THIRD
DIVISION
|
EDUARDO B. OLAGUER,
Petitioner, - versus
- EMILIO PURUGGANAN, JR. AND RAUL
LOCSIN, Respondents. |
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G.R. No. 158907 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CALLEJO,
SR., CHICO-NAZARIO,
and NACHURA,* JJ. Promulgated: |
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D
E C I S I O N
CHICO-NAZARIO, J.:
This
is a Petition for Review on Certiorari,
under Rule 45 of the Rules of Court, assailing the Decision,[1] dated 30 June 2003, promulgated by the Court of Appeals, affirming
the Decision of the Regional Trial Court, dated 26 July 1995, dismissing the petitioner’s suit.
The parties presented conflicting
accounts of the facts.
EDUARDO B.
OLAGUER’S VERSION
Petitioner Eduardo B. Olaguer alleges that he was the owner of 60,000 shares of
stock of Businessday Corporation (Businessday)
with a total par value of P600,000.00, with
Certificates of Stock No. 005, No. 028,
No. 034, No. 070, and No. 100.[2] At the time he was employed with the
corporation as Executive Vice-President of Businessday,
and President of Businessday Information Systems and
Services and of Businessday Marketing Corporation,
petitioner, together with respondent Raul Locsin (Locsin) and Enrique Joaquin (Joaquin), was active in the
political opposition against the Marcos dictatorship.[3] Anticipating the possibility that petitioner
would be arrested and detained by the Marcos military, Locsin,
Joaquin, and Hector Holifeña had an unwritten
agreement that, in the event that petitioner was arrested, they would support
the petitioner’s family by the continued payment of his salary.[4] Petitioner also executed a Special Power of
Attorney (SPA), on
On
As part of his scheme to defraud the
petitioner, respondent Locsin sent Rebecca Fernando,
an employee of Businessday, to Camp Crame where the petitioner was detained, to pretend to
borrow Certificate of Stock No. 100 for the purpose of using it as additional
collateral for Businessday’s then outstanding loan
with the National Investment and Development Corporation. When Fernando returned the borrowed stock
certificate, the word “cancelled” was already written therein. When the petitioner became upset, Fernando
explained that this was merely a mistake committed by respondent Locsin’s secretary.[8]
During the trial, petitioner also
agreed to stipulate that from 1980 to 1982, Businessday
made regular deposits, each amounting to P10,000.00,
to the Metropolitan Bank and Trust Company accounts of Manuel and Genaro Pantig, petitioner’s
in-laws. The deposits were made on every
15th and 30th of the month.[9] Petitioner alleged that these funds consisted
of his monthly salary, which Businessday agreed to
continue paying after his arrest for the financial support of his family.[10] After receiving a total of P600,000.00, the payments stopped. Thereafter, respondent Locsin
and Fernando went to ask petitioner to endorse and deliver the rest of his
stock certificates to respondent Locsin, but
petitioner refused. [11]
On
RESPONDENT
RAUL LOCSIN’S VERSION
In his version of the facts,
respondent Locsin contended that petitioner
approached him and requested him to sell, and, if necessary, buy petitioner’s
shares of stock in Businessday, to assure support for
petitioner’s family in the event that something should happen to him,
particularly if he was jailed, exiled or forced to go underground.[13] At the time petitioner was employed with Businessday, respondent Locsin
was unaware that petitioner was part of a group, Light-a-Fire Movement, which
actively sought the overthrow of the Marcos government through an armed
struggle.[14] He denied that he made any arrangements to
continue paying the petitioner’s salary in the event of the latter’s
imprisonment.[15]
When petitioner was detained,
respondent Locsin tried to sell petitioner’s shares,
but nobody wanted to buy them.
Petitioner’s reputation as an oppositionist resulted in the poor
financial condition of Businessday and discouraged
any buyers for the shares of stock.[16]
In view of petitioner’s previous
instructions, respondent Locsin decided to buy the
shares himself. Although the capital
deficiency suffered by Businessday caused the book
value of the shares to plummet below par value, respondent Locsin,
nevertheless, bought the shares at par value.[17] However, he had to borrow from Businessday the funds he used in purchasing the shares from
petitioner, and had to pay the petitioner in installments of P10,000.00 every 15th and 30th of each
month.[18]
The trial court in its Decision, dated
P600,000.00 as payment for the
shares of stock.[19] The dispositive
part of the trial court’s Decision reads:
WHEREFORE,
for failure of the [herein petitioner] to prove by preponderance of evidence,
his causes of action and of the facts alleged in his complaint, the instant
suit is hereby ordered DISMISSED, without pronouncement as to costs.
[Herein
respondents’] counterclaims, however, are hereby DISMISSED, likewise, for
dearth of substantial evidentiary support.[20]
On appeal, the Court of Appeals
affirmed the Decision of the trial court that there was a perfected contract of
sale.[21] It further ruled that granting that there was
no perfected contract of sale, petitioner, nevertheless, ratified the sale to
respondent Locsin by his receipt of the purchase
price, and his failure to raise any protest over the said sale.[22] The Court of Appeals refused to credit the
petitioner’s allegation that the money his wife received constituted his salary
from Businessday since the amount he received as his
salary, P24,000.00 per month, did not
correspond to the amount he received during his detention, P20,000.00
per month (deposits of P10,000.00 on every 15th and 30th
of each month in the accounts of the petitioner’s in-laws). On the other hand,
the total amount received, P600,000.00,
corresponds to the aggregate par value of petitioner’s shares in Businessday.
Moreover, the financial condition of Businessday
prevented it from granting any form of financial assistance in favor of the
petitioner, who was placed in an indefinite leave of absence, and, therefore,
not entitled to any salary. [23]
The Court of Appeals also ruled that
although the manner of the cancellation of the petitioner’s certificates of
stock and the subsequent issuance of the new certificate of stock in favor of
respondent Locsin was irregular, this irregularity
will not relieve petitioner of the consequences of a consummated sale.[24]
Finally, the Court of Appeals affirmed
the Decision of the trial court disallowing respondent Locsin’s
claims for moral and exemplary damages due to lack of supporting evidence.[25]
Hence, the present petition, where the
following issues were raised:
I.
THE APPELLATE COURT ERRED IN RULING THAT THERE WAS A
PERFECTED CONTRACT OF
II.
THE APPELLATE COURT ERRED IN RULING THAT PETITIONER
CONSENTED TO THE ALLEGED
III.
THE APPELLATE COURT ERRED IN RULING THAT THE AMOUNTS
RECEIVED BY PETITIONER’S IN LAWS WERE NOT PETITIONER’S SALARY FROM THE
CORPORATION BUT INSTALLMENT PAYMENTS FOR THE SHARES;
IV.
THE APPELLATE COURT ERRED IN RULING THAT MR. LOCSIN
WAS THE PARTY TO THE ALLEGED
V.
THE APPELLATE COURT ERRED IN RULING THAT THE ALLEGED
The petition
is without merit.
The
first issue that the petitioner raised is that there was no valid sale since
respondent Locsin exceeded his authority under the
SPA[27]
issued in his, Joaquin and Holifena’s favor. He alleged that the authority of the afore-named
agents to sell the shares of stock was limited to the following conditions: (1)
in the event of the petitioner’s absence and incapacity; and (2) for the
limited purpose of applying the proceeds of the sale to the satisfaction of
petitioner’s subsisting obligations with the companies adverted to in the SPA.[28]
Petitioner
sought to impose a strict construction of the SPA by limiting the definition of
the word “absence” to a condition wherein “a person disappears from his
domicile, his whereabouts being unknown, without leaving an agent to administer
his property,”[29] citing
Article 381 of the Civil Code, the entire provision hereunder quoted:
ART
381. When a person disappears from his
domicile, his whereabouts being unknown, and without leaving an agent to
administer his property, the judge, at the instance of an interested party, a
relative, or a friend, may appoint a person to represent him in all that may be
necessary.
This
same rule shall be observed when under similar circumstances the power
conferred by the absentee has expired.
