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MANILA MEMORIAL PARK CEMETERY v. PEDRO L. LINSANGAN

FACTS:

Florencia Baluyot offered Atty. Linsangan a lot at the Holy Cross Memorial Park owned by MMPCI. Linsangan agreed and made payments to Baluyot, who assured him that he would only be paying the original price. Baluyot executed a document confirming this, and Linsangan signed the contract and issued postdated checks to MMPCI. Baluyot later informed Linsangan that the contract was cancelled, but he refused a new proposal and filed a complaint. The trial court held MMPCI and Baluyot jointly and severally liable.

The petitioner, MMPCI, entered into a contract with Atty. Linsangan for the interment of his mother’s remains. Atty. Linsangan later discovered that only one lot was allocated instead of three. Atty. Linsangan filed a complaint against MMPCI and Baluyot for breach of contract and misrepresentation.

The trial court ruled in favor of Atty. Linsangan, finding that MMPCI breached its contract. The court held that all payments made by Atty. Linsangan should be credited to his account. The court denied Atty. Linsangan's claim for damages and attorney's fees but awarded costs against MMPCI. The court also granted MMPCI's cross-claim against Baluyot up to the extent of costs.

MMPCI appealed, arguing that Atty. Linsangan cannot unilaterally change the terms of the contract. MMPCI claimed that it should not be held jointly and solidarily liable with Baluyot. The Court of Appeals affirmed the trial court's decision, holding that Baluyot was an agent of MMPCI and her acts bound MMPCI. The appellate court also found that Atty. Linsangan should not be prejudiced for MMPCI's failure to prevent misrepresentation.

In the instant Petition for Review, MMPCI argues that the Court of Appeals erred in disregarding the terms of the contract. Atty. Linsangan claims that he complied with the contract and performed his obligations in good faith.

The Court of Appeals made errors in apprehending the facts and came to conclusions without sufficient evidentiary support. The issue involves the contract of agency, where a person acts on behalf of another with their consent or authority. MMPCI argues that Baluyot was not their agent based on their contract, but the same contract granted Baluyot the authority to solicit.

ISSUES:

  1. Whether or not Baluyot was an agent of MMPCI.

  2. Whether or not MMPCI can be bound by the contract procured by Atty. Linsangan and solicited by Baluyot.

  3. Whether MMPCI is liable for the contract of agency entered into by Baluyot and Atty. Linsangan.

  4. Whether MMPCI's acceptance and encashment of the checks issued by Atty. Linsangan and allowing Baluyot to receive checks drawn in MMPCI's name constitute ratification of the contract of agency.

    • Whether there is estoppel in the case
    • Whether there was a custom or habit that allowed agents of MMCPI to enter into agreements for lower prices
    • Whether Contract No. 28660 is valid and enforceable against MMCPI

  8. Whether or not the complaint filed by the plaintiff in Civil Case No. 88-1253 has a cause of action.

RULING:

  1. Baluyot was an agent of MMPCI, having represented the interest of the latter and having been allowed to represent it in her dealings with clients/prospective buyers.

  2. MMPCI cannot be bound by the contract procured by Atty. Linsangan and solicited by Baluyot. Baluyot's authority was limited only to soliciting purchasers and she had no authority to alter the terms of the written contract provided by MMPCI.

  3. The Supreme Court held that MMPCI is not liable for the contract of agency entered into by Baluyot and Atty. Linsangan. The Court applied the provisions of the Civil Code on agency and ratification. According to Article 1898, if an agent contracts in the name of the principal exceeding the scope of his authority and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. However, the agent is liable if he undertook to secure the principal's ratification. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority, and ordinarily, the principal must have full knowledge at the time of ratification of all the material facts and circumstances relating to the unauthorized act of the person who assumed to act as an agent.

  4. n this case, the Court found no ratification can be implied because MMPCI did not have knowledge of the arrangement between Baluyot and Atty. Linsangan. MMPCI was only aware of the contract price stated in the Offer to Purchase, the down payment and the regular payments made by Atty. Linsangan. MMPCI accepted the checks issued by Atty. Linsangan, but those checks were insufficient to cover the full payment. If MMPCI was aware of the arrangement, it would have refused the check payments and would not have applied the checks to Atty. Linsangan's account. Therefore, MMPCI is not liable for the contract of agency entered into by Baluyot and Atty. Linsangan.

    • There is no estoppel in the case as the essential elements of estoppel are not met.
    • There is no evidence of a habit or custom in MMCPI that allows its agents to enter into agreements for lower prices.
    • Contract No. 28660 is valid and enforceable against MMCPI, and MMCPI has the right to cancel the contract due to delinquencies in payment.

  8. The Supreme Court reversed and set aside the decision and resolution of the Court of Appeals and dismissed the complaint in Civil Case No. 88-1253 for lack of cause of action.

PRINCIPLES:

  • 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.

  • Persons dealing with an agent are bound at their peril to ascertain not only the fact of agency but also the nature and extent of authority. Ignorance of a person dealing with an agent as to the scope of the latter's authority is no excuse and the fault cannot be thrown upon the principal.

  • The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

  • A person dealing with an agent assumes the risk of lack of authority in the agent. The principal may act on the presumption that third persons dealing with his agent will not be negligent in failing to ascertain the extent of his authority as well as the existence of his agency.

  • The acts of an agent beyond the scope of his authority do not bind the principal unless he ratifies them expressly or impliedly.

  • Only the principal can ratify; the agent cannot ratify his own unauthorized acts.

  • The principal must have full knowledge at the time of ratification of all the material facts and circumstances relating to the unauthorized act of the person who assumed to act as an agent.

  • Ratification cannot be implied against a principal who is ignorant of the material facts and circumstances, unless the principal's ignorance is willful or the principal chooses to act in ignorance of the facts.

  • Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority.

  • Acts of an agent beyond the scope of their authority do not bind the principal unless the principal ratifies them.

  • When a third person knows that an agent is acting beyond their authority, the principal cannot be held liable for the acts of the agent.

  • Contracts are binding upon the parties who assent to their terms and conditions.

  • Parties who breach separate agreements can be held liable for damages in a separate action.

  • Cause of action refers to the act or omission by which a party violates the right of another.

  • To establish a cause of action, the following elements must be present: (a) a legal right on the part of the plaintiff, (b) a legal duty on the part of the defendant, and (c) an act or omission by the defendant in violation of the plaintiff's right.