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AGENCY REVIEWER
Art. 1868 By the contract of agency a person binds himself to render some service or to do something in representation of another, with the consent or authority of the latter - Agency is an act which one person gives to another the power to do something for the principal in his name; - It enables a man to increase the range of his individual and corporate activity by enabling him to be constructively present in many places and to carry on diverse activities at the same time; - Characteristics: i. Principal ii. Nominate iii. Bilateral iv. Preparatory v. Commutative vi. Generally onerous contract vii. A representative relation, not a status since agency is not inherent or permanent viii. A fiduciary relationship since it is based on trust and confidence - Parties: i. Principal the person whom the agent represents and from he derives authority ii. Agent the person who acts or stands for another. - Capacity of the principal: i. Capacitated to give consent ii. A natural or juridical person iii. Emancipated minor, married woman, the husband may be a principal - Capacity of an Agent: i. Same as in the law of contracts must be able to bind himself; ii. As to third persons, it is enough that the principal be the one capacitated Art. 1869 Kinds of Agency according to manner of constitution: a) Express b) Implied from: a. Acts of the principal b. Principals silence c. Principals lack of action d. Principals failure to repudiate the agency Art. 1870 Kinds of acceptance of agency: a) Express b) Implied a. From his acts b. From his silence c. From his inaction accdg to circumstances Art. 1871 Between the persons who are present (face to face or through the telephone), there is implied acceptance if: a) Principal delivers power of attorney to the agent b) The latter receives it without objection Art. 1872 Rule: Between persons who are absent (not present), agency cannot be implied Exceptions: 1) When the principal transmit his power of attorney to the agent, who receives it without objection 2) When the principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he is habitually engaged as agent, and he did not reply to the letter or telegram

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Art. 1873 Rule - When there is specific information to a person about power of attorney to a third person, the latter becomes duly authorized agent with respect to the person who received the information Rule When there is public advertisement informing a power of attorney to a third person, the latter becomes duly authorized agent with regard to any person Rule Power shall remain in full force until the notice is rescinded in the same manner in which it was given Art. 1874 Rule: Authority in writing is needed in sale of piece of land or any interest therein, otherwise the sale is void Art. 1875 General Rule Agency is for compensation, unless there is proof to the contrary Broker one who in behalf of others, and for commission or fee, negotiates contracts relative to property. He is the negotiator between the parties, never acting in his own name, but in the name who employ him Art. 1876 Kinds of Agency: 1) General comprises all the business of the principal 2) Special one or more specific transactions Art. 1877 Rule: Agency couched in general terms comprises only acts of administration, even if principal should state that he withholds no power, or authorize a general and unlimited management Art. 1878 Special power of attorney is needed in the following 1) Make payments not usually considered acts of administration 2) Effect novations to obligations already in existence at time of agencys constitution 3) To compromise, submit questions to arbitration, renounce a rigtht to appeal from judgment, waive objections to venue, to abandon a prescription already acquired 4) Waive any obligation gratuitously 5) Enter into any contract transmitting ownership of an immovable either gratuitously or valuable consideration 6) Make gifts, except customary ones for charity or for employees of the agent 7) To loan or borrow money, unless urgent and indispensible 8) Lease any real property to another for more than one year 9) To bind the principal to render some service without compensation 10) Enter into contract of partnership 11) Obligate the principal as guarantor or surety 12) Create or convey real rights over immovable property 13) Accept or repudiate inheritance 14) Any other act of strict dominion Art. 1879 Rule: Special power to sell excludes power to mortgage. Special power to mortgage does not include the power to sell Art. 1880 Rule: Special power to compromise does not authorize submission to arbitration Art. 1881 Fundamental Principles of Agency 1) Agent must act within the scope of his authority 2) Agent must act in behalf of his principal Validity of acts of agent: a) With Authority a. In principals behalf valid b. In agents behalf generally not binding on principal, except regarding things belonging to principal

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b) Without authority a. In principals behalf UNAUTHORIZED and UNENFORCEABLE. But may be ratified in which case it may be validated from the very beginning b. In agents behalf Valid, whether or not the subject matter belongs to principal provided that at the time of delivery, the agent can transfer legally the ownership of the thing Authority the right of the agent to effect the legal relations of his principal by the performance of acts effectuated in accordance with the principals manifestation of consent. Kinds of authority: 1. Express authority is clearly defined 2. Implied necessary acts to accomplish the purpose 3. General agents discretion is complete 4. Special particular instructions are given 5. Apparent authority manifested by principals conduct Examples: 1. Implied authority: a. When authorized to collect a debt, he is impliedly authorized to employ an attorney, and to bring suit for the enforcement of the payment b. If authorized to exact payment of debt by legal means , authorized to institute legal suit c. If authorized to pay debts of the principal, empowered to pay attorneys fees for services rendered in the interest of the principal d. Is authorized to sell, it would carry with it authority to make and enter into the usual and customary contract of sale 2. No implied authority: a. Agent authorized to borrow funds has no authority to pay his own personal debt therewith b. Agent authorized to collect a debt has no right to make novation of the contract c. Agent authorized to collect money not authorized to indorse checks which had been received by in payment d. Authorized to borrow money not impliedly authorized to pay the loan at maturity, or allowed to give the money received to third person e. Authority to collect does not carry with it authority to receive partial payment Doctrine of Agency by necessity that by virtue of the existence of an emergency, the authority of the agent is correspondingly enlarged in order to cope with the exigencies or the necessities of the moment. Authority emanates from the principal, and is given to agent. Thus Power is received by the agent Art. 1882 Rule Agents authority shall not be considered exceeded if it had been performed in a manner more advantageous to the principal Art. 1883 Rule If an agent acts in his own name, principal has no right of action against persons with whom agent has contracted, and such persons has no right of action against the principal a) Agent is directly bound except when contract involves things belonging to the principal

