PART II TITLEX AGENCY (rs 1868-1992) Chapter 1 NATURE, FORM, AND KINDS OF AGENCY the contract of agency a person ‘some service orto do something, if of another, with the ARTICLE 1868. By binds himself to render’ in representation or on bebal ‘consent or authority of the latter. (170%) Concept of agency. (1) Artide which is very broad enough cone person is employed to rendé however, from its concep! employer and independent contractor, (Art. 1713.) (2) Agency isa fiduciary relationship which implies a power in an agent to contract with a third person on behalf of a princ- lt is this power to effect the principal's contractual relations thied persons that differentiates the agent from the employ ce, the servant and the independent contractor. x0 1868 defines the contract of agency. The definition, fo include all situations in which ler service for another, excludes, tthe relationship of employer and employee (Art. 1700), of master and servant (Art. 1680.), and of ‘Agency: propetly speaking, relates to commercial or business tcansactons. Agency relationship may also arise in non-business Eftuations as for example, person (agent etuens an article 18 jinder for a borrower trend (prinepal. EXAMPLE ovener ofa land, wants to construct building on i. He may do any ofthe flowing (1) He may hie C a bung cateactoy, to construct the ‘ulin with the materiale and abort be furnished by C-0F (@) He himsel’ may construct the building, buying the necessary materials and employing W, etc, (workers) whoshall. Construct the building under he direction and ssperision: or {@) Hemay socute the services of Ato supervise and tact for him inal matters connected with the constnaction work In the first case, C isan independent contractor; in the second, W, ef ate workers or employees of, and in the third, iRis an agent off Thus, the relationship between the parties ite hirer of service and the person whose service has been hired —and their rights and duties will depend upon the terms under which one works, represents, or act for another. Governing law. [As in the case of sales, partnership, loan, deposit, and guaranty a distinction formerly existed under ous law between tivil agency and commercial agency. The former was governed by the Civil Code, the latter, by the Code of Commerce, This distinction has been abolished under the new Civil Code. (Art. 2270121) “At present, all agencies are governed by the Civil Code. (Arts. 1868-1932.) Term used in other senses. “Agency” is sometimes used in a sense other than to denote the relationship of principal and agent, (1) Thus, it may be used to denote the place at which the businessis transacted, When used in the sense of place of business, the relationship of principal and agent isnot necessarily implied.nctscr — toe used in the Sense Of ing fone. (2 CJ 1024) Be ght ofa person ty st eo 8 sgh tse 2° mations etme a ste: 2) Likewi carat contet Saar eet ag . is ted on he gREMEN of toma ce sed ; rey me ose (2) prin, eau ican sand By ef without need og another contrat: (@) nominate because it hasits own names (a) uate its gauitous Because it rates obligations so pas te get Fister i foe font one tae gs Hs OCT Eh ang colton and pepo, bcs it sented into #68 BEANS 0 any mote arson contracts Nature, basis, and purpose cof agency. ‘The word “agency” when used in its broadest meaning is both a contract and a representative elation, (a) Nature. — Since agency isa contract itis essential that the minds ofthe paris should meetin making it. Article 1868, defines agency from the viewpoint of a contract (a) Manistationof onsen. — The principal must intend thatthe agen shall act for him, the agent must intend to ‘accept the authority and at on it and such intention ofthe parties must find expression either in words or conduct between them. Without such intention, there is generally 1 agency Thus, the mere fat that an entity may be 100% subsidiary corporation of another corporation does not necessarily mean that the former is duly authorized agent tf theater because i eee fora contact of BY to exist, that the principal consent thatthe other pay the agent shall act omits behalf and the agent consents 50 25 0 det. (APEX Mining Co, Ine. vs. Southeast Mindanao Gold Mining Corp, 492 SCRA 355 [2006)) (©) Agent yet etn, booms principal. —In acting fOr the principal, theagent, by legal fiction, becomes the prinipal horized to perform all acts which the latter would have him do. Such a relationship can only be effected “with the consent or authority” ofthe principal which cannot 3 way be compelled by law orby any court, (Orient Air Services Ue Hotel Representatives vs. Cour of Appeals, 197 SCRA 645 (i991) (9 Presencelabsencofcontractorconsideraton. — Although the agency relationship is usually a contractual one, either express of implied, based upon a consideration (see Art 4875), this isnot necessarily so; that i, the relationship may be created by operation of aw (eg. agency by estoppel ifr see Arts, 1881, 1882, 1884, par. 2, 1885, 1929, 1931, 1992). fora person who acts for another as principal may do 50 {gratuitously (3 Am. Jur 2419-420.) Thus, without contract ‘ora consideration there can be an agency or agency powers Inthe exercise of governmental functions, local governments or municipal corporations act as agents for the sovereign state. The legal consequences of agency may attach where one person acts for another without authority o in excess of his author and the ater subsequently ratifies. (see Arts 1881-1882) (2) Bass. — The civil law relationship of agency is also a representative relation. Its basis is representation’ The agent "Ty po vl accom by thst gud toch “te cenpye sc apy tn ao co easamer No pail age ee tice cla nt mney pr dy og Fevetel hearer period price Wt exe pur piel cet eshte rato Grape sacar sai 8 {tort ari eBoy eo fe Ps 28 SCA [2019))renders some service or des something, “in representation or on behalf of another” (Art 1868) eel a fe epee beet ee ey Serta ie nies see te ictal ee ge Petrcceirerr eri rare tated in ee oe etal Se a ct baie eh a eee ee Sc eee ae Go tee jeep eee eee oaeee Sep ctl ahs er eae seg cep oe ee ae sited oper eee ae reas eg eee Songer course Se ee ete SE er er aoK ed ‘{1983).) ood = wine ly ec wales pelea omnes ee re eSaany Relies a seal eee ees ee ee eater aa eteuett es (@) The purpose of agency i to extend the personality of {the