Agency

Civil Law; Agency; The Right Of A Broker To His Commission For Finding
A Sita!le Byer For The Seller"s #ro$erty %ven Thogh The Seller Himself
Consmmated The Sale &ith The Byer Recogni'ed By The Cort. In
Macondary & /Co. V. Sellner, The Court Recognized The Right Of The Broker To
i! Co""i!!ion #or #inding $ Suita%le Buyer #or The Seller&! 'ro(erty )*en
Though The Seller i"!elf Con!u""ated The Sale +ith The Buyer. The Court
eld That It +ould Be In The eight Of In,u!tice To 'er"it The 'rinci(al To
Ter"inate The Contract Of $gency To The 're,udice Of The Broker +hen e
ad $lready Rea(ed The Benefit! Of The Broker&! )ffort!.
Same; Same; The Seller"s &ithdrawal (n Bal Faith Of The Broker"s
Athority Cannot )n*stly +e$rive The Brokers Of Their Commission As The
Seller"s +ly Constitted Agents. In Infante V. Cunanan, )t $l., The Court
-(held The Right Of The Broker! To Their Co""i!!ion $lthough The Seller
Re*oked Their $uthority To $ct In i! Behalf $fter They #ound $ Buyer #or i!
'ro(ertie! $nd .egotiated The Sale /irectly +ith The Buyer +ho" e Met
Through The Broker&! )ffort. The Court Ruled That The Seller&! +ithdra0al In
Bad #aith Of The Broker&! $uthority Cannot -n,u!tly /e(ri*e The Broker! Of
Their Co""i!!ion! $! The Seller&! /uly Con!tituted $gent!.
Same; Same; Agency Co$led &ith An (nterest; An Agency (s +eemed
As One Co$led &ith An (nterest &here (t (s %sta!lished For The ,tal Benefit
Of The #rinci$al And Of Third #ersons- And (t Cannot Be Revoked By The
#rinci$al So Long As The (nterest Of The Agent Or Of A Third #erson S!sists.
-nder $rticle 1234 Of The Ci*il Code, $n $gency Cannot Be Re*oked If $
Bilateral Contract /e(end! -(on It, Or If It I! The Mean! Of #ulfilling $n
O%ligation $lready Contracted, Or If $ 'artner I! $((ointed Manager Of $
'artner!hi( In The Contract Of 'artner!hi( $nd i! Re"o*al #ro" The
Manage"ent I! -n,u!tifia%le. Stated /ifferently, $n $gency I! /ee"ed $! One
Cou(led +ith $n Intere!t +here It I! )!ta%li!hed #or The Mutual Benefit Of The
'rinci(al $nd Of The $gent, Of #or The Intere!t Of The 'rinci(al $nd Of Third
'er!on!, $nd It Cannot Be Re*oked By The 'rinci(al So 5ong $! The Intere!t
Of The $gent Or Of $ Third 'er!on Su%!i!t!. In $n $gency Cou(led +ith $n
Intere!t, The $gent&! Intere!t Mu!t Be In The Su%,ect Matter Of The 'o0er
Conferred $nd .ot Merely $n Intere!t In The )6erci!e Of The 'o0er Becau!e It
)ntitle! i" To Co"(en!ation. +hen $n $gent&! Intere!t I! Confined To
)arning i! $greed Co"(en!ation, The $gency I! .ot One Cou(led +ith $n
Intere!t, Since $n $gent&! Intere!t In O%taining i! Co"(en!ation $! Such
$gent I! $n Ordinary Incident Of The $gency Relation!hi(.
1

1
Lim v Saban, 447 SCRA 232
.ature, #or"! $nd 7ind! Of $gency
Statutory /efinition
By $ Contract Of $gency, $ 'er!on Bind! i"!elf To Render So"e Ser*ice Or
/o So"ething In Re(re!entation Or In Behalf Of $nother, +ith The Con!ent Or
$uthority Of The 5atter 8$rticle 19:9;
.ote That By <oing By The /efinition, $gency Include! Relation!hi(! 5ike
Ma!ter=Ser*ant, )"(loyer, )"(loyee! Or 5e!!or > Inde(endent Contractor,
Such I! o0e*er I! Incorrect $! $gency 'ertain! To The 'erfor"ance Of $
?udicial $ct 8One That Bind! $ 'er!on To $n O%ligation; In The 'erfor"ance Of
+hich /i!cretion May Be )6erci!ed, +hile In The Other Relation!hi( +hat I!
/one In Behalf Of The Other I! 'urely Mini!terial.

$nother /efinition > It I! $ Relation!hi( By +hich T0o 'artie! +here%y One
'arty Called The 'rinci(al, $uthorize! $nother, Called The $gent To $ct #or $nd
In i! Behalf.
+hat $re The )!!ential Re@ui!ite! Of $ Contract Of $gency
1. There I! Con!ent, )6(re!! Or I"(lied Of The 'artie! To )!ta%li!h The
Relation!hi(
3. The O%,ect I! The )6ecution Of $ ?uridical $ct In Relation To $ Third
'er!on
A. The $gent $ct! $! $ Re(re!entati*e $nd .ot #or i"!elf
B. The $gent $ct! +ithin The Sco(e Of i! $uthority
'artie! To $ Contract Of $gency
1. Principal > One +ho a! 'er"itted Or /irected $nother To $ct #or i!
Benefit $nd Su%,ect To i! /irection $nd Control. e I! The One +ho" The
$gent Re(re!ent! $nd #ro" +ho" e /eri*e! $uthority. e I! The One
'ri"arily Concerned +ith The Contract
Ca(acity +i!e > e Mu!t Be $%le To <i*e 5egally )ffecti*e Con!ent $nd The
$ct To Be 'erfor"ed Mu!t Be /elega%le 8+hether Or .ot The $ct Can Be /one
By The 'er!on i"!elf. If Ce! > It I! /elega%le )6ce(t > If It I! Strictly 'er!onal.
)6a"(leD S0ear -nder Oath, )6ecute $ +ill Or )6erci!e $ 'rofe!!ion.
'rinci(al! > Can Be .atural Or $rtificial/?uridical 'er!on!, #oreigner!/$lien!.
3. Agent > e +ho $ct Or Stand! #or $nother, -!ually e I! <i*en #ull Or
'artial /i!cretion, $t Ti"e! e $ct! -nder $ S(ecific Co""and.
Ca(acity +i!e, e Mu!t a*e The Ca(acity To Bind i"!elf To The 'rinci(al,
+ith Third 'er!on!, It I! .ot .ece!!ary $! It I! The 'rinci(al +ho I! Bound, e
$!!u"e! .o 'er!onal 5ia%ility
.ature Of $ Contract Of $gency
It I! $ #iduciary Relation!hi(, $! $ Con!e@uence Of +hichD 8$; .o $c@ui!iti*e
're!cri(tion )6i!t! In #a*or Of The $gent $! i! 'o!!e!!ion I! In The Ca(acity
$! $gent .ot O0ner 8B;$gent Cannot /eny The Title Of The 'rinci(al 8C;$gent
Cannot Re(re!ent Conflicting Intere!t! 8/; $gent I! O%ligated To Render $nd
<i*e 'ro(er Infor"ation $nd #ull /i!clo!ure
Manner Of Con!titution Of $ Contract Of $gency
$ Contract Of $gency Can Be Con!tituted )6(re!!ly Or I"(lied #ro" The $ct!
Of The 'rinci(al, Silence, 5ack Of $ction Or #ailure To Re(udiate $nd In $ll
Ca!e! 7no0ing That The Other 'er!on I! $cting On i! Behalf +ithout $uthority
8$rticle 19:2;, In Such Ca!e!, Burden Of 'roof I! On The 'arty Clai"ing Or
$lleging $gency. There I! .o 're!u"ed $gency )6ce(t -nder $rt. 19EA $!
Bet0een 'artner! +hen The Manner Of Manage"ent a! .ot Been $greed
-(on $nd +hen 5a0yer! $((ear Before The Court.
