Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-47538 June 20, 1941
GONZLO PU!T " SONS, #NC., petitioner,
vs.
RCO MUSEMENT COMPN! $%o&'e&() *no+n ,-
Te,.&o &/o0, respondent.
Feria & Lao for petitioner.
J. W. Ferrier and Daniel Me. Gomez for respondent.
LUREL, J.1
This is a petition for the issuance of a writ of certiorari to the
Court of Appeals for the purpose of reviewing its Auseent
Copan! "forerl! #nown as Teatro Arco$, plaintiff%appellant,
vs. &on'alo Pu!at and (ons. )nc., defendant%appellee.*
)t appears that the respondent herein brought an action against
the herein petitioner in the Court of +irst )nstance of Manila to
secure a reiburseent of certain aounts allegedl! overpaid
b! it on account of the purchase price of sound reproducing
e,uipent and achiner! ordered b! the petitioner fro the
(tarr Piano Copan! of Richond, )ndiana, -.(.A. The facts of
the case as found b! the trial court and confired b! the
appellate court, which are aditted b! the respondent, are as
follows.
)n the !ear /010, the *Teatro Arco*, a corporation dul! organi'ed
under the laws of the Philippine )slands, with its office in
Manila, was engaged in the business of operating
cineatographs. )n /023, its nae was changed to Arco
Auseent Copan!. C. (. (alon was the president, while A.
B. Coulette was the business anager. About the sae tie,
&on'alo Pu!at 4 (ons, )nc., another corporation doing business
in the Philippine )slands, with office in Manila, in addition to its
other business, was acting as e5clusive agents in the Philippines
for the (tarr Piano Copan! of Richond, )ndiana, -.(. A. )t
would see that this last copan! dealt in cineatographer
e,uipent and achiner!, and the Arco Auseent Copan!
desiring to e,uipt its cineatograph with sound reproducing
devices, approached &on'alo Pu!at 4 (ons, )nc., thru its then
president and acting anager, &il Pu!at, and an eplo!ee
naed (antos. After soe negotiations, it was agreed between
the parties, that is to sa!, (alon and Coulette on one side,
representing the plaintiff, and &il Pu!at on the other,
representing the defendant, that the latter would, on behalf of the
plaintiff, order sound reproducing e,uipent fro the (tarr
Piano Copan! and that the plaintiff would pa! the defendant,
in addition to the price of the e,uipent, a /3 per cent
coission, plus all e5penses, such as, freight, insurance,
ban#ing charges, cables, etc. At the e5pense of the plaintiff, the
defendant sent a cable, E5hibit *2*, to the (tarr Piano Copan!,
in,uiring about the e,uipent desired and a#ing the said
copan! to ,uote its price without discount. A repl! was
received b! &on'alo Pu!at 4 (ons, )nc., with the price,
evidentl! the list price of 6/,733 f.o.b. factor! Richond,
)ndiana. The defendant did not show the plaintiff the cable of
in,uir! nor the repl! but erel! infored the plaintiff of the
price of 6/,733. Being agreeable to this price, the plaintiff, b!
eans of E5hibit */*, which is a letter signed b! C. (. (alon
dated Noveber /0, /010, forall! authori'ed the order. The
e,uipent arrived about the end of the !ear /010, and upon
deliver! of the sae to the plaintiff and the presentation of
necessar! papers, the price of 6/.733, plus the /3 per cent
coission agreed upon and plus all the e5penses and charges,
was dul! paid b! the plaintiff to the defendant.
(oetie the following !ear, and after soe negotiations
between the sae parties, plaintiff and defendants, another order
for sound reproducing e,uipent was placed b! the plaintiff
with the defendant, on the sae ters as the first order. This
agreeent or order was confired b! the plaintiff b! its letter
E5hibit *1*, without date, that is to sa!, that the plaintiff would
pa! for the e,uipent the aount of 6/,833, which was
supposed to be the price ,uoted b! the (tarr Piano Copan!,
plus /3 per cent coission, plus all e5penses incurred. The
e,uipent under the second order arrived in due tie, and the
defendant was dul! paid the price of 6/,833 with its /3 per cent
coission, and 6/83, for all e5penses and charges. This
aount of 6/83 does not represent actual out%of%poc#et e5penses
paid b! the defendant, but a ere flat charge and rough estiate
ade b! the defendant e,uivalent to /3 per cent of the price of
6/,833 of the e,uipent.
