agency midterms (de leon annotations)

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

Janz Hanna Ria N. Serrano I. 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 principal’s contractual relations with 3rd 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 agent’s contract is not his own but his principal’s, a third party’s 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

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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. Principal’s intention: actual intention to appoint, or an intention naturally inferable from his words or actions b. Agent’s 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 agent’s interests are adverse to those of the principal; b. where the agent’s 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 principal’s 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 principal’s control with respect to matters relevant to the agency relationship

(2) Act of agent – the extent of the principals control over the agent’s 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 counsel may result in the rendition of an unfavorable judgment against the client.

(3) Authority outside of court CC, 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.

- since agency is a contract, there must be constent by both parties. An agency is either express or implied and this is true on the part of the principal as well on that of the agent. It does not depend upon the express appointment and accectance

CC, 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. Definition and purpose of a power of attorney

- a power of attorney is 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

- primary purpose: not to define the authority of the agent as between himself and his principal but to evidence the authority of the agent to third parties within whom the agent deals

- except as may be required by statute, a power of attorney is valid although no notary public intervened in its execution

Construction of powers of attorney - rule of strict construction – General rule: PoA must be strictly construed and strictly pursued - qualification: if the language will permit, a construction should be adopted which will carry out, instead of defeat, the

purpose of the appointment || The instrument should always be deemed to give such powers as are essential or usual anf reasonably necessary and proper in effectuating the express powers

CC, 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. CC, 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification.

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Janz Hanna Ria N. Serrano CC, 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts. CC, 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. CC, 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. CC, 1403(1). The following contracts are unenforceable, unless they are ratified: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers a. express; ratification b. implied; ratification

3. Object – execution of a juridical act in relation to a 3rd person 4. Consideration

CC, 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. B. Who are the parties to the contract of agency?

Parties to the contract: 2 parties to the contract (1) Principal – one whom the agent represents and from whom he derives his authority; he is the person reperesented. There is

no agency unless one is acting for and in behalf of another (2) Agent – one who acts for and represents another; he is the person acting in a representative authority. The agent has

derivative authority in carrying out the principal’s business. C. Must the parties be capacitated?

Capacity of parties (1) Principal – a principal must be capacitated or have the legal capacity to enter into contract in his own right. Logic: a person

who cannot legally enter into contracts directly should not be permitted to do it indirectly through another i. may either be a natural person or an artificial one

ii. during the existence of a state of war, an enemy alien may not appoint an agent to act in the beliigerent territory with which his nation is at war.

iii. Insamuch as one who acts through an agent in law does the act himself, the capacity to act by an agent depends in general on the capacity of the principal to do the act himself if he were present.

(2) Agent – generally, anyone can be an agent. His capacity is usually immaterial. In the case of the agent, since he assumes personal liability, he does not have to possess full capacity to act for himself insofar as 3rd person is concerned

II. What is the form of the contract of agency? – CC, 1869 CC, 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. A. Oral – in general, there are no formal requirements governing the appointment of an agent. The agent’s authority may be oral or

written; it may be in public or private writing. -- may even be implied from words and conduct of the parties and the circumstances of the particular case. But agency cannot be inferred from mere relationship or family ties.

B. Written III. Who has the obligation to determine the existence and scope of agency? Third persons dealing with an agent do so at their peril and

are bound to inquire as to the extent of his authority but they are not required to investigate the instructions of the principal IV. How is agency distinguished from other contracts/relationships?

- A contract is what the law defines it to be and not what it is called by the contracting parties (Quiroga v. Parsons) - The important characteristic feature of an agency relationship which distinguishes it from similar contracts or relations is

the agent’s power to bring about the business relations between his principal and 3rd persons. This power is perhaps the most distinctive mark of the agent, as contrasted with other who act in representative capacities but are not agents

A. Master-servant CC, 1689 to CC, 1699. B. Employer-employee

CC, 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

C. Lease of service CC, 1644. In the lease of work or service, one of the parties binds himself to execute a piece of work or to render to the other some service for a price certain, but the relation of principal and agent does not exist between them.

Agency Lease Service Basis: representation Employment Agent exercises discretionary powers Lessor ordinarily perform only ministerial functions (Nielson v.

