AGENCY .DOLES V.

ANGELES
-The law in fact contemplates, and to a
.NATURE, OBJECTIVE AND KINDS OF great degree, impersonal dealings where
AGENCIES the principal NEED NOT personally know or
meet the third person with whom here agent
Art. 1317 transacts
No one may contract in the name of another -The purpose of the agency is to extend the
without being authorized by the latter, or personality of the principal.
unless he has by law a right to represent
him. PHILEX MINING CORP V.
COMMISSIONER OF INTERNAL REV.
A contract entered into in the name of -essence of agency is the agent’s ability to
another by one who has no authority or represent his principal and bring about
legal representation, or who has acted business relations between the latter and
beyond powers, shall be enforceable, third person.
unless it is ratified, expressly or impliedly, by -Agent acts within the scope of the authority
the person on whose behalf it has been have the same legal effect as though the
executed before it is revoked by the other principal had been the one acting in the
contracting party (1259a) given situation.

Art. 1403 PARTIES TO A CONTRACT OF AGENCY

The following contracts are unenforceable, 1. Principal (mandante)
unless they are ratified: 2. Agent (mandatario)
-other terms: atty-in-fact, proxy,
1. Those entered into in the name of delegate or representative
another person by one who has
been given no authority or legal ELEMENTS OF CONTRACT OF AGENCY
representation, or who has acted 1. Consent - express or implied of te
beyond his powers. parties to establish the relationship
2. Object - execution of a juridical act in
Art. 1868 relation to third parties
By the CONTRACT OF AGENCY, a person 3. Cause or considerations
binds himself to render some service or to
do something in representation or on behalf ADDITIONAL ELEMENTS:
of another, with the consent or authority of 4. Agent acts as a representative and
the latter. not for himself and acts within the
scope of authority.
GENERAL RULE: -absence of this does not affect the
No one may contract in the name of another validity of the existing agency
WITHOUT being authorized by the latter, or relationship but rather the
unless he has by law a right to represent enforceability of the contracts
him. Consequence = unenforceable entered into by the agent.
ELEMENTS OF CONSENT -during the term of agency, the
Article 1317 principal or agent is place under civil
-No person may be represented by interdiction, or becomes insane or
another WITHOUT his will and that insolvent = agency extinguished
no person can be compelled against
his will to represent another. CONTRACT OF AGENCY is merely
preparatory contract, main purpose
DIZON V. C.A of which is to effect, through the
-co-owners of the same property agent, contracts and other juridical
does not make them agents to one relationships of the principal with
another third parties.

VICTORIAS MILLING CO. V. C.A ELEMENTS OF SUBJECT MATTER

-basis of agency representation -service, personal obligation TO DO
-Principal, there must be an actual
intention to appoint, derivable from ELEMENTS OF CONSIDERATION
his words and actions Art. 1875
-Agent has the intention to accept -Agency is presumed to be for
the appointment and act on it. compensation, unless there is proof
-ABSENCE= no agency to the contrary.

CAPACITY OF THE PARTIES IN AN ESSENTIAL CHARACTERISTICS

AGENCY ARRANGEMENT OF AGENCY
-Principal may either be a natural or
juridical person -RALLOS V. FELIX GO CHAN &
-Both parties must have a legal SONS REALTY CORP.
capacity to enter into a contract -(NPC PRD)
-If one doesn’t have = voidable 1. Nominate
2. Principal contract
ENTERED INTO THIRD PARTY 3. Consensual contract
1. 4. Personal
-Principal = no legal capacity 5. Representative
-Agent = enters into a contract to 6. Derivative
third party in principal’s name
= voidable and subject for annulment

2. NOMINATE AND PRINCIPAL

Principal = has legal capacity --it can stand on its own without need of
Agent = none, but enters into a another contract
contract with third part
= valid, agent’s incapacity is
irrelevant

Art. 1919 (3) Civil Code CONSENSUAL

-Art. 1869 Art. 1897
Agency may be expressed, or implied from -The agent who acts as such is not
the acts of the principal, from his slice or personally liable to the party with whom he
lack of action, or his failure to repudiate the contracts,
agency, knowing that another person is -unless he expressly binds himself or
acting on his behalf without authority. exceeds the limit of is authority without
Agency may be oral, unless the law requires giving such party sufficient notice of his
a specific form. powers

