Pineda v. CA The Facts On 4 January 1982, the Spouses ir!i"io and Adorita #enite$ %&Spouses #enite$'( )ort!a!

ed a house and "ot %&Property'( covered *y Trans+er Certi+icate o+ Tit"e ,o. T-8./1 %&TCT 8./1'( in +avor o+ Juanita P. Pineda %&Pineda'( and 0ei"a P. Sayoc %&Sayoc'(. The rea" estate )ort!a!e secured the Spouses #enite$1s "oan o+ P24.,222 3ith a one-year )aturity period. Pineda and Sayoc did not re!ister the )ort!a!e 3ith the 4e!ister o+ 5eeds. The Spouses #enite$ de"ivered the o3ner1s dup"icate o+ TCT 8./1 to Pineda. On 9 ,ove)*er 198., 3ith the consent o+ Pineda, the Spouses #enite$ so"d the house, 3hich 3as part o+ the Property, to O"ivia 6. 7o8ica %&7o8ica'(. On the sa)e date, 7o8ica +i"ed a petition +or the issuance o+ a second o3ner1s dup"icate o+ TCT 8./1 a""e!in! that she &purchased a parce" o+ "and' and the &o3ner1s dup"icate copy o+ TCT ,o. T-8./1 3as "ost.' On 9 5ece)*er 198., the tria" court !ranted the petition. The 4e!ister o+ 5eeds o+ Cavite City issued the second o3ner1s dup"icate o+ TCT 8./1 in the na)e o+ the Spouses #enite$. On 12 5ece)*er 198., the Spouses #enite$ so"d the "ot covered *y TCT 8./1 to 7o8ica. :ith the re!istration o+ the deed o+ sa"e and presentation o+ the second o3ner1s dup"icate o+ TCT 8./1, the 4e!ister o+ 5eeds cance""ed TCT 8./1 and issued Trans+er Certi+icate o+ Tit"e ,o. T-1.1.8 %&TCT 1.1.8'( in the na)e o+ 7o8ica. On 22 Fe*ruary 198;, 7o8ica o*tained a "oan o+ P292,222 +ro) Teresita A. 6on$a"es %&6on$a"es'(. 7o8ica e<ecuted a pro)issory note and a deed o+ )ort!a!e over the Property in +avor o+ 6on$a"es. 6on$a"es re!istered this deed o+ )ort!a!e 3ith the 4e!ister o+ 5eeds o+ Cavite City 3ho annotated the )ort!a!e on TCT 1.1.8 as =ntry ,o. ..229. 7ean3hi"e, on 8 7ay 198;, Pineda and Sayoc +i"ed a co)p"aint *e+ore the 4e!iona" Tria" Court o+ Cavite City, doc>eted as Civi" Case ,o.

4/;4, a!ainst the Spouses #enite$ and 7o8ica. The co)p"aint prayed +or the cance""ation o+ the second o3ner1s dup"icate o+ TCT 8./1 and the a3ard o+ )ora" da)a!es and attorney1s +ees. ?n their ans3er, the Spouses #enite$ ad)itted se""in! to 7o8ica the Property 3hich 3as a"ready su*8ect to a previous )ort!a!e in +avor o+ Pineda and Sayoc. The Spouses #enite$ c"ai)ed that under the Acknowledgment of Indebtedness, 7o8ica, 3ith the con+or)ity o+ Pineda and Sayoc, a!reed to assu)e the *a"ance o+ the )ort!a!e de*t o+ the Spouses #enite$ to Pineda and Sayoc. The Spouses #enite$ denied any >no3"ed!e o+ 7o8ica1s petition +or the issuance o+ a second o3ner1s dup"icate o+ TCT 8./1. The Spouses #enite$ prayed +or the dis)issa" o+ the co)p"aint and the a3ard o+ )ora" da)a!es and attorney1s +ees. The Spouses #enite$ a"so prayed that in case the court 3ou"d render 8ud!)ent in +avor o+ Pineda and Sayoc, on"y 7o8ica shou"d *e he"d "ia*"e. On the other hand, 7o8ica denied conspirin! 3ith the Spouses #enite$ and

co))ittin! +raud in +i"in! the petition +or the issuance o+ a second o3ner1s dup"icate o+ TCT 8./1. 7o8ica stated that the Spouses #enite$ so"d to her the Property. 7o8ica c"ai)ed that upon the e<ecution o+ the deed o+ sa"e, the Spouses #enite$ de"ivered to her the o3ner1s dup"icate o+ TCT 8./1. @o3ever, 7o8ica a""e!ed that the o3ner1s dup"icate o+ TCT 8./1 3as "ost. 7o8ica a"so asserted that she veri+ied 3ith the 4e!ister o+ 5eeds o+ Cavite City the provision in the deed o+ sa"e that the Property 3as +ree +ro) a"" "iens and encu)*rances and +ound the sa)e to *e true. 7o8ica added that on "earnin! o+ the Spouses #enite$1s )ort!a!e 3ith Pineda and Sayoc, she si!ned the Acknowledgment of Indebtedness. 7o8ica contended that since Pineda, +or herse"+ and Sayoc, con+or)ed to this a!ree)ent, Pineda and Sayoc had no persona"ity to +i"e the co)p"aint. 7o8ica +urther a""e!ed that Pineda and Sayoc 3ere in estoppe" +ro) cha""en!in! the va"idity o+ the second o3ner1s dup"icate o+ TCT 8./1 *ecause Pineda and Sayoc, despite notice, +ai"ed to oppose the reconstitution o+ the tit"e. 7o8ica )aintained that the Spouses #enite$ are indispensa*"e parties *ecause TCT 8./1 3as in their na)e. 7o8ica a"so asserted that she did not *reach the Acknowledgment of Indebtedness since she had paid the Spouses #enite$ an a)ount )ore than their de*t to Pineda and Sayoc. 7o8ica contended that had the Spouses #enite$ paid the a)ount to Pineda and Sayoc, there 3ou"d have *een no o*"i!ation to assu)e. 7o8ica prayed +or the dis)issa" o+ the co)p"aint and the a3ard o+ )ora" and e<e)p"ary da)a!es and attorney1s +ees. 5urin! the pendency o+ the case, Pineda caused the annotation on 18 Au!ust 198/ o+ a notice o+ lis pendens on the ori!ina" o+ TCT 8./1 3ith the 4e!ister o+ 5eeds. A+ter tria", the tria" court rendered a 5ecision dated 1; June 1989, the dispositive portion o+ 3hich readsA :@=4=FO4=, in vie3 o+ the +ore!oin!, the Court here*y renders 8ud!)ent dec"arin! the second o3ner1s dup"icate o+ TCT ,o. T-8./1 o+ the "and records o+ Cavite as nu"" and void and the 4e!ister o+ 5eeds

o+ Cavite City is here*y ordered upon pay)ent o+ the correspondin! "e!a" +ees the annotation o+ this pronounce)ent in its record and the reviva" o+ the +irst o3ner1s dup"icate 3ith the sa)e +aith and credit *e+ore its a""e!ed "oss. The counterc"ai) o+ de+endants #enite$es is here*y dis)issed. ,o pronounce)ent as to costs. SO O45=4=5. On 9 5ece)*er 1989, 7o8ica de+au"ted in payin! her o*"i!ation to 6on$a"es. @ence, 6on$a"es e<tra8udicia""y +orec"osed the )ort!a!e. On 29 January 1988, 6on$a"es purchased at pu*"ic auction the Property +or P42.,244.88. For +ai"ure o+ 7o8ica to redee) the Property, 6on$a"es conso"idated the tit"e to the Property. On 29 7arch 1989, 6on$a"es e<ecuted the correspondin! A++idavit o+ Conso"idation. On .2 7arch 1989, the 4e!ister o+ 5eeds o+ Cavite City cance""ed TCT 1.1.8, 3hich 3as in 7o8ica1s na)e, and issued Trans+er Certi+icate o+ Tit"e ,o. T-1/284 %&TCT 1/284'( in the na)e o+ 6on$a"es. TCT 1/284 contained =ntry ,o. .;;22, the notice o+ lis pendens dated 18 Au!ust 198/ in re"ation to Civi" Case ,o. 4/;4. The 4e!ister o+ 5eeds annotated on TCT 1/284 the notice o+ lis pendens, even thou!h TCT 1.1.8 did not contain such annotation. 7ean3hi"e, dissatis+ied 3ith the tria" court1s decision, the Spouses #enite$ and 7o8ica appea"ed to the Court o+ Appea"s, doc>eted as CA6.4. C ,o. 1;419. On 29 January 1991, the Court o+ Appea"s rendered a 5ecision a++ir)in! the tria" court1s decision dec"arin! void the second o3ner1s dup"icate o+ TCT 8./1. The decision o+ the Court o+ Appea"s *eca)e +ina" and 3as entered in the #oo> o+ =ntries o+ Jud!)ents on 19 June 1991. The Court o+ Appea"s returned the records o+ the case to the tria" court on 12 Ju"y 1991. On )otion o+ Pineda and Sayoc, the tria" court issued a 3rit o+ e<ecution to en+orce the 8ud!)ent. @o3ever, the 3rit o+ e<ecution 3as returned unsatis+ied. The Sheri++1s 4eturn o+ 12 Septe)*er 1991 stated that the 4e!ister o+ 5eeds cou"d not i)p"e)ent the 3rit o+ e<ecution. The Sheri++1s 4eturn sho3ed that

the 4e!ister o+ 5eeds had a"ready cance""ed TCT 8./1 and issued TCT 1/284 in the na)e o+ 6on$a"es *y virtue o+ the conso"idation o+ tit"e dated 29 7arch 1989. ConseBuent"y, on / 5ece)*er 1991, Pineda and Sayoc +i"ed a )otion 3ith the tria" court +or the issuance o+ an order reBuirin! 6on$a"es to surrender the o3ner1s dup"icate o+ TCT 1/284 to the 4e!ister o+ 5eeds o+ Cavite City. ?n its Order dated 12 January 1992 %&+irst order'(, the tria" court dec"ared that 6on$a"es, despite notice, +ai"ed to appear at the hearin! and to oppose the )otion to surrender TCT 1/284. ?n the sa)e order, the tria" court directed 6on$a"es to +i"e a )e)orandu). 6on$a"es received this order on 22 January 1992. Su*seBuent"y, 6on$a"es +i"ed a )otion to "i+t the +irst order a""e!in! that since she 3as not a party in Civi" Case ,o. 4/;4, the decision did not *ind her. 6on$a"es a"so c"ai)ed that she did not receive notice o+ the hearin!, copy o+ the )otion to surrender TCT 1/284 and the order resettin! the hearin! *ecause she 3as in the Cnited States o+ A)erica. 6on$a"es +ina""y a""e!ed that she 3as an innocent purchaser +or va"ue. ?n an Order dated ; Fe*ruary 1992 %&second order'(, the tria" court dec"ared void the ori!ina" and the o3ner1s dup"icate o+ TCT 1/284 in the na)e o+ 6on$a"es. The tria" court ordered the reinstate)ent o+ TCT 8./1 in the na)e o+ the Spouses #enite$. 6on$a"es +i"ed a )otion +or reconsideration o+ the second order. On .2 Apri" 1992, the tria" court issued an Order %&third order'( denyin! 6on$a"es1 )otions to "i+t the +irst order and to reconsider the second order. A!!rieved *y the tria" court1s orders, 6on$a"es +i"ed 3ith the Court o+ Appea"s a petition +or the issuance o+ a 3rit o+ prohi*itory in8unction. On 2/ Au!ust 199., the Court o+ Appea"s rendered a decision disposin! as +o""o3sA

:@=4=FO4=, the petition is !ranted. The assai"ed orders dated 12 January 1992, ; Fe*ruary 1992, and .2 Apri" 1992 are here*y dec"ared ,C00 and O?5, and the pre"i)inary prohi*itory in8unction is )ade per)anent. SO O45=4=5. @ence, the instant petition. The 4u"in! o+ the Court o+ Appea"s ?n the Court o+ Appea"s, 6on$a"es )aintained that the tria" court had no 8urisdiction over her person and property *ecause Pineda and Sayoc did not i)p"ead her as a party in Civi" Case ,o. 4/;4. ?nsistin! that the Buestioned orders 3ere procured throu!h e<trinsic or co""atera" +raud, 6on$a"es c"ai)ed that the orders o+ the tria" court 3ere void. 6on$a"es +urther a""e!ed that she 3as an innocent purchaser +or va"ue )a>in! her tit"e to the Property inde+easi*"e and i)prescripti*"e. Pineda and Sayoc, on the other hand, ar!ued that the notice o+ lis pendens annotated on the tit"e o+ the Property *ound 6on$a"es, as su*seBuent purchaser o+ the Property, to the outco)e o+ the case. Pineda and Sayoc contended that 6on$a"es 3as not a purchaser in !ood +aith *ecause 6on$a"es had constructive notice o+ the pendin! "iti!ation 3hen she purchased the Property. 7oreover, Pineda and Sayoc ar!ued that no separate action is necessary to cance" the tit"e *ecause 6on$a"es is *ound *y the outco)e o+ the "iti!ation. They contended that there 3as no e<trinsic +raud *ecause the notice o+ lis pendens 3arned 6on$a"es o+ the pendency o+ Civi" Case ,o. 4/;4 3here she cou"d have intervened. Pineda and Sayoc +urther a""e!ed that +orec"osure and sa"e, not a )ort!a!e, vest tit"e on a )ort!a!ee. Forec"osure and sa"e, ho3ever, are a"3ays su*8ect to a notice o+ lis pendens. ?n !rantin! the petition, the Court o+ Appea"s ru"ed that the tria" court erred 3hen it voided TCT 1/284 upon a )ere )otion +or the surrender o+ the o3ner1s dup"icate o+ TCT 1/284. The Court o+ Appea"s +urther he"d that the tria" court erred in orderin! the reinstate)ent o+ TCT 8./1 in the na)e o+ the Spouses #enite$.

The Court o+ Appea"s he"d that Pineda and Sayoc shou"d have +i"ed the petition to surrender TCT 1/284 in the ori!ina" case 3here the decree o+ re!istration o+ TCT 1/284 3as entered and not in Civi" Case ,o. 4/;4. The second para!raph o+ Section 128 o+ Presidentia" 5ecree ,o. 1;29 %&P5 1;29'( reBuires the +i"in! o+ such separate petition. The appe""ate court stated that it 3as *eyond the tria" court1s authority to act on the )atter on a )ere )otion to surrender TCT 1/284. The Court o+ Appea"s "i>e3ise ru"ed that the tria" court did not acBuire 8urisdiction over the person o+ 6on$a"es *ecause she 3as not a party in Civi" Case ,o. 4/;4. The appe""ate court +ound that 6on$a"es cou"d not have >no3n o+, and appeared at, the hearin! o+ the )otion to surrender TCT 1/284 *ecause 6on$a"es 3as then out o+ the country. Assu)in! that the tria" court cou"d va"id"y act on the )otion o+ Pineda and Sayoc, the Court o+ Appea"s dec"ared that the orders neverthe"ess contravened Section 129 o+ P5 1;29. This provision o+ "a3 reBuires a hearin! *e+ore the court can act on a petition to surrender a dup"icate certi+icate o+ tit"e. The ?ssues Petitioners raise the +o""o3in! issues +or reso"utionA 1. :hether a notice o+ lis pendens *inds a su*seBuent purchaser o+ the property to the outco)e o+ the pendin! case. 2. :hether TCT 1.1.8 and TCT 1/284, *ein! derived +ro) the void second o3ner1s dup"icate o+ TCT 8./1, are a"so void. .. 4. ;. :hether a separate action shou"d *e +i"ed to cance" TCT 1/284. :hether 6on$a"es 3as an innocent purchaser +or va"ue. :hether 6on$a"es 3as denied due process o+ "a3.

7o8ica +i"ed a petition +or reconstitution o+ the o3ner1s dup"icate o+ TCT 8./1 c"ai)in! that this o3ner1s dup"icate 3as "ost. @o3ever, contrary to 7o8ica1s c"ai)s, the o3ner1s dup"icate o+ TCT 8./1 3as not "ost *ut in Pineda1s possession. Since the o3ner1s dup"icate o+ TCT 8./1 3as in +act not "ost or destroyed, there 3as o*vious"y nothin! to reconstitute or rep"ace. There+ore, the tria" court correct"y ru"ed that the reconstitution proceedin!s and the second o3ner1s dup"icate o+ TCT 8./1 are void. As the Court he"d inNew Durawood Co., Inc. v. Court of AppealsA ?n the instant case, the o3ner1s dup"icate certi+icates o+ tit"e 3ere in the possession o+ 5y Dui) Pon!, the petitioner1s chair)an o+ the *oard and 3hose +a)i"y contro"s the petitioner-corporation. Since said certi+icates 3ere not in +act &"ost or destroyed', there 3as no necessity +or the petition +i"ed in the tria" court +or the &?ssuance o+ ,e3 O3ner1s 5up"icate Certi+icates o+ Tit"e . . .' In fact, the said court never acquired jurisdiction to order the issuance of new certificates. Hence, the newly issued duplicates are themselves null and void . %=)phasis supp"ied( 7o8ica re!istered 3ith the 4e!ister o+ 5eeds the deed o+ sa"e e<ecuted *y the Spouses #enite$ conveyin! the Property to her. 7o8ica a"so presented to the 4e!ister o+ 5eeds the second o3ner1s dup"icate o+ TCT 8./1. The 4e!ister o+ 5eeds cance""ed TCT 8./1 and issued on 14 5ece)*er 198. TCT 1.1.8 in the na)e o+ 7o8ica. @o3ever, since TCT 1.1.8 is derived +ro) the void second o3ner1s dup"icate o+ TCT 8./1, TCT 1.1.8 is a"so void. ,o va"id trans+er certi+icate o+ tit"e can issue +ro) a void trans+er certi+icate o+ tit"e, un"ess an innocent purchaser +or va"ue has intervened. 7o8ica 3as not a purchaser in !ood +aith. 7o8ica a""e!ed that the Spouses #enite$ !ave her the o3ner1s dup"icate o+ TCT 8./1 on 9 ,ove)*er 198., the day the Spouses #enite$ so"d to her the house. @o3ever, in her petition +or reconstitution, 3hich she a"so +i"ed on the sa)e day, 9 ,ove)*er 198., 7o8ica c"ai)ed that the o3ner1s dup"icate o+ TCT 8./1 3as "ost. ?n e++ect, 7o8ica c"ai)ed that she received the o3ner1s dup"icate o+ TCT 8./1 +ro) the Spouses #enite$,

The 4u"in! o+ the Court :e deny the petition. Validity of TCT 13138 and TCT 16084

"ost the sa)e, and +i"ed the petition +or reconstitution, a"" on the sa)e day, 9 ,ove)*er 198.. ?n her petition +or reconstitution, 7o8ica a"so c"ai)ed that she &purchased a parce" o+ "and' 3hen in +act she on"y purchased on 9 ,ove)*er 198. the house, and not the "ot covered *y TCT 8./1. O*vious"y, 7o8ica procured the reconstitution o+ the second o3ner1s dup"icate o+ TCT 8./1 throu!h )isrepresentation. @ence, 7o8ica 3as not a purchaser in !ood +aith 3hen she "ater purchased on 12 5ece)*er 198. the "ot since she >ne3 o+ the irre!u"arity in the reconstitution o+ the second o3ner1s dup"icate o+ TCT 8./1. There+ore, TCT 1.1.8 issued in the na)e o+ 7o8ica is void. @o3ever, 3hat is void is the trans+er certi+icate o+ tit"e and not the tit"e over the Property. The tit"e re+ers to the o3nership o+ the Property covered *y the trans+er certi+icate o+ tit"e 3hi"e the trans+er certi+icate o+ tit"e )ere"y evidences that o3nership. A certi+icate o+ tit"e is not eBuiva"ent to tit"e as the Court e<p"ained in 0ee Te> Shen! v. Court o+ Appea"sA <<< The certificate referred to is that document issued y the !e"ister of Deeds #nown as the Transfer Certificate of Title $TCT%. &y title, the law refers to ownership which is represented y that document. Petitioner apparent"y con+uses certi+icate 3ith tit"e. P"acin! a parce" o+ "and under the )ant"e o+ the Torrens syste) does not )ean that o3nership thereo+ can no "on!er *e disputed. O3nership is di++erent +ro) a certi+icate o+ tit"e. The TCT is on"y the *est proo+ o+ o3nership o+ a piece o+ "and. #esides, the certi+icate cannot a"3ays *e considered as conc"usive evidence o+ o3nership. 7ere issuance o+ the certi+icate o+ tit"e in the na)e o+ any person does not +orec"ose the possi*i"ity that the rea" property )ay *e under coo3nership 3ith persons not na)ed in the certi+icate or that the re!istrant )ay on"y *e a trustee or that other parties )ay have acBuired interest su*seBuent to the issuance o+ the certi+icate o+ tit"e. To repeat, re"istration is not the equivalent of title, ut is only the est evidence thereof. Title as a concept of ownership should not e confused with the certificate of title as evidence of such ownership althou"h oth are interchan"ea le. <<< %=)phasis supp"ied(

Mo ica!s Title The prior )ort!a!e o+ the Property *y the Spouses #enite$ to Pineda and Sayoc did not prevent the Spouses #enite$, as o3ners o+ the Property, +ro) se""in! the Property to 7o8ica. A )ort!a!e is )ere"y an encu)*rance on the property and does not e<tin!uish the tit"e o+ the de*tor 3ho does not "ose his principa" attri*ute as o3ner to dispose o+ the property. The "a3 even considers void a stipu"ation +or*iddin! the o3ner o+ the property +ro) a"ienatin! the )ort!a!ed i))ova*"e. Since the Spouses #enite$ 3ere the undisputed o3ners o+ the Property, they cou"d va"id"y se"" and de"iver the Property to 7o8ica. The e<ecution o+ the notari$ed deed o+ sa"e *et3een the Spouses #enite$ and 7o8ica had the "e!a" e++ect o+ actua" or physica" de"ivery. O3nership o+ the Property passed +ro) the Spouses #enite$ to 7o8ica. The nu""ity o+ the second o3ner1s dup"icate o+ TCT 8./1 did not a++ect the va"idity o+ the sa"e as *et3een the Spouses #enite$ and 7o8ica. "on#ales! Title A+ter the sa"e o+ the Property to her, 7o8ica o*tained a "oan +ro) 6on$a"es secured *y a rea" estate )ort!a!e over the Property. 6on$a"es re!istered this )ort!a!e on 22 Fe*ruary 198; 3ith the 4e!ister o+ 5eeds 3ho annotated the )ort!a!e on the void TCT 1.1.8 in 7o8ica1s na)e. The nu""ity o+ TCT 1.1.8 did not auto)atica""y carry 3ith it the nu""ity o+ the annotation o+ 6on$a"es1 )ort!a!e. The ru"e is that a )ort!a!e annotated on a void tit"e is va"id i+ the )ort!a!ee re!istered the )ort!a!e in !ood +aith. ?n &lanco v. 'squierdo, the Court he"dA That the certi+icate o+ tit"e issued in the na)e o+ Fructuosa =sBuierdo is a nu""ity, the sa)e havin! *een secured thru +raud, is not here in Buestion. The on"y Buestion +or deter)ination is 3hether the de+endant *an> is entit"ed to the protection accorded to &innocent purchasers +or va"ue', 3hich phrase, accordin! to sec. .8 o+ the 0and 4e!istration 0a3, includes an innocent mort"a"ee for value. The Buestion, in our opinion, )ust *e ans3ered in the a++ir)ative.

