EN BANCG.R. No. L-2437 February 13, 1906MONICA CASON,Plaintiff-Appellant, vs.FRANCISCO WALTERIO RICKARDS, ET AL.,Defendants-Appellees.W.A. Kincaid for appellant.Pillsbury and Sutro for appellees.WILLARD,J.:From the 1st day of November, 1895, until the 31st day of October, 1896, the defendant Rickards was the agent at Dagupan, in the Province of Pangasinan, of the other defendant, Smith, Bell & Co. While he was such agent he received from the plaintiff, as a deposit, the sum of 2,000 pesos. When he left the employ of the defendant company the 2,000 pesos were, by his orders, delivered to another agent of Smith, Bell & Co. in that province, and Smith, Bell & Co. received ad used the same. This money was not mingled with other money belonging either to Richards or to Smith, Bell & Co., and at the time of its delivery by Rickards to the other agent he notified Smith, Bell & Co. that it was not the money of Smith, Bell & Co., but was the money of the plaintiff. The judgment of the court below holding Smith, Bell & Co., responsible for this amount was clearly right. The question as to whether Rickards was authorized by Smith, Bell & Co. to receive deposits of this character for third persons is a matter of no consequence. The identical money which he received from the plaintiff was by him turned over to Smith, Bell & Co., with notice that it was the money of the plaintiff, and they now have it in their possession, and are therefore bound to pay it to her.chanroblesvirtualawlibrarychanrobles virtual law libraryAt the trial of this case Rickards testified that a few days after he received the 2,000 pesos from the plaintiff, and about the 8th day of October, 1896, he received from her an order or warrant upon the Spanish treasury for the sum of 4,200 pesos; that he wrote Smith, Bell & Co., asking if it could be collected; that they told him to send it to Manila. It was sent to Manila, and collected through the Hongkong and Shanghai Bank. Rickards testified that he received the money from the Hongkong and Shanghai Bank, and paid all of it out in the business of Smith, Bell & Co.; that after he had received it he entered upon the books of Smith, Bell & Co. at Dagupan a credit in favor of the plaintiff of 4,200 pesos, less 5 per cent commission for collection, of which commission Smith, Bell & Co. received the benefit. He testified that all these transactions took place prior to the 31st day of October, 1896, when he left the employ of Smith, Bell & Co. He also testified that he had seen the books of Smith, Bell & Co.; that they were in court in an action commenced in regard to this same amount in 1896 or 1897, and that the books which were then produced in court by Smith, Bell & Co. contained an entry or entries of the receipt by Smith, Bell & Co. of this 4,200 pesos. If this testimony is to be believed there is no doubt as to the liability of Smith, Bell & Co. to repay to the plaintiff the sum of 4,200 pesos, less the commission of 5 per cent.chanroblesvirtualawlibrarychanrobles virtual law libraryThe question as to the general authority of Rickards to receive money on deposit for Smith, Bell & Co. has nothing to do with this cause of action, for Rickards testified that he received express directions in regard to this particular transaction. Rickards in his testimony stated that he had had several conversations with different agents and employees of Smith, Bell & Co. in Manila in regard to the transaction. At the trial of this case Smith, Bell & Co. did not present as witnesses any of these employees or agents, and did not present any of their books which the witness Rickards declared would corroborate his statement, if produced, but contented themselves with calling as a witness one who was then a bookkeeper of the Hongkong and Shanghai Bank. He, testifying from entries which appeared in the books of that bank, stated that there was received for Rickards, in November, 1896, 4,200 pesos, a part of which was credited to his accounts in that bank, and the balance, amounting to about 2,616 pesos, was paid in cash. The witness could not testify to whom this cash was paid. Although he testified that he had some independent recollection of this transaction, yet it is apparent that his testimony is substantially, if not entirely, based upon the entries made in the books of the bank, which were in his handwriting.chanroblesvirtualawlibrarychanrobles virtual law libraryThe question in this case is this: Can the positive testimony of Rickards, which has been set forth above, be overcome by the testimony of the agent of the bank in view of the fact that Smith, Bell & Co. had it in their power to demonstrate the falsity of the testimony of Rickards by producing their books? No reason appears in the case why the books were not produced. The trial was had in Manila, where is located the main office of Smith, Bell & Co. Rickards gave his testimony at the opening of the trial. If it were false its falsity could have been easily proved by the introduction of these books, and their production was more imperatively demanded considering the statement of Rickards that he had seen them, and that they did contain the entries in regard to this amount of 4,200 pesos.chanroblesvirtualawlibrarychanrobles virtual law libraryUnder these circumstances the judgment of the court below relieving Smith, Bell & Co. of the responsibility for this 4,200 pesos can not be affirmed. The evidence as it stands in the record strongly preponderates against them, and the judgment must be reversed.chanroblesvirtualawlibrarychanrobles virtual law libraryThe question arises as to what disposition should be made of this case; whether final judgment should be entered in this court against Smith, Bell & Co., or whether the case should be remanded for further proceedings. Under the Code of Civil Procedure we have authority, when the judgment must be reversed, either to enter final judgment in this court or to remand the case for a new trial or for further proceedings. In the present case we think that the ends of justice require that there should be a new trial as to the 4,200 pesos. (Regaladovs. Luchsinger & Co., 1 Phil. Rep., 619.) If at the new trial Smith, Bell & Co. still fail to produce their books, and no additional evidence is offered to overcome the testimony of Rickards, final judgment should be entered against them in reference to this 4,200 pesos. In accordance with the provisions of section 505 of the Code of Civil Procedure, upon the new trial it will not be necessary to retake any of the evidence which has already been taken.chanroblesvirtualawlibrarychanrobles virtual law libraryThe judgment is reversed, and the case is remanded to the court below for a new trial only of the issue relating to the 4,200 pesos. After the new trial judgment will, as a matter of course, be entered for the plaintiff against Smith, Bell & Co. in reference to the 2,000 pesos, and for or against them in respect to the 4,200 pesos, as the results of the new trial may require. No costs will be allowed to either party in this court. So ordered.chanroblesvirtualawlibrarychanrobles virtual law libraryTorres, Mapa, Johnson, and Carson,JJ.,concur.----o0o----Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. Nos. L-18223 and L-18224 September 30, 1963COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES,plaintiff-appellee,vs.REPUBLIC ARMORED CAR SERVICE CORPORATION and DAMASO PEREZ, ET AL.,defendants-appellants.R E S O L U T I O NLABRADOR,J.:Defendant-appellant Damaso Perez has presented a motion for new trial on the ground of newly discovered evidence. It is claimed that movant was not aware of the nature of the power of attorney that Ramon Racelis used, purportedly signed by him, to secure the loans for the Republic Armored Car Service Corporation and the Republic Credit Corporation. In the motion it is claimed that a photostatic copy of the power of attorney used by Ramon Racelis was presented at the trial. This photostatic copy or a copy thereof has not been submitted to us, for this reason We cannot rule upon his claim and contention that Ramon Racelis had no authority to bind the movant as surety for the loans obtained from the appellee Commercial Bank & Trust Company. Not having before Us the supposed photostatic copy of the power of attorney used to secure the loans, there is no reason for Us to rule, in accordance with his contention, that Racelis exceeded his authority in securing the loans subject of the present actions.The motion for reconsideration, however, presents a copy of a power of attorney purportedly executed by movant on October 22, 1952. It is not expressly mentioned that this is the precise power of attorney that Ramon Racelis Utilized to secure the loans the collection of which is sought in these cases. But assuming, for the sake of argument, that the said power of attorney incorporated in the motion for reconsideration was the one used to obtain the loans. We find that the movant's contention has no merit. In accordance with the document, Racelis was authorized to negotiate for a loan or various loans .. with other being institution, financing corporation, insurance companies or investment corporations, in such sum or sums, aforesaid Attorney-in-fact Mr. Ramon Racelis, may deem proper and convenient to my interests, ... and to execute any and all documents he deems requisite and necessary in order to obtain such loans, always having in mind best interest; ... We hold that this general power attorney to secure loans from any banking institute was sufficient authority for Ramon Racelis to obtain the credits subject of the present suits.It will be noted furthermore that Racelis, as agent Damaso Perez, executed the documents evidencing the loans signing the same "Damaso Perez by Ramon Racelis," and in the said contracts Damaso Perez agreedjointly and severallyto be responsible for the loans. As the document as signed makes Perez jointly and severally responsible, there is no merit in the contention that Perez was only being held liable as a guarantor.1awphl.ntFurthermore, the promissory notes evidencing the loan are attached to the complaint in G.R. Nos. L-182 and L-18224. If the movant Perez claims that Raceli had no authority to execute the said promissory notes, the authenticity of said documents should have been specifically denied under oath in defendant's answers in the lower court. This was done; consequently Perez could not and may not now claim that his agent did not have authority to execute the loan agreements.Motion for new trial is denied.