband in his own proper person and by him as attorney in fact for his wife, and it should have been executed by both
husband and wife, and should have been so acknowledged.

There is no principle of law by which a person can become liable on a real mortgage which she never executed either in person or by
attorney in fact. It should be noted that this is a mortgage upon real property, the title to which cannot be divested except by sale on
execution or the formalities of a will or deed. For such reasons, the law requires that a power of attorney to mortgage or sell real property
should be executed with all of the formalities required in a deed. For the same reason that the personal signature of Poizat, standing alone,
would not convey the title of his wife in her own real property, such a signature would not bind her as a mortgagor in real property, the title to
which was in her name.

We make this broad assertion that upon the facts shown in the record, no authority will ever be found to hold the wife liable on a mortgage
of her real property which was executed in the form and manner in which the mortgage in question was executed. The real question
involved is fully discussed in Mechem on Agency, volume 1, page 784, in which the author says:

It is to be observed that the question here is not how but how such an authority is to be executed. it is assumed that the agent was
authorized to bind his principal, but the question is, has he done so.

That is the question here.

Upon that point, there is a full discussion in the following sections, and numerous authorities are cited:

SEC. 1093. Deed by agent must purport to be made and sealed in the name of the principal. — It is a general rule in the law of
agency that in order to bind the principal by a deed executed by an agent, the deed must upon its grace purport to be made, signed
and sealed in the name of the principal. If, on the contrary, though the agent describes name, the words of grant, covenant and the
like, purport upon the face of the instrument to be his, and the seal purports to be his seal, the deed will bind the agent if any one
and not the principal.

SEC. 1101. Whose deed is a given deed . — How question determined. — In determining whether a given deed is the deed of the
principal, regard may be had First, to the party named as grantor. Is the deed stated to be made by the principal or by some other
person? Secondly, to the granting clause. Is the principal or the agent the person who purports to make the grant?  Thirdly, to the
covenants, if any. Are these the covenants of the principal? Fourthly, to the testimonium clause. Who is it who is to set his name
and seal in testimony of the grant? Is it the principal or the agent? And Fifthly, to the signature and seal. Whose signature and seal
are these? Are they those of the principal or of the agent?

If upon such an analysis the deed does not upon its face purport to be the deed of the principal, made, signed, sealed and delivered
in his name and his deed, it cannot take effect as such.

SEC. 1102. Not enough to make deed the principal's that the agent is described as such . — It is not enough merely that not acted
in the name of the principal. Nor is it ordinarily sufficient that he describes himself in the deed as acting by virtue of a power of
attorney or otherwise, or for or in behalf, or as attorney, of the principal, or as a committee, or as trustee of a corporation, etc.; for
these expressions are usually but descriptio personae, and if, in fact, he has acted of action thereon accrue to and against him
personally and not to or against the principal, despite these recital.

SEC. 1103. Not principal's deed where agent appears as grantor and signer . — Neither can the deed ordinarily be deemed to be
the deed of the principal where the agent is the one who is named as the grantor or maker, and he is also the one who signs and
seals it. . . .
 SEC. 1108. . . . But however clearly the body of the deed may show an intent that it shall be the act of he principal, yet unless its
executed by his attorney for him, it is not his deed, but the deed of the attorney or of no one. The most usual and approved form of
executing a deed by attorney is by his writing the name of the principal and adding by A B his attorney or by his attorney A B.'

That is good law. Applying it to the facts, under his power of attorney, Juan M. Poizat may have had authority to borrow money and
mortgage the real property of his wife, but the law specifies how and in what manner it must be done, and the stubborn fact remains that, as
to the transaction in question, that power was never exercised. The mortgage in question was executed by him and him only, and for such
reason, it is not binding upon the wife, and as to her, it is null and void.

It follows that the whole decree against her and her paraphernal property and the sale of that property to satisfy the mortgage are null and
void, and that any title she may have had in or to her paraphernal property remains and is now vested in the wife as fully and as absolutely
as if the mortgage had never been executed, the decree rendered or the property sold. As to Don Juan M. Poizat, the decree is valid and
binding, and remains in full force and effect.

It is an undisputed fact, which appears in the mortgage itself, that the land in question was the paraphernal property of the wife, but after the
marriage the old buildings on the property were torn down and a new building constructed and, in the absence of evidence to the contrary, it
must be presumed that the new building is conjugal property of the husband and wife. As such, it is subject of the debts of the conjugal
partnership for the payment or security of which the husband has the power to mortgage or otherwise encumber the property .

It is very probable that his particular question was not fully presented to or considered by the lower court.

The mortgage as to the paraphernal property of the wife is declared null and void ab initio, and as to her personally, the decree is declared
null and void, and as to her paraphernal property, the sale is set aside and vacated, and held for naught, leaving it free and clear from the
mortgage, decree and sale, and in the same condition as if the mortgage had never been executed, with costs in favor of the appellant. So
ordered.

Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur.

 DECISION UPON PETITION FOR REHEARING

February 15, 1926

JOHNS, J.:

The plaintiff has filed a very able, vigorous and exhaustive petition for rehearing, which we have given the careful consideration which the
importance of the questions deserve.

The first proposition advanced is that the mortgage in question is valid not only as to the buildings, but also as to the land on which they are
constructed. The previous decision of this court is to the effect that, the buildings being conjugal property, the mortgage is valid, which is the
paraphernal property of the wife.

Plaintiff contends that the land is conjugal property under the provisions of article 1404 of the Civil Code. That article does not apply to the
instant case. It does not appear that the buildings are of the nature therein specified. The commentator Manresa, cited in the motion for
reconsideration, rightly distinguishes those buildings which, by reason of their importance, convert the land on which, on account of their
small relative value, continue to remain as accessories to the land on which they are constructed, and for such reason partake of the land.

The word building is a generic term for all architectural work with roof built for the purpose used as man's dwelling, or for offices,
clubs, theaters, etc. When the structure does not constitute a building, then the rule must be followed. The article cannot but be
interpreted strictly. An inclosure for cattle or a 'tinada,' a stone barn, etc., follow the soil as accessories thereto. (9 Manresa, 626,
1919 ed.)

It appears from the mortgaged that the buildings in question to be constructed are warehouses, and as the circumstances and details do not
appear in the record, such warehouses could not be construed as the class of buildings mentioned in article 1404. Hence, the facts are not
sufficient to justify the court in holding that the exceptional provision applies to this case in the sense of considering the soil as an accessory
to the building, contrary to the general rule contained in the Civil Code (arts. 358-364 and 1368). But conceding that article 1404 does apply,
yet under the provisions of that article, the owner of the land is entitled to an indemnity for its value. Since, according to the spirit of the law
contained in article 349 of the Civil Code, no one can be deprived of his property without previous indemnity, and it not appearing in the
instant case that such indemnity was never paid, the land in question cannot now be considered as conjugal property. But it further appears
that the mortgage upon which plaintiff relies contains the following recitals:

. . . which property must be the subject of a new registration wherein it must be stated that  the lot forming apart thereof pertains to
said Dona Gabriela Andrea de Coster in full ownership and fee simple as paraphernal property , and the building newly erected
thereon to the conjugal; partnership between Don Juan M. Poizat and his wife, the aforesaid Dona Gabriela Andrea de Coster . . .
(Emphasis ours.)
The plaintiff, having taken and accepted the mortgage is bound by those recitals. It further appears that this property is registered under the
Torrens System, and that the title to the land is vested in the wife, and is not conjugal property, and that the wife is at least the owner of the
land.

