1.

PABLITO MURAO VS PEOPLE OF THE PHILIPPINES

(G.R. No. 141485. June 30, 2005)

Civil Law; Agency; Private complainant’s right to a commission does not make him a joint owner of the money paid to
LMICE by the City Government of Puerto Princesa but merely establishes the relation of agent and principal.—His right to
a commission does not make private complainant Federico a joint owner of the money paid to LMICE by the City
Government of Puerto Princesa, but merely establishes the relation of agent and principal. It is unequivocal that an agency
existed between LMICE and private complainant Federico. Article 1868 of the Civil Code defines agency as a special
contract whereby “a person binds himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter.” Although private complainant Federico never had the opportunity
to operate as a dealer for LMICE under the terms of the Dealership Agreement, he was allowed to act as a sales agent for
LMICE. He can negotiate for and on behalf of LMICE for the refill and delivery of fire extinguishers, which he, in fact, did
on two occasions—with Landbank and with the City Government of Puerto Princesa.

Same; Same; All profits made and any advantage gained by an agent in the execution of his agency should belong to the
principal.—All profits made and any advantage gained by an agent in the execution of his agency should belong to the
principal. In the instant case, whether the transactions negotiated by the sales agent were for the sale of brand new fire
extinguishers or for the refill of empty tanks, evidently, the business belonged to LMICE. Consequently, payments made
by clients for the fire extinguishers pertained to LMICE. When petitioner Huertazuela, as the Branch Manager of LMICE in
Puerto Princesa City, with the permission of petitioner Murao, the sole proprietor of LMICE, personally picked up Check
No. 611437 from the City Government of Puerto Princesa, and deposited the same under the Current Account of LMICE
with PCIBank, he was merely collecting what rightfully belonged to LMICE. Indeed, Check No. 611437 named LMICE as the
lone payee.

Same; Same; Criminal Law; Estafa; A fiduciary relationship between the complainant and the accused is an essential
element of estafa by misappropriation or conversion without which the accused could not have committed estafa.—Since
LMICE is the lawful owner of the entire proceeds of the check payment from the City Government of Puerto Princesa, then
the petitioners who collected the payment on behalf of LMICE did not receive the same or any part thereof in trust, or on
commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return, the
same to private complainant Federico, thus, the RTC correctly found that no fiduciary relationship existed between
petitioners and private complainant Federico. A fiduciary relationship between the complainant and the accused is an
essential element of estafa by misappropriation or conversion, without which the accused could not have committed
estafa.