The tria" court, in the decision co)p"ained o+, )ade no +indin! that the de+endant )ort!a!ee *an> 3as a party to the +raudu"ent trans+er o+ the "and to Fructuosa =sBuierdo. ?ndeed, there is nothin! a""e!ed in the co)p"aint 3hich )ay i)p"icate said de+endant )ort!a!ee in the +raud, or 8usti+y a +indin! that it acted in *ad +aith. On the other hand, the certi+icate o+ tit"e 3as in the na)e o+ the )ort!a!or Fructuosa =sBuierdo 3hen the "and 3as )ort!a!ed *y her to the de+endant *an>. Such *ein! the case, the said de+endant *an>, as )ort!a!ee, had the ri!ht to re"y on 3hat appeared in the certi+icate and, in the a*sence o+ anythin! to e<cite suspicion, 3as under no o*"i!ation to "oo> *eyond the certi+icate and investi!ate the tit"e o+ the )ort!a!or appearin! on the +ace o+ said certi+icate. %5e 0ara, et a". vs. Ayroso, 9; Phi"., 18;E ;2 O++. 6a$., F12G 48.8, JoaBuin vs. 7adrid, et a"., 12/ Phi"., 12/2(. &ein" thus an innocent mort"a"ee for value, its ri"ht or lien upon the land mort"a"ed must e respected and protected, even if the mort"a"or o tained her title thereto thru fraud. The re)edy o+ the persons pre8udiced is to *rin! an action +or da)a!es a!ainst those causin! the +raud, <<<. %=)phasis supp"ied( Thus, the annotation o+ 6on$a"es1 )ort!a!e on TCT 1.1.8 3as va"id and operated to *ind the Property and the 3or"d, despite the inva"idity o+ TCT 1.1.8. 6on$a"es re!istered her )ort!a!e in !ood +aith. 6on$a"es had no actua" notice o+ the prior unre!istered )ort!a!e in +avor o+ Pineda and Sayoc. To *ind third parties to an unre!istered encu)*rance, the "a3 reBuires actua" notice. The +act that 7o8ica, 3ho so"d the Property to 6on$a"es, had actua" notice o+ the unre!istered )ort!a!e did not constitute actua" notice to 6on$a"es, a*sent proo+ that 6on$a"es herse"+ had actua" notice o+ the prior )ort!a!e. Thus, 6on$a"es acBuired her ri!hts as a )ort!a!ee in !ood +aith. :hen 7o8ica de+au"ted in payin! her de*t, 6on$a"es caused the e<tra8udicia" +orec"osure o+ the )ort!a!ed Property. 6on$a"es purchased the )ort!a!ed Property as the so"e *idder at the pu*"ic auction sa"e. For 7o8ica1s +ai"ure to redee) the +orec"osed Property 3ithin the prescri*ed period, 6on$a"es conso"idated her tit"e to the Property. A*sent any evidence to the contrary, the sa"e at pu*"ic

auction o+ the Property to 6on$a"es 3as va"id. Thus, the tit"e or o3nership o+ the Property passed +ro) 7o8ica to 6on$a"es. At this point, there+ore, 6on$a"es *eca)e the o3ner o+ the Property. :hen 6on$a"es purchased the Property at the auction sa"e, Pineda and Sayoc had a"ready annotated the lis pendens on the ori!ina" o+ TCT 8./1, 3hich re)ained va"id. @o3ever, the )ort!a!e o+ 6on$a"es 3as va"id"y re!istered prior to the notation o+ the lis pendens$ The su*seBuent annotation o+ the lis pendens cou"d not de+eat the ri!hts o+ the )ort!a!ee or the purchaser at the auction sa"e 3ho derived their ri!hts under a prior )ort!a!e va"id"y re!istered. The sett"ed ru"e is that the auction sa"e retroacts to the date o+ the re!istration o+ the )ort!a!e, puttin! the auction sa"e *eyond the reach o+ any intervenin! lis pendens% sa"e or attach)ent. As the Court e<p"ained in Caviles, (r. v. &autistaA :e have a"so consistent"y ru"ed that an auction or e<ecution sa"e retroacts to the date o+ "evy o+ the "ien o+ attach)ent. :hen the su*8ect property 3as so"d on e<ecution to the petitioners, this sa"e retroacted to the date o+ inscription o+ petitioners1 notice o+ attach)ent on Octo*er /, 1982. The ear"ier re!istration o+ the petitioners1 "evy on pre"i)inary attach)ent !ave the) superiority and pre+erence in ri!hts over the attached property as a!ainst respondents. Accordin!"y, 3e ru"e that the e<ecution sa"e in +avor o+ the petitioner Cavi"es spouses 3as anterior and superior to the sa"e o+ the sa)e property to the respondent #autista spouses on Octo*er 18, 1982. The ri!ht o+ petitioners to the surrender o+ the o3ner1s dup"icate copy o+ TCT ,o. ;922/ coverin! the su*8ect property +or inscription o+ the certi+icate o+ sa"e, and +or the cance""ation o+ said certi+icate o+ tit"e and the issuance o+ a ne3 tit"e in +avor o+ petitioners cannot *e !ainsaid. A contrary ru"e 3ou"d )a>e a prior re!istration o+ a )ort!a!e or any "ien )eanin!"ess. The prior re!istered )ort!a!e o+ 6on$a"es prevai"s over the su*seBuent notice o+ lis pendens, even i+ the auction sa"e too> p"ace a+ter the notation o+ the lis pendens. ConseBuent"y, TCT 1/284, issued to 6on$a"es a+ter she presented the sheri++1s certi+icate o+ sa"e and her a++idavit o+ conso"idation, is va"id.

:hat re)ained 3ith Pineda and Sayoc a+ter the +orec"osure 3as the )ort!a!or1s residua" ri!hts over the +orec"osed Property, 3hich ri!hts are the eBuity o+ rede)ption and a share in the surp"us +und, i+ any. Since 7o8ica 3as not a purchaser in !ood +aith, the residua" ri!hts o+ 7o8ica 3ere su*8ect to the c"ai) o+ Pineda and Sayoc. O+ course, Pineda and Sayoc )ay sti"" +i"e an action to recover the outstandin! de*t o+ the Spouses #enite$, and even !o a+ter 7o8ica +or her assu)ption o+ o*"i!ation under the Acknowledgment of Indebtedness. T&e '()ities *a+o, "on#ales o+e, -ineda and .ayoc Pineda and Sayoc 3ere ne!"i!ent in not re!isterin! their )ort!a!e, 3hich u"ti)ate"y "ed to this controversy. @ad Pineda and Sayoc re!istered their )ort!a!e, their ri!hts as prior )ort!a!ees 3ou"d have prevai"ed over that o+ 6on$a"es. Pineda and Sayoc 3ere a"so ne!"i!ent in not +orec"osin! their )ort!a!e ahead o+ 6on$a"es, 3hen they cou"d have done so as ear"y as 4 January 198. a+ter the Spouses #enite$ de+au"ted on their "oan. ?n contrast, the "oan o+ 7o8ica +e"" due on"y on 9 5ece)*er 1989. Since 6on$a"es vi!i"ant"y e<ercised her ri!ht to +orec"ose the )ort!a!ed Property ahead o+ Pineda and Sayoc, 6on$a"es1 )ort!a!e 3ou"d sti"" prevai" over the )ort!a!e o+ Pineda and Sayoc even i+ 6on$a"es1 )ort!a!e 3as not va"id"y re!istered. The unre!istered )ort!a!e o+ Pineda and Sayoc 3as e<tin!uished upon +orec"osure o+ 6on$a"es1 )ort!a!e even assu)in! +or the sa>e o+ ar!u)ent that the "atter )ort!a!e 3as unre!istered. #et3een t3o unre!istered )ort!a!ees, *oth *ein! in !ood +aith, the +irst to +orec"ose his )ort!a!e prevai"s over the other. =ven assu)in! that 6on$a"es1 )ort!a!e 3as not va"id"y re!istered, the notice o+ lis pendens cou"d sti"" not de+eat 6on$a"es1 ri!ht under the +orec"osure sa"e. The e++ect o+ the notice o+ lis pendens 3as to su*8ect 6on$a"es, as the su*seBuent purchaser o+ the Property, to the outco)e o+ the case. The outco)e o+ the case is the cance""ation o+ the second o3ner1s dup"icate o+ TCT 8./1. The co)p"aint o+ Pineda and Sayoc si)p"y prayed +or the cance""ation o+ the second o3ner1s dup"icate o+ TCT 8./1 and the a3ard o+ da)a!es.

The notice o+ lis pendens 3ou"d on"y *ind 6on$a"es to the dec"aration o+ nu""ity o+ the second o3ner1s dup"icate o+ TCT 8./1. 6on$a"es cou"d not use TCT 1.1.8, as a void issue o+ the void second o3ner1s dup"icate o+ TCT 8./1, to secure a ne3 TCT in her na)e. This is the "e!a" conseBuence o+ the notice o+ lis pendens, 3hich 3ou"d have *ound 6on$a"es had the re!istration o+ her )ort!a!e *een void. @o3ever, the dec"aration o+ nu""ity o+ TCT 1.1.8 3ou"d sti"" not )a>e the )ort!a!e o+ Pineda and Sayoc pre+erred over that o+ 6on$a"es. Since 6on$a"es +orec"osed her )ort!a!e ahead o+ Pineda and Sayoc, she 3ou"d sti"" have a *etter ri!ht than Pineda and Sayoc 3ho s"ept on their ri!hts as )ort!a!ees. Concl)sion The nu""ity o+ TCT 1.1.8 did not a++ect the va"idity o+ the tit"e or o3nership o+ 7o8ica or 6on$a"es as su*seBuent trans+erees o+ the Property. :hat is void is the trans+er certi+icate o+ tit"e, not the title or ownership itse"+ o+ 7o8ica or 6on$a"es. The notice o+ lis pendens cou"d not de+eat 6on$a"es1 ri!hts over the Property +or t3o reasons. First, 6on$a"es re!istered in !ood +aith her )ort!a!e *e+ore the notation o+ the lis pendens% )a>in! the re!istration o+ her )ort!a!e va"id despite the inva"idity o+ TCT 1.1.8. Second, since 6on$a"es1 )ort!a!e 3as va"id, the auction sa"e retroacted to the date o+ re!istration o+ her )ort!a!e, )a>in! the auction sa"e prior in ti)e to the notice o+ lis pendens. Thus, TCT 1/284, issued to 6on$a"es as a resu"t o+ the +orec"osure sa"e, is va"id. WHEREFORE, the petition is 5=,?=5. The 5ecision dated 2/ Au!ust 199. and the 4eso"ution dated 4 7arch 1994 o+ the Court o+ Appea"s in CAH6.4. SP ,o. 28/;1 are AFF?47=5. Petitioners Juanita P. Pineda and 0i"ia Sayoc are directed to surrender the o3ner1s dup"icate o+ Trans+er Certi+icate o+ Tit"e ,o. 8./1 to the 4e!ister o+ 5eeds o+ Cavite City +or cance""ation. Trans+er Certi+icate o+ Tit"e ,o. 1/284 in the na)e o+ Teresita A. 6on$a"es is dec"ared va"id. This is 3ithout pre8udice to any action petitioners Juanita P. Pineda and 0i"ia Sayoc )ay +i"e a!ainst the Spouses ir!i"io and Adorita #enite$ as 3e"" as O"ivia 6. 7o8ica. ,o pronounce)ent as to costs.

SO O45=4=5. 5avide, Jr., C.J., %Chair)an(, A$cuna, JJ., concur.

Art. 1881

<-----------------------------------------------------------------------------------------< itu!, Inares-Santia!o, and VELASCO, JR., (.: The Case ia this Petition +or 4evie3 on Certiorari under 4u"e 4;, petitioners see> reversa" o+ the 5ecision dated Apri" 11, 2228 o+ the Court o+ Appea"s %CA( in CA-6.4. C ,o. 8991. 3hich revo>ed the Octo*er 18, 222; 4eso"ution, a 8ud!)ent on the p"eadin!s, o+ the 4e!iona" Tria" Court %4TC(, #ranch // in 7a>ati City, in Civi" Case ,o. 2;-198 entit"ed -acific /e&o)se Co,po,ation% -acific Conco,de Co,po,ation% Mi#pa& 0oldings% Inc$% et al$ +$ 'I1 .ec),ities% Inc ., and re)anded the case +or +urther proceedin!s. A"so assai"ed is the CA 4eso"ution dated Au!ust ;, 2228 denyin! petitioners1 )otion +or reconsideration. Petitioners1 initiatory p"eadin! in Civi" Case ,o. 2;-198 revea"s the +o""o3in! aver)entsA COMMON ALLEGATIONS FOR ALL CAUSES OF ACTION 1. On various dates durin! the period June 222. to 7arch 2224, p"ainti++s *ou!ht /2,992,222 Juo> Properties, ?nc. %&JPP'( shares o+ stoc> throu!h the Phi"ippine Stoc> =<chan!e %&PS='(. The JPP shares 3ere acBuired *y p"ainti++s throu!h their *ro>er, de+endant =?#. 2. The JPP shares o+ stoc> 3ere *ou!ht *y p"ainti++s at an avera!e price o+ P2.22 per share. .. A"so on various dates in Ju"y and Au!ust 222., p"ainti++s *ou!htKacBuired .2,182,222 57C? shares o+ stoc> throu!h the PS=. O+ these shares, 1/,182,222 3ere "i>e3ise acBuired *y the p"ainti++s throu!h their *ro>er, de+endant =?#, 3hi"e the re)ainin! 1/,222,222 57C? shares 3ere trans+erred +ro) :est"in> 6"o*a" =Buities, ?nc. 4. The 57C? shares o+ stoc> 3ere *ou!ht *y p"ainti++s at an avera!e price o+ P2..8 per share. DECISION

- The agent must act within the scope of his authority

A must act within the scope of authority: 1. See Art. 1909 for meaning of "performance within the scope of authority"

An agent may do such acts conducive to the accomplishment of the agency Compare with Art. 188 ! A must follow the instructions of "

#ffect if A acts $eyond the scope of his authority 1. Art. 1898 ! void if % rd person is aware of the limits of the authority of A &should $e unenforcea$le since the contract can $e ratified' (. Art. 1)0% &1' ! unenforcea$le Cases: Sargasso Construction & Development Corporation/Pick & Shovel, Inc.,/Atlantic Erectors, Inc. (Joint enture! v. Philippine Ports Authorit"* +(% SC,A (+0 &(010' Paci#ic $ehouse Corp. v. EI% Securities, Inc. * +%% SC,A (1) &(010'

4epu*"ic o+ the Phi"ippines SCP4=7= COC4T 7ani"a F?4ST 5? ?S?O,

;. On 21 Apri" 2224, p"ainti++s and de+endant =?# a!reed to se"" the /2,992,222 JPP shares o+ p"ainti++s to any party +or the price o+ P2.14 per share. Attached as Anne<es &A' to &A-/' are copies o+ the notices o+ sa"es sent *y de+endant =?# to the p"ainti++s, 3hich *ear the con+or)ity o+ p"ainti++s1 representative. /. As a!reed *y p"ainti++s and de+endant, the sa"e o+ the JPP shares o+ p"ainti++s 3as )ade 3ith an option on the part o+ the p"ainti++s to *uy *ac> or reacBuire the said JPP shares 3ithin a period o+ thirty %.2( days +ro) the transaction date, at the *uy-*ac> price o+ P2.18 per share %See Anne<es &A' to &A-/'(. 9. :hen the "ast day o+ the .2-day *uy *ac> period +or the JPP shares ca)e, p"ainti++ 3ere undecided on 3hether or not to e<ercise their option to reacBuire said shares. Thus, p"ainti++s and de+endant =?# a!reed that p"ainti++s 3ou"d have an e<tended period o+ unti" 2. June 2224 to e<ercise their option to *uy *ac>KreacBuire the JJP shares that had *een so"d. 8. =ventua""y, p"ainti++s decided not to e<ercise their option to *uy *ac> the JPP shares and did not !ive any *uy-*ac> instructionKs to their *ro>er, de+endant =?#. 9. On various dates in June 2224, 3ithout p"ainti++s1 prior >no3"ed!e and consent, de+endant =?# so"d p"ainti++s .2,182,222 57C? shares o+ stoc> +or an avera!e price o+ P2.24 per share. 5e+endant =?# so"d the 57C? shares o+ p"ainti++s +or an avera!e price o+ on"y P2.24 per share despite +u"" >no3"ed!e *y de+endant =?# that the sa"e 3ou"d resu"t in a su*stantia" "oss to the p"ainti++s o+ around P4.; 7i""ion since p"ainti++s acBuired the 57C? shares at P2..8 per share. %c+. Artic"e 1888, Civi" Code(. Attached Anne<es &#' to &#-9' are the Se"" Con+ir)ation s"ips issued *y de+endant =?# sho3in! the unauthori$ed sa"e o+ p"ainti++s1 .2,182,222 57C? shares. 9.1 The proceeds o+ said 57C? shares so"d *y de+endant =?# 3ithout p"ainti++s1 >no3"ed!e and consent 3ere used *y de+endant =?# to *uy *ac> /1,122,222 JPP shares ear"ier so"d *y p"ainti++s on 21 Apri" 2224. Attached as Anne<es &C' to &C-;' are the #uy Con+ir)ation s"ips

issued *y de+endant sho3in! the unauthori$ed &*uy *ac>' o+ JPP shares. 9.2 5e+endant =?# so"d 3ithout authority p"ainti++s1 .2,182,222 57C? shares and used the proceeds thereo+ to *uy *ac> /1,222,222 JPP shares *ecause de+endant =?# )ade an unauthori$ed pro)ise and co))it)ent to the *uyerKs o+ p"anti++s1 JPP shares in Apri" 2224 that p"ainti++s 3ou"d *uy *ac> the JPP shares. 9.. P"ainti++s "earned o+ the unauthori$ed sa"e o+ their .2,182,222 57C? shares and the unauthori$ed &*uy *ac>' o+ /1,222,222 JPP shares on"y )uch "ater. Cpon +urther inBuiry, p"ainti++s a"so "earned that a"" throu!hout their *usiness dea"in!s, de+endant =?# had surreptitious"y char!ed and co""ected +ro) p"ainti++s e<or*itant interest a)ountin! to thirty percent %.2L( o+ a"" a)ounts o3in! +ro) the p"ainti++s. 12. On 2; January 222;, p"ainti++s 3rote to de+endant =?# to de)and that their .2,182,222 57C? shares *e trans+erred to :est"in> 6"o*a" =Buities ?nc. %&:est"in>'(. Copies o+ the de)and "etters, a"" dated 2; January 222;, are attached as Anne< &5' to &5-4' respective"y. 11. Since the .2,182,222 57C? shares *e"on!in! to p"ainti++s had a"ready *een so"d *y de+endant =?# 3ithout p"ainti++s1 prior >no3"ed!e and consent as ear"y as June 2224, de+endant =?# cou"d not co)p"y 3ith the de)and o+ p"ainti++s as stated in their de)and "etters dated 2; January 222;. 12. ?n his "etters to the p"ainti++s dated 12 January 222;, de+endant =?# ad)itted havin! so"d the .2,182,222 57C? shares o+ stoc> o+ p"ainti++s 3ithout the "atter1s prior >no3"ed!e and consent. Copies o+ de+endant =?#1s "etters to p"ainti++s, a"" dated 12 January 222;, are attached as Anne<es &=' to &=-4', respective"y. 12.1 5e+endant =?# states in its a+oresaid "etters that it sent state)ents o+ account to p"ainti++s in Ju"y 2224. 5e+endant =?# c"ai)s, a"*eit erroneous"y, that since p"ainti++s )ade no e<ceptions to the

state)ents o+ account, the sa"e o+ p"ainti++s1 57C? shares in June 2224 F3asG supposed"y &va"id"y e<ecuted'. 1.. <<<< S=CO,5 CACS= OF ACT?O, 19. P"ainti++s rep"ead a"" o+ the +ore!oin! a""e!ations. 18. The sa"e *y de+endant =?# o+ the .2,182,222 57C? shares o+ p"ainti++s 3as done 3ith )a"ice and +raudu"ent intent. As such, de+endant shou"d *e directed to pay p"ainti++s the a)ount o+ at "east PhP.,222,222.22 as )ora" da)a!es. ?n response, respondent =?# Securities, ?nc. %=?#( su*)itted its Ans3er 3hich contained the +o""o3in! aver)entsA A57?SS?O,S A,5 5=,?A0SA 1. 5e+endant ad)its the a""e!ations contained in para!raphs under the headin! The Parties. 0i>e3ise, de+endant ad)its the a""e!ations contained in para!raph 1. 2. Para!raph 2 o+ the Co)p"aint is speci+ica""y denied, the truth o+ the )atter is that the JPP shares o+ stoc> 3ere *ou!ht *y p"ainti++s at an avera!e price o+ on"y 18 centavos per share. .. Para!raph . is ad)itted, Bua"i+ied, ho3ever, that the re)ainin! 1/,222,222 57C? shares o+ p"ainti++s 3ere trans+erred *y :est"in> 6"o*a" =Buities, ?nc. and other *ro>era!es +ir)s to the de+endant pri)ari"y to serve as a co""atera" in the cash account o*"i!ations o+ the p"ainti++s to the de+endant. 4. Para!raph 4 o+ the Co)p"aint is speci+ica""y denied, the truth o+ the )atter *ein! the 57C? shares o+ stoc> 3ere *ou!ht *y the p"ainti++s at an appro<i)ate avera!e price o+ on"y 2; centavos per share. ;. 5e+endant ad)its para!raph ; o+ the Co)p"aint inso+ar as the a""e!ation that p"ainti++s and de+endant a!reed to se"" the @ence, this Co)p"aint.

/2,992,222 JPP share o+ p"ainti++s to any party +or the price o+ 14 centavos per share, Bua"i+ied, ho3ever, *y the presence o+ a provision &Fu"" Cross to Se""er' )eanin! that the Se""ers %3ho are the p"ainti++s( have the o*"i!ation to *uy *ac> or reacBuire the shares +ro) the *uyers. /. 5e+endant speci+ica""y denies para!raph / o+ the Co)p"aint, the truth o+ the )atter and as evidenced *y the sa)e ,otices o+ Sa"e %Anne<'A' to &A-/' o+ the Co)p"aint(, p"ainti++s have no option to *uy *ac> or reacBuire the said JPP shares, the nature or >ind o+ transaction a!ree)ent is Fu"" Cross to se""er 3hich is an o*"i!ation and not )ere"y an option on the part o+ the p"ainti++s to *uy *ac> or reacBuire the said JPP shares so"d to *uyers. 9. 5e+endant speci+ica""y and vehe)ent"y denies the a""e!ations o+ para!raphs 9 and 8 o+ the Co)p"aint. The truth o+ the )atter is that there 3as no e<tension a!reed upon *y the parties +or the p"ainti++s to e<ercise option to *uy *ac>KreacBuire the Juo> Properties, ?nc. shares o+ stoc>s %JJP(. The Contracts +or the sa"e o+ JPP shares o+ stoc>s as a"ready stated a*ove and as c"ear"y sho3n +ro) the sa)e Anne<es &A' to &A-/' o+ the Co)p"aint 3as an o*"i!ation that there 3as no e<tension period !iven to the p"ainti++s. 8. 5e+endant a"so speci+ica""y and vehe)ent"y denies the a""e!ations o+ para!raphs 9 o+ the Co)p"aint and its su*-para!raphs. The truth o+ the )atter *ein! that under the tradin! ru"es, honorin! one1s o*"i!ation is a sacred co))it)ent o+ stoc>s and )ar>et traders. Considerin! that in the sa"e o+ the JPP shares there is an obli a!io" as certi+ied *y the 3ord Fu"" Cross to Se""er, the JPP shares o+ stoc>s that 3ere so"d to *uyers have to *e *ou!ht *ac> .2 days +ro) the transaction date at the #uy #ac> A)ount o+ 18 centavos per share and that p"ainti++s and de+endant have to honor the said *uy *ac> o*"i!ation. Considerin!, ho3ever, that p"ainti++s 3ere not de"iverin! +unds to the de+endant in order to honor the said *uy *ac> o*"i!ation, not to )ention the Cash account o*"i!ations o+ the p"ainti++s to the de+endant a)ountin! to )ore or "ess 92 7i""ion Pesos, de+endant had no )ore recourse *ut to *uy *ac> the JPP shares +ro) the *uyers *y se""in! the 57C? shares o+ the p"ainti++s under the de+endant1s

possession, and thus, en+orcin! the provisions o+ the Securities 5ea"in! Accounts A!ree)ents that 3as si!ned *y the p"ainti++s in +avor o+ the de+endant, a copy o+ 3hich is hereto attached and )ade an inte!ra" part hereo+ as Anne< &1'. Section 9 o+ the a+oresaid Securities 5ea"in! Accounts A!ree)ents statesA &9. 0ien The c"ient a!rees that a"" )onies andKor securities andKor a"" other property o+ the C"ient %p"ainti++s( in the Co)pany1s %de+endant( custody or contro" he"d +ro) ti)e to ti)e sha"" *e su*8ect to a !enera" "ien in +avour o+ Co)pany +or the dischar!e o+ a"" or any inde*tedness o+ the C"ient to the Co)pany. The C"ient sha"" not *e entit"ed to 3ithdra3 any )onies or securities he"d *y the Co)pany pendin! the pay)ent in +u"" to the Co)pany o+ any inde*tedness o+ the C"ient to the Co)pany. The #o$%a"& shall be e"!i!le' a! a"& !i$e a"' (i!ho)! "o!i#e !o !he Clie"! !o *e!ai", a%%l&, sell o* 'is%ose o+ all o* a"& o+ !he ,#lie"!-s. %*o%e*!& i+ a"& s)#h obli a!io" o* liabili!& is "o! 'is#ha* e' i" +)ll b& !he #lie"! (he" ')e o* o" 'e$a"' i" o* !o(a*'s !he %a&$e"! a"' 'is#ha* e o+ s)#h obli a!io" o* liabili!& a"' !he Co$%a"& shall be )"'e* "o ')!& !o !he #lie"! as !o !he %*i#e ob!ai"e' o* a"& losses o* liabili!ies i"#)**e' o* a*isi" i" *es%e#! o+ a"& s)#h sale o* 'is%osal. Su*8ect to the re"evant "a3 and re!u"ation on the )atter, the c"ient here*y authori$es the Co)pany, on hisKits *eha"+, at any ti)e and 3ithout notice to the c"ient1s property i+ any such o*"i!ation or "ia*i"ity is not dischar!ed.' F=)phasis in the ori!ina".G F5e+endantG speci+ica""y denies the a""e!ation o+ the p"ainti++s that de+endant so"d the 57C? shares o+ p"ainti++s +or an avera!e price o+ on"y 24 centavos +or the truth o+ the )atter *ein! the avera!e price those 57C? shares 3ere so"d 3as P2.2;/; centavos per share and "i>e3ise, that price 3as the contro""in! )ar>et price o+ 57C? share at the ti)e o+ the transaction. 5e+endant "i>e3ise, speci+ica""y denies the a""e!ation that de+endant surreptitious"y char!ed and co""ected an interest o+ .2L +ro) the p"ainti++ +or the truth o+ the )atter is that 3hat de+endant did not char!e such interest.

