EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v.  CUIZONG.R. No. 167552; April 23, 2007

Ponente: J. Chico-Nazario

FACTS:

From January to April 1995, petitioner sold to Impact Systems various products allegedly amounting to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 with respondents making a down payment of P50,000.00.  When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo Power Company the amount of P365,135.29.  Alarmed by this development, petitioner made several demands upon respondents to pay their obligations. As a result, respondents were able to make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations stood at P295,000.00 excluding interests and attorney's fees.  Because of respondents' failure to abide by said final demand letter, petitioner instituted a complaint for sum of money, damages, with application for preliminary attachment against herein respondents By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with petitioner and the latter was very much aware of this fact.

ISSUE: Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems

HELD:

Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that in a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter's consent. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.

In this case at hand, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal and EDWIN as agent.

Eurotech Industrial Technologies, Inc. v. Edwin Cuizon and Erwin CuizonG.R. No. 167552 April 23, 2007

FACTS:Eurotech is engaged in the business of importation and distribution of various European industrial equipment.

It has as one of its customers Impact Systems Sales which is a sole proprietorship owned by Erwin Cuizon. Petitioner sold to Impact Systems various products allegedly amounting to P91,338.00. Cuizons sought to buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making adown payment of P50,000.00. When the sludge pump arrived from the United Kingdom, Eurotechrefused to deliver the same to Cuizons without their having fully settled their indebtedness toEurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech, executed a Deedof Assignment of receivables in favor of Eurotech. Respondents, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the amount of P365,135.29. upon learning this,Eurotech made several demands upon Cuizons to pay their obligations. As a result, Cuizons were able to make partial payments to Eurotech. Cuizons’ total obligations stood at P295,000.00 excluding interests and attorney’s fees. Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of his principal, which was the Impact Systems, in his transaction with Eurotech and the latter was very much aware of this fact.

ISSUE: Whether or not Edwin exceeded his authority when he signed the Deed of Assignment thereby binding himself personally to pay the obligations to Eurotech.

RULING:No. Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that his status as such is known even to Eurotech as it is alleged in the Complaint that he is being sued in his capacity as the sales manager of the said business venture. Likewise, Edwin points to the Deed of Assignment which clearly states that he was acting as a representative of Impact Systems in said transaction.

In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s consent. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.

An agent, who acts as such, is not personally liable to the party with whom he contracts. There are 2 instances when an agent becomes personally liable to a third person. The first is when he expressly binds himself to the obligation and the second is when he exceeds his authority. In the last instance, the agent can be held liable if he does not give the third party sufficient notice of his powers. Edwin does not fall within any of the exceptions contained in Art. 1897.

In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management.

Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotech refused to deliver the 1 unit of sludge pump unless it received, in full, the payment for Impact Systems’ indebtedness. Impact Systems desperately needed the sludge pump for its business since after it paid the amount of P50,000.00 as down payment it still persisted in negotiating with Eurotech which culminated in the execution of the Deed of Assignment of its receivables from Toledo Power Company. 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. 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

Soriamont Steamship v. Sprint Transport (2009) Chico-Nazario, J.

Soriamont is a corporation providing services as a receiving agent for line load contractor vessels.o Ronas is its general manager

Sprint is a corporation engaged in transport services.o Its co-respondent Ricardo Papa (Papa) is engaged in the trucking business under the business name “Papa

Transport Services” (PTS)

SPRINT files COMPLAINT Sprint filed with the RTC a complaint against Soriamont and Ronas. Sprint alleged:

a) Soriamont rented from Sprint some chassis units for the transport of container vans;b) With authorization by Ronas, PTS and another trucker, Rebson Trucking, were able to withdraw

from the container yard of Sprint, two chassis unitsc) Soriamont and Ronas failed to pay rental f ees for the subjectd) Sprint was informed by Ronas of the purported loss of the equipmente) Despite demands, Soriamont and Ronas failed to pay the rental and to replace or return the equipment.

