Schmid & Oberly, Inc. v.

RJL Martinez Fishing

GR 75198, October 18, 1988

Facts: RJL Martinez Fishing needed electrical generators and it bought from Schmid & Oberly in two separate
transactions 3 and 12 Nagata generators. Schmid received from Nagata a commission for the sale of the generators. The
generators however (those of the 2nd transaction) burned out as they were overrated. The remaining 9 were neither
repaired nor replaced.

RJL demanded for refund and damages but Schmid argued that it was not the seller of the generators but the RTC and
CA held that Schmid was the vendor and was liable under the warranty. Schmid however argues that it was only an
indentor for the sale.

Issue: Whether Schmid is liable to RJL?

Held: (1) Schmid is not liable as it only acted as an agent for Nagata Company. – In the second transaction
Schmid was only an indentor unlike in the first transaction where Schmid delivered the goods from its own stock, issue
its own invoice and collected the payment directly from the purchaser. However, in this second one, Schmid was not a
vendor but an indentor.

Indent Transaction
An indentor is a middleman in the same class as commercial brokers and commission merchants. While there is no
specific definition of an indentor, it is lumped up with those of the two.

A commercial broker is one who is engaged, for others, on a commission, negotiating contracts relative to property in
the custody of which he has no concern and he is only a negotiator between the parties never acting in his own name but
in the name of those who employed him. He is strictly a middleman and for some purpose the ‘agent’ of both parties.

A commission merchant is one engaged in the purchase or sale of another of personal property, which for this
purpose, is placed in his possession and at his disposal. He maintains a relations not only with principals and the
purchasers or vendors, but also with the property which is the subject matter of the transaction.

A commercial broker and a commercial merchant are merely intermediaries or middlemen and act in a certain sense
as the agent of both parties to the transaction.

Webster defines Indent, as a purchase order for goods when sent from a foreign country. It would appear that there are
three parties to an indent transaction:
1. Buyer
2. Indentor, and
3. Supplier who is usually a non-resident manufacturer residing in the country where the goods are to be bought

An indentor is best described as one who for compensation, acts as a middleman in bringing about a purchase and sale
of goods between a foreign supplier and a local purchaser.

It is clear the RJL admitted that the generators were then purchased through an “ indent order” and there was evidence
that RJL paid directly to Nagata for such and that Nagata now invoiced the sale and shipped the generators directly to
RJL.

The only participation of Schmid was to act as an intermediary or middleman between RJL and Nagata by procuring
an order from RJL and forwarding the same to Nagata for which the company had received a commission from Nagata.

However, as an indentor it is to some extent an agent of both the vendor and the vendee. As such agent,
therefore, he may expressly obligate himself to undertake the obligations of the principal as provided in Article 1897
(unless he expressly binds himself).

(2) Schmid did not warrant, thus not liable. – The General Manager of Schmid stated that the company does not
warrant goods bought on indent transaction but only those goods directly bought from it like in the first transaction. RJL
also failed to prove that Schmid gave a warranty on generators of the 2nd transaction.
 Schmid & Oberly, Inc. v. RJL Martinez Fishing
GR 75198, October 18, 1988

Facts: RJL Martinez Fishing needed electrical generators and it bought from Schmid & Oberly in two separate
transactions over "Nagata"-brand generators. Schmid received from Nagata a commission for the sale of the
generators. The generators however (those of the 2nd transaction) burned out as they were overrated. The
remaining 9 were neither repaired nor replaced.

RJL demanded for refund and damages but Schmid argued that it was not the seller of the generators but
the RTC and CA held that Schmid was the vendor and was liable under the warranty. Schmid however argues
that it was only an indentor for the sale.

Issue: Whether Schmid is liable to RJL? NO.

Held: (1) Schmid is not liable as it only acted as an agent for Nagata Company. – In the second
transaction Schmid was only an indentor unlike in the first transaction where Schmid delivered the goods
from its own stock, issue its own invoice and collected the payment directly from the purchaser. However, in
this second one, Schmid was not a vendor but an indentor.

Indent Transaction
An indentor is a middleman in the same class as commercial brokers and commission merchants. While
there is no specific definition of an indentor, it is lumped up with those of the two.

A commercial broker is one who is engaged, for others, on a commission, negotiating contracts relative to
property in the custody of which he has no concern and he is only a negotiator between the parties never
acting in his own name but in the name of those who employed him. He is strictly a middleman and for some
purpose the ‘agent’ of both parties.

A commission merchant is one engaged in the purchase or sale of another of personal property, which for
this purpose, is placed in his possession and at his disposal. He maintains a relations not only with principals
and the purchasers or vendors, but also with the property which is the subject matter of the transaction.

A commercial broker and a commercial merchant are merely intermediaries or middlemen and act in a
certain sense as the agent of both parties to the transaction.

Webster defines Indent, as a purchase order for goods when sent from a foreign country. It would appear
that there are three parties to an indent transaction:
1. Buyer
2. Indentor, and
3. Supplier who is usually a non-resident manufacturer residing in the country where the goods are to be
bought

An indentor is best described as one who for compensation, acts as a middleman in bringing about a
purchase and sale of goods between a foreign supplier and a local purchaser.

It is clear the RJL admitted that the generators were then purchased through an “indent order” and there
was evidence that RJL paid directly to Nagata for such and that Nagata now invoiced the sale and shipped the
generators directly to RJL.
The only participation of Schmid was to act as an intermediary or middleman between RJL and Nagata by
procuring an order from RJL and forwarding the same to Nagata for which the company had received a
commission from Nagata.

However, as an indentor it is to some extent an agent of both the vendor and the vendee. As such
agent, therefore, he may expressly obligate himself to undertake the obligations of the principal as provided in
Article 1897 (unless he expressly binds himself).

(2) Schmid did not warrant, thus not liable. – The General Manager of Schmid stated that the company
does not warrant goods bought on indent transaction but only those goods directly bought from it like in the
first transaction. RJL also failed to prove that Schmid gave a warranty on generators of the 2nd transaction.