Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-13414

February 4, 1919

JUAN GARCIA Y PALICIO, plaintiff-appelle,

vs.
JOSEFA DE MANZANO, as administratrix of the estate of her husband Narciso Lopez Manzano,
defendant-appellant.

Godofredo Reyes for appellants.

Eduardo Gutierrez Repide and Felix Socias for appellee.

MOIR, J.:

In order to understand this case, a brief explanation of the facts is considered necessary.

Narciso Lopez Manzano was a merchant in Atimonan, Tayabas, who went to Spain in May, 1910, and
died there the 8th of September, 1913. He gave a general power-of-attorney to his son, Angel L.
Manzano on the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to
his wife, Josefa Samson.

Narciso L. Manzano had various commercial dealings before leaving for Spain.

Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other half being
owned by Ocejo, Perez & Co., with whom there was a partnership agreement to run the steamer for a
few years. When this period expired Ocejo, Perez & Co., refused to continue the contact and demanded
that Manzano buy or sell. As he did not want to sell at the price offered and could not buy, Juan Garcia
bought the half interest held by Ocejo, Perez & Co., on the 15th of October, 1910. Angel L. Manzano,
acting under his power-of-attorney, sold in July, 1911, the other half of the boat to the plaintiff, but as
Garcia is a Spaniard and could not register the boat in his name at the Custom House, the boat was
registered in the name of Agustin Garcia, a son of the plaintiff, who at that time, July 2d, 1913, was a
minor about twenty years old. Agustin Garcia shortly thereafter died, leaving his parents as his heirs at
law, and as such heirs plaintiff's wife was made a party.

On the 23rd of July, 1912, Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso
L. Manzano, executed a contract, Exhibit A, made a part of the complaint, by which Juan Garcia agreed
to extend a credit to Narciso L. Manzano in the sum of P12,000, and this credit was used by the house of
Manzano. To secure it a mortgage was given in the same document on three parcels of land in
Atimonan, with their improvements. The registration of this mortgage was refused by the registrar.

The court of First Instance of Tayabas, on the 18th of April, 1914, named Josefa Samson y San Pedro,
administratrix of the property of Narciso L. Manzano, and commissioners were duly appointed, and
notice was published, and no claims having been presented against the estate to the commissioners,
they so reported to the court on the 7th of December, 1914.

On the 29th of July, 1915, the Court of First Instance ordered the partition of the property amongst the
heirs of Narciso L. Manzano.

On the 15th day of May, 1915, the plaintiff filed his action in the Court of First Instance of Tayabas to
foreclose the so-called mortgage in Exhibit a. Josefa de Manzano filed a pleading stating that the estate
had already been divided; that the property mentioned in Exhibit A of the plaintiff had been assigned, A
and B, to her and her children and C entirely to her; that her son Angel had ceded his share to her; that
all the other children were minors and suggesting that she be made guardian ad litem for the minors. In
a second motion filed the 25th of August, 1915, the defendant's attorney states the amended complaint
had not been presented as stipulated in open court and prays the court that instead of the
administratrix the heirs of Narciso L. Manzano be considered defendants and the names of the heirs
including Josefa de Manzano are given.

Plaintiff filed his amended complaint on the 24th of August, making them individually defendants, the
minors to be represented by their guardian ad litem, and asking for a judgment against each and all of
them for P14,087.59, being the amount then due on the open account and for P2,700 as attorney's fees,
all secured by the so-called mortgage; and that in case the judgment was not paid, that the mortgaged
property be sold to pay the debt.

The defendants, "Josefa de Manzano y otros," filed an answer on September 4, 1915, stating they knew
such a mortgage document set up in the complaint existed, but as they were not certain that Exhibit A
was an exact copy, they denied the document; they denied its efficacy and legal effect; they denied the
jurisdiction of the court to hear and decide the case, and alleged that the action had prescribed.

They alleged no facts in their answer.

