Академический Документы
Профессиональный Документы
Культура Документы
SUPREME COURT
Manila
FIRST DIVISION
The Trip Charter Party was executed on 19 October 1988 "by and between BACALTOS COAL
MINES, represented by its Chief Operating Officer, RENE ROSEL SAVELLON" and private
respondent San Miguel Corporation (hereinafter SMC), represented by Francisco B. Manzon,
Jr., its "SAVP and Director, Plant Operations-Mandaue" Thereunder, Savellon claims that
Bacaltos Coal Mines is the owner of the vessel M/V Premship II and that for P650,000.00 to be
paid within seven days after the execution of the contract, it "lets, demises" the vessel to
charterer SMC "for three round trips to Davao."
As payment of the aforesaid consideration, SMC issued a check (Exhibit "B") 5 payable to
"RENE SAVELLON IN TRUST FOR BACALTOS COAL MINES" for which Savellon issued a
receipt under the heading of BACALTOS COAL MINES with the address at No 376-R Osmea
Blvd., Cebu City (Exhibit "B-1"). 6
The vessel was able to make only one trip. Its demands to comply with the contract having been
unheeded, SMC filed against the petitioners and Rene Savellon the complaint in Civil Case No.
CEB-8187 for specific performance and damages. In their Answer, 7 the petitioners alleged that
Savellon was not their Chief Operating Officer and that the powers granted to him are only those
clearly expressed in the Authorization which do not include the power to enter into any contract
with SMC. They further claimed that if it is true that SMC entered into a contract with them, it
should have issued the check in their favor. They setup counterclaims for moral and exemplary
damages and attorney's fees.
Savellon did not file his Answer and was declared in default on 17 July 1990.
At the pre-trial conference on 1 February 1991, the petitioners and SMC agreed to submit the
following issues for resolution:
Plaintiff
1. Whether or not defendants are jointly liable to plaintiff for damages on account
of breach of contract;
2. Whether or not the defendants acted in good faith in its representations to the
plaintiff;
3. Whether or not defendant Bacaltos was duly enriched on the payment made by
the plaintiff for the use of the vessel;
4. Whether or not defendant Bacaltos is estopped to deny the authorization given
to defendant Savellon;
Defendants
1. Whether or not the plaintiff should have first investigated the ownership of
vessel M/V PREM [SHIP] II before entering into any contract with defendant
Savellon;
2. Whether or not defendant Savellon was authorized to enter into a shipping
contract with the [plaintiff] corporation;
3. Whether or not the plaintiff was correct and not mistaken in issuing the checks
in payment of the contract in the name of defendant Savellon and not in the name
of defendant Bacaltos Coal Mines;
4. Whether or not the plaintiff is liable on defendants'
counterclaim. 9
After trial, the lower court rendered the assailed decision in favor of SMC and against the
petitioners and Savellon as follows:
Page 2 of 11
disavow what he initially stated to be true and to interpose the defense that Bacaltos Coal Mines
has a distinct legal personality.
Their motion for a reconsideration of the above decision having been denied, the petitioners
filed the instant petition wherein they raise the following errors:
I. THE RESPONDENT COURT ERRED IN HOLDING THAT RENE
SAVELLON WAS AUTHORIZED TO ENTER INTO A TRIP
CHARTER PARTY CONTRACT WITH PRIVATE RESPONDENT
INSPITE OF ITS FINDING THAT SUCH AUTHORITY CANNOT BE
FOUND IN THE FOUR CORNERS OF THE AUTHORIZATION;
II. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT
BY ISSUING THE CHECK IN THE NAME OF RENE SAVELLON IN
TRUST FOR BACALTOS COAL MINES, THE PRIVATE
RESPONDENT WAS THE AUTHOR OF ITS OWN DAMAGE; AND
III. THE RESPONDENT COURT ERRED IN HOLDING PETITIONER
GERMAN BACALTOS JOINTLY AND SEVERALLY LIABLE WITH
RENE SAVELLON AND CO-PETITIONER BACALTOS COAL
MINES IN SPITE OF THE FINDING OF THE COURT A QUO THAT
PETITIONER BACALTOS COAL MINES AND PETITIONER
BACALTOS ARE TWO DISTINCT AND SEPARATE LEGAL
PERSONALITIES. 12
After due deliberations on the allegations, issues raised, and arguments adduced in the petition,
and the comment thereto and reply to the comment, the Court resolved to give due course to
the petition.
