Source: https://www.scribd.com/document/264318021/16884135-Agency-Reviewer-rtf
Timestamp: 2019-08-26 01:30:40
Document Index: 704142255

Matched Legal Cases: ['Art. 1868', 'Art. 1869', 'Art. 1870', 'Art. 1871', 'Art. 1874', 'Art. 1873', 'Art. 1876', 'Art. 1877', 'Art. 1879', 'Art. 1880', 'Art. 1881', 'Art. 1882', 'Art. 1883', 'Art. 1884', 'Art. 1885', 'Art. 1886', 'Art. 1887', 'Art. 1888', 'Art. 1889', 'Art. 1890', 'Art. 1891', 'Art. 1892', 'Art. 1893', 'Art. 1894', 'Art. 1895', 'Art. 1896', 'Art. 1897', 'Art. 1898', 'Art. 1899', 'Art. 1900', 'Art. 1901', 'Art. 1902', 'Art. 1903', 'Art. 1904', 'Art. 1905', 'Art. 1908', 'Art. 1906', 'Art. 1907', 'Art. 1909', 'Art. 1910', 'art;\n5', 'Art. 1912', 'Art. 1913', 'Art. 1914', 'Art. 1915', 'Art. 1544', 'Art. 1917', 'Art. 1916', 'Art. 1918', 'Art. 1919', 'art 1919', 'Art. 1919', 'art. 1231', 'Art. 1920', 'art 1920', 'Art. 1921', 'Art. 1922', 'art. 1921', 'art. 1922', 'Art. 1923', 'Art. 1924', 'Art. 1925', 'Art. 1926', 'Art. 1927', 'Art. 1928', 'Art. 1929', 'Art. 1930', 'Art. 1931', 'Art. 1932']

16884135-Agency-Reviewer.rtf | Law Of Agency | Guarantee
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Farmers Market Policies
Cebu Mactan v Tsukahara
8447 AGENCY Agreement
Agency.printable.pdf
Partnership and Agency Formal Requirements Case Digest
PATCaseDigests21-30
Sem; 2003
Chapter 1. Nature, Form and Kinds 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
Agency: A relationship which implies a power in an
agent to contract with a 3 person on behalf of a
Kind of Contract: It is a preparatory contract. It is a
contract entered not for its own end but to be able to
enter into other contracts.
1.) Consensual: perfected by mere consent;
2.) Nominate: it has its own name;
3.) Principal: does not depend on another contract
for its existence and validity;
4.) Preparatory: entered into as a means to an end;
5.) Unilateral/Bilateral:
a.) Unilateral: if contract is gratuitous, it
creates obligations for only one of the
parties, i.e. agent.
b.) Bilateral: if for compensation, it gives
rise to reciprocal rights and obligs.
Basis: Representation.
The acts of the agent on behalf of the principal within
the scope of his authority produce the same legal and
binding effects as if the principal personally did them.
1.) Representative character; and
2.) Derivative authority.
Purpose: To extend the personality of the principal
through the facility of the agent.
1.) Principal; and
2.) Agent.
Who can be principal?
The principal may be a natural person or a juridical
person. He must be capacitated. The rule is if a person is
capacitated to act for himself or in his own right, he can
act through an agent.
Must the agent have capacity?
Insofar as 3 persons are concerned, it is enough
that the principal is capacitated; but insofar as his
obligations to his principal are concerned, the agent
must be able to bind himself.
1.) Consent, express
or implied;
2.) Object of
3.) The agent
e and not for
4.) The agent acts
Acts that cannot be done
through an agent:
1.) Personal acts: if
reqd by law or
2.) Criminal or
authority to do
an act which, if
principal would
be illegal, is
Agency v. Lease of Work
Basis is representation.
Agent exercises
3 persons are involved:
principal, agent & 3
Agency v. Guardianship
capacitated person.
Agent appointed by
principal and can be
removed by him.
Agent subject to directions
Agent can make principal
Agency to Sell v. Sale
Agent receives the goods
as the goods of the
Agent delivers proceeds of
Agent can return object in
case he is unable to sell to
a 3 person.
Agent in dealing with the
thing received is bound to
act accdg to the
instructions of his principal
Lease of Work/Service
Basis is employment
Lessor only performs
Only 2 persons involved:
Matters of mere manual or
mechanical execution.
Guardian represents an
incapacitated person.
Guardian appointed by
court and stands in loco
Guardian not subject to
directions of ward but
must act for his benefit.
Guardian has no power to
impose personal liability on
Buyer receives the goods
Buyer pays the price.
Generally, buyer cannot
return the object sold.
Buyer can deal with the
thing as he pleases, being
Helen C. Arevalo 1
Represents the principal.
Employed by employer.
Acts under the control and
Acts according to his own
instructions of the principal method.
Principal liable for torts
Employer not liable for
committed by agent w/in
torts committed by
Art. 1869. Agency must be express, or 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.
Agency may be oral, unless the law requires
a specific form.
Classifications of Agency: as
to 1.) Manner of Creation:
a.) Express: actually authorized,
b.) Implied: implied from acts of principal,
from his silence or lack of action or his
failure to repudiate the agency
knowing that another person is acting
on his behalf w/o authority.
2.) Character:
a.) Gratuitous: agent receives no
b.) Onerous: agent does receive
3.) Extent of business covered:
a.) General: comprises all the business
b.) Special: comprises one or more
4.) Authority conferred:
a.) Couched in general terms: deemed
to comprise only acts of administration.
b.) Couched in specific terms: authorizes
only the performance of a specific
act/s. 5.) Nature and effects:
a.) Representative: agent acts in name and
representation of principal.
b.) Simple/Commission: agent acts in
his own name but for the account of
Can agency be presumed?
Generally NO because the relationship between
the principal and agent must exist as a fact. The only
exceptions to this rule are when agency arises by
operation of law or agency is presumed to prevent
Form: Generally, NO formal requirements. Agents
authority may be oral or written, it may be in public or
private writings. The only exception is when the law
requires a specific form (e.g. sale of real property or
any interest therein by an agent.)
Art. 1870. Acceptance
by the agent may also be
his acts which carry out
the agency, or from his
construed and strictly
pursued. The instrument
will be held to grant only
those powers which are
specified, and the agent
may neither go beyond
nor deviate from the
power of atty. The only
exception is when strict
construction will destroy
the very purpose of the
Form of Acceptance by
Acceptance may be
express or implied; express
when it is oral or written;
implied when it can be
inferred from the acts of the
agent which carry out the
agency, or from his silence or
inaction accdg to the
Not limited to faceto-face encounters. 2
persons conversing on
the phone are also
Art. 1871. Between
present, the acceptance
of the agency may also
be implied if the
principal delivers his
the agent and the latter
receives it without any
Between 2 persons who are
present, when it acceptance
deemed implied?
receives a power of atty
himself personally
Is this presumption
NO, it can be rebutted by
contrary proof.
Power of attorney: An
instrument in writing by
which one person, as
principal, appoints another
as his agent and confers
upon him the authority to
perform certain specified
acts or kinds of acts on
behalf of the principal. Its
evidence the authority of the
agent to 3 parties w/ whom
the agent deals.
A power of atty is strictly
Helen C. Arevalo 2
who are absent, the
agency cannot be
silence of the agent,
transmits his
him by letter
or telegram a
engaged as an
agent, and he
to the letter or
2 Ways of Giving Notice of
1.) By special
2.) By public
1.) Special information: the person appointed as
agent is considered such with respect to the
person to whom it was given.