principal through the facility ofthe agent (se Orient Air po pains NATURE FORL ANDRES AGENCY 2s vce Hotel Representatives vs Court of Appeals #72) se me service to door comethng. enables {0 fy of man which is raturally inte iis exercise OF ac alton of hs physiological conditions to be leat ted by permiting him to be constructively presen entero places sn to pevorm diverse jie! 29 mare on many diferent atvtes through anther When #4 ea presence impossible or advisable atthe 5 pea Manes 08) , o) The nfl othe gency loshin bins 1 ene wth wry SP ens iw et big dl et sn a ame tne mange 2 BUS ese moran besser a OE ce nos whchca only ncogh a= Parties to the contract “The two (2) partes tothe contract are the: (1) Principal. — one whom the agent represents and from hom he derives his authority (2 CJS. 1024) he is the person weesented or the person Who consents that another shall act on his behal. ‘Agency imports the contemporaneous existence of prinpal, and there fs no agency unless one i acting for andl in {Behalf of another (2-A Words and Phrases 436.) and (2) Agent. — one who acts for and represents another; he {s the person acting in a representative capacity. The agent has ‘derivative authority in carrying out the principal's business. He ‘may employ his own agent in Which case he becomes a principal wwith respect to the later. (see Art. 1892) If an act done by one (0) person in behalf of another is in its essential nature, one of agency” the formers “agent” of the later notwithstanding that he snot socalled. (2-A Words and Phrases 436.) From the time the agent acts or transacts the business for which he has been employed in representation of another, a third party is added to the agency relationship — the party with whom, the business is transacted,lomonts of agency. ‘They areas follows: (1) There is consent, express or implied, of the parties to establish the relationship; (Q) The abject isthe execution ofa juridical actin relation to third persons: (9) The agent acts asa representative and not fr himself and’ (4) The agent acts within the scope of his authori (Rallos vs Fein Go Chan & Sons Realty Corp. and Court of Appeals, 8 SCRA 251 [1975] Tunzon vs. Heirs of B. Ramos, 463 SCRA 408 (e005)) Tnaddtion the parties must be competent act as principal and agent (na) Consideration isnot required, ja creation of agency relationship. ‘An agency relationship is consensual in nature tisbased on the concept that the partes mutually agree on its creation. (1) most cases, no formalities ae required forthe creation ofan agency relationship? [A person may express his consent by contract (Art. 1868), orally or in witing by conduct (Art. 1869) or by ratification (see ‘Ra 1910) or the eonsent may arse by presumption or operation Taare nyt dcr roi il tesepion a kepreenant ots bey pt ut A Saha ee apg SSS cried ty mead a op Exelon tiny eas ty ye eye LS cy oe eee nee Py der oe eats ey fateat eee cgariaeaen pee Seo Spode sted cotnpees ape mane ena {Sobran Sm nfs lle a we pris NATURE FORAND KINOF AGENCY = “flaw. On the pat ofthe principal there must be an intention Sppoint the agent, while onthe part ofthe agent, there must be ap ieqention to accep the appoint and act oni {@) In certain situations, the lave presumes that a person has authority to at for another. For example, in law, partners {dered agents ofthe partnership and ofeach other. (A {@) Whenan agency relationship isestablshed, the act ofthe agenton bel ofthe prpal within the scope ofthe delegated aera. (ae Art. 1881.) ae the acts of the principal insofar as the world isconcemed, Relationship of tir party with principal and agent fr) Contnct beeen tied prty and principal. — Since an ag econtrac this owm but is primp aid party's #8Etiy on such contac tothe Principal nd not to the satay to such Gnd pry enforceable against the inclpal not he gent (2) Station he ome in hich ere is no agent. — Where an agecy ets the rlatonship ofthe hd party with whom the ‘Benrhan contacted othe princi the same a that a ‘Bertin which tere no ape (a) Norally the agent has nether sights nor abilities as aginst the rd par He cannot su or be sued on the Tense He snot te rel payin interest an action upon fhe contact Since a contrat may be violated only by the paricstertoasagainteach other he rel pt hers plano defendant ina action upon tht contract trust generally bea patty tad contact “The egal situation is however, diferent where an agent ts constituted as an asignee In such a cave the agent may, War etre of tee drm by am atrey int e fot ing tenn vst shane ieee men. Eigen nda ons ral bee gn earner ain his own behalf sue on a contract made for his principal, i an assignee of such contract. (Angeles vs. Phil. National Railways, 500 SCRA 445 [2006)) (@) The fact thatthe agent did not obtain his commissions cor recoup his advances because of the non-performance of the contract does not entitle him to file an action against the buyer where he does not appear as a beneficiary of a SSpulation pour aurui under Article 131P of the Civil Code, (Cy vs. Court of Appeals, 314 SCRA 69[1999]) (@ An agent in his own behalf, may, however, bring an action founded on a contract made for his principal as an “signee of such contract. The rule requiring every action fo be prosecuted in the name of the real party-ininterest recognizes the assignments of rights of action and also recognizes that when one has aright assigned to him, he is then the real paty-in-interest and may maintain an action ‘upon such claim o right (id) (5) Need for personal encounter between principal and third party —For agency to arise itis not necessary that the principal personally encounter the third person with whom the agent Ineacts. The aw, in fact, contemplates impersonal dealings ‘where the principal need not personally know or meet the third person with whom the agent transact. Precisely, the purpose of Agency i to extend the personality ofthe principal through the facility ofthe agent (Bank of the Philippine Islands vs. Laingo, 787 SCRA 541 [2016)) Capacity of the partes. (1) Principal. — A principal must be capacitated (see Arts. 1327, 1329.) or have the legal capacity to enter into contact in ind ei ep oe i rte a ‘Srowatin Are Scimitar netics ponerse Teco Segpata ical anes tin (Grewal mtn ms pets ATURE FORM AND ENDS OF AGENCY » pis own right. The logic is simple. A person who cannot legally er into contracts directly should ot be permited to it Sesieetly through another, (a) The principal maybe either a natural person oF an antfcil one. Thus, legal entities such as corporations and fortnrships an be principals or agents Ths is expresl¥ Fcognized in Article 19193) which provides a one of the nds forthe extinguishment of agency “the dissolution he fim or corporation which entrusted or accepted the agency.” On the other hand, a voluntary association of cos which sta legal entity has no legal existence and Prnnot sue or be sued hence, thas no capacity to appoint an sent (6) Aso, during the existence of state of war, an enemy alien may not appoint an agent t0 actin the belligerent {entory with which his maton isa war. (Am. Juz 24424.) (© Inasmuch as one who acts through an agent in law does the act himself, the capacity to act by an agent depends {fr general on the capacity of the principal todo the act him Selfithe were present. (2 C]5. 