FACTS:
 Petitioner Pablito Murao is the sole owner of Lorna Murao Industrial Commercial Enterprises (LMICE), a
company engaged in the business of selling and refilling fire extinguishers.
 On 01 September 1994, petitioner Murao and private complainant Chito Federico entered into a Dealership
Agreement for the marketing, distribution, and refilling of fire extinguishers within Puerto Princesa City.
 According to the Dealership Agreement, private complainant Federico, as a dealer for LMICE, could obtain
fire extinguishers from LMICE at a 50% discount for some conditions if he fails he is allowed to act as a part-
time sales agent for LMICE entitled to a percentage commission from the sales of fire extinguishers.
 Federico claimed that he was entitled to a commission equivalent to 50% of the gross sales he had made on
behalf of LMICE, while petitioners maintained that he should receive only 30% of the net sales. Petitioners
even contended that as company policy, part-time sales agents were entitled to a commission of only 25% of
the net sales, but since private complainant Federico helped in establishing the LMICE branch office in Puerto
Princesa City, he was to receive the same commission as the full-time sales agents of LMICE, which was 30%
of the net sales.
 Federicos first successful transaction as sales agent of LMICE involved two fire extinguishers sold to Landbank.
The bank issued a check for the payment of the items to LMICE. But Federico encashed the check at Landbank
and remitted only P2,436.40 to LMICE, while he kept P3,500.00 for himself as his commission from the sale.
 Despite the supposed irregularities committed by Federico in the collection of the payment from Landbank,
petitioners forgave private the former because the latter promised to make-up for his misdeeds in the next
transaction.
 Federico, on behalf of LMICE, subsequently facilitated a transaction with the City Government of Puerto
Princesa for the refill of 202 fire extinguishers.
 On 16 June 1994, the City Government of Puerto Princesa issued to LMICE to pay for first Purchase Order No.
GSO-856. Subsequently, Federico went to see petitioner Huertazuela at the LMICE branch office in Puerto
Princesa City to demand for the amount of P154,500.00 as his commission from the payment of Purchase
Order No. GSO-856 by the City Government of Puerto Princesa. Petitioner Huertazuela, however, refused to
pay private complainant Federico his commission since the two of them could not agree on the proper
amount thereof.
  On 17 June 1994, private complainant Federico went to the police station to file an Affidavit-Complaint for
estafa against petitioners.
 After holding trial, the RTC rendered its Judgment finding petitioners guilty of the crime of estafa and ordered
to pay the sales commission fees.
 Upon appeal, the Court of Appeals affirmed the decision of the RTC Hence this petition.
ISSUE:
1. Whether or not there is a contract of agency between Frederico and Murao(LMICE)?
2. Whether or not Murao commited the crime of estafa for refusal of payment of Frederico’s sales commission?
RULING:
1. Yes. The Court ruled that Frederico is an agent of LMICE. Frederico’s right to a commission does not make private
complainant Federico a joint owner of the money paid to LMICE by the City Government of Puerto Princesa, but merely
establishes the relation of agent and principal.[25] It is unequivocal that an agency existed between LMICE and private
complainant Federico. Article 1868 of the Civil Code defines agency as a special contract whereby a person binds himself
to render some service or to do something in representation or on behalf of another, with the consent or authority of
the latter. Although private complainant Federico never had the opportunity to operate as a dealer for LMICE under the
terms of the Dealership Agreement, he was allowed to act as a sales agent for LMICE. He can negotiate for and on behalf
of LMICE for the refill and delivery of fire extinguishers, which he, in fact, did on two occasions with Landbank and with
the City Government of Puerto Princesa. Unlike the Dealership Agreement, however, the agreement that private
complainant Federico may act as sales agent of LMICE was based on an oral agreement. As a sales agent, private
complainant Federico entered into negotiations with prospective clients for and on behalf of his principal, LMICE. When
negotiations for the sale or refill of fire extinguishers were successful, private complainant Federico prepared the
necessary documentation. Purchase orders, invoices, and receipts were all in the name of LMICE. It was LMICE who had
the primary duty of picking up the empty fire extinguishers, filling them up, and delivering the refilled tanks to the clients,
even though private complainant Federico personally helped in hauling and carrying the fire extinguishers during pick-up
from and delivery to clients. All profits made and any advantage gained by an agent in the execution of his agency should
belong to the principal. In the instant case, whether the transactions negotiated by the sales agent were for the sale of
brand new fire extinguishers or for the refill of empty tanks, evidently, the business belonged to LMICE. Consequently,
payments made by clients for the fire extinguishers pertained to LMICE.

2. No. The Court ruled Murao does not commit estafa. There is an absence of two essential elements of the crime of estafa
by misappropriation or conversion under Article 315(1)(b) of the Revised Penal Code, namely: (1) That money, goods or
other personal property be received by the offender in trust, or on commission, or for administration, or under any other
obligation involving the duty to make delivery of, or to return, the same; and (2) That there be a misappropriation or
conversion of such money or property by the offender. Since LMICE is the lawful owner of the entire proceeds of the
check payment from the City Government of Puerto Princesa, then the petitioners who collected the payment on behalf
of LMICE did not receive the same or any part thereof in trust, or on commission, or for administration, or under any
other obligation involving the duty to make delivery of, or to return, the same to private complainant Federico, thus, the
RTC correctly found that no fiduciary relationship existed between petitioners and private complainant Federico. A
fiduciary relationship between the complainant and the accused is an essential element of estafa by misappropriation or
conversion, without which the accused could not have committed estafa. Although petitioners refusal to pay private
complainant Federico his commission caused prejudice or damage to the latter, said act does not constitute a crime,
particularly estafa by conversion or misappropriation punishable under Article 315(1)(b) of the Revised Penal Code.
Without the essential elements for the commission thereof, petitioners cannot be deemed to have committed the crime.
2. BICOL SAVINGS AND LOAN ASSOCIATION VS COURT OF APPEALS
(G.R. No. 85302, March 31, 1989)

