The only issue in Eurotech Industrial Technologies, Inc. v. Crizon, et al., G.R. No. 167552, April 23, 2007 is whether, sales manager of a sale proprietorship acting within the scope of his authority is liable with the principal in case the latter breaches his obligation to another.
In ruling that he is not, the SC
Held: No. An agent who acts as such, is not personally liable to the party with whom he contracts. (Art. 1897, NCC). As manager, his position is unique in that it presupposes the grant of broad powers within which to conduct the business of the principal.
Well-settled is the rule that:
The powers of an agent are particularly broad in the case of one acting as a general agent or manager; such a position presupposes a degree of confidence reposed and investiture with liberal powers for the exercise of judgment and discretion in transactions and concerns which are incidental or appurtenant to the business entrusted to his care and management. In the absence of an agreement to the contrary, a managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted to his management. x x x.. (3 Am Jur. 2d, No. 91, p. 602).
The agent acted within the scope of his authority. Had he not done so, the business of the principal would have been adversely affected and he would have violated his fiduciary relation with his principal.
The first part of 1897declares that the principal is liable in cases when the agent acted within the bounds of his authority. Under this, the agent is completely absolved of any liability. The second part of the said provision presents the situations when the agent himself becomes liable to a third party when he expressly binds himself or he exceeds the limits of his authority without giving notice of his powers to the third person. However, it must be pointed out that in case of excess of authority by the agent, like what petitioner claims exists here, the law does not say that a third person can recover from both the principal and the agent.
Nature of agency.
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 latter’s consent. 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 like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence – qui facit alium facit per se.
Elements of a contract of agency.
The elements of the contract of agency are: (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; and (4) the agent acts within the scope of his authority. (Yu Eng Cho v. Pan American World Airways, Inc., 385 Phil. 453 (2000)).