Dean CLV On Agency

I.
DEFINITION AND OBJECTIVE OF A CONTRACT OF

AGENCY
I. NATURE, FORM AND KINDS
OF AGENCY
1. DEFINITION AND OBJECTIVE OF
AGENCY
a. Defnition
Article 1868 of the Civil Code de!e" the
co!tr#ct of #$e!c% #" o!e &here'% (# )er"o!
'i!d" hi*"elf to re!der "o*e "ervice or to do
"o*ethi!$ i! re)re"e!t#tio! or o! 'eh#lf of
#!other+ &ith the co!"e!t or #,thorit% of the
l#tter.(
-1.
b. !"#o$e o" Ob%e&ti'e o( A)en&*
I! Eurotech Industrial Technologies, Inc. v.
Cuizon, /01 1CRA /82 304456+ the Co,rt held 77
I! # co!tr#ct of #$e!c%+ # )er"o! 'i!d"
hi*"elf to re!der "o*e "ervice or to do "o*ethi!$
i! re)re"e!t#tio! or o! 'eh#lf of #!other &ith the
l#tter8" co!"e!t. The ,!derl%i!$ )ri!ci)le of the
co!tr#ct of #$e!c% i" to #cco*)li"h re",lt" '%
,"i!$ the "ervice" of other" 7 to do # $re#t v#riet%
of thi!$" li9e "elli!$+ ',%i!$+ *#!,f#ct,ri!$+ #!d
tr#!")orti!$. It" ),r)o"e i" to e:te!d the
)er"o!#lit% of the )ri!ci)#l or the )#rt% for &ho*
#!other #ct" #!d fro* &ho* he or "he derive" the
#,thorit% to #ct. 3#t ). /;06
I! Orient Air Service & Hotel
Representatives v. Court of Appeals+ 1;5 1CRA
62/ 31;;16+ the Co,rt held th#t the purpose of
ever% co!tr#ct of #$e!c% i" the #'ilit%+ '% le$#l
ctio!+ to e:te!d the )er"o!#lit% of the )ri!ci)#l
thro,$h the f#cilit% of the #$e!t< ',t the "#*e c#!
o!l% 'e e=ected &ith the co!"e!t of the )ri!ci)#l.
I! iton!ua, "r. v. Eternit Corp., 2;4 1CRA 042
304466+ the Co,rt held th#t (It 'e#r" "tre""i!$ th#t
i! #! #$e!t7)ri!ci)#l rel#tio!"hi)+ the )er"o!#lit%
of the )ri!ci)#l i" e:te!ded thro,$h the f#cilit% of
the #$e!t. I! "o doi!$+ the #$e!t+ '% le$#l ctio!+
'eco*e" the )ri!ci)#l+ #,thori>ed to )erfor* #ll
#ct" &hich the l#tter &o,ld h#ve hi* do. 1,ch #
rel#tio!"hi) c#! o!l% 'e e=ected &ith the co!"e!t
of the )ri!ci)#l+ &hich *,"t !ot+ i! #!% &#%+ 'e
co*)elled '% l#& or '% #!% co,rt.(
-0.
3#t ). 00?6
I! #oles v. Angeles + 2;0 1CRA 645
304466+ the Co,rt held 77
(The CA i" i!correct &he! it co!"idered the f#ct
th#t the (",))o"ed frie!d" of -)etitio!er".+ the
#ct,#l 'orro&er"+ did !ot )re"e!t the*"elve" to
-re")o!de!t.( #" evide!ce th#t !e$#te" the
#$e!c% rel#tio!"hi)77it i" ",@cie!t th#t )etitio!er
di"clo"ed to re")o!de!t th#t the for*er &#"
#cti!$ i! 'eh#lf of her )ri!ci)#l"+ her frie!d"
1
&ho* "he referred to re")o!de!t. For #! #$e!c%
to #ri"e+ it i" !ot !ece""#r% th#t the )ri!ci)#l
)er"o!#ll% e!co,!ter the third )er"o! &ith &ho*
the #$e!t i!ter#ct". The l#& i! f#ct co!te*)l#te"+
#!d to # $re#t de$ree+ i*)er"o!#l de#li!$" &here
the )ri!ci)#l !eed !ot )er"o!#ll% 9!o& or *eet
the third )er"o! &ith &ho* her #$e!t tr#!"#ct"<
)reci"el%+ the ),r)o"e of #$e!c% i" to e:te!d the
)er"o!#lit% of the )ri!ci)#l thro,$h the f#cilit% of
the #$e!t.( 3#t ). 6006
Ahe! #! #$e!c% i" e"t#'li"hed+ #!d the
#$e!t #ct" for the )ri!ci)#l+ he i" i!"of#r #" the
&orld i" co!cer!ed e""e!ti#ll% the )ri!ci)#l #cti!$
i! the )#rtic,l#r co!tr#ct or tr#!"#ctio! o! h#!d.
Co!"eB,e!tl%+ the #ct" of the #$e!t o! 'eh#lf of
the )ri!ci)#l &ithi! the "co)e of the #,thorit%
h#ve the "#*e le$#l e=ect #!d co!"eB,e!ce #"
tho,$h the )ri!ci)#l h#d 'ee! the o!e "o #cti!$ i!
the $ive! "it,#tio!. 1o*e of the le$#l
co!"eB,e!ce" th#t Co& fro* the doctri!e of
re)re"e!t#tio! i! the co!tr#ct of #$e!c% #re th#t 77
Notice to the #$e!t i" !otice to the
)ri!ci)#l. Air $rance v. Court of
Appeals + 106 1CRA 228 31;8?6.
%no&ledge of the agent pertains to
the principal
D Ahe! #! #$e!t ),rch#"e" the )ro)ert% i! '#d
f#ith+ the )ri!ci)#l "ho,ld #l"o 'e dee*ed #
),rch#"er i! '#d f#ith. Cara', "r. v. aureta + 14?
1CRA 5 31;816.
A ",it #$#i!"t #! #$e!t c#!!ot+
&itho,t co*)elli!$ re#"o!"+ 'e
co!"idered # ",it #$#i!"t the )ri!ci)#l
()* v. Ritratto +roups, Inc.+ ?60 1CRA
016 304416.
&. a"tie$ to a Cont"a&t o( A)en&*
The )#rtie" to # co!tr#ct of #$e!c% #re the
RINCIA+ 3the )er"o! re)re"e!ted6 #!d the AGENT
3the )er"o! &ho #ct" for #!d i! re)re"e!t#tio! of
#!other6. Altho,$h Article 1868 de!e" #$e!c% i!
ter*" of 'ei!$ # co!tr#ct+ it "ho,ld #l"o 'e
co!"idered th#t ,)o! the )erfectio! of the
co!tr#ct of #$e!c%+ it cre#te" 'et&ee! the
)ri!ci)#l #!d #! #$e!t #! o!7$oi!$ le$#l
rel#tio!"hi) th#t i*)o"e" )er"o!#l o'li$#tio!" o!
'oth )#rtie".
The other ter*" ,"ed for the )o"itio! of
#$e!t #re (#ttor!e%7i!7f#ct(+ ()ro:%(+ (dele$#te( or
(re)re"e!t#tive.(
,1- Capacity of the Parties
The )ri!ci)#l *,"t h#ve c#)#cit% to co!tr#ct
3Art". 1?05 #!d 1?0;6+ #!d *#% either 'e #
!#t,r#l or E,ridic#l )er"o! 3Art. 1;1;-2.6.
0
There i" le$#l liter#t,re th#t hold" th#t "i!ce
the #$e!t #"",*e" !o )er"o!#l li#'ilit%+ he doe"
!ot h#ve to )o""e"" f,ll c#)#cit% to #ct i!"of#r #"
third )er"o!" #re co!cer!ed.
-?.
1i!ce # co!tr#ct of
#$e!c% i" r"t #!d fore*o"t # co!tr#ct i! it"elf+
the )#rtie" 3'oth )ri!ci)#l #!d #$e!t6 *,"t h#ve
to h#ve le$#l c#)#cit% to v#lidl% e!ter i!to #!
#$e!c%. If o!e of the )#rtie" h#" !o le$#l c#)#cit%
to co!tr#ct+ the! the co!tr#ct of #$e!c% i" !ot
void+ ',t *erel% void#'le+ &hich *e#!" th#t it i"
v#lid ,!til #!!,lled.
Th,"+ # void#'le #$e!c% &ill )rod,ce le$#l
co!"eB,e!ce"+ &he! it i" ),r",ed to e!ter i!to
E,ridic#l rel#tio!" &ith third )#rtie". If the )ri!ci)#l
i" the o!e &ho h#" !o le$#l c#)#cit% to co!tr#ct+
#!d hi" #$e!t e!ter" i!to # co!tr#ct,#l
rel#tio!"hi) i! hi" !#*e &ith # third )#rt%+ the
re",lti!$ co!tr#ct i" void#'le #!d ",'Eect to
#!!,l*e!t. O! the other h#!d+ if the )ri!ci)#l h#"
le$#l c#)#cit%+ #!d it i" the #$e!t th#t h#" !o le$#l
c#)#cit% to co!tr#ct+ the ,!derl%i!$ #$e!c%
rel#tio!"hi) i" void#'le+ #!d &he! the
i!c#)#cit#ted #$e!t e!ter" i!to # co!tr#ct &ith #
third )#rt%+ the re",lti!$ co!tr#ct &o,ld 'e v#lid+
!ot void#'le+ for the #$e!t8" i!c#)#cit% i"
irrelev#!t+ the co!tr#ct h#vi!$ 'ee! e!tered i!to
for #!d i! 'eh#lf of the )ri!ci)#l+ &ho h#" f,ll le$#l
c#)#cit%.
The fore$oi!$ di"c,""io!" &o,ld #ll *#9e
"e!"e to ",))ort the f#ct th#t #" # $e!er#l
)ro)o"itio! the l#c9 of le$#l c#)#cit% of the #$e!t
doe" !ot #=ect the co!"tit,tio! of the #$e!c%
rel#tio!"hi). A!d %et+ it i" cle#r ,!der Article
1;1;3?6 th#t if d,ri!$ the ter* of the #$e!c%+ the
)ri!ci)#l or #$e!t i" )l#ced ,!der civil i!terdictio!+
or 'eco*e" i!"#!e or i!"olve!t+ the #$e!c% i" ipso
!ure e:ti!$,i"hed. It i" therefore o!l% lo$ic#l to
co!cl,de th#t if the lo"" of le$#l c#)#cit% of the
#$e!t e:ti!$,i"he" the #$e!c%+ the! !ece""#ril%
#!% of tho"e c#,"e th#t h#ve the e=ect of
re*ovi!$ le$#l c#)#cit% o! either or 'oth the
)ri!ci)#l #!d #$e!t #t the ti*e of )erfectio!
&o,ld !ot 'ri!$ #'o,t # co!tr#ct of #$e!c%.
O'vio,"l%+ there "ee*" to 'e #!
i!co!$r,e!c% &he! it co*e" to )ri!ci)le"
i!volvi!$ the le$#l c#)#citie" of the )#rtie" to #
co!tr#ct of #$e!c%. The re#"o! for th#t i" th#t the
)ri!ci)le" #ct,#ll% occ,)% t&o di=ere!t le$#l
)l#i!". Ahe! it co*e" to cre#ti!$ #!d
e:ti!$,i"hi!$ the co!tr#ct,#l rel#tio!"hi) of
)ri!ci)#l #!d #$e!t+ the )rovi"io!" of l#& t#9e i!to
co!"ider#tio! ),rel% i!tr#*,r#l *#tter" )ert#i!i!$
to the )#rtie" thereto ,!der the )ri!ci)le of
rel#tivit%. 1i!ce #$e!c% i" e""e!ti#ll% # )er"o!#l
rel#tio!"hi) '#"ed o! the ),r)o"e of
re)re"e!t#tio!+ the! &he! either the )ri!ci)#l or
#$e!t die or 'eco*e le$#ll% i!c#)#cit#ted+ the!
the #$e!c% rel#tio! "ho,ld ipso !ure ce#"e. B,t #
co!tr#ct of #$e!c% i" *erel% # )re)#r#tor%
co!tr#ct+ &here the *#i! ),r)o"e i" to e=ect
thro,$h the #$e!t co!tr#ct" #!d other E,ridic#l
rel#tio!"hi)" &ith third )#rtie". The ),'lic )olic% i"
th#t third )#rtie" &ho #ct i! $ood f#ith &ith #!
?
#$e!t h#ve # ri$ht to e:)ect th#t their co!tr#ct"
&o,ld 'e v#lid #!d 'i!di!$ o! the )ri!ci)#l.
Therefore+ eve! &he! '% le$#l c#,"e #! #$e!c%
rel#tio!"hi) h#" ter*i!#ted+ "#% &ith the i!"#!it%
of the )ri!ci)#l+ if the #$e!t #!d # third )#rt% he
e!ter" i!to co!tr#ct #re ,!#&#re of the "it,#tio!+
the! the v#rio," )rovi"io!" o! the F#& o! A$e!c%
&o,ld #@r* the v#lidit% of the co!tr#ct. Gore o!
thi" )oi!t &ill 'e covered ,!der the "ectio! o! the
e""e!ti#l ch#r#cteri"tic" of #$e!c%.
.. E/e0ent$ o( t1e Cont"a&t o( A)en&*
Fi9e #!% other co!tr#ct+ #$e!c% i"
co!"tit,ted of the e""e!ti#l ele*e!t" of co!"e!t+
o'Eect or ",'Eect *#tter+ #!d c#,"e or
co!"ider#tio!. I! Rallos v. $eli, +o Chan & Sons
Realt- Corp.+ 81 1CRA 0/1 31;586+ the Co,rt held
th#t the follo&i!$ #re the e""e!ti#l ele*e!t" of
the co!tr#ct of #$e!c%D
3#6 Con$ent+ e:)re"" or i*)lied+ of the )#rtie"
to e"t#'li"h
the rel#tio!"hi)<
3'6 Ob%e&t, &hich i" the e:ec,tio! of # E,ridic#l
#ct i! rel#tio!
to third )#rtie"<
3c6 A$e!t #ct" #" # re)re"e!t#tive #!d !ot for
hi*"elf<
#!d
3d6 A$e!t #ct" &ithi! the "co)e of hi"
#,thorit%.
-2.

The ele*e!t !ot i!cl,ded i! the Rallos
e!,*er#tio! i" the c#,"e or co!"ider#tio! of ever%
co!tr#ct of #$e!c%. H!der Article 185/+ ever% #$e!c%
i" )re",*ed to 'e for # co*)e!"#tio!+ ,!le"" there i"
)roof to the co!tr#r%.
,1- Consent
iton!ua, "r. v. Eternit Corp., 2;4 1CRA 042
304466+ held th#t co!"e!t of 'oth )ri!ci)#l #!d
#$e!t i" !ece""#r% to cre#te #! #$e!c%. The
)ri!ci)#l *,"t i!te!d th#t the #$e!t "h#ll #ct for
hi*< the #$e!t *,"t i!te!d to #cce)t the
#,thorit% #!d #ct o! it+ #!d the i!te!tio! of the
)#rtie" *,"t !d e:)re""io! either i! &ord" or
co!d,ct 'et&ee! the*.
I! the "#*e *#!!er+ #o'inion Insurance
Corp. v. Court of Appeals+ 206 1CRA 604 304406+
held th#t the '#"i" for #$e!c% i" re)re"e!t#tio!.
O! the )#rt of the )ri!ci)#l+ there *,"t 'e #!
#ct,#l i!te!tio! to #))oi!t

or #! i!te!tio!
!#t,r#ll% i!fer#'le fro* hi" &ord" or #ctio!"<

#!d
o! the )#rt of the #$e!t+ there *,"t 'e #!
i!te!tio! to #cce)t the #))oi!t*e!t #!d #ct o! it+
#!d i! the #'"e!ce of ",ch i!te!t+ there i"
$e!er#ll% !o #$e!c%.
Ierh#)" the o!l% e:ce)tio! to thi" r,le i"
#$e!c% '% e"to))el+ ',t eve! the! it i" '% the
2
"e)#r#te #ct" of the ),r)orted )ri!ci)#l #!d
),r)orted #$e!t+ '% &hich the% #re 'ro,$ht i!to
the rel#tio!"hi) i!"of#r #" third )#rtie" #cti!$ i!
$ood f#ith #re co!cer!ed. Gore di"c,""io!" o!
the e""e!ti#l ele*e!t of co!"e!t "h#ll t#9e )l#ce
i! the "ectio! o! e""e!ti#l ch#r#cteri"tic of
co!"e!",#lit% of co!tr#ct" of #$e!c%.
,2- Object or Subject Matter
Object of #! #$e!c% co!tr#ct i" service+
&hich )#rtic,l#rl% i" ,!dert#9i!$ of the #$e!t to
e!ter i!to E,ridic#l #ct" &ith third )er"o!" o!
'eh#lf of the )ri!ci)#l.
Ite*" 3'6+ 3c6 #!d 3d6 i! the e!,*er#ted
ele*e!t" of Rallos c#! #ct,#ll% 'e ",**#ri>ed
i!to the o'Eect of ever% co!tr#ct of #$e!c% to 'e
th#t of service,i.e.+ the ,!dert#9i!$ 3o'li$#tio!6
of the #$e!t to e!ter i!to # E,ridic#l #ct &ith third
)#rtie" o! 'eh#lf of the )ri!ci)#l #!d &ithi! the
"co)e of hi" #,thorit%.
,3- Consideration
Cause or Consideration i! #$e!c% i" the
co**i""io! th#t the )ri!ci)#l &o,ld )#% the
#$e!t. H!der Article 185/+ #$e!c% i" )re",*ed to
'e for # co*)e!"#tio!+ ,!le"" there i" )roof to the
co!tr#r%. I! other &ord"+ li'er#lit% *#% 'e the
)ro)er c#,"e or co!"ider#tio! for #! #$e!c%
co!tr#ct o!l% &he! it i" "o e:)re""l% #$reed ,)o!.
H!le"" other&i"e "ti),l#ted+ therefore+ ever%
#$e!t i" e!titled to re*,!er#tio! or co*)e!"#tio!
for the "ervice" )erfor*ed ,!der the co!tr#ct of
#$e!c%.
I! Aguna v. arena+ /5 Ihil 6?4 31;?06+
#ltho,$h the #$e!t h#d re!dered "ervice to the
)ri!ci)#l coveri!$ collectio! of re!t#l" fro* the
v#rio," te!#!t" of the )ri!ci)#l+ #!d i! ")ite of the
#$ree*e!t th#t )ri!ci)#l &o,ld )#% for the
#$e!t8" "ervice+ !everthele""+ the )ri!ci)#l
#llo&ed the #$e!t to occ,)% o!e of hi" )#rcel" of
l#!d #!d to ',ild hi" ho,"e thereo!. The Co,rt
held th#t the "ervice re!dered '% the #$e!t &#"
dee*ed to 'e $r#t,ito,"+ #)#rt fro* the
occ,)#tio! of "o*e of the ho,"e of the dece#"ed
'% the )l#i!ti= #!d hi" f#*il%+ (for if it &ere tr,e
th#t the #$e!t #!d the dece#"ed )ri!ci)#l h#d #!
,!der"t#!di!$ to the e=ect th#t the #$e!t &#" to
receive co*)e!"#tio! #"ide fro* the ,"e #!d
occ,)#tio! of the ho,"e" of the dece#"ed+ it
c#!!ot 'e e:)l#i!ed ho& the #$e!t co,ld h#ve
re!dered "ervice" #" he did for ei$ht %e#r"
&itho,t receivi!$ #!d cl#i*i!$ #!% co*)e!"#tio!
fro* the dece#"ed.( 3#t ). 6?06
,4- Entit/e0ent o( A)ent to Co00i$$ion
An&1o"e.
on t1e Ren.e"in) o( Se"'i&e
The co*)e!"#tio! th#t the )ri!ci)#l #$ree"
to )#% to the #$e!t i" )#rt of the ter*" of the
co!tr#ct of #$e!c% ,)o! &hich their *i!d" *eet.
Therefore+ the e:te!t #!d *#!!er '% &hich the
/
#$e!t &o,ld 'e e!titled to receive co*)e!"#tio!
or co**i""io! i" '#"ed o! the ter*" of the
co!tr#ct. 1o*eti*e"+ the ter*" #re !ot th#t cle#r+
#!d deci"io!" h#ve h#d to de#l &ith the i"",e of
&he! #! #$e!t h#" *erited the ri$ht to receive
the co*)e!"#tio! either "ti),l#ted or i*)lied
fro* the ter*" of the co!tr#ct. The doctri!e th#t
*#% 'e derived fro* the v#rio," deci"io!" o! the
*#tter #re #!chored o! the !#t,re of the co!tr#ct
of #$e!c% #" # ")ecie" of co!tr#ct" of "ervice" i!
$e!er#l< #!d th#t co!"eB,e!tl%+ #! #$e!t "ho,ld
'e e!titled to receive co*)e!"#tio! &he! it h#"
'ee! e"t#'li"hed th#t it &#" thro,$h hi" e=ort" or
"ervice th#t the o'Eect of the #$e!c% &#"
#chieved.
Th,"+ i! Inland Realt- v. Court of Appeals+
05? 1CRA 54 31;;56+ the Co,rt held th#t
(Altho,$h the ,lti*#te ',%er &#" i!trod,ced '%
the #$e!t to the )ri!ci)#l d,ri!$ the ter* of the
#$e!c%+ !everthele""+ the l#)"e of the )eriod of
*ore th#! o!e 316 %e#r #!d ve 3/6 *o!th"
'et&ee! the e:)ir#tio! of )etitio!er"8 #,thorit% to
"ell #!d the co!",**#tio! of the "#le+ c#!!ot
#,thori>e co*)elli!$ the )ri!ci)#l to )#% the
"ti),l#ted 'ro9er8" fee+ "i!ce the #$e!t &#" !ot
lo!$er e!titled thereto. The Co,rt t#9e" i!to
"tro!$ co!"ider#tio! th#t ,tter l#c9 of evide!ce of
the #$e!t "ho&i!$ #!% f,rther i!volve*e!t i! the
!e$oti#tio!" 'et&ee! )ri!ci)#l #!d ',%er d,ri!$
th#t )eriod #!d i! the ",'"eB,e!t )roce""i!$ of
the doc,*e!t" )erti!e!t to "#id "#le.( 3#t ). 5;6
I! co!tr#"t+ i! .anoto/ *ros. Inc. v. Court of
Appeals+ 001 1CRA 002 31;;?6+ the Co,rt held
th#t #ltho,$h the "#le of the o'Eect of the #$e!c%
to "ell &#" )erfected three d#%" #fter the
e:)ir#tio! of the #$e!c% )eriod+ the #$e!t &#"
"till 'e e!titled to receive the co**i""io!
"ti),l#ted '#"ed o! the doctri!e held i! (rats v.
Court of Appeals+ 81 1CRA ?64 31;586+ th#t &he!
the #$e!t &#" the efcient procuring cause in
bringing about the sale th#t the #$e!t &#"
e!titled to co*)e!"#tio!. I! e""e!ce+ the Co,rt
r,led th#t &he! there i" # clo"e+ )ro:i*#te #!d
c#,"#l co!!ectio! 'et&ee! the #$e!t8" e=ort" #!d
l#'or #!d the )ri!ci)#l8" "#le of hi" )ro)ert%+ the
#$e!t i" e!titled to # co**i""io!.
The *#tter )ert#i!i!$ to e!title*e!t to
co**i""io! &ill 'e di"c,""ed i! $re#ter det#il" o! the
"ectio! th#t co!tr#"t #! co!tr#ct of #$e!c% fro* th#t
of # 'ro9er8" co!tr#ct.
e. E$$entia/ C1a"a&te"i$ti&$ o( A)en&*
,1- Nominate and Principal
Not o!l% i" the co!tr#ct of #$e!c%
")ecic#ll% !#*ed #" ",ch ,!der the Civil Code+ it
i" # )ri!ci)#l co!tr#ct 'ec#,"e it c#! "t#!d o! it"
o&! &itho,t !eed of #!other co!tr#ct to v#lid#te
it.
The re#l v#l,e of the co!tr#ct of #$e!c%
'ei!$ # (!o*i!#te #!d )ri!ci)#l( co!tr#ct i" th#t it
6
h#" 'ee! "o "et #)#rt '% l#& #!d )rovided &ith it"
o&! "et of r,le" #!d le$#l co!"eB,e!ce"+ th#t #!%
other #rr#!$e*e!t th#t e""e!ti#ll% f#ll" &ithi! it"
ter*" "h#ll 'e co!"idered #" #! #$e!c%
#rr#!$e*e!t #!d "h#ll 'e $over!ed '% the F#& o!
A$e!c%+ !ot&ith"t#!di!$ #!% i!te!tio! of the
)#rtie" to the co!tr#r%. After #ll+ # co!tr#ct i" &h#t
the l#& "#%" it i"+ #!d !ot &h#t the )#rtie" c#ll it.
I! #oles v. Angeles, 2;0 1CRA 645 304466+ it
&#" held th#t if #! #ct do!e '% o!e )er"o! i!
'eh#lf of #!other i" i! it" e""e!ti#l !#t,re o!e of
#$e!c%+ the for*er i" the #$e!t of the l#tter
!ot&ith"t#!di!$ he or "he i" !ot "o c#lled77it &ill
'e #! #$e!c% &hether the )#rtie" ,!der"tood the
e:#ct !#t,re of the rel#tio! or !ot.
,2- Consensual
The co!tr#ct of #$e!c% i" )erfected '% *ere
co!"e!t. H!der Article 186;+ #! #$e!c% *#% 'e
e:)re""ed or i*)lied fro* the #ct of the )ri!ci)#l+
fro* hi" "ile!ce or l#c9 of #ctio!+ or f#il,re to
re),di#te the #$e!c%< #$e!c% *#% 'e or#l+ ,!le""
the l#& reB,ire" # ")ecic for*.
-/.

H!der Article 1854+ #cce)t#!ce '% the #$e!t
*#% #l"o 'e e:)re""+ or i*)lied fro* hi" #ct" &hich
c#rr% o,t the #$e!c%+ of fro* hi" "ile!ce or i!#ctio!
#ccordi!$ to the circ,*"t#!ce".
,3- Unilateral and Primarily Onerous
Ordi!#ril%+ #! #$e!c% i" o!ero," i! !#t,re+
&here the #$e!c% e:)ect" co*)e!"#tio! for hi"
"ervice" i! the for* of co**i""io!". Jo&ever+
Article 185/ reco$!i>e" th#t #! #$e!c% *#% 'e
",))orted '% ),re li'er#lit%+ #!d th," &o,ld 'e
$r#t,ito,"+ ',t the ',rde! of )roof &o,ld 'e to
"ho& th#t the #$e!c% &#" co!"tit,ted
$r#t,ito,"l%.
Ahe! it i" $r#t,ito,"+ the co!tr#ct of
#$e!c% i" ,!il#ter#l co!tr#ct 'ec#,"e it o!l%
cre#te" #! o'li$#tio! o! the )#rt of the #$e!t. B,t
eve! &he! it i" ",))orted '% # v#l,#'le
co!"ider#tio! 3i.e.+ co*)e!"#ted or o!ero,"
#$e!c%6+ it &o,ld "till 'e ch#r#cteri>ed #" #
,!il#ter#l co!tr#ct+ 'ec#,"e it i" o!l% the
f,lll*e!t of the )ri*#r% o'li$#tio!" of the #$e!t
to re!der "o*e "ervice ,)o! &hich the
",'ordi!#te o'li$#tio! of the )ri!ci)#l to )#% the
co*)e!"#tio! #$reed ,)o! #ri"e".
Ahe! #! #$e!t #cce)t" the #$e!c% )o"itio!
&itho,t co*)e!"#tio!+ he #"",*e" the "#*e
re")o!"i'ilit% to c#rr% o,t the #$e!c% #!d
therefore i!c,r" the "#*e li#'ilit% &he! he f#il" to
f,lll hi" o'li$#tio!" to the )ri!ci)#l. I" i" therefore
r#ther "tr#!$e th#t ,!der Article 1;4;+ the
circ,*"t#!ce th#t the #$e!c% &#" for
co*)e!"#tio! or !ot "h#ll 'e co!"idered '% the
co,rt" i! deter*i!i!$ the e:te!t of the li#'ilit% of
the #$e!t for fr#,d or !e$li$e!ce.
,4- Preparatory and Representative
5
There i" !o do,'t th#t #$e!c% i" # ")ecie" of
the 'ro#d $ro,)i!$ of &h#t &e c#ll the ("ervice
co!tr#ct"(+ &hich i!cl,de" e*)lo%*e!t co!tr#ct+
*#!#$e*e!t co!tr#ct #!d co!tr#ct7for7# )iece of
&or9. There #re #l"o ")eci#l "ervice co!tr#ct"
&hich i!cl,de the re!deri!$ of )rofe""io!#l
"ervice 3e.g.+ doctor" #!d l#&%er"6+ #!d
co!",lt#!c% &or9. B,t it i" the ch#r#cteri"tic of
(re)re"e!t#tio!( th#t i" the *o"t di"ti!$,i"hi!$
*#r9 of #$e!c% &he! co*)#red &ith other "ervice
co!tr#ct"+ i! th#t the *#i! ),r)o"e i" to #llo& the
#$e!t to e!ter i!to co!tr#ct" &ith third )#rtie"
&hich &o,ld 'i!d the )ri!ci)#l.
A co!tr#ct of #$e!c% doe" !ot e:i"t for it"
o&! ),r)o"e< it i" # )re)#r#tor% co!tr#ct e!tered
i!to for other ),r)o"e th#t de#l &ith the ),'lic.
Thi" ch#r#cteri"tic of #! #$e!c% i" reCected i!
v#rio," )rovi"io!" i! the F#& o! A$e!c%+ #!d i!
c#"e7l#&+ th#t "ee9 to )rotect the v#lidit% #!d
e!force#'ilit% of co!tr#ct" e!tered i!to ),r",#!t
to the #$e!c% #rr#!$e*e!t+ eve! &he! to do "o
&o,ld co!tr#ve!e "trict #$e!c% )ri!ci)le". I!
#!other &#% of ),tti!$ it+ #! #$e!c% co!tr#ct i"
*erel% # tool for # $re#ter o'Eective to e!ter i!to
E,ridic#l rel#tio!" o! 'eh#lf of the )ri!ci)#l<
co!"ider#tio!" th#t )ert#i! *erel% to the tool+
cert#i!l% c#!!ot o,t&ei$h co!"ider#tio!" th#t
)ert#i! to the *#i! o'Eect" of the #$e!c%.
I! A'on Trading Corp. v. Court of Appeals,
255 1CRA //0 3044/6+ the Co,rt decreed th#t (I! #
'ev% of c#"e" #" the #v,!c,l#r c#"e of 0ictorias
.illing Co., Inc. v. Court Appeals+ -??? 1CRA 66?
304446.+ the Co,rt decreed fro* Article 1868 th#t
the '#"i" of #$e!c% i" re)re"e!t#tio!+( 3#t ).
/646+52 #!d th#t co!"eB,e!tl% o!e of the
"tro!$e"t fe#t,re of # tr,e co!tr#ct of #$e!c% i"
th#t of (co!trol(77th#t the #$e!t i" ,!der the
co!trol #!d i!"tr,ctio! of the )ri!ci)#l. Th,"+ i!
0ictorias .illing Co., Inc. v. Court of Appeals+ ???
1CRA 66? 304446+ it &#" r,led 77
It i" cle#r fro* Article 1868 th#t the '#"i" of
#$e!c% i" re)re"e!t#tio!.
-6.
O! the )#rt of the
)ri!ci)#l+ there *,"t 'e #! #ct,#l i!te!tio! to
#))oi!t or #! i!te!tio! !#t,r#ll% i!fer#'le fro* hi"
&ord" or #ctio!"< #!d o! the )#rt of the #$e!t+
there *,"t 'e #! i!te!tio! to #cce)t the
#))oi!t*e!t #!d #ct o! it+ #!d i! the #'"e!ce of
",ch i!te!t+ there i" $e!er#ll% !o #$e!c%. O!e
f#ctor &hich *o"t cle#rl% di"ti!$,i"he" #$e!c%
fro* other le$#l co!ce)t" i" co!trol< o!e )er"o! 77
the #$e!t 77 #$ree" to #ct ,!der the co!trol or
directio! of #!other 77 the )ri!ci)#l. I!deed+ the
ver% &ord (#$e!c%( h#" co*e to co!!ote co!trol
'% the )ri!ci)#l.
-5.
The co!trol f#ctor+ *ore th#!
#!% other+ h#" c#,"ed the co,rt" to ),t co!tr#ct"
'et&ee! )ri!ci)#l #!d #$e!t i! # "e)#r#te
c#te$or%. . . .
: : :
I! the i!"t#!t c#"e+ it #))e#r" )l#i! to ," th#t
)riv#te re")o!de!t C1C &#" # ',%er of the 1FDFR
for*+ #!d !ot #! #$e!t of 1TG. Iriv#te re")o!de!t
8
C1C &#" !ot ",'Eect to 1TG8" co!trol. The
B,e"tio! of &hether # co!tr#ct i" o!e of "#le or
#$e!c% de)e!d" o! the i!te!tio! of the )#rtie" #"
$#thered fro* the &hole "co)e #!d e=ect of the
l#!$,#$e e*)lo%ed. Th#t the #,thori>#tio! $ive!
to C1C co!t#i!ed the )hr#"e (for #!d i! o,r
31TG8"6 'eh#lf( did !ot e"t#'li"h #! #$e!c%.
Hlti*#tel%+ &h#t i" deci"ive i" the i!te!tio! of the
)#rtie". Th#t !o #$e!c% &#" *e#!t to 'e
e"t#'li"hed '% the C1C #!d 1TG i" cle#rl% "ho&!
'% C1C8" co**,!ic#tio! to )etitio!er th#t 1FDR
No. 1012G h#d 'ee! ("old #!d e!dor"ed( to it.
The ,"e of the &ord" ("old #!d e!dor"ed( *e#!"
th#t 1TG #!d C1C i!te!ded # co!tr#ct of "#le+ #!d
!ot #! #$e!c%. . . 3#t )). 65676556
I! #oles v. Angeles, 2;0 1CRA 645 304466+ it
&#" held th#t for #! #$e!c% to #ri"e+ it i" !ot
!ece""#r% th#t the )ri!ci)#l )er"o!#ll% e!co,!ter
the third )er"o! &ith &ho* the #$e!t
i!ter#ct"KLM)reci"el%+ the ),r)o"e of #$e!c% i" to
e:te!d the )er"o!#lit% of the )ri!ci)#l thro,$h the
f#cilit% of the #$e!t.
I! Eurotech Industrial TEchnologies, Inc. v.
It i" "#id th#t the '#"i" of #$e!c% i"
re)re"e!t#tio!+ th#t i"+ the #$e!t #ct" for #!d o!
'eh#lf of the )ri!ci)#l o! *#tter" &ithi! the "co)e
of hi" #,thorit% #!d "#id #ct" h#ve the "#*e le$#l
e=ect #" if the% &ere )er"o!#ll% e:ec,ted '% the
)ri!ci)#l. B% thi" le$#l ctio!+ the #ct,#l or re#l
#'"e!ce of the )ri!ci)#l i" co!verted i!to hi" le$#l
or E,ridic#l )re"e!ce 7 1ui facit per aliu' facit per
se. 3#t ). /;?6
E#rlier+ i! Rallos v. $eli, +o Chan & Sons
th#t (A$e!c% i" '#"ic#ll% )er"o!#l+ re)re"e!t#tive+
#!d deriv#tive i! !#t,re. The #,thorit% of the
#$e!t to #ct e*#!#te" fro* the )o&er" $r#!ted to
hi* '% hi" )ri!ci)#l< hi" #ct i" the #ct of the
)ri!ci)#l if do!e &ithi! the "co)e of the #,thorit%.
2ui facit per aliu' facit per se. 8Je &ho #ct"
thro,$h #!other #ct" hi*"elf.8( 3#t ). 0/;6
Principles lo!ing from "gency
Characteristics of #Prepartatory and
Representative$ 33 The follo&i!$ )ri!ci)le" Co&
fro* the #))lic#tio! of the e""e!ti#l
ch#r#cteri"tic" of #! #$e!c% 'ei!$ ()re)#r#tor%
#!d re)re"e!t#tive( co!tr#ct+ th,"D
3#6 The co!tr#ct e!tered i!to &ith third
)er"o!" )ert#i!"
to the )ri!ci)#l #!d !ot to the #$e!t< the
#$e!t i" #
"tr#!$er to "#id co!tr#ct #ltho,$h he
)h%"ic#ll% &#"
the o!e &ho e!tered i!to it i! #
re)re"e!t#tive
c#)#cit%<
;
the #$e!t h#" !either ri$ht" or
o'li$#tio!" fro* the re",lti!$
co!tr#ct<
the #$e!t h#" !o le$#l "t#!di!$ to ",e ,)o! "#id

co!tr#ct
3'6 The li#'ilitie" i!c,rred "h#ll )ert#i! to the
)ri!ci)#l
#!d !ot the #$e!t<
3c6 Ge!er#ll%+ #ll #ct" th#t the )ri!ci)#l c#!
do i! )er"o!+
he *#% do thro,$h #! #$e!t+ e:ce)t
tho"e &hich
,!der ),'lic )olic% #re "trictl% )er"o!#l to
the )er"o!
of the )ri!ci)#l.
3d6 The #$e!t &ho #ct" #" ",ch i" !ot
)er"o!#lit% li#'le
to the )#rt% &ith &ho* he co!tr#ct"+
,!le"" he
e:)re""l% 'i!d" hi*"elf or e:ceed" the
li*it" of hi"
#,thorit% &itho,t $ivi!$ ",ch )#rt%
",@cie!t !otice of
hi" )o&er". 3Art. 18;56
3e6 Notice to the #$e!t "ho,ld #l&#%" 'e
co!"tr,ed #"
!otice 'i!di!$ o! the )ri!ci)#l+ eve!
&he! i! f#ct the
)ri!ci)#l !ever 'ec#*e #&#re thereof.
Air $rance v.
Court of Appeals+ 106 1CRA 228 31;8?6
3f6 N!o&led$e of the #$e!t i" eB,iv#le!t to
9!o&led$e
of the )ri!ci)#l.
EOCEIT D 316 &here the #$e!t8" i!tere"t" #re
#dver"e to tho"e of the )ri!ci)#l<
306 &here the #$e!t8" d,t% i" !ot to
di"clo"e the i!for*#tio!+ #" &here he
i" i!for*ed '% &#% of co!de!ti#l
i!for*#tio!< #!d
3?6 &here the )er"o! cl#i*i!$ the 'e!et
of the r,le coll,de" &ith the #$e!t to
defr#,d the )ri!ci)#l 3De Feo! P De
Feo!+ #t ). ?65+citing TEFFER+ #t ).1/46
Th,"+ i! Eurotech Industrial Technologies, Inc. v.
Article 18;5 rei!force" the f#*ili#r doctri!e
th#t #! #$e!t+ &ho #ct" #" ",ch+ i" !ot )er"o!#ll%
li#'le to the )#rt% &ith &ho* he co!tr#ct". The
"#*e )rovi"io!+ ho&ever+ )re"e!t" t&o i!"t#!ce"
&he! #! #$e!t 'eco*e" )er"o!#ll% li#'le to #
third )er"o!. The r"t i" &he! he e:)re""l% 'i!d"
hi*"elf to the o'li$#tio! #!d the "eco!d i" &he!
he e:ceed" hi" #,thorit%. I! the l#"t i!"t#!ce+ the
14
#$e!t c#! 'e held li#'le if he doe" !ot $ive the
third )#rt% ",@cie!t !otice of hi" )o&er". 3#t ).
/;?6
I! (hilpotts v. (hil. .fg. Co.+ 24 Ihil 251 31;1;6+
the Co,rt held th#t the ri$ht of i!")ectio! $ive! to #
"toc9holder ,!der the l#& c#! 'e e:erci"ed either '%
hi*"elf or '% #!% )ro)er re)re"e!t#tive or #ttor!e% i!
f#ct+ #!d either &ith or &itho,t the #tte!d#!ce of the
"toc9holder. Thi" i" i! co!for*it% &ith the $e!er#l r,le
th#t &h#t # *#! *#% do i! )er"o! he *#% do thro,$h
#!other.
,5- %erivative& iduciary and Revocable
A co!tr#ct of #$e!c% cre#te" # le$#l
rel#tio!"hi) of re)re"e!t#tio! '% the #$e!t o!
'eh#lf of the )ri!ci)#l+ &here the )o&er" of the
#$e!t i" e""e!ti#ll% derived fro* the )ri!ci)#l+
#!d co!"eB,e!tl%+ it i" d,ci#r% i! !#t,re. O!e of
the le$#l co!"eB,e!ce" of the d,ci#r% !#t,re of
the co!tr#ct of #$e!c% i" th#t it i" e""e!ti#ll%
revoc#'leD !either the )ri!ci)#l !or the #$e!t c#!
'e le$#ll% *#de to re*#i! i! the rel#tio!"hi)
&he! the% choo"e to h#ve it ter*i!#ted.
Severino v. Severino+ 22 Ihil. ?2? 31;0?6+
held th#t the rel#tio!" of #! #$e!t to hi" )ri!ci)#l
#re d,ci#r% i! ch#r#cter 'ec#,"e the% #re '#"ed
o! tr,"t #!d co!de!ce+ &hich *,"t Co& fro* the
e""e!ti#l !#t,re # co!tr#ct of #$e!c% th#t *#9e"
the #$e!t the re)re"e!t#tive of the )ri!ci)#l.
Co!"eB,e!tl%D
3#6 A" re$#rd" )ro)ert% for*i!$ the ",'Eect
*#tter of the
#$e!c%+ the #$e!t i" e"to))ed fro*
#""erti!$ or
#cB,iri!$ # title #dver"e to th#t of the
)ri!ci)#l. 3Art.
12?/6<
3'6 I! # co!Cict7of7i!tere"t "it,#tio!+ the #$e!t
c#!!ot
choo"e # co,r"e th#t f#vor" hi*"elf to the
detri*e!t of
the )ri!ci)#l< he *,"t choo"e to the 'e"t
#dv#!t#$e of
the )ri!ci)#l. Tho'as v. (ineda+ 8; Ihil.
?10 31;/16<
(al'a v. Cristo4al+ 55 Ihil. 510 31;266< #!d
3c6 The #$e!t c#!!ot ),rch#"e for hi*"elf the
)ro)ert% of
the )ri!ci)#l &hich h#" 'ee! $ive! to hi"
*#!#$e*e!t
for "#le or di")o"itio! 3Art. 12;1-0.6< ,!le""
there i" #!
e:)re"" co!"e!t o! the )#rt of the )ri!ci)#l
3Cui v. Cui+
144 Ihil. ;1? 31;/56< or &he! the #$e!t
),rch#"e" #fter
the #$e!c% i" ter*i!#ted 30alera v. Vel#"co+
11
/1 Ihil.
6;/ 31;086.
A co!tr#ct of #$e!c% i" $e!er#ll% revoc#'le
#" it i" # )er"o!#l co!tr#ct of re)re"e!t#tio!
'#"ed o! tr,"t #!d co!de!ce re)o"ed '% the
)ri!ci)#l o! hi" #$e!t. A" the )o&er of the #$e!t
to #ct de)e!d" o! the &ill #!d lice!"e of the
)ri!ci)#l he re)re"e!t"+ the )o&er of the #$e!t
ce#"e" &he! the &ill or )er*i""io! i" &ithdr#&!
'% the )ri!ci)#l. Th,"+ $e!er#ll%+ the #$e!c% *#%
'e revo9ed '% the )ri!ci)#l #t &ill. Repu4lic v.
Evangelista+ 266 1CRA /22 3044/6.
I! Orient Air Services v. Court of Appeals+
1;5 1CRA 62/ 31;;16+ it &#" held th#t the
deci"io! of the lo&er co,rt orderi!$ the )ri!ci)#l
#irli!e co*)#!% to (rei!"t#te defe!d#!t #" it"
$e!er#l "#le" #$e!t for )#""e!$er tr#!")ort#tio!
i! the Ihili))i!e" i! #ccord#!ce &ith "#id G1A
A$ree*e!t+( &#" ,!l#&f,l "i!ce co,rt" h#ve !o
#,thorit% to co*)el the )ri!ci)#l to rei!"t#te #
co!tr#ct of #$e!c% it h#" ter*i!#ted &ith the
#$e!tD
(1,ch &o,ld 'e viol#tive of the )ri!ci)le" #!d
e""e!ce of #$e!c%+ de!ed '% l#& #" # co!tr#ct
&here'% (# )er"o! 'i!d" hi*"elf to re!der "o*e
"ervice or to do "o*ethi!$ i! re)re"e!t#tio! or o!
'eh#lf of #!other+ AITJ TJE CON1ENT OR
AHTJORITY OF TJE FATTER.( I! #! #$e!t7)ri!ci)#l
rel#tio!"hi)+ the )er"o!#lit% of the )ri!ci)#l i"
e:te!ded thro,$h the f#cilit% of the #$e!t. I! "o
doi!$+ the #$e!t+ '% le$#l ctio!+ 'eco*e" the
)ri!ci)#l+ #,thori>ed to )erfor* #ll #ct" &hich the
l#tter &o,ld h#ve hi* do. 1,ch # rel#tio!"hi) c#!
o!l% 'e e=ected &ith the co!"e!t of the )ri!ci)#l+
&hich *,"t !ot+ i! #!% &#%+ 'e co*)elled '% l#&
or '% #!% co,rt. The A$ree*e!t it"elf 'et&ee! the
)#rtie" "t#te" th#t (either )#rt% *#% ter*i!#te
the A$ree*e!t &itho,t c#,"e '% $ivi!$ the other
?4 d#%"KLQ !otice '% letter+ tele$r#* or c#'le.8(
-8.
3#t ). 6/66
(. Di$tin)!i$1e. ("o0 Ot1e" Si0i/a"
Cont"a&t$
,1- rom 'mployment Contract
H!li9e #$e!c% rel#tio!"hi) &hich i"
e""e!ti#ll% co!tr#ct,#l i! !#t,red+ ,!der Article
1544 of the Civil Code+ (-t.he rel#tio!"hi) 'et&ee!
c#)it#l #!d l#'or #re !ot *erel% co!tr#ct,#l. The%
#re "o i*)re""ed &ith ),'lic i!tere"t th#t l#'or
co!tr#ct" *,"t %ield to the co**o! $ood.
Therefore+ ",ch co!tr#ct" #re ",'Eect to the
")eci#l l#&" o! l#'or ,!io!"+ collective '#r$#i!i!$+
"tri9e" #!d loc9o,t"+ clo"ed "ho)+ &#$e"+ &or9i!$
co!ditio!"+ ho,r" of l#'or #!d "i*il#r ",'Eect".(
Gore ")ecic#ll%+ the ),r)o"e of #! e*)lo%er7
e*)lo%ee rel#tio!"hi) i" for the e*)lo%ee to
re!der "ervice for the direct 'e!et of the
e*)lo%er or of the ',"i!e"" of the e*)lo%er<
&hile #$e!c% rel#tio!"hi) i" e!tered i!to to e!ter
i!to E,ridic#l rel#tio!"hi) o! 'eh#lf of the )ri!ci)#l
&ith third )#rtie".
10
I! #ela Cruz v. )orthern Theatrical
Enterprises+ ;/ Ihil 5?; 31;/26+ the Co,rt held
th#t the rel#tio!"hi) 'et&ee! the cor)or#tio!
&hich o&!" #!d o)er#te" # the#tre+ #!d the
i!divid,#l it hire" #" # "ec,rit% $,#rd to *#i!t#i!
the )e#ce #!d order #t the e!tr#!ce of the the#tre
i" !ot th#t of )ri!ci)#l #!d #$e!t+ 'ec#,"e the
)ri!ci)le of re)re"e!t#tio! &#" i! !o &#%
i!volved. The "ec,rit% $,#rd &#" !ot e*)lo%ed to
re)re"e!t the defe!d#!t cor)or#tio! i! it"
de#li!$" &ith third )#rtie"< he &#" # *ere
e*)lo%ee hired to )erfor* # cert#i! ")ecic d,t%
or t#"9+ th#t of #cti!$ #" ")eci#l $,#rd #!d "t#%i!$
#t the *#i! e!tr#!ce of the *ovie ho,"e to "to)
$#te cr#"her" #!d to *#i!t#i! )e#ce #!d order
&ithi! the )re*i"e".
,2- rom Contract for a Piece(of()or*
H!der Article 151? of the Civil Code+ (-'.%
the co!tr#ct for # )iece of &or9 the co!tr#ctor
'i!d" hi*"elf to e:ec,te # )iece of &or9 for the
e*)lo%er+ i! co!"ider#tio! of # cert#i! )rice or
co*)e!"#tio!. The co!tr#ctor *#% either e*)lo%
o!l% hi" l#'or or "9ill+ or #l"o f,r!i"h the *#teri#l.(
H!der # co!tr#ct for # )iece of &or9+ the
co!tr#ctor i" !ot #! #$e!t of the ()ri!ci)#l(+ #!d
the co!tr#ctor h#" !o #,thorit% to re)re"e!t the
)ri!ci)#l i! e!teri!$ i!to E,ridic#l #ct" &ith third
)#rtie".
Ahere the co!tr#ct e!tered i!to i" o!e
&here the i!divid,#l ,!dertoo9 #!d #$reed to
',ild for the other )#rt% # co"tl% edice+ the
,!derl%i!$ co!tr#ct i" o!e for # co!tr#ct for #
)iece of &or9+ #!d !ot # )ri!ci)#l #!d #$e!c%
rel#tio!. Co!"eB,e!tl%+ the co!tr#ct i" #,thori>ed
to do the &or9 #ccordi!$ to hi" o&! *ethod #!d
&itho,t 'ei!$ ",'Eect to the clie!t8" co!trol+
e:ce)t #" to the re",lt of the &or9< he co,ld
),rch#"e hi" *#teri#l" #!d ",))lie" fro* &ho*
he )le#"ed #!d #t ",ch )rice" #" he de"ired to
)#%. A!d the *ere f#ct th#t it &#" "ti),l#ted i! the
co!tr#ct th#t the clie!t co,ld t#9e )o""e""io! of
the &or9 "ite ,)o! the h#))e!i!$ of ")ecied
co!ti!$e!cie" did !ot *#9e the rel#tio! i!to th#t
of #! #$e!c%. Co!"eB,e!tl%+ &he! the clie!t did
t#9e over the ,!!i"hed &or9"+ he did !ot #"",*e
#!% direct li#'ilit% to the ",))lier" of the
co!tr#ctor. $ressel v. .ariano 5- Chaco Sons &
Co., ?2 Ihil. 100 31;1/6.
,3- rom a Management "greement
I! 'oth #$e!c% #!d le#"e of "ervice"+ o!e of
the )#rtie" 'i!d" hi*"elf to re!der "o*e "ervice
to the other )#rt%. A$e!c%+ ho&ever+ i"
di"ti!$,i"hed fro* le#"e of &or9 or "ervice" i!
th#t the '#"i" of #$e!c% i" re)re"e!t#tio!+ &hile i!
the le#"e of &or9 or "ervice" the '#"i" i"
e*)lo%*e!t. The le""or of "ervice" doe" !ot
re)re"e!t hi" e*)lo%er+ &hile the #$e!t
re)re"e!t" hi" )ri!ci)#l. : : : . There i" #!other
o'vio," di"ti!ctio! 'et&ee! #$e!c% #!d le#"e of
"ervice". A$e!c% i" # )re)#r#tor% co!tr#ct+ #"
#$e!c% (doe" !ot "to) &ith the #$e!c% 'ec#,"e
1?
the ),r)o"e i" to e!ter i!to other co!tr#ct".( The
*o"t ch#r#cteri"tic fe#t,re of #! #$e!c%
rel#tio!"hi) i" the #$e!t8" )o&er to 'ri!$ #'o,t
',"i!e"" rel#tio!" 'et&ee! hi" )ri!ci)#l #!d third
)er"o!". (The #$e!t i" de"ti!e to e:ec,te E,ridic#l
#ct" 3cre#tio!+ *odic#tio! or e:ti!ctio! of
rel#tio!" &ith third )#rtie"6. Fe#"e of "ervice"
co!te*)l#te o!l% *#teri#l 3!o!7E,ridic#l6 #ct".
-;.
(
)ielson & Co., Inc. v. epanto Consolidated .ining
Co., 06 1CRA /24+ /267/25 31;686.
Ahere the )ri!ci)#l #!d )#r#*o,!t
,!dert#9i!$ of the (*#!#$er( ,!der #
G#!#$e*e!t Co!tr#ct &#" the o)er#tio! #!d
develo)*e!t of the *i!e #!d the o)er#tio! of the
*ill+ #!d #ll other ,!dert#9i!$" *e!tio!ed i! the
co!tr#ct #re !ece""#r% or i!cide!t#l to the
)ri!ci)#l ,!dert#9i!$77the"e other ,!dert#9i!$"
'ei!$ de)e!de!t ,)o! the &or9 o! the
develo)*e!t of the *i!e #!d the o)er#tio! of the
*ill. I! the )erfor*#!ce of thi" )ri!ci)#l
,!dert#9i!$ the *#!#$er &#" !ot i! #!% &#%
e:ec,ti!$ E,ridic#l #ct" for the )ri!ci)#l+ de"ti!ed
to cre#te+ *odif% or e:ti!$,i"h ',"i!e"" rel#tio!"
'et&ee! the )ri!ci)#l #!d third )er"o!. I! other
&ord"+ i! )erfor*i!$ it" )ri!ci)#l ,!dert#9i!$ the
*#!#$er &#" !ot #cti!$ #" #! #$e!t of the
)ri!ci)#l+ i! the "e!"e th#t the ter* #$e!t i"
i!ter)reted ,!der the l#& of #$e!c%+ ',t #" o!e
&ho &#" )erfor*i!$ *#teri#l #ct" for #!
e*)lo%er+ for # co*)e!"#tio!. Co!"eB,e!tl%+ the
*#!#$e*e!t co!tr#ct !ot 'ei!$ #! #$e!c%
c#!!ot 'e revo9ed #t &ill #!d &#" 'i!di!$ to it"
f,ll co!tr#cted )eriod. )ielson & Co., Inc. v.
epanto Consolidated .ining Co., 06 1CRA /24+
/267/25 31;686.
T#9i!$ i!to co!"ider#tio! the f#ct" th#t the
o)er#tor o&ed hi" )o"itio! to the co*)#!% #!d
the l#tter co,ld re*ove hi* or ter*i!#te hi"
"ervice" #t &ill< th#t the "ervice "t#tio! 'elo!$ed
to the co*)#!% #!d 'ore it" tr#de!#*e #!d the
o)er#tor "old o!l% the )rod,ct" of the co*)#!%<
th#t the eB,i)*e!t ,"ed '% the o)er#tor
'elo!$ed to the co*)#!% #!d &ere E,"t lo#!ed to
the o)er#tor #!d the co*)#!% too9 ch#r$e of
their re)#ir #!d *#i!te!#!ce< th#t #! e*)lo%ee of
the co*)#!% ",)ervi"ed the o)er#tor #!d
co!d,cted )eriodic i!")ectio! of the co*)#!%8"
$#"oli!e #!d "ervice "t#tio!< th#t the )rice of the
)rod,ct" "old '% the o)er#tor &#" :ed '% the
co*)#!% #!d !ot '% the o)er#tor< #!d th#t he
&#" # *ere #$e!t+ the !di!$ of the Co,rt of
A))e#l" th#t the o)er#tor &#" #! #$e!t of the
co*)#!% #!d !ot #! i!de)e!de!t co!tr#ctor
"ho,ld !ot 'e di"t,r'ed. Shell Co. v. $ire'en6s
Insurance of )e&ar/+ 144 Ihil. 5/5 31;/56.
,4- from Contract of Sale
H!der Article 1266 of the Civil Code+ (-i.!
co!"tr,i!$ # co!tr#ct co!t#i!i!$ )rovi"io!"
ch#r#cteri"tic of 'oth the co!tr#ct of "#le #!d of
the co!tr#ct of #$e!c% to "ell+ the e""e!ti#l
cl#,"e" of the &hole i!"tr,*e!t "h#ll 'e
co!"idered.( J,ri")r,de!ce h#" i!dic#ted &h#t the
12
(e""e!ti#l cl#,"e"( th#t "ho,ld i!dic#te &hether it
i" o!e of "#le or #$e!c% to "ellR),rch#"e+ refer" to
"ti),l#tio!" i! the co!tr#ct &hich )l#ce" o'li$#tio!
"o! the )#rt of the ),r)orted (#$e!t( h#vi!$ to do
&ith &h#t "ho,ld 'e # "eller8 o'li$#tio! to tr#!"fer
o&!er"hi) #!d deliver )o""e""io! of the ",'Eect
*#tter+ or the ',%er8" o'li$#tio! o! the )#%*e!t
of the )rice.
I! 2uiroga v. (arsons+ ?8 Ihil. /41 31;186+
#ltho,$h the )#rtie" de"i$!#ted the #rr#!$e*e!t
#" #! #$e!c% #$ree*e!t+ the Co,rt fo,!d the
#rr#!$e*e!t to 'e o!e of "#le "i!ce the e""e!ti#l
cl#,"e )rovided th#t (-).#%*e!t &#" to 'e *#de
#t the e!d of "i:t% d#%"+ or 'efore+ #t the
-)ri!ci)#l8". reB,e"t+ or i! c#"h+ if the -#$e!t. "o
)referred+ #!d i! the"e l#"t t&o c#"e" #!
#dditio!#l di"co,!t &#" to 'e #llo&ed for )ro*)t
)#%*e!t.( The"e co!ditio!" to the Co,rt &ere
()reci"el% the e""e!ti#l fe#t,re" of # co!tr#ct of
),rch#"e #!d "#le( 'ec#,"e there &#" the
o'li$#tio! o! the )#rt of the ),r)orted )ri!ci)#l to
",))l% the 'ed"+ #!d+ o! the )#rt of the ),r)orted
#$e!t+ to )#% their )rice+ th,"D
The"e fe#t,re" e:cl,de the le$#l co!ce)tio!
of #! #$e!c% or order to "ell &here'% the
*#!d#tor% or #$e!t received the thi!$ to "ell it+
#!d doe" !ot )#% it" )rice+ ',t deliver" to the
)ri!ci)#l the )rice he o't#i!" fro* the "#le of the
thi!$ to # third )er"o!+ #!d if he doe" !ot ",cceed
i! "elli!$ it+ he ret,r!" it. B% virt,e of the co!tr#ct
'et&ee! the )l#i!ti= #!d the defe!d#!t+ the
l#tter+ o! receivi!$ the 'ed"+ &#" !ece""#ril%
o'li$ed to )#% their )rice &ithi! the ter* :ed+
&itho,t #!% other co!"ider#tio! #!d re$#rdle"" #"
to &hether he h#d or h#d !ot "old the 'ed". 3#t ).
/4/6
A" # co!"eB,e!ce+ the (revoc#tio!( "o,$ht
to 'e *#de '% the )ri!ci)#l o! the ),r)orted
#$e!c% #rr#!$e*e!t &#" de!ied '% the Co,rt+ the
rel#tio!"hi) 'ei!$ o!e of "#le+ #!d the )o&er to
re"ci!d i" #v#il#'le o!l% &he! the ),r)orted
)ri!ci)#l i" #'le to "ho& ",'"t#!ti#l 're#ch o! the
)#rt of the ),r)orted #$e!t.
Ahe! the ter*" of the #$ree*e!t co*)el"
the ),r)orted #$e!t to )#% for the )rod,ct"
received fro* the ),r)orted )ri!ci)#l &ithi! the
"ti),l#ted )eriod+ eve! &he! there h#" 'ee! !o
"#le thereof to the ),'lic+ the ,!derl%i!$
rel#tio!"hi) i" !ot o!e of co!tr#ct of #$e!c% to
"ell+ ',t o!e of #ct,#l "#le. A re#l #$e!t doe" !ot
#"",*e )er"o!#l re")o!"i'ilit% for the )#%*e!t of
the )rice of the o'Eect of the #$e!c%< hi"
o'li$#tio! i" *erel% to t,r!7over to the )ri!ci)#l
the )roceed" of the "#le o!ce he receive" the*
fro* the ',%er. Co!"eB,e!tl%+ "i!ce the
,!derl%i!$ #$ree*e!t i" !ot #! #$e!c%
#$ree*e!t+ it c#!!ot 'e revo9ed e:ce)t for c#,"e.
2uiroga v. (arsons+ ?8 Ihil /40 31;186.
I! +onzalo (u-at & Sons, Inc. v. Arco
A'use'ent Co'pan-+ 50 Ihil. 240 31;216+ &hich
covered # ),r)orted #$e!c% co!tr#ct to ),rch#"e+
1/
the Co,rt loo9ed i!to the )rovi"io!" of their
co!tr#ct+ #!d fo,!d th#t the letter" 'et&ee! the
)#rtie" cle#rl% "ti),l#ted for :ed )rice" o! the
eB,i)*e!t ordered+ &hich (#d*itted !o other
i!ter)ret#tio! th#! th#t the -)ri!ci)#l. #$reed to
),rch#"e fro* the -#$e!t. the eB,i)*e!t i!
B,e"tio! #t the )rice" i!dic#ted &hich #re :ed
#!d deter*i!#te.( 3#t ). 2456. The Co,rt held th#t
(&h#tever ,!fore"ee! eve!t" *i$ht h#ve t#9e!
)l#ce ,!f#vor#'le to the -#$e!t.+ ",ch #" ch#!$e
i! )rice"+ *i"t#9e i! their B,ot#tio!+ lo"" of the
$ood" !ot covered '% i!",r#!ce or f#il,re of the
1t#rr Ii#!o Co*)#!% to )ro)erl% ll the order" #"
)er ")ecic#tio!"+ the -)ri!ci)#l. *i$ht "till le$#ll%
hold the -#$e!t. to the )rice" :ed.( 3#t ). 2456.
Co!"eB,e!tl%+ the de*#!d '% the ),r)orted
)ri!ci)#l of #ll di"co,!t" #!d 'e!et" o't#i!ed '%
the ),r)orted #$e!t fro* the A*eric#! ",))lier"
,!der the theor% th#t #ll 'e!et" received '% the
#$e!t ,!der the tr#!"#ctio!" &ere to 'e
#cco,!ted for the 'e!et of the )ri!ci)#l &#"
de!ied '% the co,rt+ the ,!derl%i!$ rel#tio!"hi)
'ei!$ e""e!ti#ll% # co!tr#ct of ),rch#"e.
Ahe! ,!der the ter*" of the #$ree*e!t+ the
),r)orted #$e!t 'eco*e" re")o!"i'le for #!%
ch#!$e" i! the #cB,i"itio! co"t of the o'Eect he
h#" 'ee! #,thori>ed to ),rch#"e fro* # ",))lier
i! the H!ited 1t#te"+ the ,!derl%i!$ #$ree*e!t i"
!ot #! co!tr#ct of #$e!c% to ',%+ "i!ce #! #$e!t
doe" !ot 'e#r #!% ri"9 rel#ti!$ to the ",'Eect
*#tter or the )rice. Bei!$ tr,l% # co!tr#ct of "#le+
#!% )rot" re#li>ed '% the ),r)orted #$e!t fro*
di"co,!t" received fro* the A*eric#! ",))lier+
)ert#i! to it &ith !o o'li$#tio! to #cco,!t for it+
*,ch le"" to t,r! it over+ to the ),r)orted
)ri!ci)#l. +onzalo (u-at v. Arco+ 50 Ihil. 240
31;216. Reiterated in $ar Eastern E,port & I'port
Co., v. i' Tech Suan+ ;5 Ihil. 151 31;//6.
I! %er & Co., td. v. ingad+ ?8 1CRA /02
31;516+ coveri!$ # co!tr#ct of di"tri',tor"hi)+ it
&#" ")ecic#ll% "ti),l#ted i! the co!tr#ct th#t (#ll
$ood" o! co!"i$!*e!t "h#ll re*#i! the )ro)ert%
of the Co*)#!% ,!til "old '% the Di"tri',tor to the
),rch#"er or ),rch#"er"+ ',t #ll "#le" *#de '% the
Di"tri',tor "h#ll 'e i! hi" !#*e<( #!d th#t the
Co*)#!% (#t it" o&! e:)e!"e+ &#" to 9ee) the
co!"i$!ed "toc9 f,ll% i!",red #$#i!"t lo"" or
d#*#$e '% re or #" # re",lt of re+ the )olic% of
",ch i!",r#!ce to 'e )#%#'le to it i! the eve!t of
lo"".( It &#" f,rther "ti),l#ted th#t the co!tr#ct
(doe" !ot co!"tit,te the Di"tri',tor the #$e!t or
le$#l re)re"e!t#tive of the Co*)#!% for #!%
),r)o"e &h#t"oever. Di"tri',tor i" !ot $r#!ted
#!% ri$ht or #,thorit% to #"",*e or to cre#te #!%
o'li$#tio! or re")o!"i'ilit%+ e:)re"" or i*)lied i!
'eh#lf of or i! the !#*e of the Co*)#!%+ or to
'i!d the Co*)#!% i! #!% *#!!er or thi!$
&h#t"oever.( I! ")ite of ",ch "ti),l#tio!"+ the
Co,rt did !d the rel#tio!"hi) to 'e o!e of
#$e!c%+ 'ec#,"e it did !ot tr#!"fe2r o&!er"hi) of
the *erch#!di"e to the ),r)orted di"tri',tor+
eve! tho,$h it &#" ",))o"ed to e!ter i!to "#le"
#$ree*e!t" i! the Ihili))i!e" i! it" o&! !#*e+
th,"D
16
The tr#!"fer of title or #$ree*e!t to tr#!"fer
it for # )rice )#id or )ro*i"ed i" the e""e!ce of
"#le. If ",ch tr#!"fer ),t" the tr#!"feree i! the
#ttit,de or )o"itio! of #! o&!er #!d *#9e" hi*
li#'le to the tr#!"feror #" # de'tor for the #$reed
)rice+ #!d !ot *erel% #" #! #$e!t &ho *,"t
#cco,!t for the )roceed" of # re"#le+ the
tr#!"#ctio! i" # "#le< &hile the e""e!ce of #!
#$e!c% to "ell i" the deliver% to #! #$e!t+ !ot #"
hi" )ro)ert%+ ',t #" the )ro)ert% of the )ri!ci)#l+
&ho re*#i!" the o&!er #!d h#" the ri$ht to
co!trol the "#le+ : the )rice+ #!d ter*"+ de*#!d
#!d receive the )roceed" le"" the #$e!t8"
co**i""io! ,)o! "#le" *#de. 3#t ). /?46
I! 0ictoria .illing Co., Inc. v. Court of
Appeals+ ??? 1CRA 66? 304446+ the Co,rt held
th#t #! #,thori>#tio! $ive! to the ',%er of $ood"
to o't#i! the* fro* the '#ilee (for #!d i! 'eh#lf(
of the '#ilor7"eller doe" !ot !ece""#ril% e"t#'li"h
#! #$e!c%+ "i!ce the i!te!tio! of the )#rtie" &#"
for the ',%er to t#9e )o""e""io! #!d o&!er"hi)
over the $ood" &ith the deci"ive l#!$,#$e i! the
#,thori>#tio! 'ei!$ ("old #!d e!dor"ed.(
A" # $e!er#l r,le+ #! #$e!c% to "ell o!
co**i""io! '#"i" doe" !ot 'elo!$ to #!% of the
co!tr#ct" covered '% Article" 1?/5 #!d 1?/8
reB,iri!$ the* to 'e i! # )#rtic,l#r for*+ #!d !ot
o!e e!,*er#ted ,!der the 1t#t,te" of Fr#,d" i!
Article 124?. Je!ce+ ,!li9e # "#le co!tr#ct &hich
*,"t co*)l% &ith the 1t#t,te of Fr#,d" for
e!force#'ilit%+ # co!tr#ct of #$e!c% to "ell i" v#lid
#!d e!force#'le i! &h#tever for* it *#% 'e
e!tered i!to. i' v. Court of Appeals+ 0/2 1CRA
154 31;;66.
,5- rom +ro*er
A 'ro9er i" 'e"t de!ed i! Sch'id and
O4erl-, Inc. v. R" .artinez+ 166 1CRA 2;? 31;886+
&here the Co,rt held th#t # 'ro9er i" (o!e &ho i"
e!$#$ed+ for other"+ o! # co**i""io!+ !e$oti#ti!$
co!tr#ct" rel#tive to )ro)ert% &ith the c,"tod% of
&hich he h#" !o co!cer!< the !e$oti#tor 'et&ee!
other )#rtie"+ !ever #cti!$ i! hi" o&! !#*e ',t i!
the !#*e of tho"e &ho e*)lo%ed hi*. . . . #
'ro9er i" o!e &ho"e occ,)#tio! i" to 'ri!$ the
)#rtie" to$ether+ i! *#tter" of tr#de+ co**erce or
!#vi$#tio!.( 3#t ). /416
H!li9e #! #$e!t &ho *,"t #ct i! the !#*e of
the )ri!ci)#l+ # 'ro9er i" o!e &ho i" e!$#$ed for
other" o! # co**i""io! to !e$oti#te 'et&ee!
other )#rtie"+ !ever #cti!$ i! hi" o&! !#*e ',t i!
the !#*e of tho"e &ho e*)lo%ed hi*. Re-es v.
Rural *an/ of San .iguel+ 202 1CRA 1?/ 304426.
Je h#" !o rel#tio! &ith the thi!$ he h#" 'ee!
ret#i!ed to ',% or to "ell< he i" *erel% #!
i!ter*edi#r% 'et&ee! the ),rch#"er #!d the
ve!dor. Je #cB,ire" !either the c,"tod% !or the
)o""e""io! of the thi!$ he "ell". Ji" o!l% o@ce i"
to 'ri!$ to$ether the )#rtie" to the tr#!"#ctio!.
(aci7c Co''ercial Co. v. 8atco+ 6? Ihil. ?;8
31;?66.
15
A 'ro9er *#% #t the "#*e ti*e 'e #! #$e!t.
Ahe! he #ct" i! hi" 'eh#lf i! de#li!$ &ith the
),'lic+ eve! &he! he h#!dle" thi!$" )ert#i!i!$ to
the )ri!ci)#l+ he i" # *ere 'ro9er. O! the other
h#!d+ if he i" d,l% #,thori>ed to #ct i! the !#*e of
the )ri!ci)#l+ there i" !o do,'t th#t the 'ro9er i"
#l"o #! #$e!t. Th,"+ i! A4acus Securities Corp. v.
A'pil, 28? 1CRA ?1/ 304466+ it &#" held th#t
"i!ce i! th#t c#"e the 'ro9er#$e rel#tio!"hi) &#"
!ece""#r% # co!tr#ct for the e*)lo%*e!t of #!
#$e!t+ )ri!ci)le" of co!tr#ct l#& #l"o $over! the
'ro9er7)ri!ci)#l rel#tio!"hi).
I! the "#*e *#!!er+ i! #o'ingo v.
#o'ingo+ 20 1CRA 1?1 31;516+ the Co,rt held th#t
the d,tie" #!d li#'ilitie" of # 'ro9er to hi"
e*)lo%er #re e""e!ti#ll% tho"e &hich #! #$e!t
o&e" to hi" )ri!ci)#l. I! ",ch # "it,#tio!+ the
deci"ive le$#l )rovi"io!" -to deter*i!e &hether #
'ro9er h#" viol#ted hi" d,t% or o'li$#tio!. #re
fo,!d i! Article" 18;1 #!d 1;4; of the Ne& Civil
Code+ &here'% ever% #$e!t i" 'o,!d to re!der #!
#cco,!t of hi" tr#!"#ctio!" #!d to deliver to the
)ri!ci)#l &h#tever he *#% h#ve received '%
virt,e of the #$e!c%+ eve! tho,$h it *#% !ot 'e
o&!i!$ to the )ri!ci)#l< #!d th#t #! #$e!t i"
re")o!"i'le !ot o!l% for fr#,d+ ',t #l"o for
!e$li$e!ce
.-14
O! the other h#!d+ the Co,rt #l"o
held i! #o'ingo th#t (-t.he d,t% e*'odied i!
Article 18;1 of the Ne& Civil Code &ill !ot #))l% if
the #$e!t or 'ro9er #cted o!l% #" # *iddle*#!
&ith the t#"9 of *erel% 'ri!$i!$ to$ether the
ve!dor #!d ve!dee+ &ho the*"elve" there#fter
&ill !e$oti#te o! the ter*" #!d co!ditio!" of the
tr#!"#ctio!.( 3#t ). 1246
+ro*er ,as No "uthority -o 'nter into
Contract in the Name of the Principal$ 33 I!
iton!ua, "r. v. Eternit Corp., 2;4 1CRA 042 304466+
it &#" held th#t # re#l e"t#te 'ro9er i" o!e &ho
!e$oti#te" the "#le of re#l )ro)ertie". Ji"
',"i!e""+ $e!er#ll% ")e#9i!$+ i" o!l% to !d #
),rch#"er &ho i" &illi!$ to ',% the l#!d ,)o!
ter*" :ed '% the o&!er. Je h#" !o #,thorit% to
'i!d the )ri!ci)#l '% "i$!i!$ # co!tr#ct of "#le.
I!deed+ #! #,thorit% to !d # ),rch#"er of re#l
)ro)ert% doe" !ot i!cl,de #! #,thorit% to "ell.
Th,"+ &he! the "eller hi*"elf clo"e" the "#le &ith
the ),rch#"er loc#ted '% the 'ro9er+ the "eller i"
'o,!d to )#% the co**i""io! he h#" co!tr#cted
&ith the 'ro9er for *erel% !di!$ the ',%er.
+ro*er .s Not /egally .ncapacityaa to
Purchase Property of the Principal$ 33 I!
Araneta, Inc. v. #el (aterno+ ;1 Ihil. 586 31;/06+ it
&#" held th#t the '#! of )#r#$r#)h 0 of -Article
12;1. &he! re!der" #! #$e!t le$#ll% i!c#)#'le of
',%i!$ the )ro)ertie" of hi" )ri!ci)#l co!!ote" the
ide# of tr,"t #!d (co!de!ce< #!d "o &here the
rel#tio!"hi) doe" !ot i!volve co!"ider#tio!" of
$ood f#ith #!d i!te$rit% the )rohi'itio! "ho,ld !ot
#!d doe" !ot #))l%. To co*e ,!der the )rohi'itio!+
the #$e!t *,"t 'e i! # d,ci#r% rel#tio! &ith hi"
)ri!ci)#l.( The Co,rt held th#t # 'ro9er doe" !ot
co*e &ithi! the *e#!i!$ of Article 12;0+ 'ec#,"e
he i" !othi!$ *ore th#! # $o7'et&ee! or
18
*iddle*#! 'et&ee! the defe!d#!t #!d the
),rch#"er+ 'ri!$i!$ the* to$ether to *#9e the
co!tr#ct the*"elve". There i" !o co!de!ce to 'e
'etr#%ed+ "i!ce # 'ro9er i" !ot #,thori>ed to *#9e
# 'i!di!$ co!tr#ct for the ),r)orted )ri!ci)#l< he
i" !ot "ell the )ro)ert%+ ',t o!l% to loo9 for #
',%er #!d the o&!er i" to *#9e the "#le< he &#"
!ot to : the )rice of the "#le 'ec#,"e the )rice
h#d to 'e #lre#d% :ed i! hi" co**i""io!< he i"
!ot to *#9e the ter*" of )#%*e!t 'ec#,"e the"e+
too+ &o,ld 'e cle#rl% ")ecied i! hi" co**i""io!.
I! !e+ # 'ro9er i" left !o )o&er or di"cretio!
&h#t"oever+ &hich he co,ld #',"e to hi"
#dv#!t#$e #!d to the o&!erKLQ" )reE,dice.
'ntitlement to Commission. 77 I! B,ite #
!,*'er of deci"io!"+ the Co,rt h#" held th#t the
deter*i!#tio! of &hether o!e i" #! #$e!t or #
'ro9er co!"tit,te" # critic#l f#ctor of &hether he
&o,ld 'e e!titled to the co**i""io! "ti),l#ted i!
the co!tr#ct.
Th,"+ i! Tan v. +ullas+ ?;? 1CRA ??2 304406+
B,oti!$ fro* Sch'id & O4erl-, Inc. v. R" .artinez
$ishing Corp.+ 166 1CRA 2;? 31;886+ it de!ed #
('ro9er( #" (o!e &ho i" e!$#$ed+ for other"+ o! #
co**i""io!+ !e$oti#ti!$ co!tr#ct" rel#tive to
)ro)ert% &ith the c,tod% of &hich he h#" !o
co!cer!< the !e$oti#tor 'et&ee! other )#rtie"+
!ever #cti!$ i! hi" o&! !#*e ',t i! the !#*e of
tho"e &ho e*)lo%ed hi*. : : : # 'ro9er i" o!e
&ho"e occ,)#tio! i" to 4ring the parties together+
i! *#tter" of tr#de+ co**erce or !#vi$#tio!.( 3#t
). ??;6 The Co,rt the! held th#t (A! agent
receive" # co**i""io! ,)o! the ",cce""f,l
co!cl,"io! of # "#le. O! the other h#!d+ # 4ro/er
e#r!" hi" )#% 'erel- 4- 4ringing the 4u-er and
the seller together+ eve! if !o "#le i" eve!t,#ll%
*#de.( . . . Cle#rl%+ therefore+ )etitio!er"+ #"
'ro9er"+ "ho,ld 'e e!titled to the co**i""io!
&hether or !ot the "#le of the )ro)ert% ",'Eect
*#tter of the co!tr#ct &#" co!cl,ded thro,$h
their e=ort".( 3#t ). ?216.
I! (hil. Health3care (roviders 9.a,icare: v.
Estrada, /20 1CRA 616 304486+ the Co,rt held th#t
the ter* ()roc,ri!$ c#,"e( i! de"cri'i!$ #
'ro9er8" #ctivit%+ refer" to # c#,"e originating #
"erie" of eve!t" &hich+ &itho,t 're#9 i! their
co!ti!,it%+ re",lt i! the #cco*)li"h*e!t of the
)ri*e o'Eective of the e*)lo%*e!t of the 'ro9er77
)rod,ci!$ # ),rch#"er re#d%+ &illi!$ #!d #'le to
',% o! the o&!er8" ter*". To 'e re$#rded #" the
()roc,ri!$ c#,"e( of # "#le #" to 'e e!titled to #
co**i""io!+ # 'ro9er8" e=ort" *,"t h#ve 'ee! the
fo,!d#tio! o! &hich the !e$oti#tio!" re",lti!$ i!
# "#le 'e$#!.
Fro* deci"io!" of the 1,)re*e Co,rt+ it
"ee*" th#t the #rr#!$e*e!t o! e!title*e!t to
co**i""io! deter*i!e" &hether the rel#tio!"hi)
i" o!e of 'ro9er or #$e!c%. Th,"+ i! Hahn v. Court
of Appeals+ 066 1CRA /?5 31;;56+ the Co,rt held
th#t (Co!tr#r% to the #))ell#te co,rt8" co!cl,"io!+
thi" #rr#!$e*e!t "ho&" #! #$e!c%. A! #$e!t
receive" # co**i""io! ,)o! the ",cce""f,l
1;
co!cl,"io! of # "#le. O! the other h#!d+ # 'ro9er
e#r!" hi" )#% *erel% '% 'ri!$i!$ the ',%er #!d
the "eller to$ether+ eve! if !o "#le i" eve!t,#ll%
*#de.( 3#t ). /2;6
B,t tr,l%+ "i!ce 'oth # 'ro9er#$e
#rr#!$e*e!t #!d #! #$e!c% #$ree*e!t #re
i!here!tl% co!tr#ct,#l rel#tio!"+ the e!title*e!t of
# 'ro9er or #$e!t to the co*)e!"#tio! or
co**i""io! "ti),l#ted &o,ld h#ve to de)e!d
,)o! the co!tr#ct,#l cl#,"e coveri!$ the "#*e. I!
other &ord"+ it *#% &ell 'e "ti),l#ted i! # tr,e
'ro9er#$e #rr#!$e*e!t th#t the 'ro9er &o,ld 'e
e!titled to # co**i""io! o!l% &he! # "#le i"
eve!t,#ll% *#de. I! the "#*e *#!!er+ the #$e!c%
co!tr#ct *#% &ell "ti),l#te th#t the #$e!t "h#ll 'e
e!titled to e#r! co**i""io! '% *erel% 'ri!$i!$
the ',%er #!d the "eller to$ether+ eve! &he! the
#ct,#l "#le of the )er"o! referred to '% the #$e!t
h#))e!" lo!$ #fter the #$e!c% rel#tio!"hi) h#"
ter*i!#ted.
To ill,"tr#te+ i! +uarde, v. )RC+ 1;1 1CRA
285 31;;46+ the Co,rt held th#t &he! the ter*" of
the #$e!c% #rr#!$e*e!t i" to the e=ect th#t
e!title*e!t to the co**i""io! &#" co!ti!$e!t o!
the ),rch#"e '% # c,"to*er of # re tr,c9+ the
i*)licit co!ditio! 'ei!$ th#t the #$e!t &o,ld e#r!
the co**i""io! if he &#" i!"tr,*e!t#l i! 'ri!$i!$
the "#le #'o,t. 1i!ce the #$e!t h#d !othi!$ to do
&ith the "#le of the re tr,c9+ #!d i" !ot therefore
e!titled to #!% co**i""io! #t #ll.
Altho,$h Sch'id & O4erl-, Inc. i" !o&
credited &ith l#%i!$ do&! the de!itio! of #
'ro9er+ the deci"io! "ho&" th#t it B,oted fro* the
e#rl% deci"io! of *ehn, .e-er and Co., td. v.
)olting and +arcia + ?/ Ihil. 052 31;166+
&here the Co,rt held 77
(A 4ro/er i" $e!er#ll% de!ed #" o!e &ho
i" e!$#$ed+ for other"+ o! # co**i""io!+
!e$oti#ti!$ co!tr#ct" rel#tive to )ro)ert% &ith the
c,"tod% of &hich he h#" !o co!cer!< the
!e$oti#tio! 'et&ee! other )#rtie"+ !ever #cti!$ i!
hi" o&! !#*e ',t i! the !#*e of tho"e &ho
e*)lo%ed hi*< he i" "trictl% # *iddle*#! #!d for
"o*e ),r)o"e the #$e!t of 'oth )#rtie". 31; C%c.+
186< Je!der"o! v". The 1t#te+ /4 I!d.+ 0?2<
B#lc98" F#& Dictio!#r%.6 A 'ro9er i" o!e &ho"e
occ,)#tio! it i" to 'ri!$ )#rtie" to$ether to
'#r$#i!+ or to '#r$#i! for the*+ i! *#tter" of
tr#de+ co**erce or !#vi$#tio!. 3Geche* o!
A$e!c%+ "ec. 1?< Ah#rto! o! A$e!c%+ "ec. 6;/6.
J,d$e 1tore%+ i! hi" &or9 o! A$e!c%+ de!e" #
'ro9er #" #! #$e!t e*)lo%ed to *#9e '#r$#i!"
#!d co!tr#ct" 'et&ee! other )er"o!"+ i! *#tter"
of tr#de+ co**erce or !#vi$#tio!+ for
co*)e!"#tio! co**o!l% c#lled 'ro9er#$e.
31tore% o! A$e!c%+ "ec. 086( 3#t ). 05;70846
Note therefore th#t ('ro9er( i" co!"idered #
co**erci#l ter* for # )er"o! e!$#$ed #" #
*iddle*#! to 'ri!$ )#rtie" to$ether i! *#tter"
)ert#i!i!$ to tr#de+ co**erce or !#vi$#tio!. If
the )er"o! h#" !ot 'ee! $ive! the )o&er to e!ter
04
i!to the co!tr#ct or co**erce i! 'eh#lf of the
)#rtie"+ the! he i" # ('ro9er( i! the "e!"e th#t hi"
Eo' *#i!l% i" (to 'ri!$ )#rtie" to$ether to
'#r$#i!+( #!d eve! the! he *#% !ot 'e e!titled to
hi" co**i""io! if the '#r$#i!i!$ 'et&ee! the
)#rtie" doe" !ot re",lt i! # co!tr#ct 'ei!$
)erfected. B,t i! thi" "e!"e+ the 'ro9er doe" !ot
#"",*e the role of #! #$e!t 'ec#,"e he h#" !o
)o&er to e!ter i!to # co!tr#ct i! 'eh#lf of #!% of
the )#rtie"< he #l"o #"",*e" !o d,ci#r%
o'li$#tio!" to either or 'oth )#rtie"+ "i!ce the%
#re e:)ected to ,"e their o&! E,d$*e!t i!
decidi!$ to 'i!d or !ot to 'i!d the*"elve" to #
co!tr#ct.
O! the other h#!d+ if the )er"o! h#" 'ee!
$ive! the )o&er to e!ter i!to # co!tr#ct or
co**erce o! 'eh#lf of #!%+ or eve! for 'oth the
)#rtie"+ he i" tr,l% # 'ro9er #!d #! #$e!t. I! &hich
c#"e+ he #"",*e" d,ci#r% o'li$#tio!" to the
)er"o! &ho i" therefore le$#ll% hi" )ri!ci)#l. I!
",ch c#"e+ he i" e!titled to # co**i""io! if hi"
e=ort" 3i.e.+ the "ervice" he re!dered6 &here the
e@cie!t c#,"e for the eve!t,#l )erfectio! #!d
co!",**#tio! of the co!tr#ct th#t &#" the o'Eect
for #))oi!ti!$ hi* 'ro9erR#$e!t.
Re/ate. Ca$e$6
Chua )go v. 5niversal Trading Co., Inc.+ 85 Ihil.
??1 31;/46.
$ar Eastern E,port & I'port Co. v. i' Tech Suan+
;5 Ihil. 151 31;//6.
(earl Island Co''ercial Corp. v. i' Tan Tong+
141 Ihil. 58; 31;/56.
)ational Rice and Corn Corp. v. Court of Appeals+
;1 1CRA 2?5 31;5;6.

-1.See Che'phil E,port v. Court of Appeals+ 0/1 1CRA 015 31;;/6<
Shopper6s (aradise Realt- v. Ro1ue+ 21; 1CRA ;? 304426<
#o'inion Insurance Corp. v. Court of Appeals+ 206 1CRA 604+ 606
304406< Repu4lic v. Evangelista+ 266 1CRA /22 3044/6< iton!ua, "r.
v. Eternit Corp., 2;4 1CRA 042 304466< Eurotech Industrial
Technologies, Inc. v. Cuizon, /01 1CRA /82 304456.
-0.Citing Orient Air Services and Hotel Representatives v. Court of
Appeals+ 052 Ihil. ;05+ ;?; 31;;16.
-?.DE FEON AND DE FEON+ COGGENT AND CA1E1 ON IARTNER1JII AGENCY
AND TRH1T1+ 044/ ed.+ #t ). ?/6< herei!#fter referred to #" (DE
FEON1(.
-2.Reiterated in Eurotech Industrial Technologies, Inc. v. Cuizon+
/01 1CRA /82 304456.
-/.See also iton!ua, "r. v. Eternit Corp., 2;4 1CRA 042 304466.
-6.Citing *ordador v. uz+ 08? 1CRA ?52+ ?80 31;;56.
01
-5.RO1COE T. 1TEFFEN+ AGENCY7 IARTNER1JII IN A NHT1JEFF
31;556 ?47?1.
-8.Reiterated in iton!ua, "r. v. Eternit Corp., 2;4 1CRA 042 304466.
-;.2uoting fro' Re%e" #!d I,!o+ (A! O,tli!e of Ihili))i!e Civil
F#&+( Vol. V+ ). 055.
-14.Citing 10 A*. J,r. 0d 8?/< 1?2 AFR 1?26< 1 AFR 0d ;85< *ro&n
vs. Coates+ 65 AFR 0d ;2?< Ha-'es vs. Rogers+ 15 AFR 0d 8;6<
.oore vs. Turner+ ?0 AFR 0d 51?.
IO1TED BY De#! Ce"#r F. Vill#!,ev# AT 8R40R0448
?D0/ AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
II. FORG RETHIRED FOR CONTRACT1 OF AGENCY

2. Fo"0$ Re7!i"e. o( A)en&*
a. 8o9 A)en&* Ma* Be Con$tit!te.
Article 186; e*)h#"i>e" the consensual
nature of the co!tr#ct of #$e!c%D (A$e!c% *#% 'e
e:)re""+ or i*)lied fro* the #ct" of the )ri!ci)#l+
fro* hi" "ile!ce or l#c9 of #ctio!+ or hi" f#il,re to
re),di#te the #$e!c%+ 9!o&i!$ th#t #!other
)er"o! i" #cti!$ o! hi" 'eh#lf &itho,t #,thorit%.
A$e!c% *#% 'e or#l+ ,!le"" the l#& reB,ire" #
")ecic for*.(
I! E1uita4le (CI3*an/ v. %u+ ?// 1CRA ?4;
304416+ it &#" held th#t #! #$e!c% *#% 'e
e:)re"" ',t it *#% #l"o 'e i*)lied fro* the #ct"
of the )ri!ci)#l+ fro* hi" "ile!ce+ or l#c9 of #ctio!
or hi" f#il,re to re),di#te the #$e!c% 9!o&i!$ th#t
#!other )er"o! i" #cti!$ o! hi" 'eh#lf &itho,t
#,thorit%. Fi9e&i"e+ #cce)t#!ce '% the #$e!t *#%
#l"o 'e e:)re""+ #ltho,$h it *#% #l"o 'e i*)lied
fro* hi" #ct" &hich c#rr% o,t the #$e!c%+ or fro*
hi" "ile!ce or i!#ctio! #ccordi!$ to the
circ,*"t#!ce". Th,"+ &he! # l#& r* #llo&ed the
e*)lo%ee of it" clie!t to occ#"io!#ll% receive it"
*#il+ #!d !ot h#vi!$ for*#ll% o'Eected to the
recei)t '% "#id e*)lo%ee of # co,rt )roce""+ or
t#9e! #!% "te)" to ),t # "to) to it+ *e#!t th#t #!
#$e!c% rel#tio!"hi) h#d 'ee! e"t#'li"hed+ to
&hich recei)t of the co,rt )roce"" '% "#id
e*)lo%ee &#" le$#ll% dee*ed to 'e "ervice to the
l#& r*.
I! i' v. Court of Appeals+ 0/2 1CRA 154
31;;66+ the Co,rt !oted th#t there #re "o*e
)rovi"io!" of l#& &hich reB,ire cert#i! for*#litie"
for )#rtic,l#r co!tr#ctD the r"t i" &he! the for* i"
reB,ired for the v#lidit% of the co!tr#ct< the
"eco!d i" &he! it i" reB,ired to *#9e the co!tr#ct
e=ective #" #$#i!"t third )#rtie" ",ch #" tho"e
*e!tio!ed i! Article 1?/5 #!d 1?/8 of the Civil
Code< #!d the third i" &he! the for* i" reB,ired
for the ),r)o"e of )rovi!$ the e:i"te!ce of the
00
co!tr#ct+ ",ch #" tho"e )rovide i! the 1t#t,te of
Fr#,d" i! Article 124?. 1i!ce # co!tr#ct of #$e!c%
to "ell )iece" of Ee&elr% o! co**i""io! doe" !ot
f#ll i!to #!% of the three c#te$orie"+ it &#"
co!"idered v#lid #!d e!force#'le i! &h#tever
for* it *#% h#ve 'ee! e!tered i!to.
,1- rom the Side of the Principal
O! the "ide of the )ri!ci)#l+ Article 186; of
the Civil Code )rovide" th#t #! #$e!c% i" i*)liedl%
co!"tit,ted 3i.e., )ri!ci)#l h#" $ive! hi" co!"e!t to
the #$e!c% #rr#!$e*e!t6 fro* hi" #ct" for*#ll%
#do)ti!$ it+ or fro* hi" "ile!ce or i!#ctio!+ or
)#rtic,l#rl% fro* hi" f#il,re to re),di#te the
#$e!c% 9!o&i!$ "o*eo!e i" #cti!$ i! hi" !#*e.
Cert#i!l%+ the ide#l for* '% &hich the )ri!ci)#l i"
dee*ed to h#ve e!tered i!to # co!tr#ct of #$e!c%
i" &he! he i"",e" # &ritte! )o&er of #ttor!e% to
the )er"o! de"i$!#ted #" #$e!t.
,2- rom the Side of the "gent
O! the "ide of the #$e!t+ Article 1854
)rovide" th#t hi" #cce)t#!ce of the #$e!c% 3i.e.,
#$e!t h#" $ive! hi" co!"e!t to the #$e!c%
#rr#!$e*e!t6 *#% 'e e:)re""ed+ or i*)lied fro*
hi" #ct" &hich c#rr% o,t the #$e!c%+ or fro* hi"
"ile!ce or i!#ctio! #ccordi!$ to the circ,*"t#!ce".
H!der Article 1851+ &hich de"cri'e" the
*o"t ide#l for* of )erfectio! of the co!tr#ct of
#$e!c%+ &he! the co!"tit,tio! of the #$e!c% i"
*#de &ith 'oth )ri!ci)#l #!d #$e!t 'ei!$
)h%"ic#ll% )re"e!t #t the ti*e of )erfectio! of the
co!tr#ct of #$e!c% 3i.e.+ (Bet&ee! )er"o!" &ho
#re )re"e!t(6+ the #cce)t#!ce of the #$e!c% *#%
'e i*)lied if the )ri!ci)#l deliver" hi" )o&er of
#ttor!e% to the #$e!t #!d the l#tter receive" it
&itho,t o'Eectio!.
O! the other h#!d+ ,!der Article 1850+ &he!
the co!"tit,tio! of the #$e!c% i" *#de &ith the
)ri!ci)#l #!d #$e!t !ot 'ei!$ )h%"ic#ll% )re"e!t i!
o!e )l#ce 3i.e.+ (Bet&ee! )er"o!" &ho #re
#'"e!t(6+ the! there c#! 'e !o i*)lied #cce)t#!ce
of the #$e!c% fro* the "ile!ce or i!#ctio! of the
#$e!t+ e:ce)t i! t&o i!"t#!ce"D
3#6 Ahe! the )ri!ci)#l trans'it hi" )o&er of
#ttor!e% to
the #$e!t 3i.e.+ it i" i! &riti!$U6+ &ho
receive" it &itho,t
#!% o'Eectio!< or
3'6 Ahe! the )ri!ci)#l e!tr,"t" to the #$e!t '%
letter or
tele$r#* # )o&er of #ttor!e% &ith respect to
the
4usiness in &hich he is ha4ituall- engaged as
an agent,
#!d he did !ot re)l% to the letter or tele$r#*.
The l#!$,#$e" ,"ed i! Article" 1851 #!d
1850 i!dic#te" th#t the ()o&er of #ttor!e%( *,"t
co!"tit,te # &ritte! i!"tr,*e!t"+ 'ec#,"e i! 'oth
0?
c#"e" the #rticle" refer to "it,#tio!" &here (the
)ri!ci)#l deliver" hi" )o&er of #ttor!e% to the
#$e!t+( #!d &he! (the )ri!ci)#l tr#!"*it" hi"
)o&er of #ttor!e% to the #$e!t+( &hich reB,ire"
th#t it *,"t 'e i! &riti!$+ &hich tod#% &o,ld
i!cl,de te:ti!$ #!d electro!ic *#il+ &hich #re
co!"idered to 'e eB,iv#le!t to # &ritte!
i!"tr,*e!t ,!der the Electro!ic Co**erce F#&.
Co!"eB,e!tl%+ &he! the other )rovi"io!" of the
F#& o! A$e!c% refer" to ($e!er#l )o&er of
#ttor!e%( #!d (")eci#l )o&er of #ttor!e%+( doe"
the l#& *e#! th#t the% co!for* to the
r,di*e!t#r% reB,ire*e!t th#t the% 'e i! &riti!$U
,3- rom the Side of -hird Parties0Public
The )revio," r,le" o! &he! # co!tr#ct of
#$e!c% i" dee*ed co!"tit,ted 3i.e., )erfected6 #re
t#9e! fro* the i!tr#*,r#l )oi!t of vie&D #"
'et&ee! the )#rtie" to the co!tr#ct of #$e!c%.
Jo&ever+ # co!tr#ct of #$e!c% i" *erel% #
)re)#r#tor% co!tr#ct+ #!d i" *e#!t to #chieve
$o#l" 'e%o!d it" o&! ('ei!$(< co!"eB,e!tl%+ the
F#& o! A$e!c% co!t#i!ed i! the Civil Code
)rovide" for #dditio!#l r,le th#t #ddre""e" *o"t
e""e!ti#ll% the t#r$et" of ever% co!tr#ct of
#$e!c%D the third )#rtie" i!te!ded to 'e
co!tr#cted &ith '% the #$e!t i! 'eh#lf of the
)ri!ci)#l.
H!der Article 185?+ &he! the )ri!ci)#l
i!for*" #!other )er"o! th#t he h#" $ive! # )o&er
of #ttor!e% to # third )er"o! 3the #$e!t6+ the l#tter
there'% 'eco*e" # d,l% #,thori>ed #$e!t &ith
re")ect to the )er"o! &ho received the ")eci#l
i!for*#tio!. The cle#r i*)lic#tio! i" th#t eve!
&he! i! f#ct there h#" 'ee! !o *eeti!$ of the
*i!d" 'et&ee! the ),r)orted )ri!ci)#l #!d #$e!t
3i.e.+ there i" "trictl% ")e#9i!$ !o co!tr#ct of
#$e!c%6+ there i" dee*ed to h#ve #ri"e! o!e &ith
re")ect to the third )#rt% &ho h#" 'ee! "o
i!for*ed '% the )ri!ci)#l.
O! the other h#!d+ &he! the )ri!ci)#l "t#te"
'% ),'lic #dverti"e*e!t th#t he h#" $ive! #
)o&er of #ttor!e% to # third )er"o! 3the #$e!t6+
the l#tter there'% 'eco*e" # d,l% #,thori>ed
#$e!t &ith re$#rd to #!% )er"o!.
It i" ")ecic#ll% )rovided i! "#id #rticle th#t
(-t.he )o&er -of the #$e!t. "h#ll co!ti!,e to 'e i!
f,ll force ,!til the !otice i" re"ci!ded i! the "#*e
*#!!er i! &hich it &#" $ive!.(
Th,"+ ,!der Article 1;01+ if the #$e!c% h#"
'ee! e!tr,"ted for the ),r)o"e of co!tr#cti!$ &ith
")ecic )er"o!" 3referred to #" (")eci#l #$e!c%(6+
the revoc#tio! of the #$e!c% "h#ll !ot )reE,dice
the l#tter if the% &ere !ot $ive! !otice thereof.
H!der Article 1;00+ if the #$e!t h#d 'ee! $r#!ted
$e!er#l )o&er" 3referred to #" ($e!er#l #$e!c%(6+
the revoc#tio! of the #$e!c% &ill !ot )reE,dice
third )er"o!" &ho #cted i! $ood f#ith #!d &itho,t
9!o&led$e of the revoc#tio!< ho&ever+ !otice of
the revoc#tio! i! # !e&")#)er of $e!er#l
02
circ,l#tio! co!"tit,te" ",@cie!t !otice to 'i!d
third )er"o!".
I! Rallos v. 8angco+ 04 Ihil 06; 31;116+ the
Co,rt held th#t # lo!$7"t#!di!$ clie!t+ #cti!$ i!
$ood f#ith #!d &itho,t 9!o&led$e+ h#vi!$ "e!t
$ood" to "ell o! co**i""io! to the for*er #$e!t
of the defe!d#!t+ co,ld recover fro* the
defe!d#!t+ &he! !o )revio," !otice of the
ter*i!#tio! of #$e!c% &#" $ive! "#id clie!t. The
Co,rt e*)h#"i>ed th#t h#vi!$ #dverti"ed the f#ct
th#t Coll#!te" &#" hi" #$e!t #!d h#vi!$ $ive!
")eci#l !otice to the )l#i!ti= of th#t f#ct+ #!d
h#vi!$ $ive! the* # ")eci#l i!vit#tio! to de#l &ith
",ch #$e!t+ it &#" the d,t% of the defe!d#!t o!
the ter*i!#tio! of the rel#tio!"hi) of )ri!ci)#l #!d
#$e!t to $ive d,e #!d ti*el% !otice thereof to the
)l#i!ti=". F#ili!$ to do "o+ the defe!d#!t &#"
held re")o!"i'le to the* for &h#tever $ood" *#%
h#ve 'ee! i! $ood f#ith #!d &itho,t !e$li$e!ce
"e!t to the #$e!t &itho,t 9!o&led$e+ #ct,#l or
co!"tr,ctive+ of the ter*i!#tio! of ",ch
rel#tio!"hi).
I! Conde v. Court of Appeals+ 11; 1CRA 02/
31;806+ the Co,rt held th#t &he! the ri$ht of
rede*)tio! '% "eller"7#7retro i" e:erci"ed '% their
"o!7i!7l#& &ho &#" $ive! !o e:)re"" #,thorit% to
do "o+ #!d the ',%er7#7retro #cce)ted the e:erci"e
#!d do!e !othi!$ for the !e:t te! %e#r" to cle#r
their title of the #!!ot#ted ri$ht of re),rch#"e o!
their title+ #!d )o""e""io! h#d 'ee! $ive! to the
"eller"7#7retro d,ri!$ the "#*e )eriod+ the! (#!
i*)lied #$e!c% *,"t 'e held to h#ve 'ee!
cre#ted fro* their "ile!ce or l#c9 of #ctio!+ or
their f#il,re to re),di#te the #$e!c%.(
,4- A)en&* Not "e$!0e. to E:i$t
Altho,$h #! #$e!c% co!tr#ct i" co!"e!",#l
i! !#t,re #!d $e!er#ll% reB,ire" !o for*#lit%+ the
Co,rt h#" "tre""ed th#t #! #$e!c% #rr#!$e*e!t i"
!ever )re",*ed. opez v. Tan Tioco+ 8 Ihil. 6;?
31;456 I! other &ord"+ the decl#r#tio! of o!e th#t
he i" #! #$e!t of #!other i" !ever to 'e #cce)ted
#t f#ce v#l,e. e:ce)t i! tho"e c#"e" &here #!
#$e!c% #ri"e" '% e:)re"" )rovi"io! of l#&.
Co'pania .ariti'a v. i'son+ 121 1CRA 245
31;866.
I! (eople v. 8a4ut, 56 1CRA 602 31;556+ it
&#" held th#t #ltho,$h the )erfectio! of #
co!tr#ct of #$e!c% *#% t#9e #! i*)lied for*+ the
e:i"te!ce of #! #$e!c% rel#tio!"hi) i" !ever
)re",*ed. The rel#tio!"hi) of )ri!ci)#l #!d #$e!t
c#!!ot 'e i!ferred fro* *ere f#*il% rel#tio!"hi)<
for the rel#tio! to e:i"t+ there *,"t 'e co!"e!t '%
'oth )#rtie". The l#& *#9e" !o )re",*)tio! of
#$e!c%< it *,"t e:i"t #" # f#ct.
-1.
I! Harr- E. %eeler Elec . Co. v. Rodriguez+
22 Ihil. 1; 31;006+ the Co,rt r,led th#t # third
)er"o! *,"t #ct &ith ordi!#r% )r,de!ce #!d
re#"o!#'le dili$e!ce to #"cert#i! &hether the
#$e!t i" #cti!$ #!d de#li!$ &ith hi* &ithi! the
"co)e of hi" )o&er". O'vio,"l%+ if he 9!o&" or h#"
0/
$ood re#"o! to 'elieve th#t the #$e!t i"
e:ceedi!$ hi" #,thorit%+ he c#!!ot cl#i*
)rotectio!. 1o+ if the ch#r#cter #"",*ed '% the
#$e!t i" of ",ch # ",")icio," or ,!re#"o!#'le
!#t,re+ or if the #,thorit% &hich he "ee9" i" of
",ch #! ,!,",#l or i*)ro'#'le ch#r#cter+ #"
&o,ld ",@ce to ),t #! ordi!#ril% )r,de!t *#!
,)o! hi" $,#rd+ the )#rt% de#li!$ &ith hi* *#%
!ot "h,t hi" e%e" to the re#l "t#te of the c#"e ',t
"ho,ld &ith#l ref,"e to de#l &ith the #$e!t #t #ll+
or "ho,ld #"cert#i! fro* the )ri!ci)#l the tr,e
co!ditio! of #=#ir".
I! *ordador v. uz+ 08? 1CRA ?52 31;;56+
the Co,rt held th#t (The '#"i" for #$e!c% i"
re)re"e!t#tio!. Jere+ there i" !o "ho&i!$ th#t
Bri$id# co!"e!ted to the #ct" of De$#!o" or
#,thori>ed hi* to #ct o! her 'eh#lf+ *,ch le""
&ith re")ect to the )#rtic,l#r tr#!"#ctio!"
i!volved. Ietitio!er"8 #tte*)t to foi"t li#'ilit% o!
re")o!de!t ")o,"e" thro,$h the ",))o"ed #$e!c%
rel#tio! &ith De$#!o" i" $ro,!dle"" #!d ill7
#dvi"ed. Be"ide"+ it &#" $ro""l% #!d i!e:c,"#'l%
!e$li$e!t of )etitio!er" to e!tr,"t to De$#!o"+ !ot
o!ce or t&ice ',t o! #t le#"t "i: occ#"io!" #"
evide!ced '% "i: recei)t"+ "ever#l )iece" of
Ee&elr% of ",'"t#!ti#l v#l,e &itho,t reB,iri!$ #
&ritte! #,thori>#tio! fro* hi" #lle$ed )ri!ci)#l. A
)er"o! de#li!$ &ith #! #$e!t i" ),t ,)o! i!B,ir%
#!d *,"t di"cover ,)o! hi" )eril the #,thorit% of
the #$e!t.( 3#t ). ?806
I! #izon v. Court of Appeals+ ?40 1CRA 088
31;;;6+ the Co,rt held th#t # co7o&!er doe" !ot
'eco*e #! #$e!t of the other co7o&!er"+ #!d
therefore+ #!% e:erci"e of #! o)tio! to ',% # )iece
of l#!d tr#!"#cted &ith o!e co7o&!er doe" !ot
'i!d the other co7o&!er" of the l#!d. The '#"i" for
#$e!c% i" re)re"e!t#tio! #!d # )er"o! de#li!$
&ith #! #$e!t i" ),t ,)o! i!B,ir% #!d *,"t
di"cover ,)o! hi" )eril the #,thorit% of the #$e!t.
1i!ce there &#" !o "ho&i!$ th#t the other co7
o&!er" co!"e!ted to the #ct of o!e co7o&!er !or
#,thori>ed her to #ct o! their 'eh#lf &ith re$#rd
to her tr#!"#ctio! &ith ),r)orted ',%er. The *o"t
)r,de!t thi!$ the ),r)orted ',%er "ho,ld h#ve
do!e &#" to #"cert#i! the e:te!t of the #,thorit%
"#id co7o&!er< 'ei!$ !e$li$e!t i! thi" re$#rd+ the
),r)orted ',%er c#!!ot "ee9 relief o! the '#"i" of
# ",))o"ed #$e!c%.
O! the other h#!d+ ,!der Article 185?+ the
decl#r#tio! of # )er"o! th#t he h#" #))oi!ted
#!other #" hi" #$e!t i" dee* to h#ve co!"tit,ted
the )er"o! #ll,ded to #" #! #$e!t 3eve! &he! the
l#tter i" ,!#&#re6+ i!"of#r #" the )er"o! to &ho*
",ch delc#r#tio! ih#" 'ee! *#de. Ah#t i" cle#r
therefore i" th#t third )#rtie" *,"t !ever t#9e the
&ord" or re)re"e!t#tio! of the ),r)orted #$e!t #t
f#ce v#l,e< the% #re *#!d#ted to #))ri"e
the*"elve" of the co**i""io! #!d e:te!t of
)o&er" of the ),r)orted #$e!t. O! the other
h#!d+ third )#rtie" 3to the co!tr#ct of #$e!c%6 c#!
t#9e the &ord"+ decl#r#tio!" #!d re)re"e!t#tio!"
of the ),r)orted )ri!ci)#l &ith re")ect to the
06
#))oi!t*e!t of+ #!d e:te!t of )o&er"+ of the
),r)orted #$e!t. The )ri!ci)le i" "elf7evide!t fro*
the !#t,re of #$e!c% #" # rel#tio! of
re)re"e!t#tio!77th#t #! #$e!t #ct" #" tho,$h he
&ere the )ri!ci)#l7 #!d therefore if the )ri!ci)#l
hi*"elf "#%" "o+ the! it i" t#9e! #t f#ce v#l,e #" #
co!tr#ct,#l co**it*e!t.
b. A)en&* b* E$to##e/
H!der Article 185?+ if # )er"o! ")eci#ll%
i!for*" #!other or "t#te" '% ),'lic #dverti"e*e!t
th#t he h#" $ive! # )o&er of #ttor!e% to # third
)er"o!+ the l#tter there'% 'eco*e" # d,l%
#,htori>ed #$e!t+ eve! if )revio,"l% there &#"
!ever # *eeti!$ of *i!d" 'et&ee! the*.

