MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L. LINSANGAN, respondent.
G.R. No. 151319 November 22, 2004
296 SCRA 631 Business Organization Corporation Law Piercing the Veil of Corporate Fiction
In 1989, San Juan Structural and Steel Fabricators, Inc. (San Juan) alleged that it entered into a contract of
sale with Motorich Sales Corporation (Motorich) through the latters treasurer, Nenita Gruenberg. The
subject of the sale was a parcel of land owned by Motorich. San Juan advanced P100k to Nenita as
earnest money.
On the day agreed upon on which Nenita was supposed to deliver the title of the land to Motorich, Nenita
did not show up. Nenita and Motorich did not heed the subsequent demand of San Juan to comply with the
contract hence San Juan sued Motorich. Motorich, in its defense, argued that it is not bound by the acts of
its treasurer, Nenita, since her act in contracting with San Juan was not authorized by the corporate board.
San Juan raised the issue that Nenita was actually the wife of the President of Motorich; that Nenita and
her husband owns 98% of the corporations capital stocks; that as such, it is a close corporation and that
makes Nenita and the President as principal stockholders who do not need any authorization from the
corporate board; that in this case, the corporate veil may be properly pierced.
ISSUE: Whether or not San Juan is correct.
HELD: No. Motorich is right in invoking that it is not bound by the acts of Nenita because her act in entering
into a contract with San Juan was not authorized by the board of directors of Motorich. Nenita is however
ordered to return the P100k.
There is no merit in the contention that the corporate veil should be pierced even though it is true that
Nenita and her husband own 98% of the capital stocks of Motorich. The corporate veil can only be pierced
if the corporate fiction is merely used by the incorporators to shield themselves against liability for fraud,
illegality or inequity committed on third persons. It is incumbent upon San Juan to prove that Nenita or her
husband is merely using Motorich to defraud San Juan. In this case however, San Juan utterly failed to
establish that Motorich was formed, or that it is operated, for the purpose of shielding any alleged
fraudulent or illegal activities of its officers or stockholders; or that the said veil was used to conceal fraud,
illegality or inequity at the expense of third persons like San Juan.
TUAZON VS HEIRS OF RAMOS
FACTS: Respondents alleged that on a relevant date, spouses Tuazon purchased from their
predecessor-in-interest cavans of rice. That on the total number of cavans, only a certain portion has been
paid for. In payment thereof, checks have been issued but on presentment, the checks were
dishonored. Respondents alleged that since spouses anticipated the forthcoming suit against them,
they made fictitious sales over their properties. As defense, the spouses averred that it was the wife of
Bartolome who effected the sale and that Maria was merely her agent in selling the rice. The true buyer of
the cavans was Santos. The spouses further averred that when Ramos got the check from Santos, she
took it in good faith and didn't knew that the same were unfunded.
HELD:
First, there is no contract of agency.
If it was truly the intention of the parties to have a contract of agency, then when the spouses sued
Santos on a separate civil action, they should have instituted the same on behalf and for the
respondents. They didn't do so. The filing in their own names negate their claim that they acted as
mere agents in selling the rice.
Second, the spouses are liable on the check.
As indorser, Tuazon warranted that upon due presentment, according to
their tenor, and that in case they were dishonored, she would pay the
corresponding amount. After the instrument is dishonored by non-
payment, indorsers cease to be merely secondarily liable. They became
principal debtors whose liability becomes identical to that of the original
obligor. The holder of a negotiable instrument need not even proceed
against the maker before suing the indorser. Santos is not an indispensable party to the suit
against the spouses.
FACTS: Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross
Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under
Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to
reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty.
Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the
original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and typewritten
receipts for these payments. Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was
cancelled for reasons the latter could not explain, and presented to him another proposal for the purchase
of an equivalent property. He refused the new proposal and insisted that Baluyot and MMPCI honor their
undertaking. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan
filed a Complaint for Breach of Contract and Damages against the former. For its part, MMPCI alleged that
Contract No. 28660 was cancelled conformably with the terms of the contract because of non-payment of
arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was
not authorized to represent MMPCI or to use its name except as to the extent expressly stated in the
Agency Manager Agreement.
ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI.
RULING: NO. The acts of an agent beyond the scope of his authority do not bind the principal, unless he
ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own
unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify. No ratification
can be implied in the instant case. Atty. Linsangan failed to show that MMPCI had knowledge of the
arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to
Purchase signed by Atty. Linsangan and MMPCI's authorized officer. Likewise, this Court does not find
favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been expressly
conferred upon her; however, the same may have been derived impliedly by habit or custom which may
have been an accepted practice in their company in a long period of time." A perusal of the records of the
case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to
enter into agreements for lower prices of its interment spaces, nor to assume a portion of the purchase
price of the interment spaces sold at such lower price. No evidence was ever presented to this effect.
Nature and Purpose of Agency
AIR FRANCE vs. Court of Appeals, December 29, 1983 G.R. No. L-57339
Facts:
I n F e b ru a r y, 19 7 0, t h e l at e J os e G . G a na an d hi s f am i l y, (t he G A N A S ) , pu r c h as e d f r om
A IR FRANCE through Imperial Travels, Incorporated, a duly authorized travel agent, nine "open-dated" air
passage tickets for the Manila/Osaka/Tokyo/Manila route.On April 24, 1970, AIR FRANCE exchanged or substituted the aforementioned
tickets with other tickets for the same route. At this time, the GANAS were booked for the Manila/Osaka
segmento n A I R F R A N C E F l i g h t 1 8 4 f o r M a y 8 , 1 9 7 0 , a n d f o r t h e
T o k y o / M a n i l a r e t u r n t r i p o n A I R FRANCE Flight 187 on May 22, 1970. The aforesaid tickets
were valid until May 8, 1971.TheGANAS did not depart on 8 May 1970.Jose Gana sought the assistance of Teresita
Manucdoc, a Secretary of the Sta. Clara Lumber Company where Jose Gana was the Director and
Treasurer, for the extension of the validity of their tickets, which were due to expire on May 8, 1971.
Teresita enlisted the help of Lee EllaM an a ge r o f t h e P h i l i pp i n e T r av el B u re a u, w ho u s ed t o
ha n dl e t r av el a r r an g em e nt s f o r t h e pe rs o nn el o f t he S t a. C l a r a Lum b er C om p a n y. E l l a
s e nt t h e t i c k e t s t o C e s a r R i l l o , O f f i c e Manager of AIR FRANCE.The tickets were returned to Ella who
was informed that extension was not possible. Ella thenreturned the tickets to Teresita and informed her of the impossibility
of extension.In the meantime, the GANAS had scheduled their departure on May 7, 1971 or one day beforethe
expiry date. In the morning of the very day of their scheduled departure on the first leg of their trip, Teresita
requested travel agent Ella to arrange the revalidation of the tickets. Ella gavet h e s am e n eg at i v e a ns w e r a n d w a r ne d
he r t ha t al t h o ug h t he t i c k e t s c o ul d be us ed b y t he GANAS if they left onMay 7, 1971, the tickets
would no longer be valid for the rest of their tripbecause the tickets would then have expired on May 8,1971. Teresita replied
