G.R. No. 149353.
 June 26, 2006.* commission; and that respondent transacts on behalf of her “principal financier,” a
JOCELYN B. DOLES, petitioner, vs. MA. AURA TINA ANGELES, respondent.
Agency; Evidence; Estoppel; The basis of agency is representation; The
question of whether an agency has been created is ordinarily a question which may
be established in the same way as any other fact, either by direct or circumstantial
evidence; Though that fact or extent of authority of the agents may not, as a general
rule, be established from the declarations of the agents alone, if one professes to act
as agent for another, she may be estopped to deny her agency both as against the
asserted principal and the third persons interested in the transaction in which he or
she is engaged.—This Court has affirmed that, under Article 1868 of the Civil Code,
the basis of agency is representation. The question of whether an agency has been
created is ordinarily a question which may be established in the same way as  notwithstanding he or she is not so called—it will be an agency whether the parties
_______________
*
 FIRST DIVISION.
608
608  SUPREME COURT REPORTS ANNOTATED  notwithstanding he or she is not so called. The question is to be determined by the
Doles vs. Angeles
any other fact, either by direct or circumstantial evidence. The question is
ultimately one of intention. Agency may even be implied from the words and
conduct of the parties and the circumstances of the particular case. Though the fact
or extent of authority of the agents may not, as a general rule, be established from the
declarations of the agents alone, if one professes to act as agent for another, she may
be estopped to deny her agency both as against the asserted principal and the third
persons interested in the transaction in which he or she is engaged.
Same; For an agency to arise, it is not necessary that the principal personally
encounter the third person with whom the agent interacts—precisely, the purpose of
agency is to extend the personality of the principal through the facility of the agent.
—The CA is incorrect when it considered the fact that the “supposed friends of
[petitioner], the actual borrowers, did not present themselves to [respondent]” as
evidence that negates the agency relationship—it is sufficient that petitioner
disclosed to respondent that the former was acting in behalf of her principals, her
friends whom she referred to respondent. For an agency to arise, it is not necessary
that the principal personally encounter the third person with whom the agent
interacts. The law in fact contemplates, and to a great degree, impersonal dealings
where the principal need not personally know or meet the third person with whom
her agent transacts: precisely, the purpose of agency is to extend the personality of
the principal through the facility of the agent.
Same; If the principals do not actually and personally know each other, such
ignorance does not affect their juridical standing as agents.—In the case at bar, both
petitioner and respondent have undeniably disclosed to each other that they are
representing someone else, and so both of them are estopped to deny the same. It is
evident from the record that petitioner merely refers actual borrowers and then
collects and disburses the amounts of the loan upon which she received a
certain Arsenio Pua. If their respective principals do not actually and personally
know each other, such ignorance does not affect their juridical standing as agents,
especially since the very purpose of agency is to extend the personality of the
principal through the facility of the agent.
609
VOL. 492, JUNE 26, 2006  609 
Doles vs. Angeles
Same; Words and Phrases; If an act done by one person in behalf of another
is in its essential nature one of agency, the former is the agent of the latter
understood the exact nature of the relation or not.—With respect to the admission of
petitioner that she is “re-lending” the money loaned from respondent to other
individuals for profit, it must be stressed that the manner in which the parties
designate the relationship is not controlling. If an act done by one person in behalf of
another is in its essential nature one of agency, the former is the agent of the latter
fact that one represents and is acting for another, and if relations exist which will
constitute an agency, it will be an agency whether the parties understood the exact
nature of the relation or not.
Same; Loans; Sales; A sale predicated on a loan between the principals in
which the agents are not privy to is void for lack of consideration.—In view of the
two agency relationships, petitioner and respondent are not privy to the contract of
loan between their principals. Since the sale is predicated on that loan, then the sale
is void for lack of consideration.
Sales; Mortgages; An assumption of a mortgage debt may constitute a valid
consideration for a sale.—A further scrutiny of the record shows, however, that the
sale might have been backed up by another consideration that is separate and distinct
from the debt: respondent averred in her complaint and testified that the parties had
agreed that as a condition for the conveyance of the property the respondent shall
assume the balance of the mortgage loan which petitioner allegedly owed to the
NHMFC. This Court in the recent past has declared that an assumption of a mortgage
debt may constitute a valid consideration for a sale.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     Maria Rowena R. Dimson for petitioner.
     Salonga, Evasco, Clave Law Office for respondent.
AUSTRIA-MARTINEZ, J.:
This refers to the Petition for Review on Certiorari under Rule 45 of the Rules of
Court questioning the Decision1dated April 30, 2001 of the Court of Appeals (CA) in
C.A.-G.R. CV No. 66985, which reversed the Decision dated July 29, 1998 of the
1
Regional Trial Court (RTC), Branch 21, City of Manila; and the CA
Resolution2 dated August 6, 2001 which denied petitioner’s Motion for
Reconsideration.
The antecedents of the case follow:
On April 1, 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a
complaint for Specific Performance with Damages against Jocelyn B. Doles
(petitioner), docketed as Civil Case No. 97-82716. Respondent alleged that petitioner
was indebted to the former in the concept of a personal loan amounting
to P405,430.00 representing the principal amount and interest; that on October 5,
1996, by virtue of a "Deed of Absolute Sale",3 petitioner, as seller, ceded to
respondent, as buyer, a parcel of land, as well as the improvements thereon, with an
area of 42 square meters, covered by Transfer Certificate of Title No. 382532,4 and
located at a subdivision project known as Camella Townhomes Sorrente in Bacoor,
Cavite, in order to satisfy her personal loan with respondent; that this property was
mortgaged to National Home Mortgage Finance Corporation (NHMFC) to secure
petitioner’s loan in the sum of P337,050.00 with that entity; that as a condition for
the foregoing sale, respondent shall assume the undue balance of the mortgage and
pay the monthly amortization of P4,748.11 for the remainder of the 25 years which
began on September 3, 1994; that the property was at that time being occupied by a
tenant paying a monthly rent of P3,000.00; that upon verification with the NHMFC,
respondent learned that petitioner had incurred arrearages amounting to P26,744.09,
inclusive of penalties and interest; that upon informing the petitioner of her arrears,
petitioner denied that she incurred them and refused to pay the same; that despite
repeated demand, petitioner refused to cooperate with respondent to execute the
necessary documents and other formalities required by the NHMFC to effect the
transfer of the title over the property; that petitioner collected rent over the property
for the month of January 1997 and refused to remit the proceeds to respondent; and
that respondent suffered damages as a result and was forced to litigate.
Petitioner, then defendant, while admitting some allegations in the Complaint, denied
that she borrowed money from respondent, and averred that from June to September
1995, she referred her friends to respondent whom she knew to be engaged in the
business of lending money in exchange for personal checks through her capitalist
Arsenio Pua. She alleged that her friends, namely, Zenaida Romulo, Theresa
Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money
from respondent and issued personal checks in payment of the loan; that the checks
bounced for insufficiency of funds; that despite her efforts to assist respondent to
collect from the borrowers, she could no longer locate them; that, because of this,
respondent became furious and threatened petitioner that if the accounts were not
settled, a criminal case will be filed against her; that she was forced to issue eight
checks amounting to P350,000 to answer for the bounced checks of the borrowers
she referred; that prior to the issuance of the checks she informed respondent that
they were not sufficiently funded but the latter nonetheless deposited the checks and
for which reason they were subsequently dishonored; that respondent then threatened
to initiate a criminal case against her for violation of Batas Pambansa Blg. 22; that
she was forced by respondent to execute an "Absolute Deed of Sale" over her
property in Bacoor, Cavite, to avoid criminal prosecution; that the said deed had no
valid consideration; that she did not appear before a notary public; that the
Community Tax Certificate number on the deed was not hers and for which
respondent may be prosecuted for falsification and perjury; and that she suffered
damages and lost rental as a result. 
The RTC identified the issues as follows: first, whether the Deed of Absolute Sale is
valid; second; if valid, whether petitioner is obliged to sign and execute the necessary
documents to effect the transfer of her rights over the property to the respondent; and
third, whether petitioner is liable for damages.
On July 29, 1998, the RTC rendered a decision the dispositive portion of which
states:
WHEREFORE, premises considered, the Court hereby orders the dismissal of the
complaint for insufficiency of evidence. With costs against plaintiff.
SO ORDERED.
The RTC held that the sale was void for lack of cause or consideration: 5
Plaintiff Angeles’ admission that the borrowers are the friends of defendant Doles
and further admission that the checks issued by these borrowers in payment of the
loan obligation negates [sic] the cause or consideration of the contract of sale
executed by and between plaintiff and defendant. Moreover, the property is not
solely owned by defendant as appearing in Entry No. 9055 of Transfer Certificate of
Title No. 382532 (Annex A, Complaint), thus:
"Entry No. 9055. Special Power of Attorney in favor of Jocelyn Doles covering the
share of Teodorico Doles on the parcel of land described in this certificate of title by
virtue of the special power of attorney to mortgage, executed before the notary
public, etc."
The rule under the Civil Code is that contracts without a cause or consideration
produce no effect whatsoever. (Art. 1352, Civil Code).
Respondent appealed to the CA. In her appeal brief, respondent interposed her sole
assignment of error:
2
THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR ON THE
GROUND OF [sic] THE DEED OF SALE BETWEEN THE PARTIES HAS NO
CONSIDERATION OR INSUFFICIENCY OF EVIDENCE.6
On April 30, 2001, the CA promulgated its Decision, the dispositive portion of which
reads:
WHEREFORE, IN VIEW OF THE FOREGOING, this appeal is hereby
GRANTED. The Decision of the lower court dated July 29, 1998 is REVERSED and
SET ASIDE. A new one is entered ordering defendant-appellee to execute all
necessary documents to effect transfer of subject property to plaintiff-appellant with
the arrearages of the former’s loan with the NHMFC, at the latter’s expense. No
costs.
SO ORDERED.
The CA concluded that petitioner was the borrower and, in turn, would "re-lend" the
amount borrowed from the respondent to her friends. Hence, the Deed of Absolute
Sale was supported by a valid consideration, which is the sum of money petitioner
owed respondent amounting to P405,430.00, representing both principal and
interest.  THE PRINCIPAL TO COLLECT DEBT IN HIS BEHALF COULD
The CA took into account the following circumstances in their entirety: the supposed
friends of petitioner never presented themselves to respondent and that all
transactions were made by and between petitioner and respondent;7 that the money
borrowed was deposited with the bank account of the petitioner, while payments
made for the loan were deposited by the latter to respondent’s bank account; 8 that
petitioner herself admitted in open court that she was "re-lending" the money loaned
from respondent to other individuals for profit;9 and that the documentary evidence
shows that the actual borrowers, the friends of petitioner, consider her as their
creditor and not the respondent.10
Furthermore, the CA held that the alleged threat or intimidation by respondent did
not vitiate consent, since the same is considered just or legal if made to enforce one’s
claim through competent authority under Article 133511 of the Civil Code;12 that with
respect to the arrearages of petitioner on her monthly amortization with the NHMFC
in the sum of P26,744.09, the same shall be deemed part of the balance of
petitioner’s loan with the NHMFC which respondent agreed to assume; and that the
amount of P3,000.00 representing the rental for January 1997 supposedly collected
by petitioner, as well as the claim for damages and attorney’s fees, is denied for
insufficiency of evidence.13
On May 29, 2001, petitioner filed her Motion for Reconsideration with the CA,
arguing that respondent categorically admitted in open court that she acted only as
agent or representative of Arsenio Pua, the principal financier and, hence, she had no
legal capacity to sue petitioner; and that the CA failed to consider the fact that
petitioner’s father, who co-owned the subject property, was not impleaded as a
defendant nor was he indebted to the respondent and, hence, she cannot be made to
sign the documents to effect the transfer of ownership over the entire property.
On August 6, 2001, the CA issued its Resolution denying the motion on the ground
that the foregoing matters had already been passed upon. 
On August 13, 2001, petitioner received a copy of the CA Resolution. On August 28,
2001, petitioner filed the present Petition and raised the following issues:
I.
WHETHER OR NOT THE PETITIONER CAN BE CONSIDERED AS A
DEBTOR OF THE RESPONDENT.
II.
WHETHER OR NOT AN AGENT WHO WAS NOT AUTHORIZED BY
DIRECTLY COLLECT PAYMENT FROM THE DEBTOR.
III.
WHETHER OR NOT THE CONTRACT OF SALE WAS EXECUTED
FOR A CAUSE.14
Although, as a rule, it is not the business of this Court to review the findings of fact
made by the lower courts, jurisprudence has recognized several exceptions, at least
three of which are present in the instant case, namely: when the judgment is based on
a misapprehension of facts; when the findings of facts of the courts a quo are
conflicting; and when the CA manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, could justify a different
conclusion.15 To arrive at a proper judgment, therefore, the Court finds it necessary
to re-examine the evidence presented by the contending parties during the trial of the
case.
The Petition is meritorious.
The principal issue is whether the Deed of Absolute Sale is supported by a valid
consideration. 
3
1. Petitioner argues that since she is merely the agent or representative of the alleged Atty. Diza:
debtors, then she is not a party to the loan; and that the Deed of Sale executed
between her and the respondent in their own names, which was predicated on that q. And you have transact[ed] with the plaintiff? 
pre-existing debt, is void for lack of consideration. 
witness:
Indeed, the Deed of Absolute Sale purports to be supported by a consideration in the
form of a price certain in money16 and that this sum indisputably pertains to the debt a. Yes, sir.
in issue. This Court has consistently held that a contract of sale is null and void and
produces no effect whatsoever where the same is without cause or
consideration.17 The question that has to be resolved for the moment is whether this Atty. Diza:
debt can be considered as a valid cause or consideration for the sale.
q. What is that transaction?
To restate, the CA cited four instances in the record to support its holding that
petitioner "re-lends" the amount borrowed from respondent to her friends: first, the witness:
friends of petitioner never presented themselves to respondent and that all
transactions were made by and between petitioner and respondent;18 second; the a. To refer those persons to Aura and to refer again to Arsenio Pua, sir.
money passed through the bank accounts of petitioner and respondent;19 third,
petitioner herself admitted that she was "re-lending" the money loaned to other Atty. Diza:
individuals for profit;20 and fourth, the documentary evidence shows that the actual
borrowers, the friends of petitioner, consider her as their creditor and not the
q. Did the plaintiff personally see the transactions with your friends?
respondent.21
witness:
On the first, third, and fourth points, the CA cites the testimony of the petitioner,
then defendant, during her cross-examination:22
a. No, sir.
Atty. Diza:
Atty. Diza:
q. You also mentioned that you were not the one indebted to the plaintiff?
q. Your friends and the plaintiff did not meet personally?
witness:
witness:
a. Yes, sir.
a. Yes, sir.
Atty. Diza:
Atty. Diza:
q. And you mentioned the persons[,] namely, Elizabeth Tomelden, Teresa
Moraquin, Maria Luisa Inocencio, Zenaida Romulo, they are your friends? q. You are intermediaries?

witness: witness:

a. Inocencio and Moraquin are my friends while [as to] Jacob and a. We are both intermediaries. As evidenced by the checks of the debtors
Tomelden[,] they were just referred. they were deposited to the name of Arsenio Pua because the money came
from Arsenio Pua.
4
xxxx Atty. Villacorta:

Atty. Diza: q. Who is this Arsenio Pua?

q. Did the plaintiff knew [sic] that you will lend the money to your friends witness:
specifically the one you mentioned [a] while ago?
a. Principal financier, sir.
witness:
Atty. Villacorta:
a. Yes, she knows the money will go to those persons.
q. So the money came from Arsenio Pua?
Atty. Diza:
witness:
q. You are re-lending the money?
a. Yes, because I am only representing him, sir.
witness:
Other portions of the testimony of respondent must likewise be
a. Yes, sir. considered:24

Atty. Diza: Atty. Villacorta:

q. What profit do you have, do you have commission? q. So it is not actually your money but the money of Arsenio Pua?

witness: witness:

a. Yes, sir. a. Yes, sir.

Atty. Diza: Court:

q. How much? q. It is not your money?

witness: witness:

a. Two percent to Tomelden, one percent to Jacob and then Inocencio and a. Yes, Your Honor.
my friends none, sir.
Atty. Villacorta:
Based on the foregoing, the CA concluded that petitioner is the real
borrower, while the respondent, the real lender.  q. Is it not a fact Ms. Witness that the defendant borrowed from you to
accommodate somebody, are you aware of that?
But as correctly noted by the RTC, respondent, then plaintiff, made the
following admission during her cross examination:23 witness:
5
a. I am aware of that. Atty. Villacorta:

Atty. Villacorta: q. And because of your assistance, the friends of the defendant who are in
need of money were able to obtain loan to [sic] Arsenio Pua through your
q. More or less she [accommodated] several friends of the defendant? assistance?

witness: witness:

a. Yes, sir, I am aware of that. a. Yes, sir.

xxxx Atty. Villacorta:

Atty. Villacorta: q. So that occasion lasted for more than a year?

q. And these friends of the defendant borrowed money from you with the witness:
assurance of the defendant?
a. Yes, sir.
witness:
Atty. Villacorta:
a. They go direct to Jocelyn because I don’t know them.
q. And some of the checks that were issued by the friends of the defendant
xxxx bounced, am I correct?

