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Agency Agency- a person binds himself to render some

ARTICLE 1868. By the contract of agency a person service or to do something in representation or on


binds himself to render some service or to do behalf of another, with the consent or authority of
something in representation or on behalf of the latter
another, with the consent or authority of the SPANISH TERM:
latter. Principal- mandante
Agent- mandatario, factor, broker, attorney-in-
fact, proxy, delegate, representative

ARTICLE 1317. No one may contract in the name GEN. RULE: What a man may do in person, he may
of another without being authorized by the latter, do to another
or unless he has by law a right to represent him. Ratio: to accomplish results i.e do a great variety
ARTICLE 1403. The following contracts are of things of things by using the services of another
unenforceable, unless they are ratified: Aim: to extend the personality of the principal or
the party for whom another acts and from whom
(1) Those entered into in the name of such agent derives the authority to act
another person by one who has been CONSEQ:
given no authority or legal IF contract is entered into
representation, or who has acted beyond - without authority/
his powers; - acted beyond authority
THEN contract is UNENFORCEABLE, unless
ratified(expressly, or impliedly by the “principal”)
ELEMENTS OF THE CONTRACT OF AGENCY
1. CONSENT, express or implied, or the parties to establish the relationship
2. OBJECT, which is the Execution of Juridical Acts in Relation to Third Parties
3. AGENT ACTS AS A REPRESENTATIVE AN NOT FOR HIMSELF
4. AGENT ACTS WITHIN THE SCOPE OF HIS AUTHORITY

Basis of Agency: REPRESENTATION


CONSENT (no consent—no agency)
 BY THE PRINCIPAL i.e. There must be an actual intention to appoint or that such intention is
naturally inferable from his words or actions
 BY THE AGENT i.e. there must also be an intention to accept the appointment and act on it
Note: the principal’s personality is extended through the facility of the agent, who by legal fiction
becomes the principal—authorized to perform all acts which the latter would have him do.
SUBJECT MATTER: Service—Execution of Juridical Acts in the Name of the Principal and Within the
Scope of Authority
 CONTROL- the distinguishing factor of Agency from other concepts
 That the agent agrees to act under the control of the principal

ARTICLE 1875. Agency is presumed to be for a CONSIDERATION: Agency is presumed to be For


compensation, unless there is proof to the Compensation
contrary. (n) UNLESS, there is proof to the contrary
OLD CIVIL CODE NEW CIVIL CODE
Service of agent is Presumption is it is
GRATUITOUS, unless, FOR COMPENSATION
there is an express unless, the contrary
agreement to receive had been proven
compensation
ESSENTIAL CHARACTERISTICS OF AGENCY
1. NOMINATE AND PRICNIPAL
2. UNILATERAL AND PRIMARILY ONEROUS
3. CONSENSUAL
4. PERSONAL, REPRESENTATIVE and DERIVATIVE
5. FIDUCIARY and REVOCABLE
6. AGENCY IS A PREPARATORY CONTRACT
NOMINATE RULE: the agreement will be ruled by what it is,
- has a special name or designation in our considering the circumstances and not by what the
law parties though it to be
PRINCIPAL  It will be agency whether or not parties
- it does not depend for its existence or understood the exact nature of the
validity upon some other contracts relation
 The nature of the work to be done and the
circumstances of what the parties
intended are considered to determine
what the parties really agreed upon
UNILATERAL ART. 1875. Agency is presumed to be for a
- That one party makes a promise or compensation, unless there is proof to the
undertaking to do things for another contrary. (n)
ONEROUS
- each of the parties aspires to procure for
himself a benefit through the giving of
something---- presumed to be for
compensation
CONSENSUAL ART. 1869. Agency may be express, or implied
- it is perfected by mere consent, that is, from the acts of the principal, from his silence or
upon the express or implied agreement of lack of action, or his failure to repudiate the
two or more persons agency, knowing that another person is acting on
his behalf without authority.