In a supplemental plea filed January 21, 1926, petitioner cites and relies on the case of the National Bank vs. Quintos and Ansaldo (46 Phil.,
370), in which article 1408 of the Civil Code was construed and applied. It must be conceded that this article applies only to those cases
wherein there is a presumption that the debt contracted by the husband is for the common benefit of both spouses, but this presumption
may be overcome by evidence to the contrary.

All debts and obligations contracted during the marriage by the husband, the legal representative of the partnership in the normal
condition thereof, are deemed contracted by the partnership. The law presumes that they are contracted for the common benefit of
both. However, this presumption may be overthrown  by evidence to the contrary, as we shall see when we take up article 1413. (9
Manresa, 648.)

For this reason, where, as in the instant case, it appears that the loan obtained by the husband was not only not obtained for the common
benefit of the conjugal partnership, but was obtained to the damage of the wife, there is no such presumption, and that article does not
apply. It is further contended that the mortgage was executed with all of the legal necessary formalities, and in accord with the established
practice and custom in the Philippine Islands, from which plaintiff's counsel contends that it is not required that the attorney in fact, who
executes a document in his own name and that of his principal, must show in his signature his double capacity by writing first his own
signature and then the name of his principal, and say "by" and thereafter his own signature as attorney in fact.

The Act should be construed with reference to section 81 of Act No. 136, which says:

After the enactment of a new system of registration of land titles, the notarial law of the Philippine Islands of February fifth, eighteen
hundred and eighty-nine, its regulations of April eleventh, eighteen hundred and ninety, and the general instructions for drafting
instruments subject to record in the Philippine Islands, of October third, eighteen hundred and eighty-nine, and the modifications
thereof, by General Order Number Forty, issued from the office of the United States Military Governor, on September twenty-third,
eighteen hundred and ninety-nine, and by General Order Number Twenty, issued from the office of the Military Governor on
February third, nineteen hundred, shall be repealed and shall be of no effect after the date of such enactment, and thereafter
appointments of notaries public and the performance of official duties by them shall be regulated by the subsequent provisions of
this Act.

The old Spanish notarial law and system of conveyances was repealed in the Philippines, and another and a different notarial law and
system became the law of the land with the enactment of Act No. 496. One of the fundamental differences between the two systems
consists in this. Under the Spanish system, the documents were executed in the form of minutes, wherein the notary was the one who
spoke, and under Act No. 496, the notary is not the one who speaks, and there is no record kept of the minutes, and the intervention of a
notary is limited to the acknowledgment only of the document. Under the Spanish System, to determine the capacity in which a person
executed a document, it was sufficient to look at the text of the document, because its whole text was attended with the solemnity of the
notary authorizing its execution. Under the present system, it is necessary to resort to the form in which the parties sign an instrument,
because it is the signature rather than the text which bears the stamp of authenticity.

Neither does section 127 of Act No. 496 bear the construction for which the plaintiff contends. It provides in legal effect that were one or
more persons executed a conveyance, the instrument must be executed by all of the parties to the conveyance, and that if there are two or
more persons, the instrument must not only be signed by all of the parties to the conveyance, but it must be acknowledged by all of them.
That clearly appears from the certificate of acknowledgment in which it is recited:

. . . personally appeared ________________________ known to me to be the same person (or persons) who executed the
foregoing instrument, and acknowledge that the same in his (or their) free act and deed.

The construction for which plaintiff contends would nullify the words " or persons" and the words "or their." The fact that those words are
used in the manner in which they are used in section 127, must mean that where two or more persons give a deed or mortgage on real
property, that all of them should not only sign the mortgage, but that all of them should acknowledge it as "their free act and deed.

Again, in the instant case, the power of attorney was given by the wife to the husband, and the husband himself was a party to the
mortgage, and the money was paid to him for and on his personal account, and his signature was necessary to bind any interest which he
had in the land as the husband of the wife, and the signature of the wife in some form was necessary to bind her interest in the land. Here,
you have the signature upon the face of it which shows that in the signing of it, the husband ever intended to bind his wife. If Poizat had not
been the husband of his wife, and if he himself was not a party to the instrument and did not have any interest in the land mortgaged,
another and a very different question would be presented, and his lone signature might then bind the property of the wife.

With all due respect to the learned counsel, no law, either Spanish or American, has been cited or will ever be found which, upon the facts
shown in the record, will construe the lone unqualified signature of the husband as the joint and dual signing of both the husband and the
wife, so as to make it binding upon the paraphernal property of the wife.

Although not cited in the petition during the discussion of this case in conference, attention was called to article 1717 of the Civil Code which
provides as follows:
 When an agent acts in his own name, the principal shall have no right of action against the persons with whom the agent has
contracted, or such persons against the principal.

In such case, the agent is directly liable to the person with whom he has contracted, as if the transactions were his own. Cases
involving things belonging to the principal are excepted.

The provisions of this article shall be understood to be without prejudice to actions between principal and agent.

In the instant case, this section should be construed with article 1713, which among other things provides that:

In order to compromise, alienate, mortgage, or to execute any other act of strict ownership, an express power is required.

The mortgage in question was upon real property, and it was not a "simple contract, " and where an agency is created by an express power,
it must be executed with the formalities of an express power.

Again, although the wife was a party to the body of the mortgage, Poizat himself had an interest in the real property, and was a party to the
instrument, and his personal signature was necessary to the mortgage to bind his own personal interest, and the interest of the conjugal
partnership. The power of attorney from the wife gave her husband the express power defined in article 1713, and that power should have
been exercised, and the mortgage should have been executed "in the name, place, and stead of the wife." That was not done.

The authorities cited in the petition for a rehearing and in the majority opinion are based upon, and refer to, the execution by the agent of a
"simple contract," and for such reason are not in point. There is a very marked legal distinction between the authority of an agent to make a
"simple contract," and his authority to convey or mortgage real property and the manner in which the power should be executed.

It may be true that the decision of this court is based upon questions that are not as fully discussed in the appellant's brief, as they should
have been, but the fact remains that they were pointed out, and attention was called to them in the argument in the brief, and that they are
expressly covered by the assignments of error.

Although ably presented, we are clearly of the opinion that the petition for a rehearing must be denied. So ordered.

Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur.

