1. Westmont Investment Corporation vs. Francia, Jr.

(2011)

Facts: In 1999, Amos Francia was convinced by the bank manager of Westmont Bank
(Westmont) to make an investment in Westmont Investment Corp. (Wincorp). Since the interest
rate offered was impressive, 3% to 5% higher than regular bank investment, Amos was
convinced. He invited his siblings to join in the investment and so they invested P1,400,000.00
& P2,500,000.00 with net interest rate of 11% over 43-day spread. When the investment
matured, the Francia siblings demanded the retirement of their investment but Wincorp “rolled-
over” their placements and issued Confirmation Advices for another 34 days. At the same time,
Wincorp advised the Francias that their money was borrowed by Pearlbank Securities Inc.
(Pearlbank). When the extension asked by Westmont expired, they again were not able to pay up
and so the Francias sued Wincorp. Pearlbank was impleaded in the complaint. Wincorp was
unable to present their evidence; their Motion to Postpone was denied by the RTC and was
considered to have waived its right to present evidence. The RTC ruled in favour of the Francias
and held that Wincorp is solely liable to them. Wincorp filed a Motion for Reconsideration
which was denied. The CA affirmed the ruling of the RTC.

Issue: Whether the CA is correct in finding Wincorp solely liable to pay the Francias?

Ruling: Yes. Sec. 34, Rule 132 of the Rules on Evidence states that: “The court shall consider no
evidence which has not been formally offered. The purpose for which the evidence is offered
must be specified.” The attached documents in the Motion for Reconsideration filed before the
RTC cannot be given any probative weight or credit because the documents were not formally
offered as evidence in trial court. As established by the oral evidence and confirmed by
Confirmation Advices, the Francias failed to get their investment after 43 days and was rolled
over for another 34 days; Wincorp never negated these saying it merely acted as an agent of the
Francias and that Pearlbank is the actual borrower. The alleged “Contract of Agency” and that
Pearlbank received the Francias’ money were never proven. The fact that Pearlbank was printed
in Confirmation Advices does not automatically make it liable to the Francias as nothing therein
shows that Pearlbank adhered or acknowledged that it is the actual borrower. Hence, the question
of law; findings of the CA are final & conclusive.

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 authority or consent of the latter. The elements of
such contract are: (1) consent, express or implied; (2) object is the execution of a juridical act in
relation to a third person; (3) agents act as a representative and not for himself; and (4) agent
acts within the scope of his authority.

The principal-agent relationship between the Francias and Wincorp were not duly established by
evidence. The record does not show that Wincorp merely brokered a loan transaction between
the Francias and Pearlbank; the latter was the actual recipient of the money. Pearlbank did not
authorize Wincorp to borrow money for it. Neither was there a ratification, express or implied.
There was not even a promissory note validly and duly executed by Pearlbank which would in
any way serve as evidence of borrowing. 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 Wincorp and never with Pearlbank. The fact that the Francias
impleaded Pearlbank in their suit is understandable because they only impleaded Pearlbank to
protect their interest when they found out that Wincorp was already bankrupt.