Short answer. Yes. Under Civil Code Article 1898, if an agent exceeds their authority and undertook to secure the principal's ratification — and that ratification does not happen — the agent is personally liable to the third party. The agent's promise created a personal obligation they must answer for.
What the law says
the agent is liable if he undertook to secure the principal's ratification
Civil Code, Article 1898 — Unauthorized Act Not Ratified. Read the full provision →
The basic rule when an agent goes beyond authority
When an agent enters into a contract in the principal's name but exceeds the scope of their authority, the contract is not automatically enforceable against the principal. Article 1898 states the rule: if the third party knew the limits of the agent's authority and the principal does not ratify, the contract is void. The third party's awareness of the limitation is the key factor. A party who dealt with an agent knowing the agent could not bind the principal took that risk voluntarily.
When the agent promises ratification
Article 1898 adds a critical exception to the otherwise bleak position of the third party: the agent is liable if he undertook to secure the principal's ratification. If the agent did not just act without authority but went further — assuring the third party that the principal would approve the deal — the agent created a personal obligation. If the principal then refuses to ratify, the third party has a direct claim against the agent based on that undertaking. The agent cannot hide behind the principal's refusal when the agent was the one who promised it would be obtained.
Why this matters for principals
As the principal who refused ratification, you are not liable on the unauthorized contract itself — refusal is your right, and an agent acting outside their authority binds you to nothing. But the agent's personal exposure shifts to the agent alone. If the third party sues the agent, that dispute is between them. Your refusal is not a wrongful act — you cannot be compelled to ratify a deal you did not authorize. The agent's decision to promise ratification without your approval was their own risk to take.
What the third party should know
If you are the third party in this situation — the one whose contract was not ratified — your remedy is against the agent, not the principal. Your claim arises from the agent's personal undertaking to obtain ratification, which failed. The nature and extent of the agent's liability depends on the facts: what was promised, whether you relied on it, and what loss resulted from the principal's refusal. Document the agent's statements carefully. The word 'undertook' in Article 1898 suggests a deliberate promise, not a mere hope — gathering evidence of that commitment is essential to pursuing the agent.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Sps. Delfin O. Tumibay and Aurora T. Tumibay-deceased; Grace Julie Ann Tumibay Manuel, Legal representative vs. Sps. Melvin A. Lopez and Rowena Gay T. Visitacion, G.R. No. 171692, June 3, 2013 — read the decision on LawPhil →
- Marcos V. Prieto vs. Court of Appeals, et al, G.R. No. 158597, June 18, 2012 — read the decision on LawPhil →