The defendants also filed a counter-claim against Juan Garcia and his wife, Conception Castro, in which
they allege that Narciso L. Manzano was the owner of one-half of the small steamer San Nicolas and
Juan Garcia the owner of the half; that Garcia taking advantage of the youth and inexperience of Angel
L. Manzano falsely and maliciously made him believe that he had authority under the power-of-attorney
from his father to sell the half interest in the San Nicolas, and that he did so. That Angel L. Manzano had
no authority to sell the interest in the steamer, but that since the date of said sale, July, 1912, (1911?)
the plaintiff had illegally appropriated all rents and profits of the boat to his own use, which amount to
P30,000 per year, after paying for all repairs, etc., and they ask the court to absolve them from the
complaint, to declare them the owners of one-half of the steamer San Nicolas, and to order the plaintiffs
to render a detailed account of all the profits received from the San Nicolas, and to order one-half of the
profits paid to the defendants.

There are other immaterial questions presented by the counterclaim.

The trial court held there was not legal mortgage and gave judgment for the plaintiff against Josefa
Samson only, for the amount admitted by her letter to be due, i.e., P12,752.85, and dismissed the claim
against the other defendants and also dismissed the counterclaim of defendants. The plaintiffs did not
appeal. All of the defendants presented a motion for a new trial, but only the defendant Josefa de
Manzano excepted to the order of the court denying the motion for new trial, and she sets up the
following assignments of error in the decision giving judgment against her individually. (The alleged
errors of the trial court regarding the counterclaim are set out later.)

1.
The court exceeded its jurisdiction in deciding a question and granting a relief not comprised
within the pleadings and contentions of the parties.

2.
debt.

The trial court acted without jurisdiction on judging and holding that there was a novation of the

3.

The trial court erred in an essential mater in holding that there was a novation of the debt.

The argument presented in support of the first error assigned is that the action was against the
administratrix of the estate and not against the heirs individually. What are the facts? The original action
was presented against Josefa de Manzano as administratrix of her deceased husband, Narciso L.
Manzano, on May 15, 1915. The defendant's attorneys on the 6th of August filed a pleading stating that
the estate had been distributed by the court on the 27th of July, and giving the names of the heirs and
stating that some are minors for whom the mother "is the guardian" and agreeing that she be named
guardian ad litem for the minors which was done by the court's order dated the 4th of September, and
she took the oath prescribed by law for such guardian.

On the 25th of August the same attorneys filed another pleading saying the time stipulated by the
parties in open court for filing an amended complaint had passed, that the complaint had not been
presented and "Wherefore they respectfully request the Honorable Court that, in place of the
defendant-administratrix, the heirs of the late Narciso L. Manzano, whose names are Josefa Samson de
Manzano, widow, Paz Manzano, Matilde Manzano, Soledad Manzano, Carmelo Manzano, Narciso
Manzano, and Jose Manzano, be considered defendants in this case," The first two of legal age and
the others minors, and they pray that Josefa Samson be named guardian ad litem for the minors, which
the court did. The plaintiff's amended complaint making all the above heirs and Angel L. Manzano
defendants by name had been filed in the clerk's office the day before but it is assumed the defendants
were not then aware of the fact.

The defendants filed their answer on September 4th 1915, which is headed "Josefa de Manzano y Otros,
demandados." The court's judgment is against them individually.

It is difficult to conceive what more defendants could want in order to make them individually
defendants, or what effect they intended their pleadings to have if they were not to be considered as
defendants. The only thing that might be considered as lacking is an order of the court admitting the
amended complaint, but his admission was supplied by the facts of defendants themselves. All the
parties were before the court individually and the court could only give judgment against them
individually if they were obligated individually.

When the whole record shows that the trial proceeded on the theory set up in an amended complaint
this court will not inquire as to whether the court actually entered an order admitting the amended
complaint. There is no error in this part of the decision.

The other two errors assigned will be considered together.

The nature of the action having been changed from one against the administratrix to one against the
heirs individually, the action against the other heirs was dismissed and judgment was given by the Court
against Josefa Samson de Manzano individually, basing its decision on the following letter:

September 10, 1913.

Mr. Juan Garcia.

Manila, Philippine Islands.

Dear Sir: In reply to your favor which I have received together with a copy of my current account kept in
your city, showing a balance of P12,752.852, I have to state that I find the same entirely satisfactory.

I hope to be able to remit a part of the sum during the month of October.

I remain,

Yours respectfully.

(Sgd.) JOSEFA DE MANZANO.