Lepanto) 3 persons are involved: the principal, the agent and the 3rd person

Only 2 persons are involved

Relates to commercial or business transactions Relates more to matters of mere manuak or mechanical execution

Employed in a capacity superior to that of the servant, being entitled, in general, to use his discretion as to the means to accomplish the end for which he is employed

D. Independent contractor

CC, 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material.

Agency Independent contract

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Agent is subject to the control and direction of the principal whom he represents with respect to the matters entrusted to him

Where one party undertakes to accomplish a certain result according to his own method and without being subject to the other party’s control except as to the result of the work

General rule: the employer is not liable for the torts or injury inflicted by the independent contractor upon 3rd persons or by the employees of such contractor

E. Trust

CC, 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary.

Agency Trust the agent represents and acts for his principal Title and control of the property under the trust instrument

passes to the trustee who acts in his own name, May in general be revoked at any time May be ordinarily terminated only by the fulfillment of its

purpose Formed with the thought of constant supervision and control by principal

Based on the idea of discretion in the trustee and guidance by the settler or cestui only to a limited extent and when expressly provided for.

F. Sale

CC, 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. ||A contract of sale may be absolute or conditional.

Contract of Sale Contract of Agency to sell Buyer pays the price Agent does not pay Buyer acquires the ownership over the object Agent does not acquire ownership Essence: transfer of title Essence: delivery to the agent of the goods not as the agent’s

property but of the principal who remains the owner and has the right to control

G. Partnership CC, 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.

Two or more persons may also form a partnership for the exercise of a profession. Agency Partnership

In both cases, the agent or partner can bind the principal or his co-partner only by such contract s as are entered into within the scope of his authority || both fiduciary

Control by the principal: not applicable to the partnership concept Fundamental: that an agent must submit to the principal’s tight to control the agent’s conduct in regard to the subject of agency

Yet the partnership relation, while having many of the characteristics of the agency relationship, differs from it in that a partner’s power to binfd his co-partner is not subject to the co-partner’s right control, unless there is an agreement to that effect

Liability of the agent: the ordinary agent assumes no personal liability where he acts within the scope of his authority

Liability of the agent: a partner acting as agent for the partnership binds not only the firm members but himself as well || a partner is both principal and agent at the same time

Sharing of profits

H. Negotiorum gestio/quasi-contract CC, 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances: (1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern. In the second case, the rules on agency in Title X of this Book shall be applicable. CC, 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management.

The courts may, however, increase or moderate the indemnity according to the circumstances of each case. Agency Negotiorum gestio

In both, there is representation Representation is expressly conferred It is not only without the authority of the owner of the business

but is without his knowledge. Agent acts according to the express will of the principal Gestor acts according to the presumed will of the owner

I. Judicial administrator Agency Judicial administrator

Agent only answerable to the principal Appointed by the court Protection which the law gives the pruincipal, in limiting the powers and rights of an agent, stems from the fact that control by the principal can only be through agreements

Not only representative of the said court, but also of the heirs and creditors of the estate

Before entering into his duties, is required to file a bond.

J. Broker Agency Brokerage

Broker: one who is engaged for others on a commission; a

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Janz Hanna Ria N. Serrano

negotiator between other parties, never acting in his own name but in the name of those who employed him

Commission agent: one engaged in the purchase or sale for another of personal property which for this purpose is place in his possession and at his disposal.

Has no relation with the thing he buys or sells; merely an intermediary or negotiator between the purchaser and the vendor relative to the property with the custody or possession of which he has no concern His only office is to bring together the parties to the transaction never acting in his own name but in the name of those who employed him

Agent receives a commission uipon the successful conclusion of a transaction

Earns his pay merely by bringing the buyer and the seller together even if no sale is eventually made.

City-lite v. CA.

V. Some classes of agents ***according to the nature and extent of their authority:

1) universal agent – one employed to do all acts that the principal may personally do, and which he van lawfully delegate to another the power of doing.

2) general agent – one employed to transact t 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. He has the authority to do all acts connected with or necessary to accomplish a certain job.

3) special or 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.

