Beruflich Dokumente
Kultur Dokumente
1. As to manner of creation
a. Express – Agent has been actually authorized by the principal, either orally or in
writing (NCC, Art. 1869).
b. Implied– Agency is implied from the acts of the principal, from his silence or lack of
action or his failure to repudiate the agency, knowing that another person is acting on
his behalf without authority (NCC, Art. 1869)
2. As to character
a. Gratuitous – Agent receives no compensation for his services (Art. 1875)
b. Onerous– Agent receives compensation for his services (NCC, Art. 1875)
a. General – Agency comprises all the business of the principal (NCC, Art. 1876).
b. Special– Agency comprises one or more specific transactions (NCC, Art. 1876).
4. As to authority conferred
a. Couched in general terms – Agency is created in general terms comprises only acts of
administration (NCC, Art. 1877).
b. Couched in specific terms – Agency authorizing only the performance of a specific act
or acts (NCC, Art. 1876)
b. Simple or commission – Agent acts in his own name but for the account of the
principal
1. Principal – One whom the agent represents and from whom he derives his authority;
he is the person represented.
2. Agent – One who acts for and represents another; he is the person acting in a
representative capacity
Exception: When the law requires a specific form. i.e. – when sale of land or any
interest therein is through an agent, the authority of the latter must be in writing;
otherwise, the sale shall be void (NCC, Art. 1874).
There are two circumstances to consider in order to know what rules to apply on
implied acceptance of agency:
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2. Between persons who are absent –
The acceptance of the agency cannot be implied from the silence of the agent
except:
a. When the principal transmits his power of attorney to the agent, who
receives it without any objection;
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 (NCC, Art. 1870).
It is fiduciary in nature that is based on trust and confidence. The agent is estopped from
asserting or acquiring an interest adverse to that of his principal.
Disclosed principal – At the time of the transaction contracted by the agent, the other party
knows that the agent is acting for a principal and of the principal’s identity.
Partially disclosed principal – The other party knows or has reason to know that the agent
is or may be acting for a principal but is unaware of the principal’s identity.
Undisclosed principal – The party has no notice of the fact that the agent is acting as such
for a principal
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WHAT DO WE MEAN BY “JOINT PRINCIPALS”?
Two or more persons appoint an agent for a common transaction or undertaking (NCC,
Art. 1915).
First, there are two or more principals. Second, they have all concurred in the appointment
of the same agent. Third, the agent is appointed for a common transaction or undertaking.
The importance of the duty to give information of material facts becomes readily apparent
when it is borne in mind that knowledge of the agent is imputed to the principal even
though the agent never communicated such knowledge to the principal.
The theory is not absolute. The exceptions are: First, the agent’s interests are adverse to
those of the principal. Second, the agent’s duty is not to disclose the information, as where
he is informed by way of confidential information. Third, the person claiming the benefit of
the rule colludes with the agent to defraud the principal.
The theory of imputed knowledge ascribes the knowledge of the agent to the principal, not
the other way around. The knowledge of the principal cannot be imputed to his agent.
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Universal agent – employed to do all acts which the principal may personally do, and
which he can lawfully delegate to another the power of doing.
General agent – employed to transact all business of the principal, or all the business of a
particular kind or in a particular place, do all acts connected with a particular trade,
business or employment.
The general rule is that Agency is not presumed. The relation between principal and agent
must exist as a fact. Thus, it is held that where the relation of agency is dependent upon the
acts of the parties, the law makes no presumption of agency, and it is always a fact to be
proved, with the burden of proof resting upon the person alleging the agency to show, not
only the fact of its existence, but also its nature and extent.
First, there must be a real existence of emergency. Second, there must be an inability of the
agent to communicate with the principal. Third, the exercise of additional authority is for
the principal’s protection. Lastly, there must be an adoption of fairly reasonable means,
premises duly considered.
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WHAT IS THE RULE REGARDING DOUBLE AGENCY?
The general rule is that it is disapproved by law for being against public policy and sound
morality.
The exception is where the agent acted with full knowledge and consent of the principals.
WHAT ARE THE ACTS THAT A PRINCIPAL MAY DELEGATE TO HIS AGENT?