----o0o----Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 137686 February 8, 2000RURAL BANK OF MILAOR (CAMARINES SUR),petitioner,vs.FRANCISCA OCFEMIA, ROWENA BARROGO, MARIFE O. NIO, FELICISIMO OCFEMIA, RENATO OCFEMIA JR, and WINSTON OCFEMIA,respondents.PANGANIBAN,J.:When a bank, by its acts and failure to act, has clearly clothed its manager with apparent authority to sell an acquired asset in the normal course of business, it is legally obliged to confirm the transaction by issuing a board resolution to enable the buyers to register the property in their names. It has a duty to perform necessary and lawful acts to enable the other parties to enjoy all benefits of the contract which it had authorized.The CaseBefore this Court is a Petition for Review onCertiorarichallenging the December 18, 1998 Decision of the Court of Appeals1(CA) in CA-GR SP No. 46246, which affirmed the May 20, 1997 Decision2of the Regional Trial Court (RTC) of Naga City (Branch 28). The CA disposed as follows:Wherefore, premises considered, the Judgment appealed from is hereby AFFIRMED. Costs against the respondent-appellant.3The dispositive portion of the judgment affirmed by the CA ruled in this wise:WHEREFORE, in view of all the foregoing findings, decision is hereby rendered whereby the [petitioner] Rural Bank of Milaor (Camarines Sur), Inc. through its Board of Directors is hereby ordered to immediately issue a Board Resolution confirming the Deed of Sale it executed in favor of Renato Ocfemia marked Exhibits C, C-1 and C-2); to pay [respondents] the sum of FIVE HUNDRED (P500.00) PESOS as actual damages; TEN THOUSAND (P10,000.00) PESOS as attorney's fees; THIRTY THOUSAND (P30,000.00) PESOS as moral damages; THIRTY THOUSAND (P30,000.00) PESOS as exemplary damages; and to pay the costs.4Also assailed is the February 26, 1999 CA Resolution5which denied petitioner's Motion for Reconsideration.The FactsThe trial court's summary of the undisputed facts was reproduced in the CA Decision as follows:This is an action formandamuswith damages. On April 10, 1996, [herein petitioner] was declared in default on motion of the [respondents] for failure to file an answer within the reglementary-period after it was duly served with summons. On April 26, 1996, [herein petitioner] filed a motion to set aside the order of default with objection thereto filed by [herein respondents].On June 17, 1996, an order was issued denying [petitioner's] motion to set aside the order of default. On July 10, 1996, the defendant filed a motion for reconsideration of the order of June 17, 1996 with objection thereto by [respondents]. On July 12, 1996, an order was issued denying [petitioner's] motion for reconsideration. On July 31, 1996, [respondents] filed a motion to set case for hearing. A copy thereof was duly furnished the [petitioner] but the latter did not file any opposition and so [respondents] were allowed to present their evidenceex-parte. Acertioraricase was filed by the [petitioner] with the Court of Appeals docketed as CA GR No. 41497-SP but the petition was denied in a decision rendered on March 31, 1997 and the same is now final.The evidence presented by the [respondents] through the testimony of Marife O. Nio, one of the [respondents] in this case, show[s] that she is the daughter of Francisca Ocfemia, a co-[respondent] in this case, and the late Renato Ocfemia who died on July 23, 1994. The parents of her father, Renato Ocfemia, were Juanita Arellano Ocfemia and Felicisimo Ocfemia. Her other co-[respondents] Rowena O. Barrogo, Felicisimo Ocfemia, Renato Ocfemia, Jr. and Winston Ocfemia are her brothers and sisters.1wphi1.ntMarife O. Nio knows the five (5) parcels of land described in paragraph 6 of the petition which are located in Bombon, Camarines Sur and that they are the ones possessing them which [were] originally owned by her grandparents, Juanita Arellano Ocfemia and Felicisimo Ocfemia. During the lifetime of her grandparents, [respondents] mortgaged the said five (5) parcels of land and two (2) others to the [petitioner] Rural Bank of Milaor as shown by the Deed of Real Estate Mortgage (Exhs. A and A-1) and the Promissory Note (Exh. B).The spouses Felicisimo Ocfemia and Juanita Arellano Ocfemia were not able to redeem the mortgaged properties consisting of seven (7) parcels of land and so the mortgage was foreclosed and thereafter ownership thereof was transferred to the [petitioner] bank. Out of the seven (7) parcels that were foreclosed, five (5) of them are in the possession of the [respondents] because these five (5) parcels of land described in paragraph 6 of the petition were sold by the [petitioner] bank to the parents of Marife O. Nio as evidenced by a Deed of Sale executed in January 1988 (Exhs. C, C-1 and C-2).The aforementioned five (5) parcels of land subject of the deed of sale (Exh. C), have not been, however transferred in the name of the parents of Merife O. Nio after they were sold to her parents by the [petitioner] bank because according to the Assessor's Office the five (5) parcels of land, subject of the sale, cannot be transferred in the name of the buyers as there is a need to have the document of sale registered with the Register of Deeds of Camarines Sur.In view of the foregoing, Marife O. Nio went to the Register of Deeds of Camarines Sur with the Deed of Sale (Exh. C) in order to have the same registered. The Register of Deeds, however, informed her that the document of sale cannot be registered without a board resolution of the [petitioner] Bank. Marife Nio then went to the bank, showed to if the Deed of Sale (Exh. C), the tax declaration and receipt of tax payments and requested the [petitioner] for a board resolution so that the property can be transferred to the name of Renato Ocfemia the husband of petitioner Francisca Ocfemia and the father of the other [respondents] having died already.The [petitioner] bank refused her request for a board resolution and made many alibi[s]. She was told that the [petitioner] bank ha[d] a new manager and it had no record of the sale. She was asked and she complied with the request of the [petitioner] for a copy of the deed of sale and receipt of payment. The president of the [petitioner] bank told her to get an authority from her parents and other [respondents] and receipts evidencing payment of the consideration appearing in the deed of sale. She complied with said requirements and after she gave all these documents, Marife O. Nio was again told to wait for two (2) weeks because the [petitioner] bank would still study the matter.After two (2) weeks, Marife O. Nio returned to the [petitioner] bank and she was told that the resolution of the board would not be released because the [petitioner] bank ha[d] no records from the old manager. Because of this, Marife O. Nio brought the matter to her lawyer and the latter wrote a letter on December 22, 1995 to the [petitioner] bank inquiring why no action was taken by the board of the request for the issuance of the resolution considering that the bank was already fully paid [for] the consideration of the sale since January 1988 as shown by the deed of sale itself (Exh. D and D-1 ).On January 15, 1996 the [petitioner] bank answered [respondents'] lawyer's letter (Exh. D and D-1) informing the latter that the request for board resolution ha[d] already been referred to the board of directors of the [petitioner] bank with another request that the latter should be furnished with a certified machine copy of the receipt of payment covering the sale between the [respondents] and the [petitioner] (Exh. E). This request of the [petitioner] bank was already complied [with] by Marife O. Nio even before she brought the matter to her lawyer.On January 23, 1996 [respondents'] lawyer wrote back the branch manager of the [petitioner] bank informing the latter that they were already furnished the receipts the bank was asking [for] and that the [respondents] want[ed] already to know the stand of the bank whether the board [would] issue the required board resolution as the deed of sale itself already show[ed] that the [respondents were] clearly entitled to the land subject of the sale (Exh. F). The manager of the [petitioner] bank received the letter which was served personally to him and the latter told Marife O. Nio that since he was the one himself who received the letter he would not sign anymore a copy showing him as having already received said letter (Exh. F).After several days from receipt of the letter (Exh. F) when Marife O. Nio went to the [petitioner] again and reiterated her request, the manager of the [petitioner] bank told her that they could not issue the required board resolution as the [petitioner] bank ha[d] no records of the sale. Because of this Merife O. Nio already went to their lawyer and ha[d] this petition filed.The [respondents] are interested in having the property described in paragraph 6 of the petition transferred to their names because their mother and co-petitioner, Francisca Ocfemia, is very sickly and they want to mortgage the property for the medical expenses of Francisca Ocfemia. The illness of Francisca Ocfemia beg[a]n after her husband died and her suffering from arthritis and pulmonary disease already became serious before December 1995.Marife O. Nio declared that her mother is now in serious condition and they could not have her hospitalized for treatment as they do not have any money and this is causing the family sleepless nights and mental anguish, thinking that their mother may die because they could not submit her for medication as they do not have money.6The trial court granted the Petition. As noted earlier, the CA affirmed the RTC Decision.Hence, this recourse.7In a Resolution dated June 23, 1999, this Court issued a Temporary Restraining Order directing the trial court "to refrain and desist from executing [pending appeal] the decision dated May 20, 1997 in Civil Case No. RTC-96-3513, effective immediately until further orders from this Court."8Ruling of the Court of AppealsThe CA held that herein respondents were "able to prove their present cause of action" against petitioner. It ruled that the RTC had jurisdiction over the case, because (1) the Petition involved a matter incapable of pecuniary