G.R. No. 129039, 17 September 2002

FACTS:

Private respondent Conrado De Guzman is an architect-contractor doing business under the name and style of Jigscon Construction. Herein petitioner Siredy Enterprises, Inc. is the owner and developer of Ysmael Village, a subdivision in Sta. Cruz, Marilao, Bulacan. The president of Siredy is Ismael E. Yanga. As stated in its Articles of Incorporation, the primary corporate purpose of Siredy is to acquire lands, subdivide and develop them, erect buildings and houses thereon, and sell, lease or otherwise dispose of said properties to interested buyers. Sometime before October 1978, Yanga executed an undated Letter of Authority, duly authorizing MR. HERMOGENES B. SANTOS, to negotiate and enter into contract or contracts to build Housing Units on our subdivision lots in Ysmael Village, Sta. Rosa, Marilao, Bulacan and to sell lots on our subdivisions.

On October 15, 1978, Santos entered into a Deed of Agreement with De Guzman. The deed expressly stated that Santos was “representing Siredy Enterprises, Inc.” Private respondent was referred to as “contractor” while petitioner Siredy was cited as “principal” . To build for them 2-bedroom single housing units and 4-bedroom duplex housing units; at YSMAEL VILLAGE, Bo. Sta. Rosa, Marilao, Bulacan owned and developed by SIREDY ENTERPRISES and Mr. Ismael E. Yanga, Sr.; the CONTRACTOR intends to build for the PRINCIPAL eighty (80) units singles and eighteen (18) units duplex residences at the cost above mentioned or a lump sum total of FOUR MILLION, EIGHT HUNDRED FORTY TWO THOUSAND (P4,842,000.00) PESOS, Philippine Currency;

From October 1978 to April 1990, De Guzman constructed 26 residential units at Ysmael Village. Thirteen (13) of these were fully paid but the other 13 remained unpaid. The total contractual price of these 13 unpaid houses is P412,154.93 which was verified and confirmed to be correct by Santos, per an Accomplishment Billing that the latter signed. De Guzman tried but failed to collect the unpaid account from petitioner. Thus, he instituted the action below for specific performance against Siredy, Yanga, and Santos who all denied liability. During the trial, Santos disappeared and his whereabouts remain unknown.

In its defense, petitioner presented testimonial evidence to the effect that Siredy had no contract with De Guzman and had not authorized Santos to enter into a contract with anyone for the construction of housing units at Ysmael Village. The trial court agreed with petitioner based on the doctrine of privity of contract.

Thus, the trial court disposed of the case in favor of Siredy Enterprises and Dr. Yanga and directing defendant Hermogenes B. Santos to pay unto plaintiff Conrado de Guzman the amount of P412,154.93 as actual damages.

On appeal, De Guzman obtained a favorable judgment from the Court of Appeals. The CA ordered Siredy Enterprises, Inc. to pay appellant Conrado de Guzman cost and P412,154.93 as actual damage plus legal interest thereon. Hence this petition for review on certiorari under Rule 45 of the Rules of Court.

ISSUE:

Whether or not Hermogenes B. Santos was a duly constituted agent of Siredy, with authority to enter into contracts for the construction of residential units in Ysmael Village and thus the capacity to bind Siredy to the Deed of Agreement.

RULING:

By the relationship of agency, one party called the principal authorizes another called the agent to act for and in his behalf in transactions with third persons. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. “He who acts through another acts himself.”

Resolution of this issue necessitates a review of the Letter of Authority executed by Ismael E. Yanga as president of Siredy in favor of Santos. Within its terms can be found the nature and extent of the authority granted to Santos which, in turn, determines the extent of Siredy’s participation in the Deed of Agreement.

On its face, the instrument executed by Yanga clearly and unequivocally constituted Santos “to do and execute”, among other things, the act of negotiating and entering into “contract or contracts to build Housing Units on our subdivision lots in Ysmael Village. Nothing could be more express than the written stipulations contained therein. It was upon the authority of this document that De Guzman transacted business with Santos that resulted in the construction contract denominated as the Deed of Agreement.

Aside from the Letter of Authority, Siredy’s Articles of Incorporation, duly approved by the Securities and Exchange Commission, shows that Siredy may also undertake to erect buildings and houses on the lots and sell, lease, or otherwise dispose of said properties to interested buyers. Such Articles, coupled with the Letter of Authority, is sufficient to have given De Guzman reason to believe that Santos was duly authorized to represent Siredy for the purpose stated in the Deed of Agreement.

We find that a valid agency was created between Siredy and Santos, and the authority conferred upon the latter includes the power to enter into a construction contract to build houses such as the Deed of Agreement between Santos and De Guzman’s Jigscon Construction. Hence, the inescapable conclusion is that Siredy is bound by the contract through the representation of its agent Santos.

This petition is DENIED for lack of merit. The Decision of the Court of Appeals dated April 26, 1996, is hereby AFFIRMED.

*Case digest by Paul C. Gandola (Refresher), Andres Bonifacio Law School, SY 2019-2020