B. Attorneys-at-law – one whose business is to represent clients in legal proceedings C. Auctioneers – one whose business is to sell property for others to the highest bidder at a public sale D. Brokers – one who business is to act as intermediary between two other parties E. Factors; commission merchants – 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 || strict sense: an agent having a special authority created by deed

General agent Special agent Scope of authority Usually authorized to do all acts

connected with the business or employment in which the principal is engaged

Authorized to do only one or more specific acts in pursuance of particular instructions or with restrictions necessarily implied from the act to be done

Continuous nature of service authorized One who is authorized to conduct a series of transactions over time involving a continuity of service

Authorized to conduct a single transaction or a series of transactions not involving continuity of service and covering a limited period of time

Extent to which agent may bind principal May bind his principal by an act within the scope of his authority although it may contrary to his special instructions

Cannot bind his principal in a manner beyond or outside the specific acts which he is authorized to perform on behalf of the principal

Knowledge/disclosure of limitations of power

In its general nature, continuing and unrestricted by limitations other than those which confine the authority within the bounds of what is usual, proper, and necessary under like circumstances

In its nature temporary and naturally suggests limitations of power of which 3rd persons must inform themselves

Termination of authority Does not terminate by the mere revocation of his authority without notice to the 3rd party

The duty imposed upon the 3rd party to inquire makes the termination of the relationship as between the principal and agent effective as to such 3rd person unless the agency has been entrusted for the purpose of contracting with such 3rd party

Construction of instructions of principal Statement by the principal with respect to authority would ordinarily be regarded as advisory in nature only

Must be strictly pursued || regarded as words limiting the authority

VI. What are the classifications of agency contracts?

A. Express agency; implied agency – CC, 1869. – as to manner of creation (a) Express – one where the agent has been actually authorized by the principal, either orally or in writing (b) Implied – one which is 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, or from the acts of the agent which carry out the agency, or from his silence or inaction according to the circumstances

Agency by ratification – principal cannot deny the existence of the agency after 3rd parties, relying on his conduct, have had dealings with the supposed agents

B. Agency by estoppels; no consent CC, 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. CC, 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. CC, 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof.

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Janz Hanna Ria N. Serrano CC, 1922. If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons.

C. Agency by operation of law 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. CC, 1884(2). He must also finish the business already begun on the death of the principal, should delay entail any danger. CC, 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. CC, 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause 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.

D. Universal, general and special CC, 1876. An agency is either general or special. The former comprises all the business of the principal. The latter, one or more specific transactions.

E. Durable agency CC, 1930., supra.

F. Couched in general terms; couched in specific terms CC, 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. Agency couched in general terms: may be a general or a special agency It includes only acts of administration and an express power is necessary to perform any act of strict ownership, even if the principal states that (1) he withholds no power, or that (2) the agent may execvute such acts as he may consider appropriate, or that (3) he authorizes a general or unlimited management Acts of administration – those that do not imply the authority to alienate; will always be a question of fact || BUT, UNLESS THE CONTRARY APPEATS, THE AUTHORITY OF AN AGENT IS PRESUMED TO INCLUDE ALL THE NECESSARY MEANS TO CARRY OUT THE AGENCY INTO EFFECT (Macke v. Camps) Construction of contracts of agency 1. Contracts of agency as well as GPAs must be interpreted in accordance with the language used by the parties 2. The real intention of the parties is primarily to be determined from the language used and gathered from the whole

instrument 3. In case of doubt, resort must be had to the situation, surroundings, and relations of the parties 4. The intention of the parties must be sustained rather than defeated 5. Acts of the parties in carrying our the contract will be presumed to have been done in good fiath CC, 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; - payment: delivery of money or the performance in any other manner of an obligation - it is an act of ownership because it involves conveyance of ownership of money or property - BUT, when payment is made in the ordinary course of management, it is considered a mere act of administration

(2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; - Novation: extinction of an obligation through the creation of a new one which substitutes it by changing the object or

principal conditions thereof (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; - The grant of special power regarding one of the acts mention in 1878(3) is not enough to authorize the others - Compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one

already commenced - Arbitrations is where the parties submit their controversies to one or more arbitrators for decision - These are acts of ownership since they involve the possibility of disposing of the thing or right subject to

compromise (Vicente v. Geraldez; Caballero v. Deiparine) or arbitration - Dungo v. Lopena: Absence of a special power of attorney in order that one may compromise an interest of another

does not render the compromise agreement void. In such a case, the compromise is merely unenforceable (4) To waive any obligation gratuitously;

- Condonation or remission - Agent cannot waive a right belonging to the principal without valuable consideration or even for a nominal

consideration (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a

valuable consideration; - Applies whether the contract is gratuitous or onerous - Refers only to immovables - (5) & ( 12) refer to sales made by an agent for a principal and not to sales made by the owner personally to another,

whether that other be acting personally or through a representative (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;

- Gift or donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another who accepts it (CC, 725)

(7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; - To power to lend or borrow money is one with much great possibility of avuse and is not ordinarily incident to a

general managerial agency - Hodges v. Salas: the power to borrow any amount which the agent deems necessary cannot be interpreted as also

authorizing him to use the money as he pleases - Exception: referes to “borrow” and not to “loan” - Refers only to money and not to other fungible things.

