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Defne Agency (MANDATO):
Agency is a contract whereby a person binds to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter. (Art. 1!)
"bservations: Defnition is very broad and therefore defective. As worded, the
defnition includes relationship of master and servant of employer and employee of lessor
and independent contractor. #he servant, the employee and the independent contractor all
render some wor$ or service in representation or on behalf of another.
%"#&: 'hat the agent really does for the principal is a ()*+D+,A- A,#, and not
merely a material one. +n other words, while an agent may e.ercise discretionary powers,
the lessess of service ordinarily performs only ministerial functions.
(ustice (/- *eyes: #he true essence of the distribution, it is submitted lies in that the
agent enters or is designed to enter 0udicial relations, with or without representation of the
Basis of Agency:
Agency is also a representation relation. *epresentation constitutes its basic. /y this legal
fction of representation, the actual absence of the principal is transferred into legal fction of
representation, the actual absence of the principal is transferred into legal or 0udicial
Imo!"ance: +t enables a man to increase the range of his individual and corporate
activity by enabling him to be constructively present in many places and to carry on diverse
at the same time.
#$!ose an% Na"$!e of Agency:
#he purpose is to e.tend the personality of the principal. +t enables the activity of man which
is naturally limited in its e.ercise by impositions of his physiological conditions to be
e.tended, permitting him to perform diverse 0uridical acts at the same time in di1erent
#he relation is fduciary in character since it is based on trust and confdence. 2ence the
agent is estopped from asserting or ac3uiring a title to the sub0ect matter of the agency
adverse to that or the principal.
4arties to a ,ontract of Agency:
4rincipal (5andante) 6 one whom the agent represent and from whom he derives his
authority, he is the person represented7 and
Agent (5andatario) 6 one who acts for and represents another7 he is the person acting in a
%"#&: #he principal is sometime called employer, constituent or chief. #he agent is
fre3uently called attorney, or an attorney in fact. &.g. occasionally is spo$en as pro.y,
delegate or representative.
Caaci"y of "&e a!"ies:
1. Any person who is capacitated to act in his own right may be principal.
8. +n the case of the agent, since he assumes no personal liability, he does not have
to possess full capacity to act insofar as third persons are concerned. /ut persons
who are absolutely incapacitated such as insane persons cannot be agents.
+nsofar as his obligations to his principal are concerned, the agent must be
competent to bind himself.
#!incia' o! essen"ia' e'emen"s of con"!ac" of Agency:
1. #here is consent, e.pressed or implied7
8. #he ob0ect is the e.ecution of 0uridicial act in relation to a third person7
9. #he agent acts as a representative and not for himself7
:. #he agent acts within the scope of his authority
C(ARACTERISTIC AS A CONTRACT)
Di1erent ;inds or ,lassifcation of Agency:
As to form:
As to the manner of creation:
a. &.press< one where the agent has been actually authori=ed by the principal either
orally or in writing7
b. +mplied 6 one, which implied from the acts of the principal, from his silence or lac$ of
action, or his failure to repudiate the agency.
As to cause:
a. "nerous or compensated 6 one where the agent receives compensation for his
services. Agency is presumed to be for compensation. (art. 1>?)
b. @ratuitous 6 one where the agent receives no compensation.
As to e.tent of business covered:
a. @eneral 6 one which comprises all business of the principal (art. 1>!)7 or
b. Apecial 6 one which comprises one or specifc transactions7
As to authority conferred:
a. ,ouched in general terms 6 one which is created in general terms and is deemed
comprise only acts of administration (art. 1>>)
b. ,ouched in specifc terms 6 one authori=ing only one performance of a specifc act or
acts (art. 1>)
As to its nature and &1ects:
a. "stensible or representative 6 one where the agent acts in the name and
representation of the principal (art. 1>)
b. Aimple or commission 6 one where the agent acts for the account of the principal but
in his own name7
Distinction with other ,ontracts
Distinguish Agency from -oan:
+n loan, a borrower is given money (a) for purpose of his own, in agency, to advance
principalBs business and he must generally return it whether or not his business is
Distinguish Agency form lease of service:
#he basis of lease of service is employment and the lessor (li$e a servant ordinarily
performs only ministerial (not discretionary powers) functions.
Distinguish Agency from contract for a piece of wor$:
#he independent contractor e.ercise his employment independently and not in
representation of the employer.
