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Uy vs. Court of Appeals, G.R. No.

120465, 314 SCRA 69, 09 September

Petitioners William Uy and Rodel Roxas are agents to authorized to sell eight
(8) parcels of land by the owners. By virtue of such authority, petitioners offered to
sell the lands, located at Benguet to respondent National Housing Authority (NHA)
to be utilized and developed as housing project.
NHA passed a resolution approving the acquisition of said lands with an area of
31.8231 hectares, at the cost of P23.867 million, pursuant to which the parties
executed a series of Deeds of Absolute Sale covering the subject lands. However,
only five (5) were paid for by NHA because of the report it received from the Land
Geosciences Bureau of the DENR that the remaining area is located at an active
landslide area and therefore, not suitable for development into a housing project.
The NHA issued two (2) resolutions cancelling the sale over the three (3) parcels of
land and subsequently offered the amount of P1.255 million to the landowners as
daos perjuicious.
Petitioners filed before Regional Trial Court (RTC) a Complaint for Damages against
NHA and its General Manager Robert Balao. After trial, the RTC rendered a decision
declaring the cancellation of the contract to be justified and awarded damages to
plaintiffs in the sum of P1.255 million, the same amount initially offered by NHA to
petitioners as damages.
Upon appeal by petitioners, the Court of Appeals reversed the decision of the RTC
and entered new one dismissing the complaint. It held that since there was
justifiable basis cancelling the sale, it saw no reason for the award of damages.
Were the petitioners the real parties in interest?
No, petitioners are not parties to the contract of sale between their principals
and NHA. They are mere agents of the owners of the land subject sale of the sale.
As agents, they only render some service or do something in representation or on
behalf of their principals. The rendering of such service did not make them parties
to the contracts of sale executed in behalf of the latter. Since a contract may be
violated only by the parties thereto as against each other, the real parties-ininterest, either as plaintiff or defendant, in an action upon that contract must,
generally, either be parties to said contract.

Angeles vs. PNR, G.R. No. 150128, 500 SCRA 444, 31 August 2006
On May 5, 1980, respondent Philippine National Railways (PNR) informed a
certain Gaudencio Romualdez that it has accepted the latters to buy, on an AS IS
WHERE IS basis, the PNRs scrap/unserviceable rails located in Del Carmen and
Lubao, Pampanga at P1,300.00 and P2,100.00 per metric ton, respectively, for the
total amount of P96,600.00 Romualdez authorized Lizette R. Wijanco-Angeles, the
wife of petitioner Laureano Angeles to be his representative in the withdrawal of the
scrap/unserviceable rails. The PNR granted said request and allowed Lizette to
withdraw scrap/unserviceable rail in Murcia, Capas and San Miguel, Tarlac instead in
Pampanga. However, the PNR subsequently suspended the withdrawal in view of
what it considered as documentary discrepancies coupled by reported pilferages of
over P500,000.00 worth of PNR scrap properties in Tarlac.
Consequently, the spouses Angeles demanded the refund of the amount of
P96,000.00. The PNR, however, refused to pay, alleging that as per delivery receipt
duly signed by Lizette, 54.658 metric tons of unserviceable rails had already been
withdrawn which, at P2,100 per metric ton, were worth of P114,781.80, an amount
that exceed the claim for refund.
On August 10, 1988, the spouses Angeles file suit against PNR and its corporate
secretary, Rodolfo Flores, among others, for specific performance and damages
before RTC of Quezon City, and praying that PNR be directed to deliver 46 metric
tons of scrap/unserviceable rails and to pay them damages and attorneys fees.
Meanwhile, Lizette passed away and was substituted by her heirs, among whom is
her husband, herein petitioner Laureano Angeles.
On April 16, 1996, the trial court, on the postulate that the spouses Angeles are not
the real parties-in-interest, rendered judgment dismissing their complaint for lack of
cause of action. As held by the court, Lizette was merely a representative of
Romualdez in the withdrawal of scrap or unserviceable rails awarded to him and not
an assignee to the latters rights with respect to the award. Upon appeal, the CA
affirmed the trial courts decision.
Whether or not the petitioner merely an agent or assignee of the rights of
Romualdez interest in the scrap rails awarded?
Lizette was not an assignee, but merely an agent whose authority was limited
to the withdrawal of the scrap rails, hence, without personality to sue.

Where agency exists, the third partys (PNR) liability on a contract is to the principal
and not to the agent and the relationship of the third party to the principal is the
same as that in a contract in which there is no agent. Normally, the agent has
neither rights nor liabilities as against the third party. He cannot thus sue and be
sued on the contract. Since a contract may be violated only by the parties thereto
as against each other, the real party-in-interest, either as plaintiff or defendant in an
action upon that contract must, generally, be a contracting party.