Art. 1870 -Agents act is the act of principal if acted

Acceptance by the agent may also be within the scope of the authority.
expressed, or implied from his acts which
carry out the agency or from his silence or -Knowledge of the agent is equivalent to
inaction according to the circumstances. knowledge of the principal
XPN:
-Contract of agency is perfected by mere - Agent’s interest are adverse to those
consent of the principal
- Agent’s duty is not to disclose the
information, as where he is informed
UNILATERAL AND PRIMARILY ONEROUS by way of confidential informations
-Onerous in nature where an agent expects - Person claiming the benefit of the
compensation for his services in the form of rule colluded with the agent to
commissions. In the absence of express defraud the principal.
stipulation that it is done for gratuitous one,
it is presumed that the agency is onerous. FIDUCIARY AND REVOCABLE
-When gratuitous, the contract of agency is -fiduciary in character for it is based on trust
a unilateral contract because it only creates and confidence, but this kind of characters
an obligation on the part of the agent. is also revocable
-Even when onerous, it is still considered as
unilateral, because it is only the fulfillment of PREPARATORY AND PROGRESSIVE
the primary obligations of the agent to -Preparatory contract entered into for other
render some service upon which the purposes that deal with the public in a
subordinate obligation of the principal to pay particular manner
the compensation agreed upon arises.

KINDS OF AGENCY
Art. 1875
An agency is either general or special.
-The former comprises all the business of
the principal. The latter, one or more
specific transactions.

PERSONAL, REPRESENTATIVE AND WHETHER OR NOT IT COVERS

DERIVATIVE LITIGATION MATTERS
Attorney-at-Law -essence of this is that the service rendered
- Relationship means the appointment must give rise to the manufacture or
of an agent to represent the principal production of the object agreed upon. No
on legal matters, particularly on element of control
mates pertaining on legal matters.
FROM A MANAGEMENT AGREEMENT
Attorney-in-Fact
- Intended to describe all agents NIELSON & CO. , INC V. LEPANTO
appointed by a principal to act on CONSOLIDATED MINING CO.
juridical relations that have nothing -basis of agency is representation, while in
to do with legal matters and do not the lease of work or service, the basis is
constitute a practice of law on the employment.
part of the agent.
FROM A CONTRACT OF SALE
WHETHER IT COVERS ACTS OF Art. 1466
ADMINISTRATION OR ACTS OF - In construing a contract containing
OWNERSHIP provisions characteristic of both the
contract of sale and of the contract
General Powers of Atty. of agency to sell, the essential
-covers acts of administration, or power to clauses of the whole instrument shall
pursue the ordinary or regular course of be considered.
business of the principal
-General rule is that unless so expressly
stated when an agency is constituted, it only
covers the powers to execute acts of
administrations in relation to the business. FORMALITIES OF AGENCY

AGENCY DISTINGUISHED FROM HOW AGENCY MAY BE CONSTITUTED?

