Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-11491 August 23, 1918
ANDRES QUIROGA, plaintiff-appellant,
vs.
PARSONS ARD!ARE CO., defendant-appellee.
Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant.
Crossfield & O'Brien for appellee.
A"ANCE#A, J.$
On Januar !", #$##, in this cit of %anila, a contract in the follo&in' tenor &as entered
into b and bet&een the plaintiff, as part of the first part, and J. Parsons (to &hose
ri'hts and obli'ations the present defendant later subro'ated itself), as part of the
second part*
CON+RAC+ E,EC-+E. B/ AN. BE+0EEN AN.RE1 2-3RO4A AN. J. PAR1ON1,
BO+5 MERC5AN+1 E1+AB6315E. 3N MAN36A, 7OR +5E E,C6-138E 1A6E O7
92-3RO4A9 BE.1 3N +5E 831A/AN 316AN.1.
AR+3C6E #. .on Andres 2uiro'a 'rants the e:clusive ri'ht to sell his beds in the
8isaan 3slands to J. Parsons under the follo&in' conditions*
(A) Mr. 2uiro'a shall furnish beds of his %anufacture to Mr. Parsons for the latter;s
establish%ent in 3loilo, and shall invoice the% at the sa%e price he has fi:ed for sales,
in Manila, and, in the invoices, shall %a<e and allo&ance of a discount of != per cent of
the invoiced prices, as co%%ission on the sale> and Mr. Parsons shall order the beds
b the do?en, &hether of the sa%e or of different stles.
(B) Mr. Parsons binds hi%self to pa Mr. 2uiro'a for the beds received, &ithin a period
of si:t das fro% the date of their ship%ent.
(C) +he e:penses for transportation and ship%ent shall be borne b M. 2uiro'a, and
the frei'ht, insurance, and cost of unloadin' fro% the vessel at the point &here the
beds are received, shall be paid b Mr. Parsons.
(.) 3f, before an invoice falls due, Mr. 2uiro'a should re@uest its pa%ent, said
pa%ent &hen %ade shall be considered as a pro%pt pa%ent, and as such a
deduction of ! per cent shall be %ade fro% the a%ount of the invoice.
+he sa%e discount shall be %ade on the a%ount of an invoice &hich Mr. Parsons %a
dee% convenient to pa in cash.
(E) Mr. 2uiro'a binds hi%self to 'ive notice at least fifteen das before hand of an
alteration in price &hich he %a plan to %a<e in respect to his beds, and a'rees that if
on the date &hen such alteration ta<es effect he should have an order pendin' to be
served to Mr. Parsons, such order shall enAo the advanta'e of the alteration if the price
thereb be lo&ered, but shall not be affected b said alteration if the price thereb be
increased, for, in this latter case, Mr. 2uiro'a assu%ed the obli'ation to invoice the
beds at the price at &hich the order &as 'iven.
(7) Mr. Parsons binds hi%self not to sell an other <ind e:cept the 92uiro'a9 beds.
AR+. !. 3n co%pensation for the e:penses of advertise%ent &hich, for the benefit of
both contractin' parties, Mr. Parsons %a find hi%self obli'ed to %a<e, Mr. 2uiro'a
assu%es the obli'ation to offer and 'ive the preference to Mr. Parsons in case anone
should appl for the e:clusive a'enc for an island not co%prised &ith the 8isaan
'roup.
AR+. B. Mr. Parsons %a sell, or establish branches of his a'enc for the sale of
92uiro'a9 beds in all the to&ns of the Archipela'o &here there are no e:clusive a'ents,
and shall i%%ediatel report such action to Mr. 2uiro'a for his approval.
AR+. ". +his contract is %ade for an unli%ited period, and %a be ter%inated b either
of the contractin' parties on a previous notice of ninet das to the other part.
Of the three causes of action alle'ed b the plaintiff in his co%plaint, onl t&o of the%
constitute the subAect %atter of this appeal and both substantiall a%ount to the
aver%ent that the defendant violated the follo&in' obli'ations* not to sell the beds at
hi'her prices than those of the invoices> to have an open establish%ent in 3loilo> itself to
conduct the a'enc> to <eep the beds on public e:hibition, and to pa for the
advertise%ent e:penses for the sa%e> and to order the beds b the do?en and in no
other %anner. As %a be seen, &ith the e:ception of the obli'ation on the part of the
defendant to order the beds b the do?en and in no other %anner, none of the
obli'ations i%puted to the defendant in the t&o causes of action are e:pressl set forth
in the contract. But the plaintiff alle'ed that the defendant &as his a'ent for the sale of
his beds in 3loilo, and that said obli'ations are i%plied in a contract of co%%ercial
a'enc. +he &hole @uestion, therefore, reduced itself to a deter%ination as to &hether
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the defendant, b reason of the contract hereinbefore transcribed, &as a purchaser or
an a'ent of the plaintiff for the sale of his beds.
3n order to classif a contract, due re'ard %ust be 'iven to its essential clauses. 3n the
contract in @uestion, &hat &as essential, as constitutin' its cause and subAect %atter, is
that the plaintiff &as to furnish the defendant &ith the beds &hich the latter %i'ht order,
at the price stipulated, and that the defendant &as to pa the price in the %anner
stipulated. +he price a'reed upon &as the one deter%ined b the plaintiff for the sale of
these beds in Manila, &ith a discount of fro% !C to != per cent, accordin' to their class.
