Bordador vs. Luz

A person dealing with an agent must discover at their peril the authority of the agent, and absent proof of express or implied agency, the alleged principal cannot be held solidarily liable for the agent's obligations.

Petitioners Jose and Lydia Bordador were in the business of buying and selling jewelry. Respondent Brigida D. Luz (also known as Aida D. Luz) was their regular customer, while respondent Narciso Deganos is Brigida's brother. The dispute arose from transactions where Deganos received jewelry from petitioners to sell at a profit, some of which were indicated in receipts as received for Brigida or for a niece, Evelyn Aquino.

Petitioners Jose and Lydia Bordador were engaged in the jewelry business, and respondent Brigida D. Luz was a regular customer. Between April 27, 1987, and September 4, 1987, Brigida's brother, respondent Narciso Deganos, received several pieces of gold and jewelry from petitioners amounting to P382,816.00, covered by seventeen receipts. Eleven receipts stated the items were received for Evelyn Aquino, Deganos's niece, and six indicated they were received for Brigida. Deganos was supposed to sell the items at a profit, remit the proceeds, and return unsold items. He remitted only P53,207.00 and failed to pay the balance or return unsold items, accumulating an unpaid account of P725,463.98, including interest, by January 1990.

Petitioners initially filed a complaint in the barangay court against Deganos. Brigida appeared as a witness for Deganos, and eventually, she, her husband Ernesto, and Deganos signed a compromise agreement with petitioners where Deganos agreed to pay the balance on installment. Deganos failed to comply with this undertaking. On June 25, 1990, petitioners filed Civil Case No. 412-M-90 in the RTC of Malolos against Deganos and Brigida for recovery of a sum of money and damages, impleading Ernesto as Brigida's spouse. Four years later, on March 29, 1994, Deganos and Brigida were charged with estafa in Criminal Case No. 785-M-94, which remains pending.

During the civil trial, petitioners claimed Deganos acted as Brigida's agent, making her and her spouse solidarily liable. Deganos admitted his unpaid obligation but claimed it was only P382,816.00 and denied acting as Brigida's agent or delivering any items to her. Brigida denied any involvement, claiming she never authorized Deganos to receive items for her and never received any of the articles. The trial court found only Deganos liable, noting that while Brigida had past transactions with petitioners, those were paid, and she only owed P21,483.00 in interest. The trial court found that petitioner Lydia Bordador indicated in the receipts that items were received for Evelyn and Brigida. Although the court believed Brigida was "behind Deganos," it held any agreement unenforceable under the Statute of Frauds for lack of a written memorandum connecting the Luz spouses to the receipts or authorizing Deganos.

• Existence of Agency: Petitioners argued that the Court of Appeals erred in finding respondent spouses not liable, contending that the appellate court's own findings of fact established that Deganos acted as Brigida's agent. They claimed Brigida clothed Deganos with apparent authority and held him out to the public as her agent, thus she cannot deny this authority to innocent third parties.
• Evidentiary Value of Letters: Petitioners averred that letters sent by Brigida acknowledged her obligation to them and proved she was the principal of Deganos in the subject transactions.
• Independence of Civil and Criminal Actions: Petitioners claimed the appellate court erred in ruling against them in the civil action because it could conflict with the pending criminal case for estafa, arguing the Court of Appeals should have awaited the criminal case decision.
• Jurisdiction and Regularity of Appellate Resolution: Petitioners postulated that the Court of Appeals lost jurisdiction to issue the denial resolution due to irregularities and undue haste, alleging it was impossible to resolve the motion in one and a half days, especially given the ponente's health and pending caseload.
• Statute of Frauds Applicability: Petitioners faulted the trial court's application of the Statute of Frauds, arguing it applies only to executory contracts and not to executed or partially executed ones, claiming the contract here was executed because items were already delivered.

• Agency and Liability: Whether respondent spouses are liable for the claim despite the absence of their signatures on the receipts or written authorization for Deganos to receive jewelry on their behalf.
• Independence of Civil Action: Whether the civil action for damages may proceed independently of the pending criminal case for estafa.
• Validity of Appellate Resolution: Whether the Court of Appeals lost jurisdiction or committed grave abuse of discretion in issuing the denial resolution due to alleged irregularities and undue haste.
• Statute of Frauds: Whether the Statute of Frauds applies to the alleged agency contract between Deganos and Brigida.

