SECOND DIVISION [G.R. No. 117356. June 19, 2000] VICTORIAS MILLING CO., INC., petitioner, vs.

COURT OF APPEALS and CONSOLIDATED SUGAR CORPORATION, respondents. DECISION QUISUMBING, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals dated February 24, 1994, in CA-G.R. CV No. 31717, as well as the respondent court's resolution of September 30, 1994 modifying said decision. Both decision and resolution amended the judgment dated February 13, 1991, of the Regional Trial Court of Makati City, Branch 147, in Civil Case No. 90-118. The facts of this case as found by both the trial and appellate courts are as follows: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc., (VMC). In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M, which gave rise to the instant case. Dated October 16, 1989, SLDR No. 1214M covers 25,000 bags of sugar. Each bag contained 50 kilograms and priced at P638.00 per bag as "per sales order VMC Marketing No. 042 dated October 16, 1989."[1] The transaction it covered was a "direct sale."[2] The SLDR also contains an additional note which reads: "subject for (sic) availability of a (sic) stock at NAWACO (warehouse)."[3] On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M for P 14,750,000.00. CSC issued one check dated October 25, 1989 and three checks postdated November 13, 1989 in payment. That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No. 1214M. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC "to withdraw for and in our behalf the refined sugar covered by Shipping List/Delivery Receipt-Refined Sugar (SDR) No. 1214 dated October 16, 1989 in the total quantity of 25,000 bags."[4] On October 27, 1989, STM issued 16 checks in the total amount of P31,900,000.00 with petitioner as payee. The latter, in turn, issued Official Receipt No. 33743 dated October 27, 1989 acknowledging receipt of the said checks in payment of 50,000 bags. Aside from SLDR No. 1214M, said checks also covered SLDR No. 1213. Private respondent CSC surrendered SLDR No. 1214M to the petitioner's NAWACO warehouse and was allowed to withdraw sugar. However, after 2,000 bags had been released, petitioner refused to allow further withdrawals of sugar against SLDR No. 1214M. CSC then sent petitioner a letter dated January 23, 1990 informing it that SLDR No. 1214M had been "sold and endorsed" to it but that it had been refused further withdrawals of sugar from petitioner's warehouse despite the fact that only 2,000 bags had been withdrawn.[5] CSC thus inquired when it would be allowed to withdraw the remaining 23,000 bags. On January 31, 1990, petitioner replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already dwithdrawn all the sugar covered by the cleared checks.[6] On March 2, 1990, CSC sent petitioner a letter demanding the release of the balance of 23,000 bags. Seven days later, petitioner reiterated that all the sugar corresponding to the amount of STM's cleared checks had been fully withdrawn and hence, there would be no more deliveries of the commodity to STM's account. Petitioner also noted that CSC had represented itself to be STM's agent as it had withdrawn the 2,000 bags against SLDR No. 1214M "for and in behalf" of STM. On April 27, 1990, CSC filed a complaint for specific performance, docketed as Civil Case No. 90-1118. Defendants were Teresita Ng Sy (doing business under the name of St. Therese Merchandising) and herein petitioner. Since the former could not be served with summons, the case proceeded only against the latter. During the trial, it was discovered that Teresita Ng Go who testified for CSC was the same Teresita Ng Sy who could not be reached through summons.[7] CSC, however, did not bother to pursue its case against her, but instead used her as its witness. 1