7oreoever, and contrary to the a""e!ations o+ the Co)p"aint, p"ainti++s are +u""y a3are and >no3"ed!ea*"e o+ the sa"e o+ their 57C? shares as ear"y as June 2224 and that the proceeds thereo+ 3ere not even enou!h to +u""y pay the *uy *ac> o*"i!ation o+ the p"ainti++s to the *uyers o+ JPP shares o+ stoc>s. P"ainti++s, in order to +ei!n i!norance o+ the sa"e o+ their 57C? shares had attached in the Co)p"aint various Sa"es Con+ir)ations 4eceipts 3hich 3ere )ar>ed thereto as Anne<es &#' to &#-9'. :ittin!"y or un3ittin!"y, p"ainti++s attached on"y the 4eceipts that do not *ear the correspondin! ac>no3"ed!e)ent si!natures o+ their respective o++icers. As averred *y the de+endant, p"ainti++s 3ere +u""y a3are and >no3"ed!ea*"e o+ the sa"e o+ their 57C? shares as ear"y June 2224, and to e<pose the rea" truth, de+endant hereto attaches the identica" Sa"es Con+ir)ation 4eceipts hereto )ar>ed as A""e/es 012 !o 013 G2. ?n the sa)e )anner that in each and every Sa"es Con+ir)ation 4eceipts %Anne<es &2' to &2-6'( the +o""o3in! ?7PO4TA,T ,OT?C= is 3rittenA &A"" transaction are su*8ect to the ru"es and custo)s o+ the =<chan!e and its C"earin! @ouse. ?t is a!reed that a"" securities sha"" secure a"" )yKour "ia*i"ities to e.securities andis a)!ho*i4e' i" !hei* 'is#*e!io" !o all o* a"& o+ !he$ (i!ho)! "o!i#e !o (e5)s (he"e6e* i" !he o%i"io" o+ e.se#)*i!ies $&5o)* a##o)"! is "o! %*o%e*l& se#)*e' .' F=)phasis in the ori!ina".G 0i>e3ise, a+ter each and every transaction, de+endant sent State)ent o+ Accounts sho3in! a detai"ed transaction that 3ere entered into and that p"ainti++s du"y received a+oresaid State)ent o+ Accounts +ro) the de+endants as evidenced *y the si!natures o+ p"ainti++s1 respective o++icers hereto )ar>ed as Anne<es &.' to &.-6'. ?n each and every State)ents o+ Accounts the +o""o3in! ,otice is c"ear"y printed thereinA &This state)ent 3i"" *e considered correct un"ess 3e receive notice in 3ritin! o+ any e<ceptions 3ithin ; days +ro) receipt. P"ease address a""

correspondence concernin! e<ceptions to our OP=4AT?O,S 5=PA4T7=,T. Jind"y noti+y us in 3ritin! o+ any chan!es in your address.' @ence, p"ainti++s, )ay have other u"terior )otives in +i"in! this *ase"ess Co)p"aint since they +u""y >ne3 and consented a")ost a year a!o o+ the nature o+ their transactions 3ith the de+endant. 9. 5e+endant ad)its para!raphs 12 to 12 inc"usive o+ the su*para!raphs on"y to the e<istence o+ the p"ainti++s1 de)and "etters a"" dated January ;, 22F2G;, *ut Bua"i+ies that the a+oresaid "etters had *een ans3ered *y the de+endant on January 12, 222;. The rest o+ the a""e!ations are *ein! speci+ica""y denied. ?n de+endant1s rep"y to the said "etters, de+endant c"ear"y pointed out that p"ainti++s had *een du"y noti+ied o+ the su*8ect transactions as ear"y as June 9, 2224. That de+endant had +urnished the p"ainti++s as ear"y as Ju"y 14, 2224 State)ents o+ Accounts o+ a"" their transactions +or the period o+ June 1-22, 2224 3hich inc"uded the sa"e o+ the su*8ect shares 3ith a c"ear instruction to noti+y the de+endant in 3ritin! 3ithin +ive %;( days +ro) receipt thereo+ o+ any e<ception therein. That i+ no correspondence 3as received *y the de+endant +ro) the p"ainti++s, the sa"e sha"" *e considered as va"id"y e<ecuted. On Ju"y 19, 222;, petitioners re!istered a 7otion +or Jud!)ent on the P"eadin!s, assertin! that =?# )ateria""y ad)itted the a""e!ations o+ their co)p"aint *y not tenderin! any !enuine issue in its ans3er. This 3as opposed *y =?#, 3ith *oth parties su*seBuent"y +i"in! their respective rep"y and re8oinder. On Octo*er 9, 222;, petitioners )oved that the tria" court reso"ve their )otion +or 8ud!)ent on the p"eadin!s. The R)li" o+ !he RTC On Octo*er 18, 222;, the 4TC rendered its 8ud!)ent on the p"eadin!s throu!h a 4eso"ution, the dispositive portion o+ 3hich readsA :@=4=FO4=, pre)ises considered, 8ud!)ent is here*y rendered directin! the de+endant F=?#G to return the p"ainti++s1 FpetitionersG .2,182,222 57C? shares, as o+ 8udicia" de)and.

On the other hand, p"ainti++s are directed to rei)*urse the de+endant the a)ount o+ P12,942,222.22, representin! the *uy *ac> price o+ the /2,992,222 JPP shares o+ stoc>s at P2.18 per share. 5e+endant1s 7otion to 5ischar!e :rit o+ Pre"i)inary Attach)ent, *ased on the su*)itted counter *ond issued *y ?ntra Strata Assurance Corporation is here*y 64A,T=5. SO O45=4=5. The tria" court +ound )erit in renderin! a 8ud!)ent on the p"eadin!sA fi,st, the assai"ed transactions 3ere a"" docu)entedE second, the transactions 3ere ad)itted *y the partiesE and t&i,d, the )ain issues can *e reso"ved *ased on the parties1 docu)entary evidence appended to the p"eadin!s. The 4TC, interpretin! the a!ree)ent a!reed upon *y the parties, he"d that the sa"e o+ the Juo> Properties, ?nc. %JJP( shares 3as 3ith a *uy*ac> o*"i!ation and not an option as petitioners ar!ued. @o3ever, it +ound that, as per their notices o+ sa"e a!ree)ents, the co""atera" +or the sa"e transactions is the sa)e JJP shares. Thus, it he"d that =?# erred in se""in! the 57C? shares instead o+ the JJP shares 3hich served as co""atera". ?t ru"ed that Section 9 o+ the Securities 5ea"in!s Account A!ree)ent %S5AA( does not app"y, since it provided +or a !enera" a!ree)ent e<ecuted prior to the su*seBuent and speci+ic a!ree)ents entered into *y the parties speci+ica""y +or the sa"e and repurchase o+ the JJP shares. Thus, the tria" court conc"uded that =?# 3ent *eyond its authority in se""in! petitioners1 57C? shares in order to *uy *ac> the JJP shares. Anent petitioners1 apparent "ac> o+ o*8ection to the account state)ents issued *y =?# and the sa"es con+ir)ation receipts coverin! the sa"e o+ 57C? shares, the 4TC vie3ed it as not constitutin! rati+ication *y petitioners +or said docu)ents did not disc"ose the purpose o+ the sa"e, app"yin! the ru"e that any a)*i!uity in a 3ritten docu)ent shou"d *e strict"y construed a!ainst the party 3ho caused its preparation. ?n +ine, it he"d that since the parties1 re"ation is +iduciary in nature, 3ith )ore reason that =?# shou"d have *een )ore +orthri!ht in !ettin! the prior consent o+ petitioners *e+ore se""in! the 57C? shares.

=?# ti)e"y +i"ed its )otion +or partia" reconsideration o+ the 4TC 4eso"ution dated Octo*er 18, 222;. ?n the )eanti)e, =?# )oved to inhi*it Jud!e 4o))e" O. #ay*ay +ro) +urther hand"in! the case. #oth )otions o+ =?# 3ere opposed *y petitioners. On Apri" 28, 222/, 4TC Jud!e #ay*ay inhi*ited hi)se"+. Su*seBuent"y, on Ju"y 2/, 222/, the 4TC, #ranch //, throu!h its ne3 Presidin! Jud!e, Jose"ito C. i""arosa, denied =?#1s )otion +or partia" reconsideration. A+ter ora" ar!u)ents on June 2., 222/, the 4TC a++ir)ed the propriety o+ the 8ud!)ent on the p"eadin!s rendered *y Pairin! Jud!e #ay*ay. Citin! .a+ellano +$ 2o,t&west Ai,lines, on the strict construa" o+ any a)*i!uity on a 3ritten docu)ent on the party issuin! it, the tria" court reiterated its ru"in! that petitioners are not estopped +ro) assai"in! the sa"e *y =?# o+ their 57C? shares, +or the sa"e con+ir)ation receipts do not disc"ose the purpose o+ the sa"es )ade. The R)li" o+ !he CA On Apri" 11, 2228, the appe""ate court rendered the assai"ed decision, revo>in! the 4TC1s 8ud!)ent on the p"eadin!s and re)andin! the case *ac> to the 4TC +or +urther proceedin!s. The fallo readsA WHEREFORE, pre)ises considered, the instant appea" is GRANTED. Accordin!"y, the Court a ()o1s 4eso"ution dated 18 Octo*er 222; is 4= OJ=5 and S=T AS?5= and this case is ordered re)anded to the Court a ()o 3hich is directed to conduct +urther proceedin!s hereo+ (i!h 'is%a!#h. SO O45=4=5. :hi"e =?# raised si< issues on appea", the CA reso"vedHH3hat it considered the pivota" issueHHthe propriety o+ the rendition *y the tria" court o+ a 8ud!)ent on the p"eadin!s. The CA +ound that 3hi"e so)e )ateria" a""e!ations in petitioners1 co)p"aint 3ere ad)itted *y =?#, the "atter1s ans3er nonethe"ess raised other !enuine issues 3hich it vie3ed can on"y *e threshed out in a +u""-*"o3n tria", "i>e &the avera!e price o+ the JPP shares o+ stoc>, the scope o+ the co""atera"s stated in

the ,otices o+ Sa"e and the )onetary c"ai)s o+ the Appe""ant F=?#G a!ainst the Appe""ees FpetitionersG.' Petitioners +i"ed their )otion +or reconsideration, 3hi"e =?# +i"ed a 7ani+estation 3ith 7otion +or C"ari+icationK5e"etion 3hich 3as opposed *y petitioners. ?n its )otion +or c"ari+icationKde"etion, =?# too> e<ception to the appe""ate court1s pronounce)ent that it %=?#( ad)itted the sa"e o+ petitioners1 57C? shares +or the purpose o+ *uyin! *ac> the JJP shares, 3hich stren!thened petitioners1 c"ai) o+ the nu""ity o+ the sa"e. #oth )otions 3ere denied *y the assai"ed reso"ution issued on Au!ust ;, 2228. Thus, 3e have this petition. The Iss)es ? CO,T4A4I TO T@= 4C0?,6 OF T@= COC4T OF APP=A0S, T@= T4?A0 COC4T :AS CO44=CT ?, 4=,5=4?,6 JC567=,T O, T@= P0=A5?,6S ?, T@= CAS= #=FO4= ?T. ?? T@= T4?A0 COC4T :AS CO44=CT ?, 4C0?,6 T@AT P=T?T?O,=4S1 57C? S@A4=S COC05 ,OT #= SO05 #I 4=SPO,5=,T =?# C,5=4 T@= ,OT?C=S OF SA0=. ??? T@= T4?A0 COC4T :AS CO44=CT ?, @O05?,6 T@AT 4=SPO,5=,T =?# COC05 ,OT ?, OJ= S=CT?O, 9 OF T@= S=CC4?T?=S 5=A0?,6S ACCOC,T A64==7=,T AS #AS?S FO4 T@= SA0= OF P=T?T?O,=4S1 57C? S@A4=S. ? T@= T4?A0 COC4T :AS CO44=CT ?, @O05?,6 T@AT P=T?T?O,=4S :=4= ,OT #A44=5 #I 4AT?F?CAT?O,, 0AC@=S O4 =STOPP=0 F4O7 DC=ST?O,?,6 T@= C,ACT@O4?M=5SA0= OF T@=?4 57C? S@A4=S.

T@= T4?A0 COC4T @A5 JC4?S5?CT?O, O =4 T@= CAS= F?0=5 #=FO4= ?T #I P=T?T?O,=4S :@O @A5 FC00I PA?5 T@= 5OCJ=T F==S ASS=SS=5 #I T@= C0=4J OF COC4T. ? C,5=4 P4= A?0?,6 JC4?SP4C5=,C=, T@= PA?4?,6 JC56= 5?5 ,OT CO77?T 64A = A#CS= OF 5?SC4=T?O,. ?, A,I = =,T, T@= APPO?,T7=,T OF A P4=S?5?,6 JC56= :@O = =,TCA00I 5=,?=5 4=SPO,5=,T1S 7OT?O, FO4 4=CO,S?5=4AT?O, 4=,5=4=5 T@= 7ATT=4 7OOT A,5 ACA5=7?C. The Co)*!-s R)li" :e !rant the petition. Th*eshol' Iss)e: 7*o%e* 7a&$e"! o+ Do#8e! Fees =?# asserts that the tria" court has no 8urisdiction over the co)p"aint on account o+ insu++icient doc>ets +ees. A"thou!h petitioners paid a tota" o+ PhP 122,9;8.82 in "e!a" +ees 3ith the 4TC, =?# ar!ues that 3hat 3as paid is *ased )ere"y on petitioners1 prayer +or )ora" da)a!es o+ PhP . )i""ion, e<e)p"ary da)a!es o+ PhP . )i""ion, and attorney1s +ees o+ PhP 2 )i""ion, *ut not inc"udin! petitioners1 c"ai) +or PhP 4.; )i""ion as actua" da)a!es as averred in para!raph 9 o+ the co)p"aint. Thus, =?#, re"yin! on Manc&este, 3e+elopment Co,po,ation +$ Co),t of Appeals %Manc&este,( and .)n Ins),ance 4ffice% 5td$ +$ As)ncion, )aintains that the 4TC shou"d not have entertained the case. ?t is horn*oo> "a3 that courts acBuire 8urisdiction over a case on"y upon pay)ent o+ the prescri*ed doc>et +ee. A p"ain readin! o+ the prayer does not sho3 that petitioners as>ed +or the pay)ent o+ actua" da)a!es o+ PhP 4.; )i""ion. The re"ie+s as>ed *y petitioners in the prayer areA 1. Cpon the +i"in! o+ the Co)p"aint, a 3rit o+ pre"i)inary attach)ent *e issued e6 pa,te a!ainst de+endant pursuant to Section 2, 4u"e ;9 o+ the 1999 /)les of Ci+il -,oced),eE

2. A+ter tria", 8ud!)ent rendered in +avor o+ p"ainti++s and a!ainst de+endant as +o""o3sA On the F?4ST CACS= OF ACT?O, H dec"arin! void the sa"e *y de+endant o+ the .2,182,222 57C? shares o+ stoc> o+ p"ainti++s and directin! de+endant to return to p"ainti++s the "atter1s .2,182,222 57C? shares o+ stoc>, or in the event the return thereo+ is not possi*"e, ho"din! de+endant "ia*"e under Artic"es 1888,1889,1929 and other pertinent provisions o+ the Civi" Code. On the S=CO,5 CACS= OF ACT?O, H directin! de+endant to pay p"ainti++s )ora" da)a!es in the a)ount o+ at "east P.,222,222.22E On the T@?45 CACS= OF ACT?O, H directin! de+endant to pay p"ainti++s e<e)p"ary da)a!es in the a)ount o+ at "east P.,222,222.22E and On the FOC4T@ CACS= OF ACT?O, H directin! de+endant to pay p"ainti++s attorney1s +ees in the a)ount o+ P2,222,222.22 and such a)ounts as )ay *e proven at the tria" as "iti!ation e<penses. Other 8ust and eBuita*"e re"ie+ are "i>e3ise prayed +or. Since the prayer did not as> +or the pay)ent o+ actua" da)a!es o+ PhP 4.; )i""ion, the c"er> o+ court correct"y assessed the a)ount o+ PhP 122,9;8.82 as doc>et +ees *ased on the tota" a)ount o+ PhP 8 )i""ion consistin! o+ PhP . )i""ion as )ora" da)a!es, PhP . )i""ion as e<e)p"ary da)a!es, and PhP 2 )i""ion as attorney1s +ees. ?n disputin! the +ees paid *y petitioners, respondent re"ies on our ru"in! in Manc&este,, 3here 3e said that &a"" co)p"aints, petitions, ans3ers and other si)i"ar p"eadin!s shou"d speci+y the a)ount o+ da)a!es *ein! prayed +or not on"y in the *ody o+ the p"eadin! *ut a"so in the prayer, and said da)a!es sha"" *e considered in the assess)ent o+ the +i"in! +ees in any case.' =?# insinuates that petitioners, *y a""e!in! the su*stantia" "oss o+ PhP 4.; )i""ion +ro) the sa"e o+ the 57C? shares *ut not speci+yin! the a)ount in their prayer, circu)vented the Manc&este, ru"in! to evade the pay)ent o+ the correct +i"in! +ees. This postu"ation is incorrect. ?t is

c"ear that petitioners de)anded the return o+ the 57C? shares in the prayer o+ the co)p"aint and ,OT the a""e!ed "oss in the va"ue o+ the shares. ?+ the 57C? shares are returned, then no actua" da)a!es are su++ered *y petitioners. A reca"" o+ the aver)ent in par. 9 o+ the co)p"aint sho3s that the a""e!ed "oss o+ PhP 4.; )i""ion to petitioners resu"ted +ro) the sa"e o+ 57C? shares at PhP 2.24 per share 3hen they acBuired it at PhP 2..8 per share. 7ore i)portant"y, the court 3as proscri*ed *y the Manc&este, ru"in! +ro) !rantin! actua" da)a!es o+ PhP 4.; )i""ion to petitioners, *ecause precise"y the a""e!ed da)a!es 3ere never sou!ht in the prayer. ',go, =?#1s attac> on the tria" court1s assu)ption o+ 8urisdiction )ust +ai". 7*o#e')*al Iss)e: J)' $e"! o" !he 7lea'i" s At the outset, 3e "ay stress on the Court1s po"icy that cases shou"d *e pro)pt"y and e<peditious"y reso"ved. The 4u"es o+ Court see>s to a**reviate court procedure in order to a""o3 the s3i+t disposition o+ cases. Speci+ica""y, specia" strate!ies "i>e de)urrer to evidence, 8ud!)ent on the p"eadin!s, and su))ary 8ud!)ent 3ere adopted to attain this avo3ed !oa". Fu""-*"o3n tria" is dispensed 3ith and 8ud!)ent is rendered on the *asis o+ the p"eadin!s, supportin! a++idavits, depositions, and ad)issions o+ the parties. ?n the instant petition, the Court is con+ronted 3ith the propriety o+ the 8ud!)ent on the p"eadin!s rendered *y the 7a>ati City 4TC. Petitioners c"ai) such ad8udication on said papers and attach)ents is proper. The petitioner1s position is i)pressed 3ith )erit. 4u"e .4 o+ the 4u"es o+ Court provides that &3here an ans3er +ai"s to tender an issue or other3ise ad)its the )ateria" a""e!ations o+ the adverse party1s p"eadin!, the court )ay, on )otion o+ that party, direct 8ud!)ent on such p"eadin!.' Jud!)ent on the p"eadin!s is, there+ore, *ased e<c"usive"y upon the a""e!ations appearin! in the p"eadin!s o+ the parties and the anne<es, i+ any, 3ithout consideration o+ any evidence ali)nde.

:hen 3hat is "e+t are not !enuine"y issues reBuirin! tria" *ut Buestions concernin! !he %*o%e* i"!e*%*e!a!io" o+ !he %*o6isio"s o+ so$e (*i!!e" #o"!*a#! a!!a#he' !o !he %lea'i" s, 8ud!)ent on the p"eadin!s is proper. Fro) the p"eadin!s, the parties ad)itted the +o""o3in! +actsA %1( =?# is the stoc>*ro>er o+ petitioners. %2( Petitioners and =?# entered into a S5AA, Anne< &1' o+ =?#1s ans3er, 3hich !overned the re"ationship *et3een petitioners as c"ients and =?# as stoc>*ro>er. Sec. 9 o+ the S5AA providesA 9. 0ien The #lie"! a *ees !ha! all $o"ies a"'5o* se#)*i!ies a"'5o* all o!he* %*o%e*!& o+ !he Clie"! 9%lai"!i++s: i" !he Co$%a"&-s 9'e+e"'a"!: #)s!o'& o* #o"!*ol hel' +*o$ !i$e !o !i$e shall be s)b;e#! !o a e"e*al lie" i" +a6o)* o+ Co$%a"& +o* !he 'is#ha* e o+ all o* a"& i"'eb!e'"ess o+ !he Clie"! !o !he Co$%a"&. The Clie"! shall "o! be e"!i!le' !o (i!h'*a( a"& $o"ies o* se#)*i!ies hel' b& !he Co$%a"& %e"'i" !he %a&$e"! i" +)ll !o !he Co$%a"& o+ a"& i"'eb!e'"ess o+ !he Clie"! !o !he Co$%a"&. The co)pany sha"" *e entit"ed at any ti)e and 3ithout notice to the C"ient to retain, app"y, se"" or dispose o+ a"" or any o+ the Fc"ient1sG property i+ any such o*"i!ation or "ia*i"ity is not dischar!ed in +u"" *y the c"ient 3hen due or on de)and in or to3ards the pay)ent and dischar!e o+ such o*"i!ation or "ia*i"ity and the Co)pany sha"" *e under no duty to the c"ient as to the price o*tained or any "osses or "ia*i"ities incurred or arisin! in respect o+ any such sa"e or disposa". Su*8ect to the re"evant "a3 and re!u"ation on the )atter, the c"ient here*y authori$es the Co)pany, on hisKits *eha"+, at any ti)e and 3ithout notice to the c"ient1s property i+ any such o*"i!ation or "ia*i"ity is not dischar!ed. %=)phasis supp"ied.( ?t is c"ear +ro) the S5AA that a"" )onies, securities, and other properties o+ petitioners in =?#1s custody or contro" sha"" *e su*8ect to a !enera" "ien in +avor o+ the la!!e* solel& +o* !he 'is#ha* e o+ all o* a"& i"'eb!e'"ess !o EI<.