Atty. Villacorta: witness:

q. And is it not also a fact Madam witness that everytime that the defendant a. Yes, sir.
borrowed money from you her friends who [are] in need of money issued
check[s] to you? There were checks issued to you? Atty. Villacorta:

witness: q. And because of that Arsenio Pua got mad with you?

a. Yes, there were checks issued. witness:

Atty. Villacorta: a. Yes, sir.

q. By the friends of the defendant, am I correct? Respondent is estopped to deny that she herself acted as agent of a certain Arsenio
Pua, her disclosed principal. She is also estopped to deny that petitioner acted as
witness: agent for the alleged debtors, the friends whom she (petitioner) referred.

a. Yes, sir. This Court has affirmed that, under Article 1868 of the Civil Code, the basis of
agency is representation.25 The question of whether an agency has been created is

6
ordinarily a question which may be established in the same way as any other fact,
either by direct or circumstantial evidence. The question is ultimately one of
intention.26 Agency may even be implied from the words and conduct of the parties
and the circumstances of the particular case.27Though the fact or extent of authority
of the agents may not, as a general rule, be established from the declarations of the
agents alone, if one professes to act as agent for another, she may be estopped to
deny her agency both as against the asserted principal and the third persons
interested in the transaction in which he or she is engaged.28
In this case, petitioner knew that the financier of respondent is Pua; and respondent
knew that the borrowers are friends of petitioner.
The CA is incorrect when it considered the fact that the "supposed friends of
[petitioner], the actual borrowers, did not present themselves to [respondent]" as
evidence that negates the agency relationship—it is sufficient that petitioner
disclosed to respondent that the former was acting in behalf of her principals, her
friends whom she referred to respondent. For an agency to arise, it is not necessary
that the principal personally encounter the third person with whom the agent
interacts. The law in fact contemplates, and to a great degree, impersonal dealings
where the principal need not personally know or meet the third person with whom
her agent transacts: precisely, the purpose of agency is to extend the personality of
the principal through the facility of the agent.29
In the case at bar, both petitioner and respondent have undeniably disclosed to each
other that they are representing someone else, and so both of them are estopped to
deny the same. It is evident from the record that petitioner merely refers actual
borrowers and then collects and disburses the amounts of the loan upon which she
received a commission; and that respondent transacts on behalf of her "principal
financier", a certain Arsenio Pua. If their respective principals do not actually and
personally know each other, such ignorance does not affect their juridical standing as
agents, especially since the very purpose of agency is to extend the personality of the
principal through the facility of the agent.
With respect to the admission of petitioner that she is "re-lending" the money loaned
from respondent to other individuals for profit, it must be stressed that the manner in
which the parties designate the relationship is not controlling. If an act done by one
person in behalf of another is in its essential nature one of agency, the former is the
agent of the latter notwithstanding he or she is not so called.30 The question is to be
determined by the fact that one represents and is acting for another, and if relations
exist which will constitute an agency, it will be an agency whether the parties
understood the exact nature of the relation or not.31
That both parties acted as mere agents is shown by the undisputed fact that the
friends of petitioner issued checks in payment of the loan in the name of Pua. If it is
true that petitioner was "re-lending", then the checks should have been drawn in her
name and not directly paid to Pua.
With respect to the second point, particularly, the finding of the CA that the
disbursements and payments for the loan were made through the bank accounts of
petitioner and respondent, 
suffice it to say that in the normal course of commercial dealings and for reasons of
convenience and practical utility it can be reasonably expected that the facilities of
the agent, such as a bank account, may be employed, and that a sub-agent be
appointed, such as the bank itself, to carry out the task, especially where there is no
stipulation to the contrary.32
In view of the two agency relationships, petitioner and respondent are not privy to
the contract of loan between their principals. Since the sale is predicated on that loan,
then the sale is void for lack of consideration. 
2. A further scrutiny of the record shows, however, that the sale might have been
backed up by another consideration that is separate and distinct from the debt:
respondent averred in her complaint and testified that the parties had agreed that as a
condition for the conveyance of the property the respondent shall assume the balance
of the mortgage loan which petitioner allegedly owed to the NHMFC.33 This Court in
the recent past has declared that an assumption of a mortgage debt may constitute a
valid consideration for a sale.34
Although the record shows that petitioner admitted at the time of trial that she owned
the property described in the TCT,35 the Court must stress that the Transfer
Certificate of Title No. 38253236 on its face shows that the owner of the property
which admittedly forms the subject matter of the Deed of Absolute Sale refers
neither to the petitioner nor to her father, Teodorico Doles, the alleged co-owner.
Rather, it states that the property is registered in the name of "Household
Development Corporation." Although there is an entry to the effect that the petitioner
had been granted a special power of attorney "covering the shares of Teodorico
Doles on the parcel of land described in this certificate," 37 it cannot be inferred from
this bare notation, nor from any other evidence on the record, that the petitioner or
her father held any direct interest on the property in question so as to validly
constitute a mortgage thereon38 and, with more reason, to effect the delivery of the
object of the sale at the consummation stage.39 What is worse, there is a notation that
the TCT itself has been "cancelled." 40
In view of these anomalies, the Court cannot entertain the 
possibility that respondent agreed to assume the balance of the mortgage loan which
petitioner allegedly owed to the NHMFC, especially since the record is bereft of any
7
factual finding that petitioner was, in the first place, endowed with any ownership
rights to validly mortgage and convey the property. As the complainant who initiated
the case, respondent bears the burden of proving the basis of her complaint. Having
failed to discharge such burden, the Court has no choice but to declare the sale void
for lack of cause. And since the sale is void, the Court finds it unnecessary to dwell
on the issue of whether duress or intimidation had been foisted upon petitioner upon
the execution of the sale.  direction of another—the principal. Indeed, the very word “agency” has come to
Moreover, even assuming the mortgage validly exists, the Court notes respondent’s
allegation that the mortgage with the NHMFC was for 25 years which began
September 3, 1994. Respondent filed her Complaint for Specific Performance in
1997. Since the 25 years had not lapsed, the prayer of respondent to compel
petitioner to execute necessary documents to effect the transfer of title is premature.
WHEREFORE, the petition is granted. The Decision and Resolution of the Court of
Appeals are REVERSED and SET ASIDE. The complaint of respondent in Civil
Case No. 97-82716 is DISMISSED.
SO ORDERED.
G.R. No. 117356. June 19, 2000.*
VICTORIAS MILLING CO., INC., petitioner, vs. COURT OF APPEALS and
CONSOLIDATED SUGAR CORPORATION, respondents.
Appeals; Pleadings and Practice; It is settled that an issue which was not
raised during the trial in the court below could not be raised for the first time on
appeal as to do so would be offensive to the basic rules of fair play, justice, and due
process.—Anent the first issue, we find from the records that petitioner raised this
issue for the first time on appeal. It is settled that an issue which was not raised
during the trial in the court below could not be raised for the first time on appeal as
to do so would be offensive to the basic rules  assignee of vendee are not mutually creditors and debtors of each other and
_______________
*
 SECOND DIVISION.
664
664  SUPREME COURT REPORTS ANNOTATED 
Victorias Milling Co., Inc. vs. Court of Appeals
of fair play, justice, and due process. Nonetheless, the Court of Appeals opted
to address this issue, hence, now a matter for our consideration.
Agency; The basis of agency is representation—on the part of the principal,
there must be an actual intention to appoint or an intention naturally inferable from
his words or actions, while on the part of the agent, there must be an intention to
accept the appointment and act on it; One factor which most clearly distinguishes
agency from other legal concepts is control—one person (the agent) agreeing to act
under the control or direction of another (the principal).—It is clear from Article
1868 that the basis of agency is representation. On the part of the principal, there
must be an actual intention to appoint or an intention naturally inferable from his
words or actions; and on the part of the agent, there must be an intention to accept
the appointment and act on it, and in the absence of such intent, there is generally no
agency. One factor which most clearly distinguishes agency from other legal
concepts is control; one person—the agent—agrees to act under the control or
connote control by the principal. The control factor, more than any other, has caused
the courts to put contracts between principal and agent in a separate category.
Same; An authorization given to another containing the phrase “for and in
our behalf” does not necessarily establish an agency, as ultimately, what is decisive
is the intention of the parties, and the use of the words “sold and endorsed” means
that the parties intended a contract of sale, and not an agency.—It appears plain to
us that private respondent CSC was a buyer of the SLDFR form, and not an agent of
STM. Private respondent CSC was not subject to STM’s control. The question of
whether a contract is one of sale or agency depends on the intention of the parties as
gathered from the whole scope and effect of the language employed. That the
authorization given to CSC contained the phrase “for and in our (STM’s) behalf” did
not establish an agency. Ultimately, what is decisive is the intention of the parties.
That no agency was meant to be established by the CSC and STM is clearly shown
by CSC’s communication to petitioner that SLDR No. 1214M had been “sold and
endorsed” to it. The use of the words “sold and endorsed” means that STM and CSC
intended a contract of sale, and not an agency. Hence, on this score, no error was
committed by the respondent appellate court when it 
665
VOL. 333, JUNE 19, 2000  665 
Victorias Milling Co., Inc. vs. Court of Appeals
held that CSC was not STM’s agent and could independently sue petitioner.
Compensation; Where the articles had been fully paid for, the vendor and the
compensation could not take place pursuant to Article 1279 of the Civil Code.—On
the second issue, proceeding from the theory that the transactions entered into
between petitioner and STM are but serial parts of one account, petitioner insists that
its debt has been offset by its claim for STM’s unpaid purchases, pursuant to Article
1279 of the Civil Code. However, the trial court found, and the Court of Appeals
concurred, that the purchase of sugar covered by SLDR No. 1214M was a separate
and independent transaction; it was not a serial part of a single transaction or of one
account contrary to petitioner’s insistence. Evidence on record shows, without being
rebutted, that petitioner had been paid for the sugar purchased under SLDR No.
1214M. Petitioner clearly had the obligation to deliver said commodity to STM or its
assignee. Since said sugar had been fully paid for, petitioner and CSC, as assignee of
STM, were not mutually creditors and debtors of each other. No reversible error
could thereby be imputed to respondent appellate court when it refused to apply
Article 1279 of the Civil Code to the present case.
8
 Sale; Words and Phrases; Where the terms and conditions clearly show that
the vendor transferred title to the articles to the buyer or his assignee upon payment
of the purchase price, the same clearly establish a contract of sale, not a contract to
sell.—The aforequoted terms and conditions clearly show that petitioner transferred
title to the sugar to the buyer or his assignee upon payment of the purchase price.
Said terms clearly establish a contract of sale, not a contract to sell. Petitioner is now
estopped from alleging the contrary. The contract is the law between the contracting
parties. And where the terms and conditions so stipulated are not contrary to law,
morals, good customs, public policy or public order, the contract is valid and must be
upheld. Having transferred title to the sugar in question, petitioner is now obliged to
deliver it to the purchaser or its assignee.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
666
666  SUPREME COURT REPORTS ANNOTATED  warehouse and was allowed to withdraw sugar. However, after 2,000 bags had been
Victorias Milling Co., Inc. vs. Court of Appeals
     Ruben E. Agpalo for petitioner.
     Alfonso R. Yatco for private respondent.
QUISUMBING, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the decision of the Court of Appeals dated February 24, 1994, in CA-G.R.
CV No. 31717, as well as the respondent court's resolution of September 30, 1994
modifying said decision. Both decision and resolution amended the judgment dated
February 13, 1991, of the Regional Trial Court of Makati City, Branch 147, in Civil
Case No. 90-118.
The facts of this case as found by both the trial and appellate courts are as follows:
St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner
Victorias Milling Co., Inc., (VMC). In the course of their dealings, petitioner issued
several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases.
Among these was SLDR No. 1214M, which gave rise to the instant case. Dated
October 16, 1989, SLDR No. 1214M covers 25,000 bags of sugar. Each bag
contained 50 kilograms and priced at P638.00 per bag as "per sales order VMC
Marketing No. 042 dated October 16, 1989."1 The transaction it covered was a "direct
sale."2 The SLDR also contains an additional note which reads: "subject for (sic)
availability of a (sic) stock at NAWACO (warehouse)."3  not be served with summons, the case proceeded only against the latter. During the
On October 25, 1989, STM sold to private respondent Consolidated Sugar
Corporation (CSC) its rights in SLDR No. 1214M for P 14,750,000.00. CSC issued
one check dated October 25, 1989 and three checks postdated November 13, 1989 in
payment. That same day, CSC wrote petitioner that it had been authorized by STM to
withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were a copy
of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to
withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery
Receipt-Refined Sugar (SDR) No. 1214 dated October 16, 1989 in the total quantity
of 25,000 bags."4 
On October 27, 1989, STM issued 16 checks in the total amount of P31,900,000.00
with petitioner as payee. The latter, in turn, issued Official Receipt No. 33743 dated
October 27, 1989 acknowledging receipt of the said checks in payment of 50,000
bags. Aside from SLDR No. 1214M, said checks also covered SLDR No. 1213.
Private respondent CSC surrendered SLDR No. 1214M to the petitioner's NAWACO
released, petitioner refused to allow further withdrawals of sugar against SLDR No.
1214M. CSC then sent petitioner a letter dated January 23, 1990 informing it that
SLDR No. 1214M had been "sold and endorsed" to it but that it had been refused
further withdrawals of sugar from petitioner's warehouse despite the fact that only
2,000 bags had been withdrawn.5 CSC thus inquired when it would be allowed to
withdraw the remaining 23,000 bags.
On January 31, 1990, petitioner replied that it could not allow any further
withdrawals of sugar against SLDR No. 1214M because STM had already
dwithdrawn all the sugar covered by the cleared checks.6 
On March 2, 1990, CSC sent petitioner a letter demanding the release of the balance
of 23,000 bags.
Seven days later, petitioner reiterated that all the sugar corresponding to the amount
of STM's cleared checks had been fully withdrawn and hence, there would be no
more deliveries of the commodity to STM's account. Petitioner also noted that CSC
had represented itself to be STM's agent as it had withdrawn the 2,000 bags against
SLDR No. 1214M "for and in behalf" of STM.
On April 27, 1990, CSC filed a complaint for specific performance, docketed as
Civil Case No. 90-1118. Defendants were Teresita Ng Sy (doing business under the
name of St. Therese Merchandising) and herein petitioner. Since the former could
trial, it was discovered that Teresita Ng Go who testified for CSC was the same
Teresita Ng Sy who could not be reached through summons.7 CSC, however, did not
bother to pursue its case against her, but instead used her as its witness.
9
CSC's complaint alleged that STM had fully paid petitioner for the sugar covered by
SLDR No. 1214M. Therefore, the latter had no justification for refusing delivery of
the sugar. CSC prayed that petitioner be ordered to deliver the 23,000 bags covered
by SLDR No. 1214M and sought the award of P1,104,000.00 in unrealized profits,
P3,000,000.00 as exemplary damages, P2,200,000.00 as attorney's fees and litigation
expenses.
Petitioner's primary defense a quo was that it was an unpaid seller for the 23,000
bags.8 Since STM had already drawn in full all the sugar corresponding to the amount
of its cleared checks, it could no longer authorize further delivery of sugar to CSC.
Petitioner also contended that it had no privity of contract with CSC.
Petitioner explained that the SLDRs, which it had issued, were not documents of
title, but mere delivery receipts issued pursuant to a series of transactions entered
into between it and STM. The SLDRs prescribed delivery of the sugar to the party
specified therein and did not authorize the transfer of said party's rights and interests.
Petitioner also alleged that CSC did not pay for the SLDR and was actually STM's
co-conspirator to defraud it through a misrepresentation that CSC was an innocent
purchaser for value and in good faith. Petitioner then prayed that CSC be ordered to
pay it the following sums: P10,000,000.00 as moral damages; P10,000,000.00 as
exemplary damages; and P1,500,000.00 as attorney's fees. Petitioner also prayed that
cross-defendant STM be ordered to pay it P10,000,000.00 in exemplary damages,
and P1,500,000.00 as attorney's fees.
Since no settlement was reached at pre-trial, the trial court heard the case on the
merits.
As earlier stated, the trial court rendered its judgment favoring private respondent
CSC, as follows:
"WHEREFORE, in view of the foregoing, the Court hereby renders judgment in
favor of the plaintiff and against defendant Victorias Milling Company:
"1) Ordering defendant Victorias Milling Company to deliver to the plaintiff
23,000 bags of refined sugar due under SLDR No. 1214;
"2) Ordering defendant Victorias Milling Company to pay the amount of
P920,000.00 as unrealized profits, the amount of P800,000.00 as exemplary
damages and the amount of P1,357,000.00, which is 10% of the acquisition
value of the undelivered bags of refined sugar in the amount of
P13,570,000.00, as attorney's fees, plus the costs.
"SO ORDERED."9 
It made the following observations:
"[T]he testimony of plaintiff's witness Teresita Ng Go, that she had fully paid the
purchase price of P15,950,000.00 of the 25,000 bags of sugar bought by her covered
by SLDR No. 1214 as well as the purchase price of P15,950,000.00 for the 25,000
bags of sugar bought by her covered by SLDR No. 1213 on the same date, October
16, 1989 (date of the two SLDRs) is duly supported by Exhibits C to C-15 inclusive
which are post-dated checks dated October 27, 1989 issued by St. Therese
Merchandising in favor of Victorias Milling Company at the time it purchased the
50,000 bags of sugar covered by SLDR No. 1213 and 1214. Said checks appear to
have been honored and duly credited to the account of Victorias Milling Company
because on October 27, 1989 Victorias Milling Company issued official receipt no.
34734 in favor of St. Therese Merchandising for the amount of P31,900,000.00
(Exhibits B and B-1). The testimony of Teresita Ng Go is further supported by
Exhibit F, which is a computer printout of defendant Victorias Milling Company
showing the quantity and value of the purchases made by St. Therese Merchandising,
the SLDR no. issued to cover the purchase, the official reciept no. and the status of
payment. It is clear in Exhibit 'F' that with respect to the sugar covered by SLDR No.
1214 the same has been fully paid as indicated by the word 'cleared' appearing under
the column of 'status of payment.'
"On the other hand, the claim of defendant Victorias Milling Company that the
purchase price of the 25,000 bags of sugar purchased by St. Therese Merchandising
covered by SLDR No. 1214 has not been fully paid is supported only by the
testimony of Arnulfo Caintic, witness for defendant Victorias Milling Company. The
Court notes that the testimony of Arnulfo Caintic is merely a sweeping barren
assertion that the purchase price has not been fully paid and is not corroborated by
any positive evidence. There is an insinuation by Arnulfo Caintic in his testimony
that the postdated checks issued by the buyer in payment of the purchased price were
dishonored. However, said witness failed to present in Court any dishonored check
or any replacement check. Said witness likewise failed to present any bank record
showing that the checks issued by the buyer, Teresita Ng Go, in payment of the
purchase price of the sugar covered by SLDR No. 1214 were dishonored."10 
Petitioner appealed the trial court’s decision to the Court of Appeals.
10
On appeal, petitioner averred that the dealings between it and STM were part of a
series of transactions involving only one account or one general contract of sale.
Pursuant to this contract, STM or any of its authorized agents could withdraw bags
of sugar only against cleared checks of STM. SLDR No. 21214M was only one of 22
SLDRs issued to STM and since the latter had already withdrawn its full quota of
sugar under the said SLDR, CSC was already precluded from seeking delivery of the
23,000 bags of sugar.
Private respondent CSC countered that the sugar purchases involving SLDR No.
1214M were separate and independent transactions and that the details of the series
of purchases were contained in a single statement with a consolidated summary of
cleared check payments and sugar stock withdrawals because this a more convenient
system than issuing separate statements for each purchase.
The appellate court considered the following issues: (a) Whether or not the
transaction between petitioner and STM involving SLDR No. 1214M was a separate,
independent, and single transaction; (b) Whether or not CSC had the capacity to sue
on its own on SLDR No. 1214M; and (c) Whether or not CSC as buyer from STM of
the rights to 25,000 bags of sugar covered by SLDR No. 1214M could compel
petitioner to deliver 23,000 bags allegedly unwithdrawn.
On February 24, 1994, the Court of Appeals rendered its decision modifying the trial
court's judgment, to wit:
"WHEREFORE, the Court hereby MODIFIES the assailed judgment and orders
defendant-appellant to:
"1) Deliver to plaintiff-appellee 12,586 bags of sugar covered by SLDR No.
1214M;
"2) Pay to plaintiff-appellee P792,918.00 which is 10% of the value of the
undelivered bags of refined sugar, as attorneys fees;
"3) Pay the costs of suit.
"SO ORDERED."11  SLDR No. 1214M, precisely because of its theory that all sales in question were a
Both parties then seasonably filed separate motions for reconsideration.
In its resolution dated September 30, 1994, the appellate court modified its decision
to read:
"WHEREFORE, the Court hereby modifies the assailed judgment and orders
defendant-appellant to:
"(1) Deliver to plaintiff-appellee 23,000 bags of refined sugar under SLDR
No. 1214M;
"(2) Pay costs of suit.
"SO ORDERED."12 
The appellate court explained the rationale for the modification as follows:
"There is merit in plaintiff-appellee's position.
"Exhibit ‘F' We relied upon in fixing the number of bags of sugar which remained
undelivered as 12,586 cannot be made the basis for such a finding. The rule is
explicit that courts should consider the evidence only for the purpose for which it
