Aivad v.

Filma Mercantile Co

Article 1883 makes it clear that the foregoing rules are without prejudice to actions between principal
and agent.

The rule in this jurisdiction is that where the merchandise is purchased from an agent with
undisclosed principal and without knowledge on the part of the purchaser that the vendor is merely an
agent, the purchaser take titles to the merchandise and the principal cannot an actions against him for
the recovery of the merchandise or even for damages, but can only proceed against the agent.

Facts:

E. Awad & Co. delivered to Chua Lioc (operating under the name of Hang Chuan Co.) certain merchandise
in the amount of P11,140. Chua Lioc, representing himself as the owner of the merchandise sold them to
Filma Mercantile for a total of P12,155.60. After deducting Chua Lioc debts to Filma and to the Phil.
Manufacturing Co. (which Filma agreed to pay), Filma is still indebted to Chua Lioc in the amount of
P6,657.52. Thereafter, E. Awad obtained authorization from Chua Lioc to collect the P11,140 due it.

Filma however refused to directly pay to E. Awad the purchase price. Subsequently, the Phil. Trust
Company brought an action against Chua Lioc for the payment of P1,036.36. As a result, the balance due
from Filma was attached in that action. This balance was further attached in another action instituted by
E. Awad for the payment of P11,140. E. Awad then filed a separate action against Filma, for the payment
of the purchase price. Filma however averred that it was a buyer in good faith. It further alleged that it
was holding the balance of P6657.52 (having been attached in two separate cases) subject to the orders
of the court.

The trial court dismissed the complaint 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 the two separate cases.

ISSUE: WON E. Awad can collect from Filma.

HELD: No. According to the Court, 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, not the latter against the former, the liabilities of the principal and of the agent to
each other always being reverse." Hence, he can have no right of action against the buyer. Moreover,
Awads claim that Filma is not a buyer in good faith and had knowledge of the condition under which the
merchandise was entrusted to Chua Lioc, was not supported by evidence.