LAW ON AGENCY Click to edit Master subtitle style ARTICLES 1877 - 1879 BY: JOSEPH D.

DAJAY 3/12/13

ARTICLE 1877 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 According to the POWER or AUTHORITY conferred, th e agency may authorize a general and unlimited management.be : couched in general terms ( Article 1877), or couched in specific terms ( Special Power of Attorney) ( Art. 1878) Observat ion: 3/12/13 A general agency may be : a. Couched in general terms; b. Couched in specific te rms. A special agency may be : a. Couched in general

An agency couched in general terms comprises only ACTS OF ADMINISTRATION even if : 1. The management be apparently unlimited EXAMPLE: 2. The Pedro his agent in t his withholds Juan made principal states that he manner: no power from the agent . I make you my agent for all my properties, I withhold no power from you. You m ay execute such acts as you may consider appropriate. You QUESTIONS: are hereby given general and unlimited management a.) May Pedro compromise in behalf of Juan ? NO 3/12/13 b.) May Pedro accept or repudiate an inheritance for Juan: ?

REASON FOR ALL THE ANWERS: These are the acts of strict dominion, not mere acts of administration. To do the acts above-mentioned, an agency couched in general terms is not sufficient; special power of attorney are needed. NOTE: A power giv en to an agent to sell ALL of the properties of the principal is NOT an agency c ouched in general terms; it is a special power of attorney. EXAMPLES OF ACTS OF MERE ADMINISTRATION a) b) c) d) e) f) To Sue for the collection of debts To employ workers or servants and employees n eeded for the conduct of business To engage counsel to preserve the ownership an d possession of the principals property. To lease real property to another person for one year or less, provided the lease is not registered. To make customary g ifts for charity or to employees in the business managed by the agent. To borrow money if it be urgent and indispensable for preservation of the things under ad ministration. In order to SELL, an agent must have a special power of attorney, unless the act of selling itself is part of ADMINISTRATION, as in the case of sa le of goods in a retail store. 3/12/13

ARTICLE 1878 Special power of attorney are necessary in the following cases: 1. To make such payments as are not usually considered as act of administration; To effect novations which to put an end to obligations already in existence at the time the agency was constituted; To compromise, to submit question to arbitrati on, 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; To waive any o bligation gratuitously; To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consi deration; To make gifts, except customary ones for charity or those made to empl oyees in the business managed by the agent; To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; To lease any real property to another person for more than one year; 2. 3. 4. 5. 6. 7. 3/12/13 8.

9. To bind the principal to render some services without compensation; 10. To bind the principal in a contract of partnership; 11. To obligate the prin cipal as a guarantor or surety; 12.To create or convey real rights over immovabl e property; 13. To accept or repudiate an inheritance; 14. To ratify or recogniz e obligations contacted before the agency 15. Any other act of strict dominion. WHEN SPECIAL POWERS OF ATTORNEYS ARE NEEDED 1. Acts of strict dominion or ownership ( as distinguished from acts of mere admini stration.) Gratuitous contracts; Contracts where personal trust or confidence is of the essence of the agreement 1. 3. ( J.B.L. 3/12/13 Reyes, Observation on the New Civil Code, 16 L.J. 138)

MEANING OF SPECIAL POWER OF ATTORNEY This refers to a clear mandate (express or im plied) specifically authorizing the performance of the act, and must therefore b e distinguished from an agency couched in general terms. A special power of atto rney is an authority granted by the principal to the agent where the act for which it is drawn is expressly m entioned (Strong v. A special power can be included in a general power of Repide 1906) attorney, either by giving authority for all acts of a particular charact er or by specifying therein the act/transaction for which a special power is nee ded Example: ( Tolentino)authorized you to sell ALL my properties This I does not need a special power to sell for each property involved, since such special pow er has already been given. NOTE: In general, the execution of a power of attorne y does not need the intervention of any notary public ( Barreto 3/12/13 v. Tuason 58 Phil. 845)

POWER OF ATTORNEY: - defined as the written authorization to an agent to perform specified acts in behalf of his principal which acts when performed , shall hav e binding effect on the principal ( 2Am. Jur 30) PURPOSE Not to define the agents authority, but to evidence such authority to thi rd parties . ARTICLE 1879 A special power to sell excludes the power to mortgage , and a special power to mortgage does not include the power to sell. THE POWER TO SELL CARRIES WITH IT THE FOLLOWING: The power to find a purchaser or to sell directly 3/12/13

The power to deliver the property The power to make the usual representation and warranty The power to execute the necessary transfer documents ( like the execu tion of the contract itself of sale ) The power to fix the terms of the sale, in cluding the time, place, mode of delivery, price of the goods, and the mode of p ayment unless there be set conditions stipulated by the principal. The power to sell only for CASH (In the absence of special authority, mere authority to sell does not give the agent The power authority to the price, unless he was to recei ve sell on credit) authorized only to solicit orders. NOTE: The power to sell DOES NOT carry with it the power to: 1. ) BARTER or to E XCHANGE 3/12/13 2. ) To MORTGAGE or to PLEDGE

THE POWER TO MORTGAGE DOES NOT INCLUDE THE FOLLOWING To sellexecute a To second mortgage To mortgage for the agents personal benefit or for the benefit of any t hird person, unless the contrary has been clearly indicated. NOTE: Ordinarily, T he mortgage can be made only on the present property of the principal, and not o n hereafter acquired property, but he contrary can be stipulated upon. It is ess ential however, that at the time of the mortgage itself, the principal must be t he owner otherwise the mortgage is VOID. 3/12/13

1. two parcels of land belonging to his principal; with one for ten years @ Php 1,000.00 a year payable annually, and with the other without a fixed term @ 100. 00 a month payable monthly. Do you think that these contacts are valid and bindi ng upon the principal? Give reasons. ANS: The first contract is not valid and bi nding, because according to the Civil Code, to lease any real property to anothe r person for more that one year, a special power of attorney is necessary (Artic le 1878, NCC). The Second, however is valid and binding, because the contract in volves merely acts of administration 2. An agent with general powers of administ ration, desirous of improving the financial condition of the principals business sold a piece of land belonging to his principal for double the price that appear ed in the inventory prepared by the principal before leaving the place. Do you t hink the agent has exceeded his powers? Why? ANS: Yes the agent has exceeded his authority. An agent with general power of administration cannot perform acts of strict dominion without a special power of attorney ( Article 1878, NCC). Conse quently, the contract in this case is not valid; it is unenforceable PROBLEM S An agent with general powers of administration, leased to another pers ons 3/12/13