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Eurotech Industrial Technologies, Inc. v.

Edwin Cuizon and Erwin Cuizon

GR #167552, April 23,2007
Edwin Cuizon, general manager of Impact Systems Sales owned by Erwin Cuizon,
bought one equipment from Petitioner Eurotech valued at Php 250,000.00, paying
Php 50,000.00 as downpayment. When the equipment arrived, petitioner refused to
deliver it to the respondent without paying the balance.
Edwin and a general manager of Eurotech signed a deed of assignment, whereby
Impact Systems assigns its outstanding receivable amounting to Php 365,000.00 to
Eurotech, which delivered the equipment thereafter.
But Erwin, the proprietor, still collected the receivables despite the assignment.
After partial payments made, Eurotech made a final demand of Php 295,000.00,
excluding interest and attorney's fees.
For failure to meet the demand, Eurotech filed a complaint for sum of money,
damages, with application for preliminary attachment.
Edwin alleged that he is not a real party in interest in the case for he merely acted
as an agent of his principal, Impact Systems.
RTC dropped respondent as a party defendant of the case. The CA affirmed the
order, hence the appeal was made.
Whether or not respondent, as sales manager, is acting merely as an agent for the
sole proprietorship
Respondent Edwin merely acted as an agent.
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 latters consent.
The underlying principle of the contract of agency is to accomplish results by using
the services of others to do a great variety of things like selling, buying,
manufacturing, and transporting.
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.
By this legal fiction, the actual or real absence of the principal is converted into his
legal or juridical presence qui facit per alium facit per se.
The elements of the contract of agency are:
(1) consent, express or implied, of the parties to establish the relationship;
(2) 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;
(4) the agent acts within the scope of his authority
In this case, the parties do not dispute the existence of the agency relationship
between respondents ERWIN as principal and EDWIN as agent. The only cause of
the present dispute is whether respondent EDWIN exceeded his authority when he
signed the Deed of Assignment thereby binding himself personally to pay the
obligations to petitioner.
Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not
personally liable to the party with whom he contracts.
The same provision, however, presents two instances when an agent becomes
personally liable to a third person:
(1) When he expressly binds himself to the obligation; and,
(2) 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.
We hold that respondent EDWIN does not fall within any of the exceptions
contained in this provision.
"...the position of manager is unique in that it presupposes the grant of broad
powers with which to conduct the business of the principal."
The powers of an agent are particularly broad in the case of one acting as a general
agent or manager; such a position presupposes a degree of confidence reposed and
investiture with liberal powers for the exercise of judgment and discretion in
transactions and concerns which are incidental or appurtenant to the business
entrusted to his care and management. In the absence of an agreement to the
contrary, a managing agent may enter into any contracts that he deems reasonably
necessary or requisite for the protection of the interests of his principal entrusted to
his management.

A real party in interest is one who "stands to be benefited or injured by the

judgment in the suit, or the party entitled to the avails of the suit.
# 37 Prudential Bank vs. CA
233 SCRA 350
Facts: The complaint in this case arose when private respondent Aurora F. Cruz,
with her sister as co-depositor, invested P200, 000.00 in Central Bank bills with the
Prudential Bank at its branch in Quezon Avenue, Quezon City, on June 23, 1986.
Susan Quimbo, the Bank employee assisted her on all her dealings. One of such
dealing involves Cruz withdrawal from her Savings Account No. 2546 and applying
such amount to the investment with the same bank. Cruz was asked to sign a
Withdrawal Slip for P196, 122.98, representing the amount to be re-invested after
deduction of the prepaid interest. Quimbo explained this was a new requirement of
the bank. Several days later, Cruz received another Confirmation of Sale and a copy
of the Debit Memo coming from Quimbo. On October 27, 1986, Cruz returned to the
bank and sought to withdraw her P200, 000.00. After verification of her records,
however, she was informed that the investment appeared to have been already
withdrawn by her on August 25, 1986. There was no copy on file of the Confirmation
of Sale and the Debit Memo allegedly issued to her by Quimbo. Quimbo herself was
not available for questioning as she had not been reporting for the past week.
Prompted by the event Cruz's reaction was to file a complaint for breach of contract
against Prudential Bank in the Regional Trial Court of Quezon City. She demanded
the return of her money with interest, plus damages and attorney's fees. Cruz won
the case in both the RTC and CA.
Issue: Does the fault of bank employee bind the Bank particularly in cases where
the bank employee created blunder or, worse, intentionally cheat the depositor?
Held:The liability of the principal for the acts of the agent is not debatable. Law and
jurisprudence are clearly and absolutely against the petitioner. Such liability dates
back to the Roman Law maxim, Qui per alium facit per seipsum facere videtur. "He
who does a thing by an agent is considered as doing it himself." This rule is affirmed
by the Civil Code thus: Art. 1910. The principal must comply with all the obligations
which the agent may have contracted within the scope of his authority. Art. 1911.
Even when the agent has exceeded his authority, the principal is solidarily liable
with the agent if the former allowed the latter to act as though he had full powers.
Conformably, we have declared in countless decisions that the principal is liable for
obligations contracted by the agent. The agent's apparent representation yields to
the principal's true representation and the contract is considered as entered into
between the principal and the third person. WHEREFORE, the petition is DENIED and
the appealed decision is AFFIRMED.