Civil Law; Mortgage; Sale; The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary
stipulation supported by the same cause or consideration for the mortgage and forms an essential or inseparable part of
that bilateral agreement.—The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and
independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default
of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to extrajudicially
foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms
an essential or inseparable part of that bilateral agreement.

Same; Same; Same; Same; Power to foreclose is primarily an authority conferred upon the mortgagee for the latter’s own
protection.—The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the
principal by the agent but is primarily an authority conferred upon the mortgagee for the latter’s own protection. That
power survives the death of the mortgagor (Perez vs. PNB, supra). In fact, the right of the mortgagee bank to extrajudicially
foreclose the mortgage after the death of the mortgagor Juan de Jesus, acting through his attorney-in-fact, Jose de Jesus,
did not depend on the authorization in the deed of mortgage executed by the latter. That right existed independently of
said stipulation and is clearly recognized in Section 7, Rule 86 of the Rules of Court.

Same; Same; Same; Same; Same; No creditor will agree to enter into a mortgage contract without that stipulation intended
for its protection.—It matters not that the authority to extrajudicially foreclose was granted by an attorney-in-fact and
not by the mortgagor personally. The stipulation in that regard, although ancillary, forms an essential part of the mortgage
contract and is inseparable therefrom. No creditor will agree to enter into a mortgage contract without that stipulation
intended for its protection.

FACTS:
 Juan de Jesus was the owner of a parcel of land, containing an area of 6,870 sq. ms., more or less, situated in
Naga City. On 31 March 1976, he executed a Special Power of Attorney in favor of his son, Jose de Jesus, "To
negotiate, mortgage my real property in any bank either private or public entity preferably in the Bicol Savings
Bank, Naga City, in any amount that may be agreed upon between the bank and my attorney-in-fact.
 By virtue thereof, Jose de Jesus obtained a loan of twenty thousand pesos from petitioner bank. To secure
payment, Jose de Jesus executed a deed of mortgage on the real property
 Juan de Jesus died in the meantime on a date that does not appear of record.
 By reason of his failure to pay the loan obligation even during his lifetime, petitioner bank caused the mortgage
to be extrajudicially foreclosed. In the subsequent public auction, the mortgaged property was sold to the bank
as the highest bidder.
 Private respondents herein, including Jose de Jesus, who are all the heirs of the late Juan de Jesus, failed to
redeem the property within one year from the date of the registration of the Provisional Certificate of Sale
 Notwithstanding, private respondents still negotiated with the bank for the repurchase of the property. Offers
and counter-offers were made, but no agreement was reached, as a consequence of which, the bank sold the
property instead to other parties in installments.
 Private respondents filed a Complaint with the then Court of First Instance of Naga City for the annulment of the
foreclosure sale or for the repurchase by them of the property. That Court dismissed the case ruling that the
title of the bank over the mortgaged property had become absolute upon the issuance and registration of the
said deed. The Trial Court also held that herein private respondents were guilty of laches by failing to act until 31
January 1983 when they filed the instant Complaint.
 On appeal, the CA reverse the decision of the RTC. In so ruling, the Appellate Court applied Article 1879 of the
Civil Code and stated that since the special power to mortgage granted to Jose de Jesus did not include the
power to sell, it was error for the lower Court not to have declared the foreclosure proceedings -and auction
sale held in 1978 null and void because the Special Power of Attorney given by Juan de Jesus to Jose de Jesus
was merely to mortgage his property, and not to extrajudicially foreclose the mortgage and sell the mortgaged
property in the said extrajudicial foreclosure.

