Quiroga v. Parsons Hardware Inc.

G.R. No. L-11491; 23 August 1918

FACTS:
A contract was entered into between Andres Quiroga and J. Parsons, who were both
merchants, which granted the exclusive right to sell his beds in the Visayan Islands to Parsons under
the following conditions:
1) There be a discount of 2.5% as commission for the sale;
2) Parsons shall order the beds by the dozen, whether of the same or of different styles;
3) Expenses for transportation and shipment shall be borne by Quiroga;
4) Parsons is bound to pay Quiroga for the beds received within 60 days from the date of their
shipment;
5) If Quiroga should request payment before the invoice falls due, it shall be considered as prompt
payment with 2% deduction;
6) 15-day notice must at least be given by Quiroga before any alteration in price of beds; and
7) Parsons binds himself to only sell Quiroga beds.
Quiroga alleged that Parsons breached its contract by selling the beds at a higher price, not
having an open establishment in Iloilo, not maintaining a public exhibition, and for not ordering the
beds by the dozen. Only the last imputation was provided for by the contract, the others were not
stipulated.
Quiroga argued that since there was a contract of agency between them, such obligations
were necessarily implied.
ISSUE:
Whether or not the contract between them is one of agency, not of sale.
RULING:
The Supreme Court declared 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.

In order to classify a contract, due regard 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. 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.