This letter was written two days after the death of Narciso L. Manzano. Is it a novation of the obligation
of her husband?

Article 1205 of the Civil Code reads as follows:

Novation which consists in the substitution of a new debtor in the place of the original one may be made
without the knowledge of the later, but not without the consent of the creditor.

If the creditor Garcia had consented to the substitution of debtors in this case, he would not have
presented his original action against the administratrix of Narciso L. Manzano and later against all the
heirs, but against Josefa de Manzano only.

As much as justice may plead for it, we can see nothing in the letter which would made appellant
personally liable.

There is no denial that the debt is a justice one against the estate. The judgment is based on the letter
which was not intended by the writer to make her personally liable, and was not considered by the
plaintiff to make her personally responsible. There was not novation of the obligation and the part of
the judgment holding her liable must be reversed.

The defendants set up the following assignment of errors as to their counterclaim against plaintiffs:

1.
The trial court erred in holding that the power of attorney executed in favor of Angel L.
Manzano was not revoked, at least in so far as it might concern the plaintiff Juan Garcia Palicio.

2.
The court below erred in holding that the power of attorney executed by Narciso L. Manzano in
favor of Angel L. Manzano authorized the latter to alienate the vessel San Nicolas.

3.
The trial court erred in holding that the sale of the vessel San Nicolas was approved by Narciso L.
Manzano.

4.
The trial court erred in holding that Angel L. Manzano, in executing the sale, did not do so under
the pressure of undue influences.

As to the first two alleged errors the defendants argue that the power-of-attorney to the wife revoked
the one to the son, in accordance with article 1735 of the Civil code, and that even if not revoked the
power-of-attorney did not authorize the sale of the boat by Angel L. Manzano. Article 1735 of the Civil
code is as follows:

The appointment of a new agent for the same business produces a revocation of the previous agency
from the day on which notice was given to the former agent, excepting the provisions of the next
preceding article.

There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his
mother.

It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that
the son had notice of the second power-of-attorney. They have not done so, and it must be considered
that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been
legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half
interest was legally inherited by the plaintiffs.

The defendant's next argument is that the power-of-attorney, if valid, does not authorize the sale of the
half interest in the boat to the plaintiff.

There is no pretense that the boat was not sold for a fair price, there is no denial that the value was
received in full, but he defendants allege that the power-of-attorney under which Angel L. Manzano
acted, even if a valid power, did not authorize the sale of the boat, and they want it back it with one-half
of the profits derived from its use by the plaintiff.

The document under which Angel L. Manzano sold the boat reads in part as follows:

To enable him to buy or sell, absolutely or under pacto de retro, any of the rural or urban estates that
now own and may acquire in the future, at such price as he may deem most advantageous, which he
shall collect in cash or by installments and under such conditions as he may consider proper, and he
shall set forth the encumbrances on the properties and their origin. I bind myself to warrant and defend,
in accordance with law, the titles to such properties; and if the properties alienated by this agreement
should be redeemed, he is empowered to redeem them by paying the price that may have been fixed,
and, for this purpose, shall execute the proper instrument.

The power-of-attorney authorizes the sale of real property, the buying of real property and mortgaging
the same the borrowing of money and in fact is general and complete.

The power does not expressly state that the agent may sell the boat, but a power so full and complete
authoring the sale of real property, must necessarily carry with it the right to sell a half interest in a
small boat. The record further shows the sale was necessary in order to get money or a credit without
which it would be impossible to continue the business which was being conducted in the name of
Narciso L. Manzano and for his benefit.

We consider that the authorization is so complete that it carries with it full authority to sell the one-half
interest in the boat which was then owned by Narciso L. Manzano.

The last assignment of error is not supported by any reasonable evidence in the record.

That part of the judgement ordering the defendant Josefa Samson de Manzano to pay the plaintiff
P12,752.85 is revoked, and the judgment in so far as it dismisses the counterclaim of the defendants is
affirmed, without any declaration of costs. So ordered.

Arellano, C.J., Carson, Street and Avancea, JJ., concur.

Johnson, J., took no part.

