LSACT (AGENCY) Study Outline: Page 1

STUDY OUTLINE: THE LAW ON AGENCY

CHAPTER I: NATURE, FORM AND KINDS OF AGENCY

(A.1868-A.1883)
I. DEFINITION (A.1868)

II. PARTIES
A. Principal (mandante)
B. Agent (mandatario)

III. NATURE; CHARACTERISTICS

- Qui facit per alium facit se
- Personal, representative, derivative
- It is a contract; thus:
1. Principal
2. Nominate
3. Bilateral
4. Commutative
5. Onerous
6. Preparatory
7. Fiduciary

IV. BASIS

V. PURPOSE

VI. ELEMENTS
1. Consent
2. Object (the execution of a juridical act in relation to a third person)
3. Agent acts in representation and not for himself
4. Agent acts within the scope of his authority

VII. AS COMPARED TO:

A. Sale (as to parties, transfer of title)
B. Lease of services (as to parties, basis, acts involved)
C. Partnership (as to representation)
D. Negotiorum Gestio (as to legal relation created)

VIII. FORM
A. For perfection; GR/EXC (A.1869, par.2; A.1874)
B. To inform third persons & to rescind: (A.1873)

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IX. KINDS

A. As to manner of creation
1. Express (A.1869, par.1, A.1870)
2. Implied
* Implied agency vs. Agency by estoppel

a. As to principal (A.1869, par.1)

b. As to agent (A.1870-1872)

B. As to character
1. Gratuitous
2. Onerous (A.1875)

C. As to extent of business covered (A.1876)

1. General
2. Special

D. As to authority conferred
1. Couched in general terms (A.1877)
2. Couched in specific terms
- When SPA is necessary (A.1878)
- Limitations of SPA
a. To sell (A.1879)
b. To compromise (A.1880)
c. To loan (A.1890)

E. As to nature and effects

1. Ostensible/representative
2. Simple/commission

X. AUTHORITY OF THE AGENT

A. GR (A.1881)

B. EXC (A.1882)

C. Effects of acts of agent

1. In his own name (A.1883; 1897)

2. In his own name, involving things belonging to the principal (A.1883, par.2)

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3. In name of principal, within authority

a. GR (A.1910, par.1)
b. Within written authority, outside of instructions (A.1900)

4. In name of principal, outside of authority

a. GR (A.1910, par.2)
b. EXC (A.1901; 1911)

5. In name of principal, without authority

CHAPTER II: OBLIGATIONS OF THE AGENT

(A.1884 – 1909)
GENERAL OBLIGATIONS:

1. Loyalty to his trust agent’s first duty

2. Obedience to principal’s instruction
3. Exercise of reasonable care

SPECIFIC OBLIGATIONS:

1. To carry out the agency once accepted (A.1884) – Scope

2. To exercise diligence in custody and preservation of objects of agency if agency is declined (A.1885)

3. To advance necessary funds (A.1886) – EXC

4. To follow instructions (A.1887) – duty if none given

5. NOT to carry out agency if its execution would manifestly result in the loss or damage to the
principal (A.1888)

6. NOT to prefer his own interest to those of principal (A.1889)

7. To be a lender but NOT a borrower (A.1890) – EXC

8. To render accounts (A.1891)

9. To be liable for appointed substitute/sub-agent (A.1892-1893)

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10. To be liable for acts of co-agent (A.1894-1895) – GR/EXC

11. To be liable for Interest (A.1896)

12. To be personally liable to 3rd persons (A.1897)

13. To be liable for contracts entered into in excess of authority (A.1898) – ratification

14. NOT to be personally liable for ignorance (A.1899)

15. To present Power of Attorney or instructions as regards agency if required by 3rd persons (A.1902)

16. To be obligated as a Commission / Factor Agent

- Commission Agent vs. Broker
- Doctrine of Procuring Cause
a. To take responsibility for received goods (A.1903) – GR/EXC
b. To make countermarks on goods (A.1904)
c. NOT to sell on credit (A.1905, 1906) – GR/EXC
d. To collect credits of principal (A.1908)

17. To be obligated as a Del Credere agent (A.1907)

- Commission Agent vs. Del Credere agent
a. To bear the risk of collection
b. To pay the principal the proceeds of the sale

18. To be liable for fraud and negligence (A.1909)

CHAPTER III: OBLIGATIONS OF THE PRINCIPAL

(A.1910-1918)

1. To be liable for all contracts entered into by the agent within the scope of his authority (A.1910)

2. To be liable for all contracts entered into by the agent who has exceed his authority if estoppel
applies (A.1911)

3. To advance/reimburse to the agent upon his request the sums necessary for the execution of the
agency
a. GR: A.1912
b. EXC: A.1918 .

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4. To reimburse agent for damages (A.1913, 1914)

5. To be solidarily liable with co-principal (A.1915)

6. To respect preference of an earlier contract involving the same thing (A.1916)

7. To be liable for damages in favour of the party with rejected contract (A.1917) – GR/EXC

CHAPTER IV: EXTINGUISHMENT OF AGENCY

(A.1919-1932)

A. Modes (A.1919)

B. Rules on revocation of agency (A.1920)

1. Who may revoke an agency

- If there are 2/more principals (A.1925)

2. When agency may be revoked

GR: At will (A.1920)
EXC: (A.1927)
a. When a bilateral contract depends on the agency
b. When the agency is the means of fulfilling an obligation already contracted
c. When the agent is a managing partner and his removal is unjustifiable

3. How agency may be revoked

a. Express
b. Implied – may be total/partial revocation
 Appointment of a new agent (A.1923)
 Principal deals directly with 3rd persons (A.1924)
 Grant of SPA to another (A.1926)

4. Effects of revocation of agency

 No effect on 3rd persons who were not notified (A.1921, 1922)

C. Rules on withdrawal of the agent

1. Duty to give notice to principal (A.1928, 1st sentence)

2. Liability for damages – GR/EXC (A.1928, 2nd sentence)
3. Duty to continue (A.1929)

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D. Rules on DEATH as cause of extinguishment of agency

1. Death of principal
 When it does NOT affect continuity of agency (A.1930) - If agency has been constituted:
a. In the common interest of the principal and the agent
b. In the interest of a third person who has accepted the stipulation in his favor
 Effects:
 Acts of agent are valid (A.1931) – Requisites

2. Death of agent
 Duty of heirs towards principal

1st Semester, SY 2020-2021 ~ labor omnia vincit ~ Atty. Maan Grace B. Elago