G.R. No. L-10099; January 27, 1916
TEOFILA DEL ROSARIO DE COSTA and BERNARDO COSTA, plaintiffs-appellants, vs. LA BADENIA, a corporation, defendant-appellee.

FACTS:
Plaintiffs Teofila del Rosario de Costa and her husband Bernardino Costa sued defendant corporation La Badenia to recover P1,795.25, allegedly a balance due for Teofila’s services and expenses as La Badenia’s agent in selling its tobacco products in Legaspi, Albay, from February 1, 1911, to March 24, 1912. The defendant denied the claim and counterclaimed for P55.43, contending that the plaintiffs were independent merchants who bought goods at wholesale and sold on their own account, not agents.

The business was conducted under Celestino Aragon, La Badenia’s general agent for Albay and nearby provinces. Aragon established a central distributing agency in the plaintiffs’ house, with Bernardino Costa actively managing it. Goods from Manila were charged to Aragon, who in turn charged them to the plaintiffs on his books. Withdrawals for sales or shipments by both Aragon and the plaintiffs were credited to the plaintiffs’ account. The plaintiffs made direct remittances to La Badenia’s Manila office, which acknowledged them and referred to the “agency in your charge.” On March 24, 1912, Aragon settled accounts with the plaintiffs and acknowledged a balance of P1,795.25 in their favor. La Badenia refused to pay, arguing that the plaintiffs should be charged with P1,850.68 in uncollected credits from sales, which would instead leave a balance of P55.43 in La Badenia’s favor.

The trial court ruled for the defendant, holding that the plaintiffs were independent purchasers, not agents.

ISSUE:
Whether the plaintiffs acted as agents of La Badenia or as independent merchants purchasing and selling goods on their own account.

RULING:
The Supreme Court reversed the trial court’s decision. It held that the plaintiffs were agents of La Badenia, not independent merchants. The Court found that:
1. The defendant, through its general agent Aragon, vested the plaintiffs with authority to sell its products under Aragon’s supervision.
2. La Badenia’s head office was fully aware of the plaintiffs’ role, as shown by correspondence acknowledging remittances and referring to the “agency in your charge.”
3. The accounting methodwhere goods were charged to the plaintiffs but credits were given for withdrawals, remittances, and expenseswas consistent with an agency arrangement, not a simple buyer-seller relationship.
4. Aragon, as general agent with broad authority, had settled the account and confirmed the balance in the plaintiffs’ favor; La Badenia could not repudiate it without proof that Aragon exceeded his authority, which was not shown.

Thus, the plaintiffs were entitled to recover the balance of P1,795.25, with legal interest from the filing of the complaint, plus costs.