Case Summary (G.R. No. 149353)
Applicable Law
1987 Philippine Constitution (applicable because the decision date is after 1990). Civil Code provisions and doctrines the Court relied on or discussed in the decision: Arts. 1352 (cause/consideration), 1335 (intimidation and threats to enforce legal claims), 1868–1872 (agency and representation), Arts. 1892–1893 (authority to employ facilities/sub-agents), and Art. 2085(3) (requirements affecting conveyance/mortgage). The decision also considered established jurisprudential principles regarding review of factual findings.
Procedural History
Respondent filed a complaint for Specific Performance with Damages in the Regional Trial Court (RTC), Branch 21, City of Manila (Civil Case No. 97-82716) on April 1, 1997. The RTC dismissed the complaint for insufficiency of evidence on July 29, 1998. The Court of Appeals (CA) reversed and ordered petitioner to execute documents to transfer the property to respondent (April 30, 2001); petitioner’s motion for reconsideration was denied by the CA (August 6, 2001). Petitioner sought review by the Supreme Court under Rule 45.
Facts as Found in the Record
- Respondent alleged a personal loan owed by petitioner in the amount of P405,430.00 and that, to satisfy the debt, petitioner executed a Deed of Absolute Sale dated October 5, 1996 conveying the subject property to respondent; respondent also alleged she would assume and pay the outstanding NHMFC mortgage (monthly amortization P4,748.11) and that petitioner had arrears of P26,744.09. Respondent alleged petitioner collected rent and refused to remit it, and otherwise failed to cooperate to effect transfer.
- Petitioner admitted certain facts but asserted she was not the principal debtor. Petitioner testified she referred friends to respondent (who dealt with a financier, Arsenio Pua) and that the loans were financed by Pua. Petitioner said she acted as an intermediary or agent, collected commissions, and issued checks to answer for bounced checks of the referred borrowers; she alleged she was coerced into signing the Deed of Absolute Sale to avoid threatened criminal prosecution and alleged defects in the deed’s formalities.
Issues Presented to the Supreme Court
- Whether petitioner can be considered a debtor of respondent.
- Whether an agent not authorized by the principal to collect can directly collect payment from the debtor (i.e., whether respondent, as agent, could sue petitioner).
- Whether the contract of sale (Deed of Absolute Sale) was executed for a valid cause or consideration.
RTC Ruling
The RTC dismissed respondent’s complaint for insufficiency of evidence. The RTC held the Deed of Absolute Sale was void for lack of cause or consideration, noting respondent’s admission that the borrowers were petitioner’s friends and that checks issued by those borrowers undermined the asserted cause. The RTC also observed that the TCT showed an entry (a Special Power of Attorney in favor of petitioner covering the share of Teodorico Doles) suggesting the property was not solely petitioner’s.
Court of Appeals Ruling
The CA reversed the RTC, concluding that petitioner was the real borrower and respondent the real lender. The CA relied on four circumstances in the record: (1) the supposed friends did not personally present themselves to respondent and transactions were handled between petitioner and respondent; (2) funds passed through the bank accounts of petitioner and respondent; (3) petitioner admitted she “re-lent” the money to others for profit; and (4) documentary evidence showed the actual borrowers treated petitioner as their creditor. The CA held the sale was supported by valid consideration (the loan amount of P405,430.00) and ordered petitioner to execute necessary documents, with respondent to pay arrearages to NHMFC. The CA denied claims for damages, attorney’s fees, and rental for January 1997 for insufficiency of evidence. The CA also determined that alleged threats by respondent did not vitiate consent because threats to enforce a just or legal claim through competent authority do not constitute intimidation under Art. 1335.
Supreme Court Standard of Review
The Supreme Court acknowledged the general rule against overturning factual findings of lower courts but identified exceptions permitting review: misapprehension of facts, conflicting findings among courts, and manifest oversight of undisputed facts that could alter the result. The Court determined that re-examination of the record was necessary under these exceptions and found the petition meritorious.
Supreme Court Analysis — Agency and Privity to the Loan Contract
- The Court examined testimony from both parties. Petitioner admitted in cross-examination she acted as an intermediary, that the money would go to persons she referred, that she “re-lent” the money and received commissions. Respondent admitted during her cross-examination that she was representing Arsenio Pua (the principal financier) and that the money was Pua’s; respondent also acknowledged that petitioner’s friends were the actual borrowers and that checks were issued by those friends.
- The Supreme Court found both parties estopped from denying that each acted as agent for disclosed principals: petitioner acted for the referred borrowers; respondent acted for Pua. The Court applied principles in the Civil Code (Art. 1868 et seq.) and jurisprudence regarding representation: agency may be established by conduct and circumstances, may be implied, and a person purporting to act as agent may be estopped from denying agency. It also noted that it is not necessary for the principal personally to meet the third party for agency to arise—impersonal dealings are within the nature and purpose of agency.
- The Court concluded that both petitioner and respondent were merely agents and therefore not in privity to the underlying loan contract between their principals. Because the asserted sale was predicated on that loan, the sale could not be sustained as supported by that loan as consideration.
Supreme Court Analysis — Alternate Consideration and Title/Mortgage Defect
Case Syllabus (G.R. No. 149353)
Procedural History
- Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning the Court of Appeals (CA) Decision dated April 30, 2001 in C.A.-G.R. CV No. 66985 and the CA Resolution dated August 6, 2001 denying Motion for Reconsideration.
