Harry E. Keeler Elec . Co. v. Rodriguez, 44 Phil.

19 (1922)

***This case involves an action for the payment of purchase price by plaintiff Keeler Electric against defendant
Rodriguez.

Facts:

Plaintiff is Harry E. Keeler Electric Co., a domestic corporation based in Manila engaged in the electrical business,
and among other things in the sale of what is known as the "Matthews" electric plant. Defendant is Domingo
Rodriguez a resident of Talisay, Occidental Negros.

Montelibano, a resident of Iloilo, went to Keeler Electric and made arrangement with the latter wherein: He claimed
that he could find purchaser for the "Matthews" plant; which later made Keeler Electric offer to pay a commission of
10% for his services, if the sale was consummated. Through Montelibano’s efforts, Keeler was able to sell to
Rodriguez one of the "Matthews" plants.

Rodriguez paid Montelibano (the purchase price of P2,513.55) , after the installation of the plant and without the
knowledge of Keeler Electric. Hence, Keeler Electric filed an action against Rodriguez for the Payment of the
purchase price.

Rodriguez countered and claimed to have paid the purchase price of the plant to Montelibano because the latter was
the one who sold, delivered, and installed the electrical plant; and was assured that he was duly authorized to collect
the value of the electrical plant. By evidence, he showed a statement and receipt with Montelibano’s signature.

The witness of the plaintiff (Keeler Electrics), Juan Cenar, who was sent by Keeler Electric to install the plant in
Rodriguez’s premises in Iloilo testified that he brought with him a statement of account for Rodriguez but the latter
said he would pay in Manila.

The Lower Court has decided in favor of Rodriguez and held that Keeler Electric had held out Montelibano to
Rodriguez as an agent authorized to collect. Hence, Rodriguez is discharged from debt.

Thus, this present case - Keeler Electric filed an Appeal and alleged that Montelibano had no authority to receive the
money. His services were confined to the finding of purchasers of for the “Matthews” plant. Montellibano was not
an electrician, could not install the plant and did not know anything about the mechanism.

ISSUES:

1. Whether or not Keeler Electric authorized Montelibano to receive or receipt for money in his behalf.

2. Whether or not Rodriguez had a right to aasume by any act or deed of Keeler Electric that Montelibano was
authorized to receive the money.

RULING:

1. No, Montellibano was not authorized nor was an agent of Keeler Electric.

According to the fundamental principles in Agency, (1) the law indulges in no bare presumptions that an agency
exists: it must be proved or presumed from facts; (2) the agent cannot establish his own authority, either by his
representations or by assuming to exercise it; among others.

In the case at bar, the evidence receipt presented showing Montelibano received the purchase payment was not
dated, and only shows his own personal receipt and own personal signature thus did not prove or establish any given
authority by Keeler Electric. In fact, the letter to Rodriguez requesting the payment of its account is in direct conflict
with Rodriguez’s evidence, the receipted statement signed by Montelibano.
Also, the plant was actually sold by Keeler Electric to Rodriguez and was consigned to Iloilo where it was installed
by Cenar, acting for, and representing, Keeler Electric, whose expense for the trip is included in, and made a part of,
the bill which was receipted by Montelibano. Here, it can be presumed from the facts that it was Cenar who
represented Keeler Electric and not Montelibano.

2. No, Rodriguez had no right to assume by any act or deed of Keeler Electric that Montelibano was authorized to
receive the money.

Well settled is the rule that persons dealing with an assumed agent, whether the assumed agency be a general or
special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but
the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to
establish it.

In the case at bar, the testimony is conclusive that the plaintiff – Keeler Electric - never authorized Montelibano to
receive or receipt for money in its behalf. Rodriguez’s reliance on Montelibano did not show the ordinary prudence
and reasonable diligence required for a person dealing with an assumed agent.

Also, Article 1162 of the Civil Code provides that payment must be made to the persons in whose favor the
obligation is constituted, or to another authorized to receive it in his name. Rodriguez made the payment at his own
risk and on the sole representations of Montelibano even if it was Cenar who installed the plant and the first who
sought for his payment in Iloilo; and even if he received the letter from Keeler Electric requesting for payment.
Rodriguez, therefore, is still liable for repayment of debt for the repayment of a debt must be made to the person in
whose favor the obligation is constituted, or to another expressly authorized to receive the payment in his name.
(Ormachea Tin-Conco vs. Trillana (13 Phil., 194).

CA decision: The judgment of the lower court is reversed, in favor of the plaintiff (Keeler Electric) and against the
defendant (Rodriguez) for the sum of P2,513.55 with interest at the legal rate from January 10, 1921, with costs in
favor of the appellant.