Quiroga vs Parsons Hardware Co.

GR No. L-11491
August 23, 1918

Facts:
The plaintiff and the respondent entered into a contract making the latter an “agent” of the former.
The contract stipulates that petitioner Quiroga grants exclusive rights to sell his beds in the Visayan
region to Parsons. The contract only stipulates that Parsons should pay Quiroga within 6 months upon the
delivery of beds. Quiroga files a case against Parsons for allegedly violating the following stipulations: 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; and 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 since there was a contract of agency between them, such obligations were
necessarily implied.

Issue:
WON the contract entered by the parties is a contract of agency, not of sale.

Ruling:
No. The agreement between Quiroga and Parsons was that of a simple purchase and sale — not
an agency. Quiroga supplied the beds, while Parsons had the obligation to pay their purchase 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. There was mutual tolerance in the performance of the
contract in disregard of its terms; and it gives no right to have the contract considered, not as the parties
stipulated it, but as they performed it. 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.