G.R. No.

145817

October 19, 2011

URBAN BANK, INC, Petitioner, vs. MAGDALENO M. PEA, Respondent. FACTS: Pea, a lawyer, was formerly a stockholder, director and corporate secretary of Isabel Sugar Company, Inc. (ISCI). ISCI owned a parcel of land. ISCI leased the land. Without its consent and in violation of the lease contract, the lessee subleased the land to several tenants, who in turn put up nightclubs inside the compound. Before the expiration of the lease contract, ISCI informed the lessee and his tenants that the lease would no longer be renewed because the land will be sold. ISCI and Urban Bank executed a Contract to Sell, and they agreed that the final installment released by the bank upon ISCIs delivery of full and actual possession of the land, free from any tenants. ISCI then instructed Pea, to act as its agent and handle the eviction of the tenants. The lessee left, but the unauthorized sub-tenants refused to leave. Pea had the gates of the property closed and he also posted security guardsservices for which he advanced payments. Despite the closure of the gates and the posting of the guards, the sub-tenants would force open the gates, and proceed to carry on with their businesses. Pea then filed a complaint with the RTC, which issued a TRO. At the time the complaint was filed, a new title to the had already been issued in the name of Urban Bank. When information reached the judge that the had already been transferred by ISCI to Urban Bank, the trial court recalled the TRO and issued a break-open order for the property. Pea immediately contacted ISCIs presidentand told him that because of the break-open order of the RTC, he (Pea) would be recalling the security guards he had posted to secure the property. The President asked him to suspend the withdrawal of the posted guards, so that ISCI could get in touch first with Urban Bank. Pea also called Urban Banks President. The President allegedly assured him that the bank was going to retain his services, and that the he should not give up possession of the subject land. Thereafter, Pea, in representation of Urban Bank, filed a separate complaint with the RTC-Makati City, to enjoin the tenants from entering the Pasay property. Acting on Urban Banks preliminary prayer, the RTC-Makati City issued a TRO. While the 2nd complaint was pending, Pea made efforts to settle the issue of possession of the with the sub-tenants. During the negotiations, he was exposed to several civil and crimal cases and received several threats against his life. The sub-

tenants eventually agreed to stay off the property for a total consideration of PhP1.5M. Pea advanced the payment for the full and final settlement of their claims against Urban Bank. Pea formally informed Urban Bank that it could already take possession of the Pasay property. There was however no mention of the compensation due and owed to him for the services he had rendered. The bank subsequently took actual possession of the property and installed its own guards at the premises. Pea thereafter made several attempts to contact Urban Bank, but the bank officers would not take any of his calls. Pea formally demanded from Urban Bank the payment of the 10% compensation and attorneys fees allegedly promised to him during his telephone conversation with Urban Banks President for securing and maintaining peaceful possession of the property. Urban Bank and individual bank officers and directors argued that it was ISCI, the original owners of the Pasay property, that had engaged the services of Pea in securing the premises; and, consequently, they could not be held liable for the expenses Pea had incurred. ISSUE: W/N Pena is entitled to payment for the services he rendered as agent of Urban Bank. HELD: Yes. RATIO: Pea should be paid for services rendered under the agency relationship that existed between him and Urban Bank based on the civil law principle against unjust enrichment, and not on the basis of the purported oral contract. Whether or not an agency has been created is determined by the fact that one is representing and acting for another. The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it. (NOTE: This case is also under I.3.c of our outline so Im including this): Agency is presumed to be for compensation. Unless the contrary intent is shown, a person who acts as an agent does so with the expectation of payment according to the agreement and to the services rendered or results effected. In this case theres no evidence that Urban Bank agreed to pay Pea a specific amount or percentage of amount for his services, so the court applies the principle against unjust enrichment and on the basis of quantum meruit. The agency of Pea comprised of services ordinarily performed by a lawyer who is tasked with the job of ensuring clean possession by the owner of a property. The court measured the amount Pena is entitled to for the services he rendered (as opposed to the 10% compensation demanded by Pena).