SIMILAR CONTRACTS Art. 1869
-Agency may be expressed, or implied from
FROM AN EMPLOYMENT CONTRACT the acts of the principal, from his silence or
-relationship between capital and labor lack of actions, or his failure to repudiate the
impressed with public interest that labor agency, knowing that another person is
contracts must yield for common good. acting on his behalf without authority.
Agency ay be oral, unless the law requires a
-Purpose of Ee-Er relationship is for the Ee specific form
to render service for the direct benefit of the
Er. No element of representation Art 1870
-While agency relationship is entered into to -Acceptance by the agent may also be
enter into juridical relationship on behalf or express, or implied from his act which
principal with third parties.. carries out the agency, or from his silence or
inaction according to the circumstances.
FROM A CONTRACT FOR A
PIECE-OF-WORK
-Agency is perfected by mere consent, or articles refer to situations where the
merely by the meeting of the minds on the principal delivers his power of attorney to
object. the agent and when the principal transmits
-Required form when: his power of attorney to the agent.
1. Form is required for the validity of -Include electronic documents and
the contract electronic mail under the Electronic
2. Required to make the contract Commerce Law.
effective as against third parties
such as those mentioned in articles PERFECTION OF THE CONTRACT OF
1357-1358 of the Civil Code AGENCY AS IT AFFECTS THIRD
3. Required for the purpose of proving PERSONS.
the existence of the contract, such
as those provided in the statute of Art. 1873
Frauds -If a person specially informs another or
states by public advertisement that he has
given a power of attorney to a third person,
INSTANCES WHEN THERE IS DEEMED the latter thereby becomes duly authorized
TO BE MEETING OF MINDS BETWEEN agent, in the former case with respect to the
THE PRINCIPAL AND THE AGENT person who received the special
information, and in the latter case with
Art. 1871 regard to any person. The power shall
-Between persons who are PRESENT, the continue to be in full force until the notice is
acceptance of the agency may also be rescinded in the same manner in which it
implied if the principal delivers his power of was given.
attorney to the agent and the after recipes it
without any objections. Art. 1921
-if the agency has been entrusted for the
Art. 1872 purpose of contracting with specified
-Between persons who are ABSENT, the persons, its revocation shall not prejudice
acceptance of the agency cannot be implied the latter if they were not given notice
from the silence of the agent, XPN: thereof. (special agency)
1. When the principal transmits his
power of attorney to the agent, who Art 1922
receives it without any objection -if the agent had general powers, revocation
of the agency does not prejudice third
2. When the principal entrusts to him persons, who acted in good faith and
by letter or telegram a power of without knowledge of the revocation. Notice
attorney with respect to the business of the revocation in a newspaper of general
in which he is habitually engaged as circulation is a sufficient warning to third
an agent and he did not reply to the person. (general agency)
letter or telegram.

-Power of Attorney must constitute a written PAGE 73 VILLANUEVA, TO BE

instrument, because in both cases the CONTINUED
POWER AND AUTHORITY, DUTIES AND OBLIGATION OF AGENT WHO DECLINES
OBLIGATIONS, RIGHTS OF THE AGENT AGENCY

GENERAL OBLIGATION OF AGENT WHO Art. 1885

ACCEPTS THE AGENCY -In case a person declines an agency, he is
Art. 1884 bound to observe the diligence of a good
-The agent is bound by his acceptance to father of a family in the custody and
carry out the agency and is liable for the preservation of the goods forwarded to him
damages which through his by the owner until the latter should appoint
non-performance, the principal may suffer. an agent, the owner shall sa soon as
-He mus also finis the business already practicable either appoint an agent or take
begun on the death of the principal, should charge of the goods.
delay entail any danger.
-person declines, no contract of agency
-In essence one’s an agent accepts the arises and thereby no obligation is assumed
principal’s appointment, the agent is bound by such person to the offeror.
to comply with his duty of diligence or care. XPN: he is bound to observe the diligence
of a good father of a family in the custody
-If the agent refuses to copley with his and preservation of the goods forwarded to
obligations the remedy of the principal is to him by the owner until the latter should
sue him for damages. appoint an agent.
-Agent’s liability to damages is within the -can only cover a “reasonable period”
terms of Art. 1170 which provides that:
-those who in the performance of their GENERAL RULE ON AGENT’S POWER
obligations are guilty of fraud, negligence or AND AUTHORITY
delay and those who in any manner
COTTOTO are liable of damages. Art. 1881
-Agent must act within the scope of his
MEASURE OF DAMAGE FOR AGENT’S authority. He may do such acts as may be
NON-PERFORMANCE conducive to the accomplishment of the
- SC held that the burden is on the purpose of the agency.
person who seeks to make an agent
liable to show that the losses and Art. 1882
damage cause were occasioned by -The limits of the agent’s authority shall not
the fault or negligence of the agent be considered exceeded should it have
- Mere allegation without been performed in a manner more
substantiation is not enough. advantageous to the principal than that
specified by him.
Art. 1887 - Art. 1898 provides that if the agent
-In the execution of the agency, the agent contracts in the name of the principal,
shall act in accordance with the instructions exceeding the scope of his authority, and
of the principal. In default thereof, he shall the principal does not ratify the contract, it
do all that a good father of a family would shall be VOID. if the party with whom the
do, as required by the nature of the agent contracted is aware of the limits of the
business. powers granted by the principal.

