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ALBALADEJO Y CIA., S. EN C. v. PHILIPPINE REFINING CO.

[PRC] 1923 / Street FACTS Albaladejo y Cia is a limited partnership, which was engaged in the buying and selling of copra in Legaspi, and in the conduct of a general mercantile business. Visayan Refining Co. [PRCs successor] was engaged in operating its extensive plant for the manufacture of coconut oil. On August 1918, Albaladejo made a contract with the Visayan Refining, wherein they agreed that VRC will buy for a period of 1 year all the copra that Albaladejo purchased in Albay. It was also agreed upon that during the continuance of the contract, VRC will not appoint any other agent for the purchase of copra in Legaspi, nor buy copra from any vendor in the same place. In addition, VRC would provide transportation for the copra delivered to it by Albaladejo. At the end of said year, both parties found themselves satisfied with the existing arrangement, and they continued by tacit consent to govern their future relations by the same agreement . On July 9, 1920, VRC closed down its factory at Opon and withdrew from the copra market. After VRC ceased to buy copra, the copra supplies already purchased by Albaladejo were gradually shipped out and accepted by the VRC, and in the course of the next 8-10 months, the accounts between the two parties were liquidated. The last account rendered by VRC to Albaladejo showed a balance of P288 in favor of VRC. Albaladejo addressed a letter to the PRC (which had now succeeded to the rights and liabilities of VRC), expressing its approval of said account. Albaladejo filed a complaint against PRC, seeking to recover P110k, the alleged amount that Albaladejo spent in maintaining and extending its organization. Albaladejo alleges that such maintenance and extension was made at the express request of PRC. On the other hand, PRC contends that the contract between them created the relation of principal and agent ; therefore, the principal should indemnify the agent for damages incurring in carrying out the agency. The lower court ruled in favor of Albaladejo, but granted only 30% of the amount prayed for, in view of the fact that Albaladejos transactions in copra amounted in the past to only about 30% of the total business it transacted. ISSUE & HOLDING WON the contract is one of agency. NO RATIO The relation between the parties was not that of principal and agent in so far as relates to the purchase of copra by Albaladejo. While VRC made Albaladejo one of its instruments for the collection of copra, in making its purchases from the producers, Albaladejo was buying upon its own account. When Albaladejo turned over the copra to VRC, a second sale was effected. In the contract, it is declared that during the continuance of the agreement, VRC would not appoint any other agent for the purchase of copra in Legaspi; and this gives rise indirectly to the inference that Albaladejo was considered its buying agent. However, the use of this term in one clause of the contract cannot dominate the real nature of the agreement as revealed in other clauses, no less than in the caption of the agreement itself. This designation was used for convenience. The title to all of the copra purchased by Albaladejo remained in it until it was delivered by way of subsequent sale to VRC. Lastly, the letters from VRC to Albaladejo that the Court quoted did not indicate anything to the effect that VRC is liable for the such expenses incurred by Albaladejo, as the letters only noted the dire condition of VRCs copra business, as well as its hopes to enter the market on a more extensive scale [which was unfortunately unrealized].