Tuesday, February 21, 2012

Victorias Milling Co., Inc. vs. CA and Consolidated Sugar Corp., [G.R. # 117356]

Facts: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc. In the course of their dealings, petitioner issued several Shipping List/Delivery Receipts to STM as proof of purchases. Among these was SLDR No. 1214M, which gave rise to the instant case. SLDR No. 1214M covers 25,000 bags of sugar. The transaction it covered was a "direct sale." 

Thereafter, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in SLDR No. 1214M. That same day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by the SLDR. However, after 2,000 bags had been released, petitioner refused to allow further withdrawals of sugar. CSC thus inquired when it would be allowed to withdraw the remaining 23,000 bags. In its reply, petitioner said that it could not allow any further withdrawals of sugar because STM had already withdrawn all the sugar covered by the cleared checks. Petitioner also noted that CSC had represented itself to be STM's agent as it had withdrawn the 2,000 bags "for and in behalf" of STM. 

As a result, CSC filed a complaint for specific performance. Petitioner's primary defense a quo was that it was an unpaid seller for the 23,000 bags. Since STM had already drawn in full all the sugar corresponding to the amount of its cleared checks, it could no longer authorize further delivery of sugar to CSC. Petitioner also contended that it had no privity of contract with CSC. Furthermore, 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. 

The Trial Court rendered its judgment favoring the private respondent CSC. The appellate court affirmed said decision but modified the costs against petitioner. 

Issue: Whether or not the Court of Appeals erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR No. 1214M as an assignee. 

Held: No. It is clear from Article 1868 that the basis of agency is representation. 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 

That the authorization given to CSC contained the phrase "for and in our (STM's) behalf" did not establish an agency. Ultimately, what is decisive is the intention of the parties. 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. 1214M had been "sold and endorsed" to it. The use of the words "sold and endorsed" means that STM and CSC intended a contract of sale, and not an agency. Hence, on this score, no error was committed by the respondent appellate court when it held that CSC was not STM's agent and could independently sue petitioner.

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