Distinguish Agency from partnership:
A partner acts not only for his co<partners and the partnership but also as a principal
for himself (in agency, agent acts only for his principal).
Distinguish Agency from negotiorum getio:
%egotiorum gestio is a 3uasi<contract7 the getio acts authority and $nowledge of the
owner of the property or business although according to his presumed (not e.press) will by
e.ercising C all the diligence of a good father of a family.D (art. 81:?. +n both however, there
Distinguish Agency from sale7
+n sale (as distinguished from agency to sell, the buyer receives the goods as owner,
pays the price (the agent deliver the proceeds of the sale to the principal), can deal with the
thing as he please being the owner (the agent, according to the instructions of the principal)
and as a general rule, cannot return the ob0ect sold.
Distinguish agency from bro$erage:
A bro$er is merely an intermediary between the purchaser and the vendor whose
only oEce is to bring together the parties to the transaction and has nor relation to the thing
he buys or sell, while a (commission) agent maintains a relation not only his principal and
the purchaser or vendor but also with the property the sub0ect matter of the transaction
which is placed and at disposal in accordance with his authority.
Appointment of the Agent:
a. &.press 6 one where the agent has been actually authori=ed by the principal either
orally or in writing.
b. +mplied 6 inferred from the a) acts of the principal, b) from principalBs silence, c)
principalBs lac$ of action or d) his failure to repudiate the agency $nowing that
another person is acting on his behalf without authority (Art. 1!F)
Gorm: Agency may be oral, unless the law re3uires specifc form.
'hen forms are re3uired:
Art. 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.
Art. 138. !he following "ust appear in a public docu"ent#
$3% !he power to ad"inister property, or any other power which has for its ob(ect an act
appearing or which should appear in a public docu"ent, or should pre(udice a third person;
'hen is there implied acceptance of an agency by an agentH
a. As between person present 6 +f the principal (personally) delivers his power or
attorney to the agent and the latter receives it without any ob0ection. (Art 1>1)
b. As between persons absent
'hen the principal transmits the power of attorney to the agent, who receives it without any
'hen the principal entrust to him by letter or telegram a power of attorney with respect to
the business in which he is habitually engaged as an agent, and he did not reply to the letter
or telegram (Art. 1>8)
Art. 1873. )f a person specially infor"s another or states by public advertise"ent that he has given a
power of attorney to a third person, the latter thereby beco"es a duly authori*ed agent, in the for"er
case with respect to the person who received the special infor"ation, and in the latter case with
regard to any person.
#he power shall continue to be in full force until the notice is rescinded in the same manner in which it
+nforming "ther 4eople of the &.istence of the agency: #wo ways:
a) Apecial information 6 the person appointed as agent is considered as such with
respect to whom it was given
b) 4ublic advertisement 6 #he agent is regarded as such with regard to any person.
*ule in case of revocation: +t must be revo$ed in same manner how the agency was made
$nown. /ut revocation made in any manner shall be e1ective against all persons having
$nowledge thereof. *eason according to (ustice (./.-. *eyes is to forestall fraud.
Meaning of #o+e! of A""o!ney
A written authori=ation to an agent to perform specifc acts in behalf of his principal which
acts, when performed, shall have binding e1ect on the principal.
Dis"ing$is&e% im'ie% agency f!om agency ,y es"oe'.
+n implied agency, there is an actual agency. #he principal alone is liable. +n an agency by
estoppel, the authority of the agent is not real but apparent. +f the principal causes the
estoppel, he is liable to any third person who relied on the misrepresentation. +f the estoppel
is cause by the agent, then only agent is liable (Art. 1F11).
As ,e"+een "&e !incia' an% "&e agen":
+n implied agency, the agent is true agent, with rights and duties of an agent. +n an
agency by estoppel (caused for instance by estoppel on the part of the agent), the agent is
not a true agent7 hence he has nor rights as such.
As "o "&i!% e!sons:
+f the estoppel is caused by the principal, he is liable, but only if the third person
acted on misrepresentation in an implied agency, the principal is always liable.
+f the estoppel is caused by the agent, it is only agent who is liable, never the alleged
principal7 in an implied agency, the agency is never personally liable.
#he right of the agent to e1ect the legal relations of his principal by the performance
of acts e1ected in accordance with the principalBs manifestation of consent.
