Francisco v. Chemical Bulk Carriers

G.R. No. 193577 (September 7, 2011)

Facts:

Antonio Francisco was the owner and manager of a Caltex station in Teresa, Rizal, since 1965. In March 1993, he was approached by Gregorio Bacsa, who claimed to be an employee of Chemical Bulk Carriers, Incorporated (CBCI), offering to sell diesel fuel. After verifying Bacsa's identification, Francisco agreed to purchase the fuel under specific conditions: delivery by Petron Corporation, a sealed delivery tank, and a separate receipt from Bacsa.

From April 5, 1993, to January 25, 1994, there were 17 deliveries of diesel fuel, all of which complied with Francisco's conditions. However, in February 1996, CBCI sent a demand letter to Francisco for payment of P1,053,527 for the diesel fuel, claiming that it had already paid for the fuel delivered to Francisco. Francisco rejected this demand, leading CBCI to file a complaint for sum of money and damages against him.

CBCI alleged that Francisco had acquired the diesel fuel without authority and deprived them of its use. They argued that Francisco should have known the sale was illegitimate, as only authorized companies could sell petroleum products in the Philippines. CBCI sought actual damages, exemplary damages, attorney's fees, and other litigation expenses.

Francisco filed a motion to dismiss based on forum shopping, which was denied. He later answered the complaint, asserting that he had acted in good faith, relying on Bacsa's assurances and the conditions he had set for the purchase. He also filed a counterclaim for damages.

The trial court ruled in favor of Francisco, dismissing CBCI's complaint and awarding him moral damages and attorney's fees. CBCI appealed this decision.

Legal Issues:

1. Did the Court of Appeals err in finding that Francisco failed to exercise the required diligence of a blind person in conducting his business?
2. Was there express or tacit approval of the transactions by CBCI, thereby binding them to the actions of Bacsa?

Arguments:

Petitioners (Francisco's Heirs):

• They argued that Francisco exercised the required diligence for a blind person by verifying Bacsa's identity through his son, requiring direct delivery from Petron, and insisting on separate receipts.
• They contended that CBCI had tacitly approved the transactions, as Bacsa was acting as an agent, and CBCI should be estopped from denying the authority of Bacsa.

Respondent (CBCI):

• CBCI maintained that Bacsa was not authorized to sell the diesel fuel and that Francisco acted in bad faith by failing to verify Bacsa's authority.
• They argued that Francisco's experience in the petroleum business should have prompted him to conduct further inquiries, and his reliance on Bacsa's identification was insufficient.

Court's Decision and Legal Reasoning:

The Court of Appeals reversed the trial court's decision, ruling in favor of CBCI. It found that Bacsa's actions were personal and did not bind CBCI. The court emphasized that Francisco, despite being blind, had been managing the Caltex station for years and should have exercised greater diligence. It noted that Francisco's reliance on Bacsa's identification and the informal receipts indicated a lack of prudence.

The court ruled that CBCI was unlawfully deprived of its property and had the right to recover the value of the diesel fuel from Francisco. It concluded that Francisco did not acquire any title to the diesel fuel, as Bacsa was neither the owner nor authorized to sell it.

Significant Legal Principles Established:

1. Diligence of a Blind Person: The standard of care required of a person with a disability is that of a reasonably careful person with the same disability. In this case, the court found that Francisco did not meet this standard.

2. Authority to Sell: A seller without title cannot transfer a better title than they possess. The owner of goods unlawfully deprived of them may recover from a purchaser in good faith.

3. Estoppel: For estoppel to apply, the principal must have allowed the agent to appear as having authority, misleading the buyer to their detriment. In this case, CBCI did not mislead Francisco regarding Bacsa's authority.