FACTS:

The case involves a petition for review assailing the decision of the Court of Appeals in a case entitled "Eurotech Industrial Technologies, Inc. v. Hon. Antonio T. Echavez." The decision affirmed the order of Judge Antonio T. Echavez, which ordered the dropping of respondent Edwin Cuizon as a party defendant in Civil Case No. CEB-19672.

Eurotech Industrial Technologies, Inc. is engaged in the importation and distribution of European industrial equipment. Respondent Erwin Cuizon owns Impact Systems Sales, one of Eurotech's customers. Respondent Edwin Cuizon is the sales manager of Impact Systems and was impleaded as a defendant in the case.

Eurotech sold various products to Impact Systems, and a down payment was made for a sludge pump. However, Eurotech refused to deliver the pump unless respondents settled their indebtedness. Respondent Edwin and Eurotech's general manager executed a Deed of Assignment of receivables in favor of Eurotech, assigning the receivables from Toledo Power Corporation. Eurotech then delivered the pump to respondents.

Unbeknownst to Eurotech, respondents collected money from Toledo Power Company and partially paid their obligations to Eurotech. Eurotech demanded full payment, but respondents failed to comply, prompting Eurotech to file a complaint for sum of money, damages, with an application for preliminary attachment.

The trial court granted Eurotech's prayer for a writ of preliminary attachment. Respondent Edwin admitted to the sale transactions but disputed the total indebtedness. He claimed to have acted as an agent of Impact Systems and not a real party in interest.

Eurotech filed a motion to declare defendant Erwin in default with a motion for summary judgment, which was granted. However, the pre-trial conference was deferred pending the resolution of respondent Edwin's special and affirmative defenses.

After respondent Edwin filed his memorandum, the trial court dropped him as a party defendant, reasoning that he acted on behalf of Impact Systems in the Deed of Assignment and that Eurotech accepted the down payment, thereby ratifying Edwin's act. Eurotech appealed the ruling, but the Court of Appeals affirmed the trial court's decision.

ISSUES:

1. Whether respondent Edwin B. Cuizon should be held personally liable for the obligations of his principal, Impact Systems Sales/Erwin Cuizon.

2. Whether respondent Edwin B. Cuizon exceeded his authority in signing the Deed of Assignment.

3. Whether Edwin Cuizon acted within his authority when he signed the Deed of Assignment.

4. Whether both the principal and the agent are liable when the agent exceeds his authority.

RULING:

1. The Court held that respondent Edwin B. Cuizon should not be held personally liable for the obligations of his principal, Impact Systems Sales/Erwin Cuizon. Article 1897 of the New Civil Code provides that an agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving notice of his powers. In this case, the Deed of Assignment clearly states that respondent Edwin B. Cuizon signed as the sales manager of Impact Systems, indicating that he was acting as a representative of the company and not for himself.

2. The Court further held that respondent Edwin B. Cuizon did not exceed his authority in signing the Deed of Assignment. The evidence showed that the principal had ratified Edwin's act, and the plaintiff was aware of this ratification. Additionally, the principal made a down payment two days later, indicating that they acknowledged the contract entered into by Edwin B. Cuizon on their behalf.

3. Edwin Cuizon acted within his authority when he signed the Deed of Assignment. As a manager, he was granted broad powers to conduct the business of the principal, including the authority to enter into any contracts reasonably necessary for the protection of the principal's interests. The negotiation and execution of the Deed of Assignment was deemed reasonably necessary to protect the business of the principal.

4. Both the principal and the agent are not liable when the agent exceeds his authority. Article 1897 of the New Civil Code states that the principal is liable when the agent acts within the bounds of his authority. The agent, on the other hand, becomes liable to a third party only when he expressly binds himself or exceeds the limits of his authority without giving notice of his powers to the third person. In cases of excess of authority by the agent, a third person cannot recover from both the principal and the agent.

PRINCIPLES:

• In a contract of agency, the agent acts for and on behalf of the principal on matters within the scope of his authority, and the acts of the agent have the same legal effect as if they were personally executed by the principal.

• An agent, who acts as such, is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving sufficient notice of his powers.

• The position of a manager presupposes the grant of broad powers and investiture with liberal powers for the exercise of judgment and discretion in transactions and concerns incidental to the business entrusted to his care and management.

• A managing agent may enter into any contracts that he deems reasonably necessary or requisite for the protection of the interests of his principal.

• Under Article 1897 of the New Civil Code, the principal is liable when the agent acts within the bounds of his authority, while the agent becomes liable to a third party when he expressly binds himself or exceeds the limits of his authority without giving notice of his powers to the third person.

• In cases of excess of authority by the agent, a third person cannot recover from both the principal and the agent.