Agency- By the contract of agency a
Principal- one whom the agent
person binds himself to render some
service or to do something in
representation or on behalf of another,
with the consent or authority of the latter.
-power to effect the principals contractual
relations with third person
Characteristics:
1. Consensual- based on consent
2. Principal- it can stand by itself
without the need of another
contract
3. Nominate it has own name
4. Unilateral if gratuitious because it
creates obligations for one party
a. Bilateral if reciprocal rights
5. Preparatory- it is entered into as a
means to an end
1. Nature it is essential that the
minds of the parties should meet in
making it
a. Manifestation of consent-
the principal must intend
that the agent shall act for
him and such intention
should be express either in
words or in conduct.
b. Agent by legal fiction,
becomes principal- he
becomes such when he is
authorized to perform all
acts which the latter would
have him do. (with consent /
authority)
c. Presence/absence of
contract-
2. Basis- representation. (1868)
3. Purpose- To extend the personality
of the principal through the facility
of the agent.
-Enables the activity of man
which is naturally limited to
be legally extended by
permitting him to be
constructively present in
many diff places.
PARTIES OF THE CONTRACT
1.
represents and from whom he
derives his authority
2. Agent- one who acts for and
represents another; he is the
person acting in a representative
capacity.
ESSENTIAL ELEMENTS OF AGENCY
1. There is consent express or
implied, of the parties to establish
the relationship
2. The object is the execution of a
juridical act in relation to third
person
3. The agent acts as a representative
and not for himself
4. The agent acts within the scope of
his authority
Creation of Agency Relationship
Consensual therefore parties must
mutually agree on its creation
A person may express his consent by:
a. Contract
b. Orally or in Writing
c. Conduct
d. Ratification
e. Presumption or operation of
law
For the principal:
-there must be an intention to
appoint the agent
For the agent:
-there must be an intention to
accept the appointment and act on it.
CAPACITY OF THE PARTIES
1. Principal- Must be capacitated or have
the legal capacity to enter into a contract
a. May either be natural or artificial
person
2. Agent- Anyone can be an agent. His
capacity is immaterial.
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 He assumes no personal liability
He does not have to possess full
capacity to act for himself
Derives his authority from the
principal
ACTS THAT MANY BE/NOT DELEGATED TO
AGENTS
1. Personal acts- if personal
performance is required by law or
public policy, the doing of the act
by a person on behalf of another
does not constitute performance by
the latter.
a. Right to vote
b. Making of a will
c. Statements under oath
d. Member of BOT cannot validly
act by proxy
e. An agent cannot delegate to a
sub agent the performance of
acts which he has been
appointed to perform in person
2. Criminal Acts- An attempt to
delegate to another authority to do
an which, if done by principal
would be illegal is void. There can
be no agency in the perpetration of
crime
a. Since alien cannot acquire
agri lands, an alien cannot
purchase a land throught a
Filipino agent
b. Persons who, because of
their position and relation
with persons cannot acquire
the same through mediation
of another
c. When a person participates
in commission of a crime,
he cannot escape
punishment.
DETERMINATION OF EXISTENCE OF
AGENCY
- No formalities are required in the
creation of agency
A. Designation by the parties- if an
act done by one person in behalf of
another is in its essential nature of
agency
B. Fact of existence- determined by
the fact that one represents
another, and not by consideration.
C. Presumption of existence- if there
is a consent and fact
D. Intention to create relationship-
a. Principal- there must be
either an actual intention to
appoint or intention
inferable from his actions
b. Agent- intention to accept
the appointment and act on
it
NATURE OF RELATIONS BETWEEN
PRINCIPAL AND AGENT
1. Relation is fiduciary in character
2. Agent estopped from asserting
interest adverse to his principal
3. Agent must not act as an adverse
party-
4. Agent must not act FOR an
adverse party
5. Agent must not use or disclose
secret information
6. Agent must give notice of
material facts
KNOWLEDGE OF AGENT IMPUTED TO
PRINCIPAL
1. Agents duty of notification
a. Required to notify the
principal of all matters that
came to his attention that
are material to the subject
matter of the agency.
2. Relationship of attorney and client-
he is entitled to the fullest
disclosure of why certain steps are
taken
3. Knowledge of the Principal- the
knowledge of the principal cannot
be imputed to his agent.
EXCEPTIONS TO THE RULE
1. Where the agents interests are
adverse to those of the principal
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 2. Where the agents duty is not to AGENCY DISTINGUISHED FROM
disclose the info as where is INDEPENDENT CONTRACT
informed by way of confidential
information Agency I.C
3. Where the person claiming the Subject to control Without ,
benefit of the rule colludes with the and direction of exercises his
agent to defraud the principal. principal employment
independently and
AGENCY DISTINGUISHED FROM LOAN not in
representation of
Agency Loan the employer
The financing When one borrows Principal liable to Employer not
operations to be money, a lender 3rd persons liable for the torts
carried on by has no interest or or injury inflicted
another for mutual concern in manner by the
advantage of both, of its conduct independent
without any contractor
obligation to return
An agent may be Borrower is given
given funds by the money for AGENCY DISTINGUISHED FROM
P to advance the purposes of his PARTNERSHIP
latters business own and must
return it Agency Partnership
When checks are After the checks Control by the Not subject to co-
deposited with the are collected and principal partners right to
collecting bank encashed- creditor control
that is the bank is debtor relationship Liability (alam mo The partnership is
to collect from the na un) liable to the same
drawees of the extent as the
checks the partner so acting
corresponding or omitting to act
proceeds- AGENCY If the owner takes Profits earned
Relationship his agreed share of belong to the
Di ko gets ung profits, not as parties as common
pang 4 owner but as an proprietors in
agreed measure of agreed proportion
compensation for
AGENCY DISTINGUISHED FROM LEASE his service

Agency Lease
Basis- Lease of service- AGENCY DISTINGUISHED FROM SALE
Representation Basis-Employment
Exercises Ministerial
discretionary functions Agency Sale
powers Agent receives the The buyer receives
3 persons are 2 persons goods of the the goods as
involved (P,A,3rd (master/employer) principal owner
person) Servant/employee Agent delivers the The buyer pays
Relates to Mere manual or proceeds of the the price
commercial or mechanical sale
business execution Agent cant return The buyer cannot
transaction the object in case return the object
he is unable to sell sold

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the same
Agent bound to act The buyer can deal
according to the with the thing as
instruction of he pleases, being
principal the owner
ART 1869- Agency may be express or
implied from the acts of the principal, from
his silence or lack of action, or his failure
to repudiate the agency, knowing that
another person is acting in his behalf
without authority.
Agency may be oral, unless the law
requires a specific form
KINDS OF AGENCY
1. As to manner of its creation:
a. Express- one where the
agent has been actually
authorized by the principal
either orally or in writing
b. Implied- implied from the
acts of the principal, from
his silence or lack of action,
or his failure to repudiate
the agency
Ratification- may produce the
effect of an express or implied
agency
Agency by estoppel or implication-
The principal cannot deny the
existence of the agency after third
persons, relying on his conduct,
have had dealings with the
supposed agent.
2. As to its character:
a. Gratuitious- agent receives
no compensation
b. Compensated or onerous-
3. As to extent of business covered:
a. General- comprises all the
business of the principal
b. Special- one or specific
4. As to authority conferred:
a. Couched in general terms-
deemed only to acts of
administration
b. Couched on specific terms-
authorizing only the
performance of a specific
act
5. As to its nature and effects:
a. Ostensible or
representatives- one where
the agent acts in the name
and representation of the
principal
b. Simple or commission- one
where the agent acts in his
own name but for the
account of the principal
FORMS OF AGENCY
G: Oral, Written or Implied
E:
1. When law required certain
formalities
2. When it is required to make the
contract effective against third
persons
3. When it is required for the purpose
of proving the existence of a
contract (1403)
PRESUMPTION OF AGENCY
1. General rule- Agency is not
presumed, there muse exist as a
fact.
2. Exception- By law or to prevent
unjust enrichment
ART 1870. Acceptance by the agent may
also be express or implied from his acts
which carry out the agency, or from his
silence or inaction according to the
circumstances.
-Kaya mo na yan intindihin bes
ART 1871. Between persons who are
present, the acceptance of the agency
may also be implied if the principal
delivers his power of attorney to the agent
and the latter receives it without any
objection.
Power of Attorney- is an instrument in
writing by which one person, as principal,
appoints another as his agent and confers
upon him the authority to perform certain
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specified acts or kinds of acts on behalf of
the principal.
- Its purpose is not to define the
authority given to the agent but to
evidence the authority of the agent
to third parties
ARTICLE 1872. Between persons who are
absent, the acceptance of the agency
cannot be implied from the silence of the
agent, except:
(1) When the principal transmits his power
of attorney to the agent, who receives it
without any objection;
(2) When the principal entrusts to him by
letter or telegram a power of attorney with
respect to the business in which he is
habitually engaged as an agent, and he
did not reply to the letter or telegram. (n)
If both the principal and agent are absent,
acceptance of the agency by the agent is
not implied from his silence or inaction.
Since the agent is not bound to accept
agency, he can simply ignore the offer.
However in the 2 cases above, agency is
implied.
ARTICLE 1873. If a person specially
informs another or states by public
advertisement that he has given a power
of attorney to a third person, the latter
thereby becomes a duly authorized agent,
in the former case with respect to the
person who received the special
information, and in the latter case with
regard to any person.
The power shall continue to be in full force
until the notice is rescinded in the same
manner in which it was given. (n)
Communication of existence of agency
1. Special information (eg letter)- The
person appointed is considered
such
2. Public advertisement- newspaper
etc
Manner of Revocation- Paragraph 2 (sa
taas)
ARTICLE 1874. When a sale of a piece of
land or any interest therein is through an
agent, the authority of the latter shall be
in writing; otherwise, the sale shall be
void. (n)
1. Speaks only for the SALE of a piece
of land
2. Refers to sales made by an agent
not sales made by the owner
3. Up to sale, cannot be extended to
finding prospective buyers
ARTICLE 1875. Agency is presumed to
be for a compensation, unless there is
proof to the contrary. (n)
Amount- reasonable value of the
agents services if no compensation
was specified.
Note: A broker is never entitled to
commission for unsuccessful efforts
Why? Kailangan may sale.
Procuring Cause- refers to a cause
originating a series of events which,
without break in their continuity, result
in the accomplishment of the prime
objective of the employment of the
broker- producing a purchase ready,
willing and able to buy in the owners
terms.
An agent is not entitled to compensation
until the principal realizes the profit.