11.) National Power Corp. v National Merchandising Corporation October 23, 1982 |G.R. No.

L-33819 and L-33897 Facts:NPC and Namerco, as representatives of International Commodities Corporations (New York),executed a contract for the purchase by the NPC of 4,000 long tons of crude sulfur for itsMaria Cristina fertilizer plant for the price of 450,716.00. The agreement was that upon receipt of the letter of credit by the seller, it would deliver the sulfur at Iligan City within 60days. Else, the seller and its surety would be liable to pay liquidated damages at the rate of two-fifth of the one percent of the full contract price for the first thirty days of default andfour-fifth of one percent for everyday thereafter until complete delivery is made The New York supplier was not able to deliver the sulfur before January 15, 1957, which was the deadline for the delivery as it was not able to secure shipping space. NPCs fertilizer had to shut down from January 20 to January 26 because of this and no fertilizer was produced. According to NPCs counsel, non-availability of bottom or vessel is not a fortuitious event and demanded f or liquidated damages from date of deadline (January 15, 1957) up to May 9,1957, which was the date NPC rescinded the contract of sale stating that time was of theessence. Similar demand was made on Domestic Insurance Company as its surety. The total of liquidated damages amounted to PhP360,572.80.The Contract of Sale explicitly excludes non-availability of bottom or vessel as reason to exempt seller from payment of liquidated damages. Namercos offer is even more explicit as it guarantees the availability of bottom or vessel.RTC concluded that Namerco acted beyond the bounds of its authority because it violated its principals cabled instructions which among others includes that the sale is subject to availability of steamer. Issue:Is Namerco liable to pay liquidated damages to NPC? Held:Yes. Under Article 1397, the agent who exceeds the limits of his authority without giving theparty with whom he contracts sufficient notices of his powers is personally liable to suchparty.Even before the contract of sale was signed, Namerco was already aware that its principal washaving difficulties in booking shipping space and yet it proceeded to do so despite warningsbecause the company did not want to forfeit Namercos bidders bond in the sum of PhP45,100.00. Namerco never disclosed to the NPC the cabled or written instructions of itsprincipal. The contract of sale was even expressly repudiated by the principal since Namercotook chances and acted in its own name.Namerco cannot hide behind Article 1403 which provides that a contract entered into in thename of another person by one who has acted beyond his powers is unenforceable. This isbecause the unenforceability of contract being referred to is against the principal, and not theagent. For agents such as Namerco, it is Article 1897 that applies. Thus, it should be held liablefor liquidated damages.Otherdetails:Damages reduced to only PHP45,100.00 instead of the original amount since the liquidated damages as computed per contract would have amounted to 80% of the purchase price and asan equitable consideration since Namerco employed persistent efforts to charter steam andfailure to secure shipping space is not attributable to its fault or negligence.