LIM TIU v. RUIZ y REMENTERIA (1910) merchandise to DTBL.

Legal Doctrine * The lower court rendered a judgment in favor of the

defendants.
OCC 1717 (now, 1883): When an agent acts in his own
name, the principal shall have no right of action Issue
against the persons with whom the agent has
contracted, nor the said persons against the principal. W/N the plaintiffs should be entitled to payments from
the defendant.
Facts
Held
* Lim Tiu, etc. – plaintiffs
No.
* Ruiz y Rementeria – defendants
Ratio
* It appears that the defendants had been buying
merchandise from Domingo Tim Bun Liu for a period OCC 1717 (now, 1883): When an agent acts in his own
covering several months, and paying for said name, the principal shall have no right of action
merchandise by selling to Domingo Tim Bun Liu certain against the persons with whom the agent has
merchandise in exchange. contracted, nor the said persons against the principal.

* The defendants claim that they had no knowledge or Reasoning

information that the merchandise which they were * It is established by a preponderance of the evidence
receiving from Domingo Tim Bun Liu (DTBL) was the that DTBL acted in his own name in selling the
merchandise of the plaintiffs, and that DTBL was merchandise to the defendants, and that defendants
merely an agent of the plaintiffs. fully believed that they were dealing with the said
* On July 16, 1908, the plaintiffs commenced an action DTBL w/o any knowledge of the fact that he was the
in CFI Manila against the defendants alleging that they agent of the plaintiffs, and having paid him in full for
sold to defendants certain merchandise which were the merchandise purchased.
due but unpaid, and prayed judgment for P 1,043.57 * A fair preponderance of evidence shows that the
(amount of the merchandise). defendants, in their dealings with DTBL, believed that
* The defendants answered that they had paid the said they were dealing with him and not the plaintiffs.
* There is no proof that DTBL ever notified the Philippine National Bank (PNB), whereby constituted
defendants that he was acting as the agent of the mortgages on properties included in the
plaintiffs. aforementioned special powers of attorney.

* Neither does the proof show that the plaintiffs ever * However, Mauro failed to pay his loans to PNB, and
notified the defendants that DTBL was acting as their thus, PNB instituted an action.
agent in selling the merchandise in question.
* The lower court ruled that since Paz Agudelo is the
NATIONAL BANK v. AGUDELO (1933) owner of the subject properties mortgaged to PNB, she
is liable to the former for Mauro’s outstanding loans.
Legal Doctrine
Issue
The exception to the general rule in OCC 1717 (now
1883) is applicable only when the agent, acting in his W/N Paz Agudelo is liable for the payment of the loans
own name in connection with the properties of his obtained by Mauro Garrucho from PNB for the security
principal, does so within the scope of his of which he constituted a mortgage on a real estate
authority. belonging to Paz.

Facts Held

* Paz Agudelo y Gonzaga and Amparo Garrucho both No.

