Case Summary (G.R. No. 167812)
Procedural History
• November 25, 1998 – Petitioner filed a collection suit in the Regional Trial Court (RTC) of Angeles City, Branch 57, for P1,177,906 (unpaid balance for printing services and cash advance), plus interest and attorney’s fees
• April 10, 2002 – RTC rendered judgment for petitioner, ordering respondent to pay P1,177,906 plus 12% interest per annum and P50,000 attorney’s fees
• December 8, 2004 – Court of Appeals (CA) in CA-G.R. CV No. 76309 reversed the RTC, dismissing the complaint for lack of cause of action
• April 14, 2005 – CA denied petitioner’s motion for reconsideration
• December 19, 2006 – Supreme Court (SC) granted petitioner’s petition for review on certiorari
Factual Background
Respondent engaged petitioner to print his 1995 campaign materials after reviewing draft samples and a price quotation. With time constraints, petitioner subcontracted production to Metro Angeles Printing and St. Joseph Printing Press. Deliverables included posters bearing respondent’s photograph, leaflets listing party candidates, sample ballots, poll watcher IDs, and stickers. On March 31, 1995, respondent’s sister-in-law, Lilian Soriano, obtained a P253,000 “cash advance” from petitioner for poll watcher allowances and related expenses, acknowledging receipt in petitioner’s diary. Petitioner’s Statement of Account totaled P2,177,906, broken down as:
• JMG Publishing House – P640,310
• Metro Angeles Printing – P837,696
• St. Joseph Printing Press – P446,900
• Cash advance to Lilian – P253,000
Respondent’s wife paid P1,000,000 on August 11, 1995. Despite repeated demands and respondent’s assurances, the remaining P1,177,906 was not settled. Petitioner’s counsel sent a demand letter, which went unheeded, prompting the 1998 suit.
Respondent’s Defense
Respondent denied contracting with petitioner, asserting that all materials were donations from family, friends, and supporters. He claimed campaign-related contracts required his personal signature for compliance with election laws and that Lilian had no authority to borrow on his behalf. He admitted only learning of petitioner’s claim upon receipt of the complaint and explained that the P1,000,000 paid by his wife was a goodwill compensation rather than payment for services.
RTC Findings and Decision
The trial court found that petitioner proved his cause of action by preponderance of evidence:
• Materials were printed at respondent’s request and delivered to his campaign headquarters
• Respondent partially paid P1,000,000 and failed to settle the balance
• A demand letter was properly sent and received
It ordered respondent to pay P1,177,906 plus 12% annual interest from filing until full payment, and P50,000 attorney’s fees.
Court of Appeals’ Ruling
The CA reversed, holding that:
- The P253,000 advance was unenforceable under Article 1317 because Lilian’s receipt did not specify her capacity or authority to bind respondent.
- Claims for P837,696 (Metro Angeles) and P446,900 (St. Joseph) failed because those subcontractors were not parties and petitioner lacked authority to sue on their behalf.
- After deducting the cash advance, the remaining account for JMG Publishing House (P640,310) was already settled by the P1,000,000 paid.
Issues on Appeal
- Whether petitioner proved that Lilian Soriano had authority to borrow P253,000 on respondent’s behalf.
- Whether petitioner, as the principal contractor, is the real party in interest for amounts due to subcontractors.
Supreme Court Ruling and Rationale
Agency and Special Authority to Borrow
• A special power of attorney is required to borrow money on behalf of another unless the act is urgent and indispensable.
• Lilian’s receipt lacked any indication she acted for respondent. Under Articles 1868 and 1869
Case Syllabus (G.R. No. 167812)
Procedural History
- Petition for review on certiorari filed by Jesus M. Gozun challenging the Court of Appeals’ December 8, 2004 Decision and April 14, 2005 Resolution in CA-G.R. CV No. 76309.
- The Court of Appeals reversed the Regional Trial Court of Angeles City’s April 10, 2002 Decision in favor of Gozun and dismissed the complaint for lack of cause of action.
- Gozun seeks reinstatement of the trial court’s decision and recovery of the unpaid balance of his account.
Facts of the Case
- In the 1995 Pampanga gubernatorial campaign, petitioner Gozun, owner of JMG Publishing House, was requested by respondent Mercado to submit draft samples and price quotations for campaign materials.
- Respondent’s wife allegedly approved the price quotations, prompting petitioner to print posters, leaflets, sample ballots, poll watcher IDs, and stickers.
- Petitioner subcontracted urgent work to Metro Angeles Printing and St. Joseph Printing Press (owned by his daughter and mother, respectively).
- On March 31, 1995, Lilian Soriano, respondent’s sister-in-law, received a “cash advance” of ₱253,000 from petitioner, as acknowledged in petitioner’s 1995 diary.
- Petitioner sent Mercado a Statement of Account totaling ₱2,177,906:
• ₱640,310 for JMG Publishing House
• ₱837,696 for Metro Angeles Printing
• ₱446,900 for St. Joseph Printing Press
• ₱253,000 cash advance - On August 11, 1995, respondent’s wife paid petitioner ₱1,000,000, with a receipt issued.
- Despite repeated demands and respondent’s promise to pay, the remaining balance of ₱1,177,906 remained unpaid.
- On November 25, 1998, Gozun filed a collection complaint for ₱1,177,906 plus inflationary adjustment and attorney’s fees before RTC