Art. 1888 DUTY OF DILIGENCE

-An agent shall not carry out an agency if its -shall do all the good father of a family
execution would manifestly result in loss or would do, as required by the nature of the
damage to the principal. business.

Art.1889 MEASURE OF LIABILITY FOR BREACH

-The agent shall be liable for damages if, OF DUTY OF DILIGENCE
there being a conflict between his interest - Agent violates his duty of diligence,
and those of the principal, he should prefer he becomes personally liable to the
his own. principal for the damages caused to
the principal by reason of his fraud
Art. 1899 or negligence.
-if a duly authorized agent acts in - Agent acts in accordance with the
accordance with the orders of the principal, instructions of the principal, agent
the latter cannot set up the ignorance of the cannot be deemed to have acted in
agent as to circumstance whereof he fraud against the principal or to have
himself, was or ought to have been aware. acted negligently, even when
damage was caused to the principal.
DUTY OF OBEDIENCE
-one factor which most clearly distinguishes RESPONSIBILITY FOR FRAUD OR
agency from other legal concepts is NEGLIGENCE
CONTROL = the agent - agrees to act Art. 1909
under the control of another. -The agent is responsible not only for fraud,
-Indeed, the very word agency has to come but also for negligence, which shall be
to connote control by the principal. judged with more or less rigor by the courts,
according to whether the agency was or
LEGAL CONSEQUENCE OF BREACH OF was not for compensation.
DUTY OF OBEDIENCE
1. The agent becomes personally liable (Tan Tiong Teck v. SEC)
for damages -the client order the broker to sell the shares
2. The principal is not personally bound giving a floor or minimum price, and the
by the terms of such contract or broker did sell at the minimum price
transactions. indicated even though the prevailing ranging
3. It would then be the agent who may princess were much higher that they, the
become personally liable for the broker was liable for the difference suffered
contract or transaction. by the principal because the broker failed to
exercise the prudence and tact of a good judicial auction, either in person or through
father of a family which the law required of the mediation of another:
him.
2.) Agents, the property whose
DUTY OF LOYALTY IN GENERAL administration or sale ebay have been
Art. 1889 entrusted to them, unless the consent of the
-The agent shall be liable for damages if, principal has been given.
there being a conflict between his interest
and those of the principal, he should prefer Art. 1492
his own. - The prohibitions in the two preceding
articles are applicable to sales in legal
-agency relation is essentially fiduciary in redemption, compromises and renunciation
character, that requires the agent to observe
utmost good faith and loyalty to the - even when the agent is authorized to sell
principal. the property, and he sells it to himself for
-conflict of interest arises, and the agent valuable consideration but without the
prefers his own interest to the detriment of consent of the principal, the sale would be
the principal, making the former liable for void.
damages suffered by the principal.
-In Corporate law, when a director or officer WHEN THE AGENT EMPOWERED TO
violates his duty of loyalty, he is bound to BORROW OR LEND MONEY
digorge to the corporation all the profits and Art. 1890
earnings he obtains from his breach of duty, -if the agent has been empowered to borrow
even when he used his own capital or fund money, he may himself be the lender at the