%.( Fro) June 222. to 7arch 2224, petitioners, throu!h their *ro>er, =?#, *ou!ht /2,992,222 JJP shares o+ stoc> at the Phi"ippine Stoc> =<chan!e %PS=(. %4( On various dates in Ju"y and Au!ust 222., petitioners *ou!ht 1/,182,222 57C? shares o+ stoc> throu!h =?# "i>e3ise at the PS=, 3hi"e 1/,222,222 57C? shares o+ petitioners 3ere trans+erred to =?# *y :est"in> 6"o*a" =Buities, ?nc. Thus, a tota" o+ .2,182,222 57C? shares o+ stoc> o3ned *y petitioners 3ere p"aced in the custody or contro" o+ =?#. %;( On Apri" 1, 2224, petitioners ordered the sa"e o+ /2,992,222 JPP shares to any *uyer at the price o+ PhP 2.14 per share. The JPP shares 3ere eventua""y so"d at PhP 2.14 per share to interested *uyers. %/( Petitioners +ai"ed to reacBuire or *uy *ac> the JPP shares at PhP 2.18 per share a+ter .2 days +ro) date o+ transaction. %9( As petitioners +ai"ed to de"iver +unds to =?# to honor the *uy-*ac> o*"i!ation, not to )ention the cash account o*"i!ations o+ petitioners in the a)ount o+ PhP 92 )i""ion to =?#, =?# had no recourse *ut to se"" the 57C? shares o+ petitioners to reacBuire the JPP shares. %8( Thus, on various dates in June 2224, =?#, 3ithout petitioners1 >no3"ed!e and consent, so"d petitioners1 .2,182,222 57C? shares at the contro""in! )ar>et price. =?# "ater sent sa"es con+ir)ation receipts to petitioners re!ardin! the sa"e o+ their 57C? shares, said receipts containin! the co))on notice, 3hich readsA A"" transactionFsG are su*8ect to the ru"es and custo)s o+ the =<chan!e and its C"earin! @ouse. I! is a *ee' !ha! all se#)*i!ies shall se#)*e all $&5o)* liabili!ies !o e.se#)*i!iesand is authori$ed in their discretion to se"" a"" or any o+ the) 3ithout notice to 3eKus 3henever in the opinion o+ e.securities )yKour account is not proper"y secured. %=)phasis supp"ied.( %9( =?# sent state)ents o+ accounts to petitioners sho3in! the sa"e o+ the 57C? shares 3hich uni+or)"y contained the +o""o3in! noticeA

This state)ent 3i"" *e considered correct un"ess 3e receive notice in 3ritin! o+ any e<ceptions 3ithin ; days +ro) receipt. P"ease address a"" correspondence concernin! e<ceptions to our OP=4AT?O,S 5=PA4T7=,T. Jind"y noti+y us in 3ritin! o+ any chan!es in your address. %12( On January 12, 222;, petitioners 3rote =?# de)andin! the return o+ the .2,182,222 57C? shares. %11( On January 12, 222;, =?# re8ected petitioners de)and +or the return o+ the 57C? shares, as those 3ere a"ready so"d to cover the *uy *ac> o+ the JPP shares. %12( Petitioners1 prayer is the return o+ the .2,182,222 57C? shares *y =?# to the). The principa" issue in petitioners1 co)p"aint is 3hether =?# can *e co)pe""ed to return 57C? shares to petitioners *ased on the a""e!ed unauthori$ed disposa" or sa"e o+ said shares to co)p"y 3ith the *uy *ac> o+ the JJP shares. The thresho"d issue raised in the ans3er is the "ac> o+ 8urisdiction over the co)p"aint due to the a""e!ed nonpay)ent o+ the proper doc>et +ees. A++ir)ative de+enses presented are that =?# disposed o+ the 57C? shares pursuant to Sec. 9 o+ the S5AA, and the notices o+ sa"e, rati+ication and "aches. #ased on the ad)issions in the p"eadin!s and docu)ents attached, the Court +inds that the issues presented *y the co)p"aint and the ans3er can *e reso"ved 3ithin the +our corners o+ said p"eadin!s 3ithout need to conduct +urther hearin!s. As e<p"ained *y the Court in -&ilippine 2ational 1ank +$ 7tility Ass),ance 8 .),ety Co$% Inc ., (he" (ha! *e$ai"s !o be 'o"e is !he %*o%e* i"!e*%*e!a!io" o+ !he #o"!*a#!s o* 'o#)$e"!s a!!a#he' !o !he %lea'i" s, !he" ;)' $e"! o" !he %lea'i" s is %*o%e*. ?n the case at *ar, the issue o+ 3hether the sa"e o+ 57C? shares to e++ectuate the *uy *ac> o+ the JJP shares is va"id can *e decided *y the tria" court *ased on the S5AA, ,otices o+ Sa"e, Sa"es Con+ir)ation 4eceipts, the "etters o+ the parties, and other appenda!es to the p"eadin!s in con8unction 3ith the a""e!ations or ad)issions contained in the p"eadin!s 3ithout need o+ tria". The

7a>ati City 4TC is, there+ore, correct in issuin! the Octo*er 18, 222; 4eso"ution !rantin! the 7otion +or Jud!)ent on the P"eadin!s. The CA nu""i+ied the Octo*er 18, 222; 4eso"ution on the !round that there are other issues that )ust *e reso"ved durin! a +u""-*"o3n tria", ratiocinatin! this 3ayA :hi"e it )ay *e true that the Appe""ant has a"ready ad)itted that the sa"e o+ the 57C? shares 3as +or the purpose o+ *uyin! *ac> the JPP shares and that such ad)ission stren!thened Appe""ees1 c"ai) that the sa"e o+ the 57C? shares is a nu""ity, there 3ere other issues raised *y the Appe""ant that can on"y *e threshed out durin! a +u"" *"o3n tria", +i#A the avera!e price o+ the JPP shares o+ stoc>, the scope o+ the co""atera"s stated in the ,otices o+ Sa"e and the )onetary c"ai)s o+ the Appe""ant a!ainst the Appe""ees. To the )ind o+ the Court, these )atters are not !enuine"y tria*"e issues *ut actua""y )inor issues or )ere incidenta" Buestions that can *e reso"ved *y construin! the state)ents e)*odied in the appenda!es to the p"eadin!s. The +acts that !ave rise to the side issues are undisputed and 3ere a"ready presented to the tria" court renderin! tria" unnecessary. On the disparity in the avera!e price o+ JPP shares o+ stoc>, petitioners c"ai) that the avera!e purchase price o+ the JPP share is PhP 2.22 per share %par. 2 o+ the co)p"aint(, 3hi"e =?# c"ai)s it is on"y PhP 2.18 per share %par. 2 o+ the ans3er(. The dissi)i"arity in the acBuisition price paid *y petitioners +or the JPP shares is a non-issue, since the re"ie+ prayed +or is the return o+ the 57C? shares and not the JPP shares. Petitioners did not even c"ai) actua" da)a!es in the prayer o+ the co)p"aint. On the scope o+ the co""atera"s stated in the ,otices o+ Sa"e, it is c"ear +ro) the notices that the co""atera" is &JPP SharesKProperty'A Apri" 21, 2224 PAC?F?C 4=@OCS= CO4P. 7a>ati City

Phi"ippineFsG 4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S #CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, Apri" 21, 2224 FO4C7 @O05?,6S CO4P. 7a>ati City Phi"ippineFsG 4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S A A A 1;,;/2,222KS@A4=S P@P 2.14 Se""ers Account A A A A A A A ;,822,222KS@A4=S P@P 2.14 Se""ers Account a+ter .2 days %used on transaction P@P 2.18 AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

#CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, Apri" 21, 2224 7?MPA@ @O05?,6S ?,C. 7a>ati City Phi"ippineFsG

A A A A

a+ter .2 days %used on transaction P@P 2.18 AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

FSi!nedG PAC0?,= TA, Apri" 21, 2224 4=O0O, 4=A0TI 64OCP ?,C. 7a>ati City Phi"ippineFsG 4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S #CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, Apri" 21, 2224 4=CO =4I 5= =0OP7=,T CO4P. 7a>ati City Phi"ippineFsG A A A A A A A ;,222,222KS@A4=S P@P 2.14 Se""ers Account a+ter .2 days %used on transaction P@P 2.18 AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S #CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 A A A A A A A 8,4.2,222KS@A4=S P@P 2.14 Se""ers Account a+ter .2 days %used on transaction P@P 2.18 AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S #CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, Apri" 21, 2224 PAC?F?C :?5= 4=A0TI 5= =0OP7=,T CO4P. 7a>ati City Phi"ippineFsG 4=A SA0= OF JCOJ P4OP=4T?=S ?,C., %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S A A A 9,222,222KS@A4=S P@P 2.14 Se""ers Account A A A A A A A 12,.;2,222KS@A4=S P@P 2.14 Se""ers Account a+ter .2 days %used on transaction P@P 2.18 AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

#CI #ACJ 5AT= date( #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, A

a+ter .2 days %used on transaction P@P 2.18

A A

AP4?0 21, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

The deter)ination o+ the co""atera" in said notices can easi"y *e )ade +ro) the notices itse"+ and Sec. 9 o+ the S5AA. The JPP shares stated in the notices re+er to the JPP shares o3ned *y the &Petitioners' and so"d to third parties *y =?#. The 3ord &Property' in the notices is e"ucidated in the a+ore)entioned Sec. 9 as &a"" )onies andKor securities andKor a"" other property o+ the C"ient in the co)pany1s custody or contro" he"d +ro) ti)e to ti)e %C"ient1s Property( < < <.' These properties sha"" *e su*8ect to &a !enera" "ien in +avour o+ the Co)pany +or the dischar!e o+ a"" or any inde*tedness and other o*"i!ations o+ the c"ient to F=?#G.' Thus, the 57C? shares o3ned *y petitioners are covered *y the 3ord &Property' in the ,otices o+ Sa"e. On the )onetary c"ai)s *y petitioners a!ainst =?#, said c"ai)s are not a *ar to a 8ud!)ent on the p"eadin!s. :hi"e it 3as averred *y petitioners under par. 9 o+ the co)p"aint that they su++ered a "oss o+ PhP 4.; )i""ion +ro) the sa"e o+ the 57C? shares, the c"ai) +or actua" da)a!es 3as not set up as a re"ie+ in the prayer and, there+ore, the Manc&este,doctrine prec"udes such a3ard to petitioners. Anent the c"ai) +or )ora" da)a!es o+ PhP . )i""ion, e<e)p"ary da)a!es o+ PhP . )i""ion, and attorney1s +ees o+ PhP 2 )i""ion, the c"ai) is not proper in a 8ud!)ent on the p"eadin!s in the a*sence o+ proo+. Sans such proo+ e<tent on record, the c"ai) +or da)a!es is a non-issue.

?n su), there are no !enuine issues that cannot *e deter)ined *ased on the p"eadin!s. ',go, the assai"ed Octo*er 18, 222; 4eso"ution o+ the 7a>ati City 4TC !rantin! 8ud!)ent on the p"eadin!s is in accord 3ith 4u"e .4 o+ the 4u"es o+ Court and sett"ed 8urisprudence. A)!ho*i!& o+ EI< !o Sell DMCI Sha*es o+ 7e!i!io"e*s Petitioners assert the inapp"ica*i"ity o+ Sec. 9 o+ the S5AA to their "ia*i"ity to reacBuire the JJP shares, as the 57C? shares 3ere not so"d to pay +or their PhP 92 )i""ion o*"i!ation to =?# *ut to sett"e their o*"i!ation to the *uyers o+ their JJP shares. Petitioners1 position is i)pressed 3ith )erit. :e ru"e that =?# has no "e!a" authority to se"" the 57C? shares +or the purpose or reacBuirin! the JJP shares. Sec. 9 o+ the S5AA pertains to outstandin! o*"i!ations or inde*tedness o+ petitioners to =?# *ut does not cover any o*"i!ation o+ petitioners to third-party purchasers to reacBuire its JJP shares under the &+u"" cross to se""er' *uy-*ac> o*"i!ation su*8ect o+ the various notices o+ sa"e. 0et us scrutini$e ane3 Sec. 9 o+ the S5AAA 9. 0ien The #lie"! a *ees !ha! all $o"ies a"'5o* se#)*i!ies a"'5o* all o!he* %*o%e*!& o+ !he Clie"! 9%lai"!i++s: i" !he Co$%a"&-s 9'e+e"'a"!: #)s!o'& o* #o"!*ol hel' +*o$ !i$e !o !i$e shall be s)b;e#! !o a e"e*al lie" i" +a6o)* o+ Co$%a"& +o* !he 'is#ha* e o+ all o* a"& i"'eb!e'"ess o+ !he Clie"! !o !he Co$%a"&. The C"ient sha"" not *e entit"ed to 3ithdra3 any )onies or securities he"d *y the Co)pany pendin! the pay)ent in +u"" to the Co)pany o+ any inde*tedness o+ the C"ient to the Co)pany. The co)pany sha"" *e entit"ed at any ti)e and 3ithout notice to the C"ient to retain, app"y, se"" or dispose o+ a"" or any o+ the Fc"ient1sG property i+ any such o*"i!ation or "ia*i"ity is not dischar!ed in +u"" *y the c"ient 3hen due or on de)and in or to3ards the pay)ent and dischar!e o+ such o*"i!ation or "ia*i"ity and the Co)pany sha"" *e under no duty to the c"ient as to the price o*tained or any "osses or "ia*i"ities incurred or arisin! in respect o+ any

such sa"e or disposa". Su*8ect to the re"evant "a3 and re!u"ation on the )atter, the c"ient here*y authori$es the Co)pany, on hisKits *eha"+, at any ti)e and 3ithout notice to the c"ient1s property i+ any such o*"i!ation or "ia*i"ity is not dischar!ed. %=)phasis supp"ied.( As couched, the "ien in +avor o+ =?# attaches to any )oney, securities, or properties o+ petitioners 3hich are in =?#1s possession +or the dischar!e o+ a"" or any inde*tedness and o*"i!ations o+ petitioners to =?#. For this, petitioners are a"so *arred +ro) 3ithdra3in! its assets that are in the possession o+ =?# pendin! +u"" pay)ent *y petitioners o+ their inde*tedness to =?#. The a*ove proviso a"so !ives =?# the authority to se"" or dispose o+ petitioners1 securities or properties in its possession to pay +or petitioners1 inde*tedness to =?#. ?t is, thus, evident +ro) the a*ove S5AA provision that said lie" a"' a)!ho*i!& *a"!e' !o EI< !o 'is%ose o+ %e!i!io"e*s- se#)*i!ies o* %*o%e*!ies i" !he +o*$e*-s %ossessio" a%%l& o"l& !o 'is#ha* e a"' %a& o++ %e!i!io"e*s- i"'eb!e'"ess !o EI< and nothin! )ore. Sec. 9 o+ the S5AA does not app"y to petitioners1 o*"i!ations to thirdparty purchasers o+ their JJP shares under the &+u"" cross to se""er' o*"i!ation, and certain"y =?# cou"d not use said provision +or the repurchase o+ the JJP shares. ?ndu*ita*"y, the sa"e o+ the 57C? shares )ade *y =?# is nu"" and void +or "ac> o+ authority to do so, +or petitioners never !ave their consent or per)ission to the sa"e. 7oreover, Artic"e 1881 o+ the Civi" Code provides that &the a!ent )ust act 3ithin the scope o+ his authority.' Pursuant to the authority !iven *y the principa", the a!ent is !ranted the ri!ht &to a++ect the "e!a" re"ations o+ his principa" *y the per+or)ance o+ acts e++ectuated in accordance 3ith the principa"1s )ani+estation o+ consent.' ?n the case at *ar, the scope o+ authority o+ =?# as a!ent o+ petitioners is &to retain, app"y, se"" or dispose o+ a"" or any o+ the c"ient1s Fpetitioners1G property,' i+ a"" or any inde*tedness or other o*"i!ations o+ petitioners to =?# are not dischar!ed in +u"" *y petitioners &3hen due or on de)and in or to3ards the pay)ent and dischar!e o+ such o*"i!ation or "ia*i"ity.' The ri!ht to se"" or dispose o+ the properties o+ petitioners *y =?# is uneBuivoca""y con+ined to pay)ent o+ the o*"i!ations and "ia*i"ities o+ petitioners to =?# and none other. Thus, 3hen =?# so"d the 57C? shares to *uy

*ac> the JJP shares, it paid the proceeds to the vendees o+ said shares, the act o+ 3hich is c"ear"y an o*"i!ation to a third party and, hence, is *eyond the a)*it o+ its authority as a!ent. Such act is sure"y i""e!a" and does not *ind petitioners as principa"s o+ =?#. As a "ast-ditch e++ort, =?# see>s re+u!e +ro) the notices o+ sa"es it issued to petitionersA 0et us scrutini$e a typica" notice o+ sa"e issued to petitioners, thusA 4=A SA0= OF JCOJ P4OP=4T?=S ?,C. %JPP( As a!reed upon the a*ove )entioned stoc> 3i"" *e so"d to a party 3ith the +o""o3in! conditions attachedA ,C7#=4 OF S@A4=S A7OC,T N S@A4= C@A46=S #CI #ACJ 5AT= 5ateG #CI #ACJ A7OC,T 5AT= OF =O=CCT?O, CO00AT=4A0 FSi!nedG PAC0?,= TA, The a*ove notice states that the co""atera" is JPP SharesKProperty. =?# asserts that the 3ord &Property' re+ers to a"" the &)onies andKor securities andKor a"" other property' o+ petitioners in =?#1s custody or contro" pursuant to Sec. 9 o+ the S5AA. This postu"ation is correct. The 57C? shares are inc"uded in the 3ord &Property' under A A A P@P 2.18 AP4?0 1, 222F4G FC00 C4OSS TO S=00=4 JPP S@A4=SKP4OP=4TI A A A A < < <KS@A4=S P@P 2.14 Se""ers Account A+ter .2 days F*ased on transaction

Sec. 9 o+ the S5AA. @o3ever, =?#1s theory stops there. As ear"ier e<p"ained, the S5AA, )ore particu"ar"y its Sec. 9, cannot *e )ade the "e!a" *asis +or =?# to se"" petitioners1 properties in its possession or custody to pay petitioners1 o*"i!ations to third parties. The S5AA is con+ined on"y to o*"i!ations o+ petitioners to =?# and not to third parties "i>e the purchases o+ the JJP shares. Thus, the sa"e o+ the 57C? shares to *uy *ac> the JPP shares is i""e!a" and ine++ective, since it is on"y ans3era*"e +or the "ia*i"ities o+ petitioners to =?# and no one e"se. The notices o+ sa"e issued *y =?# coverin! the sa"e o+ the JJP shares o+ petitioners c"ear"y sho3 that the very sa)e JJP shares so"d to third parties a"*eit under a *uy-*ac> arran!e)ent and the &Property' o+ petitioners 3ere )ade the co""atera"s to secure the pay)ent o+ the reacBuisition. Since the possession o+ the JJP shares and the &Property' 3ere p"aced in =?#, a third party *y co))on a!ree)ent, then the accessory contract in the case at *ar is a contract o+ p"ed!e !overned *y Arts. 228; to 2292 o+ the Civi" Code, 3hich are provisions co))on to p"ed!e and )ort!a!e, and Arts. 229. to 21.9 on p"ed!e. The Buery is 3hether or not the p"ed!e on &JJP SharesKProperty' is va"id. The ans3er is no. Art. 228; o+ the Civi" Code providesA Art. 228;. The +o""o3in! reBuisites are essentia" to the contracts o+ p"ed!e and )ort!a!eA %1( That they *e constituted to secure the +u"+i"")ent o+ a principa" o*"i!ationE %2( That the p"ed!or or )ort!ator *e the a*so"ute o3ner o+ the thin! p"ed!ed or )ort!a!edE %.( That the persons constitutin! the p"ed!e or )ort!a!e have the +ree disposa" o+ their property, and in the a*sence thereo+, that they *e "e!a""y authori$ed +or the purpose. Third persons 3ho are not parties to the principa" o*"i!ation )ay secure the "atter *y p"ed!in! or )ort!a!in! their o3n property.

J?,5 OF T4A,SACT?O, A For and *eha"+ o+ =?# Securities.

?t is indispensa*"e that the p"ed!or is the a*so"ute o3ner o+ the thin! p"ed!ed %second e"e)ent(. ?n the case at *ar, the JJP shares 3ere so"d to third parties *y =?# at PhP 2.14 and, as a resu"t, petitioners "ost their ri!ht o+ o3nership over the JJP shares. @ence, +ro) the ti)e o+ the sa"e, petitioners 3ere no "on!er the a*so"ute o3ners o+ said shares, )a>in! the p"ed!e constituted over said JJP shares nu"" and void. A"so, it is necessary under Art. 228; that the person constitutin! the p"ed!e has the +ree disposa" o+ his or her property, and in the a*sence o+ that +ree disposa", that he or she *e "e!a""y authori$ed +or the purpose %third e"e)ent(. This e"e)ent is a*sent in the case at *ar. Petitioners no "on!er have the +ree disposa" o+ the JJP shares 3hen =?# so"d said shares at the stoc> e<chan!e as they are no "on!er the o3ners o+ the shares. Thus, there 3as no va"id p"ed!e constituted on the JJP shares. The notice o+ sa"e, assu)in! it incorporates the accessory contract o+ p"ed!e, )ere"y stated &Property' as co""atera" in addition to JJP shares. This is a *"atant vio"ation o+ Art. 229/, 3hich provides that &a p"ed!e sha"" not ta>e e++ect a!ainst third persons i+ description o+ the thin! p"ed!ed and the date o+ the p"ed!e do not appear in a pu*"ic instru)ent.' The thin! p"ed!ed )ust *e a)p"y and c"ear"y descri*ed and speci+ica""y identi+ied. =vident"y, the 3ord &Property' is va!ue, *road, and con+usin! as to the o3nership. @ence, it does not satis+y the prescription under Art. 229/ o+ the Code. :orse, the notice o+ sa"e is not in a pu*"ic instru)ent as reBuired *y said "e!a" provisionE there+ore, the p"ed!e on &property' is void and 3ithout "e!a" e++ect. 7oreover, the notices o+ sa"e )ust *e construed a!ainst =?#. Any a)*i!uity in a contract 3hose ter)s are suscepti*"e o+ di++erent interpretations )ust *e read a!ainst the party 3ho dra+ted it. The 57C? shares 3hich =?# construed to *e inc"uded 3ithin the a)*it o+ the 3ord &property' cannot *e considered the thin! p"ed!ed to secure the *uy *ac> o+ the JJP shares in vie3 o+ the va!ueness o+ the 3ord &Property' and the non-app"ica*i"ity o+ the S5AA to the sa"e o+ the JJP shares.

0ast"y, the appe""ate court ru"ed that the a++ir)ative de+ense o+ estoppe" 3as raised *y =?# due to the a""e!ed +ai"ure o+ petitioners to o*8ect to the sa"e o+ the 57C? shares. The princip"e o+ estoppe" rests on the ru"e thatA F:Ghere a party, *y his or her deed or conduct, has induced another to act in particu"ar )anner, estoppe" e++ective"y *ars the +or)er +ro) adoptin! an inconsistent position, attitude or course o+ conduct that causes "oss or in8ury to the "atter. The doctrine o+ estoppe" is *ased upon the !rounds o+ pu*"ic po"icy, +air dea"in!, !ood +aith and 8ustice, and its purpose is to +or*id one to spea> a!ainst his o3n act, representations, or co))it)ents to the in8ury o+ one 3ho) they 3ere directed and 3ho reasona*"y re"ied thereon. The essentia" e"e)ents o+ estoppe" as re"ated to the party estopped areA %1( conduct 3hich a)ounts to a +a"se representation or concea")ent o+ )ateria" +acts, or, at "east, 3hich ca"cu"ated to convey the i)pression that the +acts are other3ise than, and inconsistent 3ith, those 3hich the party su*seBuent"y atte)pts to assertE %2( intention, or at "east e<pectation, that such conduct sha"" *e acted upon *y the other partyE and %.( >no3"ed!e, actua" or constructive, o+ the actua" +acts. 4e"iance *y respondent =?# on estoppe" is )isp"aced. The +irst e"e)ent does not o*tain +ro) the +actua" settin! presented *y the p"eadin!s, attach)ents, and ad)issions. There is no a""e!ation that petitioners per+or)ed an act 3hich can *e considered as +a"se representation that =?# can se"" their 57C? shares to reacBuire the JJP shares, or concea"ed a )ateria" +act. Sec. 9 o+ the S5AA is uneBuivoca" that =?# can on"y se"" the shares o+ petitioners +or pay)ent o+ any inde*tedness to =?#. There 3as no act or concea")ent on the part o+ petitioners that )ade >no3n or conveyed the i)pression to =?# that it can se"" the 57C? shares o+ petitioners +or the "atter1s inde*tedness or o*"i!ation to a third party in contravention o+ =?#1s authority under Sec. 9 o+ the S5AA. 7oreover, the second e"e)ent is a"so a*sent. There 3as no sho3in! that petitioners authori$ed =?# to pay a third party +ro) the proceeds o+ the sa"e o+

their 57C? shares. 0ast"y, on the third e"e)ent, petitioners had no >no3"ed!e o+ the +act that the proceeds o+ the sa"e o+ 57C? shares 3ere paid to *uy *ac> the JPP shares. 4e"iance o+ =?# on the sa"es con+ir)ation receipts issued to petitioners does not he"p any. The condition printed on said receipts e<p"icit"y states that the &securities sha"" secure Fpetitioners1G "ia*i"ities to e.securities.' =ven the account state)ents issued *y =?# do not re+"ect the pay)ent o+ the proceeds o+ the sa"e o+ 57C? shares o3ned *y petitioners to *uy *ac> the JJP shares previous"y o3ned *y petitioners. A"" that these accounts sho3 is the creditin! o+ the proceeds o+ the sa"e o+ 57C? shares to petitioners and nothin! )ore. There 3as no disc"osure o+ the purpose o+ the sa"e o+ the 57C? shares. C"ear"y, there is no estoppe". WHEREFORE, the petition is GRANTED. The CA 5ecision dated Apri" 11, 2228 in CA-6.4. C ,o. 8991. is REVERSED and SET ASIDE. The 4TC 4eso"ution dated Octo*er 18, 222; in Civi" Case ,o. 2;-198 is here*y REINSTATED. ,o costs. SO ORDERED. 7RES<ITERO J. VELASCO, JR. Associate Justice

Associate Justice CERTIFICATION Pursuant to Section 1., Artic"e ??? o+ the Constitution, ? certi+y that the conc"usions in the a*ove 5ecision had *een reached in consu"tation *e+ore the case 3as assi!ned to the 3riter o+ the opinion o+ the Court1s 5ivision. RENATO C. CORONA Chi e+ Justice
Deen v. Paci#ic Commercial* )( "hil. %8

4epu*"ic o+ the Phi"ippines SU7REME COURT 7ani"a =, #A,C G.R. No. L3>?@AA Feb*)a*& ?, >B11 N. T. DEEN, p"ainti++-appe""ee, vs. 7ACIFIC COMMERCIAL CO., de+endant-appe""ant. Mas .&oop 8 1lock% 9o&nston and ",eenba)m fo, appellant$ McVean 8 Vicke,s fo, appellee$

:= CO,CC4A RENATO C. CORONA Chie+ Justice Chairperson TERESITA J. LEONARDO3DE CASTRO CASTILLO Associate Justice Associate Justice MARIANO C. DEL

JOHNS, (.) ?t is undisputed that the p"ainti++ is a resident o+ Ce*u and du"y "icensed as rea" estate *ro>er in the Phi"ippine ?s"ands. That the Paci+ic Co))ercia" Co)pany, to 3hich 3e 3i"" herea+ter re+er as the Co)pany, is a du"y or!ani$ed corporation and authori$ed to do *usiness in the Phi"ippine ?s"ands, 3ith its principa" o++ice and p"ace o+ *usiness in the city o+ 7ani"a. That it has nu)erous *ranch houses, one o+ 3hich is in Ce*u, and does )ore or "ess *usiness a"" over the Phi"ippine ?s"ands. That the de+endant 0.J. Francisco is a resident o+ Ce*u and the "oca" )ana!er o+ the Co)pany at that p"ace. That at the

JOSE 7ORTUGAL 7ERE=

ti)e speci+ied, the Co)pany 3as the o3ner o+ a concrete ce)ent 3arehouse in sections 4 and ; o+ *"oc> / on the 3ater +ront o+ Ce*u, 3hich is used and rented as a bodega. That @.#. Pond 3as a resident o+ 7ani"a and the vice-president and !enera" )ana!er o+ the Co)pany. That on Octo*er 1;, 1919, he 3rote a "etter to Francisco at Ce*u, enc"osin! a *"ueprint o+ the property 3hich the Co)pany o3ned there, and statin! that it 3as o++ered +or the su) o+ P.22,222 and our 3arehouse P122,222,P in 3hich he +urther saidA P?+ this property is so"d arran!e)ents 3i"" o+ course have to *e )ade to protect us and a"so to protect the "eases at present on the property o+ the Ce*u :arehouse Co. As you >no3, it is our p"an to occupy the 3arehouse at present "eased to 7essrs. 7ac"eod and Co. 3hich ad8oins our Ce*u O++ice. :i"" you p"ease "oo> around Ce*u and see i+ you can +ind *uyers +or this propertyQP 5ece)*er 1, 1919, Francisco 3rote the +o""o3in! "etter to the p"ainti++A ? attach *"ueprint 3hich 3i"" sho3 P. C. C. properties +or sa"e on the 3ater+ront. 5r. Pond is +a)i"iar 3ith the ter)s o+ the 6overn)ent "eases. They 3ere to run +or 122 years, ? *e"ieve, +ro) 1912, and are su*8ect to re-va"uation each ten years. 5r. Pond has recent"y investi!ated the su*8ect and 3i"" !ive you detai"s, ? a) sure. 1lock 2o$ 4$ : The Paci+ic Co))ercia" Co)pany has +or sa"e sections ,os. 1, 2, and .. The area is !iven in the sections. Sections ,os. 1 and 2 are at present occupied *y Stevenson and Co. and section ,o. ., *y 7ac"eod and Co. Stevenson and Co. pay P9;2 a )onth +or section 1 and 2, and 7ac"eod and Co)pany pay P.9;, +or section ,o. .. The Paci+ic Co))ercia" Co)pany is as>in! P222,222 net to the) +or these three sections. Our o++er to any one is that these three sections are su*8ect to "eases 3ith 7ac"eod and Co. and Stevenson and Co. These "eases e<pire 5ece)*er .1, 1921. 1lock 2o$ 6$ : The Paci+ic Co))ercia" Co)pany no3 o3ns and occupies a *ode!a on areas ,os. 4 and ; in #"oc> ,o. /. The areas are !iven on the *"ueprint. The Paci+ic Co))ercia" Co)pany is p"acin! this property +or sa"e at P122,222 net to the).

