G.R. No. L-47538 June 20, 1941
GONZALO PUYAT & SONS, INC., petitioner,
ARCO AMUSEMENT COMPANY (formerly known as Teatro Arco), respondent.
Arco Amusement Company is a business engaged in operating cinematographs. Gonzalo Puyat & Sons, Inc, was acting as exclusive agents in the Philippines for Starr Piano Company of Indiana, USA, and dealt with cinematographer equipment and company.
Arco Amusement approached Gonzalo Puyat & Sons entered into an agreement wherein Gonzalo Puyat will, on behalf of Arco Amusement, order sound reproducing equipment from Starr Piano Company and that Arco Amusement will pay Gonzalo Puyat, in addition to the price of equipment, a 10% commission plus all expenses. Starr Piano quoted the list price of equipment as $1700 without discount to Gonzalo Puyat, which then told Arco Amusement about it. Being agreeable, the two formalized the transaction and Arco Amusement duly paid $1700 to Gonzalo Puyat.
Subsequently, Arco Amusement made another order again to Gonzalo Puyat for the equipment on the same terms as the first order. The order stated that Gonzalo Puyat would pay for the equipment the amount of $1600 which was supposed to be the exact price quoted by Starr Piano plus 10% commission and expenses. Arco Amusement duly paid $1600 plus 10% commission plus $160 for the expenses; the $160 does not represent actual out-of-pocket expenses but a mere flat charge and rough estimate made by Arco Amusement equivalent to 10% of the $1,600 price.
Arco Amusement subsequently discovered that the price quoted to them with regard to their previous orders were not the net price but rather the list price, and that the Gonzalo Puyat had obtained a discount from the Starr Piano Company. Moreover, by reading reviews and literature on prices of machinery and cinematograph equipment, Arco Amusement was convinced that the prices charged them were much too high. For these reasons, they sought to obtain a reduction from Gonzalo Puyat rather than a reimbursement, and failing in this they filed the complaint.
RTC: Contract between Arco Amusement and Gonzalo Puyat was one of outright purchase and sale.
CA: Reversed RTC’s ruling; the relation between the two was that of agent and principal, Gonzalo Puyat acting as agent of Arco Amusement, and sentenced Gonzalo Puyat to pay the alleged overpayments.
Whether or not the contract between Arco Amusement and Gonzalo Puyat was one of purchase and sale, and not agency.
Yes. There was a contract of sale between the two.
In the first place, the contract is the law between the parties and should include all the things they are supposed to have been agreed upon. What does not appear on the face of the contract should be regarded merely as “dealer’s” or “trader’s talk”, which can not bind either party. The letters showing that Arco Amusement accepted the prices of $1700 and $1600 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.
Whatever unforseen events might have taken place unfavorable to Arco Amusement, such as change in prices, mistake in their quotation, loss of the goods not covered by insurance or failure of the Starr Piano Company to properly fill the orders as per specifications, Gonzalo Puyat might still legally hold Arco Amusement to the prices fixed. This is incompatible with the pretended relation of agency between the petitioner and the respondent, because in agency, the agent is exempted from all liability in the discharge of his commission provided he acts in accordance with the instructions received from his principal (section 254, Code of Commerce), and the principal must indemnify the agent for all damages which the latter may incur in carrying out the agency without fault or imprudence on his part (article 1729, Civil Code).
The orders which state that the petitioner was to receive ten per cent (10%) commission does not necessarily make Gonzalo Puyat an agent of Arco Amusement as this provision is only an additional price which Arco Amusement bound itself to pay, and which stipulation is not incompatible with the contract of purchase and sale.