I.

INTRODUCTION
A. How is agency defined

Ratio: The PURPOSE of agency is to EXTEND the personality of the principal through the facility of the agent. The agent by legal fiction becomes the principal authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the CONSENT or AUTHORITY of the principal which CANNOT, in any way, be COMPELLED by any law or any court. UY V CA Uy and Roxas were agents to sell 8 parcels land. The property was offered to NHA. NHA Board approved the acquisition but thereafter cancelled the acquisition of 3 parcels of land. Agents filed a case against NHA to recover their unearned income. CA ruled that as agents they were not real parties in interest, hence it is indispensable that the lot owners be included as party plaintiffs. Ratio: Agents do something or render some service in representation or on behalf of the principal. The rendering of service does not make them parties to a contract. A contract may be violated only by the parties thereto as against each other. Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Agency may be oral, unless the law requires a specific form. (1710a) CONSENT may be 1. Express o Through words or deeds 2. Implied o Action: acts of principal o Inaction (knowledge is important here): (1) silence/lack of action (2) failure to repudiate actions done on his behalf and without authority o E.g. a. Payment of commission of agent b. Receipt of benefits (every time its received without objection, its implied consent and ratification) MACKE V CAMPS Macke and Chandler sold to one Ricardo Flores, managing agent of Washington Caf, various goods which were only partially paid pending the return of his principal (Camps). Principal refused to pay on the ground that Flores was not his agent. Written contract shows that defendant was sub lessee of a property with Flores as managing agent of the caf Ratio: Authority to buy such reasonable quantities of supplies as might from time to time be necessary in carrying on the business may be fairly presumed that such agent is clothed with a general authority, especially in view of the fact that the principal appears to have left the agent in charge during more or less prolonged periods of absence. PRUDENTIAL BANK V CA Aurora Cruz invested 200k in CB bills with Prudential. Upon maturity, she renewed the investment and was requested to sign a Withdrawal Slip, allegedly a new requirement of the bank. After some time, she sought to withdraw her 200k but she was informed that the investment appeared to have been withdrawn. It appears that the banks employee Quimbo perpetuated the fraud and caused the withdrawal of the amount. Bank ignored repeated follow-ups of Cruz. Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

Art. 1868. By 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. RALLOS V. FELIX GO CHAN Sisters authorized their brother to SELL their undivided shares in a parcel of land. One of the sisters DIED. Subsequently the brother sold the parcel of land. Administrator went to court and prayed that the sale be declared unenforceable. Ratio: Theres a relationship of Agency when 1 party called the principal (mandante) authorized another called the agent (mandatario) for and in his behalf with transactions to third persons. The essential elements of agency (CORA): 1. Consent, express or implied 2. Object is the execution of a juridical act in favor of third persons 3. Agent acts as a Representative 4. Agent acts within the scope of his Authority. Agency is basically 1, personal 2. representative, and 3. derivative in nature. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of authority Qui facit per alium facit per se, meaning, He who acts through another acts for himself. By the very nature of the relationship between the agent and the principal, agency is extinguished by death of the principal or the agent. De Leon: Characteristics of a contract of agency 1. Consensual 2. Principal 3. Nominate 4. Unilateral (if gratuitous); bilateral (if for a compensation) 5. Preparatory 1. Consent

Art. 1868. By 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. ORIENT AIR SERVICES V CA By virtue of a General Sales Agency Agreement, American airlines authorized Orient Air Services as its exclusive general agent within the Philippines. Orient Air failed to promptly remit net proceeds of sales. As a result American Air terminated the agreement. RTC and CA ordered reinstatement of Orient as a general sales agent of American Air in the Philippines.

Under Professor Dio (2nd Sem, AU 2009-2010). By Annie, Eds, Jam, Anj F, Kae, Lou, Chi, Pat (Batch 2012). Compiled by Eds.

She then filed a complaint for breach of contract. TC = for plaintiff, CA affirmed. Ratio: A bank is liable for the wrongful acts of its officers done in the interest of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. The bank is still liable to innocent third persons where the representation is made in the course of business by an agent acting within the general scope of his authority even though the agent is secretly abusing his/her authority and attempting to perpetuate fraud upon his principal or some other person for his ultimate benefit. LINTONJUA V ETERNIT 90% of ECs stocks were owned by ESAC, with Glanville as President and Delsaux as Regional Director. ESAC in 1986 instructed Adams, member of ESAC Board of Directors, to dispose the 8 parcels of land without written authority from EC. Adams engaged the services of Lauro Marquez as broker, who in turn offered it to Litonjua. EC cancelled the sale of 8 parcels of land to Litonjua siblings due to the end of political instability. Litonjua filed a complaint for specific performance and damages against EC. TC = EC, CA affirmed. Ratio: Requisites of agency by estoppel: 1. Principal manifested a representation of the agents authority / knowingly allowed agent to assume such authority 2. Third person in Good Faith relied upon such representation rd 3. 3 person has changed its position to its detriment. Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. (n) * ACCEPTANCE signifies the AGENTS CONSENT to establish the relationship of agency * Implied acceptance of agency by agent: silence when the principal delivers the POA without objection. Art. 1871. Between persons who are present, the acceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection. (n) * Principal personally delivers POA. * What is the duty of the agent? To read the POA. So theres presumption that agents can read. * When do you know someone is present? When you can physically sense each other. Art. 1872. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except: (1) When the principal transmits his power of attorney to the agent, who receives it without any objection; (2) When the principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram. (n) *Principal only transmits POA 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. (n) Art. 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts. (n) * Only the principal can ratify * A principal can ratify a transaction by receiving the benefits thereof, in accord with the principle that the principal may not accept the benefits of a transaction and repudiate its burdens. Cf. Macke v Camps Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. * The duties and liabilities of the principal are primarily based upon the contract and the validity of the contract between them. 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. (1259a) 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; 2. Object

* Sir Dio: What may be the object of a contract of agency? GENERALLY: every juridical act may be the object of agency EXCEPTION (remember this, because you wont hear it from others) 1. If it will result to crime, torts or any illegal act 2. If it requires exercise of discretion 3. If it requires personal performance by the principal 3. Consideration

Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n) * Sir Dio: Do not confuse COMPENSATION with CONSIDERATION. Consideration is essential to the validity of the contract of agency, compensation is not. B. Who are the parties to the contract of agency

(1) Principal - person represented (2) Agent - who acts for and represent another (3) Third party - the party to whom the business is transacted

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Principal authorized agent to enter into a compromise agreement. In the compromise agreement, agent agreed to sell the property to the 3rd party
PRINCIPAL AGENT 3RD PERSON

Relative weight of interests. In case of conflict, between rd rd AGENT and 3 Person, resolve in favor of 3 person AGENT and PRINCIPAL, resolve in favor of principal There are at least two contracts involved: (1) Contract of agency (2) Commercial transaction cause of first one C. Must the parties be capacitated

Ratio: The authority granted is explicit and exclusionary. The power to enter into a compromise agreement does not include the power to sell. SAN JUAN STRUCTURAL STEEL V CA A corporate treasurer by herself without any authorization from the board of directors sold a parcel of land owned by the corporation. Ratio: The general principles of agency govern the relations between a corporation and its officers subject to: 1. articles of incorporation 2. by laws 3. relevant provisions of law 4. board resolution 5. powers that may be implied or incidental to the power intentionally conferred upon the officer, powers added by custom and usage DE LOS REYES V CA A verbal agreement between principal and agent involving a sale of land registered in the name of principals deceased father. Ratio: A void contract under 1874 can be ratified. AF REALTY V DIESELMAN Quick Facts: A member of the board of directors authorized a broker to sell a parcel of land owned by the company. Ratio: A void contract CANNOT be ratified by clear mandate in 1409 (7) of the civil code.

Principal must be capacitated. capacity of the agent depends on the capacity of the principal Agent does not have to possess full capacity in so far as third persons are concerned but in so far as his obligation to his principal is concerned, the agent must be competent to bind himself.

