Bacaltos Coal Mines vs.

CA and SMC
Doctrine:
Every person dealing with an agent is put upon inquiry
and must discover at his own peril the authority of
such agent.
If he does not make such an inquiry, he is chargeable
with knowledge of the agents authority. Ignorance will
not be an excuse.

Its demands to comply with the contract having been

unheeded, SMC filed against the petitioners and Rene
Savellon. In payment for this agreement, SMC issued a
check payable to Rene Savellon in trust for BCM.

Principal: Bacaltos
Agent: Savellon

BCM denies liability on the contention that Savellon

was not the Chief Operating Officer and did not have
authorization to enter into a Trip Charter Party Contract
with SMC.
Issues:
1. WON agent Savellon acted within his authority
2. WON BCM is liable to SMC

Facts:

Held/Ratio:

Petitioner Bacaltos authorized Savellon to use the

coal operating contract of Bacaltos Coal Mines (BCM)
for any legitimate purpose that it may serve. Namely,
but not by way of limitation, as follows:

1. NO, he acted beyond his authority.

The SC interpreted the above quoted authority of
Savellon as a special power of attorney. And that the
clause but not by way of limitation should be
understood as contemplating other prerogatives which
must exclusively pertain to the power to use the coal
operating contract because BCM doesnt own the
vessels and their main business is coal mining.

1. acquire purchase orders

2. engage in trading
3. collect receivables
4. extend to any person/ company by substitution the
same extent of authority granted to Savellon
5. in connection with the preceding paragraphs to
execute and sign documents, contracts, and other
pertinent papers
Savellon executed a Trip Charter Party with San Miguel
Corp (SMC), represented by Francisco Monzon, wherein
they agreed that BCM lets/demises a vessel to SMC for
3 round trips to Davao. The vessel was only able to
make one trip.

2. NO, there is negligence on the part of SMC.

Apart from their negligence in drawing the check
payable to Rene Savellon, they were also negligent in
their to fail to inquire upon the authority of the agent.
As they did not make such inquiry, they are chargeable
with knowledge of his authority despite ignorance
thereof.
Who Won? Bacaltos Coal Mines