Agency (Module 1.2) - Power of Attorney

State Article 1491(2). Can the agent purchase property of the principal?

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given. - Stems from the fiduciary character of agency

State Article 1877. What is a general power of attorney?

An agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management.

T/F attorneys must obtain written authorization from their client to compromise litigation.

FALSE. Section 23, Rule 138 of RoC does not state that special authority must be in writing. However, it must be proved with evidence other than self-serving assertions. Not necessary but difficult to prove without. Only reliable manner is a written instrument signed by the principal.

T/F the power to collect money on behalf of the principal required only a GPA.

FALSE. The power to collect money, when it is extraordinary in character, constitutes an act of strict ownership in Article 1878(15). If the power to collect money is within the ordinary course of business, then GPA is sufficient. E.g. manager of a store.

T/F a saleman with the authority to collect money on behalf of the principal also has the authority to indorse checks.

FALSE. The right of an agent to indorse check will not be lightly inferred. A salesman with authority to collect money for his principal does not have the implied authority to indorse checks received in payment. Insular Drug v. PNB

T/F the power to bring suits in behalf of the principal to collect amounts accruing in the ordinary pursuit of business is considered an act of administration and can be covered by a GPA.

FALSE. They amount to acts of strict ownership, which require a SPA. Germann v. Donaldson

T/F the interpretation of Ks of agency are determined from the title given.

FALSE. they are determined by the nature of the power given under the operative provisions.

What kind of evidence is required to prove the existence of a SPA?

Clear, competent, and convincing evidence.

What must TPs do establish the nature and extent of an agent's authority to comply with the due diligence requirement?

1) Demand a written authority coming from the principal 2) Direct inquiry to the principal (oral evidence)

Define "acts of administration".

Acts of administration are those the principal expects to encounter on a day-to-day pursuit of his business or those that fall within the ordinary course of business.

Distinguish between Article 1878(5) and Article 1874.

1878(5) A SPA is necessary...To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration - Covers both purchase and sale - Covers both tangible and intangible immovable property - Speaks of nature of authorization...can be oral SPA - Can be found in old CC 1874 - When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. - Covers only sale - Covers land only - Speaks of form of authorization...must be in writing. - Entirely new provision in new CC

State Article 1878. What are the acts which require a SPA?

Article 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (9) To bind the principal to render some service without compensation; (10) To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12) To create or convey real rights over immovable property; (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion.

Can the agent bind the principal to render some service WITH compensation?

Depends on the nature of the agency. - If ordinary course of business -> only GPA required - If extraordinary course of business -> SPA required

Is the authority to ratify Os constituted during the term of the agency considered an act of administration or strict ownership?

Depends. If the creation of the O in favor of the principal was in the ordinary course of business in the first place, then the power to ratify would fall within the implied powers of the agent. If the creation of the O were not within the power of the agent in the first place, then the power to ratify would not be implied.

T/F the grant of authority to compromise necessarily includes the grant of the authority to submit to arbitration.

FALSE. Article 1880. The special power to compromise does not authorize submission to arbitration.

T/F an SPA to approve loans necessarily includes the power to bind the principal to a guaranty.

FALSE. A SPA to approve loans does not carry power to bind the principal to a guaranty even to the extent of the amount for which a loan could have been granted by agent. Must be EXPRESS.

T/F under Article 1978, a SPA must ALWAYS be in writing for its enforceability.

FALSE. As long as the mandate is express, such authority may be either oral or written. We unequivocably declare that the requirement under Art. 1878 refers to the nature of the authorization and not to its form. NOTE: The authority must be duly established by competent and convincing evidence other than the self-serving assertion of the party claiming that such authority was verbally given Patrimonio v. Gutierrez

T/F a SPA is required for an agent to make any payments on behalf of the principal.

FALSE. It is only required to make payments that are not considered acts of administration (those for the ordinary course of business), taking into consideration the nature of the business or property under the PA issued to the agent. Art 1878(1)

T/F a SPA is always required for an agent to lease the property of the principal.

FALSE. It is only required: - When the term of the lease of REAL property is more than year - When the term of the lease of REAL property is less than a year but falls within the extraordinary course of business. - When the lease is for PERSONAL property but falls within the extraordinary course of business.

T/F a power of attorney must be notarized.

