BASICS OF POWERS OF ATTORNEY
What is a POWER OF ATTORNEY?
A power of attorney is an authorization to act on someone else’s behalf in legal or business matter.
WHY NEED A POWER OF ATTORNEY?
1. Absence of Person
2. Inability to be present
3. Don’t want to be present
4. Physical Incapacity
5. Minimize Persons/ Signatories
6. Future Plans/ Circumstances
7. Simply busy
Types of Powers of Attorney
1. General Power of Attorney – authorizes your Agent to act on your behalf in a variety of different situations for administration and general supervision and management.
2. Special Power of Attorney – authorizes your Agent to act on your behalf in specific situations only, particularly acts of dominion or ownership in real estate.
MAIN LAW governing Powers of Attorney
New Civil Code [ Law on Agency ]
TITLE X, AGENCY, CHAPTER 1 [Articles No. 1868-1932]
1. AGENCY – defined
2. 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 NCC]
EXPRESS or IMPLIED
1. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.
2. Agency may be oral, unless the law requires a specific form. [ Art. 1869, NCC ]
Essential Requisites (Elements) of Contracts
(Art. 1318, Civil Code)
There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract;
3. Cause of the obligation which is established
Definition – it is the meeting of the minds between the parties on the subject matter and the cause of the contract, even if neither one has been delivered.
Effect of No Consent
1. If there is absolutely no consent, there is no contract and may be considered VOID or non-existent (Example: when it was simply a JOKE between the parties who never intended to be bound by agreement)
2. If there is consent but is vitiated such as error, fraud, or undue influence, etc., the contract is not VOID, but is merely VOIDABLE (valid until annulled)
Applicable Law on Consent – Art. 1319, Civil Code, provides:
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge. The contract, in such a case is presumed to have been entered into the place where the offer was made.
REQUISITE FOR A PERSON TO CONTRACT IN THE NAME OF ANOTHER (AGENT, ATTORNEY-IN-FACT)
Under Art. 1317 of the Civil Code, it is provided that:
Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.
A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly, or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party.
If a person wants to contract in the name of another
He must be duly authorized (expressly or impliedly
Or he must have by law a right to represent him (e.g. guardian, administrator)
Or he must be subsequently ratified (expressly, impliedly, by word or deed)
NOTE : IN CASE OF SALE OF PIECE OF LAND OR ANY INTEREST THEREIN THROUGH AN AGENT, the following must be followed:
Art. 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.
AUTHORITY MUST BE IN WRITING
OR ELSE, THE SALE IS VOID
OFFER MADE THROUGH AN AGENT
Acceptance of an Offer Through an Agent
If both the offer and the acceptance are made through an AGENT (who is an extension of the personality of the principal) , then there is a valid ACCEPTANCE.
If made to an AGENT (but who had no authority to bind) but is merely a sort of messenger, then there is NO VALID acceptance
As provided under Article 1322 of the Civil Code:
Art. 1322. An offer made through an agent is accepted from the time acceptance is communicated to him.
WHEN SPECIAL POWERS OF ATTORNEY ARE NEEDED:
(Art. 1878, Civil Code)
GENERAL POWER OF ATTORNEY VS. SPECIAL POWER OF ATORNEY
What is controlling are the content of the power of attorney and not the heading or title of the document. It is best to look into the contents of the power and limitations in the document to determine whether it will be sufficient for the authority being delegated to the attorney-in-fact.
SPECIAL POWER OF ATTORNEY
In general, a special power of attorney is required for the following:
1. Acts of strict dominion or ownership (as compared to acts of mere administration)
2. Gratuitous contracts
3. Contracts where personal trust and confidence is of the essence of the agreement.Or the following:
1. To make such payments as are not usually considered as acts of administration.
2. To effect novations which put an end to obligation 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 judgement, 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 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
Substitution of Agent
In general, the agent may appoint a substitute if the principal has not prohibited him from doing so, as provided under Art. 1892 of the Civil Code:
Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but shall be responsible for the acts of the substitute:
• When he was not given the power to appoint one;
• When he was not given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.
All acts of the substitute appointed against the prohibition of the principal shall be void.
MODES OF EXTINGUISHING AGENCY [ EDWARD]
1. Expiration of period
2. Death of principal or agent
3. Withdrawal of agent
4. Accomplishment of purpose
6. Dissolution of firm which granted or accepted agency