Sprint wants from Soriamont:o Some amount (about P53k) as interes t and penaltieso Actual damages (unpaid rentals + replacement of lost equipment)o Some amount equivalent to 25% of the total amount claimed for (why 25%? Case didn’t say)o Atty feeso Costs of the suit

SORIAMONT files COUNTERCLAIM Admitted to the lease agreement but only on certain dates ( Oct 1993 to Jan 1994) and not anymore on some dates (Dec

1993) as alleged in Sprint’s complaint Soriamont is not a party in interest since it was PTS and Rebson Trucking that withdrew the equipment

from the container yard

SORIAMONT files THIRD PARTY COMPLAINT against PTS Filed a 3rd party complaint because PTS and Rebson were the ones who withdrew the equipment

RTC: Papa failed to answer so it was declared in default Soriamont liable for claim of Sprint Ronas and Papa both have no liability Reason: Soriamont authorized PTS to withdraw the equipment

RTC awards to Sprint: Value of the 2 chasis equipment with INTEREST at the legal rate from filing of the complaint The unpaid rentals with INTEREST at the legal rate from the filing of the complaint Atty fees Rate of INTEREST increased to 12% per annum once decision becomes final and executor

CA: Affirmed with MODIFICATION: Rate of legal INTEREST per annum on both the value of the two chassis equipment, and on the unpaid

rentals, is 6% to be increased to 12% from finality of decision (sorry, I don’t get how that modified the RTC decision they both said 12%)

Issue: Is Soriamont liable??

Held: Yes

Ratio:

Re: Interest Adjustment of the applicable rate of legal interest on the value of the equipment, and on the un paid

rentals is proper and with legal basis. Under NCC 2209 when an obligation not constituting a loan or forbearance of money is breached, then an

interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% p er annum.

The monetary judgment in favor of Sprint does not involve a loan or forbearance of money; hence, the proper imposable rate of interest is 6% percent

As in Eastern Shipping Lines, Inc. v. CA, the interim period from the finality of the judgment awarding a monetary claim until payment, is deemed to be equivalent to a forbearance of credit.

Rules as explained by the Eastern Shipping case: When an obligation is breached, the contravenor can be held liable for damages . With regard to an award of interest in the concept of actual and compensatory damages, the rate of

interest, as well as the accrual, is imposed, as follows:

When the obligation is breached, and it consists in the payment of a sum of money: I.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. The interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default,

i.e., from judicial or extrajudicial demand under and subject to the provisions of NCC 1169 of the Civil Code.

When an obligation, not constituting a loan or forbearance of money: An interest on the amount of damages awarded may be imposed at the discretion of the court at the

rate of 6% per annum. No interest on unliquidated claims or damages except when or until the demand can be established. Where the demand is established, the interest shall begin to run from the time the claim is

made judicially or extrajudicially (NCC 1169) BUT when such certainty cannot be reasonably established at the time the demand is made, the

interest shall begin to run only from the date the judgment of the court is made The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

When the judgment of the court awarding a sum of money becomes final and executor: Rate of legal interest shall be 12% per annum from such finality until its satisfaction, Interim period being deemed to be an equivalent to a forbearance of credit.

-----

Consistent with the jurisprudence, and affirmed in more recent cases, when the judgment awarding a sum of money becomes final and executory, the rate of legal interest shall be 12% per annum from such finality until its satisfaction,

o Interim period being deemed to be by then an equivalent of a forbearance of credit.o From the time the judgment becomes final until its full satisfaction, the applicable rate of legal interest shall be

12%

Re: Evidence Soriamont anchors its defense on its denial that it authorized PTS to withdraw the equipment from the container yard of

Sprint Soriamont admits that the authorization letter dated was under its letterhead, however, letter was actually

meant for and sent to Harman Foods as shipper. And Harman was the one who tasked PTS to withdraw

SC says: Soriamont is essentially challenging the sufficiency of the evidence that PTS withdrew the subject

equipment. In effect, it is raising questions of fact. Only questions of law blah blah.. But given that Soriamont is precisely that the findings of fact of the CA are premised on the absence of

evidence and are contradicted by the evidence on record, SC accommodatea Soriamont by going over the same evidence considered by the CA and RTC

The burden is on Soriamont to prove its allegation that PTS acted in any manner in excess of its authority as agent, thus, resulting in the loss of the equipment.

BUT as the CA and the RTC found Soriamont did not adduce any evidence to prove that allegation. The only thing proven was that Soriamont, through PTS, withdrew the two chassis units from Sprint, and

that these have never been returned to Sprint.

Petition denied.