estimation; (2)mandamusfell within the jurisdiction of RTC; and (3) assuming that the action was for specific performance as argued by the petitioner, it was still cognizable by the said court.IssuesIn its Memorandum,9the bank posed the following questions:1.Question of Jurisdiction of the Regional Trial Court. Has a Regional Trial Court original jurisdiction over an action involving title to real property with a total assessed value of less than P20,000.00?2.Question of Law. May the board of directors of a rural banking corporation be compelled to confirm a deed of absolute sale of real property owned by the corporation which deed of sale was executed by the bank manager without prior authority of the board of directors of the rural banking corporation?10This Court's RulingThe present Petition has no merit.First Issue:Jurisdiction of the Regional Trial CourtPetitioner submits that the RTC had no jurisdiction over the case. Disputing the ruling of the appellate court that the present action was incapable of pecuniary estimation, petitioner argues that the matter in fact involved title to real property worth less than P20,000. Thus, under RA 7691, the case should have been filed before a metropolitan trial court, a municipal trial court or a municipal circuit trial court.We disagree. The well-settled rule is that jurisdiction is determined by the allegations of the complaint.11In the present case, the Petition for Mandamus filed by respondents before the trial court prayed that petitioner-bank be compelled to issue a board resolution confirming the Deed of Sale covering five parcels of unregistered land, which the bank manager had executed in their favor. The RTC has jurisdiction over such action pursuant to Section 21 of BP 129, which provides:Sec. 21.Original jurisdiction in other cases. Regional Trial Courts shall exercise original jurisdiction;(1) in the issuance of writ ofcertiorari, prohibition, mandamus,quo warranto,habeas corpusand injunction which may be enforced in any part of their respective regions; and(2) In actions affecting ambassadors and other public ministers and consuls.A perusal of the Petition shows that the respondents did not raise any question involving the title to the property, but merely asked that petitioner's board of directors be directed to issue the subject resolution. Moreover, the bank did not controvert the allegations in the said Petition. To repeat, the issue therein was not the title to the property; it was respondents' right to compel the bank to issue a board resolution confirming the Deed of Sale.Second Issue:Authority of the Bank ManagerRespondents initiated the present proceedings, so that they could transfer to their names the subject five parcels of land; and subsequently, to mortgage said lots and to use the loan proceeds for the medical expenses of their ailing mother. For the property to be transferred in their names, however, the register of deeds required the submission of a board resolution from the bank confirming both the Deed of Sale and the authority of the bank manager, Fe S. Tena, to enter into such transaction. Petitioner refused. After being given the runaround by the bank, respondents sued in exasperation.Allegations in the Petition for Mandamus Deemed AdmittedRespondents based their action before the trial court on the Deed of Sale, the substance of which was alleged in and a copy thereof was attached to the Petition forMandamus. The Deed named Fe S. Tena as the representative of the bank. Petitioner, however, failed to specifically deny under oath the allegations in that contract. In fact, it filed no answer at all, for which reason it was declared in default. Pertinent provisions of the Rules of Court read:Sec. 7.Action or defense based on document. Whenever an action or defense is based upon a written instrument or document, the substance of such instrument or document shall be set forth in the pleading, and the original or a copy thereof shall be attached to the pleading as an exhibit, which shall be deemed to be a part of the pleading, or said copy may with like effect be set forth in the pleading.Sec. 8.How to contest genuineness of such documents. When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but this provision does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused.12In failing to file its answer specifically denying under oath the Deed of Sale, the bank admitted the due execution of the said contract. Such admission means that it acknowledged that Tena was authorized to sign the Deed of Sale on its behalf.13Thus, defenses that are inconsistent with the due execution and the genuineness of the written instrument are cut off by an admission implied from a failure to make a verified specific denial.Other Acts of the BankIn any event, the bank acknowledged, by its own acts or failure to act, the authority of Fe S. Tena to enter into binding contracts. After the execution of the Deed of Sale, respondents occupied the properties in dispute and paid the real estate taxes due thereon. If the bank management believed that it had title to the property, it should have taken some measures to prevent the infringement or invasion of its title thereto and possession thereof.Likewise, Tena had previously transacted business on behalf of the bank, and the latter had acknowledged her authority. A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent like Manager Tena, even though such agent is abusing her authority.14Clearly, persons dealing with her could not be blamed for believing that she was authorized to transact business for and on behalf of the bank. Thus, this Court has ruled inBoard of Liquidators v.Kalaw:15Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general practice, custom, and policy, the general manager may bind the company without formal authorization of the board of directors. In varying language, existence of such authority is established, by proof of the course of business, the usages and practices of the company and by the knowledge which the board of directors has, or must be presumed to have, of acts and doings of its subordinates in and about the affairs of the corporation. So also,. . . authority to act for and bind a corporation may be presumed from acts of recognition in other instances where the power was in fact exercised.. . . Thus, when, in the usual course of business of a corporation, an officer has been allowed in his official capacity to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to manage its business.Notwithstanding the putative authority of the manager to bind the bank in the Deed of Sale, petitioner has failed to file an answer to the Petition below within the reglementary period, let alone present evidence controverting such authority. Indeed, when one of herein respondents, Marife S. Nino, went to the bank to ask for the board resolution, she was merely told to bring the receipts. The bank failed to categorically declare that Tena had no authority. This Court stresses the following:. . . Corporate transactions would speedily come to a standstill were every person dealing with a corporation held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face. This Court has observed inRamirez vs.Orientalist Co., 38 Phil. 634, 654-655, that In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestation of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would permit the property of man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. As already observed, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be estopped from denying his authority; and where it is said "if the corporation permits this means the same as "if the thing is permitted by the directing power of the corporation."16In this light, the bank is estopped from questioning the authority of the bank manager to enter into the contract of sale. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it holds the agent out to the public as possessing the power to do those acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent's authority.17Unquestionably, petitioner has authorized Tena to enter into the Deed of Sale. Accordingly, it has a clear legal duty to issue the board resolution sought by respondent's. Having authorized her to sell the property, it behooves the bank to confirm the Deed of Sale so that the buyers may enjoy its full use.The board resolution is, in fact, mere paper work. Nonetheless, it is paper work necessary in the orderly operations of the register of deeds and the full enjoyment of respondents' rights. Petitioner-bank persistently and unjustifiably refused to perform its legal duty. Worse, it was less than candid in dealing with respondents regarding this matter. In this light, the Court finds it proper to assess the bank treble costs, in addition to the award of damages.WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. The Temporary Restraining Order issued by this Court is hereby LIFTED. Treble costs against petitioner.SO ORDERED.Melo, Purisima and Gonzaga-Reyes, JJ.,concur.Vitug, J.,please see concurring opinion.Separate OpinionsVITUG,J.,concurring opinion;I share the views expressed in theponenciawritten for the Court by our esteemed colleague Mr. Justice Artemio V. Panganiban. There is just a brief clarificatory statement that I thought could be made.The Civil Code, being a law of general application, can be suppletory to special laws and certainly not preclusive of those that govern commercial transactions. Indeed, in its generic sense, civil law can rightly be said to encompass commercial law.Jus civile, in ancient Rome, was merely used to distinguish it fromjus gentiumor the law common to all the nations within the empire and, at some time later, only in contrast to international law. In more recent times, civil law is so referred to as private law in distinction from public law and criminal law. Today, it may not be totally inaccurate to consider commercial law, among some other special laws, as being a branch of civil law.Sec. 45 of the Corporation Code provides:Sec. 45.Ultra vires acts of corporations. No corporation under this Code shall possess or exercise any corporate powers except those conferred by this Code or by its articles of incorporation and except such as are necessary or incidental to the exercise of the powers so conferred.The language of the Code appears to confine the termultra viresto an act outside or beyond