GR L 11491; (August, 1918) (Digest)
G.R. No. L-11491; August 23, 1918
ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee.
FACTS:
On January 24, 1911, Andres Quiroga and J. Parsons (whose rights and obligations were later subrogated to Parsons Hardware Co.) entered into a contract granting Parsons the exclusive right to sell Quiroga’s beds in the Visayan Islands. The contract stipulated, among other things, that Quiroga would furnish the beds at Manila prices with a 25% discount, Parsons would pay within 60 days of shipment, and Parsons would not sell any other kind of bed. Quiroga filed a complaint alleging that Parsons violated certain obligations, such as not selling at higher prices, maintaining an open establishment in Iloilo, conducting the agency, keeping beds on public exhibition, paying for advertisements, and ordering beds strictly by the dozen. Except for the obligation to order by the dozen, none of these obligations were expressly stated in the contract. Quiroga contended that these were implied obligations in a contract of commercial agency. The core issue was the legal nature of the contractwhether it constituted a contract of purchase and sale or one of agency.
ISSUE:
Whether the contract between Quiroga and Parsons Hardware Co. is one of purchase and sale or one of agency (mandatum).
RULING:
The Supreme Court ruled that the contract is one of purchase and sale, not an agency. The essential clauses of the contract show that Quiroga was obligated to supply beds at agreed prices, and Parsons was obligated to pay the price within a fixed term, regardless of whether the beds were resold. These features are characteristic of a contract of sale. The use of terms like “commission” in the contract referred merely to a discount on the invoice price, and the term “agency” only indicated that Parsons had the exclusive right to sell the beds in the Visayan Islands. The Court emphasized that a contract is defined by law based on its essential stipulations, not by the name given to it by the parties. The subsequent conduct of the parties (e.g., return of some beds, direct sales by Quiroga in Iloilo) could not alter the clear nature of the contract. As the alleged obligations were not part of the agreement nor implied by law in a contract of sale, Parsons was not liable for their breach. The appealed judgment was affirmed.