7. CHUA NGO VS. UNIVERSAL TRADING CO. INC.
 It appears from the record that UTC wrote Chua Ngo 2 letters informing him that order
GR NO. L-2870
SEPTEMBER 19, 1950
BY: 2LT REYNALDO N. NOVENO PA (MI)
TOPIC: CONTRACT OF SALE vs CONTRACT OF AGENCY; WHAT AN AGENT DOES NOT DO
PETITIONERS: CHU NGO
RESPONDENTS: UNIVERSAL TRADING CO. (UTC FOR BREVITY)
PONENTE: BARRIOS, J.
RECIT-READY/SUMMARY: Chua Ngo purchased and paid for 300 boxes of
oranges from Universal Trading Co. In turn, the latter purchased from Gabuardi
Company of San Francisco F. O. B. San Francisco sufficient fruit to comply with
its contract with Chua Ngo. Part of the orange consignment from Gabuardi
Company of San Francisco was lost in transit and so Chua Ngo received 120
boxes only. Held, as between Gabuardi Company and UTC., the loss must be
borne by the latter, said goods having been legally delivered to the purchaser at
San Francisco on board the vessel; Chua Ngo, as a consequence, is entitled to be
paid back for the price paid for the undelivered goods.
DOCTRINE: The following circumstances indicate that the contract is of sale and not of
agency:
1. No commission was paid to the agent;
2. The agreement indicates that if the balance of the total contract price was unpaid, the
merchandise may be resold and deposit forfeited.
a. Resold implies that the items were sold;
b. Forfeiture of deposit is incompatible of an agency contract.
3. After contract execution, the “agent” ordered for the purchase of the same products at a
lower price than the price to be paid by the “principal” to the “agent”. If done in good
faith, the “agent” would have not acted thus.
4. The principal was charged a sales tax.
5. The agent was laying claim for the losses instead of pressing the same for the principal.
FACTS:
 At $6.30/box, Chua Ngo ordered 300 boxes of Sunkist Oranges from Universal Trading
Corp.. UTC ordered said boxes from Gabuardi Company from San Francisco. The goods
were shipped from San Francisco to Manila “F.O.B. San Francisco”
o “Free-On-Board San Francisco” or F.O.B. San Francisco - FOB shipping point is a
contraction of the term "Free on Board Shipping Point." The term means that the
buyer takes delivery of goods being shipped to it by a supplier once the goods leave
the supplier's shipping dock.
 However, 180 boxes were lost in transit thus never delivered by Chua Ngo. Chua Ngo
hopes to recover the corresponding price he paid in advance.
 UTC refused to pay him since it merely acted as agent of Chua Ngo in buying the
oranges.
 Chua Ngo asserts that he bought the oranges from UTC hence he is entitled to the
return of the price which corresponds to the undelivered items.
could be fulfilled hence asked for 65% deposit of the contract price plus charges. The
amount of deposited by Chua Ngo and was subsequently committed.
 Said items were loaded by Gabuardi Co. on board SS Silversandal. The boxes were
confined to UTC. The causes of the loss were beyond UTC’s control. The total cost of the
lost was P3,882.60.
 Furthermore, evidence pointed that the boxes were marked UTC Manila (e.g. Universal
Trading Company, Manila) and it paid in its own name to Gabuardi said shipment and
also made claims for the lost shipment to the shipping company and insurance
company. UTC. did not receive any commission.
ISSUE: WON UTC is an agent for Chua Ngo hence is not liable for the return of the purchase
price
HELD/RATIO: NO. The transaction between the two parties is a sale.
 No commission was paid by Chua Ngo to UTC.
 Per records, the contract states that “if the balance is not paid within 48 hours of
notification, merchandise may be resold by UTC. and deposit forfeited.”
o Resold in this case implied that the goods were sold to Chua Ngo.
o Forfeiture is incompatible with a contract of agency.
 After executing the contract, the oranges cost $6.30/box, UTC placed an order for the
same purchase from Gabuardi Co. at $6.00/box. If UTC was Chua Ngo’s agent, it could
not properly do that.
 SC held that UTC acted since it was not acting as an agent of Chua Ngo, but as an
independent purchaser from Gabuardi Co..
 UTC charged P218.87 for 3.5% sales tax thereby implying that the transaction was a sale.
 If the purchase of the oranges has been made in Chua Ngo’s behalf, all claims for losses
thereof against insurance company and shipping company should have been done by
Chua Ngo, not UTC.
 The arrangement was this: Chua Ngo bought from UTC 300 boxes of oranges at $6.30+.
In turn, UTC bought said item from Gabuardi Co. at $6+ in order to comply with its
contract with Chua Ngo.
 Who is to suffer that loss? Chua Ngo could not suffer such as the oranges were not
delivered to him hence no ownership was bestowed on him. UTC must borne that loss
because said goods had been delivered by Gabuardi on board the ship. That is why UTC
has been trying to recover the loss.
 UTC’s contention as having no liability as to the causes of the loss were beyond its
control cannot be sustained. Such contention assumes that UTC merely acted as agent
of Chua Ngo, for which they are not.
DISPOSITIVE PORTION: In view of the foregoing, the appealed judgment for plaintiff in the
sum of P3,882.60 is affirmed, with costs
WINNER: CHUA NGO
LOSER: UTC. Has to return the purchase price of lost items