$! To #or"
$ Contract Of $gency Can Be Orally Con!tituted -nle!! The 5a0 Re@uire! It To
Be +ritten. The 5a0 Re@uire! It To Be +ritten -nder $rticle! 194B 8Sale Of
5and Or $ny Intere!t Shall Be In +riting, Other0i!e The Sale I! Void; $rticle
1949 8+hen $ S(ecial 'o0er Of $ttorney I! Re@uired; $nd In Relation Thereto,
$rticle! 1942 $nd 199E
o0 I! It 'erfected
$ Contract Of $gency I! 'erfected By $cce(tance, +hich Can Be )6(re!! Or
I"(lied #ro" $ct! That Carry Out The $gency Or Silence Or Inaction $ccording
To Circu"!tance! 8$rticle 194E It Can $l!o Be I"(lied FBet0een 'er!on!
're!entG +hen The 'rinci(al /eli*er! i! 'o0er Of $ttorney To The $gent +ho
Recei*e! It +ithout O%,ection Such I! 'ri"a #acie 'roof Of $cce(tance 8$rticle
1941; $nd $! Bet0een 'er!on! +ho $re $%!ent It Cannot Be I"(lied #ro" The
Silence Of The $gent )6ce(tD 81; If The 'rinci(al Tran!"it! i! 'o0er Of
$ttorney To The $gent +ho Recei*e! It +ithout O%,ection 83;+hen The
'rinci(al )ntru!t! To i" By 5etter Or Telegra", $ 'o0er Of $ttorney +ith
Re@ue!t To The Bu!ine!! In +hich e I! a%itually )ngaged In $! $n $gent
$nd e /id .ot Re(ly To The 5etter Or Telegra" 8$rticle 1943;
$! To Third 'er!on! > It I! 'erfected +hen $ 'er!on S(ecifically Infor"!
$nother Or State! By 'u%lic $d*erti!e"ent That e a! <i*en $ 'o0er Of
$ttorney To $ Third 'er!on, The 5atter Beco"e! $n $gent In!ofar $! 8$; 'er!on
To +ho" S(ecific Infor"ation I! <i*en, 8B; $nyone If It Be By 'u%lic
$d*erti!e"ent 8$rticle 194A;. The 'o0er Of $ttorney Shall Re"ain In #ull #orce
-ntil .otice Of Re!ci!!ion I! Made In The Manner .otice Of Con!titution I!
<i*en, Or By $ctual 7no0ledge, Such I! Sufficient To Make Re!ci!!ion
)ffecti*e.
In Relation To $rt. 194A = If The 'rinci(al 5ead! $nother To Belie*e That $
Certain 'er!on I! i! $gent But It I! .ot In #act True $nd Such Re(re!entation
I! $cted -(on > That Create! $n $gency By )!to((el. .ote o0e*er That Such
Can $l!o Be Created By The Su((o!ed $gent.
/i!tingu!ihing Bet0een $gency By )!to((el $nd I"(lied $gency. In The
#or"er, The $gent I! .ot $ True $gent, The Su((o!ed 'rinci(al Or $gent I! The
One 5ia%le $l0ay! /e(ending -(on +ho <a*e Ri!e To The $gency By
)!to((el. In The 5atter, The $gent I! True $gent $nd It I! The 'rinci(al +ho I!
5ia%le.
$gency I! 're!u"ed To Be #or Co"(en!ation -nle!! There I! 'roof To The
Contrary
+hen There I! .o Co"(en!ation Mentioned, There I! Still $ Contract Of
$gency. The $%!ence Or 're!ence Of Co"(en!ation .ot Being $ .ece!!ary
Or )!!ential Re@uire"ent 8$rticle 194H;. .either /oe! The $gent a*e To
'ro*e That The $gency I! #or Co"(en!ation.
Kinds Of Agency
$gency I! )ither <eneral 8+hen It Co"(ri!e! $ll Of The Bu!ine!! Of The
'rinci(al; Or S(ecial 8+hen It Co"(ri!e! One Or More S(ecific Tran!action!;.
Con!e@uently, If One I! $((ointed $! $ <eneral $gent, e Shall Be $uthorized
To Conduct $ Serie! Of Tran!action! In*ol*ing Continuity Of Ser*ice. If One I!
$((ointed $! $ S(ecial $gent , e Shall Be $uthorized To Conduct $
Single/Serie! Of Tran!action! .ot In*ol*ing Continuity Of Ser*ice 8$rticle 194:;
How Construed
If It I! Couched In <eneral Ter"!, It Only Co"(ri!e! Of $ct! Of $d"ini!tration,
)*en If The 'rinci(al Should State That e +ithhold! .o 'o0er Or That The
$gent May )6ecute Such $ct! $! e May /ee" $((ro(riate Or )*en If $gency
Should $uthorize $ <eneral Or -nli"ited Manage"ent 8$rticle 194:;. $ct! Of
$d"ini!tration $re Tho!e That $re .ece!!ary In The /ay To /ay $ffair! Of The
Bu!ine!! Of The 'rinci(al.
Con!e@uently, If +hat I! To Be 'erfor"ed I! .ot $n $ct Of $d"in!tration, $
S(ecial 'o0er Of $ttorney I! Re@uired In The #ollo0ing In!tance!D 81; To Make
'ay"ent! $! .ot -!ually Con!idered $ct! Of $d"ini!tration 83; To )ffect
.o*ation! +hich 'ut $n )nd To O%ligation! $lready In )6i!tence $t The Ti"e
The $gency +a! Con!tituted 8A; To Co"(ro"i!e Su%"it Iue!tion! To
$r%itration, To Renounce The Right To $((eal, To +ai*e O%,ection! To Venue
Or To $%andon 're!cri(tion $lready $c@uired 8B; To +ai*e $ny O%ligation
<ratuitou!ly 8H; To )nter Into $ Contract By +hich O0ner!hi( O*er $n
I""o*a%le I! Tran!"itted Or $c@uired <ratuitou!ly Or #or Valua%le
Con!ideration 8:; To Make <ift!, )6ce(t Cu!to"ary One! #or Charity Or Tho!e
Made To )"(loyee! In The Bu!ine!! Managed By The $gent 84; To 5oan Or
Borro0 Money, -nle!! The 5atter $ct Be -rgent $nd Indi!(en!a%le #or The
're!er*ation Of The Thing! +hich $re -nder $d"ini!tration 89; To 5ea!e Real
'ro(erty To $nother #or $ 'eriod )6ceeding One Cear 82; To Bind The 'rinci(al
To Render Ser*ice +ithout Co"(en!ation 81E; To Bind The 'rinci(al In $
Contract Of 'artner!hi( 811; To O%ligate The 'rinci(al $! $ <uarantor Or Surety
813; To Create Real Right! Or Con*ey Real Right! O*er I""o*a%le 'ro(erty
81A; To $cce(t Or Re(udiate $n Inheritance 81B; To Ratify O%ligation!
Contracted Before The $gency 81H; $ny Other $ct Of Strict /o"inion 8$rticle
1949;
There I! .eed #or $ S(ecial 'o0er Of $ttorney To <i*e The $gent $ Clear
Mandate S(ecifically $uthorizing The 'erfor"ance Of $n $ct $! The $ct! $re
Cla!!ified $! 8$; $ct! Of Strict /o"inion Or O0ner!hi( 8B; <ratuitou!
Contract!, Or 8C; Contract! +here 'er!onal Tru!t Or Confidence I! Of The
)!!ence. If $n $ct Of The $gent Re@uire! $ S(ecial 'o0er Of $ttorney, It!
$%!ence Render! The Contract -nenforcea%le. .oteD $ <eneral 'o0er Of
$ttorney Containing $uthorization #or $ct! +hich Re@uire! $ S(ecial 'o0er Of
$ttorney I! $llo0ed 8Velo!o V!. Ca , 3:E Scra H2A;.
In Relation To $rticle 1949, .ote That 81; $ S(ecial 'o0er Of $ttorney To Sell
)6clude! The 'o0er To Mortgage, $nd $ S(ecial 'o0er Of $ttorney To
Mortgage /oe! .ot Include The 'o0er To Sell 8$rticle 1942; $! The Real O%,ect
I! To /i!(o!e Of The 'ro(erty, If o0e*er The 'o0er <i*en I! To Rai!e Money
#or +hich $n $gent May Sell 'ro(erty Or $*ail Of $ll Other Mean! > Then $
Mortgage +ould Be Valid 83; $ S(ecial 'o0er Of $ttorney To Co"(ro"i!e /oe!
.ot $uthorize Su%"i!!ion To $r%itration. The 'rinci(al Tru!t! The ?udg"ent Of
The $gent But .ot The ?udg"ent Of The $r%itrator.
Rule! That <o*ern The 'erfor"ance By The $gent Of The $gency
There Being $ Contract Of $gency, The <eneral O%ligation! $nd Sco(e Of
'o0er Of The $gent $reD
8$; e Mu!t $ct +ithin The Sco(e Of i! $uthority 8$rticle 1991;. e May /o
Such $ct! $! May Be Conduci*e To The $cco"(li!h"ent Of The 'ur(o!e Of
The $gency. $uthority /efined= The Right Of The $gent To )ffect 5egal
Relation! +ith i! 'rinci(al By The 'erfor"ance Of $ct! )ffectuated By $nd In
$ccordance +ith The 'rinci(al&! Manife!tation Of Con!ent. 7ind! Of $uthority
8$; )6(re!! > The $uthority I! Clearly /efined $nd I! S(elled Out In Ter"! That
The $gent #ully -nder!tand! +hat I! To Be /one 8B; I"(lied > Only The
<eneral .ature Of The $uthority I! /efined, But I! /ee"ed To Include $ct!
.ece!!ary To $cco"(li!h The 'ur(o!e 8C; <eneral > The $gent&! /i!cretion I!
Co"(lete 8/; S(ecial > 'articular In!truction! $re <i*en 8); $((arent= +hen
The $gent Or $ Third 'er!on I! 5ed To Belie*e By The 'rinci(al That e I! $n
$gent. $uthority $! /i!tingui!hed #ro" 'o0er= $uthority May Be Con!idered $!
The Cau!e +hile 'o0er I! The )ffect. $uthority <i*en By The 'rinci(al To The
$gent I! The One That )"(o0er! The $gent, +ho Can .o0 $ct.
8B; The 5i"it! Of $n $gent&! $uthority Shall .ot Be Con!idered )6ceeded
Should It a*e Been 'erfor"ed In $ Manner More $d*antageou! To The
'rinci(al Than That S(ecified By i" 8$rticle 1993;. The Condition! Of The
$gency Can Be I"(ro*ed, But .ot Made +or!e. The $gent Cannot Be Said To
a*e )6ceeded The Sco(e Of i! $uthority Becau!e It I! 're!u"ed That If It
+ere The 'rinci(al So $cting, e +ould a*e #ollo0ed The More
$d*antageou! Cour!e. Clearly, It I! 'o!!i%le That The 'o0er Of The $gent Be
Broader Than The 'rinci(al It Should Be Characterized By The #act That It I!
More $d*antageou! To The 'rinci(al.
If $n $gent I! Con!trained To $ct Beyond The $uthority <i*en i". It Can Be
?u!tified If It I! Con!idered $n $gency By .ece!!ity. Thi! Refer! To The
Conce(t That The $gent&! $uthority I! Corre!(ondingly )nlarged To Co(e +ith
The .ece!!itie! Or )6igencie! Of The Mo"ent > But Thi! Should $l0ay! 're=
Su((o!e That $n $gency I! $lready In )6i!tence. The Condition! $re 81; Real
)6i!tence Of $n )"ergency 83; Ina%ility To Co""unicate +ith The 'rinci(al 8A;
)6erci!e Of $dditional $uthority I! #or 'rinci(al&! 'rotection 8B; e $do(t!
#a"ily Rea!ona%le Mean!, 're"i!e! /uly Con!idered, $nd 8H; $uthority Cea!e!
The Mo"ent The )"ergency .o 5onger /e"and! It
8C; If $n $gent $ct! In i! O0n .a"e, The 'rinci(al a! .o Right Of $ction
$gain!t The 'er!on! +ith +ho" The $gent Contracted, .either a*e Such
'er!on! $gain!t The 'rinci(al. In Such I! The Ca!e, The $gent I! /irectly
Re!(on!i%le To The 'er!on! +ith +ho" e Contracted $! If The Tran!action
a! i! O0n )6ce(t +hen The Contract In*ol*e! Thing! Belonging To The
'rinci(al. It I! $l!o +ithout 're,udice To $ction! Bet0een The 'rinci(al $nd The
$gent. 8$rticle 199A;. Thi! I! $n $gency +ith $n -ndi!clo!ed 'rinci(al. Thi!
+ill $((ly Only +hen There I! $ Contract Of $gency $! The $gent ere +a!
$uthorized But $cted In i! O0n .a"e, $! O((o!ed To $n $gency By
)!to((el. ere The $gent I! 5ia%le $lone $! The #act Of Re(re!entation
/i!a((ear! In!ofar $! The Third 'er!on $nd The 'rinci(al.
$((lying 1991
In Thi! #our In!tance! The )ffect! $reD
1. $ct! In 'rinci(al&! Behalf Of $uthority > Valid > 'rinci(al I! Bound
3. $gent $ct! +ith $uthority But In i! Behalf > Valid > 'rinci(al I! .ot
Bound )6ce(t If 1993 $((lie!
A. F$gentG +ithout $uthority But In Behalf Of The 'rinci(al > -nenforcea%le
> But 'rinci(al Can Ratify.
$rt. 1BEA > 'aragra(h I
Tho!e )ntered Into In The .a"e Of $nother 'er!on By One +ho a!
<i*en $ $uthority Or 5egal Re(re!entati*e Or +ho a! Cited Beyond i!
'o0er!.
B. F$gentG +ithout $uthority In i! Behalf > Valid > 'ro*ided $t The Ti"e Of
/eli*ery e Can /eli*er
O%ligation! Of The $gent
I. Carry Out The $gency
$rt. 199B > The $gent I! Bound By i! $cce(tance To Carry Out The
$gency > If e /oe! .ot > e I! 5ia%le Through .on='erfor"ance #or /a"age!
That May Be Su!tained By i! 'rinci(al.
e Mu!t $l!o > #ini!h Bu!ine!! $lready Began On The /eath Of The 'rinci(al >
Should /elay )nJJ $ny /a"age!
'l!. .oteD That If e Carrie! JJJ The $gency In <ood #aith $nd In $ccordance
+ith I! $uthority But /a"age! Still Re!ult. e I! .ot 5ia%le.
But > -nder $rt. 1999 > The $gent Shall .ot Carry Out The $gency If It!
)6ecution +ould Manife!tly Re!ult In 5o!! Or /a"age
Manife!tly > )6ecution +ill /efinitely /a"age The 'rinci(al
If The $gent /ecline! 8Or $rt. 194E, 41, Or 43 /oe! .ot $((ly;
$. O%!er*e The /iligence Of $ <ood #ather Of The #a"ily In The Cu!tody $nd
're!er*ation Of The <ood! #or0arded To i".
-ntilD
1. The 'rinci(al Shall a*e $((ointed $n $gent, Or
3. The 'rinci(al Shall a*e $! Soon $! 'ractica%le Taken Charge Of The
<ood!
If The $gent )6erci!e! The Re@uire /iligence > 5o!! JJJ a*e To Be Borne
By The O0ner/'rinci(al
If e $cce(t! > $rt. 1994
The $gent In The )6ecution Shall $ct.
$. In $ccordance +ith The In!truction! Of The 'rinci(al
8In!truction! $! O((o!ed To $uthority $re The S(ecific $ct! To Be -ndertaken
To Carry Out The $gency;
In So <i*ing In!truction! > The 'rinci(al Mu!t Make i! Ter"! Clear $nd
JJJJJJJJJ, If It Be Su!ce(ti%le To T0o Meaning!, $do(tion In <ood #a"ily
/oe! .ot Cau!e 5ia%ility #or 5o!! In Con!tituting The In!truction! They Shall Be
Con!trued $! F$ 'lain .on $c@uainted +ith The O%,ect $nd $ttending
Rea!ona%ly To The 5anguage -!ed, a! In #act Con!trued.
B. In /efault Of In!truction! > e Shall /o $ll That $ <ood #ather Of The
#a"ily +ill /o $! Re@uired By The .ature Of The Bu!ine!!.
8That +hich $n Ordinary 'rudent Man +ould )6erci!e $! Regard! i! O0n
'ro(erty;
e Mu!t Careful > $gent I! Re!(on!i%le .ot $l!o #raud, But $l!o #or
.egligence +hich Shall Be ?udged +ith More Or 5e!! JJJ By Co!t! /e(ending
Or +hether $gency +a! Or +a! .ot #or Co"(en!ation.
In $ddition, In Carrying Out The $gency
$rt. 199: > If There Be $ Sti(ulation That The $gent Shall $d*ance The
.ece!!ary #und!, e Shall Be #ound To /o So )6ce(t Of The 'rinci(al I!
In!ol*ent.
= Thi! $((lie! +hether The $gency I! <ratuitou! Or Onerou!.
= If JJJJJ The $gent > 8$rt. 1219; 8See 1213 $l!o;
= $ctual In Contra*ention Of Being $uthority -nle!! e $*ail! i"!elf Of
The Benefit!.
= )6(en!e! $re /ue To i! JJ
- Incurred The )6(en!e! +ith 7no0ledge That $n -nfa*ora%le Re!ult +ill
)n!ure
- Or, It I! Sti(ulated That )6(en!e! $re To Be JJJ By i"
- +hen )*en If e 8$gent; $d*ance! The $"ount .o Right #or $
Rei"%ur!e"ent )6i!t!
Ii. $gent Should .ot Re(re!ent JJ
$rt. 1992 > The $gent I! 5ia%le #or /a"age!, If There I! $ Conflict
Bet0een i! Intere!t! $nd That Of The 'rinci(al e Should 'refer i! O0n.
Iii. If e I! $uthorized To 5end Or Borro0 Money 8192E;
- If e I! $uthorized To Borro0, e May Be The 5ender $t The Current
Rate
- If e a! Been $uthorized To 5end Money $t Intere!t, e Cannot Borro0
It +ithout The Con!ent Of The 'rinci(al > $! There I! $ /a"age! That
The Intere!t Of The 'rinci(al +ill Be ?eo(ardized
I*. O%ligation To Render $n $ccount Of i! Tran!action!
- /eli*er To The 'rinci(al +hate*er e May a*e Recei*ed By Virtue Of
The $gency, )*en If It I! .ot O0ing To The 'rinci(al
8$rt. 1921;
$ny Sti(ulation )6e"(ting i" #ro" Rendering $n $ccounting I! Void.
- #ailure To $ccount Or Return +ithout ?u!tifia%le Rea!on Shall Be <round
#or 'ro!ecution -nder $rt. A1H 'ar 1 8:; Of The R(l #or )!tafa
V. .ature Of 5ia%ility Of The $gent To The 'rinci(al
$rt. 192B > The Re!(on!i%ility Of T0o Or More $gent!, )*en Though
They a*e Been $((ointed. Si"ultaneou!ly, I! .ot Solidary, If Solidarily a! .ot
Been )6(re!!ly $greed -(on.
5ia%ility I! ?oint.
But $rt. 192H > If Solidarily a! Been $greed -(on )ach Of The $gent!
I! Re!(on!i%le #or The .on=#ulfill"ent Of The $gency $nd #or The JJJ $nd
.egligence Of i! JJ $gent! )6ce(t In The 5atter Ca!e The $gent $cted
Beyond The Sco(e Of Their $uthority.
If The Co=$gent JJ Beyond The Sco(e Of i! $uthority > .o 5ia%ility I!
I"(o!ed On The Other $gent.
'rinci(al Can Sue )ither $gent +ithout 're,udice To $ny $ction/S #or
Reco*ery Bet0een The".
In $ddition
$rt. 192: > Of The $gent
a!D
1. Con*erted $nd $((lied JJJ To i! O0n -!e, Or
3. One! JJ $fter The $gency I! )6tingui!hed
e I! 5ia%le #or Intere!t On The Said $"ount! +ithout 're!uJJJ To $
'ro!ecution #or )!tafa If So +arranty
Can The $gent $((oint $ Su%!titute
$rt. 1923 > The $gent I! $llo0ed To $((oint $ Su%!titute Of The 'rinci(al
a! .ot 'rohi%ited #ro" /oing So, But If e /oe! $((oint, The $gent Shall Be
Re!(on!i%le #or $ll The $ct! Of The Su%!titute IfD
a. e a! .ot <i*en The 'o0er To $((oint One
%. e +a! <i*en The 'o0er To $((oint But +ithout /e!ignating The
'er!on $nd The 'er!on $((ointed +a! .otoriou!ly Inco"(etent Or
In!ol*ent
$l!o, $ll The $ct&! Of The Su%!titute Shall Be Void If It I! Counter To The
'rinci(al&! 'rohi%ition To $((oint!.
$rticle 192A > In Ca!e! +here There I! .o 'o0er To $((oint Or The
'er!on $((ointed I! Inco"(etent Or In!ol*ent. The 'rinci(al May Bring $n
$ction $gain!t The Su%!titute +ith Regard! To The O%ligation +hich a! Been
Contracted -nder Su%!titution.
)6ecution On The Rule Of 'riJJ
$rt. 1A11 > Contract! Take )ffect Bet0een The 'artie! Only
In!ofar $! 5ia%ilitie! To Third 'er!on!
$rticle 1924 > $gent I! .ot 'er!onally 5ia%le To The 'arty +ith +ho" e
Contract! > -nle!!
a. e )6(re!!ly Bind! i"!elf In +hich Ca!e The 'rinci(al I! Still 5ia%le.
%. e )6ceed! The JJ Of i! $uthority +ithout <i*ing Such 'arty
Sufficient .otice Of i! 'o0er! But If 'arty I! $0are Then e I!
)!to((ed #ro" Clai"ing Other0i!e
$rt. 1929 > If The $gent Contract! In The .a"e Of The 'rinci(al
)6ceeding The Sco(e Of i! $uthority $nd The 'rinci(al /oe! .ot Ratify The
Contract I! Void, If The 'arty I! $0are Of The JJ Of The 'o0er <ranted By The
'rinci(al.
If The $gent -ndertook To Secure Ratification $nd It I! .ot <i*en, The
$gent I! 5ia%le )*en If The Third 'arty I! $0are Or -na0are.
Re@ui!ite! #or Valid Ratification
1. Contract I! One +hich +ould a*e Been Valid Or 5egal ad The $gent
Been $uthorizedK
3. 'rinci(al Mu!t Be )6i!ting $nd 5egally Co"(etent $t The JJ Of
RatificationK
A. Contract Mu!t 'ur(ort To Be In The 'rinci(al&! BehalfK
B. Sa"e #or"alitie! Re@uired #or Ratification $! Original $uthorizationK
H. 'rinci(al Mu!t a*e #ull 7no0ledge Of The #act!K
$rt. 1922 > If The /uly $uthorized $gent $ct! In $ccordance +ith The
Order Of The 'rinci(al The 'rinci(al Cannot Set -( The Ignorance Of The $gent
$! To Circu"!tance! +hereof e i"!elf +a! On Ought To a*e Been $0are.
).<. $gent +a! To $do(t To $ Situation That I! #ore!een
'rinci(al Cannot Say JJ In $ttri%ute To $gent If e +a! $0are
Rule! Co*ering Third 'er!on!
$rt. 12EE > They Can Con!ider $n $ct 'erfor"ed By The $gent To Be
+ithin The Sco(e Of <ranted $uthority, If It I! +ithin The Ter"! Of The +ritten
'o0er Of $ttorney, )*en If In #act It a! Been )6ceeded $ccording To $n
-nder!tanding Bet0een The 'rinci(al $nd $gent.
$rt. 12EE > a! .o $((lication Of The $gency I! .ot +ritten
On The Other and > -nder $rt. 12E1= $ Third 'er!on Cannot Set -(
The #act That The $gent a! )6ceeded i! 'o0er Of The 'rinci(al a!D
a. Ratified The $ct Or
%. a! )6(re!!ed $ +illingne!! To Ratify
c. To )n!ure That The $gent $ct! +ith i! $uthority
$rt. 12E3 > $ Second 'er!on a! The Right $nd The $gent The O%ligation ToD
a. Re@uire/'re!ent The 'o0er Of $ttorney Or
%. Re@uire/'re!ent The In!truction!
If There $re 'ri*ate Or Secret Order! Or In!truction!, Third 'artie! +ill
.ot Be 're,udiced If They a*e Relied On +hat a! Been Sho0n To The".