II. WHAT IS THE FORM OF THE CONTRACT OF AGENCY?

Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Agency may be oral, unless the law requires a specific form. (1710a) Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. (n) ANGELES V PNR Principal authorized through a letter explicitly stating that the agent was his lawful representative to withdraw PNRs scrap/unserviceable rails. Agent already paid PNR, but was unable to withdraw the scrap materials/unserviceable rails. Ratio: Power of Attorney in the absence of statute, no form or method of execution is required. A letter is sufficient to constitute a power of attorney JIMENEZ V RABOT Principal wrote to his sister requesting that the latter sell any of his parcels of land located in Pangasinan Ratio: Power of attorney to convey such property, even though in the form of a private document will operate with effect. The written authorization need not contain the particular description of the property which the agent is permitted to sell. CITY LITE REALTY CORPORATION V CA Broker was the one who negotiated and agreed to sell the property. Ratio: A written authority to find a buyer is different from a written authority to sell. COSMIC LUMBER V CA

III. WHO HAS THE OBLIGATION TO DETERMINE EXISTENCE AND SCOPE OF AGENCY?
KEELER ELECTRIC CO. V. RODRIGUEZ - Keeler sold to Rodriquez an electric plant, to be shipped from Manila to Iloilo. Rodriquez paid to Montelibano, who claimed to be Keelers agent. SC: Montelibano not Keelers agent. - Mechem on Agency Sec. 743: Fundamental principles: 1. The law indulges no bare presumptions that an agency exists. It must be proved/presumed from facts. 2. The A cannot establish his own authority either by his representations or his assuming to exercise it. 3. An authority cannot be established by mere rumor or generational reputation. 4. Every general authority is not an unlimited one. 5. Every authority must find its ultimate sources in some act/omission from the P. - Persons dealing with an assumed agency, are bound at their peril, if they would hold the P to ascertain not only the fact of the agency but the nature and extent of the authority and in case either is controverted, the burden of proof is upon them to establish it. - Against the A, the TP has the oblign to determine existence and scope of agency. It is entirely within TPs power to satisfy himself that the A has the authority he assumed to exercise, or to decline to enter into relations with him. TP must also act with ordinary prudence and reasonable diligence, if he knows or has good reason Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

to believe that the A is exceeding his authority, he cant claim protection. - Notes: 1. Every authoritys ultimate source is Ps act/omission 2. TP dealing with assumed A are bound to: a. Verify fact of agency b. Verify nature and extent c. In case any is controverted by P, A must prove agency YU ENG CHO V. PAN AMERICAN Tokyo-SanFrancisco wasnt confirmed yet plaintiffs pushed through with the flight. Business agreement didnt push through. Damages sought from PanAm, TWSI, and Tagunicar was a broker/independent travel agent who represented herself as agent of TWSI. Against the A, the TP has oblign to determine the existence and scope of agency, and is bound at his peril, having the burden to ascertain not only the fact of agency, but also the nature and extent of the authority granted. To prove fact of agency, it should not be from admission of agent but must be traced from act/omission from principal

Art. 1697. If the period for household service is fixed neither the head of the family nor the house helper may terminate the contract before the expiration of the term, except for a just cause. If the house helper is unjustly dismissed, he shall be paid the compensation already earned plus that for fifteen days by way of indemnity. If the house helper leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding fifteen days. Art. 1698. If the duration of the household service is not determined either by stipulation or by the nature of the service, the head of the family or the house helper may give notice to put an end to the service relation, according to the following rules: (1) If the compensation is paid by the day, notice may be given on any day that the service shall end at the close of the following day; (2) If the compensation is paid by the week, notice may be given, at the latest on the first business day of the week, that the service shall be terminated at the end of the seventh day from the beginning of the week; (3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the month, that the service shall cease at the end of the month. Art. 1699. Upon the extinguishment of the service relation, the house helper may demand from the head of the family a written statement on the nature and duration of the service and the efficiency and conduct of the house helper. B. Employee-employee

IV. HOW IS AGENCY DISTINGUISHED FROM OTHER CONTRACTS/RELATIONSHIPS?

A. Master-servant Art. 1689. Household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the house helper's lodging, food, and medical attendance. Art. 1690. The head of the family shall furnish, free of charge, to the house helper, suitable and sanitary quarters as well as adequate food and medical attendance. Art. 1691. If the house helper is under the age of eighteen years, the head of the family shall give an opportunity to the house helper for at least elementary education. The cost of such education shall be a part of the house helper's compensation, unless there is a stipulation to the contrary. Art. 1692. No contract for household service shall last for more than two years. However, such contract may be renewed from year to year. Art. 1693. The house helper's clothes shall be subject to stipulation. However, any contract for household service shall be void if thereby the house helper cannot afford to acquire suitable clothing. Art. 1694. The head of the family shall treat the house helper in a just and humane manner. In no case shall physical violence be used upon the house helper. Art. 1695. House helper shall not be required to work more than ten hours a day. Every house helper shall be allowed four days' vacation each month, with pay. Art. 1696. In case of death of the house helper, the head of the family shall bear the funeral expenses if the house helper has no relatives in the place where the head of the family lives, with sufficient means therefor.

Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects. Diff. from agency: representation C. Lease of service Art. 1644. In the lease of work or service, one of the parties binds himself to execute a piece of work or to render to the other some service for a price certain, but the relation of principal and agent does not exist between them. Diff. from agency: representation, fiduciary relp D. Independent contractor Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. Diff. from agency: limited control E. Trust Art. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary. Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

Incident fiduciary relp; no representation; a property relp; control; objective: preservation of thing Diff. from agency: also has control (P can terminate anytime); but objective: juridical act F. Sale Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. Diff. from agency: representation; A never acquires ownership G. Partnership Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also form a partnership for the exercise of a profession. Mutual agency; distribution of profits Diff. from agency: no sharing of losses, no contribution to a common fund H. Negotiorum gestio/quasi-contract Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances: (1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern. In the second case, the rules on agency in Title X of this Book shall be applicable. (1888a) Art. 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management. The courts may, however, increase or moderate the indemnity according to the circumstances of each case. Quasi-contract due to acts executed by manager ; officious: acting out of desire to help another; agent for a limited value; objective: preserve/administer business/property; implied agency Diff. from agency: also has representation; but consent is needed; objective: representation/execution of juridical act I. Judicial administrator Court-appointed, bond required, relationship Diff. from agency: also has representation; but no bond

J. Broker Brings parties together; may be agent; can represent both parties if authorized by both; no relation to the thing; compensation: commission upon consummation of contract 2 test (City Lite): 1. Must be the efficient procuring cause 2. Should have obtained a ready, able, willing buyer SEVILLA V. CA Plaintiff was branch manager of TWC, but was really its agent and not its employee nor partner Tests for determination of er-ee relp: 1. Right of control test: where the person for whom the services are performed reserves the right to control not only the end to be achieved but means to be used in reaching such end 2. Existing economic conditions prevailing between parties It was an agency with plaintiff as agent, who solicited fares in behalf of TWC, and received commission. And since there was mutual interest of both A and P, the agency here cannot be revoked at will by the P. A entitled to damages. SHELL V. FIREMENS INSURANCE CO. Car fell from hydraulic lifter at carwash; plaintiff sued Shell for sum of money on negligence. Shell claimed the person responsible was an independent contractor, hence, Shell not liable. Person was really an agent. Since he was found negligent, Shell found liable. As the act of the A or his employees acting within the scope of his authority is the act of the P, breach of the undertaking by A is one for which P is responsible. DELA CRUZ V. NORTHERN THEATRICAL ENTERPRISES Guard sues employer for recovery of expenses incurred in his homicide cases. SC denied, because he wasnt hired to represent defendant in its dealings with third persons; he was an employee hired to perform specific duty. NIELSON & CO. V. LEPANTO CONSOLIDATED Mining operations suspended during the Japanese occupation and resumed a little later after the war, mgt contract unilaterally terminated by Lepanto AGENCY LEASE OF SERVICES
One of the parties binds himself to render some service to the other party Based on representation Based on employment Agent is destined to execute juridical Contemplates only material acts (creation, modification, or (non-juridical) acts extinction of relations with third parties)

The management contract is a lease of service and not a contract of agency. Neilsons principal undertaking or operating the mine and mill wasnt executing juridical acts for Lepanto, to create, modify, or extinguish business relations between Lepanto and third persons. Neilson was not an agent as interpreted in the law of agency, but an only an agent only in the sense of performing material acts for an employer, for compensation. Neilsons incidental capacity as purchasing agent of supplies and enter into contracts regarding the sale of mineral, but Neilson couldnt make any purchase or sell minerals without prior approval of Lepanto; hence, these are not considered juridical acts either, but just acting only as an intermediary. QUIROGA V. PARSONS HARDWARE Parsons agreed with Quiroga for exclusive sale of Quiroga beds. Quiroga claims Parsons was his agent. Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

SC: it was a sale, not an agency, because Quiroga supplies the beds, and Parsons pays their price; if he were an A, hed have to deliver price to Quiroga for the beds sold, and return unsold beds, which isnt the case here. The words commission on sales simply means discount on the price. The word agency only meant Parsons was the only one who could sell Quiroga beds in Visayas. GONZALO PUYAT & SONS V. ARCO AMUSEMENT CO. Discounted price of sound equipment not disclosed; Arco seeks reimbursement. SC denied. Whatever unforeseen events mightve taken place unfavorable to Arco, Gonzalo, vendors agent, might still legally hold Arco for the fixed price. This is incompatible to the claimed agency, because in agency, A is exempted from all liability in discharge of his commission provided that A acts within scope of authority and P must indemnify A for all damages which A may incur in carrying out the agency without As fault. Besides, it is out of the ordinary for one to be the A of both the vendor and the vendee. LIM V. PEOPLE Tobacco, estafa, receipt letter Since Lim was a businesswoman and took efforts collecting tobacco leaves from Ayrosos house, more likely acting as A. There was no transfer of ownership and the agreement clearly considered Lim as an A with obligation to return any unsold tobacco. PACIFIC COMMERCIAL V. YATCO Sugar, commission merchant, broker, tax, ex-ship Commission merchant: engaged in purchase/sale for another of personal property, which, for this purpose, is placed in his possession and at his disposal. Relationship not only with P, but also to property. Broker: no relation to the thing; merely intermediary; doesnt acquire possession over the property. KER V. LINGAD Rubber products distributor, commercial broker National Internal Revenue Code: commercial broker: sell merchandise for other persons or bring buyers and sellers together; includes commission merchants. Essence of sale: transfer of title for a price paid; transferee is in the position of an owner, not merely an agent who accounts for the proceeds of a resale. Essence of agency to sell: delivery to an agent, not as his property, but as the property of the principal, who remains the owner and has the right to control sales, fix price and terms, demand and receive the proceeds less the As commission upon the sales. HAHN V. CA BMW distributor found by SC as agent of BMW Agent: receives commission upon successful conclusion of a sale; P exercises control over A (as BMW has over Hahn). Broker: earns merely by bringing buyer and seller together, even if no sale is eventually made.

