G.R. No. L-17160 November 29, 1965
PHILIPPINE PRODUCTS COMPANY, plaintiff-appellant, vs. PRIMATERIA SOCIETE ANONYME POUR LE COMMERCE EXTERIEUR: PRIMATERIA (PHILIPPINES) INC., ALEXANDER G. BAYLIN and JOSE M. CRAME, defendants-appellees.

FACTS

Plaintiff Philippine Products Company entered into an agreement on October 24, 1951, with defendant Primateria Zurich (a foreign entity based in Switzerland), through defendant Alexander G. Baylin, whereby plaintiff would buy copra in the Philippines for Primateria Zurich’s account. The contract was renewed and extended up to 1953. Plaintiff made shipments pursuant to instructions from Primateria Zurich, through its agents Primateria (Philippines) Inc., Alexander G. Baylin, and Jose M. Crame. A balance of P33,009.71 became due to plaintiff, later reduced to P31,009.71 after a P2,000.00 payment. Primateria Zurich had no license to transact business in the Philippines. The trial court held Primateria Zurich liable to plaintiff for P31,009.71 with interest and attorney’s fees but absolved the other three defendants (Primateria Philippines, Baylin, and Crame) from liability. Plaintiff appealed the dismissal of its complaint against these three defendants.

ISSUE

Whether defendants Primateria (Philippines) Inc., Alexander G. Baylin, and Jose M. Crame, as agents of the unlicensed foreign entity Primateria Zurich, can be held personally liable for the contracts entered into on behalf of their principal.

RULING

No. The Supreme Court affirmed the trial court’s judgment absolving the agents from personal liability. The Court agreed with the lower court’s conclusion that Primateria Zurich was not duly proven to be a “foreign corporation” within the meaning of Sections 68 and 69 of the Corporation Law, noting a distinction in the law between “sociedades anonimas” and corporations. Furthermore, the Court held that plaintiff could not recover from both the principal and its agents, as plaintiff had already obtained a judgment against the principal (Primateria Zurich) for the full amount and did not appeal that portion. Regarding Article 1897 of the New Civil Code, there was no proof that the agents exceeded the limits of their authority, and the principal never raised the issue of excess authority. The Court found it unnecessary to decide the broader issue of an agent’s personal liability for contracts made for an unlicensed foreign corporation, noting that such a corporation may be sued in the Philippines, and an agent’s liability is premised on the inability to sue or the non-liability of the principal, absent express legislation.