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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
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First Regular Session 
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~enntr 
~iI.;r~ ~114'~"f<Ttll1"l 
SEN ~TIL 
1411AR 11 P 4 157 
S. B. No. 
1'11 
Introduced by Senator Maria Lourdes Nancy S. Binay 
AN ACT AMENDING ARTICLE 1898 OF REPUBLIC ACT 386, OTHERWISE 
KNOWN AS THE NEW CNIL CODE OF THE PHILIPPINES 
EXPLANATORY NOTE 
Article 1898 of the Republic Act No. 386, otherwise known as the New Civil Code of 
the Philippines provides that the contract executed by an agent beyond the scope of his 
authority shall be void, if not ratified by the principal and if the third party is aware of 
the limits of the powers granted by the principal, thus: 
Art. 1898. If the agent contracts in the name of the principal, exceeding the 
scope of his authority, and the principal does not ratifY the contract, it shall be 
void if the party with whom the agent contracted is aware of the limits of the 
powers granted by the principal. In this case, however, the agent is liable if he 
undertook to secure the principal's ratification. 
However, Art. 1317 and Article 1403 (1) of the New Civil Code provides that a 
contract executed by a person on behalf of another without such authority or in excess 
of his authority shall be unenforceable, thus: 
Art. 1317. No one may contract. in the name of another without being 
authorized by the latter, or Unless he has by law a right to represent him. 
A contract entered into in the name of another by one who has no authority or 
legal representation, or who has acted beyond his powers, shall be 
unenforceable, unless it is ratified, expressly or impliedly, by the person on 
whose behalf it has been executed, before it is revoked by the other contracting 
party. 
Art. 1403. The following contracts are unenforceable, unless they are ratified: 
(1) 
Those entered into in the name of another person by one who has been 
given no authority or legal representation, or who has acted beyond his 
powers; xxx 
In order to clarify the apparent conflict of the New Civil Code relating to the status of 
a contract executed by a person on behalf of another without such authority or in 
excess of his authority, this bill proposes to amend Article 1898 of the New Civil 


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Code by stating that a contract executed by an agent beyond the scope of his authority 
shall be unenforceable, if not ratified by the principal and if the third party is aware of 
the limits of the powers granted by the principal consistent with the other applicable 
provisions ofthe New Civil Code. 
The passage of this bill is therefore earnestly requested. 
NANCY S. BINAY 
Senator 


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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
'14 
I1fIR 11 P 4 '57 
SEN 1\..TJL 
S. B. No. 
~.l·71 
Introduced by Senator Maria Lourdes Nancy S. Binay 
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AN ACT AMENDING ARTICLE 1898 OF REPUBLIC ACT 386, OTHERWISE 
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KNOWN AS THE NEW CNIL CODE OF THE PHILIPPINES 
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Be it enacted by. the Senate .and House of Representatives of the Philippines in 
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Congress assembled: 
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SECTION 1. Article 1898 of Republic Act No. 386, otherwise known as the New 
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Civil Code of the Philippines is hereby amended to read as follows: 
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Art. 1898. If the agent contracts in the name of the principal, exceeding the 
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scope of his authority, and the .principal does not ratify the contract, it shall be 
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[void) UNENFORCEABLE if the party with whom the agent contracted is 
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aware of the limits of the powers granted by the principal. In this case, 
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however, the agent is liable if he undertook to secure the principal's 
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ratification. 
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SECTION 2. Repealing Clause. All laws, decrees, orders, rules and regulations, other 
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issuances, or parts thereof inconsistent with the provisions of this Act are hereby 
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repealed or modified accordingly. 
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SECTION 3. EffectivitY. This Act shall take effect fifteen (15) days after its 
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publication in at·least·two (2) newspapers of generaf circulation. 
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Approved, 
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