G.R. No. 94753. April 7, 1993.
MANOTOK BROTHERS, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE
JUDGE OF THE REGIONAL TRIAL COURT OF MANILA (Branch
VI), and SALVADOR SALIGUMBA, respondents.
Antonio C. Ravelo for petitioner.
Remigio M. Trinidad for private respondent.
SYLLABUS
1. CIVIL LAW; AGENCY; AGENT'S COMMISSION; WHEN
ENTITLED' RULE; APPLICATION IN CASE AT BAR. — In an
earlier case, this Court ruled that when there is a close, proximate
and causal connection between the agent's efforts and labor and
the principal's sale of his property, the agent is entitled to a
commission. We agree with respondent Court that the City of
Manila ultimately became the purchaser of petitioner's property
mainly through the efforts of private respondent. Without
discounting the fact that when Municipal Ordinance No. 6603 was
signed by the City Mayor on May 17, 1968, private respondent's
authority had already expired, it is to be noted that the ordinance
was approved on April 26, 1968 when private respondent's
authorization was still in force. Moreover, the approval by the City
Mayor came only three days after the expiration of private
respondent's authority. It is also worth emphasizing that from the
records, the only party given a written authority by petitioner to
negotiate the sale from July 5, 1966 to May 14, 1968 was private
respondent.
DECISION
CAMPOS, JR., J p:
Petitioner Manotok Brothers., Inc., by way of the instant Petition
docketed as G.R. No. 94753 sought relief from this Court's
Resolution dated May 3, 1989, which reads:
"G.R. No. 78898 (Manotok Brothers, Inc. vs. Salvador Saligumba
and Court of Appeals). — Considering the manifestation of
compliance by counsel for petitioner dated April 14, 1989 with the
resolution of March 13, 1989 which required the petitioner to locate
private respondent and to inform this Court of the present address
of said private respondent, the Court Resolved to DISMISS this
case, as the issues cannot be joined as private respondent's and
counsel's addresses cannot be furnished by the petitioner to this
court." 1
In addition, petitioner prayed for the issuance of a preliminary
injunction to prevent irreparable injury to itself pending resolution
by this Court of its cause. Petitioner likewise urged this Court to
hold in contempt private respondent for allegedly adopting sinister
ploy to deprive petitioner of its constitutional right to due process.
Acting on said Petition, this Court in a Resolution 2 dated October
1, 1990 set aside the entry of judgment made on May 3, 1989 in
case G.R. No. 78898; admitted the amended petition; and issued a
temporary restraining order to restrain the execution of the
judgment appealed from.
The amended petition 3 admitted, by this Court sought relief from
this Court's Resolution abovequoted. In the alternative, petitioner
begged leave of court to re-file its Petition for Certiorari 4 (G.R. No.
78898) grounded on the allegation that petitioner was deprived of
its opportunity to be heard.
The facts as found by the appellate court, revealed that petitioner
herein (then defendant-appellant) is the owner of a certain parcel of
land and building which were formerly leased by the City of Manila
and used by the Claro M. Recto High School, at M.F. Jhocson
Street, Sampaloc Manila.
By means of a letter 5 dated July 5, 1966, petitioner authorized
herein private respondent Salvador Saligumba to negotiate with the
City of Manila the sale of the aforementioned property for not less
than P425,000.00. In the same writing, petitioner agreed to pay
private respondent a five percent (5%) commission in the event the
sale is finally consummated and paid.
Petitioner, on March 4, 1967, executed another letter 6 extending
the authority of private respondent for 120 days. Thereafter,
another extension was granted to him for 120 more days, as
evidenced by another letter 7 dated June 26, 1967.
Finally, through another letter 8 dated November 16, 1967, the
corporation with Rufino Manotok, its President, as signatory,
authorized private respondent to finalize and consummate the sale
of the property to the City of Manila for not less than P410,000.00.
With this letter came another extension of 180 days.
The Municipal Board of the City of Manila eventually, on April 26,
1968, passed Ordinance No. 6603, appropriating the sum of
P410,816.00 for the purchase of the property which private
respondent was authorized to sell. Said ordinance however, was
signed by the City Mayor only on May 17, 1968, one hundred
eighty three (183) days after the last letter of authorization.
On January 14, 1969, the parties signed the deed of sale of the
subject property. The initial payment of P200,000.00 having been
made, the purchase price was fully satisfied with a second
payment on April 8, 1969 by a check in the amount of
P210,816.00.
Notwithstanding the realization of the sale, private respondent
never received any commission, which should have amounted to
P20,554.50. This was due to the refusal of petitioner to pay private
respondent said amount as the former does not recognize the
latter's role as agent in the transaction.
Consequently, on June 29, 1969, private respondent filed a
complaint against petitioner, alleging that he had successfully
negotiated the sale of the property. He claimed that it was because
of his efforts that the Municipal Board of Manila passed Ordinance
No. 6603 which appropriated the sum for the payment of the
property subject of the sale.
Petitioner claimed otherwise. It denied the claim of private
respondent on the following grounds: (1) private respondent would
be entitled to a commission only if the sale was consummated and
the price paid within the period given in the respective letters of
authority; and (2) private respondent was not the person
responsible for the negotiation and consummation of the sale,
instead it was Filomeno E. Huelgas, the PTA president for 1967-
1968 of the Claro M. Recto High School. As a counterclaim,
petitioner (then defendant-appellant) demanded the sum of
P4,000.00 as attorney's fees and for moral damages.
Thereafter, trial ensued. Private respondent, then plaintiff, testified
as to the efforts undertaken by him to ensure the consummation of
the sale. He recounted that it first began at a meeting with Rufino
Manotok at the office of Fructuoso Ancheta, principal of C.M. Recto
High School. Atty. Dominador Bisbal, then president of the PTA,
was also present. The meeting was set precisely to ask private
respondent to negotiate the sale of the school lot and building to
the City of Manila. Private respondent then went to Councilor
Mariano Magsalin, the author of the Ordinance which appropriated
the money for the purchase of said property, to present the project.
He also went to the Assessor's Office for appraisal of the value of
the property. While these transpired and his letters of authority
expired, Rufino Manotok always renewed the former's authorization
until the last was given, which was to remain in force until May 14,
1968. After securing the report of the appraisal committee, he went
to the City Mayor's Office, which indorsed the matter to the
Superintendent of City Schools of Manila. The latter office
approved the report and so private respondent went back to the
City Mayor's Office, which thereafter indorsed the same to the
Municipal Board for appropriation. Subsequently, on April 26, 1968,
Ordinance No. 6603 was passed by the Municipal Board for the
appropriation of the sum corresponding to the purchase price.
Petitioner received the full payment of the purchase price, but
private respondent did not receive a single centavo as commission.
Fructuoso Ancheta and Atty. Dominador Bisbal both testified
acknowledging the authority of private respondent regarding the
transaction.
Petitioner presented as its witnesses Filomeno Huelgas and the
petitioner's President, Rufino Manotok.
Huelgas testified to the effect that after being inducted as PTA
president in August, 1967 he followed up the sale from the start
with Councilor Magsalin until after it was approved by the Mayor on
May 17, 1968. He. also said that he came to know Rufino Manotok
only in August, 1968, at which meeting the latter told him that he
would be given a "gratification" in the amount of P20,000.00 if the
sale was expedited.
Rufino Manotok confirmed that he knew Huelgas and that there
was an agreement between the two of them regarding the
"gratification".
On rebuttal, Atty. Bisbal said that Huelgas was present in the PTA
meetings from 1965 to 1967 but he never offered to help in the
acquisition of said property. Moreover, he testified that Huelgas
was aware of the fact that it was private respondent who was
negotiating the sale of the subject property.
Thereafter, the then Court of First Instance (now, Regional Trial
Court) rendered judgment sentencing petitioner and/or Rufino
Manotok to pay unto private respondent the sum of P20,540.00 by
way of his commission fees with legal interest thereon from the
date of the filing of the complaint until payment. The lower court
also ordered petitioner to pay private respondent the amount of
P4,000.00 as and for attorney's fees. 9
Petitioner appealed said decision, but to no avail. Respondent
Court of Appeals affirmed the said ruling of the trial court. 10
Its Motion for Reconsideration having been denied by respondent
appellate court in a Resolution dated June 22, 1987, petitioner
seasonably elevated its case on Petition for Review on Certiorari
on August 10, 1987 before this Court, docketed as G.R. No. 78898.
Acting on said Petition, this Court issued a Minute Resolution 11
dated August 31, 1987 ordering private respondent to comment on
said Petition.
It appearing that the abovementioned Resolution was returned
unserved with the postmaster's notation "unclaimed", this Court in
another Resolution 12 dated March 13, 1989, required petitioner to
locate private respondent and to inform this Court of the present
address of private respondent within ten (10) days from notice. As
petitioner was unsuccessful in its efforts to locate private
respondent, it opted to manifest that private respondent's last
address was the same as that address to which this. Court's
Resolution was forwarded.
Subsequently, this Court issued a Resolution dated May 3, 1989
dismissing petitioner's case on the ground that the issues raised in
the case at bar cannot be joined. Thus, the above-entitled case
became final and executory by the entry of judgment on May 3,
1989.
Thereafter, on January 9, 1990 private respondent filed a Motion to
Execute the said judgment before the court of origin. Upon
discovery of said development, petitioner verified with the court of
origin the circumstances by which private respondent obtained
knowledge of the resolution of this Court. Sensing a fraudulent
scheme employed by private respondent, petitioner then instituted
this instant Petition for Relief, on August 30, 1990. On September
13, 1990, said petition was amended to include, in the alternative,
its petition to re-file its Petition for Certiorari (G.R. No. 78898).
The sole issue to be addressed in this petition is whether or not
private respondent is entitled to the five percent (5%) agent's
commission.
It is petitioner's contention that as a broker, private respondent's
job is to bring together the parties to a transaction. Accordingly, if
the broker does not succeed in bringing the minds of the purchaser
and the vendor to an agreement with respect to the sale, he is not
entitled to a commission.
Private respondent, on the other hand, opposes petitioner's
position maintaining that it was because of his efforts that a
purchase actually materialized between the parties.
We rule in favor of private respondent.
At first sight, it would seem that private respondent is not entitled to
any commission as he was not successful in consummating the
sale between the parties, for the sole reason that when the Deed of
Sale was finally executed, his extended authority had already
expired. By this alone, one might be misled to believe that this case
squarely falls within the ambit of the established principle that a
broker or agent is not entitled to any commission until he has
successfully done the job given to him. 13
Going deeper however into the case would reveal that it is within
the coverage of the exception rather than of the general rule, the
exception being that enunciated in the case of Prats vs. Court of
Appeals. 14 In the said case, this Court ruled in favor of claimant-
agent, despite the expiration of his authority, when a sale was
finally consummated.
In its decision in the abovecited case, this Court said, that while it
was respondent court's (referring to the Court of Appeals) factual
findings that petitioner Prats (claimant-agent) was not the efficient
procuring cause in bringing about the sale (prescinding from the
fact of expiration of his exclusive authority), still petitioner was
awarded compensation for his services. And We quote:
"In equity, however, the Court notes that petitioner had diligently
taken steps to bring back together respondent Doronila and the
SSS,.
xxx xxx xxx
The court has noted on the other hand that Doronila finally sold the
property to the Social Security System at P3.25 per square meter
which was the very same price counter-offered by the Social
Security System and accepted by him in July, 1967 when he alone
was dealing exclusively with the said buyer long before Prats came
into the picture but that on the other hand Prats' efforts somehow
were instrumental in bringing them together again and finally
consummating the transaction at the same price of P3.25 per
square meter, although such finalization was after the expiration of
Prats' extended exclusive authority.
xxx xxx xxx
Under the circumstances, the Court grants in equity the sum of
One hundred Thousand Pesos (P100,000.00) by way of
compensation for his efforts and assistance in the transaction,
which however was finalized and consummated after the expiration
of his exclusive authority . . ." 15 (Emphasis supplied.).
From the foregoing, it follows then that private respondent herein,
with more reason, should be paid his commission, While in Prats
vs. Court of Appeals, the agent was not even the efficient procuring
cause in bringing about the sale, unlike in the case at bar, it was
still held therein that the agent was entitled to compensation. In the
case at bar, private respondent is the efficient procuring cause for
without his efforts, the municipality would not have anything to pass
and the Mayor would not have anything to approve.
In an earlier case, 16 this Court ruled that when there is a close,
proximate and causal connection between the agent's efforts and
labor and the principal's sale of his property, the agent is entitled to
a commission.
We agree with respondent Court that the City of Manila ultimately
became the purchaser of petitioner's property mainly through the
efforts of private respondent. Without discounting the fact that
when Municipal Ordinance No. 6603 was signed by the City Mayor
on May 17, 1968, private respondent's authority had already
expired, it is to be noted that the ordinance was approved on April
26, 1968 when private respondent's authorization was still in force.
Moreover, the approval by the City Mayor came only three days
after the expiration of private respondent's authority. It is also worth
emphasizing that from the records, the only party given a written
authority by petitioner to negotiate the sale from July 5, 1966 to
May 14, 1968 was private respondent.
Contrary to what petitioner advances, the case of Danon vs. Brimo,
17 on which it heavily anchors its justification for the denial of
private respondent's claim, does not apply squarely to the instant
petition. Claimant-agent in said case fully comprehended the
possibility that he may not realize the agent's commission as he
was informed that another agent was also negotiating the sale and
thus, compensation will pertain to the one who finds a purchaser
and eventually effects the sale. Such is not the case herein. On the
contrary, private respondent pursued with his goal of seeing that
the parties reach an agreement, on the belief that he alone was
transacting the business with the City Government as this was
what petitioner made it to appear.
While it may be true that Filomeno Huelgas followed up the matter
with Councilor Magsalin, the author of Municipal Ordinance No.
6603 and Mayor Villegas, his intervention regarding the purchase
came only after the ordinance had already been passed — when
the buyer has already agreed to the purchase and to the price for
which said property is to be paid. Without the efforts of private
respondent then, Mayor Villegas would have nothing to approve in
the first place. It was actually private respondent's labor that had
set in motion the intervention of the third party that produced the
sale, hence he should be amply compensated.
WHEREFORE, in the light of the foregoing and finding no
reversible error committed by respondent Court, the decision of the
Court of Appeals is hereby AFFIRMED. The temporary restraining
order issued by this Court in its Resolution dated October 1, 1990
is hereby lifted.
SO ORDERED.
[G.R. No. 102737. August 21, 1996.]
FRANCISCO A. VELOSO, Petitioner, v. COURT OF APPEALS,
AGLALOMA B. ESCARIO, assisted by her husband GREGORIO L.
ESCARIO, the REGISTER OF DEEDS FOR THE CITY OF
MANILA, Respondents.
SYLLABUS
1. CIVIL LAW; AGENCY; A SPECIAL POWER OF ATTORNEY
CAN BE INCLUDED IN THE GENERAL POWER WHEN IT IS
SPECIFIED THEREIN THE ACT OR TRANSACTION FOR WHICH
THE SPECIAL POWER IS REQUIRED. — There was no need to
execute a separate and special power of attorney since the general
power of attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The special power of
attorney can be included in the general power when it is specified
therein the act or transaction for which the special power is
required.
2. ID.; SALE; PURCHASER IN GOOD FAITH; DEFINED; HIS
REMEDY IN CASE OF FRAUD. — It has been consistently held
that a purchaser in good faith is one who buys property of another,
without notice that some other person has a right to, or interest in
such property and pays a full and fair price for the same, at the
time of such purchase, or before he has notice of the claim or
interest of some other person in the property. "The right of an
innocent purchaser for value must be respected and protected,
even if the seller obtained his title through fraud. The remedy of the
person prejudiced is to bring an action for damages against those
who caused or employed the fraud, and if the latter are insolvent,
an action against the Treasurer of the Philippines may be filed for
recovery of damages against the Assurance Fund."cralaw
virtua1aw library
3. REMEDIAL LAW; EVIDENCE; FORGERY CANNOT BE
PRESUMED. — Mere variance of the signatures cannot be
considered as conclusive proof that the same were forged. Forgery
cannot be presumed. Forgery should be proved by clear and
convincing evidence and whoever allege it has the burden of
proving the same.
4. ID.; ID.; NOTARIZED DOCUMENTS ARE PRESUMED TO BE
VALID AND DULY EXECUTED. — Documents acknowledged
before a notary public have the evidentiary weight with respect to
their due execution. The questioned power of attorney and deed of
sale, were notarized and therefore, presumed to be valid and duly
executed.
5. CIVIL LAW; PRINCIPLE OF EQUITABLE ESTOPPEL,
DEFINED. — The principle of equitable estoppel states that where
one or two innocent persons must suffer a loss, he who by his
conduct made the loss possible must bear it.
DECISION
TORRES, JR., J.:
This petition for review assails the decision of the Court of Appeals,
dated July 29, 1991, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, the decision appealed from is hereby AFFIRMED
IN TOTO. Costs against appellant." 1
The following are the antecedent facts:chanrob1es virtual 1aw
library
Petitioner Francisco Veloso was the owner of a parcel of land
situated in the district of Tondo, Manila, with an area of one
hundred seventy seven (177) square meters and covered by
Transfer Certificate of title No. 49138 issued by the Registry of
Deeds of Manila. 2 The title was registered in the name of
Francisco A. Veloso, single, 3 on October 4, 1957. 4 The said title
was subsequently cancelled and a new one, Transfer Certificate of
Title No. 180685, was issued in the name of Aglaloma B. Escario,
married to Gregorio L. Escario, on May 24, 1988. 5
On August 24, 1988, petitioner Veloso filed an action for annulment
of documents, reconveyance of property with damages and
preliminary injunction and/or restraining order. The complaint,
docketed as Civil Case no. 88-45926, was raffled to the Regional
Trial Court, Branch 45, Manila. Petitioner alleged therein that he
was the absolute owner of the subject property and he never
authorized anybody, not even his wife, to sell it. He alleged that he
was in possession of the title but when his wife, Irma, left for
abroad, he found out that his copy was missing. He then verified
with the Registry of Deeds of Manila and there he discovered that
his title was already canceled in favor of defendant Aglaloma
Escario. The transfer of property was supported by a General
Power of Attorney 6 dated November 29, 1985 and Deed of
Absolute Sale, dated November 2, 1987, executed by Irma Veloso,
wife of the petitioner and appearing as his attorney-in-fact, and
defendant Aglaloma Escario. 7 Petitioner Veloso, however, denied
having executed the power of attorney and alleged that his
signature was falsified. He also denied having seen or even known
Rosemarie Reyes and Imelda Santos, the supposed witnesses in
the execution of the power of attorney. He vehemently denied
having met or transacted with the defendant. Thus, he contended
that the sale of the property, and the subsequent transfer thereof,
were null and void. Petitioner Veloso, therefore, prayed that a
temporary restraining order be issued to prevent the transfer of the
subject property; that the General Power of Attorney, the Deed of
Absolute Sale and the Transfer Certificate of Title No. 180685 be
annulled; and the subject property be reconveyed to him.
Defendant Aglaloma Escario in her answer alleged that she was a
buyer in good faith and denied any knowledge of the alleged
irregularity. She allegedly relied on the general power of attorney of
Irma Veloso which was sufficient in form and substance and was
duly notarized. She contended that plaintiff (herein petitioner), had
no cause of action against her. In seeking for the declaration of
nullity of the documents, the real party in interest was Irma Veloso,
the wife of the plaintiff. She should have been impleaded in the
case. In fact, Plaintiff’s cause of action should have been against
his wife, Irma. Consequently, defendant Escario prayed for the
dismissal of the complaint and the payment to her of damages. 8
Pre-trial was conducted. The sole issue to be resolved by the trial
court was whether or not there was a valid sale of the subject
property. 9