100) It isa general rule that Sh agent who assumes to contrat in the name ofa principal without contractual capacity renders himself lable to third Peon. The acs ofan get done for an incompetent re Epal may be ratified by the later after he acquies capacity. ‘The agent isnot liable where he was ignorant of the pring pas incapacity EXAMPLE: ‘A, agent makes a contract on behalf ofP without knowl eg that Pwasa minor P thereafter dsaffirmed the contract. Is Aliable tothe other party tothe contrat? rT tenet yon nd des who do et ire how owes ot ne vay a nt a antisera rs ttc anceney acs No. Am agent warrants that e is acting within the cope bis authority but being a mere mouthpiece of his principal, he aaa cant the ful eontractual capacity of his principal fdaneon sc Lippencot 47 NJLAS, ited in Teller, p. 228) ILLUSTRATIVE CASE Patton to efemed he share rondo prc land porary gent ef hone chins ens cer stare Tare A redeemed the share ponds of Bn a pel of andl suhoryofaspocl power fatlorey executed sa ee teres of Bo sila. Relying upon ae of atoey and redemption mae by hin, A new Sisbeta hae acquit the share o Bin tear Tru: Has Ath ight to have the potion he claims as hs shan egepted and conte of ie sd in his mame Sse frst portion? a No, forthe flowing reson: (0) The special power of attorney autorzed Ato 2 or coronbehatf atthe Gulden of, and hence, could pot have cy wet nim ay property ight in sown ame; (2) The dhlren of B had no autor to execute sak gover of aoeney because the aris aves and 1) inconsequene of sa power of atorey (valid) and redemption Acoldhaveaclred no merethanthe indo ‘Bare o1 Bin te lo in question so tat he cannot, without the erfrmity of the other eaves ora jad dere of frriton, ajdt to hime fee simple a determinate Fert sl lt Ns hare teen t the exclsin ofthe er coonmes (Seve Bnenoa, 1 SCRA 165) (2) Agent. — Generally, anyone can bean agent. His capac it is usually immaterial. eis the capacity ofthe principal that ¥s conrling since the contract is really entered into by the nl nthe cis fh agen sic ie assumes no person ably, he doesnot have to possess fll pacity to act for him sslincotr eid pesns recone (0) Anagent deriveshisauthority fom the principal and acontact made by the agent egal eed as eontac 8 NATURE. FORA, we KAD MSOF AceNCY ea of the principal. Thus, minor whose contact thera et a dsb eg. ts, there him may nevertheless act asan agent nego onan UPON agent and bind hs pineal ee cents A Principal appointing an agent. nore aude ie _(0 Thr sath fe popeton at whee extn wt Sat as his agen, the capacity of the later wl ke or suntely med. O Am. 24 68) Howererae ete fy is necessary a an agent, and, theo pret wg ae absolteyincapactted, sch asimane gerne et be agents (2 CJ.S. 1041.) as they are completely incapable of un- mang be tt befotmel Sesh ees should appoint agents who are able to make sound decisions oes (©) In an ordinary case, a person of sound mind not cucu caput maya ape a ot Aiegeementsbindon pcp Sotconssncse dBi quale tekst of nich my wih be lege ag sed ‘Sebviu isa tt of anaes dpi egal tse cep) (f)nsolr as his eligi fo hs pina ome cana he apen mabe pet bah Tes eatin pets cay od suet as srdiabitesto hs pincpl deers ponies or Restatement [Second] of Agency, Sec. 21, p. 93.) (The elatohp ott and conn which cont ot a fue) antl carte of the agency relationship results in the disqualification of see en al when ti day oo inconsistently toward another. (Tells op. cit, p- 46.) Other names used to designate the partes. “The names “principal” and “agent” though the usual ones, sare not the only terms used to designate te parties fo this rela~ tioninset ae esol spent 8 Pronk pate ree he prem pe a a ‘dud lcm See 3h cd oA. Pails Ci Coe VL 1976 pee eee are eer Soccer ese eetee cer Eee ‘ores tee enc re Se SSRIS ey rat tae tml erm ware rac ea wake es ate ieaeymee a eee aa vente se le secant dana eaai permeate! Semel Steers) "opt cnet hm ye ara we os en ten arrester Seer rarer ie ata ee romain or ‘otto ioscan) = umes tee ommatagneaenly i tae Sint tre tae sianmiiathtbatperseracngt meen Sana bien Jo ee et ck Ta Po etre a en pa (afi een acta ‘Ste hese tapi nema of arte” pee pes peeve cae appbenon n.crin Wi poner {he pun athe sip ced apt anther. (Sie onto appa Soba oa) Dunination teterce In owt curt no oma argue fr the cane sn age anowip The gues of whee = [EEEsnc as oe ei sa gestion hich may SERIE hte wy moyen te Beatin ye en The ma wh pdt ochre Want ore [fone pesen inte loner eset one 1 sro comer i get of eater natetarng SUEDE Shae inrenty the ue the med apy Mm sgt by eps in coe a em ee leakngon agent, lc ‘rach fe thse abla Cavs PL Reg Co Harsch (2) Fat fst — Th qutn io etre by eft aes ing ani ty ‘doe the pt of hehe an athens est wh cote sagen, tlbeamageny he he pes eel fe cum he rason erm rs oe (0) Pron fxs ~The mation apne comet te Ble tac lay o fm tend 1 sms co oc cary ping an ge Sete ninan ee thee mu co Sp rept ate or imho pomp thn rt x a tO gens abu ses Live Coto Apa, [SVS a [sh ping exc ate and xe ‘Rigi pen pen slegig nn {28 Rem sche Ass Uta eve SEHAUE TONE Neds Catpn co ScRAgH (ED (4 Ineo, et teratp.