was offered. (People v. Abalos, et al, 1 CA Rep 783). The rationale for this is to
afford the party against whom the evidence is presented to object thereto if he deems
it necessary. Plaintiff-appellee is, therefore, correct in its argument that Exhibit ‘F'
which was offered to prove that checks in the total amount of P15,950,000.00 had
been cleared. (Formal Offer of Evidence for Plaintiff, Records p. 58) cannot be used
to prove the proposition that 12,586 bags of sugar remained undelivered.
"Testimonial evidence (Testimonies of Teresita Ng [TSN, 10 October 1990, p. 33]
and Marianito L. Santos [TSN, 17 October 1990, pp. 16, 18, and 36]) presented by
plaintiff-appellee was to the effect that it had withdrawn only 2,000 bags of sugar
from SLDR after which it was not allowed to withdraw anymore. Documentary
evidence (Exhibit I, Id., p. 78, Exhibit K, Id., p. 80) show that plaintiff-appellee had
sent demand letters to defendant-appellant asking the latter to allow it to withdraw
the remaining 23,000 bags of sugar from SLDR 1214M. Defendant-appellant, on the
other hand, alleged that sugar delivery to the STM corresponded only to the value of
cleared checks; and that all sugar corresponded to cleared checks had been
withdrawn. Defendant-appellant did not rebut plaintiff-appellee's assertions. It did
not present evidence to show how many bags of sugar had been withdrawn against
series of one single transaction and withdrawal of sugar depended on the clearing of
checks paid therefor.
"After a second look at the evidence, We see no reason to overturn the findings of
the trial court on this point."13 
Hence, the instant petition, positing the following errors as grounds for review:
11
"1. The Court of Appeals erred in not holding that STM's and private
respondent's specially informing petitioner that respondent was authorized
by buyer STM to withdraw sugar against SLDR No. 1214M "for and in our
(STM) behalf," (emphasis in the original) private respondent's withdrawing
2,000 bags of sugar for STM, and STM's empowering other persons as its
agents to withdraw sugar against the same SLDR No. 1214M, rendered
respondent like the other persons, an agent of STM as held in Rallos v.
Felix Go Chan & Realty Corp., 81 SCRA 252, and precluded it from
subsequently claiming and proving being an assignee of SLDR No. 1214M
and from suing by itself for its enforcement because it was conclusively
presumed to be an agent (Sec. 2, Rule 131, Rules of Court) and estopped
from doing so. (Art. 1431, Civil Code).
"2. The Court of Appeals erred in manifestly and arbitrarily ignoring and
disregarding certain relevant and undisputed facts which, had they been
considered, would have shown that petitioner was not liable, except for 69
bags of sugar, and which would justify review of its conclusion of facts by
this Honorable Court.
"3. The Court of Appeals misapplied the law on compensation under Arts.
1279, 1285 and 1626 of the Civil Code when it ruled that compensation
applied only to credits from one SLDR or contract and not to those
from two or more distinct contracts between the same parties; and erred in
denying petitioner's right to setoff all its credits arising prior to notice of
assignment from other sales or SLDRs against private respondent's claim as
assignee under SLDR No. 1214M, so as to extinguish or reduce its liability
to 69 bags, because the law on compensation applies precisely to two or
more distinct contracts between the same parties (emphasis in the original).
"4. The Court of Appeals erred in concluding that the settlement or
liquidation of accounts in Exh. ‘F’ between petitioner and STM,
respondent's admission of its balance, and STM's acquiescence thereto by
silence for almost one year did not render Exh. `F' an account stated and its
balance binding.
"5. The Court of Appeals erred in not holding that the conditions of the
assigned SLDR No. 1214, namely, (a) its subject matter being generic, and
(b) the sale of sugar being subject to its availability at the Nawaco
warehouse, made the sale conditional and prevented STM or private
respondent from acquiring title to the sugar; and the non-availability of
sugar freed petitioner from further obligation.
"6. The Court of Appeals erred in not holding that the "clean hands"
doctrine precluded respondent from seeking judicial reliefs (sic) from
petitioner, its only remedy being against its assignor." 14 
Simply stated, the issues now to be resolved are:
(1)....Whether or not the Court of Appeals erred in not ruling that CSC was
an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an
assignee.
(2)....Whether or not the Court of Appeals erred in applying the law on
compensation to the transaction under SLDR No. 1214M so as to preclude
petitioner from offsetting its credits on the other SLDRs.
(3)....Whether or not the Court of Appeals erred in not ruling that the sale of
sugar under SLDR No. 1214M was a conditional sale or a contract to sell
and hence freed petitioner from further obligations.
(4)....Whether or not the Court of Appeals committed an error of law in not
applying the "clean hands doctrine" to preclude CSC from seeking judicial
relief.
The issues will be discussed in seriatim.
Anent the first issue, we find from the records that petitioner raised this issue for the
first time on appeal.1avvphi1 It is settled that an issue which was not raised during
the trial in the court below could not be raised for the first time on appeal as to do so
would be offensive to the basic rules of fair play, justice, and due
process.15 Nonetheless, the Court of Appeals opted to address this issue, hence, now a
matter for our consideration.
Petitioner heavily relies upon STM's letter of authority allowing CSC to withdraw
sugar against SLDR No. 1214M to show that the latter was STM's agent. The
pertinent portion of said letter reads:
"This is to authorize Consolidated Sugar Corporation or its representative to
withdraw for and in our behalf (stress supplied) the refined sugar covered by
Shipping List/Delivery Receipt = Refined Sugar (SDR) No. 1214 dated October 16,
1989 in the total quantity of 25, 000 bags."16 
The Civil Code defines a contract of agency as follows:
12
"Art. 1868. 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."
It is clear from Article 1868 that the basis of agency is representation. 17 On the part of
the principal, there must be an actual intention to appoint18 or an intention naturally
inferable from his words or actions;19 and on the part of the agent, there must be an
intention to accept the appointment and act on it,20 and in the absence of such intent,
there is generally no agency.21 One factor which most clearly distinguishes agency
from other legal concepts is control; one person - the agent - agrees to act under the
control or direction of another - the principal. Indeed, the very word "agency" has
come to connote control by the principal.22 The control factor, more than any other,
has caused the courts to put contracts between principal and agent in a separate
category.23 The Court of Appeals, in finding that CSC, was not an agent of STM,
opined:
"This Court has ruled that where the relation of agency is dependent upon the acts of
the parties, the law makes no presumption of agency, and it is always a fact to be
proved, with the burden of proof resting upon the persons alleging the agency, to
show not only the fact of its existence, but also its nature and extent (Antonio vs.
Enriquez [CA], 51 O.G. 3536]. Here, defendant-appellant failed to sufficiently
establish the existence of an agency relation between plaintiff-appellee and STM.
The fact alone that it (STM) had authorized withdrawal of sugar by plaintiff-appellee
"for and in our (STM's) behalf" should not be eyed as pointing to the existence of an
agency relation ...It should be viewed in the context of all the circumstances
obtaining. Although it would seem STM represented plaintiff-appellee as being its
agent by the use of the phrase "for and in our (STM's) behalf" the matter was cleared
when on 23 January 1990, plaintiff-appellee informed defendant-appellant that
SLDFR No. 1214M had been "sold and endorsed" to it by STM (Exhibit I, Records,
p. 78). Further, plaintiff-appellee has shown that the 25, 000 bags of sugar covered
by the SLDR No. 1214M were sold and transferred by STM to it ...A conclusion that
there was a valid sale and transfer to plaintiff-appellee may, therefore, be made thus
capacitating plaintiff-appellee to sue in its own name, without need of joining its
imputed principal STM as co-plaintiff."24  from alleging the contrary. The contract is the law between the contracting
In the instant case, it appears plain to us that private respondent CSC was a buyer of
the SLDFR form, and not an agent of STM. Private respondent CSC was not subject
to STM's control. The question of whether a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect
of the language employed.25 That the authorization given to CSC contained the
phrase "for and in our (STM's) behalf" did not establish an agency. Ultimately, what
is decisive is the intention of the parties.26 That no agency was meant to be
established by the CSC and STM is clearly shown by CSC's communication to
petitioner that SLDR No. 1214M had been "sold and endorsed" to it.27 The use of the
words "sold and endorsed" means that STM and CSC intended a contract of sale, and
not an agency. Hence, on this score, no error was committed by the respondent
appellate court when it held that CSC was not STM's agent and could independently
sue petitioner.
On the second issue, proceeding from the theory that the transactions entered into
between petitioner and STM are but serial parts of one account, petitioner insists that
its debt has been offset by its claim for STM's unpaid purchases, pursuant to Article
1279 of the Civil Code.28 However, the trial court found, and the Court of Appeals
concurred, that the purchase of sugar covered by SLDR No. 1214M was a separate
and independent transaction; it was not a serial part of a single transaction or of one
account contrary to petitioner's insistence. Evidence on record shows, without being
rebutted, that petitioner had been paid for the sugar purchased under SLDR No.
1214M. Petitioner clearly had the obligation to deliver said commodity to STM or its
assignee. Since said sugar had been fully paid for, petitioner and CSC, as assignee of
STM, were not mutually creditors and debtors of each other. No reversible error
could thereby be imputed to respondent appellate court when, it refused to apply
Article 1279 of the Civil Code to the present case.
Regarding the third issue, petitioner contends that the sale of sugar under SLDR No.
1214M is a conditional sale or a contract to sell, with title to the sugar still remaining
with the vendor. Noteworthy, SLDR No. 1214M contains the following terms and
conditions:
"It is understood and agreed that by payment by buyer/trader of refined sugar and/or
receipt of this document by the buyer/trader personally or through a
representative, title to refined sugar is transferred to buyer/trader and delivery to
him/it is deemed effected and completed (stress supplied) and buyer/trader assumes
full responsibility therefore…"29 
The aforequoted terms and conditions clearly show that petitioner transferred title to
the sugar to the buyer or his assignee upon payment of the purchase price. Said terms
clearly establish a contract of sale, not a contract to sell. Petitioner is now estopped
parties.30 And where the terms and conditions so stipulated are not contrary to law,
morals, good customs, public policy or public order, the contract is valid and must be
upheld.31 Having transferred title to the sugar in question, petitioner is now obliged to
deliver it to the purchaser or its assignee.
As to the fourth issue, petitioner submits that STM and private respondent CSC have
entered into a conspiracy to defraud it of its sugar. This conspiracy is allegedly
evidenced by: (a) the fact that STM's selling price to CSC was below its purchasing
price; (b) CSC's refusal to pursue its case against Teresita Ng Go; and (c) the
authority given by the latter to other persons to withdraw sugar against SLDR No.
13
1214M after she had sold her rights under said SLDR to CSC. Petitioner prays that
the doctrine of "clean hands" should be applied to preclude CSC from seeking
judicial relief. However, despite careful scrutiny, we find here the records bare of
convincing evidence whatsoever to support the petitioner's allegations of fraud. We
are now constrained to deem this matter purely speculative, bereft of concrete proof.
WHEREFORE, the instant petition is DENIED for lack of merit. Costs against
petitioner.
SO ORDERED.
G.R. No. 150128. August 31, 2006.*
LAUREANO T. ANGELES, petitioner, vs. PHILIPPINE NATIONAL
RAILWAYS (PNR) AND RODOLFO FLORES, respondents.
Civil Law; Contracts; Agency; Normally, the agent has neither rights nor
liabilities as against the third party; he cannot thus sue or be sued on the contract.—
Where agency exists, the third party’s (in this case, PNR’s) liability on a contract is
to the principal and not to the agent and the relationship of the third party to the
principal is the same as that in a contract in which there is no agent. Normally,  specified acts on behalf of the principal.—A power of attorney is only but an
_______________
 SECOND DIVISION.
*
 As filed, the petition impleads the Court of Appeals as among the
1
respondents. Pursuant to Sec. 4, Rule 45, the CA need not be impleaded.
445
VOL. 500, AUGUST 31, 2006  445 
Angeles vs. Philippine National Railways (PNR)
the agent has neither rights nor liabilities as against the third party. He cannot
thus sue or be sued on the contract. Since a contract may be violated only by the
parties thereto as against each other, the real party-in-interest, either as plaintiff or
defendant in an action upon that contract must, generally, be a contracting party.
Agency; Assignee; The legal situation is different where an agent is
constituted as an assignee.—The legal situation is, however, different where an
agent is constituted as an assignee. In such a case, the agent may, in his own behalf,
sue on a contract made for his principal, as an assignee of such contract. The rule
requiring every action to be prosecuted in the name of the real party-in-interest
recognizes the assignment of rights of action and also recognizes that when one has a
right assigned to him, he is then the real party-in-interest and may maintain an action
upon such claim or right.
Civil Law; Contracts; Article 1374 of the Civil Code provides that the various
stipulations of a contract shall be read and interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly.—Article
1374 of the Civil Code provides that the various stipulations of a contract shall be
read and interpreted together, attributing to the doubtful ones that sense which may
result from all of them taken jointly. In fine, the real intention of the parties is
primarily to be determined from the language used and gathered from the whole
instrument. When put into the context of the letter as a whole, it is abundantly clear
that the rights which Romualdez waived or ceded in favor of Lizette were those in
furtherance of the agency relation that he had established for the withdrawal of the
rails. At any rate, any doubt as to the intent of Romualdez generated by the way his
letter was couched could be clarified by the acts of the main players themselves.
Article 1371 of the Civil Code provides that to judge the intention of the contracting
parties, their contemporaneous and subsequent acts shall be principally considered.
In other words, in case of doubt, resort may be made to the situation, surroundings,
and relations of the parties.
Powers of Attorney; A power of attorney is only but an instrument in writing
by which a person, as principal, appoints another as his agent and confers upon him
the authority to perform certain
446
446  SUPREME COURT REPORTS ANNOTATED 
Angeles vs. Philippine National Railways (PNR)
instrument in writing by which a person, as principal, appoints another as his agent
14
and confers upon him the authority to perform certain specified acts on behalf of the
principal. The written authorization itself is the power of attorney, and this is clearly
indicated by the fact that it has also been called a “letter of attorney.” Its primary
purpose is not to define the authority of the agent as between himself and his
principal but to evidence the authority of the agent to third parties with whom the
agent deals.The letter under consideration is sufficient to constitute a power of
attorney. Except as may be required by statute, a power of attorney is valid although
no notary public intervened in its execution. A power of attorney must be strictly
construed and pursued. The instrument will be held to grant only those powers which
are specified therein, and the agent may neither go beyond nor deviate from the
power of attorney.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     Vicente D. Millora for petitioner.
     Dionisio D. Ramos and Frolin H. Remoquillo for respondent PNR.
GARCIA, J.:
Under consideration is this petition for review under Rule 45 of the Rules of Court
assailing and seeking to set aside the following issuances of the Court of Appeals
(CA) in CA-G.R. CV No. 54062, to wit:
1. Decision 2 dated June 4, 2001, affirming an earlier decision of the Regional Trial
Court (RTC) of Quezon City, Branch 79, which dismissed the complaint for specific
performance and damages thereat commenced by the petitioner against the herein
respondents; and
2. Resolution 3 dated September 17, 2001, denying the petitioner's motion for
reconsideration.
The facts:
On May 5, 1980, the respondent Philippine National Railways (PNR) informed a
certain Gaudencio Romualdez (Romualdez, hereinafter) that it has accepted the
latter’s offer to buy, on an "AS IS, WHERE IS" basis, the PNR’s scrap/unserviceable
rails located in Del Carmen and Lubao, Pampanga at P1,300.00 and P2,100.00 per
metric ton, respectively, for the total amount of P96,600.00. After paying the stated
purchase price, Romualdez addressed a letter to Atty. Cipriano Dizon, PNR’s Acting
Purchasing Agent. Bearing date May 26, 1980, the letter reads:
Dear Atty. Dizon:
This is to inform you as President of San Juanico Enterprises, that I have authorized
the bearer, LIZETTE R. WIJANCO of No. 1606 Aragon St., Sta. Cruz, Manila, to be
my lawful representative in the withdrawal of the scrap/unserviceable rails awarded
to me.
For this reason, I have given her the original copy of the award, dated May 5, 1980
and O.R. No. 8706855 dated May 20, 1980 which will indicate my waiver of rights,
interests and participation in favor of LIZETTE R. WIJANCO.
Thank you for your cooperation.
Very truly yours,
(Sgd.) Gaudencio Romualdez
The Lizette R. Wijanco mentioned in the letter was Lizette Wijanco- Angeles,
petitioner's now deceased wife. That very same day – May 26, 1980 – Lizette
requested the PNR to transfer the location of withdrawal for the reason that the
scrap/unserviceable rails located in Del Carmen and Lubao, Pampanga were not
ready for hauling. The PNR granted said request and allowed Lizette to withdraw
scrap/unserviceable rails in Murcia, Capas and San Miguel, Tarlac instead. However,
the PNR subsequently suspended the withdrawal in view of what it considered as
documentary discrepancies coupled by reported pilferages of over P500,000.00
worth of PNR scrap properties in Tarlac. 
Consequently, the spouses Angeles demanded the refund of the amount
of P96,000.00. The PNR, however, refused to pay, alleging that as per delivery
receipt duly signed by Lizette, 54.658 metric tons of unserviceable rails had already
been withdrawn which, at P2,100.00 per metric ton, were worth P114,781.80, an
amount that exceeds the claim for refund.
On August 10, 1988, the spouses Angeles filed suit against the PNR and its corporate
secretary, Rodolfo Flores, among others, for specific performance and damages
before the Regional Trial Court of Quezon City. In it, they prayed that PNR be
directed to deliver 46 metric tons of scrap/unserviceable rails and to pay them
damages and attorney's fees.
Issues having been joined following the filing by PNR, et al., of their answer, trial
ensued. Meanwhile, Lizette W. Angeles passed away and was substituted by her
heirs, among whom is her husband, herein petitioner Laureno T. Angeles. 
15
On April 16, 1996, the trial court, on the postulate that the spouses Angeles are not
the real parties-in-interest, rendered judgment dismissing their complaint for lack of
cause of action. As held by the court, Lizette was merely a representative of
Romualdez in the withdrawal of scrap or unserviceable rails awarded to him and not
an assignee to the latter's rights with respect to the award.
Aggrieved, the petitioner interposed an appeal with the CA, which, as stated at the
threshold hereof, in its decision of June 4, 2001, dismissed the appeal and affirmed
that of the trial court. The affirmatory decision was reiterated by the CA in its
resolution of September 17, 2001, denying the petitioner’s motion for
reconsideration.  For this reason, I have given her the original copy of the award, dated May 5, 1980
Hence, the petitioner’s present recourse on the submission that the CA erred in
affirming the trial court's holding that petitioner and his spouse, as plaintiffs a quo,
had no cause of action as they were not the real parties-in-interest in this case.
We DENY the petition.
At the crux of the issue is the matter of how the aforequoted May 26, 1980 letter of
Romualdez to Atty. Dizon of the PNR should be taken: was it meant to designate, or
has it the effect of designating, Lizette W. Angeles as a mere agent or as an assignee
of his (Romualdez's) interest in the scrap rails awarded to San Juanico Enterprises?
The CA’s conclusion, affirmatory of that of the trial court, is that Lizette was not an
assignee, but merely an agent whose authority was limited to the withdrawal of the
scrap rails, hence, without personality to sue.
Where agency exists, the third party's (in this case, PNR's) liability on a contract is to
the principal and not to the agent and the relationship of the third party to the
principal is the same as that in a contract in which there is no agent. Normally, the
agent has neither rights nor liabilities as against the third party. He cannot thus sue or
be sued on the contract. Since a contract may be violated only by the parties thereto
as against each other, the real party-in-interest, either as plaintiff or defendant in an
action upon that contract must, generally, be a contracting party.  that Lizette was intended to be an assignee, and not a mere agent.
The legal situation is, however, different where an agent is constituted as an
assignee. In such a case, the agent may, in his own behalf, sue on a contract made for
his principal, as an assignee of such contract. The rule  The phrase is "For this reason," and the antecedent thereof is his (Romualdez) having
requiring every action to be prosecuted in the name of the real party-in-interest
recognizes the assignment of rights of action and also recognizes  original copy of the contract award to enable her to withdraw the rails as
that when one has a right assigned to him, he is then the real party-in-interest and
may maintain an action upon such claim or right. 4
Upon scrutiny of the subject Romualdez's letter to Atty. Cipriano Dizon dated May
26, 1980, it is at once apparent that Lizette was to act just as a "representative" of
Romualdez in the "withdrawal of rails," and not an assignee. For perspective, we
reproduce the contents of said letter: 
This is to inform you as President of San Juanico Enterprises, that I
have authorized the bearer, LIZETTE R. WIJANCO x x x to be my lawful
representative in the withdrawal of the scrap/unserviceable rails awarded to
me.
and O.R. No. 8706855 dated May 20, 1980 which will indicate my waiver of rights,
interests and participation in favor of LIZETTE R. WIJANCO. (Emphasis added)
If Lizette was without legal standing to sue and appear in this case, there is more
reason to hold that her petitioner husband, either as her conjugal partner or her heir,
is also without such standing. 
Petitioner makes much of the fact that the terms "agent" or "attorney-in-fact" were
not used in the Romualdez letter aforestated. It bears to stress, however, that the
words "principal" and "agent," are not the only terms used to designate the parties in
an agency relation. The agent may also be called an attorney, proxy, delegate or, as
here, representative.
It cannot be over emphasized that Romualdez's use of the active verb "authorized,"
instead of "assigned," indicated an intent on his part to keep and retain his interest in
the subject matter. Stated a bit differently, he intended to limit Lizette’s role in the
scrap transaction to being the representative of his interest therein.
Petitioner submits that the second paragraph of the Romualdez letter, stating - "I
have given [Lizette] the original copy of the award x x x which will indicate my
waiver of rights, interests and participation in favor of Lizette R. Wijanco" - clarifies
 