that it will be up tothe GANAS to make the arrangements. Notwithstanding the warnings, the GANAS
departedf r om Ma n i l a i n t he af t e r n oo n o f Ma y 7 , 1 97 1 o n b oa r d A I R FR A N C E Fl i gh t 1 84
f o r O s ak a , Japan.H o w e v er , f o r t he O s ak a/ T ok yo f l i g h t on Ma y 1 7, 19 7 1, J a pa n A i r l i ne s
re f us ed t o h on o r
thet i c k e t s b e c a u s e o f t h e i r e x p i r a t i o n , a n d t h e G A N A S h a d t o p u r c h a s e n
e w t i c k e t s . T h e y encountered the same difficulty with respect to their return trip to Manila as AIR
FRANCE alsorefused to honor their tickets. They were able to return only after pre-payment in Manila, throughtheir relatives, of the
readjusted rates. They finally flew back to Manila on separate Air FranceFrights.
Issue:
W heth er o r n ot T e r es i t a w a s t h e a ge nt of t he G A N A S a n d n ot i c e t o o f t he r ej ec t i on of
th e request of the validity of the tickets was notice to the GANAS, her principals.
Held:
The GANAS cannot defend by contending lack of knowledge of those rules since the evidencebears out that
Teresita, who handled travel arrangements for the GANAS, was duly informed byt r av el a g en t E l l a o f t he a dv i c e of
R e no , t he O ffi c e Ma n a ge r o f A i r F r an c e, t ha t th e t i c k et s i n qu es t i o n c o ul d n ot b e
e x te n de d b e yo n d t h e p eri o d of t he i r v al i di t y w i th o ut p a yi n g t he f ar e di f f er e nt i al s an d
ad di ti on al t r av el ta x e s b r ou g ht ab o ut b y th e i n c re as e d f a r e r at e a nd t r av el taxes.To all legal
intents and purposes, Teresita was the agent of the GANAS and notice to her of therejection of the request
for extension of the validity of the tickets was notice to the GANAS, her principals.WHEREFORE,
the judgment under review is hereby reversed and set aside, and the AmendedComplaint filed by private
respondents hereby dismissed.
SUNACE INTERNATIONAL MANAGEMENT SERVICES vs NLRC Case Digest
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR RELATIONS
COMMISSION et al.
480 SCRA 146 (2006)
FACTS: Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace
International Management Services (Sunace) under a 12-month contract. Such employment was made with
the assistance of Taiwanese broker Edmund Wang. After the expiration of the contract, Montehermozo
continued her employment with her Taiwanese employer for another 2 years.
When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her
Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that she was
underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year extension of her
employment contract was with the consent and knowledge of Sunace. Sunace, on the other hand, denied
all the allegations.
The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor
Relations Commission and Court of Appeals affirmed the labor arbiters decision. Hence, the filing of this
appeal.
ISSUE: Whether or not the 2-year extension of Montehermozos employment was made with the
knowledge and consent of Sunace
HELD: There is an implied revocation of an agency relationship when after the termination of the original
employment contract, the foreign principal directly negotiated with the employee and entered into a new
and separate employment contract.
Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese
broker Wang, not with the foreign employer.
The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to Sunace,
that Sunace continually communicated with the foreign "principal" (sic) and therefore was aware of and had
consented to the execution of the extension of the contract is misplaced. The message does not provide
evidence that Sunace was privy to the new contract executed after the expiration on February 1, 1998 of
the original contract. That Sunace and the Taiwanese broker communicated regarding Montehermozos
allegedly withheld savings does not necessarily mean that Sunace ratified the extension of the contract.
As can be seen from that letter communication, it was just an information given to Sunace that
Montehermozo had taken already her savings from her foreign employer and that no deduction was made
on her salary. It contains nothing about the extension or Sunaces consent thereto.
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent
to enlighten Sunace who had been directed, by Summons issued on February 15, 2000, to appear on
February 28, 2000 for a mandatory conference following Montehermozos filing of the complaint on
February 14, 2000.
Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace] cannot
profess ignorance of such an extension as obviously, the act of its principal extending [Montehermozos]
employment contract necessarily bound it, it too is a misapplication, a misapplication of the theory of
imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer,
not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to
its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be
held solidarily liable for any of Montehermozos claims arising from the 2-year employment extension. As
the New Civil Code provides, Contracts take effect only between the parties, their assigns, and heirs,
except in case where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. Furthermore, as Sunace correctly points out, there was an
implied revocation of its agency relationship with its foreign principal when, after the termination of the
original employment contract, the foreign principal directly negotiated with Montehermozo and entered into
a new and separate employment contract in Taiwan. Article 1924 of the New Civil Code states that the
agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with
third persons.
94071 March 31, 1992
Lessons Applicable: Requisites of Double insurance (Insurance)
FACTS:
May 15, 1981: Western Guaranty Corporation issued Fire Insurance Policy to New Life
Enterprises foar P350,000
renewed on May, 13, 1982
July 30,1981: Reliance Surety and Insurance Co., Inc. issued Fire Insurance Policy to New Life
Enterprises for P300,000
November 12, 1981; Additional P700,000
February 8, 1982: Equitable Insurance Corporation issued Fire Insurance Policy to New Life
Enterprises for P200,000
October 19, 1982 2 am: fire electrical in nature destroyed the stock in trade worth P1,550,000
Julian Sy went to Reliance to claim but he was refused. Same thing happened with the others who
were sister companies.
Sy violated the "Other Insurance Clause"
RTC: favored New Life and against the three insurance companies
CA: reversed -failure to state or endorse the other insurance coverage
ISSUE: W/N Sy can claim against the three insurance companies for violating the "Other Insurance Clause"
HELD: NO.
The terms of the contract are clear and unambiguous.
The insured is specifically required to disclose to the insurer any other insurance and its
particulars which he may have effected on the same subject matter.
The knowledge of such insurance by the insurer's agents, even assuming the acquisition thereof by
the former, is not the "notice" that would estop the insurers from denying the claim.
conclusion of the trial court that Reliance and Equitable are "sister
companies" is an unfounded conjecture drawn from the mere fact that Yap Kam Chuan was
an agent for both companies which also had the same insurance claims adjuster
Availmentof the services of the same agents and adjusters by different companies is a
common practice in the insurancebusiness and such facts
do not warrant the speculative conclusion of the trial court.
The conformity of the insured to the terms of the policy isimplied from his failure to express any
disagreement with what is provided for.
a clear misrepresentation and a vital one because where the insured had been asked to reveal
but did not, that was deception - guilty of clear fraud
total absence of such notice nullifies the policy
 assuming arguendo that petitioners felt the legitimate need to be clarified as to the policy condition
contracts, Artemio Valencia filed a complaint for specific performance with damages against Manila
violated, there was a considerable lapse of time from their receipt of the insurer's clarificatory letter
dated March 30, 1983, up to the time the complaint was filed in court on January 31, 1984. The one- Remnant
year prescriptive period was yet toexpire on November 29, 1983, or about eight (8) months from the
receipt of the clarificatory letter, but petitioners let the
period lapse without bringing their action in court

