11. Quiroga vs Parsons Hardware, Co. GR No.

 11491 August 23, 1918 

Facts: 

On Jan 24, 1911, plaintiff and the respondent entered into a contract
making the latter an ―agent‖ of the former. The contract stipulates that
Don Andres Quiroga, here in petitioner, grants exclusive rights to sell his
beds in the Visayan region to J. Parsons. The contract only stipulates
that J.Parsons should pay Quiroga within 6 months upon the delivery of
beds. Quiroga filed a case against Parsons for allegedly violating the
conntract. Only the obligation on the part of the defendant to order the
beds by the dozen and in no other manner, was expressly 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: Whether the contract is a contract of agency

Held: 

No. 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. 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.

12. Ker and Co., LTD vs Lingad GR No. L-20871 April 30, 1971

Facts:

CIR assessed the sum of P20,272.33 as the commercial broker‘s

percentage tax, surcharge, and compromise penalty against Ker & Co.
Ker and Co. requested for the cancellation of the assessment and filed a
petition for review with the Court of Tax Appeals. The CTA ruled that Ker
and Co is liable as a commercial broker. Ker has a contract with US
rubber. Ker is the distributor of the said company. Ker was precluded
from disposing the products elsewhere unless there has been a written
consent from the company. The prices, discounts, terms of payment,
terms of delivery and other conditions of sale were subject to change in
the discretion of the Company.

Issue:Whether the relationship of Ker and Co and US rubber was that of

a vendor- vendee or

principal-broker Ruling:
 

The relationship of Ker and Co and US rubber was that of a principal-

broker/ agency. Ker and Co is only an agent of the US rubber because it
can dispose of the products of the Company only to certain persons or
entities and within stipulated limits, unless excepted by the contract or by
the Rubber Company, it merely receives, accepts and/or holds upon
consignment the products, which remain properties of the latter
company, every effort shall be made by petitioner to promote in every
way the sale of the products and that sales made by petitioner are
subject to approval by the company. Since the company retained
ownership of the goods, even as it delivered possession unto the dealer
for resale to customers, the price and terms of which were subject to the
company‘s control, the relationship between the company and the dealer
is one of agency.

13. Inchausti vs Cromwell 20 Phil. 345 October 16, 1911

Facts:Inchausti is engaged in the business of buying and selling

wholesale hemp on

commission. It is customary to sell hemp in bales which are made by

compressing the loose fiber by means of presses, covering two sides of
the bale with matting, and fastening it by means of strips of rattan; that
the operation of bailing hemp is designated among merchants by the
word ―prensaje.‖ In all sales of hemp by Inchausti, the price is quoted
to the buyer at so much per picul, no mention being made of bailing. It is
with the tacit understanding that the hemp will be delivered in bales. The
amount depends under the denomination of ―prensaje‖ or the baled
hemp. CIR made demand in writing upon Inchausti for the payment of
the sum of P1,370.68 as a tax of one third of one per cent on the sums
of money mentioned as aggreagate sum collected as prensaje or the
baled hemp. Inchausti paid upon protest, contending that the collected
amount is illegal upon the ground that the said charge does not
constitute a part of the selling price of the hemp, but is a charge made
for the service of baling the hemp.

Issue:Whether or not the baled hemp constitutes a contract of sale

Ruling:Yes, the baled hemp constitutes a contract of sale. In the case at

bar, the baled form before the agreement of sale were made and would
have been in existence even if none of the individual sales in question
had been consummated. The hemp, even if sold to someone else, will
be sold in bales. When a person stipulates for the future sale of articles
which he is habitually making, and which at the time are not made or
finished, it is essentially a contract of sale and not a contract for piece of
work. It is otherwise when the article is made pursuant to agreement. If
the article ordered by the purchaser is exactly such as the plaintiff makes
and keeps on hand for sale to anyone, and no change or modification of
it is made at the defendant‘s request, it is a contract of sale, even though
it may be entirely made after, and in consequence of, the defendant‘s
order for it.

COMMISSIONER OF INTERNAL REVENUE v ENGINEERING EQUIPMENT & SUPPLY CO.

FACTS: Engineering Equipment & Supply (EES) was engaged in the business of
designing and installing central air-conditioning systems. It was assessed by the CIR
for 30% advanced sales tax, among other penalties pursuant to an anonymous
complaint filed before the BIR. EES vehemently objected and argued that they are
contractors and not manufacturers, and thus, should only be liable for the 3% tax on
sales of services or pieces of work.

