Group IV

Article 1900

By:
Rhodalyn B. Morante

Article 1900

So far as third persons are

concerned, an act is deemed to have
been performed within the scope of
agents authority, if such act is within
the terms of the power of attorney,
as written, even if the agent has in
fact exceeded the limits of his
authority
according
to
an
understanding between the principal
and the agent.

Scope of Agents Authority

as to Third Persons

THOSE APPARENTLY OR IMPLIEDLY

DELEGATED / AUTHORITY NOT IN WRITING

Third Person must establish:

Fact of agency
Nature and extent of authority of
agent

1. Third person must act with ordinary

prudence and reasonable diligence

Example :
P principal appointed A agent to sell 1 unit
of townhouse owned by P, but A is dealing
2 units to X a third person instead of only 1
unit, and X has good reason to believe that
A is not authorized to sell 2 units and still
went ahead with the transaction with A, in
the absence of the principals ratification of
As action, X cannot claim protection.

Refuse to deal with the agent

Ascertain from the principal

the true condition of his
affairs.

2. The fact that one is dealing with an

agent, whether the agency be general

or special, should be a danger signal.

3. The authority or extent of authority

of
an agent cannot be established by
his
own representations out of court.

ILLUSTRATIVE CASE:

P engaged in the sale of electric plants agreed to

give A 10% commission for his service for any plant
A could sell. Through the efforts of A , P sold plant
to B without knowledge of P, B paid the purchase
price to A.

Issue: Is the payment to A binding to P?

Held: In approaching the consideration of the

inquiry whether an assumed agency exists in a
given case, there are certain fundamental principles
that must not be overlooked. Among them are:

1. That the law indulges in no bare

presumptions that an agency exists; it
must be proved and presumed from
facts.

2. That the agent cannot establish his

own
authority; either by his representation
or by assuming to exercise it;

3. That an authority cannot be established

by mere rumor or general reputation.
4. That even a general authority is not an
unlimited one.
5. That every authority must find its
ultimate source in some act or omission
of the principal. An assumption of
authority to act as an agent for another
of itself challenges inquiry

Like a railroad crossing, it should be in itself a

sign of danger and suggest the duty to stop,
look and listen.
In the case at bar, P never authorized A to
receive money in his behalf. Applying the
above rules, B had no right to assume by any
act or deed of P that A was authorized to
receive payment. A made the payment at his
own risk and on the sole representation of A
that he was authorized to accept payment.

B. ACTUAL AUTHORIZATION CONFERRED /

AUTHORITY IN WRITING

If the authority is in writing, a third

person is not required to inquire
further than the terms of the written
power of attorney.

Example:
P gave A a written power of attorney wherein A is
authorized to sell Ps factory for such price and upon
such terms and conditions as A may deem reasonable,
However, P and A had an understanding that A should
sell the factory for not less than P5 million and for
cash. A sold the factory to B on credit for P4.5 million.
Under Article1900, P is bound. As far as B is
concerned, A acted within the scope of his authority.
Here, A has the power to make the sale binding on P
even though as between them, A has no authority to
make such sale.

SAMPLE : WRIITEN POWER OF

ATTORNEY
I, German A. Bacaltos, of legal age, Filipino, widower, and residing at second street,
Espina Village, Cebu City, province of Cebu, Philippines, do hereby authorize Rene R.
Savellon, of Legal age, Filipino and residing at 376-R Osmena Blvd., Cebu City, Province
of Cebu, Philippines to use the coal operating contract of Bacaltos Coal Mines of which I
am the proprietor, for any legitimate purpose that it may serve. Namely, but not by way
of limitation as follows:
1. To acquire purchase orders for and in behalf of Bacaltos Coal Mines;
2. To engage in trading under the style of Bacaltos Coal Mines/Rene Savellon;
3. To collect all receivables due or in arrears people or companies having dealings
under Bacaltos Coal Mines/ Rene Savellon;
4. To extend to any person or any company by substitution to the same extent of
authority that is granted Rene Savellon;
5. In connection with the preceding paragraphs to execute and sign documents,
contract and other pertinent papers.

Further I hereby give and grant to Rene Savellon full authority to do and perform all and
every lawful act requisite or necessary to carry into effect the foregoing stipulations as
fully to all intents and purposes as I might or would lawfully do if personally present
with full power of substitution and revocation

METHODS OF BROADENING AND RESTRICTING AGENTS AUTHORITY . . .

A principal may assume rights and

incur liabilities in respect of his agents
acts or transactions other those for
which express authorization has been
given and an agents authority may be
enlarged or restricted in a number of
ways:

METHODS OF BROADENING AND RESTRICTING AGENTS AUTHORITY . . .

1. By implication this means that the

agents authority extends not only to
the express requests, but also to those
acts
and
transactions
incidental
thereto. It embraces all the necessary
and appropriate means to accomplish
the desired end.

METHODS OF BROADENING AND RESTRICTING AGENTS

AUTHORITY . . .

2. By usage and Custom

They may enlarge as well as restrict
the
scope of agents authority
How Restricted:
a. Where it is sought to vary the terms and express
authorization
b. To dispense with a legal requirement
c. Where it is sought to change a rule of law
d.Where it is sought to vary an essential quality of the
agency
relationship

METHODS OF BROADENING AND RESTRICTING AGENTS AUTHORITY . . .

How enlarged:
1. Where principal and agent reside in
the
same community
2. Where the agent is authorized to
deal in
a particular place , market or
exchange

METHODS OF BROADENING AND RESTRICTING

AGENTS AUTHORITY . . .

3. By necessity
a. Emergency really exists
b. Agent is unable to communicate
with the
principal
c. Enlarged authority is exercised for
the
principals protection
d. Means adopted are reasonable

METHODS OF BROADENING AND RESTRICTING

AGENTS AUTHORITY.

4. By certain doctrines
a. Apparent authority
b. Liability of estoppel
c. Ratification
5. By rule of ejusdem generis

Thank you!