express, implied and incidental corporate powers. Nevertheless, the concept can also include those acts that may ostensibly be within such powers but are, by general or special laws, either proscribed or declared illegal. In general, although perhaps loosely,ultra vireshas also been used to designate those acts of the board of directors or of corporate officers when acting beyond their respective spheres of authority. In the context that the law has used the term in Article 45 of the Corporation Code, anultra viresact would be void and not susceptible to ratification.1In determining whether or not a corporation may perform an act, one considers the logical and necessary relation between the act assailed and the corporate purpose expressed by the law or in the charter. For if the act were one which is lawful in itself or not otherwise prohibited and done for the purpose of serving corporate ends or reasonably contributes to the promotion of those ends in a substantial and not merely in a remote and fanciful sense, it may be fairly considered within corporate powers.2Sec. 23 of the Corporation Code states that the corporate powers are to be exercised, all business conducted, and all property of corporations controlled and held, by the Board of Directors. When the act of the board is within corporate powers but it is done without the concurrence of the shareholders as and when such approval is required by law3or when the act is beyond its competence to do,4the act has been described as void5or, as unenforceable,6or as ineffective and not legally binding.7These holdings notwithstanding, the act cannot accurately be likened to anultra viresact of the corporation itself defined in Section 45 of the Code. Where the act is within corporate powers but the board has acted without being competent to independently do so, the action is not necessarily and totally devoid of effects, and it may generally be ratified expressly or impliedly. Thus, an acceptance of benefits derived by the shareholders from an outside investment made by the board without the required concurrence of the stockholders may, nonetheless, be so considered as an effective investment.8It may be said, however, that when the board resolution is yet executory, the act should aptly be deemed inoperative and specific performance cannot be validly demanded but, if for any reason, the contemplated action is carried out, such principles as ratification or prescription when applicable, normally unknown in void contracts, can serve to negate a claim for the total nullity thereof.Corporate officers, in their case, may act on such matters as may be authorized either expressly by the By-laws or Board Resolutions or impliedly such as by general practice or policy or as are implied by express powers. When officers are allowed to act in certain particular cases, their acts conformably therewith can bind the company. Hence, a corporate officer entrusted with general management and control of the business has the implied authority to act or contract for the corporation which may be necessary or appropriate to conduct the ordinary business.9If the act of corporate officers comes within corporate powers but it is done without any express or implied authority therefor from the by-laws, board resolutions or corporate practices, such an act does not bind the corporation. The Board, however, acting within its competence, may ratify the unauthorized act of the corporate officer. So, too, a corporation may be held in estoppel from denying as against innocent third persons the authority of its officers or agents who have been clothed by it with ostensible or apparent authority.10The Corporation Code itself has not been that explicit with respect to the consequences ofultra viresacts; hence, the varied ascriptions to its effects heretofore expressed. It may well be to consider futile any further attempt to have these situations bear any exact equivalence to the civil law precepts of defective contracts. Nevertheless, general statements could be made. Here reiterated, while an act of the corporation which is either illegal or outside of express, implied or incidental powers as so provided by law or the charter would be void under Article 511of the Civil Code, and the act is not susceptible to ratification, an unauthorized act (if within corporate powers) of the board or a corporate officer, however, would only be unenforceable conformably with Article 140312of the Civil Code but, if the party with whom the agent has contracted is aware of the latter's limits of powers, the unauthorized act is declared void by Article 189813of the same Code, although still susceptible thereunder to ratification by the principal. Any person dealing with corporate boards and officers may be said to be charged with the knowledge that the latter can only act within their respective limits of power, and he is put to notice accordingly. Thus, it would generally behoove such a person to look into the extent of the authority of corporate agents since theonuswould ordinarily be with him.1wphi1.nt

Footnotes1Special Thirteenth Division composed of J. Renato C. Dacudao,ponente; and JJ Salvador J. Valdez Jr. (chairman) and Roberto A. Barrios (member), both concurring.2Penned by Judge Antonio N. Gerona.3CA Decision, p. 9;rollo, p. 25.4RTC Decision, p. 6;rollo, p. 49.5Rollo, pp. 36-37.6RTC Decision, pp. 1-3;rollo, pp. 44-46.7The case was deemed submitted for resolution on October 27, 1999, upon receipt by this Court of the respective Memoranda of the petitioner and the respondents. The Memorandum of Petitioner was signed by Atty. David C. Naval, while that of respondents was signed by Atty. Eustaquio S. Beltran.8Rollo, p. 117.9Rollo, pp. 153-160.10Ibid., p. 154.11Santiago v. Guingona, 298 SCRA 756, 766, November 18, 1998; Bernate v. CA, 263 SCRA 323, October 18, 1996; Sandel v. CA, 262 SCRA 101, September 19, 1996.12Rule 8 of the Rules of Court.13Imperial Textile Mills, Inc. v. C.A., 183 SCRA 1, March 22, 1990.14First Philippine International Bank v. CA, infra, note 17.1520 SCRA 987, 1005, August 14, 1967, per Sanchez, J.16Francisco v. GSIS, 7 SCRA 577, 583-584, March 30, 1963, per Reyes, J.B.L., J.17First International Bank v. CA, 252 SCRA 259, January 24, 1996; People's Aircargo and Warehousing Co., Inc. v. CA, 297 SCRA 170, 184-185, October 7, 1998.

VITUG,J.,concurring opinion;1Republic vs. Acoje Mining Co , Inc., 7 SCRA 361. Although in this case the Supreme Court held that the opening of a post office branch by a corporation falls under its implied powers and, therefore, not anultra viresact, since said facility is needed for the convenience of its personnel and employees.2National Power Corporation vs. Judge Vera, 170 SCRA 721.3Such as an the sale of all or substantially all of the corporate assets or an investment in another corporation outside corporate purposes.4Like the removal of a director.5Pea vs. Court of Appeals, 193 SCRA 717.6Ricafort vs. Moya, 195 SCRA 247.7Natino vs. Intermediate Appellate Court, 197 SCRA 323.8Gokongwei, Jr. vs. Securities & Exchange Commission, 89 SCRA 336 97 SCRA 78.9Board of Liquidators vs. Heirs of Kalaw, 20 SCRA 987.10In Yao Ka Sin Trading vs. Court of Appeals, the Court said. The rule is, of course settled that although an officer or agent acts without or in excess of, his actual authority however, if he acts within the scope of an apparent authority with which the corporation has clothed him by holding him out or permitting him to appear as having such authority, the corporation is bound thereby in favor of a person who deals with him in good faith in reliance on that apparent authority, as where an officer is allowed to exercise a particular authority with respect to the business, or a particular branch of it, continuously and publicly, for a considerable time. Also, "if a private corporation intentionally or negligently clothes its officers or agent with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents. (Fletcher, op, cit. 340) This "apparent authority may result from (1) the general manner by which the corporation holds out an officer or agent as having power to act or, in other words, the apparent authority with which it clothes him to act in general, or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or without the scope of his ordinary powers."11Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void except when the law itself authorities their validity.12Art. 1403. The following contracts are unenforceable, unless they are ratified.(1) Those 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;(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action unless the same, or some note or memorandum thereof, be in writing, and subscribed and by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:(a) An agreement that by its terms is not to be performed within a year from the making thereof;(b) A special promise to answer for the debt, default or miscarriage of another;(c) An agreement made in consideration of marriage, other than a mutual promise to marry;(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;(f) A representation as to the credit of a third person;(3) Those where both parties are incapable of giving consent to a contract.13If the agent contracts in the name of the principal, exceeding the scope of his authority and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification.----o0o----