Separate Opinions

TORRES, J., dissenting:

The undersigned, regretting not to be entirely in accord with the majority opinion, with the due respect
thereto, is of the opinion that the defendant Josefa Samson, widow of the late Narciso Lopez Manzano,
should be obliged to pay one-half of the sum stated in her letter of September 10, 1913, with interest at
the rate of 6 per cent per annum from January 10, 1917, the date on which the amended complaint was
filed.

It is contended that the conjugal partnership property is directly liable for the payment of the debts of
such partnerships and that in order to determine what this property is, in case of the death of one of the
spouses, it is indispensable that a liquidation be made of the property that may have been left by the
deceased husband or wife, for the purpose of classifying and separating in the estate the private
property of each spouse and such property as partakes of the nature of community property.

The record shows that, not only was the liquidation made, but also that the partition of the estate left
by Narciso Lopez Manzano at his death, had already been effected, so that it appears duly determined
what property as community property would have pertained to the widow, Josefa Samson; and, as it is a
proven fact, and one not discussed, that, on the death of the husband Manzano, the dissolved conjugal
partnership was in debt to the plaintiff in the sum of P12, 752.85. Under this premise it is
unquestionable that the window Samson, the surviving member of that partnership, should be obliged
to pay one-half of this sum, that is P6,376.425, for it would not be right for her to enrich herself by
keeping possession of this amount, to the prejudice of the plaintiff creditor.

Although, on the death of the husband, the property of the conjugal partnership was in a mass and pro
indiviso, after the liquidation and partition of this property had been made, the widow, a member of the

dissolved partnership, received her share of the community property, and it would not be just that, for
the collection of one-half of the debt, for which she is liable, the creditor should be force to subject
himself to and observe the proceedings prescribed for the collection of the amount owing him, from the
testate or intestate estate of the deceased debtor.

We abstain in this opinion from an examination of the right which the plaintiff creditor may have had to
collect the debt owing him from the estate of the deceased debtor, and we restrict our opinion solely to
the debt which the defendant Josefa Samson, on her part, had the obligation to pay, not in her capacity
of administratrix, but in that of widow member of the partnership, the property of which is directly
liable for the debts contracted by her; and if the defendant Samson, as lawful owner of one-half of the
community property, was entitled to receive it, and in fact did receive it, nothing could be more just
than that she should, in turn, be compelled to pay, out of the property she received, the one-half of the
debts for which part thereof she is liable.

The defendant Josefa Samson should, therefore, be ordered to pay the aforesaid sum of P6,376.425,
with interest thereon at the rate of 6 per cent per annum from January 10, 1917. That part of the
judgment whereby this defendant is ordered to pay the other one-half of the sum mentioned therein,
should be reversed, and the dismissed of the counterclaim should be affirmed, without special finding as
to costs.

Araullo, J., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-17043

January 31, 1961

NATIVIDAD HERRERA, assisted by her husband EMIGDIO SALAZAR, plaintiffs-appellants,

vs.
LUY KIM GUAN and LINO BANGAYAN, defendants-appellees.

T. de los Santos for plaintiffs-appellants.

Rafael C. Climaco and Abelardo S. Fernandez for defendants-appellees.

BARRERA, J.:

This is an appeal from the decision of the Court of First Instance of Zamboanga City (a) dismissing
plaintiff-appellant's complaint for the recovery of three (3) parcels of land and their produce in the sum
of P320,000.00; and (b) instead, sentencing plaintiff to pay P2,000.00 for attorney's fees and P1,000.00
for expenses of litigation, to defendant Lino Bangayan, and P2,000.00 as attorney's fees and P500.00 as
expenses of litigation, to the other defendant Luy Kim Guan.

The pertinent facts as found by the trial court and upon which its decision was predicated are set forth
in the following portion of the decision appealed from:

The Plaintiff Natividad Herrera is the legitimate daughter of Luis Herrera, now deceased and who died in
China sometime after he went to that country in the last part of 1931 or early part of 1932. The said Luis
Herrera in his lifetime was the owner of three (3) parcels of land and their improvements, known as Lots
1740, 4465 and 4467 of Expediente No. 5, G.L.R.O. Record 477 and the area, nature, improvements and
bound of each and every of these three (3) lots are sufficiently described in the complaint filed by the
plaintiffs.