ISSUE:
Whether or not the agent-son exceeded the scope of his authority in agreeing to a stipulation in the mortgage
deed that petitioner bank could extrajudicially foreclose the mortgaged property.

RULING:
No. The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent
contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default of a
mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to extrajudicially foreclose a
mortgage is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential
or inseparable part of that bilateral agreement. The power to foreclose is not an ordinary agency that contemplates
exclusively the representation of the principal by the agent but is primarily an authority conferred upon the mortgagee
for the latter's own protection. That power survives the death of the mortgagor (Perez vs. PNB, supra). In fact, the right
of the mortgagee bank to extrajudicially foreclose the mortgage after the death of the mortgagor Juan de Jesus, acting
through his attorney-in-fact, Jose de Jesus, did not depend on the authorization in the deed of mortgage executed by the
latter. That right existed independently of said stipulation and is clearly recognized in Section 7, Rule 86 of the Rules of
Court, which grants to a mortgagee three remedies that can be alternatively pursued in case the mortgagor dies, to wit:
(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2) to foreclose
the mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely on the mortgage exclusively,
foreclosing the same at any time before it is barred by prescription, without right to file a claim for any deficiency.
3. REGINA P. DIZON VS COURT OF APPEALS
(G.R. No. 122544, January 28, 2003)

Civil Law; Contracts; Sales; Special Power of Attorney; 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.—
When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for the 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.

FACTS:
 On January 28, 1999, this Court rendered judgment in these consolidated cases as follows: WHEREFORE, in view
of the foregoing, both petitions are GRANTED. The decision dated March 29, 1994 and the resolution dated
October 19, 1995 in CA-G.R. CV Nos. 25153-54, as well as the decision dated December 11, 1995 and the
resolution dated April 23, 1997 in CA-G.R. SP No. 33113 of the Court of Appeals are hereby REVERSED and SET
ASIDE. However, petitioners are ordered to REFUND to private respondent the amount of P300,000.00 which
they received through Alice A. Dizon on June 20, 1975.
 Private respondent filed a Motion for Reconsideration, Second Motion for Reconsideration, and Motion to
Suspend Procedural Rules in the Higher Interest of Substantial Justice, all of which have been denied by this
Court. Hence, this petition.

ISSUE:
Whether or not the sale is void considering that there is no written special power of attorney granted to Alice
Dizon to sell in behalf of the petitioners which is a requirement for the validity of the sale of an immovable property

RULING:
Yes. The Court ruled that the sale is void. there is absolutely no written proof of Alice Dizon's authority to bind petitioners.
First of all, she was not even a co-owner of the property. Neither was she empowered by the co-owners to act on their
behalf. The acceptance of the amount of P300,000.00, purportedly as partial payment of the purchase price of the land,
was an act integral to the sale of the land. As a matter of fact, private respondent invokes such receipt of payment as
giving rise to a perfected contract of sale. In this connection, Article 1874 of the Civil Code is explicit that: "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." When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter
shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to execute a contract for the 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. It
necessarily follows, therefore, that petitioners cannot be deemed to have received partial payment of the supposed
purchase price for the land through Alice Dizon. It cannot even be said that Alice Dizon's acceptance of the money bound
at least the share of Fidela Dizon, in the absence of a written power of attorney from the latter. It should be borne in mind
that the Receipt dated June 20, 1975, while made out in the name of Fidela Dizon, was signed by Alice Dizon alone.
4. FAR EAST BANK AND TRUST COMPANY (NOW BANK OF THE PHILIPPINE ISLANDS) VS SPS. ERNESTO AND LEONOR C.
CAYETANO
(G.R. No. 179909, January 25, 2010)

