Manila Memorial Park Cemetery v.

Linsangan

Facts:
- In 1984, Florencia Baluyot (Baluyot) offered Atty. Linsangan a lot at the Holy Cross
Memorial Park (Manila Memorial) owned by petitioner, Manila Memorial Park Cemetery.
Baluyot told Atty. Linsangan that a former memorial lot owner was no longer interested in
acquiring the lot and has decided to sell his rights subject to reimbursement of the
amounts he already paid
- The contract for the said memorial lot was P95,000. Baluyot assured Atty. Linsangan
that ice the former owner was reimbursed, the contract would transfer to him.
- Atty. Linsangan agreed and paid Baluyot P35,295 representing the amount to be
reimbursed to the original owner and to complete down payment to Manila Memorial.
Baluyot issued receipts for these payments
- In March 1985, Baluyot told Atty. Linsangan that he would be issued a new contract
covering the subject lot. Atty. Linsangan protested but Baluyot assured him that he would
still be paying the old price of P95,000
- Baluyot later brought an offer to purchase the lot for the amount of P19,838, with the
price of the new contract listed at P132,250. Atty. Linsangan objected to the new
contract price as it was not the price they had agreed on. Baluyot thus executed a
document confirming that while the contract price was P132,250, Atty. Linsangan only
had to pay the original price of P95,000
- Atty. Linsangan thus signed the contract and accepted an official receipt for it. As per
Baluyot’s request, Atty. Linsangan issued a total of 24 post dated checks of P1,800 each
in favor of Manila Memorial, over the span of 2 years
- In May 1987, Baluyot informed Atty. Linsangan that the contract was cancelled for some
unexplainable reason and presented Atty. Linsangan with another proposal for the
purchase of a similar property but Atty. Linsangan refused and insisted that Baluyot and
Manila Memorial had to honor their undertaking
- Failing to conform to their agreement, Atty. Linsangan filed a complaint for breach of
contract and damages against Manila Memorial
Manila Memorial’s Argument
● The contact was cancelled conformably with the terms of the contract
because of non-payment of arrearages. Manila Memorial stated that
Baluyot was not an agent but an independent contractor, and as such was
not authorized to represent Manila Memorial or to use its name except as
to the extent expressly stated in the Agency Manager Agreement.
Moreover, Manila Memorial was not aware of the arrangements entered
into by Atty. Linsangan and Baluyot,
- the trial court held Manila Memorial and Baluyot jointly and severally liable, and found
Baluyot to be an agent of Manila Memorial and
- Manila Memorial appealed to the CA but the CA affirmed the decision of the trial court,
upholding the trial court’s finding that Baluyot was an agent of Manila Memorial. The CA
also noted that 3rd persons like Atty. Linsangan should not be prejudiced where the
principal failed to adopt the necessary measures for the prevention of
 misrepresentations. Manila Memorial filed a motion for reconsideration but was denied
for lack of merit

Issue:
WON Manila Memorial can be bound by the contract procured by Atty. Linsangan and solicited
by Baluyot

Held:
NO.
- According to the Court, the moment Atty. Linsangan signed the Offer to Purchase, it
signified that he understood its contents and the fact that he had a different agreement
with Baluyot did not matter as it was made outside of Baluyot;s authority and thus should
not affect Manila Memorial
- Baluyot’s authority was limited too soliciting purchasers. She had no authority to
change the terms of the contract provided by Manila Memorial
- The ignorance of a person dealing with an agent, in relation to the extent of such
agent’s authority is not an excuse and the principal cannot be held liable.
According to the Court, a person dealing with an agent assumes the risk of lack
of authority and cannot charge the principal by relying upon the assumption that
the agent had such authority
- In the present case, Atty. Linsangan failed to establish that he tried to inquire whether
Baluyot had the authority to agree to terms that are different from those indicated in the
contract. Even if Baluyot was Atty. Linsangan’s friend and known to be an agent of
Manila Memorial, he declarations and actions alone are not enough to establish the
extent of her authority
- Under Art. 1910, Acts of the agent that are beyond the scope of his/her authority do not
bind the principal, unless he ratifies them. Only the principal may ratify and such must
have the knowledge of the acts he is to ratify
- In the absence of circumstances putting a reasonably prudent man on inquiry,
ratification cannot be implied as against the principal who is ignorant of the facts.
Thus, no ratification can be implied in the present case
- From Baluyot’s Answer, it was is covered that the real arrangement between her and
Atty. Linsangan was for Atty. Linsangan to pay a monthly installment of P1,800 and for
her to pay the difference of P1,455 to meet the P3255 mostly installments as indicated in
the contract. However due to her own financial difficulties, Baluyot failed to pay the
mostly installment of P1,455 which she undertook.
- Atty. Linsangan failed to show that Manila Memorial had knowledge of his agreement
with Baluyot. Thus, as as far as Manila Memorial is concerned, the contract price was
P132,250 as stated in the Offer to Purchase, which Atty. Linsangan and Baluyot signed.
- According to the Court there are 2 obligations involved in the present case. One was the
contract between Manila Memorial and Atty. Linsangan for the purchase of the memorial
lot and the other was the agreement between Atty. Linsangan and Baluyot
- The Court stated that since Atty. Linsangan was aware of the limits of Baluyot’s authority,
he cannot insist that the terms of the contract are those which he and Baluyot agreed
upon. Insofar as the P95,000 contract price, the agreement was void and cannot be
enforced against Manila Memorial and that his only recourse should only be against
Baluyot who undertook to pay the difference between the true contract price of P132,250
and the price the P95,000 they agreed on.