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Unformatted text preview: his principal is not
liable for his acts.
It is noted that Mauro A. Garrucho was not authorized to execute promissory notes even in the
name of his principal Paz Agudelo y Gonzaga, nor to constitute a mortgage on her real properties to secure
such promissory notes. The plaintiff Philippine National Bank should know this inasmuch as it is in duty
bound to ascertain the extent of the agent's authority before dealing with him. Therefore, Mauro A.
Garrucho and not Paz Agudelo y Gonzaga is personally liable for the amount of the promissory
note. National Power v. NAMERCO, 117 SCRA 789 (1982) CAMERINO
DOCTRINE: An agent who exceeds the limit of his authority is personally liable
FACTS:National Power Corporation and National Marketing Corporation, as representative of International
Commodities Corporation of New York, executed in Manila a contract for the purchase by the NPC from ICC
4,000 long tons of sulfur.
It was stipulated that the seller would deliver the sulfur in Iligan City within 60 days from notice of the
establishment of letter of credit and that failure to effect delivery would subject the seller and its surety to the
payment of liquidated damages.
In entering into the contract, NAMERCO did not disclose to NPC that ICC, in a cable instruction, stated that
the sale was subject to the availability of a streamer. Contrary to this, NAMERCO agreed that
nonavailability of a streamer was not a justification for nonpayment of liquidated damages.
ICC was unable to deliver the sulfur due to its inability to secure shipping space. Consequently, Government
Corporate Counsel rescinded the contract due to the nonperformance. NPC sued for recovery of the
stipulated liquidated damages. SC dismisses case against ICC for lack of jurisdiction.
ISSUES: WON NAMARCO is absolved from liability for being a mere agent of ICC.
HELD: NO, NAMARCO is not absolved for acting beyond his powers thus, making him personally liable.
The contention of NAMARCO that every person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent would be would apply in this case IF the principal is sought to be
held liable on the contact entered into by the agent. However, in this case, it is the agent who is sought to
be liable on a contract of sale, which was expressly repudiated by the principal because the agent
exceeded his authority.
In addition, the unenforceability of a contract entered into by an agent beyond his power is applicable onl...
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This document was uploaded on 03/11/2014.
- Fall '14