Dizon v CA

January 28, 1999

G.R. No. 122544
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON,
RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR.,
vs.
COURT OF APPEALS and OVERLAND EXPRESS LINES, INC.
G.R. No. 124741
REGINA P. DIZON, AMPARO D. BARTOLOME, FIDELINA D. BALZA, ESTER ABAD DIZON and JOSEPH ANTHONY DIZON,
RAYMUND A. DIZON, GERARD A. DIZON, and JOSE A. DIZON, JR
vs.
COURT OF APPEALS, HON. MAXIMIANO C. ASUNCION, and OVERLAND EXPRESS LINES, INC.
MARTINEZ, J.:
SUMMARY: Upon non-payment of rental, petitioners filed an action for ejectment against Overland which was granted by the City
Court. However, Overland argues that it has exercised its option to buy the land when it paid P300,000 to Alice Dizon, petitioners
agent, as partial payment for the land. Thus, it filed an action for Specific Performance and Fixing of Period for Obligation to compel the
execution of a deed of sale pursuant to the option to purchase and the receipt of the partial payment, and to fix the period to pay the
balance which was dismissed by the RTC but was granted by the CA. In a subsequent petition, CA also recognized the perfection of
the contract of sale between petitioners and Overland. SC: No perfected contract of sale. Alice Dizon was not authorized to accept such
payment. There was no showing that the co-owners authorized her to enter into a contract of sale with Overland. Latter should have
ascertained the extent of her authority.
DOCTRINE: A co-owner does not become an agent of the other co-owners, and therefore any exercise of an option to buy a piece of
land transacted with one co-owner does not bind the other co-owners of the land. The basis for agency is representation and a person
dealing with an agent is put upon inquiry and must discover upon his own peril the authority of the agent. Since there was no showing
that the other co-owners consented to the act of one co-owner nor authorized her to act on their behalf with regard to her transaction
with purported buyer, the most prudent thing the purported buyer should have done was ascertain the extent of the authority of said coowner. Being negligent in this regard, the purported buyer cannot seek relief on the basis of a supposed agency. (AS cited in
Villanueva)
NOTE: In relation to Article 1873
FACTS:
G. R. NO. 122544:

May 23, 1974: Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with Option to Buy with Dizon et. al. (lessors)
involving a 1,755.80 square meter parcel of land
o Situated at corner MacArthur Highway and South "H" Street, Diliman, Quezon City.
o For 1 year commencing from May 16, 1974 up to May 15, 1975.
o During this period, Overland was granted an option to purchase for P3,000 per square meter. Thereafter, the lease shall
be on a per month basis with a monthly rental of P3,000

June 20, 1975: Overland allegedly paid P300,000 as partial payment for the leased property, which an Alice A. Dizon
accepted and for which an official receipt was issued

June 1976: Increased rental of P8,000 per month was made effective. Overland failed to pay.

Dizon et. al. filed an action for ejectment before City Court (MeTC) of QC.

City Court: Ordered Overland to vacate the leased premises and to pay the sum of P624,000 representing rentals in arrears
and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal
detainer from June 1976 to Nov. 1982

Overland filed a certiorari petition praying for the issuance of a restraining order enjoining the enforcement of said judgment and
dismissal of the case for lack of jurisdiction of the City Court.

IAC: City Court has jurisdiction. Overland to vacate.

o Questions of whether Overland was granted an extension of the option to buy the property; whether such option, if any,
extended the lease or whether Overland actually paid the alleged P300k to Fidela Dizon, and, whether Overland
thereafter offered to pay the balance of the supposed purchase price, are all merely incidental and do not remove the
unlawful detainer case from the jurisdiction of City Court.
o Teodoro, Jr. vs. Mirasol: The above matters may be raised and decided in the unlawful detainer suit as, to rule otherwise,
would be a violation of the principle prohibiting multiplicity of suits.
o MR denied.

