Prieto vs.

CA
G.R. No.: G.R. No. 158597 Date: June 18, 2012
Petitioner: Marcos V. Prieto Respondents: The Hon. Court of Appeals (Former Ninth
Division), Hon. Rose Mary R. Molina-Alim, In her Capacity as Pairing Judge of Branch 67 of
the RTC, First Judical Region, Buang, LaUnion, Far East Bank and Trust Company, now the
Bank of the Philippine Islands, through Atty.Edilberto B. Tenefrancia, and spouses
Antonio and Monette Prieto

FACTS:
The petitioner/plaintiff Marcos V. Prieto with his spouse and Susan Prieto executed a
Special Power of Attorney (SPA) to spouses Antonio and Monette Prieto to use their
real property in La Union. The real property with the Transfer Certificate of Title (TCT) No.
T-40223 was used as collateral for a loan of P 5,000,000 from Far Eastern Bank and Trust
Company (FEBTC). The defendants spouses Antonio and Monette Prieto obtained the loan
evidenced by promissory notes and real estate mortgage contracts were in the name
of the defendants, which later on was extra-judicially foreclosed by FEBTC because of the
defendant failed to pay their loans. The petitioner/plaintiff Marcos Prieto filed Temporary
Restraining Order (TRO) against the bank with the RTC, which was granted, contending that
the real estate mortgage and promissory notes was in the name of the defendant spouses
thus it should be null and void ab initio. The RTC dismissed the application for the writ of
preliminary injunction stating that although the name of the petitioner/plaintiff Marcos as a
registered owner, did not appear in the real estate contracts, the petitioner/plaintiff cannot
be absolved from liability because he ratified the contract by acknowledging the contract.
Such acknowledgement was sent through a said letter of acknowledgement and was found
as a document of adhesion. As a principal, the contracts entered into by his agent on his
behalf even if assuming that the agent has exceeded his authority. Thus, the
petitioner/plaintiff Marcos Prieto filed an appeal with the CA, which was dismissed because
of the delay in filing and this petition was sought on certiorari.

ISSUE:1)

Whether or not the ratification by the petitioner/plaintiff would validate the real estate
mortgage and promissory notes and such ratification in letter of acknowledgment could be
treated as a contract of adhesion.

HELD:
Yes, the Supreme Court held that the petitioner/plaintiff had precisely granted the
defendant Antonio as his agent the authority to borrow money, and to transfer and convey
the property by way of mortgage to FEBTC; to sign, execute and deliver promissory notes;
and to receive the proceeds of the loans on the formers behalf. In other words, the
mortgage contracts were valid and enforceable against petitioner/plaintiff, who is fully
bound by their terms. It is stipulated under Article 1898 of the Civil Code, the acts of an
agent done beyond the scope of his authority do not bind the principal unless the latter
expressly or impliedly ratifies the same. As to the ratification by the contract of adhesion,
although his agent, the defendant, had exceeded the express authority, the
petitioner/plaintiff is liable by virtue of the expressed ratification. In agency, ratification is
the adoption or confirmation by one person of an
act performed on his behalf by another without authority. The substance of ratification is the
confirmation after the act, amounting to a substitute for a prior authority. The court held
that the petitioner/plaintiff was a lawyer that he is aware of the import and consequences of
the letter of acknowledgment. It is not a contract of adhesion for
the petitioner/plaintiff is not the weaker party because he is fully aware of the meaning of
every phrase and letter of the letter of acknowledgment as well as the legal effect of his
confirmation of the act of his agent. Thus, the court affirms the decision of the CA


Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Clemente Pedrosa,
TeresitaPedrosa and Jennifer Palacio
G.R. No. 159489, February 04, 2008 Quisumbing, J.

FACTS:

Teresi ta Pedroso i s a pol i cyhol der of a 20-year endowment l i fe i nsurance i ssued
by Fi li pi nas Li fe Assurance Co. Pedroso claims Renato Valle was her insurance agent since
1972 and Valle collected her monthly premiums. In the first week of January 1977, Valle
told her that the Filipinas Life Escolta Office was holding a promotional investment program
for policyholders. It was offering 8% prepaid interest a month for certain amounts deposited
on a monthly basis. Enticed, she initially invested and issued a post-dated check
for P10,000. In return, Valle issued Pedroso his personal check for P800 for the 8% prepaid
interest and a Filipinas Life Agent receipt.

Pedroso called the Escolta office and talked to Francisco Alcantara, the administrative
assistant, who referred her to the branch manager, Angel Apetri or. Pedroso
i nqui red about the promoti onal investment and Apetrior confirmed that there was such
a promotion. She was even told she could push through wi th the check she i ssued.
From the records, the check, wi th the endorsement of Alcantara at the back, was
deposited in the account of Filipinas Life with the Commercial Bank and Trust Company, Escolta
Branch.

