Title IV.

- ESTOPPEL (n)

Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon.

Art. 1432. The principles of estoppel are hereby adopted insofar as they are not in conflict with the
provisions of this Code, the Code of Commerce, the Rules of Court and special laws.

Art. 1433. Estoppel may be in pais or by deed.

Art. 1434. When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee.

Art. 1435. If a person in representation of another sells or alienates a thing, the former cannot
subsequently set up his own title as against the buyer or grantee.

Art. 1436. A lessee or a bailee is estopped from asserting title to the thing leased or received, as against
the lessor or bailor.

Art. 1437. When in a contract between third persons concerning immovable property, one of them is
misled by a person with respect to the ownership or real right over the real estate, the latter is precluded
from asserting his legal title or interest therein, provided all these requisites are present:

(1) There must be fraudulent representation or wrongful concealment of facts known to the party
estopped;

(2) The party precluded must intend that the other should act upon the facts as misrepresented;

(3) The party misled must have been unaware of the true facts; and

(4) The party defrauded must have acted in accordance with the misrepresentation.

Art. 1438. One who has allowed another to assume apparent ownership of personal property for the
purpose of making any transfer of it, cannot, if he received the sum for which a pledge has been
constituted, set up his own title to defeat the pledge of the property, made by the other to a pledgee who
received the same in good faith and for value.

Art. 1439. Estoppel is effective only as between the parties thereto or their successors in interest.

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless
he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice
of his powers. (1725)

Art. 1898. If the 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. In this case, however, the agent is liable if he
undertook to secure the principal's ratification. (n)
Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot
set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been,
aware. (n)

Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the
scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if
the agent has in fact exceeded the limits of his authority according to an understanding between the
principal and the agent. (n)

Art. 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal
has ratified, or has signified his willingness to ratify the agent's acts. (n)

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within
the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when
he ratifies it expressly or tacitly. (1727)

Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent
if the former allowed the latter to act as though he had full powers. (n)

Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases:

(1) If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail
himself of the benefits derived from the contract;

(2) When the expenses were due to the fault of the agent;

(3) When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal
was not aware thereof;

(4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be
allowed only a certain sum.

FILIPINAS LIFE ASSURANCE COMPANY vs. CLEMENETE N. PEDROSO ET.AL.,

G.R.No. 159489, February 4, 2008

FACTS: Teresita O. Pedroso is a policyholder of a 20-year endowment life insurance issued by Filipinas Life
Assurance Company. Pedroso claims Renato Valle was her insurance agents since 1972 and Valle collected
her monthly premiums. Valle told her that the Filipinas Life Escolta Office was holding a promotional
investment program for policyholders. Enticed, she initially invested and issued a post-dated check. In
return, Valle issued Pedroso his personal check for P800 for the 8% prepaid interest and a Filipinas Life
“Agent’s Receipt”. Subsequently, she called the Escolta office inquiring about the promotional investment
and the branch manager confirmed that there was such promotion. She was even told she could “push
through with the check” she issued. Relying on the representations made by the Filipinas Life’s duly
authorized representatives, as well as having known agent Valle for quite some time, Pedroso waited for
the maturity of her initial investment. Pedroso told Jennifer N. 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. With the assistance of their lawyer, they went to Filipinas Life Escolta Office to collect
their respective investments, and to inquire why they had not seen Valle for quite some time. But their
attempts were futile. Hence, Pedroso and Palacio filed an action for the recovery of a sum of money.

ISSUE: Whether or not Filipinas Life is liable through the acts of his agents

RULING: Yes, Filipinas Life is liable. Filipinas Life does not dispute that Valle was its agent, but claims that
it was only a life insurance company and was not engaged in the business of collecting investment money.
It contends that the investment scheme offered to respondents by Valle, and branch manager was outside
the scope of their authority as agents of Filipinas Life such that, it cannot be held liable to the respondents.
On the other hand, respondents contend that Filipinas Life authorized Valle to solicit investments from
them. In fact, Filipinas Life’s official documents and facilities were used in consummating the transactions.
These transactions, according to respondents, were confirmed by its officers Apetrior and Alcantara.
Respondents assert they exercised all the diligence required of them in ascertaining the authority of
petitioner’s agents; and it is Filipinas Life that failed in its duty to ensure that its agents act within the
scope of their authority. It appears indisputable that respondents Pedroso and Palacio had
invested P47,000 and P49,550, respectively. These were received by Valle and remitted to Filipinas Life,
using Filipinas Life’s official receipts, whose authenticity were not disputed. Valle’s authority to solicit and
receive investments was also established by the parties. When respondents 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 agent’s authority, in this case, respondents 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. In other words, 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
in agency is the adoption or confirmation by one person of an act performed on his behalf by another
without authority. Filipinas Life cannot profess ignorance of Valle’s acts. Even if Valle’s representations
were beyond his authority as a debit/insurance agent, Filipinas Life thru Alcantara and Apetrior expressly
and knowingly ratified Valle’s acts. It cannot even be denied that Filipinas Life benefited from the
investments deposited by Valle in the account of Filipinas Life. In our considered view, Filipinas Life had
clothed Valle with apparent authority; hence, it is now estopped to deny said authority. Innocent third
persons should not be prejudiced if the principal failed to adopt the needed measures to prevent
misrepresentation, much more so if the principal ratified his agent’s acts beyond the latter’s authority.
The act of the agent is considered that of the principal itself. Qui per alium facit per seipsum facere videtur.
"He who does a thing by an agent is considered as doing it himself."