$rt. 12EA > 12E9 > Co""i!!ion $gent
$gent I! $ Broker Or $ 'enchant +ho a! The O(tion +ith $ction! In i!
O0n .a"e Or That Of The 'rinci(al #or +hich 'ur(o!e > <ood! $re 'laced In
i! JJJ Of JJ, )ngaged In 'urcha!e $nd Sale Of 'ro(o!ed 'ro(erty.
$rt. 12EA > e Shall Be Re!(on!i%le #or The <ood! Recei*ed By i" In The
Ter"! $nd Condition! $nd $! /e!cri%ed In The Con!ign"ent -nle!! -(on
Recei*ing The" e Should Make $ +ritten State"ent Of The /a"age $nd
/eterioration.
$rt. 12EB > If e andle! <ood! Of The Sa"e 7ind $nd +ork, +hich Belong To
/ifferent O0ner!, e Should /i!tingui!h Then By Counter"ark! $nd /e!ignate
The Merchandi!e Belonging To )ach 'rinci(al.
A. e Cannot Sell The <ood! On Credit +ithout The )6(re!! Or I"(lied
Con!ent Of The 'rinci(al. If e Sell! On Credit, The 'rinci(al Can /e"and
Ca!h But The $gent Shall Be )ntitled To $ny Benefit Or Intere!t 8But 'rinci(al
Can Ratify Sale;. If e Sell! On Credit +ith The $uthority Of The 'rinci(al, e
Shall Infor" The 'rinci(al +ith $ State"ent Of The .a"e! Of The Buyer!.
Should e #ail, The Sale Shall Be /ee"ed To a*e Been Made In Ca!h In!ofar
$! The 'rinci(al I! Concerned Thi! I! To 're*ent $gent #ro" Saying That $
Ca!h Sale +a! On Credit 8$rticle! 12EH $nd 12E:;.
B. If The $gent I! )ntitled To $ <uarantee Co""i!!ion 8In $ddition To The
Ordinary Co""i!!ion; e Shall Bear The Ri!k Of Collection $nd Shall 'ay The
'rinci(al The 'roceed! Of The Sale On The Ter"! $greed -(on +ith The
'urcha!er 8$rticle 12E4;. ere The In!ol*ency Of The /e%tor I! .ot $ /efen!e.
H. If The Co""i!!ion $gent /oe! .ot Collect The Credit! Of i! 'rinci(al
+hen They Beco"e /ue $nd /e"anda%le, e I! 5ia%le #or /a"age! -nle!!
e 'ro*e! e )6erci!ed /ue /iligence 8$rticle 12E9;.
Obligations Of The Principal
1. To Co"(ly Co"(ly +ith $ll O%ligation! That The $gent May a*e
Contracted +ithin The Sco(e Of i! $uthority. $! #or $ny O%ligation Contracted
+hen i! 'o0er I! )6ceeded, The 'rinci(al I! .ot Bound )6ce(t If e Ratifie!
)6(re!!ly Or Tacitly 8$rticle 121E;. If The $gent )6ceeded i! $uthority The
'rinci(al I! Solidarily 5ia%le +ith The $gent If e $llo0ed The 5atter To $ct $! If
e ad #ull 'o0er! 8$rticle 1211;.
3. To $d*ance , If The $gent Re@uire!, The Su"! .ece!!ary To )6ecute
The $gency. If It I! .ot $d*anced, The 'rinci(al Mu!t Rei"%ur!e The $gent
)*en If The Bu!ine!! Or -ndertaking +a! -n!ucce!!ful 'ro*ided, The $gent I!
#ree #ro" $ny #ault Or .egligence, To Include Intere!t #or" The /ay On
+hich The $d*ance I! Made 8$rticle 1213;.
.oteD That -nder $rticle 1219 > The 'rinci(al I! .ot 5ia%le #or )6(en!e!
Incurred By The $gent In 8B; In!tance!D 8$; $gent $cted In Contra*ention Of The
'rinci(al&! In!truction!, -nle!! e Choo!e! To $*ail i"!elf +ith The Benefit!
8B; )6(en!e! $re /ue To The $gent&! #ault 8C; +hen They $re Incurred By
The $gent +ith 7no0ledge That $n -nfa*ora%le Re!ult +ould )n!ue, If The
'rinci(al .ot $0are Thereof 8/; +hen It a! Been Sti(ulated That The $gent
+ould Bear The )6(en!e Or That The 5atter +ould Only Be $llo0ed $ Certain
Su".
A. To Inde"nify The $gent #or /a"age! +hich The )6ecution Of The
$gency May a*e Cau!ed The $gent, +ho I! +ithout #ault Or .egligence
8$rticle 121A;.
To )nforce 'ay"ent Of The Su"! /ue -nder 'aragra(h! 83; $nd 8A;, The
$gent May Retain In 'ledge The Thing! +hich $re The O%,ect Of The $gency
-ntil The 'rinci(al )ffect! Rei"%ur!e"ent $nd 'ay"ent Of The Inde"nity. Thi!
I! $n )6ce(tion To The /uty To /eli*er -nder $rticle 1921.
+hat I! .ature Of The 5ia%ility Of The 'rinci(al In Ca!e! +here 3 Or More
'er!on! a*e $((ointed $n $gent #or $ Co""on Tran!action Or -ndertaking
The 5ia%ility Of The 'rinci(al I! Solidary > #or $ll Con!e@uence! Of The $gency
8$rticle 121H;
+hat a((en! +hen T0o 'er!on! Contract Regard! The Sa"e Thing, One
+ith The 'rinci(al, The Other +ith The $gent
+hen 3 'er!on! Contract +ith Regard! The Sa"e Thing, One Of The" +ith
The $gent, The Other +ith The 'rinci(al $nd The 3 Contract! $re Inco"(ati%le
+ith )ach Other. That Of The 'rior /ate 'referred, -nle!! $rt. 1HBB $((lie!D
Mo*a%le! > #ir!t To Take 'o!!e!!ion In <ood #aith, I""o*a%le > #ir!t In <ood
#aith Record! It In The Regi!try Of 'ro(erty. .o In!cri(tion > #ir!t a*ing
'o!!e!!ion In <ood #aith, $nd In It! $%!ence, 'er!on +ho 're!ent! The Olde!t
Title, 'ro*ided There I! <ood #aith 8$rticle 121:;.
If The $gent $cted In <ood #aith, The 'rinci(al Mu!t Be eld #or /a"age!
Suffered By The 'er!on +ho!e Contract I! Re,ected 8$rticle 1214;. If e I! In
Bad #aith, e $lone Shall Be Re!(on!i%le
+hat $re The Mode! Of )6tingui!hing The Contract Of $gency
The Contract Of $gency I! )6tingui!hed By 8$; Re*ocation 8B; +ithdra0al Of
The $gent 8C; /eath, Ci*il Interdiction, In!anity Or In!ol*ency Of The $gent 8/;
/i!!olution Of The #ir" Or Cor(oration )ntru!ted +ith Or $cce(ting The $gency
8); $cco"(li!h"ent Of The O%,ect Or 'ur(o!e Of The $gency 8#; )6(iration Of
The 'eriod #or +ith The $gency +a! Con!tituted 8$rticle 1219;
Other 7no0n Cau!e! $re Ter"ination By Mutual Con!ent, .o*ation, 5o!! Of
The Su%,ect Matter, Out%reak Of +ar If Incon!i!tent +ith $gency.
Re*ocation
81; Re*ocation I! -ndertaken By The 'rinci(al $t +ill $nd e May Co"(el
The $gent To Return The /ocu"ent )*idencing The $gency. It May Be /one
8$; )6(re!!ly, Or 8B; I"(liedly 8$rticle 123E;
83; I"(lied Re*ocation Take! 'lace +henD 8$; $ .e0 $gent I! $((ointed #or
The Sa"e Bu!ine!! Or Tran!action +hich Beco"e! )ffecti*e On The /ay
.otice Thereof +a! <i*en +ithout 're,udice To $rticle! 1231 $nd 1233 8$rticle
123A;, 8B; +hen The 'rinci(al /irectly Manage! The Bu!ine!! )ntru!ted To The
$gent By /ealing /irectly +ith Third 'er!on! 8$rticle 123B;, $nd 8C; <rant To
$nother $gent Of $ S(ecial 'o0er Of $ttorney Re*oke! $ <eneral 'o0er Of
$ttorney $! Regard! The S(ecial Matter In*ol*ed In The S(ecial 'o0er Of
$ttorney 8$rticle 123:;.
