SALLY YOSHIZAKI vs. JOY TRAINING CENTER OF AURORA, INC. G.R. No. 174978 July 31, 2013

Respondent Joy Training is a non-stock, non-profit religious educational institution. It was the registered owner of a parcel of land and the building thereon (real properties). Spouses Richard and Linda Johnson sold the real properties, a Wrangler jeep, and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki. The spouses Johnson were members of Joy Training’s board of trustees at the time of sale.

Joy Training filed an action for the Cancellation of Sales and Damages with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction against the spouses Yoshizaki and the spouses Johnson before the RTC.

In the complaint, Joy Training alleged that the spouses Johnson sold its properties without the requisite authority from the board of directors. It highlighted that the Articles of Incorporation provides that the board of trustees consists of seven members. On the other hand, the spouses Yoshizaki claimed that Joy Training authorized the spouses Johnson to sell the parcel of land. They asserted that a majority of the board of trustees approved the resolution and maintained that the actual members of the board of trustees consist of five members. Moreover, Connie Dayot, the corporate secretary, issued a certification authorizing the spouses Johnson to act on Joy Training’s behalf. Furthermore, they highlighted that the Wrangler jeep and other personal properties were registered in the name of the spouses Johnson. Lastly, they assailed the RTC’s jurisdiction over the case. They posited that the case is an intra-corporate dispute cognizable by the Securities and Exchange Commission (SEC).

After the presentation of their testimonial evidence, the spouses Yoshizaki formally offered in evidence photocopies of the resolution and certification, among others. Joy Training objected to the formal offer of the photocopied resolution and certification on the ground that they were not the best evidence of their contents. RTC denied the admission of the offered copies. However, it held that the sale was valid because Joy Training authorized the spouses Johnson to sell the real properties.

Joy Training appealed the RTC decision to the CA. The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect to the sale of real properties.

The CA did not also give any probative value to the certification. It stated that the certification failed to indicate the date and the names of the trustees present in the meeting. Moreover, the spouses Yoshizaki did not present the minutes that would prove that the certification had been issued pursuant to a board resolution.

Q1: Is the Court of Appeals correct in upholding the RTC’s jurisdiction over the present case?

Yes, the Court of Appeals is correct in upholding the RTC’s jurisdiction over the present case.

Jurisdiction over the subject matter is the power to hear and determine cases of the general class to which the proceedings before a court belong. It is conferred by law. The allegations in the complaint and the status or relationship of the parties determine which court has jurisdiction over the nature of an action.

Joy Training seeks to nullify the sale of the real properties on the ground that there was no contract of agency between Joy Training and the spouses Johnson. This was beyond the ambit of the SEC’s original and exclusive jurisdiction prior to the enactment of Republic Act No. 8799 which only took effect on August 3, 2000. The determination of the existence of a contract of agency and the validity of a contract of sale requires the application of the relevant provisions of the Civil Code. It is a well-settled rule that "disputes concerning the application of the Civil Code are properly cognizable by courts of general jurisdiction." Indeed, no special skill requiring the SEC’s technical expertise is necessary for the disposition of this issue and of this case.

Q2) Was there a contract of agency to sell the real properties between Joy Training and the spouses Johnson?

No, there was no contract of agency to sell the real properties between Joy Training and the spouses Johnson.

Article 1868 of the Civil Code defines a contract of agency as a 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." Moreover, Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be void.

In the present case, Sally presents three pieces of evidence which allegedly prove that Joy Training specially authorized the spouses Johnson to sell the real properties: (1) TCT No. T-25334, (2) the resolution, (3) and the certification.

These documents do not convince the existence of the contract of agency to sell the real properties. TCT No. T-25334 merely states that Joy Training is represented by the spouses Johnson. The title does not explicitly confer to the spouses Johnson the authority to sell the parcel of land and the building thereon. As to the resolution, the basis for determining the board of trustees’ composition is the trustees as fixed in the articles of incorporation and not the actual members of the board. The second paragraph of Section 25 of the Corporation Code expressly provides that a majority of the number of trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business. Moreover, the certification is a mere general power of attorney which comprises all of Joy Training’s business. Article 1877 of the Civil Code clearly states that "an agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management."