The Ventanillas, believing that they had already remitted enough money went directly to Manila Remnant

THE MANILA REMNANT CO., INC vs. THE HONORABLE COURT OF APPEALS, OSCAR
VENTANILLA, JR. and CARMEN GLORIA DIAZ
FACTS: Petitioner Manila Remnant Co., Inc. is the owns parcels of land situated in Quezon City and
constituting the Capital Homes Subdivision Nos. I and II. Manila Remnant and A.U. Valencia & Co. Inc.
entered into a contract entitled "Confirmation of Land Development and Sales Contract" to formalize a prior
verbal agreement whereby A.U. Valencia and Co., Inc. was to develop the aforesaid subdivision for a
and offered to pay the entire outstanding balance of the purchase price. Unfortunately, they discovered
from Gloria Caballes that their names did not appear in the records of A.U. Valencia and Co. as lot buyers.
Also, Manila Remnant refused the offer of the Ventanillas to pay for the remainder of the contract price. The
Ventanillas then commenced an action for specific performance, annulment of deeds and damages against
Manila Remnant, A.U. Valencia and Co. and Carlos Crisostomo.

consideration of 15.5% commision. At that time the President of both A.U. Valencia and Co. Inc. and Manila

Remnant Co., Inc. was Artemio U. Valencia. Manila Remnant thru A.U. Valencia and Co. executed two The trial court found that Manila Remnant could have not been dragged into this suit without the fraudulent

"contracts to sell" covering Lots 1 and 2 of Block 17 in favor of Oscar C. Ventanilla and Carmen Gloria Diaz. manipulations of Valencia. Subsequently, Manila Remnant and A.U. Valencia and Co. elevated the lower

Ten days after the signing of the contracts with the Ventanillas, Artemio U. Valencia, without the knowledge court's decision to the Court of Appeals through separate appeals. On October 13, 1987, the Appellate

of the Ventanilla couple, sold Lots 1 and 2 of Block 17 again, to Carlos Crisostomo, one of his sales agents Court affirmed in toto the decision of the lower court. Reconsideration sought by petitioner Manila Remnant

without any consideration. Artemio Valencia then transmitted the fictitious Crisostomo contracts to Manila was denied, hence the instant petition.

Remnant while he kept in his files the contracts to sell in favor of the Ventanillas. All the amounts paid by
ISSUE: Whether or not petitioner Manila Remnant should be held solidarily liable together with A.U.
the Ventanillas were deposited in Valencia's bank account. Upon orders of Artemio Valencia, the monthly
Valencia and Co. and Carlos Crisostomo for the payment of moral, exemplary damages and attorney's fees
payments of the Ventanillas were remitted to Manila Remnant as payments of Crisostomo for which the
in favor of the Ventanillas
former issued receipts in favor of Crisostomo.

HELD: YES. In the case at bar, the Valencia realty firm had clearly overstepped the bounds of its authority

as agent and for that matter, even the law when it undertook the double sale of the disputed lots.
General Manager Karl Landahl, wrote Artemio Valencia informing him that Manila Remnant was
Such being the case, the principal, Manila Remnant, would have been in the clear pursuant to Article 1897
terminating its existing collection agreement with his firm on account of the considerable amount of
of the Civil Code which states that "(t)he agent who acts as such is not personally liable to that party with
discrepancies and irregularities. As a consequence, Artemio Valencia was removed as President by the
whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving
Board of Directors of Manila Remnant. Therefore, Valencia stopped transmitting Ventanilla's monthly
such party sufficient notice of his powers." However, the unique relationship existing between the principal
installments. A.U. Valencia and Co. sued Manila Remnant to impugn the abrogation of their agency
and the agent at the time of the dual sale must be underscored. Bear in mind that the president then of both
agreement. The court ordered all lot buyers to deposit their monthly amortizations with the court. But A.U.
firms was Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the fact
Valencia and Co. wrote the Ventanillas that it was still authorized by the court to collect the monthly
that the double sale was beyond the power of the agent, Manila Remnant as principal was chargeable with
amortizations and requested them to continue remitting their amortizations with the assurance that said
the knowledge or constructive notice of that fact and not having done anything to correct such an
payments would be deposited later in court.
irregularity was deemed to have ratified the same. More in point, we find that by the principle of estoppel,

Manila Remnant is deemed to have allowed its agent to act as though it had plenary powers.
Thereafter, the trial court issued an order prohibiting A.U. Valencia and Co. from collecting the monthly

installments. Valencia complied with the court's order of submitting the list of all his clients but said
Article 1911 of the Civil Code provides: "Even when the agent has exceeded his authority, the
list excluded the name of the Ventanillas. Manila Remnant caused the publication in the Times Journal of a
principal is solidarily liable with the agent if the former allowed the latter to act as though he had
notice cancelling the contracts to sell of some lot buyers. To prevent the effective cancellation of their
full powers." In such a situation, both the principal and the agent may be considered as joint feasors

