Short answer. Yes. A principal must comply with all the obligations his agent contracted within the scope of his authority — the deal is yours, not his. Where the agent went beyond his power you are not bound, unless you ratify what he did, expressly or by your conduct.
What the law says
The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.
Civil Code, Article 1910 — Principal Must Comply With the Agent's Acts. Read the full provision →
Within the scope, the contract is simply yours
This is the point of appointing an agent. When he contracts within his authority, he drops out of the picture and the obligations settle on you as if you had signed personally. Regret is not a ground for undoing it — not a better offer that came in afterwards, not a change in the market, not a falling-out with the agent. Nor does it matter that you would have negotiated differently. If you gave him the power to make the deal and he made it, the other side is entitled to hold you to it, and your dissatisfaction with how he used the authority is a matter between you and him.
Beyond the scope: not bound, but be careful how you say so
Where the agent exceeded his power, the article says you are not bound. The scope, though, is measured by what the authority actually gave him, and for outsiders that means the terms of the written power of attorney rather than any private understanding you had with him. An instruction given by phone, not reflected in the document he was carrying, will not usually rescue you. So examine the instrument itself before concluding that he went too far, paying attention to any general clause authorising him to do whatever was necessary to accomplish the purpose.
Ratification, including the kind you do by accident
An unauthorised act becomes binding if you ratify it — expressly or tacitly. Express is a letter or a signature. Tacit is where most people lose the point: accepting the price, cashing the cheque, delivering the goods, moving into the property, or staying silent while the other side performs and you take the benefit. If you intend to disown a transaction, say so promptly and in writing to the third party, and do not take anything under it in the meantime. Conduct that treats the deal as real is read as accepting it, whatever you say about it afterwards.
Where the loss lands
This is another provision that shares out a loss between two people who both acted honestly. The counterparty dealt with someone you sent, on the strength of a document you signed. You may have been let down by an agent who ignored your instructions. The Code puts the transaction on the person who chose the agent and put him in a position to be trusted, and leaves that person with a claim against the agent for exceeding or misusing his mandate. Keep the two questions separate in your own mind: honour the deal if it was within scope, and pursue the agent on its own footing.
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.
- AFP Retirement and Separation Benefits System (Afp-Rsbs) vs. Plastic King Industrial Corp, G.R. No. 231395, June 26, 2023 — read the decision on LawPhil →
- Desiderio Dalisay Investments, Inc., vs. Social Security System, G.R. No. 231053, April 4, 2018 — read the decision on LawPhil →
- Sps. Fernando and Lourdes Viloria vs. Continental Airlines, Inc, G.R. No. 188288, January 16, 2012 — read the decision on LawPhil →
- Sps. Raul & Amalia Panlilio vs. Citibank, N.A, G.R. No. 156335, November 28, 2007 — read the decision on LawPhil →