— On te pt of te rnp ei et i nace ‘Teta en page erties ‘eprineaparian ond aon inane see cnt the pole agen (CO se Damon [nce Cora Couto Appen, e SoRA 299 DML ‘Noor adng Crporton vs Cort Api 7 SCRA 2 jane The dentin the apt abe gv sticiet tp oubieh tbe for ev fe sey on ‘Renner 27 SHA a Ton Hn Baro, ‘Speen ev Bel Copan SOSCRADD TT) ‘vee feos apt ate ha them soy yet on te Se en ape ‘Tantpezeg hd pram wi arater oe {Tepid getony abt he pet ot or (GE ta es css Bate pci personaly ‘Str te td pom wk whom th pet ete a See pr tage nc errno ‘eppl dcoph th yf ge Da Anps, re are of relations between pris ‘snd agent (Ratio larch —Te ato oan agent to pine Edin act ice hy a bas nt an confident ve Sever Pi 3 [oh ows Sogn which vr osiey am ston {2 ten The aparmet ae al 0 the eal Cesta fama that a eon day, ‘Ses y Rr deat ct pry the eet ofervey pra cage a area re 1 2 sgt fn i ly faring ea a oe ea I etn ain anal arti a aniuaneauein aes eta re sate another, the principal ing (Restatement oft Te some cases, the fi may continue even afte the ter Tee inka chaps ore ate SHaM pommel reese sty iecommon sae ietioe Se emcee Seer chcrenaet mana sl pace mee il mnbeheattiees ancien tema iptet sibinnapirRer aes ccaraecee iomet paren ncaa gee ices ed areas rset wudhate inpatient toate are ipirianjecle pet gettinearatietepes Rindoeneaintenticeanonamiren SoS eee eee reer na oer eae laa Wate ferent pnd says re en ream inayat edn apne ible to Profit by yielding to Sra SSN ern emptation (Thomas vs. Fined, Sor 3st Pana isc, aa any prior chim which he hime may bane ge eee Reni be aa ohne aoe br property in Bis hands was nt recived y hm a tgem the principal or that the principal pared with his interest nthe property subsequent tthe delivery to him as agent o thatthe property has Ben ake from the principal by» paramount tile, Erthat he hasbeen lwfllycegued to accout for another thatthe tt isin another towhombe wouldbeliabe ithe should Surender the property tothe principal (SC}S. 63) (0) Agent must notactasanadereparty —Inmatters tou henge agents camotscnss bik pnp whee they have an adverse interest in themselves “The rule is founded upon the plain and obvious consider- ation thatthe principal bargains ithe employment forthe ex reise ofthe dlsinterested sll digence and zal ofthe ent forhis own excusive benefit. Even impartaliy could pesibly be presumed on the par of an agers, where his own interests vere concerned, that snot what he principal bargains for and Inmeny eae iis the very as thing whch would advance His interests (Anew v. Ramsay & Co, [193] 2 KD. 635, cited in ‘chem SeetedCseson thaw ot Agere PAS 52) (@)_Anagent cannot acquire by purchase, even at public or judi ution erin person ar ough he medion of another the property whose administration or sale has been entrusted fo him, unless the consent ofthe principal has been given” (Art 1491[2}) The agent's incapacity to ‘bay is pencpa's property zs inthe fact thatthe agent ad the principal form one juriical person. The fear that {roed might get the better ofthe sentiments of loyalty and Efsinteresedsess which should animate an administrator for agent, is the reason underlying the incapacity. The ban Ta Ana, — Tele re pr 1 iar ning Ex ef a Eh)csc es trust and confidence. (G, Araneta, Ine, 119521) Law 857 8) so a oe sale or administration after the paced in gene aera vs. Velasco, 51 Pil 685 termini tial gwen is consent thereto (Ca 1a or STs Tr), oer properties diferent fm {haces een commissioned tel ‘iat ithe principal authorizes the agent to sll good gest must nt sl to sll. His diy (0 get goods th a6 ere conics wth is interest (0 buy a ae Ph) Ca fe Mart, oc p18) The Grett mgy rover damages fr the wrong sale. The Pra ike damages the dference between the vale ae ur hen ad an thi val when the sale was Shade Kzwn and repainted by, the peincpl elle op. aiep- 13) Bat whee appears rom he fas that the principal is inured nthe rept of fed pce forthe subject matter cage hema sll to hams Ths, where the agent rly sll spac of land at 4 cetainiinum fre any amount above the price eing allowed to hin a Emi, te agent may purchase the property hime. Simin, he may ter sir cumstances ac fo both buyer and sl lle pcp. 19-40, cing Halton Sherrard 50'NM. 138 nd Ente American Cental Ins. Corse) (4 Ago mt at for an aes pry. — An agent cannot sesame sb ese ol eee Iidleman o temeiay eg ral eat broke) with 0 Independent ate ath ap pra Aled Free Worker's Union PLUM vs. Compania Mariima 19 SCRA 258 19671) An agent cannot act as such for both po ts such foe bth presto he jnimst NATURE. FORK ND RBUOFACENCY »” ‘same transaction, in the presence of conflicting interests, unless jects wh the nowledge and conan oft anon lureso so operate, either party may repudiate the transaction involved.” toate ance wih is ty cows tons ens ape Cebth buyer and salt nthe same eat ne 0 te ret lhe verder seas ight ptt oe hese to py Ue and the agent ey some 8 ra gine OCIS 187) (0) Whee a ogn company hasan aget in the Philippines selling its goods and merchandise, ‘was held Matera pet cod nol ery wellact ay get or local tae beens te erste gn ncaa those spars would ence eon could tse ot nya the ae tear Easter Bop IC Lin ek Sun PL 7 95) (Where an agent ac for bok pres without the ootege or cons cere & arenle a tste HOSTS prof ofthe tarncon and expose for to ata by be petal feough suck acon and rat recone conperaten fem espns. The rule {aU anda esos of pub poly an aplesto ‘idl geney atone nobeithtanding tht he agent os into lath ot tat te ancl ebjeing incurs 0 Mee aSetom @C)s 1517) Eternal en rescind (¢) Where the third party (second principal) is aware ‘of the dual employment but the principal is not, the latter Ty Aces a Cig n— isthe dty eaten at eine fcc tb crams ations the an lprorer cme het igi ect he sonatenmet onch einwishaay merct lehe oppee. Seer tice rans Rely aot dr seer crn olsun neg cps tant epee ‘Somes sda afin neste let wih pect ch ‘neers ber gre! (Conf ress EOS) Se a ectcacete psetcetandapospecive 2 ee ag sig essays (Cm CHa, iesena saat)ost ight atin orescind the wansacton and er haath ight ty and te ae epee mags or tan pee Na he eared vehi Tari te dake employment withthe knowledge andre snap sch pea bound sd comen ot Enter Ga comments under Ar ae tr! wih nwt of double agen cant etal agen obeach ah (6) The prohibition against dual agency does not apply tocases where the principal possesses full knowledge ofthe facts and consents thereto, or in which the interests of the tnwo 2) principals are not conflicting and loyalty by the agent tone a them does not comprise a breach of his duty to the fll as may be where the agent exercises no discretion in the matter but acts merely to bring the parties together, and they’ themselves