FACTS:

The National Food Authority (NFA), formerly known as the National Grains Authority (NGA), filed a petition for review on certiorari against the decision of the Intermediate Appellate Court, which affirmed the decision of the trial court. The trial court ordered defendants Gil Medalla and NFA to pay jointly and severally the plaintiff, Superior Shipping Corporation, the amount of P25,974.90 with interest and P10,000.00 as attorney's fees. The case arose from a contract for hire of the ship "MV Sea Runner" entered into between Medalla, acting as commission agent of Superior Shipping Corporation, and NGA. Under the contract, Medella was obligated to transport 8,550 sacks of rice belonging to NGA from San Jose, Occidental Mindoro, to Malabon, Metro Manila. After the completion of the delivery of rice, Superior Shipping Corporation requested NGA to allow it to collect the amount stated in its statement of account, which included claims for freightage, demurrage, and stevedoring charges. NGA replied that it cannot grant the request because the contract was entered into with Medalla who did not disclose that he was acting as a mere agent of Superior Shipping Corporation. Consequently, NGA paid Medalla the sum of P25,974.90. Superior Shipping Corporation demanded that Medalla turn over the amount paid to him, but he ignored the demand, leading to the filing of the complaint. NGA admitted that it entered into a contract with Medalla and paid him for freightage. The trial court rendered judgment in favor of Superior Shipping Corporation, holding both NGA and Medalla jointly and severally liable for freightage. NGA appealed to the appellate court, arguing that it is not liable because it had no knowledge of the agency between Superior Shipping Corporation and Medalla. The appellate court affirmed the judgment of the trial court. NGA filed this petition for review on the sole issue of whether or not it falls within the exception of the general rule provided for in Article 1883 of the Civil Code of the Philippines.

ISSUES:

1. Whether the National Food Authority (NFA) is jointly and severally liable with Gil Medalla for freightage charges.

2. Whether the case falls within the exception of the general rule provided for in Article 1883 of the Civil Code.

RULING:

1. The Supreme Court ruled that the NFA is jointly and severally liable with Gil Medalla for the freightage charges. The Court held that even though NFA had no knowledge of the agency relationship between Superior Shipping Corporation and Medalla at the time the contract was entered into, the agent's apparent representation yields to the principal's true representation. Therefore, the contract must be considered as entered into between the principal (Superior Shipping Corporation) and the third person (NFA). Hence, the NFA can be obliged to perform its duties under the contract and can also demand the enforcement of its rights arising from the contract.

PRINCIPLES:

• An undisclosed principal cannot maintain an action upon a contract made by his agent unless the principal was disclosed in such contract.

• When things belonging to the principal are dealt with, the agent is bound to the principal although he does not assume the character of such agent and appears acting in his own name.

• The agent's apparent representation yields to the principal's true representation.