Laureano T. Angeles vs.

Philippine National Railways (PNR) and Rodolfo Flores, August 31,

2006 G.R. No. 150128

Facts:

Respondent Philippine National Railways (PNR) informed a certain GaudencioRomualdez

(Romualdez, hereinafter) that it has accepted the latters offer to buythe PNRs scrap/unserviceable
rails located in Del Carmen and Lubao, Pampanga at P1,300.00 and P2,100.00 per metric ton,
respectively, for the total amount of P96,600.00. Romualdez paid the purchase price and addressed
a letter to Atty. CiprianoDizon, PNRs Acting Purchasing Agent. The letter authorized LIZETTE R.
WIJANCOto be his (Romualdez) lawful representative in the withdrawal of the scrap/unserviceable
rails awarded to him. Furthermore, the original copy of the award which indicates the waiver of
rights, interest and participation in favor of Lizetter R. Wijanco was also given.

The Lizette R. Wijanco was petitioner's now deceased wife. That very same day, Lizette requested
the PNR to transfer the location of withdrawal for the reason that the scrap/unserviceable rails
located in Del Carmen and Lubao, Pampanga were not ready for hauling.The PNR granted said
request and allowed Lizette to withdraw scrap/unserviceable rails in Murcia, Capas and San Miguel,
Tarlac instead. However, PNR subsequently suspended the withdrawal in view of what it considered
as documentary discrepancies coupled by reported pilferages of over P500,000.00 worth of PNR
scrap properties in Tarlac.Consequently, the spouses Angeles demanded the refund of the amount of
P96,000.00. The PNR, however, refused to pay, alleging that as per delivery receipt duly signed by
Lizette, 54.658 metric tons of unserviceable rails had already been withdrawn. The spouses Angeles
filed suit against the PNR for specific performance and damages before the Regional Trial Court.
Lizette W. Angeles passed away and was substituted by her heirs, among whom is her husband,
herein petitioner Laureno T. Angeles.

The trial court, on the postulate that the spouses Angeles are not the real parties-in-interest,
rendered judgment dismissing their complaint for lack of cause of action. As held by the court,
Lizette was merely a representative of Romualdez in the withdrawal of scrap or unserviceable rails
awarded to him and not an assignee to the latter's rights with respect to the award. Petitioner
appealed with the Court of Appeals which dismissed the appeal and affirmed that of the trial court.

Issue:

Whether or not the CA erred in affirming the trial court's holding that petitioner and his spouse, as
plaintiffs a quo, had no cause of action as they were not the real parties-in-interest in this case.

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-in-interest, 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 rulerequiring every action to be prosecuted in the name of the real party-in-interest
recognizes the assignment of rights of action and also recognizesthat 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.
Pahud vs CA

Facts:

Spouses Pedro San Agustin and Agatona Genil acquired a 246 m 2 land in Brgy. Anos, Los Ban os,
Laguna. Both died intestate, survived by their eight (8) children: respondents Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.

Eufemia, Ferdinand and Raul sold the property to the petitioners, the Pahuds for P525,000.00.
Eufemia also signed the deed on behalf of her four (4) other co-heirs, namely: Isabelita on the basis
of a special power of attorney executed on September 28, 1991, 7 and also for Milagros, Minerva, and
Zenaida but without their apparent written authority. 8 The deed of sale was also not notarized.9

Pahuds paid the balance of the consideration. Virgilio, however, refused to sign in the extra judicial
partition.

Virgilios co-heirs filed a complaint for judicial partition. In the course of the proceedings, a
Compromise Agreement was signed with seven (7) of the co-heirs agreeing to sell their undivided
shares to Virgilio forP700,000.00.

Eufemia acknowledged having received P700,000.00 from Virgilio. Virgilio then sold the entire
property to spouses (Belarminos) sometime in 1994. The Belarminos immediately constructed a
building on the subject property.

The Pahuds immediately confronted Eufemia who confirmed to them that Virgilio had sold the
property to the Belarminos. Aggrieved, the Pahuds filed a complaint in intervention in the pending
case for judicial partition.

After trial, the RTC upheld the validity of the sale to Pahuds. CA reversed it and ruled in favor of the
heirs.

Issue: WON the sale of the property by Eufemia to the Pahuds are valid?

Held: Yes. We find the transaction to be valid and enforceable.

Under Art. 1874, a sale of a piece of land or any interest through an agent, requires that the
authority of the latter shall be in writing; otherwise, the sale shall be void.

Also, Article 1878, a special power of attorney is necessary for an agent to enter into a contract by
which the ownership of an immovable property is transmitted or acquired.

The express mandate required by law to enable an appointee of an agency in general terms to sell
must be one that expressly mentions a sale. A power of attorney must so express the powers of the
agent in clear and unmistakable language.

Absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the
interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.

In this case, the sale made by Eufemia, Isabelita and her two brothers to the Pahuds sometime in
1992 should be valid only with respect to the 4/8 portion of the subject property.

The sale with respect to the 3/8 portion, representing the shares of Zenaida, Milagros, and Minerva,
is void because Eufemia could not dispose of the interest of her co-heirs in the said lot absent any
written authority from the latter, as explicitly required by law.

While the sale with respect to the 3/8 portion is void by express provision of law, it is still valid on
the basis of the principle of estoppel. Under Art 1431, Through estoppel an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.

Eufemia was not armed with the requisite special power of attorney to dispose of the 3/8 portion of
the property. Initially, in their answer to the complaint in intervention, Eufemia and her other co-
heirs denied having sold their shares to the Pahuds. Later, however, they admitted that they had
indeed sold 7/8 of the property to the Pahuds sometime in 1992. 33 Thus, the previous denial was
superseded, if not accordingly amended, by their subsequent admission.

Also, the three heir concerned did not assail the validity of the sale by Eufemia to the Pahuds on the
basis of want of written authority to sell. They opted to remain silent and left the task of raising the
validity of the sale as an issue to their co-heir, Virgilio, who is not privy to the said transaction.

It is a basic rule in the law of agency that a principal is subject to liability for loss caused to another
by the latters reliance upon a deceitful representation by an agent in the course of his employment
(1) if the representation is authorized; (2) if it is within the implied authority of the agent to make
for the principal; or (3) if it is apparently authorized, regardless of whether the agent was
authorized by him or not to make the representation.37

By their continued silence, Zenaida, Milagros and Minerva have caused the Pahuds to believe that
they have indeed clothed Eufemia with the authority to transact on their behalf. Clearly, the three
co-heirs are now estopped from impugning the validity of the sale from assailing the authority of
Eufemia to enter into such transaction.

Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was void because they no
longer had any interest over the subject property which they could alienate at the time of the
second transaction.38 Nemo dat quod non habet. Virgilio, however, could still alienate his 1/8
undivided share to the Belarminos.