FACTS:
 Leonor C. Cayetano executed a special power of attorney in favor of her daughter Teresita C. Tabing authorizing
her to contract a loan from petitioner in an amount not more than three hundred thousand pesos (P300,000.00)
and to mortgage her two (2) lots located in Barangay Carolina, Naga City.
 Petitioner loaned Tabing one hundred thousand pesos (P100,000.00) secured by two (2) promissory notes and a
real estate mortgage over Cayetano's two (2) properties.
 Petitioner foreclosed the mortgage for failure of the respondents and the spouses Tabing to pay the loan. It was
auctioned and the bank acquired the property.
 More than five (5) years later, Tabing, on behalf of Cayetano, sent a letter to the bank expressing the intent to
repurchase the properties for P250,000.00.
 Petitioner refused the offer stating that the minimum asking price for the properties was P500,000.00.
Petitioner nevertheless gave respondents the chance to buy back the properties by joining a bidding to be set in
some future date.
 However, respondents filed on December 18, 1996 a complaint for annulment of mortgage and extrajudicial
foreclosure of the properties with damages in the RTC of Naga City. Respondents sought nullification of the real
estate mortgage and extrajudicial foreclosure sale, as well as the cancellation of petitioner's title over the
properties.
 After trial, the RTC rendered judgment in favor of the respondents, holding that the principal (Cayetano) cannot
be bound by the real estate mortgage executed by the agent (Tabing) unless it is shown that the same was made
and signed in the name of the principal. Hence, the mortgage will bind the agent only.
 The Court of Appeals affirmed the RTC's ruling. Hence, this petition.

ISSUE:
Whether or not the principal is bound by the real estate mortgage executed by the authorized agent in her own
name without indicating the principal.

RULING:
It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed
by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will
bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not
acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as
acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal
to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of
the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent
for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal.

Notwithstanding the nullity of the real estate mortgage executed by Tabing and her husband, we find that the
equity principle of laches is applicable in the instant case. Laches is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert
it. In the present case, records clearly show that respondents could have filed an action to annul the mortgage on their
properties, but for unexplained reasons, they failed to do so. They only questioned the loan and mortgage transactions in
December 1996, or after the lapse of more than five (5) years from the date of the foreclosure sale. It bears noting that
the real estate mortgage was registered and annotated on the titles of respondents, and the latter were even informed
of the extrajudicial foreclosure and the scheduled auction. Instead of impugning the real estate mortgage and opposing
the scheduled public auction, respondents' lawyer wrote a letter to petitioner and merely asked that the scheduled
auction be postponed to a later date. Even after five (5) years, respondents still failed to oppose the foreclosure and the
subsequent transfer of titles to petitioner when their agent, Tabing, acting in behalf of Cayetano, sent a letter proposing
to buy back the properties. It was only when the negotiations failed that respondents filed the instant case. Clearly,
respondents slept on their rights. Therefore, the mortgage and the foreclosure of the bank is valid.
5. HADJI MAHMUD L. JAMMANG VS TAKAHASHI TRADING CO LTD
(G.R. No. 149429, October 9, 2006)

