Professional Documents
Culture Documents
Definition
Article 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. (1709a)
P and A are friends, A on Ps behalf met T and brought business relations between P and
T. When P did not even encounter P. Is there a contract of agency? Doles vs Angeles
(2006), Philex Mining Corp vs CIR (2008) , Litonjua Jr vs Eternit Corp (2006)
Yes, agency is valid and compensation is tenable.
Parties capacity
Both principal and agent must have the capacity to contract to enter into a valid
agency.
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Principle of Relativity
The agency is personal. If the principal or agent dies or becomes legally incapacitated,
the agency should ipso facto jure cease. But
Public Policy
But agency is preparatory contract. It must effect the juridical relationship between
the principal and the third party. The law of agency affirms the validity of the contract.
If a person represented someone to a third party without capacity/ without legal
representation and the third party/person does not know it, contract is valid because of
public policy
Civil interdiction, insanity and insolvency extinguishes the agency. If these grounds exist
before the agency is perfected
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Principle of consensuality
No person may be represented without his will, nor a person be compelled against his
will to represent another.
Exception to the rule: Agency by estoppel
The agency of estoppel is an exception to the principle of consensuality.
The purported principal and the purported agent is brought into a relationship in so far
as a third party in good faith are concerned.
Knowledge of defect by the third person is a manifestation of bad faith and does
connotes misrepresentation.
Object of agency
Can real and personal properties be a valid object of agency? Rallos vs Felix Go Chan
and Sons Reality Corp. (1978)
No, by definition, only service and not properties is subject to a contract of agency
Presumption of compensation
Agency is presumed to be for compensation (A 1875)
Article 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n)
A is Ps agent. A, on Ps behalf, collects rentals from Ps tenants for 8 years since 1920. A
did not receive compensation ever since but was allowed to occupy Ps parcel of land
and build a house thereon. Is A entitled to compensation aside from the use of Ps
property? Aguna vs Larena (1932)
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No, intervening time is so long and the introduction of P to T by A is not the efficient
procuring cause.
Characteristics
A, acting on Ps behalf and with his authority, sold Ps property to T. P calls him
employee. A calls P boss. They entered into an employment contract. Is there a valid
employment contract? Doles vs Angeles (2006)
None, it is a contract of agency or contract of representation because of the element
of authority to act in behalf of the principal.
NB: Contract is what the law says it is and not what the parties call it.
A is Ps sales agent. A failed to fulfil his obligation under the agency. Is he liable to P
assuming he agreed not to be entitled to compensation?
Article 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. (n)
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Article 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n)
Article 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. (1726)
Control
The basis of agency is representation, and that consequently, one of the strongest
feature of a true contract of agency is that of control that the agent is under control
and instruction of the principal
Agency versus
Employment contract
Contract for a piece of work
Management agreement
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Contract of sale
Brokerage contract
T, a theatre, hired S, a security guard and authorized him to maintain peace and order
at the entrance of the theatre. Is there an agency? Dela Cruz vs Nrotheren Theatrical
Ent. (1954). Yes
P authorized C to build a house on Ps behalf. C can choose the men, method, and
materials for building the house. C didnt finish building the house, so P took over. Can S,
Cs supplier run after P to assume Cs direct liability to S? Fressel vs Mariano Uy Chaco
Sons and Co. (1915)
This is a contract of piece of work. Hence S cannot run after P, his remedy is to run after
C in his personal capacity.
P authorized M under a management contract to develop mine, operate the mill, and
do all undertakings necessary or incidental to the development of mine or operation of
mill. Can P revoke Ms contract at will? Neilson and Co vs Lepandto Consolidated
Mining Co. (1968)
No, what is contemplated above is not a contract of agency but a management
contract hence is not revocable at will.
P authorizes A to sell Ps products. Under As contract, at the end of 60 days and the
products are unsold, A should pay P. Is there a valid agency? Quiroga vs Parsons (1918)
None, based on stipulations, the contract is a consignment sale.