During the trial, plaintiff (herein petitioner) Francisco Veloso
testified that he acquired the subject property from the Philippine
Building Corporation, as evidenced by a Deed of Sale dated
October 1, 1957. 10 He married Irma Lazatin on January 20, 1962.
11 Hence, the property did not belong to their conjugal partnership.
Plaintiff further asserted that he did not sign the power of attorney
and as proof that his signature was falsified, he presented Allied
Bank Checks Nos. 16634640, 16634641 and 16634643, which
allegedly bore is genuine signature.
Witness for the plaintiff Atty. Julian G. Tubig denied any
participation in the execution of the general power of attorney. He
attested that he did not sign thereon, and the same was never
entered in his Notarial Register on November 29, 1985.
In the decision of the trial court dated March 9, 1990, 12 defendant
Aglaloma Escario was adjudged the lawful owner of the property as
she was deemed an innocent purchaser for value. The assailed
general power of attorney was held to be valid and sufficient for the
purpose. The trial court ruled that there was no need for a special
power of attorney when the special power was already mentioned
in the general one. It also declared that plaintiff failed to
substantiate his allegation of fraud. The court also stressed that
plaintiff was not entirely blameless for although he admitted to be
the only person who had access to the title and other important
documents, his wife was still able to posses the copy. Citing
Section 55 of Act 496, the court held that Irma’s possession and
production of the certificate of title was deemed a conclusive
authority from the plaintiff to the Register of Deeds to enter a new
certificate. Then applying the principle of equitable estoppel,
plaintiff was held to bear the loss of it was he who made the wrong
possible. Thus:jgc:chanrobles.com.ph
"WHEREFORE, the Court finds for the defendants and against
plaintiff — Thus, there was no need to execute a separate and special power
a. declaring that there was a valid sale of the subject property in
favor of the defendant;
b. denying all other claims of the parties for want of legal and
factual basis.
Without pronouncement as to costs.
SO ORDERED."cralaw virtua1aw library
Not satisfied with the decision, petitioner Veloso filed his appeal
with the Court of Appeals. The respondent court affirmed in toto the
findings of the trial court.
Hence, this petition for review before Us.
This petition for review was initially dismissed for failure to submit
an affidavit of service of a copy of the petition on the counsel
for Private Respondent. 13 A motion for reconsideration of the
resolution was filed but it was denied in a resolution dated March
30, 1992. 14 A second motion for reconsideration was filed and in
a resolution dated Aug. 3, 1992, the motion was granted and the
petition for review was reinstated. 15
A supplemental petition was filed on October 9, 1992 with the
following assignment of errors:chanrob1es virtual 1aw library
I as testified by Atty. Tubig himself, he did not sign thereon nor was
The Court of Appeals committed a grave error in not finding that
the forgery of the power of attorney (Exh. "C") had been
adequately proven, despite the preponderant evidence, and in
doing so, it has so far departed from the applicable provisions of
law and the decisions of this Honorable Court, as to warrant the
grant of this petition for review on certiorari.
II
There are principles of justice and equity that warrant a review of
the decision.
III
The Court of Appeals erred in affirming the decision of the trial
court which misapplied the principle of equitable estoppel since the
petitioner did not fail in his duty of observing due diligence in the
safekeeping of the title to the property.
We find petitioner’s contentions not meritorious.
An examination of the records showed that the assailed power of
attorney was valid and regular on its face. It was notarized and as
such, it carries the evidentiary weight conferred upon it with respect
to its due execution. While it is true that it was denominated as a
general power of attorney, a perusal thereof revealed that it stated
an authority to sell, to wit:jgc:chanrobles.com.ph
"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate
lands, tenements and hereditaments or other forms of real
property, more specifically TCT No. 49138, upon such terms and
conditions and under such covenants as my said attorney shall
deem fit and proper." 16
of attorney since the general power of attorney had expressly
authorized the agent or attorney in fact the power to sell the subject
property. The special power of attorney can be included in the
general power when it is specified therein the act or transaction for
which the special power is required.
The general power of attorney was accepted by the Register of
Deeds when the title to the subject property was cancelled and
transferred in the name of private Respondent. In LRC Consulta
No. 123, Register of Deeds of Albay, Nov. 10, 1956, it stated
that:jgc:chanrobles.com.ph
"Whether the instrument be denominated as "general power of
attorney" or "special power of attorney," what matters is the extent
of the power or powers contemplated upon the agent or attorney in
fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the
power to sell is specific, it not being merely implied, much less
couched in general terms, there can not be any doubt that the
attorney in fact may execute a valid sale. An instrument may be
captioned as "special power of attorney" but if the powers granted
are couched in general terms without mentioning any specific
power to sell or mortgage or to do other specific acts of strict
dominion, then in that case only acts of administration may be
deemed conferred."cralaw virtua1aw library
Petitioner contends that his signature on the power of attorney was
falsified. He also alleges that the same was not duly notarized for
it ever recorded in his notarial register. To bolster his argument,
petitioner had presented checks, marriage certificate and his
residence certificate to prove his alleged genuine signature which
when compared to the signature in the power of attorney, showed
some difference.
We found, however, that the basis presented by the petitioner was
inadequate to sustain his allegation of forgery. Mere variance of the
signatures cannot be considered as conclusive proof that the same
were forged. Forgery cannot be presumed. 17 Petitioner, however,
failed to prove his allegation and simply relied on the apparent
difference of the signatures. His denial had not established that the
signature on the power of attorney was not his.
We agree with the conclusion of the lower court that private
respondent was an innocent purchaser for value. Respondent
Aglaloma relied on the power of attorney presented by petitioner’s
wife, Irma. Being the wife of the owner and having with her the title
of the property, there was no reason for the private respondent not
to believe, in her authority. Moreover, the power of attorney was
notarized and as such, carried with it the presumption of its due
execution. Thus, having had no inkling on any irregularity and
having no participation thereof, private respondent was a buyer in
good faith. It has been consistently held that a purchaser in good
faith is one who buys property of another, without notice that some
other person has a right to, or interest in such property and pays a
full and fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other person
in the property. 18
Assurance Fund."cralaw virtua1aw library
Finally, the trial court did not err in applying equitable estoppel in
this case. The principle of equitable estoppel states that where one
or two innocent persons must suffer a loss, he who by his conduct
made the loss possible must bear it. From the evidence adduced, it
should be the petitioner who should bear the loss. As the court a
quo found:jgc:chanrobles.com.ph
"Besides, the records of this case disclosed that the plaintiff is not
entirely free from blame. He admitted that he is the sole person
who has access to TCT No. 49138 and other documents
appertaining thereto (TSN, May 23, 1989, pp. 7-12). However, the
fact remains that the Certificate of Title, as well as other documents
necessary for the transfer of title were in the possession of
plaintiff’s wife, Irma L. Veloso, consequently leaving no doubt or
any suspicion on the part of the defendant as to her authority.
Under Section 55 of Act 496, as amended, Irma’s possession and
production of the Certificate of Title to defendant operated as
"conclusive authority from the plaintiff to the Register of Deeds to
enter a new certificate." 21
Considering the foregoing premises, we found no error in the
appreciation of facts and application of law by the lower court
which will warrant the reversal or modification of the appealed
decision.

