MIRIAM L. MAGLANA, PLAINTIFF-APPELLEE, VS. MANUEL S. SANTAMARIA, DEFENDANT-APPELLANT.

Maglana versus Santamaria

The Case

This is a lecture on Maglana versus Santamaria, a decision of the Supreme Court on the law of agency. Miriam Maglana sued her estranged husband, Manuel Santamaria, to recover possession of several parcels of land and the owner's duplicate certificates of title that she had entrusted to him under a notarized document styled an Irrevocable General Power of Attorney. The case matters because it teaches the single most examined distinction in agency law: the difference between an ordinary agency, which the principal may revoke at will, and an agency coupled with interest, which the principal cannot revoke unilaterally. It also reminds us that the label the parties give a document does not control; its contents do.

Procedural History

Maglana filed a complaint for recovery of possession of real property, of the owner's certificates of title, damages, and attorney's fees before the Regional Trial Court of Davao City, with a prayer for a writ of preliminary injunction. After trial, the Regional Trial Court rendered judgment in her favor, ordering Santamaria to surrender the owner's duplicate copies of the titles and to turn over the physical possession of the listed lots, with no pronouncement as to attorney's fees and with costs de oficio. Santamaria appealed to the Court of Appeals under Rule 41 of the Rules of Court. While the appeal was pending, Maglana died, and she was substituted by her children, represented by Matthew Constancio. The appeal eventually reached the Supreme Court, which decided it on the merits.

Facts

Miriam Maglana and Manuel Santamaria were married in April 1966 at the Ellinwood-Malate Church in Malate, Manila, and were blessed with four children. Sometime in 1980 the spouses separated de facto. Maglana filed a case for legal separation, which the trial court denied; she then filed a case for annulment, which the trial court granted in August 2001, declaring the marriage null and void.

In the meantime, in October 1989, Maglana executed a duly notarized Irrevocable General Power of Attorney constituting Santamaria as her attorney-in-fact. The instrument authorized him to sell, transfer, and convey, and to take control, management, and full administration of, several parcels of land in Cotabato, General Santos, Davao City, Panabo, Mati, and Guianga, and further empowered him to collect sums of money, to execute contracts with third persons, and to delegate his powers. The titles to the properties were turned over to him.

Maglana alleged that the power of attorney was executed upon a verbal agreement that Santamaria would give monthly support to their children of not less than ten thousand pesos from the proceeds of the properties. She claimed he failed to comply, conveyed a portion of one property without giving anything to the children, and used the proceeds to support a live-in partner and three children. She therefore revoked the power of attorney by a notarized document dated February 27, 1998, and, when he refused to return the properties, the proceeds, and the titles, she filed the complaint in October 1998. Santamaria answered that the instrument was given in exchange for an affidavit of desistance in a bigamy case he had filed against her, and that it was in lieu of a transfer of ownership because he is an American citizen who cannot own land in his own name. He insisted the agency was coupled with interest and could not be revoked unilaterally.

Issues

• Whether or not the Irrevocable General Power of Attorney was validly revoked by the principal.
• Whether or not the agency was coupled with interest, and therefore not revocable at the principal's will.
• Whether or not the Court should rule on the nature of the properties as conjugal or paraphernal.

Applicable Provisions

Article 1868 of the Civil Code defines the contract of agency:

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.

This establishes that agency is representative in nature, so the agent's acts bind the principal only within the scope of the authority granted.

Article 1927 of the Civil Code states the exception to revocability:

Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

This is the provision on which Santamaria's defense of irrevocability rests, and which the Court found inapplicable.

Article 160 of the New Civil Code supplies the presumption of conjugality:

Article 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.

This governs the properties because the spouses were married in 1966, before the Family Code took effect, but the Court declined to apply it for lack of proof of when the properties were acquired.

Ruling

On the first issue, the Court held that the power of attorney was validly revoked. Although the document is styled an Irrevocable General Power of Attorney, its terms confer specific authorities, including acts of strict dominion such as selling and conveying, so it is in truth a special power of attorney. Agency is personal, representative, and derivative, and is generally revocable because it rests on trust and confidence; the agent's power ceases when the principal withdraws his will.

On the second issue, the Court held that the agency was not coupled with interest. Mere allegation is not enough; the interest must be stated in the power of attorney or inferred from its terms. Here, nothing in the instrument showed that it was established for the mutual benefit of principal and agent or for the interest of a third person, and no bilateral contract with reciprocal obligations depended upon it. Maglana's claim of a verbal support agreement was not incorporated in the instrument and was unsupported by evidence, and Santamaria's claim of an affidavit of desistance was likewise unproved. The Court quoted its earlier ruling in Lim versus Saban:

In an agency coupled with an interest, the agent's interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation.

On the third issue, the Court refused to characterize the properties as conjugal or paraphernal. The nature of property is determined by law and not by the will of a spouse, and the presumption of conjugality operates only upon proof that the property was acquired during the marriage. Since neither party presented such evidence, and since the action was for recovery of possession rather than liquidation of the conjugal partnership, the Court left the question open.

Doctrine

An agency is generally revocable at the principal's will, because it is a personal contract of representation founded on trust and confidence. The exception is an agency coupled with interest, which cannot be revoked if a bilateral contract depends upon it, if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership and his removal is unjustifiable. To be coupled with interest, the agent's interest must be in the subject matter of the power, not merely in earning compensation, and that interest must appear in the power of attorney or be inferable from its terms. The title given by the parties does not control; a document called a general power of attorney may be a special power of attorney if it confers specific powers, including acts of strict dominion.

Disposition

The appeal was partly meritorious: the Supreme Court upheld the revocation of the power of attorney and sustained the order for Santamaria to surrender the titles and possession of the properties to Maglana's substituted heirs, while declining to rule on the nature of the properties.

Remember This

Memorize this line: an agency is revocable at will unless it is coupled with interest, and the interest must be in the subject matter and must appear in the instrument. Examiners use this case to test the distinction between a general and a special power of attorney, and the requisites of an agency coupled with interest under Article 1927 of the Civil Code.