Before leaving for China, however, Luis Herrera executed on December 1, 1931, a deed of General
Power of Attorney, Exhibit 'B', which authorized and empowered the defendant Kim Guan, among
others to administer and sell the properties of said Luis Herrera.

Lot 1740 was originally covered by Original Certificate Title 8601 registered in the name of Luis Herrera,
married to GO Bang. This lot was sold by the defendant Luy Kim in his capacity as attorney-in-fact of the
deceased Luis Her to Luy Chay on September 11, 1939, as shown in Exhibit "2", corresponding deed of
sale. Transfer Certificate of Title 3162, Exhibit "3", was issued to Luy Chay by virtue of deed of sale. On
August 28, 1941, to secure a loan of P2,00 a deed of mortgage to the Zamboanga Mutual Building and
Association was executed by Luy Chay, Exhibit "4". On January 31, 1947, the said Luy Chay executed a
deed of sale, Exhibit "E", in favor of Lino Bangayan. By virtue of this Transfer Certificate of Title T-2567
was issued to Lino Bangayan on June 24, 1949, Exhibit "1":

Lots 4465 and 4467 were originally registered in the of Luis Herrera, married to Go Bang, under Original
Certificate of Title No. 0-14360, Exhibit "5". On December 1, 1931, Luis Herrera sold one-half ()
undivided share and to Herrera and Go Bang, the other half (), as shown by Exhibit "12" and Exhibit
"12-A", the latter an annotation made the Register of Deeds of the City of Zamboanga, in which stated
as follows:

Cancelado el presente Certificado en virtud de una escritura de traspaso y en su lugar se ha expedido el

Certificado de T No. 494-(T-13045) del Tomo 2 del Libro de Certificado de Transferencias.

(Fdo) R. D. MACROHON
Registrador de Titulos
Ciudad de Zamboanga

On July 23, 1937, Luis Herrera thru his attorney-in-fact Luy Kim Guan, one of the defendants, sold to
Nicomedes Salazar his one half () participation in these two (2) lots, as shown in Exhibit "C", the
corresponding deed of sale for P3,000.00 Transfer Certificate of Title No. T-494-(T-13045) was is to
Nicomedes Salazar and to the defendant Luy Kim Guan, Exhibit '7'. On August 4, 1937, the defendant
Luy Kim Guan Nicomedes Salazar executed a deed of mortgage in favor of Bank of the Philippine Islands
to secure a loan of P3,500.00, Exhibit '6'. On August 17, 1937, the defendant Luy Kim Guan and
Nicomedes Salazar sold Lot 4465 to Carlos Eijansantos for the sum of P100.00 as shown in Exhibit "9",
the corresponding deed of sale, and Transfer Certificate of Title No. T-2653 was issued on September 7,
1939 to Carlos Eijansantos, Exhibit "10". Nicomedes Salazar sold his one half () interest on Lot 4467 to
the defendant Lino Bangayan for P3,000.00 on February 22, 1949, Exhibit 'B', and the corresponding
Transfer Certificate of Title T-2654 was issued to Lino Bangayan and to Luy Kim Guan, both are coowners in equal shares, Exhibit "8". Opinion of the City Attorney, Exhibit "p", and an affidavit of Atty.
Jose T. Atilano, Exhibit "O", state that Lino Bangayan is a Filipino citizen.

As admitted by both parties (plaintiffs and defendants), Luis Herrera is now deceased, but as to the
specific and precise date of his death the evidence of both parties failed to show.

It is the contention of plaintiff-appellant that all the transactions mentioned in the preceding quoted
portion of the decision were fraudulent and were executed after the death of Luis Herrera and,
consequently, when the power of attorney was no longer operative. It is also claimed that the
defendants Lino Bangayan and Luy Kim Guan who now claim to be the owners of Lots Nos. 1740 and
4467 are Chinese by nationality and, therefore, are disqualified to acquire real properties. Plaintiffappellant, in addition, questions the supposed deed of sale allegedly executed by Luis Herrera on
December 1, 1931 in favor of defendant Luy Kim Guan, conveying one-half interest on the two lots, Nos.
4465 and 4467, asserting that what was actually executed on that date, jointly with the general power
of attorney, was a lease contract over the same properties for a period of 20 years for which Luy Kim
Guan paid the sum of P2,000.00.