1213 and 1214. witness for defendant Victorias Milling Company.' "On the other hand. Petitioner's primary defense a quo was that it was an unpaid seller for the 23. in view of the foregoing.000.000. the trial court heard the case on the merits. plus the costs. Petitioner then prayed that CSC be ordered to pay it the following sums: P10.570. issued to cover the purchase. October 16. it could no longer authorize further delivery of sugar to CSC.00 as unrealized profits.357. but mere delivery receipts issued pursuant to a series of transactions entered into between it and STM.000.000.000.00.500.00 of the 25. However.000 bags covered by SLDR No. Petitioner also alleged that CSC did not pay for the SLDR and was actually STM's co-conspirator to defraud it through a misrepresentation that CSC was an innocent purchaser for value and in good faith. 1214M.000.000."[9] It made the following observations: "[T]he testimony of plaintiff's witness Teresita Ng Go.00 as attorney's fees.00 for the 25. "2) Ordering defendant Victorias Milling Company to pay the amount of P920. the Court hereby renders judgment in favor of the plaintiff and against defendant Victorias Milling Company: "1) Ordering defendant Victorias Milling Company to deliver to the plaintiff 23. 1214 the same has been fully paid as indicated by the word 'cleared' appearing under the column of 'status of payment. the claim of defendant Victorias Milling Company that the purchase price of the 25. which it had issued. the latter had no justification for refusing delivery of the sugar.000. P3. The Court notes that the testimony of Arnulfo Caintic is merely a sweeping barren assertion that the purchase price has not been fully paid and is not corroborated by any positive evidence. Therese Merchandising in favor of Victorias Milling Company at the time it purchased the 50.00 as exemplary damages.00 (Exhibits B and B-1).000 bags of sugar covered by SLDR No.000.[8] Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks. Therese Merchandising for the amount of P31. said witness failed to present in Court any 2 . There is an insinuation by Arnulfo Caintic in his testimony that the postdated checks issued by the buyer in payment of the purchased price were dishonored. and P1. Therese Merchandising. which is 10% of the acquisition value of the undelivered bags of refined sugar in the amount of P13.200. and the status of payment. 1214 as well as the purchase price of P15.000. which is a computer printout of defendant Victorias Milling Company showing the quantity and value of the purchases made by St. 1989 (date of the two SLDRs) is duly supported by Exhibits C to C-15 inclusive which are post-dated checks dated October 27. Therefore.000 bags of sugar purchased by St. that she had fully paid the purchase price of P15. P2. Petitioner explained that the SLDRs. the trial court rendered its judgment favoring private respondent CSC.00 in unrealized profits. were not documents of title. It is clear in Exhibit 'F' that with respect to the sugar covered by SLDR No. Petitioner also prayed that cross-defendant STM be ordered to pay it P10.00 as exemplary damages.950. 1989 issued by St. Therese Merchandising covered by SLDR No. 1989 Victorias Milling Company issued official receipt no. 1214 has not been fully paid is supported only by the testimony of Arnulfo Caintic. the official reciept no.000 bags of sugar bought by her covered by SLDR No. 1214.000. "SO ORDERED.000.00 as attorney's fees.CSC's complaint alleged that STM had fully paid petitioner for the sugar covered by SLDR No.000.00 in exemplary damages.500.00 as exemplary damages and the amount of P1.000.000. 1214M and sought the award of P1. the amount of P800. as follows: "WHEREFORE.000 bags of refined sugar due under SLDR No. P10.950. and P1.000. Petitioner also contended that it had no privity of contract with CSC.104.000. 1213 on the same date.00 as moral damages. As earlier stated.000 bags of sugar bought by her covered by SLDR No.000. the SLDR no.00 as attorney's fees and litigation expenses.000 bags.900.00. The SLDRs prescribed delivery of the sugar to the party specified therein and did not authorize the transfer of said party's rights and interests.000. The testimony of Teresita Ng Go is further supported by Exhibit F. as attorney's fees. 34734 in favor of St. Since no settlement was reached at pre-trial. CSC prayed that petitioner be ordered to deliver the 23. Said checks appear to have been honored and duly credited to the account of Victorias Milling Company because on October 27.