H!der Article 1;11+ eve! &he! the #$e!t h#"
e:ceeded hi" #,thorit% 3i.e., he #ct" &itho,t
#,thorit% fro* the )ri!ci)#l6+ the )ri!ci)#l "h#ll 'e
"olid#ril% &ith the #$e!t if he #llo&ed the #$e!t to
#ct #" tho,$h he h#d f,ll )o&er".
I! I! .ac/e v. Ca'ps+ 5 Ihil //? 31;456.
&here the o&!er of # hotelRc#fe ',"i!e"" #llo&ed
# )er"o! to ,"e the title (*#!#$i!$ #$e!t( #!d
d,ri!$ hi" )rolo!$ed #'"e!ce" #llo&ed ",ch
)er"o! to t#9e ch#r$e of the ',"i!e""+ )erfor*i!$
the d,tie" ,",#ll% e!tr,"ted to *#!#$i!$ #$e!t+
the! ",ch o&!er i" 'o,!d '% the #ct of ",ch
)er"o!.The Co,rt held th#t (O!e &ho clothe"
#!other #))#re!t #,thorit% #" hi" #$e!t+ #!d
hold" hi* o,t to the ),'lic #" ",ch+ c#! !ot 'e
)er*itted to de!% the #,thorit% of ",ch )er"o! to
#ct #" hi" #$e!t+ to the )reE,dice of i!!oce!t third
)#rtie" de#li!$ &ith ",ch )er"o! i! $ood f#ith #!d
i! the follo&i!$ )re7#"",*)tio!" or ded,ctio!"+
&hich the l#& e:)re""l% direct" to 'e *#de fro*
)#rtic,l#r f#ct"+ #re dee*ed co!cl,"ive.( 3#t ).
///6 The hotel o&!er &#" dee*ed 'o,!d '% the
co!tr#ct" e!tered i!to '% "#id *#!#$i!$ #$e!t
th#t #re &ithi! the "co)e of #,thorit% )erti!e!t to
",ch )o"itio!+ i!cl,di!$ the ),rch#"i!$ ",ch
re#"o!#'le B,#!titie" of ",))lie" #" *i$ht fro*
ti*e to ti*e 'e !ece""#r% i! c#rr%i!$ o! the
',"i!e"" of hotel '#r.
I! )aguiat v. Court of Appeals+ 210 1CRA
/;0 3044?6+ the Co,rt #))lied the )rovi"io!" of
Article 185? of the Civil Code to r,le th#t if '% the
i!ter#ctio! 'et&ee! # ),r)orted )ri!ci)#l #!d #
),r)orted #$e!t i! the )re"e!ce of # third )er"o!+
the l#tter &#" $ive! the i*)re""io! of the
e:i"te!ce of # )ri!ci)#l7#$e!c% rel#tio!+ #!d the
),r)orted )ri!ci)#l did !othi!$ to correct the third
)er"o!8" i*)re""io!+ #! (#$e!c% '% e"to))el i"
dee*ed to h#ve 'ee! co!"tit,ted+ #!d the r,le i"
cle#rD o!e &ho clothe" #!other &ith #))#re!t
#,thorit% #" hi" #$e!t+ #!d hold" hi* o,t to the
),'lic #" ",ch+ c#!!ot 'e )er*itted to de!% the
#,thorit% of ",ch )er"o! to #ct #" hi" #$e!t+ to the
)reE,dice of i!!oce!t third )#rtie" de#li!$ &ith
",ch )er"o! i! $ood f#ith+ #!d i! the ho!e"t 'elief
th#t he i" &h#t he #))e#r" to 'e.( 3#t ). /;;6
05
I! iton!ua, "r. v. Eternit Corporation, 2;4
1CRA 042 304466+ the Co,rt held th#t for #!
#$e!c% '% e"to))el to e:i"t+ the follo&i!$ *,"t 'e
e"t#'li"hedD 316 the )ri!ci)#l *#!ife"ted #
re)re"e!t#tio! of the #$e!t8" #,thorit% or
9!o&i!$l% #llo&ed the #$e!t to #"",*e ",ch
#,thorit%< 306 the third )er"o!+ i! $ood f#ith+ relied
,)o! ",ch re)re"e!t#tio!< 3?6 rel%i!$ ,)o! ",ch
re)re"e!t#tio!+ ",ch third )er"o! h#" ch#!$ed hi"
)o"itio! to hi" detri*e!t. A! #$e!c% '% e"to))el+
&hich i" "i*il#r to the doctri!e of #))#re!t
#,thorit%+ reB,ire" )roof of reli#!ce ,)o! the
re)re"e!t#tio!"+ #!d th#t+ i! t,r!+ !eed" )roof
th#t the re)re"e!t#tio!" )red#ted the #ctio! t#9e!
i! reli#!ce.
-1.Reiterated in i' v. Court of Appeals+ 0/1 1CRA 248
31;;/6.
?D01 AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
III. NIND1 OF AGENCY
3. Kin.$ o( A)en&*
a. Ba$e. on t1e B!$ine$$ o" T"an$a&tion$
Co'e"e.
H!der Article 1856+ #! #$e!c% i" ter*ed to
'e # (general agenc%( &he! it e!co*)#""e" #ll of
the ',"i!e"" of the )ri!ci)#l. The 'etter ter* for
",ch #! #$e!c% &o,ld 'e # (universal agenc-+( for
the ter* ($e!er#l #$e!c%( i" o!e th#t i"
#ddre""ed to the $e!er#l ),'lic+ #!d !ot E,"t #
)#rtic,l#r )er"o! or $ro,) of )er"o!" &hich &ho*
the #$e!t i" to tr#!"#ct.
I! Siasat v. Inter'ediate Appellate Court+
1?; 1CRA 0?8 31;8/6+ the Co,rt held th#t # )o&er
of #ttor!e% &hich )rovide" th#t (Thi" i" to
for*#li>e o,r #$ree*e!t for %o, to re)re"e!t
H!ited Fl#$ I!d,"tr% to de#l &ith #!% e!tit% or
or$#!i>#tio!+ )riv#te or $over!*e!t+ i!
co!!ectio! &ith the *#r9eti!$ of o,r )rod,ct"77
C#$" #!d #ll it" #cce""orie". For %o,r "ervice"+ %o,
&ill 'e e!titled to # co**i""io! of ?4V+( &#"
co!"tr,ed to #,thori>e the #$e!t to e!ter i!to
co!tr#ct of "#le over the )rod,ct" covered #!d for
&hich he &o,ld 'e e!titled to receive
co**i""io!" "ti),l#ted. It held th#t (-#. $e!er#l
08
#$e!t ,",#ll% h#" #,thorit% either e:)re""l%
co!ferred i! $e!er#l ter*" or i! e=ect *#de
$e!er#l '% the ,"#$e"+ c,"to*" or !#t,re of the
',"i!e"" &hich he i" #,thori>ed to tr#!"#ct.(
O! the other h#!d+ Article 1856 de!e" #
(special agenc%( &he! it cover" o!l% o!e or *ore
")ecic tr#!"#ctio!". The 'etter ter* for ",ch #!
#$e!c% i" (particular agenc-<( for i!deed+ the ter*
(")eci#l #$e!c%( h#" 'ee! ,"ed i! deci"io!" of the
1,)re*e Co,rt to refer to o!e &hich i" #ddre""ed
to # )#rtic,l#r )er"o! or $ro,) of )er"o!" &ith
&ho* the #$e!t i" to tr#!"#ct.
The cl#""ic#tio!" ,!der Article 1856 #re
*ore #c#de*ic th#! )r#ctic#l+ "i!ce o,t"ide of
$,#rdi#!"hi) )roceedi!$"+ h#rdl% #!%'od% i! the
*oder! &orld e*)o&er" #! #$e!t to cover ever%
',"i!e"" #")ect o&!ed '% the )ri!ci)#l. Be"ide
",ch # cl#""ic#tio! i" !ot re#ll% ,"ef,l 'ec#,"e #
($e!er#l or ,!iver"#l #$e!c%( c#! '% l#& o!l%
cover $e!er#l )o&er" of #ttor!e% coveri!$ *erel%
#ct" of #d*i!i"tr#tio!< #!d c#!!ot+ &itho,t
e:)re"" or det#iled de"cri)tio!+ cover ")eci#l
)o&er" of #ttor!e%+ coveri!$ )#rtic,l#r #ct" of
"trict o&!er"hi). Therefore+ # $e!er#l #$e!c% i"
'etter #chieved '% other co!tr#ct,#l for*" ",ch
#" # co!tr#ct of e*)lo%*e!t+ or # ,!iver"#l
)#rt!er"hi).
Ro4inson $le'ing v. Cruz+ ;2 Ihil 20
31;066
b. ;1et1e" o" Not It Co'e"$ +iti)ation
Matte"$
Altho,$h !ot ")ecic#ll% tre#ted i! the Civil
Code+ &e "ho,ld di"ti!$,i"h 'et&ee! # for* of
#$e!c% c#lled (attorne-3at3la&+( fro* th#t of
(attorne-3in3fact..(
A! #ttor!e%7#t7l#&+ !ece""#ril% *e#!" the
#))oi!t*e!t of #! #$e!t to re)re"e!t the
)ri!ci)#l o! le$#l *#tter"+ )#rtic,l#rl% o! *#tter"
)ert#i!i!$ to liti$#tio! or co,rt *#tter". Not ever%
#ttor!e%7clie!t rel#tio!"hi) i" # co!tr#ct of #$e!c%
&here the e""e!ti#l o'Eective i" re)re"e!t#tio!+
",ch #" &he! #! #ttor!e% i" ret#i!ed to dr#&7,)
le$#l doc,*e!t". B,t &he! it co*e" to liti$#tio!+
the ret#i!i!$ of #! #ttor!e% i" tr,l% i!
re)re"e!t#tio! of the clie!t7)ri!ci)#l 'efore the
co,rt+ ",ch th#t the #ct" of the #ttor!e% for #!d i!
'eh#lf of the clie!t+ th#t !otice to the #ttor!e%+
#!d "ervice of E,dici#l )roce"" to the #ttor!e%+ i"
eB,iv#le!t to "ervice to the clie!t )ri!ci)#l. H!der
e:i"ti!$ r,le" #!d E,ri")r,de!ce+ ",ch #! #$e!t
&o,ld 'e )r#ctici!$ l#& #!d &o,ld h#ve to 'e #
lice!"ed l#&%er. The rel#tio!"hi) i" o!e th#t i"
d,ci#r% #!d )rofe""io!#l+ #!d i" $over!ed '%
"e)#r#te r,le"+ i!cl,di!$ the le$#l )rofe""io!#l
code #!d the r,le" )ro*,l$#ted '% the 1,)re*e
Co,rt coveri!$ the )r#ctice of l#&.
Co!"eB,e!tl%+ the ter* (#ttor!e%7i!7f#ct( i"
i!te!ded to de"cri'e #ll #$e!t" #))oi!ted '% #
)ri!ci)#l to #ct o! E,ridic#l rel#tio!" th#t h#ve
0;
!othi!$ to do &ith le$#l *#tter" #!d do !ot
co!"tit,te # )r#ctice of l#& o! the )#rt of the
#$e!t. Thi" i" the cl#""ic#tio! th#t cover" the
(co!tr#ct of #$e!c%( $over!ed '% the Civil Code.
It "ho,ld 'e !oted+ ho&ever+ th#t eve! i!
the c#"e of #! #ttor!e%7#t7l#& re)re"e!ti!$ #
clie!t i! # co,rt c#"e+ there #re cert#i! )o&er"
&hich #re !ot i!here!t i! the )o"itio! of #!
#ttor!e%7#t7l#& to le$#ll% 'i!d the clie!t+ ",ch #"
the )o&er to co*)ro*i"e+ to #r'itr#te+ etc.
Ahether #! #ttor!e%7#t7l#& h#" )o&er to 'i!d the
clie!t )ri!ci)#l i! ",ch *#tter" #re $over!ed '%
the r,le" of the Civil Code o! ")eci#l #$e!c% or
")eci#l )o&er" of #ttor!e%.
&. ;1et1e" It Co'e"$ A&t$ o( A.0ini$t"ation
o" A&t$ o( O9ne"$1i#
It i" i! the re#l* of (#ttor!e%7i!7f#ct( th#t &e
&o,ld *ore #))ro)ri#tel% ,"e the cl#""ic#tio!"
of ($e!er#l )o&er of #ttor!e%( #!d (")eci#l )o&er
of #ttor!e%( to de"cri'e the #,thorit% #!d )o&er
of the #$e!t.
1i*)l% "t#ted+ # general po!er of
attorney cover" o!l% #ct" of #d*i!i"tr#tio!+ or
e:)re""ed i! co**erci#l ter*"+ it o!l% cover"
)o&er to ),r",e the ordi!#r% or re$,l#r co,r"e of
',"i!e"". Ahere#"+ # special po!er of attorney
cover" #ct" of do*i!io! or "trict o&!er"hi). The
$e!er#l r,le i" th#t ,!le"" "o e:)re""l% "t#ted+ #!
#$e!c% cover" o!l% the )o&er" to e:ec,te #ct" of
#d*i!i"tr#tio!. Th,"+ ,!der Article 1855 of the
Civil CodeD (A! #$e!c% co,ched i! $e!er#l ter*"
co*)ri"e" o!l% #ct" of #d*i!i"tr#tio!+ eve! if the
)ri!ci)#l "ho,ld "t#te th#t he &ithhold" !o )o&er
or th#t the #$e!t *#% e:ec,te ",ch #ct" #" he
*#% co!"ider #))ro)ri#te+ or eve! tho,$h the
#$e!c% "ho,ld #,thori>e # $e!er#l #!d ,!li*ited
*#!#$e*e!t.(
Di"ti!ctio! 'et&ee! $e!er#l )o&er of
#ttor!e% #!d ")eci#l )o&er of #ttor!e% "h#ll 'e
covered i! the i**edi#tel% ",cceedi!$ ch#)ter o!
the (Io&er #!d A,thorit%+ D,tie" #!d O'li$#tio!"+
of the A$e!t.(
I! .ac/e vs. Ca'ps+ 5 Ihill. //? 31;456+ the
Co,rt heldD (It "ee*" e#"% to #!"&er th#t #ct" of
#d*i!i"tr#tio! #re tho"e &hich do !ot i*)l% the
#,thorit% to #lie!#te for the e:erci"e of &hich #!
e:)re"" )o&er i" !ece""#r%. Yet &h#t #re #ct" of
#d*i!i"tr#tio! &ill #l&#%" 'e # B,e"tio! of f#ct+
r#ther th#! of l#&+ 'ec#,"e there c#! 'e !o do,'t
th#t "o,!d *#!#$e*e!t &ill "o*eti*e" reB,ire
the )erfor*#!ce of #! #ct of o&!er"hi). 310
G#!re"# 2686 B,t+ ,!le"" the co!tr#r% #))e#r"+
the #,thorit% of #! #$e!t i" )re",*ed to i!cl,de
#ll the !ece""#r% #!d ,",#l *e#!" to c#rr% o,t
the #$e!c% i!to e=ect.( 3#t ). ///6
I! Insular #rug Co. v. ()*+ /8 Ihil 682
31;??6+ it &#" held th#t the ri$ht of #! #$e!t to
i!dor"e # co**erci#l )#)er i" !ever )re",*ed to
e:i"t"< it *,"t 'e cle#rl% $r#!ted '% the )ri!ci)#l.
?4
A "#le"*#! &ith #,thorit% to collect *o!e%
'elo!$i!$ to the )ri!ci)#l doe" !ot h#ve i*)lied
#,thorit% to i!dor"e the chec9" received i!
)#%*e!t. A!% )er"o! t#9i!$ chec9" )#%#'le to #
cor)or#tio! thro,$h the e!dor"e*e!t of #! #$e!t+
doe" "o #t hi" )eril #!d *,"t #'ide '% the
co!"eB,e!ce" if the #$e!t &ho i!dor"e" the "#*e
i" &itho,t #,thorit%.
?D1; AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
IV. AHTJORITY P IOAER+ DHTIE1 P OBFIGATION1+
OF TJE AGENT
II. O;ER < AUT8ORITY,
DUTIES <
OB+IGATIONS, OF T8E
AGENT
1. GENERA+ OB+IGATION OF AGENT ;8O ACCETS
T8E AGENCY

H!der Article 1882+ &he! #! #$e!t #cce)t"
the #))oi!t*e!t of the )ri!ci)#l+ the! he i" le$#ll%
'o,!d to c#rr% o,t the ter*" of the #$e!c%<
other&i"e+ if he f#il" or ref,"e" to c#rr% o! the
#$e!c%+ he "h#ll 'e li#'le for d#*#$e" ",=ered '%
the )ri!ci)#l '% re#"o! of hi" !o!7fe#"#!ce or
!o!7)erfor*#!ce.
Article 1882 e:)re""e" i! the re#l* of
A$e!c% the co!tr#ct l#& )ri!ci)le" of
consensualit-+ 'utualit- #!d o4ligator- force
e:)re""ed i! Article" 11/; #!d 1?1/ of the Civil
Code+ &hich )rovide th#t (O'li$#tio!" #ri"i!$ fro*
co!tr#ct" h#ve the force of l#& 'et&ee! the
co!tr#cti!$ )#rtie" #!d "ho,ld 'e co*)lied &ith i!
$ood f#ith+( #!d th#t (Co!tr#ct" #re )erfected '%
*ere co!"e!t+ #!d fro* th#t *o*e!t the )#rtie"
#re 'o,!d !ot o!l% to the f,lll*e!t of &h#t h#"
'ee! e:)re""l% "ti),l#ted ',t #l"o to #ll the
co!"eB,e!ce" &hich+ #ccordi!$ to their !#t,re+
*#% 'e i! 9ee)i!$ &ith $ood f#ith+ ,"#$e #!d
l#&.( Fi9e&i"e+ Article 1?/6 of the Civil Code
)rovide" th#t (Co!tr#ct" "h#ll 'e o'li$#tor%+ i!
&h#tever for* the% *#% h#ve 'ee! e!tered i!to+
)rovided #ll the e""e!ti#l reB,i"ite" for their
v#lidit% #re )re"e!t.( Fi!#ll%+ Article 1?48 )rovide"
th#t the (co!tr#ct *,"t 'i!d 'oth co!tr#cti!$
)#rtie"< it" v#lidit% or co*)li#!ce c#!!ot 'e left to
the &ill of o!e of the*.(
?1
De")ite the o'li$#tor% !#t,re of ever%
co!tr#ct of #$e!c%+ !ote th#t Article 1882
e*)h#"i>e" the )oi!t th#t &he! #! #$e!t ref,"e"
to co*)l% &ith the o'li$#tio!" he #cce)ted for
hi*"elf+ the re*ed% of the )ri!ci)#l i" to ",e hi*
for d#*#$e"+ "i!ce #! #ctio! for ")ecic
)erfor*#!ce i" !ot #v#il#'le for )er"o!#l
o'li$#tio!" to do or !ot to do. The li#'ilit% of #!
#$e!t for d#*#$e" &he! he f#il" to c#rr% o,t hi"
o'li$#tio!" i" co!"i"te!t &ith the ter*" of Article
1154 of the Civil Code &hich )rovide" th#t (Tho"e
&ho i! the )erfor*#!ce of their o'li$#tio!" #re
$,ilt% of fr#,d+ !e$li$e!ce+ or del#%+ #!d tho"e
&ho i! #!% *#!!er co!tr#ve!e the te!or thereof+
#re li#'le for d#*#$e".( Thi" "#*e )ri!ci)le i"
e:)re""ed i! Article 1;4; of the F#& o! A$e!c%+
&hich )rovide" th#t (-t.he #$e!t i" re")o!"i'le !ot
o!l% for fr#,d+ ',t #l"o for !e$li$e!ce+ &hich "h#ll
'e #dE,d$ed &ith *ore or le"" ri$or '% the co,rt"+
#ccordi!$ to &hether the #$e!c% &#" or &#" !ot
for # co*)e!"#tio!.(
Fi!#ll%+ #ltho,$h # co!tr#ct of #$e!c% i"
ter*i!#ted ipso !ure ,)o! the de#th of the
)ri!ci)#l+ !o!ethele""+ Article 1882 )rovide"
e:)re""l% th#t the #$e!t *,"t !i"h the ',"i!e""
#lre#d% 'e$,! ,)o! de#th of )ri!ci)#l "ho,ld
del#% e!t#il #!% d#!$er. Thi" )rovi"io!
e*)h#"i>e" the ch#r#cteri"tic of #$e!c% to 'e
*erel% # preparator- contract< th#t it i"
co!"tit,ted !ot for it" o&! "#9e+ '% )ri*#ril% to 'e
the '#"i" '% &hich the #$e!t *#% e!ter i!to
E,ridic#l #ct" o! 'eh#lf of the )ri!ci)#l &ith
re")ect to third )#rtie". Co!"eB,e!tl%+ eve! if
"trictl% ")e#9i!$ the #$e!c% rel#tio! i" ter*i!#ted
,)o! the de#th of the )ri!ci)#l+ the e"t#'li"hed
',t ,!!i"hed co!tr#ct" #!d tr#!"#ctio!" the!
)e!di!$ *,"t 'e f,llled '% the #$e!t o! 'eh#lf of
the decede!t+ &he! co!ti!,#tio! of
re)re"e!t#tio! i" !ece""#r%.
,1- Measure of %amage for an "gent1s Non(
Performance of Obligation
I! *A $inance v. Court of Appeals+ 041 1CRA 1/5
31;;16+ ,!der the deed of ch#ttel *ort$#$e+ the
!#!ce co*)#!% &#" co!"tit,ted #" #! #ttor!e%7i!7
f#ct for the *ort$#$or" &ith f,ll )o&er #!d #,thorit% to
le+ follo&7,)+ )ro"ec,te+ co*)ro*i"e or "ettle
i!",r#!ce cl#i*"< to "i$! e:ec,te #!d deliver the
corre")o!di!$ )#)er"+ recei)t" #!d doc,*e!t" to the
i!",r#!ce co*)#!% #" *#% 'e !ece""#r% to )rove the
cl#i*+ #!d to collect fro* the l#tter the )roceed" of
i!",r#!ce to the e:te!t of it" i!tere"t"+ i! the eve!t
th#t the *ort$#$ed c#r ",=er" #!% lo"" or d#*#$e+
the $r#!t of )o&er co!"tit,ted the !#!ce co*)#!% #"
the #$e!t of the *ort$#$or". Ahe! the *ort$#$ed
*otor vehicle $,red i! #! #ccide!t th#t &o,ld h#ve
#llo&ed recover% o! the i!",r#!ce cl#i* for tot#l lo""+
#!d the *ort$#$or" h#d i!"tr,cted the !#!ce
co*)#!% to *#9e ",ch cl#i*+ ',t i!"te#d it o)ted to
h#ve the *otor vehicle re)#ired #!d fore$o the tot#l
lo"" cl#i*+ the Co,rt decreed th#t the f#il,re #!d
ref,"#l of the !#!ce co*)#!% to "ee9 tot#l lo""
cl#i*" o! the vehicle *ort$#$ed #$#i!"t the i!",r#!ce
co*)#!%+ co!"tit,ted !e$li$e!ce #!d !ot o,tri$ht
ref,"#l to co*)l% &ith the i!"tr,ctio!" of the
)ri!ci)#l"+ #!d li#'le for d#*#$e". It held th#t ,!der
?0
Article 1882 of the Civil Code+ the !#!ce co*)#!%
&#" 'o,!d '% it" #cce)t#!ce to c#rr% o,t the #$e!c%+
#!d i" li#'le for d#*#$e" &hich+ thro,$h it" !o!7
)erfor*#!ce+ the )ri!ci)#l"7*ort$#$or" *#% ",=er.
Co!"eB,e!tl%+ '% re#"o! of the lo"" ",=ered '% the
)ri!ci)#l"+ the Co,rt held th#t the !#!ce co*)#!%
co,ld !o lo!$er collect o! the ,!)#id '#l#!ce of the
)ro*i""or% !ote "ec,red '% the ch#ttel *ort$#$e.
I! ()* v. .anila Suret-+ 12 1CRA 556
31;6/6+ &here the holder of #! e:cl,"ive #!d
irrevoc#'le )o&er of #ttor!e% to *#9e collectio!"+
f#iled to collect the ",*" d,e to the )ri!ci)#l #!d
there'% #llo&ed the #llotted f,!d" to 'e
e:h#,"ted '% other creditor"+ ",ch #$e!t &#"
#dE,d$ed to h#ve f#iled to #ct &ith the c#re of #
$ood f#ther of # f#*il% reB,ired ,!der Article
1885 #!d 'ec#*e )er"o!#ll% li#'le for the
d#*#$e" &hich the )ri!ci)#l *#% ",=er thro,$h
hi" !o!7)erfor*#!ce.
I! *arton v. e-te Asphalt+ 26 Ihil ;?8
31;026+ &here the )rev#ili!$ "t#t,tor% r,le the!
&#" Article 065 of the Code of Co**erce &hich
del#red th#t !o #$e!t "h#ll ),rch#"e for hi*"elf or
for #!other th#t &hich he h#" 'ee! ordered to
"ell+ the Co,rt held th#t # "#le '% # 'ro9er to
hi*"elf &itho,t the co!"e!t of the )ri!ci)#l &o,ld
'e void #!d i!e=ect,#l &hether the 'ro9er h#"
'ee! $,ilt% of fr#,d,le!t co!d,ct or !ot.
Co!"eB,e!tl%+ ",ch 'ro9er i" !ot e!titled to
receive #!% co**i""io! ,!der the co!tr#ct+ *,ch
le"" #!% rei*',r"e*e!t of e:)e!"e" i!c,rred i!
),r",i!$ #!d clo"i!$ ",ch "#le".
2. OB+IGATION OF AGENT ;8O DEC+INES AGENCY
H!der Article 188/+ if # )er"o! decli!e" #!
#$e!c%+ (he i" 'o,!d to o'"erve the dili$e!ce of #
$ood f#ther of # f#*il% i! the c,"tod% #!d
)re"erv#tio! of the $ood" for&#rded to hi* '% the
o&!er ,!til the l#tter "ho,ld #))oi!t #! #$e!t.(
The #rticle *#!d#te" the o&!er i! ",ch c#"e to
(#" "oo! #" )r#ctic#'le either #))oi!t #! #$e!t or
t#9e ch#r$e of the $ood".(
Ae "ho,ld co*)#re the o'li$#tio!" of #
)er"o! &ho decli!e" #! #$e!c%+ fro* o!e &ho
&ithdr#&" fro* #! #$e!c% he )revio,"l%
#cce)ted. H!der Article 1;0;+ eve! if #! #$e!t
&ithdr#&" fro* the #$e!c% for # v#lid re#"o!+ (he
*,"t co!ti!,e to #ct ,!til the )ri!ci)#l h#" h#d
re#"o!#'le o))ort,!it% to t#9e the !ece""#r%
"te)" to *eet the "it,#tio!.(
The )rovi"io!" of Article" 188/ #!d 1;0;
co!"tit,te r#re i!"t#!ce" &here # d,t% of dili$e!ce
i" o&ed '% # )er"o! to #!other o,t"ide of #!
e:i"ti!$ co!tr#ct,#l 'o!d.
3. GENERA+ RU+E ON AGENT=S O;ER AND
AUT8ORITY 6

a. A)ent M!$t A&t ;it1in t1e S&o#e o(
8i$ A!t1o"it*
??
H!der Article 1881+ the #$e!t *,"t #ct
(&ithi! the "co)e of hi" #,thorit%+( &hich
e""e!ti#ll% *e#!" th#t "i!ce the #$e!t #ct" i!
re)re"e!t#tio! of the )ri!ci)#l+ he *,"t e!ter i!to
E,ridic#l rel#tio!" o! 'eh#lf of the )ri!ci)#l #!d
re)re"e!ti!$ the &ill of the )ri!ci)#l+ #!d !ot hi"
3#$e!t8"6 o&! &ill. The $e!er#l r,le e*'odie" the
t&o d,ci#r% d,tie" of the #$e!t to the )ri!ci)#lD
d,t% of o'edie!ce #!d the d,t% of dili$e!ce.
a. D!t* o( Obe.ien&e
,1- "s +et!een the Principal and the "gent
Th#t the #$e!t *,"t #ct (&ithi! the "co)e of
hi" #,thorit%( *e#!" th#t th#t ever% #$e!t
#"",*e" '% hi" #cce)t#!ce of the #$e!c% to 'e
o'edie!t to the &ill of the )ri!ci)#l+ &hich i" 'e"t
e:)re""ed ,!der Article 1885 of the Civil Code+
&hich )rovide" th#t (-i.! the e:ec,tio! of the
#$e!c%+ the #$e!t "h#ll #ct i! #ccord#!ce &ith the
i!"tr,ctio!" of the )ri!ci)#l.( There i" !o do,'t
th#t &he! #! #$e!t co*)lie" &ith the i!"tr,ctio!"
of hi" )ri!ci)#l+ he i" #cti!$ &ithi! the "co)e of hi"
#,thorit%.
A" held i! 0ictorias .illing Co., Inc. v. Court
of Appeals+ ??? 1CRA 66? 304446+ o!e f#ctor th#t
*o"t cle#rl% di"ti!$,i"he" #! #$e!c% fro* other
le$#l co!ce)t"+ i!cl,di!$ "#le+ i" control; o!e
)er"o!77the #$e!t77#$ree" to #ct ,!der the co!trol
or directio! of #!other77the )ri!ci)#l. It i" cle#r
therefore+ th#t &he! #! #$e!t #ct" i! #ccord#!ce
&ith the )ri!ci)#lKLQ" i!"tr,ctio!+ he i" #cti!$
&ithi! the "co)e of hi" #,thorit%.

No!ethele""+ #$e!c% rel#tio! i" e!tered i!to
*#i!l% for ',"i!e"" or co**erci#l ve!t,re"+ #!d it
i" !ot e:)ected th#t the )ri!ci)#l c#! cover ever
co!ti!$e!cie" &ith ")ecic i!"tr,ctio!"+ or th#t
ever% #ct of the #$e!t *,"t 'e '#"ed o! det#iled
i!"tr,ctio!" of the )ri!ci)#l. I!deed+ the #$e!t i"
e:)ected to ,"e hi" ',"i!e"" di"cretio! #" th#t of
the )ri!ci)#l &o,ld or co,ld if )er"o!#ll% )re"e!t.
Therefore+ &e "ho,ld co!"ider the )ri!ci)#l8"
i!"tr,ctio!" #" the li*it of #! #$e!t8" )o&er< #!d
th#t i! the #'"e!ce of li*iti!$ i!"tr,ctio!"+ it i"
e:)ected th#t the #$e!t ,"e" hi" 'e"t E,d$*e!t to
"t#% &ithi! the "co)e of the )ri!ci)#l8" #,thorit%
$r#!ted to hi*. Thi" i" )#rt of the d,t% of
dili$e!ce of ever% #$e!t &ho #cce)t" #! #$e!c%
de"i$!#tio!.
Thi" )ri!ci)le i" 'e"t e:)re""ed ,!der Article
1881+ &hich )rovide" th#t the #$e!t (#!% do ",ch
#ct" #" *#% 'e co!d,cive to the #cco*)li"h*e!t
of the ),r)o"e of the #$e!c%.( Fi9e&i"e+ Article
1880 )rovide" th#t (-t.he li*it" of the #$e!t8"
#,thorit% "h#ll !ot 'e co!"idered e:ceed "ho,ld it
h#ve 'ee! )erfor*ed i! # *#!!er *ore
#dv#!t#$eo," to the )ri!ci)#l th#! th#t ")ecied
'% hi*.( I! other &ord"+ #! #$e!t !ot o!l% h#"
e:)re"" )o&er"+ ',t #l"o i*)lied )o&er"
e*#!#ti!$ fro* the e:)re"" )o&er" $r#!ted to
hi*< #" &ell #" i!cide!t#l )o&er" !ece""#r% i!
?2
order to #chieve the ),r)o"e for &hich the #$e!c%
&#" co!"tit,ted.
I!Tan Tiong v. SEC+ 6; Ihil 20/ 31;246+ it
&#" held th#t the #$e!t i" !ot dee*ed to h#ve
e:ceeded hi" #,thorit% "ho,ld he )erfor* the #$e!c%
i! # *#!#$er *ore #dv#!t#$eo," to the )ri!ci)#l th#!
th#t i!dic#ted '% the )ri!ci)#l. Th,"+ &he! the #$e!t
"ell" the c#r of the )ri!ci)#l for *ore th#! the #*o,!t
i!dic#ted '% the )ri!ci)#l+ the! he h#" !ot e:ceeded
hi" #,thorit% 'ec#,"e # hi$her )rice i" *ore
#dv#!t#$eo," to the )ri!ci)#l.
The )ri!ci)le &#" reiter#ted i! the "%ll#',"
of the ),'li"hed deci"io! i!Olaguer v.
(urugganan, "r.+ /1/ 1CRA 264 304456+ it &#" held
th#t ,!der Article 1880 of the Civil Code the li*it" of
#! #$e!t8" #,thorit% "h#ll !ot 'e co!"idered e:ceeded
"ho,ld it h#ve 'ee! )erfor*ed i! # *#!!er
#dv#!t#$eo," to the )ri!ci)#l th#! th#t ")ecied '%
hi*. I! th#t deci"io!+ the *#!!er '% &hich the
#ttor!e%7i!7f#ct ),r",ed the "#le of the "h#re" of the
)ri!ci)#l+ #!d the )#%*e!t of the co!"ider#tio! "o #"
!ot to reve#l th#t he o&!ed ",ch "h#re" #" reB,e"ted
'% the )ri!ci)#l+ &ere #ll dee*ed to h#ve 'ee!
e:ec,ted '% the #$e!t &ithi! the "co)e of hi"
#,thorit%.
,2- "s -o -hird Parties
The ter*" of Article 1885 &hich e=ectivel% "t#te"
th#t &he! #! #$e!t #ct" co!tr#r% to the i!"tr,ctio!" of
hi" )ri!ci)#l+ he i" dee*ed to h#ve #cted &itho,t or i!
e:ce"" of #,thorit%+ i" # r,le th#t $over!" the
rel#tio!"hi) of the )ri!ci)#l #!d #$e!t< it i" !ot # r,le
th#t e""e!ti#ll% #ddre""e" the i!tere"t" of third )#rtie"
&ith &ho* the #$e!t e!ter" i!to E,ridic#l rel#tio!" o!
Th,"+ ,!der Article 1;11+ eve! &he! the #$e!t
h#" e:ceeded hi" #,thorit%+ the )ri!ci)#l re*#i!"
"olid#ril% li#'le &ith the #$e!t if the )ri!ci)#l #llo&ed
the #$e!t to #ct #" tho,$h he h#d f,ll )o&er".
H!der Article 1;44+ i!"of#r #" third )er"o!"
#re co!cer!ed+ (#! #ct i" dee*ed to h#ve 'ee!
)erfor*ed &ithi! the "co)e of the #$e!t8"
#,thorit%+ if ",ch #ct i" &ithi! the ter*" of the
)o&er of #ttor!e%+ #" &ritte!+ eve! if the #$e!t
h#" i! f#ct e:ceeded the li*it" of hi" #,thorit%
#ccordi!$ to #! ,!der"t#!di!$ 'et&ee! the
)ri!ci)#l #!d #$e!t.( I! other &ord"+ #" to third
)#rtie" #cti!$ i! $ood f#ith+ the &ritten
instructions of the )ri!ci)#l #re the 'i!di!$
)o&er" of the #$e!t+ #!d c#!!ot 'e overco*e '%
!o!7&ritte! i!"tr,ctio!" of the )ri!ci)#l !ot *#de
9!o&! to the*. I! *an/ of (.I. v. #e Coster+ 25
Ihil. /;2 31;0/6+ the Co,rt held th#t the )o&er"
#!d d,tie" of #! #$e!t #re co!!ed #!d li*ited to
tho"e &hich #re ")ecied #!d de!ed i! hi"
&ritte! )o&er of #ttor!e%+ &hich li*it#tio! i" #
!otice to+ #!d i" 'i!di!$ ,)o!+ the )er"o! de#li!$
&ith ",ch #$e!t.
I! e=ect+ &he! the )o&er of #ttor!e% of the
#$e!t h#" 'ee! red,ced i! &riti!$ '% the
)ri!ci)#l+ it co!"tit,te+ eve! #" to third )#rtie"
de#li!$ &ith the #$e!t+ the hi$he"t for* of the
e:te!t #!d li*it#tio! of the )o&er" of the #$e!t+
?/
#!d third )#rtie" "ho,ld co!tr#ct o! the '#"i" of
",ch &ritte! i!"tr,*e!t. Th,"+ Article 1;40
)rovide" th#t # third )er"o! &ith &ho* the #$e!t
&i"he" to co!tr#ct o! 'eh#lf of the )ri!ci)#l *#%
reB,ire the )re"e!t#tio! of the )o&er of #ttor!e%+
or the i!"tr,ctio!" #" re$#rd" the #$e!c%. I!
#dditio!+ )riv#te or "ecret order" #!d i!"tr,ctio!"
of the )ri!ci)#l do !ot )reE,dice third )er"o!" &ho
h#ve relied ,)o! the )o&er of #ttor!e% or
i!"tr,ctio! "ho&! the*.
O,t"ide of the &ritte! )o&er of #ttor!e% of
#! #$e!t+ third )#rtie" &ho de#l &ith ",ch #$e!t
#re !ot ",))o"ed to )re",*e th#t the #$e!t i"
f,ll% #,thori>ed. The r,le h#" #l&#%" 'ee! th#t
ever% )er"o! de#li!$ &ith #! #"",*ed #$e!t i"
),t ,)o! #! i!B,ir% #!d *,"t di"cover ,)o! hi"
)eril+ if he &o,ld hold the )ri!ci)#l li#'le+ !ot o!l%
the f#ct of the #$e!c% ',t the !#t,re #!d e:te!t
of the #,thorit% of the #$e!t. Strong v. +utierrez
Repide+ 6 Ihil. 684 31;646< #een v. (aci7c
Co''ercial Co.+ 20 Ihil. 5?8 31;006< 0elso v. a
5r4ana, /8 Ihil. 681 31;??6<To-ota Sha&, Inc. v.
Court of Appeals+ 022 1CRA ?04 31;;/6.
The f#ct th#t o!e i" de#li!$ &ith #! #$e!t+
&hether the #$e!c% 'e $e!er#l or ")eci#l+ "ho,ld
'e # d#!$er "i$!#l. The *ere re)re"e!t#tio! or
decl#r#tio! of o!e th#t he i" #,thori>ed to #ct o!
'eh#lf of #!other c#!!ot of it"elf "erve #" )roof of
hi" #,thorit% to #ct #" #$e!t or of the e:te!t of hi"
#,thorit% #" #$e!t. 8u Eng Cho v. (an A'erican
<orld Air&a-s, Inc.+ ?08 1CRA 515 304446.
The #,thorit% or e:te!t of #,thorit% of #!
#$e!t c#!!ot 'e e"t#'li"hed '% hi" o&!
re)re"e!t#tio!" o,t of co,rt ',t ,)o! the '#"i" of
the *#!ife"t#tio!" of the )ri!ci)#l hi*"elf. I! c#"e
the f#ct of #$e!c% or the e:te!t of the #,thorit% of
the #$e!t i" co!troverted+ the 4urden of proof is
upon the third person to esta4lish it. *A $inance
Corp. v. Court of Appeals+ 011 1CRA 110 31;;06<
0elasco v. a 5r4ana, /8 Ihil. 681 31;??6<
*acaltos Coal .ines v. Court of Appeals+ 02/ 1CRA
264 31;;/6< Sa7c Alcan & Cie v. I'perial
0egeta4le Oild co., Inc., ?// 1CRA //; 304416.
If # third )er"o! doe" !ot *#9e #! i!B,ir%
i!to the #,thorit% of #! #"",*ed #$e!t+ he i"
ch#r$e#'le &ith 9!o&led$e of the #$e!t8"
#,thorit%+ #!d hi" i$!or#!ce of th#t #,thorit% &ill
!ot 'e #! e:c,"e. *acaltos Coal .ines v. Court of
Appeals+ 02/ 1CRA 264 31;;/6.
No!ethele""+ i! ")ite of the f#ct th#t the
),r)orted #$e!t #ct" &itho,t #,thorit% or i!
e:ce"" of #,thorit%+ ,!der Article 1;41+ # third
)er"o! c#!!ot "et7,) the f#ct th#t the #$e!t h#"
e:ceeded hi" )o&er"+ if the )ri!ci)#l h#" r#tied+
or h#" "i$!ied hi" &illi!$!e"" to r#tif% the
#$e!tKLQ" #ct".
b. D!t* o( Di/i)en&e
,1- "s +et!een the Principal and the "gent
?6
H!der Article 1885+ it i" the o'li$#tio! of
ever% #$e!t &ho #cce)t" the #$e!c% to #ct i!
#ccord#!ce &ith the i!"tr,ctio!" of the )ri!ci)#l+
#!d i! def#,lt thereof+ to do #ll th#t # $ood f#ther
of # f#*il% &o,ld do #" reB,ired '% the !#t,re of
the ',"i!e"". I! the "#*e *#!!er+ Article 1;4;
)rovide" e:)re""l% th#t the #$e!t i" re")o!"i'le
!ot o!l% for fr#,d+ ',t #l"o for !e$li$e!ce.

