WESTMONT INVESTMENT CORP v. FRANCIA, JR.

(2011)
Topic: Contract of Agency

PARTIES:
 Petitioners: Westmont Investment Corporation
 Respondents: Amos P. Francia, Cecilia Zamora, et. al and Pearlbank Securities, Inc.

FACTS:
 Sometime in 1999, Amos Francia was enticed by Ms. Lalaine Alcaraz (bank manager
of Westmont Bank) to make investments with Wincorp (bank’s financial investment
arm), as it was offering interest rates that were 3% to 5% higher than regular bank
interest rates.
 Due to the promise of a good return of investment, Francia was convinced to invest
and even invited his siblings to join. They placed their investments in the amounts of
P1.4M and P2.5M with Wincorp in consideration of a net interest rate of 11% over a
43-day spread.
 Wincorp, through Westmont Bank, issued Official Receipts evidencing the said
transactions.
 When the 43-day placement matured, Francias wanted to retire their investments
but they were told that Wincorp had no funds. Instead, Wincorp “rolled-over” their
placements and issued Confirmation Advices extending their placement for another
34 days. Said Confirmation Advices indicated the name of Pearlbank as borrower.
 On April 30, 2000 (due date), the Francias again tried to get back the principal
amount they invested, but again were frustrated. They demanded from Pearlbank
their investments.
 On March 27, 2001, the Francias filed Complaint for Collection of Sum of Money and
Damages against Westmont and Pearlbank Securities.
 The RTC rendered a decision in favor of the Francias and held Wincorp solely liable
to them. Thus, Wincorp was ordered to pay P3.9M representing the aggregate
amount of investment placements made by the Francias.
 Westmont argues that it received the money of the Francias but it merely acted as
their agent, and that the actual borrower of the Francias’ money is Pearlbank.
Wincorp alleges that it should be Pearlbank who must be held liable to the Francias.
 The CA affirmed the decision of the RTC, finding that the contract of agency and the
fact that Pearlbank actually received the Francias’ money was not proven. The
records are bereft of any showing that Pearlbank is the actual borrower of the
money invested by the Francias.
 Furthermore, the CA ruled that the fact that the name of Pearlbank was printed in
the Confirmation Advices as the actual borrower does not automatically make
Pearlbank liable to the Francias as nothing therein shows that Pearlbank adhered or
acknowledged that it is the actual borrower of the amount specified.
 Wincorp would want the Court to rule that there was a contract of agency between
it (Wincorp) and the Francias with the latter (Francias) authorizing the former
(Wincorp) as their agent to lend money to Pearlbank. According to Wincorp, the two
Confirmation Advices presented and admitted by the court were competent proof
that the recipient of the loan proceeds was Pearlbank.
ISSUES/HELD:
 W/N the CA is correct in finding Wincorp solely liable to pay the Francias the amount
of P3.9M plus interest of 11% per annum.
o YES.
o The principal-agent relationship between Francias and Wincorp was not duly
established by evidence. The records are bereft of any showing that Wincorp
merely brokered the loan transactions between the Francias and Pearlbank
and the latter was the actual recipient of the money invested by the former.
o Pearlbank did not authorize Wincorp to borrow money for it. Neither was
there a ratification, expressly or impliedly, that it had authorized or
consented to said transactions.
o Although the subject Confirmation Advices indicate the name of Pearlbank as
the purported borrower of the said investments, said documents do not bear
the signature or acknowledgment of Pearlbank or any of its officers.
Pearlbank even initiated filed and pursued several cases against Wincorp,
questioning, among other things, Wincorp’s acts of naming it as borrower of
funds from investors.

DOCTRINE:
 Contract of Agency – “A person binds himself to render some service or to do
something in representation or on behalf of another with the latter’s consent.”
 It is said that 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. Its aim is to
extend the personality of the principal or the party for whom another acts and from
whom he/she derives the authority to act. Its basis is representation.
 Elements of contract of agency:
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.

JUDGMENT: Petition is denied.