CSC was already precluded from seeking delivery of the 23. " 2) Pay to plaintiff-appellee P792. In its resolution dated September 30. et al. and (c) Whether or not CSC as buyer from STM of the rights to 25. (Formal Offer of Evidence for Plaintiff. Abalos. 1214M."[10] Petitioner appealed the trial court’s decision to the Court of Appeals. Said witness likewise failed to present any bank record showing that the checks issued by the buyer. Pursuant to this contract. 58) cannot be used to prove the proposition that 12. independent. 1994.00 had been cleared.00 which is 10% of the value of the undelivered bags of refined sugar. The appellate court considered the following issues: (a) Whether or not the transaction between petitioner and STM involving SLDR No.dishonored check or any replacement check. STM or any of its authorized agents could withdraw bags of sugar only against cleared checks of STM. On February 24. Teresita Ng Go. (People v."[11] Both parties then seasonably filed separate motions for reconsideration. On appeal. the Court hereby modifies the assailed judgment and orders defendant-appellant to: "(1) Deliver to plaintiff-appellee 23. The rule is explicit that courts should consider the evidence only for the purpose for which it was offered.000 bags of sugar covered by SLDR No. and single transaction.000 bags allegedly unwithdrawn.586 bags of sugar remained undelivered. "Exhibit ‘F' We relied upon in fixing the number of bags of sugar which remained undelivered as 12. 1214M. 1214 were dishonored. 1214M. Records p. Plaintiff-appellee is. 1994. 3 . Private respondent CSC countered that the sugar purchases involving SLDR No.000 bags of refined sugar under SLDR No. "(2) Pay costs of suit. "SO ORDERED. "SO ORDERED. 21214M was only one of 22 SLDRs issued to STM and since the latter had already withdrawn its full quota of sugar under the said SLDR. petitioner averred that the dealings between it and STM were part of a series of transactions involving only one account or one general contract of sale. therefore. in payment of the purchase price of the sugar covered by SLDR No. correct in its argument that Exhibit ‘F' which was offered to prove that checks in the total amount of P15. "3) Pay the costs of suit. the Court of Appeals rendered its decision modifying the trial court's judgment. (b) Whether or not CSC had the capacity to sue on its own on SLDR No.586 bags of sugar covered by SLDR No. to wit: "WHEREFORE. 1 CA Rep 783).918.950. as attorneys fees.000 bags of sugar. 1214M could compel petitioner to deliver 23.000. the appellate court modified its decision to read: "WHEREFORE. 1214M was a separate. the Court hereby MODIFIES the assailed judgment and orders defendant-appellant to: "1) Deliver to plaintiff-appellee 12. SLDR No. The rationale for this is to afford the party against whom the evidence is presented to object thereto if he deems it necessary.586 cannot be made the basis for such a finding."[12] The appellate court explained the rationale for the modification as follows: "There is merit in plaintiff-appellee's position. 1214M were separate and independent transactions and that the details of the series of purchases were contained in a single statement with a consolidated summary of cleared check payments and sugar stock withdrawals because this a more convenient system than issuing separate statements for each purchase.

"4. (Art. " 2."Testimonial evidence (Testimonies of Teresita Ng [TSN. Rule 131. so as to extinguish or reduce its liability to 69 bags. and erred in denying petitioner's right to setoff all its credits arising prior to notice of assignment from other sales or SLDRs against private respondent's claim as assignee under SLDR No. an agent of STM as held in Rallos v. "6. 17 October 1990. Santos [TSN. Documentary evidence (Exhibit I. The Court of Appeals erred in not holding that the conditions of the assigned SLDR No. 1431. and which would justify review of its conclusion of facts by this Honorable Court. 1214. and STM's acquiescence thereto by silence for almost one year did not render Exh.. Felix Go Chan & Realty Corp. and that all sugar corresponded to cleared checks had been withdrawn. 1279.. 10 October 1990. 2. 81 SCRA 252. The Court of Appeals erred in not holding that STM's and private respondent's specially informing petitioner that respondent was authorized by buyer STM to withdraw sugar against SLDR No. 78. 80) show that plaintiff-appellee had sent demand letters to defendant-appellant asking the latter to allow it to withdraw the remaining 23."[13] Hence. and STM's empowering other persons as its agents to withdraw sugar against the same SLDR No.000 bags of sugar from SLDR after which it was not allowed to withdraw anymore. (a) its subject matter being generic. respondent's admission of its balance. ‘F’ between petitioner and STM. Id. Defendant-appellant. 1214M. pp. the issues now to be resolved are: (1).. The Court of Appeals misapplied the law on compensation under Arts. p. and 36]) presented by plaintiff-appellee was to the effect that it had withdrawn only 2. 33] and Marianito L.000 bags of sugar for STM.. on the other hand. and the non-availability of sugar freed petitioner from further obligation. except for 69 bags of sugar. 1214M. It did not present evidence to show how many bags of sugar had been withdrawn against SLDR No.Whether or not the Court of Appeals erred in applying the law on compensation to the transaction under SLDR No. the instant petition. " 3. rendered respondent like the other persons. We see no reason to overturn the findings of the trial court on this point. namely. 18. 4 . Id. estopped to sue upon SLDR No. Civil Code).. Defendant-appellant did not rebut plaintiff-appellee's assertions. had they been considered. 1214M as an assignee.. The Court of Appeals erred in concluding that the settlement or liquidation of accounts in Exh. 1214M so as to preclude petitioner from offsetting its credits on the other SLDRs."[14] Simply stated. Rules of Court) and estopped from doing so. "5. would have shown that petitioner was not liable. Exhibit K.Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence. 1214M "for and in our (STM) behalf. The Court of Appeals erred in manifestly and arbitrarily ignoring and disregarding certain relevant and undisputed facts which. (2).. positing the following errors as grounds for review: "1.. 16. p. "After a second look at the evidence. 1285 and 1626 of the Civil Code when it ruled that compensation applied only to credits from one SLDR or contract and not to those from two or more distinct contracts between the same parties. because the law on compensation applies precisely to two or more distinct contracts between the same parties (emphasis in the original). The Court of Appeals erred in not holding that the "clean hands" doctrine precluded respondent from seeking judicial reliefs (sic) from petitioner. alleged that sugar delivery to the STM corresponded only to the value of cleared checks. made the sale conditional and prevented STM or private respondent from acquiring title to the sugar.000 bags of sugar from SLDR 1214M. p. its only remedy being against its assignor. `F' an account stated and its balance binding. 1214M and from suing by itself for its enforcement because it was conclusively presumed to be an agent (Sec." (emphasis in the original) private respondent's withdrawing 2. precisely because of its theory that all sales in question were a series of one single transaction and withdrawal of sugar depended on the clearing of checks paid therefor. and precluded it from subsequently claiming and proving being an assignee of SLDR No. and (b) the sale of sugar being subject to its availability at the Nawaco warehouse.. 1214M.

1214M to show that the latter was STM's agent.[19] and on the part of the agent. Anent the first issue. the very word "agency" has come to connote control by the principal. Here..[23] The Court of Appeals.A conclusion that there was a valid sale and transfer to plaintiff-appellee may."[16] The Civil Code defines a contract of agency as follows: "Art. with the consent or authority of the latter.Whether or not the Court of Appeals committed an error of law in not applying the "clean hands doctrine" to preclude CSC from seeking judicial relief. 1214M had been "sold and endorsed" to it.. Although it would seem STM represented plaintiffappellee as being its agent by the use of the phrase "for and in our (STM's) behalf" the matter was cleared when on 23 January 1990. what is decisive is the intention of the parties. Private respondent CSC was not subject to STM's control. the law makes no presumption of agency. It is settled that an issue which was not raised during the trial in the court below could not be raised for the first time on appeal as to do so would be offensive to the basic rules of fair play... The fact alone that it (STM) had authorized withdrawal of sugar by plaintiff-appellee "for and in our (STM's) behalf" should not be eyed as pointing to the existence of an agency relation . therefore. Further. the Court of Appeals opted to address this issue. was not an agent of STM. 3536]. there must be an actual intention to appoint[18] or an intention naturally inferable from his words or actions.(3). By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another.. more than any other.[22] The control factor. 000 bags. 1989 in the total quantity of 25. justice.[27] The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale. The question of whether a contract is one of sale or agency depends on the intention of the parties as gathered from the whole scope and effect of the language employed. there is generally no agency.[25] That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency. Indeed.[26] That no agency was meant to be established by the CSC and STM is clearly shown by CSC's communication to petitioner that SLDR No.. with the burden of proof resting upon the persons alleging the agency. in finding that CSC. and it is always a fact to be proved. but also its nature and extent (Antonio vs. Records. now a matter for our consideration.[21] One factor which most clearly distinguishes agency from other legal concepts is control." It is clear from Article 1868 that the basis of agency is representation. 1214M were sold and transferred by STM to it .the principal. Ultimately. plaintiff-appellee has shown that the 25.[17] On the part of the principal. Enriquez [CA]. 78). plaintiff-appellee informed defendant-appellant that SLDFR No. (4). no error was committed by the respondent appellate court when it held that CSC was not STM's agent and could independently sue petitioner. 1868.G. hence. on this score.the agent . Hence. and due process.agrees to act under the control or direction of another . Petitioner heavily relies upon STM's letter of authority allowing CSC to withdraw sugar against SLDR No. without need of joining its imputed principal STM as co-plaintiff. 000 bags of sugar covered by the SLDR No. 5 . and not an agent of STM.. one person . 51 O. we find from the records that petitioner raised this issue for the first time on appeal.It should be viewed in the context of all the circumstances obtaining.. has caused the courts to put contracts between principal and agent in a separate category."[24] In the instant case.[15] Nonetheless. there must be an intention to accept the appointment and act on it. The pertinent portion of said letter reads: "This is to authorize Consolidated Sugar Corporation or its representative to withdraw for and in our behalf (stress supplied) the refined sugar covered by Shipping List/Delivery Receipt = Refined Sugar (SDR) No. and not an agency. 1214 dated October 16. defendant-appellant failed to sufficiently establish the existence of an agency relation between plaintiff-appellee and STM.Whether or not the Court of Appeals erred in not ruling that the sale of sugar under SLDR No. to show not only the fact of its existence.. 1214M had been "sold and endorsed" to it by STM (Exhibit I.. opined: "This Court has ruled that where the relation of agency is dependent upon the acts of the parties. The issues will be discussed in seriatim. 1214M was a conditional sale or a contract to sell and hence freed petitioner from further obligations. p. be made thus capacitating plaintiff-appellee to sue in its own name. it appears plain to us that private respondent CSC was a buyer of the SLDFR form.[20] and in the absence of such intent.

