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[G.R. No. 139737. October 25, 1999]

DAVID RAYMUNDO vs. ELECTROLUX PHILIPPINES, INC.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated OCT 25 1999.

G.R. No. 139737 (David Raymundo vs. Electrolux Philippines.)

Petitioner David Raymundo, assails the decision of the Court of Appeals dated August 16, 1999 which set aside and reserved the decision of the regional trial court, disposing in the process:

WHEREFORE, the decision of the Regional Trial Court is hereby REVERSED and SET ASIDE. Defendant-appellee is hereby ORDERED to pay plaintiff-appellant the amount of P112,500.00, representing the amount of the unused pre-paid rent, plus an interest of 6% per annum from the date of the filing of the complaint, i.e., March 7, 1991, until the said amount has been paid in full. No pronouncement as to cost.

SO ORDERED.

The present controversy stemmed from an action for collection of sum of money filed by respondent Electrolux Philippines, Inc. against petitioner David Raymundo. It appears that sometime in January, 1988, petitioner and respondent entered into a contract of lease pertaining to a residential unit which Raymundo owns located at Kamias St., Dasmari�as Village, Makati City. The said contract of lease was for a period of one year and as agreed upon, the leased premises would house Electrolux's manager, a certain Mr. Vulsson. It was also agreed that Electrolux shall pay in advance the sum of P420,000.00 less 5% withholding tax, representing the rentals for the entire duration of the contract, with the condition that in case of any pre-termination, a refund of the unused pre-paid rent shall be in order.

In May, 1988, the contract of lease was pre-terminated due to the severance of the employment relationship of Mr. Vulsson with Electrolux. Consequently, Electrolux demanded from petitioner a refund of its unused pre-paid rent in the amount of P262,500.00. petitioner returned only P150,000.00 leaving, a balance of P112,500.00. due to several unheeded demands, respondent eventually filed an action for collection of sum of money before the regional trial court. The refusal of petitioner to pay the balance of P112,500.00 was anchored on the ground that during the time the contract of lease was still subsisting, the occupant (Mr. Vulsson) sold him furniture and household items which petitioner later discovered as among the items which he himself furnished to the leased residential unit. Petitioner claimed that the said amount was used to offset the amount which he wrongfully paid to Mr. Vulsson.

After trial, the court a quo rendered a decision in favor of petitioner dismissing the complaint, holding that the sale between Vulsson and petitioner was enforceable against Electrolux inasmuch as the principle of estoppel had already worked against the latter. It further concluded that Vulsson as an authorized occupant of the leased premises, was empowered to deal with petitioner on any matter pertaining to the contract of lease.

Expectedly, respondent Electrolux appealed to the Court of Appeals which reversed. The appellate court in its judgment held that the contract of sale is a private undertaking between petitioner and Vulsson, thus the same could not be enforced against Electrolux. The said contract of sale may not be expanded as to hold respondent liable for the misrepresentation committed by its employee. Moreover, even if one were to assume that Vulsson acted as an agent to Electrolux when he sold the furniture and other household items, petitioner's claim will still not prosper. This so because if an agent acts in his own name, the person with whom the agent has contracted has no right of action against the principal hence the agent is the one directly bound, as if the transaction were his own. The person dealing with a known agent must bear the burden of reasonable diligence and prudence, the existence or non-existence of the agent's authority to act in the premises. The Court of Appeals further concluded that while it is true that Vulsson was the authorized occupant of the leased residential house and could act on any matter pertaining to the contract of lease, the power to sell second hand property for and in behalf of Electrolux cannot be safely inferred as included therein.

Undaunted, petitioner filed the instant petition.

It is petitioner's contention that the Court of Appeals erred when it did not apply the doctrine of estoppel against Electrolux. This assertion is anchored on the ground that since Vulsson was an authorized occupant, it is necessarily follows that he is also an authorized representative of Electrolux and can deal with petitioner in all matters pertaining to the lease agreement. Moreover, it is petitioner's contention Electrolux's failure to immediately notify petitioner of the employee's termination if only to serve notice that the employee concerned was no longer authorized to continue acting for the company had put Electrolux in estoppel from contesting and disowning the legal effects of Vulsson's act.

The petition is devoid of merit.

In reversing the trial court, the appellate court held and correctly so, that:

While it is true that Mr. Vulsson (Paulsson) was the authorized occupant of the leased residential house and could act on any matter pertaining to the contract of lease, the power to sell secondhand properties for and on behalf of Electrolux is not however implied therefrom. WE note that Electrolux is not engaged in the business of selling secondhand furniture, from which the said power to sell could be safely inferred. Neither was it one of Mr. Vulsson's (Paulsson's) power as a manager of Electrolux.

All told, we cannot therefore hold Electrolux liable for the misrepresentation committed by Mr. Vulsson (Paulsson). Raymundo should return to Electrolux the unused pre-paid rent in the amount of P112,500.00, plus an interest of 6% per annum from the date of filing of the complaint, i.e., on March 7, 1991, until the said amount has been paid in full, in according with Article 2209 of the New Civil Code (Eastern Shipping Lines, Inc. vs. Court of Appeals, 234 SCRA 78 [194]).

Furthermore, it is hornbook law that one who claims the benefit of estoppel on the ground that he had been misled by the representations of another must not have been misled through his own want of reasonable care and circumspection. Estoppel is a shield against injustice and a party invoking its protection should not be allowed to use the same to conceal his or her own negligence (Mijares vs. CA, 271 SCRA 558).

WHEREFORE, the petition is denied due course for failure of petitioner to sufficiently show that public respondent committed any reversible error.

SO ORDERED.

Very truly yours,

(Sgd.) JULIETA Y. CARREON

Clerk of Court

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