Agency may be oral, unless the law requires a


specific form. (1710a)
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. (n)

PERSONAL ARTICLE 1868. By the contract of agency a person


binds himself to render some service or to do
REPRESENTATIVE something in representation or on behalf of
another, with the consent or authority of the
DERIVATIVE latter. (1709a)
QUI FACIT PER ALIUMFACIT PER SE
- he who acts through another acts himself
 no agency on co-ownership; the
transactions of a co-owner does NOT bind
the other co-owners
 in turn, the third person is given the duty
to ascertain the authority of the agent to
do the task
 representative in nature, therefore, the
agent is not personally liable to the party
with whom he contracts; it is the principal
who is liable on the contracts of the agent
 knowledge of agent is knowledge of
principal
 notice to agent is notice to principal
FIDUCIARY SINCE fiduciary,
- based on trust and confidence reposed by  the agent is estopped from acquiring or
the principal on his agent asserting a title adverse to that of the
REVOCABLE principal
- authority given is retractable  therefore, an action in personamn will lie
against an agent to compel him to retur or
retransfer to his principal, or to the
principal’s estate, the real property
committed to his custody as such agents
and also to execute the necessary
documents of conveyance to effect such
transfer
Rule summary on revocation:
GEN RULE: may be revoked by the principal at will
EXCEPTION: must be revoked by both parties if
coupled with interest
PREPARATORY CONTRACT A contract is entered BEFORE the main transaction
- it is entered into as a means to an end, i.e., is entered into.
to engage in business or specific venture
for the realization of profits with the view
of dividing them among the contracting
parties
RALLOS vs FELIX GO CHAN & SONS REALTY CORP

Agent SIMEON RALLOS executed a sale on behalf of dead principal, ; INVALID SALE; agent’s act is
unenforceable, ½ share on land invalidly sold. Petition Granted, ½ share of land reverted back to the
estate.

FACTS:

Agent(atty in fact/SPA), Simeon Rallos executed a sale on behalf of dead principal, Concepcion Rallos, of
his undivided share in a parcel of land in CEBU. The land was owned by siblings Rallos(Concepcion and
Geruna). After death of Concepcion, Simeon sold the land to FGCSRC for 10,6868.9PHP.
Administrator of estate of Concepcion, RAMON RALLOS-petitioner, moves to have the sale be declared
as unenforceable contending that Simeon had no authority to sell the land since his agency was
extinguished upon the death of Concepcion, the principal.

TC- valid sale as to the ½, part of Geruna’s share on the land. She died after the sale was made.

CA-valid sale

ISSUE: WON the sale of an undivided share of Concepcion Rallos was valid although it was executed by
the agent after the death of his principal.

RULING: NO, invalid sale of share on the land. Simeon’s agency was extinguished upon the death of the
principal.

RULES governing the death of the Principal in the COA:

General Rule: AGENCY IS EXTINGUISHED

Exception: (1931-must concur)—acts remain valid

1. That the agent acted without the knowledge of the death of the principal
2. That the third person who contracted with the agent himself acted in good faith

In the case at bar, Simeon was not in good faith for he and knowledge that Concepcion had died when he
executed the sale to FGCSRC.

The following are the elements of agency:

1. CONSENT, express or implied, of the parties to establish the relationship


2. OBJECT which is the execution of of a juridical act in relation to third person
3. AGENTS ACT AS A REPRESENTATIVE and not for himself
4. AGENT ACTS WITHIN SCOPE OF AUTHORITY

Nature of agency:

1. Personal
2. Representative
3. Derivative

Juridical basis for agency: REPRESENTATION—integration of the personality of the principal into that of
the agent

Various was of extinguishing agency(1919NCC):

ORIENT AIR SERVICES and HOTEL REPRESENTATIVES vs CA

FACTS:
AMERICAN AIRLINES, INC entered into a GENERAL SALES AGENCY AGREEMENT with ORIENT AIR
SERVICES AND HOTE REPRESENTAIVES whereby AAI authorized Orient Air to be its exclusive general
sales agent in the Philippines for SALE OF AIR PASSENGER TRANSPORTATION.

Unde their agreement,, Orient Air was to remit to AAI the net proceeds of the sales.

