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ANDRES QUIROGA, vs. PARSONS HARDWARE CO.

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GR No. L-11491 August 23, 1918

FACTS:

On January 24, 1911, Manila, a contract was entered into by and Quiroga, and J. Parsons (to whose rights and
obligations the present defendant later subrogated itself), for the exclusive sale of "Quiroga" beds in the Visayan
Islands.

The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon the delivery of beds.
Quiroga filed a case against Parsons for allegedly violating the following stipulations:
a. not to sell the beds at higher prices than those of the invoices;
b. to have an open establishment in Iloilo;
c. itself to conduct the agency;
d. to keep the beds on public exhibition,
e. to pay for the advertisement expenses for the same; and
f. to order the beds by the dozen and in no other manner*.
With the exception of the obligation on the part of the defendant to order the beds by the dozen and in no other
manner, none of the obligations imputed to the defendant in the two causes of action are expressly set forth in the
contract. But the plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency. The whole question, therefore, reduced itself to a
determination as to whether the defendant, by reason of the contract hereinbefore transcribed, was a purchaser
or an agent of the plaintiff for the sale of his beds.

ISSUE:
WON the contract between them was one of agency, not sale

HELD:
NO. The contract is one of purchase and sale, and not of commercial agency.

In order to classify a contract, due attention must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the
defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the
price in the manner stipulated. Payment was to be made at the end of sixty days, or before, at the plaintiff’s
request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be
allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. There
was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay
their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or
agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from
the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the
contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay
their price within the term fixed, without any other consideration and regardless as to whether he had or had not
sold the beds.

Only the acts of the contracting parties, subsequent to, and in connection with, the execution of the contract, must be
considered for the purpose of interpreting the contract, when such interpretation is necessary, but not when, as in the instant
case, its essential agreements are clearly set forth and plainly show that the contract belongs to a certain kind and not to
another.
In respect to the defendant’s obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might
place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for
having acted thus at his own free will.
For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of
action are not imposed upon the defendant, either by agreement or by law.