In Filipinas Life Assurance Co. v. Pedroso, the Supreme Court affirmed that a company can be held liable for the actions of its agents, even if those actions exceed the agent’s explicit authority, provided the company creates the appearance that the agent has broader powers. This principle of apparent authority protects individuals who reasonably rely on an agent’s representations, preventing companies from disavowing commitments made on their behalf. This ruling highlights the importance of companies carefully controlling their agents’ conduct to avoid unintended liabilities.

When Endorsements Lead to Corporate Responsibility: Filipinas Life’s Investment Scheme

The case revolves around respondents Teresita O. Pedroso and Jennifer N. Palacio, both policyholders of Filipinas Life. They invested in what they believed to be a promotional investment program offered by Filipinas Life, based on the representations of Renato Valle, an agent of the company, and confirmations from other employees, Francisco Alcantara and Angel Apetrior. Valle assured them of high-yield returns, and Pedroso and Palacio invested significant sums. When they attempted to withdraw their investments, however, Filipinas Life refused to return the money, leading to a legal battle.

At trial, the Regional Trial Court held Filipinas Life jointly and solidarily liable with its co-defendants, including Valle, Apetrior, and Alcantara. The Court of Appeals affirmed this ruling, prompting Filipinas Life to appeal to the Supreme Court. The central issue before the Supreme Court was whether the Court of Appeals erred in holding Filipinas Life jointly and severally liable with its agents, particularly Valle, for the claims of Pedroso and Palacio. Filipinas Life argued that Valle’s actions were outside the scope of his authority as an agent, and therefore, the company should not be held responsible.

The respondents argued that Filipinas Life authorized Valle to solicit investments, pointing to the use of the company’s official documents and facilities in completing the transactions, and the explicit confirmations made by Apetrior and Alcantara. They contended that they had exercised due diligence in ascertaining Valle’s authority and that it was Filipinas Life’s failure to ensure that its agents acted within the bounds of their authority. The Supreme Court emphasized the principle that a principal is liable for the acts of its agent, especially when those acts are performed within the scope of the agent’s apparent authority. The Court referenced Article 1868 of the Civil Code, which defines agency:

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 Court underscored that the principal is responsible for the damages caused to third persons by the acts of its agent. It noted that even when an agent exceeds his authority, the principal may still be held solidarily liable if it allowed the agent to act as if they had full powers. This is based on the principle of **estoppel**, which prevents a party from denying the consequences of its actions or representations when another party has reasonably relied on those actions. The Court underscored that respondents acted diligently to confirm Valle’s authority.

The court found that Filipinas Life, through Alcantara and Apetrior, had indeed ratified Valle’s actions. By confirming Valle’s authority to solicit investments and allowing the use of company resources for the transactions, Filipinas Life created the appearance that Valle had the authority to act on its behalf. Moreover, Filipinas Life directly benefited from the investments deposited by Valle into the company’s account. Consequently, the Supreme Court held that Filipinas Life was estopped from denying Valle’s authority and was responsible for the resulting damages. The Court cited the legal maxim **Qui per alium facit per seipsum facere videtur**, meaning “He who does a thing by an agent is considered as doing it himself.”

FAQs

What was the key issue in this case?	The key issue was whether Filipinas Life should be held liable for the actions of its agent, Renato Valle, who solicited investments that were later not honored by the company. The court examined whether Valle acted within his apparent authority and whether Filipinas Life ratified his actions.
What is “apparent authority”?	Apparent authority refers to a situation where a principal, through its actions or statements, leads a third party to reasonably believe that its agent has the authority to act on its behalf, even if the agent does not actually possess such authority. This concept is central to agency law and liability.
How did Filipinas Life ratify Valle’s actions?	Filipinas Life ratified Valle’s actions through its employees, Alcantara and Apetrior, who confirmed Valle’s authority to solicit investments when approached by the respondents. The company also benefited from the deposits made by Valle into its account.
What is the significance of official receipts in this case?	The fact that Valle issued Filipinas Life’s official receipts to Pedroso and Palacio strengthened the respondents’ claim that the investments were legitimate and authorized by Filipinas Life. This undermined the company’s defense.
What does “jointly and severally liable” mean?	“Jointly and severally liable” means that each of the parties found liable (Filipinas Life, Valle, Apetrior, and Alcantara) is individually responsible for the entire amount of the damages. The plaintiffs can recover the full amount from any one of them.
What due diligence did the respondents perform?	The respondents exercised due diligence by seeking confirmation from Filipinas Life’s employees, Alcantara and Apetrior, regarding Valle’s authority. They also relied on the fact that Valle used official company receipts for the transactions.
Can a principal be held liable for acts beyond an agent’s authority?	Yes, a principal can be held liable for acts beyond an agent’s express authority if the principal has created the appearance that the agent has broader authority (apparent authority) or if the principal ratifies the agent’s unauthorized acts.
What is the legal principle “Qui per alium facit per seipsum facere videtur”?	This Latin legal principle translates to “He who does a thing by an agent is considered as doing it himself.” It underscores that the acts of an authorized agent are legally equivalent to the acts of the principal, binding the principal to the agent’s actions.

The Supreme Court’s decision in Filipinas Life v. Pedroso serves as a reminder that companies must carefully manage and oversee the actions of their agents. It illustrates that the creation of apparent authority can lead to significant liability, even for actions that the company did not explicitly authorize. It underscores the importance of principals to prevent misrepresentations by implementing proper oversight. The case serves as a potent reminder of the legal maxim “Qui per alium facit per seipsum facere videtur”.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Filipinas Life Assurance Company v. Clemente N. Pedroso, G.R. No. 159489, February 04, 2008