PNB vs Welch, Fairchild & co.

44 phil 780

FACTS:
La Compania bought Benito Juarez.

It was through the efforts of Mr. Fairchild that the consent of theproper authorities in Washington, D.C. was
obtained for the transferof the ship to Philippine registry.

While the ship was being delivered to the agent of the buyer in SanFrancisco (Welch & Co., I think), it was found
out that it neededrepairs before it could be transported to the Philippines. It alsobecame impracticable to deliver
the bill of sale and insurancemoney to Anglo-London and Paris National Bank, PNBs agent in San Francisco
which was supposed to deliver the purchase money(Ignore the agency between PNB ang Anglo-London. Not the
subject agency in this case.). Because of this, defendant wrote a letter to PNB to request the latterto cable Anglo-
London to release the money and make payment for the ship upon Welch &Co.s application without requiring the
delivery of the bill of sale or insurance policy. It was written in the letter that the CompaniaNaviera will deliver to
you here the bill of sale also the insurance policy covering the voyage to Manila

La Compania also addressed a letter to PNB confirming the request and authorizing the bank to send the
necessary cablegram. PNB sent the cablegram authorizing payment without theproduction of the bill of sale or
insurance policy. Anglo-London did,and the ship was delivered.

After the repair of the ship, it was insured by Welch & Co to thevalue of $150,000 and was dispatched on its
voyage to the Phils.

The vessel encountered a storm off the Island in Hawaii and becamea total loss.

When the insurance was taken out to cover the voyage to Manila, nopolicy was issued by any insurer; but the
insurance was placed byWelch & Co. of San Francisco, upon the instructions of Welch,Fairchild& Co., as agents
of the CompaaNaviera, and it was takenout in the ordinary course of business to protect the interests of
allparties concerned. The risk was distributed among several companies, some in remotecenters; and it was
many months before Welch & Co., of SanFrancisco, had collected the full amount due from the insurers.However,
as the money came to the hands of Welch & Co., of SanFrancisco, it was remitted by draft or telegraphic transfer
to Welch,Fairchild & Co. in Manila.

The amount of $13,000 was mistakenly remitted to PNB in NewYork, and it was only a month after this that PNB
Manila receivedauthority to pay defendant the said amount. This drew the attentionof the bank to the fact that
the transfer was related to the proceedsof the insurance on Benito Juarez. PNB Manila first determined
tointercept the transfer and withhold the credit from the defendant.

ISSUE/HELD:
WON PNB could collect from Welch, Fairchild & Co.
YES.

RATIO:
While it is true that an agent who acts for a revealed principal in the making of a contract does not become
personally bound to the other party in the sense that an action can ordinarily be maintained upon such contract
directly against the agent (art. 1725, Civ. Code), yet that rule clearly does not control this case; for even
conceding that the obligation created by the letter of August 8, 1918, was directly binding only on the principal,
and that in law the agent may stand apart therefrom. yet it is manifest upon the simplest principles
of jurisprudence that one who has intervened in the making of contract in the character of agent cannot be
permitted to intercept and appropriate the thing which the principal is bound to deliver, and thereby make
performance by the principal impossible. The agent in any event must be precluded from doing any positive
act that could prevent performance on the part of his principal. This much, ordinary good faith towards the other
contracting party requires. The situation before us in effect is one where, notwithstanding the promise held out
jointly by principal and agent in the letters of August 8 and 10, 1918, the two have conspired to make an
application of the proceeds of the insurance entirely contrary to the tenor of said letters. This cannot be permitted.
The idea on which we here proceed can perhaps be made more readily apprehensible from another point of
view, which is this: By virtue of the promise contained in the letter of August 8, 1918, thebank became the
equitable owner of the insurance effected on the Benito Juarez to the extent necessary to indemnify the bank for
the money advanced by it, in reliance upon that promise, for thepurchase of said vessel; and this right of the bank
must be respectedby all persons having due notice thereof, and most of all by thedefendant which took out the
insurance itself in the interest of theparties then concerned, including of course the bank. The defendant therefore
cannot now be permitted to ignore the right of the bankand appropriate the insurance to the prejudice of the bank,
eventhough the act be done with the consent of its principal.
As to the argument founded upon the delay of the bank in assertingits right to the insurance money, it is enough
to say that mere delayunaccompanied by acts sufficient to create an equitable estoppeldoes not destroy legal
rights, but such delay as occurred here is inpart explained by the fact that the loan to La CompaaNavieradid not
mature till May 17, 1919, and a demand for the surrender of theproceeds of the insurance before that date would
have seemedpremature. Besides, it is to be borne in mind that most of theinsurance was not in fact collected until
in June of 1919. x xx thebank was not slow in asserting its right to the remittance that camethrough the bank in
June to Welch, Fairchild & Co., consisting of $13,000 of the proceeds of this insurance.
De Borja vs. De Borja
58 Phil 811

The plaintiff herein, in his capacity as judicial administrator of the estate of the deceased Marcelo de
Borja,instituted this action of the Court of First Instance of Rizal, to recover from the defendant the sum of
P61,376.56which, according to the amended complaint, the said defendant owed the aforesaid deceased, for the
certain sums of money loaned to and collected by him from other persons with the obligation to render an
accounting thereof to thesaid deceased.

In his amended answer, the defendant interposed various counterclaims for alleged sums of money owed by him
bythe aforesaid deceased.

