Prieto v CA

DOCTRINE:
FACTS
The petitioner/plaintiff 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.
o The real property with the Transfer Certificate of Title (TCT) No. T-40223 was used as
collateral for a loan of P 5,000,000 from Far Eastern Bank and Trust Company (FEBTC).
o The defendants spouses Antonio and Monette Prieto obtained the loan evidenced
by promissory
notes and real estate mortgage contracts were in the name
of the defendants, which later on was extra-judicially foreclosed by FEBTC because of the
defendant failed to pay their loans. The petitioner/plaintiff 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
o Thus 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/plaintiff Marcos as a registered owner, did not appear in the real estate
contracts, the petitioner/plaintiff cannot be absolved from liability because he ratified the contract
by acknowledging the contract.
o Such acknowledgement was sent through a said letter of acknowledgement and was
found as a document of adhesion.
o As a principal, the contracts entered into by his agent on his behalf even if assuming that
the agent has exceeded his authority.
o Thus, the petitioner/plaintiff 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 + RULING
Whether or not the ratification by the petitioner/plaintiff would validate the real estate mortgage and
promissory notes and such ratification in letter of acknowledgment could be treated as a contract of
adhesion? YES.
The Supreme Court held that the petitioner/plaintiff 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 formers behalf. In other words, the mortgage contracts
were valid and enforceable against petitioner/plaintiff, who is fully bound by their terms.
o 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.
o As to the ratification by the contract of adhesion, although his agent, the defendant, had
exceeded the express authority, the petitioner/plaintiff is liable by virtue of the expressed
ratification.
o In agency, ratification is the adoption or confirmation by one person of an
act performed on his behalf by another without authority.
o The substance of ratification is the confirmation after the act, amounting to a substitute for
a prior authority.
The court held that the petitioner/plaintiff was a lawyer that he is aware of the import and
consequences of the letter of acknowledgment.
o It is not a contract of adhesion for
the petitioner/plaintiff is not the weaker party because he is fully aware of the meaning of
every phrase and letter of the letter of acknowledgment as well as the legal effect of his
confirmation of the act of his agent.