Salonga v Warner Barnes Co Ltd

DOCTRINE: An adjustment and settlement agent is no different from any other agent from the point of
view of his responsibilities, for he also acts in a representative capacity. Since the scope and extent of the
functions of an adjustment and settlement agent are merely to settle and adjust claims in behalf of his
principal, and the same cannot be taken to mean that it includes the assumption of personal liability. Thus,
if claims are disapproved by the principal, the agent does not assume any personal liability, and the
recourse of the insured is to press his claim against the principal.
FACTS
Westchester Fire Insurance Company of New York (WF) contracted with Tina Gamboa where
they insured one case of rayon yardage Gamboa shipped from CA on a steamer to Manila.
This was consigned to Salonga.
WF undertook to pay sender (Gamboa) or her consignee (Salonga) damages caused to
the goods on the condition that their liability is limited to actual loss not exceeding P2,000.
Ship arrived in Manila and the shipment was examined by CB Nelson and Co (marine surveyors)
at Salongas request.
o A shortage worth P1,723.12 (through pilferage) was discovered so Salonga filed a claim
for damages against American President Lines (agents of the ship).
o When no action was taken on the claim, Salonga demanded payment from Warner
Barnes (WB) as agent of WF in the Philippines also refused payment.
American President Lines agreed later to payP476.16 under its liability in the bill of lading.
o This offer was rejected and the claim was finally settled at P1,021.25.
o As a result, the claim from the insurance contract was reduced to P717.82 (shortage
minus American President Lines payment).
CFI: WB to pay Salonga; MR: denied
o
o

ISSUE + RULING
Is Warner Barnes liable for insurance claim as an agent? NO
WB: They are not responsible because (1) there is no contractual relationship between WB and
Salonga or Gamboa, (2) they are not real party in interest, and (3) a judgment for/against an
agent does not bind the real party in interest.
o SC: An action ex contractu must be founded upon a contract (oral, written, implied, or
express). No contract, no liability.
o Art 1257, CC: privity of contracts; only binding upon parties
o 51309203
This is the same as Macias v Warner Barnes
o An agent who acts within the scope of his authority cannot assume liability for a contract
entered into by him in behalf of his principal.
o Therefore, when only principal is bound, the agent cannot assume personal liability.
o In this case: added fore and effect is that WB did not even sign the contract as an agent
(unlike in Macias, WB signed as agent).
WB: Action should have been filed against principal.
o SC: An action must be brought against the real party in interest, or against a party, which
may be bound by the judgment to be rendered therein.
o WB did not assume any obligation either as an agent or a principal. Therefore, it is not
a real party in interest and cannot be made liable.
WB is a settlement and adjustment agent of WF and as such, it has authority to settle all losses
and claims under the insurance policies in accordance with the instructions of its principal.
o However, WB still does not assume liability under the policies and can still not be sued in
its own right.
o Scope and extent of an adjustment and settlement agent does not include personal
liability. His functions are to merely settle and adjust claims if they are proven. If not
proven, like in this case where it is disputed by the principal, agent does not assume
personal liability.
Remedy of Salonga: serve on WFs settling agent in the PH.