Gozun v. Mercado
REITERATIONFacts
The Antecedents: Petitioner Jesus M. Gozun, owner of JMG Publishing House, was approached by respondent Jose Teofilo T. Mercado, a gubernatorial candidate, for campaign materials. Petitioner submitted draft samples and price quotations. Petitioner claims respondent's wife approved the quotation, prompting petitioner to print various campaign materials. Petitioner also availed of the services of two other printing presses owned by his daughter and mother. Petitioner delivered the materials to respondent's headquarters. Subsequently, respondent's sister-in-law, Lilian Soriano, obtained P253,000 from petitioner as a "cash advance" for poll watcher allowances and related expenses, issuing an acknowledgment receipt. Petitioner sent respondent a Statement of Account totaling P2,177,906, itemizing costs for his own printing house, the two other presses, and the cash advance. Respondent's wife made a partial payment of P1,000,000. Despite demands and promises, respondent failed to pay the balance. Procedural History: Petitioner filed a complaint against respondent to collect the remaining P1,177,906 plus interest and attorney's fees. Respondent denied transacting with petitioner, claiming the materials were donations and that any personal expenses were coursed through him with proper authorization. He denied authorizing Lilian Soriano to obtain the cash advance. The Regional Trial Court (RTC) ruled in favor of petitioner, ordering respondent to pay the outstanding amount and attorney's fees. The Court of Appeals (CA) reversed the RTC decision, dismissing the complaint. The CA found no evidence that Lilian Soriano was authorized to borrow money on respondent's behalf, rendering the P253,000 claim unenforceable. It also held that petitioner could not collect amounts due to the other two printing presses as their owners were not impleaded. Finally, it noted that after the P1,000,000 payment, the P640,310 claim (after excluding the P253,000) was settled. The Petition: Petitioner seeks review of the CA decision, arguing the CA erred in dismissing the complaint for lack of evidence of Lilian Soriano's authority to receive the cash advance and for dismissing the claims of the other printing presses on the ground that petitioner was not the real party in interest.
Issue(s)
Whether Lilian Soriano was authorized by respondent to obtain a cash advance of P253,000 on his behalf. Whether petitioner is the real party in interest to collect the amounts due to Metro Angeles Printing and St. Joseph Printing Press.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The RTC decision is REINSTATED mutatis mutandis, with the modification that the amount payable by respondent to petitioner is reduced to P924,906.
Ratio Decidendi
On the authority of Lilian Soriano to obtain a cash advance: The Supreme Court affirmed the Court of Appeals' finding that petitioner failed to prove Lilian Soriano was authorized by respondent to obtain the P253,000 cash advance. The Court reiterated that contracts entered into in the name of another without authority are unenforceable unless ratified, citing Article 1317 of the Civil Code. While agency can be oral, a special power of attorney is required to borrow money, which must be express and duly established by evidence. Petitioner's testimony was equivocal, stating the money was borrowed by the "defendant" but the receipt indicated Lilian received it "in behalf of Mrs. Annie Mercado." Furthermore, Lilian signed the receipt in her personal capacity, not indicating she was acting as an agent for respondent. The Court distinguished this from situations where a principal clothes another with apparent authority, as there was no clear indication respondent held Lilian out as his agent for this specific transaction. On petitioner as the real party in interest for the other printing presses: The Supreme Court clarified that petitioner is the real party in interest for the recovery of the cost of campaign materials he personally contracted for. However, it erred in affirming the appellate court's notion that petitioner could not collect amounts due to Metro Angeles Printing and St. Joseph Printing Press because their owners were not impleaded. The Court held that petitioner, having personally and directly contracted with respondent and merely sub-contracted the other establishments to meet the deadline, was entitled to recover the total cost of the campaign materials, which included the amounts due to the sub-contractors. The total cost of printing, less the partial payment, amounted to P924,906.
Main Doctrine
A contract entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers, is an unauthorized contract and is unenforceable unless ratified. For an agent to borrow money on behalf of the principal, a special power of attorney is generally required, which must be express and duly established by evidence, not merely self-serving assertions.