Documents acknowledged before a notary public have the ACCORDINGLY, the petition for review is hereby DENIED for lack
evidentiary weight with respect to their due execution. The of merit.
questioned power of attorney and deed of sale, were notarized and
therefore, presumed to be valid and duly executed. Atty. Tubig SO ORDERED.
denied having notarized the said documents and alleged that his
signature had also been falsified. He presented samples of his
signature to prove his contention. Forgery should be proved by
clear and convincing evidence and whoever alleges it has the
burden of proving the same. Just like the petitioner, witness Atty.
Tubig merely pointed out that his signature was different from that
in the power of attorney and deed of sale. There had never been
an accurate examination of the signature, even that of the
petitioner. To determine forgery, it was held in Cesar v.
Sandiganbayan 19 (quoting Osborn, The Problem of Proof)
that:jgc:chanrobles.com.ph

"The process of identification, therefore, must include the

determination of the extent, kind, and significance of this
resemblance as well as of the variation. It then becomes necessary
to determine whether the variation is due to the operation of a
different personality, or is only the expected and inevitable variation
found in the genuine writing of the same writer. It is also necessary
to decide whether the resemblance is the result of a more or less
skillful imitation, or is the habitual and characteristic resemblance
which naturally appears in a genuine writing. When these two
questions are correctly answered the whole problem of
identification is solved."cralaw virtua1aw library