The general rule: What a man may do in person, he may do thru another.
The exceptions are personal acts; and criminal acts or acts not allowed by law.
Example of personal acts are marrying a person. One cannot marry a person on behalf of
the other.
What are the instances when the act of an agent is binding to the principal?
1. When the agent acts as such without expressly binding himself or does not exceed
the limits of his authority (NCC, Art. 1897).
2. If principal ratifies the act of the agent which exceeded his authority (NCC, Art.
1898).
3. Circumstances where the principal himself was, or ought to have been aware (NCC,
Art. 1899).
4. If such act is within the terms of the power of attorney, as written (NCC, Arts.
1900&1902).
5. Principal has ratified, or has signified his willingness to ratify the agent’s act (NCC,
Art 1901).
We have to take note of two instances: with authority and without authority.
If it is with authority:
a. In principal’s name – Valid
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b. b. In his own name – Not binding on the principal; agent and stranger are the only
parties, except regarding things belonging to the principal or when the principal
ratifies the contract or derives benefit there from.
If it is without authority:
a. In principal’s name – Unenforceable but may be ratified, in which case, may be
validated retroactively from the beginning.
b. In his own name – Valid on the agent, but not on the principal.
The general rule is, he is not bound then the act is without or beyond the scope of his
authority in the principal’s name.
The exceptions are:
a. Where the acts of the principal have contributed to deceive a 3rd person in good
faith.
b. Where the limitation upon the power created by the principal could not have been
known by the 3rd person. c. Where the principal has placed in the hands of the
agent instruments signed by him in blank. d. Where the principal has ratified the
acts of the agent.
Also, he is not bound when the act is within the scope of the agent’s authority but in his
own name.
The exception is: When the transaction involves things belonging to the principal (NCC,
Art. 1883).
We have to take note that the limits of the agent’s authority shall not be considered
exceeded should it have been performed in a manner more advantageous to the principal
than that specified by him.
The following are instances when the agent may retain in pledge the object of the agency:
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1. If principal fails to reimburse the agent the necessary sums, including interest, which the
latter advanced for the execution of the agency (NCC, Art. 1912).
2. If principal fails to indemnify the agent for all damages which the execution of the
agency may have caused the latter, without fault or negligence on his part (NCC, Art. 1913).
WHAT IS THE RULE WHEN TWO PERSONS DEAL SEPARATELY WITH THE
AGENT AND THE PRINCIPAL?
If the two contracts are incompatible with each other, the one of prior date shall be
preferred. This is subject however to the rule on double sale under Art. 1544 of the NCC.
We have to take note of the Rules of preference in double sale:
A person acting as an agent cannot escape criminal liability by virtue of the contract of
agency. The law on agency has no application in criminal cases. When a person participates
in the commission of a crime, he cannot escape punishment on the ground that he simply
acted as an agent of another party
An agent cannot maintain an action against persons with whom they contracted on behalf
of his principal. Agents are not a party with respect to that contract between his principal
and third persons. As agents, they only render some service or do something in
representation or on behalf of their principals. The rendering of such service did not
make them parties to the contracts of sale executed in behalf of the latter.
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The fact that an agent who makes a contract for his principal will gain or suffer loss by the
performance or non-performance of the contract by the principal or by the other party
thereto does not entitle him to maintain an action on his own behalf against the other party
for its breach.
In the case of Sps. Yu v. Pan American World Airways, Inc., (G.R. No. 123560, March 27,
2000):
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AGENCY VS. JUDICIAL ADMINISTRATION
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(Source: De Leon, 2010)
CHAPTER 2
OBLIGATIONS OF THE AGENT
• To act in accordance with the instructions of the principal and in default thereof to
do all the good father of a family would do
• Not to carry out the agency if its execution would manifest a result in the loss or
damage to the principal
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• To answer for damages if there being a conflict between his interest and the
principal, he should prefer his own
• Not to loan to himself if he has been authorized to lend money at interest
ILLUSTRATIVE CASES
(REIGER VS CAMPBELL-STUART)
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ISSUE: IS A LIABLE FOR DAMAGES
CHAPTER 3
OBLIGATIONS OF THE PRINCIPAL
I. Article 1910
a. The principal must comply with all the obligations which the agent may have
contracted within the scope of his authority.
b. As for any obligation wherein, the agent has exceeded his power, the
principal is not bound except when he ratifies it expressly or tacitly
c. The duties and liabilities of the principal are primarily based upon the
contract and the validity of the contract between them.
d. The principal is under an obligation to deal fairly and in good faith with his
agent who owes the same duty to his principal
e. The law imposes upon the principal certain obligations to his agent, among
which are the following:
i. To comply with all the obligations which the agent may have
contracted within the scope of his authority and in the name of the
principal
ii. To advance to the agent, should the latter so request, the sums
necessary for the execution of the agency
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iii. To reimburse the agent for all advances made by him, provided the
agent is free from fault (Ibid.);
iv. To indemnify the agent for all the damages which the execution of the
agency may have caused the latter without fault or negligence on his
part; and
v. To pay the agent the compensation agreed upon, or if no
compensation was specified, the reasonable value of the agent’s
services.
f. It may be stated as a general rule that where the relation of agency legally
exists, the principal will be liable to third persons for all acts committed by
the agent and obligations contracted by him in the principal’s behalf in the
course and within the actual (express or implied) or apparent scope of his
authority, and should bear the damage caused to third persons
g. The principal becomes liable to the third party when he ratifies an authorized
act of his agent.
h. The principal is bound by the act of his agent when he has placed the agent in
such position that persons of ordinary prudence are thereby led to believe
and assume that the agent is possessed of certain authority, and to deal with
him in reliance on such assumption
i. An agent is the instrumentality of the principal whose primary design is to
obtain rights against third parties. The principal’s rights are the third parties’
liabilities.
j. Since notice by a third party to the agent is notice to the principal, the third
party is not liable for damages for failure of the agent to give notice to his
principal
k. The third person’s tort liability to the principal, insofar as the agent is
involved in the tort, arises in three main factual situations:
i. Where the third person damages or injures property or interest of the
principal in the possession of the agent;
ii. Where the third person colludes with the agent to injure or defraud
the principal; and
iii. Where the third person induces the agent to violate his contract with
the principal to betray the trust reposed upon him by the principal
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p. The “business hazard theory” advances the argument that “it is thought that
the hazards of business should be borne by the business directly
q. Motivation-deviation test. — The bounds of the agent’s authority are not the
limits of the principal’s tort liability, but rather the “scope of the
employment” which may or may not be within the bounds of authority.
r. It is not enough, however, that the agent should act within the scope of his
authority under Article 1910. The agent must also act in a representative
capacity, in the principal’s name; otherwise, the principal assumes no liability
s. ratification is the adoption or affirmance by a person of a prior act which did
not bind him, but which was done or professed to be done on his account
thus giving effect to the acts as if originally authorized
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II. Article 1911
a. Even when the agent has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to act as though he had
full powers
b. Estoppel is a bar which precludes a person from denying or asserting
anything contrary to that which has been established as the truth by his own
deed or representation either express or implied
c. Ratification affects the entire transaction and from the beginning, while
estoppel affects only the relevant parts of the transaction and from that time
only when estoppel may be said to be spelled out
d. The substance of ratification is confirmation of the unauthorized act or
contract after it has been done or made, whereas, the substance of estoppel is
the principal’s inducement to another to act to his prejudice
e. Apparent authority is that which though not actually granted, the principal
knowingly permits the agent to exercise or holds him out as possessing.
f. Authority by estoppel arises in those cases where the principal, by his
culpable negligence, permits his agent to exercise powers not granted to him,
even though the principal may have no notice or knowledge of the conduct of
the agent.
g. If the estoppel is caused by the principal, he is liable to any third person who
relied on the misrepresentation.
h. If the estoppel is caused by the agent, then only the agent is liable.
a. The principal must advance to the agent, should the latter so request, the
sums necessary for the execution of the agency.
b. Should the agent have advanced them, the principal must reimburse him
therefor, even if the business undertaking was not successful, provided the
agent is free from all fault.
c. The reimbursement shall include interest on the sums advanced, from the
day on which the advance was made
d. In the absence of stipulation that the agent shall advance the necessary
funds, the principal must advance to the agent upon his request the sums
necessary for the execution of the agency
e. If the principal fails to comply with his obligations, the agent will not be
liable for the damage which, through his non- performance, the principal
may suffer.
