Case Summary (G.R. No. 9188)
Petitioner and Respondent
Petitioner/appellant: Engracio Orense — owner of the property of record and defendant in the civil action. Respondent/appellee: Gutierrez Hermanos — purchaser under a notarial instrument executed by Jose Duran, claiming the benefit of that sale and seeking specific performance, rent and damages.
Key Dates
Notable factual and procedural dates in the record: execution of the notarial instrument of sale by Jose Duran on February 14, 1907 (sale with a four‑year right of repurchase); lease in force to February 14, 1911 (during which plaintiff did not take possession); oral testimony by Orense confirming consent given during a criminal trial (record shows a declaration on March 14, 1912); complaint filed March 5, 1913; trial court judgment April 14, 1913; appeal by bill of exceptions and Supreme Court decision on review (decision date in the record).
Applicable Law
Primary statutes and doctrines invoked by the court: provisions of the Civil Code concerning agency and ratification (articles cited in the record include arts. 1709, 1710, 1727, 1888, 1892, 1259, 1309 and 1313), procedural provision requiring written authority for certain contracts (paragraph 5, section 335 of the Code of Civil Procedure as pleaded by defendant), and the land‑registration regime (Act No. 496) under which the defendant relied on the fact that title was recorded in his name. The court’s reasoning rests on agency and ratification principles in the Civil Code and on evidentiary proof of consent.
Factual Background
On February 14, 1907 Jose Duran executed a public instrument purporting to sell the described property to Gutierrez Hermanos for P1,500, reserving to himself a right to repurchase within four years. Gutierrez Hermanos did not take possession immediately because the property continued to be occupied by Orense and Duran under a lease which ran until February 14, 1911. After the redemption period lapsed, Orense refused to convey or to pay rent at the pleaded rate; Gutierrez Hermanos charged Duran with estafa in criminal proceedings. During that criminal trial Orense, when examined, testified that he had consented to Duran’s sale of the property. Duran was acquitted on account of that testimony. Thereafter Gutierrez Hermanos instituted the present civil action seeking a decree that the property belongs to the plaintiff, an order compelling Orense to execute conveyance of all his rights in favor of the plaintiff, payment of rent from February 14, 1911, damages, and costs.
Procedural Posture
The plaintiff’s amended complaint survived demurrer. Orense denied substantive allegations and interposed two special defenses: (1) that the pleaded facts did not constitute a cause of action, and (2) that his registered title in the property (Act No. 496 proceedings) was conclusive and that there was no written power of attorney authorizing Duran to sell. After trial the Court of First Instance rendered judgment ordering Orense to execute the conveyance in favor of Gutierrez Hermanos, to pay P780 in damages (and costs), and to account for rentals; the defendant excepted, sought a new trial which was denied, and appealed by bill of exceptions.
Issues Presented
The principal legal questions resolved by the court were: (a) whether Orense’s oral consent (and subsequent public confirmation) to the sale by his nephew constitutes a valid ratification or authorization that binds him to the sale; (b) whether such ratification cures any initial defect or nullity in the contract arising from the lack of written authority; and (c) whether the defendant’s registered title and the alleged absence of written authority prevent enforcement of the sale against him.
Court’s Analysis on Agency and Ratification
The court found that Orense had, by his testimony in the criminal trial and by subsequent evidence, admitted and ratified the sale effected by his nephew. Under the Civil Code principles applied by the court, a principal who consents to or ratifies acts done in his name by another confers either verbal or implied agency and is bound by obligations entered into by the agent within the scope of that authority (citing the relevant Civil Code articles relied upon in the record). Even if consent were given after the sale, the owner’s approval operated as an express authorization by ratification (again relying on the Code provisions referenced in the record). The court emphasized that ratification under article 1313 (as cited) remedies defects present in the contract from its inception and that article 1309 (as cited) extinguishes the right of action for nullification once the contract has been validly confirmed and ratified by the principal. Thus the sworn admission of consent by Orense cured the initial defect (lack of written authority) and rendered the sale effective from its
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Procedural History
- Appeal by bill of exceptions from the judgment rendered April 14, 1913, by Hon. P. M. Moir, Judge, in the Court of First Instance of Albay.
- Complaint (filed March 5, 1913 and afterwards amended) by Gutierrez Hermanos against Engracio Orense seeking specific performance of a conveyance, rents/damages, and costs; demurrer to the amended complaint overruled.
- Defendant excepted, made general denial except where admissions were made, and asserted special defenses; motion for a new trial after judgment was denied; proper bill of exceptions was approved, certified, and forwarded to the clerk of the Supreme Court.
- Supreme Court decision rendered December 4, 1914 (28 Phil. 571), affirming the trial court judgment with costs against the appellant.
Material Facts
- Prior to and on February 14, 1907, Engracio Orense was owner of a parcel of land with buildings and improvements in the pueblo of Guinobatan, Albay, recorded in the new property registry in Orense's name under certificate No. 5 with stated boundaries.
- On February 14, 1907, Jose Duran, a nephew of Orense, executed before a notary a public instrument selling and conveying the described property to Gutierrez Hermanos for P1,500, reserving to himself the right to repurchase it for the same price within four years of the instrument.
- The plaintiff had not entered possession of the property because it continued to be occupied by Orense and Jose Duran; plaintiff had executed a lease to Duran which remained in force until February 14, 1911.
- Jose Duran was notoriously insolvent, and the plaintiff alleged it could not recover the purchase price or losses from him.
- After the four-year redemption period expired (February 14, 1911), Orense refused to deliver the property to the purchaser and refused to pay rent despite demands for P30 per month, the plaintiff alleging bad faith and claiming ownership and possession rights.
- Jose Duran was criminally charged with estafa for representing himself as absolute owner; during that criminal trial, Engracio Orense, when interrogated by the fiscal, replied that he had consented to Duran's selling the property; on that basis Duran was acquitted.
- Following Duran's acquittal and Orense's sworn admission of consent, Gutierrez Hermanos filed the present civil action against Orense seeking, among other things, that Orense be compelled to execute a deed of transfer and to pay rents from February 14, 1911.
Issues Presented
- Whether the sale by Jose Duran to Gutierrez Hermanos (February 14, 1907), made with a right of redemption, was valid and effective as against the record owner Engracio Orense.
- Whether Orense had given authority (written, verbal, or implied) to Jose Duran to sell the property in Orense’s name, and if not, whether subsequent ratification cured any defect.
- Whether registration of the property in Orense's name under Act No. 496 rendered Orense’s title conclusive against the plaintiff’s claim.
- Whether lack of written authority (power of attorney) as required by paragraph 5 of section 335 of the Code of Civil Procedure invalidated the sale.
- Whether the plaintiff was entitled to specific performance (execution of a conveyance by Orense), rent/damages (P30 per month from February 14, 1911), or alternatively P3,000 as damages.
Plaintiff’s Allegations and Prayer
- Alleged Duran executed the deed of sale on February 14, 1907 with Orense’s knowledge and consent; sale recorded in a public instrument; plaintiff had not entered possession due to continued occupancy by Orense and Duran.
- Alleged Duran had reserved right to repurchase for four years; after expiration of that period plaintiff demanded conveyance and possession but Orense refused without justifiable cause.
- Alleged Duran’s insolvency meant plaintiff could not be made whole by recourse against the vendor.
- Sought judgment declaring the land and improvements belong to plaintiff; ordering Orense to execute legal deed of transfer and conveyance of all his rights; sentencing Orense to pay P30 per month from February 14, 1911 until restitution; alternatively, awarding P3,000 as damages plus interest; and awarding costs and legal expenses.
Defendant’s Pleadings and Defenses
- Genera