whose liability is joint and solidary (Verzosa vs. Lim, 45 Phil. 416). In essence, therefore, the basis for
Manila Remnant's solidary liability is estoppel which, in turn, is rooted in the principal's neglectfulness in
failing to properly supervise and control the affairs of its agent and to adopt the needed measures to
prevent further misrepresentation. As a consequence, Manila Remnant is considered estopped from
pleading the truth that it had no direct hand in the deception employed by its agent. That the principal might
not have had actual knowledge of the agent's misdeed is of no moment.
FONTANILLA
FACTS: A pick up owned by the National Irrigation Administration and driven officially by its regular driver,
Hugo Garcia, bumped a bicycle ridden by Francisco Fontanilla, which resulted in the latter's death. The
parents of Francisco filed a suit for damages against Garcia and the NIA, as Garcia's employer. After trial,
the court awarded actual, moral and exemplary damages to Spouses Fontanilla. NIA appealed. The
Solicitor General contends that the NIA does not perform solely and primarily proprietary functions but is an
agency of the government tasked with governmental functions, and is therefore not liable for the tortious act
of its driver Hugo Garcia, who was not its special agent.
ISSUE:
May NIA, a government agency, be held liable for the damages caused by the negligent act of its driver
who was not its special agent?
HELD:
Yes. NIA is a government agency with a juridical personality separate and distinct from the government. It
is not a mere agency of the government but a corporate body performing proprietary functions. Therefore, it
may be held liable for the damages caused by the negligent act of its driver who was not its special
agent. (Fontanilla vs. Maliaman, G.R. Nos. L-55963 & 61045, February 27, 1991)
RATIO:
Section 1 of RA No. 3601 tells us that NIA is a government agency invested with a corporate personality
separate and distinct from the government, thus is governed by the Corporation Law. Section 2, subsection
f of PD 552 provides that NIA also has its own assets and liabilities and has corporate powers to be
exercised by a Board of Directors. Section 2, subsection b of PD 552 provides that NIA may sue and be
sued in court.
Of equal importance is the case of National Waterworks and Sewerage Authority (NAWASA) vs. NWSA
Consolidated Unions, 11 SCRA 766, which propounds the thesis that "the NAWASA is not an agency
performing governmental functions; rather it performs proprietary functions . . . ." The functions of providing
water supply and sewerage service are regarded as mere optional functions of government even though
the service rendered caters to the community as a whole and the goal is for the general interest of society.
Like the NAWASA, the National Irrigation Administration was not created for purposes of local government.
While it may be true that the NIA was essentially a service agency of the government aimed at promoting
public interest and public welfare, such fact does not make the NIA essentially and purely a "government-
function" corporation. NIA was created for the purpose of "constructing, improving, rehabilitating, and
administering all national irrigation systems in the Philippines, including all communal and pump irrigation
projects." Certainly, the state and the community as a whole are largely benefited by the services the
agency renders, but these functions are only incidental to the principal aim of the agency, which is the
irrigation of lands.
NOTES:
The liability of the State has two aspects. namely:
1. Its public or governmental aspects where it is liable for the tortious acts of special agents only.
2. Its private or business aspects (as when it engages in private enterprises) where it becomes liable as
an ordinary employer. Fontanilla vs. Maliaman, G.R. Nos. L-55963 & 61045, December 1, 1989)
Facts: Bulu Chowdury was charged with the crime of illegalrecruitment in large scale by recruiting Estrella
B. Calleja, Melvin C. Miranda and Aser S. Sasis for employment in Korea. Evidence shows that accused
appellant interviewed private complainant in 1994 at Craftrades office. At that time, he was an interviewer
of Craftrade which was operating under temporary authority given by POEA pending the renewal of license.
He was charged based on the fact that he was not registered with the POEA as employee of Craftrade and
he is not in his personal capacity, licensed to recruit overseas workers. The complainants also averred that
during theirapplications for employment for abroad, the license of Craftrade was already expired.
For his defense Chowdury testified that he worked as interviewer at Craftrade from 1990 until 1994. His
primary duty was to interview jobapplicants for abroad. As a mere employee, he only followed the
instructions given by his superiors, Mr. Emmanuel Geslani, the agency's President and General Manager,
and Mr. UtkalChowdury, the agency's Managing Director.
Issue: Whether or not accused-appellant knowingly and intentionally participated in the commission of the
crime charged.
Held: No, an employee of a company or corporation engaged in illegal recruitment may be held liable as
principal, together with his employer, if it is shown that he actively and consciously participated in
illegal recruitment. In this case, Chowdury merely performed his tasks under the supervision of its president
and managing director. The prosecution failed to show that the accused-appellant is conscious and has an
active participation in the commission of the crime of illegal recruitment. Moreover, accused-appellant was
not aware of Craftrade's failure to register his name with the POEA and the prosecution failed to prove that
he actively engaged inrecruitment despite this knowledge. The obligation to register its personnel with the
POEA belongs to the officers of the agency. A mere employee of the agency cannot be expected to know
the legalrequirements for its operation. The accused-appellant carried out his duties as interviewer of
Craftrade believing that the agency was duly licensed by the POEA and he, in turn, was duly authorized by
his agency to deal with the applicants in its behalf. Accused-appellant in fact confined his actions to his job
description. He merely interviewed the applicants and informed them of the requirementsfor deployment but
he never received money from them. Chowdury did not knowingly and intentionally participated in the
commission of illegal recruitment being merely performing his task and unaware of illegality of recruitment.
252 SCRA 259 Legal Ethics Forum Shopping
Civil Law Contract of Sale Parties to a Sales Contract
Producers Bank (now called First Philippine International Bank), which has been under conservatorship
since 1984, is the owner of 6 parcels of land. The Bank had an agreement with Demetrio Demetria and
Jose Janolo for the two to purchase the parcels of land for a purchase price of P5.5 million pesos. The said
agreement was made by Demetria and Janolo with the Banks manager, Mercurio Rivera. Later however,
the Bank, through its conservator, Leonida Encarnacion, sought the repudiation of the agreement as it
alleged that Rivera was not authorized to enter into such an agreement, hence there was no valid contract
of sale. Subsequently, Demetria and Janolo sued Producers Bank. The regional trial court ruled in favor of
Demetria et al. The Bank filed an appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention
with the trial court. The trial court denied the motion since the trial has been concluded already and the
case is now pending appeal. Subsequently, Co, assisted by ACCRA law office, filed a separate civil case
against Demetria and Janolo seeking to have the purported contract of sale be declared unenforceable
against the Bank. Demetria et al argued that the second case constitutes forum shopping.
ISSUES:
1. Whether or not there is forum shopping.
2. Whether or not there is a perfected contract of sale.
HELD:
1. Yes. There is forum shopping because there is identity of interest and parties between the first case and
the second case. There is identity of interest because both cases sought to have the agreement, which
involves the same property, be declared unenforceable as against the Bank. There is identity of parties
even though the first case is in the name of the bank as defendant, and the second case is in the name of
Henry Co as plaintiff. There is still forum shopping here because Henry Co essentially represents the bank.
Both cases aim to have the bank escape liability from the agreement it entered into with Demetria et al. The
Supreme Court did not lay down any disciplinary action against the ACCRA lawyers but they were warned
that a repetition will be dealt with more severely.
2. Yes. There is a perfected contract of sale because the bank manager, Rivera, entered into the agreement
with apparent authority. This apparent authority has been duly proved by the evidence presented which Meanwhile, on March 31, 1995, respondents sister-in-law, Lilian Soriano (Lilian) obtained from
showed that in all the dealings and transactions, Rivera participated actively without the opposition of the
conservator. In fact, in the advertisements and announcements of the bank, Rivera was designated as the
petitioner cash advance of P253,000 allegedly for the allowances of poll watchers who were attending
go-to guy in relation to the disposition of the Banks assets.
a seminar and for other related expenses. Lilian acknowledged on petitioners 1995 diary[9] receipt of