(8) To lease any real property to another person for more than one year;

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Janz Hanna Ria N. Serrano - Unrecorded lease of real estate is not binding upon 3rd persons. Lease of realty to another person for one year or less

is an act of mere administration provided the lease is not registered - Requirement of SPA extends to renewal or extension of lease

(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;

- E.g. mortgage. Usufruct, easements, etc. (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion.

- Acts of ownership - CC, 1878 refers to the nature of the authorization, not its form - E.g. sale or purchase of personal property

CC, 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell. CC, 1880. A special power to compromise does not authorize submission to arbitration. 1. Mortgage – CC, 1878(12) 2. Loan/borrow – CC, 1978(7) 3. Sell – CC, 1878(5) 4. Lease – CC, 1878(8) 5. Compromise – CC, 1878(3). 6. Other acts of strict dominion – CC, 1878(12)

VII. What are the obligations and liabilities of agents to their principals? A. Act within scope of authority

CC, 1879., supra. CC, 1880., supra. CC, 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. CC, 1882. The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal than that specified by him. Authority is the power of the agent to affect the legal relationso f 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 of the principal and agen relationship When principal bound by act of agent: the principal is liable to the agent if he breaches his contractual or any other duty to the agent (1) Requisites in order that principal may be bound by the act of the agent as to 3rd persons and as to the agent himself:

(1) agent must act within the scope of his authority; and (2) agent must act in behalf of the principal (2) Authority possessed by agent: principal is bound by either the actual (express or implied) or apparent (estoppel) authority

i. So long as the agent has actual authority, principal is bound by agent’s acts w/n the 3rd person dealing with the agent believes that the agent has actual authority

ii. Under the doctrine of apparent authority, the principal is liable only as to 3rd person who have been led reasonably to believe by the conduct of the principal that such actual authority exists, although none has been given

When a person not bound by act of another: (1) latter acts without or beyond the scope of gis authority in the former’s name; and, (2) latter acts within scope of his authority but in his own name, except when the transaction involves things belonging to the principal Liability of principal/agent for acts of agent beyond his authority/power (1) Principal – as a general rule, the principal is not bound by the acts of an agent beyond his limited powers; 3rd persons dealing with an agent do so at their risk and are bound to inquire as to the scope of his powers 4 qualifications whereby the principal is held liable (a) where P’s acts have contributed to deceive a 3rd person in good faith (b) where the limitations upon the power created by him could not have been known by the 3rd person (c) where the principal has palce in the hands of the agents instruments signed by him in blank

(d) where the principal has ratified the acts of the agent. (2) Agent – the agent who exceeds his authority is personally liable either to the principal or to the 3rd party, in the absence of ratification by the principal (a) if P is liable to 3rd party on the ground of apparent authority, the agent’s liability is to the P

(b) if P is not liable to 3rd persons because the facts are such no apparent authority is present, then the agent’s liability is to the 3rd party (c) if agent personally assumes responsibility for the particular transaction becomes co-principal

Action must be brought by and against the principal CC, 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.

In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. B. Carry out the agency

CC, 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer.

He must also finish the business already begun on the death of the principal, should delay entail any danger. Obligations, in general, of agent to principal

(1) Good faith and loyalty to his trust, agent’s first duty (2) Obedience to P’s instruction (3) Exercise of reasonable care

Specific obligations of agent to principal (1) to carry out the agency which he has accepted; (2) To answer for damages which through his non-performance the P may suffer

