Payment to an agent of the principal extinguishes obligation

DearPAO,

I entered into a contract with Pedro, regarding the purchase of 40 square meters of land in Ca vi te. We agreed that I will pay 50 percent of the purchase price and the remaining balance shall be paid in six monthly installments. The down-payment was received personally by Pedro. When I went to Pedro’ s residence to pay the informed me that Pedro left for abroad. I contacted Pedro through his phone and asked him who will receive the payment. He told me to just leave the payment with his helper and the latter will issue an acknowledge ment receipt covering thesaidpayment.

I followed the said method of payment for six months. When I was informed that Pedro had already returned, I immediately asked him for the transfer of the title of the said property to my name. However, he refused and claimed that his helper allegedly ran away with the money covering the inst al men ts for two months. Pedro is now asking me to pay the amount taken by his helper, but I refused and claimed that I had already settled my obligation. Can Pedro collect from me again the amount taken by his helper? Berto Dear Berto,

Payment or performance is one mode of extinguishing an obligation under Article 1231 of the New Civil Code of the Philippines. Correlative thereto, Article 1240 states that “payment shall be made to the person in whose favor the obligation has been constituted or his successor in interest, or any person authorized to receive it.”

Please be guided also by the decision of the Supreme Court in the case of Spouses Dela Cruz vs Concepcion (G.R. No. 172825, October 11, 2012), where the Honorable Associate Justice Diosdado M. Peralta stated that:

“Payment made by the debtor to the person of the creditor or to one authorized by him or by the law to receive it extinguishes the obligation. When payment is made to the wrong party, however, the obligation is not extinguished as to the creditor who is without fault or negligence even if the debtor acted in utmost good faith and by mistake as to the person of the creditor or through error induced by fraud of a third person. In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by will, therefore, satisfy the debt.”

Applying the abovementioned jurisprudence and provision of law in your case, it is clear that your obligation had already been extinguished by the payment you made to the helper of Pedro. His helper was acting on behalf of Pedro, as per the latter’s authority conveyed to you during your telephone conversation, and also the acknowledgment receipts issued. Hence, the payment made to the helper, who is the agent or representative, is deemed payment to the principal.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated. We hope that we were able to enlighten you on the matter.