FACTS:
 Hadji Mahmud I. Jammang is a trader and the owner of the MV Queen Alma, a vessel engaged in the shipment
of barter goods from Singapore to Jolo, Philippines. He is also the general manager of Alma Shipping Lines, Inc.
(Alma), a duly-organized and existing domestic corporation.
 Takahashi is a foreign corporation duly licensed to transact business in the Philippines, while co-respondent
Sinotrans Shandong Company (Sinotrans) is a foreign corporation organized and existing under the laws of the
People’s Republic of China.
 Petitioner Jammang has been engaged in the trading business for over fifteen years, and is a pioneer in the
establishment of trade relations between Zamboanga City and nearby Asian countries.
 Sometime in October of 1993, Hiroaki Takahashi introduced Jammang to Sinotrans because the latter was
scouting for a supplier of Chinese goods for his buyers in Labuan, Malaysia. Sinotrans agreed to supply said
respondent with Chinese goods on the condition that the latter will act as a sales agent of petitioner Sinotrans.
 Upon Jammang’s assurances that he had ready buyers in the area, two shipments of goods consisting of
bleached or printed cotton, garlic and lungkow vermicelli (sotanghon) were made by Sinotrans from Qingdao,
China to Labuan, Malaysia.
 The goods, valued at US$696,337, were consigned to Takahashi. Contrary to the representation and assurances
of Jammang, however, there were no ready buyers in Labuan, Malaysia. For two months, Takahashi was forced
to store the goods in a warehouse for a fee.
 Nevertheless, Jammang was able to convince Sinotrans and Takahashi to allow him to bring the goods to
Zamboanga City, Philippines, where he again claimed to have ready buyers. He promised to turn over the
proceeds of the sale, as well as the unsold items, to Sinotrans. Likewise, he reassured Takahashi of their equal
sharing of the profits earned from the sale.
 The goods were subsequently transshipped to Zamboanga City with Jammang as consignee. Initially, he made a
partial turnover of the proceeds of the sale in the amount of US$230,000. After that, however, no further
remittance was made. Also, a supplemental agreement was made but Jammang was able to remit only the
amount of US$15,000.
 It was discovered later, upon Sinotrans’ investigation, that Jammang had already sold all the goods subject of
the agreement. Despite repeated oral and written demands, Jammang failed to account for and turn over the
remaining balance of US$451,337 to Sinotrans. He likewise declined to talk to respondents. Moreover, he
refused to give to Takahashi its share in the perceived profits.
 Consequently, respondents filed with the RTC of Pasig City a complaint for a sum of money and damages with an
application for a writ of preliminary attachment against Jammang.
 Jammang insisted that as a barter trader, he neither bought nor sold the goods but merely facilitated the sale.
Neither was he an agent of respondents. His signing of the supplemental agreement was only for record
purposes, and the business development report was likewise signed by him in order to convince Sinotrans that it
is profitable to send goods to the Philippines.
 The RTC ruled that Jammang is bound by the provisions of the supplemental agreement. Upon appeal, The CA
affirmed the decision of the RTC. Hence this petition.

ISSUE:
Whether or not there is an agency formed between Jammang and Sinotrans despite the lack of special power of
attorney authorizing him to sell the goods of the latter?

RULING:
Yes. The plain and clear language of the Agreement undoubtedly shows that Jammang committed himself to act
as a selling agent of Sinotrans by his acknowledgment of the actual receipt of goods worth US$696,337 shipped by the
latter, his first remittance of the amount of US$230,000 as partial payment thereof, his undertaking to remit the sum of
US$266,000 still due and collectible and to remit US$15,000 on July 29, 1994, and his acknowledgment of the remaining
unsold goods worth US$185,000 which he will try to dispose of by October 31, 1994. Aside from said Agreement, Jammang
had earlier submitted a Business Development Report confirming receipt of the goods sent to him Sinotrans, in which We
do not find any indication that he was accepting said goods merely as facilitator or warehouseman. In fact, We could not
make out of the evidence presented as to the receipt of the subject goods by BCC Warehouse as these are mere
photocopies and the owner of said warehouse not presented in court to shed on the particular transaction and
arrangement with plaintiffs-appellees. Such evidence would be crucial especially were it true as claimed by appellant
Jammang that plaintiff-appellees’ goods were not duly covered by customs documents. Actually, the claim of alleged
seizure by the authorities of plaintiffs-appellees’ goods was not substantiated by competent evidence such as documents
or official report from the Philippine Navy, Philippine Coast Guard or the Bureau of Customs. AS to Rev. Palis whom
appellant Jammang claims was the appointed selling agent of plaintiff-appellees, the same does not hold water. As
manifest in an Affidavit executed by Rev. Pablo Palis, he was actually employed by appellant Jammang and worked as his
Executive Assistant in Jammang’s SAKATA Office in Alta Mall Complex from 1993 up to December 1995, when the subject
transaction with plaintiffs-appellees took place. Appellant Jammang did not deny the statements in said affidavit but
maintained that he had clearly spelled out his limited role in the transaction with plaintiffs-appellees. Nevertheless, said
affidavit only served to prove that Palis’ involvement in the subject transaction was in his capacity as agent or employee
of appellant Jammang and not of plaintiffs-appellees. Thus, even if appellants presented documentary evidence showing
that Palis actually withdrew some of the goods at the warehouse, the same does not sufficiently prove the existence of
agent-principal relationship between him and plaintiffs-appellees, as in fact it only goes to show that he did so to assist
appellant Jammang in disposing of the goods. This conclusion is buttressed by the fact that the buyers had issued
promissory notes for the payment of the goods bought by them in the name of appellant Jammang and not of Palis.