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Janz Hanna Ria N. Serrano (3) To finish business already begun on the death of the principal should delay entail any danger; (4) To observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the

owner in case he declines an agency, until an agent is appointed; (5) To advance the necessary funds should there be a stipulation to do so; (6) To act in accordance with the instructions of the principal, and in default thereof, to do all that a good father of a family would

do (7) not to carry out the agency if its execution would manifestly result in loss or damage to the principal (8) to answer for damages if there being a conflict between his interest and those of the principal, he should prefer his own; (9) not to loan to himself if he has been authorized to lend money at interest; (10) To render an account of his transactions and to deliver to the principal whatever he may have receive by virtue of the agency (11) To 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; (12) To be responsible in certain cases for the acts of the substitute appointed by him (13) To pay interest on funds he has applied to his own use (14) To inform the principal, where an authorized sale of credit has been made (15) To bear the risk of collection, should he receive a guarantee commission (16) To indemnify the principal for damages for his failure to collect the credits of his principal at the time that they become due (17) To be responsible for fraud or negligence CC, 1928. The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. CC, 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

C. Not to carry out the agency CC, 1888. An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal

D. Loyalty CC, 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own. CC, 1890. If the agent has been empowered to borrow money, he may himself be the lender at the current rate of interest. If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal. CC, 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.

Every stipulation exempting the agent from the obligation to render an account shall be void. E. Diligence

CC, 1885. In case a person declines an agency, he is bound to observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent or take charge of the goods. CC, 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.

In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. IF an act done by an agent is within the apparent scope of his authority with which he has been clothed, it matters not that is is directly contrary to the instructions of the principal CC, 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation.

F. Account/deliver CC, 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.

Every stipulation exempting the agent from the obligation to render an account shall be void G. Solidary liability

CC, 1894. The responsibility of two or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated. CC, 1895. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment of agency, and for the fault or negligence of his fellows agents, except in the latter case when the fellow agents acted beyond the scope of their authority

H. Pay interest CC, 1896. The agent owes interest on the sums he has applied to his own use from the day on which he did so, and on those which he still owes after the extinguishment of the agency.

I. Fraud; negligence CC, 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation.

J. Specific obligations of commission agents CC, 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. CC, 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. CC, 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. CC, 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. CC, 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. CC, 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose.

VIII. Responsibility for acts of substitutes

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Janz Hanna Ria N. Serrano CC, 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void CC, 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.

IX. What are the obligations and liabilities of agents to third parties? A. Agent acting within scope of authority

CC, 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal.

The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. Kinds of Principal (4) Disclosed – at the time of the transaction contracted by the agent, the other party thereto has known that the agent is acting

for a principal and of the P’s identity (5) Partially disclosed – if other party knows or has reason to know that agent is or may be acting for a principal but is unaware of

P’s identity (6) Undisclosed – party has no notice of the fact that such agent is acting as such for the P. Agency with undisclosed principal A1883 speaks of a case where agent (a) being authorized to act on behalf of the principal, (b) acts instead in his own name General Rule: the agent is the one directly liable to the person with whom he contracted as if the transaction were his own. Reason: there is no representation of the principal when the agent acts in his own name therefore, the P cannot have a right of action against the third person nor the third person against him. Agent should be liable for the act or omission of the principal only if the latter is undisclosed, unless it is clearly intended that the agent not be bound Exception: when the contract involves a thing belonging to the principal necessary for the protection of third persons against possible collusion between the agent and the principal agent is bound to the principal although he does not assume the character of such agent and appears acting in his own name the agent’s apparent representation yields to the P’s true representation and that, in reality and in effect, the contract must be considered as entered into between the principal and the 3rd person Remedy of principal – right to demand from the agent damages Remedy of 3rd person – may sue P and A in the alternative CC, 1897. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. Rule: principal is responsible for the acts of the agent done within the scope of his authority and should bear any damage cause to third persons. The agent acquires no rights whatsoever, nor does he incur any liabilities arising from the contracte entered into be him on behalf of his principal Exceptions: (1) when the agent expressly binds himself; (2) when the agent exceeds his authority; (3) when an agent by his act prevents performance on the part of the principal; (4) when a person acts as an agent without authority or without a principal; (5) a person who purports to act as an agent of an incapacitated principal

CC, 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware.

B. Agent acting outside of authority CC, 1897, supra CC, 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal's ratification. CC, 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. 1. With notice to third parties

CC, 1901. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agent's acts.

