Victorias Milling Co.,Inc. v. Court of Appeals

G.R. No. 117356, 19 June 2000


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 P14,750,000.00. 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 VMC’s 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But VMC replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all the sugar covered by the cleared checks. VMC also claimed that CSC was only representing itself as STM’s agent as it had withdrawn the 2,000 bags against SLDR No. 1214M “for and in behalf” of STM.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 STM’s 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 STM’s 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.)

Agency distinguished from sale.

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.

*Case digest by Jan Robert M. Corre, JD-4, Andres Bonifacio Law School, SY 2019-2020

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