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Art. 1868. 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.
Agency: A relationship which implies a power in an agent to contract with a 3 rd person on behalf of a principal.
Kind of Contract: It is a preparatory contract. It is a contract entered not for its own end but to be able to enter into other contracts.
Characteristics:
1.) Consensual: perfected by mere consent; 2.) Nominate: it has its own name;
3.) Principal: does not depend on another contract for its existence and validity;
4.) Preparatory: entered into as a means to an end; 5.) Unilateral/Bilateral:
a.) Unilateral: if contract is gratuitous, it creates obligations for only one of the parties, i.e. agent.
b.) Bilateral: if for compensation, it gives rise to reciprocal rights and obligations.
Basis: Representation.
The acts of the agent on behalf of the principal within the scope of his authority produce the same legal and binding effects as if the principal personally
did them.
Distinguishing Features:
1.) Representative character; and 2.) Derivative authority.
Purpose: To extend the personality of the principal through the facility of the agent.
Parties:
1.) Principal; and
2.) Agent.
Nature of Relation between Principal and Agent: Fiduciary, based on trust and confidence.
Agency Lease of Work/Service
Basis is representation. Basis is employment
Agent exercises Lessor only performs
discretionary powers. ministerial functions.
3 persons are involved: Only 2 persons involved:
principal, agent & 3rd lessor and lessee
person.
Commercial or business Matters of mere manual or
transactions. mechanical execution.
Agency Guardianship
Agent represents a Guardian represents an
capacitated person. incapacitated person.
Agent appointed by Guardian appointed by
principal and can be court and stands in loco
removed by him. parentis.
Agent subject to directions of Guardian not subject to
principal. directions of ward but must
act for his benefit.
Agent can make principal Guardian has no power to
personally liable. impose personal liability on his
ward.
Art. 1869. Agency must be express, or 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.
Agency may be oral, unless the law requires a specific form.
Form: Generally, NO formal requirements. Agent’s authority may be oral or written, it may be in public or private writings. The only exception is when the law
requires a specific form (e.g. sale of real property or any interest therein by an agent.)
Art. 1870. 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.
Art. 1871. 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.
Power of attorney: 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. Its primary purpose is to evidence the authority of the agent to 3rd parties w/ whom the agent
deals.
Construction
A power of atty is strictly construed and strictly pursued. The instrument will be held to grant only those powers which are specified, and the agent may
neither go beyond nor deviate from the power of atty. The only exception is when strict construction will destroy the very purpose of the power.
Meaning of “present”
Not limited to face-to-face encounters. 2 persons conversing on the phone are also considered as both “present”.
Art. 1872. 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.
2 Ways of Giving Notice of Agency 1.) By special information; or 2.) By public advertisement.
Effects:
1.) Special information: the person appointed as agent is considered such with respect to the person to whom it was given.
2.) Public advertisement: Agent is considered such with regard to any person.
Art. 1873. If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the latter
thereby becomes a duly authorized agent, in the former case with respect to the person who received the special information, and in the latter case with
regard to any person.
The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given.
Agency by Estoppel: There is really no agency at all, but the alleged agent seemed to have apparent or ostensible, although no real authority to represent another.
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 3rd
persons interested in the transaction in which he is engaged.
2.) Estoppel of Principal –
a.) As to Agent – One who knows that another is acting as his agent and fails to repudiate his acts, or accept the benefits of them, will be estopped to
deny the agency as against such other.
b.) As to sub-agent – To estop the principal from denying his liability to a 3rd person, he must have known or be charged with knowledge of the fact of
the transmission and the terms of the agreement between the agent and sub- agent.
c.) As to 3rd persons – One who knows that another is acting as his agent or permitted another to appear as his agent, to the injury of 3rd 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 3rd Persons – A 3rd person, having dealt with one as an agent may be estopped to deny the agency as against the principal, agent or 3rd persons
in interest.
4.) Estoppel of the govt – The govt is neither estopped by the mistake or error on the part of its agents. But it may be estopped through affirmative acts of its officers acting within the scope of their authority.
Art. 1874. 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.
Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary.
Broker: One who in behalf of others, and for compensation or fee, negotiate contracts relative to property. He is the negotiator between the parties, never
acting in his own name, but in the name of those who employ him. He is strictly a middleman and for some purposes, the agent of both parties.
In case the agent assumes a double agency, what is his right to compensation?
1.) If with knowledge of both principals – recovery can be had from both.
2.) If without knowledge of both – agent can recover from neither.
3.) If with knowledge of only one – as to the principal who knew of that fact and as to the agent, they are in pari delicto and the courts shall leave them as
they were, the contract between them being void as against public polisy and good morals.
Classification of Agents:
1.) Universal agent: One employed to do all acts that the principal may personally do, and which the principal can lawfully delegate to another the power of doing.
2.) General agent: One employed to transact all the business of his principal, or all business of a particular kind or in a particular place, or in other words, to
do all acts connected with a particular trade, business, or employment.
3.) Special/Particular agent: One authorized to act in one or more specific transactions, or to do one or more specific acts, or to act upon a particular
occasion. e.g.:
a.) Atty at law: One whose business is to represent clients in legal proceedings.
b.) Auctioneer: One whose business is to sell property for others to the highest bidder at a public sale.
c.) Broker: One whose business is to act as intermediary between 2 other parties.
d.) Factor: One whose business is to receive and sell goods for a commission, being entrusted with the possession of the goods involved in the
transaction.
Attorney-in-fact: One who is given authority by his principal to do a particular act not of a legal character. In strict legal sense: An agent having a special authority created by deed.
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 or unlimited
management.
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.
The ff are included in a Power to Sell: The power to:
1.) Find a purchaser or to sell directly; 2.) Deliver the property;
3.) Make the usual representation and warranty; 4.) Execute the necessary transfer documents; 5.) Fix the terms of the sale unless there be set conditions stipulated by the principal;
6.) Sell only for cash;
7.) Receive the price unless he was authorized only to solicit orders.
Does the principal have the power to revoke a contract giving an agent exclusive authority to sell?
YES. But he may not have the right to use such power if he has agreed not to exercise such power during a certain period. In case he fails to comply with
this obligation-not-to-do, he will be liable for damages.
Art. 1880. A special power to compromise does not authorize submission to arbitration.
Rationale:
A principal may authorize his agent to compromise because of absolute confidence in the latter’s judgment and discretion to protect the former’s rights and
obtain for him the best bargain in the transaction. If the transaction would be left in the hands of an arbitrator, said arbitrator may not enjoy the trust of the
principal.
Art. 1881. The agent must act within the scope of his authority. He may do such acts as may be conducive to the accomplishment of the purpose of
the agency.
Authority: The power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestation of consent to him.
The authority of the agent is the very essence – sine qua non – of the principal and agent relationship. This authority, unless it is otherwise agreed, includes only
the authority to act for the benefit of the principal, and the source of the authority is the principal and never the agent.
Kinds of Authority:
1.) Actual: when it is actually granted, and it may be express or implied. It results from what the principal indicates to the agent.
2.) Express: when it is directly conferred by words. 3.) Implied: when it is incidental to the transaction or reasonably necessary to accomplish the
purpose of the agency, and therefore, the