2. Without notice to third parties C. Agent acting in his own name; exception – CC, 1883.

X. What are the obligations and liabilities of principals to agents? PRIMARY OBLIGATION OF THE PRINCIPAL TO THE AGENT that of complying with the terms of their employment contract Specific obligations of principal to agent To comply with all the obligations which the agent may have contracted within the scope of his authority and in the name of

the principal To advance to the agent, should the latter so request, the sums necessary for the execution of the agency To reimburse the agent for all advances made by him, provided he us free from fault To indemnify the agent for all the damages which the execution of the agency may have caused the latter without fault or

negligence on his part To pay the agent the compensation agreed upon, or if no compensation was specified, the reasonable value of the agent’s

services A. Advance/reimburse

CC, 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency. Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was

not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made.

CC, 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles CC, 1918. The principal is not liable for the expenses incurred by the agent in the following cases:

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Janz Hanna Ria N. Serrano (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; (4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum.

B. Indemnify CC, 1913. The principal must also indemnify the agent for all the damages which the execution of the agency may have caused the latter, without fault or negligence on his part. Dela Cruz v. No. Theatrical.

C. Solidary liability CC, 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. Requisites: (1) there are 2 or more principals (2) the principals have all concurred in the appointment of the same agent (3) the agent is appointed for a common transaction or undertaking

D. Compensation – CC, 1875. agent does not have to prove that the agency is for compensation, but may be contradicted by contrary evidence liability of principal to pay compensation - amount – agreed upon or a reasonable value if not specified - compliance by agent with his obligation – the liability of the principal to pay commission presupposes that the agent has

complied with his obligation to such principal - procuring cause of the transaction – governing rule: agent must prove that he was the guiding cause for the

transaction, or, the “procuring cause” thereof (Inland Realty v. CA) o procuring cause refers to a cause originating a series of event which, without break in their continuity, result in

the accomplishment of the prime objective of the employment of the broker - evasion of commission in bad faith: (Infante v. Cunanan) - compensation contingent on profits – agent is not entitle to compensation until the principal realizes the profit - right of agent to compensation in case of double agency

o with knowledge of both principals: recovery may be had by the agent (Domingo v. Domingo) o without knowledge – agent can recover from neither, where his employment by either is concealed

from or not assented to by the other o with knowledge of 1 principal – in pari delicto as to the knowledged principal and agent

E. Agent’s lien CC, 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles.

XI. What are the obligations of principals to third parties? General rule: when the relation of agency legally exists, the principal will be liable to third persons for all acts committed by the agent and obligations contracted by him in the principal’s behalf in the course and within the actual (express or implied) or apparent scope of his authority, and should bear the damage caused to 3rd persons. This responsibility is not altered by the fact that the agent also may be liable, not by the fact that some of the acts are to P’s disadvantage while others are to his advantage. || the principal becomes liable to the 3rd party when he ratifies an unauthorized act of his agent. Reason for liability: A principal is liable for the acts of his agent within his express authority because the act of such agent is the act of the principal. Estoppel to deny: P is bound by the act of his agent when he has placed the agent in such position that persons of ordinary prudence are thereby led to believe and assume that the agent is possessed of certain authority, and to deal with him in reliance on such assumption. The rule that P is responsible for the acts of his agent within the apparent scope of his authority applies only where the principal is responsible for such appearance of authority Waiver of claim against principal: since it is the principal who should be answerable for the obligation arising from the agency, it is obvious that if a 3rd person waives his claims against the principal, he cannot assert them against the agent Agency from necessity or by operation of law: authority limited to the necessity and ceases to exist when the emergency has passed. A. Agent acting within scope of authority

CC, 1883, supra. CC, 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. Representation, essence of agency (1) Agent acts in a representative capacity – in order that the principal be held liable for the acts of the agent, it is not enough that

the latter does an act within the scope of his authority; the agent should have done the act in a representative capacity, i.e., in the principal’s name

(2) Agent acts within the limits of his authority – 2nd paragraph, A1910: the agent who exceeds his authority is not deemed as a representative of the principal; in effect, he acts without authority and becomes personally liable for any damage caused. Hence, the principal is not bound unless he ratifies the act expressly or impliedly Ratification – the adoption or affirmance 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. - PURELY VOLUNTARY Conditions for ratification: a. the principal must have the capacity and power to ratify; b. he must have had knowledge or had reason to know of material or essential facts about the transaction

- material facts: those which reasonably ought to be known by the principal, having in mind the factors of time, place, and circumstance, and especially the situation of the parties.