Even granting for the sake of argument, that the petitioner’s

signature was falsified and consequently, the power of attorney
and the deed of sale were null and void, such fact would not revoke
the title subsequently issued in favor of private respondent
Aglaloma. In Tenio-Obsequio v. Court of Appeals, 20 it was held,
viz:jgc:chanrobles.com.ph

"The right of an innocent purchaser for value must be respected

and protected, even if the seller obtained his title through fraud.
The remedy of the person prejudiced is to bring an action for
damages against those who caused or employed the fraud, and if
the latter are insolvent, an action against the Treasurer of the
Philippines may be filed for recovery of damages against the
[G.R. NO. 167812 : December 19, 2006]
JESUS M. GOZUN, Petitioner, v. JOSE TEOFILO T. MERCADO
A.K.A. 'DON PEPITO MERCADO, Respondent.
DECISION
CARPIO MORALES, J.:
On challenge via Petition for Review on Certiorari is the Court of
Appeals' Decision of December 8, 2004 and Resolution of April 14,
2005 in CA-G.R. CV No. 763091 reversing the trial court's
decision2 against Jose Teofilo T. Mercado a.k.a. Don Pepito
Mercado (respondent) and accordingly dismissing the complaint of
Jesus M. Gozun (petitioner).
In the local elections of 1995, respondent vied for the gubernatorial
post in Pampanga. Upon respondent's request, petitioner, owner of
JMG Publishing House, a printing shop located in San Fernando,
Pampanga, submitted to respondent draft samples and price
quotation of campaign materials.
By petitioner's claim, respondent's wife had told him that
respondent already approved his price quotation and that he could
start printing the campaign materials, hence, he did print campaign
materials like posters bearing respondent's photograph, 3 leaflets
containing the slate of party candidates, 4 sample ballots,5 poll
watcher identification cards,6 and stickers.
Given the urgency and limited time to do the job order, petitioner
availed of the services and facilities of Metro Angeles Printing and
of St. Joseph Printing Press, owned by his daughter Jennifer
Gozun and mother Epifania Macalino Gozun, respectively.7
Petitioner delivered the campaign materials to respondent's
headquarters along Gapan-Olongapo Road in San Fernando,
Pampanga.8
Meanwhile, on March 31, 1995, respondent's sister-in-law, Lilian
Soriano (Lilian) obtained from petitioner "cash advance"
of P253,000 allegedly for the allowances of poll watchers who were
attending a seminar and for other related expenses. Lilian
acknowledged on petitioner's 1995 diary9 receipt of the amount.10
Petitioner later sent respondent a Statement of Account 11 in the
total amount of P2,177,906 itemized as follows: P640,310 for JMG
Publishing House; P837,696 for Metro Angeles Printing; P446,900
for St. Joseph Printing Press; and P253,000, the "cash advance"
obtained by Lilian.
On August 11, 1995, respondent's wife partially paid P1,000,000 to
petitioner who issued a receipt12 therefor.
Despite repeated demands and respondent's promise to pay,
respondent failed to settle the balance of his account to petitioner.
Petitioner and respondent being compadres, they having been
principal sponsors at the weddings of their respective daughters,
waited for more than three (3) years for respondent to honor his
promise but to no avail, compelling petitioner to endorse the matter
to his counsel who sent respondent a demand letter. 13 Respondent,
however, failed to heed the demand.14
Petitioner thus filed with the Regional Trial Court of Angeles City on
November 25, 1998 a complaint 15 against respondent to collect the
remaining amount of P1,177,906 plus "inflationary adjustment" and
attorney's fees.
In his Answer with Compulsory Counterclaim,16 respondent denied
having transacted with petitioner or entering into any contract for
the printing of campaign materials. He alleged that the various
campaign materials delivered to him were represented as
donations from his family, friends and political supporters. He
added that all contracts involving his personal expenses were
coursed through and signed by him to ensure compliance with
pertinent election laws.
On petitioner's claim that Lilian, on his (respondent's) behalf, had
obtained from him a cash advance of P253,000, respondent denied
having given her authority to do so and having received the same.
At the witness stand, respondent, reiterating his allegations in his
Answer, claimed that petitioner was his over-all coordinator in
charge of the conduct of seminars for volunteers and the
monitoring of other matters bearing on his candidacy; and that
while his campaign manager, Juanito "Johnny" Cabalu (Cabalu),
who was authorized to approve details with regard to printing
materials, presented him some campaign materials, those were
partly donated.17
When confronted with the official receipt issued to his wife
acknowledging her payment to JMG Publishing House of the
amount of P1,000,000, respondent claimed that it was his first time
to see the receipt, albeit he belatedly came to know from his wife
and Cabalu that the P1,000,000 represented "compensation [to
petitioner] who helped a lot in the campaign as a gesture of
goodwill."18
Acknowledging that petitioner is engaged in the printing business,
respondent explained that he sometimes discussed with petitioner
strategies relating to his candidacy, he (petitioner) having actively
volunteered to help in his campaign; that his wife was not
authorized to enter into a contract with petitioner regarding
campaign materials as she knew her limitations; that he no longer
questioned the P1,000,000 his wife gave petitioner as he thought
that it was just proper to compensate him for a job well done; and
that he came to know about petitioner's claim against him only after
receiving a copy of the complaint, which surprised him because he
knew fully well that the campaign materials were donations. 19
Upon questioning by the trial court, respondent could not, however,
confirm if it was his understanding that the campaign materials
delivered by petitioner were donations from third parties. 20
Finally, respondent, disclaiming knowledge of the Comelec rule
that if a campaign material is donated, it must be so stated on its
face, acknowledged that nothing of that sort was written on all the
materials made by petitioner.21
As adverted to earlier, the trial court rendered judgment in favor of
petitioner, the dispositive portion of which reads:
WHEREFORE, the plaintiff having proven its (sic) cause of action
by preponderance of evidence, the Court hereby renders a
decision in favor of the plaintiff ordering the defendant as follows:
1. To pay the plaintiff the sum of P1,177,906.00 plus 12% interest
per annum from the filing of this complaint until fully paid;
2. To pay the sum of P50,000.00 as attorney's fees and the costs
of suit.
SO ORDERED.22
Also as earlier adverted to, the Court of Appeals reversed the trial
court's decision and dismissed the complaint for lack of cause of
action.
In reversing the trial court's decision, the Court of Appeals held that
other than petitioner's testimony, there was no evidence to support
his claim that Lilian was authorized by respondent to borrow money
on his behalf. It noted that the acknowledgment receipt 23 signed by
Lilian did not specify in what capacity she received the money.
Thus, applying Article 1317 24 of the Civil Code, it held that
petitioner's claim for P253,000 is unenforceable.
On the accounts claimed to be due JMG Publishing House
- P640,310, Metro Angeles Printing - P837,696, and St. Joseph
Printing Press - P446,900, the appellate court, noting that since the
owners of the last two printing presses were not impleaded as
parties to the case and it was not shown that petitioner was
authorized to prosecute the same in their behalf, held that
petitioner could not collect the amounts due them.
Finally, the appellate court, noting that respondent's wife had
paid P1,000,000 to petitioner, the latter's claim of P640,310 (after
excluding the P253,000) had already been settled.
Hence, the present petition, faulting the appellate court to have
erred:
1. . . . when it dismissed the complaint on the ground that there is
no evidence, other than petitioner's own testimony, to prove that
Lilian R. Soriano was authorized by the respondent to receive the
cash advance from the petitioner in the amount of P253,000.00.
xxxx
2. . . . when it dismissed the complaint, with respect to the amounts
due to the Metro Angeles Press and St. Joseph Printing Press on
the ground that the complaint was not brought by the real party in
interest.
x x x x25
By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of
another, with the consent or authority of the latter. 26 Contracts
entered into in the name of another person by one who has been
given no authority or legal representation or who has acted beyond
his powers are classified as unauthorized contracts and are
declared unenforceable, unless they are ratified.27
Generally, the agency may be oral, unless the law requires a
specific form.28 However, a special power of attorney is necessary
for an agent to, as in this case, borrow money, unless it be urgent
and indispensable for the preservation of the things which are
under administration.29 Since nothing in this case involves the
preservation of things under administration, a determination of
whether Soriano had the special authority to borrow money on
behalf of respondent is in order.
Lim Pin v. Liao Tian, et al. 30 held that the requirement of a special
power of attorney refers to the nature of the authorization and not
to its form.
. . . The requirements are met if there is a clear mandate from the
principal specifically authorizing the performance of the act. As
early as 1906, this Court in Strong v. Gutierrez-Repide (6 Phil. 680)
stated that such a mandate may be either oral or written. The one
thing vital being that it shall be express. And more recently, We
stated that, if the special authority is not written, then it must
be duly established by evidence:
" the Rules require, for attorneys to compromise the litigation of
their clients, a special authority. And while the same does not state
that the special authority be in writing the Court has every reason
to expect that, if not in writing, the same be duly established by
evidence other than the self-serving assertion of counsel himself
that such authority was verbally given him."31 (Emphasis and
underscoring supplied)cralawlibrary
Petitioner submits that his following testimony suffices to establish
that respondent had authorized Lilian to obtain a loan from him, viz:
Q : Another caption appearing on Exhibit "A" is cash advance, it
states given on 3-31-95 received by Mrs. Lilian Soriano in behalf of
Mrs. Annie Mercado, amount P253,000.00, will you kindly tell the
Court and explain what does that caption means?cralawlibrary
A : It is the amount representing the money borrowed from me by
the defendant when one morning they came very early and talked
to me and told me that they were not able to go to the bank to get
money for the allowances of Poll Watchers who were having a
seminar at the headquarters plus other election related expenses
during that day, sir.
Q : Considering that this is a substantial amount which according to
you was taken by Lilian Soriano, did you happen to make her
acknowledge the amount at that time?cralawlibrary
A : Yes, sir.32 (Emphasis supplied)cralawlibrary
Petitioner's testimony failed to categorically state, however,
whether the loan was made on behalf of respondent or of his wife.
While petitioner claims that Lilian was authorized by respondent,
the statement of account marked as Exhibit "A" states that the
amount was received by Lilian "in behalf of Mrs. Annie Mercado."
Invoking Article 187333 of the Civil Code, petitioner submits that
respondent informed him that he had authorized Lilian to obtain the
loan, hence, following Macke v. Camps34 which holds that one who
clothes another with apparent authority as his agent, and holds him
out to the public as such, respondent cannot be permitted to deny
the authority.
Petitioner's submission does not persuade. As the appellate court
observed:
. . . Exhibit "B" [the receipt issued by petitioner] presented by
plaintiff-appellee to support his claim unfortunately only indicates
the Two Hundred Fifty Three Thousand Pesos (P253,0000.00)
was received by one Lilian R. Soriano on 31 March 1995, but
without specifying for what reason the said amount was delivered
and in what capacity did Lilian R. Soriano received [sic] the money.
The note reads:
"3-31-95
261,120 ADVANCE MONEY FOR TRAINEE'
RECEIVED BY
RECEIVED FROM JMG THE AMOUNT OF 253,000 TWO
HUNDRED FIFTY THREE THOUSAND PESOS
(SIGNED)
LILIAN R. SORIANO

