G.R. No.

L-49395 December 26, 1984

GREEN VALLEY POULTRY ALL!ED PRODU"T#, !N"., petitioner
vs.
T$E !NTER%ED!ATE APPELLATE "OURT &'( E.R. #)U!** #ON# P$!L!PP!NE
"ORPORAT!ON, respondents.

A*AD #ANTO#, J.:
This is a petition to review a decision of the defunct Court of Appeals which affirmed the
judgment of the trial court whereby:
... judgment is hereby rendered in favor of the plaintiff [E.R. !uibb "
ons #hilippine Corporation$% ordering the defendant [&reen 'alley #oultry
" Allied #roducts% (nc.$ to pay the sum of #)*%+,).,) plus #-..// with
interest at .0 per annum from the filing of this action1 plus attorney2s fees
in the amount of #3%///.// and to pay the costs.
4n 5ovember +% 6-.-% !uibb and &reen 'alley entered into a letter agreement the te7t
of which reads as follows:
E.R. !uibb " ons #hilippine Corporation is pleased to appoint &reen
'alley #oultry " Allied #roducts% (nc. as a non8e7clusive distributor for
!uibb 'eterinary #roducts% as recommended by 9r. :eoncio 9. Rebong%
;r. and 9r. ;.&. Cru<% Animal =ealth 9ivision ales upervisor.
As a distributor% &reen 'alley #oultry " Allied #roducts% (nc. wig be entitled
to a discount as follows:
>eed tore #rice ?Catalogue@
:ess 6/0
Aholesale #rice
:ess 6/0
9istributor #rice
There are e7ceptions to the above price structure. At present% these are:
6. Afsillin Improved 40 lbs. bag
The distributor commission for this product si<e is *0 off #6B/.//
B. Narrow Spectrum Injectible Antibiotics
These products are subject to price fluctuations. Therefore% they are
invoiced at net price per vial.
+. 9eals and pecial 4ffers are not subject to the above distributor price
structure. A 30 distributor commission is allowed when the distributor
furnishes copies for each sale of a complete deal or special offer to a
feedstore% drugstore or other type of account.
9eals and pecial 4ffers purchased for resale at regular price invoiced at
net deal or special offer price.
#rices are subject to change without notice. !uibb will endeavor to
advise you promptly of any price changes. =owever% prices in effect at the
tune orders are received by !uibb 4rder 9epartment will apply in all
instances.
&reen 'alley #oultry " Allied #roducts% (nc. win distribute only for the
Central :u<on and 5orthern :u<on including Cagayan 'alley areas. Ae
will not allow any transfer or stocCs from Central :u<on and 5orthern
:u<on including Cagayan 'alley to other parts of :u<on% 'isayas or
Dindanao which are covered by our other appointed 9istributors. (n line
with this% you will follow strictly our stipulations that the ma7imum discount
you can give to your direct and turnover accounts will not go beyond 6/0.
(t is understood that &reen 'alley #oultry and Allied #roducts% (nc. will
accept turn8over orders from !uibb representatives for delivery to
customers in your area. (f for credit or other valid reasons a turn8over
order is not served% the !uibb representative will be notified within )*
hours and hold why the order will not be served.
(t is understood that &reen 'alley #oultry " Allied #roducts% (nc. will put up
a bond of #B/%///.// from a mutually acceptable bonding company.
#ayment for #urchases of !uibb #roducts will be due ./ days from date
of invoice or the nearest business day thereto. 5o payment win be
accepted in the form of post8dated checCs. #ayment by checC must be on
current dating.
(t is mutually agreed that this non8e7clusive distribution agreement can be
terminated by either &reen 'alley #oultry " Allied #roducts% (nc. or !uibb
#hilippines on +/ days notice.
( trust that the above terms and conditions will be met with your approval
and that the distributor arrangement will be one of mutual satisfaction.
(f you are agreeable% please sign the enclosed three ?+@ e7tra copies of
this letter and return them to this 4ffice at your earliest convenience.
ThanC you for your interest and support of the products of E.R. !uibb "
ons #hilippines Corporation. ?Rollo% pp. 6B8 6+.@
>or goods delivered to &reen 'alley but unpaid% !uibb filed suit to collect. The trial
court as aforesaid gave judgment in favor of !uibb which was affirmed by the Court of
Appeals.
(n both the trial court and the Court of Appeals% the parties advanced their respective
theories.
&reen 'alley claimed that the contract with !uibb was a mere agency to sell1 that it
never purchased goods from !uibb1 that the goods received were on consignment only
with the obligation to turn over the proceeds% less its commission% or to return the goods
ff not sold% and since it had sold the goods but had not been able to collect from the
purchasers thereof% the action was premature.
Epon the other hand% !uibb claimed that the contract was one of sale so that &reen
'alley was obligated to pay for the goods received upon the e7piration of the ./8day
credit period.
Foth courts below upheld the claim of !uibb that the agreement between the parties
was a sales contract.
Ae do not have to categori<e the contract. Ahether viewed as an agency to sell or as a
contract of sale% the liability of &reen 'alley is indubitable. Adopting &reen 'alley2s
theory that the contract is an agency to sell% it is liable because it sold on credit without
authority from its principal. The Civil Code has a provision e7actly in point. (t reads:
Art. 6-/3. The commission agent cannot% without the e7press or implied
consent of the principal% sell on credit. hould he do so% the principal may
demand from him payment in cash% but the commission agent shall be
entitled to any interest or benefit% which may result from such sale.
A=ERE>4RE% the petition is hereby dismissed1 the judgment of the defunct Court of
Appeals is affirmed with costs against the petitioner.
4 4R9ERE9.