Bedia vs. White

An agent who contracts within the scope of her authority on behalf of a disclosed principal is not personally liable for obligations arising from the contract; the principal alone is answerable, and a party who dismisses the action against the principal cannot thereafter recover from the agent.

Sylvia H. Bedia was associated with Hontiveros & Associated Producers Phil. Yields, Inc., a corporation engaged in recruiting local exporters to participate in international trade fairs. Emily A. White was a local exporter whom Bedia solicited to participate in the 1980 State Fair of Texas in Dallas. The dispute centered on a Participation Contract for booth space at that fair, signed by both Bedia and White, and the $500.00 down payment White made toward the total contract price of $2,250.00. The legal question turned on whether Bedia signed in her personal capacity or as agent for Hontiveros, which determination governed whether she or the corporation was liable for the alleged fraud and breach.

Sylvia H. Bedia, acting in connection with Hontiveros & Associated Producers Phil. Yields, Inc., solicited Emily A. White, a local exporter, to participate in the 1980 State Fair of Texas scheduled in Dallas from October 3 to 19, 1980. On August 1, 1980, Bedia and White signed a Participation Contract, typewritten on the letterhead stationery of Hontiveros, whereby White agreed to participate in the fair and requested a 15-square-meter booth space worth $2,250.00. The contract provided that it would be deemed non-cancellable after payment of a down payment, and that any intention to cancel would result in forfeiture of amounts paid in favor of Hontiveros. White signed as "Participant" and Bedia signed as "Participation Accepted By." White made a down payment of $500.00 to Bedia.

White thereafter traveled to Dallas with her merchandise, only to discover that no display space had been registered in her name and that the defendants had not been authorized by the state fair director to recruit participants. She claimed to have incurred losses as a result. Bedia, for her part, explained that White was supposed to share the space leased by Hontiveros in its own name, and that White was not allowed to display her goods because she had not paid the remaining balance of $1,750.00, in violation of their contract. Bedia also averred that she had signed the Participation Contract not on her own behalf but as an agent of Hontiveros, and that she had later returned the $500.00 advance payment to White.

On August 10, 1986, White and her husband filed a complaint for damages in the Regional Trial Court of Pasay City against Bedia and Hontiveros, alleging fraudulent violation of their agreement. The defendants filed a joint answer denying the fraud allegation, with Bedia specifically asserting she acted only as Hontiveros's agent. During the trial, the plaintiffs moved to dismiss the complaint against Hontiveros, leaving Bedia as the sole defendant. The trial court found Bedia personally liable, a ruling sustained by the Court of Appeals on the ground that the contract was not executed in the name of the corporation and that Bedia had represented herself as authorized by the State of Texas to solicit booths.

• Capacity in Contracting: Petitioner Bedia maintained that she did not sign the Participation Contract in her personal capacity but as an agent of Hontiveros & Associated Producers Phil. Yields, Inc., and that the obligation, if any, should be imputed to the corporation as principal.
• Principal's Admission of Agency: Petitioner argued that Hontiveros itself never repudiated her agency, having filed a joint answer with her through common counsel and not denying her allegation that she was acting as its agent.
• Plaintiffs' Own Acknowledgment: Petitioner pointed to White's own letter to the Minister of Trade, in which White stated she was "recruited by Hontiveros & Associated Producers Phil. Yields, Inc.," as evidence that White knew Bedia was acting for the corporation.

• Personal Capacity: Respondent White argued that Bedia acted on her own, representing herself as authorized by the State of Texas to solicit and assign booths, and that the Participation Contract was not executed in the name of Hontiveros.
• Fraud and Liability: Respondent contended that Bedia and Hontiveros fraudulently violated their agreement by failing to register any display space in her name and by lacking authorization from the state fair director to recruit participants, causing her to incur losses for which they should be held solidarily liable.

• Capacity of the Agent: Whether Bedia entered into the Participation Contract in her personal capacity or as an agent of Hontiveros.
• Liability After Dismissal Against Principal: Whether the plaintiffs, having dismissed the complaint against Hontiveros, could still hold Bedia liable as agent for obligations arising from the contract.

• Capacity of the Agent: No. Bedia acted as an agent of Hontiveros, not in her personal capacity, as shown by the contract's execution on Hontiveros letterhead, White's own acknowledgment that she was recruited by Hontiveros, and Hontiveros's failure to repudiate the agency.
• Liability After Dismissal Against Principal: No. Having moved to dismiss the complaint against the principal, the plaintiffs forfeited whatever claims they might have proved against it and could no longer assert those claims against the agent.