About three !ears later, in connection with a civil case in 9igan,
filed b! one +idel Re!es against the defendant herein &on'alo
Pu!at 4 (ons, )nc., the officials of the Arco Auseent
Copan! discovered that the price ,uoted to the b! the
defendant with regard to their two orders entioned was not the
net price but rather the list price, and that the defendants had
obtained a discount fro the (tarr Piano Copan!. Moreover,
b! reading reviews and literature on prices of achiner! and
cineatograph e,uipent, said officials of the plaintiff were
convinced that the prices charged the b! the defendant were
uch too high including the charges for out%of%poc#et e5pense.
+or these reasons, the! sought to obtain a reduction fro the
defendant or rather a reiburseent, and failing in this the!
brought the present action.
The trial court held that the contract between the petitioner and
the respondent was one of outright purchase and sale, and
absolved that petitioner fro the coplaint. The appellate court,
however, : b! a division of four, with one ;ustice dissenting :
held that the relation between petitioner and respondent was that
of agent and principal, the petitioner acting as agent of the
respondent in the purchase of the e,uipent in ,uestion, and
sentenced the petitioner to pa! the respondent alleged
overpa!ents in the total su of 6/,22<.<1 or P1,87/.3=,
together with legal interest thereon fro the date of the filing of
the coplaint until said aount is full! paid, as well as to pa!
the costs of the suit in both instances. The appellate court further
argued that even if the contract between the petitioner and the
respondent was one of purchase and sale, the petitioner was
guilt! of fraud in concealing the true price and hence would still
be liable to reiburse the respondent for the overpa!ents ade
b! the latter.
The petitioner now clais that the following errors have been
incurred b! the appellate court.
). El Tribunal de Apelaciones incurrio en error de derecho al
declarar ,ue, segun hechos, entre la recurrente ! la recurrida
e5istia una relacion iplicita de andataria a andante en la
transaccion de ,ue se trata, en ve' de la de vendedora a
copradora coo ha declarado el >u'gado de Priera )nstncia
de Manila, presidido entonces por el ho! Magistrado ?onorable
Marcelino Montea!or.
)). El Tribunal de Apelaciones incurrio en error de derecho al
declarar ,ue, suponiendo ,ue dicha relacion fuerra de vendedora
a copradora, la recurrente obtuvo, ediante dolo, el
consentiiento de la recurrida en cuanto al precio de 6/,733 !
6/,833 de las a,uinarias ! e,uipos en cuestion, ! condenar a la
recurrente ha obtenido de la (tarr Piano Copan! of Richond,
)ndiana.
@e sustain the theor! of the trial court that the contract between
the petitioner and the respondent was one of purchase and sale,
and not one of agenc!, for the reasons now to be stated.
)n the first place, the contract is the law between the parties and
should include all the things the! are supposed to have been
agreed upon. @hat does not appear on the face of the contract
should be regarded erel! as *dealerAs* or *traderAs tal#*, which
can not bind either part!. "Nolbroo# v. Conner, <8 (o., <78, //
A. Rep., 1/1B Ban# v. Brosscell, /13 )))., /8/B Ban# v. Paler,
=7 )))., 01B ?osser v. Copper, C Allen, 22=B Doles v. Merrill, /72
Mass., =//.$ The letters, E5hibits / and 1, b! which the
respondent accepted the prices of 6/,733 and 6/,833,
respectivel!, for the sound reproducing e,uipent sub;ect of its
contract with the petitioner, are clear in their ters and adit no
other interpretation that the respondent in ,uestion at the prices
indicated which are fi5ed and deterinate. The respondent
aditted in its coplaint filed with the Court of +irst )nstance of
Manila that the petitioner agreed to sell to it the first sound
reproducing e,uipent and achiner!. The third paragraph of
the respondentAs cause of action states.
2. That on or about Noveber /0, /010, the herein plaintiff
"respondent$ and defendant "petitioner$ entered into an
agreeent, under and b! virtue of which the herein defendant
was to secure fro the -nited (tates, and sell and deliver to the
herein plaintiff, certain sound reproducing e,uipent and
achiner!, for which the said defendant, under and b! virtue of
said agreeent, was to receive the actual cost price plus ten per
cent "/3E$, and was also to be reibursed for all out of poc#et
e5penses in connection with the purchase and deliver! of such
e,uipent, such as costs of telegras, freight, and siilar
e5penses. "Ephasis ours.$
@e agree with the trial ;udge that *whatever unforseen events
ight have ta#en place unfavorable to the defendant "petitioner$,
such as change in prices, ista#e in their ,uotation, loss of the
goods not covered b! insurance or failure of the (tarr Piano
Copan! to properl! fill the orders as per specifications, the
plaintiff "respondent$ ight still legall! hold the defendant
"petitioner$ to the prices fi5ed of 6/,733 and 6/,833.* This is
incopatible with the pretended relation of agenc! between the
petitioner and the respondent, because in agenc!, the agent is
e5epted fro all liabilit! in the discharge of his coission
provided he acts in accordance with the instructions received
fro his principal "section 1<=, Code of Coerce$, and the
principal ust indenif! the agent for all daages which the
latter a! incur in carr!ing out the agenc! without fault or
iprudence on his part "article /710, Civil Code$.