2.) Public advertisement: Agent is considered such
with regard to any person.
its agents. But
of its officers
Revocation An agency is revoked in the same manner as
Art. 1874. When a
General rule: Special information needs special
information of revocation.
sale of a piece of land
or any interest therein
Except: if you can prove that the 3 person read the
is through an agent,
Art. 1873. If a person specially informs another
or states by public advertisement that he has given writing; otherwise, the
a power of attorney to a third person, the latter
sale shall be void.
thereby becomes a duly authorized agent, in the
former case with respect to the person who received A letter is sufficient
the special information, and in the latter case with
[Jimenez v. Rabot].
The power shall continue to be in full force until
the notice is rescinded in the same manner in which Agency is
Agency by Estoppel: There is really no agency at all, but
the alleged agent seemed to have apparent or ostensible, unless there is
although no real authority to represent another.
1.) Estoppel of Agent One professing to act as agent contrary.
for another may be estopped to deny his agency
both as against his asserted principal and the 3
Broker: One who in
persons interested in the transaction in which he is behalf of others, and for
compensation or fee,
2.) Estoppel of Principal
a.) As to Agent One who knows that
relative to property. He
another is acting as his agent and fails to is the negotiator
repudiate his acts, or accept the benefits between the parties,
of them, will be estopped to deny the
never acting in his own
agency as against such other.
name, but in the name
b.) As to sub-agent To estop the principal
of those who employ
from denying his liability to a 3 person, him. He is strictly a
he must have known or be charged with
middleman and for some
knowledge of the fact of the transmission purposes, the agent of
and the terms of the agreement between both parties.
the agent and sub-agent.
c.) As to 3 persons One who knows that
When is a broker entitled
another is acting as his agent or permitted to compensation?
another to appear as his agent, to the
A broker is entitled to
injury of 3 persons who have dealt with commission whenever he
the apparent agent as such in good faith
rings to his principal a
and in the exercise of reasonable
prudence, is estopped to deny the agency. party who is able and
willing to take the
3.) Estoppel of 3 Persons A 3 person, having
property, and enter into a
dealt with one as an agent may be estopped to
deny the agency as against the principal, agent or valid contract upon the
terms named by the
3 persons in interest.
4.) Estoppel of the govt The govt is neither estopped
principal, although the
particulars may be
by the mistake or error on the part of
arranged and the matter
negotiated and completed
the purchaser directly. A
broker is never entitled to
Helen C. Arevalo 3
Section II- D
Does the law allow double
disapproved by law for
being against public policy
and sound morality. The
exception is where the
agent acted with full
consent of the principals.
In case the agent
assumes a double
agency, what is his right
to compensation?
1.) If with
both principals
had from both.
2.) If without
3.) If with knowledge
of only one as to
the principal who
knew of that fact
agent, they are in
pari delicto and
the courts shall
leave them as they
were, the contract
being void as
polisy and good
Art. 1876. An
agency is either
comprises all the
principal. The latter,
one or more specific
1.) Universal agent:
do all acts that the
principal may
personally do, and
the principal can lawfully delegate to another
the power of doing.
2.) General agent: One employed 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/Particular agent: One authorized to
act in one or more specific transactions, or to
do one or more specific acts, or to act upon a
particular occasion. e.g.:
a.) Atty at law: One whose business is to
represent clients in legal proceedings.
b.) Auctioneer: One whose business is to
sell property for others to the highest
bidder at a public sale.
c.) Broker: One whose business is to act
as intermediary between 2 other
d.) Factor: One whose business is to
receive and sell goods for a
commission, being entrusted with the
possession of the goods involved in the
Attorney-in-fact: One who is given authority by his
principal to do a particular act not of a legal character.
In strict legal sense: An agent having a special
authority created by deed.
General Agent v. Special Agent [SNETI]
All acts connected
Only one or more
w/ the business in
specific acts in
instructions or w/
from the act to be
or a series of
involving continuity
By an act within
Cannot in a manner
which agent the scope of his
beyond or outside
authority although
the specific acts w/c
it may be contrary
he is authorized to
to his special
Termination Apparent authority
does not terminate effective as to 3
by mere revocation party unless agency
of authority w/o
was for purpose of
notice to 3
contracting w/ that
Construction Merely advisory.
Strictly construed.
Limits the authority
Art. 1877. An agency
comprises only acts of
administration, even if
the principal should state
that he withholds no
power or that the agent
may execute such acts as
he may consider
appropriate, or even
though the agency
should authorize a
general or unlimited
ation: 1.)
of debts;
2.) To employ workers
or servants and
3.) To engage
4.) To lease real
for 1 year or less,
lease is not
5.) To make
charity or to
6.) To borrow money if
it be urgent and
How are contracts of agency
Contracts of agency as
well as general powers of
interpreted in accordance
with the language used by
the parties. The real
intention of the parties is
primarily determined from
gathered from the whole
instrument. In case of
doubt, resort must be had
surroundings and relations
of the parties. The
must be sustained rather
than defeated. So if the
contract be open to 2
constructions, one of
which would uphold the
intention while the other
would overthrow it, the
former is to be chosen.
MEMORIZE THIS: [PNCWIGLLS-PG-CARS]
necessary in the
which put an
existence at
arbitration, to
judgment, to
an action or to
4.) To waive any
obligation gratuitously;
To enter into any contract by which the
ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
To make gifts,
customary ones
for charity or
Helen C. Arevalo 4
those made to
To loan or borrow money, unless the latter
act be urgent and indispensable for the
preservation of the things which are under
To lease any real property to another
person for more than one year;
To bind the principal to render some
service without compensation;
To bind the principal in a contract of
11.) To obligate the principal as a guarantor
or surety;
12.) To create or convey real rights over
13.) To accept or repudiate an inheritance;
5.) Fix the terms
6.) Sell only for cash;
7.) Receive the price
to solicit orders.
The ff are not
To ratify or recognize obligations
1.) Sell;
contracted before the agency;
15.) Any other act of strict dominion.
2.) Execute a 2
3.) Mortgage for the
Scope of General Authority to Purchase
agents personal
Where an agents power to purchase is general and
benefit or for the
unrestricted, he has implied authority to do whatever is
benefit of any 3
usual and necessary in the exercise of such power. He
person, unless the
contrary has been
1.) Determine the usual and necessary details of the
Does the principal have
2.) agree upon the price,
the power to revoke a
3.) modify or rescind the contract of purchase,
contract giving an agent
4.) accept delivery for his principal,
exclusive authority to
5.) give directions for the delivery of the property
purchased, and
YES. But he may not
6.) may borrow money to pay for the care and
have the right to use such
preservation of the property purchased.
power if he has agreed
But he has no special power to
not to exercise such power
1.) Settle a contest between the principal and a 3
during a certain period. In
person regarding the ownership of goods
case he fails to comply
with this obligation-not-to2.) Agree to an account stated, or
do, he will be liable for
3.) Do anything not usual or necessary to the
Scope of Special Authority to Purchase
Where the agency is a special one, or is restricted to
purchases upon certain terms and conditions, the agent
1.) Purchase upon different terms and conditions
from those authorized, or
2.) Modify or rescind a contract of purchase made
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.
The ff are included in a Power to Sell:
1.) Find a purchaser or to sell directly;
2.) Deliver the property;
3.) Make the usual representation and warranty;
4.) Execute the necessary transfer documents;
Helen C. Arevalo 5
Art. 1880. A special
does not authorize
A principal may
authorize his agent to
compromise because of
absolute confidence in the
latters judgment and
discretion to protect the
formers rights and obtain
for him the best bargain in
the transaction. If the
transaction would be left
in the hands of an
arbitrator, said arbitrator
may not enjoy the trust of
agent is specifically
authorized to submit to
binds the principal,
that the agent acted
Art. 1881. The agent
must act within the
He may do such acts as
may be conducive to the
purpose of the agency.
