(5) Dizon v.

Court of Appeals
302 SCRA 288, 1999

DOCTRINE: Every person dealing with an agent is put upon inquiry and must discover
upon his peril the authority of the agent. If he does not make such inquiry, he is
chargeable with knowledge of the agent's authority, and his ignorance of that authority
will not be any excuse. Persons dealing with an assumed agency, whether the assumed
agency be a general or special one, are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the agency but also the nature and extent of
the authority, and in case either is controverted, the burden of proof is upon them to
establish it.

STATEMENT of FACTS:
1. This is a case of two consolidated petitions involving an ejectment suit filed by
Dizon Et Al.
2. Overland Express Lines, Inc. (lessee) entered into a Contract of Lease with
Option to Buy with Dizon Et Al. (lessors) involving a parcel of land. The term of
the lease was for one (1) year. During this period, Overland was granted an
option to purchase. Thereafter, the lease shall be on a per month basis with a
monthly rental.
3. Thereafter, Overland failed to pay the increased rental which caused Dizon Et Al.
to file an action for ejectment.
4. The contract of lease expired without the private respondent, as lessee,
purchasing the property but remained in possession thereof.
5. Overland contended that there was a perfected contract of sale and there was
also a partial payment when it delivered the check to Alice Dizon who acted as
agent of petitioners pursuant to the supposed authority given by petitioner Fidela
Dizon, the payee thereof. It insisted that it was the partial payment of the
purchase price constituted a valid exercise of the option to buy.
6. The Trial Court and CA ruled in favor of Dizon.

STATEMENT of ISSUE: Whether or not Alice Dizon was an authorized agent of the
petitioners to receive payment from the respondents.

DECISION: In an attempt to resurrect the lapsed option, private respondent gave

P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the
said amount tendered would constitute a perfected contract of sale pursuant to the
contract of lease with option to buy.
There was no valid consent by the petitioners (as co-owners of the leased
premises) on the supposed sale entered into by Alice A. Dizon, as petitioners' alleged
agent, and private respondent. 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.
As provided in Article 1868 of the New Civil Code, there was no showing that
petitioners consented to the act of Alice A. Dizon nor authorized her to act on their
behalf with regard to her transaction with private respondent. The most pru dent thing
private respondent should have done was to ascertain the extent of the authority of
Alice A. Dizon.
Being negligent in this regard, private respondent cannot seek relief on the basis
of a supposed agency.