We are not persuaded. As it were, the petitioner conveniently omitted an important
phrase preceding the paragraph which would have put the whole matter in context.
appointed Lizette as his representative in the matter of the withdrawal of the scrap
items. In fine, the key phrase clearly conveys the idea that Lizette was given the
Romualdez’s authorized representative.
16
Article 1374 of the Civil Code provides that the various stipulations of a contract
shall be read and interpreted together, attributing to the doubtful ones that sense
which may result from all of them taken jointly. In fine, the real intention of the
parties is primarily to be determined from the language used and gathered from the
whole instrument. When put into the context of the letter as a whole, it is abundantly
clear that the rights which Romualdez waived or ceded in favor of Lizette were those
in furtherance of the agency relation that he had established for the withdrawal of the
rails.
At any rate, any doubt as to the intent of Romualdez generated by the way his letter
was couched could be clarified by the acts of the main players themselves. Article
1371 of the Civil Code provides that to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered. In other
words, in case of doubt, resort may be made to the situation, surroundings, and
relations of the parties.
The fact of agency was, as the trial court aptly observed, 5 confirmed in subsequent
letters from the Angeles spouses in which they themselves refer to Lizette as
"authorized representative" of San Juanico Enterprises. Mention may also be made
that the withdrawal receipt which Lizette had signed indicated that she was doing so
in a representative capacity. One professing to act as agent for another is estopped to
deny his agency both as against his asserted principal and third persons interested in
the transaction which he engaged in.
itself is the power of attorney, and this is clearly indicated by the fact that it has also
been called a "letter of attorney." Its primary purpose is not to define the authority of
the agent as between himself and his principal but to evidence the authority of the
agent to third parties with whom the agent deals. 8 The letter under consideration is
sufficient to constitute a power of attorney. Except as may be required by statute, a
power of attorney is valid although no notary public intervened in its execution. 9
A power of attorney must be strictly construed and pursued. The instrument will be
held to grant only those powers which are specified therein, and the agent may
neither go beyond nor deviate from the power of attorney. 10Contextually, all that
Lizette was authorized to do was to withdraw the unserviceable/scrap railings.
Allowing her authority to sue therefor, especially in her own name, would be to read
something not intended, let alone written in the Romualdez letter.
Finally, the petitioner's claim that Lizette paid the amount of P96,000.00 to the PNR
appears to be a mere afterthought; it ought to be dismissed outright under the
estoppel principle. In earlier proceedings, petitioner himself admitted in his
complaint that it was Romualdez who paid this amount. 
WHEREFORE, the petition is DENIED and the assailed decision of the CA
is AFFIRMED.
Costs against the petitioner.

Whether or not an agency has been created is a question to be determined by the fact SO ORDERED.
that one represents and is acting for another. The appellate court, and before it, the
trial court, had peremptorily determined that Lizette, with respect to the withdrawal
of the scrap in question, was acting for Romualdez. And with the view we take of
this case, there were substantial pieces of evidence adduced to support this
determination. The desired reversal urged by the petitioner cannot, accordingly, be
granted. For, factual findings of the trial court, adopted and confirmed by the CA,
are, as a rule, final and conclusive and may not be disturbed on appeal. 6 So it must
be here.

Petitioner maintains that the Romualdez letter in question was not in the form of a
special power of attorney, implying that the latter had not intended to merely
authorize his wife, Lizette, to perform an act for him (Romualdez). The contention is
specious. In the absence of statute, no form or method of execution is required for a
valid power of attorney; it may be in any form clearly showing on its face the agent’s
authority. 7