OBLIGATIONS OF THE AGENT Art. 1884 Rule: Agents obligation to carry out the agency. He is liable for damages, the principal may suffer, through his non-performance. At death of principal, he must also finish business already begun.

Art. 1885 Rule: Should agent declines the agency, he shall observe diligence of a good father in custody and preservation of the goods delivered to him. Art. 1886 Rule: Agents obligation to advance necessary funds when there is stipulation Exception when the principal is insolvent Art. 1887 Rule: Agents obligation to act in accordance with the instruction of the principal. In case there is no instruction, he shall do all that a good father of a family would do as required by the nature of the business Art. 1888 Rule: Agents obligation not to carry out business if its execution would manifestly result in loss or damage Art. 1889 Rule: Agents obligation to prefer principals interest in case of conflict, otherwise he will be liable for damages. Art. 1890 Rule: If the agent is 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 consent of principal Art. 1891 Rule: Agents obligation to render 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 the principal Because of representative relation and fiduciary position Agent has an absolute duty to make a full disclosure or accounting to his principal of all transactions and material facts that may have some relevance with the agency

Art. 1892 Rule: Agent may appoint substitute if not prohibited by principal. He shall be responsible of the acts of the substitute: 1) When he was not given the power to appoint one 2) When given power, but the person appointed was notoriously imcompetent or insolvent All acts of substitute appointed against the prohibition shall be void. Art. 1893 Rule: In all acts of substitute appointed against the prohibition, principal may bring action Art. 1894 Rule on liability of 2 or more agents, even though they have been appointed simultaneously: General rule - Joint Exception when solidarity has been stipulated Art. 1895 Rule: If solidarily liable, each agent is liable for fault or negligence of fellow agent Exception when agent is at fault Art. 1896 Rule: Agent to pay interest on the sums he has applied to his own use from the day he did so. And on those which he still owes after the extinguishment of the agency

Art. 1897 Rule: Agent who acts within authority is not personally liable to the party with whom he contracts Exceptions: when he binds himself - If he exceeds the limits of authority without giving sufficient notice of his powers Art. 1898 Rule: Contract is void when: 1. Agent acts in behalf of principal but exceeding his authority 2. Principal does not ratify 3. Other party is aware of the limits of the powers Agent is liable if he undertook to secure principals ratification Art. 1899 Rule: if agent acts in accordance with principals orders, the principal cannot set up the ignorance of the agent as to circumstances Requisites agent must have complied with the orders and instructions of the principal Art. 1900 Rule: As to third persons, acts of agent is valid if within the terms of power of attorney, even though exceeded the limits of his authority according to understanding between the principal and agent Art. 1901 Rule: A third person cannot set up that the agent has exceeded his powers, if the principal has ratified or signified his willingness to ratify Art. 1902 Rule: Third persons right to require presentation of the power of attorney. Private or secret orders and instructions of principal do not prejudice third persons Art. 1903 Rule: Commission agent responsible for goods received by him unless upon receiving them he should make a written statement of the damage and deterioration. Commission agent a merchant or broker, the agent having the option of acting in his own name or in that of the principal Commission agent 1. Engaged in purchase and sale for a Principal 2. He has relationship with principal, buyer And property object of transaction Broker 1.No relation with the thing he purchases or sells. 2.He does not have custody or possession of property object of transaction

Art. 1904 Rule: Obligation of commission agent to distinguish by countermarks goods of the same kind and mark that belongs to different principals Art. 1905 Rule: Commission agent cannot sell on credit without consent of principal. If he do so, principal may demand from him payment in cash, but agent shall be entitled to any interest or benefit which may result from such sale. Art. 1906 Rule: Obligation of commission agent to inform principal with a statement of buyers on credit. Failure to do so, it shall be deemed that sale have been made in cash in so far as principal is concerned.