I! e""e!ce+ the d,t% of dili$e!ce reB,ire" of
the #$e!t to #ct o! 'eh#lf of the )ri!ci)#l
e:erci"i!$ the d,e dili$e!ce of # $ood f#ther of #
f#*il%< #!d he i" i! 're#ch of ",ch d,ci#r% d,t%
&he! he #ct" i! fr#,d or i! !e$li$e!ce+ eve! &he!
he ),r",e" the ',"i!e"" of the )ri!ci)#l. Article"
1885 #!d 1;4; of the Civil Code co!r* the
tr,i"* th#t i! the ),r",it of the #$e!c%+ it i"
e:)ected th#t the #$e!t &o,ld h#ve to #ct '#"ed
o! hi" o&! #""e""*e!t of &h#t i" !ece""#r% ,!der
the "it,#tio! &he! it i" !ot covered '% #! e:)re""
i!"tr,ctio! fro* the )ri!ci)#l. The #$e!t i"
",))o"ed to e:erci"e the ',"i!e"" E,d$*e!t
e:)ected fro* the )ri!ci)#l &he! e!teri!$ i!to
E,ridic#l rel#tio!" &ith third )#rtie" or ),r",i!$ the
',"i!e"" ,!der hi" *#!#$e*e!t.
A" # *#tter of $,ideli!e of &h#t i" &ithi! hi"
)o&er+ Article 1888 )rovide" th#t the #$e!t ("h#ll
!ot c#rr% o,t #! #$e!c% if it" e:ec,tio! &o,ld
*#!ife"tl% re",lt i! lo"" or d#*#$e to the
)ri!ci)#l.( Notice th#t the #rticle cover" o!l% #ct"
th#t &o,ld (*#!ife"tl%( le#d to lo""e"< i! other
&ord"+ the #$e!t c#!!ot 'e # $,#r#!tor th#t the
)ri!ci)#l &o,ld ",=er !o lo"" or d#*#$e i! the
),r",it of the #$e!c%< h,*#! !#t,re #" it i"+ the
","t#i!i!$ of lo""e" d,e to h,*#! error i" )#rt of
the ri"9 of ever% o&!er or )ri!ci)#l+ eve! &he! he
hi*"elf c#rrie" o! the ',"i!e"". The o'li$#tio! of
the #$e!t i" to #void lo""e" &hich #re cle#rl%
#void#'le fro* the e:erci"e of d,e dili$e!ce of #
$ood f#ther of # f#*il%.
Ahe! #! #$e!t viol#te" hi" d,t% of dili$e!ce+
he 'eco*e" )er"o!#ll% li#'le to the )ri!ci)#l for
the d#*#$e" c#,"ed to the )ri!ci)#l '% re#"o! of
hi" fr#,d or !e$li$e!ce.
It "ho,ld 'e e*)h#"i>ed ho&ever+ th#t &he!
the #$e!t #ct" i! #ccord#!ce &ith the i!"tr,ctio!"
of the )ri!ci)#l+ the #$e!t c#!!ot 'e dee*ed to
h#ve #cted i! fr#,d #$#i!"t the )ri!ci)#l or to
h#ve #cted !e$li$e!tl%+ eve! &he! d#*#$e &#"
c#,"ed to the )ri!ci)#l. Th," Article 18;; )rovide"
th#t (If # d,l% #,thori>ed #$e!t #ct" i! #ccord#!ce
&ith the order" of the )ri!ci)#l+ the -)ri!ci)#l.
c#!!ot "et ,) the i$!or#!ce of the #$e!t #" to
circ,*"t#!ce" &hereof he hi*"elf &#"+ or o,$ht
to h#ve 'ee!+ #&#re.(
,2- "s to -hird Parties
1i!ce #! #$e!t #ct" i! re)re"e!t#tio! of hi"
)ri!ci)#l+ &he! he #ct" &ithi! the "co)e of hi"
#,thorit%+ ',t doe" "o &ith fr#,d or !e$li$e!ce
th#t c#,"e" d#*#$e to third )er"o!"+ the )ri!ci)#l
i" li#'le to ",ch i!E,red )#rtie" to the d#*#$e"
?5
c#,"ed '% the #$e!t+ #" tho,$h he hi*"elf h#d
directl% c#,"ed the d#*#$e".
Ahe! #! #$e!t #ct" &ith fr#,d or !e$li$e!ce
',t ),r",#!t to the i!"tr,ctio!" of the )ri!ci)#l+
&o,ld the #$e!t the! 'e )er"o!#ll% li#'le to the
third )#rtie" i!E,red there'%U I! other &ord"+ doe"
the #$e!t #l"o 'eco*e )er"o!#ll% li#'le to third
)#rtie" i!E,red '% hi" fr#,d,le!t or !e$li$e!t #ct"U
The #!"&er &o,ld 'e i! the #@r*#tive. H!der
Article 1;4;+ (-t.he #$e!t i" -)er"o!#ll%.
!e$li$e!ce+ &hich "h#ll 'e E,d$ed &ith *ore or
le"" ri$or '% the co,rt"+ #ccordi!$ to &hether the
#$e!c% &#" or &#" !ot for # co*)e!"#tio!.( I!
other &ord"+ #ct" of fr#,d or !e$li$e!ce o! the
)#rt of the #$e!t+ eve! &he! #cti!$ for #!d i!
'eh#lf of the )ri!ci)#l+ #re '% the*"elve" c#,"e"
of #ctio! for the i!E,red )#rt% #$#i!"t the )er"o!
of the #cti!$ #$e!t.
Th,"+ i! *ritish Air&a-s v. Court of
Appeals+ 08/ 1CRA 2/4 31;;86+ it &#" held th#t
&he! o!e #irli!e co*)#!% 3Briti"h Air&#%"6
",'co!tr#ct" # le$ of the i!ter!#tio!#l tri) of it"
)#""e!$er to #!other #irli!e co*)#!% 3IAF6+ the
co!tr#ct of #ir tr#!")ort#tio! &#" e:cl,"ivel% 'et&ee!
)#""e!$er #!d BA+ &ith IAF *erel% #cti!$ #" it" #$e!t
o! the G#!il# to Jo!$ No!$ le$ of the Eo,r!e%. The
&ell7"ettled r,le i" th#t #! #$e!t i" #l"o re")o!"i'le for
#!% !e$li$e!ce i! the )erfor*#!ce of it" f,!ctio! #!d
i" li#'le for d#*#$e" &hich the )ri!ci)#l *#% ",=er '%
re#"o! of the #$e!t8" !e$li$e!t #ct.
&. E>e&t$ on t1e A)ent o( Cont"a&t$ Ente"e.
into
;it1in t1e S&o#e o( 8i$ A!t1o"it*
All co!tr#ct" #!d tr#!"#ctio!" e!tered i!to
'% the #$e!t o! 'eh#lf of the )ri!ci)#l &ith the
"co)e of hi" #,thorit% #re 'i!di!$ o! the )ri!ci)#l+
#!d the #$e!t doe" !ot "t#!d to either 'e li#'le+
or to h#ve $#i!ed #!% ri$ht o! hi" o&! #ccord+
there,!der. Th,"+ Article 18;5 )rovide" th#t (-t.he
#$e!t &ho #ct" #" ",ch i" !ot )er"o!#ll% li#'le to
the )#rt% &ith &ho* he co!tr#ct+ ,!le"" he
e:)re""l% 'i!d" hi*"elf or e:ceed" the li*it" of
hi" #,thorit% &itho,t $ive! ",ch )#rt% ",@cie!t
!otice of hi" )o&er".(
I! Ang v. $ulton $ire Insurance Co.+ 0 1CRA
;2/ 31;616+ it &#" held th#t &he! the #$e!t h#"
#cted &ithi! the "co)e of hi" #,thorit%+ the #ctio!
o! the co!tr#ct *,"t 'e 'ro,$ht #$#i!"t the
)ri!ci)#l #!d !ot #$#i!"t the #$e!t.
I! *a- 0ie& Hotel v. %er & Co.+ 116 1CRA
?05 31;806+ the Co,rt held th#t the #ct" #!d
decl#r#tio! of the #$e!t &ithi! the "co)e of hi"
#,thorit% #!d d,ri!$ it" e:i"te!ce #re co!"idered
#!d tre#ted #" tho"e of )ri!ci)#l.
Ahe! #! #$e!t+ i! e:ec,ti!$ the order"
#!d co**i""io!" of hi" )ri!ci)#l+ c#rrie" o,t the
i!"tr,ctio!" he h#" received fro* hi" )ri!ci)#l+
#!d doe" !ot #))e#r to h#ve e:ceeded hi"
#,thorit% or to h#ve #cted &ith !e$li$e!ce+ deceit+
?8
or fr#,d+ he c#!!ot 'e held re")o!"i'le for the
f#il,re of hi" )ri!ci)#l to #cco*)li"h the o'Eect of
the #$e!c%. +utierrez Her'anos v. Oria
Her'anos+ ?4 Ihil. 2;1 31;1/6< +. (u-at & Sons,
Inc. v. Arco A'use'ent Co'pan-+ 50 Ihil. 240
31;216.
A! #ctio! 'ro,$ht i! the !#*e of the
#$e!t #!d !ot i! the !#*e of the )ri!ci)#l &ho i"
the re#l )#rt% i! i!tere"t+ *,"t 'e di"*i""ed !ot
,)o! the *erit"+ ',t ,)o! the $ro,!d th#t it h#"
!ot 'ee! )ro)erl% i!"tit,ted. Esperanza and *ullo
v. Catindig+ 05 Ihil. ?;5 31;126.
Re/ate. Ca$e$D
Cason v$ Richards, 5 1i/ ?11 ,1@A?-
()* v. .anila Suret-+ 12 1CRA 556 31;6/6
)epo'uceno v. Heredia+ 5 Ihil /6? 31;456
(hil. *an/ of Co''erce v. Aruego+ 140 1CRA /?4
31;816
)ational $ood Authorit- v. IAC+ 182 1CRA 166 31;;46
.ariti'e Agencies & Securities, Inc. v. Court of
Appeals+ 185 1CRA ?26 31;;46.
.. E>e&t$ o( A&t$ Done b* A)ent ;it1o!t o"
in
E:&e$$ o( 8i$ A!t1o"it*
The $e!er#l r,le i" "et ,!der Article 1?15 of
the Civil Code th#t (No o!e *#% co!tr#ct i! the
!#*e of #!other &itho,t 'ei!$ #,thori>ed '% the
l#tter+ or ,!le"" he h#" '% l#& # ri$ht to re)re"e!t
hi*. A co!tr#ct e!tered i!to i! the !#*e of
#!other '% o!e &ho h#" !o #,thorit% or le$#l
re)re"e!t#tio!+ or &ho h#" #cted 'e%o!d hi"
)o&er"+ "h#ll 'e ,!e!force#'le+ ,!le"" it i"
r#tied+ e:)re""l% or i*)liedl%+ '% the )er"o! o!
&ho"e 'eh#lf it h#" 'ee! e:ec,ted+ 'efore it i"
revo9ed '% the other )#rt%.(
The r,le" ,!der Article 1?15 #re ",))orted
,!der Article 124?+ &hich i!cl,de" #*o!$ tho"e
cl#""ied #! (,!e!force#'le co!tr#ct"+( (316 Tho"e
e!tered i!to i! the !#*e of #!other )er"o! '% o!e
&ho h#" 'ee! $ive! !o #,thorit% or le$#l
re)re"e!t#tio!+ or &ho h#" #cted 'e%o!d hi"
)o&er.(
1)ecic#ll%+ ,!der the F#& o! A$e!c%+
Article 18;8 )rovide" th#t (-i.f the #$e!t co!tr#ct"
i! the !#*e of the )ri!ci)#l+ e:ceedi!$ the "co)e
of hi" #,thorit%+ #!d the )ri!ci)#l doe" !ot r#tif%
the co!tr#ct+ it "h#ll 'e void if the )#rt% &ith
&ho* the #$e!t co!tr#cted i" #&#re of the li*it"
of the )o&er" $r#!ted '% the )ri!ci)#l. I! thi"
c#"e+ ho&ever+ the #$e!t i" li#'le if he ,!dertoo9
to "ec,re the )ri!ci)#l8" r#tic#tio!.( the follo&i!$
co!"eB,e!ce" "h#ll Co&D
3#6 it "h#ll 'e void if the )#rt% &ith &ho* the
#$e!t
?;
co!tr#cted i" #&#re of the li*it" of the
)o&er"
$r#!ted '% the )ri!ci)#l<
3'6 I! ",ch c#"e+ the #$e!t &o,ld 'e li#'le
)er"o!#ll% to
",ch third )#rt%+ if he ,!dertoo9 to
"ec,re the
)ri!ci)#l8" r#tic#tio!<
Thi" )ri!ci)le i" reiter#ted i! the "eco!d
)#r#$r#)h of Article 1;14 &hich )rovide" th#t (A"
for #!% o'li$#tio! &herei! the #$e!t h#"
e:ceeded hi" )o&er+ the )ri!ci)#l i" !ot 'o,!d
e:ce)t &he! he r#tie" it e:)re""l% or t#citl%.(
O! the other h#!d+ if the )#rt% &hich &ho*
the #$e!t co!tr#ct i" ,!#&#re of the li*it" of the
)o&er" $r#!ted '% the )ri!ci)#l+ the co!tr#ct i"
,!e!force#'le ,!der Article 124?316.
H!der Article 1;44+ the &ritte! )o&er of
#ttor!e% $ive! '% the )ri!ci)#l $over!" the
co!tr#ct" e!tered i!to &ith third )#rtie"+
irre$#rdle"" of #!% )riv#te li*it#tio! of )o&er"
#$reed ,)o! 'et&ee! the )ri!ci)#l #!d the #$e!t.
The li#'ilit% of #! #$e!t &ho e:ceed" the
"co)e of hi" #,thorit% de)e!d" ,)o! &hether the
third )er"o! &#" #&#re of the li*it" of the #$e!t8"
)o&er. The #$e!t i" !ot 'o,!d !or li#'le for
d#*#$e" i! c#"e he $#ve !otice of hi" )o&er to
the )er"o! &ith &ho* he h#" co!tr#cted+ !or i!
c#"e ",ch )er"o! i" #&#re of the li*it" of the
#$e!t8" )o&er". The re",lti!$ co!tr#ct &o,ld 'e
void eve! #" 'et&ee! the #$e!t #!d the third
)er"o!+ #!d co!"eB,e!tl% !ot le$#ll% 'i!di!$ #"
'et&ee! the*. Jo&ever+ if the #$e!t )ro*i"ed or
,!dertoo9 to "ec,re the )ri!ci)#l8" r#tic#tio! #!d
f#iled+ he i" )er"o!#ll% li#'le. If the r#tic#tio! i"
o't#i!ed+ the! the )ri!ci)#l 'eco*e" li#'le.
Cervantes v. Court of Appeals+ ?42 1CRA 0/
31;;;6< Sa7c Alcan v. I'perial 0egeta4le+ ?//
1CRA //; 304416< #*( v. Court of Appeals+ 0?1
1CRA ?54 31;;26.
Re/ate. Ca$e$6
+orja v$ Sulyap, 3@@ SCRA ?A1 ,2AA3-.
)ational (o&er v. )A.ARCO+ 115 1CRA 58; 31;806
=a-co v. Serra+ 2; Ihil ;8/ 31;0/6
()* v. <elsh $airchild+ 22 Ihil 584 31;0?6
e. Con$e7!en&e$ ;1en A)ent A&t$ in 8i$
O9n Na0e
H!der Article 188?+ if #! #$e!t #ct" i! hi" o&!
!#*e+ the )ri!ci)#l h#" !o ri$ht of #ctio! #$#i!"t the
)er"o!" &ith &ho* the #$e!t h#" co!tr#cted< #!d
!either h#ve ",ch )er"o!" # ri$ht or c#,"e of #ctio!
#$#i!"t the )ri!ci)#l. It # &ell7e"t#'li"hed doctri!e th#t
&he! #! #$e!t+ do #cti!$ &ithi! the "co)e of hi"
#,thorit%+ e!ter" i!to the covered co!tr#ct i! hi" o&!
!#*e+ the! the co!tr#ct i" 'i!di!$ o!l% #$#i!"t the
24
#$e!t+ #!d the )ri!ci)#l i" !ot 'o,!d+ !or doe" he
h#ve le$#l "t#!di!$ to e!force it< thi" i" 'ec#,"e the
co!tr#ct i" dee*ed to h#ve 'ee! e!tered 'et&ee! the
third )#rt% #!d the #$e!t #" hi" o&! )ri!ci)#l.
-1.

I! +ozun v. .ercado /11 1CRA ?4/ 304466+
it &#" held th#t it i" # $e!er#l r,le i! the l#&
#$e!c% th#t+ i! order to 'i!d the )ri!ci)#l '% #
*ort$#$e o! re#l )ro)ert% e:ec,ted '% #! #$e!t+
it *,"t ,)o! it" f#ce ),r)ort to 'e *#de+ "i$!ed
#!d "e#led i! the !#*e of the )ri!ci)#l+
other&i"e+ it &ill 'i!d the #$e!t o!l%.