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 149353 June 26, 2006JOCELYN B. DOLES,Petitioner,vs.MA. AURA TINA ANGELES,Respondent.D E C I S I O NAUSTRIA-MARTINEZ,J.:This refers to the Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the Decision1dated April 30, 2001 of the Court of Appeals (CA) in C.A.-G.R. CV No. 66985, which reversed the Decision dated July 29, 1998 of the Regional Trial Court (RTC), Branch 21, City of Manila; and the CA Resolution2dated August 6, 2001 which denied petitioners Motion for Reconsideration.The antecedents of the case follow:On April 1, 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a complaint for Specific Performance with Damages against Jocelyn B. Doles (petitioner), docketed as Civil Case No. 97-82716. Respondent alleged that petitioner was indebted to the former in the concept of a personal loan amounting toP405,430.00 representing the principal amount and interest; that on October 5, 1996, by virtue of a "Deed of Absolute Sale",3petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the improvements thereon, with an area of 42 square meters, covered by Transfer Certificate of Title No. 382532,4and located at a subdivision project known as Camella Townhomes Sorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent; that this property was mortgaged to National Home Mortgage Finance Corporation (NHMFC) to secure petitioners loan in the sum ofP337,050.00 with that entity; that as a condition for the foregoing sale, respondent shall assume the undue balance of the mortgage and pay the monthly amortization ofP4,748.11 for the remainder of the 25 years which began on September 3, 1994; that the property was at that time being occupied by a tenant paying a monthly rent ofP3,000.00; that upon verification with the NHMFC, respondent learned that petitioner had incurred arrearages amounting toP26,744.09, inclusive of penalties and interest; that upon informing the petitioner of her arrears, petitioner denied that she incurred them and refused to pay the same; that despite repeated demand, petitioner refused to cooperate with respondent to execute the necessary documents and other formalities required by the NHMFC to effect the transfer of the title over the property; that petitioner collected rent over the property for the month of January 1997 and refused to remit the proceeds to respondent; and that respondent suffered damages as a result and was forced to litigate.Petitioner, then defendant, while admitting some allegations in the Complaint, denied that she borrowed money from respondent, and averred that from June to September 1995, she referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. She alleged that her friends, namely, Zenaida Romulo, Theresa Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money from respondent and issued personal checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her efforts to assist respondent to collect from the borrowers, she could no longer locate them; that, because of this, respondent became furious and threatened petitioner that if the accounts were not settled, a criminal case will be filed against her; that she was forced to issue eight checks amounting toP350,000 to answer for the bounced checks of the borrowers she referred; that prior to the issuance of the checks she informed respondent that they were not sufficiently funded but the latter nonetheless deposited the checks and for which reason they were subsequently dishonored; that respondent then threatened to initiate a criminal case against her for violation ofBatas Pambansa Blg.22; that she was forced by respondent to execute an "Absolute Deed of Sale" over her property in Bacoor, Cavite, to avoid criminal prosecution; that the said deed had no valid consideration; that she did not appear before a notary public; that the Community Tax Certificate number on the deed was not hers and for which respondent may be prosecuted for falsification and perjury; and that she suffered damages and lost rental as a result.The RTC identified the issues as follows: first, whether the Deed of Absolute Sale is valid; second; if valid, whether petitioner is obliged to sign and execute the necessary documents to effect the transfer of her rights over the property to the respondent; and third, whether petitioner is liable for damages.On July 29, 1998, the RTC rendered a decision the dispositive portion of which states:WHEREFORE, premises considered, the Court hereby orders the dismissal of the complaint for insufficiency of evidence. With costs against plaintiff.SO ORDERED.The RTC held that the sale was void for lack of cause or consideration:5Plaintiff Angeles admission that the borrowers are the friends of defendant Doles and further admission that the checks issued by these borrowers in payment of the loan obligation negates [sic] the cause or consideration of the contract of sale executed by and between plaintiff and defendant. Moreover, the property is not solely owned by defendant as appearing in Entry No. 9055 of Transfer Certificate of Title No. 382532 (Annex A, Complaint), thus:"Entry No. 9055. Special Power of Attorney in favor of Jocelyn Doles covering the share of Teodorico Doles on the parcel of land described in this certificate of title by virtue of the special power of attorney to mortgage, executed before the notary public, etc."The rule under the Civil Code is that contracts without a cause or consideration produce no effect whatsoever. (Art. 1352, Civil Code).Respondent appealed to the CA. In her appeal brief, respondent interposed her sole assignment of error:THE TRIAL COURT ERRED IN DISMISSING THE CASE AT BAR ON THE GROUND OF [sic] THE DEED OF SALE BETWEEN THE PARTIES HAS NO CONSIDERATION OR INSUFFICIENCY OF EVIDENCE.6On April 30, 2001, the CA promulgated its Decision, the dispositive portion of which reads:WHEREFORE, IN VIEW OF THE FOREGOING, this appeal is hereby GRANTED. The Decision of the lower court dated July 29, 1998 is REVERSED and SET ASIDE. A new one is entered ordering defendant-appellee to execute all necessary documents to effect transfer of subject property to plaintiff-appellant with the arrearages of the formers loan with the NHMFC, at the latters expense. No costs.SO ORDERED.The CA concluded that petitioner was the borrower and, in turn, would "re-lend" the amount borrowed from the respondent to her friends. Hence, the Deed of Absolute Sale was supported by a valid consideration, which is the sum of money petitioner owed respondent amounting toP405,430.00, representing both principal and interest.The CA took into account the following circumstances in their entirety: the supposed friends of petitioner never presented themselves to respondent and that all transactions were made by and between petitioner and respondent;7that the money borrowed was deposited with the bank account of the petitioner, while payments made for the loan were deposited by the latter to respondents bank account;8that petitioner herself admitted in open court that she was "re-lending" the money loaned from respondent to other individuals for profit;9and that the documentary evidence shows that the actual borrowers, the friends of petitioner, consider her as their creditor and not the respondent.10Furthermore, the CA held that the alleged threat or intimidation by respondent did not vitiate consent, since the same is considered just or legal if made to enforce ones claim through competent authority under Article 133511of the Civil Code;12that with respect to the arrearages of petitioner on her monthly amortization with the NHMFC in the sum ofP26,744.09, the same shall be deemed part of the balance of petitioners loan with the NHMFC which respondent agreed to assume; and that the amount ofP3,000.00 representing the rental for January 1997 supposedly collected by petitioner, as well as the claim for damages and attorneys fees, is denied for insufficiency of evidence.13On May 29, 2001, petitioner filed her Motion for Reconsideration with the CA, arguing that respondent categorically admitted in open court that she acted only as agent or representative of Arsenio Pua, the principal financier and, hence, she had no legal capacity to sue petitioner; and that the CA failed to consider the fact that petitioners father, who co-owned the subject property, was not impleaded as a defendant nor was he indebted to the respondent and, hence, she cannot be made to sign the documents to effect the transfer of ownership over the entire property.On August 6, 2001, the CA issued its Resolution denying the motion on the ground that the foregoing matters had already been passed upon.On August 13, 2001, petitioner received a copy of the CA Resolution. On August 28, 2001, petitioner filed the present Petition and raised the following issues:I.WHETHER OR NOT THE PETITIONER CAN BE CONSIDERED AS A DEBTOR OF THE RESPONDENT.II.WHETHER OR NOT AN AGENT WHO WAS NOT AUTHORIZED BY THE PRINCIPAL TO COLLECT DEBT IN HIS BEHALF COULD DIRECTLY COLLECT PAYMENT FROM THE DEBTOR.III.WHETHER OR NOT THE CONTRACT OF SALE WAS EXECUTED FOR A CAUSE.14Although, as a rule, it is not the business of this Court to review the findings of fact made by the lower courts, jurisprudence has recognized several exceptions, at least three of which are present in the instant case, namely: when the judgment is based on a misapprehension of facts; when the findings of facts of the courtsa quoare conflicting; and when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, could justify a different conclusion.15To arrive at a proper judgment, therefore, the Court finds it necessary to re-examine the evidence presented by the contending parties during the trial of the case.The Petition is meritorious.The principal issue is whether the Deed of Absolute Sale is supported by a valid consideration.1. Petitioner argues that since she is merely the agent or representative of the alleged debtors, then she is not a party to the loan; and that the Deed of Sale executed between her and the respondent in their own names, which was predicated on that pre-existing debt, is void for lack of consideration.Indeed, the Deed of Absolute Sale purports to be supported by a consideration in the form of a price certain in money16and that this sum indisputably pertains to the debt in issue. This Court has consistently held that a contract of sale is null and void and produces no effect whatsoever where the same is without cause or consideration.17The question that has to be resolved for the moment is whether this debt can be considered as a valid cause or consideration for the sale.To restate, the CA cited four instances in the record to support its holding that petitioner "re-lends" the amount borrowed from respondent to her friends: first, the friends of petitioner never presented themselves to respondent and that all transactions were made by and between petitioner and respondent;18second; the money passed through the bank accounts of petitioner and respondent;19third, petitioner herself admitted that she was "re-lending" the money loaned to other individuals for profit;20and fourth, the documentary evidence shows that the actual borrowers, the friends of petitioner, consider her as their creditor and not the respondent.21On the first, third, and fourth points, the CA cites the testimony of the petitioner, then defendant, during her cross-examination:22Atty. Diza:q. You also mentioned