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Unformatted text preview: rs. It distinguished between the
1985 contracts, where Safic likewise dealt with Dominador Monteverde, who was presumably
authorized to bind IVO, and the 1986 contracts, which were highly speculative in character.
Moreover, the 1985 contracts were covered by letters of credit, while the 1986 contracts were payable by
telegraphic transfers, which were nothing more than mere promises to pay once the shipments became
ready. For these reasons, the lower court held that Safic cannot invoke the 1985 contracts as an implied
corporate sanction for the highrisk 1986 contracts, which were evidently entered into by Monteverde for his
TC: Safic failed to substantiate its claim for actual damages. Likewise, it rejected IVO’s counterclaim and
● Both IVO and Safic appealed to the Court of Appeals.
Whether or not Monteverde exceeded his scope of authority as an agent in entering into the 1986 contracts.
● ● ● Yes. It was proven by IVO, when they presented a copy of their bylaws, that Monteverde acted
beyond his authority when he entered into speculative contracts with Safic in 1986. The 1986
contracts are speculative because at the time of the contracts, the coconuts are not even growing
at that time and are yet to be harvested. Hence, the 1986 contracts are sales of mere expectations
– and this is something prohibited by the bylaws and the Board of Directors of IVO.
Under Article 189812 of the Civil Code, the acts of an agent beyond the scope of his authority do not
bind the principal unless the latter ratifies the same expressly or impliedly. It also bears
emphasizing that when the third person knows that the agent was acting beyond his power or
authority, the principal cannot be held liable for the acts of the agent. If the said third person is
aware of such limits of authority, he is to blame, and is not entitled to recover damages from the
agent, unless the latter undertook to secure the principal’s ratification.13
There can be no implied agency too simply because there has been a...
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- Fall '14