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G.R.No.L17160

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RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L17160November29,1965
PHILIPPINEPRODUCTSCOMPANY,plaintiffappellant,
vs.
PRIMATERIASOCIETEANONYMEPOURLECOMMERCEEXTERIEUR:PRIMATERIA(PHILIPPINES)INC.,
ALEXANDERG.BAYLINandJOSEM.CRAME,defendantsappellees.
JoseA.Javierforplaintiffappellant.
IbarraandPapafordefendantsappellees.
BENGZON,C.J.:
This is an action to recover from defendants, the sum of P33,009.71 with interest and attorney's fees of
P8,000.00.
Defendant Primateria Societe Anonyme Pour Le Commerce Exterieur (hereinafter referred to as Primateria
Zurich)isaforeignjuridicalentityand,atthetimeofthetransactionsinvolvedherein,haditsmainofficeatZurich,
Switzerland.Itwasthenengagedin"Transactionsininternationaltradewithagriculturalproducts,particularlyin
oils,fatsandoilseedsandrelatedproducts."
Therecordshowsthat:
OnOctober24,1951,PrimateriaZurich,throughdefendantAlexanderB.Baylin,enteredintoanagreementwith
plaintiffPhilippineProductsCompany,wherebythelatterundertooktobuycoprainthePhilippinesfortheaccount
ofPrimateriaZurich,during"atentativeexperimentalperiodofonemonthfromdate."Thecontractwasrenewed
bymutualagreementofthepartiestocoveranextendedperioduptoFebruary24,1952,laterextendedto1953.
During such period, plaintiff caused the shipment of copra to foreign countries, pursuant to instructions from
defendantPrimateriaZurich,thruPrimateria(Phil.)Inc.referredtohereafterasPrimateriaPhilippinesacting
bydefendantAlexanderG.BaylinandJoseM.Crame,officersofsaidcorporation.Asaresult,thetotalamount
duetotheplaintiffasofMay30,1955,wasP33,009.71.
Atthetrial,beforetheManilacourtoffirstinstance,itwasproventhattheamountduefromdefendantPrimateria
Zurich, on account of the various shipments of copra, was P31,009.71, because it had paid P2,000.00 of the
originalclaimofplaintiff.Thereisnodisputeaboutaccounting.
AndthereisnoquestionthatAlexanderG.BaylinandPrimateriaPhilippinesactedasthedulyauthorizedagents
of Primateria Zurich in the Philippines. As far as the record discloses, Baylin acted indiscriminately in these
transactions in the dual capacities of agent of the Zurich firm and executive vicepresident of Primateria
Philippines,whichalsoactedasagentofPrimateriaZurich.ItislikewiseundisputedthatPrimateriaZurichhadno
licensetotransactbusinessinthePhilippines.
Forfailuretofileananswerwithinthereglementaryperiod,defendantPrimateriaZurichwasdeclaredindefault.
Aftertrial,judgmentwasrenderedbythelowercourtholdingdefendantPrimateriaZurichliabletotheplaintifffor
thesumsofP31,009.71,withlegalinterestfromthedateofthefilingofthecomplaint,andP2,000.00asandfor
attorney'sfeesandabsolvingdefendantsPrimateria(Phil.),Inc.,AlexanderG.Baylin,andJoseM.Cramefrom
anyandallliability.
Plaintiffappealedfromthatportionofthejudgmentdismissingitscomplaintasregardsthethreedefendants.
Itisplaintiff'stheorythatPrimateriaZurichisaforeigncorporationwithinthemeaningofSections68and69of
the Corporation Law, and since it has transacted business in the Philippines without the necessary license, as
requiredbysaidprovisions,itsagentsherearepersonallyliableforcontractsmadeinitsbehalf.
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Section 68 of the Corporation Law states: "No foreign corporation or corporation formed, organized, or existing
underanylawsotherthanthoseofthePhilippinesshallbepermittedtotransactbusinessinthePhilippines,until
after it shall have obtained a license for that purpose from the Securities and Exchange Commission .. ." And
under Section 69, "any officer or agent of the corporation or any person transacting business for any foreign
corporationnothavingthelicenseprescribedshallbepunishedbyimprisonmentforetc....."
Theissueswhichhavetobedetermined,therefore,arethefollowing:
1.WhetherdefendantPrimateriaZurichmaybeconsideredaforeigncorporationwithinthemeaningofSections
68and69oftheCorporationLaw
2.Assumingsaidentitytobeaforeigncorporation,whetheritmaybeconsideredashavingtransactedbusiness
inthePhilippineswithinthemeaningofsaidsectionsand
3.Ifso,whetheritsagentsmaybeheldpersonallyliableon contracts made in the name of the entity with third
personsinthePhilippines.
The lower court ruled that the Primateria Zurich was not duly proven to be a foreign corporation nor that a
societe anonyme ("sociedad anomima") is a corporation and that failing such proof, the societe cannot be
deemed to fall within the prescription of Section 68 of the Corporation Law. We agree with the said court's
conclusion. In fact, our corporation law recognized the difference between sociedades anonimas and
corporations.
At any rate, we do not see how the plaintiff could recover from both the principal (Primateria Zurich) and its
agents.Ithasbeengivenjudgmentagainsttheprincipalforthewholeamount.Itaskedforsuchjudgment,and
didnotappealfromit.Itclearlystatedthatitsappealconcernedtheotherthreedefendants.
ButplaintiffallegesthattheappelleesasagentsofPrimateriaZurichareliabletoitunderArt.1897oftheNew
CivilCodewhichreadsasfollows:
Art.1897.Theagentwhoactsassuchisnotpersonallyliabletothepartywithwhomhecontracts,unless
heexpresslybindshimselforexceedsthelimitsofhisauthoritywithoutgivingsuchpartysufficientnoticeof
hispowers.
Butthereisnoproofthat,asagents,theyexceededthelimitsoftheirauthority.Infact,theprincipalPrimateria
Zurichwhoshouldbetheonetoraisethepoint,neverraisedit,denieditsliabilityonthegroundofexcessof
authority. At any rate, the article does not hold that in cases of excess of authority, both the agent and the
principalareliabletotheothercontractingparty.
Thisviewofthecausedispenseswiththenecessityofdecidingtheothertwoissues,namely:whethertheagent
ofaforeigncorporationdoingbusiness,butnotlicensedhereispersonallyliableforcontractsmadebyhiminthe
nameofsuchcorporation.1Although,thesolutionshouldnotbedifficult,sincewealreadyheldthatsuchforeign
corporation may be sued here (General Corporation vs. Union Ins., 87 Phil. 509). And obviously, liability of the
agentisnecessarilypremisedontheinabilitytosuetheprincipalornonliabilityofsuchprincipal.Intheabsence
ofexpresslegislation,ofcourse.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the appealed judgment is affirmed, with costs against
appellant.
BautistaAngelo,Concepcion,Reyes,J.B.L.,Dizon,Regala,Makalintal,Bengzon,J.P.,andZaldivar,JJ.,concur.
Barrera,J.,tooknopart.

Footnotes
1 Lashar v. Stimson, 23 Atl. 552, is one case invoked by the appellant. We are not fully aware of the

statutoryprovisionsinPennsylvania.Butonethingiscertaininthatcase,theforeigncorporationwasnot
suedandnojudgmentagainstitwasobtained.
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