564 AGENCY AGENCY Agency, concept Agency is a contract whereby a person binds himself render some service or to do something in Tepresentation »1 ° behalf of anotlter, with the consent and authority of the latte , (Art. 1868) Importance of agency Agency enables a person to perform diverse juridical ao, at the same time by enabling him to be constructively present ;. many places, which would not be possible for him tq) physically. The underlying principle of the contract of agency is tp accomplish results by using the services of others ~ to do a gre vanety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he derives his authority. The basis of agency is representation, ie the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effects as if they were personally executed by the principal, By this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence — qui facit per alium facit per se, (Eurotech Industrial Technologies, Inc. vs. Cuizon, G.R. No. 167552, April 23, 2007), ie., he who acts through another, acts by himself. (Bank of the Philippine Islands vs. De Coster, 49 Phil 593; Rallos vs. Felix Go Chan and Sons, 81 SCRA 259) Agency is basically personal, representative, and derivative The authority of the agent to act emanates from the principal: his act is the act of the Jiloria in nature. granted to him by hi: the scope of the authori Inc., G.R. No. 188288, January 16,AGENCY 565 of a cont Bloments tract of agency L Consent, express or impii relationship. plied, of the parties to establish the 2 The object is the execy athird person. “SP Of a juridical act in relation to 3. The agent acts as Tepresentative and not for himself. MY The agent acts within i the scope of his authority. tech Industrial Technologies, Inc. vs Cae pay (Eurotec! Characteristics ofagency — favciavy 1 2. Principal - it can stand by itself, Preparatory - It is a mea y ans by which oth ae nay, be entered into. Y Which other contracts may Consensual ~ It is perfected by mere consent. Onerous ~ It is presumed to be for a compensation, unless there is proof to the contrary. (Art. 1875) Nominate ~ It has a name given to it hy aw. (Art. 1868) Bilateral - The parties are bound reciprocally to each other. : Commutative - The parties give and receive almost equivalent values; hence, there is real fulfillment. Parties to a contract of agency, capacity of the parties 5 Principal - The person represented by the agent and from whom the latter derives his authority, he is the party primarily and originally concerned in the contract of agency. a. Capacity to be a principal Agency being a contract, any person with legal capacity may appoint an agent for any legal purpose whatsoever bv, Fifect if principal is incapacitated If the principal is incapacitated but the agent is capacitated, the contract of agency is566 PMincipal 2 Ineapac rtabed voidable at the instance of the principal. Shou, the agent enter into a contract in behalf of hig. principal, such contract is likewise voida}j* because the real party to such contract js the principal the agent beirg merely an extension the personality of the principal 2. Agent ~ He who acts for and represents the principal ang from whom he derives his authority. a. Capacity to be an agent : A person capable of acting for himself can be an agent of another. Legal capacity is no required for the validity of the agent’s acts which are considered those of the principal since the agent is merely an extension of the personality of the principal. The agent, however, needs t) Possess some mental capacity. scamx vind hines b. Effect if agent is incapacitated uF The contract of agency is voidable lif the agent is incapable of giving consent. While the contract entered into by the agent in behalf of the principal is really that of the principal and which will be valid as long as the principal is not incapacitated, the contract of agency itself is voidable because one of the parties is incapable of giving consent. In case of dispute between the principal and the agent who is incapable, the latter may avail himself of his incapacity as a defense or as a ground to set aside the contract of agency. Acts that may be delegated Any act which one may lawfully do personally may be delegated. However, the following acts may not be delegated: 1 Acts which are personal in nature. ‘& | Acts that are prohibited by law to be delegated. Examples: : 1. The right of a stockholder to vote during stockholders’ meetings may be delegated since this is something thatwo a x ENCY 4d However, # poard c. 25, one can lawfully do, (Sec. 58, Curp. Code) director cannot be represented by proxy during. meetings because this is prohibited by law. (See Se Corp. Code.) The right to vote and to run for public office cannot be & delegated since delegation thereof is prohibited by law where The right to be represented in a marriage ceremony be 3 the principal is a party to the marriage cannot delegated, this act being purely personal. 4 ‘An alien cannot purchase land in the Philippines becau"™ g this is probibited by the Constitution. Accordingly, he cannot delegate such act to a Filipino. What ap alien cannot lawfully do, he may not lawfully do it through another. Relationship between principal and egent ‘ The relation of an agent to his principal is fiduciary since based on trust and confidence. (See Palma vs. Cristobal, 440 itis erino vs. Severino, 44 Phil 343.) 0.G, 67; Sev How agency relationship is created t By appointment This is usually made by giving a person a power of attorney. 