9/7/2016 G.R.No.

L49395

TodayisWednesday,September07,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.L49395December26,1984

GREENVALLEYPOULTRY&ALLIEDPRODUCTS,INC.,petitioner
vs.
THEINTERMEDIATEAPPELLATECOURTandE.R.SQUIBB&SONSPHILIPPINECORPORATION,
respondents.

ABADSANTOS,J.:

ThisisapetitiontoreviewadecisionofthedefunctCourtofAppealswhichaffirmedthejudgmentofthetrialcourt
whereby:

...judgmentisherebyrenderedinfavoroftheplaintiff[E.R.Squibb&SonsPhilippineCorporation],
ordering the defendant [Green Valley Poultry & Allied Products, Inc.] to pay the sum of P48,374.74
plus P96.00 with interest at 6% per annum from the filing of this action plus attorney's fees in the
amountofP5,000.00andtopaythecosts.

On November 3, 1969, Squibb and Green Valley entered into a letter agreement the text of which reads as
follows:

E.R. Squibb & Sons Philippine Corporation is pleased to appoint Green Valley Poultry & Allied
Products,Inc.asanonexclusivedistributorforSquibbVeterinaryProducts,asrecommendedbyDr.
LeoncioD.Rebong,Jr.andDr.J.G.Cruz,AnimalHealthDivisionSalesSupervisor.

Asadistributor,GreenValleyPoultry&AlliedProducts,Inc.wigbeentitledtoadiscountasfollows:

FeedStorePrice(Catalogue)

Less10%

WholesalePrice

Less10%

DistributorPrice

Thereareexceptionstotheabovepricestructure.Atpresent,theseare:

1.AfsillinImproved40lbs.bag

Thedistributorcommissionforthisproductsizeis8%offP120.00

2.NarrowSpectrumInjectibleAntibiotics

Theseproductsaresubjecttopricefluctuations.Therefore,theyareinvoicedatnetpricepervial.

3.DealsandSpecialOffersarenotsubjecttotheabovedistributorpricestructure.A5%distributor
commission is allowed when the distributor furnishes copies for each sale of a complete deal or
specialoffertoafeedstore,drugstoreorothertypeofaccount.

Deals and Special Offers purchased for resale at regular price invoiced at net deal or special offer
price.

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Pricesaresubjecttochangewithoutnotice.Squibbwillendeavortoadviseyoupromptlyofanyprice
changes.However,pricesineffectatthetuneordersarereceivedbySquibbOrderDepartmentwill
applyinallinstances.

Green Valley Poultry & Allied Products, Inc. win distribute only for the Central Luzon and Northern
Luzon including Cagayan Valley areas. We will not allow any transfer or stocks from Central Luzon
and Northern Luzon including Cagayan Valley to other parts of Luzon, Visayas or Mindanao which
arecoveredbyourotherappointedDistributors.Inlinewiththis,youwillfollowstrictlyourstipulations
that the maximum discount you can give to your direct and turnover accounts will not go beyond
10%.

ItisunderstoodthatGreenValleyPoultryandAlliedProducts,Inc.willacceptturnoverordersfrom
Squibb representatives for delivery to customers in your area. If for credit or other valid reasons a
turnoverorderisnotserved,theSquibbrepresentativewillbenotifiedwithin48hoursandholdwhy
theorderwillnotbeserved.

It is understood that Green Valley Poultry & Allied Products, Inc. will put up a bond of P20,000.00
fromamutuallyacceptablebondingcompany.

PaymentforPurchasesofSquibbProductswillbedue60daysfromdateofinvoiceorthenearest
business day thereto. No payment win be accepted in the form of postdated checks. Payment by
checkmustbeoncurrentdating.

It is mutually agreed that this nonexclusive distribution agreement can be terminated by either
GreenValleyPoultry&AlliedProducts,Inc.orSquibbPhilippineson30daysnotice.

I trust that the above terms and conditions will be met with your approval and that the distributor
arrangementwillbeoneofmutualsatisfaction.

Ifyouareagreeable,pleasesigntheenclosedthree(3)extracopiesofthisletterandreturnthemto
thisOfficeatyourearliestconvenience.

Thank you for your interest and support of the products of E.R. Squibb & Sons Philippines
Corporation.(Rollo,pp.1213.)

For goods delivered to Green Valley but unpaid, Squibb filed suit to collect. The trial court as aforesaid gave
judgmentinfavorofSquibbwhichwasaffirmedbytheCourtofAppeals.

InboththetrialcourtandtheCourtofAppeals,thepartiesadvancedtheirrespectivetheories.

GreenValleyclaimedthatthecontractwithSquibbwasamereagencytosellthatitneverpurchasedgoodsfrom
Squibbthatthegoodsreceivedwereonconsignmentonlywiththeobligationtoturnovertheproceeds,lessits
commission,ortoreturnthegoodsffnotsold,andsinceithadsoldthegoodsbuthadnotbeenabletocollect
fromthepurchasersthereof,theactionwaspremature.

Upontheotherhand,SquibbclaimedthatthecontractwasoneofsalesothatGreenValleywasobligatedtopay
forthegoodsreceivedupontheexpirationofthe60daycreditperiod.

BothcourtsbelowupheldtheclaimofSquibbthattheagreementbetweenthepartieswasasalescontract.

We do not have to categorize the contract. Whether viewed as an agency to sell or as a contract of sale, the
liability of Green Valley is indubitable. Adopting Green Valley's theory that the contract is an agency to sell, it is
liablebecauseitsoldoncreditwithoutauthorityfromitsprincipal.TheCivilCodehasaprovisionexactlyinpoint.
Itreads:

Art.1905.Thecommissionagentcannot,withouttheexpressorimpliedconsentoftheprincipal,sell
oncredit.Shouldhedoso,theprincipalmaydemandfromhimpaymentincash,butthecommission
agentshallbeentitledtoanyinterestorbenefit,whichmayresultfromsuchsale.

WHEREFORE, the petition is hereby dismissed the judgment of the defunct Court of Appeals is affirmed with
costsagainstthepetitioner.

SOORDERED.

Aquino,Concepcion,Jr.,EscolinandCuevas,JJ.,concur.

Makasiar(Chairman),reserveshisvote.

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