National Food Authority v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: On September 6, 1979, Gil Medalla, as commission agent of Superior Shipping Corporation (Superior), entered into a contract with the National Grains Authority (NGA, now NFA) to transport 8,550 sacks of rice from San Jose, Occidental Mindoro to Malabon, Metro Manila using the vessel "MV Sea Runner". On October 17, 1979, Superior requested NGA to allow it to collect the freightage, demurrage, and stevedoring charges amounting to P93,538.70. On November 5, 1979, Superior reiterated its request, clarifying it was the owner of the vessel and payment should be made to it, not Medalla. NGA replied on November 16, 1979, stating it could not grant the request as the contract was with Medalla, who did not disclose his agency. On November 19, 1979, NGA paid Medalla P25,974.90 for freight services. On December 4, 1979, Superior demanded the P27,000.00 paid to Medalla, which he ignored. Procedural History: Superior filed a complaint against Medalla and NGA. The trial court ordered Medalla and NFA to jointly and severally pay Superior P25,974.90 with legal interest and P10,000.00 as attorney's fees. The Intermediate Appellate Court affirmed this decision. The Petition: NFA appealed to the Supreme Court, raising the sole issue of whether it is jointly and severally liable with Medalla for freightage, particularly whether the case falls within the exception of Article 1883 of the Civil Code.
Issue(s)
Whether the National Food Authority (NFA) is jointly and severally liable with Gil Medalla for freightage, considering Article 1883 of the Civil Code. Whether the contract for the transportation of rice falls within the exception provided in Article 1883 of the Civil Code, specifically regarding NFA's knowledge of the agency between Superior Shipping Corporation and Medalla.
Ruling
The petition is denied, and the appealed decision is affirmed. NFA is jointly and severally liable with Gil Medalla for the payment of freightage.
Ratio Decidendi
On the issue of joint and several liability and the applicability of Article 1883 of the Civil Code: The Supreme Court held that the petitioner NFA's contention that it is not liable under the exception to the rule in Article 1883 because it had no knowledge of the agency between Superior Shipping Corporation and Medalla at the time of contracting is without merit. The Court emphasized that it is an undisputed fact that Gil Medalla was a commission agent of Superior Shipping Corporation, the owner of the vessel "MV Sea Runner". Article 1883 of the Civil Code states that if an agent acts in his own name, the principal has no right of action against the persons with whom the agent contracted, nor have such persons against the principal, except when the contract involves things belonging to the principal. In such cases, the agent is directly bound in favor of the person with whom he contracted, but this is without prejudice to the actions between the principal and the agent. The Court clarified that when things belonging to the principal are dealt with, the agent's apparent representation yields to the principal's true representation, and the contract is considered as entered into between the principal and the third person. Consequently, if the principal can be obliged to perform its duties under the contract, it can also demand the enforcement of its rights arising from the contract. Therefore, NFA, having contracted for the transportation of its rice using Superior's vessel, is bound to Superior as the principal, despite Medalla acting in his own name. On the issue of whether the contract falls under the exception of Article 1883 regarding NFA's knowledge: The Court emphasized that it is an undisputed fact that Gil Medalla was a commission agent of Superior Shipping Corporation, the owner of the vessel "MV Sea Runner". The Court emphasized that it is an undisputed fact that Gil Medalla was a commission agent of Superior Shipping Corporation, the owner of the vessel "MV Sea Runner". Article 1883 of the Civil Code states that if an agent acts in his own name, the principal has no right of action against the persons with whom the agent contracted, nor have such persons against the principal, except when the contract involves things belonging to the principal. In such cases, the agent is directly bound in favor of the person with whom he contracted, but this is without prejudice to the actions between the principal and the agent. The Court clarified that when things belonging to the principal are dealt with, the agent's apparent representation yields to the principal's true representation, and the contract is considered as entered into between the principal and the third person. Consequently, if the principal can be obliged to perform its duties under the contract, it can also demand the enforcement of its rights arising from the contract. Therefore, NFA, having contracted for the transportation of its rice using Superior's vessel, is bound to Superior as the principal, despite Medalla acting in his own name.
Main Doctrine
When a contract involves things belonging to the principal, the agent is bound to the principal even if the agent acts in their own name, and the contract is considered as entered into between the principal and the third person.