Petitioner also puts forward that the
word “incapacity” would be limited to mean “minority, insanity, imbecility, the state of being deaf-mute, prodigality and civil
interdiction.”[30] He cites Article 38 of the Civil Code, in
support of this definition, which is hereunder quoted:
ART.
38 Minority, insanity or
imbecility, the state of being a deaf-mute, prodigality and civil interdiction
are mere restrictions on capacity to act, and do not exempt the incapacitated
person, from certain obligations, as when the latter arise from his acts or
from property relations, such as easements.
Petitioner,
thus, claims that his arrest and subsequent detention are not among the
instances covered by the terms “absence or incapacity,” as provided under the
SPA he executed in favor of respondent Locsin.
Petitioner’s arguments are unpersuasive.
It is a general rule that a power of attorney must be strictly construed; the
instrument will be held to grant only those powers that are specified, and the
agent may neither go beyond nor deviate from the power of attorney. However, the rule is not absolute and should
not be applied to the extent of destroying the very purpose of the power. If the language will permit, the construction
that should be adopted is that which will carry out instead of defeat the
purpose of the appointment. Clauses in a
power of attorney that are repugnant to each other should be reconciled so as
to give effect to the instrument in accordance with its general intent or
predominant purpose. Furthermore, the
instrument should always be deemed to give such powers as essential or usual in
effectuating the express powers.[31]
In the present case, limiting the
definitions of “absence” to that provided under Article 381 of the Civil Code
and of “incapacity” under Article 38 of the same Code negates the effect of the
power of attorney by creating absurd, if not impossible, legal situations.
Article 381 provides the necessarily stringent standards that would justify the
appointment of a representative by a judge.
Among the standards the said article enumerates is that no agent has
been appointed to administer the property.
In the present case, petitioner himself had already authorized agents to
do specific acts of administration and thus, no longer necessitated the
appointment of one by the court.
Likewise, limiting the construction of “incapacity” to “minority,
insanity, imbecility, the state of being a deaf-mute, prodigality and civil
interdiction,” as provided under Article 38, would render the SPA
ineffective. Article 1919(3) of the
Civil Code provides that the death, civil interdiction, insanity or insolvency
of the principal or of the agent extinguishes the agency. It would be equally incongruous, if not
outright impossible, for the petitioner to require himself to qualify as a
minor, an imbecile, a deaf-mute, or a prodigal before the SPA becomes
operative. In such cases, not only would
he be prevented from appointing an agent, he himself would be unable to
administer his property.
On the other hand, defining the terms
“absence” and “incapacity” by their everyday usage makes for a reasonable
construction, that is, “the state of not being present” and the “inability to
act,” given the context that the SPA authorizes the agents to attend
stockholders’ meetings and vote in behalf of petitioner, to sell the shares of
stock, and other related acts. This
construction covers the situation wherein petitioner was arrested and detained. This much is admitted by petitioner in his
testimony.[32]
Petitioner’s contention that the
shares may only be sold for the sole purpose of applying the proceeds of the
sale to the satisfaction of petitioner’s subsisting obligations to the company
is far-fetched. The construction, which
will carry out the purpose, is that which should be applied. Petitioner had not submitted evidence that he
was in debt with Businessday at the time he had
executed the SPA. Nor could he have considered
incurring any debts since he admitted that, at the time of its execution, he
was concerned about his possible arrest, death and disappearance. The language of the SPA clearly enumerates, as among those acts that the agents were
authorized to do, the act of applying the proceeds of the sale of the
shares to any obligations petitioner might have against the Businessday
group of companies. This interpretation is
supported by the use of the word “and” in enumerating the authorized acts,
instead of phrases such as “only for,”
“for the purpose of,” “in order to” or any similar terms to indicate
that the petitioner intended that the SPA be used only for a limited purpose,
that of paying any liabilities with the Businessday
group of companies.
