DEFINITION/DISTINCTIONS
— one where the
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.
As to Manner of Constitution
1. Express Agency. — one where the agent has
been actually authorized by the principal, either
orally or in writing; or
2. Implied Agency — one which is 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 (Ibid.), or from the acts
of the agent which carry out the agency, or from
his silence or inaction according to the
circumstances.
As to its character:
1. gratuitous. — one where the agent receives
no
compensation for his services; or
2. compensated or onerous. — one where the
agent receives compensation for his
services.
As to extent of business covered:
1. general. — one which comprises all the
business of the principal (Art. 1876.); or
2. special. — one which comprises one or
more specific transactions.
As to authority conferred:
1. couched in general terms. — one which is
created in general terms and is deemed to
comprise only acts of administration; or
2. couched in specific terms. — one
authorizing only the performance of a
specific act or acts.
As to its nature and effects:
1. ostensible or representative. — one where
the agent acts in the name and
representation of the principal; or
2. simple or commission.
agent acts in his own name but for the
account of the principal.
Gift or donation is an act of liberality whereby a
person disposes gratuitously of a thing or right in
favor of another who accepts it.
Instructions are private directions which the principal
may give the agent in regard to the manner of
performing his duties as such agent but of which a
third party is ignorant. They are said to be secret if
the principal intended them not to be made known to
such party.
ratification is the adoption or affirmance by a person
of a prior act which did not bind him, but which was
done or professed to be done on his account thus
giving effect to the acts as if originally authorized.
Meaning of material facts - they are those which
reasonably ought to be known by the principal,
having in mind the factors of time, place, and
circumstance, and especially the situation of the
parties.
ESTOPPEL is a bar which precludes a person from
denying or asserting anything contrary to that which
has been established as the truth by his own deed
or representation either express or implied.
A TRUST is the fiduciary relationship between one
person having an equitable ownership in property
and another owning the legal title to such property,
the equitable ownership of the former entitling him to
the performance of certain duties and the exercise
of certain powers by the latter for the benefit of the
former.
VS BAILMENT
Bailment describes a legal relationship in common
law where physical possession of personal property,
or a chattel, is transferred from one person (the
"bailor") to another person (the "bailee") who
subsequently has possession of the property.
VS DONATION
Donation is the act by which the owner of a thing
voluntarily transfers the title and possession of the
same from himself to another person, without any
consideration; a gift.
VS DEBT
A sum of money that is owed or due to be paid
because of an express agreement
 TRUSTOR (creator/settlor/grantor) or the
person who intentionally creates or
establishes the trust.
 TRUSTEE or the person who takes and holds
the legal title to the property in trust solely for
the benefit of another, with certain powers
and subject to certain duties;
 BENEFICIARY or cestui que trust or the
person who has the equitable title or interest
in the property and enjoys the benefit of the
administration of the trust by the trustee.
EXPRESS TRUST (Arts. 1443-1446.) or one which
can come into existence only by the execution of an
intention to create it by the trustor or the parties;
Express trusts are those trusts intentionally
created by direct and positive act of the trustor, by
some writing, deed, will, or oral declaration evincing
an intention to create the trust.
IMPLIED TRUST, or one which comes into being by
operation of law ; this latter trust being either:
RESULTING TRUST or one in which the intention to
create a trust is implied or presumed in law
CONSTRUCTIVE TRUST or one imposed by law
irrespective of, and even contrary to, any such
intention for the purpose of promoting justice,
frustrating fraud, or preventing unjust enrichment.
TESTAMENTARY TRUST or one which is to take
effect upon the trustor’s death.
TRUST INTER VIVOS (sometimes called “living
trust”) or one established effective during the
owner’s life.
REVOCABLE TRUST or one which can be revoked
or cancelled by the trustor or another individual given
the power;
IRREOVOCABLE TRUST or one which may not be
terminated during the specified term of the trust.
EXPRESS TRUSTS (KINDS)
CHARITABLE TRUST or one designed for the
benefit of a segment of the public or of the public in
general. It
ACCUMULATION TRUST or one that will
accumulate income to be reinvested by the trustee
in the trust for the period of time specified;
SPENDTHRIFT TRUST or one established when
the beneficiary need to be protected, because of his
inexperience or immaturity from his imprudent
spending habits or simply because the beneficiary is
spendrift.
SPRINKLING TRUST or one that gives the trustee
the right to determine the income beneficiaries who
should receive income each year and the amount
thereof.
IMPLIED TRUSTS
Implied trusts are those which, without being
express, are deducible from the nature of the
transaction as matters of intent, or which are
superinduced on the transaction by operation of law,
as matters of equity, independently of the particular
intention of the parties.
AGENCY 4. Where the person claiming the benefit of the
rule colludes with the agent to defraud the
Characteristics of a contract of agency.
principal.

