Submitted by Jonel Ian B.

Lucas CASE 11
ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee
G.R. No. L-11491 August 23, 1918
FACTS: A contract was executed by and between Andres Quiroga and J. Parsons, both merchants
established in Manila, for the exclusive sale of “Quiroga" beds in the Visayan islands.
What is an invoice?-An invoice is a time-stamped commercial document that itemizes and records a
transaction between a buyer and a seller. If goods or services were purchased on credit,
the invoice usually specifies the terms of the deal and provides information on the available methods of
payment.
ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J.
Parsons under the following conditions:
• Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's establishment in
Iloilo, shall invoice them at the same price he has fixed for sales, in Manila
• allowance of a discount of 25 per cent of the invoiced prices, as commission on the sale
• Mr. Parsons shall order the beds by the dozen, whether of the same or of different styles
• Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within a period of sixty days
from the date of their shipment.
• The expenses for transportation and shipment shall be borne by M. Quiroga, Insurance, and
cost of unloading from the vessel at the point where the beds are received, shall be paid by Mr.
Parsons
• If, before an invoice falls due, Mr. Quiroga should request its payment, said payment when
made shall be considered as a prompt payment, and as such a deduction of 2 per cent shall be
made from the amount of the invoice.
• Mr. Quiroga binds himself to give notice at least fifteen days before hand of any alteration in
price. For pending orders it will enjoy the benefit of price lowering but no change if the price is
increased.
• Mr. Parsons binds himself not to sell any other kind except the "Quiroga" beds
Art 2: In compensation for the expenses of advertisement, Mr. Quiroga assumes the obligation to offer
and give the preference to Mr. Parsons in case anyone should apply for the exclusive agency for any
island not comprised with the Visayan group.
Art 3: Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in all the
towns of the Archipelago where there are no exclusive agents, and shall immediately report such
action to Mr. Quiroga for his approval.
Art 4: This contract is made for an unlimited period, and may be terminated by either of the contracting
parties on a previous notice of ninety days to the other party.
Quiroga claimed the following Implied obligation that were violated
-not to sell the beds at higher prices than those of the invoices;
-to have an open establishment in Iloilo; itself to conduct the agency;
-to keep the beds on public exhibition, and to pay for the advertisement expenses for the same;
Quiroga also claimed the following obligation specified in the contract that were violated
-to order the beds by the dozen and in no other manner.
ISSUE:
Is Mr. Parson an agent or purchaser of Mr. Quiroga?
RULING:
To classify a contract, due regard must be given to its essential clauses. There was the obligation on
the part of the plaintiff (Quiroga) to supply the beds, and, on the part of the defendant (Pearson), 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.
On the use of the word commission
• Not a single one of these clauses necessarily conveys the idea of an agency. The words
commission on sales used in article 1 mean nothing else, as stated in the contract itself, than a
mere discount on the invoice price.
On the use of the word agency
• The word agency, also used in articles 2 and 3, only expresses that the defendant was the only
one that could sell the plaintiff's beds in the Visayan Islands. With regard to the remaining
clauses, the least that can be said is that they are not incompatible with the contract of purchase
and sale.
On the issue of implied obligation
• There is no need for further interpretation of the contract as the agreements are very
clear to be a purchase and sale. Non compliance on the performance of the obligations
does not change the contract.
• 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.
• On the commission on beds sold directly by the plaintiff to persons in Iloilo was because, as the
defendant obligated itself in the contract to incur the expenses of advertisement of the plaintiff's
beds, such sales were to be considered as a result of that advertisement.
On the issue of the Testimony of Ernesto Vidal, a former vice-president of the defendant corporation
and who established and managed the latter's business in Iloilo.
• When questioned as to what was his purpose in contracting with the plaintiff, Ernesto Vidal
replied that it was to be an agent for his beds and to collect a commission on sales.
• But the court ruled that a contract is what the law defines it to be, and not what it is
called by the contracting parties.

On the Violation of the stipulated condition “to order the beds by the dozen and in no other manner”
The defendant's(Parson) obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff (Quiroga) 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.
THEREFORE
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.