Every person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the
agent's authority, and his ignorance of that authority will not be any excuse. Persons dealing
with an assumed agent, whether the assumed agency be a general or special one, are bound at
their peril, if they would hold the principal, to ascertain not only the fact of the agency but also
the nature and extent of the authority, and in case either is controverted, the burden of proof is
upon them to establish it. 13 American jurisprudence 14 summarizes the rule in dealing with an
agent as follows:
A third person dealing with a known agent may not act negligently with regard to
the extent of the agent's authority or blindly trust the agent's statements in such
respect. Rather, he must use reasonable diligence and prudence to ascertain
whether the agent is acting and dealing with him within the scope of his powers.
The mere opinion of an agent as to the extent of his powers, or his mere
assumption of authority without foundation, will not bind the principal; and a third
person dealing with a known agent must bear the burden of determining for
himself, by the exercise of reasonable diligence and prudence, the existence or
nonexistence of the agent's authority to act in the premises. In other words,
whether the agency is general or special, the third person is bound to ascertain not
only the fact of agency, but the nature and extent of the authority. The principal, on
the other hand, may act on the presumption that third persons dealing with his
agent will not be negligent in failing to ascertain the extent of his authority as well
as the existence of his agency.
Or, as stated in Harry E. Keller Electric Co. vs. Rodriguez, 15 quoting Mechem on Agency:
The person dealing with the agent must also act with ordinary prudence and
reasonable diligence. Obviously, if he knows or has good reason to believe that
the agent is exceeding his authority, he cannot claim protection. So if the
suggestions of probable limitations be of such a clear and reasonable quality, or if
Page 4 of 11
SO ORDERED.
Bellosillo, Quiason, and Kapunan, JJ., concur.
Padilla, J., took no part.
Footnotes
1 Annex "D" of Petition; Rollo, 64-71. Per Herrera, M., J., with Francisco, C., and
Guerrero, B., JJ., concurring.
2 Annex "B," Id.; Id., 24-32. Per Judge Benigno G. Gaviola.
3 Original Records (OR), 8-10.
4 Id., 11. The document is not acknowledged before a notary public.
5 OR, 12.
6 Id., 13.
7 Id.,16-18.
8 Id., 44.
9 OR, 57-58.
10 OR, 138; Rollo, 32.
11 Annex "C" of Petition, Brief for Appellants; Rollo, 45-46.
12 Rollo, 9.
13 Veloso vs. La Urbana, 58 Phil. 681 [1933], citing Deen vs. Pacific Commercial
Co., 42 Phil. 738 [1922] and Harry E. Kelter Electric Co. vs. Rodriguez, 44 Phil. 19
[1922]. See also Strong vs. Repide, 6 Phil. 680 [1906] and Pineda vs. Court of
Appeals, 226 SCRA 754 [1993].
14 3 Am Jur 2d Agency 83 [1986].
15 Supra note 13.
16 OR, 135; Rollo, 29.
17 See Article 1876 Civil Code.
18 TSN, 4 April 1991, 21-22.
19 Section 4.
20 Section 6.
21 TSN, 4 April 1991, 6-7.
22 TSN, 4 April 1991, 14-15.
23 TSN, 30 April 1991, 23-24.
Page 10 of 11
24 OR, 73.
25 TSN, 4 April 1991, 11-12.
26 OR, 74.
27 TSN, 30 April 1991, 5-6.
28 Francisco vs. Government Service Insurance System, 7 SCRA 577 [1963],
cited in Cuison vs. Court of Appeals, 227 SCRA 391 [1993].
Page 11 of 11