Article 1868 -He may employ his own agent
By the contract of agency Third Person- The One for which the business is transacted
a person binds himself
to render some service or to do something Essential Elements of Agency:
in representation or on behalf of another 1. Consent- Oral or in writing/ Conduct or Ratification/ Presumption or Operation of
with the consent or authority of the latter. Law
2. Object- is the execution of a juridical act in relation to third persons
Excludes that of: 3. The Agent Acts as a representative and not for himself
1. Employee and Employer (Article 1700) 4. The Agent Acts within the Scope of his authority
2. Master and Servant (Article 1680) 5. Competent to Act as a Principal and Agent
3. Employer and Independent Contractor (Article 1713) CONSIDERATION IS NOT REQUIRED
Fiduciary Relationship- Power of an Agent to Contract with third persons in behalf of Relationship of Third Party to the Principal and Agent
the Principal 1. The Liability extends to the Principal and not on the Agents
-Based on Trust and Confidence 2. The Agent has neither liabilities nor rights against the third party.
Except if he is an assignee
Governed by Civil Code
Capacity of the Parties:
Characteristics of a Contract of Agency 1. Principal
a. The Principal must be Capacitated
1. Consensual b. Natural or Artificial
2. Principal c. An Agent acting in behalf of the Principal without capacity is liable to third persons
3. Nominate d. The Act of the Agent may be ratified by the principal if he acquires a capacity
4. Unilateral/ Bilateral e. The Agent is not liable if he is ignorant to the Principals Incapacity
5. Preparatory
2. Agent
Can be created by mere Operation of Law a. His Capacity is Immaterial
Agency is Generally Revocable b. Mental Capacity is Required
Purpose- To extend the Personality of the Principal through the facility of the agent to
render some service or to do something Acts which cannot done by an agent:
1. Personal Acts
Parties to the Contract: a. Right to Vote
1. Principal b. Making of a Will
-One whom the agent represents and from whom he derives his authority c. Statement under Oath
-He is the Person Represented d. Member of the Board of Directors or Trustees
2. Agent e. The Agent cannot delegate to sub-agents
- One who acts for and represents another
-The Person Acting in a Representative Capacity Criminal Acts or Acts Not Allowed by Law
1. Prohibition to acquire property Agency v. Partnership
2. The Law on Agency has no Application in Criminal Cases 1. Agency- Controlled by the Principal
2. Partnership- Binds the Partnership including himself
No formalities are required for the creation of an agency relationship 3. Sharing of Profits
1. Intention of the Parties
2. Representative in behalf of another Agency v. Negotiorum Gestio
1. Express Representation
Agent must not act as an adverse party
Agent cannot serve two masters Agency v. Brokerage
Agent must not use or Disclose Secret Information 1. Broker earns a commission upon bringing the buyer and seller into a transaction
Agent must give notice of Material Facts 2. Broker has no relation with the thing he buys
Imputing Knowledge of the Agents to the Principal Agency v. Sale
Exceptions: 1. Agent=Receives the Goods as the Principal/ Sale= Receives the Goods as the
(1) Where the agent’s interests are adverse to those of the principal; Owner
(2) Where the agent’s duty is not to disclose the information, as where he is informed 2. Agent=Delivers the Proceeds to the Principal/ Sale= Buyer Pays the Price
by way of confidential information; and 3. Agent= Can return the Object/ Sale=Cannot Return the Object
(3) Where the person claiming the benefit of the rule colludes with the agent to 4. Agent= Act According to the Instructions of the Principal/ Sale= at his Discretion
defraud the principal.
Agency v. Bailment
The Agent is Subject to the Control of the Principal 1. Bailee does not bind the Bailor with respect to personal Liability
Agency v. Loan Agency v. Guardianship
(Terms of the Contract and Intention of the Contracting Parties) 1. Does not Derived Authority from the Ward
1. Money Advance=Money Lent- Loan 2. Created irrespective of consent
2. Purpose of Funds 3. Not subject to the control of the ward
4. Substituted by Law and not Appointed
Agency v. Lease 5. Represents one who has no capacity
1. Basis- Agency= Representation/ Lease= Employment
2. Functions- Agency= Discretionary/ Lease= Ministerial Functions Agency v. Trust
3. Persons Involved- Agency=3/ Lease=2 1. Title and control passes to the trustee
4. Agency=Commencial or Business Transactions/ Lease= Manual or Mechanical 2. Based on the Discretion of the Trustee
Execution
Agency v. Judicial Administration
Agency v. Independent Contract 1. Appointed by Court of Law
to accomplish a certain result (as the construction of a house) according to his own 2. Representative of the Court, Heirs, and Creditors of the Estate
method and without being subject to the other party’s control except as to the result
of the work, the contract is one for a piece of work
ART. 1869 ART. 1870.