After the trial thereof and the presentation of voluminous evidence therein, the trial court reached the conclusion
andheld that, from his various causes of action, the plaintiff was entitled to recover the sum of P33,218.86 from
thedefendant, and that, by way of counterclaim, the said defendant in turn was entitled to collect the sum of
P39,683from the plaintiff, and rendered judgment in favor of the defendant in the sum of P6,464.14 with legal
interestthereon from the date of the counterclaim, with the costs. Both parties appealed therefrom.

The trial court made a very careful analysis of the oral and documentary evidence presented therein, and from the
preponderance thereof, inferred the findings of fact stated in its decision. We are convicted that, from the
evidence presented, the liquidation made by the trial court is the nearest approach to its findings of fact, and for
this reason wedo not feel inclined to alter or modify it.

The plaintiff-appellant's contention that the counterclaims presented by the defendant have already prescribed,
isuntenable. The counterclaims in question are based on instruments in writing marked Exhibit 1 to 6. The period
of prescription thereof is not six (6) years, as claimed, but ten (10) years, in accordance with the provisions of
section43 (1) of the Code of Civil Procedure.

Neither is the plaintiff entitled to the interest claimed by him upon the alleged sums loaned to and collected by
thedefendant from various persons for his deceased father. In all the aforementioned transactions, the defendant
actedin his capacity as attorney-in-fact of his deceased father, and there being no evidence showing that he
converted themoney entrusted to him to his own use, he is not liable for interest thereon, in accordance with the
provisions of article 1742 of the Civil Code.

The defendant-appellant's claim to the effect that he is entitled to collect the rents for the use of the earthen jar
factory and the buildings thereof, is, likewise, unfounded. The trial court held that all there existed between the
parties was a mere gratuitous commodatumand that the most that the deceased bound himself to do was to pay
thetaxes on the properties in question. There is nothing in the records of the case to justify reversing the
judgmentrendered therein.

The judgment appealed from being, in our opinion, in accordance with the law and sufficiently supported by a
preponderance of the evidence presented therein, it is hereby affirmed, without special pronouncement as to the
costs of this instance. So ordered.
Harry E. Keeler Electric Co. vs. Rodriguez

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.

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.

Keeler Electric told Montelibano that for any plant that he could sell or any customer that he could findhe would
be paid a commission of 10%for his services, if the sale was consummated.
Through Montelibanos efforts, Keeler was able to sell to Rodriguezone 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:
Montelibano sold and delivered the plant to him, and "was the one who ordered the installation of that electrical
plant"

There were evidences: a statement and receipt which Montelibano signed to whom he paid the money.

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.

The receipt had the following contents:

STATEMENT Folio No. 2494Mr. DOMINGO RODRIGUEZ,
Iloilo, Iloilo, P.I.
In account with HARRY E. KEELER ELECTRIC COMPANY, INC.221 CalleEchaque, Quiapo, Manila,
P.I.MANILA, P.I.,

August 18, 1920

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. The receipt is signed as follows:

Received payment
HARRY E. KEELER ELECTRIC CO. Inc.,Recibi(Sgd.) A. C. MONTELIBANO.
Witness (Juan Cenar):

Cenar was sent by Keeler Electric to install the plant in Rodriguezs premises in Iloilo
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:
Keeler Electric had held out Montelibano to Rodriguez as an agent authorized to collect payment to Montelibano
would discharge the debt of Rodriguez.

The bill was given to Montelibano for collection purposes

Keeler Electric appealed.

It alleged that:
Montelibano had no authority to receive the money.
His services were confined to the finding of purchasers for the "Matthews" plant.
Montelibano was not an electrician, could not install the plant and did not know anything about its mechanism.
Issues:
1. WON Keeler Electric authorized Montelibano to receive or receipt for money in its behalf
2. WON Rodriguez had a right to assume by any act or deed of Keeler Electric that Montelibano was authorized
to receive the money

Held/Ratio:
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.

-Outside of the fact that Montelibano received the money and signed this receipt, there is no evidence that he had
anyauthority, real or apparent, to receive or receipt for the money.

-Neither is there any evidence that Keeler Electric ever delivered the statement to Montelibano. (It is very
apparentthat the statement is the one which was delivered by Keeler Electric to Cenar, and is the one which
Cenardeliveredto Rodriguez)b. It was Juan Cenar, and not Montelibano who sold the plant to Rodiguez

-The evidence is in direct conflict withRodriguezsown pleadings and the receipt statement which he offered in
evidence. This statement also shows upon its face that P81.60 of the bill isround trip fare and
machinesTransportation costs.

-This claim 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.

-If Montelibano installed the plant, there would not have been any necessity for Cenar to make this trip at the
expense of Rodriguez.

-After Cenar's return to Manila, Keeler Electric wrote a letter to Rodriguez requesting the payment of its account,
towhich Rodriguez answered that he already paid to Montelibano.

-This is in direct conflict with the receipted statement, which Rodriguez offered in evidence, signed
byMontelibano.

-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.
a. Relevant laws:

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.

Article 1727 CC: The principal shall be liable as to matters with respect to which the agent has exceeded
hisauthority only when he ratifies the same expressly or by implication.
Ormachea Tin-Conco vs. Trillana:

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.

b. On whether an assumed authority exist

Certain principles must be considered: (Mechem on Agency, volume I, section743)

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

(3) that an authority cannot be established by mere rumor or general reputation;

(4)that even a general authority is not an unlimited one; and

(5) that every authority must find its ultimate source in some act or omission of the principal. Applying the above

rules:
-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 heknows 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 plant.