SC: Dismissed the petition in a resolution and denied subsequent MR

Oct. 7, 1985: Overland filed before RTC QC an action for Specific Performance and Fixing of Period for Obligation with
prayer for the issuance of a restraining order pending hearing on the prayer for a writ of preliminary injunction.
o Compel the execution of a deed of sale pursuant to the option to purchase and the receipt of the partial payment,
and to fix the period to pay the balance.

RTC: Denied the issuance of a writ of preliminary injunction on the ground that City Court decision for the ejectment of Overland,
having been affirmed by IAC and SC, has become final and executory.

Nov. 15, 1985: Unable to secure an injunction, Overland also filed before RTC QC, Br. 102 a complaint for Annulment of and
Relief from Judgment with injunction and damages.

RTC: Dismissed the complaint for annulment on the ground of res judicata, and the writ of preliminary injunction previously issued
was dissolved. Overland to pay P3,000.00 as attorney's fees.

However, upon MR, the preliminary injunction was reinstated, thereby restraining the execution of the City Court's judgment on the
ejectment case.

2 cases were consolidated before RTC QC

RTC: Dismissed complaint for specific performance case and denied MR in annulment of the ejectment case.
MR denied
CA: In favor of Overland. Dizon et. al ordered to execute the deed of absolute sale of the property in question, free from any lien or
encumbrance whatsoever and to deliver deed of sale, as well as the owner's duplicate of the certificate of title to said property
upon payment of the balance of the purchase price by Overland.
o There was a perfected contract of sale between the parties on the leased premises and that pursuant to the option to buy
agreement, Overland had acquired the rights of a vendee in a contract of sale.
o The payment by Overland of P300,000 as partial payment for the leased property, which Dizon et. al accepted (through
Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of
sale
o For failure of Dizon et. al. to deny receipt thereof, Overland can therefore assume that Alice A. Dizon, acting as agent of
petitioners, was authorized by them to receive the money in their behalf.
o What was entered into was a "conditional contract of sale" wherein ownership over the leased property shall not pass to
the private respondent until it has fully paid the purchase price.
o Since Overland did not consign to the court the balance of the purchase price and continued to occupy the subject
premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price.

Upon denial of the motion for partial reconsideration, Dizon et. al elevated the case via petition for certiorari :
o Questioned the authority of Alice A. Dizon as agent of Dizon et. al in receiving Overland's partial payment amounting
to P300,000pursuant to the Contract of Lease with Option to Buy.
o Assail propriety of Overland's exercise of the option when it tendered the said amount on June 20, 1975 which purportedly
resulted in a perfected contract of sale.
G. R. NO. 124741

Dizon et. al filed with CA a motion to remand the records of ejectment case to MTC for execution of the judgment which was
granted in a resolution. Overland filed a motion to reconsider said resolution which was denied.

Overland thus filed a petition for certiorari, prohibition with preliminary injunction and/or restraining order with SC which was
dismissed in a resolution on the ground that the same was a refiled case previously dismissed for lack of merit. Entry of judgment
was issued by this Court.

July 14, 1993: Dizon et. al filed an urgent ex-parte motion for execution of the decision with the MTC

MTC: Ordered the issuance of a third alias writ of execution.

MR filed, denied. MTC ordered the immediate implementation of the third writ of execution without delay.

Overland thus filed with RTC-QC a petition for certiorari and prohibition with preliminary injunction/restraining order challenging the
enforceability and validity of the MTC judgment as well as the order for its execution.

RTC: Granted the issuance of a writ of preliminary injunction upon posting of an injunction bond of P50k

Dizon et. al filed a petition for certiorari and prohibition with a prayer for a TRO and/or preliminary injunction with CA.

CA: Dismissed petition. Purpose of petition is to enjoin RTC from restraining the ejectment of Overland. To grant the petition
would be to allow the ejectment of the Overland which CA cannot do. Right to eject Overland has been demonstrated to be without
basis in the said civil case.

CA: MR filed, denied.

o Overland acquired the rights of a vendee in a contract of sale, in effect, recognizing the right of Overland to possess the
subject premises.
o CA cannot not allow ejectment as it would disturb the status quo of the parties since Dizon et. al. are not in possession of
the subject property.
o It would be unfair and unjust to deprive Overland of its possession of the subject property after its rights have been
established in a subsequent ruling.