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V. SOME CLASSES OF AGENTS

A. B. C. D. Attorneys-at-law Auctioneers Brokers Factors; commission merchants

Mechem, A Treatise on the Law of Agency

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Art. 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. (n) Art. 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. (n) Art. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. (n) Art. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. (n) Art. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. (n) Art. 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. (n)

Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his nonperformance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. (1718) Art. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (n) Art. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. (1738) D. Universal, general and special

Art. 1876. An agency is either general or special. The former comprises all the business of the principal. The latter, one or more specific transactions. (1712) E. Durable agency

Art. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (n) Is this valid: 1. Your agency shall survive my death for 5 years? o Valid in the US 2. Living will i.e. permanent state of unconsciousness (coma) given to agents and caregivers? o Hypothetically yes, as long as he is capacitated at time of making condition SIASAT VS. IAC (Sale of flags to DepEd) Kinds of Agents 1. Universal agent one who is authorized to do all acts for his principal which can lawfully be delegated to an agent 2. General agent one authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business of a particular class or series 3. Special agent one authorized to do some particular act or act upon some particular occasion. He acts usually in accordance with specific instructions DOMINION INSURANCE CORPORATION VS. CA (Special vs. general agency) A perusal of the Special Power of Attorney would show that Dominion and Guevarra intended to enter into a principal-agent relationship and, despite the use of the word special, the contents reveal that what was really constituted was a general agency. o Arts. 1876 and 1877 state that a general agency is one which comprises all the business of the principal but, couched in general terms, it is limited only to acts of administration. A general power permits the power to do all acts for which the law does not require a special power, such as those acts Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

VI. WHAT ARE THE CLASSIFICATION OF AGENCY CONTRACTS?

A. B. Express agency; implied agency Agency by estoppel; no consent

Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (n) Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. (n) Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof. (1734) Art. 1922. If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons. (n) C. Agency by operation of law

Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Agency may be oral, unless the law requires a specific form. (1710a)

enumerated in the Special Power of Attorney. However, the payment of claims is not an act of administration and Art. 1878 includes such payment in its enumeration of instances when a special power of attorney is required, besides the abovementioned document. F. Couched in general terms; couched in specific terms Art. 1877. An agency couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and unlimited management. (n) Art. 1878. Special powers of attorney are necessary in the following cases: (1) To make such payments as are not usually considered as acts of administration; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (3) To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive objections to the venue of an action or to abandon a prescription already acquired; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (9) To bind the principal to render some service without compensation; (10) To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12) To create or convey real rights over immovable property; (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion. (n) Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell. (n) Art. 1880. A special power to compromise does not authorize submission to arbitration. (1713a) 1. Mortgage

the property jointly owned by them, not to contract for any loans in their names and behalf. Maximo alone, with Valeriana who authorized him to borrow money, must answer for them; other defendants-appellants' only liability is that the real estate authorized by them to be mortgaged would be subject to foreclosure and sale to respond for the obligations contracted by Maximo. But they cannot be held personally liable. BPI VS. DE COSTER [Wife was in Paris when husband mortgaged her property] It is very apparent from the face of the instrument that the whole purpose and intent of the power of attorney was to empower and authorize the husband to look after and protect the interest of his wife. There is no provision authorizing him to sign anything or to do anything which would make his wife liable as a surety of a pre-existing debt. It is fundamental rule of construction that in an instrument that defines and specifies powers and duties, such would be limited and confined to those which are specified and defined and that all other powers and duties are excluded. Hence, it follows that since the husband was not authorized then the note in question is void for want of power to execute it. The mortgage is also void. The mortgaged property is owned by Gabriela and since the note is void as to her, then it follows that the mortgage is also void for want of power to execute it. 2. Loan / borrow

HODGES VS. SALAS [Applied proceeds of mortgage to personal debt] The provision cannot be interpreted as also authorizing Yulo to dispose of the money as he pleases, particularly when it does not appear that such was the intention of the principals. And in applying part of the funds to pay his personal obligations, he exceeded his authority. The agent was obliged to turn over the money to the principals or, at least, place it at their disposal 3. Sell

STRONG V GUTIERREZ REPIDE [Agent Jones, capital stocks, sale, general agent] Jones did not have the authority to sell in behalf of Mrs Strong. Strong was a general agent, which according to Art. 1713 (Old Civil Code): An agency stated in general terms only includes acts of administration. In order to compromise, alienate mortgage, or to execute any other act of strict ownership an express mandate is required. There are only three instances whereby the principal is held bound by the third partys assumption of the authority of the agent: (1) Where his acts have contributed to deceive a third person in good faith; (2) Where the limitations upon the power created by him could not have been known by a third person; and (3) Where he has placed in the hands of the agent instruments signed in blank. KATIGBAK VS. TAI CHING CO (Letters indicating acknowledgment of agency) Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

PNB VS. STA. MARIA [6 brothers and sisters executed PA in favor of Maximo Sta. Maria; power to mortgage does not include power to loan] Disinclination of courts to enlarge an authority granted beyond the powers expressly given and those incidentally flowing therefrom as being usual or reasonably necessary and proper for the performance of such express powers. The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo, was merely to mortgage

While it is true that a power of attorney not recorded in the registry of deeds is ineffective in order that an agent may validly perform acts in the name of the principal, it does, however, bind the principal to acknowledge acts performed by his attorney-in-fact regarding said property. The record contains many indications that Tecsi was aware of the sale (letters complaining of the demands of Gabino to send him rents of the land, promises to send, remittance) and these were a tacit acknowledgement that he occupied the land no longer as an owner but only as a lessee. 4. Lease

commercial paper is a very responsible power and will not be lightly inferred. A salesman with authority to collect money belonging to his principal does not have the implied authority to indorse checks received in payment. Any person taking checks made payable to a corporation, which can act only by agent does so at his peril, and must same by the consequences if the agent who indorses the same is without authority.

VII. WHAT ARE THE OBLIGATIONS AND LIABILITIES OF AGENTS TO THEIR PRINCIPALS?
A. Act within scope of authority

VDA. DE CHUA VS. IAC [General agent executed lease contract for 5years] Where the lease contract entered into by an agent is for more than one year, the agent must be armed with a special power of attorney. 5. Compromise

Art. 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell. (n) Reason for 1879 o Power to sell payment of price o Power to mortgage purpose as collateral Art. 1880. A special power to compromise does not authorize submission to arbitration. (1713a) Compromise avoid litigation by making reciprocal/mutual concessions Why power to arbitrate & power to compromise different? Because power to compromise requires another SPA Can General Agent appoint Principal as agent of another? YES, but only if for a compensation 1878 (9) SPA needed of w/o compensation Art. 1881. The agent must act within the scope of his authority. He may do such acts as may be conducive to the accomplishment of the purpose of the agency. (1714a) 1 sentence states duty & limitation nd 2 sentence qualifies limitation = conducive to the accomplishment of the purpose of the agency Art. 1882. The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him. (1715) Discusses manner of performance of the agent If more advantageous Principal controlling actions of agent Ex. P instructs A to sell in MM only; but A can offer to sell anywhere outside MM like in internet (e-bay) Instructions words said/written by P to A to guide latter simultaneous w/ or after delivery of written PoA; can refer to oral instructions Are instructions part of PoA? o Yes if general agency o No between A & P; scope of authority includes written in PoA instructions Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.
st

DUNGO VS. LOPENA [Attorney entered into compromise agreement] The client, on becoming aware of the compromise and the judgment thereon, fails to repudiate promptly the action of his attorney, he will not afterwards be heard to contest its validity. It is neither accurate nor correct to conclude that the absence of an SOA where one is required by law renders the contract void. It is merely unenforceable (1403[1] CC). VICENTE VS. GERALDEZ [Placer lease contract, cement, mining, VP of company refused to sign compromise agreement] 1. Special powers of attorney are necessary to compromise and to renounce the right to appeal from a judgment. Attorneys cannot compromise their clients litigation. It is not disputed that the lawyers of Hi Cement had not submitted to the Court any written authority from their client to enter into a compromise. Juridical persons may compromise only in the form and with the requisites which may be necessary to alienate their property. As a general rule an officer or agent of the corporation has no power to compromise or settle a claim by or against the corporation, except to the extent that such power is given to him either expressly or by reasonable implication from the circumstances. To ratify the unauthorized contract of an agent and make it binding on the corporation, it must be shown that the governing body or officer authorized to ratify had full and complete knowledge of all the material facts connected with the transaction to which it relates. Ratification must be by the officer or governing body having authority to make such contract, and must be with full knowledge. 6. Other acts of strict dominion

2.

