GR 32547; (October, 1930) (Digest)

G.R. No. 32547, October 4, 1930
EARNSHAWS DOCKS AND HONOLULU IRON WORKS, plaintiff-appellee, vs. MABALACAT SUGAR COMPANY, defendant-appellant.

FACTS

Earnshaws Docks and Honolulu Iron Works (plaintiff) sued Mabalacat Sugar Company (defendant) to recover sums due for labor and materials supplied (first cause of action) and on a promissory note (second cause of action). The defendant’s president and general manager, B.A. Green, who owned 55% of its stock, conducted transactions using the trade name “B.A. Green & Co.” on letterheads, with the defendant’s name printed as a shipping mark. Orders for materials and services were signed by Green individually, but the plaintiff billed the defendant and shipped goods directly to it. Payments were mostly made in the name of “B.A. Green & Co.” The defendant denied liability, arguing that the obligations were personal to Green or his trade name, not the corporation.

ISSUE

Whether the Mabalacat Sugar Company is liable for the obligations incurred by B.A. Green under the trade name “B.A. Green & Co.” for labor and materials supplied by the plaintiff.

RULING

Yes, the Mabalacat Sugar Company is liable. The Court looked beyond the form of the transactions to their substance. Green, as president and general manager, had authority to make purchases for the defendant. The plaintiff extended credit to the defendant, not to the fictitious “B.A. Green & Co.,” and knew Green was the defendant’s manager. The defendant, as the principal and recipient of the materials and services, is bound. The judgment was modified to correct a computational error, reducing the award on the first cause of action from P16,231.51 to P15,986.21, and affirmed as modified.