MARCOS V. PRIETO vs. Hon.

Court of Appeals
G.R. No. 158597, June 18, 2012
PONENTE: Bersamin, J.

FACTS:

The petitioner 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 loan of ₱ 5, 000,000 from Far
Eastern Bank and Trust Company (FEBTC). The defendant’s
spouses Antonio and Monette Prieto obtained the load evidenced
by promissory notes and real estate mortgage contracts were in
the name of the defendant, which later on was extra-judicially
foreclosed by FEBTC because of the defendant failed to pay their
loans.

The petitioner 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 that 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 Marcos as a registered owner did not appear real estate
contracts, the petitioner 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 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:

Whether or not the ratification by the petitioner would validate

the real estate and promissory notes and such ratification in letter
of acknowledgement could be treated as a contract of adhesion.
HELD:

Yes, the Supreme Court held that the petitioner 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 former’s behalf. In
other words, the mortgage contracts were valid and enforceable
against petitioner, 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 is liable by virtue of the expressed ratification. In agency,
ratification is the adoption or conformation 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 was a lawyer that he is

aware of the import and consequences of the letter of
acknowledgement. It is not a contract of adhesion for the petitioner
is not the weaker party because he is fully aware of the meaning of
every phrase and letter of the letter of acknowledgement as well as
the legal effect of his confirmation of the act of his agent.

  WHEREFORE, the Court AFFIRMS the resolution

promulgated by the Court of Appeals on April 24, 2002;
and ORDERSpetitioner to pay the costs of suit.