3.

INSULAR DRUG VS. NATIONAL BANK [Former salesman had anomalous transactions, committed suicide] Foerster had implied authority to indorse all checks made out in the name of the Insular Drug Co., Inc., has even less force. Not only did the bank permit Foerster to indorse checks and then place them to his personal account, but it went farther and permitted Foerster's wife and clerk to indorse the checks. The right of an agent to indorse

Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. (1719) B. Carry out the agency

* Agent relative limitation only o Valid if w/ consent (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. Lawyers relative prohibition; only w/ respect to the property under litigation Generally, agent has interest in property of P = compensation Principal has interest on subject = interest (6) Any others specially disqualified by law. (1459a) AUSTRIA V CA Pendant w/ diamonds worth 4.5K; consignment of goods for sale; on her way home 2 men snatched her purse w/ pendant inside; Maria didnt pay robbery extinguished her obligation. SC: prior conviction not necessary; fortuitous event = focus on events not on agents PNB V MANILA SURETY P279K delivered by PNB to ATACO, guaranteed by Manila Surety under trust receipt up to P50K. ATACO assigned rt. to collect from BPW(public works); Bank ceased to collect. SC: bank negligent in stopping collection, exonerated surety. Irrevocable agency by stipulation of the parties. Principal cant revoke agency E. Diligence

Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his nonperformance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. (1718) Notes: Acceptance agent signifies consent to agency; bound by his acceptance Agent not required to perform acts 8 hrs/day Art. 1928. The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. (1736a) To withdraw with due notice to P Withdrawal by terms of the contract Repudiation breach of contract Art. 1929. The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation. (1737a) Reasonable time & manner depends on circumstances Sufficient time ex. To return things to P C. Not to carry out the agency

Art. 1888. An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal. (n) D. Loyalty

Art. 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own. (n) * Damages if conflict of interest Art. 1890. If the agent has been empowered to borrow money, he may himself be the lender at the current rate of interest. If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal. (n) Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given;

Art. 1885. In case a person declines an agency, he is bound to observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent or take charge of the goods. (n) Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal. In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. (1719) Art. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. (1726) * Agent liable for fraud & negligence; to whom? PRINCIPAL

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F.

Account/deliver J. Specific obligations of commission agents

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal. Every stipulation exempting the agent from the obligation to render an account shall be void. (1720a) Render an account of his transactions & deliver o Even though it may not be owing to the P Agent may contract w/ other persons but the moment he receives something not from the P, he must turn it over for the P DOMINGO V DOMINGO Exclusive agency to sell; 1K earnest money and 1k gift/propina to Oscar; Highest loyalty required= utmost good faith; absolute obligation to make full disclosure = 1891. Sir: no duty when 1) broker & 2) plus disclosed & no obligation G. Solidary liability

Art. 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. (n) Art. 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. (n) Art. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. (n) Art. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. (n) Art. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. (n) Art. 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. (n) GREEN VALLEY POULTRY V IAC Sale v Agency; non-exclusive distributor; nature is one of agency; looked like a sale because of 1) discounts & 2) payment due 60 days MUNICIPAL COUNCIL OF ILOILO V EVANGELISTA Claim of MC as alleged assignee of rights of Atty. Soriano by virtue of a judgment as payment of professional services rendered by him to widow and co-heirs

Art. 1894. The responsibility of two or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated. (1723) Art. 1895. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment of agency, and for the fault or negligence of his fellow agents, except in the latter case when the fellow agents acted beyond the scope of their authority. (n) Joint agency (and) - 2 or more agency acting together Solidary agency (and/or) there are 2 or more agents & theyre required to act independently SEVERINO V SEVERINO Fabiola wants to be recognized as sole heir of Melecio & take land from Guillermo; SC: defendant is agent of Melecio; def is estopped from owning/asserting adverse title to the subject of agency. Encargado = administrator to preserve property; H. Pay interest

Art. 1896. The agent owes interest on the sums he has applied to his own use from the day on which he did so, and on those which he still owes after the extinguishment of the agency. (1724a) Exception to the general rule that interest only accrues after demand. Demand is not necessary for interest to apply. 2 kinds of interests here o For misappropriation applied to his own use o For monies left with him after accomplishment of agency still owes after extinguishment I. Fraud; negligence

VIII. RESPONSIBILITY FOR ACTS OF SUBSTITUTES

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. (1721) Substitute agent appointed by original agent to do same things originally mandated/tasked by the Principal on behalf of the P

Art. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. (1726)

Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

Sub-agent agent appointed by original agent to do same thing but on behalf of the agent Can agent appoint his own agent? YES you are a principal for your own self General Rule: Agent may appoint substitute Problem w/ substitution: o No recourse against agent; better not to designate a substitute agent o Purpose to give flexibility to agent; to be continuous agency Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. (1722a) Joint liability

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. (n) Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. (n) 1. With notice to third parties

Art. 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts. (n) 2. Without notice to third parties

DEL ROSARIO V LA BADENIA Extensive selling campaign; Aragon as Gen Agent in Albay; Aragon hired spouses Del Rosario as manager of central agency in Legaspi; according to Aragons book =it was sps account; Spouses were agents; broad power of Aragon; no evidence that they acted beyond limit INTERNATIONAL FILMS V LYRIC FILM IFC leased Monte Carlo madness film; verbal agreement re: subagency and keeping the film in vault; new agent Joseph agreed to subagency; vault burned down; SC: defendant not obliged to fulfill more than whats mandated; no mandate to insure against fire

PHILIPPINE NATIONAL BANK VS. AGUDELO When an agent negotiates a loan in his personal capacity and executes a promissory note under his own signature without express authority from his principal, giving as security therefore real estate belonging to the latter, also in his own name and not in the name and representation of the said principal, the obligation so contracted by him is personal and does not bind the principal. PHIL PRODUCTS CO. V PRIMATERIA SOCIETE ANONYME POUR LE COMMERCE EXTERIUR: PRIMATERA (PHIL). INC. With regard to Art 1897 of the CC which provides that the agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers, the court held that there is no proof that the agents exceeded the limits of their authority. In fact, the principal (Primateria Zurich) who should have raised the point, never raised it. It did not deny liability on the ground of excess of authority. In addition, the article does not hold that in cases of excess of authority, both the agent and its principal are liable. Since, a judgement was already given against the Primateria Zurich for the whole amount, and PPC did not appeal from such judgment then Art 1897 would not apply. NATIONAL POWER CORP. VS. NATIONAL MERCHANDISING CORP. - NPC was unaware of the limitations on the powers granted by the New York firm to Namerco. - The New York corporation in its letter said: We hereby certify that National Merchandising Corporation . . . are our exclusive representatives in the Philippines. - Namerco never disclosed to the NPC the cabled or written instructions of its principal. NATIONAL BANK V. WELCH, FAIRCHILD & CO. [Benito Juarez ship] True, an agent who acts for a revealed principal in the making of a contract does not become personally bound to the other party in the sense that an action can ordinarily be maintained upon such contract directly against agent. Yet that rule doesnt apply here. One who has intervened in the making of a contract in the character of agent cant Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

IX. WHAT ARE THE OBLIGATIONS AND LIABILITIES OF AGENTS TO 3RD PARTIES?
A. Agent acting within scope of authority Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. (1717) Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. (1725) Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware. (n) B. Agent acting outside of authority 1897, 1898, 1911 Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. (1725)

be permitted to intercept and appropriate the thing which is the principal is bound to deliver, and thereby make performance by the principal impossible. The agent must be precluded from doing any positive act that could prevent performance on the part of his principal. This much is what ordinary good faith requires. TUASON VS. OROZCO A debt thus incurred by the agent is binding directly upon the principal, provided the former acted, as in the present case, within the scope of his authority. The fact that the agent has also bound himself to pay the debt does not relieve from liability the principal for whose benefit the debt was incurred. The individual liability of the agent constitutes a further security and does not affect the liability of the principal. CERVANTES vs. CA Plaintiff knew that a written request to the legal counsel was necessary for extension, he cannot use what the PAL agents did to his advantage Citing Art. 1898 of the Civil Code, the acts of an agent beyond the scope of his authority do not bind the principal, unless the latter ratifies the same expressly or impliedly When the third person knows that the agent was acting beyond the scope of his power or authority, the principal cannot be held liable for the acts of the agent

person with whom agent has contracted EXCEPT cases involving things belonging to the principal Effects of this rule: Agent is bound to the principal although he does not assume the character of such agent and appears acting in his own name. Agents apparent representation yields to the principals true representation and that, in reality and in effect, the contract must be considered as entered into between the principal and the third person and consequently, if the obligations belong to the former [principal], to him alone must also belong the rights arising from the contract. NFA VS. IAC

