Title
Siredy Enterprises, Inc. vs. Court of Appeals
Case
G.R. No. 129039
Decision Date
Sep 17, 2002
Siredy Enterprises, represented by its agent Santos, entered a construction agreement with De Guzman. Despite completing 26 units, 13 remained unpaid. The Supreme Court ruled Siredy liable for P412,154.93, affirming Santos's authority under the Letter of Authority.

Case Digest (G.R. No. 208912)
Expanded Legal Reasoning Model

Facts:

  • Parties and Background
    • Petitioner:
      • Siredy Enterprises, Inc., owner and developer of Ysmael Village, a subdivision in Sta. Cruz, Marilao, Bulacan.
      • Its corporate purpose, as stated in the Articles of Incorporation, includes acquiring land, subdividing and developing it, erecting buildings and houses, and disposing of such properties.
      • Its president, Dr. Ismael E. Yanga, was central to the dispute.
    • Respondents:
      • Private respondent Conrado De Guzman, an architect-contractor doing business as Jigscon Construction.
      • Hermogenes B. Santos, who entered into contracts on behalf of Siredy under allegedly conferred authority via a Letter of Authority.
  • The Creation and Content of the Agency Instrument
    • Letter of Authority:
      • Executed by Dr. Ismael E. Yanga (president of Siredy Enterprises, Inc.) before October 1978.
      • Authorized Santos to negotiate, enter into contracts for the construction of housing units on the subdivision lots of Ysmael Village.
      • Detailed that all proceeds from any such contracts were to be deposited in Yanga’s name, with Santos receiving the remainder after obligations were met.
      • The document was signed by Yanga both in his personal capacity and as president, thereby giving it an air of corporate authority.
    • Deed of Agreement:
      • Executed on October 15, 1978 between Santos (as the purported agent of Siredy) and De Guzman.
      • Identified the roles in the contract explicitly: Santos as the contractor (representing Siredy) and Siredy as the principal, though Siredy did not directly sign the document.
      • Set forth the terms for the construction of residential housing units with specific details including:
        • Contract price amounts – P45,000 for a 2-bedroom unit and P69,000 for a duplex residence.
        • A lump sum total of P4,842,000 for building 80 single units and 18 duplex units.
        • Provisions regarding the supply of construction materials, labor, and payment arrangements in accordance with SSS releases.
        • A stipulated construction period and start date, along with requisite permits and utilities as responsibilities for the principal.
    • Performance and Dispute:
      • Between October 1978 and April 1990, De Guzman constructed 26 residential units at Ysmael Village.
      • Thirteen of these units were fully paid, while the balance of 13 units remained unpaid, totaling P412,154.93.
      • An Accomplishment Billing signed by Santos confirmed the contractual price of the unpaid houses.
      • After unsuccessful attempts to collect the unpaid balance from Siredy, De Guzman instituted an action for specific performance.
  • Procedural History
    • Trial Court Proceedings:
      • Petitioner (Siredy Enterprises, Inc.) presented evidence to deny any contractual relationship with De Guzman stating:
        • No direct contract existed with De Guzman.
        • Siredy did not engage in the construction business but only in selling lots.
        • Santos had no valid authority.
      • The trial court, invoking the doctrine of privity of contract, held that Siredy and Dr. Yanga were not parties to the contract entered into by Santos and thus dismissed their liability.
      • Judgment directed Santos individually to pay the unpaid amount with attorney’s fees, while Siredy and Dr. Yanga were dismissed from liability.
    • Court of Appeals Decision:
      • Reversed the trial court’s decision by upholding the validity of the agency created by the Letter of Authority.
      • Held that Santos acted within the scope of his authority to bind Siredy in the construction contract with De Guzman.
      • Ordered Siredy to pay the sum of P412,154.93 as actual damages with interest.
    • Petition for Review:
      • Siredy Enterprises, Inc. filed a petition for review on certiorari under Rule 45, contesting:
        • The proper creation of agency given its non-construction business.
        • The failure to consider pivotal provisions in the Deed of Agreement and the allegation that De Guzman violated the contract.
      • The petition raised two main issues regarding:
        • The authority of Santos as an agent of Siredy.
        • Whether Siredy was bound by the contract entered into by Santos.

Issues:

  • Validity of Agency and Scope of Authority
    • Whether Hermogenes B. Santos was a duly constituted agent of Siredy Enterprises, Inc. for the construction of housing units in Ysmael Village.
    • Whether the Letter of Authority, executed by Dr. Ismael E. Yanga, effectively empowered Santos to enter into the Deed of Agreement with De Guzman.
  • Liability Under the Construction Contract
    • Assuming Santos was acting within his authority, whether Siredy is bound by the Deed of Agreement for the construction of the residential units.
    • Whether Siredy can be held liable for the amount sought by De Guzman, considering the specific provisions of the contract and the doctrine of agency.
  • Procedural and Evidentiary Considerations
    • Whether the trial court erred in invoking the doctrine of privity of contract to exclude Siredy from liability, ignoring documentary evidence (the Letter of Authority and Articles of Incorporation).
    • The admissibility and weight of testimonial evidence concerning Siredy’s actual business practices versus the contents of its corporate documents.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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