Authority: The power of
the agent to affect the
legal relations of the
principal by acts done in
principals manifestation of
consent to him. The
authority of the agent is
the very essence sine
qua non of the principal
This authority, unless it is
otherwise agreed, includes
only the authority to act
principal, and the source
of the authority is the
principal and never the
1.) Actual: when it
granted, and it
may be express
or implied. It
2.) Express: when it
is directly conferred
by words. 3.)
Implied: when it is
incidental to the
principal is deemed to have actually
intended the agent to possess.
Apparent or Ostensible: when it is conferred by
words, conduct or even by the silence of the
principal which causes a 3 person reasonably
to believe that a particular person, who may or
may not be the principals agent, has actual
authority to act for the principal. Ostensible
authority is another name for authority by
General: when it refers to all the business of
Special: when it is limited only to one or
more specific transactions.
By necessity or by operation of law: when it is
demanded by virtue of the existence of an
emergency; it terminates when the
emergency has passed.
Requisites for Principal to be Bound by Act of Agent:
1.) The agent must act in behalf of the
principal; 2.) The agent must act within the
scope of his
with whom the
agent contracted;
neither have such
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 when the
contract involves things
this article shall be
actions between the
Kinds of Principals:
1.) Disclosed: if at the
When is a principal not bound by the act of his agent?
When the agent acts without or beyond the scope
agent, the other
party thereto has
his authority; or when the agent acts within the scope
known that the
of his authority but in his own name except when the
transaction involves things belonging to the principal.
principal and has
Status of K
principals identity.
2.) Partially disclosed: if
Depends. [1883]
knows or has reason
agent is or may be
acting for a principal
but is unaware of
In case the agent acts in the name of the
principal and within his scope of authority, you must
name the principal as the defendant.
enforce against the
Note: The authority to look for buyers does not
3 person the
carry with it the authority to sell.
contract of the
agent like any
Art. 1882. The limits of the agents authority
Similarly, the 3
shall not be considered exceeded should it have
person has a right
been performed in a manner more advantageous
of action against the
to the principal than that specified by him.
3.) Undisclosed: if
What happens if the agent exceeds his authority but he
the party has no
performs the agency in a manner more advantageous
to the principal?
It will e as if he did not exceed the limits of his
agent is acting
authority since he must do such acts as may be
as such for a
conducive to the accomplishment of the purpose of
Test: Would the principal enter into this transaction?
Art. 1883. If an agent acts in his own name, the
principal has no right of action against the persons
Helen C. Arevalo 6
General Rule in 1883: If
the agent is authorized to
act on behalf of the
principal but instead acts
in his own name, the agent
is the one directly liable
to the person with whom
he had contracted as if
the transaction were his
Exception: If the contract
involves something
Remedy of the Principal if
this situation arises:
He can demand
damages for his
Remedy of the 3
contracted in case
the oblig is not
If the case falls under
the general rule, he can
sue the agent. But when
the contract involves
things belonging to the
principal, he can sue the
principal. But if it cannot
be determined w/o
litigation who is liable, he
can sue both.
Art. 1884. The agent
is bound by his
acceptance to carry out
the agency and is liable
for the damages which,
through his nonperformance, the
principal may suffer.
He must also finish the business already begun
on the death of the principal, should delay entail
General Obligations of an Agent to his Principal:
1.) To act with the utmost good faith and loyalty for
the furtherance and advancement of the interests
2.) To obey the principals instructions.
3.) To exercise reasonable care.
1.) To carry out the agency he has accepted.
2.) To answer for damages which through his nonperformance the principal may suffer.
3.) To finish the business already begun on the death
of the principal should delay entail danger.
4.) To observe the diligence of a good father or 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 do so.
6.) To act in accordance with the instructions of the
principal, and in default thereof, to do all that a
good father of a family would do.
7.) Not to carry out the agency if its execution would
manifestly result in loss or damage to the
8.) To answer for damages if there be a conflict
between his interests and those of the principal,
he should prefer his own.
9.) Not to loan to himself if he has been authorized
10.) Not 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 be responsible in certain cases for the act of
the substitute appointed by him.
12.) To pay interest on funds he has applied to his
Art. 1885. In case a person declines an agency, he
is bound 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 until the latter should
appoint an agent. The owner shall as soon as
practicable either appoint an agent or take charge of
What is the rule if a person declines agency?
In the event a person declines an agency, he is
bound to observe the diligence of a good father of a
forwarded to him by the owner.
Duty of Owner in case an Agency is Declined:
He must act as soon as possible by appointing an
agent or by taking charge of the goods.
Art. 1886. Should
there be a stipulation
that the agent shall
necessary funds, he
shall be bound to do
so except when the
principal is insolvent.
In a contract of
agency, may the
parties stipulate that
the agent shall
advance the necessary
funds? YES.
Except: When the
This exception is based
on the principals
Art. 1887. In the
agency, the agent
shall act in
thereof, he shall do
all that a good
would do, as
Instructions: Private
directions which the
principal may give the
agent in regard to the
manner of performing his
duties as such agent.
Authority v. Instructions
Sum total of powers
committed or permitted to
the agent by the principal.
Relates to the subject with
which the agent is
empowered to deal or the
kinds of business or
transactions upon which he
is powered to act.
Limitations of authority are
operative as against those
who have or are charged
with knowledge of them.
Contemplated to be made
known to the 3 person
dealing w/ the agent.
agent and 3
that the agent must
not depart from the
principal: [SAI]
ay be justified by: 1.) A
sudden emergency;
2.) If the instructions are ambiguous; or
3.) If the departure is so insubstantial that it does
not affect the result and the principal suffers
a right to disobey the
When the Agent has
Helen C. Arevalo 7
1.) When the instruction calls for the performance of
illegal acts; or
2.) Where he is privileged to do so to protect his
security/interest in the subject matter of the
Art. 1888. An agent shall not carry out an
agency if its execution would manifestly result in
loss or damage to the principal.
Rationale: The duty of the agent who is merely an
extension of the personality of the principal is to render
service for the benefit of the principal and not to act to his
detriment. Furthermore, the agent must exercise due
diligence in carrying out the agency.
Art. 1889. The agent shall be liable for damages
if, its execution would manifestly result in loss or
damage to the principal.
Note: This provision applies to both onerous and
gratuitous transactions. The law does not distinguish so
Rationale: An agent occupies a fiduciary position and
therefore is bound to exercise loyalty, obedience, and
diligence with respect to the interest of the principal.
If the agent follows the principals instructions yet his acts
still result in damage to 3 persons, who is liable?
General rule: The agent is NOT liable.
Except: if before acting that way, it is obvious that
the act will result to damage, then the agent is liable.
Art. 1890. If the agent has been empowered to
borrow money, he may himself be the lender at the
current rate of interest. If he has been authorized
to lend money at interest, he cannot borrow it
without the consent of the principal.
Rationale: The agent can lend money to the principal using
the agents own funds at the current rate of interest and
NOT at a higher interest rate because the agent is
supposed to act for the principals benefit.
