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JURISTS BAR REVIEW CENTER

REVIEW OUTLINE IN AGENCY


Atty. Aliakhbar A. Jumrani
I. What is a Contract of Agency?
By a 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. (Art. 1868, CC)
1. Elements:
a. The parties consent, express or implied, to establish the relationship;
b. The object, which is the execution of a juridical act in relation to a third person;
c. The representation, by which the one who acts as an agent does so, not for himself, but
as a representative;
d. The limitation that the agent acts within the scope of his or her authority. (Tuazon vs.
Ramos, G.R. No. 156262, July 14, 2005)
The declarations of agents alone are generally insufficient to establish the fact or extent of their
authority. The law makes no presumption of agency; proving its existence, nature and extent is
incumbent upon the person alleging it. (Ibid)
II. Powers of an Agent
1. Those expressly conferred, and
2. Powers incidental to the express powers conferred.
It is a fundamental principle in the law of agency that every delegation of authority, whether
general or special, carries with it, unless the contrary be expressed, implied authority to do all of those
acts, naturally and ordinarily done in such cases, which are reasonably necessary and proper to be done
in order to carry into effect the main authority conferred. (Citibank, N.A. vs. Chua, G.R. No. 102300,
March 17, 1993)
III. Express and Implied Agency
1. Express Agency
The contract may be oral, unless the law requires a specific form. (Art. 1869, second par, CC) Ex.
Sale of real property
2. Implied Agency
a. From the acts of the agent which carry out the agency (Art. 1870, CC)
b. From his silence or inaction according to the circumstances (Ibid)
i. Applicable only between persons who are present
c. If the principal deliver his power of attorney to the agent and the latter receives it
without any objection (Art. 1871, CC)

2015 Review Outline in Agency Atty.by Aliakhbar A. Jumrani for Jurists Bar Review Center.
All rights reserved 2015 by Jurists Review Center Inc. Unauthorized reproduction, use, or dissemination is
strictly prohibited and shall be prosecuted to the full extent of the law, including administrative
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d. Between persons who are absent:


i. When the principal transmits his power of attorney to the agent, who receives it
without any objection;
ii. 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. (Art. 1872, CC)
IV. Agency by Estoppel, Ostensible Agency and Doctrine of Apparent Authority
The principal is bound by the acts of his agent with the apparent authority which he knowingly
permits the agent to assume, or which he holds the agent out to the public as possessing. The question
in every case is whether the principal has by his voluntary act placed the agent in such a situation that a
person of ordinary prudence, conversant with business usages and the nature of the particular business,
is justified in presuming that such agent has authority to perform the particular act in question.
(Professional Services Inc. vs. Agana, G.R. No. 126297, January 31, 2007)
Proof of the Apparent Authority:
1. the general manner in which the corporation holds out an officer or agent as having the
power to act or, in other words the apparent authority to act in general, with which it clothes him; or
2. the acquiescence in his acts of a particular nature, with actual or constructive knowledge
thereof, within or beyond the scope of his ordinary powers. (Advance Paper Corporation vs. Arma
Traders, G.R. No. 176897, December 11, 2013)
V. General and Special Agency
A general agency comprises all the business of the principal, while a special agency comprises
one or more specific transactions. (Art. 1876, CC)
The authority to sell a property, which is a special agency, does not include or extend to the
power to administer the property, which is a general agency. (Spouses Aggabao vs. Spouses Parulan,
G.R. No. 165803, September 1, 2010)
VI. Agency Couched in General Terms
It comprises only acts of administration, even if the principal should state that he withholds no
power or that the agent may execute such acts as he may consider appropriate, or even though the
agency should authorize a general and unlimited management. (Art. 1877, CC)
Acts of administration, as opposed to acts of ownership, pertain solely to management or
superintendence. They do not necessarily pivot on ownership. (United BF Homeowners vs. Barangay
Chairman of BF Homes, G.R. No. 140092, September 8, 2006)
VII. Agency Requiring Special Power of Attorney
1. To make such payments as are not usually considered as acts of administration;
2. To effect novations which put an end to obligations already in existence at the time the agency
was constituted;

2015 Review Outline in Agency Atty.by Aliakhbar A. Jumrani for Jurists Bar Review Center.
All rights reserved 2015 by Jurists Review Center Inc. Unauthorized reproduction, use, or dissemination is
strictly prohibited and shall be prosecuted to the full extent of the law, including administrative
complaints with the Office of the Bar Confidant, Supreme Court.
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3. 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;
4. To waive any obligation gratuitously;
5. To enter into any contract which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration;
6. To make gifts, except customary ones for charity or those made to employees in the business
managed by the agent;
7. To loan or borrow money, unless the latter act be urgent and indispensable for the preservation
of the things which are under administration;
8. To lease any real property to another person for more than one year;
9. To bind the principal to render some service without compensation;
10. To bind the principal in a contract of partnership;
11. To obligate the principal as a guarantor or surety;
12. To create or convey real rights over immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize obligations contracted before the agency;
15. Any other act of strict dominion.
The requirement of a special power of attorney refers to the nature of the authorization and not
to its form. If the special authority is not written, then it must be duly established by evidence. (Gozun
vs. Mercado, G.R. No. 167812, December 19, 2006, citing Lim Pin Lao vs. Liano Tian, 200 Phil 685 [1982])
Note, however, that the authority to sell a piece of land or any interest therein should be in
writing; otherwise, the sale is void. (Art. 1874, CC)
VIII. Agency by Operation of Law
1. When a person declines the agency and no new agent has been appointed
Art. 1885. In case a person declines an agency, he is bound to observe the diligence of a good
father of family in the custody and preservation of the goods forwarded to him by the owner until the
latter should appoint an agent. The owner shall as soon as practicable either appoint an agent or take
charge of the goods.
2. Immediately after the agent withdraws from the agency
Art. 1929. The agent, even if he should withdraw from the agency for a valid reason, must
continue to act until the principal has had reasonable opportunity to take the necessary steps to meet
the situation.

