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petitioner inside the courtroom before the same was submitted for approval.
Atty. Cruz stressed that the penalty clause of 2% interest per month until full
payment of the amount due, plus 25% thereof as attorneys fees, in case of
default in payment, was actually chosen by the petitioner.
The trial court ruled in favour of Sulyap because it gave credence to the
testimony ofAtty. Cruz and even noted that it was more than one year from
receipt of the judgment on compromise on October 25, 1995, when he
questioned the inclusion of the penalty clause in the approved compromise
agreement despite several opportunities to raise said objection.
ISSUE: Whether Borja is bound by the penalty clause in the compromise
agreement.
HELD: YES. While a judicial compromise may be annulled or modified on
the ground ofvitiated consent or forgery, we find that the testimony of the
petitioner failed to establish the attendance of fraud in the instant case. No
evidence was presented by petitioner other than his bare allegation that his
former counsel fraudulently attached the page of the genuine compromise
agreement where he affixed his signature to the compromise agreement
submitted to the court.
Petitioner cannot feign ignorance of the existence of the penalty clause in
thecompromise agreement approved by the court. When he received the
judgmentreproducing the full text of the compromise agreement, to February
19, 1997, he neverraised the issue of the fraudulent inclusion of the penalty
clause in their agreement. We note that petitioner is a doctor of medicine. He
must have read and understood thecontents of the judgment on compromise.
In fact, on November 13, 1995, he filed,without the assistance of counsel, a
motion praying that the amounts of P50,000.00 and 37,575.00 be withheld
from his total obligation and instead be applied to the expenses for the repair
of the leased premises which was allegedly vandalized by the private
respondent
Even assuming that Atty. Leonardo Cruz exceeded his authority in inserting
the penalty clause, the status of the said clause is not void but merely
voidable, i.e., capable of being ratified.17 Indeed, petitioners failure to
question the inclusion of the 2% monthly interest and 25% attorneys fees in
the judicial compromise despite several opportunities to do so was
tantamount to ratification. Hence, he is estopped from assailing the validity
thereof.
does so without express authority is responsible for the acts of the sub-agent.
Thus Serona is still civilly liable.
CASE LAW/ DOCTRINE: The acts of an agent beyond the scope of his
authority do not bind the principal unless he ratifies them, expressly or
impliedly. An agent who is not prohibited from appointing a sub-agent but
does so without express authority is responsible for the acts of the subagent.
WILLIAM UY V. COURT OF APPEALS
FACTS:
Petitioners Uy and Roxas are agents authorized to sell eight parcels of land
bythe owners thereof. By virtue of such authority, petitioners offered to sell
thelands located in Benguet to respondent NHA to be utilized and developed
as ahousing project. On February 14, 1989, the NHA Board approved
theacquisition of said lands, at the cost of P23.87M, pursuant to which the
partiesexecuted a series of Deeds of Absolute Sale covering the subject
lands. Of theeight parcels, however, only five were paid for by the NHA
because of thereport it received from the Land Geosciences Bureau of the
DENR that theremaining area is located at an active landslide area and
therefore, not suitablefor development into a housing project.In 1991, the
NHA cancelled the sale of the 3 parcels of land and subsequentlyoffered the
amount of P1.225 million to the landowners as daos perjuicios. On9 March
1992, petitioners filed before the QC RTC a Complaint for Damages.The
RTC rendered a decision declaring the cancellation of the contract to
bejustified. The trial court nevertheless awarded damages to plaintiffs in the
sameamount offered by NHA to petitioners as damages. Upon appeal by
petitioners,the CA held that since there was "sufficient justifiable basis" in
cancelling thesale, "it saw no reason" for the award of damages. Hence, this
petition.
ISSUES:
(1) Was there a legal basis for the rescission of the sale of the 3 parcels of
land?And granting arguendo that NHA has legal basis to rescind, does the
petitionerhave the right to claim for damages?(2) [Irrelevant] Were the
petitioners allowed to lodge a complaint as agents?
HELD:
Facts:
RATIO:
(1) Petitioners confuse the cancellation of the contract by the NHA as
arescission of the contract under Art. 1191. The right of rescission or,
moreaccurately, resolution, is predicated on a breach of faith by the other
party.NHA did not have the right to rescind for the other parties to the
contract, thevendors, did not commit any breach of their obligation. The
cancellation wasbased on the negation of the cause arising from the
realization that the lands,which were the object of the sale, were not suitable
for housing. Cause, whichis the essential reason for the contract, should be
distinguished from motive,which is the particular reason of a party which
does not affect the other party.In a contract of sale of a piece of land, such as
in this case, the cause of thevendor (petitioners' principals) in entering into
the contract is to obtain theprice. For the vendee, NHA, it is the acquisition of
the land. The motive of theNHA, on the other hand, is to use said lands for
housing. Ordinarily, a party's motives for entering into the contract do not
affect the contract. However, when the motive predetermines the cause, the
motive may be regarded as the cause. In this case, it is clear, and petitioners
do not dispute, that NHA would not have entered into the contract were the
lands not suitable for housing. In other words, the quality of the land was an
implied condition for the NHA to enter into the contract.