;inds of Authority:
1. &.press (here, the authority is clearly defned)
8. +mplied (this includes necessary acts to accomplish the purpose)
9. @eneral (#he agentBs discretion is ,"54-&#&)
:. Apparent (here, the agent or third person was led by the principalBs conduct or words
to believe that agent was really authori=ed, when in fact he was not. #he e1ect here
is as if there really was an authority.)
&.amples of +mplied Authority
+f an authori=ed to collect a debt, he usually is also impliedly authori=ed to employ an
attorney as counsel, and to bring suit for the enforcement of the payment. +f an agent is
authori=ed to e.act the payment of the debt by legal means, he has the right to institute a
legal suit for its recovery.
An agent or attorney in fact who is authori=ed to pay the debts of the principal and to
employ attorney to defend the interest of the latter is naturally impliedly empowered to pay
fees of the attorney for the services rendered in the interest of said principal.
E-am'es of Ins"ances +&e!e no im'ie% a$"&o!i"y.
1. An agent authori=ed to borrow necessary funds has no authority to pay his own
personal debts therewith.
8. An agent authori=ed to collect a debt has no right to ma$e a novation of the contract
and to release sureties of the debtor.
9. An agent authori=ed to collect money belonging to the principal does not posses the
implied authority to indorse the chec$s which has been received by him in payment.
:. An agent authori=ed to borrow is not implied authori=ed to pay loan at maturity nor is
he allowed to give the money received to a third person.
?. Authority to collect does not carry with it authority to receive partial payment, nor
the authority to accept commercial paper as payment of the debt.
4*&A)54#+"% AA ,"%A+D&*A#+"%
Agency is presumed to be onerous, unless there is proof to the contrary. (art.
Lega' e/ec" of an agency co$c&e% in gene!a' "e!ms:
Auch an agency comprises only acts of administration, (a) even if the principal should state
that the he withholds no power, or (b) that the agent may e.ecute such acts as he may
consider appropriate (c) even though the agency should authori=e a general and unlimited
management. (art. 1>>)
&.amples of Acts of 5ere Administration
a. #o sue for the collection of debts.
b. #o employ wor$ers or servant and employees needed for the conduct of a business.
c. #o engage counsel to preserve the ownership and possession of the principalBs
d. #o lease real property to another for one year or less provided the lease is not
registered . (see Art. 1> %o. by implication)
e. #o ma$e customary gifts for charity or to employees in business managed by the
agent (see Art. 1>, %o. !)
f. #o borrow money if it urgent and indispensable for the preservation of the thing under
administration (see Art. 1>, %o.>)
,ases where Apecial powers of Attorney are re3uired:
1. #o ma$e such payment as are not usually considered as act of administration
8. #o e1ect novations which put an end to obligation already in e.istence at the
at the time the agency was constituted7
9. #o compromise, to submit 3uestions to arbitration, to renounce the right to
appeal from the 0udgment, to waive ob0ections to the venue of an action or to
abandon a prescription already ac3uired.
:. #o waive any obligation gratuitously7
?. #o enter into any contract by which the ownership of immovable is transmitted
or ac3uired either gratuitously or for a valuable consideration7
!. #o ma$e gift, e.cept customary ones for charity or those made to employees
in the business management by the agent.
>. #o loan or borrow money, unless the latter act be urgent and indispensable for
the preservation of the things which are under administration7
. #o lease any real property to another person for more than one year.
F. #o bind the principal to render some service without compensation:
1I. #o bind the principal in a contract of partnership7
11. #o obligate the principal as guarantor or surety.
18. #o create or convey real right over immovable property7
19. #o accept or repudiate an inheritance
1:. #o ratify or recogni=e obligations contracted before the agency7 and
1?. Any other act of strict dominion. (Art. 1>)
1. #he cases enumerated involve acts of strict dominion or ownership as distinguish
from acts of administration.
8. A special power to sell e.cludes the power to mortgage7 and a special power to
mortgage does not include the power to sell. (Art. 1>F).
