Navotas Industrial Corporation v. Guanzon

 

Navotas Industrial Corporation v. Guanzon

G.R. No. 230931

November 15, 2021

 

FACTS:

Navotas Industrial and Ganda Energy executed an Energy Conversion Agreement, whereby Navotas Industrial undertook various dredging and construction projects in preparation for the arrival of a power barge and in exchange, the latter would pay a sum of money through two postdated checks. Unfortunately, these checks were later dishonored. When Navotas Industrial learned that Ganda Energy had receivables from NAPOCOR, it thus sent an assistance requesting the receivables to settle Ganda Energy’s debt; NAPOCOR declined. Sometime later, purported representatives of Ganda Energy presented a letter of authority authorizing Mr. Terence Selvarajah and Kay Swee Tuan of, and S.T. Kay & Company to settle Ganda Energy's outstanding claims from the NAPOCOR and execute a quitclaim. In turn, Kay Swee Tuan authorized Ms. Nora Go to collect the checks on her behalf. On this basis, Ms. Go, as a purported representative of Ganda Energy, transacted with the National Power Corporation. The NBI investigated these payments and discovered the authorization letter to Kay Swee Tuan was not only unauthenticated but also spurious as Mr. Khean disowned the signature on the authorization letter. Guanzon was later indicted for the disbursement.

ISSUE:

Whether or not the payment of NAPOCOR to Kay Swee Tuan extinguished their obligation to pay Ganda Energy.

HELD:

No. Agency is not presumed. Proving its existence, nature, and extent is incumbent upon the person alleging it. In Bordador v. Luz, the SC stated that "a person dealing with an agent is put upon inquiry and must discover upon their peril the authority of the agent." They must demand a written authority from the principal, lest it would be grossly and inexcusably negligent for such third party to enter into a contract with such an agent. Thus, a third party must determine the nature and extent of authority of a purported agent to bind a principal. Failure to do so constitutes negligence. Accordingly, they cannot enforce the contract against the ostensible principal. In this case, Kay Swee Tuan was not authorized by the board of directors of Ganda Energy to act on its behalf. This notwithstanding, respondent recommended the disbursement vouchers and allowed payment of Ganda Energy's entire account to Kay Swee Tuan, who, it bears reiterating, did not possess authority to receive said payment. There is no board resolution or a secretary's certificate that the board of directors of Ganda Energy as a collective body appointed Kay Swee Tuan as the corporation's authorized representative in transacting with NAPOCOR. Respondent failed to ensure the veracity of authority of Kay Swee Tuan. He should not have dealt with Kay Swee Tuan, much less recommended the release of receivables to her. Considering that Kay Swee Tuan did not possess the credit nor was authorized by Ganda Energy, any payment made to her does not extinguish the outstanding obligation of National Power Corporation to Ganda Energy.