+ho Can Re*oke If There $re T0o Or More 'rinci(al!
If T0o Or More 'rinci(al! a*e <ranted $ 'o0er Of $ttorney #or $ Co""on
Tran!action, $ny One Of The" May Re*oke +ithout The Con!ent Of The Other!
8$rticle 123H;. Thi! I! /ue To Their Solidary 5ia%ility.
)ffecti*ity Of Re*ocation
In $ll In!tance!, The Re*ocation I! )ffecti*e Only +henD 81; .otice a! Been
<i*en To S(ecified 'er!on!, In Ca!e! +here The $gency a! Been )ntru!ted
#or The 'ur(o!e Of Contracting +ith Third 'er!on! 8$rticle 1231;, Or 83; If The
$gent ad <eneral 'o0er!, Re*ocation +ill .ot 're,udice Third 'er!on! +ho
$cted In <ood #aith $nd +ithout 7no0ledge Of The Re*ocation. .otice Of The
Re*ocation In $ .e0!(a(er Of <eneral Circulation I! Sufficient +arning To
Third 'er!on!. 8$rticle 1233;
+hen There Can Be .o Re*ocation
81; It I! Cou(led +ith Intere!t, But $ Mere State"ent That It I! Cou(led +ith
$n Intere!t I! .ot Sufficient > Intere!t In The Su%,ect Mater I! Re@uired
83; In Ca!e! Mentioned -nder $rticle 1234 8$; +hen $ Bilateral Contract
/e(end! On The $gency. )6a"(leD $ Buy! $ 'arcel Of 5and #ro" B By
In!tall"ent. To 'ay Balance, $ $((oint! C To Sell $nother 'ro(erty If e
Cannot 'ay The Balance $nd /eli*er The 'roceed! To B. 8B; If The $gency I! $
Mean! Of #ulfilling $n O%ligation $lready Contracted. )6a"(leD In $ Contract Of
5oan +ith $ Mortgage. If The Mortgagor I! -na%le To 'ay, The Mortgagee I!
Con!tituted $! The Mortgagor&! $ttorney In #act To Sell The 'ro(erty <i*en $!
Security -(on #oreclo!ure8C; $ 'artner I! $((ointed $! $ Managing 'artner
$nd i! Re"o*al I! -n,u!tified -nder $rticle 19EE
8A; +hen There I! $ +ai*er By The 'rinci(al $! To Re*ocation
8B; +hen The 'rinci(al I! O%liged .ot To Re*oke
8H; Re*ocation I! -ndertaken In Bad #aith. ere There I! $ctual Re*ocation
But Third 'artie! +ill .ot Be 're,udiced.
+ithdra0al
It I! The $gent +ho May +ithdra0 #ro" The $gency By <i*ing .otice To The
'rinci(al But If The 'rinci(al Suffer! $ny /a"age /ue To The +ithdra0al, The
$gent Mu!t Inde"nify i" -nle!! > The Ba!i! Of +ithdra0al I! I"(o!!i%ility Of
Carrying Or Continuing The $gency +ithout <ra*e /etri"ent To i"!elf 8$rticle
1239;. o0e*er, /e!(ite .otice $nd +ithdra0al #or $ Valid Rea!on, The $gent
Mu!t Continue To $ct -ntil The 'rinci(al a! ad Rea!ona%le O((ortunity To
Take .ece!!ary Ste(! To .eed The Situation 8$rticle 1232;. Thi! I! To 're*ent
/a"age To The 'rinci(al
/eath Of The 'rinci(al Or The $gent
81; $! $ <eneral Rule, The /eath Of The 'rinci(al )6tingui!he! The $gency
But If .ot So If It a! Been Con!tituted InD 8$; Co""on Intere!t Of The
'rinci(al $nd $gent. )6a"(leD $ Borro0! #ro" B $nd )ntru!t! $n Ite" To B,
+hich e Can Sell If The /e%t I! .ot 'aid, The $gency Shall Re"ain )*en If $
Should /ie. The Co""on Intere!t Being The 'ay"ent Of The 5oan. 8B; The
Intere!t Of $ Third 'er!on +ho a! $cce(ted The Sti(ulation In i! #a*or.
)6a"(leD $ Sell! 'ro(erty To B $nd $((oint! B $! i! $gent To 'ay C #ro"
The 'roceed! Of The Sale. The $gency +ill )6i!t )*en If $ /ie! 8$rticle 12AE;
83; $nything /one By The $gent +ithout 7no0ledge Of The /eath Of The
'rinci(al Or $ny Other Cau!e That +ill )6tingui!h The $gency, I! Valid $nd
Shall Be #ully )ffecti*e +ith Re!(ect To Third 'er!on! +ho May a*e
Contracted +ith i" In <ood #aith 8$rticle 12A1;.
8A; If The $gent /ie!, It )6tingui!he! The Contract Of $gency. Con!e@uently
8$; i! eir! Mu!t .otify The 'rinci(al, $nd 8B; $do(t Mea!ure! $! The
Circu"!tance! May /e"and In The Intere!t Of The 'rinci(al 8$rticle 12A3;.
+hen .otice I! I"(o!!i%le, Con!ign"ent I! The Re"edy.
.ote!r!r.Bu!orgn.'cA
Trust
+hat I! $ Tru!t
It I! $ #iduciary Relation!hi( Concerning 'ro(erty +hich O%lige! The 'er!on
olding It To /eal +ith The 'ro(erty #or The Benefit Of $nother. #ro" The
Beneficiary&! Vie0(oint, It I! The Right To Beneficial )n,oy"ent Of 'ro(erty, The
5egal Title O*er +hich I! Ve!ted In $nother
+hat $re The Characteri!tic! Of $ Tru!t
The Characteri!tic! Of $ Tru!t $re 81; It I! $ #iduciary Relation!hi( 83; It I!
Created By 5a0 Or By $gree"ent 8$rticle 1BB1; 8A; 5egal Title I! eld By One,
+hile )@uita%le/Beneficial Title I! eld By $nother
/i!tingui!hed #ro" Other 5egal Relation!hi(!
1. #ro" <uardian!hi(/)6ecutor!hi(, $ Tru!tee a! 5egal Title, .ot So #or $
<uardian/)6ecutor
3. #ro" $ Sti(ulation 'our $utri 88$ Sti(ulation In $ Contract In #a*or Of $
'er!on .ot $ 'arty To The Contract, The 'artie! Thereto .ot Being -nder $ny
5egal O%ligation To <rant $ Benefit;, 8$; $ Tru!t )6i!t! Becau!e Of $ 5egal
'ro*i!ion Or $ Contract, $ Sti(ulation 'our $utri $ri!e! Only In Ca!e Of
Contract! 8B; $ Tru!t Refer! To S(ecific 'ro(erty Only, $ Sti(ulation 'our $utri
Can Refer To Both S(ecific Thing! Or Other Thing!.
I! Co=O0ner!hi( $ Tru!t
In The Ca!e! Of Sotto V!. Te*e! 89: Scra 1HB; $nd Ca!trillo V!. Ca 81E Scra
HB2;, The Su(re"e Court eld That $ Co=O0ner!hi( I! $ #or" Of Tru!t, +ith
)ach Co=O0ner Being $ Tru!tee #or )ach Of The Other!, Thu! e May .ot
$ny $ct 're,udicial To The Intere!t Of i! Co=O0ner! $nd $n $gree"ent To
're!er*e 'ro(erty In Co=O0ner!hi( I! $n )6(re!! Tru!t.
+ho $re The 'artie! To $ Tru!t
The 'artie! To $ Tru!t $re 81; Tru!tor > The 'er!on +ho )!ta%li!he! The Tru!t
83; Tru!tee > The 'er!on In +ho" Confidence I! Re(o!ed $! Regard! 'ro(erty
#or The Benefit Of $nother 'er!on 8A; Beneficiary > The 'er!on #or +ho!e
Benefit The Tru!t a! Been Created. e I! The FCe!tui Iue Tru!tG. I! 'o!!i%le
To a*e 3 'artie! Only, If The Beneficiary $nd Tru!tor $re One $nd The Sa"e
8$rticle 1BBE;.
