ATP.7.3 Harry Keeler v.

Rodriquez

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:
o He claimed that he could find purchaser for the "Matthews" plant
o Keeler Electric told Montelibano that for any plant that he could sell or any customer that he could find
he would be paid 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,
 Keeler Electric filed an action against Rodriguez for the payment of the purchase price.
 Rodriguez: Claimed that he already paid the price of the plant. In addition, he alleged that:
o Montelibano sold and delivered the plant to him, and "was the one who ordered the installation of that
electrical plant"
o There were evidences: a statement and receipt which Montelibano signed to whom he paid the money.
o He paid Montelibano because the latter was the one who sold, delivered, and installed the electrical plant,
and he presented to him the account, and assured him that he was duly authorized to collect the value of the
electrical plant
o It was supported with receipt
o The answer alleges and the receipt shows upon its face that the plaintiff sold the plant to the defendant, and
that he bought it from the plaintiff.

 Witness (Juan Cenar):

o Cenar was sent by Keeler Electric to install the plant in Rodriguez’s premises in Iloilo
o He brought with him a statement of account for Rodriguez but the latter said that he would pay in Manila.

 Lower Court: In favor of Rodriguez. It held that:

o Keeler Electric had held out Montelibano to Rodriguez as an agent authorized to collect
o Payment to Montelibano would discharge the debt of Rodriguez
o The bill was given to Montelibano for collection purposes

 Keeler Electric appealed. It alleged that:

o Montelibano had no authority to receive the money.
o His services were confined to the finding of purchasers for the "Matthews" plant
o Montelibano was not an electrician, could not install the plant and did not know anything about its
mechanism

ISSUES: 1. Whether Keeler Electric authorized Montelibano to receive or receipt for money in its behalf
2. Whether Rodriguez had a right to assume by any act or deed of Keeler Electric that Montelibano was authorized to
receive the money

RULING:
1. NO, Montelibano was not authorized. The plant was 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.
a. Montelibano was not an agent of Keeler Electric
There is nothing on the face of this receipt to show that Montelibano was the agent of, or that he was acting
for, Keeler Electric. It is his own personal receipt and his own personal signature.

b. It was Juan Cenar, and not Montelibano who sold the plant to Rodiguez
 After Cenar's return to Manila, Keeler Electric wrote a letter to Rodriguez requesting the payment of its
account, to which Rodriguez answered that he already paid to Montelibano. This is in direct conflict with
the receipted statement, which Rodriguez offered in evidence, signed by Montelibano. It will be noted that
the receipt which Montelibano signed is not dated, and it does not show when the money was paid.

2. NO. Article 1162 CC: Payment must be made to the persons in whose favor the obligation is constituted, or to another
authorized to receive it in his name and Article 1727 CC: The principal shall be liable as to matters with respect to which
the agent has exceeded his authority only when he ratifies the same expressly or by implication.

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.

The person dealing with the agent must act with ordinary prudence and reasonable diligence. Obviously, if he knows or
has good reason to believe that the agent is exceeding his authority, he cannot claim protection. So if the suggestions of
probable limitations be of such a clear and reasonable quality, or if the character assumed by the agent is of such a
suspicious or unreasonable nature, or if the authority which he seeks to exercise is of such an unusual or improbable
character, the party dealing with him may not shut his eyes to the real state of the case, but should either refuse to deal with
the agent at all, or should ascertain from the principal the true condition of affairs. Judgment of the lower court is
REVERSED. Rodriguez should pay Keeler Electric the purchase price of the plan