ISSUE: W/N EES is a contractor (piece of work)

HELD: YES. EES was NOT a manufacturer of air- conditioning units. While it imported
such items, they were NOT for sale to the general public and were used as mere
components for the design of the centralized air-conditioning system, wherein its
designs and specifications are different for every client. Various technical factors
must be considered and it can be argued that no 2 plants are the same; all are
engineered separately and distinctly. Each project requires careful planning and
meticulous layout. Such central air- conditioning systems and their designs would not
have existed were it not for the special order of the party desiring to acquire it. Thus,
EES is not liable for the sales tax of 30%.

6. PUYAT v ARCO AMUSEMENT CO.

FACTS: Arco Amusement was engaged in the business of operating cinematopgraphs.

Gonzalo Puyat & Sons Inc (GPS) was the exclusive agent in the Philippines for the
Starr Piano Company. Desiring to equip its cinematograph with sound reproducing
devices, Arco approached GPS, through its president, GIl Puyat, and an employee
named Santos. After some negotiations, it was agreed between the parties that GPS
would order sound reproducing equipment from Starr Piano Company and that Arco
would pay GPS, in addition to the price of the equipment, a 10% commission, plus all
expenses such as freight, insurance, etc. When GPS inquired Starr Piano the price
(without discount) of the equipment, the latter quoted such at $1,700 FOB Indiana.
Being agreeable to the price (plus 10% commission plus all other expenses), Arco
formally authorized the order.

The following year, both parties agreed for another order of sound reproducing
equipment on the same terms as the first at $1,600 plus 10% plus all other expenses.

Three years later, Arco discovered that the prices quoted to them by GPS with regard
to their first 2 orders mentioned were not the net prices, but rather the list price,
and that it had obtained a discount from Starr Piano. Moreover, Arco alleged that the
equipment were overpriced. Thus, being its agent, GPS had to reimburse the excess
amount it received from Arco.

ISSUE: W/N there was a contract of agency, not of sale

HELD: NO. The letters containing Arco's acceptance of the prices for the equipment
are clear in their terms and admit no other interpretation that the prices are fixed
and determinate. While the letters state that GPS was to receive a 10% commission,
this does not necessarily mean that it is an agent of Arco, as this provision is only an
additional price which it bound itself to pay, and which stipulation is not incompatible
with the contract of sale.

It is GPS that is the exclusive agent of Starr Piano in the Philippines, not the agent of
Arco. it is out of the ordinary for one to be the agent of both the seller and the buyer.
The facts and circumstances show that Arco entered into a contract of sale with GPS,
the exclusive agent of Starr Piano. As such, it is not duty bound to reveal the private
arrangement it had with Starr Piano relative to the 25% discount.

Thus, GPS is not bound to reimburse Arco for any difference between the cost price
and the sales price, which represents the profit realized by GPS out of the
transaction.

LO v KJS ECO-FORMWORK SYSTEM PHIL., INC.

FACTS: KJS Inc was engaged in the sale of steel scaffolding. Sonny Lo, a contractor,
purchased scaffolding equipment worth P540,000. He made a deposit of P150,000, the
balance payable within 10 months. Due to financial difficulties, Lo defaulted after
paying only 2 installments. A debt of some P335,000 remained. Thus, Lo assigned in
favor of KJS all his receivables from Jomero Realty Corp. which refused to pay and
raised the defense of compensation—claiming that Lo also had debts in its favor. KJS
thus again sought to collect from Lo who them averred that his debts have already
been extinguished by the said assignment.

ISSUE: W/N the assignment of credit extinguished the debts

HELD: NO. The assignment of credit made by Lo in favor of KJS was in the nature of
dacion en pago, which is governed by the law on sales. It is as if KJS bought the credit
from Lo, the payment of which is to be charged upon the latter’s debt. Lo, as vendor
not good faith, shall be liable for the existence and legality of the credit at the time
of the sale (but not for the solvency of the debtor). He is bound by certain
warranties. In this case, since the assignment he made in favor of KJS has already
been compensated, he should still be liable to pay KJS for his indebtedness. He should
make good the warranty and pay the obligation.