5/20/2018 Gonzalo Puyat and Sons, Inc. v Arco Amusement Company

GONZALO PUYAT AND SONS, INC. V ARCO AMUSEMENT COMPANY

FACTS:

Arco Amusement was engaged in the business of operating cinematographs. Gonzalo Puyat & Sons Inc

(GPS) was the exclusive agent in the Philippines for the Starr Piano Company. Desiring to equip its

cinematograph with sound reproducing devices, Arco approached GPS. After some negotiations, it was

agreed between the parties that GPS would order sound reproducing equipment from Starr Piano

Company and that Arco would pay GPS, in addition to the price of the equipment, a 10% commission,

plus all expenses such as freight, insurance, etc. When GPS inquired Starr Piano the price (without

discount) of the equipment, the latter quoted such at $1,700. Being agreeable to the price (plus 10%

commission plus all other expenses), Arco formally authorized the order. The following year, both

parties agreed for another order of sound reproducing equipment on the same terms as the first at

$1,600 plus 10% plus all other expenses.

Three years later, Arco discovered that the prices quoted to them by GPS with regard to their first 2

orders mentioned were not the net prices, but rather the list price, and that it had obtained a discount

from Starr Piano. Moreover, Arco alleged that the equipments were overpriced. Thus, being its agent,

GPS had to reimburse the excess amount it received from Arco.

ISSUE:

W/N there was a contract of agency, not of sale

HELD:

The letters containing Arco's acceptance of the prices for the equipment are clear in their terms and

admit no other interpretation that the prices are fixed and determinate. While the letters state that GPS

was to receive a 10% commission, this does not necessarily mean that it is an agent of Arco, as this

provision is only an additional price which it bound itself to pay, and which stipulation is not

incompatible with the contract of sale. The facts and circumstances show that Arco entered into a

contract of sale with GPS, the exclusive agent of Starr Piano. As such, it is not duty bound to reveal the

private arrangement it had with Starr Piano relative to the 25% discount. Being the exclusive agent ofStarr, Arco could not have secured this discount with Starr and neither is GPS willing to waive the

discount for Arco. Thus, GPS is not bound to reimburse Arco for any difference between the cost price

and the sales price, which represents the profit realized by GPS out of the transaction.

5/20/2018 Gonzalo Puyat and Sons, Inc. v Arco Amusement Company