I! .ari'perio Co'pania )aviera, S.A. v. Court
of Appeals+ 1/6 1CRA ?68 31;856+ the Co,rt held th#t
,!der Article 188? of the Civil Code+ if #! #$e!t #ct" i!
hi" o&! !#*e+ the )ri!ci)#l h#" !o ri$ht of #ctio!
#$#i!"t the )er"o!" &ith &ho* the #$e!t h#"
co!tr#cted< !either h#ve ",ch )er"o!" #$#i!"t the
)ri!ci)#l. I! ",ch c#"e the #$e!t i" the o!e directl%
'o,!d i! f#vor of the )er"o! &ith &ho* he h#"
co!tr#cted+ #" if the tr#!"#ctio! &ere hi" o&!+ e:ce)t
&he! the co!tr#ct i!volve" thi!$" 'elo!$i!$ to the
)ri!ci)#l. 1i!ce the )ri!ci)#l" h#ve c#,"ed their #$e!t
to e!ter i!to # ch#rter )#rt% i! hi" o&! !#*e #!d
&itho,t di"clo"i!$ th#t he #ct" for #!% )ri!ci)#l+ the!
",ch )ri!ci)#l" h#ve !o "t#!di!$ to ",e ,)o! #!% i"",e
or c#,"e of #ctio! #ri"i!$ fro* "#id ch#rter )#rt%.
,1- '2ception3 )hen the Property .nvolved
in the
Contract +elongs to the Principal
The e:ce)tio!+ #" )rovided i! Article 188?+ i"
&he! the )ro)ertie" of the )ri!ci)#l #re i!volved+
i! &hich c#"e the )ri!ci)#l i" 'o,!d eve! &he!
the co!tr#ct &#" e!tered i!to i! the !#*e of the
#$e!t. +old Star .ining Co., Inc. v. i'3"i'ena+ 0/
1CRA /;5 31;686< #!d i" # r,le !ece""#r% for the
)rotectio! of third )er"o!" #$#i!"t )o""i'le
coll,"io! 'et&ee! the #$e!t #!d the )ri!ci)#l.
()* v. Agudelo + /8 Ihil. 6// 31;??6.
Th,"+ the f#ct th#t *o!e% ,"ed '% the #$e!t
'elo!$ed to the )ri!ci)#l i" covered '% the
e:ce)tio!. Sy(4uco v$ Sy(4uco, 4A 1i/ ?34
,1@2A-.
,2- Remedy of the Principal .s to Recover
%amages
from the "gent
Article 188? *#9e" it cle#r th#t the
fore$oi!$ r,le" #re &itho,t )reE,dice to #ctio!"
'et&ee! )ri!ci)#l #!d #$e!t.
The r,le i! thi" E,ri"dictio! i" th#t &here the
*erch#!di"e i" ),rch#"ed fro* #! #$e!t &ith
,!di"clo"ed )ri!ci)#l #!d &itho,t 9!o&led$e o!
the )#rt of the ),rch#"er th#t the ve!dor i"
*erel% #! #$e!t+ the ),rch#"er t#9e title" to the
*erch#!di"e #!d the )ri!ci)#l c#!!ot #! #ctio!"
#$#i!"t hi* for the recover% of the *erch#!di"e
or eve! for d#*#$e"+ ',t c#! o!l% )roceed
#$#i!"t the #$e!t. "ivad v$ ilma Mercantile
Co$& 4@ 1i/. B1? ,1@2?-.
21
Altho,$h #ccordi!$ to #rticle 188?+ &he!
the #$e!t #ct" i! hi" o&! !#*e he i" !ot
)er"o!#ll% li#'le to the )er"o! &ith &ho* he
e!ter" i!to # co!tr#ct &he! thi!$" 'elo!$i!$ to
the )ri!ci)#l #re the ",'Eect thereof< %et ",ch
third )er"o! h#" # ri$ht of #ctio! !ot o!l% #$#i!"t
the )ri!ci)#l ',t #l"o #$#i!"t the #$e!t+ &he! the
ri$ht" #!d o'li$#tio!" &hich #re the ",'Eect
*#tter of the liti$#tio! c#!!ot 'e le$#ll% #!d
E,ridic#ll% deter*i!ed &itho,t he#ri!$ 'oth of
the*. +eaumont v$ Prieto, 41 1i/. ?CA
,1@21-$
)ational $ood Authorit- v. Inter'ediate Appellate
Court+ 182 1CRA 166 31;;46
-1.Herranz & +arriz v. %er & Co.+ 8 Ihil. 160 31;456< i' Tiu v.
Ruiz+ 1/ Ihil ?65 31;146< S'ith *ell v. Sotelo .atti+ 22 Ihil 852
31;006< *ehn .e-er & Co. v. *anco Espanol3$ilipino+ /1 Ihil. 0/?
31;056< i' Te/ +oan v. Azores+ 54 Ihil. ?6? 31;246< Ortega v.
*auang $ar'ers Cooperative .ar/eting Assn.+ 146 Ihil. 865
31;/;6.
?D18 AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
V. RHFE1 OF AJAT IOAER1 GAY BE VAFIDFY
EOERCI1ED BY TJE AGENY
a. Gene"a/ R!/e on o9e" o(
A.0ini$t"ation
I! the #'"e!ce of the $r#!t of ")eci#l )o&er
of #ttor!e% to the #$e!t+ he i" dee*ed to h#ve
'ee! e:te!ded o!l% # $e!er#l )o&er of #ttor!e%
'% the )ri!ci)#l+ #!d hi" )o&er" c#! o!l% cover
#ct" of #d*i!i"tr#tio!. Th,"+ ,!der Article 1855+
ever% #$e!c% co,ched i! $e!er#l ter*" c#! o!l%
'e co!"tr,ed #" $r#!ti!$ to the #$e!t the )o&er
to e:ec,te #ct" of #d*i!i"tr#tio!+ eve! if the
)ri!ci)#lD
3#6 1t#te" th#t he &ithhold" !o )o&er fro* the
#$e!t<
3'6 1t#te" th#t the #$e!t *#% e:ec,te #ct" he
co!"ider"
#))ro)ri#te< or
3c6 A,thori>e" $e!er#l #!d ,!li*ited *#!#$e*e!t
Act" of #d*i!i"tr#tio! h#" the "#*e
co**erci#l #!d le$#l "i$!ic#!ce #" (to #ct i! the
ordi!#r% co,r"e of ',"i!e"".( For e:#*)le+ the
ri$ht to ",e for the collectio! of de't o&i!$ to the
)ri!ci)#l i" dee*ed not #! i!cide!t of "trict
20
o&!er"hi) &hich *,"t 'e co!ferred i! e:)re""
ter*". 5erman 6 Co$ v$ %onaldson& Sim 6
Co$, 1 1i/. ?3 ,1@A1-.
A! #ttor!e%7i!7f#ct e*)o&ered to )#% the
de't" of the )ri!ci)#l #!d to e*)lo% le$#l co,!"el
to defe!d the )ri!ci)#lKLQ" i!tere"t+ h#" cert#i!l%
the i*)lied )o&er to )#% o! 'eh#lf of the )ri!ci)#l
the #ttor!e%8" fee" ch#r$ed '% the l#&%er.
.unicipal Council of Iloilo v. Evangelista+ // Ihil
0;4 31;?46.
A! #$e!t $r#!ted ,!der # )o&er of #ttor!e%
the #,thorit% to de#l &ith )ro)ert% &hich the
)ri!ci)#l *i$ht or co,ld h#ve do!e if )er"o!#ll%
)re"e!t+ i" dee*ed #,thori>ed to e!$#$e the
"ervice" of # l#&%er to )re"erve the o&!er"hi)
#!d )o""e"" of the )ro)ertie" of the )ri!ci)#l.
A! o@cer &ho h#" co!trol #!d *#!#$e*e!t
of the cor)or#tio!8" ',"i!e""+ or # ")ecic )#rt
thereof+ i" dee*ed to h#ve )o&er to e*)lo% ",ch
#$e!t" #!d e*)lo%ee" #" #re ,",#l #!d !ece""#r%
i! the co!d,ct of the cor)or#tio!8" ',"i!e""+
e:ce)t o!l% &here ",ch #,thorit% i" e:)re""l%
ve"ted i! the Bo#rd of Director". 7u Chuc* v$
8ong /i Po, 4? 1i/ ?AB ,1@24-.
+overn'ent of (I v. <agner+ /2 Ihil 1?0 31;0;6.
Ahether &h#t i" $r#!ted i" #! #,thorit% to
*erel% #d*i!i"ter 3$e!er#l )o&er of #ttor!e%6+ or
to do #! #ct of "trict o&!er"hi) 3")eci#l )o&er of
#ttor!e%6+ i" !ot deter*i!ed fro* the title $ive! to
the i!"tr,*e!t+ ',t !#t,re o! the !#t,re of the
)o&er $ive! ,!der the o)er#tive )rovi"io!" of
",ch i!"tr,*e!t.
B,t &hether &h#t i" $r#!ted to the #$e!t i"
# $e!er#l )o&er of #ttor!e% or # ")eci#l )o&er of
#ttor!e%+ the r,le of "trict co!"tr,ctio! "till
)rev#il". Th," 77
Io&er" of #ttor!e% #re $e!er#ll% co!"tr,ed
"trictl% #!d co,rt" &ill !ot i!fer or )re",*e
'ro#d )o&er" fro* deed" &hich do !ot
",@cie!tl% i!cl,de )ro)ert% or ",'Eect ,!der
&hich the #$e!t i" to de#l. The #ct do!e *,"t
'e le$#ll% ide!tic#l &ith th#t #,thori>ed to 'e
do!e. )oodchild ,oldiings& .nc$ v$ Ro2as
'lectric 6 Construction Co$& .nc$, 43? SCRA
235 ,2AA4-.
The decl#r#tio! of the #$e!t #lo!e #re $e!er#ll%
i!",@cie!t to e"t#'li"h the f#ct or e:te!t of her
#,thorit%. The "ettled r,le i" th#t )er"o!"
de#li!$ &ith #! #"",*ed #$e!t #re 'o,!d #t
their )eril+ #!d if the% &o,ld hold the )ri!ci)#l
li#'le to #"cert#i! !ot o!l% the f#ct of #$e!c%
',t #l"o the !#t,re #!d e:te!t of #,thorit%+ #!d
i! c#"e either i" co!troverted+ the ',rde! of
)roof i" ,)o! the* to )rove it. iton!ua v.
$ernandez+ 205 1CRA 258 304426+ citing 8u Eng
Cho v. (an A'erican <orld Air&a-s, Inc.+ ?08
1CRA 515 304446.
Eve! &he! # ")eci#l )o&er of #ttor!e% i"
$r#!ted '% the )ri!ci)#l to hi" #$e!t+ it i" "till
2?
the $e!er#l r,le th#t # )o&er of #ttor!e% *,"t
'e "trictl% co!"tr,ed< the i!"tr,*e!t &ill 'e held
to $r#!t o!l% tho"e )o&er" th#t #re ")ecied+
#!d the #$e!t *#% !either $o 'e%o!d !or
devi#te fro* the )o&er of #ttor!e%. Olaguer v.
(urugganan, "r.+ /1/ 1CRA 264 304456.
,1- orms Re9uired of Po!ers of "ttorney
Altho,$h #$e!c% i" # co!"e!",#l co!tr#ct
#!d *#% th," 'e co!"tit,ted '% *ere *eeti!$ of
*i!d"+ it "ee*" th#t &he! the l#& reB,ire" the
#$e!c% to 'e i! the for* of # ()o&er of #ttor!e%(+
it *e#!" th#t ide#ll% 3',t !ot !ece""#ril%6 it 'ust
4e in &riting. Ahe! the #$e!c% i" !ot i! &riti!$+
the! it doe" !ot !ece""#ril% *e#! th#t the
co!tr#ct of #$e!c% i" void+ ',t th#t f#il,re to
co*)l% &ith the for* reB,ired &o,ld h#ve "erio,"
le$#l co!"eB,e!ce".
Th,"+ ,!der Article 1852 of the Civil Code+
#! #$e!c% to "ell # )iece of l#!d or #! i!tere"t
therei! *,"t 'e i! &riti!$+ other&i"e+ the re",lti!$
co!tr#ct of "#le &o,ld 'e void.
H!der Article 1858+ # ")eci#l )o&er of #ttor!e% i"
!ece""#r% to co!fer )o&er i! the #$e!c% th#t
&o,ld co!"tit,te #ct" of o&!er"hi)+ ide#ll% the
#$e!c% co!tr#ct *,"t 'e i! &riti!$. Ahe!
therefore # ")eci#l )o&er of #ttor!e%+ or the
co!fer*e!t of )o&er" to the #$e!t to e:ec,te #ct"
of "trict o&!er"hi) o! 'eh#lf of the )ri!ci)#l+ i"
do!e or#ll%+ the #$e!c% rel#tio!"hi) *#% 'e v#lid
#" 'et&ee! the )ri!ci)#l #!d #$e!t+ ',t th#t third
)#rtie" &ho de#l &ith hi* *,"t reB,ire &ritte!
evide!ce of hi" )o&er to e:ec,te #ct" of "trict
o&!er"hi)+ other&i"e+ the% #re 'o,!d to e!ter
i!to the co!tr#ct #t their o&! ri"9.
I! Ho'e Insurance Co. v. 5nited States ines
Co., 01 1CRA 86? 31;656+ the Co,rt held th#t
Article 1858 doe" !ot "t#te th#t the ")eci#l )o&er
of #ttor!e% 'e i! &riti!$< 'e th#t #" it *#%+ the
"#*e *,"t 'e d,l% e"t#'li"hed '% evide!ce other
th#! the "elf7"ervi!$ #""ertio! of the )#rt%
cl#i*i!$ th#t ",ch #,thorit% &#" ver'#ll% $ive!
hi*. I! Ho'e Insurance Co.+ i! ")ite of co,!"el8"
#"",r#!ce th#t he h#d ver'#l #,thorit% to e!ter
i!to co*)ro*i"e for ),r)o"e of )re7tri#l
)roceedi!$"+ the R,le" of Co,rt reB,ire for
#ttor!e%" to co*)ro*i"e the liti$#tio! of their
clie!t" # (")eci#l #,thorit%( 3the! 1ectio! 0?+ R,le
1?8+ R,le" of Co,rt6. A!d &hile the "#*e doe" !ot
"t#te th#t the ")eci#l #,thorit% 'e i! &riti!$+ the
co,rt h#" ever% re#"o! to e:)ect th#t+ if !ot i!
&riti!$+ the "#*e 'e d,l% e"t#'li"hed '% evide!ce
other th#! the "elf7"ervi!$ #""ertio! of co,!"el
hi*"elf th#t ",ch #,thorit% &#" ver'#ll% $ive!
hi*. . . For #,thorit% to co*)ro*i"e c#!!ot li$htl%
'e )re",*ed. A!d if+ &ith $ood re#"o!+ the E,d$e
i" !ot "#ti"ed th#t "#id #,thorit% e:i"t"+ #" i! thi"
c#"e+ di"*i""#l of the ",it for !o!7#))e#r#!ce of
)l#i!ti= i! )re7tri#l i" "#!ctio!ed '% the R,le".
Altho,$h+ there i" !o reB,ire*e!t th#t the
)o&er of #ttor!e% to 'e v#lid #!d 'i!di!$ *,"t 'e
22
!ot#ri>ed or i! # ),'lic i!"tr,*e!t. *arretto v.
Tuason+ /; Ihil. 82/ 31;?26. Jo&ever+ # !ot#ri>ed
)o&er of #ttor!e% c#rrie" the evide!ti#r% &ei$ht
co!ferred ,)o! it &ith re")ect to it" d,e
e:ec,tio!. :eloso v$ Court of "ppeals, 2?A
SCRA 5@3 ,1@@?-.
,2- Construction Rules on Po!ers of
"ttorney
Th#t # )o&er of #ttor!e% 'e i! &riti!$ "ee*"
to 'e *ore critic#l to the co!"tit,tio! of # ")eci#l
)o&er of #ttor!e%+ th#! to # $e!er#l )o&er of
#ttor!e%. I! 'oth t%)e" of #$e!cie"+ 'ec#,"e of the
#'"e!ce of # &ritte! evide!ce+ the ',rde! of )roof
to "ho& th#t there i" i!deed # co!tr#ct of #$e!c%
i" o! the )#rt of the )er"o! &ho ),r)ort" to #ct
for #!d i! 'eh#lf of # )ri!ci)#l+ #!d eve! the!
third )#rtie" #re directed to e!",re the !#t,re #!d
e:te!t of the #$e!t8" )o&er. B,t if &h#t &#"
co!"tit,ted &#" # $e!er#l )o&er of #ttor!e%+ it
cover" *erel% #ct" of #d*i!i"tr#tio!+ #!d
therefore third )#rtie" &o,ld 'e le"" &#r% th#t the
co!tr#ct or tr#!"#ctio! the% e!tered i!to i" !ot
&ithi! the )o&er" of the #$e!t. O! the other
h#!d+ &he! &h#t &#" co!"tit,ted &#" #! or#l
")eci#l )o&er of #ttor!e%+ the! l#c9i!$ the &ritte!
evide!ce of &h#t )#rtic,l#r )o&er of o&!er"hi)
h#" 'ee! $r#!ted to the #$e!t+ the third )#rt%
*#% o!l% re#"o!#'l% )re",*e th#t the #$e!t i"
$r#!ted o!l% )o&er" of #d*i!i"tr#tio!.
Therefore+ o,t"ide of Article 1852 &hich
re!der" the "#le of # )iece of l#!d void if the
)o&er of #ttor!e% i" !ot i! &riti!$+ ever% co!tr#ct
e!tered i!to '% the #$e!t o! 'eh#lf of the
)ri!ci)#l coveri!$ #ct" of o&!er"hi) *#de
),r",#!t to # ver'#l ")eci#l )o&er of #ttor!e%
&o,ld !ot 'e void+ ',t r#ther ,!e!force#'le+ for
the )ri!ci)#l h#" ever% #,thorit% to ),r",e the
re",lti!$ co!tr#ct+ #!d the third7)#rt% &o,ld 'e
e"to))ed fro* ref,"i!$ to co*)l% &ith # co!tr#ct
he &illi!$l% e!tered i!to #'"e!t the &ritte!
#,thorit% of the #$e!t.
b. Ca$e$ ;1e"e S#e&ia/ o9e"$ o( Atto"ne*
A"e
Ne&e$$a"*
Article 1858 e!,*er#te" fo,rtee! i!"t#!ce"
&hich #re de"cri'ed #" (#ct" of "trict do*i!io!+(
#!d &hich c#!!ot 'e dee*ed to 'e &ithi! the
)o&er of the #$e!t ,!le"" e:)re""l% $r#!ted 3i.e.+
e:ce)t ,!der # ")eci#l )o&er of #ttor!e%6+ #!d the
ftee!th c#"e e!,*er#ted #ct,#ll% cover" the
$e!er#l r,leD A dul- appointed agent has no
po&er to e,ercise on 4ehalf of the principal an-
act of strict do'inion unless it is under a special
po&er of attorne-.
<hat 'a/es an agenc- a special po&er of
attorne-> It i" !ot the !#*e or title $ive! i! the deed
i"",ed '% the )ri!ci)#l th#t deter*i!e" &hether the
#$e!t c#! e:erci"e #ct" of "trict do*i!io! for #!d i!
2/
,1- -o Ma*e Payments as "re Not Usually
Considered as "cts of "dministration
I#%*e!t" *#de i! the ordi!#r% co,r"e of
',"i!e"" co!"tit,te *erel% #ct" of #d*i!i"tr#tio!+
"i!ce the% the! $o i!to *ere #ct" of *#!#$e*e!t.
H!der Article 1855+ #! #$e!c% co,ched i! $e!er#l
ter*" co*)ri"e" #ct" of #d*i!i"tr#tio! &hich
&o,ld i!cl,de ($e!er#l #!d ,!li*ited
*#!#$e*e!t.(
All other for*" of )#%*e!t for #!d i! 'eh#lf
of the )ri!ci)#l &o,ld co!"tit,te #ct" of "trict
do*i!io!+ &hich #re !ot dee*ed &ithi! the )o&er
of eve! # d,l% #))oi!ted #$e!t+ ,!le"" $r#!ted
")eci#ll% or ,!der # ")eci#l )o&er of #ttor!e%.
I! #o'inion Insurance v. Court of Appeals+
?56 1CRA ?0; 304406+ #ltho,$h # (1)eci#l Io&er
of Attor!e%( &#" i"",ed '% the i!",r#!ce co*)#!%
to it" #$e!c% *#!#$er+ it" &ordi!$" "ho&ed th#t it
"o,$ht o!l% to e"t#'li"h #! #$e!c% th#t co*)ri"e"
#ll the ',"i!e"" of the )ri!ci)#l &ith the
de"i$!#ted loc#lit%+ ',t co,ched i! $e!er#l ter*"+
#!d co!"eB,e!tl% &#" li*ited o!l% to #ct" of
#d*i!i"tr#tio!. The Co,rt held th#t # $e!er#l
)o&er )er*it" the #$e!t to do #ll #ct" for &hich
the l#& doe" !ot reB,ire # ")eci#l )o&er. Th,"+
the #ct" e!,*er#ted i! or "i*il#r to tho"e
e!,*er#ted i! the (1)eci#l Io&er of Attor!e%(
3i.e.+ re#ll% # $e!er#l )o&er of #ttor!e%6 did !ot
reB,ire # ")eci#l )o&er of #ttor!e%+ #!d co,ld
o!l% cover #ct" of #d*i!i"tr#tio!.
I! #o'inion Insurance+ it &#" held th#t the
)#%*e!t of cl#i*" '% the #re# *#!#$er of #!
i!",r#!ce co*)#!% did !ot co!"tit,te #! #ct of
#d*i!i"tr#tio!+ #!d th#t "i!ce the "ettle*e!t of
cl#i*" &#" !ot i!cl,ded #*o!$ the #ct"
e!,*er#ted i! the 1)eci#l Io&er of Attor!e%
i"",ed '% the i!",r#!ce co*)#!%+ !or i" of #
ch#r#cter "i*il#r to the #ct" e!,*er#ted therei!+
the! # ")eci#l )o&er of #ttor!e% &#" reB,ired
'efore ",ch #re# *#!#$er co,ld "ettle the
i!",r#!ce cl#i*" of the i!",red. Co!"eB,e!tl%+ the
#*o,!t" )#id '% the #re# *#!#$er to "ettle ",ch
cl#i*" &ere !ot #llo&ed to 'e rei*',r"ed fro*
the )ri!ci)#l i!",r#!ce co*)#!%.
,2- -o ';ect Novation )hich Put an 'nd to
Obligations "lready in '2istence at the
-ime the
"gency )as Constituted
The )o&er of #! #$e!t to !ov#te o'li$#tio!"
(#lre#d% i! e:i"te!ce #t the ti*e the #$e!c% &#"
co!"tit,ted+( &hich *,"t 'e covered '% # ")eci#l
)o&er of #ttor!e%+ &o,ld i*)l% th#t if the
o'li$#tio! &#" cre#ted o!l% d,ri!$ the #$e!c%
rel#tio!"hi)+ the )o&er to cre#te ",ch o'li$#tio!
$r#!ted to the #$e!t 'ri!$" &ith it the i*)lied
)o&er to !ov#te it.
<hat happens if the agent is clearl-
e'po&ered under a special po&er of attorne- to
incur an o4ligation in 4ehalf of the principal, and
26
in the process of doing so, the agent novates an
pre3e,isting o4ligation>
,3- -o Compromise& -o Submit <uestions to
"rbitration& -o Renounce the Right to
"ppeal from
a 4udgment& -o )aive Objections to the
:enue of
an "ction& or -o "bandon a Prescription
"lready
"c9uired
H!der Article 1884+ # ")eci#l )o&er to
co*)ro*i"e doe" !ot #,thori>e ",'*i""io! to
#r'itr#tio!. It *#% #l"o 'e ded,ced th#t # ")eci#l
)o&er to ",'*it to #r'itr#tio! c#!!ot 'e
co!"tr,ed to $r#!t to the #$e!t the )o&er to
co*)ro*i"e.
H!der Article 0408+ co*)ro*i"e i" #
co!tr#ct &here'% the )#rtie"+ '% *#9i!$
reci)roc#l co!ce""io!"+ #void # liti$#tio! or ),t #!
e!d to o!e #lre#d% co**e!ced.
1ectio! ?3d6 of the Alter!#tive Di"),te
Re"ol,tio! Act of 0442 3R.A. No. ;08/6+
(#r'itr#tio!( i" de!ed #" (# vol,!t#r% di"),te
re"ol,tio! )roce"" i! &hich o!e or *ore
#r'itr#tor"+ #))oi!ted i! #ccord#!ce &ith the
#$ree*e!t of the )#rtie"+ or r,le" )ro*,l$#ted
),r",#!t to thi" Act+ re"olve # di"),te '%
re!deri!$ #! #&#rd.(
H!der Article 1884+ the )o&er to
co*)ro*i"e e:cl,de" the )o&er to ",'*it to
#r'itr#tio!. It &o,ld #l"o 'e re#"o!#'le to
co!cl,de th#t the )o&er to ",'*it to #r'itr#tio!
doe" !ot c#rr% &ith it the )o&er to co*)ro*i"e.
<ith such special e,clusion rule under Article
?@@A as to the po&ers to co'pro'ise and
ar4itrate, &ould that 'ean all other po&ers
covered under the paragraph nu'4ered B of
Article ?@C@ are not 'utuall- e,clusive> I! order
&ord"+ the $r#!t of the ")eci#l )o&er to
co*)ro*i"e &o,ld *e#! th#t the i*)lied )o&er
of the #$e!t to re!o,!ce the ri$ht to #))e#l fro*
# E,d$*e!t of # lo&er co,rt+ if th#t 'e e""e!ti#l i!
#rrivi!$ #t # co*)ro*i"e re"ol,tio! 'efore the
#))ell#te co,rt. 1#*e thi!$ co,ld 'e "#id of the
")eci#l )o&er to &#ive o'Eectio!" to the ve!,e of
#! #ctio!+ or to &#ive # )re"cri)tio! #lre#d%
#cB,ired+ vi"7W 7vi" the ")eci#l )o&er to
co*)ro*i"e.
Ahe! the #ttor!e%7i!7f#ct h#" 'ee!
#,thori>ed i! &riti!$ to i!"tit,te #!% #ctio! i!
co,rt to eEect #ll )er"o! fo,!d i! # ")ecied )#rcel
of l#!d (#!d for thi" ),r)o"e+ to #))e#r #t the )re7
tri#l #!d e!ter i!to #!% "ti),l#tio! of f#ct" #!dRor
co*)ro*i"e #$ree*e!t ',t o!l% i!"of#r #" thi"
&#" )rotective of the ri$ht" #!d i!tere"t" of the
)ri!ci)#l i! the )ro)ert%+( the "#*e doe" !ot
co!"tit,te #,thorit% to e!ter i!to # co*)ro*i"e
#$ree*e!t th#t )rovide" for the "#le of the
)ro)ert% to the defe!d#!t i! the c#"e th," led.
The E,d$*e!t '#"ed o! co*)ro*i"e e!tered i!to
25
'% the #ttor!e% &ho h#" !ot "ho&! ")ecic
#,thorit% to do "o &#" decl#red void. Cos'ic
u'4er v. Court of Appeals+ 06/ 1CRA 168 31;;66.
No!ethele""+ i! %ungo v$ /opena, ? SCRA 1AAC
,1@?2-+ the co,rt ch#r#cteri>ed # co*)ro*i"e
e!tered i!to '% the l#&%er &itho,t the ")eci#l
)o&er of #ttor!e% of clie!t !ot to 'e void ',t
*erel% ,!e!force#'le.
Co!fe""io! of E,d$*e!t" "t#!d" o! the "#*e
footi!$ #" # co*)ro*i"e+ #!d *#% !ot 'e e!tered
i!to '% co,!"el e:ce)t &ith the 9!o&led$e #!d
co!"e!t of the clie!t+ or ,)o! hi" ")eci#l
e*)o&er*e!t. "cener v$ Sison, B SCRA C11
,1@?3-.
,4- -o )aive "ny Obligation 5ratuitously
(To &#ive #!% o'li$#tio! $r#t,ito,"l%( i" the
i!ele$#!t ver"io! of the le$#l ter* (co!do!#tio!
or re*i""io! of the de't( &hich ,!der Article 1054
(i" e""e!ti#ll% $r#t,ito,"+ #!d reB,ire" the
#cce)t#!ce '% the o'li$or. It *#% 'e *#de
e:)re""l% or i*)liedl%.( I! other &ord"+ #! #$e!t
c#!!ot o,t"ide of # ")eci#l )o&er of #ttor!e%+
co!do!e or re*it the o'li$#tio!" o&i!$ to the
)ri!ci)#l< #!d if he doe" "o+ the #ct i"
(,!e!force#'le.(
It doe" !ot *e#! ho&ever+ th#t ever% #$e!t
of the )ri!ci)#l &o,ld h#ve the )o&er to &#ive
the )ri!ci)#l8" o'li$#tio! for v#l,#'le
co!"ider#tio! o,t"ide of #,thorit% to do "o< &h#t it
*e#!" i" th#t &he! &ithi! the "co)e of #,thorit%
of the #$e!t8" #,thorit% he *#% do "o #" #!
i*)lied or i!cide!t#l )o&er< &here#"+ the )o&er
to &#ive #! o'li$#tio! o&ed to the )ri!ci)#l
$r#t,ito,"l% c#! o!l% #ri"e #" #! e:)re"" )o&er+
',t !ot i*)lied or i!cide!t#l )o&er of #! #$e!t. I!
other &ord"+ the eB,iv#le!t of the ter* (to &#ive
#!% o'li$#tio! o!ero,"l%+( &o,ld 'e eB,iv#le!t to
)#%*e!t or )erfor*#!ce of the o'li$#tio!+ &hich
'% it" e""e!ce i" #! #ct #dv#!t#$eo," to the
)ri!ci)#l+ #!d &he! do!e &itho,t e:)re""
#,thorit% i" "till &ithi! the "co)e of the #$e!t8"
#,thorit%.
A!other &#% of #))ro#chi!$ the i"",e+ i"
th#t if ,!der )#r#$r#)h !,*'ered 1 of Article
1858+ ever% #$e!t h#" the i*)lied )o&er to *#9e
)#%*e!t" th#t i! the ordi!#r% co,r"e of ',"i!e""+
the! *ore"o c#! #! #$e!t collect )#%*e!t" o!
o'li$#tio!" o&i!$ to the )ri!ci)#l+ &hich '% their
!#t,re #re #l"o #ct" of #d*i!i"tr#tio! or
*#!#$e*e!t.
,5- -o 'nter into "ny Contract by )hich the
O!nership of an .mmovable .s
-ransmitted or
"c9uired 'ither 5ratuitously or for a
:aluable
Consideration
I#r#$r#)h !,*'ered / of Article 1858
cover" o!l% i**ov#'le )ro)ert%+ #" di"ti!$,i"hed
fro* *ov#'le )ro)ert%. It doe" !ot *e#! th#t
28
ever% #$e!t h#" the i*)lied )o&er to tr#!"*it or
#cB,ire o&!er"hi) over *ov#'le )ro)ert% o!
'eh#lf of the )ri!ci)#l< &h#t the )#r#$r#)h
i!te!d" to co!ve% i" th#t there c#! !ever 'e #!
i*)lied )o&er o! the )#rt of the #$e!t to tr#!"*it
or #cB,ire o&!er"hi) over i**ov#'le )ro)ert%+
&hether '% o!ero," or $r#t,ito," title< if ",ch
)o&er "h#ll 'e dee*ed to e:i"t i" *,"t 'e
e:)re""l% $r#!ted.
I#r#$r#)h !,*'ered / of Article 1858
cre#te" the ($e!er#l r,leS( of ")eci#l )o&er of
#ttor!e% &he! it co*e" to i**ov#'le )ro)ert%<
#!d $e!er#ll% re!der" the re",lti!$ co!tr#ct"
*erel% ,!e!force#'le. Ahe! it co*e" to #
)#rtic,l#r t%)e of i**ov#'le )ro)ert%+ !#*el%
l#!d or #!% i!tere"t therei!+ Article 1852 #))lie"
")ecic#ll%+ i.e.+ !ot o!l% *,"t the )o&er 'e
$r#!ted ,!der # ")eci#l )o&er of #ttor!e% 3i.e.+
e:)re""l% $ive!6+ it *,"t 'e i! &riti!$+ other&i"e+
the re",lti!$ co!tr#ct of "#le i" void. O'vio,"l%+ i!
the ),rch#"e of # )iece of l#!d or #!% i!tere"t
therei! thro,$h #! #$e!t+ Article 1852 doe" !ot
#))l%+ #!d &o,ld 'e covered '% Article 1858.
Fi9e&i"e+ do!#tio!" of i**ov#'le" thro,$h #!
#$e!t #re covered e!tirel% ,!der )#r#$r#)h / of
Article 1858.
Fi!#ll%+ it i" cle#r fro* # co*)#ri"o! of the
)rovi"io!" of Article 1852 #!d 1858-/.+ th#t the
)o&er $r#!ted to #! #$e!t to ),rch#"e # )iece of
l#!d or #!% i!tere"t therei! *,"t 'e i! the for* of
")eci#l )o&er of #ttor!e%+ the "#*e !eed !ot 'e
i! &riti!$ i! order to 'e v#lid. Rodrigue= v$
Court of "ppeals, 2@ SCRA 41@ ,1@?@-. I!
(ineda v. Court of Appeals+ ?56 1CRA 000 304406+ it
&#" held th#t &he! # ho,"e #!d lot &#" "old '%
#! #$e!t &ho h#d !o #,thorit% fro* the re$i"tered
o&!er to do "o+ the re",lti!$ "#le i" voidD
The Civil Code )rovide" th#t i! # "#le of #
)#rcel of l#!d or #!% i!tere"t therei! i" *#de
thro,$h #! #$e!t+ # ")eci#l )o&er of #ttor!e% i"
e""e!ti#l. -Article 1858. Thi" #,thorit% *,"t 'e i!
&riti!$+ other&i"e the "#le "h#ll 'e void. -Article
1852. : : : A ")eci#l )o&er of #ttor!e% i"
!ece""#r% to e!ter i!to #!% co!tr#ct '% &hich the
o&!er"hi) of #! i**ov#'le i" tr#!"*itted or
#cB,ired for # v#l,#'le co!"ider#tio!. Aitho,t #!
#,thorit% i! &riti!$ . . . #!% 8"#le8 . . . i" void. 3#t ).
0086
There i" !o doc,*e!t#r% evide!ce o! record
th#t the o&!er" of # l#r$e tr#ct of l#!d ")ecic#ll%
#,thori>ed the 'ro9er to "ell their )ro)ert% to
#!other. Article 1858 of the Ne& Civil Code
)rovide" th#t # ")eci#l )o&er of #ttor!e% i"
!ece""#r% to e!ter i!to #!% co!tr#ct '% &hich the
o&!er"hi) of #! i**ov#'le i" tr#!"*itted or
#cB,ired either $r#t,ito,"l% or for # v#l,#'le
co!"ider#tio! -Article 18583/6.+ to cre#te or
co!ve% re#l ri$ht" over i**ov#'le )ro)ert%
-Article 18583106.+ or for #!% other #ct of "trict
do*i!io! -Article 185831/4.. A!% "#le or re#l
)ro)ert% '% o!e ),r)orti!$ to 'e #! #$e!t of the
re$i"tered o&!er &itho,t #!% #,thorit% therefor i!
2;
&riti!$ fro* "#id o&!er i" !,ll #!d void.
-1.
iton!ua
v. $ernandez+ 205 1CRA 258 304426.
H!der Article 185;+ (-#. ")eci#l )o&er to "ell
e:cl,de" the )o&er to *ort$#$e< #!d # ")eci#l
)o&er to *ort$#$e doe" !ot i!cl,de the )o&er to
"ell.(
,5DA- Sale of a Piece of /and
Article 1852 of the Civil Code )rovide" th#t
(Ahe! # "#le of # )iece of l#!d or #!% i!tere"t
therei! i" thro,$h #! #$e!t+ the #,thorit% of the
l#tter "h#ll 'e i! &riti!$< other&i"e+ the "#le "h#ll
'e void.( Note th#t the #rticle doe" !ot decl#re
the #$e!c% to 'e void+ ',t the re",lti!$ co!tr#ct
of "#le e=ected '% the #$e!t. Is the agenc- itself
void>
The De Feo!" h#ve o)i!ed th#t the "t#t," of
",ch # "#le e=ected thro,$h #! #$e!t &ho"e
")eci#l )o&er of #ttor!e% i" !ot i! &riti!$+ i" !ot
re#ll% void+ ',t *erel% void#'le ("i!ce the "#le
c#! 'e r#tied '% the )ri!ci)#l 3"ee Art". 1;41+
1;14+ )#r. 06 ",ch #" '% #v#ili!$ hi*"elf of the
'e!et" derived fro* the co!tr#ct.( 3#t ). 2166.
I!deed+ i! +utierrez Her'anos v. Orense+ 08
Ihil /50 31;126+ the Co,rt held th#t #ltho,$h the
"eller h#d !ot )revio,"l% #,thori>ed # )er"o! to
"ell hi" )#rcel of l#!d+ ',t &he! ",ch )er"o!
",'"eB,e!tl% #))roved the #ctio! of the
),r)orted #$e!t+ thi" )rod,ced the e=ect of
r#tic#tio! co!verti!$ the rel#tio!"hi) i!to #!
e:)re"" #$e!c%. Jo&ever+ the r,li!$ i! +uitierrez
Her'anos c#!!ot 'e relied ,)o! to ",))ort the
co!cl,"io! th#t # "#le of # )iece of l#!d thro,$h
#! #$e!t &itho,t # &ritte! #,thorit% &o,ld *erel%
'e ,!e!force#'le i! ")ite of the cle#r l#!$,#$e of
Article 1852 "i!ce the deci"io! &#" re!dered
,!der the ter*" of the old Civil Code+ #!d Article
1852 i" #! e!tirel% !e& )rovi"io! i! the Ne& Civil
Code. Fi9e&i"e+ #)#rt fro* the deed of "#le
e=ected '% the #$e!t i! +utierrez Her'anos+ the
re$i"tered o&!er ",'"eB,e!tl% thereto #@r*ed
the "#le ,!der ),'lic doc,*e!t#tio!. The
)roced,re i" #l"o )o""i'le ,!der Article 1852+
&hich *e#!" th#t if the #$e!t e!ter" i!to # "#le of
# )iece of l#!d &itho,t &ritte! #,thorit%+ i!deed
the "#le &o,ld 'e void< ',t th#t if the )ri!ci)#l
",'"eB,e!tl%+ e!ter" directl% #$#i! &ith the "#*e
',%er i!to # for*#l deed of "#le+ the! the "eco!d
tr#!"#ctio!" &o,ld 'e v#lid for it i" !o lo!$er
covered ,!der Article 1852.
The r,le therefore i" 'e"t e:)re""ed i! Raet
v. Court of Appeals+ 0;/ 1CRA 655 31;;86+ &here
the Co,rt held th#t Article 1852 of the Civil Code
reB,ire" for the v#lidit% of # "#le i!volvi!$ l#!d
th#t the #$e!t "ho,ld h#ve #! #,thori>#tio! i!
&riti!$< other&i"e #!% "#le co!cl,ded o! the l#!d
i" void<
-0.
#!d th#t i! Rodriguez v. Court of
A))e#l"+ 0; 1CRA 21; 31;6;6+ &hich held th#t
Article 1852 refer" to "#le" *#de '% #! #$e!t for
# )ri!ci)#l #!d !ot the "#le" *#de '% the o&!er
)er"o!#ll% to #!other+ &hether th#t other 'e
/4
#cti!$ )er"o!#ll% or thro,$h # re)re"e!t#tive. Is it
clear therefore that Art. ?@DE does not cover
directl- an agency to purchase a piece of land
or an interest therein.
No!ethele""+ o!l% rece!tl% i! Escueta v. i',
/10 1CRA 211 304456+ the Co,rt #@r*ed the
r,li!$ i! +utierrez Her'anos. Escueta i!volved
the "#le i" )#rcel" of l#!d e=ected '% the ",'7
#$e!t #))oi!ted '% the #ttor!e%7i!7f#ct of the
o&!er+ &ho cl#i*" th#t th#t the ",'7#$e!t &#"
!ot $ive! #!% ")eci#l )o&er of #ttor!e% to "ell the
)#rcel" of l#!d. The Co,rt heldD (Eve! #"",*i!$
th#t -the ",'7#$e!t. h#" !o #,thorit% to "ell the
",'Eect )ro)ertie"+ the co!tr#ct "he e:ec,ted i!
f#vor of the re")o!de!t" i" !ot void+ ',t "i*)l%
,!e!force#'le+ ,!der the "eco!d )#r#$r#)h of
Article 1?15 of the Civil Code &hich re#d" . . . #
co!tr#ct e!tered i!to i! the !#*e of #!other '%
o!e &ho h#" !o #,thorit% or le$#l re)re"e!t#tio!+
or &ho #cted 'e%o!d hi" )o&er"+ "h#ll 'e
,!e!force#'le+ ,!le"" it i" r#tied+ e:)re""l% or
i*)liedl%+ '% the )er"o!" o! &ho"e 'eh#lf it h#"
'ee! e:ec,ted+ 'efore it i" revo9ed '% the other
co!tr#cti!$ )#rt%.( 3#t ). 2026.
A letter co!t#i!i!$ the ")ecic #,thorit% to
"ell i" ",@cie!t #!d co*)lie" &ith Article 1852.
"i'enez v. Ra4ot+ ?8 Ihil. ?85 31;186. Th,"+ I!
Cit- ite Realt- Inc. v. Court of Appeals+ ?0/ 1CRA
?8/ 304446+ the &ritte! letter i"",ed '% #
l#!do&!er re#dD (Ae &ill #))reci#te Getro Dr,$8"
#""i"t#!ce i! referri!$ to ," ',%er" for )ro)ert%.
Ile#"e )roceed to hold )reli*i!#r% !e$oti#tio!"
&ith i!tere"ted ',%er" #!d e!dor"e for*#l o=er"
to ," for o,r !#l ev#l,#tio! #!d #))r#i"#l.( The
Co,rt held th#t the l#!$,#$e of the letter did !ot
co!"tit,te &ritte! #,thorit% to "ell the l#!d+ #!d
the #))oi!ted i!divid,#l &#" o!l% de"i$!#ted #" #
co!t#ct )er"o! or # 'ro9er &ith !o #,thorit% to
co!cl,de # "#le of the )ro)ert%. A!% "#le o! the
)#rcel of l#!d co!cl,ded '% ",ch #! #))oi!tee
&o,ld 'e void+ #!d the "#le co,ld !ot )rod,ce #!%
le$#l e=ect #" to tr#!"fer the ",'Eect )ro)ert%
fro* it" l#&f,l o&!er.
I! inan v. (uno+ ?1 Ihil. 0/; 31;1/6+ the
Co,rt held th#t for the )ri!ci)#l to co!fer the ri$ht
,)o! #! #$e!t to "ell re#l e"t#te+ # )o&er of
#ttor!e% *,"t "o e:)re"" the )o&er" of the #$e!t
i! cle#r #!d ,!*i"t#9#'le l#!$,#$e< #!d &he!
there i" #!% re#"o!#'le do,'t th#t the l#!$,#$e
"o ,"ed co!ve%" ",ch )o&er+ !o ",ch co!"tr,ctio!
"h#ll 'e $ive! the doc,*e!t. Th,"+ i! th#t
deci"io!+ # )o&er of #ttor!e% )rovidi!$ th#t (I
here'% co!fer ",@cie!t )o&er : : : ,)o! A+ i!
order th#t i! *% !#*e #!d re)re"e!t#tio! he *#%
#d*i!i"ter the i!tere"t I )o""e"" &ithi! thi"
G,!ici)#lit% of T#rl#c+ ),rch#"e+ "ell+ collect #!d
)#%+ etc.( &#" held ",@cie!t to cover the "#le '%
the #$e!t of l#!d of the )ri!ci)#l i! T#rl#c.
I! Strong v$ 5utierre= Repide, ? 1i/.
?BA ,1@A?-+ the Co,rt cl#ried th#t The e:)re""
*#!d#te reB,ired '% Article 1852 to e!#'le #!
#))oi!tee of #! #$e!c% co,ched i! $e!er#l ter*"
/1
to "ell *,"t 'e o!e th#t e:)re""l% *e!tio!" # "#le
or th#t i!cl,de" # "#le #" # !ece""#r% i!$redie!t
of the #ct *e!tio!ed. The )o&er of #ttor!e% !eed
!ot co!t#i! # ")ecic de"cri)tio! of the l#!d to 'e
"old+ ",ch th#t $ivi!$ the #$e!t the )o&er to "ell
(#!% or #ll tr#ct"+ lot"+ or )#rcel"( of l#!d
'elo!$i!$ to the )ri!ci)#l i" #deB,#te.
I! 8atigba* v$ -ai ,ing Co$, 52 1i/. ?22
,1@2B-+ it &#" held th#t the #,thorit% to "ell #!%
9i!d of re#lt% th#t (*i$ht 'elo!$(
to the )ri!ci)#l &#" held to i!cl,de #l"o ",ch #"
the )ri!ci)#l *i$ht #fter&#rd" h#ve d,ri!$ the
ti*e it &#" i! force.
I! P$ "mico and 4$ "migo v$ S$ -eves, @?
1i/. 252 ,1@54-+ the Co,rt held th#t &here the
)o&er of #ttor!e% "#%" th#t the #$e!t c#! e!ter
i!to #!% co!tr#ct co!cer!i!$ # l#!d+ or c#! "ell
the l#!d ,!der #!% ter* or co!ditio! #!d
cove!#!t he *#% thi!9 t+ he i" cert#i!l% $r#!ted
)o&er to de#l &ith the l#!d+ #!d "ell it+ i! the
"#*e *#!!er #!d &ith the "#*e 're#dth #!d
l#tit,de #" the )ri!ci)#l co,ld.
Altho,$h the doc,*e!t e:ec,ted '% the
o&!er of the l#!d &#" de!o*i!#ted #" # (Ge!er#l
Io&er of Attor!e%+( it &#" &ith re")ect to the
#,thorit% $ive! to "ell the l#!d # ")eci#l )o&er of
#ttor!e%+ for it )ro)erl% de"cri'ed the title of the
l#!d #!d the cle#r )o&er to "ell it. Th," there &#"
!o !eed to e:ec,te # "e)#r#te #!d ")eci#l )o&er
of #ttor!e% for the #$e!t to e=ect the "#le of the
l#!d i! the !#*e of the )ri!ci)#l. (The ")eci#l
)o&er of #ttor!e% c#! 'e i!cl,ded i! the $e!er#l
)o&er &he! it i" ")ecied therei! the #ct or
tr#!"#ctio! for &hich the ")eci#l )o&er i"
reB,ired.( 0eloso v. Court of Appeals, 064 1CRA
/;? 31;;66.
Fi!#ll%+ it "ho,ld 'e !oted th#t i! +ico
Savings 6 /oan "ssn$ v$ Court of A##ea/$,
1C1 SCRA ?3A ,1@B@-+ the Co,rt held th#t the
"#le )ro"cri'ed ,!der Article 185; refer" to #
vol,!t#r% "#le e=ected thro,$h the #$e!t< it doe"
!ot cover the ),'lic "#le th#t h#))e!" #" )#rt of
the foreclo",re o! the *ort$#$e d,l% co!"tit,ted.
Re/ate. Ca$e$6
()* v. Court of Appeals+ ;2 1CRA ?/5 31;5;6
%uenzle and StreiF v. Collector of Custo's+ ?1 Ihil 626
31;1/6
#ela (ena v. Hidalgo+ 16 Ihil 2/4 31;146
Rio - Ola44arrieta v. 8utec+ 2; Ihil 056 31;066
,5DB- A)ent Cannot Va/i./* !"&1a$e
"o#e"t* o(
"in&i#a/
H!der Article 12;1306 of the Civil Code+
,!le"" "o e:)re""l% #,thori>ed+ #! #$e!t c#!!ot
),rch#"e the )ro)ert% of hi" )ri!ci)#l< #!d if he
/0
doe" "o+ the "#le &o,ld 'e void. It *e#!"
therefore th#t eve! &he! the #$e!t h#" 'ee!
$r#!ted # ")eci#l )o&er of #ttor!e% to "ell # )iece
of l#!d or #!% i!tere"t i! it+ ",ch )o&er doe" !ot
i!cl,de '% i*)lic#tio! the )o&er to "ell to hi*"elf
,!der the cle#r )rovi"io!" of Article 12;1306 of the
Civil Code+ ,!le"" there &#" ",ch )rior
#,thori>#tio! $ive! '% the )ri!ci)#l.
Olaguer v. (urugganan, "r.+ /1/ 1CRA 264
304456+ reco$!i>ed th#t the )rohi'itio! #$#i!"t
#$e!t" ),rch#"i!$ )ro)ert% i! their h#!d" for "#le
or *#!#$e*e!t i" cle#rl%+ !ot #'"ol,te< &he! "o
#,thori>ed '% the )ri!ci)#l+ the #$e!t i" !ot
di"B,#lied fro* ),rch#"i!$ the )ro)ert% he hold"
,!der # co!tr#ct of #$e!c% to "ell.
,?- To MaEe Gi(t$
A $ift or # do!#tio! i" de!ed ,!der Article
50/ of the Civil Code #" #! #ct of li'er#lit%
&here'% # )er"o! di")o"e" $r#t,ito,"l% of # thi!$
or ri$ht i! f#vor of #!other )er"o! &ho #cce)t" it.
H!der )#r#$r#)h 6 of Article 1858+ for #!
#$e!t to h#ve the )o&er to *#9e $ift" or
do!#tio!" o! 'eh#lf of the )ri!ci)#l &o,ld reB,ire
the "#*e to 'e i! the for* of # ")eci#l )o&er of
#ttor!e%+ e:ce)tD
3#6 C,"to*#r% o!e" for ch#rit%
3'6 Tho"e *#de to e*)lo%ee" i! the ',"i!e""
*#!#$ed '%
the #$e!t
Ahe! # $ift or do!#tio! i" *#de '% #! #$e!t
o! 'eh#lf of the )ri!ci)#l &hich i" !ot covered '%
# ")eci#l )o&er of #ttor!e%+ it doe" !ot 'eco*e
void for f#il,re to co*)l% &ith the"e reB,ire*e!t
i! A$e!c% F#& 3'ec#,"e ",ch decie!c% *erel%
re!der" the co!tr#ct ,!e!force#'le6+ ',t r#ther it
i" void or !ot de)e!di!$ o! &hether it co*)lie"
&ith the for*#litie" reB,ired ,!der the F#& o!
Do!#tio!+ for ever% #ct of do!#tio! co!"tit,ted #
"ole*! co!tr#ct. The !et e=ect of co*)li#!ce
&ith the for*#litie" reB,ired '% the F#& o!
Do!#tio! &o,ld 'e to *#9e the re",lti!$ $ift or
do!#tio! ,!e!force#'le+ &he! it doe" !ot co*)l%
&ith the ")eci#l )o&er of #ttor!e% reB,ire*e!t.
,C- To +oan o" Bo""o9 Mone*
H!der )#r#$r#)h 5 of Article 1858+ the
)o&er of #! #$e!t to either lo#! or 'orro& *o!e%+
i" #! #ct of "trict o&!er"hi)+ #!d reB,ire" the
"#*e to 'e i! the for* of # ")eci#l )o&er of
#ttor!e%. The e:ce)tio! &o,ld 'e &he! the #ct
('e ,r$e!t #!d i!di")e!"#'le for the )re"erv#tio!
of the thi!$" &hich #re ,!der #d*i!i"tr#tio!.(
-?.
The )#r#$r#)h h#" 'ee! co!"tr,ed to cover o!l%
the 'orro&i!$ of *o!e% ,!der 'utuu'+ #!d doe"
!ot i!cl,de ),rch#"i!$ of $ood" o! credit o!
'eh#lf of the )ri!ci)#l. #e 0illa v. $a4ricante+ 14/
Ihil. 650 31;/;6.
/?
1i!ce the #,thorit% to 'orro& *o!e% i"
r#rel% i!ferred+ i! Rural *an/ of Caloocan, Inc. v.
Court of Appeals+ 142 1CRA 1/1 31;816+ the Co,rt
r,led th#t # creditor "ho,ld reB,ire the e:ec,tio!
of # )o&er of #ttor!e% i! order th#t o!e *#% 'e
,!der"tood to h#ve $r#!ted #!other the #,thorit%
to 'orro& o! 'eh#lf of the for*er.
<hat happens &hen there is no po&er of
attorne- given> I! +ozun v. .ercado /11 1CRA
?4/ 304466+ the Co,rt held th#t # ")eci#l )o&er of
#ttor!e% i" !ece""#r% for #! #$e!t to 'orro&
*o!e%+ ,!le"" it 'e ,r$e!t #!d i!di")e!"#'le for
the )re"erv#tio! of the thi!$" &hich #re ,!der
#d*i!i"tr#tio!< #!d th#t ",ch co!tr#ct e!tered
i!to i! the !#*e of #!other )er"o! '% o!e &ho
h#" 'ee! $ive! !o #,thorit% or le$#l
re)re"e!t#tio! or &ho h#" #cted 'e%o!d hi"
)o&er" #re cl#""ied #" ,!#,thori>ed co!tr#ct"
#!d #re ,!e!force#'le+ ,!le"" the% #re r#tied.
The ")eci#l #,thorit% to 'orro& *o!e% for
the )ri!ci)#l i" !ot to 'e i*)lied fro* the ")eci#l
)o&er of #ttor!e% to *ort$#$e re#l e"t#te. PN+
v$ Sta$ Ma"ia, 2@ SCRA 3A3 ,1@?@-< #!d the
)o&er to 'orro& *o!e% $r#!ted to the #$e!t
cannot be deemed to i!cl,de the )o&er to
")e!d the #*o,!t th," 'orro&ed #" he )le#"e".
,odges v$ Salas, ?3 1i/. 5?C ,1@3?-.
O! the other h#!d+ ,!der Article 18;4+ if the
#$e!t h#" 'ee! e*)o&ered to 'orro& *o!e%+
the! he i" !ot di"B,#lied fro* 'ei!$ hi*"elf the
le!der #t the c,rre!t r#te of i!tere"t. O! the other
h#!d+ the #rticle #l"o )rovide"+ th#t if the #$e!t
h#" 'ee! e*)o&ered to le!d *o!e% #t i!tere"t+
he c#!!ot 'orro& it &itho,t the co!"e!t of the
)ri!ci)#l.
I! Rural *an/ of Caloocan v. Court of
Appeals+ 142 1CRA 1/1 31;816+ the Co,rt held
th#t #ltho,$h it i" )ri!ci)le i" th#t # )er"o! &ho"e
#ct" holdi!$ #!other )er"o! to 'e hi" #$e!t #!d
&o,ld le#d # third )er"o! to 'elieve ",ch
),r)orted #$e!t &#" #,thori>ed to ")e#9 #!d 'i!d
hi*+ c#!!ot !o& 'e )er*itted to de!% the
#,thorit% of the ),r)orted #$e!t< ',t thi" i" o!l%
tr,e &he! the ),r)orted #$e!t &#" clothed &ith
#))#re!t #,thorit%. I! thi" c#"e+ &here the
#,thorit% of the ),r)orted #$e!t &#" o!l% to
follo& ,) of the )ri!ci)#l8" lo#! #))lic#tio! &ith
the '#!9+ it c#!!ot 'e )re",*ed th#t he &#" #l"o
$r#!ted #,thorit% to 'orro& o! 'eh#lf of the
)ri!ci)#l+ e")eci#ll% &he! the )ri!ci)#l her"elf
&e!t to the '#!9 to "i$! the )ro*i""or% !ote for
the lo#! o't#i!ed fro* the '#!9. If the
)ri!ci)#8KLQ" #ct h#d 'ee! ,!der"tood '% the
'#!9 to 'e # $r#!t of #! #,thorit% to the #$e!t to
'orro& o! 'eh#lf of the )ri!ci)#l+ the '#!9 "ho,ld
h#ve reB,ired # ")eci#l )o&er of #ttor!e%
coveri!$ ",ch )o&er to 'orro&.
Re/ate. Ca$e6
#e 0illa v. $a4ricante+ 14/ Ihil 650 31;/;6
/2
()* v. Tan Ong Sze+ /? Ihil. 2/1 31;0;6
Rodriguez v. (a'intuan+ ?5 Ihil 856 31;186
()* v. Sta. .aria+ 0; 1CRA 04? 31;6;6
,B- To +ea$e Rea/ "o#e"t* (o" Mo"e T1an
One Yea"
It "ee*" cle#r fro* )#r#$r#)h !,*'ered 8
of Article 1858+ the le#"e of re#l )ro)ert% for *ore
th#! o!e %e#r i" #! #ct of "trict o&!er"hi)<
&here#"+ the #ct of e!teri!$ i!to # co!tr#ct of
le#"e for o!e %e#r or le""+ &o,ld 'e co!"idered #!
#ct of #d*i!i"tr#tio!+ #!d *#% 'e i! the for* of
$e!er#l )o&er of #ttor!e%.
The )#r#$r#)h doe" !ot cover le#"e" of
)er"o!#l )ro)ert%+ &hich the! &o,ld le#d to the
co!cl,"io! th#t #!% )o&er $ive! to the #$e!t to
le#"e )er"o!#l )ro)ert%+ for &h#tever )eriod+
&o,ld co!"tit,te *erel% # $e!er#l )o&er of
#ttor!e%< #!d *#% 'e i*)lied fro* the e:)re""
)o&er" $ive!.
I! thi" co!!ectio!+ it "ho,ld 'e !oted th#t
,!der Article 124?306 of the Civil Code+ #!
#$ree*e!t for the le#"i!$ of re#l )ro)ert% for #
)eriod lo!$er th#! o!e %e#r i" ,!e!force#'le
,!le"" *#de i! &riti!$. Therefore+ eve! &he! the
#$e!c% )o""e"" # ")eci#l )o&er of #ttor!e% to
le#"e re#l )ro)ert%+ &he! the le#"e it"elf for *ore
th#! # %e#r i" !ot i! &riti!$+ the re",lti!$ co!tr#ct
&o,ld "till 'e ,!e!force#'le.
I! # co!tr#ct of #$e!c%+ the #$e!t #ct" i!
re)re"e!t#tio! or i! 'eh#lf of #!other &ith the
co!"e!t of the l#tter. Article 1858 of the Civil Code
e:)re""e" th#t # ")eci#l )o&er of #ttor!e% i"
!ece""#r% to le#"e #!% re#l )ro)ert% to #!other
)er"o! for *ore th#! o!e %e#r. The le#"e of re#l
)ro)ert% for *ore th#! o!e %e#r i" co!"idered !ot
*erel% #! #ct of #d*i!i"tr#tio! ',t #! #ct of "trict
do*i!io! or of o&!er"hi). A ")eci#l )o&er of
#ttor!e% i" th," !ece""#r% for it" e:ec,tio!
thro,$h #! #$e!t. Shopper6s (aradise Realt- v.
Ro1ue+ 21; 1CRA ;? 304426.
<hat is the legal status of a contract entered
into 4- an agent on 4ehalf of the principal &here
the la& re1uires that he should 4e ar'ed &ith a
special po&er of attorne-, and -et he had no such
special po&er> I! 0da. #e Chua v. IAC+ 00; 1CRA ;;
31;;26+ &here the i"",e 'efore the 1,)re*e Co,rt &#"
(the #@r*#!ce '% the Co,rt of A))e#l" of the
deci"io! of the tri#l co,rt+ orderi!$ their eEect*e!t
fro* the )re*i"e" i! B,e"tio! #!d the de*olitio!
of the i*)rove*e!t" i!trod,ced thereo!+( the
le""ee" relied o! the co!tr#ct of le#"e e!tered i!to
'% o! 'eh#lf of the )ri!ci)#l7le""or+ '% her
#ttor!e% i! f#ct &ho &#" !ot #r*ed to le#"e the
)re*i"e" for *ore th#! o!e %e#r. Jo&ever+ the
f#ct" "ho&ed th#t the le""ee" "t#%ed i! the
)re*i"e" d,ri!$ the ter* of the le#"e+ #!d &hich
&#" i*)liedl% re!e&ed thro,$h tacita
//
reconduccion. The Co,rt e:)re""l% #$reed &ith
the Co,rt of A))e#l" re"ol,tio! (decl#ri!$ the
co!tr#ct of le#"e 3E:h (C(6 void( o! the $ro,!d
th#t the #$e!t (&#" !ot #r*ed &ith # ")eci#l
)o&er of #ttor!e% to e!ter i!to # le#"e co!tr#ct
for # )eriod of *ore th#! o!e %e#r+ th,"D
Ae #$ree &ith the Co,rt of A))e#l".
The le#"e co!tr#ct 3E:h. (C(6+ the li!ch)i! of
)etitio!er"8 c#,"e of #ctio!+ i!volve" the le#"e of
re#l )ro)ert% for # )eriod of *ore th#! o!e %e#r.
The co!tr#ct &#" e!tered i!to '% the #$e!t of the
le""or #!d !ot the le""or her"elf. I! ",ch # c#"e+
the l#& reB,ire" th#t the #$e!t 'e #r*ed &ith #
")eci#l )o&er of #ttor!e% to le#"e the )re*i"e". :
: :.
It i" tr,e th#t re")o!de!t Jerrer# #llo&ed
)etitio!er" to occ,)% the le#"ed )re*i"e" #fter
the e:)ir#tio! of the le#"e co!tr#ct 3E:h. (C(6 #!d
,!der Article 1654 of the Civil Code of the
Ihili))i!e"+ # t#cit re!e&#l of the le#"e 3t#cit#
reco!d,ccio!6 i" dee*ed to h#ve t#9e! )l#ce.
Jo&ever+ #" held i! Ber!#rdo G. Di>o! v.
A*'ro"io G#$"#%"#%+ /5 1CRA 0/4 31;526+ # t#cit
re!e&#l i" li*ited o!l% to the ter*" of the co!tr#ct
&hich #re $er*#!e to the le""ee8" ri$ht of
co!ti!,ed e!Eo%*e!t of the )ro)ert% #!d doe" !ot
e:te!d to #lie! *#tter"+ li9e the o)tio! to ',% the
le#"ed )re*i"e". 3#t ). 1466
,@- -o +ind the Principal to Render Some
Service
)ithout Compensation
Altho,$h the #$e!t *#% 'i!d hi*"elf to the
co!tr#ct of #$e!c% &itho,t co*)e!"#tio!+ 3Article
185/6+ i! order to 'i!d the )ri!ci)#l to e!ter i!to
"ervice &itho,t co*)e!"#tio! &o,ld 'e
,!e!force#'le &itho,t # ")eci#l )o&er of #ttor!e%.
The i*)lic#tio! of )#r#$r#)h !,*'er ; of Article
1858 i" th#t to 'i!d the )ri!ci)#l to re!der "ervice
for co*)e!"#tio! &o,ld 'e dee*ed # *ere #ct of
#d*i!i"tr#tio!+ #!d co!"tit,ted i! # *ere $e!er#l
)o&er of #ttor!e%+ or *ore ")ecic#ll%+ to 'e #!
i*)lied )o&er of ever% #$e!t.
I di"#$ree+ #!% co!tr#ct of "ervice to 'e
e!tered i!to o! 'eh#lf of the )ri!ci)#l "ho,ld
)ro)erl% 'e co!"idered #! #ct of "trict o&!er"hi)+
for it i*)i!$e" o! o'li$i!$ the )ri!ci)#l to re!der
# )er"o!#l o'li$#tio!+ &hich if he ref,"e" *#9e"
hi* li#'le for d#*#$e". Ah% "ho,ld co!tr#ct" of
"ervice+ eve! &he! for co*)e!"#tio!+ 'e dee*ed
to 'e &ithi! i*)lied )o&er" of the #$e!t to 'i!d
the )ri!ci)#lU
,1A- -o +ind the Principal in a Contract of
Partnership
Ever% #$ree*e!t '% the #$e!t o! 'eh#lf of
the )ri!ci)#l &hich h#" the e=ect of o'li$i!$ the
)ri!ci)#l to co!tri',te *o!e% or i!d,"tr% to #
co**o! f,!d &ith the i!te!tio! of derivi!$ )rot"
/6
therefro* &o,ld 'e ,!e!force#'le &itho,t #
")eci#l )o&er of #ttor!e% h#vi!$ 'ee! )revio,"l%
$ive! to the #$e!t+ for it i! e=ect *#9e" the
)ri!ci)#l # )#rt!er i! # )#rt!er"hi). 3Art. 15656.
,11- -o Obligate the Principal as a 5uarantor
or
Surety
H!der Article 0425 of the Civil Code+ '% the
co!tr#ct of $,#r#!t%+ the $,#r#!tor 'i!d" hi*"elf
to f,lll the o'li$#tio! of the )ri!ci)#l de'tor i!
c#"e the l#tter "ho,ld f#il to do "o< #!d if the
)er"o! 'i!d" hi*"elf "olid#ril% &ith the )ri!ci)#l
de'tor+ he 'eco*e" # ",ret% ,!der # co!tr#ct of
",ret%"hi).
Therefore+ ,!der )#r#$r#)h !,*'ered 11 of
Article 1858+ !o co!tr#ct of $,#r#!t% or ",ret% i"
e!force#'le #$#i!"t the )ri!ci)#l &he! it h#" 'ee!
e!tered i!to '% #! #$e!t &ho )o""e""e" !o
")eci#l )o&er of #ttor!e% to do "o
It h#" 'ee! held th#t # co!tr#ct of $,#r#!t%
or ",ret% c#!!ot 'e i!ferred fro* ," of v#$,e or
$e!er#l &ord" of co**it*e!t. Th,"+ the #,thorit%
$ive! '% the cor)or#tio! to it" #$e!t to #))rove #
lo#! ,) to I?/4+444 &itho,t #!% "ec,rit%
reB,ire*e!t doe" !ot i!cl,de the #,thorit% to
i"",e $,#r#!tee" for #!% #*o,!t. *A $inance
Corp. v. Court of Appeals+ 011 1CRA 110 31;;06.
Th,"D
A )o&er of #ttor!e% to "ell or le#"e the
)ro)ert% of the )ri!ci)#l &ith the )rovi"io!
th#t e*)o&er" the #$e!t (to )erfor* #!d
e:ec,te #ll #!d ever% l#&f,l #!d re#"o!#'le
#ct #" f,ll% #!d e=ectivel% #" I *i$ht or
co,ld do if )er"o!#ll% )re"e!t+( c#!!ot 'e
co!"tr,ed to i!cl,de the )o&er to e!ter i!to
# co!tr#ct of $,#r#!t% to 'i!d the )ri!ci)#l.
#irector of (u4lic <or/s v. Sing "uco+ /? Ihil.
04/ 31;0;6.
A )o&er of #ttor!e% to lo#! *o!e% doe" !ot
i!cl,de the i*)lied )o&er to *#9e the
)ri!ci)le # ",ret% for the )#%*e!t of the
de't # third )er"o!. *an/ of (.I. v. Coster+ 25
Ihil. /;2 31;0/6.
It "ho,ld 'e rec#lled th#t ,!der Article
124?-0.-'. of the Civil Code+ # co!tr#ct of
$,#r#!t% i" ,!e!force#'le ,!le"" it i" *#de i!
&riti!$. Co!"eB,e!tl%+ eve! &he! the #$e!t h#"
the reB,i"ite ")eci#l )o&er of #ttor!e% to e!ter
i!to # co!tr#ct of $,#r#!t% i! 'eh#lf of the
)ri!ci)#l+ the re",lt co!tr#ct &o,ld 'e
,!e!force#'le if !ot red,ced i! &riti!$.
,12- -o Create or Convey Real Rights Over
.mmovable
H!der )#r#$r#)h !,*'ered 10 of Article
1858+ #! #$e!t c#!!ot+ i! the !#*e of the
)ri!ci)#l+ cre#te or co!ve% re#l ri$ht" over
i**ov#'le )ro)ert% &itho,t 'ei!$ )o""e""ed of #
/5
")eci#l )o&er of #ttor!e%< other&i"e+ the re",lti!$
co!tr#ct &o,ld 'e ,!force#'le #$#i!"t the
)ri!ci)#l.
The )#r#$r#)h i!te!d" to cover de#li!$" o!
i**ov#'le )ro)ert% o,t"ide of the "#le of # )iece
of l#!d or #!% i!tere"t therei! covered ")ecic#ll%
,!der Article 1852+ #!d co!tr#ct" of ),rch#"e of #
)iece of l#!d+ #!d co!tr#ct" of do!#tio!" of ever%
t%)e of i**ov#'le )ro)ert%.
(Re#l ri$ht"( over i**ov#'le )ro)ert% &o,ld
cover ",ch co!tr#ct" #" *ort$#$e"+ ,",fr,ct+
e#"e*e!t+ etc. It o'vio,"l% cover" the e!teri!$
i!to # le#"e co!tr#ct over #! i**ov#'le &ith #
)eriod e:ceedi!$ o!e %e#r 3"e)#r#tel% covered
,!der )#r#$r#)h !,*'ered 8 of Article 18586.
Ahe! it co*e" to # *ort$#$e+ the Co,rt h#"
e:)re""ed the doctri!e th#t # )er"o! c#! 'eco*e
li#'le o! # re#l e"t#te *ort$#$e &hich he !ever
e:ec,ted either i! )er"o! or '% #ttor!e%7i!7f#ct.
(hilippine sugar Estates #ev. Co. v. (oizat, 28 Ihil.
/?6 31;066. Rural *an/ of *o'4on, Inc. v. Court of
Appeals+ 010 1CRA 0/ 31;;06.
H!der Article 185;+ the )o&er to "ell
e:cl,de" the )o&er to *ort$#$e< #!d th#t the
)o&er to *ort$#$e e:cl,de" the )o&er "ell. Thi"
",))ort" the )ro)o"itio! th#t e#ch of the )o&er"
e!,*er#ted ,!der Article 1858+ #re !#*ed (#ct"
of "trict do*i!io!+( #!d c#!!ot 'e i*)lied )o&er"<
#!d th#t o!e for* of !#*ed ")eci#l )o&er c#!!ot
$ive the )re",*)tio! th#t it i!cl,de" ,!der #!%
for* of co!"tr,ctio! or i!ter)ret#tio! #!other
!#*ed ")eci#l )o&er. Rodrigue= v$ Pamintuan
and %e 4esus, 3C 1i/. BC? ,1@1B-.
The )o&er to *ort$#$e doe" !ot c#rr% the
i*)lied )o&er to re)re"e!t the )ri!ci)#l i!
liti$#tio!. 0al'onte v. Court of Appeals+ 0/0 1CRA
;0 31;;66.
I! Rural *an/ of *o'4on v. Court of Appeals+
010 1CRA 0/ 31;;06+ #ltho,$h the #$e!t &#"
$ive! # ")eci#l )o&er of #ttor!e% to *ort$#$e the
)ro)ert% of the )ri!ci)#l+ !o!ethele""+ &he! he
"i$!ed the Deed of Re#l E"t#te Gort$#$e i! hi"
!#*e #lo!e #" *ort$#$or+ &itho,t #!% i!dic#tio!
th#t he &#" "i$!i!$ for #!d i! 'eh#lf of the
)ro)ert% o&!er+ the *ort$#$e i" void+ #!d the
#$e!t 'o,!d hi*"elf #" the o!l% de'tor of ,!der
the lo#! o't#i!ed fro* the '#!9.
I! (hilippine Sugar Estates #ev. Co., v. (oizat+
28 Ihil. /?6 31;0/6+ the Co,rt held th#t it i" #
$e!er#l r,le i! the l#& of #$e!c% th#t+ i! order to
'i!d the )ri!ci)#l '% # *ort$#$e o! re#l )ro)ert%
e:ec,ted '% #! #$e!t+ it *,"t ,)o! it" f#ce
),r)o"e to 'e *#de+ "i$!ed #!d "e#led i! the
!#*e of the )ri!ci)#l+ other&i"e+ it &ill 'i!d the
#$e!t o!l%. It i" !ot e!o,$h *erel% th#t the #$e!t
&#" i! f#ct #,thori>ed to *#9e the *ort$#$e+ if he
h#" !ot #cted i! the !#*e of the )ri!ci)#l. Neither
i" it ordi!#ril% ",@cie!t th#t i! the *ort$#$e the
#$e!t de"cri'ed hi*"elf #" #cti!$ '% virt,e of the
/8
)o&er of #ttor!e%+ if i! f#ct the #$e!t h#" #cted i!
hi" o&! !#*e #!d h#" "et hi" o&! h#!d #!d "e#l
to the *ort$#$e. Thi" i" e")eci#ll% tr,e &here the
#$e!t hi*"elf i" # )#rt% to the i!"tr,*e!t.
Jo&ever cle#rl% the 'od% of the *ort$#$e *#%
"ho& #!d i!te!d th#t it "h#ll 'e the #ct of the
)ri!ci)#l+ %et+ ,!le"" i! f#ct it i" e:ec,ted '% the
#$e!t for #!d o! 'eh#lf of hi" )ri!ci)#l+ it i" !ot
v#lid #" to the )ri!ci)#l.
,13- -o "ccept or Repudiate an .nheritance
H!der Article 1422 of the Civil Code+ #!%
)er"o! (h#vi!$ the free di")o"#l of hi" )ro)ert%
*#% #cce)t or re),di#te #! i!herit#!ce+( &hich
o'vio,"l% ,!der )#r#$r#)h 1? of Article 1858
co!"tit,te #ct" of "trict do*i!io!. Ahile there i"
!o do,'t th#t re),di#tio! of #! i!herit#!ce i" #!
#ct th#t $oe" #$#i!"t the i!tere"t of the )ri!ci)#l
#!d &o,ld reB,ire the $r#!t of # ")eci#l )o&er of
#ttor!e% if it i" to 'e do!e thro,$h #! #$e!t+ the
#cce)t#!ce of i!herit#!ce h#" #!other '#"i" ,)o!
&hich it c#!!ot 'e #! i*)lied )o&er of hi" #$e!tD
the #cce)t#!ce of #! i!herit#!ce i!volve" #! #ct
of $r#tit,de o! the )#rt of the heir+ #!d therefore
c#!!ot 'e )re",*ed to 'e # (',rde!( th#t the
)ri!ci)#l i" )re",*e to #cce)t #" # *#tter of
co,r"e..
,14- -o Ratify or Recogni=e Obligations
Contracted
+efore the "gency
(R#tif%( i" # le$#l ter* th#t i!volve" the
#cce)t#!ce of # co!tr#ct+ &hich i" either void#'le
or ,!e!force#'le+ #!d h#" the e=ect cle#!"i!$
",ch co!tr#ct of it" le$#l defect" th#t retro#ct" to
the d#te of it" )erfectio!. H!der Article" 1?;0 #!d
1?;6+ (-r.#tic#tio! e:ti!$,i"he" the #ctio! to
#!!,l # void#'le co!tr#ct+( #!d (cle#"e!"e" the
co!tr#ct fro* #ll it" defect" fro* the *o*e!t it
&#" co!"tit,ted.( Ahe! it co*e" to ,!e!force#'le
co!tr#ct"+ ,!der Article 1242+ tho"e co!tr#ct" th#t
#re $over!ed '% the 1t#t,te" of Fr#,d" (#re
r#tied '% the f#il,re to o'Eect to the )re"e!t#tio!
of or#l evide!ce to )rove the "#*e+ or '% the
#cce)t#!ce of 'e!et" ,!der the*.(
I#r#$r#)h !,*'ered 12 of Article 1858
cle#rl% reco$!i>e" th#t the #ct of r#tif%i!$ or
cle#!"i!$ # defect co!tr#ct th#t therefore co,ld
v#lidl% 'e e!forced #$#i!"t the )ri!ci)#l i" #! #ct
of "trict o&!er"hi)+ #!d c#!!ot 'e e=ected '% the
#$e!t &itho,t ")eci#l )o&er of #ttor!e%.
(Reco$!itio!( of #! o'li$#tio! refer" to
#c9!o&led$i!$ &h#t &#" # !#t,r#l o'li$#tio!
&hich &#" !ot therefore the ",'Eect of civil
e!force*e!t< it h#" the e=ect of *#9i!$ # for*er
!#t,r#l o'li$#tio! 'e tr#!"for*ed i!to # civil
o'li$#tio! th#t c#! 'e e!forced #$#i!"t the e"t#te
of the )ri!ci)#l. Reco$!itio! i" #! #ct of "trict
o&!er"hi) &hich c#! 'e )erfor*ed '% #! #$e!t
o! 'eh#lf of the )ri!ci)#l &ho )o""e""e" # ")eci#l
)o&er of #ttor!e%.
/;
#irector v. Sing "uco+ /? Ihil 04/ 31;0;6
0illa v. +arcia *os1ue+ 2; Ihil 106 31;066
*an/ of (I v. #e Coster+ 25 Ihil /;2 31;0/6
Aznar v. .orris+ ? Ihil 6?6 31;426
+er'ann v. #onaldson+ 1 Ihil 6? 31;416
,15- "ny Other "ct of Strict %ominion
Ge!er#ll%+ the "#le or ),rch#"e of eve!
)er"o!#l )ro)ertie" "ho,ld 'e tre#ted #" #ct" of
"trict do*i!io! #!d &o,ld reB,ire # ")eci#l )o&er
of #ttor!e% to 'e e:ec,ted '% the #$e!t i! 'eh#lf
of the )ri!ci)#l. B,t ,!der Article 1855+ # "#le or
),rch#"e *#de i! the ordi!#r% co,r"e of
*#!#$e*e!t i" *erel% #! #ct of #d*i!i"tr#tio!
#!d+ therefore+ i!cl,ded i! #$e!c% co,ched i!
$e!er#l ter*". The cle#r i*)lic#tio! ,!der
)#r#$r#)h !,*'ered 1/ i" th#t tho"e th#t *#% 'e
co!"tit,ted #" #ct" of "trict o&!er"hi)+ ',t !ot "o
")ecic#ll% !#*ed i! the r"t fo,rtee!
)#r#$r#)h"+ &o,ld #l&#%" !eed # ")eci#l )o&er of
#ttor!e% to 'e e:ec,ted i! 'eh#lf of the )ri!ci)#l
'% the #$e!t+ BHT !ot h#vi!$ "o !#*ed+ it i"
)o""i'le th#t ",ch #ct" of "trict o&!er"hi) *#%+
de)e!di!$ o! circ,*"t#!ce" )rev#ili!$ i! e#ch
c#"e+ &o,ld 'e #ct" of #d*i!i"tr#tio!+ #!d *#% 'e
$over!ed '% # $e!er#l )o&er of #ttor!e%+ or *#%
'e i*)lied or i!cide!t#l fro* e:)re"" )o&er" or
fro* the !#t,re of the ',"i!e"" covered '% the
#$e!c% #rr#!$e*e!t.
I! +arcia v. #e .anzano+ ?; Ihil /55 31;1;6+
o!e of the i"",e to 'e re"olved &#" &hether #
)o&er of #ttor!e% th#t $r#!ted the "o! the
follo&i!$ )o&er"D (To e!#'le hi* to ',% or "ell+
#'"ol,tel% or ,!der )#cto de retro+ #!% of the
r,r#l or ,r'#! e"t#te" th#t I !o& o&! #!d *#%
#cB,ire i! the f,t,re+ #t ",ch )rice #" he *#%
dee* *o"t #dv#!t#$eo,"+ &hich he "h#ll collect
i! c#"h or '% i!"t#ll*e!t" #!d ,!der ",ch
co!ditio!" #" he *#% co!"ider )ro)er+ #!d he
"h#ll "et forth the e!c,*'r#!ce" o! the )ro)ertie"
#!d their ori$i!. I 'i!d *%"elf to &#rr#!t #!d
defe!d+ i! #ccord#!ce &ith l#&+ the title" to ",ch
)ro)ertie"< #!d if the )ro)ertie" #lie!#ted '% thi"
#$ree*e!t "ho,ld 'e redee*ed+ he i" e*)o&ered
to redee* the* '% )#%i!$ the )rice th#t *#%
h#ve 'ee! :ed+ #!d+ for thi" ),r)o"e+ "h#ll
e:ec,te the )ro)er i!"tr,*e!t+( &o,ld $r#!t hi*
#,thorit% to "ell the h#lf7i!tere"t th#t the )ri!ci)#l
h#d i! # 'o#t. The co,rt held i! the #@r*#tive+
r,li!$ #" follo&" 77
The )o&er7of7#ttor!e% #,thori>e" the "#le of
re#l )ro)ert%+ the ',%i!$ of re#l )ro)ert% #!d
*ort$#$i!$ the "#*e+ the 'orro&i!$ of *o!e%
#!d i! f#ct i" $e!er#l #!d co*)lete.
The )o&er doe" !ot e:)re""l% "t#te th#t the
#$e!t *#% "ell the 'o#t+ ',t # )o&er "o f,ll #!d
co*)lete #!d #,thori>i!$ the "#le of re#l
64
)ro)ert%+ *,"t !ece""#ril% c#rr% &ith it the ri$ht
to "ell # h#lf i!tere"t i! # "*#ll 'o#t. The record
f,rther "ho&" the "#le &#" !ece""#r% i! order to
$et *o!e% or # credit &itho,t &hich it &o,ld 'e
i*)o""i'le to co!ti!,e the ',"i!e"" &hich &#"
'ei!$ co!d,cted i! the !#*e of N#rci"o F.
G#!>#!o #!d for hi" 'e!et. 3#t ). /8/6
#e .anzano i" #,thorit% to "ho& th#t
#ltho,$h the )o&er to "ell i**ov#'le" *,"t 'e
co!t#i!ed i! # ")eci#l )o&er of #ttor!e%+ #!d
therefore #l&#%" co!"tit,te" #! #ct of "trict
o&!er"hi)+ the "#le or e!c,*'r#!ce of *ov#'le"
*#% co!"tit,te either #ct" of #d*i!i"tr#tio! or
#ct" of "trict o&!er"hi)+ de)e!di!$ o! the
)rev#ili!$ circ,*"t#!ce". Th,"+ i! #e .anzano+
the $r#!t of the e:)re"" )o&er to *#!#$e the
e!tire ',"i!e"" #=#ir" of the )ri!ci)#l+ &#"
dee*ed to i!cl,de the )o&er to "ell co7o&!er"hi)
i!tere"t i! *ov#'le )ro)ert%+ e")eci#ll% &he! the
"#le &#" !ece""#r% to co!d,ct the ',"i!e"" of the
)ri!ci)#l.
-1.Citing Cit-3ite Realt- Corp. v. Court of Appeals+ ?0/ 1CRA ?8/
304446< Raet v. Court of Appeals+ 0;/ 1CRA 655 31;;86.
-0.Reiterated in iton!ua, "r. v. Eternit Corp., 2;4 1CRA
042 304466.
-?.See +ozun v. .ercado /11 1CRA ?4/ 304466<
8asu'a v. Heirs of Cecilio S. #e 0illa, 2;; 1CRA 266
304466.
0D/? AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
VI. 1IECIFIC OBFIGATION RHFE1 FOR AGENT1
a. Ob/i)ation o( A)ent to A.'an&e
F!n.$
There i" !o co**o!7l#& d,t% or o'li$#tio!
o! the )#rt of the #$e!t to #dv#!ce hi" o&! f,!d"
i! 'eh#lf of the )ri!ci)#l< for i!deed+ o!e of the
di"ti!$,i"hi!$ ch#r#cteri"tic of ever% #$e!c% i"
th#t the #$e!t doe" !ot )er"o!#ll% 'eco*e li#'le
for the co!tr#ct" #!d tr#!"#ctio!" ),r",ed i!
H!der Article 1886 of the Civil Code+ the
o!l% ti*e th#t #! #$e!t i" le$#ll% 'o,!d to
#dv#!ce )er"o!#l f,!d" i! the ),r",it of the
#$e!c% i" &he! ",ch o'li$#tio! h#" 'ee!
e:)re""l% #$reed ,)o! i! the cre#tio! of the
co!tr#ct of #$e!c%. B,t eve! i! ",ch # c#"e+ the
#$e!t *#% ref,"e to #dv#!ce #!% )er"o!#l f,!d"
&he! the )ri!ci)#l i" i!"olve!t. I!deed+ ,!der
61
Article 1;1;3?6+ i!"olve!c% of the )ri!ci)#l
e:ti!$,i"he" the #$e!c%.
b. A)entFGH$ D!t* o( +o*a/t*
,1- %uty of /oyalty in 5eneral
Article 18;; "et"7o,t &h#t i! cor)or#te
)#rl#!ce i" 9!o&! #" the d,t% of lo%#lt% of #!
#$e!tD (The #$e!t "h#ll 'e li#'le for d#*#$e" if+
there 'ei!$ # co!Cict 'et&ee! hi" i!tere"t #!d
tho"e of the )ri!ci)#l+ he "ho,ld )refer hi" o&!.(
A$e!c% rel#tio! i" e""e!ti#ll% d,ci#r% i!
ch#r#cter+ &hich reB,ire" of the #$e!t to o'"erve
,t*o"t $ood f#ith #!d lo%#lt% to the )ri!ci)#l.
Ahe! # #$e!t viol#te" hi" d,t% of lo%#lt%+
#!d i! # co!Cict7of7i!tere"t" "it,#tio!+ he )refer"
hi" o&! i!tere"t to the detri*e!t of the )ri!ci)#l+
Article 18;; doe" !ot decl#re the co!tr#ct or
tr#!"#ctio! he e!tered i!to to 'e void+ ',t *erel%
*#9e" the #$e!t li#'le for the d#*#$e" ",=ered
'% the )ri!ci)#l. I! Cor)or#te F#&+ &he! # director
or o@cer viol#te" hi" d,t% of lo%#lt% to the
cor)or#tio!+ he i" 'o,!d to di"$or$e to the
cor)or#tio! #ll the )rot" #!d e#r!i!$" he o't#i!
fro* hi" 're#ch of d,t%+ eve! &he! he ,"ed hi"
o&! c#)it#l or f,!d" for the co!tr#ct or
tr#!"#ctio! 31ectio!" ?1 #!d ?2+ Cor)or#tio!
Code6. <ould the 'easure of da'ages due to the
principal 4e the sa'e &hen an agent violates his
dut- of lo-alt->
Do,'le #$e!c% 3&here the "#*e #$e!t
"erve" the t&o co!tr#cti!$ )ri!ci)#l" i" fro&!ed
,)o! '% l#&+ #!d &ill 'e #llo&ed o!l% &he! 9!o&!
to 'oth )#rtie". %omingo v$ %omingo, 42 SCRA
131 ,1@C1-.
,2- )hen "gent 'nters
into a Contract in ,is
O!n Name on a Matter
that alls )ith the
Scope of the "gency
Article 188? )rovide" th#t (-i.f #! #$e!t #ct"
i! hi" o&! !#*e+ the )ri!ci)#l h#" !o ri$ht of
#ctio! #$#i!"t the )er"o! &ith &ho* the #$e!t