GOLD STAR MINING CO., INC. v MARTA LIM-JIMENA Pursuant to Article 1883 Jimena may sue Gold Star because Lincallo, in transferring the mining claims to Gold Star (without disclosing that Jimena was a co-owner although Gold Star had knowledge of this fact as shown by the proofs) acted as Jimena's agent with respect to Jimena's share of the claims

X. WHAT ARE THE OBLIGATIONS AND LIABILITIES OF PRINCIPALS TO AGENTS?

A. Advance/reimburse 1912, 1914, 1918

C. Agent acting in his own name; exception 1883 Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. (1717) SMITH, BELL & CO. v SOTELO MATTI Manila Oil doesnt seem to have taken part in the contracts. Mr Vicente Sotelo signed the contracts in his individual capacity and under his own name. If Mr Vicente Sotelo was agent, he is still liable since he entered the contract under his own name, and did not represent that he was under commission to represent Manila Oil (Art. 1717 of the Old Civil Code, Art. 1883 in the NCC). The Code of Commerce holds Mr Vicente Sotelo since he transacted the business under his own name, and therefore directly liable. Intervenor has no right of action, so the Court in its disposition only directed the acceptance and payment of the ordered goods under Mr Vicente Sotelos name, without prejudice to actions he could invoke against his principal. RURAL BANK OF BOMBON VS. CA

Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency. Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made. (1728) Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730) Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases: (1) If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail himself of the benefits derived from the contract; (2) When the expenses were due to the fault of the agent; (3) When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal was not aware thereof; (4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum. (n) B. Indemnify 1913 Dela Cruz v. No. Theatrical case of the special guard

SY-JUCO v SY-JUCO The effects of agency must be sought: Art 1717 (when an agent acts in his own name, principal has no right of action against

Art. 1913. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. (1729) Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

C.

Solidary liability 1915

Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. (1731) D. Compensation 1875

PRATS vs. CA (Initial negotiations by principal with SSS, subsequent grant of exclusive agency; after termination, sale is eventually consummated between principal and SSS) An agent who is not the efficient procuring cause in bringing about the sale as his exclusive authority has expired is not entitled to compensation. Exception, as a matter of equity, may be compensated for the diligent steps taken to bring the parties together. UNILAND RESOURCES vs. DBP (Agent without authority, but introduced potential buyers nonetheless; allegation of implied agency) Implied agency does not apply because it has been clear that only accredited brokers may look for a buyer. Relationship of agency is founded on mutual consent. Applied Prats Case to award compensation for efforts.

Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n) E. Agents lien 1914

Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730) MACONDRAY vs. SELLER (Real estate broker, arbitrary 5pm deadline) There is no valid revocation because at the time fixed by the manager for the deadline and termination of negotiations, the broker had already earned his commissions agreed upon, and could be deprived thereof by the arbitrary action of the principal. DANON vs. BRIM & CO. (Factory; 5% commission if sale is consummated or if the broker finds a purchaser ready, able and willing to buy) Broker has not yet performed all acts under the contract to recover commission because what he has accomplished is merely to find a person who might have bought the factory. The company was willing to go into negotiations, but was not yet ready to buy- no negotiations yet, and no board resolution to authorize the purchase ROCHA vs. PRATS (Sale did not transpire due to disagreement on proviso on the need for banking security) The duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and the terms on which it is to be made. Until all that is done, right to commission does not accrue. INLAND REALTY vs. CA (Agent referred Stanford Microsystems as buyer, initial price too low; sale was eventually consummated with Stanford about 1 year 5 months after cessation of agency) Agent not entitled to commission because it was not the efficient procuring cause in bringing about the sale. There was no participation in the critical events leading to the sale negotiations, finalization of terms and conditions, drafting of the deed, processing of documents, etc. INFANTE vs. CUNANAN (Principal terminated agency after referral of a buyer, allegedly because of change of mind, but subsequently transacted directly with the proposed buyer) Agents entitled to commission; the principal took advantage of the services of the agents, and in bad faith, terminated the agency to avoid payment of commission.

XI. WHAT ARE THE OBLIGATIONS OF PRINCIPALS TO 3RD PARTIES?

A. Agent acting within the scope of his authority Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. (1717) Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. Art. 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible. (n) B. Agent acting outside scope of his authority Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (n) Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. (n) Art. 1916. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice to the provisions of Article 1544. (n) GONZALES vs. HABERES (Misrepresentation in the deed of sale; vendor spouses) There is no merit in the contention of the husband that misrepresentations of his wife cannot be charged against him, because in negotiating for the sale, he acted as agent and representative of his wife. Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

Sale of land in Nueva Ecija where the entire area of which was occupied by adverse claimants and the title disputed. The plaintiff brought the action to recover the unpaid sum for the land. Defendants defense is that plaintiff through false representation led him to believe that the plaintiff is in possession of the land. Ratio: Where the sale of land is effected on the strength of misrepresentations of the agent of the vendor, the latter cannot accept the benefit of such representations and at the same time deny the responsibility for them.

(3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; (4) By the dissolution of the firm or corporation which entrusted or accepted the agency; (5) By the accomplishment of the object or purpose of the agency; (6) By the expiration of the period for which the agency was constituted. (1732a) Art. 1920. The principal may revoke the agency at will, and compel the agent to return the document evidencing the agency. Such revocation may be express or implied. (1733a) Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof. (1734) Art. 1922. If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons. (n) Art. 1923. The appointment of a new agent for the same business or transaction revokes the previous agency from the day on which notice thereof was given to the former agent, without prejudice to the provisions of the two preceding articles. (1735a) Art. 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. (n) Art. 1925. When two or more principals have granted a power of attorney for a common transaction, any one of them may revoke the same without the consent of the others. (n) Art. 1926. A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in the latter. (n) Art. 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. (n) BARRETTO VS. STA. MARIA Sta. Maria, a resident of Spain and owner of La Insular Cigar & Cigarettes factory. Barretto is the agent for the company in the Philippines. He transacted with a Uy Yuan who bought company products but later on became insolvent. Barretto wrote a letter to Sta. Maria allegedly containing his resignation. Sta. Maria did not replied only after 11 months and accepted Barrettos resignation and replaced him with another agent. Ratio: When the time during which the agent may hold his position is indefinite or undetermined when no period has been fixed in his commission and so long as the confidence reposed in him by the principal exists. But as soon as this confidence disappears the principal has a right to revoke the power he conferred upon the agent especially when the latter has resigned his position for good reason. Sta. Maria did not immediately reply because he was being cautious. Even though a period is stipulated during which the agent or employee is to hold his position in the service of the owner or head of a mercantile establishment, yet the latter may, for any of the special Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

XII. DUTY OF 3RD PARTIES DEALING WITH AGENT

Art. 1902. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. (n) Sir Dios discussion on the chain of duties
PRINCIPAL 1 appoint an agent AGENT 2 disclose representation (if no disclosure: agent deals in his name) THIRD PARTIES 3 inquire - Ascertain the FACT and SCOPE of agency - How? Demand copy of POA and INSTRUCTIONS as written 5 comply with the terms of transaction or obligation (his participation essentially ends here)

4 carry out/perform agency within scope of his authority (now 3P knows whats within the scope of agents authority) 6 accounting of expense (less a. reimbursements and b. indemnifications for damages) 7 if happy with the transaction (agency essential ends by accomplishment of the object) if not happy he either ACCEPTS (e.g. issuance of certification etc) or REPUDIATES (e.g. disown the transaction)