for the contract or transaction. Claw-back current rate of interest. If he has been
doctrine. authorized to lend money at interest, he
cannot borrow it without the consent of the
.WHEN AGENT CONTRACT IN HIS OWN principal.
NAME ON A MATTER THAT FALLS
WITHIN THE SCOPE OF THE AGENCY. - Violation of this provision if in case
the agent is the borrower at the
-Art. 1883 provides that if an agent acts in current rate, the difference would
his own name, the principal has no rights of have to be returned to the principal.
acting against the person with whom the - If the agent borrows for
agent has contracted. himself,without the principal’s
XPN: when the contract involves things consent, the money which the
belonging to the principal. principal has authorized him to lend
out, he would not only be liable for
PARTICULAR RULES ON the current interest that the principal
CONFLICT-OF-INTEREST SITUATIONS would have earned, also the
damages the principal would have
.Purchase of Principal’s Authority suffered.
Art. 1491 The following persons cannot
acquire by purchase, even at a public or
 - Hodges v. Salas and Salas provides - The provision dictates that
that the lender who lends money to advancing funds by the agent is only
the agent knowing that is for through stipulation. The latter may
personal purpose and not for the refuse to advance if the principal is
principals account, is a mortgagee in insolvent. Art. 1919 (3) of the New
bad faith and cannot foreclose on Civil Code, insolvency of the
the montage thus constituted for the principal extinguishes the agency.
account of the agent.
2.) LIABILITY OF THE AGENT FOR
.OBLIGATION TO RENDER AN ACCOUNT INTEREST
AND TURN-OVER TO PRINCIPAL WHAT
IS RECEIVED BY VIRTUE OF THE Art. 1896
AGENCY -The agent owes interest on the sums he
has applied to his own use from the day on
Art. 1891 which he did son, and on those which he
-Every agent is bound to render an account still owes after the extinguishment of the
of his transactions and to deliver to the agency.
principal whatever he may have received by
virtue of the agency, even though it may not POWER OF THE AGENT TO APPOINT A
be owing to the principal. Every stipulation SUBSTITUTE
exempting the agent from the obligation to
render an account shall be void. Art. 1892
-the agent may appoint a substitute if the
Domingo v. Domingo principal has not prohibited him from doing
- Explained that the term to deliver is so; but he shall be responsible for the acts
more comprehensive. It also noted of the substitute:
that the second paragraph of the
Article 1891 which declared void any 1. When he was not given the power to
stipulation seeking to exempt an appoint one;
agent from the obligation to render 2. When he was given such power, but
an account, is a new addition without designating the person, and
designed to stress the highest the person appointed was
loyalty that is required to an agent. notoriously incompetent or insolvent
All acts of the substitute appointed against
SPECIFIC OBLIGATION RULES ON the prohibition of the principal shall be void.
FUNDS
Art. 1893
1.) OBLIGATION TO ADVANCE FUNDS -In the cases mentioned in Nos. 1 and 2 of
Art. 1886 the preceding article, the principal may
-should there be a stipulation that the agent furthermore bring an action against the
shall advance the necessary funds, he shall substitute with respect to the obligation
bound to do so which the latter has contracted under the
-XPN: when the principal is insolvent substitution.
CONSIDERATION OF THE FIDUCIARY diligence and prudence to ascertain
DUTIES OF THE AGENT AS TO THIRD whether the agentacts within the
PARTIES. scope of his authority.