If the agent is authorized to lend the principals
money, with interest, to 3 persons, the agent cant be
the borrower without the consent of the principal because
the agent may not be a good borrower or he may be
insolvent or he may not be a good risk. There is a danger
here that the interest of the principal would be
This would also seem to be the case if the agent is
authorized to lend money w/o interest because of the
Art. 1891. Every agent is bound to render an
account of his transactions and to deliver to the
principal whatever he may have received by virtue
of the agency, even though it may not be owing to
Every stipulation
exempting the agent
Rationale: Contrary
to public policy as it
fraud. It is in the
nature of a waiver
of an action for
future fraud w/c is
If the agent fails to
deliver and instead
converts or
appropriates for his
own use the money or
his principal, with what
Art. 1892. The
agent may appoint a
substitute if the
principal has not
doing so; but he shall
acts of the substitute:
All acts of the
substitute appointed
principal shall be
Sub-agent: A person
to whom the agent
delegates, as his
performance of an act
for the principal which
the agent has been
Relation among the
principal, agent and subagent
In reality, the subagent is a stranger to the
principal who originally
gave life to the agency.
But if the agent is
authorized to appoint a
sub-agent, the relation of
principal and agent exists
and the sub-agent. That
is, the sub-agent may be
the agent of the principal
if he is in actual control
principal knows of his
appointment or knows
that his appointment is
necessary. Consequently,
any act done by the subagent in behalf of the
principal is deemed an
act of the principal; so
neither agent nor subagent may be held
personally liable as long
as they act within the
scope of their authority.
When can an agent appoint
a sub-agent?
So long as theres
However, he shall be
responsible for all the
sub-agents acts.
4 Instances where a
Sub-agent is
appointed and the
Authority to appoint but
not designated by principal
Authority to appoint and
designated by principal
Agent responsible for all
the acts of sub-agent.
Sub-agents acts are VOID
as to the principal.
Agent liable for acts of
sub-agent if the sub-agent
is notoriously incompetent
or insolvent.
Agent is released from any
liability from the acts of
Helen C. Arevalo 8
Reason for general rule:
Because an agent who
acts as such within the
scope of his authority
Art. 1893. In the cases mentioned in Nos. 1 and 2 represents the principal so
of the preceding article, the principal may
that his contract is really
furthermore bring an action against the substitute
the sub-agent.
with respect to the obligations which the latter has
contracted under the substitution.
When can the principal sue the substitute?
Under the premises given in the previous provision,
the principal can sue both the agent and the substitute.
Art. 1894. The responsibility of two or more
agents, even though they have been appointed
simultaneously, is not solidary, if solidarity has not
been expressly stipulated.
If solidarity is not stipulated, what is the liability to 2 or
more agents? JOINT.
Each is liable only for proportionate part of debt.
Art. 1895. If solidarity has been agreed upon,
each of the agents is responsible for the nonfulfillment of the agency, and for the fault or
negligence of his fellow agents, except in the
latter case when the fellow agents acted beyond
the scope of their authority.
What happens if solidarity has been agreed upon?
Then each of the agents becomes solidarily liable for:
1.) The non-fulfillment of the agency; or
2.) The fault or negligence of the fellow agent
provided the latter acted within the scope of his
But the innocent agent has a right later on to recover
from the guilty or negligent agent.
What happens if the fellow agent acted beyond the
scope of his authority?
Then the innocent agent cannot be liable at all to the
principal even if solidarity had been agreed upon.
Art. 1896. The agent owes interest on the sums
he has applied to his own use from the day on
which he did so, and on those which he still owes
after the extinguishment of the agency.
Art. 1897. The agent who acts as such is not
personally liable to the party with whom he
contracts, unless he expressly binds himself or
exceeds the limits of his authority without giving
such party sufficient notice of his powers.
Principal Agent 3
Party (wrong party to complain if the
principal doesnt complain
of the agents acts)
General rule: an agent who acts as such is not personally
liable to the party with whom he contracts.
Helen C. Arevalo 9
1.) When the agent
binds himself; or
2.) When he exceeds
party sufficient
expressly binds
thereby obligates
by his own act.
2.) When the agent
exceeds his
authority, he
really acts
principal. The
agent becomes
because y his
omission, he
deprives the 3
party with whom
he contracts of
Art. 1898. If the
agent contracts in the
name of the principal,
his authority, and the
principal does not ratify
the contract, it shall be
void if the party with
whom the agent
contracted is aware of
the limits of the powers
principal. In this case,
however, the agent is
liable if he undertook to
secure the principals
Art. 1899. If a duly
authorized agent acts in
orders of the principal,
the latter cannot set up
agent as to
circumstances whereof
he himself was, or
to the liability of the
principal towards 3
principal appoints an
agent who is ignorant?
Then the fault is the
principals alone. Equity
demands that the
principal should be bound
by the acts of the agent if
the latter acts within the
scope of his authority and
instructions of the former.
Art. 1900. So far
as third persons are
concerned, an act is
authority, is such
act is within the
of attorney, as
written, even if the
agent has in fact
exceeded the limits
Requisite for article to
Authority to agent must
Scope of agents
authority includes:
Not only the actual authorization conferred upon the
agent by the principal, but also that which has apparently
or impliedly been delegated to him.
To hold the principal liable, a 3 person dealing with an
agent must:
Discover upon his peril not only the fact of agency but
the nature and extent of authority of the agent. He is put
on inquiry. He must also act with ordinary prudence and
Fundamental principles when inquiring whether authority
1.) The law indulges in no bare presumptions that
an agency exists, it must be proved and
presumed from facts;
2.) The agent cannot establish his own authority,
either by his representations or by assuming to
exercise it;
3.) An authority cannot be established by mere
rumor or general reputation;
4.) A general authority is not an unlimited one; and
5.) Every authority must find its ultimate source in
some act or omission of the principal.
In case the fact of agency or the extent of the authority
of the agent is controverted, the burden of proof is on:
The 3 person to establish the fact of agency or the
extent of authority of the agent.
Does the 3 person have to inquire further if the power
of attorney is written?
No. He is not required to inquire further than the
terms of the written power of attorney.
If there is a secret mutual understanding between the
principal and the agent, and such is not expressed in the
written power of attorney, does the 3 person have to
No. As far as he is concerned, an act of the agent
within the terms of the power of attorney as written, is
within the scope of the agents apparent authority
notwithstanding that the agent may have exceeded the
limits of his actual authority according to a secret
understanding between him and the principal. In such a
case, the principal is estopped from claiming that the
agent exceeded his authority.
Ways by which the agents authority may be broadened
or restricted: [Im-UNDEr]
1.) By implication agents authority extends not
only to express requests, but also to those acts
and transactions incidental thereto. It embraces
all the necessary and appropriate means to
2.) By usage and custom
a.) An agents authority may not be enlarged
through usage and custom in the
following cases: Where it is sought to
i.) Vary the
terms of an
ii.) Dispense
iii.) Change a
iv.) Vary an
b.) General
rule: principal
of the alleged custom,
before the agents
acts, in
i.) Where the
ii.) Where the
4.) By necessity the
operate to invest
in an agent
authority to meet
t is unable to
General rule: Motive
communicate w/ the principal; c.) of agent inrdentering into
a K w/ a 3 person is
Agents enlarged authority is
exercised for the principals
d.) The means adopted are
5.) By certain doctrines
a.) Apparent authority b.)
Liability by estoppel; c.)
6.) By the ejusdem generis rule such that where in
an instrument of any kind, an enumeration of
specific matters is followed by a general phrase is
held to be limited in scope by the specific
Responsibility of principal when agent acts w/ improper
1.) Where the 3
that the agent
was acting for
his benefit, in
w/c case, the
principal is not
liable to the 3
2.) Where the owner is
seeking recovery of
w/c he has been
unlawfully deprived.
1.) Within the scope of
the agents authority
liability for lass
reliance upon a
an agent in the
course of his
a.) Representation is authorized;
b.) Within the implied authority of the agent
to make for the principal; or
c.) Apparently authorized.
2.) Beyond the scope of the agents authority
General rule: Principal is not bound. Exception:
when the principal takes advantage
of a K made under the false misrepresentation of
3.) For the agents own benefit Principal is liable
(motive of agent immaterial).