Agency may be express, or implied Acceptance by the agent
from the acts of the principal may also be express, or implied from his acts which carry out the agency
from his silence or lack of action or from his silence or inaction according to the circumstances.
or his failure to repudiate the agency
knowing that another person is acting on his behalf without authority ART. 1871.
Agency may be oral, unless the law requires a specific form. Between persons who are present
the acceptance of the agency may also be implied
Kinds of Agency: if the principal delivers his power of attorney to the agent
1. Express- The Agent is Actually Authorized by the Principal and the latter receives it without any objection.
2. 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 May be Rebutted by Contrary Proof
on his behalf without authority
3. Gratuitous- The Agent does not receive any compensation A power of attorney is an instrument in writing by which one person, as principal,
4. Compensated or Onerous- The Agent receives compensation appoints another as his agent and confers upon him the authority to perform certain
5. General- Comprises all the business of the Principal specified acts or kinds of acts on behalf of the principal.
6. Special- Comprises Specific Business of the Principal
7. Couched in General Terms- Only Acts of Administration ART. 1872. Between persons who are absent, the acceptance of the agency cannot
8. Couched in Specific Terms- Only the Performance of a Specific Act or Acts be implied from the silence of the agent, except:
9. Ostensible or Representative- Acted in the name or representation of the Principal
10. Simple or Commission- Acted in his own name but for the account of the Principal (1) When the principal transmits his power of attorney to the agent, who receives it
without any objection;
Agency by Estoppel or Implication (2) When the principal entrusts to him by letter or telegram a power of attorney with
1. The Principal Cannot deny the existence of the agency after the third parties have respect to the business in which he is habitually engaged as an agent, and he did not
transactions or dealings with the agent reply to the letter or telegram.
Appointment of Agent ART. 1875.
1. By Principal Agency is presumed to be for a compensation, unless there is proof to the contrary.
2. By Referral
Under the Old Civil Code, The Contract of Agency is Gratuitous
Presumption of Agency
General Rule: Not Presumed The Presumption that it is to be for compensation may be rebutted
Authority of an Attorney to Appear on behalf of his Client- Presumed Determining the extent of liability of an agent for fraud or for negligence.
The principal is liable for the damage to third persons caused by the torts of the
gratuitous agent whose services he accepted.
The Payment by the Principal of Compensation infavor of the Agent presupposes that ART. 1901. A third person cannot set up the fact that the agent has exceeded his
the Agent has complied with its obligation. powers, if the principal has ratified, or has signified his willingness to ratify the agent’s
acts.
Right of agent to compensation in case of double agency
1. With Knowledge of Both Principals- Recovery can be made by Agents
2. Without Knowledge of Both Principals- Recovery Cannot be Made by Agents
3. Knowledge of one of the Principal- Recovery Cannot be Made by Agents as the
contract is void ab initio
Factors in Fixing the Amount of Attorneys Fee
1. No Overvaluation or Undervaluation of the Fees
Considerations
1. Time and Labor/ Difficulty/ and Skill Required
2. Expectation that he will involved in a loss of other business
3. Customary Charges
4. Amounts Involved in the Controversy/ Benefits received by the Client
5. Contingency of the Consideration or Compensation
6. Character of the Employment
ART. 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.
Effect where third person aware of limits of agent’s powers.
1. The Agent Acts in the Name of the principal with authority and within the scope of
the authority given- No Liability
2. The Agent Acts in the Name of the Principal in excess of the Authority Given-
Liable unless there is a ratification.
3. The Agent promised for the Ratification but failed to secured one- The Agent is
Liable