that you were not the one indebted to the plaintiff?witness:a. Yes, sir.Atty. Diza:q. And you mentioned the persons[,] namely, Elizabeth Tomelden, Teresa Moraquin, Maria Luisa Inocencio, Zenaida Romulo, they are your friends?witness:a. Inocencio and Moraquin are my friends while [as to] Jacob and Tomelden[,] they were just referred.Atty. Diza:q. And you have transact[ed] with the plaintiff?witness:a. Yes, sir.Atty. Diza:q. What is that transaction?witness:a. To refer those persons to Aura and to refer again to Arsenio Pua, sir.Atty. Diza:q. Did the plaintiff personally see the transactions with your friends?witness:a. No, sir.Atty. Diza:q. Your friends and the plaintiff did not meet personally?witness:a. Yes, sir.Atty. Diza:q. You are intermediaries?witness:a. We are both intermediaries. As evidenced by the checks of the debtors they were deposited to the name of Arsenio Pua because the money came from Arsenio Pua.x x x xAtty. Diza:q. Did the plaintiff knew [sic] that you will lend the money to your friends specifically the one you mentioned [a] while ago?witness:a. Yes, she knows the money will go to those persons.Atty. Diza:q. You are re-lending the money?witness:a. Yes, sir.Atty. Diza:q. What profit do you have, do you have commission?witness:a. Yes, sir.Atty. Diza:q. How much?witness:a. Two percent to Tomelden, one percent to Jacob and then Inocencio and my friends none, sir.Based on the foregoing, the CA concluded that petitioner is the real borrower, while the respondent, the real lender.But as correctly noted by the RTC, respondent, then plaintiff, made the following admission during her cross examination:23Atty. Villacorta:q. Who is this Arsenio Pua?witness:a. Principal financier, sir.Atty. Villacorta:q. So the money came from Arsenio Pua?witness:a. Yes, because I am only representing him, sir.Other portions of the testimony of respondent must likewise be considered:24Atty. Villacorta:q. So it is not actually your money but the money of Arsenio Pua?witness:a. Yes, sir.Court:q. It is not your money?witness:a. Yes, Your Honor.Atty. Villacorta:q. Is it not a fact Ms. Witness that the defendant borrowed from you to accommodate somebody, are you aware of that?witness:a. I am aware of that.Atty. Villacorta:q. More or less she [accommodated] several friends of the defendant?witness:a. Yes, sir, I am aware of that.x x x xAtty. Villacorta:q. And these friends of the defendant borrowed money from you with the assurance of the defendant?witness:a. They go direct to Jocelyn because I dont know them.x x x xAtty. Villacorta:q. And is it not also a fact Madam witness that everytime that the defendant borrowed money from you her friends who [are] in need of money issued check[s] to you? There were checks issued to you?witness:a. Yes, there were checks issued.Atty. Villacorta:q. By the friends of the defendant, am I correct?witness:a. Yes, sir.Atty. Villacorta:q. And because of your assistance, the friends of the defendant who are in need of money were able to obtain loan to [sic] Arsenio Pua through your assistance?witness:a. Yes, sir.Atty. Villacorta:q. So that occasion lasted for more than a year?witness:a. Yes, sir.Atty. Villacorta:q. And some of the checks that were issued by the friends of the defendant bounced, am I correct?witness:a. Yes, sir.Atty. Villacorta:q. And because of that Arsenio Pua got mad with you?witness:a. Yes, sir.Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua, her disclosed principal. She is also estopped to deny that petitioner acted as agent for the alleged debtors, the friends whom she (petitioner) referred.This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation.25The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention.26Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case.27Though the fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged.28In this case, petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of petitioner.The CA is incorrect when it considered the fact that the "supposed friends of [petitioner], the actual borrowers, did not present themselves to [respondent]" as evidence that negates the agency relationshipit is sufficient that petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends whom she referred to respondent. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates, and to a great degree, impersonal dealings where the principal need not personally know or meet the third person with whom her agent transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent.29In the case at bar, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else, and so both of them are estopped to deny the same. It is evident from the record that petitioner merely refers actual borrowers and then collects and disburses the amounts of the loan upon which she received a commission; and that respondent transacts on behalf of her "principal financier", a certain Arsenio Pua. If their respective principals do not actually and personally know each other, such ignorance does not affect their juridical standing as agents, especially since the very purpose of agency is to extend the personality of the principal through the facility of the agent.With respect to the admission of petitioner that she is "re-lending" the money loaned from respondent to other individuals for profit,it must be stressed that the manner in which the parties designate the relationship is not controlling. If an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he or she is not so called.30The question is to be determined by the fact that one represents and is acting for another, and if relations exist which will constitute an agency,it will be an agency whether the parties understood the exact nature of the relation or not.31That both parties acted as mere agents is shown by the undisputed fact that the friends of petitioner issued checks in payment of the loan in the name of Pua. If it is true that petitioner was "re-lending", then the checks should have been drawn in her name and not directly paid to Pua.With respect to the second point, particularly, the finding of the CA that the disbursements and payments for the loan were made through the bank accounts of petitioner and respondent,suffice it to say that in the normal course of commercial dealings and for reasons of convenience and practical utility it can be reasonably expected that the facilities of the agent, such as a bank account, may be employed, and that a sub-agent be appointed, such as the bank itself, to carry out the task, especially where there is no stipulation to the contrary.32In view of the two agency relationships, petitioner and respondent are not privy to the contract of loan between their principals. Since the sale is predicated on that loan, then the sale is void for lack of consideration.2. A further scrutiny of the record shows, however, that the sale might have been backed up by another consideration that is separate and distinct from the debt: respondent averred in her complaint and testified that the parties had agreed that as a condition for the conveyance of the property the respondent shall assume the balance of the mortgage loan which petitioner allegedly owed to the NHMFC.33This Court in the recent past has declared that an assumption of a mortgage debt may constitute a valid consideration for a sale.34Although the record shows that petitioner admitted at the time of trial that she owned the property described in the TCT,35the Court must stress that the Transfer Certificate of Title No. 38253236on its face shows that the owner of the property which admittedly forms the subject matter of the Deed of Absolute Salerefers neither to the petitioner nor to her father, Teodorico Doles, the alleged co-owner. Rather, it states that the property is registered in the name of "Household Development Corporation." Although there is an entry to the effect that the petitioner had been granted a special power of attorney "covering the shares of Teodorico Doles on the parcel of land described in this certificate,"37it cannot be inferred from this bare notation, nor from any other evidence on the record, that the petitioner or her father held any direct interest on the property in question so as to validly constitute a mortgage thereon38and, with more reason, to effect the delivery of the object of the sale at the consummation stage.39What is worse, there is a notation that the TCT itself has been "cancelled."40In view of these anomalies, the Court cannot entertain thepossibility that respondent agreed to assume the balance of the mortgage loan which petitioner allegedly owed to the NHMFC, especially since the record is bereft of any factual finding that petitioner was, in the first place, endowed with any ownership rights to validly mortgage and convey the property. As the complainant who initiated the case, respondent bears the burden of proving the basis of her complaint. Having failed to discharge such burden, the Court has no choice but to declare the sale void for lack of cause. And since the sale is void, the Court finds it unnecessary to dwell on the issue of whether duress or intimidation had been foisted upon petitioner upon the execution of the sale.Moreover, even assuming the mortgage validly exists, the Court notes respondents allegation that the mortgage with the NHMFC was for 25 years which began September 3, 1994. Respondent filed her Complaint for Specific Performance in 1997. Since the 25 years had not lapsed, the prayer of respondent to compel petitioner to execute necessary documents to effect the transfer of title is premature.WHEREFORE, the petition is granted. The Decision and Resolution of the Court of Appeals areREVERSEDandSET ASIDE. The complaint of respondent in Civil Case No. 97-82716 isDISMISSED.SO ORDERED.MA. ALICIA AUSTRIA-MARTINEZAssociate JusticeWE CONCUR:ARTEMIO V. PANGANIBANChief JusticeChairpersonCONSUELO YNARES-SANTIAGOAssociate JusticeROMEO J. CALLEJO, SR.Asscociate Justice