Pa%ent &as to be %ade at the end of si:t das, or before, at the plaintiff;s re@uest, or
in cash, if the defendant so preferred, and in these last t&o cases an additional
discount &as to be allo&ed for pro%pt pa%ent. +hese are precisel the essential
features of a contract of purchase and sale. +here &as the obli'ation on the part of the
plaintiff to suppl the beds, and, on the part of the defendant, to pa their price. +hese
features e:clude the le'al conception of an a'enc or order to sell &hereb the
%andator or a'ent received the thin' to sell it, and does not pa its price, but delivers
to the principal the price he obtains fro% the sale of the thin' to a third person, and if he
does not succeed in sellin' it, he returns it. B virtue of the contract bet&een the
plaintiff and the defendant, the latter, on receivin' the beds, &as necessaril obli'ed to
pa their price &ithin the ter% fi:ed, &ithout an other consideration and re'ardless as
to &hether he had or had not sold the beds.
3t &ould be enou'h to hold, as &e do, that the contract b and bet&een the defendant
and the plaintiff is one of purchase and sale, in order to sho& that it &as not one %ade
on the basis of a co%%ission on sales, as the plaintiff clai%s it &as, for these contracts
are inco%patible &ith each other. But, besides, e:a%inin' the clauses of this contract,
none of the% is found that substantiall supports the plaintiff;s contention. Not a sin'le
one of these clauses necessaril conves the idea of an a'enc. +he &ords
commission on sales used in clause (A) of article # %ean nothin' else, as stated in the
contract itself, than a %ere discount on the invoice price. +he &ord agency, also used
in articles ! and B, onl e:presses that the defendant &as the onl one that could sell
the plaintiff;s beds in the 8isaan 3slands. 0ith re'ard to the re%ainin' clauses, the
least that can be said is that the are not inco%patible &ith the contract of purchase
and sale.
+he plaintiff calls attention to the testi%on of Ernesto 8idal, a for%er vice-president of
the defendant corporation and &ho established and %ana'ed the latter;s business in
3loilo. 3t appears that this &itness, prior to the ti%e of his testi%on, had serious trouble
&ith the defendant, had %aintained a civil suit a'ainst it, and had even accused one of
its partners, 4uiller%o Parsons, of falsification. 5e testified that it &as he &ho drafted
the contract E:hibit A, and, &hen @uestioned as to &hat &as his purpose in contractin'
&ith the plaintiff, replied that it &as to be an agent for his beds and to collect a
commission on sales. 5o&ever, accordin' to the defendant;s evidence, it &as Mariano
6ope? 1antos, a director of the corporation, &ho prepared E:hibit A. But, even
supposin' that Ernesto 8idal has stated the truth, his state%ent as to &hat &as his idea
in contractin' &ith the plaintiff is of no i%portance, inas%uch as the a'ree%ents
contained in E:hibit A &hich he clai%s to have drafted, constitute, as &e have said, a
contract of purchase and sale, and not one of co%%ercial a'enc. +his onl %eans that
Ernesto 8idal &as %ista<en in his classification of the contract. But it %ust be
understood that a contract is &hat the la& defines it to be, and not &hat it is called b
the contractin' parties.
+he plaintiff also endeavored to prove that the defendant had returned beds that it
could not sell> that, &ithout previous notice, it for&arded to the defendant the beds that
it &anted> and that the defendant received its co%%ission for the beds sold b the
plaintiff directl to persons in 3loilo. But all this, at the %ost onl sho&s that, on the part
of both of the%, there &as %utual tolerance in the perfor%ance of the contract in
disre'ard of its ter%s> and it 'ives no ri'ht to have the contract considered, not as the
parties stipulated it, but as the perfor%ed it. Onl the acts of the contractin' parties,
subse@uent to, and in connection &ith, the e:ecution of the contract, %ust be
considered for the purpose of interpretin' the contract, &hen such interpretation is
necessar, but not &hen, as in the instant case, its essential a'ree%ents are clearl set
forth and plainl sho& that the contract belon's to a certain <ind and not to another.
7urther%ore, the return %ade &as of certain brass beds, and &as not effected in
e:chan'e for the price paid for the%, but &as for other beds of another <ind> and for the
letter E:hibit 6-#, re@uested the plaintiff;s prior consent &ith respect to said beds, &hich
sho&s that it &as not considered that the defendant had a ri'ht, b virtue of the
contract, to %a<e this return. As re'ards the ship%ent of beds &ithout previous notice,
it is insinuated in the record that these brass beds &ere precisel the ones so shipped,
and that, for this ver reason, the plaintiff a'reed to their return. And &ith respect to the
so-called co%%issions, &e have said that the %erel constituted a discount on the
invoice price, and the reason for applin' this benefit to the beds sold directl b the
plaintiff to persons in 3loilo &as because, as the defendant obli'ated itself in the
contract to incur the e:penses of advertise%ent of the plaintiff;s beds, such sales &ere
to be considered as a result of that advertise%ent.
3n respect to the defendant;s obli'ation to order b the do?en, the onl one e:pressl
i%posed b the contract, the effect of its breach &ould onl entitle the plaintiff to
disre'ard the orders &hich the defendant %i'ht place under other conditions> but if the
plaintiff consents to fill the%, he &aives his ri'ht and cannot co%plain for havin' acted
thus at his o&n free &ill.
7or the fore'oin' reasons, &e are of opinion that the contract b and bet&een the
plaintiff and the defendant &as one of purchase and sale, and that the obli'ations the
breach of &hich is alle'ed as a cause of action are not i%posed upon the defendant,
either b a'ree%ent or b la&. +he Aud'%ent appealed fro% is affir%ed, &ith costs
a'ainst the appellant. 1o ordered.
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