Secondly, petitioner argued that the
records failed to show that he gave his consent to the sale of the shares to
respondent Locsin for the price of P600,000.00. This
argument is unsustainable. Petitioner
received from respondent Locsin, through his wife and
in-laws, the installment payments for a total of P600,000.00
from 1980 to 1982, without any protest or complaint. It was only four years after 1982 when
petitioner demanded the return of the shares. The petitioner’s claim that he
did not instruct respondent Locsin to deposit the
money to the bank accounts of his in-laws fails to prove that petitioner did
not give his consent to the sale since respondent Locsin
was authorized, under the SPA, to negotiate the terms and conditions of the
sale including the manner of payment.
Moreover, had respondent Locsin given the
proceeds directly to the petitioner, as the latter suggested in this petition,
the proceeds were likely to have been included among petitioner’s properties
which were confiscated by the military.
Instead, respondent Locsin deposited the money
in the bank accounts of petitioner’s in-laws, and consequently, assured that
the petitioner’s wife received these amounts.
Article 1882 of
the Civil Code provides that the limits of an agent’s authority shall not be
considered exceeded should it have been performed in a manner more advantageous
to the principal than that specified by him.
In addition, petitioner made two
inconsistent statements when he alleged that (1) respondent Locsin
had not asked the petitioner to endorse and deliver the shares of stock, and
(2) when Rebecca Fernando asked the petitioner to endorse and deliver the
certificates of stock, but petitioner refused and even became upset.[33] In either case, both statements only prove
that petitioner refused to honor his part as seller of the shares, even after
receiving payments from the buyer. Had
the petitioner not known of or given his consent to the sale, he would have
given back the payments as soon as Fernando asked him to endorse and deliver
the certificates of stock, an incident which unequivocally confirmed that the
funds he received, through his wife and his in-laws, were intended as payment
for his shares of stocks. Instead,
petitioner held on to the proceeds of the sale after it had been made clear to
him that respondent Locsin had considered the P600,000.00
as payment for the shares, and asked petitioner, through Fernando, to endorse
and deliver the stock certificates for cancellation.
As regards the third issue,
petitioner’s allegation that the installment payments he was adjudged to have
received for the shares were actually salaries which Businessday
promised to pay him during his detention is unsupported and implausible. Petitioner received P20,000.00 per month through his in-laws; this amount does not
correspond to his monthly salary at P24,000.00.[34] Nor does the amount received correspond to
the amount which Businessday was supposed to be
obliged to pay petitioner, which was only P45,000.00
to P60,000.00 per annum.[35]
Secondly, the petitioner’s wife did not
receive funds from respondent Locsin or Businessday for the entire duration of petitioner’s
detention. Instead, when the total amount
received by the petitioner reached the aggregate amount of his shares at par
value -- P600,000.00 -- the payments
stopped. Petitioner even testified that
when respondent Locsin denied knowing the petitioner
soon after his arrest, he believed respondent Locsin’s
commitment to pay his salaries during his detention to be nothing more than
lip-service.[36]
Granting that petitioner was able to
prove his allegations, such an act of gratuity, on the part of Businessday in favor of petitioner, would be void. An arrangement whereby petitioner will
receive “salaries” for work he will not perform, which is not a demandable debt
since petitioner was on an extended leave of absence, constitutes a donation
under Article 726[37]
of the Civil Code. Under Article 748 of
the Civil Code, if the value of the personal property donated exceeds P5,000.00, the donation and the acceptance shall have to be
made in writing. Otherwise, the donation
will be void. In the present case,
petitioner admitted in his testimony[38]
that such arrangement was not made in writing and, hence, is void.
The fact that some of the deposit
slips and communications made to petitioner’s wife contain the phrase
“household expenses” does not disprove the sale of the shares. The money was being deposited to the bank
accounts of the petitioner’s in-laws, and not to the account of the petitioner
or his wife, precisely because some of his property had already been
confiscated by the military. Had they
used the phrase “sale of shares,” it would have defeated the purpose of not
using their own bank accounts, which was to conceal from the military any
transaction involving the petitioner’s property.
