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ANDRES QUIROGA, plaintiff-appellant, vs. PARSONS HARDWARE CO., defendant-appellee.

FACTS: A contract was entered into by and between the plaintiff and defendant for the exclusive sale of quiroga beds in the Visayan Island. The contract provides: - ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J. Parsons under the following conditions: (A) Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's establishment in Iloilo, and shall invoice them at the same price he has fixed for sales, in Manila + 25 per cent discount of the invoiced prices, as commission on the sale; and Mr. Parsons shall order the beds by the dozen (B) Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within 60 days from the date of their shipment. Argument of Plaintiff: defendant violated the following obligations: (a) Not to sell the beds at higher prices than those of the invoices; (b) To have an open establishment in Iloilo; (c) Itself to conduct the agency; (d) To keep the beds on public exhibition, and (e) To pay for the advertisement expenses of the same; and to order the beds by the dozen and in no other manner. Some of these obligations were not set forth in the contract but the 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 bed.

HELD: The contract is one of PURCHASE AND SALE. In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to furnish the defendant with the beds which the latter might order, at the price stipulated, and that the defendant was to pay the price in the manner stipulated. The price agreed upon was the one determined by the plaintiff for the sale of these beds in Manila, with a discount of from 20 to 25 per cent, according to their class. Payment was to be

made at the end of sixty days, or before, at the plaintiff's request, or in cash, if the defendant so preferred, and in these last two cases an additional discount was to be allowed for prompt payment. These are precisely the essential features of a contract of purchase and sale. The legal concept of agency on the other hand, 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. The contention of the plaintiff that the contract is of made on a commission on sales, however 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. 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.

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