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[E. A WAD v. FILMA MERCANTILE CO.](https://lawyerly.ph/juris/view/c1466?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. 25950, Dec 24, 1926 ]

E. A WAD v. FILMA MERCANTILE CO. +

DECISION

49 Phil. 816

[ G. R. No. 25950, December 24, 1926 ]

E. A WAD, PLAINTIFF AND APPELLANT, VS. FILMA MERCANTILE CO., INC., DEFENDANT AND APPELLEE.

D E C I S I O N

OSTRAND, J.:

Early  in the  month of  September, 1924,  the plaintiff, doing business in the Philippine  Islands under the name of E. Awad & Co., delivered certain merchandise  of the invoice value of P11,140 to Chua Lioc, a  merchant operating under  the name of Hang Chuan Co. in  Manila, said merchandise to be sold on commission by  Chua Lioc.  Representing himself as being the owner of the  merchandise, Chua Lioc, on September 8, 1924, sold it to the  defendant for the sum of P12,155.60.  He owed the Philippine Manufacturing Co.,  the  sum of P3,480, which the  defendant agreed to pay, and was  also indebted to the defendant  itself in the sum of P2,017.98.  The total amount of the two debts,  P5,497.98, was  deducted from the  purchase  price, leaving a balance of P6,657.52 which the defendant promised to pay to Chua Lioc on or before  October 9, 1924.

The merchandise so  purchased on September 9, was delivered  to the defendant, who immediately offered it for sale.  Three days later D. J.  Awad, the representative  of the plaintiff in the Philippine Islands, having ascertained that the goods entrusted to Chua Lioc was being offered for sale by the defendant, obtained authorization from  Chua Lioc to collect the sum  of P11,707 from  said  defendant and informed  the latter's treasurer of the  facts  above set forth.   On September 15, D. J. Awad, in behalf of E. Awad & Co.,  wrote a letter to the defendant corporation advising it that, inasmuch as the merchandise belonged to E. Awad & Co.,  the purchase price should be paid to them, to which letter,  the defendant,  on September 18,  1924, made the following answer:
"Messrs; E. Awad & Co.

"435 Juan Luna, Manila.

"GENTLEMEN: We are in receipt of your letter  of September 15, 1924, in  which you state that certain blankets and shirts were bought from  you  by the Chinaman  Chua Lioc 'under false pretenses on consignment, basis and  in which you say that the  merchandise is yours and  we should make payment to you for said merchandise.  In answer to your letter, we  beg to say to you that the blankets and shirts in question, together with other merchandise, were purchased and received by us from  the Chinaman  Chua Lioc on September 9, 1924, in the ordinary course of business, and that there is  now due from us to the said Chinaman a balance of P6,657.52,  which is payable on October 9, 1924.  In view of these facts, we are unable  to comply with your request, and would advise you, in case this Chinaman is indebted to you for said merchandise, to take the necessary steps through the Court to secure the payment of this balance due to him to your firm, inasmuch as if you do not do so, we shall be obliged to pay the balance which we owe for said merchandise directly to him,

"Yours respectfully,

"FILMA MERCANTILE CO. INC."
On the same date,  September  18, 1924,  the Philippine Trust  Company, brought an action,  civil case No. 26934, against Chua Lioc for the recovery of the sum of P1,036.36 and under a writ of attachment garnished the balance due Chua Lioc  from the defendant.   On October 7, E.  Awad also brought an action, civil case No. 27016, against  Chua Lioc for the recovery of the sum of P11,140, the invoice value of the merchandise above-mentioned and also obtained a writ of attachment under which notice of garnishment of the aforesaid balance was served upon the herein defendant.

The complaint in the present action was filed on November 26, 1924, the plaintiff demanding payment of the same sum of P11,140 for which action  had already been brought against Chua Lioc. The defendant,  in its answer, set up as special defense that it bought the merchandise in good faith and without any knowledge whatever of the person from  whom or the condition under  which the said  merchandise had been acquired by Chua Lioc or  Hang Chuan Co.; that the defendant therefore had acquired title to the merchandise purchased; that the balance of P6,657.52, now in the hands of the defendant had been attached in the two actions brought on September 18, and October 7, respectively,  and garnishment served upon the defendant, who, therefore, holds  the money subject to the orders  of the court in the cases above-mentioned, but which sum the defendant is able and willing to pay at any time when the court  decides to  whom the money lawfully  pertains.

Upon trial, the court below dismissed the case without costs on the ground that the plaintiff was only entitled to payment of the sum of P6,657.52, but which sum the defendant had the right to retain subject to the orders of the court in cases Nos. 26134 and 27016.  From this judgment the plaintiff appealed.

The law applicable to the case is well settled.  Article 246 of the Code of Commerce reads as follows:
"When  the agent transacts business in his own name, it shall not be necessary for him to state  who is the principal and he shall be directly liable, as if the business were for his own account, to the persons with whom he transacts the same,  said persons  not having any right  of action against the principal, nor  the latter against the  former, the liabilities of  the principal and  of the  agent  to  each other always being reserved."
The  rule laid down in the article quoted is contrary to the general rule in the United  States as to purchases of merchandise  from agents with  undisclosed principal, but it has  been followed in a number of cases and is  the law in this jurisdiction.  (Pastells & Regordosa vs. Hollman & Co., 2  Phil., 235;  Castle Bros.,  Wolf & Sons vs. Go-Juno, 7 Phil., 144; Lim Tiu  vs.  Ruiz y Rementeria, 15  Phil., 367.) But the appellant points out several circumstances which, in his opinion, indicate that the defendant-appellee was aware of the condition under which  the merchandise was entrusted to the agent Chua Lioc and therefore did not purchase the goods in good  faith.  This, if true, would, of course, lead to a decision of the  case in favor of the plaintiff, but there is, in our opinion, nothing conclusive about the circumstances referred  to and they are not sufficient to overcome the presumption of good faith.

The appealed judgment is in accordance with the law and the facts and is affirmed with the costs against the appellant.  So ordered.

Avanceña, C. J., Street, Malcolm, Villamor, Johns, Romualdez, and Villa-Real, JJ., concur.

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