settle the terms of the agreement between them, Also, the rule does not disqualify one who is the agent ‘of one (1) party for a certain purpose from acting as agent of in adverse party for an enticely different purpose. (bid, 17 18) For purposes ofthe income tax law; the withholding agent i the agent of bot te Government — in calecting enor Withholding the tax due from the taxpayer — and the taxpayer in paying the tx withheld tothe Government. (8) Agent must not use or disclose secret information. — Requirements of good faith and loyalty demand of the agent the daly not to use or divulge confidential information obtained in the course of his agency for his own benefit to the principal's injury and expense.” Alter the agency is terminated, the agent eae sc, st hy iy sh dy of up ree ce yh pt epleynt ha aaes 2h tine cml er rth oka aan ieee arnt aN roc "NATURE FORM AND KOS AGENCY ost ee eee Somacircemeneec mare irae Stucun aeeet Ginder Art 1919.) Be (6) Agent mast sv aio matrilfts, — Pris of good fh a ost tothe pot erat ak tie {Botan agent make wns incl every ane ltl fet of hich the agent ha cgrzancs, which concen the tramcacton and sbjet mater of he agen On sre od the agent nay be ed habe or damage or any los steed ot inj nce as eso suchbresch OC}S-8) ‘Theprincpal lo owesthe agent the duty oact with wos good akin ie ay nop tos he agent rain tht hes ify bearing on thet agency lato. Knowledge of agent imputod to principal. (1) Agents’ duty of notifatin, — The importance of the duty: to give information of material facts becomes readily apparent when itis borne in mind that under the theory of imputed knowledge, the knowledge ofthe agent i imputed to the principal even though the agent never communicated such knowledge to the principal. See At. 182.) Thus it isonly logical that the agent is required to notify the principal of ll matters that ame to his altenton that ae material to the subject mater ‘of the agency. A typical ustation is where an agent, having suuhont to buy poopy lean thatthe property isencumbered by an unrecorded mortgage. The knowledge of the agent will be imputed to the principal so thatthe principal acquires the property subject to the mortgage. The knowledge, however, of {he principal cannot be imputed tothe agent inthe absence of substantial proof of knowledge by the later. (2) Relationship of attorney and client. — The relationship i ant fare ever reset the ned for hess aceney ees 6) Rime ofthe princi. — Note that the theory of imputed nwtedge acres te knowlege of the agent 0 the prncpal ot theater way around. The knowledge of the risa fone be pute Yo hs agent: Sanace Iteration Efingerent Services Inc. vs” National Labor Relations Coma, 450 SCRA 146 [206)) Excoptions to the rule. There are at least three (3) exceptions to the rule imputing knowledge of agent to the principal iid (1) Where the agent's interests are adverse to those of the principal; (2) Where the agent’s duty is not to disclose the information, as where he is informed by way of confidential information; and (3) Where the person claiming the benefit of the rule colludes With the agent to defraud the principal. (Teller, op. cit, p. 150.) Agent subject to principal's control (1 Sabet mater ofgeny — One factor which most cleat ainingistes agency fom other legal concept controls ee erm ieee toch cnt recon another ~ the principal Indeed the very “agency has come to conte ona bythe prinpal Viton Miling Cos ne ‘ourt of Appeals, 333 SCRA 663 [2000].) The agent is subject to his principal's contol with respect to the matters relevant to the agency relationship. Many Tegal relationships are possessed of fiducary quality and the guality Gf power in one of the parties, yet the relationship falls short Sfagency because ofthe absence of control on the part of one of the partis. Thus, “the directors ofa corporation are HdUuiary having poveer to affect its relations, but they ate not agents of the stockholders since they have no duty to espond to the will of the stockholders as to the details of management.” (bid, citing Restatement of Agency Sec. Ma.) (2) Actofagent.—Theextentofthe pincipal'scontrolover the agent’s acts varies both with the type of the agency relationship and the facts ofthe particular case. But the general rule is that the principal may direct the acts of his agent even though the principal has promised not to do so. The principal, of course, ‘Becomes lable in damages for breach of his promise not to give direction, but the agent cannot act in disregard ofthe principal's ‘demands, ie, the principal's promise nat to give directions is not susceptible of specific performance. Teller, op. cit p: 8.) ‘Agency and similar contracts or relations. In order to classify a contract, due regard must be given to its essential clauses. A contract is what the law defines it to be and not what itis called by the contracting partes. (Quiroga vs, Parsons Hardware Co,, 38 Phil 501 [1918}) The essence of the contract determines what law should apply to the relation between the contracting parties. (American Rubber Co. vs. Collector of Internal Revenue, 64 SCRA 569 (1975}) (1) The important characteristic feature of an agency relationship which distinguishes it from similar contracts oF relations isthe agent's power to bring about business relations between his principal and third persons. This power is pethaps the most distinctive mark ofthe agent, as contrasted with others ‘Who actin representative capacities but are not agents. (2) Also, genera agents (see Art. 1876 )aretobedistinguished from certain particular kinds of agents. Thus, while attorneys-at-lav: auctioncers, brokers, factors partners, officers and agents of ‘corporations and publicoficers may, in some respectsat least, be regarded as agent, they are distinguishable from general agents because their authority is of a special and limited character in ost respects (3 Am. Jur 24 420.) ‘Agency distinguished from loan. Whether in a particular case the relation between the parti is one of lender and borrower" or principal and agent depends, ‘on the terms ofthe contract between them and their intention, (1) Where money advanced to another is expressly regarded ‘as money lent, no agency results. One who borrows money to Conducta business in which the lender has no interest or concern in the manner ofits conduct is not an agent of the lender, but the financing of operations to be carried on by another for the ‘mutual advantage of both, without any obligation of such other tozeturn the money advanced, makes such other an agent rather than a borrower. (2CJ5. 