XIII. HOW IS AGENCY EXTINGUISHED?

A. Revocation; agency coupled with interest Art. 1873. If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the latter thereby becomes a duly authorized agent, in the former case with respect to the person who received the special information, and in the latter case with regard to any person. The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given. (n) Art. 1919. Agency is extinguished: (1) By its revocation; (2) By the withdrawal of the agent;

reasons specified in the Art 300 of the Code of Commerce, dismissed such agent or employee even before the termination of such period. DIOLOSA VS. CA Brokers authority was revoked because principal intend to reserve the lots for the benefit of her grandchildren. NOTE: the case talked about the RESCISSION of the contract of agency Ratio: The authority to sell is not extinguished until all the lots have been disposed of, as stated in the contract of agency. Since the agreement is a valid contract, it can only be rescinded on the grounds specified in Art 1381 to 1382 of the CC. (in short, those transactions with lesions or there is economic disadvantage+ other contracts declared by law to be rescissible). NEW MANILA LUMBER COMPANY VS. RP Two schools Section 1 of Public Act No. 3688 Section one of Public Act No. 3688, entitled "An Act for the protection of persons furnishing material and labor for the construction of public works", states that a person entering into a contract with the Republic must first execute a penal bond, with good and sufficient sureties, with the additional obligation that such contractor or his or its sub-contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company or corporation who has furnished labor or materials in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the Government In the case at bar, it is not disputed that defendant Republic has already instituted a suit against the contractor for the forfeiture of the latter's bond posted to secure the faithful performance of stipulations in the construction contract with regards to one of the two school buildings. The contractor has a similar bond with respect to the other school building. Pursuant to Act 3688, plaintiff's legal remedy is, not to bring suit against the Government, there being no privity of contract between them, but to intervene in the civil case above-mentioned as an unpaid supplier of materials to the contractor, or file an action in the name of the Republic against said contractor on the latter's other bond. At any rate, under the facts alleged in the complaint, the powers of attorney in question made plaintiff the contractor's agent in the collection of whatever amounts may be due the contractor from the defendant. And since it is also alleged that, after the execution of the powers of attorney, the contractor (principal) demanded and collected from defendant the money the collection of which he entrusted to plaintiff, the agency apparently has already been revoked. (Articles 1920 and 1924 CC) The point is made by plaintiff that the powers of attorney executed by the contractor in its favor are irrevocable and are coupled with interest. But even supposing that they are, still their alleged irrevocability cannot affect defendant who is not a party thereto. They are obligatory only on the principal who executed the agency. Plaintiff also cites Article 1729 of the new Civil Code, which states that Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. . . . This article, however, as expressly provided in its last paragraph, "is subject

to the provisions of special law." The special law governing in the present case, as already seen, is Act No. 3688. There is another reason for upholding the order of dismissal complained of. Plaintiff's action being a claim for sum of money arising from an alleged implied contract between it and the Republic of the Philippines, the same should have been lodged with the Auditor General. The state cannot be sued without its consent. DY BUNCIO VS. ONG GUAN Rice mill and camarin The POA given to the agent was not a general POA but a limited one that did not include the power to alienate the properties in question. The claim of Tong, et. al that the validity of the sale should be upheld because there is a previous POA given in 1920 which is a general power of attorney is untenable. The court held that the making and accepting of a new POA (whether it enlarges or decreases the power of the agent) must be held to supplant and revoke the latter when the two are inconsistent. Reasoning: If the new appointment with limited powers does not revoke the gen. POA, the execution of the second POA would be a mere futile gesture. The deed of sale in favor of Teng did not divest Ong Guan Can of his title therefore, his properties are subject to attachment and execution. GARCIA VS. DE MANZANO Father gave first POA to son and then second POA to wife; son sold half interest in the boat A second POA (of wife) revokes the first one only after notice is given to the first agent (son). RALLOS VS. YANGCO Tobacco leaf; severance of the agency without notice to the third person transacting with the agent Since Yangco advertised the fact the Collantes was his agent, gave special notice to Rallos of this fact, and gave a special invitation to Rallos to deal with Collantes as an agent, it was Yangcos duty on the termination of the agency to give due and timely notice to Rallos. Failing to do so, Yangco is responsible to Rallos for whatever goods may have been in good faith and without negligence sent to the agent without knowledge, actual or constructive, of the termination of such relationship. a. The Power of Attorney executed by Tiburcio does not create an agency coupled with an interest nor does it clothe the agency with an irrevocable character The rule is that a mere statement in the PoA that it is coupled with an interest is not enough. In what does such interest consist must be stated in the PoA IN THIS CASE, the fact that Tiburcio mortgaged the improvements on the land in favor of Primitivo, does not constitute an interest that could render irrevocable the PoA executed by Primitivo. In fact, the mortgage has nothing to do with the PoA as it can be foreclosed by Primitivo UPON DEFAULT of Tiburcio

Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

AS SUCH, the agency was terminated upon the death of Tiburcio in 1945. CONSEQUENTLY, Primitivo could no longer validly convey the land

than such a partner in so far as irrevocability of the power is concerned. B. Withdrawal

b.

ASSUMING ARGUENDO that the irrevocable PoA was valid, the act of Primitivo would subject the land to an encumbrance, which is prohibited by law (see footnote 1) Note that the homestead was issued in 1936 while the PoA was executed in 1937 It was contended by Primitivo that (1) the PoA was to be availed of by the agent after the lapse of the prohibition period of five years, and that (2) in fact he sold the land in 1947 HOWEVER, this argument cannot be sustained since nothing to that effect is found in the PoA

Art. 1919. Agency is extinguished: (1) By its revocation; (2) By the withdrawal of the agent; (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; (4) By the dissolution of the firm or corporation which entrusted or accepted the agency; (5) By the accomplishment of the object or purpose of the agency; (6) By the expiration of the period for which the agency was constituted. (1732a) Art. 1928. The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. (1736a) Art. 1929. The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation. (1737a) VALERA VS. VELASCO - The filing of the complaint by an agent against the principal for the collection of a balance in his favor resulting from a liquidation of the agency accounts between them, and his rendering of a final account of his operations, are equivalent to an express renunciation of the agency and terminate the juridical relation between them. Filing of the complaint by agent against the principal is equivalent to an express renunciation as if the agent explicitly said I renounce the agency C. Death; Agency coupled with an interest Art. 1919. Agency is extinguished: (1) By its revocation; (2) By the withdrawal of the agent; (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; (4) By the dissolution of the firm or corporation which entrusted or accepted the agency; (5) By the accomplishment of the object or purpose of the agency; (6) By the expiration of the period for which the agency was constituted. (1732a) Art. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. (n) Art. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. (1738)

COMPANIA GENERAL DE TOBACOS V. DIABA The agent sold some goods to third party and bought some goods as well. Principal ratifies the sale by the agent but does not want to recognize the obligation of the agent. The principal is liable to the transactions conducted by the agent because he failed to notify the agent of the termination of the agency. DEL ROSARIO VS. ABAD Within the prohibited period of 5 years, the homesteader mortaged the improvements of the homestead. At the same time, he executed an irrevocable SPOA coupled with interest in favor of the mortgagee authorizing him to sell the land. After the lapse of the prohibitive period, the mortgagor died leaving his debts unpaid. Mortagagee used the SPOA to sell the land. A mere statement in the POA that it is coupled with interest is not enough. What the interest consists of must be shown. CALEONGCO VS. CLAPAROLS Sabotage of the nail factory The financing agreement itself already contained clauses for the protection of appellant's interest, and did not call for the execution of any power of attorney in favor of Coleongco. But granting appellant's view, it must not be forgotten that a power of attorney can be made irrevocable by contract only in the sense that the principal may not recall it at his pleasure; but coupled with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney- in-fact betrays the interest of the principal, as happened in this case. It is not open to serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent, for that would amount to holding that a power, coupled with an interest authorizes the agent to commit frauds against the principal. Our new Civil Code, in Article 1172, expressly provides the contrary in prescribing that responsibility arising from fraud is demandable in all obligations, and that any waiver of action for future fraud is void. It is also on this principle that the Civil Code, in its Article 1800, declares that the powers of a partner, appointed as manager, in the articles of copartnership are irrevocable without just or lawful cause; and an agent with power coupled with an interest cannot stand on better ground

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Art. 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt such measures as the circumstances may demand in the interest of the latter. (1739) PASNO VS. RAVINA -The power of sale given in a mortgage is a power coupled with an interest which survives the death of the grantor RAMOS VS. CAOIBES The first document is only a power of attorney. Caoibes as an agent had the obligation to deliver the amount collected by virtue of the said power to the principal, or, after her death, to the administratrix of her estate, Consolacion. A1711 CC the contract of agency is presumed to be gratuitous, unless the agent is a professional agent. There is no such proof that respondent is such. A1732 agency is terminated, among other causes, by the death of the principal or of the agent. When Caoibes made use of the power of attorney, his principal was already dead. Re donation: The donation made was of personal property and in writing thus the acceptance must also be made in writing (A632 OCC). HERRERA VS. LUY KIM GUAN There was no proof of the death of the principal Assuming that the principal died, Natividad presented no proof and there is no indication in the record that the agent, Luy, was aware of the death of his principal. The death of the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment of the agency. RALLOS VS. FELIX GO CHAN (supra) D. Dissolution of the firm/corporation likened to the death of a natural person SEC issues certificate of dissolution when all the assets and liabilities are partitioned, settled and liquidated E. Accomplishment of the object or purpose