A power of attorney is only but an instrument in writing by which a person, as

principal, appoints another as his agent and confers upon him the authority to
perform certain specified acts on behalf of the principal. The written authorization
17
 G.R. No. 160346. August 25, 2009.*
PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE CASTILLA (represented
by Mother and Attorney-in-Fact VIRGINIA CASTILLA),
petitioners, vs. COURT OF APPEALS, SPOUSES ISAGANI BELARMINO and
LETICIA OCAMPO, EUFEMIA SAN AGUSTIN-MAGSINO, ZENAIDA SAN
AGUSTIN-McCRAE, MILAGROS SAN AGUSTIN-FORTMAN, MINERVA
SAN AGUSTIN-ATKINSON, FERDINAND SAN AGUSTIN, RAUL SAN
AGUSTIN, ISABELITA SAN AGUSTIN-LUSTENBERGER and VIRGILIO
SAN AGUSTIN, respondents.
Civil Law; Agency; Special Power of Attorney; A special power of attorney is
necessary for an agent to enter into a contract by which the ownership of an
immovable property is transmitted or acquired, either gratuitously or for a valuable
consideration.—Under Article
_______________
* Additional member as per August 3, 2009 raffle.
* THIRD DIVISION.
14
14 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
1878, a special power of attorney is necessary for an agent to enter into a
contract by which the ownership of an immovable property is transmitted or
acquired, either gratuitously or for a valuable consideration. Such stringent statutory
requirement has been explained in Cosmic Lumber Corporation v. Court of Appeals,
265 SCRA 168 (1996).
Same; Same; Same; Absence of a written authority to sell a piece of land is,
ipso jure, void, precisely to protect the interest of an unsuspecting owner from being
prejudiced by the unwarranted act of another.—We have repeatedly held that the
absence of a written authority to sell a piece of land is, ipso jure, void, precisely to
protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another.
Same; Sales; A purchaser of a real property is not required to make any
further inquiry beyond what the certificate of title indicates on its face. But the rule
excludes those who purchase with knowledge of the defect in the title of the vendor
or of facts sufficient to induce a reasonable and prudent person to inquire into the
status of the property.—The Belarminos, for their part, cannot argue that they
purchased the property from Virgilio in good faith. As a general rule, a purchaser of
a real property is not required to make any further inquiry beyond what the certificate
of title indicates on its face. But the rule excludes those who purchase with
knowledge of the defect in the title of the vendor or of facts sufficient to induce a
reasonable and prudent person to inquire into the status of the property. Such
purchaser cannot close his eyes to facts which should put a reasonable man on guard,
and later claim that he acted in good faith on the belief that there was no defect in the
title of the vendor. His mere refusal to believe that such defect exists, or his obvious
neglect by closing his eyes to the possibility of the existence of a defect in the
vendor’s title, will not make him an innocent purchaser for value, if afterwards it
turns out that the title was, in fact, defective. In such a case, he is deemed to have
bought the property at his own risk, and any injury or prejudice occasioned by such
transaction must be borne by him.
CARPIO-MORALES, J., Concurring and Dissenting Opinion:
Civil Law; Estoppel; Article 1432 of the Civil Code expressly states that the
principles of estoppel are adopted “insofar as they are 
15
VOL. 597, AUGUST 25, 2009 15
Pahud vs. Court of Appeals
not in conflict with the provisions of this Code,” among other laws.—Article
1432 of the Civil Code expressly states that the principles of estoppel are adopted
“insofar as they are not in conflict with the provisions of this Code,” among other
laws. Indeed, estoppel, being a principle in equity, cannot be applied in the presence
of a law clearly applicable to the case. The Court is first and foremost a court of law.
While equity might tilt on the side of one party, the same cannot be enforced so as to
overrule positive provisions of law in favor of the other.
Same; Same; The evident purpose of the legal requirement of written authority
is not only to safeguard the interest of an unsuspecting owner from being prejudiced
by the unauthorized act of another, but also to caution the buyer to assure himself of
the specific authorization of the putative agent.—The evident purpose of the legal
requirement of such written authority is not only to safeguard the interest of an
unsuspecting owner from being prejudiced by the unauthorized act of another, but
also to caution the buyer to assure himself of the specific authorization of the
putative agent. In other words, the drafters of the law already saw the risky
predicament of selling lands through agents which, in the absence of a specific law,
would otherwise ultimately depend on equity to resolve disputes such as the present
case.
Same; Same; Estoppel cannot give validity to an act that is prohibited by law
or one that is against public policy.—The previous sale being violative of an express
mandate of law, such cannot be ratified by estoppel. Estoppel cannot give validity to
an act that is prohibited by law or one that is against public policy. Neither can the
defense of illegality be waived. An action or defense for the declaration of the
inexistence of a contract does not prescribe. Amid the confusion from the double
dealing made by their sibling Eufemia, the three sisters expectedly kept mum about
it. Succinctly, their “continued silence” cannot be taken against them. Bargaining
away a provision of law should not be countenanced.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Hilarion L. Aquino for petitioners.16
16 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
18
   Saguisag & Associates for respondents Spouses Isagani Belarmino and Leticia
Ocampo.
  Demeterio L. Hilbero for respondents Eufemia San Agustin-Magsino, et al.
  Carmelino F. Pansacola for respondent Virgilio San Agustin.
NACHURA, J.:
For our resolution is a petition for review on certiorariassailing the April 23,
2003 Decision1 and October 8, 2003 Resolution2 of the Court of Appeals (CA) in
CA-G.R. CV No. 59426. The appellate court, in the said decision and resolution,
reversed and set aside the January 14, 1998 Decision 3 of the Regional Trial Court
(RTC), which ruled in favor of petitioners.
The dispute stemmed from the following facts.
During their lifetime, spouses Pedro San Agustin and Agatona Genil were able to
acquire a 246-square meter parcel of land situated in Barangay Anos, Los Baños,
Laguna and covered by Original Certificate of Title (OCT) No. O-(1655) 0-
15.4 Agatona Genil died on September 13, 1990 while Pedro San Agustin died on
September 14, 1991. Both died intestate, survived by their eight (8) children:
respondents Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and
Virgilio.
Sometime in 1992, Eufemia, Ferdinand and Raul executed a Deed of Absolute
Sale of Undivided Shares5conveying in
_______________
1 Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices
Mercedes Gozo-Dadole and Hakim S. Abdulwahid, concurring; Rollo, pp. 35-45.
2 Id., at pp. 47-48.
3 Rollo, pp. 121-146.
4 Id., at pp. 85-86.
5 Id., at pp. 49-50.
17
VOL. 597, AUGUST 25, 2009 17
Pahud vs. Court of Appeals
favor of petitioners (the Pahuds, for brevity) their respective shares from the lot they
inherited from their deceased parents for P525,000.00. 6 Eufemia also signed the deed
on behalf of her four (4) other co-heirs, namely: Isabelita on the basis of a special
power of attorney executed on September 28, 1991,7 and also for Milagros, Minerva,
and Zenaida but without their apparent written authority.8 The deed of sale was also
not notarized.9
On July 21, 1992, the Pahuds paid P35,792.31 to the Los Baños Rural Bank
where the subject property was mortgaged. 10 The bank issued a release of mortgage
and turned over the owner’s copy of the OCT to the Pahuds. 11Over the following
months, the Pahuds made more payments to Eufemia and her siblings totaling to
P350,000.00.12 They agreed to use the remaining P87,500.00 13 to defray the payment
for taxes and the expenses in transferring the title of the property. 14 When Eufemia
and her co-heirs drafted an extra-judicial settlement of estate to facilitate the transfer
of the title to the Pahuds, Virgilio refused to sign it.15
On July 8, 1993, Virgilio’s co-heirs filed a complaint 16 for judicial partition of
the subject property before the RTC of Calamba, Laguna. On November 28, 1994, in
the course of the proceedings for judicial partition, a Compromise Agreement 17
_______________
6  Id., at pp. 37-38.
7  Id., at p. 61.
8  Id., at p. 37.
9  Id., at pp. 50, 140.
10 Id., at p. 13.
11 Id., at p. 38.
12 Id., at pp. 89-96.
13 Id., at p. 97.
14 Id., at pp. 13, 140.
15 Id., at p. 38.
16 Id., at pp. 51-54. The complaint was docketed as Civil Case No. 2011-93-C.
17 Id., at pp. 69-71.
18
18 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
was signed with seven (7) of the co-heirs agreeing to sell their undivided shares to
Virgilio for P700,000.00. The compromise agreement was, however, not approved
by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6)
co-heirs, refused to sign the agreement because he knew of the previous sale made to
the Pahuds.18
On December 1, 1994, Eufemia acknowledged having received P700,000.00
from Virgilio.19 Virgilio then sold the entire property to spouses Isagani Belarmino
and Leticia Ocampo (Belarminos) sometime in 1994. The Belarminos immediately
constructed a building on the subject property.
Alarmed and bewildered by the ongoing construction on the lot they purchased,
the Pahuds immediately confronted Eufemia who confirmed to them that Virgilio
had sold the property to the Belarminos.20 Aggrieved, the Pahuds filed a complaint in
intervention21 in the pending case for judicial partition.
After trial, the RTC upheld the validity of the sale to petitioners. The dispositive
portion of the decision reads:
“WHEREFORE, the foregoing considered, the Court orders:
1. the sale of the 7/8 portion of the property covered by OCT No. O (1655) O-
15 by the plaintiffs as heirs of deceased Sps. Pedro San Agustin and Agatona Genil
in favor of the Intervenors-Third Party plaintiffs as valid and enforceable, but
obligating the Intervenors-Third Party plaintiffs to complete the payment of the
purchase price of P437,500.00 by paying the balance of P87,500.00 to defendant Fe
19
(sic) San Agustin Magsino. Upon receipt of the balance, the plaintiff shall formalize
the sale of the 7/8 portion in favor of the Intervenor[s]-Third Party plaintiffs;
2. declaring the document entitled “Salaysay sa Pagsang-ayon sa Bilihan”
(Exh. “2-a”) signed by plaintiff Eufemia San
_______________
18 Id., at pp. 136, 139.
19 Id., at p. 106.
20 Id., at pp. 135-136.
21 Id., at pp. 72-84.
19
VOL. 597, AUGUST 25, 2009 19
Pahud vs. Court of Appeals
Agustin attached to the unapproved Compromise Agreement (Exh. “2”) as not a
valid sale in favor of defendant Virgilio San Agustin;
3. declaring the sale (Exh. “4”) made by defendant Virgilio San Agustin of the
property covered by OCT No. O (1655)-O-15 registered in the names of Spouses
Pedro San Agustin and Agatona Genil in favor of Third-party defendant Spouses
Isagani and Leticia Belarmino as not a valid sale and as inexistent;
4. declaring the defendant Virgilio San Agustin and the Third-Party defendants
spouses Isagani and Leticia Belarmino as in bad faith in buying the portion of the
property already sold by the plaintiffs in favor of the Intervenors-Third Party
Plaintiffs and the Third-Party Defendant Sps. Isagani and Leticia Belarmino in
constructing the two-[storey] building in (sic) the property subject of this case; and
5. declaring the parties as not entitled to any damages, with the parties
shouldering their respective responsibilities regarding the payment of attorney[‘]s
fees to their respective lawyers.
No pronouncement as to costs.
SO ORDERED.”22
Not satisfied, respondents appealed the decision to the CA arguing, in the main,
that the sale made by Eufemia for and on behalf of her other co-heirs to the Pahuds
should have been declared void and inexistent for want of a written authority from
her co-heirs. The CA yielded and set aside the findings of the trial court. In disposing
the issue, the CA ruled:
“WHEREFORE, in view of the foregoing, the Decision dated January 14, 1998,
rendered by the Regional Trial Court of Calamba, Laguna, Branch 92 in Civil Case
No. 2011-93-C for Judicial Partition is hereby REVERSED and SET ASIDE, and a
new one entered, as follows:
(1) The case for partition among the plaintiffs-appellees and appellant
Virgilio is now considered closed and terminated;
_______________
22 Id., at pp. 145-146.
20
20 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
(2) Ordering plaintiffs-appellees to return to intervenors-appellees the
total amount they received from the latter, plus an interest of 12% per
annum from the time the complaint [in] intervention was filed on April 12,
1995 until actual payment of the same;
(3) Declaring the sale of appellant Virgilio San Agustin to appellants
spouses, Isagani and Leticia Belarmino[,] as valid and binding;
(4) Declaring appellants-spouses as buyers in good faith and for value
and are the owners of the subject property.
No pronouncement as to costs.
SO ORDERED.”23
Petitioners now come to this Court raising the following arguments:
“I. The Court of Appeals committed grave and reversible error when it did not
apply the second paragraph of Article 1317 of the New Civil Code insofar as
ratification is concerned to the sale of the 4/8 portion of the subject property
executed by respondents San Agustin in favor of petitioners;
II. The Court of Appeals committed grave and reversible error in holding that
respondents spouses Belarminos are in good faith when they bought the
subject property from respondent Virgilio San Agustin despite the findings of
fact by the court a quo that they were in bad faith which clearly contravenes
the presence of long line of case laws upholding the task of giving utmost
weight and value to the factual findings of the trial court during appeals;
[and]
III. The Court of Appeals committed grave and reversible error in holding that
respondents spouses Belarminos have superior rights over the property in
question than petitioners despite the fact that the latter were prior in pos-
_______________
23 Id., at pp. 44-45.
21
VOL. 597, AUGUST 25, 2009 21
Pahud vs. Court of Appeals
session thereby misapplying the provisions of Article 1544 of the New Civil
Code.”24 
The focal issue to be resolved is the status of the sale of the subject property by
Eufemia and her co-heirs to the Pahuds. We find the transaction to be valid and
enforceable.
Article 1874 of the Civil Code plainly provides:
“Art. 1874. When a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.”
Also, under Article 1878,25 a special power of attorney is necessary for an agent
to enter into a contract by which the ownership of an immovable property is
transmitted or acquired, either gratuitously or for a valuable consideration. Such
20
stringent statutory requirement has been explained in Cosmic Lumber Corporation v.
Court of Appeals:26
“[T]he authority of an agent to execute a contract [of] sale of real estate must be
conferred in writing and must give him specific authority, either to conduct the
general business of the principal or to execute a binding contract containing terms
and conditions which are in the contract he did execute. A special power of attorney
is necessary to enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale or that includes
a  executed on September 28, 1991, Rollo, p. 61 (Annex “E”);
_______________
24 Id., at p. 19.
25 Article 1878(5) provides:
Art. 1878. Special powers of attorney are necessary in the following
cases:
xxxx
(5) To enter into any contract by which the ownership of an immovable
is transmitted or acquired either gratuitously or for a valuable consideration.
26 332 Phil. 948; 265 SCRA 168 (1996).
22
22 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
sale as a necessary ingredient of the act mentioned. For the principal to confer the
right upon an agent to sell real estate, a power of attorney must so express the powers
of the agent in clear and unmistakable language. When there is any reasonable doubt
that the language so used conveys such power, no such construction shall be given
the document.”27
In several cases, we have repeatedly held that the absence of a written authority
to sell a piece of land is, ipso jure, void,28 precisely to protect the interest of an
unsuspecting owner from being prejudiced by the unwarranted act of another.
Based on the foregoing, it is not difficult to conclude, in principle, that the sale
made by Eufemia, Isabelita and her two brothers to the Pahuds sometime in 1992
should be valid only with respect to the 4/8 portion of the subject property. The sale
with respect to the 3/8 portion, representing the shares of Zenaida, Milagros, and
Minerva, is void because Eufemia could not dispose of the interest of her co-heirs in
the said lot absent any written authority from the latter, as explicitly required by law.
This was, in fact, the ruling of the CA.
Still, in their petition, the Pahuds argue that the sale with respect to the 3/8
portion of the land should have been deemed ratified when the three co-heirs,
namely: Milagros, Minerva, and Zenaida, executed their respective special power of
attorneys29 authorizing Eufemia to represent them in the sale of their shares in the
subject property.30
_______________
27 Id., at pp. 957-958. (Emphasis supplied, citations omitted.)
28 Estate of Lino Olaguer, etc. v. Hon. CA and Emiliano M. Ongjoco, G.R. No.
173312, August 26, 2008, 563 SCRA 373; Dizon v. Court of Appeals, G.R. Nos.
122544 and 124741, January 28, 2003, 396 SCRA 151, 155; AF Realty &
Development, Inc. v. Dieselman Freight Services, Co., 424 Phil. 446, 455; 373
SCRA 385, 392 (2002); San Juan Structural and Steel Fabricators, Inc. v. Court of
Appeals, G.R. No. 129459, September 29, 1998, 296 SCRA 631, 648.
29 Special Power of Attorney of Isabelita San Agustin-Lustenberger was
23
VOL. 597, AUGUST 25, 2009 23
Pahud vs. Court of Appeals
While the sale with respect to the 3/8 portion is void by express provision of law
and not susceptible to ratification,31 we nevertheless uphold its validity on the basis
of the common law principle of estoppel.
Article 1431 of the Civil Code provides:
“Art. 1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against
the person relying thereon.”
True, at the time of the sale to the Pahuds, Eufemia was not armed with the
requisite special power of attorney to dispose of the 3/8 portion of the property.
Initially, in their answer to the complaint in intervention, 32 Eufemia and her other co-
heirs denied having sold their shares to the Pahuds. During the pre-trial conference,
however, they admitted that they had indeed sold 7/8 of the property to the Pahuds
sometime in 1992.33 Thus, the previous denial was superseded, if not accordingly
amended, by their subsequent admission.34
_______________
Special Power of Attorney of Milagros San Agustin-Fortman was executed in
December 1992, Id., at p. 62 (Annex “F”); Special Power of Attorney of Minerva
San Agustin-Atkinson was executed, undated, but was witnessed by G.R.
Stephenson, Commissioner for Oaths, on February 12, 1993, Id., at p. 63 (Annex
“G”); and Special Power of Attorney of Zenaida San Agustin-McCrae was executed
on May 10, 1993, Id., at p. 64 (Annex “H”).
30 Rollo, p. 20.
31 Civil Code, Art. 1409 provides in part:
Art. 1409. The following contracts are inexistent and void from the
beginning:
xxxx
(7) Those expressly prohibited or declared void by law.
21
 These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.
32 I Records, p. 26; Exh. “I-A,” entitled Answer to Counterclaim dated
December 14, 1993.
33 II Records, pp. 262-264.
34 Rules of Court, Rule 10, Sec. 5 provides in full:
24
24 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
Moreover, in their Comment,35 the said co-heirs again admitted the sale made to
petitioners.36
Interestingly, in no instance did the three (3) heirs concerned assail the validity of
the transaction made by Eufemia to the Pahuds on the basis of want of written
authority to sell. They could have easily filed a case for annulment of the sale of their
respective shares against Eufemia and the Pahuds. Instead, they opted to remain
silent and left the task of raising the validity of the sale as an issue to their co-heir,
Virgilio, who is not privy to the said transaction. They cannot be allowed to rely on
Eufemia, their attorney-in-fact, to impugn the validity of the first transaction because
to allow them to do so would be tantamount to giving premium to their sister’s
dishonest and fraudulent deed. Undeniably, therefore, the silence and passivity of the
three co-heirs on the issue bar them from making a contrary claim.
It is a basic rule in the law of agency that a principal is subject to liability for loss
caused to another by the latter’s reliance upon a deceitful representation by an agent
in the course of his employment (1) if the representation is author-
_______________
SEC. 5. Amendment to conform to or authorize presentation of
evidence.—When issues not raised by the pleadings are tried with the express
or implied consent of the parties, they shall be treated in all respects as if they
had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues
may be made upon motion of any party at any time, even after judgment; but
failure to amend does not affect the result of the trial of these issues. If
evidence is objected to at the trial on the ground that it is not within the issues
made by the pleadings, the court may allow the pleadings to be amended and