Q3) Was there a valid contract of sale of the real properties between Joy Training and the spouses Yoshizaki.

No, there was no valid contract of sale of the real properties between Joy Training and the spouse Yoshizaki.

The absence of a contract of agency renders the contract of sale unenforceable. Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a registered land have the legal right to rely on the face of the title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested.

 

The established principle states that persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agent’s authority. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover on his own peril the authority of the agent. Thus, Sally bought the real properties at her own risk; she bears the risk of injury occasioned by her transaction with the spouses Johnson.

INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF THE PHILIPPINES vs SPOUSES JEROME AND QUINNIE BRIONES, AND JOHN DOE G.R. No. 205657 March 29, 2017

Spouses Briones took out a loan of ₱3,789,216.00 from iBank to purchase a BMW Z4 Roadster. The Spouses Briones executed a promissory note with chattel mortgage that required them to take out an insurance policy on the vehicle. The promissory note also gave iBank, as the Spouses Briones' attorney-infact, irrevocable authority to file an insurance claim in case of loss or damage to the vehicle. 

Four months after, the mortgaged BMW Z4 Roadster was carnapped by three (3) armed men. The Spouses Briones declared the loss to iBank, which instructed them to continue paying the next three (3) monthly installments "as a sign of good faith," a directive they complied with. After the Spouses Briones finished paying the three (3)-month installment, iBank sent them a letter demanding full payment of the lost vehicle. Spouses Briones submitted a notice of claim with their insurance company, which denied the claim due to the delayed reporting of the lost vehicle.

iBank filed a complaint for replevin and/or sum of money against the Spouses Briones and a person named John Doe. RTC dismissed iBank's complaint. It ruled that as the duly constituted attorney-in- fact of the Spouses Briones, iBank had the obligation to facilitate the filing of the notice of claim and then to pursue the release of the insurance proceeds. RTC also pointed out that as the Spouses Briones' agent, iBank prioritized its interest over that of its principal when it failed to file the notice of claim with the insurance company and demanded full payment from the spouses.

iBank appealed to the Court of Appeals. In addition, they posited that respondent Jerome's direct dealing with the insurance company was a revocation of the agency relationship between petitioner and respondents. The Court of Appeals upheld the RTC's ruling that "the denial of the insurance claim for delayed filing was a direct consequence of the bank's inaction in not filing the insurance claim."

Q1: Does an agency relationship exist between the parties?

Yes, an agency exists between parties.

Article 1884 of the Civil Code provides that "the agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer." Also, Rallos v. Felix Go Chan & Sons Realty Corporation lays down the essential elements of agency such as: (1) there is consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; and (4) the agent acts within the scope of his authority.

All the elements of agency exist in this case. Under the promissory note with chattel mortgage, Spouses Briones appointed iBank as their attorney-in-fact, authorizing it to file a claim with the insurance company if the mortgaged vehicle was lost or damaged. Petitioner was also authorized to collect the insurance proceeds as the beneficiary of the insurance policy. Article 1370 of the Civil Code is categorical that when "the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control." Therefore, the agency relationship between the Spouses Briones and iBank is still existing and can be found based on the clear wording of the promissory note with chattel mortgage, which petitioner prepared and respondents signed.

 

Q2: Was the agency relationship revoked or terminated due to respondent’s direct dealing with the insurance company?

No, the agency relationship was not revoked or terminated.

Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only applies in cases of incompatibility, such as when the principal disregards or bypasses the agent in order to deal with a third person in a way that excludes the agent. The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or their way of excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim; rather, they had no choice but to personally do it because of their agent's negligence.

While a contract of agency is generally revocable at will as it is primarily based on trust and confidence, Article 1927 of the Civil Code provides the instances when an agency becomes irrevocable: Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

 

In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim, collect, and apply· the insurance proceeds towards the full satisfaction of their loan if the mortgaged vehicle were lost or damaged. Clearly, a bilateral contract existed between the parties, making the agency irrevocable. Petitioner was also aware of the bilateral contract; thus, it included the designation of an irrevocable agency in the promissory note with chattel mortgage that it prepared for the Spouses Briones to sign.