and the Court of Appeals concurred. the instant petition is DENIED for lack of merit. Costs against petitioner. public policy or public order.[31] Having transferred title to the sugar in question. [14] Id. [12] Id. Intermediate Appellate Court. with title to the sugar still remaining with the vendor. Petitioner is now estopped from alleging the contrary.[28] However. Since said sugar had been fully paid for. were not mutually creditors and debtors of each other. As to the fourth issue. Mendoza. it refused to apply Article 1279 of the Civil Code to the present case. (Chairman). [1] [2] Records. [15] Spouses Felipe and Irma Buñag v. Regarding the third issue. 89. [4] Supra Note 1. 6 . as assignee of STM. [3] Ibid. 1214M after she had sold her rights under said SLDR to CSC. that petitioner had been paid for the sugar purchased under SLDR No. good customs. WHEREFORE. and (c) the authority given by the latter to other persons to withdraw sugar against SLDR No. petitioner insists that its debt has been offset by its claim for STM's unpaid purchases. 134. October 10.. [8] Supra Note 1. 189 SCRA 201. SLDR No. and De Leon. [5] Id. Petitioner clearly had the obligation to deliver said commodity to STM or its assignee. pursuant to Article 1279 of the Civil Code. The contract is the law between the contracting parties. at 95. the contract is valid and must be upheld. However. without being rebutted. No reversible error could thereby be imputed to respondent appellate court when. Bellosillo. p. This conspiracy is allegedly evidenced by: (a) the fact that STM's selling price to CSC was below its purchasing price. the trial court found. [7] TSN. morals. petitioner contends that the sale of sugar under SLDR No. p. 303 SCRA 591. 1214M.[30] And where the terms and conditions so stipulated are not contrary to law. [6] Id. 149 (1997) citing Gevero v. at 9. at 93-94. at 12. bereft of concrete proof. despite careful scrutiny. petitioner is now obliged to deliver it to the purchaser or its assignee. petitioner and CSC.. at 11. (b) CSC's refusal to pursue its case against Teresita Ng Go. SO ORDERED. it was not a serial part of a single transaction or of one account contrary to petitioner's insistence.On the second issue. at 131-132. Court of Appeals. Buena. 68. Roman Catholic Archbishop of Manila v. p. not a contract to sell. 1214M is a conditional sale or a contract to sell. we find here the records bare of convincing evidence whatsoever to support the petitioner's allegations of fraud. 336 Phil. proceeding from the theory that the transactions entered into between petitioner and STM are but serial parts of one account. p.title to refined sugar is transferred to buyer/trader and delivery to him/it is deemed effected and completed (stress supplied) and buyer/trader assumes full responsibility therefore…"[29] The aforequoted terms and conditions clearly show that petitioner transferred title to the sugar to the buyer or his assignee upon payment of the purchase price. We are now constrained to deem this matter purely speculative. 138. [13] Id. Court of Appeals. [11] Rollo. Petitioner prays that the doctrine of "clean hands" should be applied to preclude CSC from seeking judicial relief. at 24. Ibid. Jr. 1214M was a separate and independent transaction. [9] CA Rollo. concur. Said terms clearly establish a contract of sale. 1990. 596 (1999). p. 1214M contains the following terms and conditions: "It is understood and agreed that by payment by buyer/trader of refined sugar and/or receipt of this document by the buyer/trader personally or through a representative. [10] Id. that the purchase of sugar covered by SLDR No. 208 (1990) [16] Records. petitioner submits that STM and private respondent CSC have entered into a conspiracy to defraud it of its sugar. JJ. Evidence on record shows. Noteworthy. 60. at 170. 16.