?n case a sa"e is consu))ated it )ust *e understood that 3e sha"" *e per)itted to continue to occupy this 3arehouse +or a reasona*"e "en!th o+ ti)e in order that 3e )ay secure other *ode!a space and arran!e the trans+er o+ our he)p press, etc.P 5ece)*er 12, 1919, the p"ainti++ 3rote the +o""o3in! "etter to FranciscoA /e the sa"e o+ #ode!as as per your "etter o+ 5ec. 1stK19, ? *e! to in+or) you that ? have set the *a"" ro""in!. A) ? ri!ht in assu)in! that there is no other person authori$ed to o++er these #ode!as +or sa"eQ ?, +urther)ore, *e! to reBuest that no prices *e !iven to any person direct"y, *ut any inBuiries )ade *e re+erred to )e. ?t appears that, as Francisco construed the "etter o+ vice-president Pond to hi) o+ date Octo*er 1;th, he did not thin> it prudent +or the Co)pany to dispose o+ its property in section 4 and ; o+ *"oc> / in Ce*u, and that on 5ece)*er tenth, he 3rote to Pond, as vicepresident, advisin! a!ainst the sa"e. 5ece)*er 1/th, vice-president Pond 3rote a "etter to Francisco, in 3hich, a)on! other thin!s, he saidA Iour "etter "eads )e to *e"ieve that you have )isunderstood the *asis on 3hich 3e 3ere considerin! the sa"e o+ your 3arehouse ,o. 2. ?n se""in! this 3arehouse 3e have, there+ore, considered a"" a"on! that it 3ou"d *e on"y on the understandin! that 3e sha"" *e per)itted to occupy this 3arehouse unti" the "ease o+ 7ac"eod and Co)pany on their present pre)ises e<pires. On any other *asis it 3ou"d o+ course *e +oo"ish +or us to dispose o+ the property. ?n vie3 o+ recent deve"op)ents ? su!!est that you discontinue )a>in! any e++orts to dispose o+ 3arehouse ,o. 2. :e sha"" ta>e up our +uture po"icy in connection 3ith our 3arehouses in Ce*u at the ti)e 7r. 0oe3enstain and ? visit Ce*u in January. This "etter 3as received *y Francisco at Ce*u on the )ornin! o+ 5ece)*er 19th, and he at once te"ephoned the p"ainti++ the su*stance o+ the "etter, and that the property 3as 3ithdra3n +ro) the )ar>et. 5ece)*er 19th, the p"ainti++ 3rote Francisco, as )ana!er o+ the Co)pany, the +o""o3in! "etterA

:ith re+erence to our te"ephone conversation this )ornin!, the dea" +or the sa"e o+ your #ode!a has !one so +ar and in accordance 3ith the ter)s o+ your "etter to )e, that ? donRt see ho3 ? can repudiate the a!ree)ent ? have )ade 3ith the *uyer. The entire transaction 3i"" *e ter)inated and the )oney paid to you 3ithin ten days or "ess. On the sa)e day, Francisco, as )ana!er, 3rote the p"ainti++ the +o""o3in! "etterA ? have your "etter o+ the 19th o+ 5ece)*er 3ith re+erence to the sa"e o+ our :arehouse ,o. 2. As soon as 3e receive the o++er it 3i"" *e p"aced *e+ore our 7ani"a =<ecutives +or acceptance. ? *e! to state S outside o+ this particu"ar dea" S that this property 3as 3ithdra3n +ro) sa"e in accordance 3ith the instructions received today +ro) our 7ani"a O++ice. And on 5ece)*er 22th, 3rote hi) another "etter, the )ateria" portions o+ 3hich are as +o""o3sA 4ep"yin! to your "etters o+ 5ece)*er 19th and 5ece)*er 22th, 3e *e! to state that our o++er to you to ne!otiate on our *eha"+ a sa"e o+ 3ater+ront property in Ce*u 3as su*8ect to con+ir)ation o+ the a!ree)ent to se"" *y our head o++ice in 7ani"a. This *ranch has no authority to c"ose a dea" o+ this character 3ithout e<press approva" o+ the 7ani"a o++ice and in +act assi!n)ent o+ the "ease to the "and )ust *e approved *y the #ureau o+ 0ands. On 5ece)*er 19th the 3riter te"ephoned you and ta">ed to you 3ithdra3in! this property +ro) sa"e and you rep"ied on the sa)e day *y "etter that the dea" +or the sa"e had !one too +ar +or you to then 3ithdra3 your o++er. ,ot unti" 5ece)*er 22th 3as a de+inite o++er )ade to us and then you Buoted a price o+ P122,222 in cash and stated that the )oney 3ou"d *e paid as soon as the necessary docu)ents are dra3n up. :e a!ain ca"" your attention to the +act that the necessary docu)ents cannot *e dra3n up unti" the 7ani"a o++ice approves this sa"e, that is to say, you 3ere noti+ied *e+ore you c"osed 3ith the person 3ho is no3 o++erin! to *uy that the 3riter a"one 3as not authori$ed to consu))ate this sa"e.

A "ease o+ this character +or this period is essentia" to consu))ate this dea" +or the reason that the Paci+ic Co))ercia Co)pany is no3 occupyin! the property 3as are discussin! and no other suita*"e *ode!a space is avai"a*"e in Ce*u and 3i"" not *e, accordin! to our in+or)ation, unti" a*out 5ece)*er .1, 1921, and the Co)pany does not propose to *e put out into the street. The 3riter re!rets that you )isunderstood his "etter o+ 5ece)*er 1st 3hich 3as intended to have you secure o++ers 3hich 3ere to *e su*)itted and +or3arded to 7ani"a. ... The p"ainti++ c"ai)in! that he had a *uyer 3ho 3as a*"e, ready and 3i""in! to purchase the property and pay P122,222 +or it, and the Co)pany re+usin! to se"" and convey the property, a+ter certain ne!otiations, +or the purpose o+ tryin! to sett"e the dispute *et3een the), the p"ainti++ co))enced this action. The co)p"aint a""e!es that on 5ece)*er 1, 1919, the de+endant Francisco, as )ana!er o+ the de+endant Co)pany, and co)p"yin! 3ith its instructions, o++ered in 3ritin! to p"ainti++ +or sa"e sections 4 and ; o+ *"oc> o+ / o+ the Ce*u 4ec"ai)ed 0ands +or the su) o+ P122,222, Pand uti"i$ed in e++ect p"ainti++ in his capacity a"ready cited to ne!otiate the sa"e o+ the property.P That said de+endant, 0. J. Francisco, in o++erin! and reco))endin! to p"ainti++ the ne!otiation +or the sa"e o+ the property a"ready )entioned, a!reed 3ith the "atter that, i+ he cou"d se"" said property +or the +i<ed su) o+ P122,222, the p"ainti++ 3ou"d receive, as re)uneration +or his services in the ne!otiation o+ the sa"e, any a)ount 3hich cou"d *e o*tained +ro) the *uyer in e<cess o+ the said su), 3hatever )ay *e the va"ue o+ the di++erence. That on the 18th o+ 5ece)*er, 1919, the p"ainti++ e++ected the ne!otiation o+ the sa"e said 3arehouse, and pro)ised in the na)e o+ his principa" 3ith the 4o)an Catho"ic #ishop o+ Ce*u, that he 3ou"d se"" to hi) +or the su) o+ P122,222 the 3arehouse re+erred to, havin! c"osed the a!ree)ent 3ith the 4o)an Catho"ic #ishop re+erred to on the sa)e dateE and that the de+endant 0. J. Francisco 3as i))ediate"y noti+ied o+ the e<ecution o+ this a!ree)ent.

?t is then a""e!ed that the de+endants Phave re+used to pay the p"ainti++ his co))ission o+ P22,222, not3ithstandin! the de)ands )ade *y the p"ainti++, 3hich su) is due and paya*"e *y the de+endants 8oint"y and severa""y.P As a second cause o+ action, the p"ainti++ a""e!es in su*stance that the de+endants have +or)ed a conspiracy to de+eat p"ainti++Rs c"ai) a!ainst the Co)pany, and to p"ace a"" "ia*i"ity upon the de+endant Francisco. The de+endants +i"ed a !enera" de)urrer to the co)p"aint 3hich 3as overru"ed. An ans3er 3as then +i"ed, in 3hich they ad)it the +or)a" a""e!ations o+ the co)p"aint, and )a>e a !enera" denia" o+ a"" the others. Testi)ony 3as ta>en upon such issues, and the tria" court dis)issed the action as to Francisco, and rendered a 8ud!)ent a!ainst the Co)pany +or P22,222, 3ith interest and costs, +ro) 3hich is appea"ed, )a>in! ei!hteen assi!n)ents o+ error. The p"ainti++ did not appea". A"thou!h the tria" court +ound +or the p"ainti++ and a!ainst the Co)pany, and there is a sharp con+"ict in )uch o+ the evidence, there is no dispute a*out any o+ the )atters a*ove stated. ,either is there any a""e!ation or proo+ that Francisco 3as an o++icer or director o+ the Co)pany, or that he had any authority to convey the property, or that his si!nature 3as necessary to the conveyance. ?t is a"so undisputed that the +ee to the property 3as in the 6overn)ent, and that the Co)pany had a ninety-nine-year "ease +ro) the 6overn)ent, datin! +ro) 1912, su*8ect to certain ter)s and provisions, a)on! 3hich 3as the +act that the "ease cou"d not *e assi!ned 3ithout the consent o+ the 6overn)ent. ?t is a"so undisputed that at the ti)e in Buestion 7r. Pond 3as vice-president and !enera" )ana!er o+ the Co)pany, and that his si!nature 3as necessary to any conveyance o+ rea" property. ?n +act, he 3as the on"y o++icer o+ the Co)pany in the Phi"ippine ?s"ands 3ho had authority to )a>e such a conveyance. The de+endant Francisco, *ein! on"y the "oca" )ana!er o+ the *ranch o++ice o+ the Co)pany at Ce*u and not an o++icer or director, un"ess other3ise e)po3ered, 3ou"d not have any authority to se"" or convey the rea" property o+ the Co)pany, or )a>e a contract +or a sa"e or

conveyance. That po3er 3as pri)ari"y vested in the #oard o+ 5irectors and the e<ecutive o++icers o+ the Co)pany, and it appears +ro) the record that at the ti)e o+ the a""e!ed acts, it 3as de"e!ated to, and vested in, 7r. Pond, 3ho 3as the vice-president and !enera" )ana!er o+ the Co)pany, and that he a"one 3as authori$ed *y the #oard o+ 5irectors to e<ercise that po3er. Francisco, as "oca" )ana!er, not havin! any authority to )a>e contracts +or the sa"e or conveyance o+ the rea" property o+ the Co)pany, his authority, i+ any, )ust co)e +ro) the Co)pany or Pond, its !enera" )ana!er. Any authority o+ Francisco )ust *e +ound in the "etter to hi) o+ Octo*er 1;, 1919, +ro) vicepresident Pond, in 3hich, a+ter spea>in! o+ the va"ue o+ re"ative areas, and that the va"ue o+ the property in Buestion 3ou"d +i!ure out P122,222, he saysA P?+ this property is so"d arran!e)ents 3i"" o+ course have to *e )ade to protect us and a"so to protect the "eases at present, on the property o+ the Ce*u :arehouse Co. As you >no3, it is our p"an to occupy the 3arehouse at present "eased to 7essrs. 7ac"eod and Co. 3hich ad8oins our Ce*u O++ice. :i"" you p"ease "oo> around Ce*u and see i+ you can +ind *uyers +or this property.P #y the e<press ter)s o+ this "etter, the authority o+ Francisco 3as "i)ited to P"oo> around Ce*u and see i+ you can +ind *uyers +or this property.P ?t did not authori$e hi) to se"" the property or to contract +or its sa"e. @is instructions 3ere to "oo> around and see i+ he cou"d +ind a *uyer. A!ain, the "etter c"ear"y says that an a!ree)ent 3i"" Phave to *e )ade to protect us and a"so to protect the "eases at present on the property o+ the Ce*u :arehouse Co.P That it 3as the p"an o+ the Co)pany to occupy the 3arehouse 3hich ad8oint its Ce*u o++ice. #y the very ter)s o+ the "atter, any sa"e o+ the property 3as su*8ect to the approva" o+ the ho)e o++ice at 7ani"a, and no sa"e cou"d *e )ade 3ithout its approva", and yet, under the record, any authority o+ Francisco to se"" or contract +or the sa"e o+ the property )ust *e +ound in this "etter. This "etter 3as +o""o3ed *y the one o+ Francisco to the p"ainti++ o+ 5ece)*er 1, 1919, a*ove Buoted, 3hich 3as 3ritten on the stationery o+ the Co)pany, and is si!ned )ere"y P0. J. Francisco.P The "etterhead sho3s upon its +ace that the head o++ice o+ the Co)pany is in 7ani"a, and that it has *ranch o++ices at Sydney, Jo*e, Ce*u, ?"oi"o and Ma)*oan!a. A+ter statin! that the property is he"d under 6overn)ent "eases and p"acin!

the va"ue o+ the property at P222,222 on *"oc> 4, this "etter saysA The Co)pany Pno3 o3ns and occupies a *ode!a on areas ,os. 4 and ; in *"oc> ,o. /. The areas are !iven on the *"ueprint,P and it Pis p"acin! this property +or sa"e at P122,222 net to the).P A"so, that in the event o+ a sa"e, Pit )ust *e understood that 3e sha"" *e per)itted to continue to occupy this 3arehouse +or a reasona*"e "en!th o+ ti)e in order that 3e )ay secure other *ode!a space and arran!e the trans+er o+ our he)p press, etc.P @ere a!ain, this "etter e<press"y says any sa"e o+ the property 3ou"d *e conditiona". A"thou!h this "etter is not as c"ear and e<p"icit on that point as that o+ vice-president Pond o+ Octo*er 1;th, it does c"ear"y point out that, as one o+ the conditions o+ the sa"e, the Co)pany )ust have an a!ree)ent satis+actory to it +or the continued possession o+ the property. #y the very ter)s o+ this "etter, the ri!ht 3as reserved to the Co)pany to say 3hat ter)s 3ou"d *e and 3ou"d not *e satis+actory, and 3hat 3ou"d *e a reasona*"e "en!th o+ ti)e, +or its continued possession o+ the property. The po3er to do that 3as never de"e!ated *y the Co)pany, or in the "etter to 5een. A!ain, the p"ainti++ either >ne3 or it 3as his *usiness to >no3 that he 3as dea"in! 3ith a corporation 3hich had e<ecutive o++icers and a *oard o+ directors, and 3hose principa" o++ice 3as in 7ani"a, and that Francisco 3as not an o++icer or director o+ the corporation, and that he 3as on"y a "oca" )ana!er o+ the Co)panyRs property at Ce*u, and that as such he had no "e!a" ri!ht to se"" or contract to se"" the rea" property o+ the Co)pany, and that any po3er 3hich he had or c"ai)ed to have in such )atters )ust *e e<press"y con+erred. ?n 7eche) on A!ency, 2d ed., vo". 1, section 999, it is saidA A)t&o,ity to sell ,at&e, t&an me,ely to find a p),c&ase,; me,e b,oke, no a)t&o,ity to make a binding cont,act . S ?t is to *e noted a"so that the case here conte)p"ated is that in 3hich the a!ent is rea""y authori$ed to se"", and not )ere"y e)p"oyed to +ind a purchaser to 3ho) the principa" )ay se"". The distinction is one o+ conseBuence, *ecause one e)p"oyed as a )ere rea" estate *ro>er to Tse""R "and, even thou!h e)p"oyed *y 3ritin!, is usua""y he"d to have no po3er to )a>e a *indin! contract %)uch "ess a deed o+ conveyance(, *ut is con+ined to

the +indin! o+ a person ready, 3i""in! and a*"e to *uy +ro) the principa" on the ter)s proposed *y hi). . . . ?n section 822, the sa)e author saysA Me,e p,elimina,y co,,espondence o, negotiations not eno)g& to confe, a)t&o,ity. S ?t is o*vious a"so that *e+ore the Buestions here su!!ested can *e deter)ined, the authority intended to *e con+erred )ust *e co)p"ete"y a!reed upon and vested. ?+, there+ore, the dea"in!s *et3een the principa" and the a!ent have not passed *eyond the sta!e o+ pre"i)inary correspondence, i+ the ter)s upon 3hich the authority is to *e e<ecuted or the property so"d are not yet +u""y deter)ined, i+ +urther co))unications are to *e had 3ith the principa", or +urther assent !iven, *e+ore the authority is to *e e<ercised, and the "i>e, there can ordinari"y *e no present authority to se"" in such 3ise as to *ind the principa". ?t is @orn-#oo> "a3 that a person dea"in! 3ith an a!ent is put upon inBuiry as to the po3er and authority o+ the a!ent. Corpus Juris, vo". 2, p. ;/2, section 224, saysA 3)ty of t&i,d pe,son to asce,tain a)t&o,ity; gene,al ,)le . S ?t +o""o3s +ro) the a*ove ru"es that as a !enera" ru"e every person 3ho underta>es to dea" 3ith an a""e!ed a!ent is, *y the )ere +act o+ the a!ency, put upon inBuiry, and )ust discover at his peri" that it is in its nature and e<tent su++icient to per)it the a!ent to do the proposed act, and that its source can *e traced to the 3i"" o+ the a""e!ed principa", particu"ar"y 3here he is dea"in! 3ith an a!ent 3hose authority he >no3s to *e specia", or 3here it is his +irst transaction 3ith the a!ent, or the circu)stances connected 3ith the a!ency are such as shou"d put hi) on inBuiry, as 3here it appears +ro) the circu)stances o+ the particu"ar *usiness that the interests o+ the a!ent and principa" are necessari"y adverse, or that the authority is o+ an unusua", i)pro*a*"e, or e<traordinary nature. Such a person is to *e re!arded as dea"in! 3ith the po3er *e+ore hi), and )ust, at his peri", o*serve that the act done *y the a!ent is "e!a""y identica" 3ith the act authori$ed *y the po3er.

