GR 43723; (January, 1940) (CRITIQUE)
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THE AI-ASSISTED CRITIQUE
The Court correctly applied the principles of agency and ratification under the Civil Code. The core issue was whether the principal, Ernesto J. Seva, could be held liable for the unauthorized acts of Ralph Worrell. The power of attorney granted to Olayta explicitly required any subdelegation to be in writing and subject to Seva’s approval. Since Worrell was never formally appointed, his actions fell outside the scope of the mandate. Under Article 1727, a principal is only bound by acts exceeding the mandate if expressly or tacitly ratified. The Court found no such ratification; Seva’s protest upon learning of the transaction was a clear disavowal. The doctrine of respondeat superior does not apply where the agent acts without actual or apparent authority. The plaintiff’s assumption that Worrell was a representative, without verifying his formal appointment, was a risk he bore personally.

The decision properly distinguishes between knowledge and ratification. The sub-agent Marieta C. de Delfin’s awareness of Worrell’s activities did not constitute tacit ratification by the principal. Tacit ratification requires voluntary conduct implying assent, which was absent here. The Court’s reliance on precedent, such as Tipton v. Velasco, reinforces that an agent’s unauthorized sub-delegation cannot bind the principal. The ruling safeguards principals from liability for rogue actors, emphasizing that the formalities of agency appointments are not mere technicalities but essential safeguards. The plaintiff’s failure to ascertain Worrell’s authority was fatal to his claim, as the law places the burden on third parties dealing with an agent to verify the scope of authority.

The dismissal of the claim for damages was also legally sound. The alleged damages from the forced sale of other shares were too remote and not a direct consequence of the defendants’ actions. Since Worrell was not an authorized agent, his fraud could not be imputed to Seva or the sureties. The sureties’ liability under the bond was contingent on Seva’s liability, which did not arise. The Court’s strict construction of the power of attorney and refusal to imply authority align with the policy of preventing unauthorized expansions of liability. This case serves as a cautionary tale on the perils of informal dealings in commercial agency.