Puyat v. Arco Amusement Co.

,
72 Phil. 402 (1941)

DOCTRINE:

CODAL PROVISION:

FACTS:
Gonzalo Puyat & Sons was the exclusive agent in the Philippines of Starr Piano
Company of Richmond, Indiana, U.S.A while Arco Amusement was a corporation
engaged in the business of operating cinematographs. Arco desired to equip its
cinematograph with sound reproducing devices so it approached Gonzalo Puyat &
Sons.

After some negotiations, the parties agreed that Puyat GP&S would order the
equipment on behalf of Arco and in return, Arco would pay GP&S the price of the
equipment, 10% commission plus all expenses (freight, insurance, banking charges,
cables and etc)

GP&S sent a cable to Starr Piano inquiring about the equipment and making the said
company quote its price without discount, the latter quoted the price at $1,700. GP&S
did no sow the cable of inquiry nor the reply to Arco but merely informed Arco of the
price quotation. Arco eventually agreed to the price and eventually sometime the
following year, GP&S and Arco had another transaction for sound reproducing
equipment for $1,600.

Three years later, Arco discovered that the prices quoted by GP&S were too high, that
the price given to them by GP&S was not net price but rather the list price and that
GP&S obtained a discount from Starr. Arco sought for reimbursement or reduction from
GP&S.

Trial Court Ruling: the contract was one of outright purchase and sale and absolved
petitioner from the complaint

Appellate Court Ruling: it is a contract of agency and sentenced the petitioner to pay
respondent the alleged overpayments worth $1,335.52.

ISSUE:

1. Is there a contract of agency?

 2. WON the contract between the petitioner and defendant was one of purchase and
sale?

HELD:
1. NO
2. YES

RULE:

First, the letters, exhibits 1 and 2, by which the respondent accepted the prices of
$1,700 and $1,600, respectively, for the sound reproducing equipment subject of its
contract with the petitioner, are clear in their terms and admit no other interpretation that
the respondent in question at the prices indicated which are fixed and determinate. The
respondent admitted in its complaint filed with the Court of First Instance of Manila that
the petitioner agreed to sellto it the first sound reproducing equipment and machinery.

Second, to hold the petitioner an agent of the respondent in the purchase of equipment
and machinery from the Starr Piano Company of Richmond, Indiana, is incompatible
with the admitted fact that the petitioner is the exclusive agent of the same company in
the Philippines. It is out of the ordinary for one to be the agent of both the vendor and
the purchaser. The facts and circumstances indicated do not point to anything but plain
ordinary transaction where the respondent enters into a contract of purchase and sale
with the petitioner, the latter as exclusive agent of the Starr Piano Company in the
United States.

Thus, petitioner as vendor is not bound to reimburse the respondent as vendee for any
difference between the cost price and the sales price which represents the profit
realized by the vendor out of the transaction. This is the very essence of commerce
without which merchants or middleman would not exist.

The fact that the petitioner obtained more 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 every concealment is fraud

DISPOSITIVE PORTION: The writ of certiorari should be, as it is hereby, granted. The
decision of the appellate court is accordingly reversed and the petitioner is absolved
from the respondent's complaint in G. R. No. 1023, entitled "Arco Amusement Company
(formerly known as Teatro Arco), plaintiff-appellant, vs. Gonzalo Puyat & Sons, Inc.,
defendants-appellee," without pronouncement regarding costs. So ordered.