.o),ce of info,mation$ : The person dea"in! 3ith the a!ent shou"d ascertain the e<tent o+ his authority +ro) the principa", or +ro) so)e other person 3ho 3i"" have a )otive to te"" the truth in the interests o+ the principa", and he cannot re"y upon the a!entRs state)ent or assu)ption o+ authority, or upon the )ere presu)ption o+ authority. *ail),e to in()i,e$ : ?+ such person )a>es no inBuiry *ut chooses to re"y on the a!entRs state)ents he is char!ea*"e 3ith >no3"ed!e o+ the a!entRs authority, and his i!norance o+ its e<tent 3i"" *e no e<cuse to hi), and the +au"t cannot *e thro3n upon the principa" 3ho never authori$ed the act or contract, a"thou!h he 3as care"ess in reposin! con+idence in his a!ent. Section 229 saysA <&e,e a)t&o,ity is% o, ,e()i,ed to be% in w,iting$ : :here a third person dea"in! 3ith an a!ent has >no3"ed!e that his authority )ust necessari"y *e in 3ritin! in order to *ind the principa", it is his duty to ascertain 3hether the a!ent has such authority and 3hether it is in proper +or)E and 3here there is 3ritten authority, 3hether it is reBuired or not, and such person has, or is char!ed 3ith >no3"ed!e thereo+, it is his duty to ascertain the nature and e<tent o+ the authority con+erred, and 3hether the a!ent is actin! 3ithin its scope, un"ess he is e<cused +ro) inspectin! the 3ritten authority *y a state)ent +ro) the principa" hi)se"+ de+inin! the authority. :hen the authority is *y "a3 reBuired to *e in 3ritin! he is char!ed 3ith >no3"ed!e o+ that +act, and o+ the "i)itations upon the a!entRs po3er contained in such 3ritin!. . . . The sa)e ru"e is "aid do3n in 7eche) on A!ency, vo". 1, section 9;8. As a )atter o+ "a3, it )ust +o""o3, upon the undisputed +acts, that the p"ainti++ does not have a cause o+ action a!ainst the Co)pany. The "o3er court dis)issed the case as to the de+endant Francisco. The p"ainti++ did not appea", and that decision is no3 +ina". ?n the +ina" ana"ysis o+ the +acts, Francisco did nothin! )ore than to advise and represent to the p"ainti++ that this Co)pany 3as 3i""in! to se"" the property in Buestion +or P122,222, and on condition that the Co)pany 3ou"d have the ri!ht to continue in the use and possession o+ the property upon such ter)s and conditions, and +or such a "en!th o+

ti)e, as the Co)pany 3ou"d approve. That state)ent 3as true 3hen it 3as )ade, and upon a chan!e in the po"icy o+ the Co)pany, Francisco at once noti+ied the p"ainti++. The 8ud!)ent o+ the "o3er court a!ainst the de+endant Paci+ic Co))ercia" Co)pany 3i"" *e reversed, and one entered here in +avor o+ the Co)pany and a!ainst the p"ainti++ +or the costs and dis*urse)ents o+ this action. So ordered. A,a)llo% C$9$% 9o&nson% .t,eet% Malcolm% A+ance=a% Villamo,% 4st,and and /om)alde#% 99$% conc),$
eloso v. &a 'r(ana, -8 "hil +81

4epu*"ic o+ the Phi"ippines SU7REME COURT 7ani"a =, #A,C G.R. No. L3CDCDE No6e$be* C, >BCC CORA=ON CH. VELOSO F RICA<LANCA a"' RO<USTIANO M. ROSALES, p"ainti++-appe""ee, vs. LA UR<ANA, M)!)al <)il'i" a"' Loa" Asso#ia!io", a"' JOSE MARIA DEL MAR, de+endants. LA UR<ANA, M)!)al <)il'i" a"' Loa" Asso#ia!io", appe""ant. /ami,e# and 4,tigas fo, appellant$ ")llas% 5ope# and T)a=o and 9ose 2$ 5e)te,io fo, appellees$ 4ffice of t&e .olicito,>"ene,al 0ilado fo, t&e Ins)la, T,eas),e, as amic)s c),iae$ IM7ERIAL, (.) The p"ainti++s herein *rou!ht this action to annu" certain )ort!a!es constituted *y Jose 7aria de" 7ar in the na)e o+ the p"ainti++, Cora$on

Ch. e"oso in +avor o+ the de+endant corporation, and recover da)a!es a)ountin! to P2,222 +ro) the de+endants. 0a Cr*ana, one o+ the de+endants herein, appea"ed +ro) the 8ud!)ent rendered in this case, the dispositive part o+ 3hich reads as +o""o3sA For the reasons a*ove stated, the deeds o+ )ort!a!e e<ecuted *y Jose de" 7ar in the na)e o+ Cora$on Ch. e"oso in +avor o+ 0a Cr*ana are dec"ared nu"" and void in so +ar as they purport to *ind the p"ainti++s or their propertyE the sa"e o+ the said property to 0a Cr*ana *y virtue o+ these )ort!a!es is a"so here*y dec"ared nu"" and voidE and it is +urther ordered and ad8ud!ed that the re!istration o+ the said deeds in the o++ice o+ the re!ister o+ deeds o+ 7ani"a *e cance""ed, and that 0a Cr*ana and Jose de" 7ar pay the costs o+ this suit. This decision is 3ithout pre8udice to any ri!ht o+ action 3hich 0a Cr*ana )ay have a!ainst Jose 7aria de" 7ar or the ?nsu"ar Treasurer, or *oth, under the provisions o+ sections 99 to 129 o+ Act ,o. 49/. So ordered.lawp&il$net The p"ainti++ Cora$on Ch. e"oso 3as the o3ner o+ certain undivided portions o+ the +ive parce"s o+ "and in Buestion to!ether 3ith the i)prove)ents thereon, situated in the City o+ 7ani"a, and descri*ed in certi+icates o+ tit"e ,os. ;9/9 and .../2. ?n the )onth o+ 7ay, 1929, the de+endant herein Jose 7aria de" 7ar, p"ainti++Rs *rother-in-"a3, +or!ed t3o po3ers o+ attorney purportin! to have *een e<ecuted *y the p"ainti++s, as hus*and and 3i+e, con+errin! upon hi) a)p"e authority to )ort!a!e the p"ainti++Rs participation in the a+ore)entioned properties descri*ed in said certi+icates o+ tit"e. These po3ers o+ attorney 3ere du"y re!istered in the o++ice o+ the re!ister o+ deeds. Actin! under these po3ers o+ attorney, 5e" 7ar succeeded in )ort!a!in! the p"ainti++Rs participations to 0a Previsora Fi"ipina. On Fe*ruary /, 1929, he cance""ed said )ort!a!e and trans+erred it to the de+endant 0a Cr*ana 3hich !ranted hi) a "oan o+ P12,/22. Cpon )ort!a!in! the said participations o+ the p"ainti++ to the a+oresaid de+endant, 5e" 7ar de"ivered to the )ort!a!e creditor the o3nerRs dup"icates o+ the certi+icates o+ tit"e 3hereon the )ort!a!e in Buestion 3as noted. On ,ove)*er 14 o+ the sa)e year. 5e" 7ar o*tained +ro) the sa)e

de+endant an additiona" "oan, o+ P2,89; and e<ecutin! another )ort!a!e deed 3hich 3as "i>e3ise noted or, the a+oresaid dup"icates o+ the certi+icates o+ tit"e. 5e" 7ar "ater vio"ated the conditions o+ the )ort!a!es 3hereupon 0a Cr*ana +orec"osed the) and purchased the said properties at pu*"ic auction +or the su) o+ P12,2;1.82 3hich 3as the tota" a)ount o+ 5e" 7arRs inde*tedness at that ti)e. The p"ainti++s herein "earned o+ de" 7arRs +raudu"ent transactions +ro) the advertise)ent o+ the sa"e thereo+, and in addition to this civi" action, they instituted cri)ina" proceedin!s a!ainst hi) resu"tin! in his conviction o+ the cri)e o+ +a"si+ication and the i)position upon hi) o+ a sentence o+ t3o %2( years, +our %4( )onths and one %1( day o+ p,ision co,,eccional. ?n vie3 o+ the +ore!oin! +acts, the court he"d that pursuant to artic"e 1914 o+ the Civi" Code and under the Torrens Act in +orce in this 8urisdiction, the +or!ed po3ers o+ attorney prepared *y 5e" 7ar 3ere 3ithout +orce and e++ects and that the re!istration o+ the )ort!a!es constituted *y virtue thereo+ 3ere "i>e3ise nu"" and void and 3ithout +orce and e++ect, and that they cou"d not in any 3ay pre8udice the ri!hts o+ the p"ainti++ as the re!istered o3ners o+ her participations in the properties in Buestion. The de+endant-appe""ant herein assi!n various a""e!ed errors in its *rie+ consideration thereo+. ?nas)uch as 5e" 7ar is not the re!istered o3ner o+ the )ort!a!ed properties and inas)uch as the appe""ant 3as +u""y a3are o+ the +act that it 3as dea"in! 3ith hi) on the stren!th o+ the a""e!ed po3ers o+ attorney purportin! to have *een con+erred upon hi) *y the p"ainti++, it 3as its duty to ascertain the !enuineness o+ said instru)ents and not the said po3ers o+ attorney appeared to have *een re!istered. ?n vie3 o+ its +ai"ure to proceed in this )anner, it acted ne!"i!ent"y and shou"d su++er the conseBuences and da)a!es resu"tin! +ro) such transactions.lawp&?l$net =very person dea"in! 3ith an a!ent is put upon inBuiry, and )ust discover upon his peri" the authority o+ the a!ent, and this is specia""y true 3here the act o+ the a!ent is o+ an unusua" nature.

?+ a person )a>es no inBuiry, he is char!ea*"e 3ith >no3"ed!e o+ the a!entRs authority, and his i!norance o+ that authority 3i"" not *e any e<cuse. %5een +s. Paci+ic Co))ercia" Co., 42 Phi"., 9.8.( Persons dea"in! 3ith an assu)ed a!ent, 3hether the assu)ed a!ency *e a !enera" or specia" one, are *ound at their peri", i+ they 3ou"d ho"d the principa", to ascertain not on"y the +act o+ the a!ency *ut the nature and e<tent o+ the authority, and in case either is controverted, the *urden o+ proo+ is upon the) to esta*"ish it. %@arry =. Jee"er ="ectric Co. +s. 4odri!ue$, 44 Phi"., 19.( As has *een noted at the *e!innin!, the court reserved to the appe""ant any ri!ht o+ action it )i!ht have a!ainst 5e" 7ar and the ?nsu"ar Treasurer under the provisions o+ sections 99 to 129 o+ Act 49/. :e dee) it unnecessary to repeat such reservation in this decision. At a"" events, the appe""ant )ay e<ercise such ri!ht o+ action 3ithout the necessity o+ such reservation i+ the +acts o+ the case so 3arrant. :here+ore, the 8ud!)ent appea"ed +ro) is here*y a++ir)ed, 3ith the costs a!ainst the appe""ant. So ordered. Malcolm% Villa>/eal% 0)ll% and 1)tte% 99$% conc),$
Amigo v. )eve** 9+ "hil 9-(

<AUTISTA ANGELO, (.) This is a petition +or revie3 o+ a decision o+ the Court o+ Appea"s )odi+yin! that o+ the court o+ ori!in in the sense that p"ainti++s, no3 petitioners, shou"d not *e )ade to pay the su) o+ P122 as attorneyRs +ees. This petition ste)s +ro) an action +i"ed *y petitioners in the Court o+ First ?nstance o+ ,e!ros Orienta" prayin! that 8ud!)ent *e renderedA %a( dec"arin! that the contract entered into *et3een 7arce"ino 7. A)i!o and Se+arin Teves on Octo*er .2, 19.8 is )ere"y a contract o+ )ort!a!e and not a sa"e 3ith ri!ht to repurchaseE %*( dec"arin! that even i+ said contract *e one o+ sa"e 3ith ri!ht to repurchase, the o++er to repurchase *y the vendors 3as )ade 3ithin the period a!reed uponE %c( conde)nin! respondents to e<ecute a deed o+ reconveyanceE and %c( conde)nin! respondents to restore the property to petitioners and to pay P2,;22 as da)a!es. The i)portant +acts 3hich need to *e considered +or purposes o+ this petition as +ound *y the Court o+ Appea"s )ay *e *rie+"y su))ari$ed as +o""o3sA On Au!ust 11, 19.9, 7acario A)i!o and Anac"eto Ca!a"itan e<ecuted in +avor o+ their son, 7arce"ino A)i!o, a po3er o+ attorney !rantin! to the "atter, a)on! others, the po3er Pto "ease, "et, *ar!ain, trans+er, convey and se"", re)ise, re"ease, )ort!a!e and hypothecate, part or any o+ the properties . . . upon such ter)s and conditions, and under such covenants as he sha"" thin> +it.P On Octo*er .2, 19.8, 7arce"ino A)i!o, in his capacity as attorney-in+act, e<ecuted a deed o+ sa"e o+ a parce" o+ "and +or a price o+ P.,222 in +avor o+ Sera+in Teves stipu"atin! therein that the vendors cou"d repurchase the "and 3ithin a period o+ 18 )onths +ro) the date o+ the sa"e. ?n the sa)e docu)ent, it 3as a"so stipu"ated that vendors 3ou"d re)ain in possession o+ the "and as "essees +or a period o+ 18 )onths su*8ect to the +o""o3in! ter)s and conditionsA %a( the "essees sha"" pay P182 as rent every si< )onths +ro) the date o+ the a!ree)entE %*( the period o+ the "ease sha"" ter)inate on Apri" .2, 1942E %c( in case o+ "iti!ation, the "essees sha"" pay P122 as attorneyRs +eesE and %d( in case o+ +ai"ure to pay any renta" as a!reed upon, the "ease sha""

4epu*"ic o+ the Phi"ippines SU7REME COURT 7ani"a =, #A,C G.R. No. L3ACDB No6e$be* 1B, >BGE 7ASTOR AMIGO a"' JUSTINO AMIGO, petitioners, vs. SERAFIN TEVES, respondent. 'n,i()e Medina fo, petitione,$ Capist,ano and Capist,ano fo, ,espondent$

auto)atica""y ter)inate and the ri!ht o+ o3nership o+ vendee sha"" *eco)e a*so"ute. On Ju"y 22, 19.9, the spouses 7acario A)i!o and Anac"eta Ca!a"itan donated to their sons Justino A)i!o and Pastor A)i!o severa" parce"s o+ "and inc"udin! their ri!ht to repurchase the "and in "iti!ation. The deed o+ donation 3as )ade in a pu*"ic instru)ent, 3as du"y accepted *y the donees, and 3as re!istered in the O++ice o+ the 4e!ister o+ 5eeds. The vendors-"essees paid the renta" correspondin! to the +irst si< )onths, *ut not the renta" +or the su*seBuent se)ester, and so on January 8, 1942, Sera+in Teves, the vendee-"essor, e<ecuted an PA++idavit o+ Conso"idation o+ Tit"eP in vie3 o+ the +ai"ure o+ the "essees to pay the renta"s as a!reed upon, and re!istered said a++idavit in the O++ice o+ the 4e!ister o+ 5eeds o+ ,e!ros Orienta", 3ho, on January 28, 1942, issued to Sera+in Teves the correspondin! trans+er o+ tit"e over the "and in Buestion. On 7arch 9, 1942, Justino A)i!o and Pastor A)i!o, as donees o+ the ri!ht to repurchase the "and in Buestion, o++ered to repurchase the "and +ro) Sera+in Teves *y tenderin! to hi) the pay)ent o+ the rede)ption price *ut the "atter re+used on the !round that the o3nership had a"ready *een conso"idated in hi) as purchaser a ,et,o. @ence, on Apri" 2/, 1942, *e+ore the e<piration o+ the 18th-)onth period stipu"ated +or the rede)ption o+ the "and, the donees instituted the present action. The issues posed *y petitioners areA %1( The "ease covenant contained in the deed o+ sa"e 3ith pacto de ,et,o e<ecuted *y 7arce"ino A)i!o as attorney-in-+act in +avor o+ Sera+in Teves is not !er)ane to, nor 3ithin the purvie3 o+, the po3ers !ranted to said attorney-in-+act and, there+ore, is )lt,a +i,es and nu"" and voidE %2( the pena" c"ause stipu"ated in the "ease covenant re+errin! to the auto)atic ter)ination o+ the period o+ rede)ption is nu"" and voidE and %.( petitioners shou"d *e a""o3ed to repurchase the "and on eBuita*"e !rounds considerin! the !reat disproportion *et3een the rede)ption price and the )ar>et va"ue o+ the "and on the date the period o+ rede)ption is supposed to e<pire.

Petitioners contend that, 3hi"e the attorney-in-+act, 7arce"ino A)i!o, had the po3er to e<ecute a deed o+ sa"e 3ith ri!ht to repurchase under the po3er o+ attorney !ranted to hi), ho3ever, the covenant o+ "ease contained in said deed 3here*y the vendors a!reed to re)ain in possession o+ the "and as "essees is not !er)ane to said po3er o+ attorney and, there+ore, 7arce"ino A)i!o acted in e<cess o+ his po3ers as such attorney-in-+act. The Court o+ Appea"s, there+ore, co))itted an error in not dec"arin! said covenant o+ "ease )lt,a +i,es and nu"" and void. The Court o+ Appea"s, a+ter ana"y$in! the e<tent and scope o+ the po3ers !ranted to 7arce"ino A)i!o in the po3er o+ Attorney e<ecuted in his +avor *y his principa"s, +ound that such po3ers are *road enou!h to 8usti+y the e<ecution o+ any contract concernin! the "ands covered *y the authority even i+ this *e a contract o+ "ease. The court even 3ent +urtherA even in the supposition that the po3er to ta>e the "and under "ease is not inc"uded 3ithin the authority !ranted, petitioners cannot no3 i)pu!n the va"idity o+ the "ease covenant *ecause such ri!ht devo"ves upon the principa"s, 3ho are the on"y one 3ho can c"ai) that their a!ent has e<ceeded the authority !ranted to hi), and *ecause said principa"s had tacit"y rati+ied the act done *y said a!ent. :e +ind no p"ausi*"e reason to distur* this +indin!s o+ the Court o+ Appea"s. The sa)e, in our opinion, is in consonance 3ith the evidence presented and 3ith the conc"usions that shou"d *e dra3n +ro) said evidence. This can *e sho3n +ro) a )ere e<a)ination o+ the po3er o+ attorney %=<hi*it 5.( A cursory readin! thereo+ 3ou"d at once revea" that the po3er !ranted to the a!ent is so *road that it practica""y covers the ce"e*ration o+ any contract and the conc"usion o+ any covenant or stipu"ation. Thus, a)on! the po3ers !ranted areA to *ar!ain, cont,act% ag,ee fo,, purchase, receive, and >eep "ands, tene)ents, heredita)ents, and accept the sei$in! and possessin! o+ a"" "ands,P or Pto "ease, "et, *ar!ain, t,ansfe,% con+ey and sell, re)ise, re"ease, )ort!a!e and hypothecate . . . )pon s)c& te,ms and conditions% and )nde, s)c& co+enants as &e s&all t&ink fit .P %=)phasis supp"ied(. :hen the po3er o+ attorney says that the a!ent can enter into any contract concernin! the "and, or can se"" the "and under any

ter) or condition and covenant he )ay thin> +it, it undou*ted"y )eans that he can act in the sa)e )anner and 3ith the sa)e *reath and "atitude as the principa" cou"d concernin! the property. The +act that the a!ent has acted in accordance 3ith the 3ish o+ his principa"s can *e in+erred +ro) their attitude in donatin! to the herein petitioners the ri!ht to redee) the "and under the ter)s and conditions appearin! in the deed o+ sa"e e<ecuted *y their a!ent. On the other hand, 3e +ind nothin! unusua" in the "ease covenant e)*odied in the deed o+ sa"e +or such is co))on in contracts invo"vin! sa"es o+ "and 3ith pacto de ,et,o. The "ease that a vendor e<ecutes on the property )ay *e considered as a )eans o+ de"ivery or tradition *y constit)t)m possesso,i)m. :here the vendor a retrocontinues to occupy the "and as "essee, *y +iction o+ "a3, the possession is dee)ed to *e constituted in the vendee *y virtue o+ this )ode o+ tradition %12 7anresa, 4th ed. p.124(. :e )ay say there+ore that this covenant re!ardin! the "ease o+ the "and so"d is !er)ane to the contract o+ sa"e 3ith pacto de ,et,o. :hi"e the "ease covenant )ay *e onerous or )ay 3or> hardship on the vendor *ecause o+ its c"ause providin! +or the auto)atic ter)ination o+ the period o+ rede)ption, ho3ever, the sa)e is not contrary to "a3, )ora"s, or pu*"ic order, 3hich )ay serve as *asis +or its nu""i+ication. 4ather than o*no<ious are oppressive , it is a c"ause co))on in a sa"e 3ith pacto de ,et,o, and as such it received the sanction o+ our courts. As an instance, 3e )ay cite the case o+ Vit)g 3imat)lac +s$ Co,onel, 42 Phi"., /8/, 3hich, *ecause o+ its direct *earin! on our case, 3e 3i"" present"y discuss. ?n that case, 5i)atu"ac so"d a piece o+ "and to 5o"ores Corone" +or the su) o+ P9,222, reservin! the privi"e!e to repurchase 3ithin the period o+ ; years. The contract contained a provision S Pco))on"y +ound in contracts o+ this characterP S convertin! the vendor into a "essee o+ the vendee at an a!reed renta", paya*"e annua""y in the )onths o+ January and Fe*ruary, and per)ittin! the vendor to retain possession o+ the property as "essee unti" the ti)e a""o3ed +or its repurchase. ?t 3as a"so stipu"ated that in the event the vendor shou"d +ai" to pay the a!reed renta" +or any year o+ the +ive, the ri!ht to repurchase 3ou"d *e

"ost and the o3nership conso"idated in the vendee. The vendor +ai"s to per+or) this o*"i!ation and continued in arrears in the pay)ent o+ rent +or at "east three years, and ta>in! advanta!e o+ the c"ause *y 3hich the conso"idation o+ the property 3as acce"erated, the vendee i)p"eaded the vendor in a civi" action to co)pe" hi) to surrender the property. This case, ho3ever, 3as sett"ed *y a co)pro)ise *y virtue o+ 3hich the vendor a!reed to p"ace the property at the disposa" o+ the vendee so that the "atter )ay app"y to products o+ the "and to the pay)ent o+ the rent. 0ater, the vendor o++ered to redee) the property under the contract o+ sa"e 3ith pacto de ,et,o, the period o+ rede)ption not havin! as yet e<pired. The vendee re+used the o++er on the !round that her tit"e to the property had a"ready *een conso"idated. This Court dec"ared the "ease covenant contained in the contract as lawf)l, a"thou!h it +ound that the act o+ the vendee in ta>in! possession o+ the "and *y 3ay o+ co)pro)ise constituted a 3aiver o+ the pena" provision re"ative to the acce"eration o+ the period o+ rede)ption. On this point, the Court saidA ?t is undenia*"e that the c"ause in the contract o+ sa"e 3ith pacto de ,et,o o+ June .2, 1911, providin! +or e<tinction o+ the ri!ht o+ the p"ainti++ to repurchase in case he shou"d de+au"t in the pay)ent o+ the rent +or any year 3as "a3+u". The parties to a contract o+ this character )ay "e!iti)ate"y +i< any period to p"ease, not in e<cess o+ ten years, +or the rede)ption o+ the property *y the vendorE and no su++icient reason occurs to us 3hy the deter)ination o+ the ri!ht o+ rede)ption )ay not *e )ade to depend upon the de"inBuency o+ the vendor S no3 *eco)e "essee-in the pay)ent o+ the stipu"ated rent. The Supre)e Court o+ Spain sustains the a++ir)ative o+ this proposition %decision o+ January 18,1922(E and a"thou!h such a provision, *ein! o+ a pena" nature, )ay invo"ve hardships to the "essee, the conseBuence are not 3orse than such as +o""o3 +ro) )any other +or)s o+ a!ree)ent to 3hich contractin! parties )ay "a3+u""y attach their si!natures. ,everthe"ess, ad)ittin! the va"idity o+ such a provision, it is not *e e<pected that any court 3i"" *e re"uctant to re"ieve +ro) its e++ects 3herever this can *e done consistent"y 3ith esta*"ished princip"es o+ "a3.

:e have not +ai"ed to ta>e notice o+ the CourtRs 3arnin! that Pad)ittin! the va"idity o+ such a provision, it is not to *e e<pected that any court 3i"" *e re"uctant to re"ieve +ro) its e++ects 3herever this can *e done consistent"y 3ith esta*"ished princip"es o+ "a3.P :e on"y 3ish that in this case, as in the 5i)atu"ac case, a 3ay )ay *e +ound consistent 3ith "a3 3here*y 3e 3ou"d re"ieve the petitioners +ro) the e++ects o+ the pena" c"ause under consideration, *ut, to our re!ret, none 3e have +ound, +or respondent has *een a"ert and Buic> enou!h to assert his ri!ht *y conso"idatin! his o3nership 3hen the +irst chance to do so has presented itse"+. @e has sho3n no vaci""ation, nor o++ered any co)pro)ise 3hich )ay dee) as a 3aiver or a 8usti+ication +or +or+eitin! the privi"e!e !iven hi) under the pena" c"ause. The on"y a"ternative "e+t is to en+orce it as stipu"ated in the a!ree)ent. Petitioners a"so contend that as the assessed va"ue o+ the "and in 19.8, 3hen the contract 3as ce"e*rated, 3as P4,282, the se""in! price o+ P.,222 a!reed upon is considered as not 3ritten, and petitioners shou"d *e a""o3ed to e<ercise the ri!ht to repurchase on eBuita*"e considerations. And in support o+ this contention, counse" presented evidence to sho3 that the )ar>et price o+ the "and in 1942, the year the period o+ rede)ption 3as supposed to e<pire 3as +ourteen ti)es )ore than the )oney paid +or it *y respondent such that, i+ that shou"d *e ta>en as *asis, the va"ue o+ the "and 3ou"d *e P4.,224.;2. :hi"e this contention )ay have so)e *asis 3hen considered 3ith re+erence to an a*so"ute contract o+ sa"e, it "oses 3ei!ht 3hen app"ied to a contract o+ sa"e 3ith pacto de ,et,o, 3here the price is usua""y "ess than in a*so"ute sa"e +or the reason that in a sa"e 3ith pacto de ,et,o, the vendor e<pects to re-acBuire or redee) the property so"d. Another +"a3 3e +ind is that a"" the evidence presented re+ers to sa"es 3hich 3ere e<ecuted in 1942 and 1941 and none 3as presented pertainin! to 19.8, or its nei!h*orhood, 3hen the contract in Buestion 3as entered into. And the )ain reason 3e +ind +or not entertainin! this c"ai) is that it invo"ves a Buestion o+ +act and as the Court o+ Appea"s has +ound that the price paid +or the "and is not unreasona*"e as to 8usti+y the nu""i+ication o+ the sa"e, such +indin!, in appea" *y ce,tio,a,i, is +ina" and conc"usive upon this Court.