Art. 1901. A third person cannot set up the fact
that the agent has exceeded his powers, if the
principal has ratified, or has signified his
willingness to ratify the agents acts.
Effect of ratification by the principal:
Ratification of a contract gives it the same effect as if
the principal had originally authorized it.
Who must ratify the contract?
Only the principal. But there must be knowledge on
the part of the principal of the things he is going to
When can the 3 person repudiate the contract? Before
actual ratification by the principal, or before
the principal has signified his willingness to ratify the
agents acts.
Effect of the principal receiving the benefits of the
He is deemed to have ratified it. A principal may not
accept the benefits of a transaction and at the same time
repudiate its burdens.
Art. 1902. A third person with whom the agent
wishes to contract on behalf of the principal may
require the presentation of the power of attorney,
or the instructions as regards the agency. Private
or secret orders and instructions of the principal do
not prejudice third persons who have relied upon
the power of attorney or instructions shown them.
Duty of a 3
person who deals w/ an agent:
3 person deals w/ an agent at his peril. He is bound to
inquire as to the extent of the agents authority, and this is
especially true where the act of the agent is of an unusual
nature. Ignorance of the agents authority is no excuse. It is
his duty to require the agent to produce his power of attorney
to ascertain the scope of his authority. He may also ask for
the instructions of the principal.
Do secret orders or private instructions prejudice 3
No, he cannot be prejudiced by any secret
understanding between the principal and the agent.
Such secret orders cannot be invoked as against 3
parties if the agent had apparent authority.
merchandise were
suffered while in the
custody of the agent.
Art. 1903. The
shall be responsible
received by him in
unless upon
receiving them he
suffered by the
What the commission
agent must do to
avoid liability: Make
deterioration if the
goods received by him
do not agree w/ the
Agent v. Depositary:
Cannot commingle goods
Commission agent: One
whose business is to
receive and sell goods
for a commission and
who is entrusted by the
principal with the
possession of goods to
be sold, and usually
selling in his own name.
Art. 1904. The
who handles goods of
the same kind and
mark, which belong to
different owners, shall
distinguish them by
countermarks, and
respectively belonging
to each principal.
Ordinary agent v.
Commission agent:
Acts for and behalf of his
Need not have possession
of the goods of his
Purpose of this provision:
Prevent any possible
Commission agent v. broker:
Has a relation to principal,
buyers or sellers, and the
Liability of commission
agent as to goods
agent received goods
consigned to him, he is
suffered by the same in
s: 1.) By
2.) Collecting banks.
Presumption established
Art. 1905. The commission agent cannot,
without the express or implied consent of the
principal, sell on credit. Should he do so, the
principal may demand from him payment in cash,
but the commission agent shall be entitled to any
interest or benefit, which may result from such
Rule given in this article:
Commission agent can sell on credit only with the
express or implied consent of the principal.
Right of the principal in case the commission agent sold
goods on credit without authority: [CR]
1.) He may require payment in cash, in w/c case,
any interest or benefit from the sale on credit
shall belong to the agent since the principal
cannot be allowed to enrich himself at the
agents expense; or
2.) He may ratify the sale on credit, in w/c case it
will have all the risks and advantages to him.
principal may sue the
buyers in his own name.
In such a case, the agent
amounts to no more than
a guaranty. Liability is a
contingent pecuniary
Can the agent with a
put up the defense of
insolvency of the debtor?
No. an agent receiving
a guarantee commission
cannot put up the defense
that the debtor-3
person possesses no
property since this is
precisely the risk the
Art. 1908. The
commission agent who
Art. 1906. Should the commission agent, with
does not collect the
authority of the principal, sell on credit, he shall so credits of his principal
inform the principal, with a statement of the names at the time when they
of the buyers. Should he fail to do so, the sale shall become due and
be deemed to have been made for cash insofar as
demandable shall be
the principal is concerned.
unless he proves that
he exercised due
Obligation of the commission agent where a sale on
diligence for that
credit was authorized:
An authorized sale on credit shall be deemed to have
been on a cash basis insofar as the principal is concerned
if the agent fails to inform the principal of such sale on
credit with a statement of the names of the buyers.
Reason for this article: Prevent the agent from stating
agent who has made
that the same was on credit when in fact it was made
sale on credit must collect
Art. 1907. Should the commission agent receive on a the credits due the
principal at the time they
sale, in addition to the ordinary commission, another
called a guarantee commission, he shall bear the risk of become due and
demandable. If he fails to
collection and shall pay the principal the proceeds of
do so, he shall be liable for
the sale on the same terms agreed upon with the
damages unless he can
show that the credit could
Guarantee commission: One where, in consideration of an not be collected
increased commission, the commission agent guarantees notwithstanding the
to the principal the payment of debts arising through his
on his part. In such a
case, the principals
Purpose of guarantee commission: To compensate the remedy is to proceed
agent for the risks he will have to bear in the collection of against the debtor.
the credit due to the principal.
Nature of liability of guarantee commission agent:
Liable to principal if the buyer fails to pay or is
incapable of paying. But he is not primarily the debtor.
Does this article
apply to a case
agent already assumed
the risks of collection by
accepting the guarantee
Art. 1909. The
agent is responsible
not only for fraud, but
also for negligence,
which shall be judged
with more or less rigor
by the courts,
the agency was or was
Is the agent liable for
fraud? Yes, in all cases.
For negligence? Yes,
adjudged with rigor
Why does the court have
whether the agency was
gratuitous or for
In order to fix the
liability of the agent for
negligence only (not
Art. 1910. The
comply with all the
the agent may have
the scope of his
exceeded his power,
the principal is not
bound except when
Where can the specific obligations and duties of the
principal to the agent be found?
Usually in the contract creating the agency.
subsequent but it is
equivalent to prior
Principal obligations of the principal to the agent in the
absence of such agreement:
1.) To comply with all the obligations which the
agent may have contracted in his name and
within the scope of his authority;
2.) To advance should the agent so request sums
necessary for the execution of the agency;
K3.) To reimburse the agent for all advances made
by him provided the agent is free from fault;
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;
5.) To pay the agent the compensation agreed upon or to
the reasonable value of the latters services.
2.) Principal must
Liability of the principle to 3 persons:
have capacity &
Where the relation of agency legally exists, the
power to ratify; 3.)
principal will be liable to 3 persons for all acts
committed by the agent in his behalf in the course and
within the actual or apparent scope of his authority, and
this is not altered y the fact that the agent may also be
The act must be
liable, nor by the fact that some of the acts are to the
done in behalf of
principals advantage while others are to his
the principal; 5.)
Liability of the principal for mismanagement of the
ratify acts in its
business by the agent:
Mismanagement of the business of the principal by the
6.) The act must be
agent does not relieve said principal from the
responsibility that he had contracted to 3 persons. But
where the agents acts bind the principal, the latter may
seek recourse against the agent.
Effects of ratification with
respect to the agent:
Liability of principal for a tort committed by the agent: The
1.) Relieves the
principal is civilly liable to 3 persons for torts of
an agent committed at the principals direction or I the
3 party to
course and within the scope of the agents employment.
The principal cannot escape liability whether the tort is
committed willfully or negligently so long as the tort is
committed by the agent while performing his duties in
furtherance of the principals business. Nor is it a defense
2.) To his principal for
that the act which caused the tort was unknown to him or
even that it was in disobedience to his instructions.