1030.) (2) An agent may be given funds by the principal to advance the Tatter’s business, while a borrower is given money for purposes of his own and he must generally return it whether or ‘ot his own business is successful. A lol, however, depends on ‘the intent ofthe partes. (see ii.) (0) Where checks are deposited with a colleting bank, the natuee ofthe eelationship erated at that stage is one of agency, that ithe bank fs to collet from the dravwees of the checks the corresponding proceeds, Afler the checks are collected and converted into ash, the eritor axl debtor relationship #8 cf tpt dt tate he hy we the he fora etn ae ae uaa or my ne cae ve a a ty aS hast sani wn erm Thetis we binge tee nt ea lpn el Sree le ate ns ay Se ‘Agency distinguished from lease ‘of service. ‘The distinctions are the following: (1) In agency, the basis is representation, while in lease of sexvice* (see Art. 1689.) itis employment; (2) Inagency, the agent exercises discretionary powers, while in Tease of service, the lessor (like a servant) ordinarily performs ‘only ministerial functions (see Nielson & Co,, Inc. vs. Lepanto ‘Consolidated Mining Co, 26 SCRA 540 [1968], (3) Inageney three (3) personsare involved: the principal, the agent and the third person with whom the agent has contracted, ‘while in lease of servic, only two (2) persons are involved: the lessor (master or employer) and the lsse servant or employee), and (A) Agency relates to commercial or business transactions, while Tease of service (like inthe case of master and servant) relates more to matters of mere manual or mechanical execution, in which the servant acts under the direction and contrl ofthe aster (Munn v. Welsburg Banking & Tat Co, 6 SE 750, 1) ‘The agent is employed in a capacity superior to that of the servant, being entitled, in general, to se his discretion as to the Tar 1 Tete of work or seve oe fhe pts binds him evcete ‘pi of wor oto reer th ee reserve fra pe certain but te elation offing and sgt Js not ext ete te. 4)ieee oe Fe a Teeth cet atten ES er creme fanovees O90) Ec ean Fa yw a eee Feta cot empoed epee raon ine oe See et an atten sepa ee prea ete eel Sinton ater ptaegu nae te es papa ed pet ety carer net ore ILLUSTRATIVE CASE: Plain egret t peat ning ins of efondant sujet to the general cont ofthe ater Fats: Under a management contrat, N agreed to explore, develop and operat the mining claims of Land to render for Somalimau Mo btaglr cea etna ik ects Belicctd Galea eat iaeomaeer nal aa eens een es ‘oto fsa te nate ef peal Sd gene Taek wenn dpe eranfhere see e a erm whon pec natae {ah impotent cnt dene dare Ett enone vem an ncn irs 13) teary eta np of nent ‘zur Jas the pens the employer of such watchen of guards and not the ‘Speftiegdah bo rhs od SS ola a ea ee ‘oie tai ie ng ot ‘Tras sre ame nigel ‘vx Tazve 209 SCRASI [1992] ) into with the security agency. (Soleman. I ashen seein pci nth contac N was took complete charge sub tal tines othe pl eontt ofhe Bond of Dacor of erat ad decom fe ining cnims, hing of stall and laborers, epson of mill and marketing a minee > PNR fe qaeunte stiles cee eee eee Seen ele ee eer cas Te saga tt Not apes tosh ve ct the sin ate ers far Sor cas te a ee eas eee ar ee Bromma a ie teed cae nay Coverage eet ene es aaes Lacan In other words in performing its principal undertaking, IN was not acting as an agent of in the sense that the term “agent” i interpreted under the law of agency but as one who was performing material acs for an employer for a Compensation, (Nielson & Co, In. vs. Leanlo Consolidated ‘Mining Company, 26 SCRA 540 1968) ‘Agency distinguished from ‘independent contract. (1) Control and ection of principal or enployr. — In agency, the agent is subject tothe control and direction ofthe prineipal ‘whom he represents with respect tothe matters entrusted to him. Ina contract for a piece of work, the independent contractor, without being subject to the control of the employer except only as to the result of the work exercises his employment ae mt enna te itorinan eres a icicate cpr iiepepecernsncon etm Soanov co station of the employer. (see nen’ Ins. of Newark, NJ, 109 inudepentenly, an notin repr Sell Co ofthe Pils Ltd vs DPhil. 75819571) Tor the ats of the agent or servant within the SEDC of his, uke oremployment the prinipa remployerisinBeera (@) Where one (1) party to a contract undertakes to accomplish a certain result (asthe constuction of a house) seeerting tohisown method and withoutbeing subject othe ther pany’ control except as to the result ofthe work, the canst is one fora piece of work” and not agency. (esse Sei Mariano Uy Chaco Sons & Co, 34 Phil. 1221915).) (©) Ina case, several individuals who agreed to sell the products of 9 sotdrinks manafacturer tinder an Agreement Pe veddle Soft Drinks, providing their own capital and hiring their own employees (delivery helpers) under thei direction, “ind responsibility were held as independent contractors, and Consoquenty, the manufacturer was not liable to pay $5 premiums for such employees. (Social Security System vs. Court of Appeals and Manila Cosmos Aerated Water Factory, Inc, 1H2SCRA 47 (1982) (2) Importance of distinctions. — The distinctions are impor- tant because, a a general rule, the employer isnot Kable for the tortor injury inflicted by the independent contractor upon thd persons orby theemployees of such contractor. The employer of ours, snot relieved fom liability ifthe injury is caused by his negligence or the result of his interference in the work ofthe in- ‘dependent contractor (in this case, the contractor isnot indepen- dent), There are cases which hold the employer lable where the ASE ing te ms cr mos employed aang and ae th nti Tors eft ind oe ah SERA i inti i hnacee et Need are CO Sekotiel teks Rete cher a ae ALI. wt act wos he zara ma 0 esau fer helps nanan ramp oper Thar may ec emp nl hs sr abd ar ae pi "ATOR. FoR AND RINDROF AGENCY » work contracted is intrinsically di ly dangorous or a nuisance (New man w- Sears, Roebuck &e Co, 43 N.W.2d 415) ILLUSTRATIVE CASES. 