@hile the latters, E5hibits / and 1, state that the petitioner was
to receive ten per cent "/3E$ coission, this does not
necessaril! a#e the petitioner an agent of the respondent, as
this provision is onl! an additional price which the respondent
bound itself to pa!, and which stipulation is not incopatible
with the contract of purchase and sale. "See Fuiroga vs. Parsons
?ardware Co., 2C Phil., <3/.$
)n the second place, to hold the petitioner an agent of the
respondent in the purchase of e,uipent and achiner! fro
the (tarr Piano Copan! of Richond, )ndiana, is incopatible
with the aditted fact that the petitioner is the e5clusive agent of
the sae copan! in the Philippines. )t is out of the ordinar! for
one to be the agent of both the vendor and the purchaser. The
facts and circustances indicated do not point to an!thing but
plain ordinar! transaction where the respondent enters into a
contract of purchase and sale with the petitioner, the latter as
e5clusive agent of the (tarr Piano Copan! in the -nited (tates.
)t follows that the petitioner as vendor is not bound to reiburse
the respondent as vendee for an! difference between the cost
price and the sales price which represents the profit reali'ed b!
the vendor out of the transaction. This is the ver! essence of
coerce without which erchants or iddlean would not
e5ist.
The respondents contends that it erel! agreed to pa! the cost
price as distinguished fro the list price, plus ten per cent "/3E$
coission and all out%of%poc#et e5penses incurred b! the
petitioner. The distinction which the respondents see#s to draw
between the cost price and the list price we consider to be
spacious. )t is to be observed that the twent!%five per cent "1<E$
discount granted b! the (tarr piano Copan! to the petitioner is
available onl! to the latter as the forerAs e5clusive agent in the
Philippines. The respondent could not have secured this discount
fro the (tarr Piano Copan! and neither was the petitioner
willing to waive that discount in favor of the respondent. As a
atter of fact, no reason is advanced b! the respondent wh! the
petitioner should waive the 1< per cent discount granted it b! the
(tarr Piano Copan! in e5change for the /3 percent
coission offered b! the respondent. Moreover, the petitioner
was not dut! bound to reveal the private arrangeent it had with
the (tarr Piano Copan! relative to such discount to its
prospective custoers, and the respondent was not even aware
of such an arrangeent. The respondent, therefore, could not
have offered to pa! a /3 per cent coission to the petitioner
provided it was given the benefit of the 1< per cent discount
en;o!ed b! the petitioner. )t is well #nown that local dealers
acting as agents of foreign anufacturers, aside fro obtaining a
discount fro the hoe office, soeties add to the list price
when the! resell to local purchasers. )t was apparentl! to guard
against an e5horbitant additional price that the respondent
sought to liit it to /3 per cent, and the respondent is estopped
fro ,uestioning that additional price. )f the respondent later on
discovers itself at the short end of a bad bargain, it alone ust
bear the blae, and it cannot rescind the contract, uch less
copel a reiburseent of the e5cess price, on that ground
alone. The respondent could not secure e,uipent and
achiner! anufactured b! the (tarr Piano Copan! e5cept
fro the petitioner aloneB it willingl! paid the price ,uotedB it
received the e,uipent and achiner! as representedB and that
was the end of the atter as far as the respondent was
concerned. The fact that the petitioner obtained ore or less
profit than the respondent calculated before entering into the
contract or reducing the price agreed upon between the
petitioner and the respondent. Not ever! concealent is fraudB
and short of fraud, it were better that, within certain liits,
business acuen perit of the loosening of the sleeves and of
the sharpening of the intellect of en and woen in the business
world.
The writ of certiorari should be, as it is hereb!, granted. The
decision of the appellate court is accordingl! reversed and the
petitioner is absolved fro the respondentAs coplaint in &. R.
No. /312, entitled *Arco Auseent Copan! "forerl!
#nown as Teatro Arco$, plaintiff%appellant, vs. &on'alo Pu!at 4
(ons, )nc., defendants%appellee,* without pronounceent
regarding costs. (o ordered.
Avancea, C.J., Diaz, Moran and orrilleno, JJ., concur.