3-31-95"

Nowhere in the note can it be inferred that defendant-appellant was

connected with the said transaction. Under Article 1317 of the New
Civil Code, a person cannot be bound by contracts he did not
authorize to be entered into his behalf.35 (Underscoring
supplied)cralawlibrary

It bears noting that Lilian signed in the receipt in her name alone,
without indicating therein that she was acting for and in behalf of
respondent. She thus bound herself in her personal capacity and
not as an agent of respondent or anyone for that matter.

It is a general rule in the law of agency that, in order to bind the

principal by a mortgage on real property executed by an agent, it
must upon its face purport to be made, signed and sealed in the
name of the principal, otherwise, it will bind the agent only. It is not
enough merely that the agent was in fact authorized to make the
mortgage, if he has not acted in the name of the principal. x x
x36 (Emphasis and underscoring supplied)cralawlibrary

On the amount due him and the other two printing presses,
petitioner explains that he was the one who personally and directly
contracted with respondent and he merely sub-contracted the two
printing establishments in order to deliver on time the campaign
materials ordered by respondent.

Respondent counters that the claim of sub-contracting is a change

in petitioner's theory of the case which is not allowed on appeal.

In Oco v. Limbaring,37 this Court ruled:

The parties to a contract are the real parties in interest in an action

upon it, as consistently held by the Court. Only the contracting
parties are bound by the stipulations in the contract; they are the
ones who would benefit from and could violate it. Thus, one who is
not a party to a contract, and for whose benefit it was not expressly
made, cannot maintain an action on it. One cannot do so, even if
the contract performed by the contracting parties would incidentally
inure to one's benefit.38 (Underscoring supplied)cralawlibrary

In light thereof, petitioner is the real party in interest in this case.

The trial court's findings on the matter were affirmed by the
appellate court.39 It erred, however, in not declaring petitioner as a
real party in interest insofar as recovery of the cost of campaign
materials made by petitioner's mother and sister are concerned,
upon the wrong notion that they should have been, but were not,
impleaded as plaintiffs.

In sum, respondent has the obligation to pay the total cost of

printing his campaign materials delivered by petitioner in the total
of P1,924,906, less the partial payment of P1,000,000,
or P924,906.

WHEREFORE, the petition is GRANTED. The Decision dated

December 8, 2004 and the Resolution dated April 14, 2005 of the
Court of Appeals are hereby REVERSED and SET ASIDE.

The April 10, 2002 Decision of the Regional Trial Court of Angeles
City, Branch 57, is REINSTATED mutatis mutandis, in light of the
foregoing discussions. The trial court's decision is modified in that
the amount payable by respondent to petitioner is reduced
to P924,906.

SO ORDERED.