DOMINION INSURANCE CORP. v.

CA (2002)
Topic: Kinds of Agency; When an agent can ask for reimbursement

PARTIES:
 Petitioner: Dominion Insurance Corporation
 Respondent: CA, Rodolfo Guevarra and Fernando Austria

FACTS:
 Jan. 25, 1991 – Rodolfo Guevarra instituted a case for collection of sum of money
against Dominion Insurance Corp. Guevarra sought to recover the sum of P156K which
he claimed to have advanced in his capacity as manager of Dominion Insurance to satisfy
certain claims filed by Dominion’s clients.
 Dominion denied any liability to Guevarra and asserted a counterclaim of P249K,
representing premiums that plaintiff allegedly failed to remit.
 Aug. 8, 1991 – Dominion filed a third-party complaint against Fernando Austria, who, at
the time relevant to the case, was its Regional Manager for Central Luzon area.
 The trial court rendered a judgment ordering Dominion Insurance to pay Rodolfo
Guevarra the sum of P156K representing the total amount advanced by Gueverra in the
payment of the claims of Dominion’s clients.
 Dominion appealed to the CA, which affirmed the decision of the trial court.

ISSUES/HELD:
 W/N Guevarra acted within his authority as agent for petitioner.
o YES. By the contract of agency, a person binds himself to render some service or
to do something in representation or on behalf of another, with the consent or
authority of the latter. The basis of agency is representation. On the part of the
principal, there must be an actual intention to appoint or an intention naturally
inferable from his words or actions; and on the part of the agent, there must be
an intention to accept the appointment and act on it, and in the absence of such
intent, there is generally no agency.
o A perusal of the SPA would show that Dominion Insurance (represented by third-
party defendant Austria) and Guevarra intended to enter into a principal-agent
relationship. Despite the word “special” in the title of the document, the
contents reveal that what was constitution was actually a general agency.
o The terms of the agreement read: “Guevarra x x x to be our Agency Manager for
our place and stead, to do and perform the following acts and things: (1) To
conduct, sign, manager, carry on and transact Bonding and Insurance business x
x x with the right, upon our prior written consent, to appoint agents and sub-
agents; (3) to demand, sue for collection, deposit, enforce payment, deliver and
transfer for and receive and give effectual receipts and discharge for all money
to the company.”
o The agency comprises all the business of the principal, but couched in general
terms, it is 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. Thus, the acts
enumerated in or similarly to those enumerated in the SPA do not require an
SPA.
o Art. 1878 enumerates the instances when an SPA is required.
 o Payment of claims is not an act of administration. The settlement of claims is not
included among the acts enumerated in the SPA, neither is it of a character
similar to the acts enumerated therein. An SPA is required before Guevarra could
settle the insurance claims of the insured.
o Guevarra’s authority to settle claims is embodied in the Memorandum of
Management Agreement which enumerates the scope of his duties and
responsibilities as agency manager: (1) dispose of all motor car claims in the
amount of P5K with prior approval of the Reg. Office; (2) full authority is given to
you in TPPI claims settlement.
o Respondent Guevarra’s authority is further limited by the written standard
authority to pay, which states that the payment shall come from respondent
Guevarra’s revolving fund or collection: “this is to authorize you to withdraw
from your revolving fund/collection…”
o Guevarra was authorized to pay the claim of the insured, but the payment shall
come from the revolving fund or collection in his possession. Having deviated
from the instructions of the principal, the expenses that Guevarra incurred in the
settlement of claims cannot be reimbursed from Dominion.
o Art. 1918 of the CC provides: “The principal is not liable for the expenses
incurred by the agent in the following cases: “(1) If the agent acted in
contravention of the principal’s instructions, unless the latter should wish to
avail himself of the benefits derived from the contract;”
o However, while the law on agency prohibits Guevarra from obtaining
reimbursement, his right to recover may still be justified under the general law
on obligations and contracts: Art. 1236 provides ““Whoever pays for another
may demand from the debtor what he has paid, except that if he paid without
the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.”
o In this case, when the risk insured against occurred, Dominion’s liability as
insurer arose. The obligation was extinguished when Guevarra paid the claims
and obtained Release of Claim Loss and Subrogation Receipts from the insured
who were paid.
o Thus, to the extent of the obligation of Dominion been extinguished, Guevarra
may demand for reimbursement from his principal. To rule otherwise would
result in unjust enrichment for Dominion Insurance.
o The extent to which Dominion benefited by the settlement of the insurance
claims could be best proved by the Release of Claim Loss and Subrogation
Receipts, in the total amount of P116K.
o However, the amount of the revolving fund/collection that was in the possession
of Guevarra as reflected in the statement of account would be deducted from
the above amount.
o The outstanding balance in the production/remittance to the claims was P3K.
Deducting this from P116K we get P112K. This is the amount that may be
reimbursed to Guevarra.

DOCTRINE:
 The basis of agency is representation.
JUDGMENT: Petition is DENIED.