Appellants then assailed the trial court in holding that the Agreement (Exhibit "G") embodied the entire transaction which
transpired between the parties and thus failed to properly appreciate the circumstances surrounding its execution and
subsequent events. Appellant Jammang maintained that he only acquiesced into signing the Agreement (Exhibit "G") as
he was afraid that the "conventional trading" being firmed up with plaintiffs-appellees may not materialize if he would
not accommodate the execution of said document as requested by plaintiffs-appellees. Aside from failing to establish such
alleged future business deal with plaintiffs-apapellees wherein appellant Jammang claimed to expect lucrative earnings
from shipping contracts, appellants’ efforts to vary the clear and unequivocal terms of the Agreement certainly raise more
questions than provide a more plausible and truthful version of the case. The difficulty, however, with appellants’ version
is that it tried to present an elaborately contrived picture of the entire dealings between the parties that is inconsistent
not only with the totality of evidence on record but also contrary to human experience and the ordinary course of things.
The trial court aptly remarked that appellant Jammang’s attempt to vary the terms of the Agreement is "a clear illustration
of evading a legally contracted obligation" after benefiting from the sale of the goods, he is now reneging on his
commitment to remit the proceeds of the sale.
IMPLIED TRUST

6. SPS. ROBERTO ABOITIZ VS SPS. PETER AND VICTORIA L. PO

(G.R. No. 208450, June 5, 2017)

Civil Law; Implied Trusts; Article 1456 of the Civil Code provides that a person acquiring a property through fraud becomes
an implied trustee of the property’s true and lawful owner.—Article 1456 of the Civil Code provides that a person acquiring
a property through fraud becomes an implied trustee of the property’s true and lawful owner. An implied trust is based
on equity and is either (i) a constructive trust, or (ii) a resulting trust. A resulting trust is created by implication of law and
is presumed as intended by the parties. A constructive trust is created by force of law such as when a title is registered in
favor of a person other than the true owner. The implied trustee only acquires the right “to the beneficial enjoyment of
[the] property.” The legal title remains with the true owner.

Reconveyance; An action for reconveyance based on an implied trust seeks to compel the registered owner to transfer
the property to its true owner.—An action for reconveyance based on an implied trust seeks to compel the registered
owner to transfer the property to its true owner. In Hortizuela v. Tagufa, 751 SCRA 371 (2015): [A]n action for
reconveyance is a recognized remedy, an action in personam, available to a person whose property has been wrongfully
registered under the Torrens system in another’s name. In an action for reconveyance, the decree is not sought to be set
aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks
to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always available as long
as the property has not passed to an innocent third person for value. There is no quibble that a certificate of title, like in
the case at bench, can only be questioned through a direct proceeding. The MCTC and the CA, however, failed to take into
account that in a complaint for reconveyance, the decree of registration is respected as incontrovertible and is not being
questioned. What is being sought is the transfer of the property wrongfully or erroneously registered in another’s name
to its rightful owner or to the one with a better right. If the registration of the land is fraudulent, the person in whose
name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of
the property.

