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Victoria Milling Co.

Court of Appeals

St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co
(VMC). In the course of their dealings, VMC issued several Shipping List/Delivery
Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M.SLDR No.
1214M, dated October 16, 1989, covers 25,000 bags of sugar. Each bag contained 50 kg and
priced at P638.00 per bag. The transaction covered was a direct sale.

On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation
(CSC) its rights in the same SLDR for Php 14,750,000.00. CSC issued checks in payment.
That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the
sugar covered by the said SLDR. 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 the SLDR On Oct. 27, 1989, STM issued checks to VMC as payment
for 50,000 bags, covering SLDR No. 1214M. CSC surrendered the SLDR No. 1214M and to
VMCs NAWACO Warehouse and was allowed to withdraw sugar. But only 2,000 bags had been
released because VMC refused to release the other 23,000 bags.

Therefore, CSC informed VMC that SLDR No. 1214M had been sold and endorsed to it.
But VMC replied that it could not allow any further withdrawals of sugar against SLDR No.
1214M because STM had already withdrawn all the sugar covered by the cleared checks. VMC
also claimed that CSC was only representing itself as STMs agent as it had withdrawn the
2,000 bags against SLDR No. 1214M for and in behalf of STM. Hence, CSC filed a
complaint for specific performance against Teresita Ng Sy (doing business under STM's
name) and VMC. However, the suit against Sy was discontinued because later became a
witness. RTC ruled in favor of CSC and ordered VMC to deliver the 23,000 bags left. CA
concurred. Hence this appeal.

W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue
upon SLDR No. 1214M as assignee.

NO. CSC was not an agent of STM. VMC heavily relies on STMs letter of authority
that said CSC is authorized to withdraw sugar for and in our behalf. It is clear from
Art. 1868 that the: basis of agency is representation. On the part of the principal,
there must be an actual intention to appoint or an intention naturally inferable from his
words or actions, and on the part of the agent, there must be an intention to accept the
appointment and act on it, and in the absence of such intent, there is generally NO
agency. One factor, which most clearly distinguishes agency from other legal concepts,
is control; one person the agent agrees to act under the control or direction of
another the principal. Indeed, the very word agency has come to connote control by
the principal. The control factor, more than any other, has caused the courts to put
contracts between principal and agent in a separate category. Where the relation of
agency is dependent upon the acts of the parties, the law makes no presumption of agency
and it is always a fact to be proved, with the burden of proof resting upon the persons
alleging the agency, to show not only the fact of its existence but also its nature and
extent. It appears that CSC was a buyer and not an agent of STM. CSC was not subject to
STMs control. The terms for and in our behalf should not be eyed as pointing to the
existence of an agency relation. Whether or not 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. Ultimately, what is decisive is the intention of the parties. (In
fact, CSC even informed VMC that the SLDR was sold and endorsed to it.)
In an agency to sell, the agent, in dealing with the thing received, is bound to
act according to the instructions of his principal, while in a sale, the buyer can deal
with the thing as he pleases, being the owner. The elementary notion of sale is the
transfer of title to a thing from one to another, while the essence of agency involves
the idea of an appointment of one to act for another. Agency is a relationship which
often results in a sale, but the sale is a subsequent step in the transaction.
(Teller, op. cit., p. 26; see Commissioner of Internal Revenue vs. Manila Machinery &
Supply Co., 135 SCRA 8 [1985].) An authorization given to another containing the phrase
for and in our behalf does not necessarily establish an agency, as ultimately what is
decisive is the intention of the parties. Thus, the use of the words sold and endorsed
may mean that the parties intended a contract of sale, and not a contract of agency.