• Doctrine of apparent authority


    Persida Acosta

    Dear PAO,
    Last year, I purchased a condominium unit in Mandaluyong City from a reputable real estate company through an agent handing out flyers from a booth inside a mall. As I was presented with a very good plan for the project and also with sufficient identification of the agent as a member of the company (i.e., company ID card, uniform) and transaction was made inside the company’s booth, I quickly committed by making a reservation fee of P25,000.00 right then and there. After getting my receipt, the agent then promised me that they will call me to collect on the balance after completion of documents by the real estate company. Weeks passed since then and I never heard a word from the agent again. In fact, I even called the company to ask about my unit and they said they will get back to me.

    After two months, I received a call from the company stating that the agent already resigned from the company at the time I paid, and never remitted the P25,000.00 to them. They even asked me to post a new reservation if only to push through with the sale. I demanded a refund but they rejected it by saying that I should chase after the agent instead, because the agent is no longer connected with them when the transaction happened. Is their contention correct?

    Dear Leandro,
    No, Leandro, they are wrong in rejecting your claim for a refund as they held the agent out as one still having authority to make the transaction. It should be emphasized that you personally dealt with a former agent of the real estate company (principal), and such contract of agency has legal consequences under our New Civil Code (NCC).

    Pertinently, Article 1868 of the NCC provides that “[b]y 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.” In your situation, it is clear that the principal or real estate company held out the agent as one still having authority to enter into transactions for the company. This can be taken from the fact that the agent still had his company ID, continued to wear the company uniform and even transacted from within a company booth inside the mall. These things clearly put the situation in purview of the doctrine of apparent authority.

    In the case of Advance Paper Corporation & George Hawvs. Arma Traders Corp., et al. (G.R. No. 176897, December 11, 2013), penned by former Associate Justice Arturo Brion, the Supreme Court emphatically enunciated the doctrine of apparent authority as:

    “The doctrine of apparent authority provides that a corporation will be estopped from denying the agent’s authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, and it holds him out to the public as possessing the power to do those acts. The doctrine of apparent authority does not apply if the principal did not commit any act or conduct which a third party knew and relied upon in good faith as a result of the exercise of reasonable prudence. Moreover, the agent’s acts or conduct must have produced a change of position to the third party’s detriment.

    In Inter-Asia Investment Industries v. Court of Appeals, we explained:

    x x x x

    A corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that [the]authority to do so has been conferred upon him, and this includes powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused person dealing with the officer or agent to believe that it has conferred.” [Emphasis supplied.]

    Following the pronouncements in the above-quoted case, it becomes evident that the real estate company cannot reject nor decline the transaction simply because the agent has apparently failed to remit your reservation fee to them. In other words, the real estate company is estopped from denying liability to you because you dealt with a person whom they held out as one person authorized to enter into such transaction. Stated conversely, the real estate company is incorrect in telling you to solely chase after the erring agent inasmuch as they are similarly bound to the transaction.

    We find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. Thus, the opinion may vary when the facts are changed or further elaborated.
    We hope that we were able to enlighten you on the matter.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net


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