Uy v. CAFacts:Petitioners William Uy and Rodel Roxas are agents authorized to sell 8 parcels of land. Petitioners offered to sell the land to NHA for a housing project. On February 14, 1989, NHA passed a resolution approving the acquisition of said lands, and pursuant to this the parties executed Deeds of Absolute Sale. However, only 5 out of 8 lands were paid for by NHA because of a report from DENR that the remaining area is located at an active landslide area and are therefore not conducive for housing. On November 22, 1991, NHA issued a resolution canceling the sale of the remaining lands and offered P1.225 million to the landowners as daños perjuicios. On March 9, 1992, petitioners filed a complaint for damages against NHA and its general manager Robert Balao. The RTC declared the cancellation to be justified, but awarded the amount offered by NHA. The Court of Appeals affirmed the decision, but deleted the award.Issues:

(1) Whether the petitioners are real parties in interest

(2) Whether the cancellation is justifiedHeld:

(1) Petitioners claim that they lodged the complaint not in behalf of their principals but in their own name as agents directly damaged by the termination of the contract. Petitioners in this case purportedly brought the action for damages in their own name and in their own behalf. An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced. Petitioners are not parties to the contract of sale between their principals and NHA. They are mere agents of the owners of the land subject of the sale. As agents, they only render some service or do something in representation or on behalf of their principals. The rendering of such service did not make them parties to the contracts of sale executed in behalf of the latter. Since a contract may be violated only by the parties thereto as against each other, the real parties-in-interest, either as plaintiff or defendant, in an action upon that contract must, generally, either be parties to said contract. Petitioners have not shown that they are assignees of their principals to the subject contracts. While they alleged that they made advances and that they suffered loss of commissions, they have not established any agreement granting them "the right to receive payment and out of the proceeds to reimburse [themselves] for advances and commissions before turning the balance over to the principal[s]."(2) The cancellation was not a rescission under Article 1191. Rather, the cancellation was based on the negation of the cause arising from the realization that the lands, which were the object of the sale, were not suitable for housing. Cause is the essential reason which moves the contracting parties to enter into it. In other words, the cause is the immediate, direct and proximate reason which justifies the creation of an obligation through the will of the contracting parties. Cause, which is the essential reason for the contract, should be distinguished from motive, which is the particular reason of a contracting party which does not affect the other party. Ordinarily, a party's motives for entering into the contract do not affect the contract. However, when the motive predetermines the cause, the motive may be regarded as the cause. In this case, it is clear, and petitioners do not dispute, that NHA would not have entered into the contract were the lands not suitable for housing. In other words, the quality of the land was an implied condition for the NHA to enter into the contract. On the part of the NHA, therefore, the motive was the cause for its being a party to the sale. We hold that the NHA was justified in canceling the contract. The realization of the mistake as regards the quality of the land resulted in the negation of the motive/cause thus rendering the contract inexistent.

Manila Memorial Park Inc. vs Linsangan (November 22, 2004)

Facts: Florencia Baluyot is authorized by the Manila Memorial Park Inc. (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 Florenciaassured 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. Lnsangan 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 

Held: NO. The SC ruled that Florencia acted outside the scope of her authority as agent of MMPI and 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. As such, the SC ruled that the principal cannot be held liable for actions of agents outside the scope of their authority when such acts are ratified by the principal himself. On the part of MMPI, they did not ratify Florencia’s acts, nor did they know of such actions.

ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI. RULING: NO. The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify. No ratification can be implied in the instant case. Atty. Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer. Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may not have been expressly conferred upon her; however, the same may have been derived impliedly by habit or custom which may have been an accepted practice in their company in a long period of time." A perusal of the records of the case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to enter into agreements for lower prices of its interment spaces, nor to assume a portion of the purchase price of the interment spaces sold at such lower price. No evidence was ever presented to this effect.

MANILA MEMORIAL PARK CEMETERY, INC.vs.PEDRO L. LINSANGAN

FACTS:

Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the contract would be transferred to him. 

Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and typewritten receipts for these payments. Contract No. 28660 has a listed price of P132,250.00. Atty. Linsangan objected to the new contract price, as the same was not the amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a document confirming that while the contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.

Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for reasons the latter could not explain. For the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against the former.

MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except as to the extent expressly stated in the Agency Manager Agreement. Moreover, MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in fact received a down payment and monthly installments as indicated in the contract.

The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals affirmed the decision of the trial court.

ISSUES:

1. Whether or not there was a contract of agency between Baluyot and MMPCI?2. Whether or not MMPCI should be liable for Baluyot’s act?

HELD:

First Issue. Yes. 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. As properly found both by the trial court and the Court of Appeals, Baluyot was authorized to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and, when signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.

Second Issue. No. While there is no more question as to the agency relationship between Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty. Linsangan to believe that Baluyot had the authority to alter the standard contracts of the company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had any knowledge of Baluyot's commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his dealings with Baluyot, and could have easily determined, had he only been cautious and prudent, whether said agent was clothed with the authority to change the terms of the principal's written contract.

To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same. It also bears emphasis that when the third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person was aware of such limits of authority, he is to blame and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification.