g. Araneta digested case

TITLE: GREGORIO ARANETA, INC., plaintiff-appellant, vs. PAZ TUASON DE PATERNO and JOSE VIDAL, defendants-appellants. G.R. No. L-2886; August 22, 1952 SUBJECT OF THE CASE: This is an appeal by plaintiff Gregorio Araneta Inc. and the mortgagor Jose Vidal of the judgment of Judge Rodas in declaring that the mortgage remained intact and subsisting. FACTS OF THE CASE: Paz Tuason de Paterno, who is the registered owner of an approximately 40,703 square meter land, obtained from Jose Vidal several loans totalling P90,098 and constituted a first mortgage on the aforesaid property to secure the debt. In January and April, 1943, she obtained additional loans of P30,000 and P20,000 upon the same security. On each of the last-mentioned occasions the previous contract of mortgage was renewed and the amounts received were consolidated. In the first novated contract the time of payment was fixed at two years and in the second and last at four years. In 1943 Paz Tuason decided to sell the entire property for the net amount of P400,000 to Gregorio Araneta, who at that time Jose Araneta was said to be the president of the same. Allegedly, Jose Araneta also acted as agent of Paz Tuason for the sale of the latter’s land. Thus, the result of the negotiations was the execution on October 19, 1943, of a contract called "Promesa de Compra y Venta". This contract also stated that Paz Tuason would sell to Gregorio Araneta, Inc. for the said amount of P400,000 the entire estate except for the mortgage to Jose Vidal. Paz Tuason had offered to Vidal the check for P143,150 in full settlement of her mortgage obligation, but the mortgagee had refused to receive that check or to cancel the mortgage. A case was filed against Vidal but the action never came on for trial and the record and the checks were destroyed during the war operations in January or February, 1945; and neither was the case reconstituted afterward. After liberation, an instant action was begun by Gregorio Araneta, Inc. to compel Paz Tuason to deliver to the plaintiff a clear title to the lots described free from all liens and encumbrances, and a deed of cancellation of the mortgage to Vidal. Vidal came into the case in virtue of a summon issued by order of the court, and filed a cross-claim against Paz Tuazon to foreclose his mortgage. The lower court's judgment was that deed of sale between Araneta and Tuason was invalid., unless Vidal's mortgage was cancelled. ISSUE: Whether or not Jose Araneta acted as agent of Paz Tuason de Paterno. HELD:

No. Jose Araneta did not act as agent of Paz Tuason. Even if Paz Tuason have known that Jose Araneta is the same as Gregorio Arantea Inc., she would still go with sale of her property as Jose Araneta did not by way of being an agent performed such act of being an agent for the sale was between the corporation and not that of with Jose. Otherwise, greed would have set in in the heart of Jose, would Jose have been the agent as well as the purchaser of the property of Paz, than to respect their trusted and respected relationship as principal and agent. Moreover, Jose Araneta was not given any authority to make a binding contract. He was not given the confidence to administer, and act in behalf of Paz so there was no betrayal of thrust as Jose acted only as a middle-man tasked only to look for a buyer and not to administer any sale between any prospective buyers. Adding to this, Jose was not to make the terms of payment. Therefore, Jose Araneta was left with no power or discretion whatsoever, which he could abuse to his advantage and to the owner's prejudice. He is not entrusted as an agent for the agent’s incapacity to buy principal’s property rests in the fact that the agent and principal form one juridical person. DOCTRINE: ART. 1459. The following persons can not acquire by purchase, even at public or judicial auction, neither in person nor by an agent: 2. Agents, the property the administration or sale of which may have been intrusted to them. Agency is defined in article 1709 in broad term, In the opinion of Manresa(10 Manresa 4th ed. 100), agent in the sense there used is one who accepts another's representation to perform in his name certain acts of more or less transcendency. Scaevola (Vol. 23, p. 403) says that the agent's in capacity to buy his principal's property rests in the fact that the agent and the principal form one juridicial person. In this connection Scaevola observes that the fear that greed might get the better of the sentiments of loyalty and disinterestedness which should animate an administrator or agent, is the reason underlying various classes of incapacity enumerated in article 1459. And as American courts commenting on similar prohibition at common law put it, the law does not trust human nature to resist the temptations likely to arise of antagonism between the interest of the seller and the buyer. So the ban of paragraph 2 of article 1459 connotes the idea of trust and confidence; the relationship does not involve considerations of good faith and integrity the prohibition should not and does not apply. To come under the prohibition, the agent must be in a fiduciary with his principal.

Art. 1491. Para. 2- the following persons can not acquire by purchase, even at a pulic or judicial auction , either in person or through the mediation of another: (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal have been given. LORA, JERRYCHAM ADAOAG 2ND YEAR LLB. Agents and Partnership