Rule: Art. 1881- The agent must act within the scope of his authority.

He may do such acts as may be conducive to

the accomplishment of the purpose of the agency.

HARRY E. KEELER ELECTRIC CO., INC vs. DOMINGO RODRIGUEZ

G.R. No. L-19001, November 11, 1922

Facts:
1. A. C. Montelibano approached Harry E. Keller Electric Co., Inc. claiming that he was from Iloilo lived
with Governor Yulo; and that he could find a purchaser for the "Matthews" electric plant.
2. Harry E. Keller Electric Co., Inc. told Montelibano that he would be paid a commission of 10 percent
for any plant that he could sell, or any customer that he could find, if the sale was consummated.
3. Montelibano interviews Domingo Rodriguez. Through Montelibano’s efforts, one of the "Matthews"
plants was sold by Harry E. Keller Electric Co., Inc. to Domingo Rodriguez.
4. However, Rodriguez paid Motelibano without the knowledge of Harry E. Keller Electric Co., Inc.,
resulting in a case for collection of payment plus interest against Rodriguez.
5. Rodriguez denied the allegation of non-payment and stated that he paid the electric plant through
Montelibano.
6. RTC ruled in favor of Rodriguez who said that he paid Motelibano because he was the one who sold,
delivered, and installed the electrical plant, and he presented to me the account, and he assured me
that he was duly authorized to collect the value of the electrical plant. To support this allegation, he
presented a receipt signed by Montelibano as evidence of Montelibano’s authority to act in behalf of
Harry E. Keller Electric Co., Inc.
7. As result, Harry E. Keller Electric Co., Inc. filed an appeal claiming that RTC erred in holding that:
>the payment to A. C. Montelibano would discharge Rodriguez’s debt;
>the bill was given to Montelibano for collection purposes;
>Montelibano is as an agent authorized to collect,
as Montelibano was never authorized by Harry E. Keller Electric Co., Inc. to receive money and that his
services were limited and confined to the finding of purchasers for the "Matthews" electric plant to
whom Harry E. Keller Electric Co., Inc. would later make and consummate the sale.
8. Cenar, as a witness for Harry E. Keller Electric Co., Inc., testified that he went with shipment of the
plant from Manila to Iloilo, for the purpose of installing, testing it, and to see that everything was
satisfactory. That he was there about nine days, and that he installed the plant, and that it was tested
and approved by the defendant. He also says that he personally took with him the statement of account
of tHarry E. Keller Electric Co., Inc. against Domingo Rodriguez. Cenar also said that he made no effort to
collect the amount from him because Mr. Rodriguez told him that he was going to pay for the plant here
in Manila.

Issue: Was Rodriguez correct to assume that Montelibano was an agent of Harry E. Keller Electric Co.,
Inc. authorized to collect payment in behalf of the company?

Held: No, There is nothing on the face of the receipt to show that Montelibano was the agent of, or that
he was acting for Harry E. Keller Electric Co., Inc. It was his own personal receipt and his own personal
signature. Outside of the fact that Montelibano received the money and signed this receipt, there is no
evidence that he had any authority, real or apparent, to receive or issue receipt for the money.
Neither is there any evidence that Harry E. Keller Electric Co., Inc. ever delivered the statement to
Montelibano, or authorized anyone to deliver it to him, and it is very apparent that the statement in
question is the one which was delivered by the Harry E. Keller Electric Co., Inc. to Cenar, and is the one
which Cenar delivered to the defendant at the request of the defendant. The evidence of the defendant
that Montelibano was the one who sold him the plant is in direct conflict with his own pleadings and the
receipt statement which he offered in evidence, which shows a bill of P81.60 which must be for the
expenses of Cenar in going to Iloilo from Manila and return, to install the plant, and is strong evidence
that it was Cenar and not Montelibano who installed the plant.

Note: In this case Montelibano’s authority is one of an expressed authority verbally given as manifested by Harry E.
Keller Electric Co., Inc.’s statement that Montelibano would be paid a commission of 10 percent for any plant that
he could sell, or any customer that he could find, if the sale was consummated. His authority was expressly limited
through verbal agreement that he is is to sell, but not collect any payment.
This case is an example of a possible irregularity in a contract of agency where the agent has authority but has
acted on behalf of himself. The effect to this is that generally, the agent can have a recourse only against the third
person and vice versa. Principal and the third person have no recourse against each other. However this case falls
under the exception to the general rule where the principal can have a recourse against the third persons because
the subject of the transaction belongs to the principal. (Art. 1883 par. 2)