SPOUSES ROLANDO AND HERMINIA SALVADOR v.

SPOUSES ROGELIO AND

ELIZABETH RABAJA AND ROSARIO GONZALES

G.R. No. 199990 4, FEBRUARY, 2015

FACTS:

The spouses Rolando and Herminia Salvador entered into a contract to sell
agreement for a property with spouses Rogelio and Elizabeth Rabaja and Rosario
Gonzales acts as their agent. Gonzales received the Rabajas payments to the
Salvadors as agent. Their payments have reached Php.950,000.00 already but the
spouses Salvador stated that they never received the payments which made the
Rabajas suspend their payment. The Salvadors then gave a notice to the Rabajas to
vacate the property for non -payment of rentals, they also filed an action for
ejectment against the Rabajas and the latter in turn filed an action for rescission of
contract against the Salavdors. The MeTC ruled in favor of the Salvadors in the
ejectment case, the RTC reversed the ruling because it found that there was no
lease agreement between the two parties but the CA reversed the ruling of the RTC.
The decision of the CA was not appealed therefore it became final and executory. In
the rescission case the RTC ruled in favor of the Rabajas and the CA affirmed the
said ruling.

ISSUE:

Whether or not the contract could be rescinded and the Rabajas are entitled to the
return of the Php.950,000

RULING:

The Supreme Court ruled in favor of the Rabajas stating that they are entitled to
Php.950,000. The Salvadors in their defense stated that they did not receive any
money from the Rabajas through Gonzales and that the latter was not their duly
authorized agent. The Court disagrees with this, it applied the provisions of the Civil
Code which are:

Art. 1900. So far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such act is within the terms
of the power of attorney, as written, even if the agent has in fact exceeded the
limits of his authority according to an understanding between the principal and the
agent.

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Art. 1902. A third person with whom the agent wishes to contract on behalf of the
principal may require the presentation of the power of attorney, or the instructions
as regards the agency. Private or secret orders and instructions of the principal do
not prejudice third persons who have relied upon the power of attorney or
instructions shown them.

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Art. 1910. The principal must comply with all the obligations which the agent may
have contracted within the scope of his authority.

The spouses Rabaja required the presentation of the power of attorney, Gonzales
complied with them and the spouses had no reason not to rely on it. The Salvadors
also introduced Gonzales as the administrator of the property therefore they cannot
say that Gonzales was not their agent.

Art. 1900 of the Civil Code provides that:

Art. 1900. So far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such act is within the terms
of the power of attorney, as written, even if the agent has in fact exceeded the
limits of his authority according to an understanding between the principal and the
agent.

Art. 1902 of the Civil Code provides that:

Art. 1902. A third person with whom the agent wishes to contract on behalf of the
principal may require the presentation of the power of attorney, or the instructions
as regards the agency. Private or secret orders and instructions of the principal do
not prejudice third persons who have relied upon the power of attorney or
instructions shown them.

Art. 1910 of the Civil Code provides that:

Art. 1910. The principal must comply with all the obligations which the agent may
have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power the
principal is not bound except when he ratifies it expressly or tacitly.