G.R. No. 30641, December 18, 1929
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. J. O. WAGNER, ET AL., defendants-appellants.

FACTS

The Government filed an action for the rescission of a contract of sale over a lot in the Baguio townsite due to the defendants’ failure to comply with the condition of constructing improvements worth P15,000. In a prior decision (49 Phil. 944), the Supreme Court ordered the case remanded to the trial court to determine the amount the Government must refund to the defendants as a prerequisite to rescission, which should include the purchase price and the sums expended for improvements, pursuant to Article 1295 of the Civil Code. On remand, the trial court found that the defendants spent P1,200 on improvements and ordered the Government to refund this amount plus the purchase price of P960.60. The defendants appealed, contending they spent P19,000 on improvements and challenging the trial court’s findings. Separately, defendants J.O. Wagner and Catherine Cleland Wagner, through new counsel, challenged the jurisdiction of the courts over their persons, arguing that the attorney-in-fact, J.J. Murphy, who accepted service on their behalf, lacked authority to represent them in the suit.

ISSUE

1. What is the correct amount the Government must refund to the defendants as a condition for rescinding the contract?
2. Did the trial court and the Supreme Court acquire jurisdiction over defendants J.O. Wagner and Catherine Cleland Wagner through service of process on their attorney-in-fact, J.J. Murphy?

RULING

1. On the refund amount: The Supreme Court modified the trial court’s decision. It held that the defendants’ claim of P19,000 in improvements was untenable, as it contradicted the Court’s prior finding that they failed to construct improvements worth P15,000. While disallowing certain items like plan costs and tax refunds, the Court considered the interest lost on the purchase price and other expenses incurred. In the interest of fairness and liberality, the Court fixed a lump sum refund of P4,000 in lieu of the P2,160.60 awarded by the trial court.
2. On jurisdiction: The Supreme Court upheld its jurisdiction over the persons of the Wagner spouses. The power of attorney executed in 1917 granted Murphy “full and complete authority” over the lot and the power to perform “all and every lawful act” necessary, as if the principals were personally present. Accepting service and defending the suit to protect the property were acts clearly within this broad authority. The subsequent cablegram authorizing another person to protect their interests did not constitute a valid revocation of Murphy’s power. Therefore, Murphy’s representation was valid, and the courts properly acquired jurisdiction.

DISPOSITIVE PORTION:
The intervention (challenging jurisdiction) was disallowed. The appealed judgment was affirmed with the modification that the Government shall refund to the defendants the amount of P4,000 as a condition for the rescission of the contract and cancellation of the patent and title. No costs were awarded.