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G.R. No.

167552

April 23, 2007

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., Petitioner, vs. EDWIN CUIZON and ERWIN CUIZON, Respondents. Doctrine: 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. Facts: Petitioner is engaged in the business of importation and distribution of various European industrial equipment for customers here in the Philippines. It has as one of its customers Impact Systems Sales ("Impact Systems") which is a sole proprietorship owned by respondent ERWIN Cuizon (ERWIN). Respondent EDWIN is the sales manager of Impact Systems and was impleaded in the court a quo in said capacity. Petitioner sold to Impact Systems various products allegedly amounting to P91,338.00. 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. The deed states that Impact Systems obligates itself to convey to Eurotech its recievables from Toledo Power Corporation amounting to P365,000.00. Unknown to petitioner, respondents, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the amount of P365,135.29 as evidenced by Check Voucher No. 0933 prepared by said power company and an official receipt dated 15 August 1995 issued by Impact Systems. 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, petitioners 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 attorneys 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. The trial court ruled that EDWIN should not be a part of the complaint and was dropped from the case. The CA affirmed the decision. Hence, this appeal.

Issue/s: 1.) Should EDWIN be impleaded in the case? Held: No. In this case, the parties do not dispute the existence of the agency relationship between respondents ERWIN as principal and EDWIN as agent. The only cause of the present dispute is whether respondent EDWIN exceeded his authority when he signed the Deed of Assignment thereby binding himself personally to pay the obligations to petitioner. Petitioner firmly believes that respondent EDWIN acted beyond the authority granted by his principal and he should therefore bear the effect of his deed pursuant to Article 1897 of the New Civil Code. Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liable to the party with whom he contracts. The same provision, however, presents two 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 this provision. As a general manager, EDWIN is vested with general powers including the power to enter into a deed of assignment which ERWIN approved. EDWIN acted within his authority as an agent, who did not acquire any right nor incur any liability arising from the Deed of Assignment, it follows that he is not a real party in interest who should be impleaded in this case. A real party in interest is one who "stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit."

2.) Can Petitioner collect from both EDWIN and ERWIN? Held: No. 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. Dispositive Portion: WHEREFORE, premises considered, the present petition is DENIED and the Decision dated 10 August 2004 and Resolution dated 17 March 2005 of the Court of Appeals in CA-G.R. SP No. 71397, affirming the Order dated 29 January 2002 of the Regional Trial Court, Branch 8, Cebu City, is AFFIRMED.

G.R. No. L-19001

November 11, 1922

HARRY E. KEELER ELECTRIC CO., INC., plaintiff-appellant, vs. DOMINGO RODRIGUEZ, defendant-appellee. Doctrine: The agent alone cannot enlarge or extend his authority by his own acts or statements, nor can he alone remove limitations or waive conditions imposed by his principal. To charge the principal in such a case, the principals consent or concurrence must be shown. Facts: The plaintiff is a domestic corporation with its principal office in the city of Manila and engaged in the electrical business, and among other things in the sale of what is known as the "Matthews" electric plant. Montelibano approached plaintiff at its Manila office, claiming that he was from Iloilo and lived with Governor Yulo; that he could find purchaser for the "Matthews" plant, and was told by the plaintiff that for any plant that he could sell or any customer that he could find he would be paid a commission of 10 per cent for his services, if the sale was consummated. Through Montlibanos efforts, one of the "Matthews" plants was sold by the plaintiff to the defendant, and was shipped from Manila to Iloilo, and later installed on defendant's premises after which, without the knowledge of the plaintiff, the defendant paid the purchase price to Montelibano(who was not authorized to receive payment given that his authority only covers looking for buyers). Plaintiff commenced this action claiming that he did not receive the purchase prise paid by defendant to Montelibano. The lower court rendered judgment for the defendant, from which the plaintiff appeals. Issue/s: Was there a valid payment? Held: No. It was explicitly shown that the Plaintiff never authorized Montelibano to receive payment, neither did he ratified the act of Montelibano receiving the payment for the Matthews Plant sold.

The agent alone cannot enlarge or extend his authority by his own acts or statements, nor can he alone remove limitations or waive conditions imposed by his principal. To charge the principal in such a case, the principals consent or concurrence must be shown. Dispositive Portion: The judgment of the lower court is reversed, and one will be entered here in favor of the plaintiff and against the defendant for the sum of P2,513.55 with interest at the legal rate from January 10, 1921, with costs in favor of the appellant. So ordered.