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P authorizes A to sell goods to B. Under the contract, P can hold A liable to the prices
fixed, even if there an unforeseen events unfavorable to A like price changes, loss of
goods not covered by insurance, or client doesnt fill the order. Is there a valid agency?
Gonzalo Puyat and Sons vs Arco Amusement CO. (1941)
None, this is a contract of sale.
B contracted I to import boxes of oranges from USA. The boxes were lost in transit. B
demanded refund of advance payment, I refused on the ground that it merely
imported the oranges on Bs behalf. Is there a valid agency? Chua Ngo vs Universal
Trading Co Inc (1950)
This is a contract of sale. A refund should be made by I to B for non-compliance of his
obligation to deliver.
P appointed D as sole distributor of bee waxes in the Visayan area. Under the
distributorship, D will be responsible to pay the value of the shipment so purchased. A
failed to pay so P run after Ds surety. Is this a sale or an agency? Pearl island
commercial Corp vs Lim Tan Tong (1957) .. Quiroga vs Parsons (1918)
It is a contract of sale.
P and A entered into a formal contract whereby A agreed to act as Ps agent to export
corn and rice, and to import collateral goods thru barter on no-dollar remittance basis;
A also agreed to buy the collateral goods. The government issued rules barring barter
of goods from abroad. P wanted to recover price for exported grains. Is there a sale or
agency? National Rice and Corn Co (1979)
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Is a broker an agent?
A broker is a middle man whose task is to bring arties together to close a deal. Hence a
broker is not an agent.
Yes, an agent may be a broker but not the other way around.
o
o
o
o
B is Ps broker appointed to find prospective buyer for Ps parcel of land. Is the Broker
authorized to enter into a contract in the name of the principal? Litonjua vs Eternit Corp
(2006)
No, a brokers task is only to bring the parties together. It has no authority to close a
deal.
B is Ps broker appointed to find prospective buyer for Ps parcel of land. Is the Broker
authorized to enter into contract in the name of the principal?
No, a brokers task is limited to bringing the parties together. It has no authority to close
a deal.
B is Ps broker appointed to find prospective buyer for Ps parcel of land. Is the Broker
allowed to buy Ps parcel of land? (A 1491, A 1492) ; Araneta vs Del Paterno
No, he is restricted by law.
Article 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in
person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to them, unless the
consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
government-owned or controlled corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government experts who, in any manner
whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any litigation in which
they may take part by virtue of their profession;
(6) Any others specially disqualified by law. (1459a)
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Article 1492. The prohibitions in the two preceding articles are applicable to sales in legal redemption,
compromises and renunciations. (n)
A law firm has a client whose employee has been receiving it for the client and turning
it over to the law firm. One day, the law firm did not receive a court notice and found
out that the same employee received it but failed to turn it over to the law firm. Is there
a valid service of the notice to the law firm? Equitable PCI bank vs KU (2001)
Yes, this implies a contract of agency for failure of the law firm to repudiate the
relationship of it to the employee. Hence, notice is valid and binding.
A is Ps agent. This has been known to C. Ps long standing client. P sent a termination of
the agency to A. In spite it, A still receives goods from C. Can C make P responsible for
the goods? Rallos vs Yangco (1911)
Yes, P is responsible. A contract of agency can be terminated at will. However, answer
would be different if C was not notified of the termination of the agency.
The son-in-law of the seller, though not authorized by the seller, exercised the sellers
right of redemption. The buyer accepted the exercise and did nothing for the next 10
years to clean the title. Is the redemption valid? Conde vs CA (1982)
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H, hotel owner, allowed T, a third party, to use the tile managing agent and to take
charge of the business, in Hs prolonged absences. T bought supplies for the Hotel bar,
without Hs authority from Hs suppliers. Is there an agency? Macke vs Camps (1907)
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