+hat $re The )le"ent! Of $ Tru!t
The )le"ent! Of $ Tru!t $reD 81; 'artie! 83; Tru!t 'ro(erty 8Tru!t )!tate Or
Su%,ect Matter Of The Tru!t;
7ind! Of Tru!t!
The 7ind! Of Tru!t! $reD 81; )6(re!! > One Created By The /irect $nd 'o!iti*e
$ct! Of The 'artie! By +riting /eed, +ill Or By +ord! )*idencing $n Intention
To Create $ Tru!t. It I! Sho0n By The Intention Of The Tru!tor Or The 'artie!.
.o 'articular #or" I! Re@uired 83; I"(lied > One Created By O(eration Of 5a0.
The 7ind! Of I"(lied Tru!t! $re 81; Re!ulting Tru!t > +here $ 'er!on Make!
Or Cau!e! To Be Made $ /i!(o!ition Of 'ro(erty -nder Circu"!tance! +hich
Rai!e $n Inference That e /oe! .ot Intend The 'er!on olding Or Taking The
'ro(erty To a*e Beneficial Intere!t. 8$rticle 1BB9; 83; Con!tructi*e Tru!t >
I"(o!ed +here $ 'er!on olding Title To 'ro(erty I! Su%,ect To $n )@uita%le
/uty To Con*ey To $nother On The <round That e Could Be -n,u!tly )nriched
If e +ere 'er"itted To Retain It 8$rt. 1BB4=1BH:;. $! /i!tingui!hed #ro"
Solutio Inde%iti +here So"ething I! Recei*ed +hen There I! .o Right To
/e"and It Or I! -nduly /eli*ered Through Mi!take Or There I! $ 'ay"ent By
Rea!on Of Mi!take In The Con!truction Or $((lication Of $ /ou%tful Or /ifficult
Iue!tion Of 5a0, Title /oe! .ot 'a!!, In $ Con!tructi*e Tru!t, Title 'a!!e!.
$((lication Of 5a0!
.ote That The 'rinci(le! Of The <eneral 5a0 Of Tru!t!, In!ofar $! They $re
.ot Incon!i!tent +ith The Ci*il Code, The Code Of Co""erce, The Rule! Of
Court $nd S(ecial 5a0! $re ere%y $do(ted 8$rticle 1BB3;. +e May $l!o /ra0
#reely #ro" -nited State! Or -nited 7ingdo" 'recedent!.
#or" Of )6(re!! Tru!t!
.o 'articular +ord! $re Re@uired #or The Creation Of $n )6(re!! Tru!t, It
Being Sufficient That $ Tru!t I! Clearly Intended 8$rticle 1BBB;. Con!e@uently,
$n )6(re!! Tru!t I! Created By The /irect $nd 'o!iti*e $ct! Of The 'artie! $!
Manife!ted By So"e +riting Or /eed Or +ill, Or By +ord! )*idencing $n
Intention To Create $ Tru!t.
But .o )6(re!! Tru!t Concerning $n I""o*a%le Or $ny Intere!t Therein May Be
'ro*en By 'arol )*idence 8$rticle 1BBA; o0e*er, If The Tru!t Be I"(lied, It Can
Be 'ro*en By 'arol )*idence 8$rticle 1BH4;

'arol )*idence > If Ter"! Of $n $gree"ent a! Been Reduced To +riting, It I!
Con!idered $! Containing $ll Such Ter"!, Thu!, $! Bet0een 'artie! $nd Their
Succe!!or! .o Ter"! Other Than The +riting I! $llo0ed, )6ce(t 8$; Mi!take I!
Of #act 8B; Mi!take I! Co""on Or Mutual To Both, $nd 8C; )*idence Of The
Mi!take I! Clear $nd Con*incing
ence, $! #ar $! )6(re!! Tru!t! $re Concerned, There I! .o S(ecified #or".
The Tru!t May Be Con!tituted Orally Or In +ritten #or", o0e*er, 81; If $n
)6(re!! Tru!t I! O*er $n I""o*a%le > It Mu!t Be +ritten To Be )nforcea%le But
Only #or )nforcea%ility .ot #or Validity $! The 5a0 /oe! .ot So 'reclude The
Creation Of $n )6(re!! Tru!t Orally. Thi! $rticle Can Thu! Be Con!idered $!
'art Of The Statute Of #raud! 83; By I"(lication, If The Su%,ect I! $ Mo*a%le, It
May Be Con!tituted Orally $nd If So, It I! Valid $nd )nforcea%le

Re@ui!ite! Of $n )6(re!! Tru!t
The Re@ui!ite! Of $n )6(re!! Tru!t $reD 81; $ Co"(etent Tru!tor > One
+ho I! Ca(acitated To Con*ey 'ro(erty 83; $ Co"(etent Tru!tee > One +ho
Can old 'ro(erty $nd )nter Into Contract. .oteD .o Tru!t Shall #ail Becau!e
The Tru!tee $((ointed /ecline! The /e!ignation, -nle!! The Contrary $((ear!
In The In!tru"ent Creating The Tru!t 8$rticle 1BBH;. Thi! $((lie! )*en If Tru!t I!
$lready Su%!i!ting Or The Tru!tee Beco"e! Inca(acitated. The Rea!on Being
That To 'er"it It To #ail +ould Render .ugatory Or .egate The Tru!tor&!
Intention To Create $ Tru!t. The 'ri"ary Con!ideration Being The /i!(o!iton Of
Beneficial Intere!t .ot The $((oint"ent Of Tru!tee. Con!e@uently, $ Court +ill
a*e To $((oint $ Tru!tee -nle!! The Ter"! Of The /ocu"ent 'ro*ide #or
The $((oint"ent Of $ Succe!!or. 8A; $ Co"(etent Beneficiary > One +ho I!
Ca(acitated To Recei*e <ratuitou!ly #ro" The Tru!tor 8.ote Tho!e +ho Cannot
Be /onee! $nd Tho!e +ho Cannot Be $ 5egatee Or /e*i!ee=$rticle! 4A2,
1E34, 1E39, .cc;. .ote That The Beneficiary I! Re@uired To $cce(t The Tru!t To
Make The Tru!t )ffecti*e 8$rticle 1BB:;. The $cce(tance May Be )6(re!! Or
I"(lied Or 're!u"ed Only If .o Onerou! Condition I! I"(o!ed On The
Beneficiary, )6ce(t If There I! 'roof To The Contrary Or e /id .ot $cce(t 8B;
$!certaina%le Tru!t Re! 8H;There Mu!t Be 're!ent $ Clear $nd Co"(lete
/i!(o!ition Of 'ro(erty 8 Mindanao /e*elo("ent $uthority V!. Ca 11A Scra B32;
o0 I! $ Tru!t $d"ini!tered
$ Tru!t I! To Be $d"ini!tered In $ccordance +ith The 'ro*i!ion! Of Rule 29 Of
The Rule! Of Court, +hich Re@uire! The Tru!tee To 81; #ile $ Bond 83; Render
$ True $nd Clear $ccount 8A; Make $n In*entory 8B; Manage $nd /i!(o!e Of
The )!tate #aithfully In $ccordance +ith The 5a0 $nd The Ter"! Of The Tru!t
$gree"ent.
o0 $re )6(re!! Tru!t! )nded
$n )6(re!! Tru!t I! )nded By 81; Mutual $gree"ent 83; )6(iration Of The Ter"
8A; #ulfill"ent Or $ Re!olutory Condition +hich )6tingui!he! The O%ligation 8B;
Reci!!ion Or $nnul"ent 8H; 5o!! Of The Su%,ect Matter 8:; Order Of The Court
84; Merger 89; $cco"(li!h"ent Of The 'ur(o!e
)6a"(le! Of I"(lied Tru!t!
The )nu"eration Of I"(lied Tru!t! /oe! .ot )6clude Tho!e )!ta%li!hed By
<eneral 5a0 But The 5i"itation 5aid /o0n In $rticle 1BB3 That It .ot Be
Contrary To The Ci*il Code, Code Of Co""erce, Rule! Of Court, $nd S(ecial
5a0! Shall Be $((lica%le 8 $rticle 1BB4;.