Art. 1900 EFFECTS ON THE AGENT OF

-So far as third persons are concerned, asn CONTRACTS ENTERED INTO WITHIN
act is deemed to have been performed THE SCOPE OF HIS AUTHORITY.
within the scope of the agent’s authority, if
such act is within the terms of the power of Art. 1897
attorney, as written even if the agent has in -The agent who acts as such is not
the fact exceeded the limit of his authority personally liable to the party with whom he
according to an understanding between the contracts, unless he expressly binds himself
principal and the agent. or exceeds the limits of his authority without
giving such party sufficient notice of his
Art. 1901 powers.
-A third person cannot set up the fact that
the agent has exceeded his powers, if the Art. 1910
principal has ratified, or has signified his -the principal must comply with all the
willingness to ratify the agent’s acts. obligations which the agent may have
contracted within the scope of his authority.
Art. 1902 -As for any obligation wherein the agent
-A third person with whom the agent wishes exceeded his power, the principal is not
to contract on behalf of the principal may bound except when he ratifies it expressly
require the presentation of the power of or tacitly.
attorney, of the instructions as regards the
agency, Private or secret orders and GENERAL RULE: AGENT IS NOT
instructions of the principal do not prejudice PERSONALLY LIABLE TO THIRD
third persons who have relied upon the PARTIES.
power of the attorney or instructions shown
to them. XPN:
a. When the agent expressly makes
Art. 1911 himself personally liable
-Even when the agent has exceeded his b. When the agent is guilty of fraud or
authority, the principal is solidarily liable with negligence
the agent if the former allowed the latter to Art. 1909
act as though he had full powers. -The agent is responsible not only
for fraud, but also for negligence,
- Litonjua v. Fernandez said that a which shall be judged with more or
person dealing with a known agent less rigor by the courts, according to
is not authorized, under any whether the agency was or was not
circumstances, to blindly trust the for compensation.
agent.
- Such perrson must not act
negligently but ust use reasonable
 EFFECTS OF ACTS DONE BY CONSEQUENCES WHEN AGENT ACTS
AGENT WITHOUT AUTHORITY OR IN HIS OWN NAME
IN EXCESS OF HIS AUTHORITY.
Art. 1883
Art. 1898 -if an agent acts in his own name, the
-If the agent contracts in the name of principal has no right of actions against the
the principal, exceeding the scope of person with whom the agency has
his authority, and the principal does contracted; neither have such persons
not ratify the contract against the principal.
-it shall be void -in such case the agent is the one directly
-if the party with whom the agent bound in favor of the person with whom he
contracted is aware of the limits of has contracted, as if the transaction were
the powers granted by the principal, his own, except when the contract involves
In this case, however, the agent is things belonging to the principal.
liable if he undertook to secure the
principal’s ratification. REMEDY OF THE PRINCIPAL IS TO
RECOVER DAMAGES FROM THE AGENT
a. GENERAL RULE: - Art. 1883 NCC makes it clear that
-The principal is not liable; the foregoing rules are without
Agent may be liable prejudice to actions between
Art. 1317 principal and agents.
-No one may contract in the - Beaumont v. Prieto held that when
name of another without the agent acts in his own name he is
being authorized by the not personally liable to the person
latter, or unless he has by with whom he enters into a contract
law a right to represent him. when thing belonging to the principal
b. XPN are the subject thereof; yet such
1. When the principal may be bound: person has a right of action not only
-When he ratifies the contract or against the principal but also against
transactions the agent, when the rights and
-As to the third parties who relied obligations which are subject matter
upon the terms of the power of of the litigation cannot be legally and
attorney as written, even if in fact the judicially determined without hearing
agent had exceeded the limits of his both of them.
authority according to an
understanding between the principal WHEN TWO OR MORE AGENTS
and the agent. APPOINTED BY SAME PRINCIPALS

Art. 1894 provides for the rules of

responsibility of two or more agents serving
the same principal, even when they have
een appointed simultaneously
- Joint when nothing is stipulated
- Solidary, only when so stipulated
WHEN THE THIRD PARTY LIABLE TO
THE AGENT
-Not sell on credit without principal’s
A. Agent contract in his own name, on authorization
a matter that it within the scope of Art. 1905 NCC if the commission
the agency (1883) agent sells on credit, the principal
B. Agent possesses a beneficial may still demand from his payment
interest in the subject matter of the in cash, but the agent shall be
agency such as a factor selling entitled to any interest or benefit
under the del credere commission which may result from such sale.
(1907)
C. Third party commits a tort against -To inform the principal of every
the agent. pre-authorized sale on credit
Art. 1906
-agent sell on credit with authority of
SPECIFIC OBLIGATION RULES FOR the principal, the agent shall inform
COMMISSION AGENTS the principal with a statement of the
names of the buyers, if he fails to do
1. NATURE OF FACTOR OR so, the sale shall be deemed to have
COMMISSION AGENT been made for cash insofar as the
-Is one who receives and sells principal is concerned.
goods for a commission
-usually selling in his own name. -To bear the risk of collection under
Del Credere commission set up
2. SPECIFIC OBLIGATION OF A Art. 1908
COMMISSION AGENT -should the commission agent
-To take custody of the goods. receive on a sale, i addition to the
Art. 1903 NCC custody in terms and ordinary commission, another called
conditions and as described in the a guarantee commission, then:
consignment, unless upon receiving a. He shall bear the risk of
them he should make a written collection;
statement of the damage and b. He shall pay the principal the
deterioration suffered by the same. proceeds of sale on the
same terms agreed with the
-Not to commingle similar goddess purchaser
belonging to different principals
Art. 1904 NCC, a commission agent - To collect credits of the Principal
who handles goods of the same kind Art 1908
and mark, which belong to different -commission agent who does not
owners, shall distinguish them by collect the credits at the time when
countermarks. they become due and demandable
shall be liable for damages, unless
he proves that he exercised due
diligence for that purpose.
-To return goods unsold OBLIGATION OF THE PRINCIPAL
TO THE AGENT