FACTS:
 Roberto Aboitiz is a title holder of a parcel of land located in Cabancalan, Mandaue City. The parcel of land
originally belonged to the late Mariano Seno.
 On July 31, 1973, Mariano executed a Deed of Absolute Sale in favor of his son, Ciriaco Seno over a 1.0120-
hectare land in Cebu. This property included two (2) lots: Lot No. 2807 and the land subject of this case, Lot No.
2835.
 On May 5, 1978, Ciriaco Seno sold the two (2) lots to Victoria Po. On July 15, 1982, Mariano died and was
survived by his five (5) children
 In 1990, Peter Po (son) discovered that Ciriaco "had executed a [q]uitclaim dated August 7, 1989 renouncing
[his] interest over Lot [No.] 2807 in favor of [petitioner] Roberto." In the quitclaim, Ciriaco stated that he was
"the declared owner of Lot [Nos.] 2835 and 2807."
 The Spouses Po confronted Ciriaco. By way of remedy, Ciriaco and the Spouses Po executed a Memorandum of
Agreement dated June 28, 1990 in which Ciriaco agreed to pay Peter the difference between the amount paid by
the Spouses Po as consideration for the entire property and the value of the land the Spouses Po were left with
after the quitclaim.
 However, also in 1990, Lot No. 2835 was also sold to Roberto. The Mariano Heirs, including Ciriaco, executed
separate deeds of absolute sale in favor of Roberto. Thereafter, Roberto immediately developed the lot as part
of a subdivision called North Town Homes.
 In 1991, the Spouses Po declared Lot No. 2835 for taxation purposes and was issued Tax Declaration No. 0634-A.
 In 1992, Roberto also declared Lot No. 2835 for taxation purposes and was issued Tax Declaration No. 1100,
annotated with: "This tax declaration is also declared in the name of Mrs. VICTORIA LEE PO married to PETER PO
under [T]ax [Declaration] [N]o. 0634-A so that one may be considered a duplicate to the other. "
 On April 19, 1993, Roberto filed an application for original registration of Lot No. 2835 with the Mandaue City
Regional Trial Court, acting as land registration court. The trial court granted the issuance of Original Certificate
of Title in the name of Roberto. The lot was immediately subdivided with portions sold to Ernesto and Jose.
 On November 19, 1996, the Spouses Po filed a complaint to recover the land and to declare nullity of title with
damages. The trial court ruled in favor of the Spouses Po. Upon appeal, CA partly affirmed the decision of the
RTC. Hence this petition.

ISSUES:
Is there an implied trust when Spouses Aboitiz fraudulently registered the land in their name?
RULING:

Yes. Article 1456 of the Civil Code provides that a person acquiring a property through fraud becomes an implied trustee
of the property’s true and lawful owner. An implied trust is based on equity and is either (i) a constructive trust, or (ii) a
resulting trust. A resulting trust is created by implication of law and is presumed as intended by the parties. A constructive
trust is created by force of law such as when a title is registered in favor of a person other than the true owner. The implied
trustee only acquires the right “to the beneficial enjoyment of the property.” legal title remains with the true owner. Art.
1456 of the Civil Code provides: Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. Thus,
it was held that when a party uses fraud or concealment to obtain a certificate of title of property, a constructive trust is
created in favor of the defrauded party.

Constructive trusts are “created by the construction of equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds
the legal right to property which he ought not, in equity and good conscience, to hold.” When property is registered in
another’s name, an implied or constructive trust is created by law in favor of the true owner. The action for reconveyance
of the title to the rightful owner prescribes in 10 years from the issuance of the title.
Thus, the law creates a trust in favor of the property’s true owner.

The prescriptive period to enforce this trust is 10 years from the time the right of action accrues. It is now well-settled
that the prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust under Art.
1456 of the Civil Code, is 10 years pursuant to Art. 1144. This ten year prescriptive period begins to run from the date the
adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land.
Considering that the Spouses Po’s complaint was filed on November 19, 1996, less than three (3) years from the issuance
of the Torrens title over the property on April 6, 1994, it is well within the 10-year prescriptive period imposed on an
action for reconveyance.