#o+e! "o se'' ca!!ies +i"& i" "&e o+e! "o 0n% a $!c&ase! o! "o se'' %i!ec"'y)
o+e! "o %e'i*e! "&e !oe!"y1 o+e! "o ma2e "&e $s$a' !e!esen"a"ion an%
+a!!an"y) o+e! "o e-ec$"e "&e necessa!y %oc$men"s) o+e! "o 0- "&e
"e!ms of "&e sa'e1 inc'$%ing "&e "ime1 'ace1 mo%e of %e'i*e!y1 !ice of "&e
goo%s1 an% "&e mo%e of aymen" $n'ess "&e!e ,e a se" con%i"ions s"i$'a"e%
,y "&e !incia') an% o+e! "o se'' on'y fo! CAS( an% o+e! "o !ecei*e "&e
!ice $n'ess &e +as a$"&o!i3e% "o on'y so'ici" o!%e!s.
T&e o+e! "o se'' %oes no" ca!!y +i"& i" "&e o+e! "o ,a!"e! o! "o e-c&ange
"o mo!"gage o! "o 'e%ge.
T&e o+e! "o mo!"gage %oes no" inc'$%e "&e o+e! "o se'') o! "o e-ec$"e a
secon% mo!"gage) "o mo!"gage fo! "&e agen"4s e!sona' ,ene0" of any "&i!%
e!son1 $n'ess "&e con"!a!y &as ,een c'ea!'y in%ica"e%.
A secia' o+e! "o com!ise %oes no" a$"&o!i3e s$,mission "o a!,i"!a"ion.
5a!". 67789 (ence an agen" a$"&o!i3e% "o com!omise can %o any"&ing1
+&ic& "&e !incia' &imse'f can %o "o e/ec" a se""'emen" $n'ess "&e!e is
con"!a!y 'ega' !o*ision.
Re:$isi"es in o!%e! "&e agen" can ,in% "&e !incia':
1. #he agent must act within the scope of his authority, and
8. #he agent act in behalf of the principal (see Art. 11, 18)
,ases wherein the principal may still be bound by the acts of an agent who e.ceeded
a. 'here the principalBs act have contributed to decide a third person in good faith
(see Art. 1F11
b. 'here the limitations upon the power created by him could not have been
$nown by the third person (see Art. 1FII)
c. 'here the principal has placed in the hands of the agent instruments signed by
him in blan$7 and
d. 'here the principal has ratifed the acts of the agent. (Art. 1FI1)
#he agent is one directly liable to the person with whom he had contracted as if the
transaction were his own. #herefore, the principal and such person have no right of
action against each other. #he e.ception is:
T&e !incia' is ,o$n% +&en "&e con"!ac" in*o'*es "&ings ,e'onging "o &im)
"&e !incia' may s$e "&e agen" fo! ,!eac& of con"!ac". 5A!". 677;9.
Seci0c o,'iga"ion of "&e agen":
1. #o carry out the agency in accordance with its items7 otherwise, he shall be liable for
damages. (art. 1:) *eason: 2e betray the confdence reposed on him by the
8. #o fnish the business already begun on the death of the principal should delay entail
any danger. *eason: +n such case, the agency is still deemed in full force7
9. #o advance the necessary funds if such is the stipulation e.cept when the principal is
insolvent (art. 1!)
:. #o act in accordance with the instruction of the principal and in the absence
therefore, to do all that a good father of the family would do, as re3uired by the
nature of the business (art. 1>).
?. %ot to carry out the agency if its e.ecution would manifesty result in loss or damage
to the principal (art. 1) *eason: #he duty of the agent is to render service for the
beneft and not to the determined of the principal.
!. #here being a conJict, not to prefer his own interest to those of the principal (e.g.
buying goods of the principal or selling his own goods to the principal without
informing the principal)7 otherwise, he shall be liable for damages. (art. 1F)
*eason: Agency is a fduciary relation:
>. %ot to borrow money from the principal who was authori=e him to lend although at
interest, without his consent. (art. 1FI) *eason: the agent may prove to be a bad
debtor. /ut if the agent has been authori=e to borrow money he may himself be the
lender at the current rate. *eason: #here is no danger of the principal su1ering any
. #o render an account of his transactions and deliver to principal whatever he may
have received by virtue of the agency though it may not be owing to the principal
%ote: Duty of the Agent to account is mandatory. 2ence in an overpriced received by the
agent for goods he was sell at a certain price, he is duty bound to ma$e an account. #his
applies even in cases in cases that the money not be owing to the principal but arose
from the transaction involving the contract of agency.
Atipulation e.empting from the duty to account is K"+D, being contrary to public policy
as it would be conducive to fraud.
Aome Doctrines on the duty to account:
1. 'hoever administers anotherBs a1airs must render an account because of the
representative relation and because of the fduciary position.