2, Byratification ~ / lett 4 it part |henper { } An agency by ratification is created when a person adopts or confirms an act performed by another in his behalf without prior authority. A sells the car of P to B without P’s ame of P. The sale cannot be Example: authority. The sale is in the n: eniorced by B against P. If P ratifies the sale, then he wil! be bound by it. An agency is deemed created between P and B by reason of P’s ratification of the sale. 3. + By estoppel For an agency by estoppel to exist, the following must be established: (a) The principal manif-568 ON Ace, Er ‘representation of the agent's authority or j. allowed the agent to assume such authority; (b) “7 i person in good faith, relied upon such representa. {c) Relying upon such representation, such thirq - has changed his position to his detriment, Bankers Insurance Corp. vs: Keppel Cebu Shipy.. 74 No. 166044, June 18, 2012) rd, «3 Example: , a salesman, has been per... offering goods to P, a store owner. P, however, «0 want t» buy goods from S. In order to avoid g, p{"* ty “You better to talk to A. He is there. He is my ag. tells « is not really P’s agent but his employee. S, beljejj. A is P's agent, transacts with A who buys goods f, a P's behalf. P will be bound by the act of A since he a . S to believe that A is his agent. 8 By necessity ‘An agency by necessity arises when an em, makes it necessary for one to act for another receiving any authority from the latter. W, a wife and mother of a mi nor chy Example: buys necessaries in the name of H, her husband who not been giving them support. An agency by necess,*® created between W as agent, and H as principal ; bound by the purchase made by W. erg iy Kinds of agency L a Express According to form 1) Oral agreement - An oral agency is yaji unless the law requires a specific form. (jr 1869) 2) Written agreement Those that require a special pow of attorney, such as_ thos enumerated under Article 1878 The act performed is ™ enforceable against the principal the power of attorney is not special a)AGBNcY b) When the sale of a piece of land or an interest therein (such aS easement and usufruct) is made through an agent, the authority of the agent must be in writing, otherwise the sale is void. (Art 1874) b. Implied - : following: An agency may be implied from the 1) Acts of the principal : 2) Silence of the principal. 3) Lack of action of the principal. 4) Failure of the principal to repudiate the agency | knowing thai another person is acting in his behalf without authority. (Art 1869) Examples: 1) P'Iearns that A is selling his car in his (P's) : ( name without any authority. P does not do | anything to stop A. Later, A brings the fs / buyer to P who voluntarily accepts the payment and delivers the car to B. An agency is implied from the acts of P. 2) P noticed that the financial reports on his business were being signed by B and not A whom he had appointed as his agent to manage the business. He learned on inquil ith the relatives of A that the latter was seriously ill and that he had turned over the management of the business to | before he became sick. P continued lo receive without any protest or question the reports coming from B and did not designate a new agent or give B a power of attorney. Instead, P allowed B to discharge the functions of a manager for over a year. Here, an implied agency is deemed created by the failure of P to repudiate the agency~~ 570 AGENGy knowing that another person was his behalf without any authority, gerhion of fre ¢ Acting i, 2. According to extent ae - One that comprises : General agency - One tl ‘ all th co business of the principal. (Art. 1876) ie db. Special agency ~ One that comprises one oy More specific transactions. (Art. 1876) 3. According tu authority.conferred a. Agency couched in general terms (general powe, ot attorney) This “comprises~ only act, foe 5 nao administration. This is true even if the Principa, should state: 1) That he withholds no power; or 2) That the agent may execute acts as he may consider appropriate or 3) Even though the agency should authorize A general and unlimited management, (Art, 1877) Power of attorney, concept Power of attorney is a written instrument given by a principal to his agent authorizing the latter to perform specified acts in behalf of the former, which acts, when performed, shall have a binding effect on the principal. This may be a general power of attorney or a special power of attorney. Agency couched in Specific terms - A special power of attorney is required for the performance of the following specific acts (Art. 1878): 1) To make such payments as are not usually considered acts of administration. 2) To effect novations which put an end to obligations already in existence at the time the agency was constituted, 3) To compromise,acency 4) 5) 6) 7) 8) 9) 10) 11) 12) 571 In a cg compr reciprocal concenne ond to litigation, A spec; ot autneretial power to compromise does (Art. 1880) “% submission to arbitration 1 ise, the parties make Ssions to avoid or put an © subi mt questions to arbitration, method wittation JS an extra-ordinary toe Te Settlement by referring a dispute ee ird person known as arbitrator Judginent will substitute that of the Tepresenting his party principal » 2 spécial power of attorney required, a oe To renoune ‘ © the right to 2 Judgment ® To waive obj lections to the venue of an action. To abandon a ; Prescription already acquired. To waive obligations gratuitously. To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration To make gifts, ¢xcept)the following where a general power of attorney is sufficient: a) Customary ones for charity. b) Those made to employees in the business managed by the agent. To loan wr borrow money, except) that no special power of altorney is requifed if the borrowing of money is urgent and indispensable for the preservation of the things which are under administration. To lease any real property to another person for more than a year.572 AGENGy 13) To bind the principal to render some Seryj without any compensation. ee 14) To bind the principal in a contrac, partnership. of 15) To obligate the principal 48 4 guaranto, surety, . 16) “To create or’ convey real rights ie immovable property. et A special power to sell excturts Power to mortgage; a special power mortgage does not include the powe; ¢, sell (Art. 1879) 17) To accept or repudiate an inheritance. 18) To ratify or recognize obligations Contracteg before the agency. 19) Any other act of strict dominion. Kinds of acceptance of agency by the agent 1. = Express - This may be made orally or in vviting, Implied ~ Acceptance by the agent may be implied from: a. His acts which carry out the agency. Db. His silence or inaction according to the circumstances. (Art. 1870) Cases when there is implied acceptance a —_ Between two persons whe are present, ie., they are face to face There is implied acceptance if the principal delivers his power of attorney to the agent and the latter accepts it without any objection. (Art. 1871) Db. Between two persons who are absent Acceptance by the agent can be implied from the silence of the agent in the following cases y When the principal transmits his power of attorney to the agent, and the latterjaBney 573 9 the primey AUorngy” PMACipal transmits his power of ie witho eht and the latter Tout any objection. (Art. This wi o . i will Fequite the agent to at least "Y to digo of the power of Situation qe tiRguish it from the second the business jt authority pertains to habitually enhes which the agent is When th = or telepenneipal eutrusts to him by letter Teapeet ty an, Power of attorney with habitual tt business in which he is Hot reply 2eeked as an agent, and he did 1g72) 7 %© the letter or telegram. — (Art A owl be revoKed gy Announcement. of appointment oo how rhuot Con n agent 1b Uy iep his is usually made through a ied person or persons By special information — 7 letter addressed to a specifi The person a on appointed e consi authorized agent with teapect to the pe eres duly ‘ . © person who receive the special information, (Ari 1873) hes mae By public advertisement - this may be made by Publication m the newspapers, signs, leaflets, posters, or billboards. : The person appointed will be considered as agent with regard to any p person. (Art 1873) Announcement of the revocation of appointment of an agent Le If the announcement of the appointment is by special information, the announcement of the revocation of the appointment shall also be made by special information. (Art. 1873) If the announcement of the appointment is by public advertisement, the announcement of the revocation of the appointment shall also be by public advertisement. (Art 1873)bee AQENGy iii announcement of the appointment was by special informatio | by public advertisement. ; | Basic principl LL The agent must act within the sco} 1881) , The agent may do such acts as may be co It MUN 6 the accomplishment of the purpose of the deem rd eteateh881) The limit of the agent's. authority » considered exceeded should it have bee Hf $e prieC(2nanner more Advantageous to the pri 1 net yard specified by him. (Art, 1882) OIC YET will cauje i Jeno $e damneye, Hat i wil tn behalf of his principal. (rt, 1869 of agency pe of his nuthority 4 rt. ducing Bgency. (Ar, Shall not | 1 performed ing ncipal than y.* thay Effects if an agent acts within the seo) f in behalf of the principal (disclosed priaci pal) 1 ‘The act is valid. 2. ‘The principal alone is liable bound himself. (Art. 1897) Unless the agent expressly Effects if one or both principles are absent lL. Agent acts within the scope of his authority, but in his {agent's} own behalf (undisclosed principal) a. The principal has no right of action against the person with whom the agent has contracted, b. ‘The person with whom the agent contracted has no right of action against the principal. c The agent is the one directly boun one with whom he has transaction were his own ex: involves things belon; id in favor of the contracted as. if the ‘cept when the contract ging to the principal, (Ari 1883) in which case, the principal shall have « right of action against the third person, and the third person against the principal. (Syjuco vs. Syjuco, 40 Phil 634) Not princi This is without prejudice to the actions between the ipal and the agent. (Art. 1883)Examples: a. : outhorizes A to borrow money from a bank. A, Pate: borrows money in his own name and not Bie P. The loan is a contract between the A and ¢ bans. P and the bank shall have no right of action against each other. b. P authorizes A to sell P's computer. A sells the computer in his (A’s) name and delivers it to B. P shall have a right of action against B since the contract involves a thing belonging to him (P). In case B has paid the price but has not yet received the computer, he shall have a course of action against P for the delivery of the computer. Agent acts in excess of the authority of his principal and in the principal's behalf ur a person acts withou’ the authority of another but in the latter’s behalf _ The act is unenforceable against the principal or the person in whose name the contract was entered into: unless the latter ratifies the same. (See Arts. 1317 afid 1403.) Example: A was authorized by P to sell P’s car for at least P100,000.00 cash. A, however, sold the car in the name of P to B for the same price but on credit. B cannot enforce the sale against P.unless P ratifies the contract. A alone will be liable ta.B Agent acts in excess of the authority of his principal and in his own (agent’s) behalf or a person acts without the A vA. authority of another but in his (the former's) own behalf GRE = aX The act is deemed to be thatof the agent himself or of the person acting without authority t The act is) generally valid between the agent acting in excess of authority (or person acting without authority) and the third person. Accordingly, if the agent or such person cannot perform his part of the contract, he shall be liable thereon in his personal capacity. In the case of a cortract of sale, a person may sell in his own name something belonging to another provided576 In the case of a contract of sale, a person may in his own name something belonging to another pro, 5° he can transfer its ownership thereof at the (,. 1d delivery. The act is therefore valid. ‘If he cannot tra, ate such ownership, he can be held liable for brea.) warranty against eviction. (Arts. 1459, 1548) SE ane ict, 4 Example: P is the owner of a he fi with the intention of buying the house and 19 sells the house and lot in his (A’s) name to B without ap, authority from P. The sale is a binding contract between 4 and B. If A cannot transfer the ownership of the gue: and lot at thie time of delivery, then A can be held liable ge breach of warranty against eviction. Obligations of the Agent Obligations of 2 person who declines an agency If a person is appointed as an agent but declines the appointment, he is bound to observe the diligence of a good father ofa family in the custody and preservation of the goods forwarded to him by the owner. (Art, 1885) The owner shall as soon eg practicable either: 1. Appoint an agent, or 2. Take charge of the goods. (Art. 1885) Obligations, in general, of a person who accepts an agency 1. To carry out the agency. 2.- To be liable for damages which, through his non- performance, the principal may suffer. 3. To finish the business already begun on the death of the principal, should delay entail any danger. (Art. 1884) Specific obligations of an agent 1, To advance the necessary funds if there was a stipulation to that effect, when the principal is insolvent. (Art 1886) . —____AGENCY 2» im 577 To act in aceg s Accordance in the execution of toa the instructions of the principal instructions from the cee". _ Ti te absence of specific father of a fami), ® P¥incipal, he sha aid 20K a pal, he shall do all that a good ami wi the business (ayy ay 8 Tequired by the nature of a. Instructions ” Concept; distinguished from authority Insiruet : Principal 10 cia" Tefer to the orders gwen by the which the oo. “ent relating to the manner by to the ated shall be carried out. They refer agent to a given by the principal to his (See 2.6.33, 1ogy nay Carving out the agency by third pene 01201.) They need not be known os s hecaus / ; Binal cate ise they affect only the agent. subject nents on the other hand, refers to the Commies Co ee pommissioned to act. Third persons are bound to : whether an agent is acting within his authority or not Accordingly, they have the right to require the agent to present his authority as written, (See Art. 1900.) Example: P gives a general power of attorney to A to lease P’s apartments to third persons. This is A’s authority. The power of attorney does not indicate the pet with whom A shall transact. But P tells A privately not to lease the apartments. to any foreigner. This prohibition on leasing to a foreigner is a matter between P and A and refers to instruction. Rule if agent acts in accordance with the orders of the principal The principal cannot set up the ignorance of the agent as to circumstances which he himself was, or ought to have been, aware (Art. 1899) Thus, the principal cannot claim the good faith of the agent in case the buyer should lose by eviction the property sold if the principal ought .o have known that there was a rightful claimant to the property~~ AGENcy levy ency if its execution Not to ci out an agency if ‘ manifestly result in loss or damage to the principya 1888) S78 . : if prnapal @ hol Gare of de S Yould (Art ii being a conflict 4. | To be liable for damages if there being / his interest and that of the principal, he should p | own. (Art. 1889) — "This is by reason of the fiduciary nat agency relationship. between wher hig We of an Example: P gives @ special power of attorney tg to sell P’s lot. On meeting with a Prospective buyer who offers a very good price, A sells instead his lot to B. shall be liable for damages to P for preferring his oye interest. 5. Not to borrow the money of the principal withor “ principal’s consent, if the latter has authorized him the principal’s money at interest. (Art. 1890) ut the to lend This is so because the agent may not be a good credit risk. He may not subject himself to the same strict requirements he imposes on prospective borrowers If he has been empowered to borrow may himseif be the lender at the current rate (Art. 1890) money, he of interest 6. To render an accounting of his transactions and to deliver ‘a to the principal whatever he may have received by virtue of Ihaloq nthe agency, even though it .may not be owing to the viral "principal. Any stipulation exempting the agent from the iy b a kung obligation to render an account shall be void. (Art. 1891) Whol gone) Thus, the agent must account and deliver to his Jy 0 0 “principal any excess price and. interest he collects et including those on unauthorized credit sales. z, Agent's liability when he appoints a substitute The following rules shal agent appoints a substitute: a. Agent is not prohibited to ll be observed when the appoint a substituteAGENCY Here, the power of attorney does net expressly authorize or prohibit the appointment 0 a substitute, i.e,, it is silent on this point The agent may appoint a substitu’ However, he shall be responsible for the acts of {Ne substitute. (Art. 1892) The principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted. (Art. 1893) Agent is authorized to appoint a substitute i) If the principal did not designate the person to be appointed as substitute: a) Agent shall be liable if the person he appointed as substitute is notoriously ‘incompetent or insolvent. (Art. 1892) The principal may furthermore bring an action against the substitute with respect to: the obligations which the latter has contracted. (Art. 1893) b) Agent shall not be iiable if the person he appointed as substitute is (net) notoriously incompetent or insolvent, i.e., the substitute is a reasonably prudent man. (See Art. 1892.) The substitute himself will be liable: 2) If the principal designated the person to be appointed as substitute 7 ‘The agent is not responsible for the acts of the substitute even if the latter is notoriously incompetent or insolvent since the agent had no choice as to whom he would appoint as substitute. In this case, the substitute himself will be liable to the principal for his own acts. (See Art. 1892.) Agent is prohibited to appoint a substitute= ACENCy fhe agent cannot appoint a subscitute, | he appoints one, ail the acts of the substituce 5 be void. (Art. 1892) Liability of two or more agents if they have been appcinteg sirmltaneously General rule acts or omissions. (41 Kiability shall be joint Exception: J y shall be soli the same has been agr t. 1894) In this case each of the agents shall be responsible for the following: a For the non-fulfiliment of the agency. b’ For the fault’ or negligence of his fellow agents, except when the latter acted beyond tae scupe of their authority. (Art. 1895) Examples: a. P appointed Al and A2 as his agents to sell his (P's} Toyota car. The appointment did not indicate whether the agents” liabilit: While Al was drunk one day, he alone drove th: car to a prospective buyer, Not being in control of his senses, he caused the car to bump an electric post resulting in damages to the car amoun! P10,000.00. Al alone will be responsible for the payment of the damages of P10,000.00 If both Al and A2 were driving alternately while drunk, and Al, while driving, caused the car to bump an electric post resulting in damages to the car amounting to P10,000.00, each one will be liable for only P5,000.00. This is so because their liability shall only be joint b. _In both cases above, if the liability of the agents as indicated in their authority were solidary, either Al or A2 can be held liable for the whole amount of P10,000.00. c. P appointed Al and A2 to sell P’s Toyota car for 200,000.00 cash. The agents’ appointment indicated that their liability shall be solidary. OneAGENCY 581 day, A1 received a call from a prospective buye: who was interested in buying the car for P200,000.00 but on credit. So Al brought the car to the buyer but along the way he caused the co to bump into an electric post resulting in damages of P10,000.00, At alone shall be liable because he exceeded hig authority since he and A2 were authorized only to sell the car on.cash basis To be liable for interest on the sums he has applied to his own use from the day on which he didi so, and on those which he still owes after the extinguishment of the agency. (art. 1896) Agent's liability if he contracts in the name of the principal General rule: The agent who acts as not be liable to the party with whom he contracts 97 1997) Sy coM repreren de pepe Exceptions: The agent shal! be personally liable in the following cases: a. If he expressly binds himself. (Art. 1897) In, this case, both the agent and the principal shall be liable to the party with whem the agent has contracted b. If he exceeds the limits of his authority without giving such party sufficient notice of his powers. (Art. 1897) (Eurotech Industrial Technologies, Inc vs. Cuizon, supra) 1) Rule if the other party was aware of the agent's acting beyond the limits of his autHoriry a) If the agent did not undertake to Uke wntyacl secure the principal's. ratification, aa the contract shall be void. The btu agent here will not be liable. (Art. 144 pertin \ 1898) My \ b) If the agent undertaok to secure the principal's ratification of the act and \ the principal does not ratify the Je Obnttadt it ynenereing mivcioal582 i. Commission agent i i... | wat nd yer A AGENcy oop same, the agent shall be liable 1898) at c) If the principal ratifies the contract "the coniract shall ve enforceang against the principal. (Art. 1919) —° Rights and obligations of third persons have contracted with an agent—who exceeded hs authority Whe has a) \As lo third persons, an act ig (deemed to have been performed within the scope of the agent's authority, if such aci is wi power of attorney, as wi f the agent has in fact exceeded the limits of his authority accord INE to an understanding between the principal and the agent. (Art. 1909) n the b) A third person cannot set_up the fact that the agent has exceeded hig powers, if the principal has ratified, or has signified his willingness w ratify theagent’s acts. (Art. 190i) c) A third person may require the agent to present his power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. (Art. 1902) To be responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor “by the courts, according to whether the agency was or was not for a compensation. (Art. 1909) Commission agent, concept —583 AGENCY = el A commission agent is one who buys and $1 goods or chattels consigned or delivered to him by hi principal, for a compensation known as commission- 2. Distinctions between a commission agent and a broker A comurission agent maintains a relation not only with his principal and the buyer or seller but also with the property subject matter of the transaction which is placed in his possession and at his disposal. A broker is