In the case at bar, AAI alleged that Orient Air failed to remit the net proceeds from Jan-Mar 1981
amouting to 254, 400.4 USD so AAI terminated the GSA. On the other hand, Orient Air denied failing to
remit the amount and contented that afer application theor to the commissions due under the
agreement, AAI actually owes Orient Air and that the termination was invalid

TC- in favour of Orient air, AAI to pay commission balance. GSA reinstated

IAC/CA- affirmed

AAI says that the commission is based only on sales of its services actually negotiatied or transacted by
Orient Air—ticketed sales.

On the other hand, Orient Air contends that the 3% overriding commission covers the total revenue of
AAU and not merely ticketed sales by OA.

Petition at hand seeks to know basis of the commission and wanting it to be based on total revenuw of
AAI

RULING: (Petition Granted) basis of commission is total revenue. \

Orient Air was clearly justified in retaining and refusing to remit the sums claimed by AAI. The
termination of the GSA was, then, without cause.

HOWEVER, CA’s ruling affirming the reinstatement of the GSA was violative of the essence of Agency
that—A PERSON BINDS HIMSELF TO RENDER SOME SERVICE OR TO DO SOMETHING IN
REPRESENTATION OR ON BEHALF OF ANOTHER.

AGENCY VS BROKERAGE

RULES OF BROKERAGE

AGENCY VS CONTRACT OF EMPLOYMENT


No control on the means and methods i.e. the More control i.e. there is control on the means
“hows” of doing the task—only results and methods of doing the job/dutiesxx
AGENCY VS CONTRACT FOR A PIECE OF WORK
There is an extension of juridical personality No representation
AGENCY TO SELL VS CONTRACT OF SALE
No transfer of ownership Transfer of ownership
AGENCY VS AGRICULTURAL TENANCY
Control No control
TAN vsGULLAS - One whose occupation is to bring the parties
together, in matters of trade, commerce or
Eduardo Gullas and Norma Gullas executed an SPA navigation .
authorizing Manuel Tan(licensed REB) and his assoc. Greg
M. Tecson and Alexander Sladana, to negotiate for the sale In the case at bar, GUllas party failed to prove that it was
of land at 550 per sqm(104114 total sqm in Minglanilla Pacana(other broker)who initiated the negotiationswith
Cebu). Terms included: 3% commission of the gross price, the Sisters of Mary. Furthermore, it is apparent that the
non-exclusive, effective for a month from June 29,1992. Gullas are trying to evade payment of the commission
Tan negotiatied with the Sisters of Mary and they rightfully belonging to the Tan party.. the Petitioners were
expressed their desire to buy the land but requested for not able to participate in the consummation only because
the price to be reduced to 530//sqm. On a subsequent they were prevented by the acts of the Gullas, themselves.
date, the Gullas sps. Approached the Sisters of Mary and
they exdecuted an SPA giving one Eufemia Canete Jurisprudence(Hahn vs ca and BMW) provides that AN
authority to sel the land @ 200/sqm. The deed of sale was AGENT RECEIVE A COMMISSION UPON THE SUCCESSFUL
executed. CONCLUSION OF THE SALE—A BROKER EARNS HIS PAY
MERELY BY BRINGING THE BUYER AND THE SELLER
When the Tan party went to the Gullas to claim their TOGETHER, EVEN IF NO SALE IS EVENTIUALLY MADE:
commission, the Gullas claimed that they already sold the
property and that another group of agents was responsible THEREFORE, ENTITLED.(BASED ON THE 200/SQM; NOT 530
for the sale. SINCE UNSUBSTANTIATED.

The TANs then filed a complaint to claim their commission MACONDARAY AND CO VS SELLNER
claiming that they were the EFFICIENT PROCURING CAUSE GEORGE SELLNER ALLEGEDLY SOLD A LAND FOR
in briniging about the sale of the property to the Sisters of MACONDRAY AND CO AFTER AUTHORITY TO MAKE THE
Mary but that their effforts were frustrated by the Gullas, SALEHAD BEED REVOKED.
themselves, who sought to evade paying the broker’s fee
by directly selling to the buyers. And that although various Sellnner sold the lot to Macondray for 17k. finding
agents negotiated the same land, it was the petitioners’ unsuited the land due to high tides during flood,
party who introduced them to each other. Also alleged Macondray authoried Sellner to find a buyer of the land on
undervalueness. a comiision basis—anything above the 17k price would go
to him. SEllner fount one Antonio Baretto who was a
On the other hand, the Gullas alleged that when the TANs willing byer for 18K, the deed of sale was dated Aug 21,
approached the Sisters, they were already set of buying 1912. Barretto agreed to accept the land upon
the land through PACANA, the other broker. examination of the title..
LC- granted petitioner’s commission Title examination; deadline impromptu
CA- reversed, not entitled SC says saleis stil recognized since deadline imposed was
SC reversed; granted petitioners’ commission arbitrary.

BROKER- one who is engaged, for others, on a commission, GUARDEXX ENTERPISES VS NLRC
negotiating contracts relative to property with the custody NLRC decided the case but it did not have jurisdiction.
of which he has no concern;
ORBETA SOUGHT to broker of escandor’s fire trucks.
- The negotiator between other parties, never acting
in his own name but in the name of those who He didn’t do anything.
employed him
Escandor did the work herself
Obeta came bank after 7 months, right after the sale was buying the stocks but submitted a count-offer for
consummated claiming for commission P1,000.00/share for 9,800shares payable in 5 years at 12%
per annul interest until fully paid.
Sc says, not entitled, did not do anything.
This proposal was communicated by Inland Realty to
PRATS vs CA defendant corporation but the latter opposed, claiming
Not the efficient procuring cause as he was not the one the offer was too low and asked petitioner if the price can
who introduced them in the first place in selling 300 bead justed according to the terms of the authority to sell.
hectares to sss but in equity he is granted 100k The period of the contract extended for several times.
commission. Petitioner asked for an exclusive authority and for a longer
period but Eduque would not give the same. The sale was
- Deed of sale was executed after the expiry of this made in favor of Stanford. Later on, Inland Realty sued
broker contract with D___ defendant for its brokerage fees. Defendant claims that it
- When Prats was engaged, he had multiple is not entitled because after the thirty day period expired,
meetings with SSS petitioner was no longer connected to the transaction and
- that it abandoned it.

MANOTOK Bros. inc. vs CA Issue: Whether or not Inland Realty is entitled to th


brokerage fees.
-efficient procuring cause—just that contract was
consummated after expiry of agency Held: No. Petitioner was not entitled to the brokerage
commission of 5%. It appeared that there was no express
SALVADOR SAIGUMBA, agent
authority given y defendant for the extension of the thirty-
Claro recto HS, land owned by Manotok bros. it engaged day period of the authority to sell. Moreover, petitioner
saligumba to take negotiations with city of manial did not do anything except submit the name of the
prospective buyer, Microsystems. I did not take part in the
Broker contract expired(5%commission) consummation of the sale and the processing of the
necessary documents. More importantly, what existed was
Ordinance buying land was passed.
a proposal and a counter-proposal which Did not
Saligumba complained for his commission constitute the closing of the transaction just because it was
plaintiff who solely suggested to defendants the name of
Granted- cited prats, that although expired, it was his Stanford as buyer, and that Inland Realty did not sell the
effort that brought about the consummation although stocks in accordance with the terms of the agreement with
such consummation happened after expiration of agency. Ayala Co., that each stock be sold at P1,500 each.

Inland Realty vs.CA MEDRANO VS CA

Facts: Borbon was authorized by Medrano to find sell a lot—a


platation of fruit bearing mango trees for a commission of
On Sept.6, 1975, defendant corporation Ayala, Inc. through
5 % of the purchase price.
its Assistant General Manager J. Armando Eduque, granted
to Land Realty, authority to sell 9,800 shares of stocks in Borbon informed Lee, who was his previous client, that
Architect's Bldg. Inc. The terms of the sale was for there was a mango tree plantation that suits his demands.
P1,500.00 per share and the contract was to last for thirty
days. Ocular inspection was planned but never pushed through
because of reasons beyond the control of Borbon—1.
Inland Realty, a Company engaged in realty and brokerage, Inclement weather; 2. No car available.
strategized its sale through sending letters to its
prospective buyers. Stanford Microsystems, Inc. proposed
When Lee was visiting Ibaan Bataan, Borbon and his Issue on agency of medrano= sc says medrano acted on or
associates could not join him then, so he asked for in behalf of the Bank
instructions from the respondents on how to get to the
property and who to talk to. TICONG VS MALIM