MINITA V. CHICO-NAZARIOAssociate JusticeC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.ARTEMIO V. PANGANIBANChief Justice----o0o----Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 160346 August 25, 2009PURITA PAHUD, SOLEDAD PAHUD, and IAN LEE CASTILLA (represented by Mother and Attorney-in-Fact VIRGINIA CASTILLA),Petitioners,vs.COURT OF APPEALS, SPOUSES ISAGANI BELARMINO and LETICIA OCAMPO, EUFEMIA SAN AGUSTIN-MAGSINO, ZENAIDA SAN AGUSTIN-McCRAE, MILAGROS SAN AGUSTIN-FORTMAN, MINERVA SAN AGUSTIN-ATKINSON, FERDINAND SAN AGUSTIN, RAUL SAN AGUSTIN, ISABELITA SAN AGUSTIN-LUSTENBERGER and VIRGILIO SAN AGUSTIN,Respondents.D E C I S I O NNACHURA,J.:For our resolution is a petition for review on certiorari assailing the April 23, 2003 Decision1and October 8, 2003 Resolution2of the Court of Appeals (CA) in CA-G.R. CV No. 59426. The appellate court, in the said decision and resolution, reversed and set aside the January 14, 1998 Decision3of the Regional Trial Court (RTC), which ruled in favor of petitioners.The dispute stemmed from the following facts.During their lifetime, spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-square meter parcel of land situated in Barangay Anos, Los Baos, Laguna and covered by Original Certificate of Title (OCT) No. O-(1655) 0-15.4Agatona Genil died on September 13, 1990 while Pedro San Agustin died on September 14, 1991. Both died intestate, survived by their eight (8) children: respondents Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.Sometime in 1992, Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided Shares5conveying in favor of petitioners (the Pahuds, for brevity) their respective shares from the lot they inherited from their deceased parents forP525,000.00.6Eufemia also signed the deed on behalf of her four (4) other co-heirs, namely: Isabelita on the basis of a special power of attorney executed on September 28, 1991,7and also for Milagros, Minerva, and Zenaida but without their apparent written authority.8The deed of sale was also not notarized.9On July 21, 1992, the Pahuds paidP35,792.31 to the Los Baos Rural Bank where the subject property was mortgaged.10The bank issued a release of mortgage and turned over the owners copy of the OCT to the Pahuds.11Over the following months, the Pahuds made more payments to Eufemia and her siblings totaling toP350,000.00.12They agreed to use the remainingP87,500.0013to defray the payment for taxes and the expenses in transferring the title of the property.14When Eufemia and her co-heirs drafted an extra-judicial settlement of estate to facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.15On July 8, 1993, Virgilios co-heirs filed a complaint16for judicial partition of the subject property before the RTC of Calamba, Laguna. On November 28, 1994, in the course of the proceedings for judicial partition, a Compromise Agreement17was signed with seven (7) of the co-heirs agreeing to sell their undivided shares to Virgilio forP700,000.00. The compromise agreement was, however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-heirs, refused to sign the agreement because he knew of the previous sale made to the Pahuds.18lawphil.netOn December 1, 1994, Eufemia acknowledged having receivedP700,000.00 from Virgilio.19Virgilio then sold the entire property to spouses Isagani Belarmino and Leticia Ocampo (Belarminos) sometime in 1994. The Belarminos immediately constructed a building on the subject property.Alarmed and bewildered by the ongoing construction on the lot they purchased, the Pahuds immediately confronted Eufemia who confirmed to them that Virgilio had sold the property to the Belarminos.20Aggrieved, the Pahuds filed a complaint in intervention21in the pending case for judicial partition.1avvphilAfter trial, the RTC upheld the validity of the sale to petitioners. The dispositive portion of the decision reads:WHEREFORE, the foregoing considered, the Court orders:1. the sale of the 7/8 portion of the property covered by OCT No. O (1655) O-15 by the plaintiffs as heirs of deceased Sps. Pedro San Agustin and Agatona Genil in favor of the Intervenors-Third Party plaintiffs as valid and enforceable, but obligating the Intervenors-Third Party plaintiffs to complete the payment of the purchase price ofP437,500.00 by paying the balance ofP87,500.00 to defendant Fe (sic) San Agustin Magsino. Upon receipt of the balance, the plaintiff shall formalize the sale of the 7/8 portion in favor of the Intervenor[s]-Third Party plaintiffs;2. declaring the document entitled "Salaysay sa Pagsang-ayon sa Bilihan" (Exh. "2-a") signed by plaintiff Eufemia San Agustin attached to the unapproved Compromise Agreement (Exh. "2") as not a valid sale in favor of defendant Virgilio San Agustin;3. declaring the sale (Exh. "4") made by defendant Virgilio San Agustin of the property covered by OCT No. O (1655)-O-15 registered in the names of Spouses Pedro San Agustin and Agatona Genil in favor of Third-party defendant Spouses Isagani and Leticia Belarmino as not a valid sale and as inexistent;4. declaring the defendant Virgilio San Agustin and the Third-Party defendants spouses Isagani and Leticia Belarmino as in bad faith in buying the portion of the property already sold by the plaintiffs in favor of the Intervenors-Third Party Plaintiffs and the Third-Party Defendant Sps. Isagani and Leticia Belarmino in constructing the two-[storey] building in (sic) the property subject of this case; and5. declaring the parties as not entitled to any damages, with the parties shouldering their respective responsibilities regarding the payment of attorney[]s fees to their respective lawyers.No pronouncement as to costs.SO ORDERED.22Not satisfied, respondents appealed the decision to the CA arguing, in the main, that the sale made by Eufemia for and on behalf of her other co-heirs to the Pahuds should have been declared void and inexistent for want of a written authority from her co-heirs. The CA yielded and set aside the findings of the trial court. In disposing the issue, the CA ruled:WHEREFORE, in view of the foregoing, the Decision dated January 14, 1998, rendered by the Regional Trial Court of Calamba, Laguna, Branch 92 in Civil Case No. 2011-93-C for Judicial Partition is hereby REVERSED and SET ASIDE, and a new one entered, as follows:(1) The case for partition among the plaintiffs-appellees and appellant Virgilio is now considered closed and terminated;(2) Ordering plaintiffs-appellees to return to intervenors-appellees the total amount they received from the latter, plus an interest of 12% per annum from the time the complaint [in] intervention was filed on April 12, 1995 until actual payment of the same;(3) Declaring the sale of appellant Virgilio San Agustin to appellants spouses, Isagani and Leticia Belarmino[,] as valid and binding;(4) Declaring appellants-spouses as buyers in good faith and for value and are the owners of the subject property.No pronouncement as to costs.SO ORDERED.23Petitioners now come to this Court raising the following arguments:I. The Court of Appeals committed grave and reversible error when it did not apply the second paragraph of Article 1317 of the New Civil Code insofar as ratification is concerned to the sale of the 4/8 portion of the subject property executed by respondents San Agustin in favor of petitioners;II. The Court of Appeals committed grave and reversible error in holding that respondents spouses Belarminos are in good faith when they bought the subject property from respondent Virgilio San Agustin despite the findings of fact by the court a quo that they were in bad faith which clearly contravenes the presence of long line of case laws upholding the task of giving utmost weight and value to the factual findings of the trial court during appeals; [and]III. The Court of Appeals committed grave and reversible error in holding that respondents spouses Belarminos have superior rights over the property in question than petitioners despite the fact that the latter were prior in possession thereby misapplying the provisions of Article 1544 of the New Civil Code.24The focal issue to be resolved is the status of the sale of the subject property by Eufemia and her co-heirs to the Pahuds. We find the transaction to be valid and enforceable.Article 1874 of the Civil Code plainly provides:Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.Also, under Article 1878,25a special power of attorney is necessary for an agent to enter into a contract by which the ownership of an immovable property is transmitted or acquired, either gratuitously or for a valuable consideration. Such stringent statutory requirement has been explained in Cosmic Lumber Corporation v. Court of Appeals:26[T]he authority of an agent to execute a contract [of] sale of real estate must be conferred in writing and must give him specific authority, either to conduct the general business of the principal or to execute a binding contract containing terms and conditions which are in the contract he did execute. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration. The express mandate required by law to enable an appointee of an agency (couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real estate, a power of attorney must so express the powers of the agent in clear and unmistakable language. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be given the document.27In several cases, we have repeatedly held that the absence of a written authority to sell a piece of land is, ipso jure, void,28precisely to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.Based on the foregoing, it is not difficult to conclude, in principle, that the sale made by Eufemia, Isabelita and her two brothers to the Pahuds sometime in 1992 should be valid only with respect to the 4/8 portion of the subject property. The sale with respect to the 3/8 portion, representing the shares of Zenaida, Milagros, and Minerva, is void because Eufemia could not dispose of the interest of her co-heirs in the said lot absent any written authority from the latter, as explicitly required by law. This was, in fact, the ruling of the CA.Still, in their petition, the Pahuds argue that the sale with respect to the 3/8 portion of the land should have been deemed ratified when the three co-heirs, namely: Milagros, Minerva, and Zenaida, executed their respective special power of attorneys29authorizing Eufemia to represent them in the sale of their shares in the subject property.30While the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to ratification,31we nevertheless uphold its validity on the basis of the common law principle of estoppel.Article 1431 of the Civil Code provides:Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.True, at the time of the sale to the Pahuds, Eufemia was not armed with the requisite special power of attorney to dispose of the 3/8 portion of