Central Surety v.

C.N. Hodges

1955 1971

The Facts
C.N Hodges

Vicente Layson

Parcel of land

P43,000.00
(on installment)

Absolute Deed of Sale

Promissory Note +
Bond

Central Surety

The Bond
Signed by Rosita Mesa, Iloilo Branch
Manager
P15,000 + 1% interest
January 23, 1954

The Problem
Layson DEFAULTED.
Hodges then demanded payment
from Central Surety.

Central Wont Pay

1. Mesas authority to issue bonds had
already been withdrawn in 1952.
2. Granting that she had authority, she
cannot issue surety bonds in excess of
P8,000.

CFI and CA
Central Surety is liable,
but only for P8,000.

The Issue
1) Whether Central Surety is liable
on a bond issued by an agent
whose authority had long been
revoked.
2) If liable, for how much?

Supreme Court.
YES.
ART. 1922 of the Civil Code
If the agent had general powers, revocation of the
agency does not prejudice third persons who acted
in good faith and without knowledge of the
revocation. Notice of the revocation in a newspaper
of general circulation is a sufficient warning to third
persons.

Supreme Court
1) No showing that the revocation of authority
of Mesa was made known to the public in
general by publication.

Even Hodges who was a regular customer was not

notified thereof.

2) Mesas authority to issue bonds in behalf of

Central Surety was of a general nature.
3) Central Surety honored other bonds issued by
Mesa even after her authority was revoked.

Supreme Court
BUT:
Central Suretys liability
is only P8,000.

Supreme Court
Rule 9, Sec. 8 of RoC
When an action or defense is founded upon a written
instrument, copied in or attached to the corresponding
pleading as provided in the preceding section, the
genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath
specifically denies them, and sets forth what he claims to
be the facts x x x

Supreme Court
the parties acted in complete disregard of or wholly
overlooked the rule above-quoted. Hodges had neither
objected to the evidence introduced by petitioner herein
in order to prove that Mrs. Mesa had no authority to issue
a surety bond, much less one in excess of P8,000.00, and
took no exception to the admission of said evidence.
Hence, Hodges must be deemed to have waived the
benefits of said rule and petitioner herein cannot be held
liable in excess of the sum of P8,000.00.