National Power Corporation vs. NAMERCO, G.R. Nos. L-33819 & L-33897
117 SCRA 789, 23 October 1982
On October 17, 1956, plaintiff National Power Corporation (NPC) and
defendant National Merchandising Corporation (NAMERCO), as the representative of
the International Commodities Corporation, executed a contract for the purchase by
the NPC from the New York firm of four thousand long tons of crude sulfur with a
stipulation for liquidated damages in case of breach.
Defendant-appellant Domestic Insurance Company executed a performance bond in
favor of NPC to guarantee the sellers obligation. In entering into another contract,
NAMERCO, however, did not disclose to NPC that NAMERCOs principal, in a cables
instruction, stated that the sale was subject to availability of steamer, and contrary
to its principals instruction, NAMERCO agreed that non-availability of a steamer was
not a justification for non-payment of liquidated damages.
The New York supplier was not able to deliver the sulfur due to its inability to secure
shipping space. Consequently, the Government Corporate Counsel rescinded the
contract of sale due to the suppliers non-performance of its obligations, and
demanded payment of liquidated damages from both NAMERCO and the surety.
Thereafter, NPC sued for recovery of the stipulated liquidated damages. After trial,
the Court of First Instance rendered judgment ordering the defendants-appellants to
pay solidarity to the NPC reduced liquidated damages with interest.
Whether NAMERCO exceeded its authority?
Yes, NAMERCO exceeded their authority. Article 1897 implies that the agent
who acts in excess of his authority is personally liable to the party with whom he
contracted. And that the rule is complimented by Article 1898 of the Civil Code
which provides that if the agent contracts, in the name of the principal, exceeding
the scope of his authority, and the principal does not ratify the contract, it shall be

void if the party with whom the agent contracted is aware of the limits of the
powers granted by the principal. NAMERCO never disclosed to the NPC the cabled or
written instructions of its principal. For that reason and because NAMERCO
exceeded the limits of its authority, it virtually acted in its own name and not as
agent and it is, therefore, bound by the contract of sale which, however, it not
enforceable against its principal. If, as contemplated in Articles 1897 and 1898,
NAMERCO is bound under the contract of sale, then it follows that it is bound by the
stipulation for liquidated damages in the contract.

BA Finance vs. Court of Appeals, G.R. No. 94566, 211 SCRA 112, 03 July
Renato Gaytano, doing business under the name Gebbs International, applied
for and was granted a loan with respondent Traders Royal Bank. Philip Wong as
credit administrator of BA Finance Corporation for and in behalf of the latter
undertook to guarantee the loan of the Gaytano spouses.
Partial payments were made on the loan leaving an unpaid balance which the
Gaytano spouses refused to pay. Respondent bank filed with the trial court
complaint for sum of money against the Gaytano spouses and petitioner
Corporation as alternative defendant.
The trial court rendered a decision in favor of the plaintiff and against
Gaytano spouses. Not satisfied with the decision the respondent bank appealed with
the Court of Appeals, modifying the decision of the trial court, wherein Gaytano
spouses and BA Finance Corp., were solidarily liable.
Whether Philip Wong as agent who exceeded his authority is liable?
The special power to approve loans does not carry with it the power to bind
the principal to a contract of guaranty even to the extent of the amount for which a
loan could have been granted by the agent. Guaranty is not presumed, it must be
expressed and cannot be extended beyond its specified limits. In one case, where it
appears that a wife gave her husband power of attorney to loan money, this Court
ruled that such fact did not authorized him to make her liable as a surety for the
payment of the debt of a third persons. The rule is clear that an agent who exceeds
his authority is personally liable for damaged.

Pineda vs. Court of Appeals, G.R. No. 105562, 226 SCRA 754, 27
September 1993
Prime Marine Services, Inc. (PMSI) obtained a group insurance policy for its
sailors. During the effectivity of the policy, six covered employees of the PMSI
perished at sea when their vessel sunk somewhere in Morocco. Petitioners sought to
claim death benefits due to them and asked for assistance with the President and
General Manager of PMSI, Captain Roberto Nuval. They were made to execute, with
the exception of the spouses, Alarcon, special powers of attorney authorizing
Captain Nuval to follow up, ask, demand, collect and receive for their benefit
indemnities of sums money due to them.
Petitioners were able to receive their respect death benefits. Unknown to
them, however, the PMSI, in its capacity as employer and policyholder of the life
insurance of its deceased workers, filed with the Insular Life (respondent) formal
claims for and in behalf of the beneficiaries, through Captain Nuval. Insular issued
checks payable to the order of the petitioners. These checks were released to the
treasurer of PMSI, and upon instructions by Captain Nuval, it was deposited in his
personal account.
Petitioners learned that they were entitled, as beneficiaries, to life insurance
benefits under a group policy but when they sought to recover these benefits, their
claims was denied on the ground that the liability to petitioners was already
extinguished upon delivery to and receipt by PMSI.
Whether or not Insular Life acted with negligence?
Yes. The practice in group insurance business, which is consistent with the
jurisprudence thereon in the State of California from whose laws our Insurance Code
has been mainly patterned, is that the employer-policyholder who takes out the
insurance for its officers and employees, is the agent of the insurer who has
authority to collect the proceeds from the insurer. In this case, the insurer, through
the negligence of its agent, allowed a purported attorney-in-fact whose instrument
does not clearly show such power to collect the proceeds, it was liable therefore
under the doctrine that the principal is bound by the misconduct of its agent.