• Agency and Liability: No. The respondent spouses are not liable because no express or implied agency was proven; Brigida never authorized Deganos to act on her behalf, and petitioners were negligent in dealing with him without requiring written authorization.
• Independence of Civil Action: Yes. The civil action proceeds independently of the criminal case, as they require different quanta of proof and a final judgment in the civil case does not bar the criminal action.
• Validity of Appellate Resolution: No. There was no grave abuse of discretion or irregularity; the presumption of regular performance of official duty applies, and petitioners failed to prove any irregularity.
• Statute of Frauds: Yes, conditionally. The trial court's invocation of the Statute of Frauds was merely a preparatory statement; the ultimate finding was that no contract of agency existed between Deganos and Brigida, executed or otherwise.

• Agency and Liability: The basis of agency is representation, which requires the consent or authority of the principal. The evidence showed that Brigida never authorized Deganos to act for her in the transactions with petitioners. Petitioners were grossly negligent in entrusting jewelry to Deganos on at least six occasions without requiring a written authorization from his alleged principal. A person dealing with an agent must discover upon their peril the authority of the agent. Thus, petitioners cannot seek relief from their own negligence by conjuring an agency relation unsupported by evidence.
• Independence of Civil Action: Article 33 of the Civil Code allows a civil action for damages for fraudulent acts to proceed independently of the criminal action, requiring only a preponderance of evidence. The civil case was filed four years before the criminal case. The two cases require different quanta of proof, and a final judgment absolving a defendant in a civil case does not bar a criminal prosecution. Therefore, there is no basis to fear a conflict of rulings.
• Validity of Appellate Resolution: The issuance of a resolution within a short period is not irregular. The presumption is that official duty has been regularly performed. Petitioners failed to present evidence of irregularity and merely relied on conjectures regarding the ponente's health and the court's docket. It is not for the parties to dictate when a tribunal should act on cases.
• Statute of Frauds: The trial court did not categorically state that a contract of agency existed between Deganos and Brigida. The mention of the Statute of Frauds was merely a conditional legal principle. The factual finding remained that no contract, executed or executory, existed between them, and no delivery of the subject items was made to Brigida.

• Agency — By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The basis for agency is representation. Absent proof of consent or authority from the principal, no agency exists.
• Duty to Ascertain Agent's Authority — A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. Failure to secure written authorization from the alleged principal constitutes gross negligence on the part of the third party.
• Independence of Civil and Criminal Actions — In cases of alleged fraudulent acts, a civil action for damages may proceed independently of the criminal action, requiring only a preponderance of evidence. A final judgment in the civil action absolving the defendant does not bar the criminal prosecution.
• Presumption of Regularity of Official Duty — It is a legal presumption that official duty has been regularly performed and that judicial acts and duties have been duly and properly performed. The burden of proving irregularity rests on the party alleging it.

• "The basis for agency is representation. Here, there is no showing that Brigida consented to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular transactions involved." — This passage articulates the ratio decidendi for denying the existence of an agency relationship and absolving the alleged principal from liability.
• "A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent." — This defines the canonical formulation of the duty of third parties dealing with an agent, frequently cited in subsequent jurisprudence regarding agency and apparent authority.
• "It is clear, therefore, that this civil case may proceed independently of the criminal case especially because while both cases are based on the same facts, the quantum of proof required for holding the parties liable therein differ." — This clarifies the application of Article 33 of the Civil Code and the independence of civil and criminal actions involving fraud.

• Toyota Shaw, Inc. vs. Court of Appeals, et al. — Cited to support the doctrine that a person dealing with an agent must discover upon their peril the authority of the agent.
• Salta vs. De Veyra, etc., et al. — Cited alongside Philippine National Bank vs. Purisima to support the rule that a final judgment in a civil action absolving the defendant is no bar to a criminal action.

• Article 1868, Civil Code — Defines the contract of agency, requiring the consent or authority of the principal for a person to bind himself to render service on behalf of another. Applied to determine that no agency existed between Deganos and Brigida due to lack of consent or authorization.
• Article 33, Civil Code — Provides that in cases of fraudulent acts, a civil action for damages may proceed independently of the criminal action and requires only a preponderance of evidence. Applied to justify the separate and independent proceeding of the civil case for recovery of damages.
• Article 1403, Civil Code — Enumerates unenforceable contracts, including those entered into by an unauthorized agent and those not complying with the Statute of Frauds. Discussed in relation to the trial court's conditional finding on the alleged agency agreement.
• Section 4, Rule 111, Rules of Court — States that a final judgment rendered in a civil action absolving the defendant from civil liability is no bar to a criminal action. Applied to dismiss petitioners' fear of conflicting rulings.
• Section 3(m) and (n), Rule 131, Rules of Court — Establishes the presumptions that official duty has been regularly performed and that a court or judge was acting in the lawful exercise of jurisdiction. Applied to uphold the validity of the Court of Appeals' resolution denying the motion for reconsideration.

Puno, Mendoza, and Martinez, JJ., concurred.