(4). On October 25.That they be liquidated and demandable. [21] Security Co. 5 Phil. 112 Conn... 178.. [24] Supra Note 11. issued checks in payment. [20] Internal Trust Co. AGENCY. 744 (1989). 2000 Quisumbing. 526. Consolidated Sugar Corp. [28] "Art. 383. Therese Merchandising as proof of purchases.  Victorias Milling heavily relies upon St.00. and also of the same quality if the latter has been stated. 1989. 1214M. 100 SCRA 197. 1214M because. Therese Merchandising had already withdrawn all the sugar covered by the cleared checks. 151 A. App. Legarda Koh v.That over neither of them there be any retention or controversy. 283 SCRA 374. 325. (5). Inc. Salisbury v. 497. Price. Among these was SLDR No. Greenlease Lied Motors v. 1308.. 230. Court of Appeals. 382 (1997) Connell v. at 87-88.E. [27] Supra Note 5. v. Ed 1067.That both debts consist in a sum of money. 198 P.W. [26] State v. Victorias Milling issued several Shipping List/Delivery Receipts (SLDRs) to St. Ortega . (3). 166. App. Prince. Therese Merchandising to withdraw the sugar covered by SLDR No. STEFFEN. Brooks. 1214M to Victorias Milling’s NAWACO warehouse and was allowed to withdraw sugar. commenced by third persons and communicated in due time to the debtor. 81 W. Consolidated Sugar Corp.. 249 N.PARTNERSHIP IN A NUTSHELL (1977) 30-31. Ongsiaco. art. cert den 291 US 679. wrote Victorias Milling that it had been authorized by St..000 bags of sugar. or of the things due are consumable. Rucks-Brandt Const. according to it. McLoughlin. [23] Supra.[17] [18] Bordador v.. 42 P. [22] ROSCOE T.W. 130. 218. 202 (1980) [31] CIVIL CODE. 85 Iowa 543. 1279.That each one of the obligors be bound principally and that he be at the same time a principal creditor of the other: (2). 422. Graybeal. 753. at 33. v.R. v. Va. 117356 June 19. after 2. Consolidated Sugar Corp. Therese Merchandising’s letter of authority allowing Consolidated Sugar Corp.000 bags had been released.. In order that compensation may be proper.. Therese Merchandising sold to Consolidated Sugar Corp. However. Luz. 1214M for P14. 169 (1905) Victoria Milling Co. [25] Bessing v. 78 L. J. Sadler. 52 Cal.." [29] Supra Note 1. 54 S. Victorias Milling refused to allow further withdrawals of sugar against SLDR No... 94 S. Therese Merchandising’s agent. That same day. 117. 39. [30] CIVIL CODE. In the course of their dealings. Bridges.00 per bag.000. art. 233. v. Parker.. Underwood. FACTS:    St. Inc. 216 Iowa 302. v. it is necessary: (1). 1214M to show that the latter was St. 190. 185. The transaction it covered was a direct sale. surrendered SLDR No. 57 F. Ct. 23 P2d 690. St. The pertinent portion of said letter reads: “This is to authorize Consolidated Sugar 7 . 52 N. 178 SCRA 739. Rizal Commercial Banking Corp. St.... 193 (1917). its rights in SLDR No. Icaza.That the two debts be due. Co. et al. 1306. [19] Halladay v. to withdraw sugar against SLDR No. v. 90 Ill. Each bag contained 50 kilograms and priced at P638. ISSUE: WON the contract was one of agency or sale HELD: Sale. No. Court of Appeals.. Therese Merchandising regularly bought sugar from Victorias Milling Co. 28 Or. 165 Okl. they be of the same kind.750.. 1214M which covers 25. Escano v. 36 Phil. CA and Consolidated Sugar Corporation G.

