Bacaltos Coal Mines v.

Court of Appeals
G.R. No. 114091, June 29, 1995
Facts:
The case is a petition to seek reversal of the decision of the Court of Appeals in the
case of San Miguel Corporation v. Bacaltos Coal Mines, German Bacaltos and Rene R.
Savellon, which held that the petitioners Bacaltos Coal Mines, German Bacaltos and
Savellon jointly and severally liable to San Miguel Corporation under a Trip Charter
Party. The Trip Charter Party was executed by Bacaltos Coal Mines, represented by
Savellon (Chief Operating Officer), and San Miguel Corporation, represented by
Francisco Manzon Jr. (SAVP and Director, Plants Operations-Mandaue). SMC filed
against the petitioners and Savellon for specific performance and damages because of
their failure to comply with the Trip Charter Party which was supposed to be for three
round trips to Davao. Instead, it was only able to make only one trip.

The lower court assailed a decision in favor of SMC and ordered the petitioners and
Savellon to pay the plaintiff. It ruled that the authorization given to Savellon necessarily
included the authority to enter in a Trip Charter Party. An appeal was made by the
petitioner asserting the negligence of the SMC and the authority of Savellon. The CA
affirmed the judgement of the trial court and held that SMC was not negligent because
their authority given to Savellon to enter into a Trip Charter Party.

Issue:
WON Savellon is duly authorized by the petitioners to enter into a Trip Charter Party.

Ruling:
NO. Savellon is not duly authorized by the petitioners. The agency of Savellon is based
on the Authorization which is clear that the scope of his agency is to use the coal
operating contract for any legitimate purpose as it may serve. Had SMC exercised due
diligence and prudence, it should have known that the authority to enter into any Trip
Charter Party is not included in the Authorization. The five prerogatives in the
authorization relates on the power to use the coal operating contract.

A coal operating contract is governed in P.D No. 972, as amended by P.D No. 1174, is
one of the authorized ways of active exploration, development, and production of coal
resources in a specified contract area. The authorization given to Savellon required the
use of a coal operating contract, however, the Trip Charter Party did not require him to
do so. Moreover, SMC made no attempts to verify if Bacaltos Coal Mines owned a
vessel. A party to a charter must satisfy itself that the other party is the owner of at least
entitled to its possession with power to lease or charter the vessel. An equitable maxim
between two innocent parties, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss. In the case, SMC is negligent of not
ascertaining the extent and limits of the authority of Savellon.

The petition is granted, and the decision of the Court of Appeals is reserved. The
judgement is modified, held the defendant Rene Savellon solely liable for the amounts
and ordered the dismissal of the case against the petitioners.