FACTS:
This is a petition for review by certiorari assailing the Decision of the Court Appeals which
affirmed the order dropping respondent Edwin Cuizon as a party defendant in the civil case before
the lower court.
Eurotech is engaged in the business of importation and distribution of various European
industrial equipment for customers in the Philippines. Impact Systems, owned by respondent Erwin
Cuizon, is one of its customers. Erwin Cuizon was the sales manager and impleaded in the case in
said capacity. Respondents sought to buy from Eurotech a sludge pump valued at Php 250,000.00
with the former making a down payment of Php 50,000.00. When the pump arrived from the UK,
Eurotech refused to deliver the same to respondents without their having settled their indebtedness
to petitioner. Thus, on June 28, 1995, Edwin and Alberto De Jesus, general manager petitioner,
executed a DEED OF ASSIGNMENT of receivables in favor of petitioner. In said Deed, EDWIN, as
assignor, assigned, transferred, and conveyed, unto petitioner receivables from Toledo Power in the
amount of Php 365,000.00 as payment for the purchase of the sludge pump.
Allegedly unbeknownst to petitioner, respondents, despite the existence of the Deed of
Assignment, proceeded to collect from Toledo Power Company the amount of ₱365,135.29 as
evidenced by Check Voucher No. 09339 prepared by said power company and an official receipt
dated 15 August 1995 issued by Impact Systems. Alarmed, petitioner made several demands to
respondents to pay their obligations. Partial payments were made.
On October 7, 1996, petitioner sent a final demand letter to respondent wherein it stated that
as of June 11, 1996, their total obligation stood at Php 295, 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 before the Regional Trial Court of Cebu City.
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 lower court dropped EDWIN as defendant and this was affirmed by the Court of Appeals.
With their motion for reconsideration being denied, petitioner filed the instant case.
ISSUE:
Whether respondent EDWIN exceeded his authority when he signed the Deed of Assignment
thereby binding himself personally to pay the obligations to petitioner.
RULING:
NO. Edwin is not personally liable. 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.
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. By this legal fiction, the actual or real absence of the
principal is converted into his legal or juridical presence – qui facit per alium facit per se.
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 exceedshis authority. In the last instance, the
agent can be held liable if he does not give the third party sufficient notice of his powers. Respondent
EDWIN does not fall within any of the exceptions contained in this provision because:
a. The DEED clearly stated that Edwin signed as the sales manager of Impact Systems. The
position of manager is unique as it presupposes the grant of broad powers with which to
conduct the business of the principal.
b. Edwin acted well within his authority as his 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.
Finally, the petitioner sought to recover bought from Erwin and Edwin. It must be pointed
out that in case of excess of authority by the agent, the law does not say that a third person can
recover from both the principal and the agent.
