14-ATP-Escueta vs. Lim

ESCUETA VS.
LIM
G.R. No. 137162. January 24, 2007
PARTIES
Ignacio Rubio as principal; Patricia Llamas as agent; Virginia Rubio Lim as sub-agent; Rufina Lim as
buyer/third person; Escueta as buyer who cast clouds upon subject property.
DOCTRINE
An agent may appoint a substitute agent if the principal does not prohibit such, but he or she will have to
be responsible for the acts of the sub-agent.
FACTS
This case involves 10 lots owned by Ignacio Rubio and the heirs of Baloloy, sold by Virginia Rubio Lim
(Virginia) to Rufina Lim. For this, Rufina avers that she paid a down payment in the amount of
P102,169.86 and P450,000.00 respectively to Ignacio Rubio and Baloloys. However, Ignacio Rubio
refused to receive the other half of the downpayment and consequently refused to deliver to Rufina Lim
the certificates of title.
As to petitioner Escueta, in spite of her knowledge that the lots have already been sold by Rubio to Lim, it
was alleged that a simulated deed of sale was sold by Rubio in her (Escueta) favor, and that the
simulated deed of sale by Rubio to Escueta has raised doubts and clouds over Lim’s title.
Thus, Rufina Lim filed an action to remove cloud on, or quiet title to, real property against Ignacio E.
Rubio. She then amended her complaint to include specific performance and damages.
ARGUMENTS
Escueta avers that Lim has no cause of action since the subject contract of sale has no more force and
effect as far as the Baloloys are concerned, since they have withdrawn their offer to sell for the reason
that respondent failed to pay the balance of the purchase price as orally promised.
Ignacio Rubio and the Baloloy heirs aver that Rufina Lim has no cause of action, because Virginia
Rubio-Lim was never authorized to sell the lots, as it was in fact, Patricia Llamas, Rubio’s
daughter, who had the authority.
ISSUE: W/N IGNACIO RUBIO IS BOUND THE BY THE CONTRACT OF SALE WHEN HE DID NOT
AUTHORIZE VIRGINIA RUBIO-LIM TO TRANSACT ON HIS BEHALF
HELD: YES. The petition lacks merit. The contract of sale between petitioners and respondent is valid.
(Apparently, Ignacio Rubio executed a SPA authorizing his daughter to sell the lots. Patricia, on the other
hand, appointed a substitute agent, Virginia Rubio-Lim, to sell the properties. The appointment of a sub-
agent was not prohibited by Ignacio. Thus, said appointment is backed up by Art 1892 of the Civil Code:)
Art. 1892.
The agent may appoint a substitute if the principal has not prohibited him
from doing so; but he shall be responsible for the acts of the substitute:
(1) When he was not given the power to appoint one . . . .
Applying the above-quoted provision to the special power of attorney executed by Ignacio Rubio in favor
of his daughter Patricia Llamas, it is clear that she is not prohibited from appointing a substitute. By
authorizing Virginia Lim to sell the subject properties, Patricia merely acted within the limits of the
authority given by her father, but she will have to be "responsible for the acts of the sub-agent," among
which is precisely the sale of the subject properties in favor of respondent.
Thus, we can deduce that acts of the sub-agent are also the acts of the agent.
Even assuming that Virginia Lim has no authority to sell the subject properties, the contract she executed
in favor of respondent is not void, but simply unenforceable, under the second paragraph of Article
1317 of the Civil Code which reads:
Art. 1317. . . .
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers,
shall be unenforceable, unless it is ratified, expressly or impliedly, by
the person on whose behalf it has been executed, before it is revoked by
the other contracting party.
Thus, even if the contract entered into by Virginia was unenforceable, Rubio’s acceptance and
encashment of the check, constituted ratification of the contract of sale and "produce[d] the effects of an
express power of agency." "[H]is action necessarily implies that he waived his right of action to avoid the
contract, and, consequently, it also implies the tacit, if not express, confirmation of the said sale effected"
by Virginia Lim in favor of respondent. Similarly, the Baloloys have ratified the contract of sale when they
accepted and enjoyed its benefits. "
ISSUE: W/N RUBIO CAN STILL SELL THE PROPERTIES TO ESCUETA AFTER HAVING SOLD IT TO
LIM
HELD: NO.
The parties entered into a contract of sale. "[I]n a contract of sale, the vendor loses ownership over the
property and cannot recover it until and unless the contract is resolved or rescinded . . . ."
In the sale of immovable property, even though it may have been stipulated that upon failure to pay the
price at the time agreed upon, the rescission of the contract shall of right take place, the vendee may pay,
even after the expiration of the period, as long as no demand for rescission of the contract has been
made upon him either judicially or by a notarial act.
Here, the records do not show that Ignacio Rubio asked for a rescission of the contract. What he adduced
was a belated revocation of the special power of attorney he executed in favor of Patricia Llamas.
Disposition:
Petition is denied. The CA decision is affirmed.

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ESCUETA VS.

(1) When he was not given the power to appoint one . . . .

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