Philippine Products Company vs. Primateria Societe Anonyme Pour Le Commerce Exterieur

An agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. Furthermore, a party cannot recover from both the principal and its agents when judgment has already been rendered against the principal for the full amount.

Plaintiff Philippine Products Company entered into an agreement with defendant Primateria Zurich, a foreign juridical entity, to buy copra in the Philippines for the latter's account. Primateria Zurich acted through Primateria Philippines, Inc., Alexander G. Baylin, and Jose M. Crame. Primateria Zurich had no license to transact business in the Philippines.

On October 24, 1951, Primateria Zurich, through defendant Alexander B. Baylin, entered into an agreement with plaintiff Philippine Products Company, whereby the latter undertook to buy copra in the Philippines for the account of Primateria Zurich, during "a tentative experimental period of one month from date." The contract was renewed by mutual agreement of the parties to cover an extended period up to February 24, 1952, later extended to 1953. During such period, plaintiff caused the shipment of copra to foreign countries, pursuant to instructions from defendant Primateria Zurich, thru Primateria (Phil.) Inc. — referred to hereafter as Primateria Philippines — acting by defendant Alexander G. Baylin and Jose M. Crame, officers of said corporation. As a result, the total amount due to the plaintiff as of May 30, 1955, was P33,009.71.

At the trial, before the Manila court of first instance, it was proven that the amount due from defendant Primateria Zurich, on account of the various shipments of copra, was P31,009.71, because it had paid P2,000.00 of the original claim of plaintiff. There is no dispute about accounting.

And there is no question that Alexander G. Baylin and Primateria Philippines acted as the duly authorized agents of Primateria Zurich in the Philippines. As far as the record discloses, Baylin acted indiscriminately in these transactions in the dual capacities of agent of the Zurich firm and executive vice-president of Primateria Philippines, which also acted as agent of Primateria Zurich. It is likewise undisputed that Primateria Zurich had no license to transact business in the Philippines.

For failure to file an answer within the reglementary period, defendant Primateria Zurich was declared in default. After trial, judgment was rendered by the lower court holding defendant Primateria Zurich liable to the plaintiff for the sums of P31,009.71, with legal interest from the date of the filing of the complaint, and P2,000.00 as and for attorney's fees; and absolving defendants Primateria (Phil.), Inc., Alexander G. Baylin, and Jose M. Crame from any and all liability. Plaintiff appealed from that portion of the judgment dismissing its complaint as regards the three defendants.

• Agency Liability: Petitioner argued that Primateria Zurich is a foreign corporation within the meaning of Sections 68 and 69 of the Corporation Law, and since it has transacted business in the Philippines without the necessary license, as required by said provisions, its agents here are personally liable for contracts made in its behalf.
• Excess of Authority: Petitioner alleged that the appellees as agents of Primateria Zurich are liable to it under Art. 1897 of the New Civil Code.

• Foreign Corporation Status: Whether defendant Primateria Zurich may be considered a foreign corporation within the meaning of Sections 68 and 69 of the Corporation Law.
• Transacting Business: Assuming said entity to be a foreign corporation, whether it may be considered as having transacted business in the Philippines within the meaning of said sections.
• Personal Liability of Agents: If so, whether its agents may be held personally liable on contracts made in the name of the entity with third persons in the Philippines.

• Foreign Corporation Status: N/A. The Court dispensed with the necessity of deciding this issue, although it agreed with the lower court that it was not duly proven to be a foreign corporation.
• Transacting Business: N/A. The Court dispensed with deciding this issue due to its resolution of the liability issue.
• Personal Liability of Agents: No. The agents cannot be held personally liable because the principal was already held liable for the whole amount, and there was no proof that the agents exceeded the limits of their authority.

• Foreign Corporation Status: The lower court ruled that Primateria Zurich was not duly proven to be a foreign corporation; nor that a societe anonyme is a corporation. The Supreme Court agreed, noting that Philippine corporation law recognizes the difference between sociedades anonimas and corporations.
• Transacting Business: The Court dispensed with deciding this issue due to its resolution of the liability issue.
• Personal Liability of Agents: The Court held that the plaintiff could not recover from both the principal and its agents, as it had already been given judgment against the principal for the whole amount and did not appeal from it. Regarding Article 1897 of the New Civil Code, there was no proof that the agents exceeded the limits of their authority. Furthermore, the article does not hold that in cases of excess of authority, both the agent and the principal are liable to the other contracting party.

• Personal Liability of Agents — Under Article 1897 of the Civil Code, an agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. The Court applied this by noting that there was no proof of excess of authority, and the principal was already held liable.

• "The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers." — This is the text of Article 1897 of the New Civil Code as quoted by the Court, which serves as the basis for absolving the agents of personal liability.
• "At any rate, we do not see how the plaintiff could recover from both the principal (Primateria Zurich) and its agents. It has been given judgment against the principal for the whole amount." — This passage articulates the ratio decidendi that a party cannot recover from both the principal and its agents when judgment has already been rendered against the principal for the full amount.

• General Corporation vs. Union Ins., 87 Phil. 509 — Cited for the proposition that a foreign corporation may be sued in the Philippines.

• Sections 68 and 69, Corporation Law — These provisions require foreign corporations to obtain a license to transact business in the Philippines and penalize officers or agents who transact business for unlicensed foreign corporations. The Court noted these provisions but ultimately did not apply them to hold the agents personally liable due to the resolution of the agency issue.
• Article 1897, New Civil Code — Provides that an agent is not personally liable unless he expressly binds himself or exceeds his authority. The Court applied this to absolve the agents, finding no proof of excess of authority.

Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.