LAW ON AGENCY 5.
General - One which comprises all the business of
Art. 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.
Characteristics of a contract of agency
1. Consensual because it is perfected by mere
consent;
2. Principal because it can stand by itself
without the need of another contract;
3. Nominate because it has its own name;
4. Unilateral if it is gratuitous because it creates
obligations for only one of the parties, i.e., the
agent; or bilateral if it is for compensation
because it gives rise to reciprocal rights and
obligations; and
5. Preparatory because it is entered into as a
means to an end, i.e., the creation of other
contracts.
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 persons;
3. The agent acts as a representative and not
for himself; and
4. The agent acts within the scope of his
authority.
Parties to the contract
1. Principal - one whom the agent represents
and from whom he derives his authority; he is
the person represented; and
2. Agent - one who acts for and represents
another; he is the person acting in a
Representative capacity.
Art. 1869 - Agency may be express, or implied
from the acts of the principals, 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.
Kinds of agency
1. Express -  one where the agent has been actually
authorized by the principal either orally or in writing .
2. Implied  - one which is implied from the acts of
principal , from his silence or lack of a action or his
failure to repudiate the agency knowing that the other
person is acting on his behalf without authority.
3. Gratuitous - One where the agent receives no
compensation for his services.
4. Compensated or Onerous - One where the agent
receives compensation for his services.
the principal.
6. Special - One which comprises one or more specific
transactions.
7. Couched in general terms - One which is created in
general terms and is deemed to comprise only acts of
administration.
8. Couched in specific terms - One authorizing only the
performance of a specific act or acts.
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.
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. 1876 - An agency is either general or
special.
Agents classified
1. Universal Agent or one authorized to do all
acts that the principal may personally do, and
which he can lawfully delegate to another the
power of doing.
2. General Agent or one authorized to transact
all the business of his principal, or all business
of a particular kind or in a particular place, or in
other words to do all acts, connected with a
particular trade, business or employment.
3. Special or Particular Agent - or one
authorized to act in one or more specific
transactions or to act upon a particular occasion.
Art. 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.
Art. 1879 - A special power to sell excludes the
power to mortgage; and a special power to
mortgage does not include the power to sell.  case of conflict, his own interests to those of the
Art. 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.
Authority of an agent is the power of an agent
to affect the legal relations of the principal by
acts done in accordance with the principal’s
manifestation of consent to him.
Kinds of authority
1. Actual - When it is actually granted, and it
may be express or implied;
2. Express - When it is conferred by words;
3. Implied - When it is incidental to the
transaction or reasonably necessary to
accomplish the purpose of the agency;
4. Apparent or ostensible - When it is conferred
by conduct or even by silence. Ostensible
authority is another name for authority by
estoppel, although a distinction is given between
the two. It is an implied authority in the sense
that it is not expressly conferred;
5. General - When it refers to all the business of
the principal;
6. Special - When it is limited only to one or
more specific transactions; and
7. Authority by necessity = When it is demanded
by virtue of the existence of an emergency.
Art. 1884 - The agent is bound by his
acceptance to carry out the agency, and is liable
for the damages which, through his non-
performance, the principal may suffer. 
He must also finish the business already
begun on the death of the principal, should
delay entail any danger.
Specific obligation of agent to principal
1. To carry out the agency in accordance with its
terms;
2. To answer for the damages which through his
non-performance the principal may suffer;
3. To finish the business already begun on the
death of the principal, should delay detail any
danger;
4. To observe the diligence of a good father of a
family in the custody and preservation of the
goods forwarded to him by the owner in case he
declines an agency, until an agent is appointed;
5. To advance the necessary funds ;should
there be a stipulation to that effect;
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 should he prefer in
principal;
9. Not to loan to himself without the consent of
the principal when he has been authorized to
lend at interest;
10. To render an account of his transactions and
to deliver to the principal whatever he may have
received by virtue of the agency;
11. To distinguish goods by countermarks and
designate the merchandise respectively
belonging to each principal, in the case of a
commission agent who handles goods of the
same kind and mark, which belong to different
owners;
12. To be responsible in certain cases for the
acts of the substitute appointed by him;
13. To pay interest on funds he has applied to the performance of the agency without grave
his own use; detriment to himself.
14. To inform the principal, where an authorized
sale of credit has been made, of such sale;
15. To bear the risk of collection, should he
receive also on a sale, a guarantee commission;
16. To indemnify the principal for damages for
his failure to collect the credits of his principal at
the time that they become due;
17. To answer for his fraud or negligence.

Art. 1892 - The agent may appoint a substitute

if the principal has not prohibited him from doing
so; but he shall be responsible for the acts of
the substitute:
(1) When he was not given the power to appoint
one;
(2) When he was given such power, but without
designating the person, and the person
appointed was notoriously incompetent or
insolvent. 
All acts of the substitute appointed against the
prohibition of the principal shall be void.

Art. 1910 - The principal must comply with all

the obligations which the agent may have
contracted within the scope of his authority.

As for any obligation wherein the agent has

exceeded his power, the principal is not bound
except when he ratifies it expressly or tacitly.

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.

Art. 1928 - The agent may withdraw from the

agency by giving due notice to the principal. If
the latter should suffer any damage by reason of
the withdrawal, the agent must indemnify him
therefor, unless the agent should base his
withdrawal upon the impossibility of continuing