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Janz Hanna Ria N. Serrano - in order to bind a principal by ratification, he must have been in possession of all the facts and must have acted in light of such facts

c. he must ratify the act in its entirety; d. the act must be capable of ratification; and, e. the act must be done in behalf of the principal Effects of ratification by principal 1. with respect to agent – relieves the agent from liability to the 3rd part to the unauthorized transaction, and to his

principal for acting without authority and he may recover compensation due for performing the act which has been ratified

2. with respect to principal himself – principal who ratifies thereby assumes responsibility for the unauthorized act, as fully as if the agent had acted under original authority but he is not liable for acts outside the authority approved by his ratification

3. with respect to 3rd persons – ordinarily, a 3rd person is bound by a ratification to the same extent as he would have been bound by a ratification to the same extent as he would have been bound if the ratified act had been authorized in the first instance, and he cannot raise the question of the agent’s authority to do the ratified act

- RETROACTIVE EFFECT OF RATIFICATION – general rule; exceptions: o Where to do so would be to defeat rights of 3rd parties which have accrued between the time of the making of the

unauthorized act and the ratification o Where to do so would be to render wrongful an otherwise rightful act or omission which has taken place between the

act and ratification o Where to do so would be to allow the circumvention of a rule of law o If the party has withdrawn from the contract, the act or transaction is no longer capable of ratification

CC, 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible.

B. Agent acting outside scope of authority CC, 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. CC, 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Estoppel: a bar which precludes a person from denying or asserting anything contrary to that which has been established as the truth by his own deed or representation Ratification Estoppel Rests on intention, express or implied, regardless of prejudice to another

Rests on prejudice rather than intention

Party is bound because he intended to be He is bound notwithstanding the absence of such intention because the other party will be prejudiced and defrauded by his conduct

Affects the entire transaction and from the beginning Affects only relevant parts of the transaction and from that only when estoppels may be said to be spelled out

Substance: confirmation of the unauthorized act or contract after it has been done

Substance: principal’s inducement to another to act to his prejudice

A1911: the agent must have acted in the name of a disclosed principal and the 3rd person was not aware of the limits of the power granted by the principal CC, 1916. When two persons contract with regard to the same thing, one of them with the agent and the other with the principal, and the two contracts are incompatible with each other, that of prior date shall be preferred, without prejudice to the provisions of Article 1544. CC, 1917. In the case referred to in the preceding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible.

C. For crimes; for torts (1) General rule – principal is civilly liable to 3rd persons for torts of an agent committed at the principal’s direction or in the course and within the scope of the agent’s employment (2) Reason for liability – based upon the principle that he who acts through another does it himself.

XII. Duty of third parties dealing with agent CC, 1902. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. Liability of third persons to principal (1) in contract – a 3rd person is liable to the principal upon contracts entered into by his agent, in the same manner as though the contract were entered into by the principal himself (2) in tort – 3rd person’s tort liability to the principal, insofar as the agent is involved in the tort, arises in 3 main factual situations: (a) where the 3rd person damages or injures property or interest of the principal in the possession of the agent; (b) where the 3rd person colludes with the agent to injure/defraud the principal; and, (c) where the 3rd person induces the agent to violate his contract (3) in respect of property received – P cannot recover from 3rd party if 3P is in good faith

XIII. How is agency extinguished? A. Revocation; agency coupled with an interest

CC, 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. Communication of existence of agency

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Janz Hanna Ria N. Serrano (1) if by special information (e.g. by letter), the person appointed as agent is considered such with respect to the person to whom

it was given (2) if by public advertisement, the agent is considered as such with regard to any person Manner of revocation of agency – in the same manner in which it is given

- if agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they weren’t given notice thereof

Estoppel to deny agency (1) estoppel of agent – one professing to act as agent for another may be stopped to deny his agency both as against his asserted

principal and the third persons interested in the transaction in which he 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 accepts the benefits of them, will be stopped to deny the agency as against such other

b. as to sub-agent – to estop the principal from denying his liability to a third person, he must have known or be charged with knowledge of the fact of the transaction and the terms of the agreement between the agent and the 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 stopped to deny the agency.

