a.

Ownership of an alien of a land in the country

CHAPTER 1 NATURE, FORM, AND KINDS OF AGENCY through a Filipino agent is against the law (Article
(1868 – 1884) 12 sec. 3, 7)
b. Persons prohibited from acquiring property
1868 – Definition of Agency because of their relation with the persons under
their charge 1491
Five Characteristics of Agency:
1. Consensual Nature of Relations Between Agent and Principal
2. Principal
3. Nominate 1. Fiduciary in Nature (based on trust and
4. Unilateral confidence)
5. Preparatory 2. Agent estopped from asserting adverse interest to
the principal
Five Essential Elements of Agency: 3. Agent can’t act for an adverse party (unless he acts
1. Consent with the knowledge and consent of both)
2. Object 4. Agent must not use or disclose secret information
3. Representative
4. Acted within Authority Agency Distinguished from the Following Contracts:
5. Competent to be a principal and agent
1. Loan
Agency character in Jurisprudence: 2. Lease of Service
3. Independent Contact
1. Personal 4. Partnership
2. Representative 5. Negotiorum Gestio
3. Derivative 6. Brokerage
7. Sale
Capacity Requirement:
1869 – Kinds of Agency
1. Principals – Any person who is capacitated before
the eyes of the law (1327; 1329) Kinds of Agency are differentiated from the following
2. Agents – No need to possess full capacity, as long general denominations:
as not totally incapacitated; Must be competent to
bind himself 1. Creation
2. Character
Two General Acts that can’t be delegated to agents: 3. Extent of Business Covered
4. Authority Conferred
1. Personal Acts – if personal performance is required by 5. Nature and Effects
law or public policy or the agreement of the parties, the
doing of the act by a person on behalf of another does not 1870 Form of Acceptance of Agent
constitute performance by the latter.
1. Express
Ex: 2. Implied from his acts which carry out the agency
a. Right to vote during an election in a corporation (subdivided to 1871 and 1872)
under section 25 of the Corporation Code 3. Silence
b. Making of a will pursuant to Art. 784 4. Inaction according to the circumstances
c. Statements which are required to be done
personally 1871 – Acceptance between present persons (personal
d. A member of the board of directors acting in proxy delivery of Principal)
capacity B.P. 68
e. An agent can’t delegate to sub-agent performance 1872 – Acceptance when absent (transmittal only of the
of acts where he was appointed to do in person Principal)
1892 – 1893
1. When Principal transmits power of attorney and it
2. Criminal Acts or Acts Not Allowed by Law – An attempt was received without objection
to delegate to another authority to do an act which, if done 2. When Principal entrusts by letter or telegram a
by the principal would be illegal, is void. power of attorney to the agent with which he was
habitually engaged in and did not reply to it
Ex:
1873 – Communication or Giving of Notice of Agency
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 Agency couched in general terms grants only acts of
1. By way of special information, the person administration even if the principal would state:
appointed as agent is considered such with
respect to the person to whom it was given; or 1. He withholds no power from the exercise of the
2. If by public advertisement, the agent is agent
considered as such with regard to any person. 2. Agent may execute acts appropriate to carry out
Public advertisement may be made in any form the agency
(newspaper, radio, posters, billboards) 3. Authorizes a general or unlimited management

Agency presumed to exist whether there is actually an Acts of Administration is a question of fact, because the
agency or not agency relationship sometimes exists for a specific
business, that, even if it were required of the agent to
Manner of revocation us be done in the same manner produce an SPA, an act may done not as act of strict
it was conferred. dominion but mere act of administration

1874 – sale of piece of land without authority in Ex:

writing is void a. Person employed to sell goods in a retail store
may sell the goods without need of a special
unenforceable, not necessarily void – Article 1403 2 (e) power of attorney because the ‘selling’ is the act of
[need for proof through written, otherwise unenforceable] administration
b. Attorney-in-fact authorized to pay debts and
1875 – Agency Presumed for Compensation employ services of a lawyers to defend the
principal’s interest impliedly authorized to pay for
1876- Kind of agency as to extent of business covered attorney’s fees for services