merely an intermediary between the buyer and the seller and has no relation to the property. He does not acquire either the custody or possession of the thing. His function is to bring together the parties to + the transaction. A commission agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. (Philippine Health Care Providers, Inc. vs. Estrada, G No, 171052, January 28, 2008, citing Tan vs. Gullas, 44 Phil 622) 3. Obligations of @ commission agent a To be responsible for the goods received by him in the terms and conditions and as described in the consignment unless upon receiving them he should make a written statement of the damage” and deterioration suffered by the same. (Art. 1903) b. To distinguish by countermarks goods of the same kind and mark which belong to different owners, and designate the merchandise respective! belonging to each principal. (Art. 1904) c. Authority of commi sion agent to sell on cre General rule: The commission ayeut cannot sell on credit. (Art.1905) Exception: The commission agent c2: on credit only with the express or implied consr: of the principal. (Art. 1905)584 Vian ¢ i | AGENCy 1) Effects if the commission agent ser credit without principal's consent °° on a) ‘The principal may demand from him in cash. Payment b) The commission agent, howe shall be entitled to any ‘interes benefit, which may result from ¢y°" - sale. (Art. 1905) uch 2) ‘Example: P gives a general power of attor, to A to sell P's goods for P10,000.00 ex’ for a commission. A sells the goods 15-day credit term for P11,000.00-t3 6 without authority from P. In this case: a) P may demand the immediate payment of P10,000.00, but when 4 collects the amount of P11,000.09 from B, A’ gets the excess of : P1,000.00; or b) _-P_may ratify the sale on credit, in which case, when A collects the amount of P11,000.00 from B, the said amount shall be accounted in full by A to P. ~ 3) \ Obligation of the commission agent if he is authorized to sell on credit The commission agent who sells on credit must so inform the principal, with statement of the narnes of the buyers. fhe fails to do so, the sale shall be deemed to have been made in cash insofar as the principal is concerned. (Art. 1906) To bear the risk of collection and to pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser if he receives on a sale, in addition to the ordinary commission, another called a guarantee commission. (Art. 1907) Guarantee commission 's also known as del credere commission.AGENCY E : attorney to nPle! P gave a general power of that A wilt {2 S¢ll P's goods. The parties agreed and a guaraniee 2% ordinary commission of 5% BOOdS on credie ge mmission of 10%. A sold P's Collect the sit for P50,000.00. Later, A could not insolvent. In ta cae he customer nee for the oo is case, A will be liable to P commagerice of PS0,C00.00 because as a guarantee Sion agent, he bears the risk of collecting e customer. becom, the price from tt if he does not collect the at the time when. they dable, unless he prov Ae diligence for that purpose. This applies only to an ordinary age 1908) commission Obligations of the Principal a comply wi ali the obligations which the agent ‘may have contracted within the scope of his authority. (Art 1910} OX rong efan’ on 2. To be bound for any obligation wherein the agent has exceeded his power if he ratifies such obligation expressly or tacitly. (Art. 1910) 3. To be solidarily liable with the agent if he allowed the latter to act as though he had full powers when the agent exceeded his authority. (Art. 1911) To advance to the agent the\sums necessary for the executioi the agency should the agent so request. (Art 1912) To reimburse the agent the sums advanced by the latter even if the business or undertaking was not successful provided the agent is tree from all fault. (Art. 1912) The reimbursement shall include interest on the sums advanced from the date on which the advance was made. (Art. 1912)lg Ih AGEN) i | When principal not liable for expenses incurred by the a. , When the agent acted in contravention = principal’s instructions, unless the latter g,'° Wish to avail himself of the benefits derives“ the contract. ard prncinl acy ( titan, \™ b. When the expenses were due to the fauit of, agent. th c When the agent incurred them with knowledge th, an unfavorable result would ensue, if the Pring, a was not aware thereof. Pa d. When it was stipulated that the expenses wouly * borne by the agent, or that the latter Would allowed only a certain sum. (Art. 1918) 6. To indemnify the agent for all damages which , execution of the agency may have caused the latter without fault or negligence on his part. (Art. 1913) : f. Liability when there are two or more principals When two or more persons have appointed ay agent for a common transaction or undertaking, they shal be solidarily liable for all the consequences of the ageng {Art. 1915) Right of retention of agent The agent shall have the right to retain in Pledge the things which are the object of the agency until the principal: 1 Reimburses him for the sums necessary for the executio, of the agency which he had advanced, even if the busines: or undertaking was not successful, provided the agent is free from all fault. 2 Pays him the indemnity for all damages which the execution of the agency may have caused the agent, without fault or negligence on his part. (Art. 1914) Note: The right of retention of the agent is in the nature of leg pledge. Incompatible contracts with agent and Principal 1 Rules in incompatible contracts587 When two persons contract with regard to the same thing, one of them with the agent, and the other with the principal, and the two contracts are incompatible with each other, the following rules shall be observed a. a the thing is a movable - ownership shall belong Oy 7 1) The first possessor in yood faith. 