G.R. No. L-6289, March 2, 1911
JOSE M. ARROYO, as attorney in fact of Ignacio Arroyo, plaintiff-appellee, vs. MATIAS GRANADA and CELEDONIA GENTERO, defendants-appellants.

FACTS

Ignacio Arroyo, as administrator of the estate of Blas Gerona, had a claim against the estate of the deceased Felix Granada, represented by his son Matias Granada and wife Celedonia Gentero. The parties entered into a settlement whereby the debt of P2,261 was acknowledged, payable in installments. When the first installment was not paid, a mortgage was executed as security. Upon default of the full amount (which with interest totaled P2,381), Jose M. Arroyo, acting under a power of attorney from his father Ignacio, negotiated with Matias. Matias proposed to settle the debt by conveying a 34-hectare parcel of land, which he represented as first-class, suitable for sugar cane and rice, and located near other lands owned by Ignacio. Relying on these representations, Jose M. Arroyo agreed, executed a cancellation of the debt, and received a deed of transfer for the land signed by the defendants. Later, it was discovered that the land was mostly third or fourth class, swampy, and not as represented. Jose M. Arroyo, as attorney-in-fact for Ignacio, filed an action to annul the deed and revive the debt based on fraudulent misrepresentation. The trial court ruled in favor of the plaintiff, annulling the documents.

ISSUE

1. Whether the deed of transfer should be annulled on the ground of fraudulent misrepresentation by the defendants.
2. Whether Jose M. Arroyo, suing solely in his capacity as attorney-in-fact (apoderado) for Ignacio Arroyo, is the proper party to bring the action.

RULING

1. On the merits (fraud): The Supreme Court held that the evidence was insufficient to prove fraud by clear and convincing evidence, as required to annul a solemnly executed instrument. The Court disagreed with the trial court’s finding, stating that the proof did not show by a fair preponderance that false and fraudulent representations induced the agreement.

2. On the procedural issue (party in interest): The Supreme Court dismissed the complaint on a more fundamental ground. Jose M. Arroyo, suing merely as an attorney-in-fact, had no legal interest in the subject matter of the litigation. Under the Code of Civil Procedure, the real party in interest is the principal, Ignacio Arroyo, who should have been named as the plaintiff. A judgment for or against the attorney-in-fact does not bind the principal. Therefore, the action was brought by a party without standing, rendering any decision in the case futile and non-binding.

Disposition: The complaint was dismissed. The Court refrained from making a special finding as to costs. While the opinion on the merits was technically unnecessary, it was expressed to guide Ignacio Arroyo that a future action brought by him on the same facts would likely fail, thereby discouraging further litigation.