Three Classifications of Agent: 1878 – SPECIAL POWER OF ATTORNEY

1. Universal agent – authorized to do all acts that the a. Payment (1232)

principal may personal do, and which he can lawfully b. Novation
delegate to another the power of doing, presumed to have c. Compromise (2028) (arbitration 2042) and the
universal authority three waivers
d. Waive obligation gratuitously
2. General agent – authorized to transact all the business of e. Sale of immovable
his principal in relation to a particular trade, business or f. Make gifts, other than customary ones (or gifts to
employment employees)
g. Loan
3. Special Agent – one authorized to act in one or more h. Lease more than a year
specific transactions/ particular occasion only i. Gratuitous service
j. Contract of Partnership
Special types of Agent: k. Obligation principal as guarantor or surety
l. Create or convey real rights over immovable
1. Attorney at law – represents client in legal matters property without special power
2. Auctioneer – business is to sell property for others m. Accept or repudiate an inheritance
3. Broker – one whose business is to act as n. Ratify obligations contracted before the agency
intermediary between two parties such as o. Strict Dominion
insurance and real estate brokers
4. Factor – one whose business is to receive and sell 1879 – Vice versa rule on mortgage and sale through
goods for a commission (entrusted with agent
possession)
5. Cashier in Bank – represents a banking institution 1880 – exclusion of arbitration from power to
in its financial transactions compromise
6. Attorney-in-fact – given authority to do a
particular act not of legal character. 1881 – definition of authority of agent

1877 – Agency couched in General Terms 1882 – acts beneficial even if beyond instruction to the
principal
Agency couched in general terms may be general agency or
special agency (1876)

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Authority of the agent – power of the agent to affect the 2. Partially disclosed – if the other party has notice that the
legal relations of the principal by acts done in accordance agent is or may be acting for a principal but has no notice
with the principal’s manifestation of consent to him of the principal’s identity

Distinguish Authority from Power 3. Undisclosed – The other party has no notice of the
principal
1. Authority – Source i.e. Authority from Principal to
sell AGENCY WITH UNDISCLOSED PRINCIPAL; Effects
2. Power – Effect i.e. Authority from principal gives
the agent the power to sell. 1. Agent directly responsible
a. Agent authorized to act on behalf of the
Kinds or Types of Authority principal
b. Acts in agent’s own name
1. Actual – Actually granted (express or implied)
2. Express – conferred by words (1869) Thus, the Principal reserves no right of action against
3. Implied – incidental to the transaction or Agent or Third persons
reasonable necessary to accomplish the purpose
of the agency UNLESS, contract involves things belonging to
4. apparent or ostensible – conferred by conduct or principal, PRINCIPAL IS BOUND
even by silence (another name for authority by
estoppel) [also an implied form] CHAPTER 2 OBLIGATIONS OF THE AGENT
5. General – covers all business of the principal (1884 – 1909)
6. Special – particular transaction
7. By necessity – demanded by virtue of the 1884 – agent bound by his acceptance to carry out the
existence of an emergency agency and is liable for non performance

When may Principal be Bound by Acts of Agent: General Obligations:

1. Standard Requisites: 1. Good faith and loyalty to his trust

a. Agent acts within the scope of authority 2. Obedience to principal’s instruction
b. He acted on behalf of the principal 3. Exercise of reasonable care
2. Ratification by principal
3. Acts more advantageous to principal Specific Obligations of the Principal

When Principal Bound by Acts of Agent beyond his 1. To carry out the agency according to its terms
Powers: 1884
2. To answer for the damages which through his non
1. The acts of the principal contributed to deceive performance the principal may suffer 1884
third persons in good faith 3. To finish the business already begun on the death
2. Limitations upon the power created by him could of the principal, should delay detail any danger
not have been known by the third person 1884
3. Principal placed to the agent instruments signed 4. To observe the diligence of a good father of a
by P in blank family in the custody and preservation of the
4. Ratified the acts goods forwarded to him by the owner in case he
declines an agency, until agent is appointed 1885
5. To advance the necessary funds should there be a
stipulation to that effect 1886
6. To act in accordance with the instructions of the
1883 – Kinds of Principal (and also agent acting as per principal 1887
identity) 7. Not to carry out the agency if its execution would
manifestly result in loss or damage to the principal
Kinds of Principal: (1888)
8. To answer for damages should he prefer in case of
1. Disclosed principal – if at the time of the transaction conflict, his own interests to those of the principal
contracted by the agent, the other party thereto has notice (1889)
that the agent is acting for a principal and of the principal’s 9. Not to loan to himself without the consent of the
identity principal when he has bee authorized to lend at
interest (1890)

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 10. To render an account of his transactions and to
deliver to the principal whatever he may have
received by virtue of the agency (1891)
11. Distinguish goods by countermarks and designate
the merchandise respectively belonging to each
principal, in the case of a commission agent who
handles goods of the same kind and mark, which
belong to different owners (1904)
12. To be responsible in certain cases for the acts of
the substitute appointed by him (1892)
13. To pay interest on funds he has applied to his own
use (1896)
14. TO inform the principal, where an authorized sale
of credit has been made, of such sale (1906)
15. To bear the risk of collection, should he receive
also on a sale, a guarantee commission (1907)
16. To indemnify the principal for damages for his
failure to collect the credits of his principal at the
time that they become due (1908)
17. To answer for his fraud or negligence (1909)
1885 – obligations of person who declines an agency
It also creates an obligation on the owner to act as soon as
practicable to:
1. Appoint a new agent; or
2. Taking charge of the goods
1886 – Stipulation of advancing
1887 – agent bound by the instruction of the principal
Instructions – private direction which the principal may
give the agent in regard to the manner of performing his
duties as such agent but of which a third party is ignorant.
They are said to be secret if the principal intended them
not to be made known to such party.
Duty of Obedience – it is the fundamental duty of the agent
to obey all the reasonable and lawful instructions given to
him by his principal.
Liability for loss or damage – If the agent exceeds or
violates the instructions, he will be liable.
1888 – Do not carry out the agency if it shall result to
loss or damage to principal
1889 – agent’s liability for damages if he prefers his
own interest
1890 – Obligation not to loan
1891 – Duty to Account
1892 – SUBAGENTS
Liability against him if he:
1. He was not given the power to appoint one
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2. When he was given such power, but without
designating the person, and the person appointed
was notoriously incompetent or insolvent
1893 – An action against the sub agent
Subagent – is a person to whom the agent delegates as his
agent, the performance of an act for the principal which
the agent has been empowered to perform through his
representative
Effects of Substitution
1. Substitution prohibited
2. Substitution authorized
3. Substitution not authorized, but not prohibited
1894 – Agents jointly liable, not solidary
1895 – condition on solidary liability
1896 – Agent owes interest on the sums he has applied
to his own use from the day on which he did so
Necessity of demand principle
1897 – Personal liability of the agent
1898 – agent contracting in the name of the principal
1899 – Effect of ignorance of agent
1900 – Scope of agent’s authority as to third persons
1901 – Agent’s lack of authority; when not as defense
1902 – presentation of power of attorney
1903 – Commission agent as to goods received
1904 – obligation of commission agent against co-
mingling
1905 – right of principal where sale on credit was
without authority
1. He may require payment in cash, in which case,
any interest or benefit from the sale shall belong
to the agent since the principal cannot be allowed
to enrich himself at the agent’s expense; or
2. He may ratify the sale on credit in which case it
will have all the risks and advantages to him
1906 – authorized sale on credit
1907 – guarantee commission
Guarantee commission – (del credere commission) is one
where in consideration of an increased commission the
factor or commission agent guarantees to the principal the
payment of debts arising through his agency.
Its purpose is to compensate the agent for the risks he will
have to bear in the collection of the credit due the principal
1908 – Obligation of commission agent to collect
credits of principal
1909 – Liability of agent for fraud and negligence
CHAPTER 3 OBLIGATIONS OF THE PRINCIPAL
(1910 – 1918)
1910 – Compliance of the Principal to the contracted
obligations of the agent
Specific Obligations of Principal to Agent
1. Comply with all the obligations which the agent
may have contracted within the scope of his
authority (1910, 1881) and in the name of the
principal (1868, 1883)
2. To advance to the agent, should the latter so
request, the sums necessary for the execution of
the agency (1912)
3. To reimburse the agent for all advances made by
him provided the agent is free from fault
4. To indemnify the agent for all the damages which
the execution of the agency ay have caused the
latter without fault or negligence on his part
(1913)
5. To pay the agent the compensation agreed upon,
or if no compensation was specified, the
reasonable value of the agent’s services (1875,
1306)
Ratification – is the adoption by a person of a prior act
which did not bind him, but which was done or professed
to be done on his account thus giving effect to the acts as if
originally authorized by him
VOID ACTS CANNOT BE RATIFIED, IT BEING
INOPERATIVE FROM ITS INCEPTION
Acts that may be ratified:
1. Valid acts
2. Voidable acts
3. Unrevoked acts of the third party
1911 – solidary liability of principal and agent when
agent exceeds authority yet principal allowed him to
act as if he were authorized
This rule establishes the concept of agency by estoppel
Distinguish Estoppel from Apparent Authority and
Implied Agency
Apparent Authority – is that which though not actually
granted, the principal knowingly permits the agent to
exercise or holds him out as possessing
Authority by Estoppel – arises in those cases where the
principal by his culpable negligence permits his agent to
exercise powers not granted to him, even though the
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principal may have no notice or knowledge of the conduct
of the agent
Implied Agency – is an actual and existing agency
relationship distinguished by the manner in which it was
created
1912 – advancing of funds (importan review)
1913 – Obligation to indemnify agent
1914 – Right of retention
For failing to reimburse based from 1912 and 1913, the
agent may retain in pledge the object of the agency as a
right over the thing prior to being reimbursed.
1915 – When Principals solidarily liable to agency
Three requisites:
1. There are two or more principals
2. The principals have all concurred in he
appointment of the same agent; and
3. The agent is appointed for a common transaction
or undertaking
1916 Two persons contract separately with agent and
principal
Two persons may contract separately with the agent and
the principal with regard to the same thing. If the two
contracts are incompatible with each other, the one of
prior date shall be preferred. Subject to the rules under
1544:
If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith
if it should be movable property. Should it be immovable
property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the
Registry of Property. Should there be no inscription, the
ownership shall pertain to the person who in good faith,
was the first in the possession; and, in the absence thereof,
to the person who presents the oldest title, provided there
is good faith.
1917 – Liability to third persons of agent or principal
1918 – Principal; when excused from liability
1. If the agent acted in contravention of the
principal’s instructions, unless the latter should
wish to avail himself of the benefits derived from
the contract;
2. When the expenses were due to the fault of the
agent;
 3. When the agent incurred them with knowledge
that an unfavorable result would ensue, if the
principal was not aware thereof; Principal’s Revocation of the Agency:
4. When it was stipulated that the expenses would be
borne by the agent, or that the latter would be 1. 1920 – Revocation
allowed only a certain sum. 2. 1925 – Two Principal Rule

Express Revocation:
CHAPTER 4 MODES OF EXTINGUISHMENT OF AGENCY
(1919 – 1932) 1. 1921 – contracting with specified persons
2. 1922 – Third party with no knowledge of the revocation
1919 – 6 LISTED MODES
Implied Revocation:
Contract of Agency may be extinguished by this list but it is
not exclusive. 1. 1923 – New Agent appointed for the same business
2. 1924 – Direct management (exemption: if interest is to
It may, therefore, be generally extinguished by the manage it together with the agent
following general denominations: 3. 1926 – Revocation of GPA by SPA

1. Agreement 1926 – GPA v SPA on special matters

2. Subsequent Acts of the parties
3. Operation of Law 1927 – When is agency irrevocable

Rules on Determination of Confidential Information: 1. Agency cannot be revoked if a bilateral contract

depends upon it,
1. Whether the knowledge or information, the use of 2. It is the means of fulfilling an obligation already
which the complainant seeks to enjoin, is contracted
confidential; 3. Partner is appointed manager of a partnership
2. Whether it be confidential in whole or in part, its
use ought to be prevented Agency Coupled with an Interest

An agency coupled with an interest is when the agent

receives an estate or interest in the property that is the
Rules on Destruction of Thing: subject of the agency. The agent in this relationship holds
1. General Rule – absence of the agreement, the or controls the principal's property and has legal rights
agency terminates; against interference by outside parties.
2. Exceptions –
a. If substitution is possible; Stated differently, an agency is deemed as one coupled
b. Partial loss or destruction of the subject with an interest where it is established for the mutual
matter benefit of the principal and of the agent, or for the interest
of the principal and of third persons, and it cannot be
Other causes may exist for the extinguishment of the revoked by the principal so long as the interest of the agent
Agency Relationship or of a third person subsists. In an agency coupled with an
interest, the agents interest must be in the subject matter
Other modes: of the power conferred and not merely an interest in the
exercise of the power because it entitles him to
1. Extinguishment of the obligation compensation. When an agents interest is confined to
2. War earning his agreed compensation, the agency is not one
3. Legal Impossibility coupled with an interest, since an agents interest in
4. Termination of the sub-agent’s authority from the obtaining his compensation as such agent is an ordinary
termination of the agent incident of the agency relationship (Lim v Saban)
5. Occurrence of a specified event

1928 - Renunciation
1920 – Revocation of the Agency by the Principal
1. Without just cause – duty to notify renunciation
Revocation – is the act of the Principal which is done by and bears damages;
terminating the agency relationship in accordance with his 2. With Just cause
will.
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1929 – Continuing management after renunciation

When Agency Persists Despite Death of Principal

1. 1930 constitution for: (1) common interest of the

principal and agent; (2) Interest of a third person
who has accepted the stipulation in his favor
2. 1931 – Done without knowledge of death of
Principal

1932 – Duty to notify principal by the heirs of the

agent

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