3.) He may
Meaning of ratification in 2 paragraph:
Ratification is the adoption or affirmance by a person of
ion due for
a prior act which did not bind him, but which was done or
professed to be done on his account, thus giving effect to
g the act
the act as if originally authorized. The doctrine applies to
the ratification of the act of an agent in excess of his
authority of the act of one who purports to be an agent
but who is really not. It may be implied from the
acceptance of benefits by the principal under a contract
entered in his name. The authority created by
respect to the principal:
1.) He assumes
act, as fully as
if the agent had
acted under
authority; but
2.) He is not
liable for acts
respect to 3
1.) 3 person is
ratification to
extent as he
been bound if
the ratified act
2.) He cannot
ratified act.
Must ratification be
agent or to the 3 party?
No. To be effective,
ratification need not be
communicated or made
known to the agent or
the 3 party. The act or
key. But before
ratification, the 3 party
is free to revoke the
unauthorized contract.
principal is solidarily
liable with the agent
if the former allowed
the latter to act as
though he had full
Estoppel: precludes a
person from denying or
contrary to that which
has been established as
the truth by his own
deed or representation,
either express or
Ratification v. Estoppel
Rests on intention
Affects the entire
transaction from the
Substance is confirmation
of a unauthorized act or
conduct after it has been
Rests on prejudice
Affects only relevant parts
Substance is the principals
inducement to another to
act to his prejudice.
Apparent authority v. Authority by estoppel
That which though not
Arises in cases where the
actually granted, the
principal, by his
principal knowingly
negligence, permits his
permits the agent to
agent to exercise powers
exercise or holds him out
not granted to him, even
as possessing.
though the principal may
have no notice or
knowledge of the conduct
Basis of article 1911:
Principle of estoppel. Necessary for the protection
of innocent 3 persons. Instance when solidarity is
Art. 1912. The principal must advance to the
agent, should the latter so request, the sums
necessary for the execution of the agency.
Should the agent have advanced them, the
principal must reimburse him therefor, even if
the business or undertaking was not successful,
provided the agent is free from all fault.
The reimbursement shall include interest on
the sums advanced, from the day on which the
Should the principal reimburse the agent for advances
made by the latter even if the agency was unsuccessful?
It depends. Yes, if the agent is free from fault. No,
if the agent was with fault.
Is a broker always entitled to a commission?
A broker is entitled to a commission if the sale is
effected, but not if there is no perfected
Art. 1913. The principal must also indemnify
the agent for all the damages which the executive
of the agency may have caused the latter, without
fault or negligence on his part.
Basis for the above rule: Equity. Since the principal
receives the benefits of the agency, and has a right to
demand damages from the agent should the latter not
perform the agency, he should answer for the
damages resulting from the execution thereof without
fault or negligence on the part of the agent.
Art. 1914. The agent may retain in pledge the
tings which are the object of the agency until
the principal effects the reimbursement and
pays the indemnity set forth in the two
preceding articles.
What happens when the principal fails to reimburse or
indemnify the agent for expenses set forth in arts.
1912 and 1913?
The agent has the right to retain in pledge the
things which are the object of the agency.
In case the agent sells
the goods for more
than his claim, is he
entitled to the excess?
with the principal, and
the two contracts are
incompatible with each
other, that of prior
preferred, without
prejudice to the
agents right of lien?
Specific or particular. It
is not general in the
May 2 persons contract
thing, one with the agent
and the other with the
that it gives the agent a
right to retain the goods
for claims disconnected
Art. 1915. If two or
more persons have
appointed an agent for a
common transaction or
undertaking, they shall
be solidarily liable to the
If this situation arises,
which of the contracts
will be preferred?
If the contracts are
compatible, they will both
be given effect. If they
are incompatible, then the
contract of prior date shall
[2C ] 1.)
There are 2 or
undertaki
Art. 1544: If the same
thing should have been
sold to different vendees,
the ownership shall be
transferred to the person
who may have 1 taken
possession thereof in good
faith if it should e movable
property. Should it be
immovable property, the
ownership shall belong to
the person acquiring it
who in good faith 1
recorded it in the Registry
of Property. Should there
be no inscription, the
ownership shall pertain to
the person who in good
faith was 1 in
possession; and in the
absence thereof, to the
person who presents the
oldest title, provided there
is good faith.
Art. 1917. In the
case referred to in the
preceding article, if the
agent has acted in good
faith, the principal shall
be liable in damages to
the third person whose
rejected. If the agent
acted in bad faith, he
alone shall be
Why is solidarity the rule?
common transaction.
Thus, even if the agent
was appointed separately,
the rule should apply in
Art. 1916. When two
persons contract with
regard to the same
thing, one of them with
Is the principal always liable for damages caused by a
3 person or is it the agent who is liable?
Whether the principal or the agent will be the one liable
for damages to the 3 person who has been prejudiced
depends on whether the agent acted in bad faith or not. If
the agent acted in good faith and within the scope of his
authority, the principal incurs liability. If the agent acted in
bad faith, he alone shall be responsible to such person.
What is the extent of liability covered under this article?
What is good faith referred to in this article? Good
faith here means that the agent had no
knowledge that the principal is dealing with a 3
Note: If the contract is one of sale, article 1544 governs
and not arts. 1916 and 1917.
Art. 1918. The principal is not liable for the
expenses incurred by the agent in the following
cases: [F*CKS]
1.) If the agent acted in contravention of the
principals instructions, unless the latter
should wish to avail himself of the benefits
derived from the contract;
2.) When the expenses were due to the fault of
3.) When the agent incurred them with knowledge
that an unfavorable result would ensue, if the
principal was not aware thereof;
2.) By the
3.) By the death,
insolvency of
the principal or
4.) By the
the firm or
which entrusted
or accepted the
5.) By the
6.) By the
4.) When it was stipulated that the expenses would
be borne by the agent, or that the latter would
agency: When once
be allowed only a certain sum.
existed, an agency
Instances wherein the principal is not liable for expenses
relation will be
incurred by the agent?
In the instances enumerated under this article.
absence of anything to
Reasons why the principal is not liable for the agents
show its termination.
expenses: Under
1.) To punish the agent, but when the principal has
availed of the benefits, he is deemed to have
impliedly ratified the agents acts.
2.) Kasi, kasalanan niya, eh.
3.) The agent is guilty of bad faith and lack of
4.) An express stipulation which is not contrary to
law, morals, good customs, public order or
public policy is binding between the parties.
Chapter 4. Modes of Extinguishment of
Art. 1919. Agency is extinguished: [WR-DEAD]
1.) By its revocation;
n/ter
proving a revocation
or other termination
of agency is on the
party asserting it.
Note: Even if the reason
for extinguishing the
agency is not true, the
agent cant insist on
reinstatement. The agent
can only demand
extinguishing an
generally: [ASO]
1.) Agreement;
2.) Subsequent
a.) By the
b.) By the
unilateral act of
one of them. 3.)
[WR-DEAD] 1.)
2.) Revocation;
3.) Death, civil
insolvency of the
principal or of the
4.) Expiration of
5.) Accomplishment
of the object or
6.) Dissolution of
the firm/corp
1.) Present;
2.) Capacitated;
3.) Solvent.
Why is presence necessary?
Because the general rule in art 1919 is that death of any
of the parties extinguishes agency. However in the case
where you have several principals and/or several agents,
whether the death of one principal or of one agent
terminates the agency
would depend on the
Generally the death of one
of several principals does
not revoke the agents
authority nor does the
death of one of several
agents put an end to the
agency. The intention of
the parties controls.
Why is capacity necessary?
to the contrary, the loss or
For instance, in the case of civil interdiction, it deprives destruction of the subject
the offender during the period of his sentence of the right matter of the agency
to manage his property and dispose of such property by
terminates the agents
any act or any conveyance inter vivos. A person under
authority to deal with
civil interdiction hence, cannot validly give consent. Same reference to it.
is true for insane people.
