G.R. No. 237506, July 28, 2020
SAN MIGUEL CORPORATION, PETITIONER, VS. LEONARA FRANCISCO VDA. DE TRINIDAD, SPS. TEODORICO F. TRINIDAD AND SUSANA COSME-TRINIDAD, SPS. GEMMA F. TRINIDAD-GANDIONGCO AND ALFREDO M. GANDIONGCO, JR., SPS. MANUEL F. TRINIDAD AND RUBI REMIGIO TRINIDAD AND SPS. GRACE F. TRINIDAD-MALOLOS AND BISMARK D. MALOLOS, ROBERTO N. GANDIONCO, RESPONDENTS.

FACTS

Petitioner San Miguel Corporation (SMC) requires its dealers to submit sufficient collateral to secure beer stocks. Respondent Roberto N. Gandionco (Roberto), purportedly an agent of the registered owners (respondents), approached them for help with this requirement. Respondents executed Special Powers of Attorney (SPAs) authorizing Roberto to “offer as collateral” specific Transfer Certificates of Title (TCTs) in favor of SMC. They also delivered the physical possession of the original owner’s duplicate TCTs to Roberto on four different occasions over several years. Subsequently, real estate mortgages (REMs) were executed and annotated on some of the titles. When Roberto failed to pay, SMC foreclosed on the mortgages. Respondents then claimed they only learned of the mortgages at that point, informed SMC that the SPAs had been revoked, and filed a complaint for annulment of mortgage and foreclosure sale.

ISSUE

Whether respondents are bound by the mortgages constituted by Roberto based on the doctrine of agency by estoppel, considering their execution of the SPAs and delivery of the original owner’s duplicate TCTs.

RULING

Yes, respondents are bound by the mortgages under the doctrine of agency by estoppel. The concurring opinion expounds on the legal significance of delivering the original owner’s duplicate TCTs. The owner’s duplicate certificate is a fundamental aspect of the Torrens system. Under the Property Registration Decree (P.D. 1529), its presentation is required for the registration of any voluntary instrument, and such presentation constitutes conclusive authority from the registered owner to the Register of Deeds to register the transaction. By voluntarily delivering the original owner’s duplicates to Roberto on multiple occasions over several years, without exercising ordinary diligence to inquire about their status, respondents clothed Roberto with apparent authority to mortgage the properties. This act would lead any reasonable person, like SMC, to believe Roberto possessed the requisite authority. SMC relied in good faith on this apparent authority and delivered beer stocks. Therefore, under Article 1911 of the Civil Code, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Respondents are estopped from denying Roberto’s authority. As between two innocent parties (respondents and SMC), the loss must be borne by the one who made the fraud possible by an act of confidence. Respondents’ liability is without prejudice to their right to seek reimbursement from Roberto.