1. Liens of gasoline sevice station peraesttion ae its equipment under he cot themen aos: A fie broke out at a gasoline service station. It started while gasoline was being hosed rom a tank into the Tindeeground storage, The fie spread to and bummed several ivighboring houses owned by G ete “The gasoline tation as wll a the equipment thercin {is owned by P (Cates). lela, however thatthe busines onducted atthe service station in question was owned and ‘operated by A. Taste: Whether P should be held table foe the damages caused to G et. This question depends on whether A was 39 Sependent contractor or an agent of. “Held: P shoul be held lable, Under the license agreement, ‘A asopeator, would pay P purely nominal sum of P00 for the ‘Geo he premises and all eguipment therein. Acould sell only Ps products Maintenance ofthe station and its equipment was ubjetto the approval, nother words, contol of P.Acould not Sssgn or teaser his ight a eense without the consent of Texmination ofthe cantract was aight ranted colt P bat pot to “Those provisions ofthe contactshow that A was veal an employee of P, nt an independent contractor Afrir Galee Phi], Ine, 16 SCRA 448 [19661 sce Shell Co, of the Phils Led. vs. iremens Ins, Ine of Newark, US. 100 Phil 757 {i957| under At 1910), 2 Lessee who ws nr dt the alt of independent contractor hired ry the lessorsecks ol sor ale acs Peowner of napartment house, ordered folding beds from $ snd had A install one of them in one of his furnished Apartments. Ta lessee, was seriously injured when the bed eBapeed doe to the fac that A used ordinary wood screws tated ofthe lg serews designated told the bed in place “The court found Aan independent contractor. T argues that even fA held to have bows sn independent conracor, thescescy ‘Ag ae ce an cy ta al ec ain tne Where the work, even if ® SRR when eamed, the profits belong, to all the pats cf panes i agreed proportions, the relation is Sf tf te alleged owner or partner tak rent snot asayner but as an agreed = is services or the like, the relation i5' one EE, mT ce pen mans Teas Saye crake aes etek otter Posey oom pamentip fre eresiet2F agency.” Accordingly, Article 1769(8) of the Civil Code provides that the receipt by a person of theshare of the profits ofa business js not prina facie evidence that he isa partner in the business if uch profits were recived “as wages of an employee.” (Teller, op. Gis pp. 22-23, citing Dinkelspoel v Lewis, 50 Wyo. 380; Person v. Carlex, 7 N.C. 324; 2 Corp. Jur 426.) ILLUSTRATIVE CASE ranch manager of rev egecy company th is ton fie tract get ere ha essed sate at wt the company forthe pment of monthly reso se. Tals A contrac of ease was entered nto between LS and the Tourist World Servi, Ine (TWS) whereby theater leased the premises beonging othe former for usc as branch office {Sela hesl slay lable wth TW for prompt payment ‘the monthly rental When the Branch ofc wes opened the Same was run by US who was desigaated as branch manager ‘Any aie fae brought in throught the efor of LS ened fet to recive sf ofthe proceeds LS was notin the company’s pry ‘On mere suspicion ha LS was connected witha rival rm, the ice of branch manager was sblished ewe: What was the nature ofthe arrangement of LS and ws? Held (1) Employremplaye relationship nt intended. — 1 eas nota case of employeremployee relation in view ofthe following (0) LS was not subject othe contol by TWS either as to the cel ofthe enterpeise or a othe mears used in Cennecion therewith Atte employee eannot be made 1 part with is own money in pursuance of his employers Eisiness or otherwise ssoume any inbility thereof “AS to the means wed in solitng ain fares, LS “obviously ‘lied on er own its and capabilities"; and (b) She was not a the company’s payroll Unlike an ‘employee who usualy earnsa xed salary she eared com pensation in fluctuating amounts, depending on her book Ing sucess The fact that she was designated as “branch tmanager’ did not make her an employee. Employment is Gctorined by the “right of conta” test and erin ecoomic parameter ke he nls of theemployce inthe pal 1G) Putcahip ont ines, — The partes had not might anh panes US herself lid ot recogni the te aa reton whom in he eter, se expresly re cur CTS) ig 10 sop the aperton of Your SSR A ieee is col over the manner Menthe bese wae A ant vee, seung 3 tip preappose generally 9 poy of derstanding, Eien tfneeseiesx pti ihc ty Beets impicary Inet inthe capa or property Pend add Wh Each party curses eu ris in REN ahbuss: Freon the porter i not Baskets out ay partners and te Ding Hl! wos his with he ects Tour Word Servic, {teu of dati partnership mae (@) Prciplgrt reap intend, — The parties has contempt « pingpalgent eaonship. LS sliced ‘vnc tres but she di so for and on behalf of er principal {TW as compensation she ued of the proeeds in the np commision, In her head tes, she presumed hee fincas suhery ss ower of the business undertaking. Fe sony was cme coupled ths interest ce Ars 1927, ng teem etl or Ue tl intense agent {15 wasn nai tae gent esl and the principal an, {reer could not be revoke at wil Accordingly. LS was need Yo damage (Sl Cort of Ape 160 SCRA T71 hiss ‘Agency distinguished trom ‘negotlorum gesto. In bth agency and negtiorum gst or the management of {be business o ars of an absentee there i epresentation SR Wor hy ae cg the ey mange fh imc fama wo ein te gel pn SESSA eo ln i eee Wen rey rst etd send £8 estan rece nnn ton Bs ats on on ag Fre SES ey Rl be ape — ‘anit NATUR FORA ANDI ANY “ “Theistic hat int the epee tation expres cone, wet se to ‘wthout the authority ofthe owner othe buns but wiht hrowledge While gent acs expres ll fe inl ie eto ge pct sfike ery exerting al edge ca gad aero Ahoy (at-218) Agena we tn fh quasteonrac Herc, truco se dierent ‘Agency distinguished from brokerage. ‘Aroter sone whois engaged for others ona commission: negotistor between other paris, never acing in his own name Bat in the name of those who employed him. Boke refers 10 the trade or occupation of the broker. (Reyes vs. Rural Bank of San Miguel, 424SCRA 135 [2004]) (d) Relation with principal nd subjet mater of transaction. — A “commission agent (ee Art. 1903s one engage inthe purchase ‘easle for another of personal property which for this purpose, {placed in his possession and at his disposal. He maiatains @ ‘elation not only with his principal and the purchaser or vendor, fut also with the property which is the subject mater of the transaction, ‘On the other hand, a broker has no relation withthe thing he buys of sells. He is merely an intermediary of negotiator Detween the purchaser and the vendor eative to the property ‘withthe custody or possesion of which he has no concern. His ‘nly office is to bring together the partes tothe transaction never aie Te mynd tee ‘Sy Sea Sessa Chere ve RT Maines ng Be art eam ceet comerneaner cone) acting in his wen name but in the name of those who employed Hin Pace Commeril Co vs. Yate, 65 Phil. 398 (1936 Tan a Gatos 385 SCRA 334 [2002] In effecting a transaction, he, Fovwever cts ina certain sense asthe agent ofboth partis (2) Natur ompenstion.