the amount.[10]
JESUS M. GOZUN, G.R. No. 167812
Petitioner,
Present:

QUISUMBING, J., Chairperson, Petitioner later sent respondent a Statement of Account[11] in the total amount of P2,177,906 itemized
versus - CARPIO,
CARPIO MORALES, as follows: P640,310 for JMG Publishing House; P837,696 for Metro Angeles Printing; P446,900 for
TINGA, and
JOSE TEOFILO T. MERCADO a.k.a. DON PEPITO MERCADO, VELASCO, JR., JJ. St. Joseph Printing Press; and P253,000, the cash advance obtained by Lilian.
Respondent.
Promulgated:
December 19, 2006
On August 11, 1995, respondents wife partially paid P1,000,000 to petitioner who issued a
On challenge via petition for review on certiorari is the Court of Appeals Decision of December 8,
receipt[12] therefor.
[1]
2004 and Resolution of April 14, 2005 in CA-G.R. CV No. 76309 reversing the trial courts

decision[2] against Jose Teofilo T. Mercado a.k.a. Don Pepito Mercado (respondent) and accordingly
Despite repeated demands and respondents promise to pay, respondent failed to settle the balance
dismissing the complaint of Jesus M. Gozun (petitioner).
of his account to petitioner.

In the local elections of 1995, respondent vied for the gubernatorial post in Pampanga. Upon
Petitioner and respondent being compadres, they having been principal sponsors at the weddings of
respondents request, petitioner, owner of JMG Publishing House, a printing shop located in San
their respective daughters, waited for more than three (3) years for respondent to honor his promise
Fernando, Pampanga, submitted to respondent draft samples and price quotation of campaign
but to no avail, compelling petitioner to endorse the matter to his counsel who sent respondent a
materials.
demand letter.[13] Respondent, however, failed to heed the demand.[14]
By petitioners claim, respondents wife had told him that respondent already approved his price

quotation and that he could start printing the campaign materials, hence, he did print campaign
Petitioner thus filed with the Regional Trial Court of Angeles City on November 25, 1998 a
materials like posters bearing respondents photograph,[3] leaflets containing the slate of party
complaint[15] against respondent to collect the remaining amount of P1,177,906 plus inflationary
candidates,[4] sample ballots,[5] poll watcher identification cards,[6] and stickers.
adjustment and attorneys fees.

Given the urgency and limited time to do the job order, petitioner availed of the services and facilities
In his Answer with Compulsory Counterclaim,[16] respondent denied having transacted with petitioner
of Metro Angeles Printing and of St. Joseph Printing Press, owned by his daughter
or entering into any contract for the printing of campaign materials. He alleged that the various
Jennifer Gozun and mother Epifania Macalino Gozun, respectively.[7]
campaign materials delivered to him were represented as donations from his family, friends and

political supporters. He added that all contracts involving his personal expenses were coursed
Petitioner delivered the campaign materials to respondents headquarters along Gapan-
through and signed by him to ensure compliance with pertinent election laws.
Olongapo Road in San Fernando, Pampanga.[8]
On petitioners claim that Lilian, on his (respondents) behalf, had obtained from him a cash advance As adverted to earlier, the trial court rendered judgment in favor of petitioner, the dispositive portion of

of P253,000, respondent denied having given her authority to do so and having received the same. which reads:

At the witness stand, respondent, reiterating his allegations in his Answer, claimed that petitioner was
WHEREFORE, the plaintiff having proven its (sic) cause of action by preponderance of
his over-all coordinator in charge of the conduct of seminars for volunteers and the monitoring of evidence, the Court hereby renders a decision in favor of the plaintiff ordering the
defendant as follows:
other matters bearing on his candidacy; and that while his campaign
1. To pay the plaintiff the sum of P1,177,906.00 plus 12% interest per annum from the
filing of this complaint until fully paid;
manager, Juanito Johnny Cabalu (Cabalu), who was authorized to approve details with regard to
2. To pay the sum of P50,000.00 as attorneys fees and the costs of suit.
printing materials, presented him some campaign materials, those were partly donated.[17]

Also as earlier adverted to, the Court of Appeals reversed the trial courts decision and dismissed the

When confronted with the official receipt issued to his wife acknowledging her payment to JMG complaint for lack of cause of action.

Publishing House of the amount of P1,000,000, respondent claimed that it was his first time to see

the receipt, albeit he belatedly came to know from his wife and Cabalu that the P1,000,000 In reversing the trial courts decision, the Court of Appeals held that other than petitioners testimony,

[18]
represented compensation [to petitioner] who helped a lot in the campaign as a gesture of goodwill. there was no evidence to support his claim that Lilian was authorized by respondent to borrow money

on his behalf. It noted that the acknowledgment receipt[23] signed by Lilian did not specify in what

Acknowledging that petitioner is engaged in the printing business, respondent explained that he capacity she received the money. Thus, applying Article 1317[24] of the Civil Code, it held that

sometimes discussed with petitioner strategies relating to his candidacy, he (petitioner) having petitioners claim for P253,000 is unenforceable.

actively volunteered to help in his campaign; that his wife was not authorized to enter into a contract

with petitioner regarding campaign materials as she knew her limitations; that he no longer On the accounts claimed to be due JMG Publishing House P640,310, Metro Angeles

questioned the P1,000,000 his wife gave petitioner as he thought that it was just proper to Printing P837,696, and St. Joseph Printing Press P446,900, the appellate court, noting thatsince the

compensate him for a job well done; and that he came to know about petitioners claim against him owners of the last two printing presses were not impleaded as parties to the case and it was not

only after receiving a copy of the complaint, which surprised him because he knew fully well that the shown that petitioner was authorized to prosecute the same in their behalf, held that petitioner could

campaign materials were donations.[19] not collect the amounts due them.