We find all the contentions of plaintiff-appellant untenable. Starting with her claim that the second deed
executed on December 1, 1931 by Luis Herrera was a lease contract instead of a deed of sale as asserted
by defendant Luy Kim Guan, we find that the only evidence in support of her contention is her own
testimony and that of her husband to the effect that the deceased Luis Herrera showed the said
document to them, and they remembered the same to be a lease contract on the three properties for a
period of 20 years in consideration of P2,000.00. Their testimony was sought to be corroborated by the
declaration of the clerk of Atty. Enrique A. Fernandez, who allegedly notarized the document. Outside of
this oral testimony, given more than 23 years after the supposed instrument was read by them, no other
evidence was adduced. On the other hand, defendant Luy Kim Gua produced in evidence a certification1
signed by the Register of Deeds of Dipolog, Zamboanga (Exh. 11) to the effect that a deed of sale, dated

December 1, 1931, was execute by Luis Herrera in favor of Luy Kim Guan and entered in the Primary
Book No. 4 as duly registered on September 30, 1936 under Original Certificate of Title No. 14360. It is
to be noted that the deed of sale was registered shortly after the issuance in the name of Luis Herrera of
Origin Certificate of Title No. 14360 pursuant to Decree No. 59093, covering the two lots, Nos. 4465 and
4467 (Exh. 5) dated April 7, 1936. In virtue of said deed of sale of December 1, 1931, Original Certificate
of Title No. 1436 was cancelled and Transfer Certificate of Title No. 1304 (Exh. 12) in the names of the
conjugal partnership of the spouses Luis Herrera and Go Bang, one-half share, an Luy Kim Guan, single,
one-half share, was issued on September 30, 1936. Later, or on July 23, 1937, Luy Kim Guan, in his
capacity as attorney-in-fact of Luis Herrera, sold the half interest of the latter in the two parcels o land,
in favor of Nicomedes Salazar, whereupon TCT No. 13045 was cancelled and TCT No. RT-657 (494-T13045 (Exh. 7) was issued in the names of Luy Kim Guan an Nicomedes Salazar in undivided equal
shares. On August 4, 1937, both Luy Kim Guan and Nicomedes Salazar mortgaged the two parcels in
favor of the Bank of the Philippine Islands for the sum of P3,500.00 (Exh. 6). On August 17, 1937,
Nicomedes Salazar and Luy Kim Gua sold their respective shares in Lot No. 4465 to Carlo Eijansantos
(Exh. 9), subject to the mortgage, resulting in the issuance of TCT No. 2653 (Exh. 10) covering the entire
lot No. 4465 in the name of said Carlos Eijansantos. On February 23, 1949, Nicomedes Salazar sold his
shall share in Lot No. 4467 to Lino Bangayan, as a consequence of which, TCT No. 2654 (Exh. B) was
issued covering said Lot No. 4467 in the names of Luy Kim Guan and Lino Bangayan in undivided equal
shares.

With respect to Lot No. 1740, the same was sold by Luy Kim Guan, in his capacity as attorney-in-fact of
Luis Herrera, on September 11, 1939 to Luy Chay (See Exh. 2) who, in August, 1941, mortgaged the same
(Exh. 4) to the Zamboanga Mutual Loan and Building Association (See TCT No. 3162 [Exh. 3] issued in the
name of Luy Chay). Later on, Luy Chay sold the entire lot to defendant Lino Bangayan by virtue of the
deed of sale dated January 31, 1947 (Exh. E), and as a consequence thereof, TCT No. 2567 was issued in
the name of said vendee. (See Exh. 1). As a result of these various transactions, duly recorded in the
corresponding office of the Register of Deeds, and covered by appropriate transfer certificates of title,
the properties are now registered in the following manner: Lot No. 1740, in the name of Lino Bangayan;
Lot No. 4465, in the name of Carlos Eijansantos; and Lot No. 4467, in the names of Lino Bangayan and
Luy Kim Guan in undivided equal shares.