Why is solvency necessary?
1.) If it is possible
As by an act of insolvency, the principal loses control of
the subject matter of the agency, the authority of the
agent to act for his principal ceases by operation of law
upon an adjudication of the principals insolvency. On the
other hand, the insolvency of the agent will ordinarily put
an end to the agency, at least if it is in any way connected
with the agents business which has caused his failure.
either party, or
2.) If the destroyed
General rule as to death of the principal or agent: By
reason of the very nature of the relationship
was not in fact
between the principal and the agent (which is fiduciary
argh!), agency is distinguished ipso jure upon the death of
3.) A partial loss or
1.) If the agency is coupled with an interest;
2.) If the act of the agent was executed without the Are the modes of
knowledge of the death of the principal and the
agency exclusive? No.
3 person who contracted w/ the agent acted in
Art. 1919 gives only
those causes of
Why does dissolution of a firm or corp extinguish the
which are particular to
Dissolution of a corp extinguishes its juridical
agency. But the list is not
exclusive. The general rule
actually is, an agency may
What happens when the object or the purpose of the
be extinguished by the
agency is accomplished?
modes of extinguishments
As between the parties, the principal and the agent, of obligations in general
the fulfillment of the purpose for which the agency was whenever they are
applicable, like loss of the
created ipso facto terminates the agency.
thing and novation (see
art. 1231).
What happens when the term for which the agency was
supposed to continue expires?
Does war extinguish
When an agency is created for a fixed period, the
expiration of such period ends the agency, even though
During the existence of
the purpose for which the agency was created has not
war, a contract of agency
is inoperative if the agent
or the principal is an
What happens if no time is specified?
enemy alien. But since it
The agency terminates at the end of a reasonable
is generally conceded that
war suspends all
Can the period be implied? Yes, from 1.)
between the residents of
The terms of the agreement; 2.)
2 belligerent states, the
Purpose of the agency; and
general rule is that
3.) The circumstances of the parties.
agency is terminated, as
a matter of law, upon the
What happens if the subject matter of the agency is lost
break of war.
Does legal impossibility
terminate agency?
Implied in every
contract is the
understanding that it shall
be capable of being
carried out legally at the
time called for by the
contract. An agency then
terminates if a change in
the law makes the
principals authority
terminates? A
position which flows
whether directly or
indirectly, terminates as a
matter of law with the
destruction of the trust.
Consequently, a subagents authority
principals authority.
In case of loss of the
subject matter, does the
principal incur any
It depends. If the loss
principal as in the case
where the principal sells
the subject matter to
notwithstanding that an
agency had been
constituted in reference to
it, then he may be liable
for damages for his
wrongful terminating act.
But if the subject matter
is lost without the fault of
the principal, no liability is
assumed by him.
Will a change of
conditions affect the
agency? General
rule: When there is a
basic change in the
transaction not
parties which would
reasonably lead the
agent to believe that
the principal would not
desire him to act,
authority of agent is
retain another as
his agent against
1.) If the original circumstances are restored within a
reasonable period of time, the agents authority
may be revived.
2.) Where the agent has reasonable doubts as to
whether the principal would desire him to act,
his authority will not be terminated if he acts
reasonably. (But when in doubt, agent could
contract principal for instructions if possible).
3.) Where the principal and agent are in close daily
contact, the agents authority to act will not
terminate upon a change of circumstances if the
agent knows the principal is aware of the change
and does not give him new instructions.
In case a principal does
revoke an agency, is
there any way by which
the agent can hold him
liable for damages? Yes.
1.) If the agency was
constituted for a
liable in damages
It is difficult to determine whether information is
confidential or not, because while the relation of principal
and agent is confidential, not all knowledge acquired by
discharge of the
the agent is of a confidential nature. Some clearly is of
agent before the
so general a nature that equity ought not attempt to
restrict its subsequent use.
2.) If the agent can
Usually, what a court does is to determine 2 things: 1.)
Whether the knowledge or information is indeed
principal acted in
bad faith by
2.) Whether its subsequent use ought to be
revoking the
agency in order to
Principle behind enjoining an agent from using
to be earned, the
There is in the contract of service subsisting between
principal can be
the principal and the agent an implied contract on the part
held liable for
of the agent that he will not, after the service is
terminated, use information which he has gained while the
service has been subsisting to the detriment of his former
Reason for requiring
agent to return the
document evidencing the
Art. 1920. The principal may revoke the agency
agency: To prevent the
at will, and compel the agent to return the
agent from making use
document evidencing the agency. Such revocation
and thus avoid liability to
3 persons who may
May an agency be terminated by a subsequent act of the subsequently deal with
principal? Yes, when he does so, its called revocation.
the agent on the faith of
May an agency be terminated by a subsequent act of the
agent? Yes, its called withdrawal or renunciation.
Does it matter if the agency is gratuitous or with
compensation when we speak of revocation by the
principal? No, art 1920 makes no distinction.
1.) Since the authority of the agent emanates from the R
principal, if the principal wishes to terminate the e
agency the law must enable him to do so.
2.) Confidence being the cardinal basis of the
relation, it stands to reason that it should cease
when such confidence disappears.
3.) The principal-agent relationship is consensual
and personal in nature. No one can nor should
a.) When the
appoints a new
or transaction,
or b.) When
Is notice of revocation to
the agent necessary? Yes.
A revocation without notice
to the agent will not
render invalid an act done
Is express notice of
revocation to the
agent necessary? As
notice to the agent that
the agency is revoked is
not always necessary. If
the party to be notified
actually knows, or has
reason to know, facts indicating that his authority has
been terminated or suspended, there is sufficient notice.
Is notice of revocation to 3
persons necessary? Yes.
What kind of notice should you give 3 persons?
1.) As to former customers, actual notice must e
given to them because they always assume the
continuance of the agency relationship.
2.) As to other persons, notice by publication is
May the agent renounce
the agency at will?
Yes, but subject to the
owing the principal.
Reason: The essence of the
is the consent and
willingness of the agent to
act for the principal. The
law cannot compel the
parties to continue an
agency if they do not want
to do so. (The principal
cannot even sue for
affirmative specific
performance because that
would lead to involuntary
servitude!)
Form of renunciation:
It is not always necessary for the agent to
renounce the agency expressly. He can do so
impliedly, as for example
1.) Where he has conducted himself in a
manner incompatible with his duties as
2.) When he abandons the object of his agency
and acts for himself in committing a fraud
upon his principal; or
3.) When he files a complaint against the principal and
adopts an antagonistic attitude towards him.
Does a violation of the instructions of the
principal amount to a renunciation?
No. Mere fact that agent violates his instructions
does not amount to renunciation, and although he may
thus render himself liable to the principal, he does not
cease to become an agent.
Art. 1921. If the agency has been entrusted
for the purpose of contracting with specified
persons, its revocation shall not prejudice the
latter if they were not given notice thereof.
What is the effect of revocation in relation to 3
persons if the agent was authorized to contract with
specified persons?
If the agency is created for the purpose of
contracting with specified persons, its revocation will
not prejudice such 3 persons until notice thereof is
given them. The reason for this is obvious. Since 3
persons have been made to believe by the principal
that the agent is authorized to deal with them, they
have a right to presume that the representation
continues to exist in the absence of notification by the
principal. But of course, notice is not required if the 3
persons already know of the revocation.
Art. 1922. If the agent had general powers,
revocation of the agency does not prejudice third
persons who acted in good faith and without
knowledge of the revocation. Notice of the
revocation in a newspaper of general circulation
is a sufficient warning to third persons.
