Agency- 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.
-power to effect the principals contractual
relations with third person
Characteristics:
1. Consensual- based on consent
2. Principal- it can stand by itself
without the need of another
contract
3. Nominate it has own name
4. Unilateral if gratuitious because it
creates obligations for one party
a. Bilateral if reciprocal rights
5. Preparatory- it is entered into as a
means to an end

1. Principal- one whom the agent

represents and from whom he
derives his authority
2. Agent- one who acts for and
represents another; he is the
person acting in a representative
capacity.
ESSENTIAL ELEMENTS OF AGENCY
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
person
3. The agent acts as a representative
and not for himself
4. The agent acts within the scope of
his authority
Creation of Agency Relationship

1. Nature it is essential that the

minds of the parties should meet in
making it
a. Manifestation of consentthe principal must intend
that the agent shall act for
him and such intention
should be express either in
words or in conduct.
b. Agent by legal fiction,
becomes principal- he
becomes such when he is
authorized to perform all
acts which the latter would
have him do. (with consent /
authority)
c. Presence/absence of
contract2. Basis- representation. (1868)
3. Purpose- To extend the personality
of the principal through the facility
of the agent.
-Enables the activity of man
which is naturally limited to
be legally extended by
permitting him to be
constructively present in
many diff places.
PARTIES OF THE CONTRACT

Consensual therefore parties must

mutually agree on its creation
A person may express his consent by:
a.
b.
c.
d.
e.

Contract
Orally or in Writing
Conduct
Ratification
Presumption or operation of
law

For the principal:

-there must be an intention to
appoint the agent
For the agent:
-there must be an intention to
accept the appointment and act on it.
CAPACITY OF THE PARTIES
1. Principal- Must be capacitated or have
the legal capacity to enter into a contract
a. May either be natural or artificial
person
2. Agent- Anyone can be an agent. His
capacity is immaterial.

He assumes no personal liability

He does not have to possess full
capacity to act for himself
Derives his authority from the
principal

ACTS THAT MANY BE/NOT DELEGATED TO

AGENTS
1. Personal acts- if personal
performance is required by law or
public policy, the doing of the act
by a person on behalf of another
does not constitute performance by
the latter.
a. Right to vote
b. Making of a will
c. Statements under oath
d. Member of BOT cannot validly
act by proxy
e. An agent cannot delegate to a
sub agent the performance of
acts which he has been
appointed to perform in person
2. Criminal Acts- An attempt to
delegate to another authority to do
an which, if done by principal
would be illegal is void. There can
be no agency in the perpetration of
crime
a. Since alien cannot acquire
agri lands, an alien cannot
purchase a land throught a
Filipino agent
b. Persons who, because of
their position and relation
with persons cannot acquire
the same through mediation
of another
c. When a person participates
in commission of a crime,
he cannot escape
punishment.
DETERMINATION OF EXISTENCE OF
AGENCY
-

A. Designation by the parties- if an

act done by one person in behalf of
another is in its essential nature of
agency
B. Fact of existence- determined by
the fact that one represents
another, and not by consideration.
C. Presumption of existence- if there
is a consent and fact
D. Intention to create relationshipa. Principal- there must be
either an actual intention to
appoint or intention
inferable from his actions
b. Agent- intention to accept
the appointment and act on
it
NATURE OF RELATIONS BETWEEN
PRINCIPAL AND AGENT
1. Relation is fiduciary in character
2. Agent estopped from asserting
interest adverse to his principal
3. Agent must not act as an adverse
party4. Agent must not act FOR an
adverse party
5. Agent must not use or disclose
secret information
6. Agent must give notice of
material facts
KNOWLEDGE OF AGENT IMPUTED TO
PRINCIPAL
1. Agents duty of notification
a. Required to notify the
principal of all matters that
came to his attention that
are material to the subject
matter of the agency.
2. Relationship of attorney and clienthe is entitled to the fullest
disclosure of why certain steps are
taken
3. Knowledge of the Principal- the
knowledge of the principal cannot
be imputed to his agent.
EXCEPTIONS TO THE RULE

No formalities are required in the

creation of agency

1. Where the agents interests are

adverse to those of the principal
2. Where the agents duty is not to
disclose the info as where is
informed by way of confidential
information
3. Where the person claiming the
benefit of the rule colludes with the
agent to defraud the principal.

transaction
AGENCY DISTINGUISHED FROM
INDEPENDENT CONTRACT
Agency
Subject to control
and direction of
principal

AGENCY DISTINGUISHED FROM LOAN

Agency
The financing
operations to be
carried on by
another for mutual
advantage of both,
without any
obligation to return
An agent may be
given funds by the
P to advance the
latters business
When checks are
deposited with the
collecting bank
that is the bank is
to collect from the
drawees of the
checks the
corresponding
proceeds- AGENCY
Relationship
Di ko gets ung
pang 4

