Philippines - A Different Kind Of ‘Attorney’:

SPA And The Law Of Agency.

Legal News & Analysis - Asia Pacific - Philippines -
Regulatory & Compliance

24 July 2020
 
Ever wished you can be at two places in one time? In effect, the
law of agency allows you to do that for transactions allowed by
the law and upon meeting certain conditions.
 
There are a host of reasons for one person wanting another to act
on his behalf. It may be lack of time, resources or understanding
of a certain matter, hence appointing another to act for him or her
may be the better option. Other times, constraints imposed by
physical inability or distance play a huge role. It is not uncommon
in our country for OFWs, for instance, to appoint trusted relatives
to oversee an income-generating rental property. Or for a rather
busy person to request a friend to secure a government
certification from him or her during business hours.
 
In business scenarios, a corporation, as a juridical entity, appoints
its officers or other employees to do certain tasks for the
corporation, such as signing a contract, opening and maintaining
accounts, or obtaining permits.
 
All these scenarios are governed by the law on agency where, in
effect, a person is represented by another person who is
authorized to bind and do legal acts for and in behalf of the
former. Under the Civil Code, 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. (Art. 1868, Civil Code) The agency may be
express or implied. It is generally not required to be in writing; the
contract may be oral unless the law requires a specific form.
 
For instance, 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. (Art. 1874, Civil Code) Further,
Special Powers of Attorney (SPA) 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. (Art. 1878)
 
A special power to sell excludes the power to mortgage; and a
special power to mortgage does not include the power to sell (Art.
1879) and a special power to compromise does not authorize
submission to arbitration. (Art. 1880)
 
Needless to state, the agent must act within the scope of his
authority. He may do such acts as may be conducive to the
accomplishment of the purpose of the agency limits of the agent’s
authority shall not be considered exceeded should it have been
performed in a manner more advantageous to the principal than
that specified by him.
 
In the case of Heirs of Sarili vs Lagrosa (G.R. 193517, 15 January
2014), the Supreme Court ruled that a higher degree of prudence
is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is
registered. In such a case, the buyer is expected to examine not
only the certificate of title but also the authority and identity of the
person with whom he is dealing with.
 
If there are flaws in the face of the SPA, mere inspection of the
document will not do; the buyer must show that his investigation
went beyond the document and into the circumstances of its
execution. In Heirs of Sarili, the buyers purchased the subject
property from a purported agent, however the latter’s SPA shows
flaws in its notarial acknowledgment. The agent’s community tax
certificate (CTC) number was not indicated thereon. Despite this
irregularity, however, buyers failed to show that they conducted
an investigation beyond the subject SPA and into the
circumstances of its execution as required by prevailing
jurisprudence. Hence, Sps. Sarili cannot be considered as
innocent purchasers for value. For indeed, the due execution and
authenticity of an SPA in a real estate transaction is of great
significance in determining the validity of the sale.
 
First published on The Daily Tribune.
 

 
For further information, please contact:
 
Nilo T. Divina, Managing Partner, DivinaLaw
nilo.divina@divinalaw.com

I do not own this article, for educational purposes only.