FALSE. Notarization is not required to make a power of attorney valid and enforceable. However, the notarial acknowledge of a power of attorney is prima facie evidence its due execution. Therefore, TPs have every reason to rely on a person's authority.

T/F an SPA is required for an agent to employ agents and employees for the usual conduct of business.

FALSE. Only GPA is required. Yu Chuck v. Kong Li Po

T/F power of administration includes the authority to dispose.

FALSE. Power of administration does not include dispositions or encumbrances which are acts of strict ownership. Authority to dispose cannot proceed from authority to administer. SPA is required

A contract of agency is entitled a SPA by the parties. The wordings show that the agency that comprises all the business of the principal within the designated locality but couched in general terms. Decide whether the agency is a SPA or GPA.

GPA. A general power permits the agent to do all acts for which the law does not require a special power, and only covers acts of administration. Dominion Insurance Corp. v. CA

Is the authority to novate obligations constituted during the term of the agency considered an act of administration or an act of strict ownership?

It depends whether it is in the ordinary course of business that went into incurring the O in the first place. If the creation of the O in favor of the principal was in the ordinary course of business, then the power to novate would fall within the implied powers of the agent. If the creation of the O were not within the power of the agent in the first place, then the power to novate would not be implied.

A contract of agency is entitled a GPA by the parties. Its operative clause states that the agent has the authority to sell. Decide whether the agency is a SPA or GPA.

SPA. The operative constitutes the requisite special power of attorney to sell a piece of land. Thus, there is no need to execute a separate and special power of attorney since the general power of attorney expressly authorizes the agent or attorney in fact the power to sell the subject property. Veloso v. CA

What is the doctrine of implied powers in powers of attorney?

Specific grants of "powers of dominion" necessarily includes those implied powers or those necessary to fulfill those powers of ownership granted.

T/F only a GPA is required for a co-owner, who is made attorney-in-fact, to retain the services of legal counsel for the preservation of ownership of the principal's property.

TRUE Government of PI v. Wagner

T/F the power of attorney to exact the payment of sums of money necessarily includes the power to sue.

TRUE. It will be construed to be an express power to sue, which is an act of strict ownership.

The principal authorizes the agent to execute loan documents. The agent loans money to a borrower. The agent then absolves the borrower from the loans. Decide.

The act of the agent constitutes a gratuitous waiver of an obligation enumerated under Article 1878(4). Thus, a SPA was required to perform such act. The agent exceeded his authority and the waiver is void as to the principal. Virata v. Ng Wee

The principal entrusts to the agent pre-signed blank checks. The agent enters into a contract of loan on behalf the principal. He argues that the power to loan money was implied through the act of the principal. Decide.

The agent is wrong. The power to loan or borrow money is enumerated in Article 1878. Therefore, there must be an express grant from the principal authorizing such power. The agent has the burden of proof to establish the fact of agency, its nature, and extent. Patrimonio v. Gutierrez

Why would transactions over immovables be "valid but unenforceable" when effected by the agent without a special power of attorney from the principal, and yet the sale of a piece of land pursuant to an oral special power of attorney would be worse off by being declared void?

The interpretation of the word "void" in Article 1874 is actually unenforceable or void as to the principal. Argument of CLV in the book.

State Article 1879. Does the power to sell include the power to mortgage?

The special power to sell excludes the power to mortgage; the special power to mortgage does not include the power to sell.

What are "acts of strict dominion"?

Those acts and transactions which do not fall within the ordinary course of business. Those acts or transactions relating property or business which are extraordinary in character and are not expected to occur in day-to-day pursuit of business.

T/F an agent authorized to sell a piece of land is allowed to appoint a substitute absent any prohibition to do so.

True. However, he is liable for the acts of the sub-agent.

When is an agency considered to be "couched in general terms"?

When the power of attorney does not contain within its "empowering clause" any of the terms which under Article 1878 of the Civil Code would constitute "acts of strict ownership.

An agent was authorized to mortgage the principal's land to borrow and lend sums in cash. He was not authorized to sell the land. The agent executes a contract of loan AND a deed of sale with right of repurchase. Did the agent act within his scope of authority?

Yes, the main contract of loan entered into with the deed of sale with right of repurchase merely constitutes an equitable mortgage. Rodriguez v. Pamintuan and De Jesus