Upon questioning by the trial court, respondent could not, however, confirm if it was his Finally, the appellate court, noting that respondents wife had paid P1,000,000 to petitioner, the latters

understanding that the campaign materials delivered by petitioner were donations from third claim of P640,310 (after excluding the P253,000) had already been settled.

parties.[20]

Finally, respondent, disclaiming knowledge of the Comelec rule that if a campaign material is Hence, the present petition, faulting the appellate court to have erred:

donated, it must be so stated on its face, acknowledged that nothing of that sort was written on all the
1. . . . when it dismissed the complaint on the ground that there is no evidence, other
materials made by petitioner.[21] than petitioners own testimony, to prove that Lilian R. Soriano was authorized by the
respondent to receive the cash advance from the petitioner in the amount of P253,000.00.

xxxx
2. . . . when it dismissed the complaint, with respect to the amounts due to the Metro
Angeles Press and St. Joseph Printing Press on the ground that the complaint was not
brought by the real party in interest.
By the contract of agency a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.[26] Contracts entered
into in the name of another person by one who has been given no authority or legal representation or
who has acted beyond his powers are classified as unauthorized contracts and are declared
unenforceable, unless they are ratified.[27]
Generally, the agency may be oral, unless the law requires a specific form. [28] However, a special
power of attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent and
indispensable for the preservation of the things which are under administration.[29] Since nothing in
this case involves the preservation of things under administration, a determination of
whether Soriano had the special authority to borrow money on behalf of respondent is in order.
Lim Pin v. Liao Tian, et al.[30] held that the requirement of a special power of attorney refers to the
nature of the authorization and not to its form.
. . . The requirements are met if there is a clear mandate from the principal specifically
authorizing the performance of the act. As early as 1906, this Court in Strong v. Gutierrez-
Repide (6 Phil. 680) stated that such a mandate may be either oral or written. The one
thing vital being that it shall be express. And more recently, We stated that, if the special
authority is not written, then it must be duly established by evidence:
the Rules require, for attorneys to compromise the litigation of their clients, a special
authority. And while the same does not state that the special authority be in writing
the Court has every reason to expect that, if not in writing, the same be duly
established by evidence other than the self-serving assertion of counsel himself that
such authority was verbally given him.[31] (Emphasis and underscoring supplied)
Petitioner submits that his following testimony suffices to establish that respondent had
authorized Lilian to obtain a loan from him, viz:
Q : Another caption appearing on Exhibit A is cash advance, it states given on 3-31-95
received by Mrs. Lilian Soriano in behalf of Mrs. Annie Mercado, amount P253,000.00,
will you kindly tell the Court and explain what does that caption means?
A : It is the amount representing the money borrowed from me by the defendant when
one morning they came very early and talked to me and told me that they were not
able to go to the bank to get money for the allowances of Poll Watchers who were having
a seminar at the headquarters plus other election related expenses during that day, sir.
Q : Considering that this is a substantial amount which according to you was taken
by Lilian Soriano, did you happen to make her acknowledge the amount at that time?
A : Yes, sir.[32] (Emphasis supplied)
Petitioners testimony failed to categorically state, however, whether the loan was made on behalf of
respondent or of his wife. While petitioner claims that Lilian was authorized by respondent,
the statement of account marked as Exhibit A states that the amount was received by Lilian in behalf
of Mrs. Annie Mercado.
Invoking Article 1873[33] of the Civil Code, petitioner submits that respondent informed him that he
had authorized Lilian to obtain the loan, hence, following Macke v. Camps[34] which holds that one
who clothes another with apparent authority as his agent, and holds him out to the public as
such, respondent cannot be permitted to deny the authority.
Petitioners submission does not persuade. As the appellate court observed:
. . . Exhibit B [the receipt issued by petitioner] presented by plaintiff-appellee to support
his claim unfortunately only indicates the Two Hundred Fifty Three Thousand Pesos
(P253,0000.00) was received by one Lilian R. Soriano on 31 March 1995, but without
specifying for what reason the said amount was delivered and in what capacity
did Lilian R. Soriano received [sic] the money. The note reads:
3-31-95
261,120 ADVANCE MONEY FOR TRAINEE
RECEIVED BY
RECEIVED FROM JMG THE AMOUNT OF 253,000 TWO HUNDRED FIFTY
THREE THOUSAND PESOS
(SIGNED)
LILIAN R. SORIANO
3-31-95
Nowhere in the note can it be inferred that defendant-appellant was connected with the
said transaction. Under Article 1317 of the New Civil Code, a person cannot be bound by
contracts he did not authorize to be entered into his behalf.[35] (Underscoring supplied)
It bears noting that Lilian signed in the receipt in her name alone, without indicating therein that she
was acting for and in behalf of respondent. She thus bound herself in her personal capacity and not
as an agent of respondent or anyone for that matter.
It is a general rule in the law of agency that, in order to bind the principal by a mortgage
on real property executed by an agent, it must upon its face purport to be made, signed
and sealed in the name of the principal, otherwise, it will bind the agent only. It is not
enough merely that the agent was in fact authorized to make the mortgage, if he has not
acted in the name of the principal. x x x[36] (Emphasis and underscoring supplied)

