GR 26801; (August, 1927) (CRITIQUE)
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THE AI-ASSISTED CRITIQUE
The Court correctly affirmed the liability of the principal, Chua Cho Pack & Co., rejecting the defense that its branch manager acted contrary to internal instructions. The doctrine of apparent authority binds a principal for acts of its agent within the scope of the agency, and the firm’s argument improperly sought to use a private limitation to avoid a public, contractual obligation to the government. The bonds were executed for the firm’s benefit to obtain goods, making the firm the proper party to answer for the breach of their condition, irrespective of any internal dispute with its agent. This aligns with the principle that a principal is generally liable for the contracts of its duly authorized agent.

Regarding the sureties, the Court properly applied estoppel to bind Liao Liecco based on a course of conduct that modified the written agency agreement. While the power of attorney (Exhibit C) restricted Liao Seng Wan to executing judicial bonds, the agent’s execution of twenty-three similar customs bonds over six months without objection from the principal established a customary practice that the principal tacitly ratified. The Court’s reasoning that Liao Liecco is estopped from invoking the restrictive paragraph is sound, as allowing such a defense after knowingly permitting a pattern of conduct would sanction inequity. For Tomas Liao Lamco, the factual finding that he signed in his personal capacity, not as an agent for his firm, is a finding of fact binding on appeal and sufficient to impose individual suretyship liability.

The Court’s treatment of the real party in interest is analytically precise but reveals a procedural formalism. The bonds were properly executed in favor of the Government of the Philippine Islands “for the benefit of whom it may concern,” as mandated by the Administrative Code. While the Government suffered no direct pecuniary loss, it was the nominal obligee to secure the Collector’s official act. The judgment correctly channels recovery to satisfy the Collector’s (Natividad’s) adjudged liability to the American Express Company, achieving the equitable purpose of the bond. This construct avoids a circuity of action and ensures the rightful claimant is paid, even if the procedural joinder of the Government as a plaintiff is technically nominal.