• Capacity of the Agent: The Court found that the totality of the evidence established Bedia's agency for Hontiveros. The Participation Contract was typewritten on Hontiveros's letterhead stationery, and there was no showing that Bedia had illegally used it. The contract itself named Hontiveros as the entity that would reserve the booth and to which forfeiture amounts would inure. White's own letter to the Minister of Trade, dated December 23, 1984, expressly stated that she was "recruited by Hontiveros & Associated Producers Phil. Yields, Inc." and that "Hontiveros & Associated charged me US$150.00 per square meter" — an acknowledgment that Bedia was acting for the corporation. Critically, Hontiveros never repudiated Bedia's agency; it did not deny her allegation in its joint answer that she was acting as its agent, and by filing that answer jointly with Bedia through common counsel, it effectively affirmed the agency. The trial court and the Court of Appeals erred in relying on Article 1883 of the Civil Code, which applies when an agent acts in his own name, because the evidence showed Bedia acted in the name and on behalf of Hontiveros. Under Article 1910 of the Civil Code, the principal must comply with all obligations the agent contracted within the scope of his authority.

• Liability After Dismissal Against Principal: Since Bedia was acting within the scope of her authority, it was Hontiveros, as principal, that should have been held answerable for any obligation arising from the Participation Contract. The plaintiffs, however, moved on June 5, 1984, to dismiss the complaint against Hontiveros, leaving Bedia as the sole defendant. This motion effectively stripped the plaintiffs of their cause of action against the agent, because the obligation, if any, belonged to the principal. Having waived their claims against Hontiveros, the plaintiffs could not assert those same claims against Bedia, who was merely the agent. The dismissal of the action against the principal thus operated as a forfeiture of any recoverable claim against the agent.

• Doctrine of Agency — Agent's Liability vs. Principal's Liability — Under Article 1910 of the Civil Code, the principal must comply with all obligations which the agent may have contracted within the scope of his authority. Where the agent acts within the scope of authority on behalf of a disclosed principal, the agent incurs no personal liability; the principal alone is answerable. The Court applied this by finding that Bedia signed the contract on Hontiveros letterhead, that Hontiveros admitted the agency, and that White herself acknowledged being recruited by Hontiveros — thus binding the corporation, not Bedia personally.

• Doctrine of Agency — Agent Acting in Own Name (Article 1883, Civil Code) — If the agent acts in his own name, the principal has no right of action against the persons with whom the agent contracted, and the latter likewise has no right of action against the principal. The lower courts invoked this provision, but the Supreme Court rejected its application, finding that Bedia did not act in her own name but on behalf of Hontiveros, as evidenced by the contract's form and the parties' own admissions.

• "If the plaintiffs had any doubt about the capacity in which Bedia was acting, what they should have done was verify the matter with Hontiveros. They did not. Instead, they simply accepted Bedia's representation that she was an agent of Hontiveros and dealt with her as such." — This passage articulates the Court's reasoning that the plaintiffs accepted and relied upon Bedia's representation of agency, and cannot later disavow it to impose personal liability.

• "By moving to dismiss the complaint against Hontiveros, the plaintiffs virtually disarmed themselves and forfeited whatever claims they might have proved against the latter under the contract signed for it by Bedia. It should be obvious that having waived these claims against the principal, they cannot now assert them against the agent." — This is the ratio decidendi on the second issue: dismissal of the action against the principal bars recovery against the agent for the same obligation.

• "Significantly, Hontiveros itself has not repudiated Bedia's agency as it would have if she had really not signed in its name." — This passage defines a key evidentiary principle: the principal's failure to repudiate the agency, especially when filing a joint answer through common counsel, constitutes affirmative recognition of the agent's authority.

• Article 1910, Civil Code — Provides that "the principal must comply with all the obligations which the agent may have contracted within the scope of his authority." The Court applied this provision to hold that because Bedia acted within the scope of her authority for Hontiveros, the obligation arising from the Participation Contract was imputable to the corporation, not to Bedia personally.
• Article 1883, Civil Code — Provides that if the agent acts in his own name, the principal has no right of action against the persons with whom the agent contracted, and vice versa. The lower courts invoked this article, but the Supreme Court rejected its application, finding that Bedia did not act in her own name but on behalf of Hontiveros.
• Article 1347, Civil Code — Cited by the trial court for the proposition that no one may contract in the name of another without being authorized by the latter. The Supreme Court implicitly rejected the trial court's reliance on this provision by finding that Bedia was in fact authorized by Hontiveros.

Narvasa, C.J., Feliciano, Griño-Aquino, and Medialdea, JJ., concurred.