27. Gozun v.

Mercado (2006)

FACTS:
In the local elections of 1995, respondent Mercado vied for the gubernatorial post and upon his
request, petitioner Gozun submitted draft samples and price quotations of campaign materials.

Petitioner claims that the respondent’s wife had told him that the respondent had already
approved the price quotation and he could start printing the materials. So he print the materials
and delivered the same to the respondent’s campaign headquarters.

Meanwhile, On March 31, 1995, the respondent’s sister-in-law, Lilian Soriano, obtained from
petitioner a sum of P253,000 which was, allegedly, for the allowance of the poll watchers
attending a seminar.

Petitioner later sent respondent a statement of account in the total amount of P2,177,906. This
were for the printing materials except for one of the items which was the P253,000 cash
advance obtained by Lilian Soriano.

On August 11, 1995, respondent’s wife paid a partial amount of 1,000,000 and petitioner issued
a receipt therefor.

Despite repeated demands and respondent’s promise to pay, respondent failed to settle the
balance of his account to petitioner.

Respondent now claims that the printed materials were donations but later on acknowledged
that the materials did not state on its face that they were donations, in reference to the Comelec
rule that if a campaign material is donated, it must be stated so in its face.

To the P253,000 which Lilian Soriano obtained, the respondent denied having given her the
authority to do so and having received the same.

ISSUE: Is the respondent liable to the petitioner for Liliana Soriano’s cash advance?

HELD: No. By the contract of agency, one 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.
Contracts entered into in the name of another person by one who has been given no authority
or legal representation or who has acted beyond his powers are classified as unauthorized
contracts and are declared unenforceable, unless they are ratified.

Generally, the agency may be oral, unless the law requires a specific form. A special power of
attorney is necessary for an agent to borrow money, unless it be urgent and indispensable for
the preservation of things under administration.

Since nothing in this case involves preservation of things under administration, Soriano had no
authority to borrow money on behalf of the respondent. Especially since Soriano signed the
receipt in her name alone, without indicating that she was acting for and in behalf of the
respondent.

Respondent, however, was liable to petitioner for the printing materials.