AGENCY | PAGE 1 OF SYLLABUS (Start from Eurotech V. Cuizon)| Case Digests

1. DEFINITION AND OBJECTIVES (ARTS 1317, 1403, 1868)

EUROTECH VS CUIZON

Facts: Herein petitioner is engaged in the business of importation of various European Industrial Equipments, while the Respondent ERWIN is the sole proprietorship of Impact System Sales, one of the customers of Petitioner. On the other hand, Respondent EDWIN is the sales manager of Impact Systems and it is a fact known to the petitioner.

Later, respondents sought to but one sludge pump from the petitioner by making a down payment for its purchase price. When the said equipment arrived, petitioner refused to deliver it without being paid fully by the respondents. Because of respondents’’ perseverance to get the equipment, EDWIN (agent) entered into a Deed of Assignment of Receivables in favor of the petitioner. However, despite of its existence and unknown to the petitioner, Respondents proceeded to collect from Toledo Power Company. Upon knowing this, petitioner sent several demands to respondents in order to pey its obligation, but to no avail. Hence, petitioner filed a complaint against boththe Respondents, ERWIN (principal) and EDWIN (agent).

In its defense, EDWIN asserts that he is not a real party in interest and should not be personally held liable for he was acting as a mere agent in the transaction between Impact System and the petitioner. On the other hand, invoking ART 1897 of the Civil Code, petitioner argues that EDWIN is personally liable because he either expressly binds himself or exceeds the limits of his authority.

Issue: WON EDWIN (agent) exceeded his authority when he signed the Deed of Assignment thereby binding himself personally to pay the obligations to petitioner NO.

Held: The Court ruled that EDWIN does not fall to any of the two instances provided in ART 1897 which makes him personally liable to the petitioner. The Deed of Assignment clearly states that respondent EDWIN signed thereon as the sales manager of Impact System, and such act is well-within his authority.

--To recall, petitioner refused to deliver the one unit of sludge pump unless it received, in full, the payment for Impact Systems’ indebtedness. We may very well assume that Impact Systems desperately needed the sludge pump for its business since after it paid the amount of fifty thousand pesos (P50,000.00) as down payment on 3 March 1995, it still persisted in negotiating with petitioner which culminated in the execution of the Deed of Assignment of its receivables from Toledo Power Company on 28 June 1995. The significant amount of time spent on the negotiation for the sale of the sludge pump underscores Impact Systems’ perseverance to get hold of the said equipment. There is, therefore, no doubt in our mind that respondent EDWIN’s participation in the Deed of Assignment was "reasonably necessary" or was required in order for him to protect the business of his principal. Had he not acted in the way he did, the business of his principal would have been adversely affected and he would have violated his fiduciary relation with his principal.

AS TO PETITIONER’S CLAIM AGAINST BOTH THE PRINCIPAL AND THE AGENT:We likewise take note of the fact that in this case, petitioner is seeking to recover both from respondents ERWIN, the principal, and EDWIN, the agent. It is well to state here that Article 1897 of the New Civil Code upon which petitioner anchors its claim against respondent EDWIN "does not hold that in case of excess of authority, both the agent and the principal are liable to the other contracting party." To reiterate, the first part of Article 1897 declares that the principal is liable in cases when the agent acted within the bounds of his authority. Under this, the agent is completely absolved of any liability. The second part of the said provision presents the situations when the agent himself becomes liable to a third party when he expressly binds himself or he exceeds the limits of his authority without giving notice of his powers to the third person. However, it must be pointed out that in case of excess of authority by the agent, like what petitioner claims exists here, the law does not say that a third person can recover from both the principal and the agent.

PHILLEX MINING V. CIR

RALLOS V. FELIX GO CHAN

YU EUNG CHO V. PAN-AMERICAN

Facts: The petitioner is a businessman who owns a Hardware Business. In connection to that, he used to travel time to time from different countries. In one occasion, he bought a Plane Ticket from Defendant Tagunicar who represented herself as an agent of Defendant Tourist World Services, Inc. (TWSI). The ticket is for the destination in HK, Tokyo & San Francisco USA. The purpose of the trip is to go to New Jersey in order to bur 2 equipments for his business.

