Contract of agency
By the contract of agency, a person binds
himself to render some service or to do
something in representation or on behalf of
another, with the consent or authority of the
latter (NCC, Art. 1868).
NOTE: The essence of agency is
representation. For a Contract of Agency to
exist, it is essential that the principal
consents that the agent shall act on the
former’s behalf and the agent consents so as
to act (Rabuya, 2017).
NATURE, FORMS AND KINDS OF
AGENCY
Characteristics of a contract of agency
1. Bilateral – If it is for compensation,
it gives rise to reciprocal rights and
obligations.
2. Unilateral – If gratuitous, it creates
obligations for only one of the
parties.
3. Nominate – It has its own name.
4. Consensual – It is perfected by mere
consent.
5. Principal – It can stand by itself
without need of another contract.
6. Preparatory – It is entered into as a
means to an end (De Leon, 2010).
7. Generally onerous
8. Representative relation- 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 effect as if they were personally
executed by the principal (Rabuya,
2017).
Classifications of Agency
1. As to manner of creation
1. Express – Agent has been
actually authorized by the
principal, either orally or in
writing (NCC, Art. 1869).
2. Implied– Agency is implied
from the acts of the principal,
from his silence or lack of
action or his failure to
repudiate the agency,
knowing that another person
is acting on his behalf
without authority (NCC, Art.
1869).
2. As to character
1. Gratuitous – Agent receives
no compensation for his
services (Art. 1875).
2. Onerous– Agent receives
compensation for his services
(NCC, Art. 1875).
3. As to extent of business of the
principal
1. General – Agency comprises
all the business of the
principal (NCC, Art. 1876).
2. Special– Agency comprises
one or more specific
transactions (NCC, Art.
1876).
4. As to authority conferred
1. Couched in general terms –
Agency is created in general
terms comprises only acts of
administration (NCC, Art.
1877).
2. Couched in specific terms –
Agency authorizing only the
performance of a specific act
or acts (NCC, Art. 1876).
5. As to nature and effects
1. Ostensible or representative
– Agent acts in the name and
 representation of the principal
(NCC, Art. 1868).
2. Simple or commission –
Agent acts in his own name
but for the account of the
principal (De Leon, 2010).
Parties to a contract of agency
1. Principal – One whom the agent
represents and from whom he derives
his authority; he is the person
represented.
2. Agent – One who acts for and
represents another; he is the person
acting in a representative capacity
(De Leon, 2010).
Essential elements of an agency
1. Consent (express or implied) of the
parties to establish the relationship.
NOTE: A person may express his consent:
a. by contract (NCC, Art. 1868), orally
or in writing;
b. by conduct (NCC, Art. 1869);
c. by ratification (NCC, Art. 1910); or
d. he consent may arise by presumption
or operation of law (De Leon, 2010).
2. The object is the execution of a
juridical act in relation to third
persons.
3. The agent acts as a representative
and not for himself.
4. The agent acts within the scope of
his authority (De Leon, 2010).
Appointment of an Agent
GR: There are no formal requirements
governing the appointment of an agent.
XPN: When the law requires a specific
form. i.e. – when sale of land or any interest
therein is through an agent, the authority of
the latter must be in writing; otherwise, the
sale shall be void (NCC, Art. 1874). (2010
BAR).
Rules on implied acceptance of agency
1. Between persons who are present –
The acceptance of the agency may
also be implied if the principal
delivers his power of attorney to the
agent and the latter receives it
without any objection (NCC, Art.
1871).
2. Between persons who are absent –
The acceptance of the agency cannot
be implied from the silence of the
agent except:
1. When the principal transmits
his power of attorney to the
agent, who receives it without
any objection;
2. When the principal entrusts