2 consolidated petitions were filed before SC seeking to set aside and annul CA decisions and resolutions
o There was no perfected contract of sale. Alice Dizon was not authorized to receive payment.
ISSUE: Whether there was a perfected contract of sale between Overland and Dizon et. al upon delivery of partial payment to Dizons
agent? (NO)
RATIO:
NO AUTHORITY OF AGENT/NO PERFECTED CONTRACT OF SALE

There was no perfected contract of sale between Overland and Dizon et. al.

Overland: It delivered the check of P300,000 to Alice A. Dizon who acted as agent of petitioners pursuant to the supposed
authority given by Fidela Dizon, the payee thereof. Dizons filing of the ejectment case against it, based on the contract of lease
with option to buy, holds them in estoppel to question the authority of Fidela Dizon. The payment of P300,000 as partial payment
of the purchase price constituted a valid exercise of the option to buy.

SC: No meeting of minds. There was no consent on the part of the co-owners. There was no valid consent by the petitioners (as
co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent.

The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent (Bordador vs. Luz).

As provided in Article 1868, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act
on their behalf with regard to her transaction with overland.
o Article 1868. By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter.

The most prudent thing Overland should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent
in this regard, Overland cannot seek relief on the basis of a supposed agency.

Rule in dealing with an agent: Every person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his
ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a
general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also
the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. (Bacaltos
Coal Mines vs. CA)
As to Finality of Ejectment

Petitioners have established a right to evict Overland from the subject premises for non-payment of rentals. When Overland
failed to pay the increased rental of P8,000.00 per month in June 1976, the petitioners had a cause of action to institute an
ejectment suit against the former with the then City Court.

In this regard, the City Court (now MTC) had exclusive jurisdiction over the ejectment suit. The filing by Overland of a suit with the
RTC for specific performance to enforce the option to purchase did not divest the then City Court of its jurisdiction to take
cognizance over the ejectment case. Of note is the fact that the decision of the City Court was affirmed by both IAC and SC.
As to Validity of Option to Buy

Having failed to exercise the option within the stipulated one-year period, Overland cannot enforce its option to purchase
anymore. Even assuming that the right to exercise the option still subsists at the time Overland tendered the amount on June 20,
1975, the suit for specific performance to enforce the option to purchase was filed only on October 7, 1985 or more than 10 years
after accrual of the cause of action as provided under Article 1144.

The contract of lease expired without Overland, as lessee, purchasing the property but remained in possession thereof. Hence,
there was an implicit renewal of the contract of lease on a monthly basis. However, an implied new lease does not ipso facto carry
with it any implied revival of Overland's option to purchase (as lessee thereof) the leased premises because it is alien to the
possession of the lessee.

Overlands right to exercise the option to purchase expired with the termination of the original contract of lease for one year.

This is a reasonable construction of the provision, which is based on the presumption that when the lessor allows the lessee to
continue enjoying possession of the property for fifteen days after the expiration of the contract he is willing that such enjoyment
shall be for the entire period corresponding to the rent which is customarily paid in this case up to the end of the month because
the rent was paid monthly.

Necessarily, if the presumed will of the parties refers to the enjoyment of possession the presumption covers the other terms of the
contract related to such possession, such as the amount of rental, the date when it must be paid, the care of the property, the
responsibility for repairs, etc.

But no such presumption may be indulged in with respect to special agreements which by nature are foreign to the right of
occupancy or enjoyment inherent in a contract of lease.(Villanueva vs. CA)
DISPOSITIVE: Both petitions GRANTED. CA decisions and resolutions REVERSED and SET ASIDE. Remanded to the trial court for
immediate execution of City Court (MeTC) judgment as affirmed in IAC (CA) and in SC resolution (Overland to vacate). However, Dizon
et. al/ are ordered to REFUND to Overland P300,000 which they received through Alice A. Dizon on June 20, 1975.