h#" co!tr#cted< !either h#ve ",ch )er"o!" #$#i!"t
the )ri!ci)#l.( I! ",ch # c#"e it i" )rovided th#t it
i" the #$e!t &ho (i" the o!e directl% 'o,!d i!
f#vor of the )er"o! &ith &ho* he h#" co!tr#cted+
#" if the tr#!"#ctio! &ere hi" o&!+ e:ce)t &he!
the co!tr#ct i!volve" thi!$" 'elo!$i!$ to the
)ri!ci)#l.(
If the *#tter" e!tered i!to '% the #$e!t i!
hi" o&! !#*e #re *#tter" th#t #re &ithi! the
"co)e of hi" #,thorit% or tho"e )ert#i!i!$ to
*#tter" th#t "ho,ld )ert#i! to the ',"i!e"" of the
)ri!ci)#l+ there &o,ld 'e !o do,'t th#t the #$e!t
h#" 're#ch hi" d,ci#r% d,t% of lo%#lt%+ '% h#vi!$
)referred hi" o&! i!tere"t" to th#t of the
)ri!ci)#lKLQ". Ahether the #$e!t h#" ,"ed hi"
o&! f,!d" or )ro)ert%+ or tho"e of the
)ri!ci)#lKLQ"+ he &o,ld "till 'e i! 're#ch of thi"
d,ci#r% d,t%+ #!d ,!der Article 18;1+ he (i"
'o,!d to re!der #! #cco,!t of hi" tr#!"#ctio!"
#!d to deliver to the )ri!ci)#l &h#tever he *#%
60
h#ve received '% virt,e of the #$e!c%+ eve!
tho,$h it *#% !ot 'e o&i!$ to the )ri!ci)#l.( I!
either c#"e+ therefore+ the )ri!ci)#l h#" the ri$ht
to de*#!d th#t the #$e!t "ho,ld t,r!7over to hi*
&h#tever co!tr#ct+ )ro)ert% or ',"i!e"" h#" 'ee!
#cB,ired '% the #$e!t i! 're#ch of hi" d,t% of
lo%#lt%.
I! .iguel v. Court of Appeals+ 0; 1CRA 564
31;6;6+ the Co,rt held th#t (# d,ci#r% rel#tio!
#ri"e" &here o!e *#! #"",*e" to #ct #" #$e!t for
#!other #!d the other re)o"e" co!de!ce i! hi*+
#ltho,$h there i" !o &ritte! co!tr#ct or !o
co!tr#ct #t #ll. If the #$e!t viol#te" hi" d,t% #"
d,ci#r%+ # co!"tr,ctive tr,"t #ri"e". It i"
i**#teri#l th#t there &#" !o #!tecede!t d,ci#r%
rel#tio! #!d th#t it #ro"e co!te*)or#!eo,"l% &ith
the )#rtic,l#r tr#!"#ctio!.(
-1.
If the #$e!t h#d ,"ed the f,!d" 'elo!$i!$ to
the )ri!ci)#l+ ,!der Article 18;6 he (o&e" i!tere"t
o! the ",*" he h#" #))lied to hi" o&! ,"e fro*
the d#% o! &hich he did "o+ #!d o! tho"e &hich he
"till o&e" #fter the e:ti!$,i"h*e!t of the #$e!c%.(
The )rovi"io!" of thi" #rticle )re",*e" th#t the
)ro)ert% or ',"i!e"" #cB,ired '% the #$e!t for hi"
o&! i! viol#tio! of hi" d,ci#r% d,t% i" o!e th#t
the )ri!ci)#l i" !ot de*#!di!$ to 'e delivered to
hi*. Thi" i" cle#r fro* Article 1;18 &hich )rovide"
th#t (-t.he )ri!ci)#l i" !ot li#'le for the e:)e!"e"
i!c,rred '% the #$e!t . . . -i.f the #$e!t #cted i!
co!tr#ve!tio! of the )ri!ci)#lKLQ" i!"tr,ctio!"+
,!le"" the l#tter "ho,ld &i"h to #v#il hi*"elf of
the 'e!et" derived fro* the co!tr#ct.( I! other
&ord"+ if the co!tr#ct or ',"i!e"" #cB,ired '% the
#$e!t i! 're#ch of hi" d,t% of lo%#lt% i" de*#!ded
'% the )ri!ci)#l to 'e t,r!ed over to hi*+ the! the
,"e of the )ri!ci)#l8" ",* to #cB,ire ",ch
',"i!e"" &o,ld 'e dee*ed to h#ve 'ee! r#tied+
#!d the #$e!t i" !ot )er"o!#ll% li#'le for the
i!tere"t" d,e o! "#id #*o,!t.
I! #dditio!+ Article 12// of the Civil Code
3o! i*)lied tr,"t"6+ )rovide" th#t (-&.he! #!%
tr,"tee+ $,#rdi#! or other )er"o! holdi!$ #
d,ci#r% rel#tio!"hi) ,"e" tr,"t f,!d" for the
),rch#"e of )ro)ert% #!d c#,"e" the co!ve%#!ce
to 'e *#de to hi* or to # third )er"o!+ # tr,"t i"
e"t#'li"hed '% o)er#tio! of l#& i! f#vor of the
)er"o! to &ho* the f,!d" 'elo!$.(
,3- Particular Rules on Con>ict of
.nterests Situations
The follo&i!$ #re ")ecic r,le" coveri!$
viol#tio! of the d,t% of lo%#lt% of the #$e!tD
3#6 (urchase of (rincipalGHIs
(ropert- 7 Article 12;1306 of the
Civil Code )rovide" for #!%
co!Cict7of7i!tere"t "it,#tio!
&he! it )rovide" th#t #! #$e!t
i" )rohi'ited fro* ',%i!$
)ro)ert% e!tr,"ted to hi* for
#d*i!i"tr#tio! or *#!#$e*e!t+
&itho,t the )ri!ci)#l8" co!"e!t.
Eve! &he! #! #$e!t i"
#,thori>ed to "ell the )ro)ert%+
#!d he "ell" it to hi*"elf for
6?
v#l,#'le co!"ider#tio! ',t
&itho,t the co!"e!t of the
)ri!ci)#l+ the "#le &o,ld 'e
void.
3'6 <hen Agent E'po&ered to
*orro& or end .one- 7 Article
18;4 )rovide" th#t &he! the
#$e!t i" e*)o&ered to 'orro&
or le!d *o!e% '% the )ri!ci)#l+
the!D
3i6 If e*)o&ered to 'orro&
*o!e%+ he *#% 'e the
le!der #t c,rre!t
i!tere"t< #!d
3ii6 If e*)o&ered to le!d
*o!e% #t i!tere"t+ he
c#!!ot 'orro& &itho,t
)ri!ci)#l8" co!"e!t.
3c6 O4ligation To Turn3Over to the
(rincipal <hatever Received 4-
0irtue of the Agenc- 3 H!der
Article 18;4+ ever% #$e!t i"
'o,!d to deliver to the )ri!ci)#l
&h#tever he *#% h#ve received
'% virt,e of the #$e!c%+ eve!
tho,$h it *#% !ot 'e o&i!$ to
the )ri!ci)#l+ #!d eve! &he!
$ive! to hi* for hi" 'e!et.
<hat happens &hen the agent violates his
o4ligations under Article ?@JA> I! the c#"e &here
the #$e!t &#" the le!der to the )ri!ci)#l #!d
ch#r$ed i!tere"t hi$her th#! the c,rre!t r#te+ the
di=ere!ce &o,ld h#ve to 'e ret,r!ed to the
)ri!ci)#l. If the #$e!t 'orro&" for hi*"elf &itho,t
the )ri!ci)#l8" the *o!e% &hich the )ri!ci)#l h#"
#,thori>ed hi* to le!d o,t+ he &o,ld !ot o!l% 'e
li#'le for the c,rre!t i!tere"t th#t the )ri!ci)#l
&o,ld h#ve e#r!ed h#d it 'ee! le!t o,t to # third
)#rt%+ he &o,ld #l"o 'e li#'le for d#*#$e" th#t
the )ri!ci)#l *#% h#ve ",=ered.
Re/ate. Ca$e$6
A4oitiz v. #e Silva+ 2/ Ihil 88? 31;026
Sing "uco v. Sun-antong orente+ 2? Ihil /8;
31;006
Severino v. Severino+ 22 Ihil ?2? 31;0?6
Hodges v. Salas+ 6? Ihil /65 31;?66
&. Ob/i)ation o( A)ent to Ren.e"
A&&o!nt
H!der 18;1 of the Civil Code+ (Ever% #$e!t
i" 'o,!d to re!der #! #cco,!t of hi" tr#!"#ctio!"
#!d to deliver to the )ri!ci)#l &h#tever he *#%
h#ve received '% virt,e of the #$e!c%+ eve!
tho,$h it *#% !ot 'e o&i!$ to the )ri!ci)#l. Ever%
"ti),l#tio! e:e*)ti!$ the #$e!t fro* the
o'li$#tio! to re!der #! #cco,!t "h#ll 'e void.(
The &ell7e"t#'li"hed r,le i" th#t #! #$e!t
c#!!ot ret#i! #" hi" co**i""io! #!% )#rt of the
)roceed" th#t 'elo!$ to the )ri!ci)#l.
-0. (
A" #
!ece""#r% co!"eB,e!ce of ",ch 're#ch of tr,"t+
defe!d#!t7#))ellee Gre$orio Do*i!$o *,"t forfeit
62
hi" ri$ht to the co**i""io! #!d *,"t ret,r! the
)#rt of the co**i""io! he received fro* hi"
)ri!ci)#l.( #o'ingo v. #o'ing+ 20 1CRA 1?1
31;516.
The re#"o! &h% #! #$e!t h#" to t,r!7over to
the )ri!ci)#l ever%thi!$ he receive" '% virt,e of
the #$e!c% i" th#t &he! he #ct"+ he doe" "o
*erel% #" # re)re"e!t#tive of the )ri!ci)#l+ #!d
&h#tever he receive" i" #" tho,$h it &#" the
)ri!ci)#l &ho receive" it. Je h#" !o "t#!di!$
therefore to ret#i! for hi*"elf #!% #*o,!t or ite*
received i! ),r",it of the #$e!c%.
The o'li$#tio! of the #$e!t to #cco,!t for
ever%thi!$ to the )ri!ci)#l lie" #t the core of hi"
d,ci#r% o'li$#tio!" th#t #!% "ti),l#tio!
e:e*)ti!$ the #$e!t fro* the o'li$#tio! to re!der
#! #cco,!ti!$ i" decl#red void ,!der Article 18;1.
#o'ingo v. #o'ingo+ 20 1CRA 1?1 31;516+
held th#t (I#r#$r#)h 0 of Article 18;1 i" # !e&
#dditio! de"i$!ed to "tre"" the hi$he"t lo%#lt%
th#t i" reB,ired to #! #$e!t co!de*!i!$ #" void
#!% "ti),l#tio! e:e*)ti!$ the #$e!t fro* the d,t%
#!d li#'ilit% i*)o"ed o! hi* i! )#r#$r#)h o!e
thereof.( It eB,#te" the t#9i!$ of "ecret )rot '%
the #$e!t #" to 'e # fr#,d co**itted #$#i!"t the
)ri!ci)#l. It held th#t 77
Je!ce+ #! #$e!t &ho t#9e" #
"ecret )rot i! the !#t,re of #
'o!,"+ $r#t,it% or )er"o!#l 'e!et
fro* the ve!dee+ &itho,t reve#li!$
the "#*e to hi" )ri!ci)#l+ the
ve!dor+ i" $,ilt% of # 're#ch of hi"
lo%#lt% to the )ri!ci)#l #!d forfeit"
hi" ri$ht to collect the co**i""io!
fro* hi" )ri!ci)#l+ eve! if the
)ri!ci)#l doe" !ot ",=er #!% i!E,r%
'% re#"o! of ",ch 're#ch of delit%+
or th#t he o't#i!ed 'etter re",lt"
or th#t the #$e!c% i" # $r#t,ito,"
o!e+ or th#t ,"#$e or c,"to* #llo&"
it< 'ec#,"e the r,le i" to )reve!t
the )o""i'ilit% of #!% &ro!$+ !ot to
re*ed% or re)#ir #! #ct,#l
d#*#$e. ? B% t#9i!$ ",ch )rot or
'o!," or $ift or )ro)i!# fro* the
ve!dee+ the #$e!t there'%
#"",*e" # )o"itio! &holl%
i!co!"i"te!t &ith th#t of 'ei!$ #!
#$e!t for hi" )ri!ci)#l+ &ho h#" #
ri$ht to tre#t hi*+ i!"of#r #" hi"
Co**i""io! i" co!cer!ed+ #" if !o
#$e!c% h#d e:i"ted.
The f#ct th#t the )ri!ci)#l *#%
h#ve 'ee! 'e!eted '% the
v#l,#'le "ervice" of the "#id #$e!t
doe" !ot e:c,l)#te the #$e!t &ho
h#" o!l% hi*"elf to 'l#*e for ",ch
# re",lt '% re#"o! of hi" tre#cher%
or )erd%. 3#t )). 1?571?86
#o'ingo v. #o'ingo+ 20 1CRA 1?1 31;516+
cite" A*eric#! E,ri")r,de!ce th#t #))l% the
doctri!e ,!der Article 18;1+ th," 77
6/
The A*eric#! E,ri")r,de!ce o!
thi" "core i" &ell7!i$h ,!#!i*o,".
(Ahere # )ri!ci)#l h#" )#id #!
#$e!t or 'ro9er # co**i""io! &hile
i$!or#!t of the f#ct th#t the l#tter
h#" 'ee! ,!f#ithf,l+ the )ri!ci)#l
*#% recover '#c9 the co**i""io!
)#id+ "i!ce #! #$e!t or 'ro9er &ho
h#" 'ee! ,!f#ithf,l i" !ot e!titled
to #!% co*)e!"#tio!.
::: ::: :::
(I! di"c,""i!$ the ri$ht of the
)ri!ci)#l to recover co**i""io!"
ret#i!ed '% #! ,!f#ithf,l #$e!t+ the
co,rt i! Fittle v". Ihi))" 31;116 048
G#"". ??l+ ;2 NE 064+ ?2 FRA 3N16
1426+ "#idD 8It i" &ell "ettled th#t
the #$e!t i" 'o,!d to e:erci"e the
,t*o"t $ood f#ith i! hi" de#li!$"
&ith hi" )ri!ci)#l. A" Ford C#ir!"
"#id+ thi" r,le (i" !ot # tech!ic#l or
#r'itr#r% r,le. It i" # r,le fo,!ded
o! the hi$he"t #!d tr,e"t )ri!ci)le"
of *or#lit%.( I#r9er v". GcNe!!#
318526 FR 14 Ch 3E!$6 ;6+ 118.. If
the #$e!t doe" !ot co!d,ct hi*"elf
&ith e!tire delit% to&#rd" hi"
)ri!ci)#l+ ',t i" $,ilt% of t#9i!$ #
"ecret )rot or co**i""io! i!
re$#rd the *#tter i! &hich he i"
e*)lo%ed+ he lo"e" hi" ri$ht to
co*)e!"#tio! o! the $ro,!d th#t
he h#" t#9e! # )o"itio! &holl%
i!co!"i"te!t &ith th#t of #$e!t for
hi" e*)lo%er+ #!d &hich $ive" hi"
e*)lo%er+ ,)o! di"coveri!$ it+ the
ri$ht to tre#t hi* "o f#r #"
co*)e!"#tio!+ #t le#"t+ i"
co!cer!ed #" if !o #$e!c% h#d
e:i"ted. Thi" *#% o)er#te to $ive
to the )ri!ci)#l the 'e!et of
v#l,#'le "ervice" re!dered '% the
#$e!t+ ',t the #$e!t h#" o!l%
hi*"elf to 'l#*e for th#t re",lt.8
: : :
(The i!te!t &ith &hich the #$e!t
too9 # "ecret )rot h#" 'ee! held
i**#teri#l &here the #$e!t h#" i!
f#ct e!tered i!to # rel#tio!"hi)
i!co!"i"te!t &ith hi" #$e!c%+ "i!ce
the l#& co!de*!" the corr,)ti!$
te!de!c% of the i!co!"i"te!t
rel#tio!"hi). Fittle v". Ihi))"
31;116 ;2 NE 064.(
(A" # $e!er#l r,le+ it i" # 're#ch
of $ood f#ith #!d lo%#lt% to hi"
)ri!ci)#l for #! #$e!t+ &hile the
#$e!c% e:i"t"+ "o to de#l &ith the
",'Eect *#tter thereof+ or &ith
i!for*#tio! #cB,ired d,ri!$ the
co,r"e of the #$e!c%+ #" to *#9e #
)rot o,t of it for hi*"elf i! e:ce""
of hi" l#&f,l co*)e!"#tio!D #!d if
he doe" "o he *#% 'e held #" #
66
tr,"tee #!d *#% 'e co*)elled to
#cco,!t to hi" )ri!ci)#l for #ll
)rot"+ #dv#!t#$e"+ ri$ht"+ or
)rivile$e" #cB,ired+ '% hi* i! ",ch
de#li!$"+ &hether i! )erfor*#!ce
or i! viol#tio! of hi" d,tie"+ #!d 'e
reB,ired to tr#!"fer the* to hi"
)ri!ci)#l ,)o! 'ei!$ rei*',r"ed for
hi" e:)e!dit,re" for the "#*e+
,!le"" the )ri!ci)#l h#" co!"e!ted
to or r#tied the tr#!"#ctio!
9!o&i!$ th#t 'e!et or )rot &o,ld
#ccr,e+ or h#d #ccr,ed+ to the
#$e!t+ or ,!le"" &ith ",ch
9!o&led$e he h#" #llo&ed the
#$e!t "o #" to ch#!$e hi" co!ditio!
th#t he c#!!ot 'e ),t i! "t#t,"
B,o. The #))lic#tio! of thi" r,le i"
!ot #=ected '% the f#ct th#t the
)ri!ci)#l did !ot ",=er #!% i!E,r%
'% re#"o! of the #$e!t8" de#li!$"+
or th#t he i! f#ct o't#i!ed 'etter
re",lt"< !or i" it #=ected '% the f#ct
th#t there i" # ,"#$e or c,"to* to
the co!tr#r%+ or th#t the #$e!c% i"
# $r#t,ito," o!e.( 3#t ). 1?;6
Jo&ever+ #o'ingo #l"o held th#t the d,t%
e*'odied i! Article 18;1 to #cco,!t &ill !ot #))l%
(if the #$e!t or 'ro9er h#d i!for*ed the )ri!ci)#l
of the $ift or 'o!," or )rot he received fro* the
),rch#"er #!d hi" )ri!ci)#l did !ot o'Eect
thereto.( 3#t ). 1246
The Co,rt #l"o held i! #o'ingo th#t
I#r#$r#)h 0 of Article 18;1 3&#iver of d,t% to
#cco,!t i" void6 i" de"i$!ed to "tre"" the hi$he"t
lo%#lt% th#t i" reB,ired of #! #$e!t. Article 18;1
3#!d Art. 1;4;6 i*)o"ed ,)o! the #$e!t the
#'"ol,te o'li$#tio! to *#9e # f,ll di"clo",re or
co*)lete #cco,!t to hi" )ri!ci)#l of #ll hi"
tr#!"#ctio!" #!d other *#teri#l f#ct" relev#!t to
the #$e!c%+ "o *,ch "o th#t the l#& doe" !ot
co,!te!#!ce #!% "ti),l#tio! e:e*)ti!$ the #$e!t
for* ",ch o'li$#tio! #!d co!de*!" #" void ",ch
"ti),l#tio!. The d,t% of #! #$e!t i" li9e!ed to th#t
of # tr,"tee. Thi" i" !ot # tech!ic#l or #r'itr#r%
r,le ',t # r,le fo,!ded o! the hi$he"t #!d tr,e"t
)ri!ci)le of *or#lit% #" &ell #" of the "tricte"t
E,"tice.
A! #$e!t+ ,!li9e # "erv#!t or *e""e!$er+
h#" 'oth the )h%"ic#l #!d E,ridic#l )o""e""io! of
the $ood" received i! #$e!c%+ or the )roceed"
thereof+ &hich t#9e the )l#ce of the $ood" #fter
their "#le '% the #$e!t. Ji" d,t% to t,r! over the
)roceed" of the #$e!c% de)e!d" ,)o! hi"
di"ch#r$e #" &ell #" the re",lt of the #cco,!ti!$
'et&ee! hi* #!d the )ri!ci)#l+ #!d he *#% !ot
"et ,) hi" ri$ht of )o""e""io! #" #$#i!"t th#t of
the )ri!ci)#l ,!til the #$e!c% i" ter*i!#ted.
5u=man v$ Court of "ppeals, @@ 1i/. CA3
,1@5?-.
It i" i**#teri#l &hether ",ch *o!e% or
)ro)ert% i" the re",lt of the )erfor*#!ce or
viol#tio! of the #$e!t8" d,t%+ if it 'e the fr,it of
the #$e!c%+ it *,"t 'e #cco,!ted for #!d t,r!ed
65
over to the )ri!ci)#l. If hi" d,t% i" "trictl%
)erfor*ed+ the re",lti!$ )rot #ccr,e" to the
)ri!ci)#l #" the le$iti*#te co!"eB,e!ce of the
rel#tio!< if )rot #ccr,e" fro* hi" viol#tio! of d,t%
&hile e:ec,ti!$ the #$e!c%+ th#t li9e&i"e 'elo!$"
to the )ri!ci)#l+ !ot o!l% 'ec#,"e the )ri!ci)#l h#"
to #"",*e the re")o!"i'ilit% of the tr#!"#ctio!+
',t #l"o 'ec#,"e the #$e!t c#!!ot 'e )er*itted
to derive #dv#!t#$e fro* hi" o&! def#,lt.
%umaguin v$ Reynolds& @2 1i/. ?? ,1@52-.
Therefore+ &he! the #$e!t e!ter" i!to #
co!tr#ct th#t "ho,ld )ert#i! to the )ri!ci)#l+ ',t i!
hi" o&! !#*e+ it &o,ld 'e # viol#tio! of hi" d,t%
of lo%#lt% to the )ri!ci)#l+ #!d #" 'et&ee! the
)ri!ci)#l #!d the #$e!t+ the l#tter *,"t #cco,!t to
the )ri!ci)#l for #ll )rot" e#r!ed fro* the
tr#!"#ctio!.
It *#tter" !o& ho& f#ir the co!d,ct of the
#$e!t *#% h#ve 'ee! i! # )#rtic,l#r c#"e+ !or
th#t the )ri!ci)#l &o,ld h#ve 'ee! !o 'etter of if
the #$e!t h#d "trictl% ),r",ed hi" )o&er+ !or th#t
the )ri!ci)#l &#" !ot+ i! f#ct+ i!E,red '% the
i!terve!tio! of the #$e!t for hi" o&! )rot. The
re",lt i! 'oth c#"e" i" the "#*e< the )rot" "h#ll
"till )ert#i! to the )ri!ci)#l. Ojinaga v$ 'state of
Pere=, @ 1i/. 1B5 ,1@AC-.
,1- )hen the %uty to "ccount %oes Not
"pply
H!der Article 1;12+ the #$e!t *#% ret#i! i!
)led$e the thi!$" &hich #re the o'Eect of the
#$e!c% ,!til the )ri!ci)#l e=ect" the
rei*',r"e*e!t #!d )#%" the i!de*!it% )rovided
i! Article 1;10 #!d 1;1?.
). +iabi/it* o( A)ent (o" Inte"e$t
H!der Article 18;6+ the #$e!t &o,ld o&e
i!tere"t to the )ri!ci)#l o! the follo&i!$ ite*"D
3#6 O! ",*" the #$e!t #))lied to
hi" o&! ,"e fro* the ti*e he
,"ed the*< #!d
3'6 O! ",*" o&i!$ the )ri!ci)#l
&hich re*#i! o,t"t#!di!$ #t the
ti*e of e:ti!$,i"h*e!t of the
#$e!c%+ i!tere"t to r,! fro* the
ti*e of ",ch e:ti!$,i"h*e!t.
The 1,)re*e Co,rt h#" reco$!i>ed the t&o
di"ti!ct c#"e" covered ,!der Article 18;6.
-?.
The 1,)re*e Co,rt reco$!i>ed i! +orja v$
%e +orja, 5B 1i/ B11 ,1@33-+ th#t there i" !o
i!tere"t d,e o! ",*" o&ed '% the #$e!t to the
)ri!ci)#l &hich h#ve !ot 'ee! the re",lt of
#$e!tKLQ" co!ver"io! to hi" o&! ,"e+ ",ch #$e!t
&o,ld 'e li#'le for i!tere"t" to r,! fro* the d#te
the #$e!c% i" e:ti!$,i"hed ,!til he )#%" ",ch
",*".
1. A)ent +iab/e (o" F"a!. an.
Ne)/i)en&e
Article 1;4; )rovide" th#t (-t.he #$e!t i"
!e$li$e!ce+ &hich "h#ll 'e E,d$ed &ith *ore or
68
le"" ri$or '% the co,rt"+ #ccordi!$ to &hether the
#$e!c% &#" or &#" !ot for # co*)e!"#tio!.(
#o'ingo v. #o'ingo+ 20 1CRA 1?1 31;516+
held th#t the )rovi"io!" of Article 1;4; Kde*#!d
the ,t*o"t $ood f#ith+ delit%+ ho!e"t%+ c#!dor
#!d f#ir!e"" o! the )#rt of the #$e!t+ the re#l
e"t#te 'ro9er i! thi" c#"e+ to hi" )ri!ci)#l+ the
ve!dor. The l#& i*)o"e" ,)o! the #$e!t the
#'"ol,te o'li$#tio! to *#9e # f,ll di"clo",re or
co*)lete #cco,!t to hi" )ri!ci)#l of #ll hi"
tr#!"#ctio!" #!d other *#teri#l f#ct" relev#!t to
the #$e!c%+ "o *,ch "o th#t the l#& #" #*e!ded
doe" !ot co,!te!#!ce #!% "ti),l#tio! e:e*)ti!$
the #$e!t fro* ",ch #! o'li$#tio! #!d co!"ider"
",ch #! e:e*)tio! #" void. The d,t% of #! #$e!t
i" li9e!ed to th#t of # tr,"tee. Thi" i" !ot #
tech!ic#l or #r'itr#r% r,le ',t # r,le fo,!ded o!
the hi$he"t #!d tr,e"t )ri!ci)le of *or#lit% #" &ell
#" of the "tricte"t.( 3#t ). 1?56
The )rovi"io!" of Article 1;4; #re *erel% #!
i*)le*e!t#tio! of the d,t% of dili$e!ce e:)re""ed
i! Article 1885 &hich )rovide" th#t i! the
e:ec,tio! of the #$e!c%+ the #$e!t "h#ll #ct i!
#ccord#!ce &ith the i!"tr,ctio!" of the )ri!ci)#l+
#!d i! def#,lt of i!"tr,ctio!"+ the #$e!t ("h#ll do
#ll th#t # $ood f#ther of # f#*il% &o,ld do+ #"
reB,ired '% the !#t,re of the ',"i!e""<( #!d
Article 1888+ &hich )rovide" th#t #! #$e!t ("h#ll
!ot c#rr% o,t #! #$e!c% if it" e:ec,tio! &o,ld
*#!ife"tl% re",lt i! lo"" or d#*#$e to the
)ri!ci)#l.(
It *,"t 'e !oted th#t #! #$e!t c#!!ot 'e
held )er"o!#ll% li#'le '% the )ri!ci)#l for d#*#$e"
c#,"ed &here+ #" )rovided ,!der Article 18;;+ the
(#$e!t #ct" i! #ccord#!ce &ith the order" of the
)ri!ci)#l+ the )ri!ci)#l c#!!ot "et7,) the
i$!or#!ce of the #$e!t #" to circ,*"t#!ce"
&hereof he hi*"elf &#"+ or o,$ht to h#ve 'ee!+
#&#re.( Thi" refer" to the li#'ilit% i!c,rred '% the
)ri!ci)#l #" to third )#rtie"D h#vi!$ #))oi!ted #!
i$!or#*," for #! #$e!t+ &ho #ct" i! #ccord#!ce
&ith the )ri!ci)#lKLQ" i!"tr,ctio! 3doe" !ot ,"e
$ood E,d$*e!t6+ the )ri!ci)#l c#!!ot #void hi"
o'li$#tio!" #ri"i!$ fro* the co!tr#ct.
Article 1;4; i" #l"o the le$#l '#"i" '% &hich
#! #$e!t 'eco*e" )er"o!#ll% li#'le to third
)#rtie" &ho #re i!E,red '% hi" #ct of fr#,d or
!e$li$e!ce.
Re/ate. Ca$e$6
Strong v. +uiterrez Repide+ 21 Ihil ;25
31;4;6
+ritish "ir!ays v$ Court of "ppeals, 2B5
SCRA 45A
,1@@B-
Metroban* v$ Court of "ppeals, 1@4
SCRA 1?@
,1@@1-
International $il's 9China: v. -ric $il'+ 6?
Ihil 558 31;?66
6;
Austria v. Court of Appeals+ ?; 1CRA /05
31;516
Cad&allader v. S'ith *ell+ 5 Ihil 261 31;456
-1.#t ). 555+ citing 1cott o! Tr,"t"+ ?
rd
ed.+ Vol. V+ ).
0/22+ citing Harrop v. Cole,+ 8/ N.J. EB. ?0+ ;/ A. ?58+
#=KLQd 86 N.J. E#. 0/4+ ;8 A. 148/.
-0.5.S. v. Re-es+ ?6 Ihil. 5;1 31;156< 5.S. v. %iene+ 5 Ihil. 5?6
31;456< O!inaga v. Estate of (erez+ ; Ihil. 18/ 31;456< In re
*a'4erger+ 2; Ihil. ;60 31;506< #uhart $reres - Co'pania v.
.acia+ /2 Ihil. /1? 31;?46.
-?.O!inaga v. Estate of (erez+ ; Ihil. 18/ 31;456<
.endezona v. 0da. #e +oitia+ /2 Ihil //5 31;?46< A..
A''en Transportation Co. v. #e .argallo+ /2 Ihil. /54
31;?46.
0D06 AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
VII. IOAER OF AGENT TO AIIOINT A 1HB1TITHTE
Article 18;0 "et" the def#,lt r,le th#t KLX-t.he
#$e!t *#% #))oi!t # ",'"tit,te if the )ri!ci)#l h#"
!ot )rohi'ited hi* fro* doi!$ "o.KL
I! Escueta v. i', /10 1CRA 211 304456+ the f#ther
&ho h#d $ive! her d#,$hter # ")eci#l )o&er of
#ttor!e% to "ell re#l )ro)ertie"+ co,ld !ot "ee9 the
decl#r#tio! of !,llit% of the "#le e=ected '% the
",'"tit,te #$e!t #))oi!t '% the d#,$hterD
KLXA))l%i!$ -Article 18;0 of the Civil Code. to
the ")eci#l )o&er of #ttor!e% e:ec,ted '% -the
f#ther. i! f#vor of hi" d#,$hter . . .+ it i" cle#r th#t
"he i" !ot )rohi'ited fro* #))oi!ti!$ # ",'"tit,te.
B% #,thori>i!$ -the ",'7#$e!t. to "ell the ",'Eect
)ro)ertie"+ -the d#,$hter. *erel% #cted &ithi! the
li*it" of the #,thorit% $ive! '% her f#ther+ ',t "he
&ill h#ve to 'e KLYre")o!"i'le for the #ct" of the
",'7#$e!t+KLQ #*o!$ &hich i" )reci"el% the "#le
of the ",'Eect )ro)ertie" i! f#vor of
re")o!de!t".KL 3#t )). 20?72026
a. E>e&t$ ;1en A)ent A##oint$ a S!b$tit!te6
,1- Ahe! the ",'7#$e!t h#" 'ee! #))oi!ted ),r",#!t
to the i!"tr,ctio!" of the )ri!ci)#lD
3i6 Cle#rl% the ",'7#$e!t i" re#ll% #! #$e!t of the
)ri!ci)#l #" &ell.
A!% #ct do!e '% the #$e!t or the ",'"tit,te i!
'eh#lf of the )ri!ci)#l i" dee*ed the #ct of the
)ri!ci)#l<
,2- Ahe! he h#" !ot 'ee! )rohi'ited '% the )ri!ci)#l+
#!d the #$e!t #))oi!t" # ",'"tit,te+ he i" re")o!"i'le
for #ct" of ",'"tit,teD
54
3i6 he &#" !ot $ive! )o&er to #))oi!t o!e
3ii6 he &#" $ive! ",ch )o&er &itho,t de"i$!#ti!$
the )er"o! #!d ",'"tit,te i" !otorio,"l%
i!co*)ete!t or i!"olve!t.
I! either c#"e+ the )ri!ci)#l *#% f,rther*ore 'ri!$
#! #ctio! #$#i!"t the ",'"tit,te &ith re")ect to
the o'li$#tio!" &hich the l#tter h#" co!tr#cted
,!der the ",'"tit,tio!. 3Art. 18;?6
,3- Ahe! the #$e!t #))oi!t" # ",'"tit,te #$#i!"t the
)ri!ci)#lKLQ" )rohi'itio!D
3i6 All #ct" of ",'"tit,te #" #$#i!"t the )ri!ci)#l
#re void. 3Art. 18;06
3ii6 It i" cle#r th#t it &o,ld 'e the #$e!t &ho
'eco*e" )er"o!#ll% li#'le for the co!tr#ct"
e!tered i!to '% the ",'"tit,te
The i*)lic#tio! fro* the l#!$,#$e ,"ed i! Article
18;?+ th#t the )ri!ci)#l &o,ld h#ve !o c#,"e of
#ctio! #$#i!"t the ",'"tit,te.
The le$#l *#:i* potestas delegate non delegare
potestL # )o&er o!ce dele$#ted c#!!ot 'e re7
dele$#ted+ &hile #))lied )ri*#ril% i! )olitic#l l#&
to the e:erci"e of le$i"l#tive )o&er+ i" # )ri!ci)le
of #$e!c%KLMfor #!other+ # re7dele$#tio! of the
#$e!c% &o,ld 'e detri*e!t#l to the )ri!ci)#l #"
the "eco!d #$e!t h#" !o )rivit% of co!tr#ct &ith
the for*er. *altazar v. O'4uds'an /14 1CRA 52
304466.
If the #))oi!t*e!t of # ",'7#$e!t &hich &#" !either
)rohi'ited or #,thori>ed+ h#" occ#"io!ed the i!c,rri!$
of d#*#$e" '% the )ri!ci)#l+ the #$e!t "h#ll 'e
)ri*#ril% re")o!"i'le for the #ct" of the ",'"tit,te+ i!
#ccord#!ce &ith the )rovi"io!" of Article 18;0316.
Serona v$ Court of "ppeals, 3@2 SCRA 35 ,2AA2-.
A ",'7#$e!t #))oi!ted to collect the deferred
i!"t#ll*e!t" fro* the "#le of )ro)ert% *#de '% #!
#ttor!e%7i!7f#ct h#" !o #,thorit% to e!ter i!to #
!e& co!tr#ct &ith the tr#!"feree '% *odif%i!$ the
ter*" of the "#le #!d rele#"i!$ the "olid#r%
",retie" i! the ori$i!#l co!tr#ct. :illa v$ 5arcia
5os9ue, 4@ 1i/. 12? ,1@2A-.
Re/ate. Ca$e$6
#el Rosario v. a *adenia+ ?? Ihil ?16 31;166.
opez v. Seva+ 6; Ihil ?11 31;246 31)#!i"h6.
.ar1uez v. 0arela+ ;0 Ihil. ?5? 31;/06.
?. RU+E ON +IABI+ITY ;8EN T;O OR MORE AGENTS
AOINTED BY T8E SAME RINCIA+
Article 18;2 )rovide" for the r,le of re")o!"i'ilit%
3li#'ilit%6 of t&o or *ore #$e!t" "ervi!$ the "#*e
)ri!ci)#l+ eve! &he! the% h#ve 'ee! #))oi!ted
"i*,lt#!eo,"l%D 3#6 Joi!t+ &he! !othi!$ i"
51
"ti),l#ted< #!d 3'6 1olid#r%+ o!l% &he! "o
"ti),l#ted.
H!der Article 18;/+ &he! "olid#rit% h#" 'ee!
#$reed ,)o!+ e#ch of the #$e!t" i" re")o!"i'le for
the !o!7f,lll*e!t of the #$e!c%+ #!d for the f#,lt
or !e$li$e!ce of hi" fello& #$e!t"+ e:ce)t i! the
l#tter c#"e &he! the fello& #$e!t" #cted 'e%o!d
the "co)e of their #,thorit%.
Co*)#re the r,le i! Article i! 18;2 &ith the
$e!er#l r,le of "olid#r% li#'ilit% ,!der Article
1;1/D &he! the #$e!t i" "ervi!$ t&o or *ore
)ri!ci)#l"+ the li#'ilit% of the )ri!ci)#l" i" "olid#r%.
I! .unicipal Council of Iloilo v. Evangelista+ // Ihil
0;4 31;?46+ the Co,rt "et the $e!er#l r,leD &he! #
)er"o! #))oi!t" t&o #$e!t" i!de)e!de!tl%+ the
co!"e!t of o!e &ill !ot 'e reB,ired to v#lid#te the
#ct" of the other+ ,!le"" th#t #))e#r" )o"itivel% to
h#ve 'ee! the )ri!ci)#lKLQ" i!te!tio!.
C. RU+ES OF AGENTIGHS +IABI+ITY TO T8IRD
ARTIES
a. ;1en t1e A)ent A&t$ ;it1in t1e S&o#e o(
8i$ A!t1o"it*6
,1- 5eneral Rule3
Article 18;5 e:)re""l% )rovide" th#t KLX-t.he
#$e!t &ho #ct" #" ",ch i" !ot )er"o!#ll% li#'le to
the )#rt% &ith &ho* he co!tr#ct"<KL #!d thi" i"
",))le*e!ted '% Article 1;14+ &hich )rovide"
th#t KLX-t.he )ri!ci)#l *,"t co*)l% &ith #ll the
o'li$#tio!" &hich the #$e!t *#% h#ve co!tr#cted
&ithi! the "co)e of hi" #,thorit%.KL
Article 18;5 of the Civil Code rei!force" the
f#*ili#r doctri!e th#t #! #$e!t+ &ho #ct" #" ",ch+
i" !ot )er"o!#ll% li#'le to the )#rt% &ith &ho* he
co!tr#ct". Eurotech Industrial Technologies, Inc. v.
Cuizon, /01 1CRA /82 304456.
I! 5- v. Court of Appeals+ ?12 1CRA 6; 31;;;6+ #$e!t"
&ho h#ve 'ee! #,thori>ed to "ell )#rcel" of l#!d
c#!!ot cl#i* )er"o!#l d#*#$e" i! the !#t,re of
,!re#li>ed co**i""io! '% re#"o! of the #ct of the
',%er i" ref,"i!$ to )roceed &ith the "#leD
KLXIetitio!er" #re !ot )#rtie" to the co!tr#ct of
"#le 'et&ee! their )ri!ci)#l" #!d NJA. The% #re
*ere #$e!t" of the o&!er" of the l#!d ",'Eect of
the "#le. A" #$e!t"+ the% o!l% re!der "o*e "ervice
or do "o*ethi!$ i! re)re"e!t#tio! or o! 'eh#lf of
their )ri!ci)#l". -Article 1868+ Civil Code.. The
re!deri!$ of ",ch "ervice did !ot *#9e the*
)#rtie" to the co!tr#ct" of "#le e:ec,ted i! 'eh#lf
of the l#tter. 1i!ce # co!tr#ct *#% 'e viol#ted o!l%
'% the )#rtie" thereto #" #$#i!"t e#ch other+ the
re#l )#rtie"7i!7i!tere"t+ either #" )l#i!ti= or
defe!d#!t+ i! #! #ctio! ,)o! th#t co!tr#ct *,"t+
$e!er#ll%+ either 'e )#rtie" to "#id co!tr#ct.-1.
,2- '2ceptions3
50
I! the follo&i!$ c#"e"+ #! #$e!t+ eve! &he! #cti!$
#" ",ch &ithi! the "co)e of hi" #,thorit%+ *#%
'eco*e )er"o!#ll% li#'le o! the co!tr#ct" or
tr#!"#ctio!" e!tered i!to+ &he!D
3#6 The #$e!t e:)re""l% *#9e" hi*"elf )er"o!#ll%
li#'le for the co!tr#ct" of hi" )ri!ci)#l. 3Art. 18;56<
or
3'6 The #$e!t #ct" &ith fr#,d or !e$li$e!ce 3Art.
1;4;6.
A )er"o! de#li!$ &ith # 9!o&! #$e!t i" !ot
#,thori>ed+ ,!der #!% circ,*"t#!ce"+ 'li!dl% to
tr,"t the #$e!t"< "t#te*e!t" #" to the e:te!t of
hi" )o&er"< ",ch )er"o! *,"t !ot #ct !e$li$e!tl%
',t *,"t ,"e re#"o!#'le dili$e!ce #!d )r,de!ce
to #"cert#i! &hether the #$e!t #ct" &ithi! the
"co)e of hi" #,thorit%. The "ettled r,le i" th#t+
)er"o!" de#li!$ &ith #! #"",*ed #$e!t #re 'o,!d
#t their )eril+ #!d if the% &o,ld hold the )ri!ci)#l
li#'le+ to #"cert#i! !ot o!l% the f#ct of #$e!c% ',t
#l"o the !#t,re #!d e:te!t of #,thorit%+ #!d i!
c#"e either i" co!troverted+ the ',rde! of )roof i"
,)o! the* to )rove it. iton!ua v. $ernandez+ 205
1CRA 258 304426. Reiterated in iton!ua, "r. v.
Eternit Corp., 2;4 1CRA 042 304466.
A )er"o! #cti!$ #" # *ere re)re"e!t#tive of
#!other #cB,ire" !o ri$ht" &h#t"oever+ !or doe"
he i!c,r #!% li#'ilitie" #ri"i!$ fro* the "#id
co!tr#ct 'et&ee! hi" )ri!ci)#l #!d #!other )#rt%.
Angeles v. (hilippine )ational Rail&a-s 9()R:+ /44
1CRA 222 304466. Chua v. Total OMce (roducts
and Services 9Topros:, Inc., 251 1CRA /44 3044/6<
Tan v. Engineering Services, 2;8 1CRA ;? 304466<
Chong v. Court of Appeals, /05 1CRA 122 304456.
The e""e!ce of #$e!c% 'ei!$ the re)re"e!t#tio! of
#!other+ it i" evide!t th#t the o'li$#tio!"
co!tr#cted #re for #!d o! 'eh#lf of the
)ri!ci)#lKLZ# co!"eB,e!ce of thi" re)re"e!t#tio!
i" the li#'ilit% of the )ri!ci)#l for the #ct" of hi"
#$e!t )erfor*ed &ithi! the li*it" of hi" #,thorit%
th#t i" eB,iv#le!t to the )erfor*#!ce '% the
)ri!ci)#l hi*"elf &ho "ho,ld #!"&er therefor. Tan
v. Engineering Services, 2;8 1CRA ;? 304466.
1i!ce+ #" # r,le+ the #$e!c%+ #" # co!tr#ct+ i"
'i!di!$ o!l% 'et&ee! the co!tr#dicti!$ )#rtie"+
the! o!l% the )#rtie"+ #" &ell #" the third )er"o!
&ho tr#!"#ct" &ith the )#rtie" the*"elve"+ *#%
B,e"tio! the v#lidit% of the #$e!c% or the viol#tio!
of the ter*" #!d co!ditio!" fo,!d therei!. 0illegas
v. ingan, /06 1CRA 6? 304456.
O!e &ho "i$!" # recei)t #" # &it!e"" &ith the
&ord KLX#$e!tKL t%)ed 'elo& hi" "i$!#t,re+ ',t
!ever received the #lle$ed #*o,!t or #!%thi!$ o!
#cco,!t of the ",'Eect tr#!"#ctio!+ i" !ot
)er"o!#ll% li#'le. Caoile v$ Court of "ppeals,
22? SCRA ?5B ,1@@3-.
A! #$e!t 'eco*e" )er"o!#ll% li#'le &he! '% hi"
&ro!$ or o*i""io!+ he de)rive" the third )er"o!
&ith &ho* he co!tr#ct" of #!% re*ed% #$#i!"t
5?
the )ri!ci)#l. The third )er"o! &o,ld 'e defr#,ded
if he &o,ld !ot 'e #llo&ed to recover fro* the
#$e!t. National Po!er Corp$ v$ National
Merchandising Corp$, 11C SCRA CB@ ,1@B2-.
b. ;1en t1e A)ent A&t$ ;it1o!t o" in E:&e$$
o( A!t1o"it*
,1- 5eneral Rule3
H!der Article 18;5+ #! #$e!t &ho #ct" &itho,t or
i! e:ce"" of hi" #,thorit% 'eco*e" )er"o!#ll%
li#'le to third )#rtie" eve! &he! he e!ter" i!to
"#id co!tr#ct" or tr#!"#ctio!" i! the !#*e of the
)ri!ci)#l+ &itho,t $ivi!$ ",ch third )#rtie"
",@cie!t !otice of hi" )o&er". Thi" i"
",))le*e!ted ,!der Article 1;14 &hich )rovide"
th#t KLX-#." for #!% o'li$#tio! &herei! the #$e!t
h#" e:ceeded hi" )o&er+ the )ri!ci)#l i" !ot
'o,!d.KL
,2- '2ceptions3
I! the follo&i!$ c#"e"+ eve! tho,$h the #$e!t #ct"
&itho,t or i! e:ce"" of hi" #,thorit%+ he &o,ld !ot
'e )er"o!#ll% li#'le for the co!tr#ct" or
tr#!"#ctio!" he e!tered i!to i! the !#*e of the
)ri!ci)#lD
3#6 Ahe! the )ri!ci)#l r#tie" the co!tr#ct or
tr#!"#ctio!" 3Art". 18;8 #!d 1;146<
3'6 A" to third )#rtie" &ho relied ,)o! the ter*" of
the )o&er of #ttor!e% #" &ritte!+ eve! if i! f#ct
the #$e!t h#d e:ceeded the li*it" of hi" #,thorit%
#ccordi!$ to #! ,!der"t#!di!$ 'et&ee! the
)ri!ci)#l #!d the #$e!t 3Art". 1;44 #!d 1;4?6<
H!der Article 1;41+ # KLXthird )er"o! c#!!ot "et
,) the f#ct th#t the #$e!t h#" e:ceeded hi"
)o&er"+ if the )ri!ci)#l h#" r#tied+ or h#"
"i$!ied hi" &illi!$!e"" to r#tif% the #$e!tKLQ"
#ct.KL
H!der Article 1;40+ ever% third )er"o! &ith &ho*
the #$e!t &i"he" to co!tr#ct o! 'eh#lf of the
)ri!ci)#l *#% reB,ire the )re"e!t#tio! of the
)o&er of #ttor!e% or the i!"tr,ctio!" #" re$#rd"
the #$e!c%. Co!"eB,e!tl%+ )riv#te or "ecret order"
#!d i!"tr,ctio!" of the )ri!ci)#l do !ot )reE,dice
third )er"o!" &ho h#ve relied ,)o! the )o&er of
#ttor!e% or i!"tr,ctio!" "ho&! the*.
,3- Conse9uence on Contracts 'ntered .nto
)ithout or .n '2cess of "uthority3
[\ Gene"a/ R!/e6 The co!tr#ct &o,ld 'e
!nen(o"&eab/e 3Art". 1?5 #!d 124?-1.6.
[\ E:&e#tion$6
,i- Va/i. KLZ if the )ri!ci)#l "h#ll r#tif% the co!tr#ct<
,ii- Voi. KLZ if the )#rt% &ith &ho* the #$e!t
co!tr#cted i" #&#re of the li*it" of the )o&er" $r#!ted
52
'% the )ri!ci)#l< BHT the #$e!t i" )er"o!#ll% li#'le+ if
he ,!dertoo9 to "ec,re the )ri!ci)#lKLQ" r#tic#tio!.
3Art. 18;86.
The r,le th#t the #$e!t i" li#'le &he! he #ct"
&itho,t #,thorit% i" fo,!ded ,)o! the ",))o"itio!
th#t there h#" 'ee! "o*e &ro!$ or o*i""io! o!
hi" )#rt either i! *i"re)re"e!ti!$+ or i! #@r*i!$+
or co!ce#li!$ the #,thorit% ,!der &hich he
#"",*e" to #ct. I!#"*,ch #" the !o!7di"clo",re of
the li*it" of the #$e!c% c#rrie" &ith it the
i*)lic#tio! th#t # dece)tio! &#" )er)et,#ted o!
the ,!",")ecti!$ clie!t+ the )rovi"io!" of Article"
1;+ 04 #!d 01 of the Civil Code co*e i!to )l#%.
%+P v$ Court of "ppeals, 231 SCRA 3CA
,1@@4-.
The R,le th#t # co!tr#ct e!tered i!to '% o!e &ho
h#" #cted 'e%o!d hi" )o&er" "h#ll 'e
,!e!force#'le refer" to the ,!e!force#'ilit% of the
co!tr#ct #$#i!"t the )ri!ci)#l+ #!d doe" !ot #))l%
&here the #ctio! i" #$#i!"t the #$e!t hi*"elf for
co!tr#cti!$ i! e:ce"" of the li*it" of hi" #,thorit%.
National Po!er Corp$ v$ National
Merchandising Corp$, 11C SCRA CB@ ,1@B2-.
Ahe! #$e!t e:ceed" hi" #,thorit%+ the *#tter c#!
'e r#i"ed o!l% '% the )ri!ci)#l+ #!d &he! !ot "o
r#i"ed+ recover% c#! 'e *#de '% the third )#rt%
o!l% #$#i!"t the )ri!ci)#l. Article 18;5 doe" !ot
hold th#t i! c#"e of e:ce"" of #,thorit%+ 'oth the
#$e!t #!d the )ri!ci)#l #re li#'le to the other
co!tr#cti!$ )#rt%. (hil. (roducts co. v. (ri'ateria
(our e Co''erce E,terieur; (ri'aterial N(hil.O,
Inc.+ 1/ 1CRA ?41 31;6/6.
To reiter#te+ the r"t )#rt of Article 18;5 decl#re"
th#t the )ri!ci)#l i" li#'le i! c#"e" &he! the #$e!t
#cted &ithi! the 'o,!d" of hi" #,thorit%. H!der
thi"+ the #$e!t i" co*)letel% #'"olved of #!%
li#'ilit%. The "eco!d )#rt of the "#id )rovi"io!
)re"e!t" the "it,#tio!" &he! the #$e!t hi*"elf
'eco*e" li#'le to # third )#rt% &he! he e:)re""l%
'i!d" hi*"elf or he e:ceed" the li*it" of hi"
#,thorit% &itho,t $ivi!$ !otice of hi" )o&er" to
the third )er"o!. Jo&ever+ it *,"t 'e )oi!ted o,t
th#t i! c#"e of e:ce"" of #,thorit% '% the #$e!t+
li9e &h#t )etitio!er cl#i*" e:i"t" here+ the l#&
doe" !ot "#% th#t # third )er"o! c#! recover fro*
'oth the )ri!ci)#l #!d the #$e!t. Eurotech
Industrial Technologies, Inc. v. Cuizon, /01 1CRA
/82 304456
Ae li9e&i"e t#9e !ote of the f#ct th#t i! thi" c#"e+
)etitio!er i" "ee9i!$ to recover 'oth fro*
re")o!de!t" ERAIN+ the )ri!ci)#l+ #!d EDAIN+ the
#$e!t. It i" &ell to "t#te here th#t Article 18;5 of
the Ne& Civil Code ,)o! &hich )etitio!er #!chor"
it" cl#i* #$#i!"t re")o!de!t EDAIN KLXdoe" !ot
hold th#t i! c#"e of e:ce"" of #,thorit%+ 'oth the
#$e!t #!d the )ri!ci)#l #re li#'le to the other
co!tr#cti!$ )#rt%. Eurotech Industrial
Technologies, Inc. v. Cuizon, /01 1CRA /82 304456
The "co)e #!d e:te!t of the f,!ctio! of #!
#dE,"t*e!t #!d "ettle*e!t #$e!t+ doe" !ot
5/
i!cl,de )er"o!#l li#'ilit%. Ji" f,!ctio!" #re *erel%
to "ettle #!d #dE,"t cl#i*" i! 'eh#lf of hi"
)ri!ci)#l. If tho"e cl#i*" #re di"#))roved '% the
)ri!ci)#l+ the #$e!t doe" !ot #"",*e #!% )er"o!#l
li#'ilit%. The reco,r"e of the i!",red i" to )re""
chi" cl#i* #$#i!"t the )ri!ci)#l. Salonga v. <arner
*arnes+ 88 Ihil 10/ 31;/16< '$ Macias and Co$ v$
)arner +arnes, 43 1i/ 155 ,1@22-.
Ahe! the #$e!t e:)re""l% 'i!d hi*"elf+ he
there'% o'li$#te" hi*"elf )er"o!#ll% '% hi" o&!
#ct+ ',t th#t doe" !ot relieve the )ri!ci)#l fro*
hi" o'li$#tio! to )#% the de't i!c,rred for hi"
'e!et. -uason v$ Oro=co, 5 1i/ 5@? ,1@A?-.
A! #$e!t i" !ot )er"o!#ll% li#'le to the )#rt% &ith
&ho* he co!tr#ct" ,!le"" he e:)re""l% 'i!d"
hi*"elf or he e:ceed" the li*it" of hi" #,thorit%
&itho,t $ivi!$ ",ch )#rt% ",@cie!t !otice of hi"
)o&er". =ialcita38useco v. Si''ons+ ;5 Ihil. 285
31;//6< *an1ue +enerale *elge v. <alter, *ull &
Co., Inc., 82 Ihil. 162 31;2;6< Salmon 6 Paci?c
Commercial Co$ v$ -an Cueco, 3? 1i/. 55?
,1@1C-.
Re/ate. Ca$e$6
7u 'ng Cho v$ P"N"M, 32B SCRA C1C ,2AAA-
+acaltos Coal Mines v$ Court of "ppeals, 245
SCRA 4?A ,1@@5-
-oyota Sha!& inc$ v$ Court of "ppeals, 244 SCRA
32A ,1@@5-
'ugenio v$ Court of "ppeals, 23@ SCRA 2AC
,1@@4-
+" inance v$ Court of "ppeals, 2A1 SCRA 15C
,1@@1-
*A $inance v. Court of Appeals+ 011 1CRA 110 31;;06
Smith +ell v$ Court of "ppeals, 2?C SCRA 53A
,1@@C-
%+P v$ Court of "ppeals, 231 SCRA 3CA ,1@@4-
Pineda v$ Court of "ppeals, 22? SCRA C54 ,1@@3-
*enguet v. *CI E'plo-ees+ 0? 1CRA 26/ 31;686
*an/ of (I v. #e Coster+ 25 Ihil /;2 31;0/6
,4- T1i". e"$on Cannot SetD!# Fa&t$ o(
A)entFGH$ E:&ee.in) A!t1o"it*
H!der Article 1;41+ # third )er"o! c#!!ot "et ,)
the f#ct th#t the #$e!t h#" e:ceeded hi" )o&er"+
if the )ri!ci)#l h#" r#tied+ or h#" "i$!ied hi"
&illi!$!e"" to r#tif% the #$e!tKLQ" #ct".
The "ettled r,le i" th#t+ )er"o!" de#li!$ &ith #!
#"",*ed #$e!t #re 'o,!d #t their )eril+ #!d if
the% &o,ld hold the )ri!ci)#l li#'le+ to #"cert#i!
!ot o!l% the f#ct of #$e!c% ',t #l"o the !#t,re
56
#!d e:te!t of #,thorit%+ #!d i! c#"e either i"
co!troverted+ the ',rde! of )roof i" ,)o! the* to
)rove it.
26
I! thi" c#"e+ the )etitio!er" f#iled to
di"ch#r$e their ',rde!< he!ce+ )etitio!er" #re !ot
e!titled to d#*#$e". iton!ua, "r. v. Eternit Corp.,
2;4 1CRA 042 304466.-0.
Re/ate. Ca$e$6
Commissioner v$ San %iego, 31 SCRA ?1C ,1@CA-
+acaltos Coal Mines v$ Court of "ppeals, 245
SCRA 4?A ,1@@5-
-oyota Sha! v$ Court of "ppeals, 244 SCRA 32A
,1@@5-
()* v. Tan Ong Sze+ /? Ihil 2/1 31;0;6
B. INSTANCES ;8EN T8IRD ARTY +IAB+E TO T8E
AGENT 8IMSE+F
I! the follo&i!$ c#"e"+ # third )#rt% &o,ld 'e
directl% li#'le to the #$e!t hi*"elf eve! o!
co!tr#ct" e!tered i!to ),r",#!t to the #$e!c%
#rr#!$e*e!t+ th,"D
3#6 Ahere the #$e!t co!tr#ct" i! hi" o&! !#*e+
o! # *#tter th#t it &ithi! the "co)e of the #$e!c%
3Art. 188?6<
3'6 Ahere the #$e!t )o""e""e" # 'e!eci#l
i!tere"t i! the ",'Eect *#tter of the #$e!c%+ ",ch
#" # f#ctor "elli!$ ,!der # del credere co**i""io!
3Art. 1;456<
3c6 Ahere # third )#rt% co**it" # tort #$#i!"t the
#$e!t.
@. OB+IGATIONS OF COMMISSION AGENTS
a. Nat!"e o( Fa&to" o" Co00i$$ion A)ent
A co**i""io! #$e!t i" o!e &ho"e ',"i!e"" it i" to
receive #!d "ell $ood" for # co**i""io!+ #!d &ho
i" e!tr,"ted '% the )ri!ci)#l &ith the )o""e""io!
of the $ood" to 'e "old+ #!d ,",#ll% "elli!$ i! hi"
o&! !#*e. A! ordi!#r% #$e!t !eed !ot h#ve
)o""e""io! of the $ood" of hi" )ri!ci)#l+ &hile the
co**i""io! #$e!t *,"t 'e i! )o""e""io!. 3DE
FEON+ #t ). /226.
b. S#e&if& Ob/i)ation$ o( a Co00i$$ion
A)ent
,1- -a*e Custody of 5oods KLZ A co**i""io! #$e!t
'% 'ei!$ ",ch i" re")o!"i'le for the $ood" received '%
hi* i! the ter*" #!d co!ditio!" #!d #" de"cri'ed i!
the co!"i$!*e!t+ ,!le"" ,)o! receivi!$ the* he
"ho,ld *#9e # &ritte! "t#te*e!t of the d#*#$e #!d
deterior#tio! ",=ered '% the "#*e. 3Art. 1;4?6<
,2- Not to Commingle Similar 5oods +elong to
%i;erent Principal KLZ ,!der Article 1;42+ #
co**i""io! #$e!t &ho h#!dle" $ood" of the "#*e
9i!d #!d *#r9+ &hich 'elo!$ to di=ere!t o&!er"+ "h#ll
di"ti!$,i"h the* '% co,!ter*#r9"+ #!d de"i$!#te the
55
*erch#!di"e re")ectivel% 'elo!$ to e#ch )ri!ci)#l. I!
other &ord"+ the def#,lt r,le i" th#t co**i""io! #$e!t
c#!!ot co**i!$le $ood" of the "#*e 9i!d 'elo!$i!$
to di=ere!t )ri!ci)#l".
Di"ti!$,i"h thi" def#,lt r,le i! the c#"e of #
co!tr#ct of de)o"it+ &hich ,!der Article 1;56+ the
de)o"it#r% i" #llo&ed to co**i!$le $r#i! or other
#rticle" of "i*il#r !#t,re #!d B,#lit% 3Co!tr#ct of
De)o"it6 KLZ De)o"it#r% *#% co**i!$le $r#i! or
other #rticle" of "i*il#r !#t,re #!d B,#lit%+ #!d
the re",lt &o,ld 'e )ro7r#t# o&!er"hi) #*o!$ the
o&!er" thereof.
,3- Cannot Sell on Credit !ithout Principal@ABs
"uthori=ation KLZ If he "ell" o! credit+ the )ri!ci)#l
*#% "till de*#!d fro* hi" )#%*e!t i! c#"h+ ',t the
#$e!t "h#ll 'e e!titled to #!% i!tere"t or 'e!et &hich
*#% re",lt fro* ",ch "#le. 3Art. 1;4/6<
,4- -o .nform the Principal of 'very Pre(
"uthori=ed Sale on Credit KLZ H!der Article 1;46+
"ho,ld the #$e!t "ell o! credit &ith the #,thorit% of the
)ri!ci)#l+ the! the #$e!t "h#ll "o i!for* the )ri!ci)#l
&ith # "t#te*e!t of the2 !#*e" of the ',%er". If he
f#il" to do "o+ the "#le "h#ll 'e dee*ed to h#ve 'ee!
*#de for c#"h i!"of#r #" the )ri!ci)#l i" co!cer!ed.
,5- Shall +ear the Ris* of Collection under %el
Credere Commission Set(up KLZ H!der Article
1;48+ "ho,ld the co**i""io! #$e!t receive o! # "#le+
i! #dditio! to the ordi!#r% co**i""io!+ #!other c#lled
# $,#r#!tee co**i""io!+ the!D 3i6 Je "h#ll 'e#r the
ri"9 of collectio!< #!d 3ii6 Je "h#ll )#% the )ri!ci)#l the
)roceed" of "#le o! "#*e ter*" #$reed &ith ),rch#"er
,?- -o Collect Credits of the Principal KLZ H!der
Article 1;48+ # co**i""io! #$e!t &ho doe" !ot collect
the credit" of hi" )ri!ci)#l #t the ti*e &he! the%
'eco*e d,e #!d de*#!d#'le "h#ll 'e li#'le for
d#*#$e"+ ,!le"" he )rove" th#t he e:erci"e d,e
dili$e!ce for th#t ),r)o"e.
,C- Shall +e Responsible for ,is raud and
Negligence KLZ H!der Article 1;4;+ the #$e!t i"
re")o!"i'le to the )ri!ci)#l for the d#*#$e" ",=ered
for hi" fr#,d #!d hi" !e$li$e!ce+ &hich "h#ll 'e E,d$ed
&ith *ore or le"" ri$or '% the co,rt" #ccordi!$ to
&hether the #$e!c% &#" or &#" !ot for #
co*)e!"#tio!.
The f#il,re of the ",'7#$e!t &ho h#" c,"tod% of
the l* to i!",re #$#i!"t lo"" '% re+ &here there
&#" !o i!"tr,ctio! received fro* the )ri!ci)#l to
"o i!",re or th#t the i!",r#!ce of the l* &#" !ot
# )#rt of the o'li$#tio! i*)o"ed ,)o! #! #$e!t '%
l#&+ doe" !ot co!"tit,te either !e$li$e!ce or
fr#,d. .nternational ilms v$ /yric ilm
'2change& ?3 1i/. CCB ,1@3?-.
Ahere the clie!t order the 'ro9er to "ell the
"h#re" $ivi!$ # Coor or *i!i*,* )rice+ #!d the
'ro9er did "ell #t the *i!i*,* )rice i!dic#ted
eve! tho,$h the )rev#ili!$ r#!$i!$ )rice" &ere
*,ch hi$her th#t the%+ the 'ro9er i" li#'le for the
di=ere!ce ",=ered '% the )ri!ci)#l 'ec#,"e the
'ro9er f#iled to e:erci"e the )r,de!ce #!d t#ct of
# $ood f#ther of # f#*il% &hich the l#& reB,ired of
hi*. -an -iong -ec* v$ S'C, ?@ 1i/. 425
,1@4A-.
58
Ahere the *#!#$er of the '#!9 rele#"ed the
)roceed" of #! ,!#,thori>ed lo#! to ,!B,#lied
'orro&er+ the '#!9 *#% recover 'oth #$#i!"t the
'orro&er #!d it" *#!#$er+ #!d the ",it c#!!ot 'e
co!"idered #" the )ri!ci)#l7'#!9 r#tif%i!$ the
,!#,thori>ed #ct of it" #$e!t7*#!#$er+ ',t i"
*erel% "ee9i!$ to di*i!i"h #" *,ch #" )o""i'le
the lo"" to it"elf. PN+ v$ +agamasbad and
errer& B@ 1i/. 3?5 ,1@51-.
I! +reen 0alle- v. IAC+ 1?? 1CRA 6;5 31;826+ &here
the ),r)orted #$e!t ref,"ed to 'e held li#'le for
*erch#!di"e received fro* the )ri!ci)le o! the $ro,!d
th#t it &#" # *ere #$e!t to "ell #!d the ,lti*#te
',%er" of the )rod,ct" "ho,ld 'e the o!e *#de li#'le
for the ),rch#"e )rice+ 3&here#" the ),r)orted
)ri!ci)#l i!"i"ted th#t it &#" # "#le #rr#!$e*e!t6+ the
Co,rt r,led th#t &hether the co!tr#ct 'et&ee! the
)#rtie" 'e o!e of "#le or #$e!c% to "ell+ there i" !o
do,'t th#t the ),r)orted #$e!t &o,ld 'e )er"o!#ll%
li#'le for the )rice of the *erch#!di"e "old. Bei!$ #
co**i""io! #$e!t ,!der it" #,thorit%+ the! ),r",#!t
to Article 1;4/+ it "ho,ld !ot h#ve "old the
*erch#!di"e o! credit. H!der Article 1;4/+ the
co**i""io! #$e!t c#!!ot+ &itho,t the e:)re"" or
i*)lied co!"e!t of the )ri!ci)#l+ "ell o! credit< #!d
"ho,ld he do "o+ the )ri!ci)#l *#% de*#!d fro* hi*
)#%*e!t i! c#"h.
-1.Citing .ari'perio Co'pania )aviera, S.A. v. Court of Appeals+
1/6 1CRA ?68 31;856.
-0.Citing iton!ua v. $ernandez+ 205 1CRA 258 304426<
*A $inance Corp. v. Court of Appeals+ 011 1CRA 110
31;;06.
1D46 AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
VIII. OBFIGATION1 OF TJE IRINCIIAF
1. BINDING EFFECT OF T8E TERMS OF T8E
CONTRACT OF AGENCY
I!deed+ "i!ce # co!tr#ct of #$e!c% i" *erel%
# )re)#r#tor% co!tr#ct+ it i" &ell &ithi! the le$#l
c#)#cit% of 'oth )#rtie" to e!ter i!to #!%
"ti),l#tio!+ o'li$#tio! #!d ,!dert#9i!$ '% &hich
the% c#! t#ilor7t the rel#tio!"hi) to 'e"t #chieve
the ),r)o"e of the #$e!c%. Fi9e #!% other co!tr#ct
$over!ed '% the )ri!ci)le" of *,t,#lit% #!d
o'li$#tor% force+ the )ri!ci)#l i" 'o,!d '% the
ter*" #$reed ,)o! ,!der the co!tr#ct of #$e!c%.
A)#rt fro* the co!tr#ct,#l o'li$#tio!"
vol,!t#ril% #"",*ed '% the )ri!ci)#l ,!der the
ter*" of the )#rtic,l#r co!tr#ct of #$e!c% e!tered
i!to+ the follo&i!$ #re the co**o!7l#& d,tie" #!d
5;
o'li$#tio!" of the )ri!ci)#l '% the ver% f#ct th#t
he h#" co!"tit,ted #!other )er"o!+ the #$e!t+ to
re)re"e!t hi* i! ),r",i!$ E,ridic#l #ct" #!d
co!tr#ct"+ i! hi" !#*e.
2. RINCIA+ IS BOUND BY T8E CONTRACTS MADE BY
T8E AGENT IN 8IS BE8A+F
The ce!tr#l )ri!ci)le i! #$e!c% l#& i" th#t #ll
co!tr#ct" #!d tr#!"#ctio!" e!tered i!to '% the
#$e!t o! 'eh#lf of the )ri!ci)#l &ithi! the "co)e
of hi" #,thorit% #re 'i!di!$ o! the )ri!ci)#l #"
tho,$h he hi*"elf h#d e!tered i!to the* directl%.
Thi" te!et i" re)e#tedl% e:)re""ed i! v#rio,"
)rovi"io!" of the F#& o! A$e!c%.
Article 18;5 )rovide" th#t the #$e!t &ho #ct"
#" ",ch i" !ot )er"o!#ll% li#'le to the )#rt% &ith
&ho* he co!tr#ct" &he! #cti!$ &ithi! the "co)e
of hi" #,thorit%.
Article 1;14 )rovide" th#t the )ri!ci)#l *,"t
co*)l% &ith #ll the o'li$#tio!" &hich the #$e!t
*#% h#ve co!tr#cted &ithi! the "co)e of hi"
#,thorit%.
a. "in&i#a/ Not Bo!n. b* Cont"a&t$ Ma.e b*
t1e A)ent ;it1o!t o" O!t$i.e t1e S&o#e o(
8i$ A!t1o"it*
The collol#r% r,le &o,ld the! 'e th#t (for
#!% o'li$#tio! &herei! the #$e!t h#" e:ceed hi"
)o&er+( or #ct" do!e '% the #$e!t o,t"ide of the
"co)e of hi" #,thorit%+ eve! &he! e!tered i!to i!
the !#*e of the )ri!ci)#l+ &o,ld !ot 'i!d the
)ri!ci)#l+ #!d &o,ld th," !ot 'e void+ ',t *erel%
,!e!force#'le 3Art. 124?6. I! the follo&i!$ c#"e"+
tho,$h+ eve! #ct" do!e '% the #$e!t i! the !#*e
of the )ri!ci)#l+ o,t"ide of the "co)e of hi"
#,thorit%+ &o,ld 'i!d the )ri!ci)#l+ th,"D
3#6 Ahe! the )ri!ci)#l r#tie" ",ch co!tr#ct+
e:)re""l% or t#citl% 3Art. 1;146<
3'6 Ahe! the )ri!ci)#l h#" #llo&ed the
),r)orted #$e!t to #ct #" tho,$h he h#d f,ll
)o&er" 3Art. 1;116< #!d
3c6 Ahe! the )ri!ci)#l h#" revo9ed the
#$e!c%+ ',t the third )#rt% h#ve #cted i! $ood
f#ith &itho,t !otice of ",ch revoc#tio!.
H!der Article 1;11+ eve! &he! the #$e!t
h#" e:ceeded hi" #,thorit%+ the )ri!ci)#l i"
"olid#ril% li#'le &ith the #$e!t if the for*er
#llo&ed the l#tter to #ct #" tho,$h he h#d f,ll
)o&er". Thi" i" ter*ed #" #$e!c% '% e"to))el. It i"
#l"o referred to #" the doctri!e of #))#re!t
#,thorit% i! Cor)or#te F#&.
Ahe! # '#!9+ '% it" #ct" #!d f#il,re to #ct+
h#" cle#rl% clothed it" *#!#$er &ith #))#re!t
#,thorit% to "ell #! #cB,ired #""et i! the !or*#l
co,r"e of ',"i!e""+ it i" le$#ll% o'li$ed to co!r*
the tr#!"#ctio! '% i"",i!$ # 'o#rd re"ol,tio! to
e!#'le the ',%er" to re$i"ter the )ro)ert% i! their
84
!#*e". It h#" # d,t% to )erfor* !ece""#r% #!d
l#&f,l #ct" to e!#'le the other )#rtie" to e!Eo% #ll
'e!et" of the co!tr#ct &hich it h#d #,thori>ed.
Rural *an/ of .ilaor v. Ocfe'ia+ ?0/ 1CRA ;;
304446.
Jo& doe" Ocfe'ia r,li!$ Eive &ith the other
r,li!$" of the 1,)re*e Co,rt th#t hold th#t eve!
i! the c#"e of # cor)or#tio!+ the "#le thro,$h it"
#$e!t of # )iece of l#!d reB,ire" th#t the #,thorit%
of the cor)or#te o@cer to "ell o! 'eh#lf of the
cor)or#tio! *,"t 'e i! &riti!$+ other&i"e the
re",lti!$ tr#!"#ctio! i" void ),r",#!t to Article
1852U The Ocfe'ia r,li!$ "ho&" th#t the ,"e of
the ter* (void( ,!der Article 1852+ i" rel#tive+ i!
th#t it i" void o!l% i!"of#r #" the )ri!ci)#l i"
co!cer!ed< #!d th#t #!% #tte*)t to e!force the
),rch#"e '% # third )#rt% i" void &he! the
)ri!ci)#l ref,"e" to #cce)t the "#le of # )iece of
l#!d e=ected '% #! #$e!t i! hi" !#*e &itho,t
&ritte! )o&er of #ttor!e%. I! other &ord"+ if the
)ri!ci)#l+ #fter the f#ct of "#le+ #cce)t" the
co!tr#ct+ doe" !ot o))o"e the v#lidit% of the "#le+
or i! other &ord"+ r#tie" the "#le+ it &o,ld the!
'e v#lid #!d 'i!di!$ o! the )ri!ci)#l.
I! Ocfe'ia+ &he! #! #ctio! &#" 'ro,$ht '%
the ',%er #$#i!"t the '#!9 to e!force the "#le+ it
f#iled to co!te"t the $e!,i!e!e"" #!d d,e
e:ec,tio! of the deed of #'"ol,te "#le e:ec,ted
'% it" $e!er#l *#!#$er. The Co,rt held 77
Re")o!de!t" '#"ed their #ctio! 'efore the
tri#l co,rt o! the Deed of 1#le+ the ",'"t#!ce of
&hich &#" #lle$ed i! #!d # co)% thereof &#"
#tt#ched to the Ietitio! for G#!d#*,". The Deed
!#*ed Fe 1. Te!# #" the re)re"e!t#tive of the
'#!9. Ietitio!er+ ho&ever+ f#iled to ")ecic#ll%
de!% ,!der o#th the #lle$#tio!" i! th#t co!tr#ct.
I! f#ct+ it led !o #!"&er #t #ll+ for &hich re#"o! it
&#" decl#red i! def#,lt. : : :.
I! f#ili!$ to le it" #!"&er ")ecic#ll%
de!%i!$ ,!der o#th the Deed of 1#le+ the '#!9
#d*itted the d,e e:ec,tio! of the "#id co!tr#ct.
1,ch #d*i""io! *e#!" th#t it #c9!o&led$ed th#t
Te!# &#" #,thori>ed to "i$! the Deed of 1#le o!
it" 'eh#lf.1? -I*)eri#l Te:tile Gill"+ I!c. v. C.A.+ 18?
1CRA 1+ G#rch 00+ 1;;4.. Th,"+ defe!"e" th#t #re
i!co!"i"te!t &ith the d,e e:ec,tio! #!d the
$e!,i!e!e"" of the &ritte! i!"tr,*e!t #re c,t o=
'% #! #d*i""io! i*)lied fro* # f#il,re to *#9e #
veried ")ecic de!i#l.
: : :.
I! #!% eve!t+ the '#!9 #c9!o&led$ed+ '% it"
o&! #ct" or f#il,re to #ct+ the #,thorit% of Fe 1.
Te!# to e!ter i!to 'i!di!$ co!tr#ct". After the
e:ec,tio! of the Deed of 1#le+ re")o!de!t"
occ,)ied the )ro)ertie" i! di"),te #!d )#id the
re#l e"t#te t#:e" d,e thereo!. If the '#!9
*#!#$e*e!t 'elieved th#t it h#d title to the
)ro)ert%+ it "ho,ld h#ve t#9e! "o*e *e#",re" to
81
)reve!t the i!fri!$e*e!t or i!v#"io! of it" title
thereto #!d )o""e""io! thereof.
Fi9e&i"e+ Te!# h#d )revio,"l% tr#!"#cted
',"i!e"" o! 'eh#lf of the '#!9+ #!d the l#tter h#d
#c9!o&led$ed her #,thorit%. A '#!9 i" li#'le to
i!!oce!t third )er"o!" &here re)re"e!t#tio! i"
*#de i! the co,r"e of it" !or*#l ',"i!e"" '% #!
#$e!t li9e G#!#$er Te!#+ eve! tho,$h ",ch #$e!t
i" #',"i!$ her #,thorit%.12 -Fir"t Ihili))i!e
I!ter!#tio!#l B#!9 v. CA+ i!fr#+ !ote 15.. Cle#rl%+
)er"o!" de#li!$ &ith her co,ld !ot 'e 'l#*ed for
'elievi!$ th#t "he &#" #,thori>ed to tr#!"#ct
',"i!e"" for #!d o! 'eh#lf of the '#!9. Th,"+ thi"
Co,rt h#" r,led i! Bo#rd of FiB,id#tor" v. N#l#&D1/
-04 1CRA ;85+ 144/+ A,$,"t 12+ 1;65+ )er
1#!che>+ J..
(1ettled E,ri")r,de!ce h#" it th#t &here
"i*il#r #ct" h#ve 'ee! #))roved '% the director"
#" # *#tter of $e!er#l )r#ctice+ c,"to*+ #!d
)olic%+ the $e!er#l *#!#$er *#% 'i!d the
co*)#!% &itho,t for*#l #,thori>#tio! of the
'o#rd of director". I! v#r%i!$ l#!$,#$e+ e:i"te!ce
of ",ch #,thorit% i" e"t#'li"hed+ '% )roof of the
co,r"e of ',"i!e""+ the ,"#$e" #!d )r#ctice" of
the co*)#!% #!d '% the 9!o&led$e &hich the
'o#rd of director" h#"+ or *,"t 'e )re",*ed to
h#ve+ of #ct" #!d doi!$" of it" ",'ordi!#te" i! #!d
#'o,t the #=#ir" of the cor)or#tio!. 1o #l"o+
(8: : : #,thorit% to #ct for #!d 'i!d #
cor)or#tio! *#% 'e )re",*ed fro* #ct" of
reco$!itio! i! other i!"t#!ce" &here the )o&er
&#" i! f#ct e:erci"ed.8
(8: : : Th,"+ &he!+ i! the ,",#l co,r"e of
',"i!e"" of # cor)or#tio!+ #! o@cer h#" 'ee!
#llo&ed i! hi" o@ci#l c#)#cit% to *#!#$e it"
#=#ir"+ hi" #,thorit% to re)re"e!t the cor)or#tio!
*#% 'e i*)lied fro* the *#!!er i! &hich he h#"
'ee! )er*itted '% the director" to *#!#$e it"
',"i!e"".8(
Not&ith"t#!di!$ the ),t#tive #,thorit% of the
*#!#$er to 'i!d the '#!9 i! the Deed of 1#le+
)etitio!er h#" f#iled to le #! #!"&er to the
Ietitio! 'elo& &ithi! the re$le*e!t#r% )eriod+ let
#lo!e )re"e!t evide!ce co!troverti!$ ",ch
#,thorit%. I!deed+ &he! o!e of herei!
re")o!de!t"+ G#rife 1. Ni!o+ &e!t to the '#!9 to
#"9 for the 'o#rd re"ol,tio!+ "he &#" *erel% told
to 'ri!$ the recei)t". The '#!9 f#iled to
c#te$oric#ll% decl#re th#t Te!# h#d !o #,thorit%.
A" to the *erit" of the c#"e+ it i" # &ell7
e"t#'li"hed r,le th#t o!e &ho clothe" #!other &ith
#))#re!t #,thorit% #" hi" #$e!t #!d hold" hi* o,t
to the ),'lic #" ",ch c#!!ot 'e )er*itted to de!%
the #,thorit% of ",ch )er"o! to #ct #" hi" #$e!t+ to
the )reE,dice of i!!oce!t third )#rtie" de#li!$ &ith
",ch )er"o! i! $ood f#ith #!d i! the ho!e"t 'elief
th#t he i" &h#t he #))e#r" to 'e 3G#c9+ et #l. v.
C#*)"+ 5 Ihil. //? -1;45.< Ihili))i!e N#tio!#l
B#!9 v. Co,rt of A))e#l"+ ;2 1CRA ?/5 -1;5;.6.
Fro* the f#ct" #!d the evide!ce o! record+ there
80
i" !o do,'t th#t thi" r,le o't#i!". The )etitio!
*,"t therefore f#il. 3#t )). 145714;6
Ahe! # third )#rt% #d*it" i! her &ritte!
corre")o!de!ce th#t he h#d co!tr#cted &ith the
)ri!ci)#l thro,$h #! d,l% #,thori>ed #$e!t+ #!d
the! ",e" 'oth the )ri!ci)#l #!d the #$e!t o! #!
#lle$ed 're#ch of th#t co!tr#ct+ #!d i! f#ct l#ter
o! di"*i""e" the ",it i!"of#r #" the )ri!ci)#l i"
co!cer!ed+ there c#! 'e !o c#,"e of #ctio!
#$#i!"t the #$e!t. 1i!ce it i" the )ri!ci)#l &ho
"ho,ld 'e #!"&er#'le for the o'li$#tio! #ri"i!$
fro* the #$e!c%+ it i" o'vio," th#t if # third )er"o!
&#ive" hi" cl#i*" #$#i!"t the )ri!ci)#l+ he c#!!ot
#""ert the* #$#i!"t the #$e!t. *edia v. <hite+
042 1CRA 05? 31;;16.
The '#"i" of #$e!c% i" re)re"e!t#tio!< The
B,e"tio! of &hether #! #$e!c% h#" 'ee! cre#ted
i" ordi!#ril% # B,e"tio! &hich *#% 'e e"t#'li"hed
i! the "#*e &#% #" #!% other f#ct+ either '% direct
or circ,*"t#!ti#l evide!ce< Tho,$h th#t f#ct or
e:te!t of #,thorit% of the #$e!t" *#% !ot+ #" #
$e!er#l r,le"+ 'e e"t#'li"hed fro* the
decl#r#tio!" of the #$e!t" #lo!e+ if o!e )rofe""e"
to #ct #" #$e!t for #!other+ "he *#% 'e e"to))ed
to de!% her #$e!c% 'oth #" #$#i!"t the #""erted
)ri!ci)#l #!d the third )er"o!" i!tere"ted i! the
tr#!"#ctio! i! &hich he or he i" e!$#$ed. #oles v.
Angeles, 2;0 1CRA 645 304466.
The f#ct th#t the #$e!t defr#,ded the
)ri!ci)#l i! !ot t,r!i!$ over the )roceed" of the
tr#!"#ctio!" to the l#tter c#!!ot i! #!% &#%
relieve or e:o!er#te ",ch )ri!ci)#l fro* li#'ilit% to
the third )er"o!" &ho relied o! hi" #$e!tKLQ"
#,thorit%. It i" #! eB,it#'le *#:i* th#t #"
'et&ee! t&o i!!oce!t )#rtie"+ the o!e &ho *#de
it )o""i'le for the &ro!$ to 'e do!e "ho,ld 'e the
o!e to 'e#r the re",lti!$ lo"". Cuison v. Court of
Appeals, 005 1CRA ?;1 31;;?6.
H!der the $e!er#l r,le" #!d )ri!ci)le" of
l#&+ the *i"*#!#$e*e!t of the ',"i!e"" of #
)#rt% '% hi" #$e!t" doe" !ot relieve "#id )#rt%
fro* the re")o!"i'ilit% th#t he h#d co!tr#cted
&ith third )er"o!". Commercial +an* 6 -rust
Co$ v$ Republic "rmored Car Services Corp$,
B SCRA 425 ,1@?3-.
Ahe! the )ri!ci)#l i"",ed the chec9" i! f,ll
)#%*e!t of the t#:e" d,e+ ',t hi" #$e!t" h#d
*i"#))lied the chec9 )roceed"+ the )ri!ci)#l
&o,ld "till 'e li#'le+ 'ec#,"e &he! # co!tr#ct of
#$e!c% e:i"t"+ the #$e!tKLQ" #ct" 'i!d hi"
)ri!ci)#l+ &itho,t )reE,dice to the l#tter "ee9i!$
reco,r"e #$#i!"t the #$e!t i! #! #))ro)ri#te civil
or cri*i!#l #ctio!. %y Peh v$ Collector of
.nternal Revenue, 2B SCRA 21? ,1@?@-.
A re$i"tered o&!er &ho )l#ce" i! the h#!d"
of #!other #! e:ec,ted doc,*e!t of tr#!"fer of
the re$i"tered l#!d e=ectivel% re)re"e!t" to #
third )#rt% th#t he holder of ",ch doc,*e!t i"
#,thori>ed to de#l &ith the )ro)ert%. +londeau v$
8?
Nano,. ?1 1i/. ?25 ,1@35-J %omingo v$
Robles, 453 SCRA B12 ,2AA5-.
Re/ate. Ca$e$6
Pleasantville %ev$ v$ Court of "ppeals, 253
SCRA 1A ,1@@?-
/im*et*ai Sons v Court of "ppeals, 25A SCRA
523 ,1@@5-
"ir rance v$ Court of "ppeals, 12? SCRA 44B
,1@B3-
PN+ v$ Court of "ppeals, @4 SCRA 35C ,1@C@-
PN+ v$ +agamaspad, B@ 1i/. 3?5 ,1@51-
.anila Re'nants v. Court of Appeals+ 1;1 1CRA
600 31;;46
0ersoza v. i'+ 2/ Ihil 216 31;0?6
opez v. Alvendia+ 104 Ihil 120 31;626
<ise and Co. v. Tanglao+ 6? Ihil ?50 31;?66
%atig4a/ v. Tai Hing Co.+ /0 Ihil 600 31;086
Ro4inson, $le'ing and Co. v. Cruz+ 2; Ihil 20
31;066
+onzales v. Ha4erer+ 25 Ihil ?84 31;0/6
*arton v. e-te Asphalt+ 26 Ihi< ;?8 31;026
)antes v. .adriguera+ 20 Ihil ?8; 31;016
i' Chai Seng v. Trinidad+ 21 Ihil /22 31;016
3. +IABI+ITY OF T8E RINCIA+ FOR T8E TORTS OF
T8E AGENT
The $e!er#l r,le i" th#t the )ri!ci)#l i" li#'le
to i!E,red third )#rtie" for the tort" co**itted '%
the #$e!t #t the )ri!ci)#lKLQ" director or i! the
co,r"e #!d &ithi! the "co)e of the #$e!tKLQ"
#,thorit%. It #l"o $oe" &itho,t "#%i!$+ th#t "i!ce
the #ct of !e$li$e!ce &#" th#t of the #$e!t+ he
#l"o 'eco*e" civill% li#'le to the i!E,red )#rtie"+
eve! &he! he #ct" i! re)re"e!t#tio! of the
)ri!ci)#l.
4. OB+IGATIONS OF T8E RINCIA+ TO T8E AGENT
a. Ob/i)ation to A.'an&e S!0$ Re7!e$te.
(o" E:e&!tion o( A)en&*
H!der Article 1;10+ the )ri!ci)#l *,"t
#dv#!ce to the #$e!t+ "ho,ld the l#tter "o
reB,e"t+ the ",*" !ece""#r% for the e:ec,tio! of
the #$e!c%. 1ho,ld the #$e!t h#ve #dv#!ced
the*+ the )ri!ci)#l *,"t rei*',r"e the #$e!t
therefor+ eve! if the ',"i!e"" or ,!dert#9i!$ &#"
!ot ",cce""f,l+ )rovided the #$e!t i" free fro*
f#,lt.
82
The rei*',r"e*e!t "h#ll i!cl,de i!tere"t o!
the ",*" #dv#!ced+ fro* the d#% o! &hich the
#dv#!ce &#" *#de.
Ae "ho,ld co*)#re thi" to the )rovi"io!" i!
Article 1886 &here the #$e!t i" 'o,!d to #dv#!ce
the ",*" !ece""#r% to c#rr% o,t the #$e!c%+ ',t
o!l% &he! he "o co!"e!t" or i" "ti),l#ted i! the
#$ree*e!t.
:erso=a v$ /im, 45 1i/ 41? ,1@23-
b. ;1en "in&i#a/ Not +iab/e (o" A)entFGH$
E:#en$e$
H!der Article 1;18+ the )ri!ci)#l i" !ot li#'le
for the e:)e!"e" i!c,rred '% the #$e!t i! the
follo&i!$ c#"e"D
316 if the #$e!t #cted i! co!tr#ve!tio! of the
)ri!ci)#lKLQ" i!"tr,ctio!"+ ,!le"" the l#tter
"ho,ld &i"h to #v#il hi*"elf of the 'e!et"
derived fro* the co!tr#ct<
306 Ahe! the e:)e!"e" &ere d,e to the f#,lt
of the #$e!t<
3?6 Ahe! the #$e!t i!c,rred the* &ith
9!o&led$e th#t #! ,!f#vor#'le re",lt &o,ld
e!",e+ if the )ri!ci)#l &#" !ot #&#re thereof< or
326 Ahe! it &#" "ti),l#ted th#t the e:)e!"e"
&o,ld 'e 'or!e '% the #$e!t+ or th#t the l#tter
&o,ld 'e #llo&ed o!l% # cert#i! ",*.
Ahe! the #,thorit% of the #re# *#!#$er to
"ettli!$ the cl#i*" i" f,rther li*ited '% the &ritte!
"t#!d#rd #,thorit% to )#%+

