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Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy
Cross Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a
memorial lot under Contract No. 25012 was no longer interested in acquiring the lot and had
opted to sell his rights subject to reimbursement of the amounts he already paid. The contract
was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the
former buyer, the contract would be transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be
reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot issued
handwritten and typewritten receipts for these payments. Contract No. 28660 has a listed price
of P132,250.00. Atty. Linsangan objected to the new contract price, as the same was not the
amount previously agreed upon. To convince Atty. Linsangan, Baluyot executed a
document confirming that while the contract price is P132,250.00, Atty. Linsangan would pay
only the original price of P95,000.00.
Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for
reasons the latter could not explain. For the alleged failure of MMPCI and Baluyot to conform to
their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against
the former.
MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the
contract because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent
but an independent contractor, and as such was not authorized to represent MMPCI or to use its
name except as to the extent expressly stated in the Agency Manager Agreement. Moreover,
MMPCI was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in
fact received a down payment and monthly installments as indicated in the contract.
The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals
affirmed the decision of the trial court.

1. Whether or not there was a contract of agency between Baluyot and MMPCI?
2. Whether or not MMPCI should be liable for Baluyots act?
First Issue. Yes. 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. As properly found both by the trial court and the Court of Appeals, Baluyot was authorized
to solicit and remit to MMPCI offers to purchase interment spaces obtained on forms provided by
MMPCI. The terms of the offer to purchase, therefore, are contained in such forms and, when
signed by the buyer and an authorized officer of MMPCI, becomes binding on both parties.
Second Issue. No. While there is no more question as to the agency relationship between
Baluyot and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty.
Linsangan to believe that Baluyot had the authority to alter the standard contracts of the
company. Neither is there any showing that prior to signing Contract No. 28660, MMPCI had any
knowledge of Baluyot's commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was
misled by MMPCI's actuations, he still cannot invoke the principle of estoppel, as he was clearly
negligent in his dealings with Baluyot, and could have easily determined, had he only been
cautious and prudent, whether said agent was clothed with the authority to change the terms of
the principal's written contract.
To repeat, the acts of the agent beyond the scope of his authority do not bind the principal
unless the latter ratifies the same. It also bears emphasis that when the third person knows that
the agent was acting beyond his power or authority, the principal cannot be held liable for the
acts of the agent. If the said third person was aware of such limits of authority, he is to blame
and is not entitled to recover damages from the agent, unless the latter undertook to secure the
principal's ratification.

Filipinas Life Assurance Co. (now Ayala Life Assurance, Inc.) v. Pedrosa
Teresita Pedroso is a policyholder of a 20-year endowment life insurance issued by Filipinas Life
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 Apetrior. Pedroso inquired about the
promotional investment and Apetrior confirmed that there was such a promotion. She was
even told she could push through with the check she issued. From the records, the check,
with 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 initial investment. A month after, her investment 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 a month. Upon maturity of Pedrosos subsequent
investments, Valle would take back from Pedroso the corresponding agents receipt he issued
to the latter.
Pedroso told respondent Jennifer Palacio, also a Filipinas Life insurance policyholder, about the
investment plan. Palacio made a total investment of P49,550 but at only 5% prepaid interest.
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
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 receive investments was also established by the parties. When Pedroso and
Palacio 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 responsible for the acts of its agent done within the scope of its
authority, and should bear the damage caused to third persons. When the agent exceeds his
authority, the 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.