8. +f an agent refuses to account when it is his duty to do so, the principal may at
once terminate the agency and sue for the balance due. +f the principal dies,
the agency is e.tinguished, /)# the duty to account subsists, and can be
demanded by the principalBs heirs or legal representatives.
9. #he principal, or his legal representative, has the right to pass upon the
correctness of the accounting.
:. ,orollary to his right to demand an accounting, a principal has the right to
ma$e reasonable inspection of the boo$s of account and memoranda,
including the original entries.
?. An agent, as a conse3uence of his duty to account, cannot dispute his
principalBs title to the property in his possession.
!. #o be responsible in certain cases for the acts of the substituted appointed by
him (art. 1F1).
>. #o be responsible for the goods received by him, etc. #o sell on credit only with
the consent of the principal, etc. and to collect with due diligence the credits
of the principal (art. 1FI9<1FI)7 and
. #o answer for his fraud or negligence (art. 1FIF)
-+A/+-+#L "G A@&%#
-iability of two or more agent, even if they may have been appointed simultaneously
is ("+%#. (Art. 1F:).
Agent is liable for interest on the sums he has applied to his own use from the day with he
converted the said funds and so which owes after the e.tinguishment of the agency. 2e is
liable personally in the contract of agency if he e.pressly binds himself (art. 1F>) or if he
e.ceeded his authority7
&GG&,#A "G ,"%#*A,# &%#&*&D +%#" +% &M,&AA "G A)#2"*+#L
#he principal is not at all bound, e.cept of course if there is subse3uent ratifcation
by him. #herefore, it shall be K"+D refers to the tie between the agent and the third party.
*egarding the principal, other articles are applicable. (art. 1FF)
C+f the agent contracts in the name of the principal, e.ceeding 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 if the limits of the powers granted by the principal. +n
this case, however, the agent is liable if he undertoo$ to secure the principalBs ratifcations.D
&.ample: An agent was authori=ed to sell his principalBs car. #he agent sold in the
principalBs name the principalBs radio cabinet to third person who $new that the agent was
not authori=ed. +n the above e.ample, even as between the agent and the third person ,
such sale is completely null and void. 2owever, if the agent had promised to obtain the
principalBs ratifcation, said agent would be liable in case of failure to obtain such ratifcation.
+f ratifcation has been obtained, then the principal would be bound.
D+A#+%@)+A2 A)#2"*+#L G*"5 +%A#*),#+"%A:
Authority is the e.tent or the limitation of the agentBs power to represent the
principal. +nstructions are directions which the principal may give the agent to follow in the
discharge of his duties as such agent.
#hird persons dealing with an agent do so at their own ris$ and are duty bound to
investigate his authority, the principal is not bound. /ut persons dealing with the agent need
not verify or investigate the instructions of the principal since they concern only the principal
and the agent.
&MA54-&: 4 writes to / that A is authori=ed to buy certain merchandise. 4 privately
instructions A not to but merely to obtain /Bs lowest price. + violation of said instruction, A
buys the merchandise. +n this case, the sale is binding upon 4 because A has authority to
ma$e the purchase although it is not in accordance with the instruction given.
'2" +A A A)/ A@&%#
A sub<agent (or substitute) is one to whom the agent delegates as his agent, the
performance of an act for the principal which the agent has been empowered to perform.
,AA&A '2&% #2& A@&%# +A *&A4"%A+/-& G"# #2& A,#A "G #2& A)/A#+#)#& A44"+%#&D
'hen he was not give the power to appoint one he cannot be allowed to enrich
himself at the agentBs e.penses. 'hen he was given such power, but without designating
the person, and the person appointed was notoriously incomplete of insolvent7 and 'hen he
was prohibited from appointing a substitute. (see Art. 1F8)
#he agent is bound to the party with whim he contracts:
'hen he e.pressly binds himself. 'hen he e.ceeds the limits of his authority without giving
such party suEcient notice of his powers. (Art. 1F>) *eason: #he contract being
unenforceable the third person is deprived of any remedy against the principal.
#he scope of agentBs Authority as far as third persons are concerned, if such acts is
within the terms of the power of attorney, as written, even if the agent has in fact e.ceeded
the limits of his authority according to an understanding between the principal and the
agent (Art. 1II).
4urpose of the rule: #o protect the interest of third persons.