- Underlying case initiated by respondent Ma. Aura Tina Angeles in the Regional Trial Court (RTC), Branch 21, City of Manila as Civil Case No. 97-82716: complaint for Specific Performance with Damages filed April 1, 1997.
- RTC rendered judgment on July 29, 1998 dismissing the complaint for insufficiency of evidence.
- Respondent appealed to the CA. CA reversed the RTC and ordered defendant-appellee (petitioner) to execute documents effecting transfer of the subject property to plaintiff-appellant (respondent), with arrearages of the mortgage to be paid by respondent; no costs—CA Decision promulgated April 30, 2001.
- Petitioner filed Motion for Reconsideration with the CA on May 29, 2001; CA denied the motion by Resolution dated August 6, 2001.
- Petitioner received copy of CA Resolution on August 13, 2001 and filed the present Petition on August 28, 2001 raising three issues: (1) whether petitioner can be considered a debtor of respondent; (2) whether an agent not authorized by principal to collect debt may directly collect from debtor; (3) whether the contract of sale was executed for a cause.
Parties and Roles
- Petitioner: Jocelyn B. Doles — defendant in the RTC; owner or purported owner of the subject property; alleged by respondent to have been indebted and to have executed a Deed of Absolute Sale to satisfy that indebtedness.
- Respondent: Ma. Aura Tina Angeles — plaintiff in the RTC; alleges she was lender or acting for a financier and that petitioner ceded property to satisfy a loan; sought specific performance to effect transfer of title and damages.
- Third-party financier repeatedly identified in the record: Arsenio Pua — referred to by both parties; described by respondent as "principal financier" and by petitioner as the capitalist whose funds were used in the lending transactions.
Facts as Alleged by Respondent (Plaintiff)
- Petitioner indebted to respondent in the concept of a personal loan totaling P405,430.00 (principal and interest).
- On October 5, 1996, petitioner executed a Deed of Absolute Sale (Exhibit "B") conveying a 42-square-meter parcel covered by Transfer Certificate of Title No. 382532 (Exhibit "A") at Camella Townhomes Sorrente, Bacoor, Cavite, to respondent allegedly to satisfy the personal loan.
- The property was mortgaged to National Home Mortgage Finance Corporation (NHMFC) to secure petitioner's loan of P337,050.00; respondent allegedly agreed to assume the undue balance and pay monthly amortization of P4,748.11 for the remainder of the 25-year mortgage which began September 3, 1994.
- Property was occupied by a tenant paying monthly rent of P3,000.00; respondent learned petitioner incurred arrearages of P26,744.09 (inclusive of penalties and interest) with NHMFC.
- Petitioner allegedly denied arrearages, refused to cooperate in executing documents required by NHMFC for transfer, collected January 1997 rent and refused to remit proceeds to respondent, causing damages to respondent and necessitating litigation.
Facts and Claims as Alleged by Petitioner (Defendant)
- Petitioner denied being borrower of respondent and contended she acted as intermediary/agent referring friends to respondent (who was known to be engaged in lending through financier Arsenio Pua) from June to September 1995.
- Named referred persons: Zenaida Romulo, Theresa Moratin (Moraquin/Moraquin/Moraquin variations in transcript), Julia (Maria Luisa) Inocencio, Virginia Jacob, Elizabeth Tomelden.
- Those friends purportedly borrowed money and issued personal checks which bounced for insufficiency of funds; petitioner assisted respondent in collection but could not locate borrowers.
- Petitioner claims she was compelled to issue eight checks amounting to P350,000 to answer for the bounced checks of referred borrowers; she warned respondent the checks were insufficiently funded but respondent deposited them and they were dishonored.
- Respondent threatened criminal prosecution under Batas Pambansa Blg. 22; petitioner was allegedly coerced into executing the "Absolute Deed of Sale" to avoid criminal prosecution.
- Petitioner asserted the deed had no valid consideration; challenged formalities (did not appear before a notary public; community tax certificate number on the deed not hers) and accused respondent of potential falsification and perjury; claimed damages and loss of rental.
Issues Identified by the RTC
- Whether the Deed of Absolute Sale is valid.
- If valid, whether petitioner is obliged to sign and execute necessary documents to effect transfer of rights over the property to respondent.
- Whether petitioner is liable for damages.
RTC Decision and Rationale
- RTC dismissed the complaint for insufficiency of evidence (July 29, 1998).
- RTC held the sale was void for lack of cause or consideration under Article 1352, Civil Code, reasoning that respondent's admission that the borrowers were friends of defendant and that the checks issued by these borrowers in payment of the loan negated the consideration of the sale.
- RTC observed the Transfer Certificate of Title No. 382532 contained an entry (Entry No. 9055) showing a Special Power of Attorney in favor of Jocelyn Doles covering the share of Teodorico Doles, indicating the property was not solely owned by defendant and raising doubt about petitioner's capacity to convey.
- RTC applied rule that contracts without a cause or consideration produce no effect.
CA Decision and Rationale (April 30, 2001)
- CA reversed the RTC and ordered defendant-appellee to execute all necessary documents to effect transfer of the subject property to plaintiff-appellant; arrearages of petitioner's loan with NHMFC to be paid at respondent's expense; denied claims for P3,000 rent for January 1997 and for damages and attorney's fees for insufficiency of evidence; no costs.
- CA concluded petitioner was the borrower and that she "re-lent" amounts borrowed from respondent to her friends; therefore the Deed of Absolute Sale was suppo