Effect of revocation in relation to 3 persons if the agent
was authorized to contract with the public in general:
In case the agent has general powers, innocent 3
parties dealing with the agent will not e prejudiced by
the revocation before they had knowledge thereof. In
this case, however, the fact that the revocation was
advertised in a newspaper of general circulation would
be sufficient to 3 persons for publication constitutes
notice upon everybody and this is true whether or not
persons have read the newspaper concerned.
Notice required in art. 1921 v. that in art. 1922:
May be personal.
Revocation must be known Even if 3 person doesnt
to 3 person informed of
Except: If you can
prove that the 3
person read the
Art. 1923. The
new agent for the
same business or
transaction revokes
the previous agency
from the day on
which notice thereof
former agent,
What does this article
1.) There is implied
revocation of the
revocation does
agent unless it is
the latter. Again,
the rights of 3
acted in good
faith and without
revocation will
not be prejudiced
2.) There is no
another agent is
like authority in
the 1 agent, or
if the 1 agent
Art. 1924. The
agency is revoked if
the principal directly
entrusted to the agent,
What does the above
article provide?
It provides for another
case of implied
business by the
principal himself:
Generally, it revokes
the agency because there
would no longer be any
representation previously
Exception: when
the only desire of the
principal in doing so is
for him and the agent
Art. 1925. When
two or more principals
have granted a power
of attorney for a
common transaction,
any one of them may
revoke the same
Rationale: Since the
by 2 or more principals
for a common transaction
or undertaking makes
them solidarily liable to
the agent for all
agency, then each one of
the principals should be
Helen C. Arevalo 18
power of attorney even without the consent of the
others. Remember that in a solidary obligation, the act
of one is the act of all.
Art. 1926. A general power of attorney is revoked
by a special one granted to another agent, as
regards the special matter involved in the latter.
the thing in
pledge or
hallmarks of the agency
relation is the control of
the principal over the acts
of the agent and over the
agency. An agency
removes that control.
How many agents are involved in this article?
2, one to whom a general power is previously
granted. Another to whom a special power is given.
(Note that this can also apply if a special power is
subsequently given to the same agent.)
If the contract of agency
stipulates that such will
be irrevocable, is such
terminology controlling in
No. Whether an
interest will make an
Effect of the issuance of a special power as regards the
agency irrevocable exists
in a particular case is to be
The general power is impliedly revoked as to matters
covered by the special power because a special power
entire agreement between
naturally prevails over a general power.
the parties and from the
Art. 1927. An agency cannot be revoked if a
The terminology is not
bilateral contract depends upon it, or if it is the
means of fulfilling an obligation already contracted, controlling. Even if an
or if a partner is appointed manager of a partnership agency is made in terms
in the contract of partnership and his removal from irrevocable, the fact will
not prevent its revocation
the management is unjustifiable.
by the principal when the
agency is not in fact
General rule: Principal may revoke an agency at will
since the essence of agency is the agents duty of
obedience to the principal.
If an agency is coupled
with an interest, does this
Exceptions: [BF=Partner]
mean that the principal
1.) When a bilateral contract depends on the
can never ever revoke it?
No. You can still
2.) When the agency is the means of fulfilling an
revoke in extreme
obligation already contracted;
situations, e.g.: 1.)
3.) When a partner is appointed as manager of a
Irrevocability can
partnership in the contract of partnership and
never be used as a
his removal from the management is
the perpetration of
acts in ad faith,
Can an agency, coupled with an interest, be terminated
by the sole will of the principal? No.
Requisite for agency to be irrevocable for being coupled
The law will never
with a interest:
permit the agent
Interest of the agent must be in the subject matter of
to commit frauds
the power conferred and not merely an interest in the
exercise of the power.
2.) When the interest
Instances of an agency coupled with an interest:
is already terminated.
1.) When the agent has parted with value or
incurred liability at the principals request, and he
is looking to the exercise of the power as the
means of reimbursement or indemnity.
2.) When the interest in the thing concerning which
the power is to be exercised arises from an
assignment, pledge or lien created by the
principal with the agent being given the power
Art. 1928. The agent
may withdraw from the
agency by giving due
notice to the principal.
If the latter suffer any
damage by reason of
the withdrawal, the
agent must indemnify
him therefor, unless
the agent should base
his withdrawal upon
agency without grave
detriment to himself.
Does the agent have a
right to renounce or
agency at any time?
Yes. Even without the
consent of the principal.
But, in the latter case, he
may be subject to liability
for breach of contract or
for tort.
Basis: Constitutional
Obligation of agent if he
withdraws from agency
1.) Notify principal
(even if w/ just
cause); and
2.) Indemnify the
principal should
the latter suffer
any damage by
reason of such
Why is it said that
agencies coupled with
interest are not true
Because persons with
proprietary interests in the
subject matter of their
agency are not true
agents at all. One of the
indemnity: To
answer for losses
non-fulfillment of
his obligation as
same way that revocation
of the agency does not
Is the agent liable for indemnity if the withdrawal was
prejudice 3 persons who
for just cause? No. Agent cannot be held liable if the
agent withdraws for a valid reason as when:
1.) The withdrawal is based on the impossibility of
notice of revocation, such
continuing the agency without grave detriment to
3 persons are also
protected where it is not
2.) Fortuitous event.
shown that the agent had
What happens when the agent sues the principal?
because of the death of
Equivalent to withdrawal of the agent.
the principal or any other
like cause which
Art. 1929. The agent, even if he should withdraw extinguishes the agency.
from the agency for a valid reason, must continue to
act until the principal has had reasonable
Does this article only
opportunity to take the necessary steps to meet the require the agent to
be in good faith? No,
Obligation of agent after withdrawal:
Even when withdrawal is for a valid reason, he must
continue to act until the principal has had reasonable
opportunity to take the necessary steps like the
appointment of a new agent to remedy the situation
caused by the withdrawal. This is to prevent damage or
prejudice to the principal.
Art. 1930. The agency shall remain in full force
and effect even after the death of the principal, if it
has been constituted in the common interest of the
latter and of the agent, or in the interest of a third
person who has accepted the stipulation in his
If the agent dies, his heirs should tell the principal.
However, if the principal dies, the principals heirs have
no obligation to tell the agent.
General rule: Agency is terminated instantly by the
death of the principal.
Rationale: Agency, being based on representation, there is
no one to e represented where the principal is already
1.) If the agency has been constituted in the common
interest of the principal and the agent; and
2.) If the agency has been constituted in the
interest of a 3 person who has accepted the
stipulation in his favor.
Art. 1931. Anything done by the agent, without
knowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid
and shall be fully effective with respect to third
persons who may have contracted with him in good
What does this article provide?
It provides that the death of the principal or any
other like cause, extinguishes the agency. But in the
both agent and 3
person must be.
Art. 1932. If the
agent dies, his heirs
principal thereof, and
adopt such measures
may demand in the
interest of the latter.
In case of death of
agent, what
must the heirs
do? 1.) Notify
enable the latter
take such steps
tacit agency;
2.) Agency is coupled
small syndicate of
people who name
labor case!
I basically just typed up
the reviewer minus the
cases and problems. I dont
think the problems are all
that important, theyre
Atty. Quimson problems
not Enriles. Our case
outline differs from theirs a
bit too. Besides, were all
set with case digests na,
Thanx to that other
group of people who name
imaginary perfect place.
Sorry, I plagiarized your
reviewer guys, but I
wouldnt have had to if you
didnt stamp your huge seal
right smack center of every
2.) Adopt such
measures as the
may demand in
Can the heirs continue the
General rule: No,
since an agency calls for
personal services on the
part of the agent.
1.) Agency by
law, or a
presumed or
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