to him by letter or telegram a
power of attorney with
respect to the business in
which he is habitually
engaged as an agent and he
did not reply to the letter or
telegram (NCC, Art. 1872).
NOTE: Acceptance by the agent may also
be express or implied from his acts which
carry out the agency, or from his silence
or inaction according to the
circumstances (NCC, Art. 1870).
Nature of the relationship between
principal and agent
It is fiduciary in nature that is based on
trust and confidence (De Leon, 2010).
Qualifications of a Principal
1. Natural or juridical person; and
2. He must have capacity to act.
NOTE: If a person is capacitated to act for
himself or his own right, he can act through
an agent.
Insofar as third persons are concerned, it
is enough that the principal is capacitated.
But insofar as his obligations to his
principal are concerned, the agent must be
able to bind himself.
Kinds of Principal
1. Disclosed principal – At the time of
the transaction contracted by the
agent, the other party knows that the
agent is acting for a principal and of
the principal’s identity.
2. Partially disclosed principal – The
other party knows or has reason to
know that the agent is or may be
acting for a principal but is unaware
of the principal’s identity.
3. Undisclosed principal – The party
has no notice of the fact that the
agent is acting as such for a principal
(De Leon, 2010).
Joint Principals
Two or more persons appoint an agent for a
common transaction or undertaking (NCC,
Art. 1915).
Requisites for solidary liability of joint
principals
1. There are two or more principals.
2. They have all concurred in the
appointment of the same agent.
3. Agent is appointed for a common
transaction or undertaking (De Leon,
2010).
Theory of Imputed Knowledge
The importance of the duty to give
information of material facts becomes
readily apparent when it is borne in mind
that knowledge of the agent is imputed to
the principal even though the agent never
communicated such knowledge to the
principal (De Leon, 2010).
Exceptions to the theory of imputed
knowledge
1. The agent’s interests are adverse to
those of the principal.
2. The agent’s duty is not to disclose
the information, as where he is
informed by way of confidential
information.
3. The person claiming the benefit of
the rule colludes with the agent to
defraud the principal (De Leon,
2010).
NOTE: The theory of imputed knowledge
ascribes the knowledge of the agent to the
principal, not the other way around. The
knowledge of the principal cannot be
imputed to his agent (Sunace International
Management Services, Inc. v. NLRC, G.R.
No. 161757, January 25, 2006).
Kinds of Agents
1. Universal agent – employed to do
all acts which the principal may
personally do, and which he can
lawfully delegate to another the
power of doing.
2. General agent – employed to
transact all business of the principal,
or all the business of a particular
kind or in a particular place, do all
acts connected with a particular
trade, business or employment.
3. Special or particular agent –
authorized to do act in one or more
specific transactions or to do one or
more specific acts or to act upon a
particular occasion (De Leon, 2010).
Rule with regard to the execution of the
agency
GR: The agent is bound by his acceptance to
carry out the agency, in accordance with the
instruction of the principal and is liable for
damages which, through his non-
performance, the principal may suffer (NCC,
Arts. 1884 & 1887).
XPN: If its execution could manifestly result
in loss or damage to the principal (NCC,
Art. 1888).
Responsibility of two or more agents
appointed simultaneously
GR: Jointly liable.
XPN: Solidarity has been expressly
stipulated. Each of the agents becomes
solidarily liable for:
1. The non-fulfilment of the agency
2. Fault or negligence of his fellow
agent
XPNs to the XPN:
1. When one of the other agents
acts beyond the scope of his
authority – Innocent agent is
not liable.
2. When the fault or negligence
of his fellow agents acted
beyond the scope of their
authority – Innocent agent is