1. consensual, because it is based on the

agreement of the parties which is perfected by
Communications of existence of Agency
mere consent;
1. Special Information
2. principal, because it can stand by itself without
2. Public Advertisement
need of another contract;
3. nominate, because it has its own name;
4. unilateral, if it is gratuitous because it creates
SPECIAL POWER OF ATTORNEY IS
obligations for only one of the parties
NECESSARY IN THE FOLLOWING:
5. bilateral, if it is for compensation because it
1. To make payment
gives rise to reciprocal rights and obligations;
2. To effect novation
and
3. To compromise, etc
6. preparatory, because it is entered into as a
4. To waive an obligation gratuitously
means to an end
5. To acquire or convey immovable
6. To make gift
ESSENTIAL ELEMENTS
7. To loan or borrow money
1. There is consent, express or implied, of the
8. To lease realty for more than 1 year
parties to establish the relationship;
9. To bind the principal to render service
2. The object is the execution of a juridical act in
gratuitously
relation to third persons;
10. To bind the principal in a contract pf partnership
3. The agent acts as a representative and not for
11. To obligate principal ass guarantor or surety
himself;1 and
12. To create or convey real rights over immovable
4. The agent acts within the scope of his authority.
property
13. To accept or repudiate an inheritance
14. To ratify obligations contracted before the
ACTS THAT MAY BE/NOT BE DELEGATED TO
agency
AGENTS.
15. Any other act of strict dominion

GR: is that what a man may do in person, he may

do thru another.
KINDS OF PRINCIPAL

XPNS:
1. Disclosed principal. — if at the time of the
1. Personal Acts
transaction contracted by the agent, the other
2. Criminal Acts or Acts not allowed by law
party thereto has known that the agent is acting
for a principal and of the principal’s identity.
GR: Knowledge of agent imputed to principal.
2. Partially disclosed principal. — if the other
XPN:
party knows or has reason to know that the agent
1. There are at least three exceptions to the rule
is or may be acting for a principal but is unaware
imputing knowledge of agent to the principal:
of the principal’s identity. The partially disclosed
2. Where the agent’s interests are adverse to
principal may enforce against the third person
those of the principal;
the contract of the agent like any disclosed
3. Where the agent’s duty is not to disclose the
principal.
information, as where he is informed by way
of confidential information; and
3. Undisclosed principal. — if the party has no
notice of the fact that the agent is acting as such
for a principal.
GENERAL OBLIGATION OF THE AGENT TO THE
PRINCIPAL
1. Good faith and loyalty to his trust, agent’s
first duty.
2. Obedience to principal’s instruction.
3. Exercise of reasonable care.
SPECIFIC OBLIGATIONS OF AGENT TO
PRINCIPAL.
1. To carry out the agency which he has accepted;
2. To answer for damages
3. To finish the business already begun on the
death of the principal
4. To observe the diligence of a good father of a
family in the custody and preservation of the
goods
5. To advance the necessary funds
6. To act in accordance with the instructions of the
principal
7. Not to carry out the agency if its execution would
manifestly result in loss or damage to the
principal
8. To answer for damages if there being a conflict
between his interests and those of the principal
9. Not to loan to himself
10. To render an account of his transactions;
11. To distinguish goods by countermarks and
designate the merchandise respectively
belonging to each principal
12. To be responsible in certain cases
13. To pay interest
14. To inform the principal, where an authorized
sale of credit has been made, of such sale
15. To bear the risk of collection
16. To indemnify the principal for damages
17. To be responsible for fraud or negligence.
SPECIFIC OBLIGATIONS OF PRINCIPAL TO
AGENT.
1. To comply with all the obligations which the
agent may have contracted within the scope of
his authority and in the name of the principal;
2. To advance to the agent, should the latter so
request, the sums necessary for the execution of
the agency (Art. 1912.);
3. To reimburse the agent for all advances made by
him, provided the agent is free from fault (Ibid.);
4. To indemnify the agent for all the damages which
the execution of the agency may have caused
the latter without fault or negligence on his part
(Art. 1913.); and
5. To pay the agent the compensation agreed
upon, or if no compensation was specified, the
reasonable value of the agent’s services
CONDITIONS FOR RATIFICATION
1. The principal must have the capacity and
power to ratify;
2. He must have had knowledge or had reason
to know of material or essential facts about
the transaction;
3. He must ratify the acts in its entirety;
4. The act must be capable of ratification; and
5. The act must be done in behalf of the
principal.
ACTS THAT MAY BE RATIFIED
1. Valid/void acts.
2. Voidable acts.
3. Unrevoked acts.
4. Criminal acts.
5. Tortious acts.
ART. 1919. AGENCY IS EXTINGUISHED:
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
insolvency of the principal or of the agent;
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency;
5. By the accomplishment of the object or purpose
of the agency;
6. By the expiration of the period for which the
agency was constituted.
MODES OF EXTINGUISHING AN AGENCY
1. by agreement (Nos. 5, 6.); or
2. by the subsequent acts of the parties which
may be either:
a. by the act of both parties or by mutual
consent; or
b. by the unilateral act of one of them
(Nos. 1, 2.); or
3. by operation of law. (Nos. 3, 4.)

OTHER CAUSES:
1. Termination by mutual consent
2. Novation
3. Loss of subject matter of the agency
4. Outbreak of war.

AGENCY COUPLED WITH AN INTEREST.

GR: the principal may revoke an agency at will.

XPNS:
(1) when the agency is created not only for the
interest of the principal but also for the interest
of third persons; and
(2) when the agency is created for the mutual
interest of both the principal and the agent.

When death of principal does not terminate

agency.
1. if the agency has been constituted in the
common interest of the principal and the
agent (see Art. 1927.); and
2. if it has been constituted in the interest of a
third person who has accepted the stipulation
in his favor

ELEMENTS OF EXPRESS TRUST.

1. A competent trustor and trustee;
2. An ascertainable trust res; and
3. Sufficiently certain beneficiaries.