*ules when there is multiplicity of agents:
#he responsibility of two or more agents is not solidary unless it is e.pressly stipulated (art.
1F:) and if solidarity has been agreed upon, each of them is responsible for the deliberate
non<fulfllment of the of the agency7 and the fault of negligence of his fellow agents e.cept
when the latter acted beyond the scope of their authority. (art. 1F?)
'ho is commission agentH
A commission agent (or factor is one who e business is to receive an d sell goods for
commission and who is entrusted by the principal with the possession of goods to be sold.
2e may act in his own name of in that of the principal.
A commission agent is not authori=ed to sell in credit if not so e.pressly authori=ed
(Art. 1FI?). 2e also has the duty to place countermar$s to goods he handles with di1erent
owners. (art. 1FI:).
W&a" !ig&"s a!e gi*en "o "&e !incia' +&e!e a sa'e on c!e%i" is ma%e +i"&o$"
1. *e3uire payment in cash, in which case, any interest or beneft from the sale
shall belong to the agent since the principal or
8. *atify the sale on credit in which case it will have all the ris$s and advantages
to him. (art. 1FI?)
@uarantee commission (Del ,redere ,ommission) is given in return for the ris$s
the agent will have to bear in the collection of the credit. An agent who receives a
guarantee commission is called del credere agent.
Seci0c o,'iga"ion of "&e !incia':
1. #o comply with all the obligations which the agent may have contracted within the
scope of his authority (art. 1F1I, 11) and in the name of the principal (art. 1!,
8. #o advance to the agent, should the latter so re3uest, the sums necessary to the
e.ecution of the agency (Art. 1F18)
9. #o reimbursement the agent for all advance made by him provided the agent is free
:. #o indemnify the agent for all the damages which the e.ecution of the agency may
have caused the latter without fault or negligence on his part. (Art. 1F19)7 and
?. #o pay the agent the compensation agreed upon, or if no compensation was specifed
the reasonable value of the agentBs services. (Art. 1>?)
#he principal is solidarily with the agent even when the latter e.ceeded his authority
if the principal allowed the agent to act as though he had full powers. (Art. 1F11) this
rules is based on the principle of estoppel.
R$'es in case "+o e!sons con"!ac" +i"& !ega!%s "o "&e same "&ing. One of "&em
+i"& "&e agen" an% "&e o"&e! +i"& "&e !incia'.
1. +f the two contract are compatible to each other, both shall be enforced7
8. +f they are incompatible with each other, that of prior date shall be preferred sub0ect
to the provisions of Art. 1?:: (Art. 1F1!)
9. +f the agent acted in good faith, the principal shall be liable to the third person whose
agent contract must be re0ected7 and
:. +f the agent acted in bad faith, he alone shall be responsible. (art. 1F1>)
R$'es +&en "&e!e is m$'"i'ici"y of !incia's:
'hen two or more persons have appointed and agent for a common transaction or
understanding they shall solidarily liable to the agent for all the conse3uences of agency
,ases the principal not liable for the e.pense incurred by the agent.
1. +f the agent acted in contravention of the principalBs instruction, unless the latter
should wish to avail himself, or the benefts derived from the contract7
8. 'hen the e.pense were due to the fault of the agent.
9. 'hen the agent incurred them with $nowledge that the unfavorable result would
ensue, if the principal was not aware thereof, and
:. 'hen it was stipulated that the e.penses would be borne by agent, or that he latter
would be allowed only a certain sum.
&.tinguishment "f Agent:
1. /y its revocation7
8. /y the withdrawal of the agent7
9. /y the accomplishment of the ob0ect or purpose of the agency7 and
:. /y the e.piration of the period for which the agency was constituted. (art. 1F1F)
;ey word: &D'A*D
& 6 &.piration
D 6 Death, etc.
A 6 Accomplishment of the agency
Te!mina"ion ,y m$"$a' consen"1 no*a"ion1 'oss of "&e s$,=ec" ma""e! of "&e
5ay a contract of agency be revo$edH
1. /y the appointment of anew agent for the same business transaction (art.
8. /y direct management by the principal of the business entrusted to agent
9. 'ith respect to a general power of attorney previously granted (e.g. to
manage a business ) as regards the matter involved in the latter (Art. 1F8!)
