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G.R. No. 194128 – 678 Phil. 180 – 661 SCRA 787 – Civil Law – -Agency – Existence of Agency – Lack of Authorization
In 1999, Amos Francia was convinced by the bank manager of Westmont Bank to make an investment in Westmont Investment. Since the interest rate offered was impressive, Amos was convinced, he invited his siblings to join in the investment and so they invested an aggregate amount of P3.9 million. When the investment matured, the Francia siblings demanded the retirement of their investment but Westmont Investment advised them they have no funds. Westmont Investment then requested for an extension. At the same time, Westmont Investment advised the Francias that their money was borrowed by Pearlbank. When the extension asked by Westmont expired, they again were not able to pay up and so the Francias sued Westmont Investment. Pearlbank was impleaded in the complaint.
In its defense, Westmont Investment alleged that it was merely acting as an agent of Pearlbank; that Pearlbank authorized Westmont Investment to borrow money on its behalf; that Westmont Investment merely brokered a “loan transaction” between Pearlbank and the Francias. To support its claim, Westmont provided documents showing that Pearlbank borrowed an amount equivalent to the investment of the Francias.
ISSUE: Whether or not Westmont Investment is an agent of Pearlbank.
HELD: No. The evidence presented is not sufficient to prove that an agency existed between Pearlbank and Westmont Investment hence, only Westmont Investment is liable to pay the Francias. Pearlbank did not authorize Westmont Investment to borrow money for it. Neither was there a ratification, expressly or impliedly, that it had authorized or consented to said transaction. In fact, Pearlbank questioned Westmont Investment’s practice of naming Pearlbank as a “borrower” of certain investments made by other investors with Westmont Investment. Also, the Francias had no personal knowledge if Pearlbank was indeed the recipient/beneficiary of their investments. The Francias have always maintained that they only transacted with Westmont Investment and never with Pearlbank. The fact that the Francias impleaded Pearlbank in their suit is understandable (it does not defeat their suit) because they only impleaded Pearlbank to protect their interest when they found out that Westmont was already bankrupt.