Relying on the representations made by Filipinas Lifes duly authorized representatives
Apetrior and Alcantara, as well as having known agent Valle for quite some time, Pedroso
waited for the maturity of her i ni ti al i nvestment. A month after, her i nvestment
of P10,000 was returned to her after she made a written request for its refund. To
collect the amount, Pedroso personally went to the Escolta branch where Alcantara gave her
the P10,000 in cash. After a second investment, she made 7 to 8 more investments in
varying amounts, totaling P37,000 but at a lower rate of 5% prepaid interest amonth. Upon
maturity of Pedrosos subsequent investments, Valle would take back from Pedroso the
corresponding agents receipt he issued to the latter.

Pedroso tol d respondent Jenni fer Pal aci o, al so a Fi l i pi nas Li fe i nsurance
pol i cyhol der, about the i nvestment pl an. Pal aci o made a total i nvestment of
P49,550 but at onl y 5% prepai d i nterest. However, when Pedroso tried to withdraw
her investment, Valle did not want to return some P17,000 worth of it. Palacio also tried to
withdraw hers, but Filipinas Life, despite demands, refused to return her money.

ISSUE:
WON Filipinas Life is jointly and severally liable with Apetrior and Alcantara on the claim
of Pedroso and Palacio or WON its agent Renato Valle is solely liable to Pedroso and Palacio

HELD:

Pedroso and Palacio had invested P47,000 and P49,550, respectively. These were received
by Valle and remitted to Filipinas Life, using Filipinas Lifes official receipts. Valles authority
to solicit and r ecei ve i nvest ment s was al so est abl i shed by t he par t i es.
When Pedr oso and Pal aci o sought confirmation, Alcantara, holding a supervisory position,
and Apetrior, the branch manager, confirmed that Valle had authority. While it is true that a
person dealing with an agent is put upon inquiry and must discover at his own peril the
agents authority, in this case, Pedroso and Palacio did exercise due diligence in removing
all doubts and in confirming the validity of the representations made by Valle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle. By the contract
of agency, a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. The
general rule is that the principal is responsi ble for the acts of i ts agent done wi thi n
the scope of i ts authori ty, and shoul d bear the
damage caused t o t hi r d per sons. When t he agent exceeds hi s aut hor i t y,
t he agent becomes personally liable for the damage. But even when the agent
exceeds his authority, the principal is still solidarily liable together with the agent if the
principal allowed the agent to act as though the agent had full powers. The acts of an agent
beyond the scope of his authority do not bind the principal, unless the principal ratifies them,
expressly or impliedly.

Ratification
adoption or confirmation by one person of an act performed on his behalf by another
without authority

Even if Valles representations were beyond his authority as a debit/insurance agent,
Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified Valles acts. Filipinas Life
benefited from the investments deposited by Valle in the account of Filipinas Life.


Rural Bank of Milaor v. Ocfemia
FACTS:
Several parcels of land were mortgaged by the respondents during the lifetime of the
respondents grandparents to the Rural bank of Milaor as shown by the Deed of Real Estate
Mortgage and the Promissory Note. Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of
the respondents, were not able to redeem the mortgaged properties consisting of seven
parcels of land and so the mortgage was foreclosed and thereafter ownership was
transferred to the petitioner bank. Out of the seven parcels of land that were foreclosed,
five of them are in the possession of the respondents because these five parcels of land
were sold by the petitioner bank to the parents of Marife Nino as evidenced by a Deed of
Sale. However, the five parcels of land cannot be transferred in the name of the parents of
Merife Nino, one of the respondents, because there is a need to have the document of sale
registered. The Register of deeds, however, said that the document of sale cannot
be registered without the board resolution of the petitioner bank confirming both
the Deed of sale and the authority of the bank manager, Fe S. Tena, to enter such
transaction.

The petitioner bank refused her request for a board resolution and made many
alibis. She was told that the bank had a new manager and it had no record of the
sale. Upon request Marife submitted a copy of the DOS and receipt of payment.
She was told that the Board Resolution could not be released because the bank
has no records from the old manager. Respondents initiated the present
proceedings so that they could transfer to their names the subject five parcel of
land and subsequently mortgage said lots and to use the loan proceeds for the
medical expenses of their ailing mother.


ISSUE: May the Board of Directors of a rural banking corporation be compelled to confirm
a deed of absolute sale of real property owned by the corporation which deed of sale was
executed by the bank manager without prior authority of the board of directors of
the rural banking corporation?


HELD:
YES. The bank acknowledges, by its own acts or failure to act, the authority of Fe S. Tena to
enter into binding contracts. After the execution of the Deed of Sale, respondents occupied
the properties in dispute and paid the real estate taxes. If the bank management believed
that it had title to the property, it should have taken measures to prevent the infringement
and invasion of title thereto and possession thereof. Likewise, Tena had previously
transacted business on behalf of the bank, and the latter had acknowledged her
authority. A bank is liable to innocent third persons where representation is made
in the course of its normal business by an agent like Manager Tena even though
such agent is abusing her authority. Clearly, persons dealing with her could not be
blamed for believing that she was authorized to transact business for and on
behalf of the bank.

The bank is estopped from questioning the authority of the agent to enter into contract of
sale. If a corporation knowingly permits one of its officers or any other agent to act within
the scope of an apparent authority, it holds the agent out to the public as possessing the
power to do those acts; thus, the corporation will, as against anyone who has in good faith
dealt with it through such agent, be estopped from denying the agents authority.