G.R. No. L-49395, 26 December 1984
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. as a non-exclusive distributor for Squibb Veterinary Products, as recommended by Dr. Leoncio D. Rebong, Jr. and Dr. J.G. Cruz, Animal Health Division Sales Supervisor.”
For goods delivered to Green Valley but unpaid, Squibb filed suit to collect. The trial court as aforesaid gave judgment in favor of Squibb which was affirmed by the Court of Appeals.
In both the trial court and the Court of Appeals, the parties advanced their respective theories.
Green Valley claimed that the contract with Squibb was a mere agency to sell; that it never purchased goods from Squibb; 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.
Upon the other hand, Squibb claimed that the contract was one of sale so that Green Valley was obligated to pay for the goods received upon the expiration of the 60-day credit period.
Both courts below upheld the claim of Squibb that the agreement between the parties was a sales contract.
Whether or not the agreement signed by the parties was a sales contract and thus Greeen Valley is liable for its unpaid obligations against Squibb Veterinary Products.
The Supreme Court upheld the decision of the defunct Court of Appeals. . By adopting Green Valley’s theory that the contract is an agency to sell, it is liable because it sold on credit without authority from its principal. It further gives emphasis to the decision based on Article 1905 of the Civil Code which reads:
“The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should 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.”
*Case digest by Jelyn C. Ondong, JD – 4, Andres Bonifacio College, SY 2019 – 2020