Albaladejo y Cia v. Philippine Refining Co.

(12/20/1923) D: The use of the term agent 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. Facts: 1. Albaladejo y Cia, a limited partnership engaged in the buying and selling of the products of the country esp. copra, entered into a Memorandum of Agreement with Visayan Refining Company (VRC), an organization engaged in the manufacture of coconut oil. Said MOA contained the following stipulations: a) VRC bound itself to but from Cia all copra purchased by Cia in the province of Albay for a period of 1 year from the date of MOA b) VRC bound itself to pay Cia the Cebu market price of copra deducting, however, price of the cost of transportation by sea to VRC factory c) VRC will not appoint any other agent for the purchase of copra in Legaspi nor buy copra from any vendor in Legaspi d) VRC will keep CIA advised of the prevailing prices paid for said copra in Cebu market e) VRC to provide transportation by sea to Opon, Cebu for the delivery of copra by Cia 2. Due to satisfaction on both parties from the arrangement, the agreement continued even after the 1 year period by tacit consent of both parties 3. During this time, Cia expanded its business due to the large requirements/demand of copra from VRC 4. However, VRC eventually closed down its factory in Opon and withdrew from the copra market. VRC was succeeded by Philippine Refining Company (PRC) 5. Accounts between Cia and PRC were liquidated 6. Thereafter, Cia filed a complaint against PRC for recovery of money. Cia alleged that due to VRCs negligence in sending boats for transportation to Opon of the copra products, said copra suffered a diminishment of weight through shrinkage and excessive drying and consequently, copra diminished its value. 201k was the amount claimed by Cia for damages. Furthermore, Cia claimed expenses from VRC for maintaining and expanding its organization as these were incurred at the VRCs promise to Cia to make the expenditure good. Issue: (1) WON VRC is liable for the alleged diminution of copa Held: No Ratio: 1. Copra is a product that necessarily undergoes shrinkage in the process of drying. 2. It is found out that the shrinking of copra delivered by Cia to VRC amounted to only 8.18% of the whole. This is notably below the normal. 3. This fact goes to show that there was no delay on part of VRC in supplying transportation Issue: WON VRC is principal which is liable to the expenses incurred by the agent Cia in carrying out the agency

Held: No Ratio: 1. Relation between VRC and Cia is not one of principal and agent in so far as this relates to the purchase of copra by Cia 2. True that VRC made Cia one of its instruments for the collection of Copra but it is clear that in making its purchases from the producers, Cia was buying on its own account and when it turned over to VRC pursuant to the agreement, a second sale was effected. 3. The use of the term agent for the purchase of copra, cannot dominate the real nature of the agreement as revaled in other clauses of the contract.