Westmont Investment Corporation

vs Amos Francia, Jr. et al

Business Organization – Partnership, Agency, Trust – Existence of Agency – Lack of

Authorization
In 1999, Amos Francia was convinced by the bank manager of Westmont Bank to make an
investment in Westmont Investment. Since the interest rate offered was impressive, Amos
was convinced, he invited his siblings to join in the investment and so they invested an
aggregate amount of P3.9 million. When the investment matured, the Francia siblings
demanded the retirement of their investment but Westmont Investment advised them they
have no funds. Westmont Investment then requested for an extension. At the same time,
Westmont Investment advised the Francias that their money was borrowed by Pearlbank.
When the extension asked by Westmont expired, they again were not able to pay up and so
the Francias sued Westmont Investment. Pearlbank was impleaded in the complaint.
In its defense, Westmont Investment alleged that it was merely acting as an agent of
Pearlbank; that Pearlbank authorized Westmont Investment to borrow money on its behalf;
that Westmont Investment merely brokered a “loan transaction” between Pearlbank and the
Francias. To support its claim, Westmont provided documents showing that Pearlbank
borrowed an amount equivalent to the investment of the Francias.
ISSUE: Whether or not Westmont Investment is an agent of Pearlbank.
HELD: No. The evidence presented is not sufficient to prove that an agency existed
between Pearlbank and Westmont Investment hence, only Westmont Investment is liable to
pay the Francias. Pearlbank did not authorize Westmont Investment to borrow money for
it. Neither was there a ratification, expressly or impliedly, that it had authorized or
consented to said transaction. In fact, Pearlbank questioned Westmont Investment’s
practice of naming Pearlbank as a “borrower” of certain investments made by other
investors with Westmont Investment. Also, the Francias had no personal knowledge if
Pearlbank was indeed the recipient/beneficiary of their investments. The Francias have
always maintained that they only transacted with Westmont Investment and never with
Pearlbank. The fact that the Francias impleaded Pearlbank in their suite is understandable
(it does not defeat their suit) because they only impleaded Pearlbank to protect their interest
when they found out that Westmont was already bankrupt.