shall do so with liberality if the presentation of the merits of the action and
the ends of substantial justice will be subserved thereby. The court may grant
a continuance to enable the amendment to be made.
35 Rollo, pp. 200-204.
36 Id., at p. 200.
25
VOL. 597, AUGUST 25, 2009 25
Pahud vs. Court of Appeals
ized; (2) if it is within the implied authority of the agent to make for the principal; or
(3) if it is apparently authorized, regardless of whether the agent was authorized by
him or not to make the representation.37
By their continued silence, Zenaida, Milagros and Minerva have caused the
Pahuds to believe that they have indeed clothed Eufemia with the authority to
transact on their behalf. Clearly, the three co-heirs are now estopped from impugning
the validity of the sale from assailing the authority of Eufemia to enter into such
transaction.
Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was void
because they no longer had any interest over the subject property which they could
alienate at the time of the second transaction. 38 Nemo dat quod non habet. Virgilio,
however, could still alienate his 1/8 undivided share to the Belarminos.
The Belarminos, for their part, cannot argue that they purchased the property
from Virgilio in good faith. As a general rule, a purchaser of a real property is not
required to make any further inquiry beyond what the certificate of title indicates on
its face.39 But the rule excludes those who purchase
_______________
37 See De Leon, Comments and Cases on Partnership, Agency and Trusts, 2005
edition, p. 538, citing Mechem, Cases on the Law of Agency, p. 230.
38 Civil Code, Art. 1409 provides in part:
Art. 1409. The following contracts are inexistent and void from the
beginning:
xxxx
(3) Those whose cause or object did not exist at the time of the
transaction;
xxxx
These contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.
39 Lu v. Intermediate Appellate Court, G.R. No. 70149, January 30, 1989, 169
SCRA 595, 604; Lopez v. Court of Appeals, G.R. No. 49739, January 20, 1989, 169
SCRA 271, 275-276.
26
26 SUPREME COURT REPORTS ANNOTATED
Pahud vs. Court of Appeals
with knowledge of the defect in the title of the vendor or of facts sufficient to induce
a reasonable and prudent person to inquire into the status of the property. 40 Such
purchaser cannot close his eyes to facts which should put a reasonable man on guard,
and later claim that he acted in good faith on the belief that there was no defect in the
title of the vendor. His mere refusal to believe that such defect exists, or his obvious
neglect by closing his eyes to the possibility of the existence of a defect in the
vendor’s title, will not make him an innocent purchaser for value, if afterwards it
turns out that the title was, in fact, defective. In such a case, he is deemed to have
22
bought the property at his own risk, and any injury or prejudice occasioned by such
transaction must be borne by him.41
In the case at bar, the Belarminos were fully aware that the property was
registered not in the name of the immediate transferor, Virgilio, but remained in the
name of Pedro San Agustin and Agatona Genil. 42 This fact alone is sufficient impetus
to make further inquiry and, thus, negate their claim that they are purchasers for
value in good faith.43 They knew that the property was still subject of partition
proceedings before the trial court, and that the compromise agreement signed by the
heirs was not approved by the RTC following the opposition of the counsel for
Eufemia and her six other co-heirs. 44 The Belarminos, being transferees pendente
lite, are deemed buyers in mala fide, and they stand exactly in the shoes of the
transferor and are bound by any judgment or
_______________
40 Abad v. Guimba, G.R. No. 157002, July 29, 2005, 465 SCRA 356, 367.
41 Bailon-Casilao v. Court of Appeals, G.R. No. L-78178, April 15, 1988, 160
SCRA 738, 750.
42 I Records, pp. 5-6.
43 Guaranteed Homes, Inc. v. Heirs of Maria P. Valdez, et al., G.R. No. 171531,
January 30, 2009, 577 SCRA 441.
44 I Records, at pp. 60-61.
27
VOL. 597, AUGUST 25, 2009 27
Pahud vs. Court of Appeals
decree which may be rendered for or against the transferor. 45 Furthermore, had they
verified the status of the property by asking the neighboring residents, they would
have been able to talk to the Pahuds who occupy an adjoining business
establishment46 and would have known that a portion of the property had already
been sold. All these existing and readily verifiable facts are sufficient to suggest that
the Belarminos knew that they were buying the property at their own risk.
WHEREFORE, premises considered, the April 23, 2003 Decision of the Court of
Appeals as well as its October 8, 2003 Resolution in CA-G.R. CV No. 59426, are
REVERSED and SET ASIDE. Accordingly, the January 14, 1998 Decision of
Branch 92 of the Regional Trial Court of Calamba, Laguna is REINSTATED with
the MODIFICATION that the sale made by respondent Virgilio San Agustin to
respondent spouses Isagani Belarmino and Leticia Ocampo is valid only with respect
to the 1/8 portion of the subject property. The trial court is ordered to proceed with
the partition of the property with dispatch.
SO ORDERED.
G.R. No. 144805. June 8, 2006.*
EDUARDO V. LITONJUA, JR. and ANTONIO K. LITONJUA,
petitioners, vs. ETERNIT CORPORATION (now ETERTON MULTI-
RESOURCES CORPORATION), ETEROUTREMER, S.A. and FAR EAST
BANK & TRUST COMPANY, respondents.
Actions; Pleadings and Practice; Appeals; Certiorari; Exceptions; It must be
stressed that issues of facts may not be raised in the Court under Rule 45 of the
Rules of Court because the Court is not a trier of facts.—It must be stressed that
issues of facts may not be raised in the Court under Rule 45 of the Rules of Court
because the Court is not a trier of facts. It is not to re-examine and assess the
evidence on record, whether testimonial and documentary. There are, however,
recognized exceptions where the Court may delve into and resolve factual issues,
namely: (1) When the conclusion is a finding grounded entirely on speculations,
surmises, or conjectures; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant and
appellee; (7) when the findings of the Court of Appeals are contrary to those of the
trial court; (8) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion; and (10) when the findings of fact
of the Court of Appeals are premised on the absence of evidence and are contradicted
by the evidence on record.
Corporation Law; Corporations; Property; Sales; The general principles of
agency govern the relation between the corporation and its officers or agents,
subject to the articles of incorporation, by-laws, or relevant provisions of law.—A
corporation is a juridical person separate and distinct from its members or
stockholders and is not 
_______________
*
 FIRST DIVISION.
205
VOL. 490, JUNE 8, 2006  205 
Litonjua, Jr. vs. Eternit Corporation
affected by the personal rights, obligations and transactions of the latter. It may
act only through its board of directors or, when authorized either by its by-laws or by
its board resolution, through its officers or agents in the normal course of business.
The general principles of agency govern the relation between the corporation and its
officers or agents, subject to the articles of incorporation, by-laws, or relevant
provisions of law.
Same; Same; Same; Same; The property of a corporation, however, is not the
property of the stockholders or members, and as such, may not be sold without
express authority from the board of directors.—The property of a corporation,
however, is not the property of the stockholders or members, and as such, may not be
sold without express authority from the board of directors. Physical acts, like the
23
offering of the properties of the corporation for sale, or the acceptance of a counter-
offer of prospective buyers of such properties and the execution of the deed of sale
covering such property, can be performed by the corporation only by officers or
agents duly authorized for the purpose by corporate by-laws or by specific acts of the
board of directors. Absent such valid delegation/authorization, the rule is that the
declarations of an individual director relating to the affairs of the corporation, but not
in the course of, or connected with, the performance of authorized duties of such
director, are not binding on the corporation.
Same; Same; Same; Same; Agency; Any sale of real property of a
corporation by a person purporting to be an agent thereof but without written
authority from the corporation is null and void.—While a corporation may appoint
agents to negotiate for the sale of its real properties, the final say will have to be with
the board of directors through its officers and agents as authorized by a board
resolution or by its by-laws. An unauthorized act of an officer of the corporation is
not binding on it unless the latter ratifies the same expressly or impliedly by its board
of directors. Any sale of real property of a corporation by a person purporting to be
an agent thereof but without written authority from the corporation is null and void.
The declarations of the agent alone are generally insufficient to establish the fact or
extent of his/her authority.
Same; Same; Same; Same; Same; Consent of both principal and agent is
necessary to create an agency.—By the contract of agency, a person binds himself to
render some service or to do something in  authority, requires proof of reliance upon the representations, and that, in turn, needs
206
206  SUPREME COURT REPORTS ANNOTATED  Appeals.
Litonjua, Jr. vs. Eternit Corporation
representation on behalf of another, with the consent or authority of the latter.
Consent of both principal and agent is necessary to create an agency. The principal
must intend that the agent shall act for him; the agent must intend to accept the
authority and act on it, and the intention of the parties must find expression either in
words or conduct between them.
Same; Same; Same; Same; Same; An agency may be expressed or implied
from the act of the principal, from his silence or lack of action, or failure to
repudiate the agency.—An agency may be expressed or implied from the act of the
principal, from his silence or lack of action, or his failure to repudiate the agency
knowing that another person is acting on his behalf without authority. Acceptance by
the agent may be expressed, or implied from his acts which carry out the agency, or
from his silence or inaction according to the circumstances. Agency may be oral
unless the law requires a specific form. However, to create or convey real rights over
immovable property, a special power of attorney is necessary. Thus, when a sale of a
piece of land or any portion thereof is through an agent, the authority of the latter
shall be in writing, otherwise, the sale shall be void.
Same; Same; Same; Same; Same; A person dealing with a known agent is not
authorized, under any circumstances, blindly to trust the agents—statements as to
the extent of his powers—such person must not act negligently but must use
reasonable diligence and prudence to ascertain whether the agent acts within the
scope of his authority.—A person dealing with a known agent is not authorized,
under any circumstances, blindly to trust the agents; statements as to the extent of his
powers; such person must not act negligently but must use reasonable diligence and
prudence to ascertain whether the agent acts within the scope of his authority. The
settled rule is that, persons dealing with an assumed agent are bound at their peril,
and if they would hold the principal liable, to ascertain not only the fact of agency
but also the nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to prove it.
Same; Same; Same; Same; Same; Agency by Estoppel; Requisites; For an
agency by estoppel to exist, the following must be established.—For an agency by
estoppel to exist, the following must be established: (1) the principal manifested a
representation of the agent’s authority or knowingly allowed the agent to assume
such 
207
VOL. 490, JUNE 8, 2006  207 
Litonjua, Jr. vs. Eternit Corporation
authority; (2) the third person, in good faith, relied upon such representation;
(3) relying upon such representation, such third person has changed his position to
his detriment. An agency by estoppel, which is similar to the doctrine of apparent
proof that the representations predated the action taken in reliance.
PETITION for review on certiorari of the decision and resolution of the Court of
The facts are stated in the opinion of the Court.
     Jimenez, Gonzales, Liwanag, Bello, Valdez, Caluya & Fernandez for
petitioners.
     Eufemio Law Offices for respondents Eternit Corporation and Eteroutremer,
S.A.
     Carlito P. Viniegra for FEBTC (now BPI).
CALLEJO, SR., J.:
On appeal via a Petition for Review on Certiorari is the Decision1 of the Court of
Appeals (CA) in CA-G.R. CV No. 51022, which affirmed the Decision of the
Regional Trial Court (RTC), Pasig City, Branch 165, in Civil Case No. 54887, as
well as the Resolution2 of the CA denying the motion for reconsideration thereof.
The Eternit Corporation (EC) is a corporation duly organized and registered under
Philippine laws. Since 1950, it had been engaged in the manufacture of roofing
materials and pipe products. Its manufacturing operations were conducted on eight
parcels of land with a total area of 47,233 square meters. The properties, located in
Mandaluyong City, Metro Manila, were covered by Transfer Certificates of Title
Nos. 451117, 451118, 451119, 451120, 451121, 451122, 451124 and 451125 under
24
the name of Far East Bank & Trust Company, as trustee. Ninety (90%) percent of the
shares of stocks of EC were owned by Eteroutremer S.A. Corporation (ESAC), a
corporation organized and registered under the laws of Belgium.3 Jack Glanville, an
Australian citizen, was the General Manager and President of EC, while Claude
Frederick Delsaux was the Regional Director for Asia of ESAC. Both had their
offices in Belgium.
In 1986, the management of ESAC grew concerned about the political situation in
the Philippines and wanted to stop its operations in the country. The Committee for
Asia of ESAC instructed Michael Adams, a member of EC’s Board of Directors, to
dispose of the eight parcels of land. Adams engaged the services of realtor/broker
Lauro G. Marquez so that the properties could be offered for sale to prospective
buyers. Glanville later showed the properties to Marquez.
Marquez thereafter offered the parcels of land and the improvements thereon to
Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. In a Letter dated
September 12, 1986, Marquez declared that he was authorized to sell the properties
for P27,000,000.00 and that the terms of the sale were subject to negotiation.4
Eduardo Litonjua, Jr. responded to the offer. Marquez showed the property to
Eduardo Litonjua, Jr., and his brother Antonio K. Litonjua. The Litonjua siblings
offered to buy the property for P20,000,000.00 cash. Marquez apprised Glanville of
the Litonjua siblings’ offer and relayed the same to Delsaux in Belgium, but the
latter did not respond. On October 28, 1986, Glanville telexed Delsaux in Belgium,
inquiring on his position/ counterproposal to the offer of the Litonjua siblings. It was
only on February 12, 1987 that Delsaux sent a telex to Glanville stating that, based
on the "Belgian/Swiss decision," the final offer was "US$1,000,000.00
and P2,500,000.00 to cover all existing obligations prior to final liquidation."5
Marquez furnished Eduardo Litonjua, Jr. with a copy of the telex sent by Delsaux.
Litonjua, Jr. accepted the counterproposal of Delsaux. Marquez conferred with
Glanville, and in a Letter dated February 26, 1987, confirmed that the Litonjua
siblings had accepted the counter-proposal of Delsaux. He also stated that the
Litonjua siblings would confirm full payment within 90 days after execution and
preparation of all documents of sale, together with the necessary governmental
clearances.6
The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security
Bank & Trust Company, Ermita Branch, and drafted an Escrow Agreement to
expedite the sale.7
Sometime later, Marquez and the Litonjua brothers inquired from Glanville when the
sale would be implemented. In a telex dated April 22, 1987, Glanville informed
Delsaux that he had met with the buyer, which had given him the impression that "he
is prepared to press for a satisfactory conclusion to the sale." 8 He also emphasized to
Delsaux that the buyers were concerned because they would incur expenses in bank
commitment fees as a consequence of prolonged period of inaction.9
Meanwhile, with the assumption of Corazon C. Aquino as President of the Republic
of the Philippines, the political situation in the Philippines had improved. Marquez
received a telephone call from Glanville, advising that the sale would no longer
proceed. Glanville followed it up with a Letter dated May 7, 1987, confirming that
he had been instructed by his principal to inform Marquez that "the decision has been
taken at a Board Meeting not to sell the properties on which Eternit Corporation is
situated."10
Delsaux himself later sent a letter dated May 22, 1987, confirming that the ESAC
Regional Office had decided not to proceed with the sale of the subject land, to wit: 
May 22, 1987
Mr. L.G. Marquez
L.G. Marquez, Inc.
334 Makati Stock Exchange Bldg.
6767 Ayala Avenue
Makati, Metro Manila
Philippines
Dear Sir:
Re: Land of Eternit Corporation
I would like to confirm officially that our Group has decided not to proceed with the
sale of the land which was proposed to you.
The Committee for Asia of our Group met recently (meeting every six months) and
examined the position as far as the Philippines are (sic) concerned. Considering [the]
new political situation since the departure of MR. MARCOS and a certain
stabilization in the Philippines, the Committee has decided not to stop our operations
in Manila. In fact, production has started again last week, and (sic) to recognize the
participation in the Corporation.
We regret that we could not make a deal with you this time, but in case the policy
would change at a later state, we would consult you again.
xxx
25
Yours sincerely,
(Sgd.)
C.F. DELSAUX
cc. To: J. GLANVILLE (Eternit Corp.)11
When apprised of this development, the Litonjuas, through counsel, wrote EC,
demanding payment for damages they had suffered on account of the aborted sale.
EC, however, rejected their demand.
The Litonjuas then filed a complaint for specific performance and damages against
EC (now the Eterton Multi-Resources Corporation) and the Far East Bank & Trust
Company, and ESAC in the RTC of Pasig City. An amended complaint was filed, in
which defendant EC was substituted by Eterton Multi-Resources Corporation; Benito
C. Tan, Ruperto V. Tan, Stock Ha T. Tan and Deogracias G. Eufemio were
impleaded as additional defendants on account of their purchase of ESAC shares of
stocks and were the controlling stockholders of EC.
In their answer to the complaint, EC and ESAC alleged that since Eteroutremer was
not doing business in the Philippines, it cannot be subject to the jurisdiction of
Philippine courts; the Board and stockholders of EC never approved any resolution
to sell subject properties nor authorized Marquez to sell the same; and the telex dated
October 28, 1986 of Jack Glanville was his own personal making which did not bind
EC.
On July 3, 1995, the trial court rendered judgment in favor of defendants and
dismissed the amended complaint.12The fallo of the decision reads:
WHEREFORE, the complaint against Eternit Corporation now Eterton Multi-
Resources Corporation and Eteroutremer, S.A. is dismissed on the ground that there
is no valid and binding sale between the plaintiffs and said defendants.
The complaint as against Far East Bank and Trust Company is likewise dismissed for
lack of cause of action.
The counterclaim of Eternit Corporation now Eterton Multi-Resources Corporation
and Eteroutremer, S.A. is also dismissed for lack of merit.13
The trial court declared that since the authority of the agents/realtors was not in
writing, the sale is void and not merely unenforceable, and as such, could not have
been ratified by the principal. In any event, such ratification cannot be given any
retroactive effect. Plaintiffs could not assume that defendants had agreed to sell the
property without a clear authorization from the corporation concerned, that is,
through resolutions of the Board of Directors and stockholders. The trial court also
pointed out that the supposed sale involves substantially all the assets of defendant
EC which would result in the eventual total cessation of its operation. 14
The Litonjuas appealed the decision to the CA, alleging that "(1) the lower court
erred in concluding that the real estate broker in the instant case needed a written
authority from appellee corporation and/or that said broker had no such written
authority; and (2) the lower court committed grave error of law in holding that
appellee corporation is not legally bound for specific performance and/or damages in
the absence of an enabling resolution of the board of directors."15 They averred that
Marquez acted merely as a broker or go-between and not as agent of the corporation;
hence, it was not necessary for him to be empowered as such by any written
authority. They further claimed that an agency by estoppel was created when the
corporation clothed Marquez with apparent authority to negotiate for the sale of the
properties. However, since it was a bilateral contract to buy and sell, it was
equivalent to a perfected contract of sale, which the corporation was obliged to
consummate. 
In reply, EC alleged that Marquez had no written authority from the Board of
Directors to bind it; neither were Glanville and Delsaux authorized by its board of