G.R. No. L-30573 October 29, 1971 VICENTE M. DOMINGO, represented by his heirs, ANTONINA RAYMUNDO VDA. DE DOMINGO, RICARDO, CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and JOSELITO, all surnamed DOMINGO, petitioners-appellants, vs. GREGORIO M. DOMINGO, respondent-appellee, TEOFILO P. PURISIMA, intervenor-respondent. Doctrine: An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it. Facts: Vicente M. Domingo granted Gregorio Domingo, a real estate broker, the exclusive agency to sell his parcel of land at the rate of P2.00 per square meter (or for P176,954.00) with a commission of 5% on the total price, if the property is sold by Vicente or by anyone else during the 30-day duration of the agency or if the property is sold by Vicente within three months from the termination of the agency to apurchaser to whom it was submitted by Gregorio during the continuance of the agency with notice to Vicente. Gregorio authorized the intervenor Teofilo P. Purisima to look for a buyer, promising him one-half of the 5% commission. Oscar submitted a written offer which was very much lower than the P2 per sq. m. price. Vicente directed Gregorio to tell Oscar to raise his offer. After several conferences between Gregorio and Oscar, Oscar raised his offer to P1.20 per sq. m. or P109,000 in total. Vicente agreed to said offer. Upon Vicentes demand, Oscar issued a P1,000 check to him as earnest money. Vicente, then, advanced P300 to Gregorio. Subsequently, Vicente asked for an additional P1,000 as earnest money, which Oscar promised to deliver to Vicente. Oscar gave Gregorio P1,000 as a gift or propina for succeeding in persuading Vicente to sell his lot at P1.20 per sq. m. gregorio did not disclose said gift or propina to Vicente.

Moreover, Oscar did not pay Vicente the additional P1,000 Vicente asked from him as earnest money. The deed of sale was not executed since Oscar gave up on the negotiation when he did not receive his money from his brother in the US, which he communicated to Gregorio. Gregorio did not see Oscar for several weeks thus sensing that something fishy might be going on. So, he went to Vicentes house where he read a portion of the agreement to the effect that Vicente was still willing to pay him 5% commission, P5,450. Thereafter, Gregorio went to the Register of Deeds of QC, where he discovered that a Deed of sale was executed by Amparo de Leon, Oscars wife, over their house and lot in favor of Vicente. After discovering that Vicente sold his lot to Oscars wife, Gregorio demanded in writing the payment of his commission. Gregorio also conferred with Oscar. Oscar told him that Vicente went to him and asked him to eliminate Gregorio in the transaction and that he would sell his property to him for P104,000. Vicente Gregorio in his reply, Vicente stated that Gregorio is not entitled to the 5% commission because he sold the property not to Gregorio's buyer, Oscar de Leon, but to another buyer, Amparo Diaz, wife of Oscar de Leon. CA: exclusive agency contract is genuine. The sale of the lot to Amparo de Leon is practically a sale to Oscar. Issues: Is Gregorios act of accepting the gift or propina from Oscar constitutes a fraud which would cause the forfeiture of his 5% commission? Held: Yes. Gregorio Domingo as the broker, received a gift or propina from the prospective buyer Oscar de Leon, without the knowledge and consent of his principal, Vicente Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only of his principal and undermined his loyalty to his principal, who gave him partial advance of P3000 on his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to purchase the property on the most advantageous terms desired by his principal, Gregorio Domingo, succeeded in persuading his principal to accept the counteroffer of the prospective buyer to purchase the property at P1.20 per sq. m.

The duties and liabilities of a broker to his employer are essentially those which an agent owes to his principal. An agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it. Rationale: To prevent the possibility of any wrong not to remedy or repair an actual damage The agent thereby assumes a position wholly inconsistent with that of being an agent for hisprincipal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed The fact that the principal may have been benefited by the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy. As a necessary consequence of such breach of trust, Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his principal. Dispositive Portion: WHEREFORE, the judgment is hereby rendered, reversing the decision of the Court of Appeals and directing defendant-appellee Gregorio Domingo: (1) to pay to the heirs of Vicente Domingo the sum of One Thousand Pesos (P1,000.00) as moral damages and One Thousand Pesos (P1,000.00) as attorney's fees; (2) to pay Teofilo Purisima the sum of Six Hundred Fifty Pesos (P650.00); and (3) to pay the costs.