2015 Review Outline in Agency Atty.by Aliakhbar A. Jumrani for Jurists Bar Review Center.
All rights reserved 2015 by Jurists Review Center Inc. Unauthorized reproduction, use, or dissemination is
strictly prohibited and shall be prosecuted to the full extent of the law, including administrative
complaints with the Office of the Bar Confidant, Supreme Court.
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3. In case of extinguishment of the agency, without the knowledge of the agent


Art. 1931. Anything done by the agent, without knowledge of the death of the principal or of
any other causes which extinguishes the agency, is valid and shall be fully effective with respect to third
persons who may have contracted with him in good faith.
4. In case of death of the agent
Art. 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime
adopt such measures as the circumstances may demand in the interest of the latter.
IX. Rights and Obligations of the Principal
1. Rights
a) Right of control over the agent. (Art. 1887, 1888, CC)
b) To be paid damages if, there being conflict between the interests of the principal and those
of the agent, the agent should prefer his own (Art. 1889, CC), or if the agent is guilty of fraud
or negligence. (Art. 1909, CC)
c) Right to an accounting by the agent of his transactions and to the delivery of whatever the
agent may have received by virtue of the agency. (Art. 1891, CC)
2. Obligations
a) To pay the agent his compensation, unless the contrary was agreed upon. (Art. 1875, CC)
b) To comply with the obligations which the agent may have contracted within the scope of his
authority, or those which the agent has done outside the scope of his authority but which
the principal has ratified, or when the principal allowed the agent to act as though he had
full powers. (Art. 1910, 1911, CC)
c) Doctrine of Imputed Knowledge

The principal is chargeable with and bound by the knowledge of or notice to his agent
received while the agent was acting as such. (Cosmic Lumber Corp. vs. 114311,
November 29, 1996)

d) To advance to, or reimburse, the agent, the sums necessary for the execution of the agency,
or the damages which the execution of the agency has caused the agent, without fault or
negligence on his part. (Art. 1912, 1913, CC)

But, the principal is not liable for the expenses incurred by the agent in the following
cases:
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;

2015 Review Outline in Agency Atty.by Aliakhbar A. Jumrani for Jurists Bar Review Center.
All rights reserved 2015 by Jurists Review Center Inc. Unauthorized reproduction, use, or dissemination is
strictly prohibited and shall be prosecuted to the full extent of the law, including administrative
complaints with the Office of the Bar Confidant, Supreme Court.
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3. When the agent incurred them with knowledge that an unfavorable result would
ensue, if the principal was not aware thereof;
4. When it was stipulated that the expenses would be borned by the agent, or that the
latter would be allowed only a certain sum. (Art. 1918, CC)
X. Irrevocable Agency (Art. 1927, CC)
1. If a bilateral contract depends upon it
2. If it is the means of fulfilling an obligation already contracted; and
3. If a partner is appointed manager of a partnership in the contract of partnership and his removal
from management is unjustifiable.
XI. Agency Coupled with Interest
An agency is deemed as one coupled with an interest where it is established for the mutual
benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it
cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In
an agency coupled with an interest, the agent's interest must be in the subject matter of the power
conferred and not merely an interest in the exercise of the power because it entitles him to
compensation. When an agent's interest is confined to earning his agreed compensation, the agency is
not one coupled with an interest, since an agent's interest in obtaining his compensation as such agent
is an ordinary incident of the agency relationship. (Lim vs. Saban, G.R. No. 163720, December 16, 2004)
XII. Modes of Extinguishment (Art. 1919, CC)
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent;
4. By the dissolution of the firm or corporation which entrusted or accepted the agency;
5. By the accomplishment of the object or purpose of the agency; and
6. By the expiration of the period for which the agency was constituted.
By reason of the very nature of the relationship between principal and agent, agency is
extinguished by the death of the principal or of the agent and any act of an agent after the death of his
principal is void ab initio, except as explicitly provided for in the New Civil Code: (1) when the agency is
coupled with an interest (Art. 1930); and (2) when the agent performed an act for the principal without
knowledge of the principal's death and the third person who contracted with him acted in good faith.
(Art. 1931). (Rallos vs. Felix Go Chan, L-24332, January 31, 1978).

2015 Review Outline in Agency Atty.by Aliakhbar A. Jumrani for Jurists Bar Review Center.
All rights reserved 2015 by Jurists Review Center Inc. Unauthorized reproduction, use, or dissemination is
strictly prohibited and shall be prosecuted to the full extent of the law, including administrative
complaints with the Office of the Bar Confidant, Supreme Court.
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