11/8/18
2nd hr
Agency
ART. 1876. An agency is either general or special. The
former comprises all the business of the principal.
The latter, one or more specific transactions.
Can you be an attorney without taking the bar? Yes, I
can be an attorney-in-fact.
What does that mean?
An attorney-in-fact is one who is given authority by his
principal to do a particular act not of a legal character. One
can be an attorney by executing a special power of
attorney.
What do you mean by general and special agency?
1. General agency = covers all acts connected with
the business.
2. Special agency = covers specific acts in
pursuance of a particular instructions or with
restrictions necessarily implied from the act to be
done.
ART. 1877. An agency couched in general terms
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.
If I plan to have a vacation and tell you, Jaramillo, ikaw
bahala sa akong apartment business. What kind of
agency is that?
Agency couched in general terms.
So that a VECO comes knocking and tells you that it’s
time to pay the bills. Can you sell the apartment so
can pay the VECO and save the business? VECO
might cut out the power and the business might not
be continued. Is that allowed?
No, these are acts of strict dominion. Find some other
options, perhaps, ask for a restructuring of the overdue
bills or assign future rentals.
So that, Jaramillo, you are the agent of an owner of a
car. So, he told you are given a commission when you
are able to find a buyer for his car. And on the other
hand, you also have a friend, who is looking for a car
and he promised you to also give you a commission
if you help him find a car. Can you get both
commissions? Will you be entitled to both?
No, this is a case of double agency. An agent acting at
once for both contracting parties (e.g., vendor and
vendee) assumes a double agency. In law, as in morals,
it may be stated that as a principle, no servant can serve
two masters for either he will hate the one and love the
other, or else he will hold to the one and despise the other.
In this case, the interest of the both principals (buyer and
seller) are inconsistent. The buyer wants to buy the car at
the lowest price possible, while the seller wants to sell it
at the highest price possible.
But, is there an instance that you will be able to act as
a double agent?
Yes, if the agent acted with (1) full knowledge and
(2) free consent of both principals.
NOTE: Additionally, in the example above, if for
instance the car it sold at a fixed price, then there
would be no conflict of interest between the
principals.
We said earlier that you are not allowed to sell the
property of the principal unless? You are given a
Special Power of Authority.
ART. 1878. Special powers of attorney are necessary in
the following cases:
(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;
(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 by 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.
Therefore, acts of strict dominion may involve:
a. To make payment
b. To effect novation
c. To compromise, etc
d. To waive obligation gratuitously
e. To convey or acquire immovable
f. To make gifts
 g. To loan or borrow money There is a risk. In mortgage, the principal becomes a
h. To lease realty for more than one year debtor. If he is unable to pay for his obligations, his
i. To bind principal to render service gratuitously property will be foreclosed for a lesser amount and sold in
j. To bind principal in contract of partnership a public auction. He may be liable for the deficiency.
k. To obligate principal as guarantor or surety
l. To create or convey real rights over immovable Can’t you say to your principle that “ato nalang ning
property i-mortgage para at least mabalik pa sa imo ang
m. To accept or repudiate inheritance property once redeemed”?
n. To ratify obligations contracted before agency No, the principal might not have the money to redeem the
o. Any other act of strict dominion property. If the principal does not have money to pay or
redeem, then the property can be closed at a lesser
To obligate principal as guarantor or surety, what amount.
does this mean?
Guaranty and Suretyship are accessory contracts On the other hand, authority to mortgage? Does not
whereby the guarantor or surety secures the payment or carry with it the authority to sell.
obligation of the principal debtor.
ART. 1880. A special power to compromise does not
In guaranty, what is the undertaking of the guarantor? authorize submission to arbitration.
He is obliged to pay only when the debtor has no sufficient
assets to pay the liability. Only if the debtor CANNOT pay
(i.e. he is insolvent). The nature of the liability of the
Special power to enter into compromise, does it allow
guarantor is subsidiary.
you to enter into arbitration? No, Authority to enter into
compromise does not carry with it the
While in Surety? The surety pays if the debtor DOES not
power to submit into arbitration.
pay. Even if the debtor still has assets, the creditor can
still demand payment from the surety. The liability is
What’s the difference?
solidary.
In compromise, the parties enter into reciprocal
concessions to avoid a litigation and put an end to one
You were allowed by your principal to borrow from
already commenced while in arbitration the parties submit
the bank. On your way home, you passed by the
questions to arbitrators which the principal doesn’t know
hospital where the son of your principal is admitted.
and does not trust.
You learned that there were some bills to pay. You
paid it from the money that you borrowed. Are you
authorized to pay the bills? That is his son after all?
No, authority to borrow does not include authority to
spend.

You went again to the bank, you were asked by the

principal to borrow money, but it now asked for a
collateral. You had in your possession a certificate of
registration of the car of your principal. Can you use
that to secure the loan?
No, authority to borrow does not include authority to
mortgage. Agent should act strictly within the authority.

If you have authority to mortgage, do you have the

authority to borrow? No, agent must act strictly within
the authority given. You may be authorized to borrow and
someone else may be authorized to mortgage.

ART. 1879. A special power to sell excludes the power to

mortgage; and a special power to mortgage does not
include the power to sell.

If you have the authority to sell, do you have the

authority to mortgage?
No, I do not have authority to mortgage. The authority to
sell does not include the authority to mortgage and vice
versa.

Isn’t mortgaging the property advantageous to the

principal?