Dominion Insurance Corp. v. Court of Appeals

Dominion Insurance Corp. v.
Court of
Appeals
jurist
G.R. No. 129919, 6 February 2002
FACTS:
On January 25, 1991, plaintiff Rodolfo S. Guevarra instituted Civil Case No.
8855 for sum of money against defendant Dominion Insurance Corporation.
Plaintiff sought to recover thereunder the sum of P156,473.90 which he
claimed to have advanced in his capacity as manager of defendant to satisfy
certain claims filed by defendant’s clients.
In its traverse, defendant denied any liability to plaintiff and asserted a

counterclaim for P249,672.53, representing premiums that plaintiff allegedly
failed to remit. On August 8, 1991, defendant filed a third-party complaint
against Fernando Austria, who, at the time relevant to the case, was its
Regional Manager for Central Luzon area.
Finding the verbal motion of plaintiff’s counsel to be meritorious and

considering that the pre-trial conference has been repeatedly postponed on
motion of the defendant Corporation, the defendant Dominion Insurance
Corporation is hereby declared (as) in default and plaintiff is allowed to
present his evidence on June 16, 1992 at 9:00 o’clock in the morning. On
August 7, 1992 defendant corporation filed a ‘MOTION TO LIFT ORDER OF
DEFAULT.’ It alleged therein that the failure of counsel to attend the pre-trial
conference was ‘due to an unavoidable circumstance’ and that counsel had
sent his representative on that date to inform the trial court of his inability to
appear. The Motion was vehemently opposed by plaintiff.
On November 18, 1992, the court a quo rendered judgment against the
defendant. On December 14, 1992, Dominion appealed the decision to the
Court of Appeals.On July 19, 1996, the Court of Appeals promulgated a
decision affirming that of the trial court.6 On September 3, 1996, Dominion
filed with the Court of Appeals a motion for reconsideration.7 On July 16,
1997, the Court of Appeals denied the motion. Hence, his appeal.
ISSUE:
Whether or not respondent Guevarra acted within his authority as agent for
petitioner?
RULING:
No.
By the contract of agency, a person 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. The basis for agency is representation. On the part
of the principal, there must be an actual intention to appoint or an intention
naturally inferrable from his words or actions; and on the part of the agent,
there must be an intention to accept the appointment and act on it, and in
the absence of such intent, there is generally no agency.
A perusal of the Special Power of Attorney16 would show that petitioner

(represented by third-party defendant Austria) and respondent Guevarra
intended to enter into a principal-agent relationship. Despite the word
“special” in the title of the document, the contents reveal that what was
constituted was actually a general agency.
The payment of claims is not an act of administration. The settlement of

claims is not included among the acts enumerated in the Special Power of
Attorney, neither is it of a character similar to the acts enumerated therein. A
special power of attorney is required before respondent Guevarra could
settle the insurance claims of the insured. In settling the claims mentioned
above, respondent Guevarra’s authority is further limited by the written
standard authority to pay, which states that the payment shall come from
respondent Guevarra’s revolving fund or collection.
The instruction of petitioner as the principal could not be any clearer.

Respondent Guevarra was authorized to pay the claim of the insured, but the
payment shall come from the revolving fund or collection in his possession.
Having deviated from the instructions of the principal, the expenses that
respondent Guevarra incurred in the settlement of the claims of the insured
may not be reimbursed from petitioner Dominion. This conclusion is in
accord with Article 1918, Civil Code, which states that:
“The principal is not liable for the expenses incurred by the agent in the
following cases:
“(1) If the agent acted in contravention of the principal’s instructions, unless

the latter should wish to avail himself of the benefits derived from the
contract;
”xxxxxxxxx“
However, while the law on agency prohibits respondent Guevarra from

obtaining reimbursement, his right to recover may still be justified under the
general law on obligations and contracts.
Article 1236, second paragraph, Civil Code, provides:
“Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor,
he can recover only insofar as the payment has been beneficial to the
debtor.”
In this case, when the risk insured against occurred, petitioner’s liability as
insurer arose.1âwphi1 This obligation was extinguished when respondent
Guevarra paid the claims and obtained Release of Claim Loss and
Subrogation Receipts from the insured who were paid. Thus, to the extent
that the obligation of the petitioner has been extinguished, respondent
Guevarra may demand for reimbursement from his principal. To rule
otherwise would result in unjust enrichment of petitioner.
*Case digest by Mary Tweetie Antonette G. Semprun, JD – 4, Andres

Bonifacio College, SY 2019 – 2020

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Dominion Insurance Corp. v.

G.R. No. 129919, 6 February 2002

In its traverse, defendant denied any liability to plaintiff and asserted a

Finding the verbal motion of plaintiff’s counsel to be meritorious and

By the contract of agency, a person binds himself to render some service or

A perusal of the Special Power of Attorney16 would show that petitioner

The payment of claims is not an act of administration. The settlement of

The instruction of petitioner as the principal could not be any clearer.

“(1) If the agent acted in contravention of the principal’s instructions, unless

However, while the law on agency prohibits respondent Guevarra from

Article 1236, second paragraph, Civil Code, provides:

*Case digest by Mary Tweetie Antonette G. Semprun, JD – 4, Andres

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