OBLIGATIONS OF THE PRINCIPAL 1. TO PAY THE AGENT’S

COMPENSATION
.PRINCIPAL BOUND BY THE -shall be in accordance with
CONTRACTS MADE BY THE the terms agreed upon when
AGENT IN HIS BEHALF the agency was constituted.
If no particular formula, then
Art. 1910 the following rules shall
-the principal must comply with all apply:
the obligations which the agent may a. Pay the agent’s
have contacted within the scope of commission only on
his authority. the legal basis that
-agent exceeded, principal is not the agent has
bound XPN: when ratifies it complied with his
expressly and tacitly. obligations with the
principal
Art.1897 b. For the reasonable
-agent which acts as such is not value of the agent’s
personally liable with the party he services.
contracts, UNLESS he expressly
binds himself or exceeds the limits of 2. TO ADVANCE SUMS REQUESTED FOR
his authority without giving such EXECUTION OF THE AGENCY
party sufficient notice of his powers. Art. 1912
-The principal must reimburse him therefor,
WHEN THE PRINCIPAL IS BOUND even if the business or undertaking was not
BY THE ACTS DONE OUTSIDE successful, PROVIDED the agent is free
THE SCOPE OF AUTHORITY from fault.

Art. 1910 WHEN THE AGENT IS NOT LIABLE TO

-the principal must comply with all REIMBURSE AGENT FOR HIS
the obligations which the agent may EXPENSES
have contacted within the scope of Art. 1918
his authority. -agent acted in contravention of the
-agent exceeded, principal is not principal’s instructions
bound XPN: when ratifies it -due to fault of the agent
expressly and tacitly. -agent incurred them with knowledge that
an unfavorable result would ensure, if the
Art. 1911 principal is not aware.
-Even when the agent exceeds, the -stipulated that the expresses would be
principal is solidarily liable with the borne by the agent, or that the latter would
agent IF the former allowed the latter be allowed only a certain sum.
to act as though he had full powers.
3. TO INDEMNIFY THE AGENT FOR HE preferred without prejudice to the provisions
DAMAGES SUSTAINED of Art. 1544
Art. 1913
-also indemnify the agent for all the Art. 1917
damages XPN: the agent should not caused -in the case of the preceding article if the
fault or negligence agent has acted in good faith , the principal
shall be liable in damages to the third
RIGHT OF AGENT TO RETAIN OBJECT person whose contract must be rejected, if
OF AGENCY IN PLEDGE FOR ADVANCES the agent acted in bad faith, he alone shall
AND DAMAGES be responsible.
Art. 1914
-may retain in pledge the things which are
the object of the agency UNTIL the principal EXTINGUISHMENT OF AGENCY
effects the reimbursement and pays the
indemnity set fort in the two preceding HOW AND WHEN AGENCY IS
articles. EXTINGUISHED
Art. 1919 (RWD DAE)
- An XPN to Art. 1891 which is to -revocation
deliver to the principal everything he -withdrawal of the agent
received even if not due to the -death, civil interdiction, insanity or
principal. insolvency of the principal or of the agent
-dissolution of the firm or corporation which
OBLIGATION OF TWO OR MORE entrusted or accepted the agency
PRINCIPALS TO AGENT APPOINTED -accomplishment
FOR COMMON TRANSACTIONS -expiration of the period for which the
Art. 1915 agency was constituted
-they shall be solidarily liable to the agent
for all the consequences of the agency. PRINCIPAL’S REVOCATION OF THE
AGENCY
- The rule in this article applies even Art. 1920
when the appointments were made -revoke at will, and compel the agent to
by the principles in separate acts, return the document evidencing the agency.
provided that they are for the same -revocation may be express or implied
transaction.
Art. 1925
RIGHTS OF PERSONS WHEN FACED -two or more principal have granted a power
WITH CONFLICTING CONTRACTS of attorney for a common transaction
Art. 1916 -any of them may revoke the same without
-when two persons contract with regard to the consent of the others.
the same thing, one of them with the agent
and the other with the principal
-and the two contracts are incompatible with
each other, that of prior date shall be
EXPRESS REVOCATION REVOCATION ON THE BASIS OF
Art. 1921 BREACH OF TRUST.
-its revocation shall not prejudice the latter if
they were not given notice thereof. Barretto v. Santa Maria
-held that the time during which the agent
Art. 1922 may hold his position is indefinite or
-if the agent had general powers, revocation indeterminate when no period has been
of the agency does not prejudice a third fixed in his commission and so long as the
person who acted in good faith without confidence reposed in him by the principal
knowledge of the revocation. exist; but as soon as this confidence
-Notice of the revocation in a newspaper of disappears the principal has a right to
general circulation is a sufficient warning to revoke the power he conferred upon the
third person. agent, especially when the latter has
resigned his position for good reasons.
- Agent fails or refuses to return the
power of attorney, it is incumbent EFFECTS OF REVOCATION ON THIRD
upon the principal to give proper PARTIES
notice to the members of the public
who may be affected by the WHEN IT AFFECTS DEALING WITH
revocation. SPECIFIED THIRD PARTIES
Art. 1921
IMPLIED REVOCATION -shall not prejudice the latter if they were not
Art. 1923 given notice thereof.
-appointment of new agent for the same
business or transaction revokes the REVOCATION OF GENERAL POWER OF
previous agency ATTORNEY
-from the day on which notice thereof was Art. 1922
given to the former agent, without prejudice -notice of the revocation in a newspaper of
to the provisions of the two preceding general circulation would be sufficient
articles. warning to third persons.

