Andres Quiroga v. Parsons Hardware Co.

G.R. №11491, August 23, 1918; Avancena, J.

Facts: A contract was entered into by herein plaintiff Quiroga and defendant J. Parsons wherein the
former granted the latter with the exclusive right to sale Quiroga beds in the Visayan Islands subject to
conditions. A complaint was filed by plaintiff averring that defendant violated the ff. obligations: 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 are expressly set forth in the contract. 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.

Issue: WON the defendant, by reason of the contract, was a purchaser or an agent of the plaintiff for the
sale of his beds.

Held: The contract contains 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.
I 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.

Not a single one of these clauses necessarily conveys the idea of an agency. The words commission on
sales used in clause (A) of article 1 mean nothing else, as stated in the contract itself, than a mere
discount on the invoice price. 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. It must be
understood that a contract is what the law defines it to be, and not what it is called by the contracting
parties.

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.