Petitioner raised
as his fourth issue that granting that there was a sale, Businessday,
and not respondent Locsin, was the party to the
transaction. The curious facts that the payments were received on the 15th
and 30th of each month and that the payor
named in the checks was Businessday, were adequately
explained by respondent Locsin. Respondent Locsin
had obtained cash advances from the company, paid to him on the 15th
and 30th of the month, so that he can pay petitioner for the
shares. To support his claim, he
presented Businessday’s financial records and the
testimony of Leo Atienza, the Company’s Accounting
Manager. When asked why the term “shares
of stock” was used for the entries, instead of “cash advances,” Atienza explained that the term “shares of stock” was more
specific rather than the broader phrase “cash advances.”[39] More to the point, had the entries been for “shares
of stock,” the issuance of shares should have been reflected in the stock and
transfer books of Businessday, which the petitioner
presented as evidence. Instead the stock
and transfer books reveal that the increase in respondent Locsin’s
shares was a result of the cancellation and transfer of petitioner’s shares in
favor of respondent Locsin.
Petitioner
alleges that the purported sale between himself and respondent Locsin of the disputed shares of stock is void since it
contravenes Article 1491 of the Civil Code, which provides that:
ART.
1491. The following persons cannot
acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:
x x x
x
(2) Agents, the property whose
administration or sale may have been entrusted to them, unless the consent of
the principal has been given; x x x.
It
is, indeed, a familiar and universally recognized doctrine that a person who
undertakes to act as agent for another cannot be permitted to deal in the
agency matter on his own account and for his own benefit without the consent of
his principal, freely given, with full knowledge of every detail known to the
agent which might affect the transaction.[40] The
prohibition against agents purchasing property in their hands for sale or
management is, however, clearly, not absolute.
It does not apply where the principal consents to the sale of the
property in the hands of the agent or administrator.[41]
In
the present case, the parties have conflicting allegations. While respondent Locsin
averred that petitioner had permitted him to purchase petitioner’s shares,
petitioner vehemently denies having known of the transaction. However, records show that petitioner’s
position is less credible than that taken by respondent Locsin
given petitioner’s contemporaneous and subsequent acts.[42] In 1980, when Fernando returned a stock
certificate she borrowed from the petitioner, it was marked “cancelled.” Although the petitioner alleged that he was
furious when he saw the word cancelled, he had not demanded the issuance of a
new certificate in his name. Instead of
having been put on his guard, petitioner remained silent over this obvious red
flag and continued receiving, through his wife, payments which totalled to the aggregate amount of the shares of stock
valued at par. When the payments
stopped, no demand was made by either petitioner or his wife for further
payments.
From
the foregoing, it is clear that petitioner knew of the transaction, agreed to
the purchase price of P600,000.00 for the
shares of stock, and had in fact facilitated the implementation of the terms of
the payment by providing respondent Locsin, through
petitioner’s wife, with the information on the bank accounts of his
in-laws. Petitioner’s wife and his son
even provided receipts for the payments that were made to them by respondent Locsin,[43] a
practice that bespeaks of an onerous transaction and not an act of gratuity.
Lastly, petitioner claims that the
cancellation of the shares and the subsequent transfer thereof were fraudulent,
and, therefore, illegal. In the present case, the shares were transferred in
the name of the buyer, respondent Locsin, without the
petitioner delivering to the buyer his certificates of stock. Section 63 of the Corporation Code provides
that:
Sec.63.
Certificate of stock and transfer of shares.— xxx Shares of stock so issued are
personal property and may be transferred by delivery of the certificate or
certificates indorsed by the owner or his attorney-in-fact or other person
legally authorized to make the transfer.
No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in
the books of the corporation showing the names of the parties to the
transaction, the date of the transfer, the number of the certificate or
certificates and the number of shares transferred. (Emphasis provided.)
The aforequoted
provision furnishes the procedure for the transfer of shares – the delivery of
the endorsed certificates, in order to prevent the fraudulent transfer of
shares of stock. However, this rule
cannot be applied in the present case without causing the injustice sought to
be avoided. As had been amply demonstrated, there was a valid sale of
stocks. Petitioner’s failure to deliver
the shares to their rightful buyer is a breach of his duty as a seller, which
he cannot use to unjustly profit himself by denying the validity of such sale. Thus, while the manner of the cancellation of
petitioner’s certificates of stock and the issuance of the new certificates in
favor of respondent Locsin was highly irregular, we
must, nonetheless, declare the validity of the sale between the parties. Neither does this irregularity prove that the
transfer was fraudulent. In his
testimony, petitioner admitted that they had intended to conceal his being a
stockholder of Businessday.[44] The cancellation of his name from the stock
and transfer book, even before the shares were actually sold, had been done
with his consent. As earlier explained,
even the subsequent sale of the shares in favor of Locsin
had been done with his consent.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED.
