Westmont Insurance Corporation vs Amos Francia, Jr, et al

In 1999, Amos Francia was convinced by the bank manager of Westmont Bank to make an investment in
Westmont Investment. Since the interest rate offered was impressive, Amos was convinced, he invited his
siblings to join in the investment and so they invested an aggregate amount of P3.9 million. When the
investment matured, the Francia siblings demanded the retirement of their investment but Westmont
Investment advised them they have no funds. Westmont Investment then requested for an extension. At
the same time, Westmont Investment advised the Francias that their money was borrowed by Pearlbank.
When the extension asked by Westmont expired, they again were not able to pay up and so the Francias
sued Westmont Investment. Pearlbank was impleaded in the complaint.
In its defense, Westmont Investment alleged that it was merely acting as an agent of Pearlbank; that
Pearlbank authorized Westmont Investment to borrow money on its behalf; that Westmont Investment
merely brokered a loan transaction between Pearlbank and the Francias. To support its claim, Westmont
provided documents showing that Pearlbank borrowed an amount equivalent to the investment of the
Francias.
ISSUE: Whether or not Westmont Investment is an agent of Pearlbank.
HELD: No. The evidence presented is not sufficient to prove that an agency existed between Pearlbank
and Westmont Investment hence, only Westmont Investment is liable to pay the Francias. Pearlbank did
not authorize Westmont Investment to borrow money for it. Neither was there a ratification, expressly or
impliedly, that it had authorized or consented to said transaction. In fact, Pearlbank questioned Westmont
Investments practice of naming Pearlbank as a borrower of certain investments made by other investors
with Westmont Investment. Also, the Francias had no personal knowledge if Pearlbank was indeed the
recipient/beneficiary of their investments. The Francias have always maintained that they only transacted
with Westmont Investment and never with Pearlbank. The fact that the Francias impleaded Pearlbank in
their suite is understandable (it does not defeat their suit) because they only impleaded Pearlbank to
protect their interest when they found out that Westmont was already bankrupt.

Spouses Fernando Viloria and Lourdes

Viloria vs Continental Airlines, Inc.
In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a travel
agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent,
Margaret Mager, advised the couple that they cannot travel by train because it is fully booked; that they
must purchase plane tickets for Continental Airlines; that if they wont purchase plane tickets; theyll never
reach their destination in time. The couple believed Magers representations and so they purchased two
plane tickets worth $800.00.
Later however, the spouses found out that the train trip isnt fully booked and so they purchased train
tickets and went to their destination by train instead. Then they called up Mager to request for a refund for
the plane tickets. Mager referred the couple to Continental Airlines. As the couple are now in the
Philippines, they filed their request with Continental Airlines office in Ayala. The spouses Viloria alleged
that Mager misled them into believing that the only way to travel was by plane and so they were fooled
into buying expensive tickets.
Continental Airlines refused to refund the amount of the ticket and so the spouses sued the airline
company. In its defense, Continental Airlines claimed that the ticket sold to them by Mager is nonrefundable; that, if any, they are not bound by the misrepresentations of Mager because theres no agency
existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the RTC.
ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:
1.
2.

there is consent, express or implied of the parties to establish the relationship;

the object is the execution of a juridical act in relation to a third person;

3.

the agent acts as a representative and not for himself, and

4.

the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it concluded an
agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter into
contracts of carriage with third persons on the airlines behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines and
not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf.
The fourth element is also present considering that Continental Airlines has not made any allegation that
Holiday Travel exceeded the authority that was granted to it.
Continental Airlines also never questioned the validity of the transaction between Mager and the spouses.
Continental Airlines is therefore in estoppels. Continental Airlines cannot be allowed to take an altogether
different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to
whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied
on good faith on Continental Airlines acts in recognition of Holiday Travels authority. Estoppel is primarily
based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its
injurious reliance, the failure to apply it in this case would result in gross travesty of justice.