Loan
When one borrows
money, a lender
has no interest or
concern in manner
of its conduct

Borrower is given
money for
purposes of his
own and must
return it
After the checks
are collected and
encashed- creditor
debtor relationship

AGENCY DISTINGUISHED FROM LEASE

Agency
BasisRepresentation
Exercises
discretionary
powers
3 persons are
involved (P,A,3rd
person)
Relates to
commercial or
business

Lease
Lease of serviceBasis-Employment
Ministerial
functions
2 persons
(master/employer)
Servant/employee
Mere manual or
mechanical
execution

Principal liable to
3rd persons

I.C
Without ,
exercises his
employment
independently and
not in
representation of
the employer
Employer not
liable for the torts
or injury inflicted
by the
independent
contractor

AGENCY DISTINGUISHED FROM

PARTNERSHIP
Agency
Control by the
principal
Liability (alam mo
na un)

If the owner takes

his agreed share of
profits, not as
owner but as an
agreed measure of
compensation for
his service

Partnership
Not subject to copartners right to
control
The partnership is
liable to the same
extent as the
partner so acting
or omitting to act
Profits earned
belong to the
parties as common
proprietors in
agreed proportion

AGENCY DISTINGUISHED FROM SALE

Agency
Agent receives the
goods of the
principal
Agent delivers the
proceeds of the
sale

Sale
The buyer receives
the goods as
owner
The buyer pays
the price

Agent cant return

the object in case
he is unable to sell
the same
Agent bound to act
according to the
instruction of
principal

b. Couched on specific termsauthorizing only the

performance of a specific
act
5. As to its nature and effects:
a. Ostensible or
representatives- one where
the agent acts in the name
and representation of the
principal
b. Simple or commission- one
where the agent acts in his
own name but for the
account of the principal

The buyer cannot

return the object
sold
The buyer can deal
with the thing as
he pleases, being
the owner

ART 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 in his behalf
without authority.
Agency may be oral, unless the law
requires a specific form
KINDS OF AGENCY
1. As to manner of its creation:
a. Express- one where the
agent has been actually
authorized by the principal
either orally or in writing
b. Implied- implied from the
acts of the principal, from
his silence or lack of action,
or his failure to repudiate
the agency
Ratification- may produce the
effect of an express or implied
agency
Agency by estoppel or implicationThe principal cannot deny the
existence of the agency after third
persons, relying on his conduct,
have had dealings with the
supposed agent.
2. As to its character:
a. Gratuitious- agent receives
no compensation
b. Compensated or onerous3. As to extent of business covered:
a. General- comprises all the
business of the principal
b. Special- one or specific
4. As to authority conferred:
a. Couched in general termsdeemed only to acts of
administration

FORMS OF AGENCY
G: Oral, Written or Implied
E:
1. When law required certain
formalities
2. When it is required to make the
contract effective against third
persons
3. When it is required for the purpose
of proving the existence of a
contract (1403)
PRESUMPTION OF AGENCY
1. General rule- Agency is not
presumed, there muse exist as a
fact.
2. Exception- By law or to prevent
unjust enrichment
ART 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.
-Kaya mo na yan intindihin bes
ART 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.
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.
-

Its purpose is not to define the

authority given to the agent but to
evidence the authority of the agent
to third parties

ARTICLE 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. (n)
If both the principal and agent are absent,
acceptance of the agency by the agent is
not implied from his silence or inaction.
Since the agent is not bound to accept
agency, he can simply ignore the offer.
However in the 2 cases above, agency is
implied.
ARTICLE 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. (n)

Communication of existence of agency

1. Special information (eg letter)- The
person appointed is considered
such
2. Public advertisement- newspaper
etc
Manner of Revocation- Paragraph 2 (sa
taas)
ARTICLE 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. (n)
1. Speaks only for the SALE of a piece
of land
2. Refers to sales made by an agent
not sales made by the owner
3. Up to sale, cannot be extended to
finding prospective buyers
ARTICLE 1875. Agency is presumed to
be for a compensation, unless there is
proof to the contrary. (n)
Amount- reasonable value of the
agents services if no compensation
was specified.
Note: A broker is never entitled to
commission for unsuccessful efforts
Why? Kailangan may sale.
Procuring Cause- refers to a cause
originating a series of events which,
without break in their continuity, result
in the accomplishment of the prime
objective of the employment of the
broker- producing a purchase ready,
willing and able to buy in the owners
terms.
An agent is not entitled to compensation
until the principal realizes the profit.