On NHAs part, therefore, the motive was the cause for its being a party to
the sale. The findings of the Land Geosciences Bureau were sufficient for the
cancellation of the sale NHA was justified in canceling the contract. The
realization of the mistake as regards the quality of the land resulted in the
negation of the motive/cause thus rendering the contract inexistent. Article
1318 of the Civil Code enumerates the essential requisites of a contract: (1)
Consent of the parties; (2)Subject matter; and (3) Cause of the obligation
which is established. Therefore, assuming that petitioners are parties,
assignees or beneficiaries to the contract of sale, they would not be entitled
to any award of damages
Laureano Angeles vs. Philippine National Railways
Held: No. The CAs conclusion, affirmatory of that of the trial court, is that
Lizette was not an assignee, but merely an agent whose authority was limited
to the withdrawal of the scrap rails, hence, without personality to sue. Where
agency exists, the third party's (in this case, PNR's) liability on a contract is to
the principal and not to the agent and the relationship of the third party to the
principal is the same as that in a contract in which there is no agent.
Normally, the agent has neither rights nor liabilities as against the third party.
He cannot thus sue or be sued on the contract. Since a contract may be
violated only by the parties thereto as against each other, the real party-ininterest, either as plaintiff or defendant in an action upon that contract must,
generally, be a contracting party. The legal situation is, however, different
where an agent is constituted as an assignee. In such a case, the agent may,
in his own behalf, sue on a contract made for his principal, as an assignee of
such contract. The rule requiring every action to be prosecuted in the name
of the real party-in-interest recognizes the assignment of rights of action and
also recognizes that when one has a right assigned to him, he is then the
real party-in-interest and may maintain an action upon such claim or right.
WHEREFORE, the petition is DENIED and the assailed decision of the CA is
AFFIRMED. Costs against the petitioner.
Pineda V. CA (1993) September 27, 1993
FACTS: Prime Marine Services, Inc. (PMSI), a crewing/manning outfit,
procured Group PoIicy from Insular Life Assurance Co., Ltd. to provide life
insurance coverage to its sea-based employees enrolled under the plan.
February 17 1986: 6 employees of the PMSI perished at sea when M/V
Nemos, a Greek cargo vessel, sunk somewhere in El Jadida, Morocco. The
beneficiaries asked President and General Manager of PMSI, Capt. Roberto
Nuval and issued him special powers of attorney authorizing him to "follow
up, ask, demand, collect and receive" for their benefit indemnities. It only
verbally pertained to the sinking of the fatal vessel. Unknown to them,
however, the PMSI, in its capacity as employer and policyholder of the life
insurance of its deceased workers, filed with formal claims with their special
power of attorney. Capt. Nuval, upon receipt of these checks from the
treasurer, who happened to be his son-in-law, endorsed and deposited them
in his account with the Commercial Bank of Manila, now Boston Bank Upon
learning that they are entitled to the claim, they sought to recover
from Insular Life but it denied on the ground that they already delivered to
PMSI
Group Insurance coverage terms for group insurance are usually stated in a
master agreement or policy that is issued by the insurer to a representative of
the group or to an administrator of the insurance program employer acts as a
functionary in the collection and payment of premiums and in performing
related duties falling within the ambit of administration of a group policy is the
disbursement of insurance payments by the employer to the employees
employee is in the position of a real party to the master policy employees is
the true source of the benefits, which are a form of additional compensation
to them enables the employees to carry a larger amount of insurance than
they could otherwise, and helps to attract and hold a permanent class of
employees. Even granting for the sake of argument that the special powers
of attorney were in due form, Insular Life was grossly negligent in delivering
the checks, drawn in favor of the petitioners, to a party who is not the agent
mentioned in the special power of attorney. Nor can we agree with the
opinion of the public respondent that since the shares of the minors in the
insurance proceeds are less than P50,000.00, then under Article 225 of the
Family Code their mothers could receive such shares without need of either
court appointments as guardian or the posting of a bond
Art. 225. The father and the mother shall jointly exercise legal guardianship
over the property of their unemancipated common child without the necessity
of a court appointment. In case of disagreement, the father's decision shall
prevail, unless there is judicial order to the contrary.
Where the market value of the property or the annual income of the child
exceeds P50,000, the parent concerned shall be required to furnish a bond in
such amount as the court may determine, but not less than ten per centum
(10%) of the value of the property or annual income, to guarantee the
performance of the obligations prescribed for general guardians.
It is clear from the said Article that regardless of the value of the
unemancipated common child's property, the father and mother ipso jure
become the legal guardian of the child's property. However, if the market
value of the property or the annual income of the child exceeds P50,000.00,
a bond has to be posted by the parents concerned to guarantee the
performance of the obligations of a general guardian.
It must, however, be noted that the second paragraph of Article 225 of the
Family Code speaks of the "market value of the property or the annual
income of the child," which means, therefore, the aggregate of the child's
property or annual income; if this exceeds P50,000.00, a bond is required.
There is no evidence that the share of each of the minors in the proceeds of
the group policy in question is the minor's only property. Without such
evidence, it would not be safe to conclude that, indeed, that is his only
property.