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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.The whole question, therefore, reduced itself to a determination as towhether the defendant, by reason of the contract hereinbefore transcribed,was a purchaser or an agent of the plaintiff for the sale of his beds.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 itscause and subject matter, is that the plaintiff was to furnish the defendantwith the beds which the latter might order, at the price stipulated, and thatthe defendant was to pay the price in the manner stipulated. The priceagreed upon was the one determined by the plaintiff for the sale of thesebeds in Manila, with a discount of from 20 to 25 per cent, according to theirclass. Payment wasto be made at the end of sixty days, or before, at theplaintiff's request, or in cash, if the defendant so preferred, and in these lasttwo cases an additional discount was to be allowed for prompt payment.These are precisely the essential features of acontract 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 excludethe legal conception of an agency or order to sell whereby the mandatoryor agent received the thing to sell it, and does not pay its price, but deliversto the principal the price he obtains from the sale of the thing to a thirdperson, and if he does not succeed in selling it, he returns it. By virtue ofthe contract betweenthe plaintiff and the defendant, the latter, on receivingthe 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.It would be enough to hold, as we do, that the contract by and between thedefendant and the plaintiff is one of purchase and sale, in order to showthat it was not one made on the basis of a commission on sales, as theplaintiff claims it was, for these contracts are incompatible with each other.But, besides, examining the clauses of this contract, none of them is foundthat substantially supports the plaintiff's contention. Not a single one ofthese clauses necessarily conveys the idea of an agency. The wordscommission 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

wordagency, also used in articles 2 and 3, only expresses that thedefendant was the only one that could sell the plaintiff's beds in theVisayan Islands. With regard to the remaining clauses, the least that can besaid is that they are not incompatible with the contract of purchase andsale.The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-

president of the defendant corporation and who established and managedthe latter's business in Iloilo. It appears that this witness, prior to the time ofhis testimony, had serious trouble with the defendant, had maintained acivil suit against it, and had evenaccused one of its partners, GuillermoParsons, of falsification. He testified that it was he who drafted the contractExhibit A, and, when questioned as to what was his purpose in contractingwith the plaintiff, replied that it was to be an agent for his beds and tocollect a commission on sales. However, according to the defendant'sevidence, it was Mariano Lopez Santos, a director of the corporation, whoprepared Exhibit A. But, even supposing that Ernesto Vidal has stated the

truth, his statement as towhat was his idea in contracting with the plaintiffis of no importance, inasmuch as the agreements contained in Exhibit Awhich he claims to have drafted, constitute, as we have said, a contract ofpurchase and sale, and not one of commercial agency. This only meansthat Ernesto Vidal was mistaken in his classification of the contract. But itmust be understood that a contract is what the law defines it to be, and notwhat it is called by the contracting parties.The plaintiff also endeavored to prove that the defendant had returnedbeds that it could not sell; that, without previous notice, it forwarded to the

defendant the beds that it wanted; and that the defendant received itscommission for the beds sold by the plaintiff directly to persons in Iloilo. Butall this, at the most only shows that, on the part of both of them, there wasmutual tolerance in the performance of the contract in disregard of itsterms; and it gives no right to have the contract considered, not as theparties stipulated it, but as they performed it. Only the acts of thecontracting parties, subsequent to, and in connection with, the execution ofthe contract, must be considered for the purpose of interpreting thecontract, when such interpretation is necessary, but not when, as in the

instant case, its essential agreements are clearly set forth and plainly show

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that the contract belongs to a certain kind and not to another. Furthermore,the return made was of certain brass beds, and was not effected inexchange for the price paid for them, but was for other beds of anotherkind; and for the letter Exhibit L-1, requested the plaintiff's prior consentwith respect to said beds, which shows that it was not considered that thedefendant had a right, by virtue of the contract, to make this return. As

regards the shipment of beds without previous notice, it is insinuated in therecord that these brass beds were precisely the ones so shipped, and that,for this very reason, the plaintiff agreed to their return. And with respect tothe so-called commissions, we have said that they merely constituted adiscount on the invoice price, and the reason for applying this benefit to thebeds sold directly by the plaintiff to persons in Iloilo was because, as thedefendant obligated itself in the contract to incur the expenses ofadvertisement of the plaintiff's beds, such sales were to be considered as aresult of that advertisement.In respect to the defendant's obligation to order by the dozen, the only one

expressly imposed by the contract, the effect of its breach would onlyentitle the plaintiff to disregard the orders which the defendant might placeunder other conditions; but if the plaintiff consents to fill them, he waives hisright and cannot complain for having acted thus at his own free will.For the foregoing reasons, we are of opinion that the contract by andbetween the plaintiff and the defendant was one of purchase and sale, andthat the obligations the breach of which is alleged as a cause of action arenot imposed upon the defendant, either by agreement or by law.The judgment appealed from is affirmed, with costs against the appellant.

So ordered.Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ.,concur.

Puyat v. Arco Amusement Co..G.R. No. L-47538 June 20, 1941GONZALO PUYAT & SONS, INC., petitioner,vs.ARCO AMUSEMENT COMPANY (formerly known as Teatro Arco),

respondent.

Feria & Lao for petitioner.J. W. Ferrier and Daniel Me. Gomez for respondent.LAUREL, J.:This is a petition for the issuance of a writ ofcertiorarito the Court of

Appeals for the purpose of reviewing its Amusement Company (formerlyknown as Teatro Arco), plaintiff-appellant, vs. Gonzalo Puyat and Sons.

Inc., defendant-appellee."It appears that the respondent herein brought an action against the hereinpetitioner in the Court of First Instance of Manila to secure areimbursement of certain amounts allegedly overpaid by it on account ofthe purchase price of sound reproducing equipment and machinery orderedby the petitioner from the Starr Piano Company of Richmond, Indiana,U.S.A. The facts of the case as found by the trial court and confirmed bythe appellate court, which are admitted by the respondent, are as follows:

In the year 1929, the "Teatro Arco", a corporation duly organizedunder the laws of the Philippine Islands, with its office in Manila,

was engaged in the business of operating cinematographs. In 1930,its name was changed to Arco Amusement Company. C. S. Salmonwas the president, while A. B. Coulette was the business manager.

About the same time, Gonzalo Puyat & Sons, Inc., anothercorporation doing business in the Philippine Islands, with office inManila, in addition to its other business, was acting as exclusiveagents in the Philippines for the Starr Piano Company of Richmond,Indiana, U.S. A. It would seem that this last company dealt incinematographer equipment and machinery, and the Arco

Amusement Company desiring to equipt its cinematograph withsound reproducing devices, approached Gonzalo Puyat & Sons,Inc., thru its then president and acting manager, Gil Puyat, and anemployee named Santos. After some negotiations, it was agreedbetween the parties, that is to say, Salmon and Coulette on oneside, representing the plaintiff, and Gil Puyat on the other,representingthe defendant, that the latter would, on behalf of theplaintiff, order sound reproducing equipment from the Starr PianoCompany and that the plaintiff would pay the defendant, in addition

to the price of the equipment, a 10 per cent commission, plus all