&hich "t#te" th#t the
)#%*e!t "h#ll co*e fro* hi" revolvi!$ f,!d or
collectio!+ the "ettle*e!t 'e%o!d ",ch f,!d &#" #
cle#r devi#tio! fro* the i!"tr,ctio!" of the
)ri!ci)#l. Co!"eB,e!tl%+ the e:)e!"e" i!c,rred '%
the #re# *#!#$er i! the "ettle*e!t of the cl#i*"
of the i!",red *#% !ot 'e rei*',r"ed fro* the
i!",r#!ce co*)#!% ),r",#!t to the cle#r
)rovi"io! of Article 1;18316 of the Civil Code.
Jo&ever+ &hile the l#& o! #$e!c% )rohi'it"
the #re# *#!#$er fro* o't#i!i!$ rei*',r"e*e!t+
hi" ri$ht to recover *#% "till 'e E,"tied ,!der the
$e!er#l l#& o! o'li$#tio!" #!d co!tr#ct"+
)#rtic,l#rl% Article 10?6 of the Civil Code o!
)#%*e!t '% # third )#rt% of the o'li$#tio! of the
de'tor+ #llo&" recover% KLXo!l% i!"of#r #" the
)#%*e!t h#" 'ee! 'e!eci#l to the de'tor.KL
Th,"+ to the e:te!t th#t the o'li$#tio! of the
i!",r#!ce co*)#!% h#" 'ee! e:ti!$,i"hed+ the
#re# *#!#$er *#% de*#!d for rei*',r"e*e!t
fro* hi" )ri!ci)#l. To r,le other&i"e &o,ld re",lt
i! ,!E,"t e!rich*e!t of )etitio!er. #o'inion
Insurance v. Court of Appeals+ ?56 1CRA 0?;
304406.
8/
&. "in&i#a/ +iab/e to In.e0ni(* A)ent (o" t1e
Da0a)e$ S!$taine.
H!der Article 1;1?+ the )ri!ci)#l *,"t
i!de*!if% the #$e!t for #ll the d#*#$e" &hich the
e:ec,tio! of the #$e!c% *#% h#ve c#,"ed the
#$e!t+ &itho,t f#,lt or !e$li$e!ce o! #$e!tKLQ"
)#rt.
Article 1;1? i" the co,!ter7'#l#!ce to the
)rovi"io! i! Article 1882 th#t *#9e" the #$e!t
li#'le for d#*#$e" ","t#i!ed '% the )ri!ci)#l for
#$e!tKLQ" ref,"#l to )erfor* hi" o'li$#tio!"
,!der the #$e!c%.
"lbaladejo y Cia v$ PRC, 45 1i/ 55? ,1@23-.
,1- Right of "gent to Retain Object of
"gency in Pledge for "dvances and
%amages
H!der Article 1;12+ the #$e!t i" $r#!ted the
)o&er to ret#i! i! )led$e the thi!$" &hich #re the
o'Eect of the #$e!c% ,!til the )ri!ci)#l e=ect" the
rei*',r"e*e!t #!d )#%" the i!de*!it% coveri!$
#dv#!ce" *#de #!d d#*#$e" ","t#i!ed. Thi" i"
#! e:ce)tio! to the d,t% of the #$e!t+ e:)re""ed
i! Article 18;1+ to deliver to the )ri!ci)#l
ever%thi!$ he received eve! if !ot d,e to the
)ri!ci)#l.
.. Ob/i)ation o( "in&i#a/ to a* A)entFGH$
Co0#en$ation
I! #! o!ero," or co*)e!"#ted #$e!c%+ the
o'li$#tio! of the )ri!ci)#l to )#% the #$e!t "h#ll
'e i! #ccord#!ce &ith the ter*" #$reed ,)o!
&he! the #$e!c% &#" co!"tit,ted. If !o )#rtic,l#r
for*,l# h#" 'ee! #$reed ,)o! o! the #$e!tKLQ"
co*)e!"#tio!+ the! the follo&i!$ r,le" "ho,ld
#))l%D
3i6 the )ri!ci)#l "h#ll )#% the #$e!tKLQ"
co**i""io! o!l% o! the le$#l '#"i" th#t the #$e!t
h#" co*)lied &ith hi" o'li$#tio!" &ith the
)ri!ci)#l< #!d
3ii6 the )ri!ci)#l "h#ll 'e li#'le to the #$e!t
for the re#"o!#'le v#l,e of the #$e!tKLQ"
"ervice".
A 'ro9er i" e!titled to the ,",#l co**i""io!
&he!ever the 'ri!$" to hi" )ri!ci)#l # )#rt% &ho i"
#'le #!d &illi!$ to t#9e the )ro)ert% #!d e!ter
i!to # v#lid co!tr#ct ,)o! the ter*" the! !#*ed
'% the )ri!ci)#l+ #ltho,$h the )#rtic,l#r" *#% 'e
#rr#!$ed #!d the *#tter !e$oti#ted #!d
co!",**#ted 'et&ee! the )ri!ci)#l #!d the
),rch#"er directl%. It &o,ld 'e the hei$ht of
i!E,"tice to )er*it the )ri!ci)#l the! to &ithdr#&
the #,thorit% #" #$#i!"t #! e:)re"" )rovi"io! of
the co!tr#ct+ #!d re#) the 'e!et" of the
#$e!tKLQ" l#'or"+ &itho,t 'ei!$ li#'le to hi* for
hi" co**i""io!. Macondray 6 Co$ v$ Se//ne", 33
1i/. 3CA ,1@1?-.
Re/ate. Ca$e$6
86
Infante v. Cunanan+ ;? Ihil. 6;? 31;/?6.
i' v. Sa4an+ 225 1CRA 0?0 304426.
$iege & *ro&n v. S'ith, *ell & Co., 2? Ihil. 118
31;006.
Ra'os v. Court of Appeals+ 6? 1CRA ??1 31;5/6.
"... Tuazon & Co. v. Collector of Internal Revenue,
148 Ihil. 544 31;646.
Inland Realt- Invest'ent Service, Inc. v. Court of
Appeals+ 05? 1CRA 54 31;;56.
#aPQon v. *ri'o & Co., 20 Ihil. 1?? 31;016.
Re-es v. .os1ueda+ ;; Ihil. 021 31;/66.
Collector of Internal Revenue v. Tan Eng Hong+ 18
1CRA /?1 31;666.
5. OB+IGATION OF T;O OR MORE RINCIA+S TO
AGENT AOINTED FOR COMMON TRANSACTIONS
H!der Article 1;1/+ if t&o or *ore )er"o!"
h#ve #))oi!ted #! #$e!t for # co**o!
tr#!"#ctio! or ,!dert#9i!$+ the% "h#ll 'e "olid#ril%
li#'le to the #$e!t for #ll the co!"eB,e!ce" of the
#$e!c%.
Eve! if the )ri!ci)#l" do !ot #ct,#ll% #!d
)er"o!#ll% 9!o& e#ch other+ ",ch i$!or#!ce doe"
!ot #=ect their E,ridic#l "t#!di!$ of the #$e!t.
#oles v. Angeles, 2;0 1CRA 645 304466.
%e Castro v$ Court of "ppeals, 3B4 SCRA ?AC
,2AA2-
?. RIG8TS OF ERSONS ;8EN FACED ;IT8
CONF+ICTING CONTRACTS
H!der Article 1;16+ &he! t&o )er"o!"
co!tr#ct &ith re$#rd to the "#*e thi!$+ o!e of
the* &ith the #$e!t #!d the other &ith the
)ri!ci)#l+ #!d the t&o co!tr#ct" #re i!co*)#ti'le
&ith e#ch other+ th#t of )rior d#te "h#ll 'e
)referred+ &itho,t )reE,dice to the )rovi"io!" of
Article 1/22 o! the r,le" o! do,'le "#le".
Article 1;15 )rovide" th#t i! ",ch # c#"e+ if
the #$e!t h#d #cted i! $ood f#ith+ the )ri!ci)#l
"h#ll 'e li#'le i! d#*#$e" to the third )er"o!
&ho"e co!tr#ct *,"t 'e reEected. O! the other
h#!d+ if the #$e!t #cted i! '#d f#ith+ he #lo!e
"h#ll 'e re")o!"i'le.
10D?2 AG S 4 COGGENT1 S IO1T A COGGENT S
DIGG IT
85
IO. EOTINGHI1JGENT OF AGENCY
1. 8O; AND ;8EN AGENCY EKTINGUIS8ED