(3) estoppel of third persons – a 3rd person, having dealt with one as an agent may be stopped to deny the agency as against the principal, agent, or 3rd persons in interest. (4) estoppel of the government – neither stopped by the mistake or error on the part of its agents. But may be stopped through affirmative acts of its officers acting within the scope of their authority. Agency by estoppel and implied agency distinguished

Agency be estoppels Implied agency There is no agency at all, but the one assuming to act as agent has apparent or ostensible, although not real, authority, to represent another – it is not a real agency as is one under express or implied authority

There is an actual agency, as much as if it were created by express words

If caused by principal: liable to 3rd persons who relied on the misrepresentation If cause by the agent: only the agent is liable

Principal alone is liable

Can be invoked only by a third person who in good faith relied on the conduct of the principal in holding agent out as being authorized

Reliance not nevessary in an implied agency

An apparent agent is no agent at all, and as against the principal, has none of the rights of an agent, except where the principal’s conduct or representations are such that the agent reasonable believed that the principal intended him to act as agent in the matter

An agent by implied appoint is a real agent with all the rights and liabilities; he has actual authority to act on behalf of the principal

In a strict sense, should be restricted to cases in which the authority is not real but apparent

Being an actual agency, it is a fact to be proved by deductions or inferences from other facts

CC, 1919. Agency is extinguished: (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;

- Termination of agency ipso facto – at least as between the parties, principal and agent, the fulfillment of the purpose for which the agency is created ipso facto terminates the agency

(6) By the expiration of the period for which the agency was constituted. - Term specified: - Term not specified: terminates at the end of a reasonable period of time

CC, 1920. The principal may revoke the agency at will, and compel the agent to return the document evidencing the agency. Such revocation may be express or implied.

- Agency generally revocable at will by principal – subject only to exceptions in A1927, P may revoke the agency at will – at any time, at his mere option, with or without reason – since an agency relationship is voluntary

- Liability of principal for damage caused by revocation: while the principal may have absolute power to revoke the agency at any time, he must respond in damages for breach of contract where the termination is wrongful

- Implied revocation – (1) P appoints new agent for the same business or transaction; (2) when the principal directly manages the business entrusted to the agent; (3) When the principal after granting a GPA to an agent, grants an SPA to another, there is implied revocation as regards the special matter involved

- Notice of revocation o To agent: express notice to the agent that the agency is revoked is not always necessary o To 3rd persons: actual notice must be brought home to former customers, while notice by publication is

sufficient as to other persons - Agency terminable at will – just as the principal has the power to revoke the agency at will, so too, the agent has the

power to renounce the agency relationship - Form of renunciation – not necessarily express, as when he has conducted himself in a manner clearly incompatible

with his duties as agent >>> when agent abandons object; when agent institutes an action against P for recovery of balance

CC, 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were not given notice thereof. CC, 1922. If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons.

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Janz Hanna Ria N. Serrano CC, 1923. The appointment of a new agent for the same business or transaction revokes the previous agency from the day on which notice thereof was given to the former agent, without prejudice to the provisions of the two preceding articles.

- Implied revocation of previous agency when the principal appoints a new agent for the same business or transaction provided that there is incompatibility (Dy Buncio v. Ong Guan Gan)

CC, 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons CC, 1925. When two or more principals have granted a power of attorney for a common transaction, any one of them may revoke the same without the consent of the others. CC, 1926. A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in the latter. CC, 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. Agency coupled with interest General rule: principal may revoke an agency at will Exceptions: (1) when the agency is created not only for the interest of the principal but also for the interest of 3rd persons (2) when the agency is created for the mutual interest of both the principal and the agent termination of the agency (1) interest in the subject matter of power conferred it is essential that the interest of the agent shall 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 therefor. e.g. (a) where agent has parted with value or incurred liability at the P’s request, looking to the exercise of the power as the means of reimbursement or indemnity; (b) where the interest in the thing concerned which the power is to be exercised arises from an assignment, pledge or lien created by the principal with the agent

(2) B. Withdrawal

CC, 1919. supra CC, 1928. The agent may withdraw from the agency by giving due notice to the principal. If the latter should suffer any damage by reason of the withdrawal, the agent must indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. CC, 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.

C. Death; agency coupled with an interest CC, 1919. supra CC, 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor. CC, 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause 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. CC, 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.

D. Dissolution of the firm/corporation E. Accomplishment of the object/purpose F. Expiration of the period G. Civil interdiction, insanity, insolvency

agency midterms (de leon annotations)

Documents

janz hanna

orient air

principal

solidary liability

giving due

strict sense

good faith

preceding