On the amount due him and the other two printing presses, petitioner explains that he was the one
who personally and directly contracted with respondent and he merely sub-contracted the two printing
establishments in order to deliver on time the campaign materials ordered by respondent.
Respondent counters that the claim of sub-contracting is a change in petitioners theory of the case
which is not allowed on appeal.
In Oco v. Limbaring,[37] this Court ruled:
The parties to a contract are the real parties in interest in an action upon it, as consistently
held by the Court. Only the contracting parties are bound by the stipulations in the
contract; they are the ones who would benefit from and could violate it. Thus, one who is
not a party to a contract, and for whose benefit it was not expressly made, cannot
maintain an action on it. One cannot do so, even if the contract performed by the
contracting parties would incidentally inure to one's benefit.[38] (Underscoring supplied)
In light thereof, petitioner is the real party in interest in this case. The trial courts findings on the
matter were affirmed by the appellate court.[39] It erred, however, in not declaring petitioner as a real
party in interest insofar as recovery of the cost of campaign materials made by petitioners mother and
sister are concerned, upon the wrong notion that they should have been, but were not, impleaded as
plaintiffs.
In sum, respondent has the obligation to pay the total cost of printing his campaign materials
delivered by petitioner in the total of P1,924,906, less the partial payment of P1,000,000,
or P924,906.
WHEREFORE, the petition is GRANTED. The Decision dated December 8, 2004 and the Resolution
dated April 14, 2005 of the Court of Appeals are hereby REVERSED and SET ASIDE.
The April 10, 2002 Decision of the Regional Trial Court of Angeles City, Branch 57, is
REINSTATED mutatis mutandis, in light of the foregoing discussions. The trial courts decision
is MODIFIED in that the amount payable by respondent to petitioner is reduced to P924,906. [G.R.
No. 156015. August 11, 2005]
REPUBLIC OF THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in his capacity as
former Chief of the Intelligence Service, Armed Forces of the Philippines (ISAFP), and
former Commanding General, Presidential Security Group (PSG), and MAJ. DAVID B.
DICIANO, in his capacity as an Officer of ISAFP and former member of the
PSG, petitioners, vs. HON. VICTORINO EVANGELISTA, in his capacity as Presiding
Judge, Regional Trial Court, Branch 223, Quezon City, and DANTE LEGASPI, represented
by his attorney-in-fact, Paul Gutierrez, respondents.
DECISION
PUNO, J.:
The case at bar stems from a complaint for damages, with prayer for the issuance of a writ of
preliminary injunction, filed by private respondent Dante Legaspi, through his attorney-in-fact Paul
Gutierrez, against petitioners Gen. Jose M. Calimlim, Ciriaco Reyes and Maj. David Diciano before the
Regional Trial Court (RTC) of Quezon City.[1]
The Complaint alleged that private respondent Legaspi is the owner of a land located in Bigte,
Norzagaray, Bulacan. In November 1999, petitioner Calimlim, representing the Republic of the Philippines,
and as then head of the Intelligence Service of the Armed Forces of the Philippines and the Presidential
Security Group, entered into a Memorandum of Agreement (MOA) with one Ciriaco Reyes. The MOA
granted Reyes a permit to hunt for treasure in a land in Bigte, Norzagaray, Bulacan. Petitioner Diciano
signed the MOA as a witness.[2] It was further alleged that thereafter, Reyes, together with petitioners,
started, digging, tunneling and blasting works on the said land of Legaspi. The complaint also alleged that
petitioner Calimlim assigned about 80 military personnel to guard the area and encamp thereon to
intimidate Legaspi and other occupants of the area from going near the subject land.
On February 15, 2000, Legaspi executed a special power of attorney (SPA) appointing his nephew,
private respondent Gutierrez, as his attorney-in-fact. Gutierrez was given the power to deal with the
treasure hunting activities on Legaspis land and to file charges against those who may enter it without the
latters authority.[3] Legaspi agreed to give Gutierrez 40% of the treasure that may be found in the land.
On February 29, 2000, Gutierrez filed a case for damages and injunction against petitioners for
illegally entering Legaspis land. He hired the legal services of Atty. Homobono Adaza. Their contract
provided that as legal fees, Atty. Adaza shall be entitled to 30% of Legaspis share in whatever treasure
may be found in the land. In addition, Gutierrez agreed to pay Atty. Adaza P5,000.00 as appearance fee
per court hearing and defray all expenses for the cost of the litigation.[4] Upon the filing of the complaint,
then Executive Judge Perlita J. Tria Tirona issued a 72-hour temporary restraining order (TRO) against
petitioners.
The case[5] was subsequently raffled to the RTC of Quezon City, Branch 223, then presided by
public respondent Judge Victorino P. Evangelista. On March 2, 2000, respondent judge issued another 72-
hour TRO and a summary hearing for its extension was set on March 7, 2000.
On March 14, 2000, petitioners filed a Motion to Dismiss[6] contending: first, there is no real party-in-
interest as the SPA of Gutierrez to bring the suit was already revoked by Legaspi on March 7, 2000, as
evidenced by a Deed of Revocation,[7] and, second, Gutierrez failed to establish that the alleged armed
men guarding the area were acting on orders of petitioners. On March 17, 2000, petitioners also filed a
Motion for Inhibition[8] of the respondent judge on the ground of alleged partiality in favor of private
respondent.
On March 23, 2000, the trial court granted private respondents application for a writ of preliminary
injunction on the following grounds: (1) the diggings and blastings appear to have been made on the land of
Legaspi, hence, there is an urgent need to maintain the status quo to prevent serious damage to Legaspis
land; and, (2) the SPA granted to Gutierrez continues to be valid.[9] The trial court ordered thus:
WHEREFORE, in view of all the foregoing, the Court hereby resolves to GRANT plaintiffs application for a
writ of preliminary injunction. Upon plaintiffs filing of an injunction bond in the amount of ONE HUNDRED
THOUSAND PESOS (P100,000.00), let a Writ of Preliminary Injunction issue enjoining the defendants as
well as their associates, agents or representatives from continuing to occupy and encamp on the land of
the plaintiff LEGASPI as well as the vicinity thereof; from digging, tunneling and blasting the said land of
plaintiff LEGASPI; from removing whatever treasure may be found on the said land; from preventing and
threatening the plaintiffs and their representatives from entering the said land and performing acts of
ownership; from threatening the plaintiffs and their representatives as well as plaintiffs lawyer.
On even date, the trial court issued another Order[10] denying petitioners motion to dismiss and
requiring petitioners to answer the complaint. On April 4, 2000, it likewise denied petitioners motion for
inhibition.[11]
On appeal, the Court of Appeals affirmed the decision of the trial court.[12]
Hence this petition, with the following assigned errors:
I
WHETHER THE CONTRACT OF AGENCY BETWEEN LEGASPI AND PRIVATE RESPONDENT
GUTIERREZ HAS BEEN EFFECTIVELY REVOKED BY LEGASPI.
II
WHETHER THE COMPLAINT AGAINST PETITIONERS SHOULD BE DISMISSED.
III
WHETHER RESPONDENT JUDGE OUGHT TO HAVE INHIBITED HIMSELF FROM FURTHER
PROCEEDING WITH THE CASE.
We find no merit in the petition.
On the first issue, petitioners claim that the special power of attorney of Gutierrez to represent
Legaspi has already been revoked by the latter. Private respondent Gutierrez, however, contends that the
unilateral revocation is invalid as his agency is coupled with interest.
We agree with private respondent.
Art. 1868 of the Civil Code provides that by the contract of agency, an agent binds himself to render
some service or do something in representation or on behalf of another, known as the principal, with the