Art. 1924 REVOCATION OF SPECIAL POWERS OF

-principal directly manages the business ATTORNEY
-directly with third persons PNB v. Intermediate Appellate Court
-requires that the contracts involving real
Art. 1926 poetry must appear in a proper document, a
-A general power of attorney is revoked by a revocation of a special power of attorney to
special one granted to another agent, as mortgage a parcel of land, embodied in a
regards the special matter involved in the private writing, is valid and binding.
latter.
IRREVOCABLE AGENCIES WHEN THE AGENCY CONTINUES DEATH
Art. 1927 OF PRINCIPAL
-if a bilateral contract depends upon it, or if Art. 1930
it is the means of fulfilling an obligation -shall remain in full force and effect even
already contracted or if a partner is after the death of the principal, if it has been
appointed manager of a partnership in the constituted in the common interest of the
contract of partnership and his removal from latter.
the management is unjustifiable.
EFFECT OF ACTS DONE BY AGENT
- Agency coupled with interest WITHOUT KNOWLEDGE OF PRINCIPAL’S
- Valenzuela v. CA is a clear DEATH
illustration of the situation that where Art. 1931
the appointment of the agent is not -is valid and shall be fully effective with
merely for the benefit of the respect to third person who may have
principal, but allows the agent to contracted in good faith.
build business interest that would
yield him gains in terms of Buasson v. Panuyas the validity of the sale
commission on long-term basis, of the land affected by the agent after the
such as in the case of an insurance death of the principal, when no evidence
agent, the same is deed an agency was adduced to show that at the time of
coupled with an interest and cannot sale both agents the buyers were unaware
just be revoked. of the death of the principal.

DEATH, CIVIL INTERDICTION,

WITHDRAWAL OF THE AGENT FROM INCAPACITY OR INSOLVENCY OF THE
THE AGENCY AGENT
Art.1928 Art. 1932
-by giving due notice to the principal. If the If the agent dies, his heirs must notify the
latter should suffer any damage by reason principal thereof, and in the meantime adopt
of the withdrawal, the agent must indemnify such measures as the circumstances may
him therefore, unless the agent should base demand in the interest of the latter.
his withdrawal upon the impossibility (legal
and physical) of continuing the performance IN CASE OF MULTIPLE AGENTS.
of the agency without grave detriment to -the death of one or more, but not all of
himself. them would extinguish the agency.

Art. 1929 DISSOLUTION OF A CORPORATION

-the agents, even if he should withdraw from -extinguishes its juridical personality for
the agency for a valid reason, must continue every purpose that it seeks to pursue new
to act until the principal has had a business or that of a going concern.
reasonable opportunity to take the
necessary steps to meet the situation.
OBLIGATION OF AGENT WHEN THE
AGENCY IS EXTINGUISHED.
-the agent is bound to keep confidential
such matters and information which he
learned in the course of the agency when
the nature of such matter or information is
confidential, such as business secrets.