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G.R. No. L-7144 May 31, 1955




Ignacio Delizalde, an agent of the Far Eastern Export& Import Company, went to the store of Lim TeckSuan in
Manila and offered to sell textile. Having arrived at an agreement with Bernardo Lim,General Manager of Lim
Teck Suan, Delizalde returned with a buyer†™s order. Suan established a letter of credit in favour ofFrenkel
International Corporation through HSBC. The textile arrived and was received by Suan, butcomplained to Far
Eastern of the inferior quality of the textile. Upon the instruction of Far Eastern, Suan depositedthe goods in a
warehouse and withdrew the sameand was offered for sale. The net direct loss is nowbeing claimed against Far
Eastern. The defense set up is that Far Eastern only acted as abroker in this transaction. The lower
court acquitted Far Eastern. CA reversed the judgment, basing its decision ofreversal on the case of Jose
Velasco v. UniversalTrading where the transaction therein involved wasfound by the court to be one of purchase
and saleand not of brokerage or agency Issue: WON the Far Eastern Company not only an agent of the Frenkel
Corporation but also the agent of or broker for Suan? Held: The Supreme Court, speaking through Justice
Montemayor, held that it could only be an agent of the former. Said the Court: ". . . where a foreign company has
an agent here selling its goods and merchandise, that same agent could not very well act as agent for local
buyers, because the interests of his foreign principal and those of the buyer would be in direct conflict. He could
not serve two masters at the same time." In holding that the transaction was one of purchase and sale and not
one of brokerage or agency, the Court noticed the following similarities between the present case and the Velasco
case: (1) Here, the Far Eastern company acted as agent for Frenkel Corporation, the supplier of the textile sold; in
the Velasco case, the Universal Trading Co. was acting as agent for Wilson Co., the supplier of the whisky sold;
(2) In this instant case, Suan was merely commissioning the export company to procure for him the textile, just as
in the other case, Velasco was supposed to be ordering the whisky through the Universal Trading Co.; (3) In the
present case, the price was paid for by Suan by means of an irrevocable letter of credit in favor of the supplier. In
the other case, Velasco was allowed either to open a similar letter of credit in favor of the supplier or make a cash
deposit; (4) Although in the Velasco case, the buyer there refused to receive the whisky shipped, and that in the
present case Suan received the goods, the latter nonetheless made an immediate protest and later sold the
merchandise at a lose; (5) The present case was even a stronger one than that of the other case for holding the
transaction as one of purchase and sale because the agreement in the present case spoke of the merchanise
therein involved as sold, and the sale was even confirmed by the Far Eastern Company; (6) In both cases, the
agents dealt directly with the local buyers without expressly revealing their principals; (7) In both cases, there was
no privity of contract between the local buyers and the foreign firms; and that (8) In both cases, no commission
was paid or agreed to be paid by the buyers to the Far Eastern company and the universal Trading Co., proof that
there was no agency or brokerage as between them.