G.R. No.

167552 April 23, 2007

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., Petitioner,

vs.
EDWIN CUIZON and ERWIN CUIZON, Respondents.

Principle – An agent, who acts as such, is not personally liable to the party with whom he
contracts, except when he expressly binds himself to the obligation or when he exceeds
the limits of his authority such party sufficient notice of his powers.

However, in case of excess of authority by the agent, the law does not say that a
third person can recover from both the principal and the agent.

FACTS:

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., the petitioner, is engaged in the

business of importation and distribution of various European industrial equipment for customers
here in the Philippines. One of its customers is Impact Systems Sales, which is a sole
proprietorship owned by respondent ERWIN Cuizon, and the manager thereof is respondent
EDWIN Cuizon. Both Respondents are full-blooded brothers.

Respondents urgently sought to buy from petitioner 1-unit of sludge pump valued at
₱250,000. However, petitioner refused to deliver the sludge pump to respondents without their
having fully settled their indebtedness to petitioner. Thus, EDWIN, as manager of Impact Systems
Sales, and ALBERTO, as general manager of petitioner, executed a Deed of Assignment of
receivables in favor of petitioner.

The Deed of Assignment states, among others, that said ASSIGNOR does hereby
ASSIGN, TRANSFER, and CONVEY unto the ASSIGNEE his receivables from Toledo Power
Corporation in the amount of ₱365,000, as payment for the purchase of one unit of Selwood Spate
Sludge Pump. Subsequently, petitioner delivered to respondents the sludge pump.

Despite the existence of the Deed of Assignment, the respondent-ERWIN proceeded to

collect from Toledo Power Company the amount of ₱365,135.29. Alarmed by this development,
petitioner’s counsel sent respondents a final demand letter which the respondents failed to abide.
Consequently, petitioner instituted a complaint for sum of money and damages with application
for preliminary attachment against the respondents before the Regional Trial Court. Petitioner
alleged therein, that while said collection did not revoke the agency relations of respondents,
ERWIN’s action repudiated EDWIN’s power to sign the Deed of Assignment. As EDWIN did not
sufficiently notify petitioner of the extent of his powers as an agent, petitioner claims that he should
be made personally liable for the obligations of his principal.

EDWIN filed his Answer in which he alleged that he is not a real party in interest in this
case because he was acting as a mere agent of Impact Systems Sales in his transaction with the
petitioner, and the latter was aware of such fact. Subsequently, the RTC issued an Order dropping
EDWIN as a party defendant in this case.
 Aggrieved by the trial court’s Order, petitioner brought the matter to the Court of Appeals
which, however, affirmed in its Decision the Order of the trial court. Petitioner’s motion for
reconsideration was denied by the appellate court. Hence, petitioner filed a petition for review by
certiorari before the Supreme Court, assailing said Decision of the Court of Appeals.

ISSUE:

Did EDWIN exceed his authority when he signed the Deed of Assignment and thereby
making him personally liable to petitioner.

RULING:

No.

According to the Supreme Court, in the absence of an agreement to the contrary, a

managing agent may enter into any contracts that he deems reasonably necessary or require for
the protection of the interests of his principal entrusted to his management.

In this case, the Deed of Assignment clearly states that respondent EDWIN signed thereon
as the manager of Impact Systems. EDWIN entered into an Assignment of Contract with petitioner
because he deems it reasonably necessary so that the latter would then deliver the sludge pump
to respondents, without which, the business of EDWIN’s principal (ERWIN) would have been
adversely affected and in such case, EDWIN would have violated his fiduciary relation with his
principal-ERWIN.

Therefore, respondent EDWIN acted within his authority as an agent, who did not acquire
any right nor incur any liability arising from the Deed of Assignment. It follows that he is not a real
party in interest who should be impleaded in this case.