consent or authority of the latter.[13]
A contract of agency is generally revocable as it is a personal contract of representation based on
trust and confidence reposed by the principal on his agent. As the power of the agent to act depends on the
will and license of the principal he represents, the power of the agent ceases when the will or permission is
withdrawn by the principal. Thus, generally, the agency may be revoked by the principal at will.[14]
However, an exception to the revocability of a contract of agency is when it is coupled with
interest, i.e., if a bilateral contract depends upon the agency.[15] The reason for its irrevocability is because
the agency becomes part of another obligation or agreement. It is not solely the rights of the principal but
also that of the agent and third persons which are affected. Hence, the law provides that in such cases, the
agency cannot be revoked at the sole will of the principal.
In the case at bar, we agree with the finding of the trial and appellate courts that the agency granted
by Legaspi to Gutierrez is coupled with interest as a bilateral contract depends on it. It is clear from the
records that Gutierrez was given by Legaspi, inter alia, the power to manage the treasure hunting
activities in the subject land; to file any case against anyone who enters the land without authority
from Legaspi; to engage the services of lawyers to carry out the agency; and, to dig for any
treasure within the land and enter into agreements relative thereto. It was likewise agreed upon
that Gutierrez shall be entitled to 40% of whatever treasure may be found in the land. Pursuant to this
authority and to protect Legaspis land from the alleged illegal entry of petitioners, agent Gutierrez hired the
services of Atty. Adaza to prosecute the case for damages and injunction against petitioners. As payment
for legal services, Gutierrez agreed to assign to Atty. Adaza 30% of Legaspis share in whatever
treasure may be recovered in the subject land. It is clear that the treasure that may be found in the land
is the subject matter of the agency; that under the SPA, Gutierrez can enter into contract for the legal
services of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an interest in the subject matter of the
agency, i.e., in the treasures that may be found in the land. This bilateral contract depends on the agency
and thus renders it as one coupled with interest, irrevocable at the sole will of the principal
Legaspi.[16] When an agency is constituted as a clause in a bilateral contract, that is, when the agency is
inserted in another agreement, the agency ceases to be revocable at the pleasure of the principal as the
agency shall now follow the condition of the bilateral agreement.[17] Consequently, the Deed of Revocation
executed by Legaspi has no effect. The authority of Gutierrez to file and continue with the prosecution of
the case at bar is unaffected.
On the second issue, we hold that the issuance of the writ of preliminary injunction is justified. A writ
of preliminary injunction is an ancilliary or preventive remedy that is resorted to by a litigant to protect or
preserve his rights or interests and for no other purpose during the pendency of the principal action. [18] It is
issued by the court to prevent threatened or continuous irremediable injury to the applicant before his claim
can be thoroughly studied and adjudicated.[19] Its aim is to preserve the status quo ante until the merits of
the case can be heard fully, upon the applicants showing of two important conditions, viz.: (1) the right to be
protected prima facie exists; and, (2) the acts sought to be enjoined are violative of that right.[20]
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides that a writ of preliminary injunction
may be issued when it is established:
(a) that the applicant is entitled to the relief demanded, the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring
the performance of an act or acts, either for a limited period or perpetually;
(b) that the commission, continuance or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or
(c) that a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring
or suffering to be done, some act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.
It is crystal clear that at the hearing for the issuance of a writ of preliminary injunction, mere prima
facie evidence is needed to establish the applicants rights or interests in the subject matter of the main
action.[21] It is not required that the applicant should conclusively show that there was a violation of his
rights as this issue will still be fully litigated in the main case.[22]Thus, an applicant for a writ is required
only to show that he has an ostensible right to the final relief prayed for in his complaint. [23]
In the case at bar, we find that respondent judge had sufficient basis to issue the writ of preliminary
injunction. It was established, prima facie, that Legaspi has a right to peaceful possession of his
land, pendente lite. Legaspi had title to the subject land. It was likewise established that the diggings were
conducted by petitioners in the enclosed area of Legaspis land. Whether the land fenced by Gutierrez
and claimed to be included in the land of Legaspi covered an area beyond that which is included in
the title of Legaspi is a factual issue still subject to litigation and proof by the parties in the main
case for damages. It was necessary for the trial court to issue the writ of preliminary injunction during the
pendency of the main case in order to preserve the rights and interests of private respondents Legaspi and
Gutierrez.
On the third issue, petitioners charge that the respondent judge lacked the neutrality of an impartial
judge. They fault the respondent judge for not giving credence to the testimony of their surveyor that the
diggings were conducted outside the land of Legaspi. They also claim that respondent judges rulings on
objections raised by the parties were biased against them.
We have carefully examined the records and we find no sufficient basis to hold that respondent
judge should have recused himself from hearing the case. There is no discernible pattern of bias on the
rulings of the respondent judge. Bias and partiality can never be presumed. Bare allegations of partiality will
not suffice in an absence of a clear showing that will overcome the presumption that the judge dispensed
justice without fear or favor.[24] It bears to stress again that a judges appreciation or misappreciation of the
sufficiency of evidence adduced by the parties, or the correctness of a judges orders or rulings on the
objections of counsels during the hearing, without proof of malice on the part of respondent judge, is not
sufficient to show bias or partiality. As we held in the case of Webb vs. People,[25] the adverse and
erroneous rulings of a judge on the various motions of a party do not sufficiently prove bias and prejudice to
disqualify him. To be disqualifying, it must be shown that the bias and prejudice stemmed from an
extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned
from his participation in the case. Opinions formed in the course of judicial proceedings, although
erroneous, as long as based on the evidence adduced, do not prove bias or prejudice. We also
emphasized that repeated rulings against a litigant, no matter how erroneously, vigorously and consistently
expressed, do not amount to bias and prejudice which can be a bases for the disqualification of a judge.
Finally, the inhibition of respondent judge in hearing the case for damages has become moot and
academic in view of the latters death during the pendency of the case. The main case for damages shall
now be heard and tried before another judge.
IN VIEW WHEREOF, the impugned Orders of the trial court in Civil Case No. Q-00-40115, dated
March 23 and April 4, 2000, are AFFIRMED. The presiding judge of the Regional Trial Court of Quezon
City to whom Civil Case No. Q-00-40115 was assigned is directed to proceed with dispatch in hearing the
main case for damages. No pronouncement as to costs.