Agency & Partnership | B2015
CASES
DOMINION INSURANCE V. CA
February 6, 2002
SUMMARY: Guevarra instituted a civil case for the recovery of a sum of
money against Dominion Insurance. He sought to recover sums he had
advanced in his capacity as manager. Dominion denied any liability to
Guevarra. RTC ruled that Dominion was to pay Guevarra. CA affirmed. SC
also ruled that Dominion should pay Guevarra, but not under the law on
agency, but the law on obligations and contracts. This is because Guevarra
deviated from the instructions of Dominion under which he would have had
authority to settler the latter’s claims, i.e. to pay through the revolving fund.
Nevertheless, recovery may be made under Art. 1236.
DOCTRINE: When a special power of attorney is required for the agent to do
a certain act, the agent, in the performance of such act, must comply with the
specifications embodied in the special power of attorney giving him authority
to do such.
For example, here, a special power of attorney was needed for Guevarra to
settle the claims of Dominion’s clients. And for this purpose, there was a
memorandum. However, the memorandum stated that Guevarra was to settle
the claims using the money in a revolving fund. Guevarra did not comply with
this, so e expenses Guevarra incurred in the settlement of the claims of the
insured my not be reimbursed from Dominion, at least under the law of agency.
FACTS: Rodolfo Guevarra instituted a civil case for the recovery of a
sum of money against Dominion Insurance. He sought to recover P156,473.90,
which he claimed to have advanced in his capacity as manager of Dominion to
satisfy claims filed by Dominion’s clients. Dominion denied any liability to
Guevarra and asserted a counterclaim for premiums allegedly unremitted by the
latter.
The pre-trial conference never pushed through despite being scheduled and
postponed nine times over the course of six months. Finally, the case was called
again for pre-trial and Dominion and counsel failed to show up. The trial court
declared Dominion in default and denied any reconsideration.
On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the
P156,473.90 claimed as the total amount advanced by the latter in the payment of
the claims of Dominion’s clients. The CA affirmed.
ISSUES + RATIO:
WON Guevarra acted within his authority as agent for Dominion – NO
A perusal of the “Special Power of Attorney” would show that
Dominion and Guevarra intended to enter into a principal-agent relationship.
Despite the word “special,” the contents of the document reveal that what was
constituted was a general agency. The agency comprises all the business of the
principal, but, couched in general terms, is limited only to acts of administration.
A general power permits the agent to do all acts for which the law does not
require a special power.
Art. 1878 enumerates the instances when a special power of attorney is
required, including (1) to make such payments as are not usually considered as
acts of administration; (15) any other act of strict dominion.
The payment of claims is not an act of administration. The settlement of
claims is not included among the acts enumerated in the Special Power of
Attorney, neither is it of a character similar to the acts enumerated therein. A
special power of attorney would have been required before Guevarra could settle
the insurance claims of the insured.
Guevarra’s authority to settle claims is embodied in the Memorandum of
Management Agreement which enumerated the scope of Guevarra’s duties and
responsibilities. However, the Memorandum showed the instruction of Dominion
that payment of claims shall come from a revolving fund. Having deviated from
the instructions of the principal, the expenses that Guevarra incurred in the
settlement of the claims of the insured may not be reimbursed from Dominion.
WON Guevarra is entitled to reimbursement of amounts – YES
However, while the law on agency prohibits Guevarra from obtaining
reimbursement, his right to recovery may still be justified under the general law
on Obligations and Contracts, particularly, Art. 12361.
In this case, when the risk insured against occurred, Dominion’s liability
as insurer arose. This obligation was extinguished when Guevarra paid such
claims. Thus, to the extent that the obligation of Dominion had been
extinguished, Guevarra may demand reimbursement from his principal. To rule
otherwise would result in unjust enrichment of Dominion.
RULING: Dominion is ordered to pay Guevarra P112,6762.11, representing the
total amount advanced by the latter in the payment of the claims of the former’s
clients, minus the amount in the revolving fund and the outstanding balance and
remittance.
1Art. 1236. The creditor is not bound to accept payment or performance by a third person who
has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary