Emilio Aguinaldo College

Legal Aspects in Tourism and Hospitality

Atty. Joel Mendoza, PhD

 Agency
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Introduction

The hotel, as part of the tourism industry, cannot do away with agencies
which will facilitate various transactions in dealing with third persons. Hence,
there is need to understand the operation of agencies working on behalf of the
principal belonging to the hotel, with consent or authority of the latter.
 Agency
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A Contract of Agency is a relation in which one person, the agent, acts on behalf of
another with the authority of the latter, the principal. It is a “fiduciary” relation
which results from the manifestation of consent by one person that another shall
act on the former’s behalf and subject to his control, with consent by the other to
act. The acts of the agent will be binding on his principal.

The Essential Elements of Agency are:

1. There is consent, express or implied;
2. The object is the execution of a juridical act on relation to the third person;
3. The agent acts as a representative and not for himself; and
4. The agent acts within the scope of his authority.
 Liability of the Principal and Agent
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Art. 1883. If an agent act on his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither had such person
against the principal.
In such case the agent is the one directly bound in favor of the person
with whom he has contracted, as if the transaction were his own, except the
contract involved things belonging to the principal.
 Credit Transactions
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Introduction

Companies in the Tourism industry face dents; hence, it is vital to know

various ways of handling debts in relation to third persons and credit transactions
emanating within their respective firms.
 Credit Transactions
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Art. 1933. By a contract of loan, one of the parties delivers to another either
something not consumable so that the latter may use the same for a certain time
and return it, in which case the contract is called commodatum, or money or other
consumable thing, upon the condition that the same amount of the same kind and
quality shall be paid, in which case the contract is simply called loan or mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or
with a stipulation to pay interest.
Commodatum is a loan for use wherein the property lent must be
returned. Commodatum is essentially gratuitous. (Bailor/bailee relationship)
Simple loan or mutuum is simple the delivery of sum of money to
another under a contract to return at some future time an equivalent amount with
or without an additional sum agreed upon for its use. It is a transaction wherein
the owner of the property, called the lender, allows another party, the borrower, to
the property. The borrower customarily promises to return the property after a
specified period with payment for its use, called interest. The documentation of
the promise is called a promissory note when the property is cash.
 Credit Transactions
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Simple Loan or Mutuum

Art. 1956. No interest shall be due unless it has been expressly stipulated in
writing.
1. In a contract of loan, if a particular rate of interest has been expressly
stipulated by the parties, such stipulated interest shall be applied. If the exact
rate of interest is not mentioned, the legal rate shall be payable (which is 6%
per annum. Usury law has been suspended)
2. It is only in contract of loan, with or without security, that the interest may be
stipulated and pactum commisorium demanded.
3. The debtor in delay is also liable to pay interest by way of indemnity for
damages, which legal interest may be agreed upon, and in the absence of any
stipulation, the legal interest shall be 6% per annum.
4. In all cases, interest sue shall earn legal from the time it is judicially demanded
although the obligation may be silent upon this point.
 Credit Transactions
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Pactum Commissorium
Art. 2088. The creditor cannot appropriate the things given by way of pledge or
mortgage, or dispose of them. Any stipulation to the contrary is null and void.
Discussed as a stipulation giving power to the creditor to automatically
appropriate the thing given as security, if the principal obligation is not fulfilled
without any formality, such as foreclosure proceeding and public sale.