GR 158585; (December, 2005) (Digest)
G.R. No. 158585, December 13, 2005
Amon Trading Corporation and Juliana Marketing, Petitioners, vs. Hon. Court of Appeals and Tri-Realty Development and Construction Corporation, Respondents.
FACTS
Tri-Realty, a developer, needed cement for its projects. Lines & Spaces, through Eleanor Sanchez, offered to source cement from petitioners Amon Trading and Juliana Marketing. Relying on this, Tri-Realty ordered 12,050 bags of cement and paid the full price directly to petitioners via manager’s checks handed to Sanchez. Tri-Realty also paid Lines & Spaces a separate facilitation fee. Petitioners delivered only a portion of the order, leaving 5,200 bags undelivered.
Tri-Realty demanded a refund from petitioners for the undelivered cement. Petitioners refused, asserting they had already refunded the corresponding amount to Lines & Spaces per Sanchez’s instructions, as they believed Lines & Spaces was their direct client. Tri-Realty then filed a case for sum of money against both Lines & Spaces and the petitioners.
ISSUE
Whether petitioners Amon Trading and Juliana Marketing are solidarily liable with Lines & Spaces to refund Tri-Realty for the value of the undelivered cement.
RULING
No. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision, absolving the petitioners of liability to Tri-Realty. The core legal logic rests on the absence of privity of contract between Tri-Realty and the petitioners. The contract of sale was exclusively between petitioners and Lines & Spaces. All orders and communications, including the instruction for a refund, came from Lines & Spaces’s representative, Eleanor Sanchez. Petitioners were never informed that Tri-Realty was the principal; they reasonably believed Lines & Spaces was the buyer.
Tri-Realty’s payment via checks payable to petitioners did not automatically create a direct contractual relationship. The payment was coursed through and received by Sanchez, acting for Lines & Spaces. The Court emphasized that Tri-Realty assumed the risk by dealing exclusively through an intermediary without establishing a direct paper trail with the suppliers. Since petitioners had already refunded the payment for the undelivered goods to the party they contracted with (Lines & Spaces), their obligation was extinguished. Liability for the undelivered cement rests solely with Lines & Spaces, against whom Tri-Realty has a cause of action.