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DOMINION INSURANCE CORPORATION vs. COURT OF APPEALS, RODOLFO S.

GUEVARRA, and FERNANDO AUSTRIA
G. R. No. 129919 | February 6, 2002 | J. Pardo

CASE SUMMARY: Guevarra instituted a civil case for the recovery of a sum of money against
Dominion Insurance. He sought to recover sums he had advanced in his capacity as manager.
Dominion denied any liability to Guevarra. RTC ruled that Dominion was to pay Guevarra. CA
affirmed. SC also ruled that Dominion should pay Guevarra, but not under the law on agency,
but the law on obligations and contracts. This is because Guevarra deviated from the
instructions of Dominion under which he would have had authority to settler the latters
claims, i.e. to pay through the revolving fund. Nevertheless, recovery may be made under Art.
1236.
DOCTRINE: When a special power of attorney is required for the agent to do a certain act,
the agent, in the performance of such act, must comply with the specifications embodied in
the special power of attorney giving him authority to do such.
For example, here, a special power of attorney was needed for Guevarra to settle the claims
of Dominions clients. And for this purpose, there was a memorandum. However, the
memorandum stated that Guevarra was to settle the claims using the money in a revolving
fund. Guevarra did not comply with this, so e expenses Guevarra incurred in the settlement of
the claims of the insured my not be reimbursed from Dominion, at least under the law of
agency.
FACTS:
Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against
Dominion Insurance. He sought to recover P156,473.90, which he claimed to have
advanced in his capacity as manager of Dominion to satisfy claims filed by Dominions
clients.
Dominion denied any liability to Guevarra and asserted a counterclaim for premiums
allegedly unremitted by the latter.
The pre-trial conference never pushed through despite being scheduled and postponed
nine times over the course of six months. Eventually, the case was called again for pretrial and Dominion and counsel failed to show up. The trial court declared Dominion in
default and denied any reconsideration.
On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the
P156,473.90 claimed as the total amount advanced by the latter in the payment of the
claims of Dominions clients. The CA affirmed.
ISSUES:
1. WON Guevarra acted within his authority as agent for Dominion NO

A perusal of the Special Power of Attorney would show that Dominion and Guevarra
intended to enter into a principal-agent relationship.
Despite the word special, the contents of the document reveal that what was
constituted was a general agency. The agency comprises all the business of the
principal, but, couched in general terms, is limited only to acts of administration.
A general power permits the agent to do all acts for which the law does not require a
special power.
Art. 1878 enumerates the instances when a special power of attorney is required,
including (1) to make such payments as are not usually considered as acts of
administration; (15) any other act of strict dominion.

The payment of claims is not an act of administration. The settlement of claims is not
included among the acts enumerated in the Special Power of Attorney, neither is it of a
character similar to the acts enumerated therein. A special power of attorney would
have been required before Guevarra could settle the insurance claims of the insured.
Guevarras authority to settle claims is embodied in the Memorandum of Management
Agreement which enumerated the scope of Guevarras duties and responsibilities.
However, the Memorandum showed the instruction of Dominion that payment of claims
shall come from a revolving fund. Having deviated from the instructions of the principal,
the expenses that Guevarra incurred in the settlement of the claims of the insured may
not be reimbursed from Dominion.

2. WON Guevarra is entitled to reimbursement of amounts YES

However, while the law on agency prohibits Guevarra from obtaining reimbursement,
his right to recovery may still be justified under the general law on Obligations and
Contracts, particularly, Art. 1236
In this case, when the risk insured against occurred, Dominions liability as insurer
arose. This obligation was extinguished when Guevarra paid such claims. Thus, to the
extent that the obligation of Dominion had been extinguished, Guevarra may demand
reimbursement from his principal. To rule otherwise would result in unjust enrichment
of Dominion.
RULING: Dominion is ordered to pay Guevarra P112,6762.11, representing the total amount
advanced by the latter in the payment of the claims of the formers clients, minus the amount
in the revolving fund and the outstanding balance and remittance.