2) In the absence thereof, thi contract with a prior date shall be preferred.—(Arts. T5447, ~ 1916) b. If the thing is an immovable ~ Ownership shall belong to: 1) ‘The first registrant in good faith 2) In the absence thereof, the first_pe in good faith. ° 3), In ‘the absence of both, the onc who itle in good faith. (Art 2 Liability for damages to third person whose contract is rejected in incompatible contracts f a. Agent is liable if he acted in bad faith. b. Principal is liable if the agent acted in good faith (Art. 1917) Extinguishment of Agency Modes of extinguishment of agency 1 By revocation. SS 2. By withdyawal of the agent. 3. By the death, civil interdiction, insanity or insolvency of the principal or o/ the agent a DeathSS 588 AGENCY There is no one to be represented if the principal dies. If itis the agent who dies, there i, no one to represent the principal. b. Civil interdiction A person civilly interdicted is not only in i iy prison. He cannot manage his property or dice - principal con of ix by an act or conveyance inter 11vos In the ght aunrorlt ase of the principal, his acts are restricted. In the case of the agent, he will not be able to carry out the agency because he is deprived of his liberty c. Insanity ‘The principal cannot give his consent if he is insane. An insane agent, on the other hand cannot be expected to carry out the agency. d. _ Insolvency The insolvency of the principal modifies or limits his capacity to act. . The insolvency of the on the other hand, results in his not being agent, he able to effectively carry out the agency becau trust originally reposed upon him is afiected. Note: Under Ait 1323, an offer becomes ineffective upor the death, civil interdiction, insanity, or insolvency of eitner the offerer or the offeree before acceptance is conveyed. Therefore, if the principal dies, is. civilly interdicted, or becomes insane or insolvent, any’ offer previously made by him or his agent becomes ineffective before any acceptance is conveyed to him (principal) o- through his agent. 4. By the dissolution of the firm or corporation which entrusted or accepted the agency This is equivalent to the death of a natural person. 5 By the accomplishment of the object or purpose of the apency There is nothing more to do alter the purpose % the agency is accomplished.re AGENCY 589 By the expiration of the peri vhi ney was 6 constituted. (Art. roy period for which the agency The duration of is limi i the agency is limited to the period agreed upon by the parties, seen revocation by principal L Revocation, concept Revocation refers to th inci : e act of the principal of terminating the agency at will confidence and representation being the foundation of the contract. (See Barretto vs. Sta. Marina, 26 Phil 440.) The principal may revoke the agency at will, and compel the agent to return the document evidencing the agency. (Art. 1920) 2, Who may revoke agency when there are two or more principals When the power of attorney was granted for a common transaction, any one of the principals may revoke the same without the consent of the others. (Art. 1925) This is consistent with the solidary liability of the principals. (See Art. 1915.) 3. Kinds of revocation a. Express ~ When made orally or in writing. b. _ Implied - When revocation can be inferred from the act of the principal as in the following: i) When a new agent is appointed for the same business or transaction, the previous agency is revoked from the day on which notice thereof was given to the former agent. (Art. 1923} Example: P gave a general power of attorney to Al to manage P's building. Later, P gave an exclusive authority to A2 to manage P's building and notified A1 of the giving of such exclusive authority to A2 Al’s authority is impliedly revoked upon the giving of the notice. The_notice nee’ASENC rs indi { Al's authority is b¢, not indicate that ATS t in ye agent on / revoked; otherwise, twill become express revocation. i sacipal »directly manages , ig WML if the principal » direct 2804 “4 what ty Kn 4 tieiness entrusted to the agent, deaj, + directiy with third persons. If the purpose of the principal is inj to assist the agent, the latter's authority | not deemed revoked. Example: P gave @ general power, attorney to A to manage P’s building. Late, P wrote all the tenants of the building 4 transact al! business with hit alone, “4, authority is impliedly revoked. If P goes to the building from times, time to help A in a managing the building ‘A’s authority is not deemed revoked 3) A general power-of-aitorney is revoked oy; _liwited ont special one granted to another Avent, oy regards the special matter involved in ty Jatter. (Art. 1926) Example: P gave a general poiver 9 attorney io Al to manage P's building A: manager, Al’s authority includes, ainony other powers, building administration maintenance, repairs, electrical works Later, F appointed A2, who is an exper electrician, to manage the electrical works of the building. Al’s authority with respec! tu electrical works is impliedly revoked. ty te Spec al one 4. When agency may not be revoked at will a Ifa bilateral contract depemds-typen_the age Example: P sold his lot and buildi ‘or P2,000,000.60 under (he follow down payment’ of P300,000.00; balance P1,200,000.00 to be part in 24 equal monthh installmeots of P50,090.00, The parties st that (1) the transter certificate of title to the. depends upon it with A being obligate Notice 591 building will be delivered to A upon full payment of the balance of the purchase price; and (2) A will be given a general power of attorney to manage the building with his salary of P50,000.00 to be applied to the installments. Here, P cannot revoke the agency at will because a bilateral contract J to pay the nase price and P to deliver the transfer ate of title to the property. filling an obligation pur certif! js a means of full IF the ageney already contrat ed P borrowed P50,000.00 from A. nied A as his agent to © amounts Example! To pay the debt, P appoi collect P's receivables and apply th collected to the debi. P cannot revoke the agency at will, ia partner is appointed manager of a partnc: ship in the conwvact of partnership and his removal [rom the management is unjustifiable, (Art 192’ Removal of a partner appointed as manager in the articles of partnership without justihable reason is an act of novation which wil! require the ent of all the partners including the manage! conse who is sought to be replaced of revocation entrusted for the purpo: pri If the agency has bet contracting with specified persons, the ly notice of the revocation to suc bh pal must give a tim: third persons. Without such notice, said third persons will not be prejudiced, ie., the act done shail be legally operative against the principal. (See Art. 1921.) ie., he was If the agent had general powers, entrusted to contract with the public or any person, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation.SS 592 AGEN cy Notice of revocation in a newspane, i ion is sufficient warnin, 7 neral circulation is sui ma eacenat (Art. 1922) However, the evocation tt any case binding against third persons who a knowledge thereof. Examples: i 4 2. of attorney to A “to sell my 7, ike car to 7? | Later, P wrote a letter to A revit | ¥U', XK the latter’s authority to sell the car to T. P ig a8 or ol give any notice to T of the revocation op ™% nt u authority but had such evocation publisheg i att yo" newspaper of general circulation. T, however, ya” we not able to read the publication. Should A sti set jw a the car to, will Pbe bound by the sale? | ot ad ws) / Answer: Yes, A will still be bound by the NW sale. For the revocation of A's authority be Sa — binding upon T, P should have given a notice ¢ | ® revocation to T since.A’s authority was to transac WW with a specified person.’ The publication Of the revocation of A’s authority was therefore not bindi upon T. T, however, will be bound by the revocatigy ’ if he had read the publication of the revocation f \ A's authority. b. gave a power of attorney 0 A “to sell my Toyota Kee Altis car.” “Later, P revoked A’s authority by giving ot \- the latter a notice of revocation. P also had the ‘ revocation published in a newspaper of genera) circulation. Despite the revocation, A still sold the car to T who was not able to read the publication of {HPO n° the revocation of A’s authority. Will P be bound by ny ¥4, "the sale made by A? Answer: No, because the power given to A was to transact with anybody. Hence, the Publication of the revocation of A’s authority was binding on any person, whether or not they have read such publication. Withdrawal by the agent 1 How withdrawal is madeAGENCY 593 By the agent giving due notice to the principal of his withdrawal. (Art. 1928) Liability /obligation of an agent who withdraws a. The agent must indemnify the principal for any damage suffered by the latter by reason of the withdrawal, unless the agent should base his withdrawal upon. the impossibility of continuing the performance of the agency without grave detriment to himself. (Art. 1928) Thus, the agent will not be liable if the reason for his withdrawal is his failing health. The agent who withdraws must continue to act as such until the principal has had reasonable opportunity to take the necessary steps to meet the situation, even if he withdraws for a valid reason. (art. 1929) py | ntl natorkeia ug (Ging O22 “IA pa Death of the principal When death of principal does not extinguish the agency i. As a general rule, the death of the principal extinguishes tne agency. However, the agency is not extinguished in the following: a. If the agency has been constituted in the common interest of the principal and the agent. Example: P borrowed P50,000.00 from A P delivered his gold bracelet to A by way of pledge and gave A the authority to sell the bracelet if P defaults in the payment of his debt. Should P die before the debt is paid, A remains an agent until his claim 1s collected. If the agency has been constituted in the interest of a third person who has accepted the stipulation in. his favor. (Art. 1930) Example: P sells his lot to A for P100,000.00 which is payable in 10 equal monthly installments of P10,000.00. P appointed A as his agent to make the monthly payment to T, 4 creditor of P, who accepted the stipulation in his594 AGENcy favor, Even if P dies before the payments ay, completed, the agency remains. “This is a case of stipulation pour autrui. acts without knowledge of the death of 2. Validity of agent’s the principal or other cause of extinguishment of the agency : ‘The acts of the agent which are done withou Knowledge of the death of the principal or of any other extinguishes the agency are valid and shai be fully.effective with respect to third persons who may have contracted with him in good faith. (Art. 1931) The agent must finish the business already begun on the death of the principal, should delay entail any danger. (See Art, 1884.) This presupposes that the agent had knowledge of the principal's death. cause which Death of the agent 1. Effect of death of agent on agency ' ‘The death of the agent extinguishes the agency. 2. Duty of agent's heirs a To notify the principal of the agent's death. b. To adopt in the meantime such measures as the * circumstances may demand in the interest of the principal. (Art. 1932) oN ‘Au ) “agency, HW sperahion of