DOMINION INSURANCE CORPORATION vs. COURT OF APPEALS, RODOLFO S. GUEVARRA, and FERNANDO AUSTRIA

 FACTS:

Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance Corp. (Dominion) for the amount advanced by Guevarra in his capacity as manager of defendant to satisfy certain claims filed by defendant’s client.

The pre-trial was always postponed, and during one of the pre-trial conference dominion failed to arrive therefore the court declared them to be in default. Dominion filed several Motions to Lift Order of Default but was always denied by the court. The RTC rendered its decision making Dominion liable to repay Guevarra for the sum advanced and other damages and fees. Dominion appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

ISSUE:

(a) W/N Guevarra acted within his authority as agent of petitioner.

(b) W/N Guevarra must be reimbursed for the amount advanced.

HELD:

(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word “special” the contents of the document was actually a general agency. A general power permits the agent to do all acts for which the law does not require a special power and the contents in the document did not require a special power of attorney.

Art 1878 of the civil code provides instances when a special power of attorney is required.:

1) To make such payment as are not usually considered as acts of administration.

15) any other act of dominion

The payment of claims is not an act of administration which requires a special   power of attorney before Guevarra could settle the insurance claims of the insured.

Also Guevarra was instructed that the payment for the insured must come from the revolving fund or collection in his possession, Gueverra should not have paid the insured through his own capacity. Under 1918 of civil code an agent who acted in contravention of the principal’s instruction the principal will not be liable for the expenses incurred by the agent.

(b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his right to recover may be justified under the article 1236 of the civil code.^[1] Thus Guevarra must be reimbursed but only to the extent that Dominion has benefited without interest or demand for damages.