Key distinction: idea of representation in agency AGENT LESSOR OF SERVICES Executes juridical act on behalf Performs a material act for the of another benefit of another AGENCY v INDEPENDENT CONTRACTOR Shell Company of the Philippines v Firemens Insurance The operator is an agent of the company and not an independent contractor. Consequently, his negligence as such agent is imputable to his principal and the latter is answerable to third persons. Evidence presented: 1. Operator of gasoline and service station owed his position to the company and the latter could remove him or terminate his services at will 2. Service station belonged to the company and bore its tradename 3. Operator sold only the products of the company 4. Equipment used by the operator belonged to the company and were just loaned to the operator and the company took charge of their repair and maintenance 5. Employee of the company supervised the operator and conducted periodic inspection of the companys gasoline and service station 6. Price of the products sold by the operator was fixed by the company and not by the operator 7. Receipts signed by the operator indicated he was a mere agent IMPERSONATION No agency if Juan pretends to be Pedro and enters into a contract with Jose, who thinks he is contracting actually with Pedro, there is no agency. The elements of representation is absent. Juan is not acting in anothers name but under another name. ACTS SUSCEPTIBLE OF AGENCY General rule: admissible in all contracts or acts Exception: o Marriage contract o Making of wills and testaments o Presence of accused during the trial of a criminal case CREATION OF AGENCY Testimony of person who drafted the contract does not determine its nature. A contract must be considered, not as the parties stipulated it, but as they performed it. CAPACITY OF PARTIES Both parties must have the capacity to give consent. PRINCIPALS CAPACITY If any special capacity is required for the act entrusted to the agent, it is the principal and not the agent who must have such special capacity. Why? Because it is he who will receive the benefits and incur the obligations or losses arising therefrom. AGENTS CAPACITY No particular capacity is required, so long as he has sufficient intelligence and freedom of will. But with respect to his obligations and responsibilities towards the principal, he must have the capacity to bind himself. Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

F. Expiration of the period

G. Civil interdiction, insanity, insolvency

TOLENTINO ANNOTATIONS
Chapter 1 NATURE, FORM AND KINDS OF AGENCY
Art 1868 ELEMENTS OF AGENCY 1. Consent express or implied 2. Object execution of a juridical act in relation to a third person 3. Agent (1) acts as a representative AND (2) not for himself 4. Agent acts within scope of his authority AGENCY v LEASE OF SERVICES

Incapacitated agent: o may set up his incapacity against principal o such agent would be liable to the principal only in cases of illicit acts and unjust enrichment. o cannot invoke capacity to refuse delivery of things received for the principal. Reason: zits considered a fraudulent act which the law does not sanction. RELATION OF PRINCIPAL AND AGENT Relation of an agent to his principal fiduciary In regard to property forming the subject-matter of agency agent is estopped from acquiring or asserting a title adverse to that of principal (Severino v Severino) Agent cannot represent both himself and his principal in a transaction involving the shifting to another person of the agents liability for a debt to the principal (Aboitiz v de Silva) When a person undertakes to act as agent for another Reciprocal relations are created. Even if the owner of business/property has not given his consent thereto, by virtue of a quasi-contract. BINDING EFFECT - Agent is the rep of his principal. ERGO: o Agent acts in bad faith, the principal is also deemed in bad faith o Notice to agent is also notice to principal Art 1869 IMPLIED AGENCY Created from the: o silence or lack of action o failure to repudiate the representation E.g. when a person takes charge of the administration of property without express authorization and without a power of attorney executed by the owner, but with the knowledge of the latter and performed for nine years the duties of his office without opposition or absolute prohibition on the owners part. Compared with officious management (or management of anothers business) IMPLIED AGENCY Comes from a contract Founded on the lack of contradiction or opposition, which constitutes simultaneous agreement on the part of the presumed principal to the execution of the contract Art 1870, Art 1871 PRESUMPTION - Only prima facie and may be defeated by proof to the contrary Art 1872 ACCEPTANCE - This is not compulsory, but if the agent wants to refuse it, he must act immediately so that his silence may not be interpreted as an acceptance, and so that he may not incur any responsibilities. OFFICIOUS MANAGEMENT Derived only from a quasicontract No simultaneous consent, either express or implied, but a fiction or presumption of consent because of the benefit received

RECEIPT WITHOUT OBJECTION Par 1: mere fact of non-refusal does not mean acceptance. Pothier says: Retention of POA is not as clear a proof of acceptance as when it is delivered personally. Par 2: acceptance is implied from failure to reply to the letter or telegram, ERGO, more than mere failure is required for cases falling outside of Par 2 Art 1873, Art 1874 LETTER SUFFICIENT AUTHORITY Where the owner of certain parcels of land left them in the care of his sister as his agent, and later, while absent, wrote to sell one parcel of land which she did, it has been held that the letter containing the authority to sell was sufficient (Jimenez v Rabot) Art 1875 RIGHT TO COMPENSATION When an agent employed to sell/lease property has complied with the terms of his contract by furnishing a purchaser or lessee ready, able and willing to buy or lease the property, he is entitled to commission. A broker, not having quite succeeded in bringing the minds of buyer and seller to an agreement in regard to the terms of the sale, is not entitled to commission (Rocha v Prats), nor if his exclusive authority to such has expired (Prats v CA) When does a broker earn his commission? o It is not sufficient that he only find a buyer but also one who will actually buy the property on the terms and conditions imposed by the owner. The efficient-and-procuring-cause principle is synonymous with the ready-willing-and-able rule and these words provide off hand the test in determining whether the agent was the procuring cause of the sale. o When the principal had broken negotiations with the buyer for the purpose of later making a direct contract with the latter Art 1876, Art 1877 ACTS OF ADMINISTRATION General power permits the agent to do all acts for which the law does not require a special power. Examples of mere acts of administration o Commence suits to collect debts owing to the principal o Appoint servant or employees of a firm Art 1878 SPECIAL POWERS PoA should expressly mention the act for which it is drawn (Strong v Rapide) Such special power can be included in a general power of attorney o by giving authority for all acts of a particular character o by specifying therein the act or transaction for which a special power is needed

Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

Art 1879 POWER TO SELL Must be understood as for cash and not on credit, unless the latter is expressly authorized. POWER TO RAISE MONEY If a power to raise a sum of money for which purpose the agent is authorized to sell a particular real property, or to avail himself of any other means, the agent is considered as empowered to mortgage the property. A special power to mortgage does not include the power to contract loans for the principal (PNB v Sta. Maria) Art 1880, Art 1881 LIMITATION ON AUTHORITY Power and duties of an agent are confined and limited to those which are specified and defined in his power of attorney, which limitation is a notice to and is binding upon, the person dealing with such an agent (BPI v de Coster) Agent alone cannot enlarge or extend his authority, by his own acts or statements, nor can be alone remove the limitations or waive conditions imposed by the principal; to charge the principal in such case, the principal consent or concurrence must be shown (Keeler Electirc v Rodriguez) Illustrations: o BPI v de Coster Authority given by wife does not carry with it or imply that husband has a legal right to sign her name to a promissory note which would make her liable for the payment of a pre-existing debt of the husband or that of his firm, for which she was not previously liable, or to mortgage her property to secure such debt. o Hodges v Salas PoA of special character to borrow any amount of money does not authorize agent to use the money as he pleased. In applying the money borrowed to pay his personal obligations, he exceeds his authority. It should be understood that the agent is obliged to turn over the money to the principals or at least, place it at their disposal. o NAPOCOR v NAMERCO Principal said that agent should not sign contract unless it wished to assume sole responsibility for the shipment, exceeds the limits of its authority in subsequently signing the contract. o Keeler v Rodriguez Where an agent has no authority to collect payments for his principal, and a debtor pays him, relying upon his representations as to his authority to make such collections and receipt for the money, such debtor pays at his own risk, and such payment is not a valid defense as against the principal. EFFECT OF UNAUTHORIZED ACTS When agent, entering into contract on behalf of his principal, exceeds his authority Contract not void, but only voidable at the instance of the party who has been improperly represented Only the principal is prejudiced and only he can impugn the agents act Agent becomes personally liable for damages. In order to avoid liability: He must disclose the limits of his authority (NAPOCOR v NAMERCO) When an attorney-in-fact is not authorized under his PoA to sell the business or establishment of his principal, the sale

and conveyance thereof in favor of 3 person is unenforceable and the latter acquires no title thereto. Art 1882 SCOPE OF ARTICLE Condition of agency can be improved but not made worse Refers to an advantage which can be obtained without modifying the conditions, the form or the object of the agency Not exceeding authority if: agent acts in a more advantageous manner such that if principal were the one acting, he would have followed the more advantageous course Art 1883 SCOPE OF ARTICLE rd Applicable only to cases where it is material to the 3 person to know with whom he is contracting. Otherwise (when immaterial e.g. driver of an ordinary vehicle for hire), it is inapplicable. PERSONAL LIABILITY OF AGENT When does agent incur personal liability? 1. When an agent transacts business in his own name, it shall not be necessary for him to state the name of his principal and he shall be directly liable as if the business were for his own account, to the persons with whom he transacts the same, said persons not having any right of action against the principal, nor the latter against them. 2. When agent acts beyond the scope of his authority, and for acts in violation of the terms of the written authority. LIABILITY OF THE PRINCIPAL If the things involved are those belonging to the principal, it shall be deemed that the contract is made on behalf of the principal (Syjuco v Syjuco). The principal may sue the person with whom the agent dealt with his own name, when the transaction involves things belonging to the principal (Gold Star Mining v LimJimenez) JUDGMENT AGAINST THE AGENT A judgment, for or against an agent, in no way binds the real party in interest.