Art. 1907 Rule: In case of guarantee commission for the commission agent, he shall bear risk of collection and pay the principal proceeds of the sale on the same terms agreed upon with the purchaser. Guarantee commission distinct from ordinary commission, is given in return for the risks the agent will have to bear in the collection of credits. - Agent bears the risk in case of default of payment Art. 1908 Rule: Obligation of the commission agent to collect credits at time they become due and demandable, otherwise he shall be liable for damages Exception when agent proves he exercised due diligence for that purpose Art. 1909 Rule: Whether the agency was or was not for compensation basis of the court to judge whether agent is responsible for negligence.

OBLIGATIONS OF THE PRINCIPAL Art. 1910 Rule: Principal must comply with all the obligations of the agency Exception: Where agent has exceeded his power, principal is not bound; Exception to exception when principal ratifies it expressly or tacitly; Art. 1911 Rule on liability when agent has exceeded is authority Principal is solidary liable with the agent if the principal allowed the agent to act as though he had full powers. Art. 1912 Rule principal must advance to the agent the sums necessary for the execution of the agency; - When agent have advanced them, principal must reimburse him i. Even if undertaking is not successful provided that agent is free from fault; ii. Reimbursement must include interest from the day advance was made. Art. 1913 Rule Principal must indemnify the agent for all damages which the execution of the agency may have caused the latter, without fault or negligence on his part - Even when agency is gratuitous - When agency exists Art. 1914 Rule agent may retain in pledge the things object of the agency until reimbursement and indemnity of 2 preceding articles are given Art. 1915 Rule If 2 or more principals have appointed an agent for a common transaction they shall be SOLIDARILY liable to the agent for all consequences of agency Art. 1916 Rule when two or more person contract with regard to the same thing, one with the agent and another with the principal, and the two contracts are incompatible with each other that of prior date shall be preferred, subject to provisions of article 1544 (double sale)

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Art. 1917 Rule on liability for damages to third persons in the preceding article: When agent is in good faith Principal is liable When agent is in bad faith agent alone is liable Art. 1918 Rule Principal is not liable for expenses incurred: 1) If the agent acted in contravention of principals instruction, unless the principal ratifies 2) When expenses were due to fault of agent 3) When agent incurred them with knowledge that unfavorable result would ensue 4) When stipulated that expenses would be borne by the agent, or that the agent would be allowed only a certain sum

MODES OF EXTINGUISHMENT OF AGENCY Art. 1919 Agency is extinguished by - EDWARD: E - Expiration of the period D - Death, civil interdiction, insanity, insolvency or principal or agent W - Withdrawal of the agent A - Accomplishment of the purpose of agency R - Revocation D - Dissolution of firm or corporation which entrusted or accepted the agency

Art. 1920 Rule: Agency is revocable at will - Because trust and confidence may have been lost Exceptions: a) When it is coupled with interest (interest possessed by the agent not in the proceeds but interest in the subject matter of the power) b) Cases mentioned in Art 1927: a. Bilateral contract depends on the agency b. Agency is the means of fulfilling an obligation already contracted c. Partner appointed manager, and his removal from the management is unjustifiable c) Waiver by the principal d) Principal is not obliged not to revoked (he can revoke but can be held for damages e) When revocation is done in bad faith Kinds of revocation: i. Express ii. Implied: a) Appointment of new agent for the same business or transaction b) Principal directly manages the business, in a way incompatible with the agency

Art. 1921 Rule: If agency has been entrusted for the purpose of contracting with specified persons revocation shall not prejudice third persons not given notice thereof Art. 1922 Rule: Revocation of agency with general powers: - Does not prejudice third persons in good faith and without knowledge of the revocation. - Notice of revocation in a newspaper of general circulation is a sufficient warning to third persons

Art. 1923 Rule: Effectivity of revocation by appointement of a new agent on the day on which notice thereof was given to the former agent - Without prejudice to provisions of two preceding articles Art. 1924 Rule: Agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons Art. 1925 Rule: When 2 or more principals have granted a power of attorney for a common transaction any one of them may revoke the same without consent of the others. Art. 1926 Rule: a special power of attorney revokes a general power of attorney, as regards the special matter involved in the special power Art. 1927 When can an agency cannot be revoked: a) Bilateral contract depends upon the agency a. Agency coupled with interest b) Agency is the means of fulfilling an obligation c) A partner is appointed manager of a partnership in the contract of partnership, and his removal from management is unjustifiable Art. 1928 Rule: Withdrawal by Agent - By giving due notice to principal - If damage will be suffered by principal, agent must indemnify i. Exception when withdrawal is based upon the impossibility of continuing performance of agency without detriment to himself - Reasons of health can justify withdrawal Art. 1929 Rule: Withdrawal by agent for valid reason must continue to act until principal has reasonable opportunity to act on the situation Art. 1930 Rule on death of principal agency shall remain in full force and effect - If it was constituted in their common interest; - Or in the interest of a third person who has accepted the stipulation in his favor Art. 1931 Rule on death of principal without knowledge of the agent agents acts are valid and shall be fully effective to third persons who contracted with him in good faith Art. 1932 Rule on death of agent his heirs must notify the principal, and adopt measures as circumstances may demand in the interest of the principal