Green Valley v. E.R. Squibb
REITERATIONFacts
The Antecedents: E.R. Squibb & Sons Philippine Corporation (Squibb) and Green Valley Poultry & Allied Products, Inc. (Green Valley) entered into a letter agreement on November 3, 1969, appointing Green Valley as a non-exclusive distributor for Squibb Veterinary Products in Central and Northern Luzon. The agreement outlined a price structure with discounts and specified terms regarding product exceptions, special offers, territorial limitations, stock transfers, turn-over orders, a P20,000.00 bond, payment terms (60 days from invoice, current dating for checks, no post-dated checks), and a 30-day notice for termination by either party. Procedural History: Squibb filed a suit against Green Valley to collect payment for goods delivered but unpaid. The trial court rendered judgment in favor of Squibb, ordering Green Valley to pay P48,374.74 plus P96.00, with interest at 6% per annum from the filing of the action, and attorney's fees of P5,000.00, plus costs. The defunct Court of Appeals affirmed this judgment. The Petition: Green Valley filed a petition for review with the Supreme Court, arguing that the contract was a mere agency to sell, not a sale. Green Valley contended that it never purchased goods from Squibb but received them on consignment, with an obligation to remit proceeds or return unsold goods. It claimed that since it had sold the goods but had not collected from its own purchasers, Squibb's action was premature. Squibb, conversely, maintained that the contract was one of sale, obligating Green Valley to pay for the goods upon the expiration of the 60-day credit period.
Issue(s)
Whether the agreement between Squibb and Green Valley constituted a contract of sale or an agency to sell. Whether Green Valley is liable for the unpaid goods delivered by Squibb.
Ruling
The petition is dismissed, and the judgment of the defunct Court of Appeals is affirmed. Green Valley is ordered to pay Squibb the sum of P48,374.74 plus P96.00, with interest at 6% per annum from the filing of the action, plus attorney's fees in the amount of P5,000.00 and costs.
Ratio Decidendi
On Issue 1: The Supreme Court found it unnecessary to definitively categorize the contract as either a sale or an agency to sell. The Court reasoned that regardless of the classification, Green Valley's liability for the unpaid goods was indubitable. This approach bypasses the need for a strict determination of the contract type when the outcome regarding liability remains the same based on the facts presented and applicable law. On Issue 2: Adopting Green Valley's theory that the contract was an agency to sell, the Court applied Article 1905 of the Civil Code. This article states that a commission agent cannot sell on credit without the principal's express or implied consent. If they do so, the principal may demand payment in cash, although the agent is entitled to any interest or benefit from the sale. Since Green Valley received goods from Squibb and was obligated to pay for them, and it claimed to have sold them on credit, it was liable for the payment to Squibb, irrespective of whether it had collected from its own buyers. The Court found Green Valley's liability to be clear under this provision, thus affirming the lower courts' decisions.
Main Doctrine
The Court affirmed that regardless of whether the agreement between Green Valley Poultry & Allied Products, Inc. and E.R. Squibb & Sons Philippine Corporation was characterized as a contract of sale or an agency to sell, Green Valley was indubitably liable for the unpaid goods. Applying Article 1905 of the Civil Code, if the contract were considered an agency to sell, Green Valley, as the commission agent, would be liable for selling on credit without the principal's consent, making it obligated to pay the principal in cash.