Article 1;1; of the Civil Code e!,*#r#te" the
*ode" '% &hich #! #$e!c% co!tr#ct i"
e:ti!$,i"hed+ th,"D
a. B* "e'o&ation
b. B* t1e 9it1."a9a/ o( t1e a)ent
&. B* .eat1, &i'i/ inte".i&tion, in$anit* o"
in$o/'en&* o( eit1e" t1e #"in&i#a/ o" a)ent
.. B* t1e .i$$o/!tion o( t1e %!"i.i&a/ entit*
91i&1 ent"!$te. o" a&&e#te. t1e a)en&*
e. B* t1e a&&o0#/i$10ent o( t1e ob%e&t o"
#!"#o$e o( t1e a)en&*
(. B* t1e e:#i"ation o( t1e #e"io. (o" 91i&1
t1e a)en&* 9a$ &on$tit!te.
Other *ode" of e:ti!$,i"h*e!t of #!
#$e!c% &o,ld 'e *,t,#l &ithdr#&#l+ '%
",)erve!i!$ eve!t th#t *#9e" ille$#l or
i*)o""i'le the o'Eective or ),r)o"e for &hich the
#$e!c% i" co!"tit,ted+ li9e the de"tr,ctio! of the
",'Eect *#tter &hich i" the o'Eect of the #$e!c%.
2. REVOCATION OF T8E AGENCY
The l#& reco$!i>e" the )o&er to revo9e #!
#$e!c% rel#tio! '% )ri!ci)#l+ i! 9ee)i!$ &ith the
tr,i"* th#t #! #$e!c% i" # hi$hl% )er"o!#l
rel#tio!"hi) #!d o!e ',ilt ,)o! tr,"t #!d
co!de!ce. H!li9e the re*ed% of re"ci""io! &hich
reB,ire" the e:i"te!ce of ",'"t#!ti#l 're#ch of
co!tr#ct+ revoc#tio! i" liter#ll% #t the &ill of the
)ri!ci)#l.
B,t the !e#r #'"ol,te )o&er of the )ri!ci)#l
to revo9e the #$e!c% "ho,ld !ot 'e co!f,"ed &ith
the tho,$ht th#t there c#! 'e !o 're#ch of
co!tr#ct co**itted '% # )ri!ci)#l &ho revo9e"
the #$e!c% &hich &#" co!"tit,ted #" (irrevoc#'le(
for # de!ite ter* or )eriod. I! ",ch # c#"e+ the
#$ree*e!t #" to the ter* of the #$e!c% &o,ld !ot
*#9e the )ri!ci)#l lo"e hi" )o&er to revo9e+ #!d
&he! he doe" "o revo9e the #$e!c% i" ter*i!#ted+
',t he &o,ld 'e li#'le to the #$e!t for the
d#*#$e" c#,"ed+ i!cl,di!$ to the co*)e!"#tio!
d,e hi* &he! the revoc#tio! &#" do!e i! '#d
f#ith+ i.e.+ to #void the )#%*e!t of the co**i""io!
e#r!ed '% the #$e!t.
a. E:#"e$$ Re'o&ation
H!der Article 1;04+ the )ri!ci)#l *#% revo9e
the #$e!c% #t &ill+ e:)re"" or i*)lied+ #!d there'%
co*)el the #$e!t to ret,r! the doc,*e!t
evide!ci!$ the #$e!c%. Thi" &o,ld e!",re th#t the
doc,*e!t+ i.e.+ )o&er of #ttor!e%+ &o,ld !ot f#ll
88
i!to the h#!d" of third )#rtie" &ho the! #ct i!
$ood f#ith i! e!teri!$ i!to # co!tr#ct i! the !#*e
of the )ri!ci)#l+ 'elievi!$ there i" "till e:i"ti!$ the
#$e!c% rel#tio!.
If the #$e!t f#il" or ref,"e" to ret,r! the
)o&er of #ttor!e%+ it i" i!c,*'e!t ,)o! the
)ri!ci)#l to $ive )ro)er !otice to the *e*'er" of
the ),'lic &ho *#% 'e #=ected '% the revoc#tio!.
H!der Article 1;01+ if the #$e!c% h#" 'ee!
e!tr,"ted for the ),r)o"e of co!tr#cti!$ &ith
")ecied )er"o!"+ it" revoc#tio! "h#ll !ot
)reE,dice the l#tter if the% &ere !ot $ive! !otice
thereof. H!der Article 1;00+ if the #$e!t h#d
$e!er#l )o&er" 3i.e.+ !ot directed to&#rd" ")ecic
)er"o!"6+ !otice of the revoc#tio! i! # !e&")#)er
of $e!er#l circ,l#tio! i" # ",@cie!t &#r!i!$ to
third )er"o!".
H!der Article 1;0/+ &he! t&o or *ore
)ri!ci)#l" h#ve $r#!ted # )o&er of #ttor!e% for #
co**o! tr#!"#ctio!+ #!% o!e of the* *#% revo9e
the "#*e &itho,t the co!"e!t of the other". Thi"
r,le i" co!"i"te!t &ith the r,le ,!der Article 1;1/
th#t the o'li$#tio! of t&o or *ore )ri!ci)#l" to #
co**o! #$e!t i" "olid#r%+ #!d co!"eB,e!tl%+ the
)o&er to revo9e the #$e!c% c#! 'e *#de '% the
&ill of o!l% o!e of the )ri!ci)#l".
b. I0#/ie. Re'o&ation
The follo&i!$ h#ve 'ee! e!,*er#ted #" to
co!"tit,te i*)lied revoc#tio!+ th,"D
,1- "ppointment of Ne! "gent for Same
+usiness
H!der Article 1;0?+ the #))oi!t*e!t of #
!e& #$e!t for the "#*e ',"i!e"" or tr#!"#ctio!
revo9e" the )revio," #$e!c% fro* the d#% o!
&hich !otice thereof &#" $ive! to the for*er
#$e!t. The e=ect of revoc#tio! i" &itho,t
)reE,dice to the ri$ht" of third )#rtie" &ho &ere
!ot #&#re of or !otied of ",ch "it,#tio!.
The critic#l ti*e &he! the #$e!c% i" revo9ed
i" (fro* the d#% o! &hich !otice thereof &#" $ive!
to the for*er #$e!t.( Th,"+ i! +arcia v. #e
.anzano+ ?; Ihil /55 31;1;6+ &here the f#ther
r"t $#ve # )o&er of #ttor!e% over the ',"i!e"" to
hi" "o!+ #!d ",'"eB,e!tl% to the *other+ the
Co,rt held th#t &itho,t evide!ce "ho&i!$ th#t the
"o! &#" i!for*ed of the i"",#!ce of the )o&er of
#ttor!e% to the *other+ the tr#!"#ctio! e=ected
'% the "o! ),r",#!t to hi" )o&er of #ttor!e%+ &#"
v#lid #!d 'i!di!$+ th," 77
There i" !o )roof i! the record th#t the r"t
#$e!t+ the "o!+ 9!e& of the )o&er7of7#ttor!e% to
hi" *other.
It &#" !ece""#r% ,!der the l#& for the
defe!d#!t"+ i! order to e"t#'li"h their
co,!tercl#i*+ to )rove th#t the "o! h#d !otice of
the "eco!d )o&er7of7#ttor!e%. The% h#ve !ot do!e
"o+ #!d it *,"t 'e co!"idered th#t A!$el F.
G#!>#!o &#" #cti!$ ,!der # v#lid )o&er7of7
8;
#ttor!e% fro* hi" f#ther &hich h#d !ot 'ee!
le$#ll% revo9ed o! the d#te of the "#le of the h#lf
i!tere"t i! the "te#*er to the )l#i!ti=" "o!+ &hich
h#lf i!tere"t &#" le$#ll% i!herited '% the )l#i!ti=".
3#t ). /826
,2- )hen Principal %irectly Manages
+usiness KLZ
H!der Article 1;02+ the #$e!c% i" revo9ed
&he! the )ri!ci)#l directl% *#!#$e" the ',"i!e""
e!tr,"ted to the #$e!t+ de#li!$ directl% &ith third
)er"o!". The )rovi"io! doe" !ot "t#te &he! the
#ct of revoc#tio! t#9e" )l#ce+ #!d it c#! 'e
)re",*ed therefore th#t the *o*e!t the )ri!ci)#l
directl% *#!#$e" the ',"i!e"" '% de#li!$ directl%
&ith third )er"o!"+ the #$e!c% i" revo9ed. B,t th#t
&o,ld o!l% *e#! th#t the revoc#tio! of the
#$e!c% i" o!l% &ith re")ect to the third )er"o!"
&ith &ho* the )ri!ci)#l de#l" directl%< #" to third
)#rtie" &ho h#ve )revio,"l% 9!o&! of the )o&er
of #ttor!e% of the #$e!t #!d &ho h#ve !ot de#lt
&ith the )ri!ci)#l+ the #$e!c% c#!!ot 'e
co!"idered revo9ed. It i" #l"o #))#re!t th#t ,!le""
the #$e!t i" #&#re or $ive! !otice th#t the
)ri!ci)#l h#" directl% *#!#$ed the ',"i!e"" &hich
i" covered '% hi" )o&er of #ttor!e%+ the! i!"of#r
#" the #$e!t i" co!cer!ed there i" #" %et !o
revoc#tio! of hi" )o&er".
It *,"t 'e *#de cle#r th#t the co!ti!,ed
i!volve*e!t of the )ri!ci)#l i! the *#!#$e*e!t
of the ',"i!e"" or the )ro)ert% &hich i" the o'Eect
of # )o&er of #ttor!e% $ive! to #! #$e!t doe" !ot
!ece""#ril% *e#! there i" i!te!t to revo9e. For
i!deed+ #$e!c% #rr#!$e*e!t" #re !ot *e#!t to
c,rt#il the )o&er of the )ri!ci)#l to e:ec,te #ct"
of o&!er"hi) #!d #d*i!i"tr#tio!+ ',t #" # *#tter
of ',"i!e"" "e!"e+ to #llo& the )ri!ci)#l+ '% le$#l
ctio!+ to e:te!d hi" )er"o!#lit% thro,$h the
f#cilit% of the #$e!t 3Orient Air Service & Hotel
Representatives v. Court of Appeals+ 1;5 1CRA
62/ -1;;1.6. I! other &ord"+ the direct
*#!#$e*e!t of the ',"i!e"" '% the )ri!ci)#l #!d
directl% de#li!$ &ith third )#rtie" "h#ll 'e dee*ed
to )rod,ce the e=ect of revoc#tio! &he! ",ch #ct"
&o,ld 'e i!co!"i"te!t &ith the ter*" of the )o&er
of #ttor!e% )revio,"l% $ive! to the #$e!t.
1,ch )ri!ci)le i" 'e"t ill,"tr#ted i! C.S
ogging v. Court of Appeals+ 011 1CRA ?52 31;;06+
&here the )ri!ci)#l #))oi!ted the #$e!t (#" hi"
"ole #!d e:cl,"ive e:)ort "#le" #$e!t &ith f,ll
#,thorit% . . .to "ell #!d e:)ort ,!der # r* "#le"
co!tr#ct . . . #ll lo$" )rod,ced '% -the )ri!ci)#l.
for # )eriod of ve 3/6 %e#r" co**e!ci!$ ,)o!
the e:ec,tio! of the #$ree*e!t : : : -#!d for
&hich the #$e!t. "h#ll receive ve 3/V6 )er ce!t
co**i""io! of the $ro"" "#le" of lo$" of -the
)ri!ci)#l. '#"ed o! F.O.B. i!voice v#l,e &hich
co**i""io! "h#ll 'e ded,cted fro* the )roceed"
of #!% #!dRor #ll *o!e%" received '% -#$e!t. for
#!d i! 'eh#lf #!d for the #cco,!t of -the
)ri!ci)#l..( D,ri!$ the ve %e#r7)eriod+ the
)ri!ci)#l "old lo$" directl% to J#)#!e"e r*"+ #!d
for &hich the #$e!t !o& "ee9" to recover the
;4
co**i""io! to &hich he &#" e!titled to ,!der the
e:cl,"ive #$e!c% #rr#!$e*e!t. I! de!%i!$ #!%
ri$ht o! the )#rt of the #$e!t to receive
co**i""io! fro* the )ri!ci)#lKLQ" direct "#le" of
lo$" to it" J#)#!e"e c,"to*er"+ the Co,rt held 77
Jo&ever+ Ae !d *erit i! -)ri!ci)#lKLQ".
co!te!tio! th#t the #))ell#te co,rt erred i!
holdi!$ th#t -the #$e!t. &#" e!titled to it"
co**i""io! fro* the "#le" *#de '% -the )ri!ci)#l.
to J#)#!e"e r*".
The )ri!ci)#l *#% revo9e # co!tr#ct of
#$e!c% #t &ill+ #!d ",ch revoc#tio! *#% 'e
e:)re""+ or i*)lied+ #!d *#% 'e #v#iled of eve! if
the )eriod :ed i! the co!tr#ct of #$e!c% #" !ot
%et e:)ired. A" the )ri!ci)#l h#" thi" #'"ol,te
ri$ht to revo9e the #$e!c%+ the #$e!t c#! !ot
o'Eect thereto< !either *#% he cl#i* d#*#$e"
#ri"i!$ fro* ",ch revoc#tio!+ ,!le"" it i" "ho&!
th#t ",ch &#" do!e i! order to ev#de the )#%*e!t
of #$e!t8" co**i""io!. 3#t )). ?817?806
C.S ogging co!r*" the le$#l )o"itio! th#t
the i!dic#tio! of # )eriod i! the co!tr#ct of #$e!c%
doe" !ot *e#! th#t the co!tr#ct &#" co!tr#ct,#ll%
dee*ed irrevoc#'le &ithi! the )eriod $r#!ted+
#!d to the e=ect revoc#tio! &ithi! the )eriod
&o,ld #*o,!t to 're#ch of co!tr#ct for &hich the
)ri!ci)#l *#% 'e held li#'le for d#*#$e". I!
#dditio!+ the r,li!$ #l"o co!r*" the )o"itio! th#t
the $r#!t to # )er"o! of #! (e:cl,"ive #$e!c%(
)o"itio! doe" !ot *e#! th#t the #$e!c% i"
irrevoc#'le &ithi! the )eriod )rovided i! the
co!tr#ct of #$e!c%+ ',t th#t *erel% it *e#!" th#t
the )ri!ci)#l &o,ld !ot #))oi!t #!other #$e!t to
h#!dle the ',"i!e"" covered.
I! +uardez v. )RC+ 1;1 1CRA 285 31;;46+
&here the )ri!ci)#l h#d #,thori>ed the ),r)orted
#$e!t to (follo& ,)( )ri!ci)#lKLQ" )revio," o=er
to "ell # retr,c9 to # co*)#!%+ the Co,rt held
th#t &he! the #$e!t dro))ed o,t of the "ce!e #!d
it &#" the )ri!ci)#l th#t directl% !e$oti#ted &ith
the co*)#!% to "#& the co!",**#tio! of the
"#le+ !o co**i""io! &#" d,e to the #$e!t
'ec#,"e (",ch #$e!c% &o,ld h#ve 'ee! dee*ed
revo9ed ,)o! the re",*)tio! of direct
!e$oti#tio!" 'et&ee!( the )ri!ci)#l #!d the
co*)#!%.
I! )e& .anila u'4er Co'pan-, Inc. vs.
Repu4lic of the (hilippines+ 145 Ihil 802 31;646+
the Co,rt r,led th#t the #ct of # co!tr#ctor+ &ho+
#fter e:ec,ti!$ )o&er" of #ttor!e% i! f#vor of
#!other e*)o&eri!$ the l#tter to collect &h#tever
#*o,!t" *#% 'e d,e to hi* fro* the
Gover!*e!t+ #!d there#fter de*#!ded #!d
collected fro* the Gover!*e!t the *o!e% the
collectio! of &hich he e!tr,"ted to hi" #ttor!e%7i!7
f#ct+ co!"tit,ted revoc#tio! of the #$e!c% i! f#vor
of the #ttor!e%7i!7f#ct.
The r,li!$" i! the #'ove7di"c,""ed c#"e"
i!dic#te th#t the i"",e of (i*)lied revoc#tio!(
#ri"i!$ &he! the )ri!ci)#l directl% *#!#$e" the
;1
',"i!e"" or )ro)ert% covered '% # )o&er of
#ttor!e% re#ll% $o i!to the i"",e of e!title*e!t of
the #$e!t to the co**i""io! or re*,!er#tio!
#$reed ,)o! ,!der the co!tr#ct of #$e!c%. I!
other &ord"+ it "ee*" th#t E,ri")r,de!ce i!dic#te"
th#t #$e!c% 'ei!$ # co!tr#ct of "ervice+ the #$e!t
*,"t e#r! thro,$h hi" "ervice or e=ort" the
co**i""io! or re*,!er#tio! #$reed ,)o! &ith the
)ri!ci)#l< ",ch th#t if it i" the )ri!ci)#l hi*"elf+
thro,$h hi" o&! e=ort"+ &ho i" #'le to e=ect the
tr#!"#ctio! co!te*)l#ted '% the #$e!c%
#rr#!$e*e!t+ the! the #$e!t &o,ld !ot 'e
e!titled to receive #!% co**i""io!.
,3- Special Po!er of "ttorney Revo*es a
5eneral Po!er of "ttorney
H!der Article 1;06+ (A $e!er#l )o&er of
#ttor!e% i" revo9ed '% # ")eci#l o!e $r#!ted to
#!other #$e!t+ #" re$#rd" the ")eci#l *#tter
i!volved i! the( $e!er#l )o&er of #ttor!e%. It i"
,!fort,!#te th#t Article 1;06 f,"e" t&o di"ti!ct
"it,#tio!" i!to o!e "t#t,tor% r,le.
For e:#*)le+ the i*)lic#tio! fro* the
l#!$,#$e of Article 1;06 i" th#t (# ")eci#l )o&er
of #ttor!e% $r#!ted to o!e )er"o! i" !ot revo9ed
'% # $e!er#l )o&er of #ttor!e% ",'"eB,e!tl%
$r#!ted i! f#vor of #!other )er"o! #" to the
")eci#l *#tter i!volved i! the ")eci#l )o&er of
#ttor!e%<( for i!deed the )ro)o"itio! if illo$ic#l.
The ,"e of the ter*" ($e!er#l )o&er of #ttor!e%(
#!d (")eci#l )o&er of #ttor!e%( i" co*)letel%
*i"le#di!$ i! Article 1;06+ for the r,le i" )ro)erl%
e*'odied i! Article 1;0?+ i! th#t (the
#))oi!t*e!t of # !e& #$e!t for the "#*e
',"i!e"" or tr#!"#ctio! revo9e" the )revio,"
#$e!c% fro* the d#% o! &hich !otice thereof &#"
$ive! to the for*er #$e!t.(
A$#i!+ if &e loo9 #t the l#!$,#$e of Article
1;06+ it &o,ld *e#! th#t (# $e!er#l )o&er of
#ttor!e% i" !ot revo9ed '% # ")eci#l o!e $r#!ted
to the sa'e agent.( The f#l"it% of ",ch #!
i*)lic#tio! i" 'e"t "ho&! i! the deci"io! i! #-
*uncio and Co. v. Ong +uan Can+ 64 Ihil 6;6
31;?26.
I! th#t deci"io!+ the "o! e:ec,ted o! 'eh#lf
of the f#ther+ the deed coveri!$ the "#le of # rice7
*ill #!d c#*#ri!+ i! f#vor of ',%er" &ho relied
,)o! # 1;08 )o&er of #ttor!e% #tt#ched to the
deed+ ',t &hich t,r!ed o,t &#" (!ot # $e!er#l
)o&er of #ttor!e% ',t # li*ited o!e #!d -did. !ot
$ive the e:)re"" )o&er to #lie!#te the )ro)ertie"
i! B,e"tio!.( Ahe! the creditor" of the )ri!ci)#l
"o,$ht to h#ve the "#le decl#red void+ the ',%er"
cl#i*ed th#t the defect i! the "o!KLQ" #,thorit%
to "ell o! 'eh#lf of the f#ther &#" c,red '% #!
e#rlier 1;04 ($e!er#l )o&er of #ttor!e% $ive! to
the "#*e #$e!t -"o!.( '% the f#ther. The Co,rt
!o!ethele"" decl#red the "#le void o! the $ro,!d
th#t (The *#9i!$ #!d #cce)ti!$ of # !e& )o&er of
#ttor!e%+ &hether it e!l#r$e" or decre#"e" the
)o&er of the #$e!t ,!der # )rior )o&er of
#ttor!e%+ *,"t 'e held to ",))l#!t #!d revo9e the
;0
l#tter &he! the t&o #re i!co!"i"te!t. If the !e&
#))oi!t*e!t &ith li*ited )o&er" doe" !ot revo9e
the $e!er#l )o&er of #ttor!e%+ the e:ec,tio! of
the "eco!d )o&er of #ttor!e% &o,ld 'e # *ere
f,tile $e"t,re.(
If the ),r)o"e of the )ri!ci)#l i! de#li!$
directl% &ith the ),rch#"er #!d hi*"elf e=ecti!$
the "#le of the )ri!ci)#lKLQ" )ro)ert% i" to #void
)#%*e!t of hi" #$e!tKLQ" co**i""io!+ the
i*)lied revoc#tio! i" dee*ed *#de i! '#d f#ith
#!d c#!!ot 'e "#!ctio!ed &itho,t #ccordi!$ to
the #$e!t the co**i""io! &hich i" d,e hi*.
.nfante v$ Cunanan, @3 1i/ ?@3 ,1@53-.
Ahere !o ti*e for the co!ti!,#!ce of the
#$e!c% i" :ed '% the ter*"+ the )ri!ci)#l i" #t
li'ert% to ter*i!#te it #t &ill ",'Eect o!l% to the
reB,ire*e!t" of $ood f#ith. %aCDon v$ +rimo,
42 1i/ 133 ,1@21-.
Re/ate. Ca$e$6
0alenzuala v. Court of Appeals, 1;1 1CRA 1 31;;46
$lorentino v. Sandigan4a-an+ 040 1CRA ?4;
31;;?6.
#ialosa v. Court of Appeals+ 1?4 1CRA ?/4 31;826
.anila Trading v. .anila Trading a4orers Assn.+
8? Ihil 0;5 31;2;6
0alera v. 0elasco+ /1 Ihil 6;/ 31;086
*arretto v. Santa .arina+ 06 Ihil 224 31;1?6
&. E>e&t$ o( Re'o&ation on T1i". a"tie$
,1- )hen .t ";ects %ealings !ith Speci?ed
-hird Parties
H!der Article 1;01+ if the #$e!c% h#" 'ee!
e!tr,"ted for the ),r)o"e of co!tr#cti!$ &ith
")ecied )er"o!"+ it" revoc#tio! "h#ll !ot
)reE,dice the l#tter if the% &ere !ot $ive! !otice
thereof. It "ee*" cle#r+ &he! co*)#red &ith the
"it,#tio! i! Article 185?+ th#t !otice '% ),'lic
#dverti"e*e!t &o,ld !ot co!"tit,te ",@cie!t
!otice to 'i!d ",ch ")ecied third )#rtie".
I! Rallos v. 8angco+ 04 Ihil 06; 31;116+ the
for*er )ri!ci)#l ref,"ed to 'e )er"o!#ll% li#'le for
#!% #cco,!t h#!dled '% hi" #$e!t 3Coll#!te"6 for
tr#!"#ctio!" th#t occ,rred #fter the )ri!ci)#l h#d
ter*i!#ted the #$e!c% rel#tio!"+ eve! to # lo!$7
"t#!di!$ c,"to*er &ho h#d do!e ',"i!e"" &ith
the )ri!ci)#l thro,$h the #$e!t &ho &#" ")eci#ll%
e!dor"ed. I! #@r*i!$ the li#'ilit% of the )ri!ci)#l+
the Co,rt held 77
It #))e#r"+ ho&ever+ th#t )rior to the
"e!di!$ of "#id to'#cco the defe!d#!t h#d
"evered hi" rel#tio!" &ith Coll#!te" #!d th#t the
l#tter &#" !o lo!$er #cti!$ #" hi" f#ctor.
;?
Thi" f#ct &#" !ot 9!o&! to the )l#i!ti="< #!d
it i" co!ceded i! the c#"e th#t !o !otice of #!%
9i!d &#" $ive! '% the defe!d#!t to the )l#i!ti="
of the ter*i!#tio! of the rel#tio!" 'et&ee! the
defe!d#!t #!d hi" #$e!t. The defe!d#!t ref,"ed
to )#% the "#id ",* ,)o! de*#!d of the )l#i!ti="+
)l#ci!$ ",ch ref,"#l ,)o! the $ro,!d th#t #t the
ti*e the "#id to'#cco &#" received #!d "old '%
Coll#!te" he &#" #cti!$ )er"o!#ll% #!d !ot #"
#$e!t of the defe!d#!t. Thi" #ctio! &#" 'ro,$ht to
recover "#id ",*.
A" i" "ee!+ the o!l% B,e"tio! for o,r deci"io!
i" &hether or !ot the )l#i!ti="+ #cti!$ i! $ood f#ith
#!d &itho,t 9!o&led$e+ h#vi!$ "e!t )rod,ce to
"ell o! co**i""io! to the for*er #$e!t of the
defe!d#!t+ c#! recover of the defe!d#!t ,!der
the circ,*"t#!ce" #'ove "et forth. Ae #re of the
o)i!io! th#t the defe!d#!t i" li#'le. J#vi!$
#dverti"ed the f#ct th#t Coll#!te" &#" hi" #$e!t
#!d h#vi!$ $ive! ")eci#l !otice to the )l#i!ti=" of
th#t f#ct+ #!d h#vi!$ $ive! the* # ")eci#l
i!vit#tio! to de#l &ith ",ch #$e!t+ it &#" the d,t%
of the defe!d#!t o! the ter*i!#tio! of the
rel#tio!"hi) of )ri!ci)#l #!d #$e!t to $ive d,e #!d
ti*el% !otice thereof to the )l#i!ti=". F#ili!$ to do
"o+ he i" re")o!"i'le to the* for &h#tever $ood"
*#% h#ve 'ee! i! $ood f#ith #!d &itho,t
!e$li$e!ce "e!t to the #$e!t &itho,t 9!o&led$e+
#ct,#l or co!"tr,ctive+ of the ter*i!#tio! of ",ch
rel#tio!"hi). 3#t )). 050705?6
ustan v. Court of Appeals+ 066 1CRA 66?
31;;56+ held th#t &he! the ")eci#l )o&er of
#ttor!e% d,l% #,thori>ed the #$e!t to re)re"e!t
#!d #ct o! 'eh#lf of the )ri!ci)#l+ the )o&er
$r#!ted thereto c#! 'e relied ,)o! '% third
)#rtie" for &ho* ")ecic#ll% the #,thorit% &#"
i"",ed+ th,"D
A" f#r #" third )er"o!" #re co!cer!ed+ #! #ct
i" dee*ed to h#ve 'ee! )erfor*ed &ithi! the
"co)e of the #$e!t8" #,thorit% if ",ch i" &ithi! the
ter*" of the )o&er of #ttor!e% #" &ritte! eve! if
the #$e!t h#" i! f#ct e:ceeded the li*it" of hi"
#,thorit% #ccordi!$ to the ,!der"t#!di!$ 'et&ee!
the )ri!ci)#l #!d the #$e!t. The 1)eci#l Io&er of
Attor!e% )#rtic,l#rl% )rovide" th#t the "#*e i"
$ood !ot o!l% for the )ri!ci)#l lo#! ',t #l"o for
",'"eB,e!t co**erci#l+ i!d,"tri#l+ #$ric,lt,r#l
lo#! or credit #cco**od#tio! th#t the #ttor!e%7
i!7f#ct *#% o't#i! #!d ,!til the )o&er of #ttor!e%
i" revo9ed i! # ),'lic i!"tr,*e!t #!d # co)% of
&hich i" f,r!i"hed to INB. Eve! &he! the #$e!t
h#" e:ceeded hi" #,thorit%+ the )ri!ci)#l i"
"olid#ril% li#'le &ith the #$e!t if the for*er
#llo&ed the l#tter to #ct #" tho,$h he h#d f,ll
)o&er" 3Article 1;11+ Civil Code6. The *ort$#$e
directl% #!d i**edi#tel% ",'Eect" the )ro)ert%
,)o! &hich it i" i*)o"ed. The )ro)ert% of third
)er"o!" &hich h#" 'ee! e:)re""l% *ort$#$ed to
$,#r#!tee #! o'li$#tio! to &hich the "#id )er"o!"
#re forei$!+ i" directl% #!d Eoi!tl% li#'le for the
f,lll*e!t thereof< it i" therefore ",'Eect to
e:ec,tio! #!d "#le for the ),r)o"e of )#%i!$ the
;2
#*o,!t of the de't for &hich it i" li#'le. Jo&ever+
)etitio!er h#" #! ,!B,e"tio!#'le ri$ht to de*#!d
)ro)ortio!#l i!de*!ic#tio! fro* I#r#!$#! &ith
re")ect to the ",* )#id to INB fro* the )roceed"
of the "#le of her )ro)ert% i! c#"e the "#*e i" "old
to "#ti"f% the ,!)#id de't".( 3#t ). 6566
ustan hold" th#t &here the ")eci#l )o&er of
#ttor!e% )rovide" th#t the "#*e i" $ood !ot o!l%
for the )ri!ci)#l lo#! ',t #l"o for ",'"eB,e!t
co**erci#l+ i!divid,#l+ #$ric,lt,r#l lo#! or credit
#cco**od#tio! th#t the #ttor!e%7i!7f#ct *#%
o't#i! #!d ,!til the )o&er of #ttor!e% i" revo9ed
i! # ),'lic i!"tr,*e!t #!d # co)% of &hich i"
f,r!i"hed to the '#!9+ i! the #'"e!ce of #!% )roof
th#t the '#!9 h#d 9!o&led$e th#t the l#"t three
lo#!" &ere &itho,t the e:)re"" #,thorit% of the
)ri!ci)#l+ the '#!9 c#!!ot 'e )reE,dice.
,2- )hen Revocation of 5eneral Po!ers of
"gency
H!der Article 1;00+ if the #$e!t h#d $e!er#l
)o&er"+ revoc#tio! of the #$e!c% doe" !ot
)reE,dice third )er"o!" &ho #cted i! $ood f#ith
#!d &itho,t 9!o&led$e of the revoc#tio!. Notice
of the revoc#tio! i! # !e&")#)er of $e!er#l
circ,l#tio! i" # ",@cie!t &#r!i!$ to third )er"o!".
I! # c#"e coveri!$ # )o&er of #ttor!e% to
de#l &ith the $e!er#l ),'lic+ the f#ct th#t the
revoc#tio! &#" #dverti"ed i! # !e&")#)er of
$e!er#l circ,l#tio! &o,ld 'e ",@cie!t &#r!i!$ to
third )er"o!". Rammani v$ Court of "ppeals,
1@? SCRA C31 ,1@@1-.
B% the o)e!i!$ of 'r#!ch o@ce &ith the
#))oi!t*e!t of it" 'r#!ch *#!#$er #!d ho!ori!$
"ever#l ",ret% 'o!d" i"",ed i! it" 'eh#lf+ the
i!",r#!ce co*)#!% i!d,ced the ),'lic to 'elieve
th#t it" 'r#!ch *#!#$er h#d #,thorit% to i"",e
",ch 'o!d". A" # co!"eB,e!ce+ the i!",r#!ce
co*)#!% &#" e"to))ed fro* )le#di!$+ )#rtic,l#rl%
#$#i!"t # re$,l#r c,"to*er thereof+ th#t the
'r#!ch *#!#$er h#d !o #,thorit%. Central
Surety 6 .nsurance Co$ v$ C$N$ ,odges, 3B
SCRA 15@ ,1@C1-.
Ahile Article 1?/8 of the Civil Code reB,ire"
th#t the co!tr#ct" i!volvi!$ re#l )ro)ert% *,"t
#))e#r i! # )ro)er doc,*e!t+ # revoc#tio! of #
")eci#l )o&er of #ttor!e% to *ort$#$e # )#rcel of
l#!d+ e*'odied i! # )riv#te &riti!$+ i" v#lid #!d
'i!di!$ 'et&ee! the )#rtie"+ ",ch reB,ire*e!t of
Article 1?/8 'ei!$ o!l% for the co!ve!ie!ce of the
)#rtie" #!d to *#9e the co!tr#ct e=ective #"
#$#i!"t third )er"o!". PN+ v$ .ntermediate
"ppellate Court, 1B@ SCRA ?BA ,1@@A-.
Cia. +en. #e To4acos v. #ia4a+ 04 Ihil ?01 31;116.
.. CASES OF IRREVOCAB+E AGENCIES
H!der Article 1;05+ #! #$e!c% c#!!ot 'e revo9ed
&he!D
;/
[\ # 'il#ter#l co!tr#ct de)e!d" ,)o! it<
[\ it i" the *e#!" of f,llli!$ #! o'li$#tio! #lre#d%
co!tr#ct<
[\ # )#rt!er i" #))oi!ted *#!#$er of #
)#rt!er"hi) i! the co!tr#ct of )#rt!er"hi) #!d the
re*ov#l fro* *#!#$e*e!t i" ,!E,"ti#'le.
Jo&ever+ #! e:ce)tio! to the revoc#'ilit%
of # co!tr#ct of #$e!c% i" &he! it i" co,)led &ith
i!tere"t+ i.e.+ if # 'il#ter#l co!tr#ct de)e!d" ,)o!
the #$e!c%. The re#"o! for it" irrevoc#'ilit% i"
'ec#,"e the #$e!c% 'eco*e" )#rt of #!other
o'li$#tio! or #$ree*e!t. It i" !ot "olel% the ri$ht"
of the )ri!ci)#l ',t #l"o th#t of the #$e!t #!d
third )er"o!" &hich #re #=ected. Je!ce+ the l#&
)rovide" th#t i! ",ch c#"e"+ the #$e!c% c#!!ot 'e
revo9ed #t the "ole &ill of the )ri!ci)#l. Repu4lic
v. Evangelista+ 266 1CRA /22 3044/6
I! Sevilla v. Court of Appeals+ 164 1CRA 151
31;686+ the Co,rt fo,!d th#t &he! the )etitio!er+
Fi!# 1evill#+ #$reed to *#! the re")o!de!t+
To,ri"t Aorld 1ervice+ I!c.8" Er*it# o@ce+ "he
*,"t h#ve do!e "o ),r",#!t to # co!tr#ct of
#$e!c%. It i" the e""e!ce of thi" co!tr#ct th#t the
#$e!t re!der" "ervice" (i! re)re"e!t#tio! or o!
'eh#lf of #!other.( The Co,rt the! held 77
. . . I! the c#"e #t '#r+ 1evill# "olicited #irli!e
f#re"+ ',t "he did "o for #!d o! 'eh#lf of her
)ri!ci)#l+ To,ri"t Aorld 1ervice+ I!c. A"
co*)e!"#tio!+ "he received 2V of the )roceed" i!
the co!ce)t of co**i""io!". A!d #" &e "#id+
1evill# her"elf+ '#"ed o! her letter of Nove*'er
08+ 1;61+ )re",*ed her )ri!ci)#l8" #,thorit% #"
o&!er of the ',"i!e"" ,!dert#9i!$. Ae #re
co!vi!ced+ co!"ideri!$ the circ,*"t#!ce" #!d
fro* the re")o!de!t Co,rt8" recit#l of f#ct"+ th#t
the )#rtie" h#d co!te*)l#ted # )ri!ci)#l7#$e!t
rel#tio!"hi)+ r#ther th#! # Eoi!t *#!#$e*e!t or #
)#rt!er"hi).
B,t ,!li9e "i*)le $r#!t" of # )o&er of
#ttor!e%+ the #$e!c% th#t &e here'% decl#re to 'e
co*)#ti'le &ith the i!te!t of the )#rtie"+ c#!!ot
'e revo9ed #t &ill. The re#"o! i" th#t it i" o!e
co,)led &ith #! i!tere"t+ the #$e!c% h#vi!$ 'ee!
cre#ted for the *,t,#l i!tere"t of the #$e!t #!d
the )ri!ci)#l. 1; It #))e#r" th#t Fi!# 1evill# i" #
'o!# de tr#vel #$e!t her"elf+ #!d #" ",ch+ "he
h#d #cB,ired #! i!tere"t i! the ',"i!e"" e!tr,"ted
to her. Goreover+ "he h#d #"",*ed # )er"o!#l
o'li$#tio! for the o)er#tio! thereof+ holdi!$
her"elf "olid#ril% li#'le for the )#%*e!t of re!t#l".
1he co!ti!,ed the ',"i!e""+ ,"i!$ her o&! !#*e+
#fter To,ri"t Aorld h#d "to))ed f,rther o)er#tio!".
Jer i!tere"t+ o'vio,"l%+ i" !ot li*ited to the
co**i""io!" "he e#r!ed #" # re",lt of her
',"i!e"" tr#!"#ctio!"+ ',t o!e th#t e:te!d" to the
ver% ",'Eect *#tter of the )o&er of *#!#$e*e!t
dele$#ted to her. It i" #! #$e!c% th#t+ #" &e "#id+
c#!!ot 'e revo9ed #t the )le#",re of the )ri!ci)#l.
Accordi!$l%+ the revoc#tio! co*)l#i!ed of "ho,ld
e!title the )etitio!er+ Fi!# 1evill#+ to d#*#$e".
;6
: : :.
Thi" co!d,ct o! the )#rt of To,ri"t Aorld
1ervice+ I!c. 'etr#%" # "i!i"ter e=ort to ),!i"h
1evill# for &h#t it h#d )erceived to 'e di"lo%#lt%
o! her )#rt. It i" o=e!"ive+ i! #!% eve!t+ to
ele*e!t#r% !or*" of E,"tice #!d f#ir )l#%.
Ae r,le+ therefore+ th#t for it" ,!&#rr#!ted
revoc#tio! of the co!tr#ct of #$e!c%+ the )riv#te
re")o!de!t+ To,ri"t Aorld 1ervice+ I!c.+ "ho,ld 'e
"e!te!ced to )#% d#*#$e". H!der the Civil Code+
*or#l d#*#$e" *#% 'e #&#rded for ('re#che" of
co!tr#ct &here the defe!d#!t #cted . . . i! '#d
f#ith.( 3#t ). 1826
Re/ate. Ca$e$6
National Sugar -rading v$ PN+, 3@? SCRA 52B
,2AA3-
+acaling v$ Muya, 3BA SCRA C14 ,2AA2-
Pere= v$ PN+, 1C SCRA B33 ,1@??-
Coleongco v$ Claparols, 1A SCRA 5CC ,1@?4-
%el Rosario v$ "bad, 1A4 1i/ ?4B ,1@5B-
3. ;IT8DRA;A+ OF T8E AGENT FROM T8E AGENCY
H!der Article 1;08+ the #$e!t *#%
&ithdr#&#l fro* the #$e!c% '% $ivi!$ d,e !otice
to the )ri!ci)#l. If the )ri!ci)#l "ho,ld ",=er #!%
d#*#$e '% re#"o! of the &ithdr#&#l+ the #$e!t
*,"t i!de*!if% hi* therefore+ ,!le"" the #$e!t
"ho,ld '#"e hi" &ithdr#&#l ,)o! the i*)o""i'ilit%
of co!ti!,i!$ the )erfor*#!ce of the #$e!c%
&itho,t $r#ve detri*e!t to hi*"elf.
H!der Article 1;0;+ eve! &he! the #$e!t
"ho,ld &ithdr#& for # v#lid re#"o!+ *,"t co!ti!,e
to #ct ,!til the )ri!ci)#l h#" h#d re#"o!#'le
o))ort,!it% to t#9e the !ece""#r% "te)" to *eet
the "it,#tio!.
Re/ate. Ca$e$6
0alera v. 0elasco+ /1 Ihil 6;/ 31;086
4. DEAT8, INCAACITY OR INSO+VENCY OF T8E
RINCIA+
1i!ce #$e!c% i" 'oth # d,ci#r% #!d
re)re"e!t#tive rel#tio!"hi)+ the de#th of the
)ri!ci)#l #,to*#tic#ll% e:ti!$,i"he" the co!tr#ct+
for cert#i!l% eve! if the #$e!t i" &illi!$ to $o o!+
he h#" !o'od% to re)re"e!t #!d 'i!d i! E,ridic#l
rel#tio!". Th,"+ Rallos v. $eli, +o Chan & sons
77
B% re#"o! of the ver% !#t,re of the
rel#tio!"hi) 'et&ee! )ri!ci)#l #!d #$e!t+ #$e!c%
;5
i" e:ti!$,i"hed '% the de#th of the )ri!ci)#l or the
#$e!t. Thi" i" the l#& i! thi" E,ri"dictio!.
G#!re"# co**e!ti!$ o! Art. 154; of the
1)#!i"h Civil Code e:)l#i!" th#t the r#tio!#le for
the l#& i" fo,!d i! the E,ridic#l '#"i" of #$e!c%
&hich i" re)re"e!t#tio!. There 'ei!$ #!
i!te$r#tio! of the )er"o!#lit% of the )ri!ci)#l i!to
th#t of the #$e!t it i" !ot )o""i'le for the
re)re"e!t#tio! to co!ti!,e to e:i"t o!ce the de#th
of either i" e"t#'li"h. Iothier #$ree" &ith G#!re"#
th#t '% re#"o! of the !#t,re of #$e!c%+ de#th i" #
!ece""#r% c#,"e for it" e:ti!ctio!. F#,re!t "#%"
th#t the E,ridic#l tie 'et&ee! the )ri!ci)#l #!d the
#$e!t i" "evered i)"o E,re ,)o! the de#th of either
&itho,t !ece""it% for the heir" of the )ri!ci)#l to
!otif% the #$e!t of the f#ct of de#th of the for*er.
The "#*e r,le )rev#il" #t co**o! l#& the
de#th of the )ri!ci)#l e=ect" i!"t#!t#!eo," #!d
#'"ol,te revoc#tio! of the #,thorit% of the #$e!t
,!le"" the )o&er 'e co,)led &ith #! i!tere"t. 14
Thi" i" the )rev#le!t r,le i! A*eric#!
J,ri")r,de!ce &here it i" &ell7"ettled th#t # )o&er
&itho,t #! i!tere"t co!ferred ,)o! #! #$e!t i"
di""olved '% the )ri!ci)#l8" de#th+ #!d #!%
#tte*)ted e:ec,tio! of the )o&er #fter&#rd" i"
!ot 'i!di!$ o! the heir" or re)re"e!t#tive" of the
dece#"ed. 3#t ). 0646
The de#th of # clie!t dive"t" hi" l#&%er of
#,thorit% to re)re"e!t hi* #" co,!"el. A de#d
clie!t h#" !o )er"o!#lit% #!d c#!!ot 'e
re)re"e!ted '% #! #ttor!e%. /avina v$ Court of
"ppeals, 1C1 SCRA ?@1 ,1@BB-.
Re/ate. Ca$e$6
-errado v$ Court of "ppeals, 131 SCRA 3C3
,1@B4-
Her'osa v. ongara+ ;? Ihil ;55 31;/?6
#anon v. *ri'o+ 20 Ihil 1?? 31;016
*arretto v. Santa .arina+ 06 Ihil 224 31;1?6
a. ;1en t1e A)en&* Contin!e$ De$#ite
Deat1 o( "in&i#a/
H!der Article 1;?4+ the #$e!c% "h#ll re*#i!
i! f,ll force #!d e=ect eve! #fter the de#th of the
)ri!ci)#l+ if it h#" 'ee! co!"tit,ted i! the co**o!
i!tere"t of the l#tter #!d of the #$e!t+ or i! the
i!tere"t of # third )er"o! &ho h#" #cce)ted the
"ti),l#tio! i! hi" f#vor.
E#rlier o! i! (asno v. Ravina+ /2 Ihil ?58
31;?46+ the Co,rt reco$!i>ed th#t (the )o&er of
"#le $ive! i! # *ort$#$e i" # )o&er co,)led &ith
#! i!tere"t &hich ",rvive" the de#th of the
$r#!tor.(
;8
A! e:#*)le of ",ch # "it,#tio!+ i" &he! #
)o&er of #ttor!e% i" co!"tit,ted i! # co!tr#ct of
re#l e"t#te *ort$#$e ),r",#!t to the reB,ire*e!t
of Act No. ?1?/+ &hich &o,ld e*)o&er the
*ort$#$ee ,)o! the def#,lt of the *ort$#$or to
)#%*e!t the )ri!ci)#l o'li$#tio!+ to e=ect the "#le
of the *ort$#$e )ro)ert% thro,$h e:tr#E,dici#l
foreclo",re. It h#" 'ee! held th#t the )o&er of
"#le i! the deed of re#l e"t#te *ort$#$2e i" !ot
revo9ed '% the de#th of the )ri!ci)#l7*ort$#$or+
o! the $ro,!d th#t it i" #! #!cill#r% "ti),l#tio!
",))orted '% the "#*e c#,"e or co!"ider#tio!
th#t ",))ort" the *ort$#$e #!d for*" #!
e""e!ti#l i!"e)#r#'le )#rt of th#t 'il#ter#l
#$ree*e!t. The )o&er of #ttor!e% therefore
",rvive" the de#th of the *ort$#$or+ #!d #llo&"
the *ort$#$ee to e=ect the foreclo",re of the re#l
e"t#te *ort$#$e eve! #fter the de#th of the
)ri!ci)#l7*ort$#$or. (erez v. ()*+ 15 1CRA 8??
31;666< #el Rosario v. A4ad and A4ad+ 142 Ihil.
628 31;/86.
b. E>e&t o( A&t$ Done b* A)ent ;it1o!t
Kno9/e.)e o( "in&i#a/FGH$ Deat1
H!der Article 1;?1+ #!%thi!$ do!e '% the
#$e!t+ &itho,t 9!o&led$e of the de#th of the
)ri!ci)#l or of #!% other c#,"e &hich e:ti!$,i"he"
the #$e!c%+ i" v#lid #!d "h#ll 'e f,ll% e=ective
&ith re")ect to third )er"o!" &ho *#% h#ve
co!tr#cted &ith hi* i! $ood f#ith. It i" o'vio,"+
th#t third )#rtie" &ho de#l &ith the #$e!t i! '#d
f#ith 3i.e., 9!o&i!$ th#t the )ri!ci)#l i" de#d6
&o,ld !ot 'e )rotected+ #!d the co!tr#ct &o,ld 'e
void+ !ot E,"t ,!e!force#'le+ for l#c9 of the
e""e!ti#l ele*e!t of co!"e!t.
I! *uason v. (anu-as+ 14/ Ihil 5;/ 31;/;6+
the Co,rt #))lied the )rovi"io!" of Article 1;?1 i!
,)holdi!$ the v#lidit% of the "#le of the l#!d
e=ected '% the #$e!t o!l% #fter the de#th of the
)ri!ci)#l+ &he! !o evide!ce &#" #dd,ced to "ho&
th#t #t the ti*e of "#le 'oth the #$e!t #!d the
',%er" &ere ,!#&#re of the de#th of the )ri!ci)#l.
3Reiterated in Herrera v. 5- %i' +uan+ 1 1CRA
246 -1;61.6.
I! Rallos v. $eli, +o Chan & Sons Realt-
Corp.+ 81 1CRA 0/1 31;586+ the Co,rt e*)h#"i>ed
th#t l#c9 of 9!o&led$e of the de#th of the
)ri!ci)#l *,"t e:i"t #t the ti*e of co!tr#ct &ith
'oth the #$e!t #!d the third )#rtie" for the
)rovi"io! of Article 1;?1 to #))l%+ th," 77
Article 1;?1 i" the #))lic#'le l#&. H!der thi"
)rovi"io!+ #! #ct do!e '% the #$e!t #fter the
de#th of hi" )ri!ci)#l i" v#lid #!d e=ective o!l%
,!der t&o co!ditio!"+ vi>D 316 th#t the #$e!t #cted
&itho,t 9!o&led$e of the de#th of the )ri!ci)#l+
#!d 306 th#t the third )er"o! &ho co!tr#cted &ith
the #$e!t hi*"elf #cted i! $ood f#ith. Good f#ith
here *e#!" th#t the third "o! &#" !ot #&#re of
the de#th of the )ri!ci)#l #t the ti*e he
co!tr#cted &ith "#id #$e!t. The"e t&o reB,i"ite"
*,"t co!c,rD the #'"e!ce of o!e &ill re!der the
#ct of the #$e!t i!v#lid ,!e!force#'le.
;;
I! the i!"t#!t c#"e+ it c#!!ot 'e B,e"tio!ed
th#t the #$e!t+ 1i*eo! R#llo"+ 9!e& of the de#th
of hi" )ri!ci)#l #t the ti*e he "old the l#tter8"
"h#re i! Fot No. /;8? to re")o!de!t cor)or#tio!.
The 9!o&led$e of the de#th i" cle#rl% to 'e
i!ferred fro* the )le#di!$" led '% 1i*eo! R#llo"
'efore the tri#l co,rt. Th#t 1i*eo! R#llo" 9!e& of
the de#th of hi" "i"ter Co!ce)cio! i" #l"o # !di!$
of f#ct of the co,rt a 1uo #!d of re")o!de!t
#))ell#te co,rt &he! the l#tter "t#ted th#t 1i*eo!
R#llo" (*,"t h#ve 9!o&! of the de#th of hi" "i"ter+
#!d %et he )roceeded &ith the "#le of the lot i!
the !#*e of 'oth hi" "i"ter" Co!ce)cio! #!d
Ger,!di# R#llo" &itho,t i!for*i!$ #))ell#!t 3the
re#lt% cor)or#tio!6 of the de#th of the for*er.(
O! the '#"i" of the e"t#'li"hed 9!o&led$e of
1i*eo! R#llo" co!cer!i!$ the de#th of hi"
)ri!ci)#l+ Co!ce)cio! R#llo"+ Article 1;?1 of the
Civil Code i" i!#))lic#'le. The l#& e:)re""l%
reB,ire" for it" #))lic#tio! l#c9 of 9!o&led$e o!
the )#rt of the #$e!t of the de#th of hi" )ri!ci)#l<
it i" !ot e!o,$h th#t the third )er"o! #cted i!
$ood f#ith. 3#t ). 0606
The Co,rt f,rther held i! Rallos GHR
A!other #r$,*e!t #dv#!ced '% re")o!de!t
co,rt i" th#t the ve!dee #cti!$ i! $ood f#ith relied
o! the )o&er of #ttor!e% &hich &#" d,l%
re$i"tered o! the ori$i!#l certic#te of title
recorded i! the Re$i"ter of Deed" of the Irovi!ce
of Ce',+ th#t !o !otice of the de#th &#" ever
#!!ot#ted o! "#id certic#te of title '% the heir"
of the )ri!ci)#l #!d #ccordi!$l% the% *,"t ",=er
the co!"eB,e!ce" of ",ch o*i""io!.
To ",))ort ",ch #r$,*e!t refere!ce i" *#de
to # )ortio! i! G#!re"#8" Co**e!t#rie" &hich Ae
B,oteD
(If the #$e!c% h#" 'ee! $r#!ted for the
),r)o"e of co!tr#cti!$ &ith cert#i! )er"o!"+ the
revoc#tio! *,"t 'e *#de 9!o&! to the*. B,t if
the #$e!c% i" $e!er#l i! !#t,re+ &itho,t refere!ce
to )#rtic,l#r )er"o! &ith &ho* the #$e!t i" to
co!tr#ct+ it i" ",@cie!t th#t the )ri!ci)#l e:erci"e
d,e dili$e!ce to *#9e the revoc#tio! of the
#$e!c% ),'licl% 9!o&!.
(I! c#"e of # $e!er#l )o&er &hich doe" !ot
")ecif% the )er"o!" to &ho* re)re"e!t#tio!
"ho,ld 'e *#de+ it i" the $e!er#l o)i!io! th#t #ll
#ct" e:ec,ted &ith third )er"o!" &ho co!tr#cted
i! $ood f#ith+ &itho,t 9!o&led$e of the
revoc#tio!+ #re v#lid. I! ",ch c#"e+ the )ri!ci)#l
*#% e:erci"e hi" ri$ht #$#i!"t the #$e!t+ &ho+
9!o&i!$ of the revoc#tio!+ co!ti!,ed to #"",*e #
)er"o!#lit% &hich he !o lo!$er h#d.( 3G#!re"#+
Vol. 11+ )). /61 #!d /5/< )). 1/716+ rollo6
The #'ove di"co,r"e+ ho&ever+ tre#t" of
revoc#tio! '% #! #ct of the )ri!ci)#l #" # *ode of
ter*i!#ti!$ #! #$e!c% &hich i" to 'e
di"ti!$,i"hed fro* revoc#tio! '% o)er#tio! of l#&
",ch #" de#th of the )ri!ci)#l &hich o't#i!" i! thi"
144
c#"e. O! )#$e "i: of thi" O)i!io! Ae "tre""ed th#t
'% re#"o! of the ver% !#t,re of the rel#tio!"hi)
'et&ee! )ri!ci)#l #!d #$e!t+ #$e!c% i"
e:ti!$,i"hed ipso !ure ,)o! the de#th of either
)ri!ci)#l or #$e!t. Altho,$h # revoc#tio! of #
)o&er of #ttor!e% to 'e e=ective *,"t 'e
co**,!ic#ted to the )#rtie" co!cer!ed+ %et #
revoc#tio! '% o)er#tio! of l#&+ ",ch #" '% de#th
of the )ri!ci)#l i"+ #" # r,le+ i!"t#!t#!eo,"l%
e=ective i!#"*,ch #" ('% le$#l ctio! the #$e!t8"
e:erci"e of #,thorit% i" re$#rded #" #! e:ec,tio!
of the )ri!ci)#l8" co!ti!,i!$ &ill.( Aith de#th+ the
)ri!ci)#l8" &ill ce#"e" or i" ter*i!#ted< the "o,rce
of #,thorit% i" e:ti!$,i"hed.
The Civil Code doe" !ot i*)o"e # d,t% o! the
heir" to !otif% the #$e!t of the de#th of the
)ri!ci)#l. Ah#t the Code )rovide" i! Article 1;?0
i" th#t+ if the #$e!t die"+ hi" heir" *,"t !otif% the
)ri!ci)#l thereof+ #!d i! the *e#!ti*e #do)t ",ch
*e#",re" #" the circ,*"t#!ce" *#% de*#!d i!
the i!tere"t of the l#tter. Je!ce+ the f#ct th#t !o
!otice of the de#th of the )ri!ci)#l &#" re$i"tered
o! the certic#te of title of the )ro)ert% i! the
O@ce of the Re$i"ter of Deed"+ i" !ot f#t#l to the
c#,"e of the e"t#te of the )ri!ci)#l. 3#t ). 0626
5. DEAT8, INCAACITY OR INSO+VENCY OF T8E
AGENT
Article 1;1;3?6 )rovide" th#t the de#th+ civil
i!terdictio!+ i!"#!it% or i!"olve!c% of the #$e!t
e:ti!$,i"he" #t he #$e!c%. I! Terrado v. Court of
Appeals+ 1?1 1CRA ?51 31;826+ the Co,rt held
th#t co!tr#ct of #$e!c% e"t#'li"he" # ),rel%
)er"o!#l rel#tio!"hi) 'et&ee! the )ri!ci)#l #!d
the #$e!t+ ",ch th#t the #$e!c% i" e:ti!$,i"hed
'% the de#th of the #$e!t+ #!d hi" ri$ht" #!d
o'li$#tio!" #ri"i!$ fro* the co!tr#ct of #$e!c% #re
!ot tr#!"*itt#'le to hi" heir".
Jo&ever+ ,!der Article 1;?0+ if the #$e!t
die" d,ri!$ the ter* of the #$e!c%+ hi" heir" *,"t
!otif% the )ri!ci)#l thereof+ #!d i! the *e#!ti*e
*,"t #do)t ",ch *e#",re" #" the circ,*"t#!ce"
*#% de*#!d i! the i!tere"t of the )ri!ci)#l. The
)rovi"io! e"t#'li"he" # r#re "it,#tio! &here #!
o'li$#tio! i" i*)o"ed '% l#& ,)o! )er"o!" &ho
#re !ot )#rtie" to # co!tr#ct,#l rel#tio!"hi)+ #!d
th#t i! f#ct of o!e th#t h#" #lre#d% 'ee!
e:ti!$,i"hed '% the de#th of the #$e!t.
a. In &a$e o( M!/ti#/e A)ent$
Ge!er#ll%+ &itho,t "ho&i!$ #! i!te!tio! to
the co!tr#r%+ i! c#"e of #! #$e!c% &here there #re
"ever#l #$e!t" co!"tit,ted for the "#*e ',"i!e""
or )ro)ert%+ the de#th of o!e or *ore+ ',t !ot #ll
of the* &o,ld !ot e:ti!$,i"h the #$e!c%+ &ith
re")ect to tho"e &ho re*#i! livi!$. The "#*e r,le
&o,ld #))l% i! c#"e of civil i!terdictio!+ i!"#!it% or
i!"olve!c% of #!% ',t !ot #ll of the co**o!
#$e!t".
O! the other h#!d+ &he! it i" cle#r #t the
co!"tit,tio! of the #$e!c% th#t the co**o!
141
#$e!t" &ere i!te!ded to 'e co!"idered #" h#vi!$
c#)#cit% #" # $ro,) #!d !ot i!divid,#ll% 3",ch #"
'% the ,"e of the ter* KLX#!dKL i! de!i!$
their )o&er"6+ the! the de#th+ le$#l i!c#)#cit%+ or
i!"olve!c% of o!e &o,ld le$#ll% ter*i!#te the
#$e!c%.
?. DISSO+UTION OF A CORORATION
The di""ol,tio! of # cor)or#tio! e:ti!$,i"he"
it" E,ridic#l )er"o!#lit% for ever% ),r)o"e th#t
"ee9" to ),r",e (!e& ',"i!e""( 3Alha'4ra Cigar v.
SEC+ 02 1CRA 06; -1;68.6 or th#t of (# $oi!$
co!cer!( 3()* v. Court of $irst Instance of Rizal,
(asig, *r. SSI+ 04; 1CRA 0;2 -1;;0.6.
Co!"eB,e!tl%+ ,)o! the di""ol,tio! of #
cor)or#tio!+ it" Bo#rd of Director" #!d cor)or#te
o@cer" lo"e ever% le$#l ri$ht to e!ter i!to #!
co!tr#ct or tr#!"#ctio! to ),r",e !e& ',"i!e"" or
do!e i! the ordi!#r% co,r"e of ',"i!e""+ #!d #!%
of ",ch co!tr#ct e!tered i!to &o,ld 'e void+ eve!
#" #$#i!"t third )#rtie" &ho #ct i! $ood f#ith+ for
#t the )oi!t of di""ol,tio!+ e:i"ti!$ creditor" of the
cor)or#tio!" *,"t 'e )rotected ,!der the tr,"t
f,!d doctri!e.
Jo&ever+ the cor)or#tio! #fter di""ol,tio!+
#!d &ithi! three %e#r" therefro* co!ti!,e" to
h#ve E,ridic#l )er"o!#lit% for o!l% for ),r)o"e" of
liB,id#tio!. Co!"eB,e!tl%+ the Bo#rd of Director"
#!d cor)or#te o@cer" co!ti!,e to h#ve #$e!c%
)o&er" to re)re"e!t the cor)or#tio! for #!% #!d
#ll ),r)o"e th#t "ee9 the liB,id#tio! of it" #""et"
#!d the )#%*e!t of #ll it" li#'ilitie".
C. OB+IGATIONS OF T8E AGENT EVEN ;8EN T8E
AGENCY IS EKTINGUIS8ED
The d,ci#r% !#t,re of the co!tr#ct of
#$e!c% reB,ire" th#t eve! &he! the #$e!c%
rel#tio! i" ter*i!#ted+ the #$e!t i" 'o,!d to 9ee)
co!de!ti#l ",ch *#tter" #!d i!for*#tio! &hich
he le#r!ed i! the co,r"e of the #$e!c% &he! the
!#t,re of ",ch *#tter or i!for*#tio! i"
co!de!ti#l+ ",ch #" ',"i!e"" "ecret".
J,"t #" the )ri!ci)#l c#!!ot le$#ll% revo9e #!
#$e!c% i! order to ev#de the )#%*e!t of
co*)e!"#tio! d,e to the #$e!t+ the! i! the "#*e
*#!!er #! #$e!t c#!!ot le$#ll% ter*i!#te #!
#$e!c% i! order to t#9e #dv#!t#$e of the
)ri!ci)#lKLQ" co!ditio! or to )rot '% i!for*#tio!
re",lti!$ fro* hi" #$e!c%+ for ",ch &o,ld 'e i!
're#ch of hi" d,t% of lo%#lt%.
140

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