rd

Chapter 2 OBLIGATIONS OF THE AGENT

Art. 1884-1887 Interpretation of Instructions should be done in accordance with the principals presumed will and the usages of trade. In case of doubt, it is allowed tp deposit in a bank the money realized from the agency. In an agency to sell, the price indicated must be construed as the minimum while in an agency to buy, the maximum. Effect of Instructions They shall form part of the agency; they constitute the means or the orders carrying out the power granted. If an agent departs from the instructions, it means that he has exceeded the authority conferred upon him. However, the instructions are only binding to the principal and the agent, not to third persons. Responsibility of Agent An agent cannot be held responsible for the failure of the principal to accomplish the object of the agency if Annie, Eds, Jam, Anj F., Kae, Lou, Chi, Pat

he carried out the instructions of the principal and (1) does not appear to exceed his authority; or (2) acted with negligence, deceit or fraud. Art. 1888 Result in Loss necessary that the transaction is undoubtedly prejudicial to anyone. It is insufficient that there is only possible loss or damage. An agent will become liable to the principal for the damages the latter may suffer if it is proven that he knows of considerable defects at the time he was carrying out the agency. He should have suspended action first and waited for further actions from the principal. Art. 1889 Applies to All Agents without distinction between gratuitous or renumerated agency. It is best for the agent to renounce the agency if he wishes to prefer his own interests when a conflict arises, provided the renunciation is not fo the purpose of personally profiting from the transaction. Art. 1890, Art. 1891 Delivery of What is Received If the agent is authorized to sell a parcel of land at a certain price and he sells it for a higher amount, the principal can demand the entire price paid. Same goes when an agent is authorized to lend money with interest to a person and he lends it with interest, the principal can demand the interest. This does not apply to overpayment made by mistake. If a debtor pays to the agent more than what is owing to the principal by mistake, agent may keep the mistake but he is the one directly liable to the payor if the latter decides to sue to collect the overpayment. Obligation to Account The duty of the agent to account does not only involve the money and property which may have come into his hands during and by virtue of the agency but also those which comes into the agents hands as the result of his agency (Asiatic Petroleum vs. Quey Sim Poo) The obligation of an agent to account and the right of the principal to an accounting are transmissible through their respective heirs. An order requiring an agency to render a detailed account of the business of the agency to the principal is simply a consequence of the rescission of a contract of agency, since every agent must give an account of his transactions. Lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct. Art. 1892 Use of Employees If the agent is authorized to sell a parcel of land at a certain price and he sells it for a higher amount, the principal can demand the entire price paid. Same goes when an agent is authorized to lend money with interest to a person and he lends it with interest, the principal can demand the interest. Art. 1893, 1894 Joint Agency there are several agents that act collectively. They are considered as a single unit regardless of whether they act together or separately. All must act towards the same end to bind the principal. Moreover, the knowledge of a fact by one of them is considered as knowledge of all. Liability is Personal Each agent is liable only for his own acts or omissions if there is no solidarity. If the agents are charged with a joint undertaking, so that one cannot act without the others, and

the agency is not performed due to the omission of the agent, then he alone bears the entire responsibility for the injury caused. If each one can act separately, then he is liable for his own omission. Art. 1895 Solidary Agency one in which, there being several agents for the same purpose, each acts independently of the others, and can bind the principal without the intervention of the others. When a person appoints two agents independently, the consent of one will not be required to validate the acts of the other, unless that appears positively to have been the principals intention. The present article really governs a joint agency where the agents act collectively as a unit in relation to third persons, but where it is stipulated that they shall be solidarily liable to the principal. Fault or Negligence includes fraud or dolo. Acts Beyond Powers an act of one agent beyond the scope of the agency does not concern the other agents as they have no power to prevent it, and they should not be held liable for it. This is not the same case if the liability pertains to the non-performance of the agency itself. Art. 1896, 1897 Liability of the Agent An agent cannot be held personally liable on the contract if he acts in the name of the principal within the scope of the agency. Art. 1898 Excess of Authority The agent is liable depending on whether or not the third person knows the limits of the agents power. If he knows such limits, he is to blame and he is not entitled to recover damages from the agent, unless the latter undertook to secure the principals ratification. Ratification The acts of an agent beyond the scope of his authority does not bind the principal unless he ratifies it expressly or impliedly. If the principal benefits from an act done by the agent, it means that he tacitly ratified such act. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. And the principal must have knowledge of the acts he is to ratify. Art. 1899-1909 Breach of Trust An agent may not, without the permission of the principal, directly or indirectly buy for himself what he was commissioned to sell, or sell what he has been commissioned to buy. The prohibition ceases upon the agencys termination.

Chapter 3 OBLIGATIONS OF THE PRINCIPAL

Art. 1910 Liability for agents illicit acts The fault of the agent is attributable to the principal (culpa contractual) when the agent is in the performance of an obligation of the principal. But where the fault/crime committed by agent is not in the performance of an obligation of the principal, the general rule is that the principal is not bound by the illicit act of the agent. Exceptions: 1. Principals own negligence - when the act committed by the agent because of the defective instructions from the principal, or due to the lack of necessary vigilance/supervision on his part 2. Agent secures a contract through fraud, or makes a fraudulent alienation, or executes a simulated contract

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3.

Crime consists of an act which is within the powers of the agent, but becomes criminal only because of the manner in which the agent has performed it

Art. 1911 Basis of liability principals failure to adopt the necessary measures to prevent third persons from being deceived by the apparent authority of the agent Art. 1913 Reasonable compensation for professional services rendered by third persons in the execution of agency Art. 1914 Applies even when the appointments were made by the principals in separate acts. The solidarity arises from the common interest of the principals, and not from the act constituting the agency.

Art. 1923 Incompatibility of powers A new agency revokes an existing one only when: o The two are incompatible with each other, or o When the principal makes known to the first agent that his powers have ceased by the appointment of a new agent Where there is no incompatibility, the new agency may only mean a division of the agency and the two agencies can coexist Notice to first agent Without notice to first agent, it must be considered that the latter acted under a valid POA which had not been legally revoked on the date of transaction Exclusive agency Where agency is for a compensation and the compensation depends upon the success of the transaction, it is usual to stipulate that the agency shall be exclusive. In this case the principal is deprived of the right to appoint a new agent for the same transaction, either jointly or by revocation. This stipulation is limited with respect to the transaction or with respect to time; otherwise it will be contrary to the revocability of the agency Art. 1924 Direct intervention by the principal Will revoke only when such intervention is incompatible with the agency Under Argentine Code even where there is incompatibility, the agency will subsist if the principal expressly manifests that he has no intention of revoking the agency Art. 1926 Subsequent general power law does not provide for the reverse situation but under Argentine Code the special power is not revoked by a subsequent general power given to another agent unless the latter also refers to the act authorized under the special power Art. 1927 Stipulation of irrevocability An irrevocable agency cannot be perpetual. It must be limited to a particular transaction or to a determinate period, because public order is against indefinite/irrevocable obligations Effect of irrevocable agency: o Does not insure an indemnity to agent/third persons prejudiced by revocation; o Except when otherwise stipulated, it extends the agency even against the will of the principal, in the sense that acts of the agent will bind the principal notwithstanding the untimely revocation Art. 1928 Relationship may also be terminated in case of an impossibility of continuing the agency without serious injury to himself. Art. 1931 Revocation by an act of principal vis. Revocation by operation of law (example: death of principal)

Chapter 4 MODES OF EXTINGUISHMENT OF AGENCY

Art. 1919 Death of principal Even if the agency is for a definite period and the period has not yet expired 1930 and 1931 are exceptions to the general rule provided in this article on the revocation by death Art. 1920 Power to revoke Constitutes an exception to the general rules of contract Basis: Representation and confidence being the bases of the contract, it is the will of the person represented that may put an end to the representation. If it were not so, the representation would be converted into a true alienation of the personality. Rule on damages: Principal is not liable for damages for having made use of this power to revoke the agency. Exception: When this was done in abuse of right, in bad faith and as a means to avoid paying compensation to the agent. Stipulation on irrevocability Agency is essentially revocable. Permanent revocability is an essential characteristic of agency. Parties may validly stipulate that agency shall be irrevocable for a certain period, so long as the agreement is according to the purpose of the agency and not contrary to morals. Forms of agreement: o Waiver renunciation of the right to revoke o (Sir says there is another ground, but this is what Tolentino said) A mere obligation of the principal not to revoke Art. 1921 It is the duty of the principal to give due and timely notice to third persons to whom he has given special invitation to deal with his agent and failure to do so renders him liable to them for whatever goods may have been in good faith and without negligence sent to the agent without knowledge of the termination of the agency. If the third person has knowledge of the revocation, this is equivalent to notification. Art. 1922 Refers to the agency in which the person with whom the agent is to contract, is not specified

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