1868-1883

Janice I. Diaz

Bus Org I (for midterms) TITLE X AGENCY CHAPTER 1 (1868-1883) Nature, Form and Kinds of Agency

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.

 The basis of agency is representation, while in other forms of services, employment  agent represents his principal  Perfection of the contract of agency: by offer and acceptance (acceptance may be implied))  essence of agency is that the agent renders service in representation or on behalf of another  Control Factor, categorizes agency- the agent agrees to act under the control or direction of anotherthe principal  On the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions. On the part of the AGENT- there must be an intention to accept the appointment and act on it (VMC Inc v CA)

 “for and in our behalf” phrase- not necesaarily establish an agency; it depends on the intention of the parties as gathered from the whole scope and effect of the language employed.  Essential elements of the contract of agency: 1, There is consent, express or implied, of the parties to establish the rel'n of agency 2. the object is the execution of a juridical act in relation to a third person 3. the agent acts as a representative and not for himself 4. the agent acts w/in the scope of his authority  Under the Civil Code- civil agency is one formed for other aims or purposes. No more commercial agencies  Special agents- the state is responsible in like manner when it acts through a special agent, but not when the damage has been caused by the official to whom the task done properly pertains; governed by Art 2180 dealing on vicarious or imputed liability  Characteristics of an agency contract: 1. Nominate contract- given a specific name 2. Bilateral – 2 or more parties 3. Preparatory- in preparaton for the execution of juridical act in rel'n to 3r person 4. Fiduciary 5. Representative relation and not a personal one in rel'n to 3rd persons 6. generally onerous  Parties in a contract of agency: 1. Principal- party represented by the agent. The latter derives his authority form the former 2. Agent- he is the party who represents the principal, he stands for another 3. Sub-agent- he is the agent of the agent  Agent- mandatarius; principal- mandans; contract itself- mandatum (roman)  Economic significance of agency- principal can expand his individual and corporate activities  capacity of the principal and agent- principal is capacitated to enter into contract  Co-ownership- a person's co-ownership is not inconsistent with her authorizing another to sell her share in the property via n agency arrangement  Operator of gasoline station considered agent and not an independent contractor

Article 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.  Classes of agency under 1869: 1. Express- that kind where the agent is actually clothed by the principal w/ authority- Iin writing or Oral or Verbal 2. Implied- agency created is deduced from thea. Acts or conduct of the principal b. Silence or lack of action c. Failure to repudiate the agency  Other kinds of agencies: As to Nature- 1. Conventional- created by agreement of the parties 2. Legal- formed by operation of law As to consideration- 1. Gratuitous- the agent does not receive any compensation 2. Onerous- agent receives compensation foe his services As to Extent of transaction covered: 1. General- comprises all transactions of the principal 2. Special- comprises one or more specific transactions As to Management 1. Agency couched in general terms- only acts of administration 2. Agency couched in specific terms- acts of dominion or ownership w/c needs a SPA to bind the principal As to manner of appointment 1. Direct- when principal appointed the agent directly 2. Indirect- appointment is through another person  Form of agency- may be in writing (public or private) or verbal . When the law requires a specific form, thet form must be observed 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.  It is only in legal agencies where he cannot refuse the creation of the agency because the law dictates  When implied acceptance is from silence, there are 2 situations: 1. where the persons are present (1871) 2. where the persons are absent (1872) Article 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. (n)  Power of attorney- an instrument in writing whereby one person, as principal, appoints another as his agent and confers autority to perform certain specified acts or kinds of acts in behalf of the principal

 Purpose of Power of attorney- to evidence the authority of the agent to 3rd parties with whom the agent deals; and the person holding a power of atty is shown and designated as an atty in fact, thus distinguishing such person from an atty at law  EXCEPT as may be req'd by a atatute, a power of atty is valid although no notary public intervened in its execution  Form of agency- may be oral unless the law requires a specific form  Implied agency who are personally present-

 If the person wants to decline the appointment as an agent, he must tell the principal immediately, otherwise his silence might be interpreted as acceptance  there is no objection or reply given by the agent to the principal 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) 

applies only to both persons who are absent

 there is no objection or reply given by the agent to the principal  Acceptance of agency is not compulsory- the agent's immediate reaction is necessary so that his silence may not be interpreted as silence Basis

1871

1872

Condition of creation

When created, both principal and agent are present

When created, both the principal and the agent are absent

Manner of delivery

The power of atty is personally delivered by the principal to the agent

The power of atty is not personally delivered. There is transmission by messenger, or by letter or telephone

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.  Effects of special information- the recipient becomes an agent of the informant who now becomes liable as a principal. An agency by estoppel was created  Effect of public advertisement- becomes an agent of the advetiser who in turn becomes a principal. Agency by estoppel  Manner of termination or rescission of agency- it shall continue to exist and be effective until the notice had been rescinded in the same manner it was given Implied agency

Agency by estoppel

There is an actual agency. Hence, he has rights and duties as an agent

There is no actual agency. He has no rights and duties as an agent

The principal is liable alone, not the agent

If caused by the principal, he alone is responsible. If caused by the agent, he alone is responsible. The 3rd persons must have acted in good faith

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)  applies to the sale of land or any interest therein suc as usufruct, mortgage, antichresis  Sale is effected by the owner himself or through an agent of the owner  if the owner himelf sells a parcel of land/interest therein, if not made in writing, the sale is

