G.R. No. 4395
BEHN, MEYER & CO., LTD., plaintiffs-appellees, vs. EL BANCO ESPAÑOL-FILIPINO, defendant-appellant.
September 9, 1908

FACTS:

Sander, Wieler & Co., agents for the German steamship Hilary, chartered the vessel to Sin Liong & Co. (interveners) for a voyage to load cattle at Phu Yen Harbor, Vietnam, and transport them to Manila.

Upon arrival at Phu Yen on November 18, 1906, Ullman, agent for Pujalte & Co. (who had contracted with the interveners for 200 head of cattle), was ready to load. The captain initially refused to load carabaos, despite having sufficient space and the weather being fine. This refusal continued until the morning of November 19, when the weather turned stormy. Although the captain later consented to load the carabaos, the bad weather persisted until November 27, when the vessel sailed for Manila without Pujalte’s cattle. The Court found the captain’s initial refusal unjustified and the proximate cause of the failure to transport the cattle.

When the vessel arrived in Manila on December 3, the interveners desired to unload part of the rice cargo at Iloilo. Behn, Meyer & Co., Ltd. (plaintiffs), acting as agents for the steamer for the first time in Manila, refused to allow the vessel to proceed to Iloilo until the freight and demurrage from the original charter party were paid or secured.

To secure this payment, the interveners deposited P13,000 with El Banco Español-Filipino (defendant bank). On December 4, 1906, the defendant bank issued a letter to Behn, Meyer & Co., stating: “we guarantee the said Siu Liong and Co., in the sum of P12,000, during the unloading of the said steamer; and if upon the completion of the unloading, the price stipulated in the agreement and the demurrage is not paid by said parties, this bank binds itself to make such payment.”

After the vessel finished unloading in Manila and proceeded to Iloilo, Behn, Meyer & Co. presented an account to the charterers (interveners), who refused to pay. Behn, Meyer & Co. then demanded payment from the defendant bank, which also refused. Consequently, Behn, Meyer & Co. filed an action against El Banco Español-Filipino. The charterers, Sin Liong & Co., were allowed to intervene.

ISSUE:

Can Behn, Meyer & Co., Ltd., as agents who transacted the guaranty in their own name, maintain an action against El Banco Español-Filipino for the guaranteed amount, or should the action have been brought in the name of the vessel’s owners?

RULING:

Yes, Behn, Meyer & Co., Ltd. can maintain the action in their own name.

The Court held that while Behn, Meyer & Co. were agents for the captain/owners of the vessel, they entered into the contract of guaranty with El Banco Español-Filipino in their own names. The bank’s manager testified that he was not notified and never knew for whom Behn, Meyer & Co. were acting, and the guaranty document itself showed the contract was made directly with them.

The Court applied Article 246 of the Code of Commerce, which states: “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 Court clarified that Article 246 of the Code of Commerce, being substantive law, is not repealed or modified by Section 114 of the Code of Civil Procedure (the “real party in interest” rule), which is procedural law. Therefore, Behn, Meyer & Co., having contracted in their own name, were the real parties in interest for this particular contract.

The Court also affirmed the intervention of Sin Liong & Co. (the charterers) as proper under Section 121 of the Code of Civil Procedure, given that the principal debtor has a direct legal interest in opposing the claim against their surety.

The judgment of the lower court was modified, and judgment was ordered in favor of the plaintiffs (Behn, Meyer & Co.) against the defendants (El Banco Español-Filipino) for the sum of P8,277.50, with interest.