Findin! no error in the decision appea"ed +ro), the sa)e is here*y a++ir)ed, 3ithout pronounce)ent as to costs. -ablo% 1eng#on% -adilla% Montemayo,% /eyes% A$% 9)go Concepcion% 99$% concur
+o*un v. ,erca-o -11 SC,A %0-

and

4epu*"ic o+ the Phi"ippines SU7REME COURT 7ani"a T@?45 5? ?S?O, G.R. No. >A?D>1 De#e$be* >B, 1@@A JESUS M. GO=UN, petitioner, vs. JOSE TEOFILO T. MERCADO a.8.a. HDON 7E7ITO MERCADO, respondent. 5=C?S?O, CAR7IO MORALES, (.: On cha""en!e via petition +or revie3 on certiorari is the Court o+ Appea"s1 5ecision o+ 5ece)*er 8, 2224 and 4eso"ution o+ Apri" 14, 222; in CA-6.4. C ,o. 9/.29 1 reversin! the tria" court1s decision 2 a!ainst Jose Teo+i"o T. 7ercado a.>.a. 5on Pepito 7ercado %respondent( and accordin!"y dis)issin! the co)p"aint o+ Jesus 7. 6o$un %petitioner(. ?n the "oca" e"ections o+ 199;, respondent vied +or the !u*ernatoria" post in Pa)pan!a. Cpon respondent1s reBuest, petitioner, o3ner o+ J76 Pu*"ishin! @ouse, a printin! shop "ocated in San Fernando, Pa)pan!a, su*)itted to respondent dra+t sa)p"es and price Buotation o+ ca)pai!n )ateria"s. #y petitioner1s c"ai), respondent1s 3i+e had to"d hi) that respondent a"ready approved his price Buotation and that he cou"d start printin!

the ca)pai!n )ateria"s, hence, he did print ca)pai!n )ateria"s "i>e posters *earin! respondent1s photo!raph, 3 "ea+"ets containin! the s"ate o+ party candidates,4 sa)p"e *a""ots,5 po"" 3atcher identi+ication cards,6and stic>ers. 6iven the ur!ency and "i)ited ti)e to do the 8o* order, petitioner avai"ed o+ the services and +aci"ities o+ 7etro An!e"es Printin! and o+ St. Joseph Printin! Press, o3ned *y his dau!hter Jenni+er 6o$un and )other =pi+ania 7aca"ino 6o$un, respective"y. 7 Petitioner de"ivered the ca)pai!n )ateria"s to respondent1s headBuarters a"on! 6apan-O"on!apo 4oad in San Fernando, Pa)pan!a.8 7ean3hi"e, on 7arch .1, 199;, respondent1s sister-in-"a3, 0i"ian Soriano %0i"ian( o*tained +ro) petitioner Pcash advanceP o+ P2;.,222 a""e!ed"y +or the a""o3ances o+ po"" 3atchers 3ho 3ere attendin! a se)inar and +or other re"ated e<penses. 0i"ian ac>no3"ed!ed on petitioner1s 199; diary9 receipt o+ the a)ount.10 Petitioner "ater sent respondent a State)ent o+ Account 11 in the tota" a)ount o+ P2,199,92/ ite)i$ed as +o""o3sA P/42,.12 +or J76 Pu*"ishin! @ouseE P8.9,/9/ +or 7etro An!e"es Printin!E P44/,922 +or St. Joseph Printin! PressE and P2;.,222, the Pcash advanceP o*tained *y 0i"ian. On Au!ust 11, 199;, respondent1s 3i+e partia""y paid P1,222,222 to petitioner 3ho issued a receipt12 there+or. 5espite repeated de)ands and respondent1s pro)ise to pay, respondent +ai"ed to sett"e the *a"ance o+ his account to petitioner. Petitioner and respondent *ein! compad,es, they havin! *een principa" sponsors at the 3eddin!s o+ their respective dau!hters, 3aited +or )ore than three %.( years +or respondent to honor his pro)ise *ut to no avai", co)pe""in! petitioner to endorse the )atter to his counse" 3ho sent respondent a de)and "etter. 13 4espondent, ho3ever, +ai"ed to heed the de)and.14

Petitioner thus +i"ed 3ith the 4e!iona" Tria" Court o+ An!e"es City on ,ove)*er 2;, 1998 a co)p"aint 15 a!ainst respondent to co""ect the re)ainin! a)ount o+ P1,199,92/ p"us Pin+"ationary ad8ust)entP and attorney1s +ees. ?n his Ans3er 3ith Co)pu"sory Counterc"ai), 16 respondent denied havin! transacted 3ith petitioner or enterin! into any contract +or the printin! o+ ca)pai!n )ateria"s. @e a""e!ed that the various ca)pai!n )ateria"s de"ivered to hi) 3ere represented as donations +ro) his +a)i"y, +riends and po"itica" supporters. @e added that a"" contracts invo"vin! his persona" e<penses 3ere coursed throu!h and si!ned *y hi) to ensure co)p"iance 3ith pertinent e"ection "a3s. On petitioner1s c"ai) that 0i"ian, on his %respondent1s( *eha"+, had o*tained +ro) hi) a cash advance o+ P2;.,222, respondent denied havin! !iven her authority to do so and havin! received the sa)e. At the 3itness stand, respondent, reiteratin! his a""e!ations in his Ans3er, c"ai)ed that petitioner 3as his over-a"" coordinator in char!e o+ the conduct o+ se)inars +or vo"unteers and the )onitorin! o+ other )atters *earin! on his candidacyE and that 3hi"e his ca)pai!n )ana!er, Juanito PJohnnyP Ca*a"u %Ca*a"u(, 3ho 3as authori$ed to approve detai"s 3ith re!ard to printin! )ateria"s, presented hi) so)e ca)pai!n )ateria"s, those 3ere part"y donated. 17 :hen con+ronted 3ith the o++icia" receipt issued to his 3i+e ac>no3"ed!in! her pay)ent to J76 Pu*"ishin! @ouse o+ the a)ount o+ P1,222,222, respondent c"ai)ed that it 3as his +irst ti)e to see the receipt, a"*eit he *e"ated"y ca)e to >no3 +ro) his 3i+e and Ca*a"u that the P1,222,222 represented Pco)pensation Fto petitionerG 3ho he"ped a "ot in the ca)pai!n as a !esture o+ !ood3i"".P 18 Ac>no3"ed!in! that petitioner is en!a!ed in the printin! *usiness, respondent e<p"ained that he so)eti)es discussed 3ith petitioner strate!ies re"atin! to his candidacy, he %petitioner( havin! active"y vo"unteered to he"p in his ca)pai!nE that his 3i+e 3as not authori$ed to enter into a contract 3ith petitioner re!ardin! ca)pai!n )ateria"s as she >ne3 her "i)itationsE that he no "on!er Buestioned the P1,222,222

his 3i+e !ave petitioner as he thou!ht that it 3as 8ust proper to co)pensate hi) +or a 8o* 3e"" doneE and that he ca)e to >no3 a*out petitioner1s c"ai) a!ainst hi) on"y a+ter receivin! a copy o+ the co)p"aint, 3hich surprised hi) *ecause he >ne3 +u""y 3e"" that the ca)pai!n )ateria"s 3ere donations.19 Cpon Buestionin! *y the tria" court, respondent cou"d not, ho3ever, con+ir) i+ it 3as his understandin! that the ca)pai!n )ateria"s de"ivered *y petitioner 3ere donations +ro) third parties. 20 Fina""y, respondent, disc"ai)in! >no3"ed!e o+ the Co)e"ec ru"e that i+ a ca)pai!n )ateria" is donated, it )ust *e so stated on its +ace, ac>no3"ed!ed that nothin! o+ that sort 3as 3ritten on a"" the )ateria"s )ade *y petitioner.21 As adverted to ear"ier, the tria" court rendered 8ud!)ent in +avor o+ petitioner, the dispositive portion o+ 3hich readsA :@=4=FO4=, the p"ainti++ havin! proven its %sic( cause o+ action *y preponderance o+ evidence, the Court here*y renders a decision in +avor o+ the p"ainti++ orderin! the de+endant as +o""o3sA 1. To pay the p"ainti++ the su) o+ P1,199,92/.22 p"us 12L interest per annu) +ro) the +i"in! o+ this co)p"aint unti" +u""y paidE 2. To pay the su) o+ P;2,222.22 as attorney1s +ees and the costs o+ suit. SO O45=4=5.22 A"so as ear"ier adverted to, the Court o+ Appea"s reversed the tria" court1s decision and dis)issed the co)p"aint +or "ac> o+ cause o+ action. ?n reversin! the tria" court1s decision, the Court o+ Appea"s he"d that other than petitioner1s testi)ony, there 3as no evidence to support his c"ai) that 0i"ian 3as authori$ed *y respondent to *orro3 )oney on his *eha"+. ?t noted that the ac>no3"ed!)ent receipt 23 si!ned *y 0i"ian did not speci+y in 3hat capacity she received the )oney. Thus, app"yin!

Artic"e 1.1924 o+ the Civi" Code, it he"d that petitioner1s c"ai) +or P2;.,222 is unen+orcea*"e. On the accounts c"ai)ed to *e due J76 Pu*"ishin! @ouse H P/42,.12, 7etro An!e"es Printin! H P8.9,/9/, and St. Joseph Printin! Press H P44/,922, the appe""ate court, notin! that since the o3ners o+ the "ast t3o printin! presses 3ere not i)p"eaded as parties to the case and it 3as not sho3n that petitioner 3as authori$ed to prosecute the sa)e in their *eha"+, he"d that petitioner cou"d not co""ect the a)ounts due the). Fina""y, the appe""ate court, notin! that respondent1s 3i+e had paid P1,222,222 to petitioner, the "atter1s c"ai) o+ P/42,.12 %a+ter e<c"udin! the P2;.,222( had a"ready *een sett"ed. @ence, the present petition, +au"tin! the appe""ate court to have erredA 1. . . . 3hen it dis)issed the co)p"aint on the !round that there is no evidence, other than petitioner1s o3n testi)ony, to prove that 0i"ian 4. Soriano 3as authori$ed *y the respondent to receive the cash advance +ro) the petitioner in the a)ount o+ P2;.,222.22. <<<< 2. . . . 3hen it dis)issed the co)p"aint, 3ith respect to the a)ounts due to the 7etro An!e"es Press and St. Joseph Printin! Press on the !round that the co)p"aint 3as not *rou!ht *y the rea" party in interest. < < < <25 #y the contract o+ a!ency a person *inds hi)se"+ to render so)e service or to do so)ethin! in representation or on *eha"+ o+ another, 3ith the consent or authority o+ the "atter. 26 Contracts entered into in the na)e o+ another person *y one 3ho has *een !iven no authority or "e!a" representation or 3ho has acted *eyond his po3ers are c"assi+ied as unauthori$ed contracts and are dec"ared unen+orcea*"e, un"ess they are rati+ied.27 6enera""y, the a!ency )ay *e ora", un"ess the "a3 reBuires a speci+ic +or).28 @o3ever, a specia" po3er o+ attorney is necessary +or an a!ent

to, as in this case, *orro3 )oney, un"ess it *e ur!ent and indispensa*"e +or the preservation o+ the thin!s 3hich are under ad)inistration.29 Since nothin! in this case invo"ves the preservation o+ thin!s under ad)inistration, a deter)ination o+ 3hether Soriano had the specia" authority to *orro3 )oney on *eha"+ o+ respondent is in order. 5im -in +$ 5iao Tian% et al$ 30 he"d that the reBuire)ent o+ a specia" po3er o+ attorney re+ers to the nature o+ the authori$ation and not to its +or). . . . The reBuire)ents are )et i+ there is a c"ear )andate +ro) the principa" speci+ica""y authori$in! the per+or)ance o+ the act. As ear"y as 192/, this Court in .t,ong +$ ")tie,,e#>/epide %/ Phi". /82( stated that such a )andate )ay *e either ora" or 3ritten. The one thin! vita" *ein! that it sha"" *e e<press. And )ore recent"y, :e stated that, i+ the specia" authority is not 3ritten, then it )ust *e du"y esta*"ished *y evidenceA PUthe 4u"es reBuire, +or attorneys to co)pro)ise the "iti!ation o+ their c"ients, a specia" authority. And 3hi"e the sa)e does not state that the specia" authority *e in 3ritin! the Court has every reason to e<pect that, i+ not in 3ritin!, the sa)e *e du"y esta*"ished *y evidence other than the se"+-servin! assertion o+ counse" hi)se"+ that such authority 3as ver*a""y !iven hi).P31 %=)phasis and underscorin! supp"ied( Petitioner su*)its that his +o""o3in! testi)ony su++ices to esta*"ish that respondent had authori$ed 0i"ian to o*tain a "oan +ro) hi), vi$A D A Another caption appearin! on =<hi*it PAP is cash advance, it states !iven on .-.1-9; received *y 7rs. 0i"ian Soriano i" behal+ o+ M*s. A""ie Me*#a'o, a)ount P2;.,222.22, 3i"" you >ind"y te"" the Court and e<p"ain 3hat does that caption )eansQ A A ?t is the a)ount representin! the )oney bo**o(e' +*o$ $e b& !he 'e+e"'a"! (he" o"e $o*"i" !he& #a$e 6e*& ea*l& a"' !al8e' !o $e and to"d )e that they 3ere not a*"e to !o to the *an> to !et )oney +or the a""o3ances o+ Po"" :atchers 3ho 3ere havin! a se)inar at the headBuarters p"us other e"ection re"ated e<penses durin! that day, sir.

D A Considerin! that this is a su*stantia" a)ount 3hich accordin! to you 3as ta>en *y 0i"ian Soriano, did you happen to )a>e her ac>no3"ed!e the a)ount at that ti)eQ A A Ies, sir.32 %=)phasis supp"ied( Petitioner1s testi)ony +ai"ed to cate!orica""y state, ho3ever, 3hether the "oan 3as )ade on *eha"+ o+ respondent or o+ his 3i+e. :hi"e petitioner c"ai)s that 0i"ian 3as authori$ed *y respondent, the state)ent o+ account )ar>ed as =<hi*it PAP states that the a)ount 3as received *y 0i"ian Pin *eha"+ o+ 7rs. Annie 7ercado.P ?nvo>in! Artic"e 189.33 o+ the Civi" Code, petitioner su*)its that respondent in+or)ed hi) that he had authori$ed 0i"ian to o*tain the "oan, hence, +o""o3in! Macke +$ Camps343hich ho"ds that o"e (ho #lo!hes a"o!he* (i!h a%%a*e"! a)!ho*i!& as his a e"!, a"' hol's hi$ o)! !o !he %)bli# as s)#h, respondent cannot *e per)itted to deny the authority. Petitioner1s su*)ission does not persuade. As the appe""ate court o*servedA . . . =<hi*it P#P Fthe receipt issued *y petitionerG presented *y p"ainti++appe""ee to support his c"ai) un+ortunate"y on"y indicates the T3o @undred Fi+ty Three Thousand Pesos %P2;.,2222.22( 3as received *y one 0i"ian 4. Soriano on .1 7arch 199;, *ut 3ithout speci+yin! +or 3hat reason the said a)ount 3as de"ivered and in 3hat capacity did 0i"ian 4. Soriano received FsicG the )oney. The note readsA P.-.1-9; 2/1,122 A5 A,C= 7O,=I FO4 T4A?,== H 4=C=? =5 #I 4=C=? =5 F4O7 J76 T@= A7OC,T OF 2;.,222 T:O @C,54=5 F?FTI T@4== T@OCSA,5 P=SOS %S?6,=5( 0?0?A, 4. SO4?A,O

.-.1-9;P ,o3here in the note can it *e in+erred that de+endant-appe""ant 3as connected 3ith the said transaction. Cnder Artic"e 1.19 o+ the ,e3 Civi" Code, a person cannot *e *ound *y contracts he did not authori$e to *e entered into his *eha"+. 35 %Cnderscorin! supp"ied( ?t *ears notin! that 0i"ian si!ned in the receipt in her na)e a"one, 3ithout indicatin! therein that she 3as actin! +or and in *eha"+ o+ respondent. She thus *ound herse"+ in her persona" capacity and not as an a!ent o+ respondent or anyone +or that )atter. ?t is a !enera" ru"e in the "a3 o+ a!ency that, in order to *ind the principa" *y a )ort!a!e on rea" property e<ecuted *y an a!ent, it )ust upon its +ace purport to *e )ade, si!ned and sea"ed in the na)e o+ the principa", other3ise, it 3i"" *ind the a!ent on"y. ?t is not enou!h )ere"y that the a!ent 3as in +act authori$ed to )a>e the )ort!a!e, i+ he has not acted in the na)e o+ the principa". < < < 36 %=)phasis and underscorin! supp"ied( On the a)ount due hi) and the other t3o printin! presses, petitioner e<p"ains that he 3as the one 3ho persona""y and direct"y contracted 3ith respondent and he )ere"y su*-contracted the t3o printin! esta*"ish)ents in order to de"iver on ti)e the ca)pai!n )ateria"s ordered *y respondent. 4espondent counters that the c"ai) o+ su*-contractin! is a chan!e in petitioner1s theory o+ the case 3hich is not a""o3ed on appea". ?n 4co +$ 5imba,ing,37 this Court ru"edA The parties to a contract are the rea" parties in interest in an action upon it, as consistent"y he"d *y the Court. On"y the contractin! parties are *ound *y the stipu"ations in the contractE they are the ones 3ho 3ou"d *ene+it +ro) and cou"d vio"ate it. Thus, one 3ho is not a party to a contract, and +or 3hose *ene+it it 3as not e<press"y )ade, cannot )aintain an action on it. One cannot do so, even i+ the contract per+or)ed *y the contractin! parties 3ou"d incidenta""y inure to oneRs *ene+it.38 %Cnderscorin! supp"ied(

?n "i!ht thereo+, petitioner is the rea" party in interest in this case. The tria" court1s +indin!s on the )atter 3ere a++ir)ed *y the appe""ate court.39 ?t erred, ho3ever, in not dec"arin! petitioner as a rea" party in interest inso+ar as recovery o+ the cost o+ ca)pai!n )ateria"s )ade *y petitioner1s )other and sister are concerned, upon the 3ron! notion that they shou"d have *een, *ut 3ere not, i)p"eaded as p"ainti++s. ?n su), respondent has the o*"i!ation to pay the tota" cost o+ printin! his ca)pai!n )ateria"s de"ivered *y petitioner in the tota" o+ P1,924,92/, "ess the partia" pay)ent o+P1,222,222, or P924,92/. WHEREFORE, the petition is GRANTED. The 5ecision dated 5ece)*er 8, 2224 and the 4eso"ution dated Apri" 14, 222; o+ the Court o+ Appea"s are here*y REVERSED and SET ASIDE. The Apri" 12, 2222 5ecision o+ the 4e!iona" Tria" Court o+ An!e"es City, #ranch ;9, is 4=?,STAT=5 m)tatis m)tandis% in "i!ht o+ the +ore!oin! discussions. The tria" court1s decision is )odi+ied in that the a)ount paya*"e *y respondent to petitioner is reduced to P924,92/. SO O45=4=5. ,o one )ay contract in the na)e o+ another 3ithout *ein! authori$ed *y the "atter, or un"ess he has *y "a3 a ri!ht to represent hi).
24

A contact entered into in the na)e o+ another *y one 3ho has no authority or "e!a" representation, or 3ho has acted *eyond his po3ers, sha"" *e unen+orcea*"e, un"ess it is rati+ied, e<press"y or i)p"ied"y, *y the person on 3hose *eha"+ it has *een e<ecuted, *e+ore it is revo>ed *y the other contractin! party. %Cnderscorin! supp"ied( Id$, art. 18/9. ?n Art. 894, the "a3 reBuires a speci+ic +or) in cases PF3Ghen a sa"e o+ a piece o+ "and or any interest therein is throu!h an a!ent, the authority o+ the "atter sha"" *e in 3ritin!E other3ise, the sa"e sha"" *e void.P
28

?+ a pe,son specially info,ms anot&e, or states *y pu*"ic advertise)ent that he has !iven a po3er o+ attorney to a third person, the "atter there*y *eco)es a du"y authori$ed a!ent, in the +or)er case wit& ,espect to t&e pe,son w&o ,ecei+ed t&e special info,mation , and in the "atter case 3ith re!ard to any person.
33

The po3er sha"" continue to *e in +u"" +orce unti" the notice is rescinded in the sa)e )anner in 3hich it 3as !iven. %?ta"ics supp"ied( :ith these evidence and proo+s !iven *y the p"ainti++, the Court is convinced that p"ainti++ 3as a*"e to sho3 that it FsicG has a "e!iti)ate c"ai) a!ainst 7r. 7ercado. There is evidence that he printed de+endant1s po"itica" )ateria"s and the "atter received it. There is proo+ that 7ercado partia""y paid the account *ut did not sett"e the entire a)ount. P"ainti++ sho3ed a"so that a de)and "etter 3as sent to de+endant and the sa)e 3as received *ut in spite receipt, 7r. 7ercado did not heed the de)and.
39

On 7arch 2., 1992, +our days *e+ore the e<piry date o+ su*8ect tic>et, the petitioner used it. Cpon his arriva" in 0os An!e"es on the sa)e day, he i))ediate"y *oo>ed his 0os An!e"es-7ani"a return tic>et 3ith the PA0 o++ice, and it 3as con+ir)ed +or the Apri" 2, 1992 +"i!ht. Cpon "earnin! that the sa)e PA0 p"ane 3ou"d )a>e a stop-over in San Francisco, and considerin! that he 3ou"d *e there on Apri" 2, 1992, petitioner )ade arran!e)ents 3ith PA0 +or hi) to *oard the +"i!ht in San Francisco instead o+ *oardin! in 0os An!e"es. On Apri" 2, 1992, 3hen the petitioner chec>ed in at the PA0 counter in San Francisco, he 3as not a""o3ed to *oard. The PA0 personne" concerned )ar>ed the +o""o3in! notation on his tic>etA &T?CJ=T ,OT ACC=PT=5 5C= =OP?4AT?O, OF A0?5?TI.' A!!rieved, petitioner Cervantes +i"ed a Co)p"aint +or 5a)a!es, +or *reach o+ contract o+ carria!e doc>eted as Civi" Case ,o. .829 *e+ore #ranch .2 o+ the 4e!iona" Tria" Court o+ Suri!ao de" ,orte in Suri!ao City. #ut the said co)p"aint 3as dis)issed +or "ac> o+ )erit. On Septe)*er 22, 199., petitioner interposed an appea" to the Court o+ Appea"s, 3hich ca)e out 3ith a 5ecision, on Ju"y 2;, 199;, upho"din! the dis)issa" o+ the case. On 7ay 22, 199/, petitioner ca)e to this Court via the Petition +or 4evie3 under consideration. The issues raised +or reso"ution areA %1( :hether or not the act o+ the PA0 a!ents in con+ir)in! su*8ect tic>et e<tended the period o+ va"idity o+ petitioner1s tic>etE %2( :hether or not the de+ense o+ "ac> o+ authority 3as correct"y ru"ed uponE and %.( :hether or not the denia" o+ the a3ard +or da)a!es 3as proper. To ru"e on the +i*s! iss)e, there is a need to Buote the +indin!s *e"o3. As a ru"e, conc"usions and +indin!s o+ +act arrived at *y the tria" court are entit"ed to !reat 3ei!ht on appea" and shou"d not *e distur*ed un"ess +or stron! and co!ent reasons. The +acts o+ the case as +ound *y the "o3er court are, as +o""o3sA

Cervantes v. Court o# Appeals* %0) SC,A (- &1999'

T@?45 5? ?S?O, F6.4. ,o. 12;1.8. 7arch 2, 1999G ,?C@O0AS I. C=4 A,T=S, petitione,% +s$ COC4T OF APP=A0S A,5 T@= P@?0?PP?,= A?4 0?,=S, ?,C., ,espondent$ 5=C?S?O, PC4?S?7A, 9.A This Petition +or 4evie3 on ce,tio,a,i assai"s the 2; Ju"y 199; decision o+ the Court o+ Appea"s in CA 64 C ,o. 41429, entit"ed &,icho"as I. Cervantes vs. Phi"ippine Air 0ines ?nc.', a++ir)in! in toto the 8ud!)ent o+ the tria" court dis)issin! petitioner1s co)p"aint +or da)a!es. On 7arch 29, 1989, the private respondent, Phi"ippines Air 0ines, ?nc. @-A5A, issued to the herein petitioner, ,icho"as Cervantes @Ce,+antesA% a round trip p"ane tic>et +or 7ani"a-@ono"u"u-0os An!e"es@ono"u"u-7ani"a, 3hich tic>et e<press"y provided an e<piry o+ date o+ one year +ro) issuance, i.e., unti" 7arch 29, 1992. The issuance o+ the said p"ane tic>et 3as in co)p"iance 3ith a Co)pro)ise A!ree)ent entered into *et3een the contendin! parties in t3o previous suits, doc>eted as Civi" Case ,os. ..92 and .4;1 *e+ore the 4e!iona" Tria" Court in Suri!ao City.

