GR 177086; (December, 2012) (Digest)
G.R. No. 177086; December 5, 2012
ALBERT M. CHING and ROMEO J. BAUTISTA, Petitioners, vs. FELIX M. BANTOLO, ANTONIO O. ADRIANO and EULOGIO STA. CRUZ JR., substituted by his children, represented by RAUL STA. CRUZ JR., Respondents.
FACTS
Respondents, owners of several parcels of land in Tagaytay City, executed a Special Power of Attorney (SPA) authorizing petitioners to obtain a loan using the properties as collateral. The SPA authorized petitioners to borrow money, mortgage the properties, and receive the loan proceeds, with an obligation to account for them. Petitioners alleged this agency was coupled with an interest, as they agreed to shoulder processing costs in exchange for a promised equal share in the loan proceeds or the properties themselves. Without notice to petitioners, respondents executed a Revocation of the SPA effective July 17, 2000. The following day, July 18, Philippine Veterans Bank conditionally approved a P25-million loan for petitioner Ching. Upon learning of the revocation, petitioners demanded compliance and later filed a complaint for annulment of the revocation, enforcement of the SPA, and damages.
ISSUE
The primary issue was whether the respondents’ revocation of the Special Power of Attorney was valid, and consequently, whether petitioners were entitled to damages for the revocation.
RULING
The Supreme Court partially granted the petition. It ruled that the agency was not coupled with an interest and was therefore revocable at will by the principals (respondents). The Court found the SPA was created for the sole benefit of the principals—to secure a loan for them. The alleged agreement for a share in the proceeds or properties was not embodied in the SPA document itself. Since the agency was not coupled with an interest in the subject matter of the power (the properties), but was merely given as security for obligations petitioners might incur, its revocation was valid.
However, the Court awarded actual damages to petitioner Ching. The legal logic is grounded in Article 19 of the Civil Code on abuse of rights. While respondents had the right to revoke the agency, the timing of their revocation—done without notice and immediately after petitioners had incurred significant expenses (P500,000.00) in processing the loan which was conditionally approved the very next day—constituted bad faith. This abusive exercise of a right caused damage to petitioner Ching, who satisfactorily proved the factual basis and causal connection of this expense to respondents’ acts. Thus, respondents were ordered to pay P500,000.00 as actual damages. Claims for moral and exemplary damages were denied for lack of sufficient proof of the required factual basis and causal connection.