This Court AFFIRMS the assailed
Decision of the Court of Appeals, promulgated on
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIO
Associate Justice |
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice Associate Justice
On Leave
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief
Justice
* On leave.
[1] Penned by Associate Justice Ruben
T. Reyes with Associate Justices Elvi John S. Assuncion and Lucas P. Bersamin,
concurring; rollo, pp.
70-86.
[2]
[3]
[4]
[5] Records, Volume 1, pp. 217-218.
[6] Rollo, p. 19.
[7]
[8]
[9] Records, Volume II, pp. 519-520.
[10] Rollo, pp. 21-22.
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19] CA rollo, pp. 818-822.
[20] Records, Vol. II, p. 822.
[21] Rollo, pp. 76-79.
[22]
[23]
[24]
[25]
[26]
[27]
KNOW ALL MEN BY THESE PRESENTS:
THAT I, EDUARDO B. OLAGUER, of legal age, xxx, have named, appointed and constituted, and by these presents, do hereby name, constitute and appoint Messers. RAUL L. LOCSIN, ENRIQUE M. JOAQUIN, and HECTOR HOFILEÑA, all of legal age and with business address c/o Businessday Corporation, 113 West Avenue, Quezon City, jointly and individually, to be my true and lawful attorneys-in-fact, for me and in my name, place and stead, in the event of my absence or incapacity, to do or perform any or all of the following acts and things, to wit:
1. For me and in my stead to attend and vote my stock at any stockholders’ meeting of the Businessday Group of Companies, consisting of the Businessday Corporation, Businessday Information Systems & Services, Inc., and Businessday Marketing Corporation, of all of which I am a stockholder, and to take such action as may be in my interest as fully as I could do if personally present, and for this purpose to sign and execute any proxies or other instruments in my name or on my behalf, appointing my said attorneys, or any one of them, or any other person as my proxy or proxies;
2. To sell, assign, transfer, endorse and deliver, for such price or prices, and under such terms and conditions, as my said attorneys-in-fact may deem proper, any and all shares of stock now held or which may hereafter be held by me in the aforesaid companies; to receive payment or payments from the buyer; buyers thereof; to make, execute and deliver receipts for such payments; and to apply the net proceeds of any such sale, assignment and transfer to the liquidation of and satisfaction for any and all obligations that I may have with the said companies.
[28] Rollo, p. 31.
[29]
[30]
[31] 3 Am. Jur. 2d, 536-537.
[32] Records, Volume I, p. 188.
Q: In other words Mr. Witness, it is not correct to conclude that when you executed that special power of attorney, you contemplated your possible arrest at that time?
A: Arrest, death and disappearance.
[33] Rollo, pp. 34, 1929.
[34] Records, Volume I, p. 196. Petitioner confirmed the Court of Appeal’s
factual finding that he received
a monthly salary of P24,000.00 when he testified receiving an equivalent
amount estimated at P250,000.00
to P300,000.00 per annum.
[35]
[36]
[37] ART. 726. When a person gives to another a thing or right on account of the latter’s merits or of the services rendered by him to the donor, provided they do not constitute a demandable debt, or when the gift imposes upon the donee a burden which is less than the value of the thing given, there is also a donation.
[38] Records, Volume I, p. 243.
[39] Records, TSN Duplicate, p. 2087.
[40] 3 Am. Jur. 2d, pp. 727-728.
[41] Distajo v. Court of Appeals, 393 Phil. 426, 433 (2000); Pelayo v. Perez, G.R. No. 141323,
[42] Article 1371 of the Civil Code provides that:
ART. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.
[43] TSN,
[44] Records, Volume I, pp. 217-218.