— An agent receives commission pon the succesful contusion of wansaction such as sae. On tHe other hand a broker eam his pay merely y bringing the bayer andthe seller together even fn sale eventually made, {Gan vs Court of Appeal, 266 SCRA S37 [1997] (3) Extent of powers, — “Agent” is a broader term than brokex” for while brokers are agents, thie powers are limited, ant when they have no charge o contol ofthe propety, but act ‘only as gobetreens in executing sal, they cannot be sad to ‘be agents in the lager sense entitled to receive payment forthe goods delivered, unles specially authorized, (Lawrence Gas Gers Hawkeye Oil Co, 165 NW. 45,447) ILLUSTRATIVE CASE: Omeaf lant fed ol he ln pati ws ha entered intact forthe sale of he property wit the cone’ el esate acs: brought action against. appoas that P wrote a leer toh & Cora el eva opent = flows: "xxx Thave ‘ere ny farm tough you at extremely low rats fora year, Hon ma al You may tf 12 mon et {he flowing ems 7521/2 nee at $L6 GD per see payable dstolow 1/3 eauh lane in, 2, and 3 yor oil ake $10.00 cash willow you a irl contission you can pce the fan ‘Aand Co. thereafter purported to enter into a contact for the sale ofthe land to TP refused to sll he land, and this action was brought for specifi performance ofthe contac. ‘sou: sT entitle to specific performance? eae a em net oe shonegoits the sale fal property His business generally pet NATURE Fo, AN KINDS OF AGENCY we Ins the amet many mats es fing he mn dell Of the “The dv fh owen ete etd ery ssn tobe opel pom an xed ye one Stach eu coe an time te compat 3h orth dination te cnr od de et prs Tc se wn eo te ae toe orci tone here teow ws ‘Etsy mpd ay gy om of (Se ethc ina el eae gett era age bt rece age Sangam Hed power He wo das with My ERE en cod onder stony dst th SS oi canner uch se Bl penal ela th enon igen acon fhe vowed tthe apn fe rm mine o ay Mave 28. 18D) ‘Agency distinguished from sale. “Am agency to sel differs from sale™in the following ways: (1) tn am ageny to sl the agent reves the poode oF property asthe goods ofthe principal, while in a sale, the buyer Rrccives the goods as owner® (oe Kerr & Co, Lad. vs. Lingad, 38 SCRA 524 [1971]) {@) Inanagency to sell, the agent delivers the proceeds of the sale, while in asale, the buyer pays the price; (9) tran agency tosell, the agent can return the objectin case thes unable to sell the same to a third person, while in asae, the buyer, as general rule, cannot return the object sold, See ett eet cng rae Nel ane TENDS Spat ard te deer a determinate thing, andthe other Yo poy ranean ‘Rakes fa ny te tke non (645) __ficaa iam rag ee etc, "Aaah a enh ee reste Soothe ert enor man ore pce Sera an i vn oop tts Wg Seagatencinev 6, en a een ong he iections of ccc gern wih he ing aoe See ae mere ee sy aon fle te tte of eto ea ere othe exec ost hve hg om oe i fr mc Ages see Scnas SD) EXAMPLES: (1) Peenters int a contact with A for the delivery to P of goods on a certain date and A commences to accumulate the foods for. In determining whether A is P's agent or whether Fis the vendor ofthe goods, two (2 factors ae relevant First, whats the nature of A's power in accumulating the “es does he pledge his own creditor that of P? [will be recalled that an essential feature of agency isthe agent's ‘ovr to bind the principal personally. Similarly the problem {s important as #9 who, whether Por A, undertakes the tsk of fluctuation in price. IFA undertakes to deliver the goods at 2 fixed price, the transaction fs more akin to sale rather than. agency: ‘Second, what isthe extent of contol which Pby the tem of the contract, reserves over A? IP, not A, to determine fom ‘hom ad in wht way the gods ate Be purchased, he transaction is more likely one of agency and not ane of Sle. (ler op. cit, p27) cae * @) Ase dcunt ate ied Shilo olet ston eld at Fat per "ped te gen tos iconv Hee meant fa me pry he apnea neg eae of chip he ods w Awa aan the tobacco if the Same was not sl re > sold Gee Lim vs, People, 133 patie NATURE FORM. AND INOS AGENCY ” ILLUSTRATIVE CASES: 1. Importer order goods from sho to be subsepuenty ior to nother who pid importer he price in ance. Facts: CN, in Mala, delivered to. UT Corporation the price of 300 boxes of sunkist oranges tobe obtained from the Ehret States. UT Corporation ordered the sad boxes from G ‘Company of San Francisco which shipped the goods from that port fo Manila "FOB. San Francisca.” Part of the boxes were CCN sought torecover from UT Corporation the correspond ing price paid to it in advance forthe undelivered goods. UT ‘Corporation refused to pay alleging it merely acted as agent of Chin purchasing the oranges. Iasue Did UT Corporation merely agree to buy for and om ‘behalf of CN, ordi it ogre to sll the oranges to CN? Held The circumstances indicate a sale: () Noccommission was psi (@) The written agreement (Exhibit 1 between CN and UT Corporation says that "ifbalance is not paid within 48 hours of notication, merchandise may be resold by UT Corporation aid the deposit forfeited. “Reso” implies the goods had been sold to (9) Aer executing Exhibit 1 wherein the oranges were quoted at $6.30 per box, UT Corporation placed an order for purchase of the same with GC at $600 per box, which UT Corporation could not properly do fit were acing a agent of CCN and not as independent purchaser from GC; (@) UT Corporation charged CN an amount for sales tx, thereby implying thatthe transaction was a sale; and (6) UT Corporation had been pressing the claims for loses against the insurance company and against the shipping, ‘companty for iself and instead of assigning sad claims to CN, Showing thal the purchase had nt been made on behalf of CN. (Chua No ws. Universal Trading Co, Inc, 87 Pil 331 (19501)