executed separately special powers of attorney in
favor of Mauro Garrucho to sell, alienate and mortgage Ratio
in the manner and form he might deem convenient all OCC 1717 (now, 1883): When an agent acts in his own
their real estate situated in Murcia, Bacolod and Bago name, the principal shall have no right of action
in Occidental Negros. against the persons with whom the agent has
* Nothing in the said powers of attorney expressly contracted, nor the said persons against the principal.
authorized Mauro Garrucho to contract any loan nor to In such case, the agent is directly liable to the person
constitute a mortgage on the properties belonging to with whom he has contracted, as if the transaction
the respective principals, to secure his [own] were his own. Cases involving things belonging to the
obligations. principal are excepted.
* Subsequently, Mauro Garrucho contracted loans with The provisions of this article shall be understood to be
without prejudice to actions between principal and SY-JUCO & VIARDO v. SY-JUCO (1920)
agent.
Legal Doctrine
Reasoning
* Decision by the Supreme Court of Spain, May 1,
* He executed the promissory notes evidencing the 1900: From the rule established in OCC 1717, that
aforesaid loans, under his own signature, without when an agent acts in his own name, the principal
authority from his principals and, therefore, were not shall have no right of action against the person with
binding upon the latter. whom the agent has contracted, cases involving
things belonging to the principal are excepted.
* Neither is there anything to show that he executed According to this exception, the agent is bound to the
the promissory notes in question for the account, and principal although he does not assume the character
at the request, of his respective principals. of such agent and appears acting in his own name.
* It is further claimed that inasmuch as the properties Facts
mortgaged by Mauro belong to Paz Agudelo, the latter
is responsible for the acts of the former although he * In 1902, Santiago Sy-juco (defendant) was appointed
acted in his own name, in accordance with the as administrator of properties belonging to his parents,
exception contained in OCC 1717. It would be an Vicente Sy-juco and Cipriana Viardo (plaintiffs).
exception if the agent, acting in his own name in
connection with the properties of his principal, does * In July 1914, defendant bought the launch Malabon in
so within the scope of his authority. his own name from Pacific Commercial Co., and
afterwards registered it at the Customs House. But this
* The special power of attorney does not authorize does not necessarily show that he bought it for himself
Mauro to constitute a mortgage on the real estate of and with his own money, as he claims. This transaction
his principal to secure his personal obligations. was within the agency which he had received from the
Therefore, in doing so, he exceeded the scope of his plaintiffs.
authority and his principal is not liable for his acts.
* However, the plaintiffs testify that the launch
Disposition Malabon was bouth with their money and this is
supported by the fact that, immediately after its
However, the court held that Paz Agudelo is still liable purchase, the launch had to be repaired at their
subsidiarily to PNB because she gave consent to the expense.
lien on her real estate.
* The plaintiffs then instituted this action to recover whom the agent has contracted, cases involving
the launch Malabon from the defendant. things belonging to the principal are excepted.
According to this exception, the agent is bound to the
* The defendant invokes the case of Martinez v. principal although he does not assume the character
Martinez wherein it was decided that a vessel of such agent and appears acting in his own name.
registered in the name of a person belongs to him
even though the money used for the purchase belongs * This means that in the case of this exception, the
to another. agent’s apparent representation yields to the
principal’s true representation and that, in reality and
Issue in effect, the contract must be considered as entered
W/N Martinez v. Martinez applies to the instant case. into between the principal and the third person; and
consequently, if the obligations belong to the former;
Held & Ratio to him alone must also belong the rights arising from
the contract.
No. The relation of principal and agent, which exists
between the plaintiffs and defendant in the present Reasoning
case, did not exist in the case of Martinez v. Martinez.
Therefore, the latter does not apply to the former. * The money with which the launch was bought having
come from the plaintiffs, the exception established in
Issue OCC 1717 is applicable to the instant case.

W/N the launch Malabon should belong to the NATIONAL FOOD AUTHORITY v. IAC (1990)
defendant.
Legal Doctrine
Held
* When things belonging to the principal are dealt
No. with, the agent is bound to the principal although he
does not assume the character of such agent and
Ratio appears acting in his own name. In other words, the
agent’s apparent representation yields to the
* Decision by the Supreme Court of Spain, May 1,
principal’s true representation and that, in reality and
1900: From the rule established in OCC 1717, that
in effect, the contract must be considered as entered
when an agent acts in his own name, the principal
into between the principal and the third person (Sy-
shall have no right of action against the person with
juco v. Sy-juco). * Plaintiff then filed the instant complaint.

Facts * TC: in favor of plaintiff.

* On September 6, 1979, Gil Medalla, as commission * Defendant appealed to IAC on the sole issue of w/n
agent of plaintiff Superior Shipping Corp., entered into he is jointly and severally liable with Medalla for
a contract with defendant National Grains Authority. freightage.
Under said contract, Medalla obligated to transport on
the MV Sea Runner (owned by plaintiff) 8550 sacks of * IAC affirmed judgment.
rice belonging to defendant from San Jose, Occidental Issue
Mindoro to Malabon, Metro Manila.
W/N the instant case falls within the exception of the
* Upon completion of delivery, plaintiff wrote a letter general rule provided for in NCC 1883.
to defendant requesting that it be allowed to collect
amount stated in its statement account, which Defendant’s Contention
included not only a claim for freightage but also claims
for demurrage and stevedoring charges amounting to * It is not liable since it had no knowledge of the fact of
P93,538.70. agency between plaintiff and Medalla.

* On November 5, 1979, plaintiff wrote again to Held

defendant, this time requesting that the payment for
Yes. Defendant’s contention holds no water.
freightage and other charges be made to it and not to
Medalla because plaintiff was the owner of the vessel. Ratio

* In reply, defendant on November 16, 1979 informed * When things belonging to the principal (in this case,
plaintiff that it could not grant its request because the the plaintiff) are dealt with, the agent is bound to the
contract to trccansport the rice was entered into by principal although he does not assume the character
defendant and Medalla, who did not disclose that he of such agent and appears acting in his own name. In
was acting as a mere agent of plaintiff. other words, the agent’s apparent representation
yields to the principal’s true representation and that,
* It was only on November 19, 1979 when defendant
in reality and in effect, the contract must be
paid Medalla the sum of P25,974.90 for freight
considered as entered into between the principal and
charges.
the third person (Sy-juco v. Sy-juco).