In the face of these documentary evidence presented by the defendants, the trial court correctly upheld
the contention of the defendants as against that of plaintiff-appellant who claims that the second deed
executed by Luis Herrera in 1931 was a lease contract. It is pertinent to note what the lower court stated
in this regard, that is, if the second deed executed by Luis Herrera was a lease contract covering, the 3
lots in question for a period of twenty (20) years, there would have been no purpose for him to
constitute Luy Kim Guan as. his attorney-in-fact to administer and take charge of the same properties
already covered by the lease contract.

Coming now to the contention that these transactions are null and void and of no effect because they
were executed by the attorney-in-fact after the death of his Principal, suffice it to say that as found by
the lower court, the date of death of Luis Herrera has not been satisfactorily proven. The only evidence
presented by the Plaintiff-appellant in this respect is a supposed letter received from a certain "Candi",
dated at Amoy in November, 1936, purporting to give information that Luis Herrera (without mentioning
his name) had died in August of that year. This piece of evidence was properly rejected by the lower
court for lack of identification. the other hand, we have the testimony of the witness Chung Lian to the
effect that when he was in Amoy the year 1940, Luis Herrera visited him and had a conversation with
him, showing that the latter was still alive at the time. Since the documents had been executed the
attorney-in-fact one in 1937 and the other in 1939, it is evident, if we are to believe this testimony, that
the documents were executed during the lifetime of the principal. Be that as it may, even granting
arguendo that Luis Herrera did die in 1936, plaintiffs presented no proof and there is no indication in the
record, that the age Luy Kim Guan was aware of the death of his prince at the time he sold the property.
The death of the principal does not render the act of an agent unenforceable, where the latter had no
knowledge of such extinguishment the agency.2

Appellants also raise the question of the legality of the titles acquired by Luy Chay and Lino Bangayan,
on ground that they are disqualified to acquire real properties in the Philippines. This point is similarly
without me because there is no evidence to support the claim. In fact, in the deed of sale as well as in
TCT No. 3162 issued to Luy Chay, the latter was referred to as a citizen of the Philippines. Nevertheless,
the lower court acknowledged the probability that Luy Chay could have been actually a Chinese
citizens.3 At any rate, the property was subsequently purchased by Lino Bangayan, as a result which TCT
No. 3162 in the name of Luy Chay was cancelled and another certificate (TCT No. T-2567) was issued in
favor of said vendee.

As to Bangayan's qualification, the lower court held that said defendant had sufficiently established his
Philippine citizenship through Exhibit P, concurred in by the Secretary of Justice. We find no reason to
disturb such ruling.

With respect to Luy Kim Guan, while it is true that he is a Chinese citizen, nevertheless, inasmuch as he
acquired his one-half share in Lot No. 4467 in 1931, long before the Constitution was adopted, his
ownership can not be attacked on account of his citizenship.

Appellants, in this appeal, contest the judgment of the court a quo awarding defendants Lino Bangayan
and Luy Kim Guan attorney's fees in the sum of P2,000.00 each, and expenses of litigation in the
amounts of P1,000.00 and P500.00, respectively. We agree with the appellant in this regard.

This Court has laid down the rule that in the absence of stipulation, a winning party may be awarded
attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to amount to gross
and evident bad faith.4 The same thing however, can not be said of the case at bar. As a matter of fact,
the trial court itself declared that the complaint was filed in good faith. Attorney's fees, therefore, can
not be awarded to defendants simply because the judgment was favorable to them and adverse to
plaintiff, for it may amount to imposing a premium on the right to redress grievances in court. And so
with expenses of litigation. A winning party may be entitled to expenses of litigation only where he, by
reason of plaintiff's clearly unjustifiable claims or defendant's unreasonable refusal to his demands, was
compelled to incur said expenditures. Evidently, the facts of this case do not warrant the granting of
such litigation expenses to defendants. In the absence of proof that the action was intended for reasons
other than honest, we may agree with the trial court that the same must have been instituted by
plaintiffs in their belief that they have a valid cause against the defendants.

WHEREFORE, and with the above modification, the decision appealed from is hereby affirmed in all
other respects without prejudice to appellants' right to demand from the agent (Luy Kim Guan) an
accounting of proceeds of the agency, if such right is still available. No costs. So ordered.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes and Dizon,
concur.