directors to offer the property for sale. Since the sale involved substantially all of the
corporation’s assets, it would necessarily need the authority from the stockholders.
On June 16, 2000, the CA rendered judgment affirming the decision of the
RTC. 16 The Litonjuas filed a motion for reconsideration, which was also denied by
the appellate court.
The CA ruled that Marquez, who was a real estate broker, was a special agent within
the purview of Article 1874 of the New Civil Code. Under Section 23 of the
Corporation Code, he needed a special authority from EC’s board of directors to bind
such corporation to the sale of its properties. Delsaux, who was merely the
representative of ESAC (the majority stockholder of EC) had no authority to bind the
latter. The CA pointed out that Delsaux was not even a member of the board of
directors of EC. Moreover, the Litonjuas failed to prove that an agency by estoppel
had been created between the parties.
In the instant petition for review, petitioners aver that
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO
PERFECTED CONTRACT OF SALE.
26
 II
THE APPELLATE COURT COMMITTED GRAVE ERROR OF LAW IN
HOLDING THAT MARQUEZ NEEDED A WRITTEN AUTHORITY FROM
RESPONDENT ETERNIT BEFORE THE SALE CAN BE PERFECTED.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT GLANVILLE
AND DELSAUX HAVE THE NECESSARY AUTHORITY TO SELL THE
SUBJECT PROPERTIES, OR AT THE VERY LEAST, WERE KNOWINGLY
PERMITTED BY RESPONDENT ETERNIT TO DO ACTS WITHIN THE SCOPE
OF AN APPARENT AUTHORITY, AND THUS HELD THEM OUT TO THE
PUBLIC AS POSSESSING POWER TO SELL THE SAID PROPERTIES.17
Petitioners maintain that, based on the facts of the case, there was a perfected
contract of sale of the parcels of land and the improvements thereon for
"US$1,000,000.00 plus P2,500,000.00 to cover obligations prior to final liquidation."
Petitioners insist that they had accepted the counter-offer of respondent EC and that
before the counter-offer was withdrawn by respondents, the acceptance was made
known to them through real estate broker Marquez.
Petitioners assert that there was no need for a written authority from the Board of
Directors of EC for Marquez to validly act as broker/middleman/intermediary. As
broker, Marquez was not an ordinary agent because his authority was of a special
and limited character in most respects. His only job as a broker was to look for a
buyer and to bring together the parties to the transaction. He was not authorized to
sell the properties or to make a binding contract to respondent EC; hence, petitioners
argue, Article 1874 of the New Civil Code does not apply.
In any event, petitioners aver, what is important and decisive was that Marquez was
able to communicate both the offer and counter-offer and their acceptance of
respondent EC’s counter-offer, resulting in a perfected contract of sale.
Petitioners posit that the testimonial and documentary evidence on record amply
shows that Glanville, who was the President and General Manager of respondent EC,
and Delsaux, who was the Managing Director for ESAC Asia, had the necessary
authority to sell the subject property or, at least, had been allowed by respondent EC
to hold themselves out in the public as having the power to sell the subject
properties. Petitioners identified such evidence, thus:
1. The testimony of Marquez that he was chosen by Glanville as the then
President and General Manager of Eternit, to sell the properties of said
corporation to any interested party, which authority, as hereinabove
discussed, need not be in writing. 
2. The fact that the NEGOTIATIONS for the sale of the subject properties
spanned SEVERAL MONTHS, from 1986 to 1987;
3. The COUNTER-OFFER made by Eternit through GLANVILLE to sell
its properties to the Petitioners; 
4. The GOOD FAITH of Petitioners in believing Eternit’s offer to sell the
properties as evidenced by the Petitioners’ ACCEPTANCE of the counter-
offer; 
5. The fact that Petitioners DEPOSITED the price of [US]$1,000,000.00
with the Security Bank and that an ESCROW agreement was drafted over
the subject properties;
6. Glanville’s telex to Delsaux inquiring "WHEN WE (Respondents) WILL
IMPLEMENT ACTION TO BUY AND SELL";
7. More importantly, Exhibits "G" and "H" of the Respondents, which
evidenced the fact that Petitioners’ offer was allegedly REJECTED by both
Glanville and Delsaux.18
Petitioners insist that it is incongruous for Glanville and Delsaux to make a counter-
offer to petitioners’ offer and thereafter reject such offer unless they were authorized
to do so by respondent EC. Petitioners insist that Delsaux confirmed his authority to
sell the properties in his letter to Marquez, to wit:
Dear Sir,
Re: Land of Eternit Corporation
I would like to confirm officially that our Group has decided not to proceed with the
sale of the land which was proposed to you.
The Committee for Asia of our Group met recently (meeting every six months) and
examined the position as far as the Philippines are (sic) concerned. Considering the
new political situation since the departure of MR. MARCOS and a certain
stabilization in the Philippines, the Committee has decided not to stop our operations
in Manila[.] [I]n fact production started again last week, and (sic) to reorganize the
participation in the Corporation.
27
We regret that we could not make a deal with you this time, but in case the policy
would change at a later stage we would consult you again.
In the meantime, I remain
Yours sincerely,
C.F. DELSAUX19
Petitioners further emphasize that they acted in good faith when Glanville and
Delsaux were knowingly permitted by respondent EC to sell the properties within the
scope of an apparent authority. Petitioners insist that respondents held themselves to
the public as possessing power to sell the subject properties.
By way of comment, respondents aver that the issues raised by the petitioners are
factual, hence, are proscribed by Rule 45 of the Rules of Court. On the merits of the
petition, respondents EC (now EMC) and ESAC reiterate their submissions in the
CA. They maintain that Glanville, Delsaux and Marquez had no authority from the
stockholders of respondent EC and its Board of Directors to offer the properties for
sale to the petitioners, or to any other person or entity for that matter. They assert that
the decision and resolution of the CA are in accord with law and the evidence on
record, and should be affirmed in toto.
Petitioners aver in their subsequent pleadings that respondent EC, through Glanville
and Delsaux, conformed to the written authority of Marquez to sell the properties.
The authority of Glanville and Delsaux to bind respondent EC is evidenced by the
fact that Glanville and Delsaux negotiated for the sale of 90% of stocks of
respondent EC to Ruperto Tan on June 1, 1997. Given the significance of their
positions and their duties in respondent EC at the time of the transaction, and the fact
that respondent ESAC owns 90% of the shares of stock of respondent EC, a formal
resolution of the Board of Directors would be a mere ceremonial formality. What is
important, petitioners maintain, is that Marquez was able to communicate the offer of
respondent EC and the petitioners’ acceptance thereof. There was no time that they
acted without the knowledge of respondents. In fact, respondent EC never repudiated
the acts of Glanville, Marquez and Delsaux.
The petition has no merit.
Anent the first issue, we agree with the contention of respondents that the issues
raised by petitioner in this case are factual. Whether or not Marquez, Glanville, and
Delsaux were authorized by respondent EC to act as its agents relative to the sale of
the properties of respondent EC, and if so, the boundaries of their authority as agents,
is a question of fact. In the absence of express written terms creating the relationship
of an agency, the existence of an agency is a fact question.20 Whether an agency by
estoppel was created or whether a person acted within the bounds of his apparent
authority, and whether the principal is estopped to deny the apparent authority of its
agent are, likewise, questions of fact to be resolved on the basis of the evidence on
record.21 The findings of the trial court on such issues, as affirmed by the CA, are
conclusive on the Court, absent evidence that the trial and appellate courts ignored,
misconstrued, or misapplied facts and circumstances of substance which, if
considered, would warrant a modification or reversal of the outcome of the case. 22
It must be stressed that issues of facts may not be raised in the Court under Rule 45
of the Rules of Court because the Court is not a trier of facts. It is not to re-examine
and assess the evidence on record, whether testimonial and documentary. There are,
however, recognized exceptions where the Court may delve into and resolve factual
issues, namely:
(1) When the conclusion is a finding grounded entirely on speculations, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee; (7)
when the findings of the Court of Appeals are contrary to those of the trial court; (8)
when the findings of fact are conclusions without citation of specific evidence on
which they are based; (9) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would
justify a different conclusion; and (10) when the findings of fact of the Court of
Appeals are premised on the absence of evidence and are contradicted by the
evidence on record.23
We have reviewed the records thoroughly and find that the petitioners failed to
establish that the instant case falls under any of the foregoing exceptions. Indeed, the
assailed decision of the Court of Appeals is supported by the evidence on record and
the law.
It was the duty of the petitioners to prove that respondent EC had decided to sell its
properties and that it had empowered Adams, Glanville and Delsaux or Marquez to
offer the properties for sale to prospective buyers and to accept any counter-offer.
Petitioners likewise failed to prove that their counter-offer had been accepted by
respondent EC, through Glanville and Delsaux. It must be stressed that when specific
performance is sought of a contract made with an agent, the agency must be
established by clear, certain and specific proof.24
Section 23 of Batas Pambansa Bilang 68, otherwise known as the Corporation Code
of the Philippines, provides:
28
SEC. 23. The Board of Directors or Trustees. – Unless otherwise provided in this
Code, the corporate powers of all corporations formed under this Code shall be
exercised, all business conducted and all property of such corporations controlled
and held by the board of directors or trustees to be elected from among the holders of
stocks, or where there is no stock, from among the members of the corporation, who
shall hold office for one (1) year and until their successors are elected and qualified.  corporation by a person purporting to be an agent thereof but without written
Indeed, a corporation is a juridical person separate and distinct from its members or
stockholders and is not affected by the personal rights, 
obligations and transactions of the latter.  It may act only through its board of
25
directors or, when authorized either by its by-laws or by its board resolution, through
its officers or agents in the normal course of business. The general principles of
agency govern the relation between the corporation and its officers or agents, subject
to the articles of incorporation, by-laws, or relevant provisions of law.26
Under Section 36 of the Corporation Code, a corporation may sell or convey its real
properties, subject to the limitations prescribed by law and the Constitution, as
follows:
SEC. 36. Corporate powers and capacity. – Every corporation incorporated under
this Code has the power and capacity:
xxxx
7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and
otherwise deal with such real and personal property, including securities and bonds
of other corporations, as the transaction of a lawful business of the corporation may
reasonably and necessarily require, subject to the limitations prescribed by the law
and the Constitution.  improvements thereon. The bare fact that Delsaux may have been authorized to sell
The property of a corporation, however, is not the property of the stockholders or
members, and as such, may not be sold without express authority from the board of
directors.27 Physical acts, like the offering of the properties of the corporation for
sale, or the acceptance of a counter-offer of prospective buyers of such properties
and the execution of the deed of sale covering such property, can be performed by
the corporation only by officers or agents duly authorized for the purpose by
corporate by-laws or by specific acts of the board of directors.28 Absent such valid
delegation/authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation, but not in the course of, or connected with,
the performance of authorized duties of such director, are not binding on the
corporation.29
While a corporation may appoint agents to negotiate for the sale of its real properties,
the final say will have to be with the board of directors through its officers and
agents as authorized by a board resolution or by its by-laws.30 An unauthorized act of
an officer of the corporation is not binding on it unless the latter ratifies the same
expressly or impliedly by its board of directors. Any sale of real property of a
authority from the corporation is null and void. The declarations of the agent alone
are generally insufficient to establish the fact or extent of his/her authority.31
By the contract of agency, a person binds himself to render some service or to do
something in representation on behalf of another, with the consent or authority of the
latter.32 Consent of both principal and agent is necessary to create an agency. The
principal must intend that the agent shall act for him; the agent must intend to accept
the authority and act on it, and the intention of the parties must find expression either
in words or conduct between them.33
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that another
person is acting on his behalf without authority. Acceptance by the agent may be
expressed, or implied from his acts which carry out the agency, or from his silence or
inaction according to the circumstances.34 Agency may be oral unless the law
requires a specific form.35 However, to create or convey real rights over immovable
property, a special power of attorney is necessary. 36 Thus, when a sale of a piece of
land or any portion thereof is through an agent, the authority of the latter shall be in
writing, otherwise, the sale shall be void.37
In this case, the petitioners as plaintiffs below, failed to adduce in evidence any
resolution of the Board of Directors of respondent EC empowering Marquez,
Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its
behalf, the eight parcels of land owned by respondent EC including the
to Ruperto Tan the shares of stock of respondent ESAC, on June 1, 1997, cannot be
used as basis for petitioners’ claim that he had likewise been authorized by
respondent EC to sell the parcels of land.
Moreover, the evidence of petitioners shows that Adams and Glanville acted on the
authority of Delsaux, who, in turn, acted on the authority of respondent ESAC,
through its Committee for Asia,38 the Board of Directors of respondent ESAC,39 and
the Belgian/Swiss component of the management of respondent ESAC.40 As such,
Adams and Glanville engaged the services of Marquez to offer to sell the properties
to prospective buyers. Thus, on September 12, 1986, Marquez wrote the petitioner
that he was authorized to offer for sale the property for P27,000,000.00 and the other
terms of the sale subject to negotiations. When petitioners offered to purchase the
property for P20,000,000.00, through Marquez, the latter relayed petitioners’ offer to
29
Glanville; Glanville had to send a telex to Delsaux to inquire the position of
respondent ESAC to petitioners’ offer. However, as admitted by petitioners in their
Memorandum, Delsaux was unable to reply immediately to the telex of Glanville
because Delsaux had to wait for confirmation from respondent ESAC.41 When
Delsaux finally responded to Glanville on February 12, 1987, he made it clear that,
based on the "Belgian/Swiss decision" the final offer of respondent ESAC was
US$1,000,000.00 plus P2,500,000.00 to cover all existing obligations prior to final
liquidation.42 The offer of Delsaux emanated only from the "Belgian/Swiss decision,"
and not the entire management or Board of Directors of respondent ESAC. While it
is true that petitioners accepted the counter-offer of respondent ESAC, respondent
EC was not a party to the transaction between them; hence, EC was not bound by
such acceptance.  Equally barren of merit is petitioners’ contention that respondent EC is estopped to
While Glanville was the President and General Manager of respondent EC, and
Adams and Delsaux were members of its Board of Directors, the three acted for and
in behalf of respondent ESAC, and not as duly authorized agents of respondent EC; a
board resolution evincing the grant of such authority is needed to bind EC to any
agreement regarding the sale of the subject properties. Such board resolution is not a
mere formality but is a condition sine qua non to bind respondent EC. Admittedly,
respondent ESAC owned 90% of the shares of stocks of respondent EC; however,
the mere fact that a corporation owns a majority of the shares of stocks of another, or
even all of such shares of stocks, taken alone, will not justify their being treated as
one corporation.43
It bears stressing that in an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so doing, the agent, by legal
fiction, becomes the principal, authorized to perform all acts which the latter would
have him do. Such a relationship can only be effected with the consent of the
principal, which must not, in any way, be compelled by law or by any court.44
The petitioners cannot feign ignorance of the absence of any regular and valid
authority of respondent EC empowering Adams, Glanville or Delsaux to offer the
properties for sale and to sell the said properties to the petitioners. A person dealing
with a known agent is not authorized, under any circumstances, blindly to trust the
agents; statements as to the extent of his powers; such person must not act
negligently but must use reasonable diligence and prudence to ascertain whether the
agent acts within the scope of his authority.45 The settled rule is that, persons dealing
with an assumed agent are bound at their peril, and if they would hold the principal
liable, to ascertain not only the fact of agency but also the nature and extent of
authority, and in case either is controverted, the burden of proof is upon them to
prove it.46 In this case, the petitioners failed to discharge their burden; hence,
petitioners are not entitled to damages from respondent EC.
It appears that Marquez acted not only as real estate broker for the petitioners but
also as their agent. As gleaned from the letter of Marquez to Glanville, on February
26, 1987, he confirmed, for and in behalf of the petitioners, that the latter had
accepted such offer to sell the land and the improvements thereon. However, we
agree with the ruling of the appellate court that Marquez had no authority to bind
respondent EC to sell the subject properties. A real estate broker is one who
negotiates the sale of real properties. His business, generally speaking, is only to find
a purchaser who is willing to buy the land upon terms fixed by the owner. He has no
authority to bind the principal by signing a contract of sale. Indeed, an authority to
find a purchaser of real property does not include an authority to sell.47
deny the existence of a principal-agency relationship between it and Glanville or
Delsaux. For an agency by estoppel to exist, the following must be established: (1)
the principal manifested a representation of the agent’s authority or knowlingly
allowed the agent to assume such authority; (2) the third person, in good faith, relied
upon such representation; (3) relying upon such representation, such third person has
changed his position to his detriment.48 An agency by estoppel, which is similar to
the doctrine of apparent authority, requires proof of reliance upon the
representations, and that, in turn, needs proof that the representations predated the
action taken in reliance.49 Such proof is lacking in this case. In their communications
to the petitioners, Glanville and Delsaux positively and unequivocally declared that
they were acting for and in behalf of respondent ESAC. 
Neither may respondent EC be deemed to have ratified the transactions between the
petitioners and respondent ESAC, through Glanville, Delsaux and Marquez. The
transactions and the various communications inter se were never submitted to the
Board of Directors of respondent EC for ratification. 
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioners.
SO ORDERED.
Notes.—A homestead patent, once registered, becomes as indefeasible as a
Torrens title. A person deprived of the land, estate, or interest therein by virtue of a
decree of registration may avail of the remedy provided under Section 38 of Act 496.
(Garingan vs. Garingan, 455 SCRA480; Portes, Jr. vs. Arcala, 468 SCRA 343
[2005])
Where a lawyer actively participated in representing complainant and his co-
heirs in their patent application for the subject land, apparently standing as counsel
for them, such ostensible representation and without any evidence to show that the
parties withdrew their authorization, said lawyer can even claim the certificates of
30
titles and other documents with regard to the homestead patents. (Uytengsu III vs.
Baduel, 477 SCRA 621 [2005])
——o0o——
G.R. No. 165133.  April 19, 2010.*
SPOUSES JOSELINA ALCANTARA AND ANTONIO ALCANTARA, and
SPOUSES JOSEFINO RUBI AND ANNIE DISTOR-RUBI, petitioners, vs.