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On the supposed date of the flight, only the trip to Manila to HK and to Tokyo were confirmed. The trip to USA was on “RQ” Status (On Request). After a few days, when Canilao of TWSI told Tagunicar that the flight was confirmed, the latter told the same to the petitioner. Prior to the date of confirmed flight, the son of petitioner called up Defendant Pan-American for further confirmation, which told him that the bookings are confirmed.

Petitioner flew from HK to Tokyo. While in Tokyo, they called again the Pan-American for reconfirmation of flight going to USA. Unfortunately, it informed them that their names are not in the manifest. Due to such scenario, the petitioner incurred expenses involving plane tickets from Tokyo to Taipei, hotel accommodations and worse, the Radiant Heat Enterprises cancelled Petitioner’s option to buy the supposed equipments. A complaint for damages was filed by petitioners against private respondents Pan American World Airways, Inc. (Pan Am), Tourist World Services, Inc. (TWSI), Julieta Canilao (Canilao), and Claudia Tagunicar (Tagunicar) for expenses allegedly incurred. The petitioner’s contention is that the Defendant PanAm is the principal, the TWSI as an agent and Taginucar as its agent. Thus, they shall all be held liable.

Issue: WON an Agency Relationship exists in this case. NONE.

Held: The Court held that there was no Agency Relationship existing between the defendants and that the transaction is simply a Contract of Sale wherein Tagunicar buys airline tickets from TWSI. In support to this, Tagunicar categorically denied in open court that she is a duly authorized agent of TWSI, and declared that she is an independent travel agent.

Petitioners included respondent Pan Am in the complainant on the supposition that since TWSI is its duly authorized agent, and respondent Tagunicar is an agent of TWSI, then Pan Am should also be held responsible for the acts of respondent Tagunicar. Our disquisitions above show that this contention lacks factual and legal bases. Indeed, there is nothing in the records to show that respondent Tagunicar has been employed by Pan

Am as its agent, except the bare allegation of petitioners. In the case at bar, petitioners' ticket were on "RQ" status. They were not confirmed passengers and their names were not listed in the passenger manifest. In other words, this is not a case where Pan Am bound itself to transport petitioners and thereafter reneged on its obligation. Hence, respondent airline cannot be held liable for damages.

Undoubtedly, respondent Tagunicar should be liable for having acted in bad faith in misrepresenting to petitioners that their tickets have been confirmed. Her culpability, however, was properly mitigated. Petitioner Yu Eng Cho testified that he repeatedly tried to follow up on the confirmation of their tickets with Pan Am because he doubted the confirmation made by respondent Tagunicar.

MANILA MEMORIAL PARK INC. V. LINSANGAN

Facts: Florencia Baluyot is authorized by the Manila Memorial ParkInc. (MMPI) to sell burial lots to those interested in purchasing. Herein respondent Atty. Linsangan was approached by Florenciawith an offer to sell to the former a lot that she alleges to have already been previously sold but the owner thereof has cancelled and thus, Atty. Linsangan shall only continue the payment thereof amounting to P95,000, Atty. Linsangan agreed and payed an initial P35, 000. Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract and that she needed him to sign a new contract stipulating the total price of P132, 000 but Florencia assured Atty. Linsangan that he would only pay the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has read and understood all the stipulations therein. The payment was made in installments for two years which Atty. Linsangan completed, however, after two years, Florencia informed Linsangan that their contract was cancelled and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract against MMPI and Florencia. MMPI avers that Florencia acted beyond the scope of her authority as MMPI’s agent since the latter did not allow her to renegotiate existing contracts but only to sell new contracts. Atty. Linsangan on the other hand argues that MMPI should be liable for the acts of its agents.

Issue: Whether or not MMPI is liable for the acts of Florencia NO.

Held: The Court found that indeed, Florencia is a duly authorized agent of MMPi to solicit and remit offers to purchase, however it is clear that Florencia acted outside the scope of her authority when it contracted another contract by herself without the knowledge of the MMPI.

Atty. Linsangan failed to ascertain the authority given to Florencia especially that their agreement on the second contract had a different stipulation than what he and Florencia agreed upon. Moreover, Atty. Linsangan’s signature over the new contract signifies his agreement thereto and serves as a form of ratification for the acts of Florencia which were outside the authority given her.On the part of MMPI, they did not ratify Florencia’s acts nor did they know of such new contracted agreements or actions, thus, cannot be held liable on the ground of its alleged ratification.

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