Further. binding itself unto the plaintiff in the sum of P5. Therese Merchandising) had authorized withdrawal of sugar by Consolidated Sugar Corp. that Tong could sell the article in his territory at any price he saw that fit.27 The use of the words “sold and endorsed” means that St. there must be an intention to accept the appointment and act on it. without need of joining its imputed principal St. and not an agent of STM. Therese Merchandising as co-plaintiff. 1957 PEARL ISLAND COMMERCIAL CORPORATION. L-10517 June 28. Inc. J. in the City of Manila.R. one person . that (this is important) Tong was to furnish surety bond to cover all shipments of the floor wax that are damaged or unmerchantable. 000 bags.. has shown that the 25. INC. The basis of agency is representation. that payment for any floor wax purchased shall he delivered to plaintiff within sixty days from the date of shipment. to sell to defendant Tong at factory price in Manila. there is generally no agency. at its expense. with the consent or authority of the latter. and on the part of the agent.’s communication to petitioner that SLDR No.000.agrees to act under the control or direction of another the principal. De Santos and Herrera for appellant Manila Surety & Fidelity Co. On the part of the principal. 1868. Consolidated Sugar Corp. plaintiff Pearl Island Commercial Corporation. with Tong as principal. 1214M had been “sold and endorsed” to it. was not subject to St. Inc. was going to buy the said floor wax for resale in the territory above-mentioned. wherein the latter. Leyte Cebu Bohol and Negros Oriental and all the provinces in the island of Mindanao. “for and in our (St. and not an agency.. 1214 dated October 16.” Art. One factor which most clearly distinguishes agency from other legal concepts is control. and that in case of loss due to fortuitous event or force majeure. and STM is clearly shown by Consolidated Sugar Corp. the bond 8 . O. entered into a contract. LIM TAN TONG and MANILA SURETY & FIDELITY CO. Therese Merchandising and Consolidated Sugar Corp.    Corporation or its representative to withdraw for and in our behalf (stress supplied) the refined sugar covered by Shipping List/Delivery Receipt = Refined Sugar (SDR) No. therefore.. F. Republic of the Philippines SUPREME COURT Manila EN BANC G. was a buyer of the SLDFR form. may. No. and in the absence of such intent. plaintiff-appellee. with defendant Lim Tan Tong.000 bags of sugar covered by the SLDR No. filed the surety bond (Exhibit B). defendant Manila Surety & Fidelity Co. be made thus capacitating Consolidated Sugar Corp.. engaged in the manufacture of floor wax under the name of "Bee Wax". MONTEMAYOR. Consolidated Sugar Corp. B. Manila. By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another. That no agency was meant to be established by the Consolidated Sugar Corp. 1214M were sold and transferred by St. Consolidated Sugar Corp. intended a contract of sale. by reason of the appointment of Tong as exclusive agent for plaintiff for the Visayas-Mindanao provinces. Exhibit A. defendants-appellants. there must be an actual intention to appoint or an intention naturally inferable from his words or actions. Therese Merchandising to it. Therese Merchandising’s) behalf” should not be eyed as pointing to the existence of an agency relation. Victorias Milling failed to sufficiently establish the existence of an agency relation between Consolidated Sugar Corp.the agent . Therese Merchandising’s control.: In June. The fact alone that it (St. A conclusion that there was a valid sale and transfer to Consolidated Sugar Corp. the plaintiff was to shoulder the loss. provided the goods were still in transit. designated as sole distributor of said article in the provinces of Samar. 1951. and St. 1951. The plaintiff undertook not to appoint any other distributor within the said territory. 1989 in the total quantity of 25. Therese Merchandising. vs.. On the same day said contract were executed on June 16. to sue in its own name. Diaz and Baizas for appellee.