BRIGIDA L. NIDO, as attorney-in-fact of REVELEN N. SRIVASTAVA,
respondent.
Civil Law; Agency; Sales; Article 1874 of the Civil Code requires a written
authority before an agent can sell an immovable property, likewise, a special power
of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired for a valuable consideration.—Article 1874 of
the Civil Code explicitly requires a written authority before an agent can sell an
immovable property. Based on a review of the records, there is absolutely no proof
of respondent’s written authority to sell the lot to petitioners. In fact, during the pre-
trial conference, petitioners admitted that at the time of the negotiation for the sale of
the lot,
_______________
* SECOND DIVISION.
334
334 SUPREME COURT REPORTS ANNOTATED
Alcantara vs. Nido
petitioners were of the belief that respondent was the owner of lot. Petitioners
only knew that Revelen was the owner of the lot during the hearing of this case.
Consequently, the sale of the lot by respondent who did not have a written authority
from Revelen is void. A void contract produces no effect either against or in favor of
anyone and cannot be ratified. A special power of attorney is also necessary to enter
into any contract by which the ownership of an immovable is transmitted or acquired
for a valuable consideration. Without an authority in writing, respondent cannot
validly sell the lot to petitioners. Hence, any “sale” in favor of the petitioners is void.
Same; Same; Same; A General Power of Attorney executed and acknowledged
in the United States of America cannot be admitted in evidence unless it is certified
in accordance with the Rules of Court by an officer in the foreign service of the
Philippines stationed in the United States of America.—Since the General Power of
Attorney was executed and acknowledged in the United States of America, it cannot
be admitted in evidence unless it is certified as such in accordance with the Rules of
Court by an officer in the foreign service of the Philippines stationed in the United
States of America. Hence, this document has no probative value.
Civil Procedure; Dismissal of Actions; Jurisdiction; Dismissal of a case for
lack of jurisdiction may be raised at any stage of the proceedings since jurisdiction
is conferred by law.—The general rule is that dismissal of a case for lack of
jurisdiction may be raised at any stage of the proceedings since jurisdiction is
conferred by law. The lack of jurisdiction affects the very authority of the court to
take cognizance of and to render judgment on the action; otherwise, the inevitable
consequence would make the court’s decision a “lawless” thing. Since the RTC has
no jurisdiction over the complaint filed, all the proceedings as well as the Decision of
17 June 2002 are void. The complaint should perforce be dismissed.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Rodrigo L. Yuson for petitioners.
  A.R. Fulgado & Associates for respondent.
335
VOL. 618, APRIL 19, 2010 335
Alcantara vs. Nido
RESOLUTION
CARPIO, J.:
The Case
Spouses Antonio and Joselina Alcantara and Spouses Josefino and Annie Rubi
(petitioners) filed this Petition for Review 1 assailing the Court of Appeals’ (appellate
court) Decision2 dated 10 June 2004 as well as the Resolution 3dated 17 August 2004
31
in CA-G.R. CV No. 78215. In the assailed decision, the appellate court reversed the
17 June 2002 Decision4 of Branch 69 of the Regional Trial Court of Binangonan,
Rizal (RTC) by dismissing the case for recovery of possession with damages and
preliminary injunction filed by Brigida L. Nido (respondent), in her capacity as
administrator and attorney-in-fact of Revelen N. Srivastava (Revelen).
The Facts
Revelen, who is respondent’s daughter and of legal age, is the owner of an
unregistered land with an area of 1,939 square meters located in Cardona, Rizal.
Sometime in March 1984, respondent accepted the offer of petitioners to purchase a
200-square meter portion of Revelen’s lot (lot) at P200 per square meter. Petitioners
paid P3,000 as downpayment and the balance was payable on installment. Petitioners
constructed their houses in 1985. In 1986, with respondent’s
_______________
1 Under Rule 45 of the Rules of Court.
2 Rollo, pp. 20-29. Penned by Associate Justice Conrado M. Vasquez, Jr. with
Associate Justices Rebecca De Guia-Salvador, and Jose C. Reyes, Jr., concurring.
3 Id., at p. 33. Penned by Associate Justice Conrado M. Vasquez, Jr. with
Associate Justices Rebecca De Guia-Salvador, and Jose C. Reyes, Jr., concurring.
4 CA Rollo, pp. 56-64. Penned by RTC Judge Paterno G. Tiamson.
336
336 SUPREME COURT REPORTS ANNOTATED
Alcantara vs. Nido
consent, petitioners occupied an additional 150 square meters of the lot. By 1987,
petitioners had already paid P17,5005 before petitioners defaulted on their installment
payments.
On 11 May 1994, respondent, acting as administrator and attorney-in-fact of
Revelen, filed a complaint for recovery of possession with damages and prayer for
preliminary injunction against petitioners with the RTC.
The RTC’s Ruling
The RTC stated that based on the evidence presented, Revelen owns the lot and
respondent was verbally authorized to sell 200 square meters to petitioners. The RTC
ruled that since respondent’s authority to sell the land was not in writing, the sale
was void under Article 1874 6 of the Civil Code.7  The RTC ruled that rescission is
the proper remedy.8
On 17 June 2002, the RTC rendered its decision, the dispositive portion reads:
“WHEREFORE, judgment is rendered in favor of plaintiff and against the
defendants, by—
1. Declaring the contract to sell orally agreed by the plaintiff Brigida Nido, in
her capacity as representative or agent of her daughter Revelen Nido
Srivastava, VOID and UNENFORCEABLE.
2. Ordering the parties, upon finality of this judgment, to have mutual
restitution—the defendants and all persons claiming under them to peacefully
vacate and surrender to the plaintiff the possession of the subject lot covered
by TD No. 09-0742 and its derivative Tax Declarations, together with all
permanent improvements introduced 
_______________
5 Records, p. 79.
6  Art. 1874. When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing, otherwise the sale shall be
void.
7 CA Rollo, p. 60.
8 Id., at p. 61.
337
VOL. 618, APRIL 19, 2010 337
Alcantara vs. Nido
thereon, and all improvements built or constructed during the pendency of this
action, in bad faith; and the plaintiff, to return the sum of P17,500.00, the total
amount of the installment on the land paid by defendant; the fruits and interests
during the pendency of the condition shall be deemed to have been mutually
compensated.
3. Ordering the defendants to pay plaintiff the sum of P20,000.00 as attorney’s
fees, plus P15,000.00 as actual litigation expenses, plus the costs of suit.
SO ORDERED.”9
The Appellate Court’s Ruling
On 5 January 2004, petitioners appealed the trial court’s Decision to the appellate
court. In its decision dated 10 June 2004, the appellate court reversed the RTC
decision and dismissed the civil case.10
The appellate court explained that this is an unlawful detainer case. The prayer in
the complaint and amended complaint was for recovery of possession and the case
was filed within one year from the last demand letter. Even if the complaint involves
a question of ownership, it does not deprive the Municipal Trial Court (MTC) of its
jurisdiction over the ejectment case. Petitioners raised the issue of lack of jurisdiction
in their Motion to Dismiss and Answer before the RTC. 11  The RTC denied the
Motion to Dismiss and assumed jurisdiction over the case because the issues pertain
to a determination of the real agreement between the parties and rescission of the
contract to sell the property.12
The appellate court added that even if respondent’s complaint is for recovery of
possession or accion publiciana, the
32
_______________ Alcantara vs. Nido
1. The appellate court gravely erred in ruling that the contract entered into by
9  Id., at pp. 63-64. respondent, in representation of her daughter, and former defendant Eduardo
10 Rollo, p. 28. Rubi (deceased), is void; and
11 Id., at pp. 25-26. 2. The appellate court erred in not ruling that the petitioners are entitled to their
12 Records, p. 66. counterclaims, particularly specific performance. 15
338
338 SUPREME COURT REPORTS ANNOTATED Ruling of the Court
Alcantara vs. Nido
We deny the petition.
RTC still has no jurisdiction to decide the case. The appellate court explained:
Petitioners submit that the sale of land by an agent who has no written authority
Note again that the complaint was filed on 11 May 1994. By that time, Republic Act
is not void but merely voidable given the spirit and intent of the law. Being only
No. 7691 was already in effect. Said law took effect on 15 April 1994, fifteen days
voidable, the contract may be ratified, expressly or impliedly. Petitioners argue that
after its publication in the Malaya and in the Time Journal on 30 March 1994
since the contract to sell was sufficiently established through respondent’s admission
pursuant to Sec. 8 of Republic Act No. 7691.
during the pre-trial conference, the appellate court should have ruled on the matter of
Accordingly, Sec. 33 of Batas Pambansa 129 was amended by Republic Act No.
the counterclaim for specific performance. 16
7691 giving the Municipal Trial Court the exclusive original jurisdiction over all
Respondent argues that the appellate court cannot lawfully rule on petitioners’
civil actions involving title to, or possession of, real property, or any interest therein
counterclaim because there is nothing in the records to sustain petitioners’ claim that
where the assessed value of the property or interest therein does not exceed P20,000
they have fully paid the price of the lot. 17 Respondent points out that petitioners
or, in civil actions in Metro Manila, where such assessed value does not exceed
admitted the lack of written authority to sell. Respondent also alleges that there was
P50,000, exclusive of interest, damages of whatever kind, attorney’s fees, litigation
clearly no meeting of the minds between the parties on the purported contract of
expenses and costs.
sale.18
At bench, the complaint alleges that the whole 1,939- square meter lot of
Revelen N. Srivastava is covered by Tax Declaration No. 09-0742 (Exh. “B”, p. 100,
Records) which gives its assessed value of the whole lot of P4,890.00. Such assessed Sale of Land through an Agent
value falls within the exclusive original prerogative or jurisdiction of the first level
court and, therefore, the Regional Trial Court a quo has no jurisdiction to try and Articles 1874 and 1878 of the Civil Code provide:
decided the same.”13 _______________
The appellate court also held that respondent, as Revelen’s agent, did not have a
written authority to enter into such contract of sale; hence, the contract entered into 15 Id., at p. 15.
between petitioners and respondent is void. A void contract creates no rights or 16 Id., at pp. 15-16.
obligations or any juridical relations. Therefore, the void contract cannot be the 17 Id., at p. 56.
subject of rescission.14 18 Id., at p. 58.
Aggrieved by the appellate court’s Decision, petitioners elevated the case before 340
this Court. 340 SUPREME COURT REPORTS ANNOTATED
Alcantara vs. Nido
Issues
“Art. 1874. When a sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.
Petitioners raise the following arguments:
Art. 1878. Special powers of attorney are necessary in the following cases:
_______________
xxx
(5) To enter into any contract by which the ownership of an immovable is
13 Rollo, pp. 26-27. transmitted or acquired either gratuitously or for a valuable consideration;
14 Id., at pp. 27-28. x x x”
339 Article 1874 of the Civil Code explicitly requires a written authority before an
VOL. 618, APRIL 19, 2010 339 agent can sell an immovable property. Based on a review of the records, there is
33
absolutely no proof of respondent’s written authority to sell the lot to petitioners. In
fact, during the pre-trial conference, petitioners admitted that at the time of the
negotiation for the sale of the lot, petitioners were of the belief that respondent was
the owner of lot.19 Petitioners only knew that Revelen was the owner of the lot during
the hearing of this case. Consequently, the sale of the lot by respondent who did not
have a written authority from Revelen is void. A void contract produces no effect
either against or in favor of anyone and cannot be ratified.20
A special power of attorney is also necessary to enter into any contract by which
the ownership of an immovable is transmitted or acquired for a valuable
consideration. Without an authority in writing, respondent cannot validly sell the lot
to petitioners. Hence, any “sale” in favor of the petitioners is void.
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19 Id., at p. 12.
20 Roberts v. Papio, G.R. No. 166714, 9 February 2007, 515 SCRA 346, 371.
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Our ruling in Dizon v. Court of Appeals21 is instructive:
“When the sale of a piece of land or any interest thereon is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void. Thus the
authority of an agent to execute a contract for the sale of real estate must be
conferred in writing and must give him specific authority, either to conduct the
general business of the principal or to execute a binding contract containing terms
and conditions which are in the contract he did execute. A special power of attorney
is necessary to enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in
general terms to sell must be one that expressly mentions a sale or that includes a
sale as a necessary ingredient of the act mentioned. For the principal to confer the
right upon an agent to sell real estate, a power of attorney must so express the powers
of the agent in clear and unmistakable language. When there is any reasonable doubt
that the language so used conveys such power, no such construction shall be given
the document.”
Further, Article 1318 of the Civil Code enumerates the requisites for a valid
contract, namely:
1. consent of the contracting parties;
2. object certain which is the subject matter of the contract;
3. cause of the obligation which is established.
Respondent did not have the written authority to enter into a contract to sell the
lot. As the consent of Revelen, the real owner of the lot, was not obtained in writing
as required by law, no contract was perfected. Consequently, petitioners failed to
validly acquire the lot.
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21 444 Phil. 161, 165-166; 396 SCRA 151, 155 (2003) citing Cosmic Lumber
Corp. v. Court of Appeals, 332 Phil. 948, 957-958; 265 SCRA 168, 176 (1996).
342
342 SUPREME COURT REPORTS ANNOTATED
Alcantara vs. Nido
General Power of Attorney
On 25 March 1994, Revelen executed a General Power of Attorney constituting
respondent as her attorney-in-fact and authorizing her to enter into any and all
contracts and agreements on Revelen’s behalf. The General Power of Attorney was
notarized by Larry A. Reid, Notary Public in California, U.S.A.
Unfortunately, the General Power of Attorney presented as “Exhibit C” 22 in the
RTC cannot also be the basis of respondent’s written authority to sell the lot.
Section 25, Rule 132 of the Rules of Court provides:
“Sec. 25. Proof of public or official record.—An official record or an entry
therein, when admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the legal custody of
the record, or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the office in which
the record is kept is in a foreign country, the certificate may be made by a secretary
of embassy or legation consul general, consul, vice consul, or consular agent or by
any officer in the foreign service of the Philippines stationed in the foreign country in
which the record is kept, and authenticated by the seal of his office.”
In Teoco v. Metropolitan Bank and Trust Company,23quoting Lopez v. Court of
Appeals,24 we explained: 
“From the foregoing provision, when the special power of attorney is executed
and acknowledged before a notary public or other competent official in a foreign
country, it cannot be admitted in evidence unless it is certified as such in accordance
with the foregoing provision of the rules by a secretary of embassy or legation,
consul general, consul, vice consul, or consular agent or by any officer in the foreign
service of the Philippines stationed in the foreign country in
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22 Records, pp. 102-103.
23 G.R. No. 162333, 23 December 2008, 575 SCRA 82.
24 240 Phil. 811; 156 SCRA 838, 842 (1987).
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Alcantara vs. Nido
which the record is kept of said public document and authenticated by the seal of his
office. A city judge-notary who notarized the document, as in this case, cannot issue
such certification.”25
Since the General Power of Attorney was executed and acknowledged in the
United States of America, it cannot be admitted in evidence unless it is certified as
such in accordance with the Rules of Court by an officer in the foreign service of the
34
Philippines stationed in the United States of America. Hence, this document has no
probative value.
Specific Performance
Petitioners are not entitled to claim for specific performance.  It must be stressed
that when specific performance is sought of a contract made with an agent, the
agency must be established by clear, certain and specific proof. 26 To reiterate, there is
a clear absence of proof that Revelen authorized respondent to sell her lot.
Jurisdiction of the RTC
Section 33 of Batas Pambansa Bilang 129,27 as amended by Republic Act No.
7691 provides:
“Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in Civil Cases.—Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
xxx
(3) Exclusive original jurisdiction in all civil actions which involve title to,
possession of, real property, or any interest therein where the assessed value of the
property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or,
in civil actions in Metro Manila, where such assessed value does not exceed Fifty
_______________
25 Supra note 23 at pp. 95-96.
26 Litonjua, Jr. v. Eternit Corporation, G.R. No. 144805, 8 June 2006, 490
SCRA 204, 218-219.
27 The Judiciary Reorganization Act of 1980.
344
344 SUPREME COURT REPORTS ANNOTATED
Alcantara vs. Nido
thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses and costs: x x x”
In Geonzon Vda. de Barrera v. Heirs of Vicente Legaspi,28the Court explained:
“Before the amendments introduced by Republic Act No. 7691, the plenary
action of accion publiciana was to be brought before the regional trial court. With
the modifications introduced by R.A. No. 7691 in 1994, the jurisdiction of the first
level courts has been expanded to include jurisdiction over other real actions where
the assessed value does not exceed P20,000, P50,000 where the action is filed in
Metro Manila. The first level courts thus have exclusive original jurisdiction
over accion publiciana and accion reivindicatoria where the assessed value of the
real property does not exceed the aforestated amounts. Accordingly, the
jurisdictional element is the assessed value of the property.
Assessed value is understood to be “the worth or value of property established by
taxing authorities on the basis of which the tax rate is applied. Commonly, however,
it does not represent the true or market value of the property.”
The appellate court correctly ruled that even if the complaint filed with the RTC
involves a question of ownership, the MTC still has jurisdiction because the assessed
value of the whole lot as stated in Tax Declaration No. 09-0742 is P4,890. 29 The
MTC cannot be deprived of jurisdiction over an ejectment case based merely on the
assertion of ownership over the litigated property, and the underlying reason for this
rule is to prevent any party from trifling with the summary nature of an ejectment
suit.30
The general rule is that dismissal of a case for lack of jurisdiction may be raised
at any stage of the proceedings since jurisdiction is conferred by law. The lack of
jurisdiction affects
_______________
28 G.R. No. 174346, 12 September 2008, 565 SCRA 192, 197.
29 Records, p. 100.
30 Sudaria v. Quiambao, G.R. No. 164305, 20 November 2007, 537 SCRA 689,
697.
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Alcantara vs. Nido
the very authority of the court to take cognizance of and to render judgment on the
action; otherwise, the inevitable consequence would make the court’s decision a
“lawless” thing.31 Since the RTC has no jurisdiction over the complaint filed, all the
proceedings as well as the Decision of 17 June 2002 are void. The complaint should
perforce be dismissed.
WHEREFORE, we DENY the petition. We AFFIRM the Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 78215.
SO ORDERED.
Brion, Del Castillo, Abad and Perez, JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.—Under the Civil Code, every partner is an agent of the partnership for
the purpose of its business, each one may separately execute all acts of
administration, unless a specification of their respective duties has been agreed upon,
or else it is stipulated that any one of them shall not act without the consent of all the
others. (Mendoza vs. Paule, 579 SCRA 341 [2009])
A special power of attorney is necessary for an agent to enter into a contract by
which the ownership of an immovable property is transmitted or acquired, either
gratuitously or for a valuable consideration. (Pahud vs. Court of Appeals, 597 SCRA
13 [2009])
Absence of a written authority to sell a piece of land is, ipso jure, void, precisely
to protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another. (Pahud vs. Court of Appeals,id.)
——o0o——
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