Agency & Partnership | B2015
CASES
jd
DOMINION INSURANCE V. CA
February 6, 2002
Pardo
alycat
SUMMARY: Guevarra instituted a civil case for the recovery of a
sum of money against Dominion Insurance. He sought to recover
sums he had advanced in his capacity as manager. Dominion
denied any liability to Guevarra. RTC ruled that Dominion was to
pay Guevarra. CA affirmed. SC also ruled that Dominion should
pay Guevarra, but not under the law on agency, but the law on
obligations and contracts. This is because Guevarra deviated
from the instructions of Dominion under which he would have had
authority to settler the latter’s claims, i.e. to pay through the
revolving fund. Nevertheless, recovery may be made under Art.
1236.
DOCTRINE: When a special power of attorney is required for the
agent to do a certain act, the agent, in the performance of such
act, must comply with the specifications embodied in the special
power of attorney giving him authority to do such.
For example, here, a special power of attorney was needed for
Guevarra to settle the claims of Dominion’s clients. And for this
purpose, there was a memorandum. However, the memorandum
stated that Guevarra was to settle the claims using the money in
a revolving fund. Guevarra did not comply with this, so e
expenses Guevarra incurred in the settlement of the claims of the
insured my not be reimbursed from Dominion, at least under the
law of agency.
FACTS: Rodolfo Guevarra instituted a civil case for the
recovery of a sum of money against Dominion Insurance. He
sought to recover P156,473.90, which he claimed to have
advanced in his capacity as manager of Dominion to satisfy claims
filed by Dominion’s clients. Dominion denied any liability to
Guevarra and asserted a counterclaim for premiums allegedly
unremitted by the latter.
The pre-trial conference never pushed through despite being
scheduled and postponed nine times over the course of six
months. Finally, the case was called again for pre-trial and
Dominion and counsel failed to show up. The trial court declared
Dominion in default and denied any reconsideration.
On the merits of the case, the RTC ruled that Dominion was to pay
Guevarra the P156,473.90 claimed as the total amount advanced
by the latter in the payment of the claims of Dominion’s clients. The
CA affirmed.
ISSUES + RATIO:
WON Guevarra acted within his authority as agent for
Dominion – NO
A perusal of the “Special Power of Attorney” would show
that Dominion and Guevarra intended to enter into a principal-
agent relationship. Despite the word “special,” the contents of the
document reveal that what was constituted was a general agency.
The agency comprises all the business of the principal, but,
couched in general terms, is limited only to acts of administration.
A general power permits the agent to do all acts for which the law
does not require a special power.
Art. 1878 enumerates the instances when a special power
of attorney is required, including (1) to make such payments as are
not usually considered as acts of administration; (15) any other act
of strict dominion.
The payment of claims is not an act of administration. The
settlement of claims is not included among the acts enumerated in
the Special Power of Attorney, neither is it of a character similar to
the acts enumerated therein. A special power of attorney would
have been required before Guevarra could settle the insurance
claims of the insured.
Guevarra’s authority to settle claims is embodied in the
Memorandum of Management Agreement which enumerated the
scope of Guevarra’s duties and responsibilities. However, the
Memorandum showed the instruction of Dominion that payment of
claims shall come from a revolving fund. Having deviated from the
instructions of the principal, the expenses that Guevarra incurred in
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CASES

the settlement of the claims of the insured may not be reimbursed

from Dominion.

WON Guevarra is entitled to reimbursement of amounts – YES

However, while the law on agency prohibits Guevarra from
obtaining reimbursement, his right to recovery may still be justified
under the general law on Obligations and Contracts, particularly,
Art. 12361.

In this case, when the risk insured against occurred,

Dominion’s liability as insurer arose. This obligation was
extinguished when Guevarra paid such claims. Thus, to the extent
that the obligation of Dominion had been extinguished, Guevarra
may demand reimbursement from his principal. To rule otherwise
would result in unjust enrichment of Dominion.

RULING: Dominion is ordered to pay Guevarra P112,6762.11,

representing the total amount advanced by the latter in the
payment of the claims of the former’s clients, minus the amount in
the revolving fund and the outstanding balance and remittance.

1
Art. 1236. The creditor is not bound to accept payment or performance by a third person who
has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary