Thursday, July 03, 2008
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Blog Lecture No. 83: Powers of Attorney

Finally, another opportunity to conduct a blog-lecture, just to bust some myths:

What are powers of attorney?

These are documents or contracts to establish an agency relationship between a principal and an agent.

So what is a contract of agency?

Article 1868 of the Civil Code of the Philippines states: "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."

So what is it in English?

The key word in the definition above is "representation." By the contract of agency, a principal allows his agent to act on his behalf, as if the principal is the one acting.

By this contract (generally called a power of attorney), an agent does something or acts on something, such as enters into contracts, not on his own name by in the name of his principal.

According to the Merriam Webster online dictionary, an attorney is one who is legally appointed to transact business on another's behalf. Hence the name "power of attorney"

Distinguish this from an "attorney-at-law" which refers to lawyers, who are persons authorized by the court to transact business in it. Think of us as similar to "certified public accountants." Anyone can be an attorney, if authorized by someone else, just as anyone can be an accountant. But being an attorney-at-law is a different matter, like a certified public accountant, we have to pass some stringent standard and specifically authorized by the government to practice such a profession.

So the myth that only lawyers can be given powers of attorney is simply not true. Those authorizations you give to your messengers to encash your paychecks makes such messengers your attorneys.

What are the kinds of powers of attorney?

They are:

(1) General
(2) Special

What's the difference between the two?

Simply put, a special power of attorney authorizes the agent to do specific tasks and functions.

A general power of attorney is broader and should be given only sparingly because the principal will authorize his agent to do almost everything on his behalf.

As stated by the law (Article 1876), a general power of attorney comprises all the business of the principal, a special power of attorney, one or more specific transactions.

Why did you say a general power of attorney will authorize an agent to do almost everything in his behalf?

I said almost everything because under the law (Article 1877, to be exact):

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.

This means, an agent, even if given a general power of attorney, cannot do acts of ownership over the principal's properties, unless specifically authorized in the general power of attorney over a specific property. In which case, that document becomes a special power of attorney already, insofar as that specific property and transaction is concerned.

Acts of ownership include, sale, mortgage or any other incumbrance over properties.

So where are special powers of attorney necessary?

These are necessary over the following cases, according to Article 1878:

(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.

So why is the DOJ doing something good for a change and warning the victims of the recent tragedy about blindly signing special powers of attorney?

More likewise, these special powers of attorney contain a specific authority to collect the money being given by the shipper and sign the quitclaim on the victim's (or the heirs') behalf, and because they signed that special power of attorney, they will be bound (and they have to honor) anything the appointed agent does on their behalf.

Also, the so-called special power of attorney had the name of the agent in blank. It's like signing a blank check. Anybody (not any lawyer, as the myth perpetuates) can sign his name as their agent, collect the money and compromise their claim and then, may not even give them their money, because they don't even know who they appointed as agent.

So again, what is the myth you wanted busted?

The myth is only lawyers can be given special powers of attorney. An "attorney" in this document simple means representative and anyone, not necessarily a lawyer, can be a representative, an attorney of another given this document.

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