Lee contracted with the officials of KGB Farm and the sale Malim et al were brokers engaged by the Ticongs to sell a
was consummated. HOWEVER, the brokers didn’t receive land at a net price of 900/sqm to be overpriced by them
their commission of 5 %. andthat under the MOA, they are entitled to commission
amounting to the overprice above 900—2.8 M.
The respondents, then, filed the case at bar for recovery of
their commission. The Malims found the Perez and introduced the parties
and gave then the letter of intent of the Ticongs..
The respondents contend that they are the procuring
cause of the sale because if not for them, Lee(buyer) would The Perez expressed that they are not willing anymore to
buy the property. Because of this, the Ticongs had to file
not be known to the petitioners. On the other hand,
petitioners claim that Medrano was not authorized by KGB for specific performance. Eventually, the land was sold for
to hire brokers and that the transaction with KGB 7._ M. the Malims were given a partial fee of 50 000.
consummated without intervention from the parties—that The Malims are claiming for their commission based on the
the respondents were not the procuring cause for the sale. overprice. The Ticongs were refusing to give the
WON THE RESPONDENTS ARE ENTITLED TO 5% COMISSION commission alleging that the Malims were not the
procuring cause for the sale since it was the Ticongs efforts
FOR THE SALE OF THE MANGO PLANTATION TO LEE
which consummated the sale through the action for
YES, the respondents are entitled to commission. The specific performance and are entitled only to 5% finders
respondents were the procuring cause for the sale. fee. On the other hand, the Malims contend to be the
procuring cause of the sale.
A procuring case is a cause originating a series of events
hich, without break in the continuitiy, result In the WON the Malims were the procuring cause of the sale
accomplishment of prime ojective of the employment of
YES, the Malims were the procuring cause. To be regarded
the broker.
as the procuring cause of a sale, a broker’s efforts must
It has been held that it is not necessary that the case be have been the foundation of the negotiations which
consummated. The broker is entitled to commission so subsequently resulted in a sale. The means employed by
long as he is a close, proximate and causal conector him and his efforts must result in the sale. He must find a
between for the sale. Nor is it necessary that the broker purchaser and the sale must proceed form his efforts
conduct the negotioation between the parties. It is a acting as a broker. In the case at bar, the FF are proof that
settled rule that the broker is entitled to commission the Malims were indeed the procuring cause
whenever he brings to his principal a part who is ABLE and
WILLING to take the property and enter into a valid 1. The letter of intent given by Malim to the Perez
contract—even if by other causes the sale doesn’t were with Lorenzo Ticong’s conformity;
materialize 2. Ticong expressly recognized respondents as their
sole agents and middlemen; and that they were
In the case at bar, the role of the respondents are not the one in constant communication with the buyer
disputed. They were the only ones who knew Lee and 3. Alvero, employee of the Ticongs, testified that the
spoke with him about the plantation. The fact that Lee respondents were agents which negotiated the
directly consummated the sale with the KGB Farm does not sale with the Buyer
remove form the respondents their right to commission 4. Ticongs gave 50K as partial payment which thereby
because they were the procuring cause thereto. impliedly recognized that the parties were the
procuring cause of the sale
5. That it was indeed the respondents’ efforts ----
through letters and telephone calls which brought
about the consummation of the sale. On the issue of the 5% finder’s fee, it is inferred from the
MOA that the 5% was for when they sold the lot for 900
When there is a close proximate and causal connection exactly. The land was overpriced by the Malims and they
between the agent’s efforts and the sae pf the property, are entitled to commission based on such overprice.
the agents are entitled to their commission.
FORMS ANS KINDS OF AGENCY
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 on
his behalf without authority. Agency may be oral,
unless the law requires a specific form. (1710a)
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. (n)
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. (n)
ART. 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)
ART. 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)