&The p"ane tic>et itse"+ %=<hi*it A +or p"ainti++E =<hi*it 1 +or de+endant( provides that it is not va"id a+ter 7arch 29, 1992. %=<hi*it 1-F(. ?t is a"so stipu"ated in para!raph 8 o+ the Conditions o+ Contract %=<hi*it 1, pa!e 2( as +o""o3sA P8. This !i#8e! is oo' +o* #a**ia e +o* o"e &ea* +*o$ 'a!e o+ iss)e, e<cept as other3ise provided in this tic>et, in carrier1s tari++s, conditions o+ carria!e, or re"ated re!u"ations. The +are +or carria!e hereunder is su*8ect to chan!e prior to co))ence)ent o+ carria!e. Carrier )ay re+use transportation i+ the app"ica*"e +are has not *een paid.' The Buestion on the va"idity o+ su*8ect tic>et can *e reso"ved in "i!ht o+ the ru"in! in the case o+ 5)ft&ansa +s$ Co),t of Appeals$ ?n the said case, the To"entinos 3ere issued +irst c"ass tic>ets on Apri" ., 1982, 3hich 3i"" *e va"id unti" Apri" 12,198.. On June 12, 1982, they chan!ed their acco))odations to econo)y c"ass *ut the rep"ace)ent tic>ets sti"" contained the sa)e restriction. On 7ay 9, 198., To"entino reBuested that su*8ect tic>ets *e e<tended, 3hich reBuest 3as re+used *y the petitioner on the !round that the said tic>ets had a"ready e<pired. The non-e<tension o+ their tic>ets pro)pted the To"entinos to *rin! a co)p"aint +or *reach o+ contract o+ carria!e a!ainst the petitioner. ?n ru"in! a!ainst the a3ard o+ da)a!es, the Court he"d that the &tic>et constitute the contract *et3een the parties. ?t is a<io)atic that 3hen the ter)s are c"ear and "eave no dou*t as to the intention o+ the contractin! parties, contracts are to *e interpreted accordin! to their "itera" )eanin!.' ?n his e++ort to evade this inevita*"e conc"usion, petitioner theori$ed that the con+ir)ation *y the PA01s a!ents in 0os An!e"es and San Francisco chan!ed the co)pro)ise a!ree)ent *et3een the parties. As apt"y ru"ed *y the appe""ate courtA &<<< on 7arch 2., 1992, he 3as a3are o+ the ris> that his tic>et cou"d e<pire, as it did, *e+ore he returned to the Phi"ippines.1 %pp. .22-.21, Ori!ina" 4ecords('

&The Buestion isA V5id these t3o %2( e)p"oyees, in e++ect , e<tend the va"idity or "i+eti)e o+ the tic>et in BuestionQ The ans3er is in the ne!ative. #oth had no authority to do so. Appe""ant >ne3 this +ro) the very start 3hen he ca""ed up the 0e!a" 5epart)ent o+ appe""ee in the Phi"ippines *e+ore he "e+t +or the Cnited States o+ A)erica. @e had +irst hand >no3"ed!e that the tic>et in Buestion 3ou"d e<pire on 7arch 29,1992 and that to secure an e<tension, he 3ou"d have to +i"e a 3ritten reBuest +or e<tension at the PA01s o++ice in the Phi"ippines %TS,, Testi)ony o+ ,icho"as Cervantes, Au!ust 2, 1991, pp 22-2.(. 5espite this >no3"ed!e, appe""ant persisted to use the tic>et in Buestion.' Fro) the a+orestated +acts, it can *e !"eaned that the petitioner 3as +u""y a3are that there 3as a need to send a "etter to the "e!a" counse" o+ PA0 +or the e<tension o+ the period o+ va"idity o+ his tic>et. Since the PA0 a!ents are not privy to the said A!ree)ent and petitioner >ne3 that a 3ritten reBuest to the "e!a" counse" o+ PA0 3as necessary, he cannot use 3hat the PA0 a!ents did to his advanta!e. The said a!ents, accordin! to the Court o+ Appea"s, acted 3ithout authority 3hen they con+ir)ed the +"i!hts o+ the petitioner. Cnder Artic"e 1898 o+ the ,e3 Civi" Code, the acts o+ an a!ent *eyond the scope o+ his authority do not *ind the principa", un"ess the "atter rati+ies the sa)e e<press"y or i)p"ied"y. Further)ore, 3hen the third person @&e,ein petitione,A >no3s that the a!ent 3as actin! *eyond his po3er or authority, the principa" cannot *e he"d "ia*"e +or the acts o+ the a!ent. ?+ the said third person is a3are o+ such "i)its o+ authority, he is to *"a)e, and is not entit"ed to recover da)a!es +ro) the a!ent, un"ess the "atter undertoo> to secure the principa"1s rati+ication. Anent the se#o"' iss)e, petitioner1s stance that the de+ense o+ "ac> o+ authority on the part o+ the PA0 e)p"oyees 3as dee)ed 3aived under 4u"e 9, Section 2 o+ the 4evised 4u"es o+ Court, is unsustaina*"e. Thereunder, +ai"ure o+ a party to put up de+enses in their ans3er or in a )otion to dis)iss is a 3aiver thereo+. Petitioner stresses that the a""e!ed "ac> o+ authority o+ the PA0 e)p"oyees 3as neither raised in the ans3er nor in the )otion to

dis)iss. #ut records sho3 that the Buestion o+ 3hether there 3as authority on the part o+ the PA0 e)p"oyees 3as acted upon *y the tria" court 3hen ,icho"as Cervantes 3as presented as a 3itness and the depositions o+ the PA0 e)p"oyees, 6eor!ina 7. 4eyes and 4uth i""anueva, 3ere presented. The ad)ission *y Cervantes that he 3as to"d *y PA01s "e!a" counse" that he had to su*)it a "etter reBuestin! +or an e<tension o+ the va"idity o+ su*8ect tic>ets 3as tanta)ount to >no3"ed!e on his part that the PA0 e)p"oyees had no authority to e<tend the va"idity o+ su*8ect tic>ets and on"y PA01s "e!a" counse" 3as authori$ed to do so. @o3ever, not3ithstandin! PA01s +ai"ure to raise the de+ense o+ "ac> o+ authority o+ the said PA0 a!ents in its ans3er or in a )otion to dis)iss, the o)ission 3as cured since the said issue 3as "iti!ated upon, as sho3n *y the testi)ony o+ the petitioner in the course o+ tria". 4u"e 12, Section ; o+ the 1999 4u"es o+ Civi" Procedure providesA &Sec. ;. Amendment to confo,m o, a)t&o,i#e p,esentation of e+idence$ > :hen iss)es "o! *aise' b& !he %lea'i" s are tried 3ith e<press or i)p"ied consent o+ the parties, as i+ they had *een raised in the p"eadin!s. Such a)end)ent o+ the p"eadin!s as )ay *e necessary to cause the) to con+or) to the evidence and to raise these issues )ay *e )ade upon )otion o+ any party at any ti)e, even a+ter 8ud!)entE *ut +ai"ure to a)end does not a++ect the resu"t o+ the tria" o+ these issues. <<<' Thus, &3hen evidence is presented *y one party, 3ith the e<press or i)p"ied consent o+ the adverse party, as to issues not a""e!ed in the p"eadin!s, 8ud!)ent )ay *e rendered va"id"y as re!ards the said issue, 3hich sha"" *e treated as i+ they have *een raised in the p"eadin!s. There is i)p"ied consent to the evidence thus presented 3hen the adverse party +ai"s to o*8ect thereto.' 4eA the !hi*' iss)e, an a3ard o+ da)a!es is i)proper *ecause petitioner +ai"ed to sho3 that PA0 acted in *ad +aith in re+usin! to a""o3 hi) to *oard its p"ane in San Francisco.

?n a3ardin! )ora" da)a!es +or *reach o+ contract o+ carria!e, the *reach )ust *e 3anton and de"i*erate"y in8urious or the one responsi*"e acted +raudu"ent"y or 3ith )a"ice or *ad +aith. Petitioner >ne3 there 3as a stron! possi*i"ity that he cou"d not use the su*8ect tic>et, so )uch so that he *ou!ht a *ac>-up tic>et to ensure his departure. Shou"d there *e a +indin! o+ *ad +aith, 3e are o+ the opinion that it shou"d *e on the petitioner. :hat the e)p"oyees o+ PA0 did 3as one o+ si)p"e ne!"i!ence. ,o in8ury resu"ted on the part o+ petitioner *ecause he had a *ac>-up tic>et shou"d PA0 re+use to acco))odate hi) 3ith the use o+ su*8ect tic>et. ,either can the c"ai) +or e<e)p"ary da)a!es *e uphe"d. Such >ind o+ da)a!es is i)posed *y 3ay o+ e<a)p"e or correction +or the pu*"ic !ood, and the e<istence o+ *ad +aith is esta*"ished. The 3ron!+u" act )ust *e acco)panied *y *ad +aith, and an a3ard o+ da)a!es 3ou"d *e a""o3ed on"y i+ the !ui"ty party acted in a 3anton, +raudu"ent, rec>"ess or )a"evo"ent )anner. @ere, there is no sho3in! that PA0 acted in such a )anner. An a3ard +or attorney1s +ees is a"so i)proper. WHEREFORE, the Petition is 5=,?=5 and the decision o+ the Court o+ Appea"s dated Ju"y 2;, 199; AFF?47=5 in toto$ ,o pronounce)ent as to costs. SO O45=4=5. 4o)ero, %Chair)an(, and 6on$a!a-4eyes, JJ., concur. itu!, J., a*road on o++icia" *usiness. Pan!ani*an, J., on "eave.
Borja, Sr. v. Sulyap, Inc., 399 SCRA 601 (2003)

F?4ST 5? ?S?O, F6.4. ,o. 1;2918. 7arch 2/, 222.G #AS?0?O #O4JA, S4., petitione,% +s. SC0IAP, ?,C. and T@= COC4T OF APP=A0S, ,espondents. 5=C?S?O,

I,A4=S-SA,T?A6O, 9.A This is a petition +or revie3 assai"in! the Apri" 22, 2221 5ecision o+ the Court o+ Appea"s in CA-6.4. C ,o. /22.9, and its Octo*er .1, 2221 4eso"ution denyin! petitioner1s )otion +or reconsideration. The antecedent +acts revea" that petitioner #asi"io #or8a, Sr., as "essor, and private respondent Su"yap ?nc., as "essee, entered into a contract o+ "ease invo"vin! a one-storey o++ice *ui"din! o3ned *y the petitioner and "ocated at 12th Street, ,e3 7ani"a, Due$on City. Pursuant to the "ease, private respondent paid, a)on! others, advance renta"s, association dues and deposit +or e"ectrica" and te"ephone e<penses. Cpon the e<piration o+ their "ease contract, private respondent de)anded the return o+ the said advance renta"s, dues and deposit *ut the petitioner re+used to do so. Thus, on Octo*er ;, 199;, the +or)er +i"ed 3ith the 4e!iona" Tria" Court o+ Due$on City, #ranch 82, a co)p"aint +or su) o+ )oney a!ainst the petitioner. Su*seBuent"y, the parties entered into and su*)itted to the tria" court a &Co)pro)ise A!ree)ent' dated Octo*er 1/, 199;. On the *asis thereo+, the tria" court, on Octo*er 24, 199; rendered a decision approvin! the co)pro)ise a!ree)ent. The +u"" te<t o+ the said decision readsA Parties thru counse" su*)itted the +o""o3in! co)pro)ise a!ree)entA &1. That the parties a!ree that de+endant is the 0=SSO4 and o3ner o+ the pre)ises su*8ect o+ the herein co)p"aint and that herein p"ainti++ is the 0=SS== thereo+ 3ho is to vacate the "eased pre)ises peace+u""y on ,ove)*er 9, 199;E 2. That in the possession o+ de+endant are the +o""o3in! a)ountsA a( P22,222.22 H deposited *y p"ainti++ to de+endant on June 9, 1994 +or uti"itiesE *( ;,422.22 H as returna*"e association dues to p"ainti++E c( .2,222.22 H deposited *y the p"ainti++ to de+endant on Au!ust .2, 1994, +or te"ephone Fe<pensesGE

d( ;;,222.22 H U Frenta"G deposit Fto *e app"ied as renta" pay)entG +or the period o+ Octo*er 9 to ,ove)*er 9, 199;. .. That "i>e3ise p"ainti++ paid +or the ;L 3ithho"din! ta<es to the #ureau o+ ?nterna" 4evenue +or the renta"s 3hich is due +ro) the de+endant a)ountin! to P2;,19;.22 coverin! the period +ro) Ju"y 1994, to Ju"y o+ 199;, 3hereon p"ainti++ is hereto attachin! proo+ o+ pay)ent or receipts as anne<es &A' and &#' o+ said 3ithho"din! ta<es and had *een credited to the de+endant entit"in! p"ainti++ to +u"" rei)*urse)entE 4. That it is e<press"y a!reed that prior to or on ,ove)*er 9, 199;, de+endant 3i"" rei)*urse to p"ainti++ the 3ithho"din! ta<es paid to the #ureau o+ ?nterna" 4evenue in the na)e o+ de+endant upon si!nin! o+ the herein co)pro)ise a!ree)ent p"us the association dues o+ P;,422.22 or a tota" o+ P.2,;9;.22E ;. That 3ith the P;;,222.22 consu)ed *y 3ay o+ renta"s up to ,ove)*er 9, 199;, there 3i"" *e "e+t in the possession o+ de+endant o+ p"ainti++1s )oney in the a)ount o+ P;2,222.22E said a)ount sha"" *e turned over *y de+endant to p"ainti++ 3ithin ; days +ro) arriva" o+ *i""in!s +or te"ephone, e"ectrica" and 3ater char!es on"yE /. That the a)ount sha"" *e su*8ect to actua" *i""in!s endin! ,ove)*er 9, 199; on"y and sha"" i))ediate"y as stated, *e handFedG over to p"ainti++E 9. That it is e<press"y a!reed that the parties sha"" co)p"y in !ood +aith to the ter)s o+ the herein co)pro)ise a!ree)ent and that a"& a$o)"! ')e "o! %ai' (i!hi" !he %e*io' s!a!e' i" !his a *ee$e"! shall ea*" 1I i"!e*es! %e* $o"!h )"!il +)ll& %ai' %l)s !(e"!& +i6e 1GI a!!o*"e&-s +ees o+ !he a$o)"! #olle#!ible and that 3rit o+ e<ecution sha"" *e issued as a )atter o+ ri!ht. %=)phasis supp"ied( :@=4=FO4=, in "i!ht o+ the a*ove, it is respect+u""y prayed o+ this @onora*"e Court that 8ud!)ent *e rendered on the *asis o+ the a*ove co)pro)ise a!ree)ent. 7ani"a +or Due$on City

Octo*er 1/, 199;.' Findin! the +ore!oin! co)pro)ise a!ree)ent to *e not contrary to "a3, )ora"s and pu*"ic po"icy, the sa)e is here*y APP4O =5. :@=4=FO4=, 8ud!)ent is here*y rendered in accordance 3ith the ter)s and conditions set +orth in the co)pro)ise a!ree)ent and the parties are here*y en8oined to co)p"y 3ith and a*ide *y the said ter)s and conditions thereo+. SO O45=4=5. Petitioner, ho3ever, +ai"ed to pay the a)ounts o+ P.2,;9;.22 and P;2,222.22 stated in the 8udicia" co)pro)ise. @ence, private respondent +i"ed a )otion +or the issuance o+ a 3rit o+ e<ecution +or the tota" a)ounts o+ P.2,;9;.22 and P;2,222.22 or a tota" o+ P122,9...12, inc"usive o+ 2L interest and 2;L attorney1s +ees. The tria" court, in its Fe*ruary 9, 199/ order, !ranted the )otion over the opposition o+ the petitioner. On 7ay 24, 199/, the "atter +i"ed a )otion to Buash the 3rit o+ e<ecution, contendin! that the pena"ty o+ 2L )onth"y interest and 2;L attorney1s +ees shou"d not *e i)posed on hi) *ecause his +ai"ure to pay the a)ounts o+ P.2,;9;.22 and P;2,222.22 3ithin the a!reed period 3as due to private respondent1s +au"t. On Fe*ruary 22, 1999, petitioner +i"ed another )otion prayin! +or the Buasha" o+ the 3rit o+ e<ecution and )odi+ication o+ the decision. This ti)e, he contended that there 3as +raud in the e<ecution o+ the co)pro)ise a!ree)ent. @e c"ai)ed that . sets o+ co)pro)ise a!ree)ent 3ere su*)itted +or his approva". A)on! the), he a""e!ed"y chose and si!ned the co)pro)ise a!ree)ent 3hich contained no stipu"ation as to the pay)ent o+ 2L )onth"y interest and 2;L attorney1s +ees in case o+ de+au"t in pay)ent. @e a""e!ed that his +or)er counse", Atty. 0eonardo Cru$, 3ho assisted hi) in enterin! into the said a!ree)ent, re)oved the pa!e o+ the !enuine co)pro)ise a!ree)ent 3here he a++i<ed his si!nature and +raudu"ent"y attached the sa)e to the co)pro)ise a!ree)ent su*)itted to the court in order to )a>e it appear that he a!reed to the pena"ty c"ause e)*odied therein.

Private respondent, on the other hand, vehe)ent"y denied the contention o+ the petitioner. To re+ute the "atter1s c"ai), he presented Atty. 0eonardo Cru$, 3ho dec"ared that the petitioner !ave his consent to the inc"usion o+ the pena"ty c"ause o+ 2L )onth"y interest and 2;L attorney1s +ees in the co)pro)ise a!ree)ent. @e added that the co)pro)ise a!ree)ent approved *y the court 3as in +act si!ned *y the petitioner inside the courtroo) *e+ore the sa)e 3as su*)itted +or approva". Atty. Cru$ stressed that the pena"ty c"ause o+ 2L interest per )onth unti" +u"" pay)ent o+ the a)ount due, p"us 2;L thereo+ as attorney1s +ees, in case o+ de+au"t in pay)ent, 3as actua""y chosen *y the petitioner over another proposed )ore *urdenso)e pena"ty c"ause 3hich states H &That it is e<press"y a!reed that the parties sha"" co)p"y in !ood +aith to the ter)s o+ the herein co)pro)ise a!ree)ent and that any vio"ation thereo+ sha"" auto)atica""y entit"e the a!!rieved party to da)a!es in the a)ount o+ P2;2,222.22 p"us P;2,222.22 attorney1s +ees.' On Octo*er 2/, 1998, the tria" court issued the assai"ed order denyin! petitioner1s )otion see>in! to Buash the 3rit o+ e<ecution and to )odi+y the 8ud!)ent on co)pro)ise. ?t !ave credence to the testi)ony o+ Atty. 0eonardo Cru$ that petitioner consented to the pena"ty c"ause in the co)pro)ise a!ree)ent. The court +urther noted that it 3as on"y on Fe*ruary 22, 1999, or )ore than one year +ro) receipt o+ the 8ud!)ent on co)pro)ise on Octo*er 2;, 199;, 3hen he Buestioned the inc"usion o+ the pena"ty c"ause in the approved co)pro)ise a!ree)ent despite severa" opportunities to raise said o*8ection. The dispositive portion o+ the said order statesA :@=4=FO4=, pre)ises considered, and as ear"ier stated, the de+endant1s )otion to Buash the 3rit o+ e<ecution and )odi+ication o+ 8ud!)ent is denied. SO O45=4=5. On appea" *y the petitioner to the Court o+ Appea"s, the "atter a++ir)ed the cha""en!ed order o+ the tria" court. @ence, the instant petition.

?s the petitioner *ound *y the pena"ty c"ause in the co)pro)ise a!ree)entQ The sett"ed ru"e in cri)ina" as 3e"" as in civi" cases is that, in the )atter o+ credi*i"ity o+ 3itnesses, the +indin!s o+ the tria" courts are !iven !reat 3ei!ht and hi!hest de!ree o+ respect *y the appe""ate court considerin! that the "atter is in a *etter position to decide the Buestion, havin! heard the 3itnesses the)se"ves and o*served their deport)ent and )anner o+ testi+yin! durin! the tria", un"ess it p"ain"y over"oo>ed certain +acts o+ su*stance and va"ue that, i+ considered, )i!ht a++ect the resu"t o+ the case. ?n the case at *ar, 3e are +aced 3ith the con+"ictin! c"ai) o+ the petitioner that the Buestioned pena"ty c"ause 3as +raudu"ent"y added to the co)pro)ise a!ree)ent approved *y the court, and the assertion o+ private respondent that the petitioner consented to the inc"usion thereo+ in the co)pro)ise a!ree)ent. A scrutiny o+ the records revea" that the tria" court correct"y sustained the c"ai) o+ private respondent. :hi"e a 8udicia" co)pro)ise )ay *e annu""ed or )odi+ied on the !round o+ vitiated consent or +or!ery, 3e +ind that the testi)ony o+ the petitioner +ai"ed to esta*"ish the attendance o+ +raud in the instant case. ?ndeed, the testi)ony o+ Atty. 0eonardo Cru$ is 3orthy o+ *e"ie+ and credence. :e are inc"ined to *e"ieve that the petitioner had >no3"ed!e o+ and consented to the pena"ty c"ause e)*odied in the a!ree)ent considerin! that the sa)e is "ess *urdenso)e than the auto)atic i)position o+ the pena"ty o+ P2;2,222.22 and attorney1s +ees o+ P;2,222.22 in case o+ vio"ation o+ the ter)s o+ the a!ree)ent or de+au"t in pay)ent. 7oreover, 3e see nothin! irre!u"ar in the co)pro)ise a!ree)ent approved *y the tria" court. ,o evidence 3as presented *y petitioner other than his *are a""e!ation that his +or)er counse" +raudu"ent"y attached the pa!e o+ the !enuine co)pro)ise a!ree)ent 3here he a++i<ed his si!nature to the co)pro)ise a!ree)ent su*)itted to the court. :hat +urther )i"itates a!ainst the c"ai) o+ the petitioner is his conduct a+ter receivin! the 8ud!)ent *ased on the co)pro)ise a!ree)ent. Fro) Octo*er 2;, 199;, 3hen he received the 8ud!)ent reproducin! the +u"" te<t o+ the co)pro)ise a!ree)ent, to Fe*ruary 19, 1999, he

never raised the issue o+ the +raudu"ent inc"usion o+ the pena"ty c"ause in their a!ree)ent. :e note that petitioner is a doctor o+ )edicine. @e )ust have read and understood the contents o+ the 8ud!)ent on co)pro)ise. ?n +act, on ,ove)*er 1., 199;, he +i"ed, 3ithout the assistance o+ counse", a )otion prayin! that the a)ounts o+ P;2,222.22 and .9,;9;.22 *e 3ithhe"d +ro) his tota" o*"i!ation and instead *e app"ied to the e<penses +or the repair o+ the "eased pre)ises 3hich 3as a""e!ed"y vanda"i$ed *y the private respondent. @e did not Buestion the pena"ty c"ause in the co)pro)ise a!ree)ent. =ven 3hen the petitioner 3as a"ready represented *y his ne3 counse", Atty. Fe"i<*erto F. A*ad, to 3ho) he a""e!ed"y con+ided his +or)er counse"1s +raudu"ent inc"usion o+ the pena"ty c"ause, the issue o+ +raud 3as never *rou!ht to the tria" court1s attention. On January .1, 199/, 3hen petitioner +i"ed an opposition to the private respondent1s )otion +or the issuance o+ a 3rit o+ e<ecution, he "i>e3ise +ai"ed to )ention the +raud co)p"ained o+. On 7ay 24, 199/, petitioner +i"ed a )otion to Buash the 3rit o+ e<ecution *ut *ased on a di++erent !round. @e ar!ued that the pena"ty o+ 2L )onth"y interest and 2;L attorney1s +ees cannot *e i)posed on hi) considerin! that his +ai"ure to pay on ti)e 3as due to the +au"t o+ the private respondent. @e a""e!ed"y re+used to pay *ecause the person sent *y private respondent to co""ect pay)ent did not present a specia" po3er o+ attorney authori$in! hi) to receive said pay)ent. ?n e++ect, there+ore, petitioner ac>no3"ed!ed the va"idity o+ the pena"ty c"ause. =vident"y, petitioner cannot +ei!n i!norance o+ the e<istence o+ the pena"ty c"ause in the co)pro)ise a!ree)ent approved *y the court. =ven assu)in! that Atty. 0eonardo Cru$ e<ceeded his authority in insertin! the pena"ty c"ause, the status o+ the said c"ause is not void *ut )ere"y voida*"e, i$e$, capa*"e o+ *ein! rati+ied. ?ndeed, petitioner1s +ai"ure to Buestion the inc"usion o+ the 2L )onth"y interest and 2;L attorney1s +ees in the 8udicia" co)pro)ise despite severa" opportunities to do so 3as tanta)ount to rati+ication. @ence, he is estopped +ro) assai"in! the va"idity thereo+. Fina""y, 3e +ind no )erit in petitioner1s contention that the co)pro)ise a!ree)ent shou"d *e annu""ed *ecause Atty. 0eonardo Cru$, 3ho

assisted hi) in enterin! into such a!ree)ent, 3as then an e)p"oyee o+ the Due$on City !overn)ent, and is thus prohi*ited +ro) en!a!in! in the private practice o+ his pro+ession. Su++ice it to state that the iso"ated assistance provided *y Atty. Cru$ to the petitioner in enterin! into a co)pro)ise a!ree)ent does not constitute a prohi*ited &private practice' o+ "a3 *y a pu*"ic o++icia". &Private practice' o+ a pro+ession, speci+ica""y the "a3 pro+ession does not pertain to an iso"ated court appearanceE rather, it conte)p"ates a succession o+ acts o+ the sa)e nature ha*itua""y or custo)ari"y ho"din! one1s se"+ to the pu*"ic as a "a3yer. Such 3as never esta*"ished in the instant case. WHEREFORE, in vie3 o+ a"" the +ore!oin!, the instant petition is 5=,?=5. The 5ecision o+ the Court o+ Appea"s in CA-6.4. C ,o. /22.9, 3hich sustained the tria" court1s denia" o+ petitioner1s )otion to Buash the 3rit o+ e<ecution and to )odi+y the co)pro)ise 8ud!)ent, is AFF?47=5. SO O45=4=5. 5avide, Jr., C.J., %Chair)an(, concur. itu!, Carpio and A$cuna, JJ.,