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MENDOZAVPAULE

G.R.No.175885
February13,2009
By:JeahDominguez
FACTS:
EngineerPauleistheproprietorofE.M.PauleConstructionandTrading(EMPCT).PAULE
executedanSPAauthorizingMendozatoparticipateintheprequalificationandbiddingofa
NationalIrrigationAdministration(NIA)project,theCasicnan Multi-Purpose Irrigation and
Power Plant (CMIPPL).MendozawasgiventhepowertobidandsecurebondswiththeNIA
aswellasreceiveandcollectpayments.EMPCT,throughMendoza,wasawardedtheproject.
WhenCruzlearnedtheMendozawasinneedofheavyequipmentforuseintheNIAproject,
hemetupwithhimtodiscussanagreementforsuchproject.Theproductoftheiragreement
wastwojobordersfordumptrucksonDecemberof1999.
OnApril2000,PaulerevokedtheSPAofMendozapromptingNIAtorefusepaymentonher
billings.CRUZ,therefore,couldnotbepaidfortherentoftheequipment.Uponadviceof
MENDOZA,CRUZaddressedhisdemandsforpaymentofleaserentalsdirectlytoNIAbut
thelatterrefusedtoacknowledgethesameandinformedCRUZthatitwouldberemitting
paymentonlytoEMPCTasthewinningcontractorfortheproject.
CruzthensuedPaule(EMPTC)andNIA.PauleproceedsagainstMendoza.MENDOZA
allegedinhercrossclaimthatbecauseofPAULEswhimsicalrevocationoftheSPA,shewas
barredfromcollectingpaymentsfromNIA,thusresultinginherinabilitytofundherchecks
whichshehadissuedtosuppliersofmaterials,equipmentandlaborfortheproject.She
claimedthatestafaandB.P.Blg.22caseswerefiledagainsther.
RECAP!
Cruz:Mendoza/Paule/EMPTC/NIAneedstopaybecauseMendozawastheagentofEMPTC
andsheincurredliabilitiespursuanttotheNIAproject!
Paule:IshouldntpaynorforwardthemoneyIhavefromNIAbecauseMendozaacted
outsidethescopeofherauthority!
Mendoza:Iactedwithinthescopeofmyauthorityandamnowfacingchargeswithliabilities
IincurredwhichwerentevenminetobeginwithsinceIwasjustanagent!
Paule/EMPTC/NIAshouldpayme!
LowerCourtsaidPauleisliableasMendozaactedasagentwhileCAreversedandsaidthat
MendozawasinexcesssoPaulewasnotliable.
ISSUES:
1. OnPaulesandMendozasside:WhetherornotMendoza,asagent,couldclaimfrom
Paule/EMPTCfordebtssheincurredfromCruz?

2. OnCruzsside:WhetherornotPaule/EMPTCisliableasMendozawasanagentthat
actedwithinthescopeofherauthority?
HELD:
BIGLANALANGMAYPARTNERSHIPWHOA.RecordsshowthatPAULE(or,more
appropriately,EMPCT)andMENDOZAhadenteredintoaPARTNERSHIPinregardtothe
NIAproject.PAULEscontributiontheretoishiscontractorslicenseandexpertise,while
MENDOZAwouldprovideandsecuretheneededfundsforlabor,materialsandservices;
dealwiththesuppliersandsubcontractors;andingeneralandtogetherwithPAULE,oversee
theeffectiveimplementationoftheproject.Forthis,PAULEwouldreceiveashissharethree
percent(3%)oftheprojectcostwhiletherestoftheprofitsshallgotoMENDOZA.PAULE
admitstothisarrangementinallhispleadings.
1. YES.AlthoughtheSPAlimitedMendozaonlytobidonbehalfofEMPTCwithregardthe
project,MENDOZAsactionswereinaccordwithwhatsheandPAULEoriginallyagreed
upon,astodivisionoflaboranddelineationoffunctionswithintheirpartnership.Under
theCivilCode,everypartnerisanagentofthepartnershipforthepurposeofitsbusiness;
eachonemayseparatelyexecuteallactsofadministration,unlessaspecificationoftheir
respectivedutieshasbeenagreedupon,orelseitisstipulatedthatanyoneofthemshall
notactwithouttheconsentofalltheothers.Atanyrate,PAULEdoesnothaveanyvalid
causeforoppositionbecausehisonlyroleinthepartnershipistoprovidehiscontractors
licenseandexpertise,whilethesourcingoffunds,materials,laborandequipmenthasbeen
relegatedtoMENDOZA.
2. YES.Giventhepresentfactualmilieu,CRUZhasacauseofactionagainstPAULEand
MENDOZA.Thus,theCourtofAppealserredindismissingCRUZscomplaintona
findingofexceededagency.TherewasnovalidreasonforPAULEtorevoke
MENDOZAsSPAs.SinceMENDOZAtookcareofthefundingandsourcingoflabor,
materialsandequipmentfortheproject,itisonlylogicalthatshecontrolsthefinances,
whichmeansthattheSPAsissuedtoherwerenecessaryfortheproperperformanceofher
roleinthepartnership,andtodischargetheobligationsshehadalreadycontractedpriorto
revocation.WithouttheSPAs,shecouldnotcollectfromNIA,becauseasfarasitis
concerned,EMPCTandnotthePAULEMENDOZApartnershipistheentityithad
contractedwith.WithoutthesepaymentsfromNIA,therewouldbenosourceoffundsto
completetheprojectandtopayoffobligationsincurred.AsMENDOZAcorrectlyargues,
anagencycannotberevokedifabilateralcontractdependsuponit,orifitisthemeansof
fulfillinganobligationalreadycontracted,orifapartnerisappointedmanagerofa
partnershipinthecontractofpartnershipandhisremovalfromthemanagementis
unjustifiable.
Moreover,PAULEshouldbemadecivillyliableforabandoningthepartnership,leaving
MENDOZAtofendforherown,andforundulyrevokingherauthoritytocollectpayments
fromNIA,paymentswhichwerenecessaryforthesettlementofobligationscontractedfor
andalreadyowingtolaborersandsuppliersofmaterialsandequipmentlikeCRUZ,notto
mentiontheagreedprofitstobederivedfromtheventurethatareowingtoMENDOZAby
reasonoftheirpartnershipagreement.