060 Gozun vs Mercado

G.R. No. 167812 December 19, 2006

TOPIC: Power and obligations of the agent
PONENTE: Carpio-Morales, J.

AUTHOR: Jezreel Zapanta
NOTES:
FACTS:
1. Mercado ran for the 1995 local elections for the position of Governor in Pampanga. Gozun, Mercados compadre
and owner of a publishing and printing house, submitted draft samples and price quotations for the printing of
campaign materials to Mercado. Gozun was thereafter informed by Mercados wife, Annie, that Mercado approved
the quotations. Thus, Gozun began printing the campaign materials. Due to the urgency and quantity of the order,
Gozun availed the services of 2 other publishing houses owned by his mother and daughter. After the printing of
materials, Gozun delivered it to Mercados headquarters in San Fernando.
2. Meanwhile, early one morning, Mercados sister-in-law Lilian Soriano, obtained a cash advance of
P253,000 from Gozun for the allowances of poll watchers and other election related expenses because allegedly,
they were unable to go to the bank. Lilian said that she was borrowing money in behalf of Mercados wife as was
indicated in the succeeding Statement of Account. Gozun submits that Mercado informed him that he had
authorized Lilian to obtain the loan. However, Lilian signed the receipt in her name alone.
3. Gozun then sent a Statement of Account to Mercado in the total amount of P2,177,906, itemized as
follows:
- For Gozuns publishing house: P640,310
- 2 Other publishing houses: P1,284,596
- Payment for Lilians cash advance in behalf of Annie Mercado: P253,000
- Annie paid P1M and was issued a receipt. Despite repeated demands, Mercado failed to settle the balance.

It took 3 years before Gozun finally asked his counsel to send a demand letter, to no avail. They subsequently filed
a case to recover the balance plus damages and costs.
4. Mercado claimed that the campaign materials that Gozun delivered were donations to his campaign and
that he did not authorize his wife to enter into a contract for the campaign materials. Also, he stressed that he did
not authorize Lilian to borrow money from Gozun. He further claimed that the P1M paid by Annie to Gozun was
for a job well done as he would voluntarily help his campaign and would give his opinions on his campaign
strategy.




ISSUE(S):
1. Whether Mercado is bound to pay for the campaign materials
2. Whether Lilian was authorized to borrow money from Gozun
HELD:
1. Yes, the claim that such where mere donations does not hold water
2. No, Lilian has no authority


RATIO:

1. Per Comelec rules, if a campaign material is donated, it must be so stated on its face, acknowledged that
nothing of that sort was written on all the materials made by petitioner. There was no such
acknowledgment found on the materials. The court held that Mercado must pay P924,906 for the
campaign materials.
2. Generally, the agency may be oral, unless the law requires a specific form. However, a special power of
attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent and indispensable





for the preservation of the things which are under administration. Since nothing in this case involves the
preservation of things under administration, a determination of whether Lilian had the special authority
to borrow money on behalf of respondent is in order. There was no SPA. Gozun claims that Mercado
himself authorized the loan, however, the statement of account says that it was in behalf of Annie. Thus,
the alleged authority cannot be clearly inferred. Also, Lilian signed the receipt in her name alone. There
was no indication on the note that it was made on behalf of either Mercado or his wife.
3. It bears noting that Lilian signed in the receipt in her name alone, without indicating therein that she was
acting for and in behalf of respondent. She thus bound herself in her personal capacity and not as an
agent of respondent or anyone for that matter.

4. It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property
executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the
principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact
authorized to make the mortgage, if he has not acted in the name of the principal.















5. CASE LAW/ DOCTRINE: It is not enough merely that the agent was in fact authorized to make the
mortgage, if he has not acted in the name of the principal.




DISSENTING/CONCURRING OPINION(S):

(If any)