the property. Initially, in their answer to the complaint in intervention,32Eufemia and her other co-heirs denied having sold their shares to the Pahuds. During the pre-trial conference, however, they admitted that they had indeed sold 7/8 of the property to the Pahuds sometime in 1992.33Thus, the previous denial was superseded, if not accordingly amended, by their subsequent admission.34Moreover, in their Comment,35the said co-heirs again admitted the sale made to petitioners.36Interestingly, in no instance did the three (3) heirs concerned assail the validity of the transaction made by Eufemia to the Pahuds on the basis of want of written authority to sell. They could have easily filed a case for annulment of the sale of their respective shares against Eufemia and the Pahuds. Instead, they opted to remain silent and left the task of raising the validity of the sale as an issue to their co-heir, Virgilio, who is not privy to the said transaction. They cannot be allowed to rely on Eufemia, their attorney-in-fact, to impugn the validity of the first transaction because to allow them to do so would be tantamount to giving premium to their sisters dishonest and fraudulent deed. Undeniably, therefore, the silence and passivity of the three co-heirs on the issue bar them from making a contrary claim.It is a basic rule in the law of agency that a principal is subject to liability for loss caused to another by the latters reliance upon a deceitful representation by an agent in the course of his employment (1) if the representation is authorized; (2) if it is within the implied authority of the agent to make for the principal; or (3) if it is apparently authorized, regardless of whether the agent was authorized by him or not to make the representation.37By their continued silence, Zenaida, Milagros and Minerva have caused the Pahuds to believe that they have indeed clothed Eufemia with the authority to transact on their behalf. Clearly, the three co-heirs are now estopped from impugning the validity of the sale from assailing the authority of Eufemia to enter into such transaction.Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was void because they no longer had any interest over the subject property which they could alienate at the time of the second transaction.38Nemo dat quod non habet. Virgilio, however, could still alienate his 1/8 undivided share to the Belarminos.The Belarminos, for their part, cannot argue that they purchased the property from Virgilio in good faith. As a general rule, a purchaser of a real property is not required to make any further inquiry beyond what the certificate of title indicates on its face.39But the rule excludes those who purchase with knowledge of the defect in the title of the vendor or of facts sufficient to induce a reasonable and prudent person to inquire into the status of the property.40Such purchaser cannot close his eyes to facts which should put a reasonable man on guard, and later claim that he acted in good faith on the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his obvious neglect by closing his eyes to the possibility of the existence of a defect in the vendors title, will not make him an innocent purchaser for value, if afterwards it turns out that the title was, in fact, defective. In such a case, he is deemed to have bought the property at his own risk, and any injury or prejudice occasioned by such transaction must be borne by him.41In the case at bar, the Belarminos were fully aware that the property was registered not in the name of the immediate transferor, Virgilio, but remained in the name of Pedro San Agustin and Agatona Genil.42This fact alone is sufficient impetus to make further inquiry and, thus, negate their claim that they are purchasers for value in good faith.43They knew that the property was still subject of partition proceedings before the trial court, and that the compromise agreement signed by the heirs was not approved by the RTC following the opposition of the counsel for Eufemia and her six other co-heirs.44The Belarminos, being transferees pendente lite, are deemed buyers in mala fide, and they stand exactly in the shoes of the transferor and are bound by any judgment or decree which may be rendered for or against the transferor.45Furthermore, had they verified the status of the property by asking the neighboring residents, they would have been able to talk to the Pahuds who occupy an adjoining business establishment46and would have known that a portion of the property had already been sold. All these existing and readily verifiable facts are sufficient to suggest that the Belarminos knew that they were buying the property at their own risk.WHEREFORE, premises considered, the April 23, 2003 Decision of the Court of Appeals as well as its October 8, 2003 Resolution in CA-G.R. CV No. 59426, are REVERSED and SET ASIDE. Accordingly, the January 14, 1998 Decision of Branch 92 of the Regional Trial Court of Calamba, Laguna is REINSTATED with the MODIFICATION that the sale made by respondent Virgilio San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo is valid only with respect to the 1/8 portion of the subject property. The trial court is ordered to proceed with the partition of the property with dispatch.SO ORDERED.ANTONIO EDUARDO B. NACHURAAssociate JusticeWE CONCUR:CONCHITA CARPIO MORALES*Associate JusticeMINITA V. CHICO-NAZARIOAssociate JusticePRESBITERO J. VELASCO, JR.Associate Justice

DIOSDADO M. PERALTAAssociate JusticeA T T E S T A T I O NI attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.MINITA V. CHICO-NAZARIO**Associate JusticeActing Chairperson, Third DivisionC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.REYNATO S. PUNOChief JusticeCONCURRING AND DISSENTING OPINIONCARPIO MORALES,J.:Theponenciareinstates the trial courts Decision of January 14, 1998 with the modification that "the sale made by respondent Virgilio San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo isvalid only with respect to the 1/8 portion of the subject property."1I submit that the validity of the sale to spouses Belarmino extends to 4/8 or one-half of the property, inclusive of the combined3/8 shareof respondents-sisters Zenaida, Milagros and Minerva, all bearing the maiden surname of San Agustin, thus leaving only one-half of the property to petitioners Purita Pahud,et al. who earlier purchased from Eufemia San Agustin (Eufemia) the property including the 3/8 portion over which no written authority from the three sisters was secured. The ponente, Justice Nachura, in fact, agrees to this proposition "in principle."2The ponencia evenrejectspetitioners contention that the special power of attorney subsequently executed by Zenaida, Milagros and Minerva in favor of Eufemia effectively ratified their earlier purchase of the property insofar as the 3/8 portion is concerned, for the established reason that void contracts or the illegal terms thereof3are not susceptible to ratification. The subsequent execution by the three sisters of the respective special powers of attorney only means that they considered the previous sale null and recognized the salability of their 3/8 portion, thus paving the way for its transfer to Virgilio San Agustin and its eventual sale to the spouses Belarmino.Indeed, as the ponencia elucidates, Articles 1874 and 1878 of the Civil Code clearly provide that a special power of attorney is necessary for an agent to "enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration" and that specificallyin cases of sale of a piece of land or any interest therein through an agent,"the authority of the latter shall be in writing; otherwise the sale shall bevoid."The ponencia takes one step further, however, in upholding the validity of the sale of the 3/8 portion belonging to the 3 sisters to petitioner notwithstanding the want of a written authority to sell, by applying the principle of estoppel. It ratiocinates:While the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to ratification, we nevertheless uphold its validityon the basis of the common law principle of estoppel.Article 1431 of the Civil Code provides:Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereonTrue, at the time of the sale to the Pahuds, Eufemia was not armed with the requisite special power of attorney to dispose of the 3/8 portion of the property. Initially, in their answer to the complaint in intervention, Eufemia and her other co-heirs denied having sold their shares to the Pahuds.During the pre-trial conference, however, they admitted that they had indeed sold 7/8 of the property to the Pahuds sometime in 1992. Thus, the previous denial was superseded, if not accordingly amended, by their subsequent admission. Moreover,in their Comment, the said co-heirs again admitted the sale made to petitioners.Interestingly,in no instance did the three (3) heirs concerned assail the validity of the transaction made by Eufemia to the Pahuds on the basis of want of written authority to sell. They could have easily filed a case for annulment of the sale of their respective shares against Eufemia and the Pahuds. Instead, they opted to remain silent and left the task of raising the validity of the sale as an issue to their co-heir, Virgilio, who is not privy to the said transaction. They cannot be allowed to rely on Eufemia, their attorney-in-fact, to impugn the validity of the first transaction because to allow them to do so would be tantamount to giving premium to their sisters dishonest and fraudulent deed. Undeniably, therefore,the silence and passivity of the three co-heirs on the issue bar them from making a contrary claim.It is a basic rule in the law of agency that a principal is subject to liability for loss caused to another by the lattersreliance upon a deceitful representation by an agentin the course of his employment(1) if the representation is authorized; (2) if it is within the implied authority of the agent to make for the principal; or (3) if it is apparently authorized, regardless of whether the agent was authorized by him or not to make the representation.By their continued silence, Zenaida, Milagros and Minerva have caused the Pahuds to believe that they have indeed clothed Eufemia with the authority to transact on their behalf. Clearly, the three co-heirs are now estopped from impugning the validity of the sale from assailing the authority of Eufemia to enter such transa