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a. The principal must also indemnify the agent for all the damages which the
execution of the agency may have caused the latter, without fault or
negligence on his part
b. No promise to indemnify will be implied for losses or damages caused by the
independent and unexpected wrongful acts of third persons for which the
principal is in no way responsible
c. There is no obligation to indemnify where no agency relation exists, as where
it appears that the supposed agent acted upon its own account and not as an
agent, in the legal sense
V. Article 1914
a. The agent may retain in pledge the things which are the object of the agency
until the principal effects the reimbursement and pays the indemnity set
forth in the two preceding articles
b. The agent is not entitled to the excess in case the things are sold to satisfy his
claim and the proceeds thereof are more than the amount due
c. The lien of the agent is specific or particular in character, and not a general
lien so as to give the agent a right to retain the principal’s goods for claims
disconnected with the business of the agency
d. To entitle the agent to a lien, the funds or property against which it is
asserted must be in his actual or constructive possession, and he must have
acquired that possession lawfully and in his capacity as agent
a. When two persons contract with regard to the same thing, one of them with
the agent and the other with the principal, and the two contracts are in-
compatible with each other, that of prior date shall be preferred, without
prejudice to the provisions of article 1544
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b. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property
c. Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property
d. Should there be no inscription, the ownership shall pertain to the person
who, in good faith was first in the possession; and, in the absence thereof, to
the person who presents the oldest title, provided there is good faith
a. If the agent has acted in good faith, the principal shall be liable in damages to
the third person whose contract must be rejected.
b. If the agent acted in bad faith, he alone shall be responsible
a. The principal is not liable for the expenses incurred by the agent in the
following cases:
i. If the agent acted in contravention of the principal’s instructions,
unless the latter should wish to avail himself of the benefits derived
from the contract;
ii. When the expenses were due to the fault of the agent;
iii. When the agent incurred them with knowledge that an unfavorable
result would ensue, if the principal was not aware thereof;
iv. When it was stipulated that the expenses would be borne by the agent,
or that the latter would be allowed only a certain sum
(Source: De Leon, 2010)
CHAPTER 4
MODES OF EXTINGUISHMENT OF AGENCY
There are six (6) modes of extinguishing agency under Article 1919 of the Civil Code:
1) By revocation.
General Rule: Principal has the authority to revoke agency at will.
Kinds of Revocation
a) Express- should be in writing
b) Implied –
b.1. Appointment of another agent over same business under agency. (Art 1923)
b.2. Principal directly manages the business entrusted to the agent. (Art 1924)
b.3. Subsequent granting of special power of attorney over general power. (Art
1926)
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b.4. Silence or inaction, or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority. (Art 1869)
Example:
P borrows from A P10,000.00. P mortgages his property as security for the debt and
gives A the power to dispose of it should P default. (irrevocable due to principle of
“agency coupled with interest”)
- An agent may withdraw or renounce the agency at will, even without the consent of the
principal Due to fortuitous event. (Art 1174)
Exceptions:
Note: For a valid reason, an agent may withdraw or renounce the agency at will,
provided principal be given reasonable opportunity to take necessary
steps. (Art 1929)
General Rule: Agency is extinguished ipso jure the death of either principal or agent.
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- Power to foreclose survives death of mortgagor; mortgagor-
mortgagee relationship is not an ordinary agency. (Act 3135)
Example:
P authorizes A to sell his land for a certain price and pays himself out of the
proceeds. P dies before the land is sold. Agency survives due to “agency coupled
with interest” principle.
Civil interdiction is a court order which disqualifies a person who is mentally ill or
insane, the right to manage his/her affairs and receive the rents and profits of
his/her estate. Civil interdiction terminates upon death of the interdict or by
judgment of the court.
General Rule: Once a firm/corporation was shown that it exists, the agency relation
will be presumed to have continued, in the absence of anything to
show its termination.
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6) By the expiration of the period for which the agency was constituted.
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