not liable (NCC, Art. 1895).
Instances when the agent may incur
personal liability
1. Agent expressly bound himself.
2. Agent exceeds his authority
3. Acts of the agent prevent the
performance on the part of the
principal
4. When a person acts as agent without
authority or without a principal.
5. A person who acts as an agent of an
incapacitated principal unless the
third person was aware of the
incapacity at the time of the making
of the contract (De Leon, 2010).
Presumption of contract of agency
GR: Agency is not presumed.
The relation between principal and agent
must exist as a fact. Thus, it is held that
where the relation of agency is dependent
upon the acts of the parties, the law makes
no presumption of agency, and it is always a
fact to be proved, with the burden of proof
resting upon the person alleging the agency
to show, not only the fact of its existence,
but also its nature and extent.
XPNs:
 1. Operation of law;
2. To prevent unjust enrichment (De
Leon, 2010).
Agency by necessity
Agency cannot be created by necessity.
What is created instead is additional
authority in an agent appointed and
authorized before the emergency arose. By
virtue of the existence of an emergency, the
authority of an agent is correspondingly
enlarged in order to cope with the exigencies
or the necessities of the moment (De Leon,
2010).
Requisites for the additional authority of
agent in cases of necessity
1. Real existence of emergency;
2. Inability of the agent to communicate
with the principal;
3. Exercise of additional authority is for
the principal’s protection; and
4. Adoption of fairly reasonable means,
premises duly considered.
Rule regarding double agency
GR: It is disapproved by law for being
against public policy and sound morality.
XPN: Where the agent acted with full
knowledge and consent of the principals.
Acts that a principal may delegate to his
agent
GR: What a man may do in person, he may
do thru another.
XPNs:
1. Personal acts
2. Criminal acts or acts not allowed by
law (De Leon, 2014).
Q: A granted B the exclusive right to sell
his brand of Maong pants in Isabela, the
price for his merchandise payable within
60 days from delivery, and promising B a
commission of 20% on all sales. After the
delivery of the merchandise to B but
before he could sell any of them, B’s store
in Isabela was completely burned without
his fault, together with all of A's pants.
Must B pay A for the lost pants? Why?
(1999 BAR)
A: The contract between A and B is a sale
not an agency to sell because the price is
payable by B upon 60 days from delivery
even if B is unable to resell it. If B were an
agent, he is not bound to pay the price if he
is unable to resell it. As a buyer, ownership
passed to B upon delivery and, under Art.
1504, the thing perishes for the owner.
Hence, B must still pay the price.
Proving the existence of principal-agent
relationship through mere representation
Mere representation of an alleged agent is
not sufficient to prove the existence of a
principal-agent relationship. The
declarations of the agent alone are generally
insufficient to establish the fact or extent of
agency. It is a settled rule that the persons
dealing with the assumed agent are bound
at their peril, if they would hold the
principals liable, to ascertain not only the
fact of agency but also the nature and
extent of authority, and in case either is
controverted, the burden of proof is upon
them to establish it (Sps. Yu v. Pan
American World Airways, Inc., G.R. No.
123560, March 27, 2000).
Q: A foreign manufacturer of computers
and a Philippine distributor entered into
a contract whereby the distributor agreed
to order 1,000 units of the manufacturer's
computers every month and to resell them
in the Philippines at the manufacturer's
suggested prices plus 10%. All unsold
units at the end of the year shall be
bought back by the manufacturer at the
same price they were ordered. The
manufacturer shall hold the distributor
free and harmless from any claim for
defects in the units. Is the agreement one
for sale or agency? (2000 BAR)

A: The contract is one of agency not sale.

The notion of sale is negated by the
following indicia: (1) the price is fixed by
the manufacturer with the 10% mark-up
constituting the commission; (2) the
manufacturer reacquires the unsold units at
exactly the same price; and (3) warranty for
the units was borne by the manufacturer.
The foregoing indicia negate sale because
they indicate that ownership over the
units was never intended to transfer to
the distributor.
POWERS

Kinds of agency as to extent of powers

conferred

An agency may be couched in:

1. General terms – It is one which is

created in general terms and is
deemed to comprise only acts of
administration (NCC, Art. 1877).
2. Specific terms – It is necessary to
perform any act of strict ownership
(De Leon, 2010).

Instances when the act of an agent is

binding to the principal

1. When the agent acts as such without

expressly binding himself or does not
exceed the limits of his authority
(NCC, Art. 1897).
2. If principal ratifies the act of the
agent which exceeded his authority
(NCC, Art. 1898).
3. Circumstances where the principal
himself was, or ought to have been
aware (NCC, Art. 1899).
4. If such act is within the terms of the
power of attorney, as written (NCC,
Arts. 1900&1902).
5. Principal has ratified, or has signified
his willingness to ratify the agent’s
act (NCC, Art 1901).

Effects of the acts of an agent

1. With authority
1. In principal’s name – Valid
2. In his own name – Not
binding on the principal;
agent and stranger are the
only parties, except regarding
things belonging to the
principal or when the
 principal ratifies the contract
or derives benefit there from.
2. Without authority
1. In principal’s name –
Unenforceable but may be
ratified, in which case, may
be validated retroactively
from the beginning.
2. In his own name – Valid on
the agent, but not on the
principal.
Rule as to when the principal is not bound
by the act of the agent
1.GR: When the act is without or beyond
the scope of his authority in the
principal’s name.
XPNs:
1. Where the acts of the principal have
contributed to deceive a 3rd person
in good faith.
2. Where the limitation upon the power
created by the principal could not
have been known by the 3rd person.
3. Where the principal has placed in the
hands of the agent instruments
signed by him in blank.
4. Where the principal has ratified the
acts of the agent.
2. GR: When the act is within the scope of
the agent’s authority but in his own name.
XPN: When the transaction involves things
belonging to the principal (NCC, Art. 1883).
NOTE: The limits of the agent’s authority
shall not be considered exceeded should it
have been performed in a manner more
advantageous to the principal than that
specified by him.
RIGHTS OF AGENTS
Instances when the agent may retain in
pledge the object of the agency (Legal
Pledge)
1. If principal fails to reimburse the
agent the necessary sums, including
interest, which the latter advanced
for the execution of the agency
(NCC, Art. 1912).
2. If principal fails to indemnify the
agent for all damages which the
execution of the agency may have
caused the latter, without fault or
negligence on his part (NCC, Art.
1913).
Rule where two persons deal separately
with the agent and the principal
If the two contracts are incompatible with
each other, the one of prior date shall be
preferred. This is subject however to the rule
on double sale under Art. 1544 of the NCC.
NOTE: Rules of preference in double sale
1. Personal property – possessor in
good faith
2. Real property
1. Registrant in good faith
2. Possessor in good faith
3. Person with the oldest title in
good faith (NCC, Art. 1544).
If agent acted in good faith, the principal
shall be liable for damages to the third
person whose contract must be rejected. If
agent is in bad faith, he alone shall be liable
(NCC, Art. 1917).
A person acting as an agent cannot escape
criminal liability by virtue of the contract of
agency
The law on agency has no application in
criminal cases. When a person participates
in the commission of a crime, he cannot
escape punishment on the ground that he
simply acted as an agent of another party
(Ong v. CA, G.R. No. 119858, April 29,
2003).

An agent cannot maintain an action against

persons with whom they contracted on
behalf of his principal.

Agents are not a party with respect to that

contract between his principal and third
persons. As agents, they only render some
service or do something in representation or
on behalf of their principals. The rendering
of such service did not make them parties to
the contracts of sale executed in behalf of
the latter.

The fact that an agent who makes a contract

Scope of the agent’s authority as to third
for his principal will gain or suffer loss by
persons
the performance or non-performance of the
contract by the principal or by the other
It includes not only the actual authorization
party thereto does not entitle him to maintain
conferred upon the agent by his principal but
an action on his own behalf against the other
also that which is apparent or impliedly
party for its breach.
delegated to him (De Leon, 2010).
An agent entitled to receive a commission
Q: When is a third person required to
from his principal upon the performance of a
inquire into the authority of the agent?
contract which he has made on his
principal's account does not, from this fact
A:
alone, have any claim against the other party
for breach of the contract, either in an action
1. Where authority is not in writing–
on the contract or otherwise.
Every person dealing with an
assumed agent must discover upon
An agent who is not a promisee cannot
his peril, if he would hold the
maintain an action at law against a purchaser
principal liable, not only the fact of
merely because he is entitled to have his
the agency but the nature and extent
compensation or advances paid out of the
of the authority of the agent.
purchase price before payment to the
2. Where authority is in writing – 3rd
principal (Uy v. CA, G.R. No. 120465,
person is not required to inquire
September 9, 1999).
further than the terms of the written
power of attorney.
EXPRESS v. IMPLIED
AGENCY ---
NOTE: A third person with whom the agent
wishes to contract on behalf of the principal
may require the presentation of the power of
attorney or the instructions as regards the
agency (NCC, Art. 1902).
---
Q: When may the actual or apparent
authority of the agent bind the principal?
A: The principal is bound by the acts of the
agent on his behalf, whether or not the third
person dealing with the agent believes that
the agent has actual authority, so long as the
agent has actual authority, express or
implied.
---
Doctrine of Apparent Authority
The principal is liable only as to third
persons who have been led reasonably to
believe by the conduct of the principal that
such actual authority exists, although none
has been given (De Leon, 2014).
AGENCY BY ESTOPPEL
It is when one leads another to believe that a
certain person is his agent, when as a matter
of fact such is not true, and the latter acts on
such misrepresentation, the former cannot
disclaim liability, for he has created an
agency by estoppel (Paras, 1969).
1. Estoppel of agent –One professing to
act as agent for another may be
estopped to deny his agency both as
against his asserted principal and the
third persons interested in the
transaction in which he engaged.
2. Estoppel of principal
1. As to agent – One who
knows that another is acting
as his agent and fails to
repudiate his acts, or accepts
the benefits, will be estopped
to deny the agency as against
the other.
2. As to sub-agent – To estop
the principal from denying
his liability to a third person,
he must have known or be
charged with knowledge of
the fact of the transaction and
the terms of the agreement
between the agent and sub-
agent.
3. As to third persons – One
who knows that another is
acting as his agent or
permitted another to appear
as his agent, to the injury of
third persons who have dealt
with the apparent agent as
such in good faith and in the
exercise of reasonable
prudence, is estopped to deny
the agency.
3. Estoppel of third persons – A third
person, having dealt with one as
agent may be estopped to deny the
 agency as against the principal,
agent, or third persons in interest.
4. Estoppel of the government – The
government is not estopped by the
mistake or error on the part of its
agents.

Q: In an expropriation case between RP and

several property owners in Mandaluyong for
construction of the EDSA-Shaw Boulevard
Overpass Project, decision was rendered
against the RP. The RP through the OSG
received the decision on October 7, 2002 but
it was only October 20, 2003 that RP filed a
petition for certiorari. It resorted to an
independent civil action because it failed to
file within the 15-day reglementary period.
Is the Republic bound and put in estoppel by Commission agent
the gross negligence/mistake of its
agent/former counsel? He is one engaged in the purchase and sale
of personal property for a principal, which,
A: While the Republic or the government is for this purpose, has to be placed in his
usually not estopped by the mistake or error possession and at his disposal.
on the part of its officials or agents, the
Republic cannot now take refuge in the rule Broker
as it does not afford a blanket or absolute
immunity. Our pronouncement in Republic He is a middleman or intermediary who in
v. CA is instructive: the Solicitor-General behalf of others and for a commission or fee
may not be excused from its shortcomings negotiates contracts/transactions relating to
by invoking the doctrine as if it were some real or personal property.
magic incantation that could benignly, if
arbitrarily, condone and erase its errors. NOTE: Distinguished from an agent: An
agent is authorized to enter into judicial acts
The rule on non-estoppel of the government in behalf of the principal but a true broker is
is not designed to perpetrate an injustice. In merely an intermediary between the parties
general, the rules on appeal are created and and he has no power to enter into a contract
enforced to ensure the orderly administration in behalf od any of the paries (Pacific
of justice. The judicial machinery would run Commercial Co. v. Yatco, 68 Phil. 398,
aground if late petitions, like the present 1939).
one, are allowed on the flimsy excuse that
the attending lawyer was grossly lacking in Rules
vigilance (Leca Realty Corp. v. Republic,
G.R. Nos. 155605 & 160179, September 27, 1. Efficient and procuring cause – a
2006). principle in the law on agency whereby the
broker, to be entitled to compensation, must
Implied agency v. Agency by estoppel
be the efficient agent or procuring cause of
the sale;
2. Ready-willing-and-able Rule – a principle
which states that for a broker to be entitled
to commission, he must provide a person
who is ready, willing and able both to accept
and live up to the terms offered by his
principal (Albano, 2013).
3. Procuring Cause - Procuring cause is
meant to be the proximate cause. The term
procuring cause, in describing a brokers
activity, refers to a cause originating a series
of events which, without break in their
continuity, result in accomplishment of
prime objective of the employment of the
broker producing a purchaser ready, willing
and able to buy real estate on the owners
terms. A broker will be regarded as the
procuring cause of a sale, so as to be entitled
to commission, if his efforts are the
foundation on which the negotiations
resulting in a sale are begun. The broker
must be the efficient agent or the procuring
cause of the sale. The means employed by
him and his efforts must result in the sale.
He must find the purchaser, and the sale
must proceed from his efforts acting as
broker (Medrano, et. al. v. CA, et. al., G.R.
No. 150678, February 18, 2005).
Factorage
It is the compensation of a factor or
commission agent.
Ordinary commission
It is the compensation for the sale of goods
which are placed in the agent’s possession or
at his disposal.
Guarantee commission (2004 BAR)
It is the fee which is given in return for the
risk that the agent has to bear in the
collection of credits.
The purpose of the guarantee commission is
to compensate the agent for the risks he will
have to bear in the collection of the credit
due the principal (De, Leon, 2014).
Del credere agent
He is the agent who guarantees payment of
the customer’s account in consideration of
the commission (De Leon, 2014).
A del credere agent may sue in his name for
the purchase price in the event of non-
performance by the buyer (De Leon, 2014).
AGENCY COUCHED IN GENERAL
TERMS
It is one which is created in general terms
and is deemed to comprise only acts of
administration (NCC, Art. 1877).
Acts of administration
Refers to those acts which do not imply the
authority to alienate for the exercise of
which an express power is necessary (De
Leon, 2014).
NOTE: Payment is an act of administration
when it is made in the ordinary course of
management (Art. 1878; De Leon, 2014).
The making of customary gifts for charity,
or those made to employees in the business
managed by the agent are considered acts of
administration (NCC, Art. 1878; De Leon,
2014).
---
Q: P granted to A a special power to
mortgage the former’s real estate. By virtue
of said power, A secured a loan from C
secured by a mortgage on said real estate. Is
P personally liable for said loan?
A: NO. A special power to mortgage
property is limited to such authority to
mortgage and does not bind the grantor
personally to other obligations contracted by
the grantee in the absence of any ratification
or other similar act that would estop the
grantor from questioning or disowning such
other obligations contracted by the grantee.
---
AGENCY REQUIRING SPECIAL POWER
OF ATTORNEY
Special power of attorney (SPA)
It is an instrument in writing by which one
person, as principal, appoints another as his
agent and confers upon him the authority to
perform certain specified acts or kinds of
acts on behalf of the principal with a
primary purpose to evidence agent’s
authority to third parties with whom the
agent deals (De Leon, 2014).
Intervention of a notary public in the validity
of an SPA
GR: A power of attorney is valid although
no notary public intervened in its execution
(Barretto v. Tuason, G.R. Nos. L- 36811,
36827, 36840, 36872, March 31, 1934).
XPN: When SPA is executed in a foreign
country, it must be certified and
authenticated (Sec. 24, Rule 132, Rules of
Court).
NOTE: The failure to have the special power
of attorney (executed in a foreign country)
authenticated is not merely a technicality – it
is a question of jurisdiction. Jurisdiction
over the person of the real party-in-interest
was never acquired by the courts (Ibid.).
A special power of attorney is required
(1992, 2004 BAR)
1. To create or convey real rights over
immovable property.
2. To enter into any contract by which
the ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration.
3. To loan or borrow money, unless the
latter act be urgent and indispensable
for the preservation of the things
which are under administration.
4. To lease any real property to another
person for more than one year.
5. To make such payments as are not
usually considered as acts of
administration.
6. To obligate principal as guarantor or
surety.
7. To bind the principal to render some
service without compensation.
8. To bind the principal in a contract of
partnership.
9. To ratify obligations contracted
before the agency.
10. To accept or repudiate an
inheritance.
11. To effect novation which put an end
to obligations already in existence at
the time the agency was constituted.
12. To make gifts, except customary
ones for charity or those made to
employees in the business managed
by the agent.
13. To compromise, to submit questions
to arbitration, to renounce the right to
appeal from a judgment, to waive
 objections to the venue of an action
or to abandon a prescription already
acquired.
14. Any other act of strict dominion.
15. To waive an obligation gratuitously
(NCC, Art. 1878).
Limitations to a special power of attorney
1. A special power to sell excludes the
power to mortgage (NCC, Art.
1879).
2. A special power to mortgage does
not include the power to sell (Ibid).
3. A special power to compromise does
not authorize submission to
arbitration (NCC, Art. 1880).
NOTE: The scope of the agent’s authority is
what appears in the written terms of the
power of attorney. While third persons are
bound to inquire into the extent or scope of
the agent’s authority, they are not required
to go beyond the terms of the written power
of attorney. Third persons cannot be
adversely affected by an understanding
between the principal and his agent as to the
limit of the latter’s authority. In the same
way, third persons need not concern
themselves with instruction given by the
principal to his agent outside of the written
power of attorney (Siredy Enterprises, Inc.
v. CA, G.R. No. 129039, September 27,
2002).
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Q: X was the owner of an unregistered
parcel of land in Cabanatuan City. As she
was abroad, she advised her sister Y via
overseas call to sell the land and sign a
contract of sale on her behalf. Y thus sold
the land to B1 on March 31, 2001 and
executed a deed of absolute sale on behalf of
X. B1 fully paid the purchase price. B2,
unaware of the sale of the land to B1,
signified to Y his interest to buy it but asked
Y for her authority from X. Without
informing X that she had sold the land to
B1, Y sought X for a written authority to
sell. X e-mailed Y an authority to sell the
land. Y thereafter sold the land on May 1,
2001 to B2 on monthly installment basis for
two years, the first installment to be paid at
the end of May 2001. Who between B1 and
B2 has a better right over the land? Explain.
(2010 BAR)
A: B-2 has a better title. This is not a case of
double sale since the first sale was void. The
law provides that when a sale of a piece of
land or any interest therein is through an
agent, the authority of the latter shall be in
writing; otherwise, the sale shall be void
(NCC, Art. 1874). The property was sold by
Y to B1 without any written authority from
the owner X. Hence, the sale to B1 was
void.
AGENCY BY OPERATION OF LAW
Instances where an agency is created by
operation of law
1. When the agent withdraws from the
agency for a valid reason, he must
continue to act until the principal has
had a reasonable opportunity to take
the necessary steps like the
appointment of a new agent to
remedy the situation caused by the
withdrawal (NCC, Art. 1929).
2. In case a person declines an agency,
he is bound to observe the diligence
of good father of the family in the
custody and preservation of the
goods forwarded to him by the
owner until the latter should appoint
an agent (NCC, Art. 1885).
NOTE: The law reconciles the
interests of the agent with those of
the principal, and if it permits the
withdrawal of the agent, it is on the
condition that no damage results to
the principal, and if the agent desires
to be relieved of the obligation of
making reparation when he
withdraws for a just cause, he must
continue to act so that no injury may
be caused to the principal (De Leon,
2010).