ATP.7.2. Gutierrez Hermanos v.

Oria Hermanos (1915)

FACTS: Gutierrez Hermanos and Oria Hermanos entered into a contract wherein GH bound itself to acquire for and
forward to OH certain goods such as rice, cash, petroleum, etc. Because of this, GH and OH decided to open a mutual
current account under Oria Hermanos on the books of Gutierrez Hermanos with 8% interest. Gutierrez Hermanos
informed Oria Hermanos. that said current account would be closed within 30 days, after which, Oria Hermanos would
have to settle the balance due to Gutierrez Hermanos, if any. However, despite repeated demands from Gutierrez Hermanos
to Oria Hermanos, the latter never paid which led to the filing of this suit.

Up until the closing of the account, GH had sent OH various quantities of salt, petroleum, tobacco, groceries, and beverages
and had collected a commission on the sale. The semiannual accounts rendered by GH were never questioned. However,
OH claims that GH had set higher prices than the price actually paid, thereby defrauding OH. OH prayed that GH render
an account as well as the vouchers used to determine the purchase price of the said goods. OH also claimed that GH had
kept the discount in addition to collecting commission on the sale of goods.

ISSUE: Whether or Oria Hermosa is liable to Gutierrez for its unsettled account?

RULING: Yes, but only upon proper accounting of the expenses for the shipment of rice and petroleum which were
claimed to be overpriced.

When an agent in executing the orders and commissions of his principal carries out the instructions he has received from
his principal, and does not appear to have exceeded his authority or to have acted with negligence, deceit, or fraud, he
cannot be held responsible for the failure of his principal to accomplish the object of the agency.

Since it was not proven that the price of the goods were overstated, thereby defrauding OH, OH cannot escape the liability
of paying GH for performing the task given to him by OH as his principal.