1. Re!ulting Tru!t!
$. +hen 'ro(erty I! Sold $nd The 5egal )!tate I! <ranted To One 'arty But
The 'rice I! 'aid By $nother #or The 'ur(o!e Of a*ing Beneficial Intere!t
O*er The 'ro(erty. )6a"(leD $ Buy! 'ro(erty #ro" B, But Title I! 'ut In C&!
.a"e. o0e*er, If The Title I! Con*eyed To $ Child > 5egiti"ate Or Illegiti"ate
Of The One 'aying The 'rice, .o Tru!t I! I"(lied, It Being /i!(uta%ly
're!u"ed, That There I! $ <ift In #a*or Of The Child 8$rticle 1BB9;. $l!o, $
/ocu"ent )6(re!!ing $ /ifferent Intent /oe! .ot Create $ Tru!t. )6a"(leD $
'ay! #or $ 5ot But Title I! 'ut In B&! .a"e. If $ I! Sho0n To a*e 'aid
Becau!e e I! 'aying B, There I! .o Tru!t
B. +hen $ /onation I! Made To $ 'er!on But It $((ear! That $lthough
5egal )!tate I! Tran!"itted To /onee, e .e*erthele!! I! )ither To a*e .o
Beneficial Intere!t Or Only 'art Thereof 8$rticle 1BB2;. )6a"(leD Blind Tru!t!
C. +hen 5and 'a!!e! By Succe!!ion To $ny 'er!on $nd e Cau!e! 5egal
Title To Be 'ut In The .a"e Of $nother, $ Tru!t I! )!ta%li!hed By I"(lication Of
5a0 #or The Benefit Of The True O0ner 8$rticle 1BH1;.
/. If T0o Or More 'er!on! $gree To 'urcha!e 'ro(erty $nd By Co""on
Con!ent, 5egal Title I! Taken In The .a"e Of One If The" #or The Benefit Of
$ll, $ Tru!t I! Created By #orce Of 5a0 In #a*or Of The Other! In 'ro(ortion To
The Intere!t Of )ach Re@ui!ite! 8$rticle 1BH3;. Re@ui!ite! $reD 81; T0o Or More
$gree To 'urcha!e 83; There I! Con!ent That One Should Take Title In i!
.a"e 8.ito V!. Ca, 33H Scra 3H1;
). +hen 'ro(erty I! Con*eyed To $ 'er!on In Reliance -(on i! /eclared
Intention To eld It #or, Or Tran!fer It To $nother, Or The <rantor, There I! $n
I"(lied Tru!t In #a*or Of The 'er!on +ho!e Benefit I! Conte"(lated 8$rticle
1BHA;.
3. Con!tructi*e Tru!t!
$. If The 'rice Of The 'ro(erty I! 5oaned Or 'aid By One 'er!on #or The
Benefit Of $nother $nd The Con*eyance I! Made To The 5ender Or 'ayor To
Secure The 'ay"ent Of $ /e%t, $ Tru!t $ri!e! By O(eration Of 5a0 Or #a*or
Of The 'er!on To +ho" The Money I! 5oaned Or #or +ho" It I! 'aid 8$rticle
1BHE;.
B. If $n $%!olute Con*eyance I! Made In Order To Secure The 'erfor"ance
Of $n O%ligation Of The <rantor To0ard The <rantee, $ Tru!t By Virtue Of 5a0
I! )!ta%li!hed. If #ulfill"ent Of The O%ligation I! Offered By The <rantor +hen
It Beco"e! /ue, e May /e"and Recon*eyance Of The 'ro(erty To i"
8$rticle 1BHB;.
C. +hen $ny Tru!tee, <uardian Or Other 'er!on olding $ #iduciary
Relation!hi( -!e! Tru!t! #und! #or The 'urcha!e Of 'ro(erty $nd Cau!e! The
Con*eyance To Be Made To i", $ Tru!t I! )!ta%li!hed By O(eration Of 5a0 In
#a*or Of The 'er!on To +ho" The #und! Belong 8$rticle 1BHH;.
/. If 'ro(erty I! $c@uired Through Mi!take Or #raud, The 'er!on O%taining
It I! By #orce Of 5a0 Con!idered $ Tru!tee Of $n I"(lied Tru!t #or The Benefit
Of The 'er!on #ro" +ho" The 'ro(erty Co"e! 8$rticle 1BH:;. If +hat I!
Concerned I! The $c@ui!ition By #raud Of $n I""o*a%le, It Cannot Be $c@uired
By 're!cri(tion -nder $rticle11AA. $! #ar $! Mo*a%le!, If 'o!!e!!ed Through $
Cri"e, They Can .e*er Be $c@uired Through 're!cri(tion By The Offender

Can Tru!tee $c@uire 'ro(erty Su%,ect Of The Tru!t By 're!cri(tion
The Tru!tee Cannot $c@uire The 'ro(erty Su%,ect Of The Tru!t By 're!cri(tion
-nle!! The Tru!t a! Been Re(udiated. The Re@ui!ite! Of Re(udiation $reD 81;
The Tru!tee a! 'erfor"ed -ne@ui*ocal $ct! $"ounting To The Ou!ter Of The
Ce!tui Iue Tru!t 83; The $ct! Of Re(udiation $re Made 7no0n To The Ce!tui
Iue Tru!t 8A; The )*idence Of Re(udiation $re Clear $nd Conclu!i*e 8Valdez
V!. Olarga , H1 Scra H41;
Related ?uri!(rudence
1. $n $ction #or Recon*eyance Of $ 'arcel Of 5and Ba!ed On $n
I"(lied/Con!tructi*e Tru!t 're!cri%e! In 1E Cear! #ro" Regi!tration Of The
/eed/I!!uance Of Title. Thi! $((lie! Only +hen The 'er!on Seeking
Recon*eyance I! .ot In $ctual 'o!!e!!ion > $! The $ction #or Recon*eyance
I! $ctually $n $ction To Iuiet Title +hich /oe! .ot 're!cri%e. 8SeeD eir! Of
Ol*iga V!. Ca 334 Scra AAE, Vda /e Ca%rera V!. Ca 3:4 Scra AA2, Manangan
V!. Ca, <.R. 11H42B, ?une 1E, 1222;
3. $ Re!ulting Tru!t I! I"(re!cri(ta%le -nle!! Re(udiated 8O&laco V! Co
Cho Chil, 33E Scra :H:;
A. $ Buyer $t $uction Sale To )nforce $ +ido0&! O%ligation old! The
Share Of The Other eir! In Tru!t 8 .oel V!. Ca 3BE Scra 49;
B. 're!cri(ti*e 'eriod Of 1E Cear! #ro" Re(udiation Run! #ro" The
Mo"ent 'o!!e!!ion Beco"e! $d*er!e 8 uang V!. Ca 3A: Scra B3E;.
Recon*eyance Of Regi!tered 5and Ba!ed On $n I"(lied Tru!t I! 1E Cear!
8$r"a"ento V!. C%, 2: Scra 149;
H. $n $ction #or Recon*eyance Ba!ed On $n I"(lied Or Con!tructi*e Tru!t
're!cri%e! In Ten Cear! #ro" The $lleged #raudulent Regi!tration Or /ate Of
I!!uance Of $ Certificate Of Title 8Cri!o!to"o V. <arcia, ?r. B91 Scra BE3; See
'a!cual V Ca, BE2 Scra 1EH, See $l!o S(!. $lfredo V S(!. Borra!, BEB Scra 1BH
Re!ulting Tru!t I! 're!u"ed To a*e Been Conte"(lated By The 'artie!, The
Intention $! To +hich I! To Be #ound In The .ature Of Their Tran!action But
.ot )6(re!!ed In The /eed It!elf. $ Con!tructi*e Tru!t I! Created, .ot By $ny
+ord )*incing $ /irect Intention To Create $ Tru!t, But By O(eration Of 5a0 In
Order To Sati!fy The /e"and! Of ?u!tice $nd To 're*ent -n,u!t )nrich"ent.
$n I"(lied Tru!t +a! Created In #a*or Of Re!(ondent +hen 'etitioner!
Tran!ferred The 'ro(ertie! To Their .a"e! In Violation Of The Tru!t 'laced In
The" $! O*er!eer!. 8Be,oc V!. Ca%rero!, B:B Scra 49;