AGENCY AUF SCHOOL OF LAW AY 2014-2015

PCGPineda RN, MAN,MFR 1 | P a g e

Article 1868: By the contract of agency a person (agent) binds
himself to render some service or to do something in
representation or on behalf of another (principal) with the
consent of authority of the latter.
Concept: applies to all situations in which one person is
employed to render some service for another.
EXCEPTIONS:
Relationship of an employer and employee (Article 1700)
A constructs the building himself, buying the materials and
employing C who shall construct the building under his
direction and supervision.
Masters and servants (Article 1680)
Employer and independent contractor (Article 1713)
A hires C, a building contractor, to construct the
building with the materials and labor to be furnished by C
TERM USED IN OTHER SENSES
1. To denote the place at which the business is
transacted
2. In the sense of instrumentality by which the thing is
done
3. Refer to the exclusive right of the person to sell a
product of another in specific territory
CHARACTERISTICS OF A CONTRACT
1. Consensual perfected by mere consent
2. Principal it can stand by itself without the need of
another contract
3. Nominate it has its own name
o What do mean about it has its own name?
To distinguish them. E.g sale,
loan, hiring, partnership etc.
The civil code specifically
provides for it. It is specifically
defined in the civil code
4. Unilateral if gratuitous (obligations for one party
arises) Bilateral if it is for compensation (gives rise
to reciprocal obligation)
5. Preparatory entered into as a means to an end.
NATURE, BASIS, AND PURPOSE OF AGENCY
NATURE: Agency as a contract in article 1868
Manifestation of consent: Principal must intend that an agent
shall act for him in turn agent must accept the authority and
act on it.
EXPRESSION: EITHER IN WORDS OR CONDUCT
BETWEEEN THEM
Agent, by legal fiction, becomes principal: In acting for the
principal, by legal fiction agent becomes the principal
authorized to perform all acts which the latter would have him
do.
Presence/absence of contract or consideration: Although usually
the agency relationship is usually contractual one either express
or implied, based upon a consideration (ART. 1875) It is not
necessarily so; the relationship can also be created by operations
of law or acting as a principal gratuitously.
Ergo, there can be an agency or agency power without contract
or consideration.
AGENCY AUF SCHOOL OF LAW AY 2014-2015
PCGPineda RN, MAN,MFR 2 | P a g e

Legal consequence of agency may attach where one person acts
for another without authority or in excess of his authority if the
principal subsequently ratifies it (ARTS 1881-1882)
BASIS: Also a representative relation. Agent renders some
service or does something in representative or in behalf of
another
Personal contract of representation: based on trust and
confidence reposed by principal on his agent
Agency is generally revocable (Arts 1920, 1927)
Acts of agents, by legal fiction, acts of principal
If, Art 1881: The agent must act within the scope of his authority
xxx
Thus, agents acts produce the same legal and binding capacity
as if they were personally done by the principal.
He who acts through another acts himself
PURPOSE: To extend the personality of the principal through the
facility of the agent
PARTIES TO THE CONTRACT (PAT)
Principal - one whom the agent represents and
from whom he derives his authority
Agent one who acts for and represents another
Third party the party whom the business is
transacted
ESSENTIAL ELEMENTS OF AGENCY
Consent
o Implied
o Express
Object
o What the transaction is?
eg. Business transactions
o Execution of the agent of the juridical act
as a representative of the principal to a
third person
Agent acts as a representative and not for himself
Agent acts within the scope of his authority

AGENCY AUF SCHOOL OF LAW AY 2014-2015
PCGPineda RN, MAN,MFR 3 | P a g e