Contract of agency explained - G.R. No. 194128

G.R. No. 194128

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In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s consent.[35] It is said that the underlying principle of the contract of agency is to accomplish results by using the services of others – to do a great variety of things. Its aim is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. Its basis is representation.[36]

Significantly, the elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.[37]

In this case, the principal-agent relationship between the Francias and Wincorp was not duly established by evidence. The records are bereft of any showing that Wincorp merely brokered the loan transactions between the Francias and Pearlbank and the latter was the actual recipient of the money invested by the former. Pearlbank did not authorize Wincorp to borrow money for it. Neither was there a ratification, expressly or impliedly, that it had authorized or consented to said transaction.

As to Pearlbank, records bear out that the Francias anchor their cause of action against it merely on the strength of the subject Confirmation Advices bearing the name “PearlBank” as the supposed borrower of their investments. Apparently, the Francias ran after Pearlbank only after learning that Wincorp was reportedly bankrupt.[38] The Francias were consistent in saying that they only dealt with Wincorp and not with Pearlbank. It bears noting that even in their Complaint and during the pre-trial conference, the Francias alleged that they did not have any personal knowledge if Pearlbank was indeed the recipient/beneficiary of their investments.

Although the subject Confirmation Advices indicate the name of Pearlbank as the purported borrower of the said investments, said documents do not bear the signature or acknowledgment of Pearlbank or any of its officers. This cannot prove the position of Wincorp that it was Pearlbank which received and benefited from the investments made by the Francias. There was not even a promissory note validly and duly executed by Pearlbank which would in any way serve as evidence of the said borrowing.

Another significant point which would support the stand of Pearlbank that it was not the borrower of whatever funds supposedly invested by the Francias was the fact that it initiated, filed and pursued several cases against Wincorp, questioning, among others, the latter’s acts of naming it as borrower of funds from investors.[39]
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