agency midterms (de leon annotations)

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under Prof. Dionne Sanchez



Agency & Partnership Midterms Reviewer de leon annotations Prof. D. Sanchez 2 semester, AY 10-11nd

Janz Hanna Ria N. SerranoI. Introduction A. How is agency defined? CC, 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. Concept of Agency a fiduciary relationship which implies a power in an agent to contract with a third person on behalf of a principal it is this power to effect the principals contractual relations with 3 rd persons that differentiates the agent from the employee, the servant, and the independent contractor properly speaking, relates to commercial or business transactions; but may also arise in non-business situations Characteristics a. consensual based on the agreement of the parties which is perfected by mere consent b. principal it can stand by itself without need of another contract c. nominate it has its own name d. unilateral (if gratuitous) creates obligations for only one of the parties, i.e. the agent or bilateral (if for compensation) gives rise to reciprocal rights and obligations e. preparatory entered into as a means to an end, i.e., the creation of other transactions or contracts Nature, basis and purpose of agency (1) nature since agency is a contract, it is essential that there be meeting of the minds between the parties a. manifestation of consent principal must intend that the agent shall act for him, the agent must intent to accept the authority and act on it, and such intention of the parties must find expression either in words or conduct between them. Without such intention, there is generally no agency. Apex Mining Co v. Southeast Mindanao. It is essential, for a contract of agency to exist, that the principal consents that the other party, the agent, shall act on its behalf and the agent consents so as to act b. agent, by legal fiction, becomes principal in acting for the principal, the agent, by legal fiction, becomes the principal authorized to perform all acts which the latter would have him do. Orient Air Services v. CA. The consent or authority of the principal cannot in any way be compelled by law or by any court c. presence/absence of contract or consideration although usually a contractual one, the relationship of principal-agent may be created by operation of law (agency by estoppel) or a person who acts for another as principal may do so gratuitously. (2) Basis a. Personal contract of representation representation constitutes the basis of agency. As it is a personal contract of representation based on trust and confidence reposed by the principal on his agent, agency is generally revocable. b. Acts of agents, by legal fiction, acts of principal 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 they were personally done by the principal. c. Purposes purpose of agency is to extend the personality of the principal through the facility of the agent (Orient Air Services v. CA) Essential elements (Rallos v. Felix Go Chan) (1) there is consent, express or implied, of the parties to establish the relationship; (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 ** In addition, the parties must be competent to act as principal and agent. Consideration is not required. Relationship of third party with principal and agent (1) Since an agents contract is not his own but his principals, a third partys liability on such a contract is to the principal and not to the agent, and liability to such third party is enforceable against the principal, not the agent. (2) Where an agency exists, the relationship of the 3rd party with whom the agent has contracted, to the principal, is the same as that in a contract in which there is no agent a. Normally, the agent has neither rights nor liabilities as against the third party. He cannot sue or be sued on the contract. Since a contract may be violated only by the parties thereto as against each other, the real party-in-interest, either as plaintiff or defendant in an action upon that contract must, generally, be a party to said contract. b. The fact that the agent did not obtain his commissions or recoup his advances because of the non-performance of the contract does not entitle him to file an action against the buyer where he does not appear as a benificiary of a stipulation pour autrui. c. An agent, in his own behalf, may, however, bring an action founded on a contract made for his principal as assignee of such contract. Acts that may be/not be delegated to agents General Rule: What a man may do in person, he may do through another Exceptions: 1) personal acts right to vote making of a will statements made under oath an agent cannot delegate to a sub-agent the performance of acts which has been appointed to perform in person 2) criminal acts or acts not allowed by law Determination of existence of agency In most circumstances, no formalities are required for the creation of an agency relationship. The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention. (1) Designation by the parties not controlling; if an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he is not so called; vice-versa. (2) Fact of existence the question is to be determined by the fact that one represents and is acting for another, and not by the consideration that it will be inconvenient or unjust if he is not held to be the agent of such other; and if relations exist which will constitute an agency, it will be an agency whether the parties understood the exact nature of the relation or not


Agency & Partnership Midterms Reviewer de leon annotations Prof. D. Sanchez 2 semester, AY 10-11nd

Janz Hanna Ria N. Serrano(3) Presumption of existence the relation of agency cannot be inferred from mere relationship or family times unattended by conditions, acts, or conduc clearly implying an agency. For the relation to exist, there must by consent by both parties. The law makes no presumption thereof. Burden of proof: incumbent upon the person alleging it. (4) Intention to create relationship a. Principals intention: actual intention to appoint, or an intention naturally inferable from his words or actions b. Agents part: intention to accept the appointment and act on it (5) As between the principal and a third person agency may exist without the direct assent of the agent. Nature of relations between principal and agent (1) Relations fiduciary in character since they are based on trust and confidence (Severino v. Severino) degree: case to case basis (2) Agent stopped from asserting interest adverse to his principal it is an elementary and very old rule that in regard to property forming the subject matter of the agency, the agent is stopped from asserting or acquiring a title adverse to that of the principal (3) Agent must not act as an adverse party agents cannot act so as to bind their principals, where they have an adverse interese in themselves. (4) Agent must not act for an adverse party cannot serve 2 masters Knowledge of agent imputed to principal (1) agents duty of notification 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 thoufh the agent never communicated such to the principal. (2) Relationship of attorney and client the relationship being one of confidence, there is ever-present the need for the latter being adequately and fully informed of the mode and manner in which his interest is defended (3) Knowledge of the principal 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. Exceptions to the rule a. where the agents interests are adverse to those of the principal; b. where the agents duty is not to disclose the information as where he is informed by way of confidential information c. where the person claiming the benefit of the rule colludes with the agent to defraud the principal. Agent subject to principals control (1) subject matter of agency one factor which most clearly distinguishes agency from other legal concepts is control. [Victorias Milling Co. v. CA] agent is subject to his principals control with respect to matters relevant to the agency relationship (2) Act of agent the extent of the principals control over the agents acts varies both with the type of the agency relationship and the factws of the particular case. General rule: the principal may direct the acts of his agent even though the principal has promised not to do so. 2. Consent CC, 1869. Agency may 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. Presumption of agency (1) General rule not presumed. The relation between principal and agent must exist as a fact (2) Exceptions in those few cases where an agency may arise by operation of law or to prevent unjust enrichment. Authority of attorney to appear on behalf of his client (1) authority in an action presumed (2) Scope of authority an act performed by counsel within the scope of a general or implied authority is regarded as an act of the client. Consequently, the mistake or negligence of co