,ases when agency is irrevocable
#he principal may generally revo$e an agency at will. (Art. 1F8I). +n the following
case, he has no right to revo$e the agency without incurring liability for damages:
+f the agency is coupled with interest, i.e. the agent possesses an interest in the
sub0ect matter of the power conferred and nor merely in the compensation arising from the
e.ercise of the power (e.g. where the principal pledges his property to the agent as security
for his debt and gives the agent the power to dispose of it should be in default).
)nder Art. 1F8>:
1. +f a bilateral contract depends on the agency (e.g. where it is stipulated that
the ownership of the factory sold would be transferred to the buyer only after
payment of the balance of the purchase price and that the seller (principal)
would appoint the agent to manage the factory and that any proft would be
used to pay o1 the balance.
8. +f the agency is means of fulflling an obligation already contracted (e.g.
agency in favor of creditor to collect sums due debtor< principal) 7 and
9. +f a partner is appointed manager of a contract of partnership, his appoint
being revocable only upon 0ust and lawful cause and upon the vote of the
partners representing the controlling interest. (see Art. 1F8>)
:. 'hen there has been waiver by the principal (however, the irrevocability of a
power of attorney cannot a1ect one who is not party thereto, it being
obligatory only on the principal who created the agency.
?. 'hen the principal is obliged not to revo$e. ( here the principal can still revo$e
but he can held liable for damages, for breach of contract).
!. 'hen the revocation is done is bad faith. (2ere, the principal can still revo$e
but innocent third parties should not be pre0udiced7 moreover the innocent
agent can be entitled to damages from him.
Agency is no" "e!mina"e% imme%ia"e'y ,y %ea"& in "&e fo''o+ing cases:
1. +f the agency is necessary to fnish the business already begun on the death of
principal where delay should entail any danger. (1:):
8. +f it has been constituted in the common interest of the principal and the agent (art.
9. +f it has constituted in the interest of the third person who has accepted the
stipulation in favor (Art. 1911)
A left his car at shell station, operated by /, to be washed, greased and sprayed.
'hen the car was being raised in the elevator shaft, it fell from the service platform and as a
result is su1ered damage estimated 48,III. Aince the car was insured by M insurance ,o.,
the latter had to pay 48,III to A. )pon payment of the amount M, insurance ,o. brought an
action against the Ahell ,ompany of the 4hilippines to recover said amount. #he defendant
,ompany interposed the defense that /, operator of the service station, is an independent
contractor, conse3uently, it cannot be held liable for damages. +s this correctH *eason.
*uling: #he contention of the Ahell 4hilippines is not correct. #he Aupreme ,ourt ruled
the contract entered between the company and the operator station is a contract of agency.
#he operator of a service station is not an independent contractor, but merely and agent of
the ,ompany because even the e3uipment which he use in his service station are owned by
the ,ompany and oil, gasoline and other products which he sells the public are sold at
A constituted son as his agent to mortgage parcel of land with the ban$. +n the
contract of mortgage, there is a provision that the ban$ can foreclose the mortgage in case
the debtorBs failure to pay his obligation, the ban$ foreclosed and sold the same to the
higher bidder. A 3uestioned the sale contending that the authority to mortgage does not
carry with it the power to sell. +s ABs contention correctH 'hyH
%o. 'hile it is true that Apecial 4ower of Attorney to sell does not carry with it the
power of mortgage of the power to mortgage does not carry the power to sell, yet the
stipulation granting an authority to foreclose a mortgage is an ancillary stipulation
supported by the same cause or consideration for the mortgage and forms an essential or
inseparable part of the bilateral agreement.
DOCTRINE OF AGENCY BY NECESSITY
Atrictly spea$ing, an agency can never be created by necessity. 'hat is meant by the
phrase Cagency by necessityD is however this: #hat by virtue of the e.istence of an
emergency the authority of an agent is correspondingly enlarged in order to cope with the
e.igencies or the necessities of the moment.
Give conditions laid down by the Aupreme ,ourt for Authority of Agency by %ecessity:
1. #he real e.istence of an emergency7
8. +nability of the agent to communicate with the principal7
9. #he e.ercise of the additional authority for the principalBs own protection7
:. Adoption of fairly reasonable means, premises duly considered7
?. #he ceasing of the authority the moment the emergency no longer demands the
+f a bus conductor is seriously hurt, the driver is authori=ed to engage the services of
the physician, in the companyBs name, sot that the conductor may survive. #his is really for
the best interest of all concerned.
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