UNENFORCEABLE (subject to reatification)  but if through an agent and is not in writing, the sale is VOID  the law speaks of sale. Repurchase through an agent partakes of the nature of sale, which when effected through an agent, the agency should be in writing to be valid. Article 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n)  Gratuitous agency- the law does not raise an implied promise to pay thereform though the service be valuable  an agent is entitled to compensation ONLY AFTER he has completely or substantially completed his obligation as an agent  the right of the broker to commission arises from conclusion of transaction- by stipulation, compensation may be contingent or dependent upon realization of profit for the principal.  Transaction need not only be perfected but also consummaed to justify broker's or agent's commission  labor of agent, when it is the proximate casue of the contract preparation of documents part of the broker's function  a sub-agent may join a suit for compensation against the principal  an agent acting simultaneously for both the seller and buyer is exercising DOUBLE AGENCY. It is improper unless the agent is acting w/ the full knowledge and consent of principal parties. The agent is not entitled to any compensation  right of principal to terminate agent;s authority when no time is fixed  BROKER- negotiator b/n the parties. HE does not act in his own name. He is a middleman or for some purposes, the agent of both parties  AGENT-represents only one party as a rule. He is acting in the name of his principal and equipped w/ power of atty signed by the latter Article 1876. An agency is either general or special. The former comprises all the business of the principal. The latter, one or more specific transactions.  General agent- agent who is empowered to transact all the business of his principal  Special agency- only one or more specific transactions are covered in the authority of the agent  Special agent- authorized to do only one or more specific acts in pursuance of particular instructions or w/ restrictions necessarily implied from the act to be done  Universal agency- the agent is uthorized to do all acts for his principal w/c can lawfully be delegated to an agent Article 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.  General power permits the agent to do all acts for w/c the law does not require a specific power Article 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; (2) To effect novations which put an end to obligations already in existence at the time the agency was constituted; (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; (4) To waive any obligation gratuitously; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired

either gratuitously or for a valuable consideration; (6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent; (7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under administration; (8) To lease any real property to another person for more than one year; (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; (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion. (n) 

SPA- an authority granted by the principal to the agent where the act for which it is drawn is expressly mentioned

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General power of Atty- an authority granted to the agent to do all acts of a particular character

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a special power can be included in a general power of atty, either by giving authority for all acts of a particular character or by specifying the act or transaction for w/c a special power is needed.

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Children cannot execute a SPA while their father is alive

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Principle- An express power is necessary to perform any act of strict ownership which is the principle in Art 713, par 2

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a general power permits the agent to do all acts for which the law does not require a special power

 15 acts neessitating SPA for validity Article 1879. A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell.  Power to sell is more onerous that the power to mortgage Article 1880. A special power to compromise does not authorize submission to arbitration.  A SPA is req'd to authorize the agent to enter into compromise Article 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.  In agency, authority is delegated authority  authority may be express or implied  Express when it is specifically definedm either in writing or orally  Implied- its performance is deemed included in an expres power or is necessary to the accomplishment of the  Aithority is the cause . Power is the effect  Authority-in-fact- need not be a lawyer  Attys-at-law- agents but their agency is special one and of limited character  Basic principles in an agency: 1. the agent must act w/in the scope of his authority 2. the agent must act on behalf of the princiipal and not on his own behalf.  Possible irregularities in agency 1. agent has authority but acts on behalf of himself- agent can have a recourse only against third

person and vice versa 2. supposed agent has no authority but acts on behalf of another- transaction is unauthorized and unenforceable . Only the supposed agent is bound, unless princiipal ratifies the representation made on his behalf. 3. Supposed agent has no authority and acts on his own name- only the agent is bound  Agency by necessity 1. an emergency actually exists 2. agent cannot timely communicate w/ the princiipal 3. exercise of the addt'l authority is for the princiipal's own protection 4. adoption of reasonable means to cope w/ the situation 5. stoppage of the authority from the moment emergency ceases Article 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.  Administrator of a land cannot sell the land even at a better price, unless he has a SPA  Presupposes sufficient authority to fulfill the agency Article 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.  Disclosed and undisclosed Principals 1. Disclosed princiipal is one who at the time of the transaction contracted by the agent, the other party dealing w/ the agent has known that the agent is acting for a principal whose identity is revealed 2. Undisclosed principal is one whom the other party dealing with the agent has no notice of the fact that the said agent has no notice of the fact that the said agent is acting for a principal  Reasons why agent is personally liable under 1883: To bind the principal, and to avoid personal liability with the person w/ whom the agent contracts, the agent must: 1. act within the scope of his authority 1881 2. act in the name or representation of the principal 1897/1868

 when agent acts in his own name, resulting contract is b/n him and 3rd person. He is personally and directly bound by the contract and the princiipal has no cause of contract w/ 3rd person and vice versa.  Exception to the rule- Art 1883, par 2; rationale: in order to protect third persons against possible collusion b/n agent and princiipal

 the agents who made in their own names may sue the 3rd person. He may sue or be sued in his individual capacity.  When principal is disclosed , action must be filed by or agianst him

 remedy of 3rd person in case of authority of agent is doubtful- he should be included in the case as party defendant. This is a suit against alternative defendants  effect when agent becomes the assignee- agent does not have such an interest in a contract to entitle him to maintain an action at law upon it in his own name  remedy of an Undisclosed Principal- purchaser takes title to the merchandise and the principal cannot maintain an action against him for recovery of the merchandise or for damages, BUT can only proceed against the AGENT