. but that it turned out that said contract was one of purchase and sale. the lower court. Besides.00 with legal rate of interest from the date of the filing of this complaint until said amount is fully paid.. said surety Company guaranteed the faithful performance of tong as agent. plus P500 as attorney's fees. which he admits to be still with him. in accordance with the agreement.337. namely. and with the trial courts permission. Tong failed to remit the value within sixty days. The Surety company is appealing said decision. . valued at P7. duly received by the latter. and despite the demand made by plaintiff on him to send that amount. claiming that the latter owed him a larger amount. II. the above bounden principal has been appointed as exclusive agent for Pearl Islands Commercial Corporation of Manila. . and appellant never undertook to guaranty the faithful performance of Tong as a purchaser. as already stated. he sent only P770. the sum of P5. Inc. rendered judgment. plaintiff shipped 299 cases of Bee Wax. to Tong. Appellant assigns the following errors: I. It is appellant's contention that it cannot be held liable on its bond for the reason that the latter was filed on the theory that the contract between the plaintiff and Tong was one of agency as a result of which. to pay jointly and severally the plaintiff Pearl Island Commercial Corporation the sum of P5. Inc.107. The trial court erred in ordering the defendant-appellant herein to pay attorney's fees and other charges stated in the judgement. provides that tong was to furnish surety bond to cover all shipments made by the plaintiff to him. (b) the Court orders the defendant Lim Tan Tong to pay to the plaintiff the sum of P1. of agency because the bond itself (Exhibit B) says the following: WHEREAS. Furthermore. (c) The two defendants shall pay jointly and severally another amount of P500 to the plaintiff as attorney's fees. plus the costs of this suit. On June 18. also designates Tong as the sole distributor of the article within a certain territory. while providing for sale of Bee Wax from the plaintiff to Tong and purchase of the same by Tong from the plaintiff. the dispositive part of which reads as follows: IN VIEW OF ALL THE FOREGOING.000. However. the Court renders judgment in favor of the plaintiff and against the defendants as follows: (a) The Court orders the defendants Lim Tan Tong and the Manila Surety & Fidelity Co. for the reason that the terms of the said contract. The Surety Company in its answer filed a cross-claim against Tong. leaving a balance of P6. To enforce payment of the balance of P6.being conditioned on the faithful performance of Tong's duties. plus the costs of this suit.337.000. filed a third-party complaint against Ko Su Kuan and Marciano Du who. but which he refuses to remit to the plaintiff. at least partly. had executed an indemnity agreement in its favor. After trial.. . The appeal originally taken to the Court of Appeals was later certified to us as involving only questions of law. 1951. shown by the very title of said contract (Exhibit A). appellant must have understood the contract to one. paragraph 4 of the contract entitled "Security". until it is fully paid. but also against the Surety Company. presided by Judge Hermogenes Concepcion. 9 . It would appear that for its security. plaintiff filed this present action not only against Tong.000 with legal rate of interest from the date of the filing of this complaint until fully paid.00 plus legal interest from the date of the filing of this complaint. to recover from the latter the amount of its bond of P5. (d) The Court orders the cross-defendant Lim Tan Tong and the third-party defendants Ko Su Kuan and Marciano Du to pay jointly and severally to the Manila Surety & Fidelity Co. the Surety Company had Ko Su Kuan and Marciano Du execute in its favor an indemnity agreement that they would indemnify said surety company in whatever amount it may pay to the plaintiff by reason of the bond filed by it. "Contract of Purchase and Sale".337.. Philippines. The trial court erred in holding that the contract between the Pearl Island Commercial Corporation and Lim Tan tong was one of agency so that breach thereof would come within the terms of the surety bond posted by appellant therein. for the Visayas-Mindanao Provinces. a careful examination of the said contract shows that appellant is only partly right.

Reyes. of course. and said two persons evidently have not appealed from the decision. Moreover. Bautista Angelo. In view of the foregoing. True. Anyway. A.107 minus the P770 he had paid on account). Whether the article was purchased by Tong or whether it was consigned to him as agent to be sold within his area. we are afraid that the Surety Company is not now in a position to deny its liability for the shipment of the 299 cases of Bee Wax duly received by Tong and his failure to pay its value of P7. the fact is that Tong admits said shipment. even confusing. especially by the judgment because by its express terms.. but that he is retaining it for reasons of his own. minus P770 or a balance of P6. 10 . admits keeping the same (P7. Paras.Under the circumstances. either as purchaser or as agent..107. While it speaks of sale of Bee Wax to Tong and his responsibility for the payment of the value of every shipment so purchased. Bengzon.337.J. JJ. Concepcion. at the same time it appoints him sole distributor within a certain area. Labrador. in the final analysis said payment by Tong. the Surety Company is adequately protected. appellant can recover from Ko Su Kuan and Marciano Du whatever amounts.B. J.. the amount of the bond. the decision appealed from is hereby affirmed.. and Felix. namely. Padilla. It is in some respects. up to the limit of P5. Reyes. the plaintiff undertaking not to appoint any other agent or distributor within the same area. with costs.concur. admits its value. including attorney's fees it may pay to plaintiff. the contract (Exhibit A) is not entirely clear.L. C. that plaintiff allegedly owes him a larger amount.000. it seems to have been the sole concern and interest of the plaintiff to be sure that it was paid the value of all shipments of Bee Wax to Tong and the Surety Company by its bond.

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