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1923 / Street
FACTS Albaladejo
y Cia is a limited partnership, which was engaged in the buying and selling of
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
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 b
uy 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 wi
th the existing arrangement, and
they continued by tacit consent to govern their future relations by the same agr
. On July 9, 1920, VRC closed down its factory at Opon and withdrew from the cop
ra market. After VRC ceased to buy copra, the copra supplies already purchased b
y Albaladejo were gradually shipped out and accepted by the VRC, and in the cour
se 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 fav
or 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 an
d agent
; therefore, the principal should indemnify the agent for damages incurring in c
arrying 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 amo
unted in the past to only about 30%
of the total business it transacted.
WON the contract is one of agency.
The relation between the parties was not that of principal and agent in so far a
s 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 o
ver the copra to VRC, a second sale was effected. In the contract, it is declare
d 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 th
e 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 agree
ment 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 su
bsequent 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 sca
le [which was unfortunately unrealized]