G.R. No. 167552, 23 April 2007
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. Eurotech 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 a down payment. When the sludge pump arrived from the United Kingdom, Eurotech refused to deliver the same to Cuizons without their having fully settled their indebtedness to Eurotech. Thus, Edwin Cuizon and Alberto de Jesus, general manager of Eurotech, executed a Deed of Assignment of receivables in favor of Eurotech.
Cuizons, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the amount of P365,135.29. Eurotech made several demands upon Cuizons to pay their obligations 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.
The RTC dropped Edwin Cuizon as party defendant in the case. The Court of Appeals, affirmed the trial court’s decision. Hence, the appeal.
Whether or not Edwin exceeded his authority when he signed the Deed of Assignment thereby binding himself personally to pay the obligations to Eurotech.
No. Edwin did not exceEd his authority when he signed the Deed of Assignment. As stated in Art. 1897, The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. 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.
In this case, Edwin does not fall within any of the exceptions contained in Art. 1897. Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. 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.
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. Therefore, Edwin Cuizon acted within the scope of his authority and is not personally liable for the obligations to Eurotech.
*Case digest by April Rose B. Tuanda, JD-IV, Andres Bonifacio Law School, S.Y 2019-2020