Professional Documents
Culture Documents
Introduction
Formerly, a distinction was made between
commercial agency and civil agency. The
commercial agency was governed by the
Code of Commerce and the Civil Agency
was governed by the Spanish Civil Code.
With the enactment of Republic Act No.
386, otherwise known as the New Civil
Code od the Philippines, the distinction
was removed, for the provisions of the
Code of Commerce on Agency were
repealed. Presently, the law that governs
agency is the New Civil Code particularly
Articles 1868 to 1932 inclusive.
GENERAL PROVISIONS
Define Agency (MANDATO):
Agency is a contract whereby a
person binds to render some service or
to do something in representation or on
behalf of another, with the consent or
authority of the latter. (Art. 1868)
GENERAL PROVISIONS
Observations: Definition is very broad
and therefore defective. As worded,
the definition includes relationship of
master and servant of employer and
employee of lessor and independent
contractor.
The servant, the employee and the
independent contractor all render
some work or service in
representation or on behalf of
another.
GENERAL PROVISIONS
NOTE: What the agent really does for
the principal is a JURIDICAL ACT, and
not merely a material one.
In other words, while an agent may
exercise discretionary powers, the
lessees of service ordinarily performs
only ministerial functions.
GENERAL PROVISIONS
Justice JBL Reyes: The true essence
of the definition, it is submitted lies
in that the agent enter or is
designed to enter judicial relations,
with or without representation of the
principal.
GENERAL PROVISIONS
Agency is also a representation relation.
Representation constitutes its basic. By
this legal fiction of representation, the
actual absence of the principal is
transferred into legal fiction of
representation, the actual absence of
the principal is transferred into legal
or judicial presence.
GENERAL PROVISIONS
Importance:
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 at the same time.
GENERAL PROVISIONS
Purpose and Nature of Agency:
The purpose is to extend the
personality of the principal.
It enables the activity of man
which is naturally limited in its
exercise by impositions of his
physiological conditions to be
extended, permitting him to
perform diverse juridical acts at
the same time in different places.
GENERAL PROVISIONS
Basis of Agency
is
REPRESENTATION.
GENERAL PROVISIONS
Nature:
The relation is fiduciary in character
since it is based on trust and
confidence. Hence the agent is
estopped from asserting or acquiring
a title to the subject matter of the
agency adverse to that or the
principal.
GENERAL
PROVISIONS
Parties to a Contract of Agency:
Principal (Mandante) one whom
the agent represent and from
whom he derives his authority, he
is the person represented; and
Agent (Mandatario) one who acts
for and represents another; he is
the person acting in a
representative capacity.
GENERAL
PROVISIONS
Who may be a principal?
Any person who is legally competent to
act for himself may act through an
agent. This is based on the general
principle that whatever a person may
do personally, he may do through
another. This is not absolute though,
because there are certain acts which
are as such of personal nature and
they cannot be delegated or that the
law prohibits it.
GENERAL
PROVISIONS
Some of these acts which cannot
be performed by an agent are:
Voting in national or local elections,
executing a will, the making of
affidavit, right to be represented
in marriage and attending a board
of directors meeting (Sec. 25 of
the Corp. Code)
GENERAL
PROVISIONS
Who may act as agent?
It also follows that if a person is
legally competent to enter into any
contract, he can also enter into a
contract for and on behalf of
another. It is generally held that
the agent need not be absolutely
legally capacitated to qualify as an
agent.
GENERAL
PROVISIONS
Ordinary intelligence is sufficient
qualification. Thus a minor may
be appointed as an agent, for
when he acts, provided, he keeps
himself within the scope of his
authority, the act is not
considered as his but his principal.
Of course an idiot, insane person
or a very young child cannot act
as an agent.
GENERAL
PROVISIONS
Example:
P appointed A, a minor, to sell his car
for Php 50,000. A not knowing that
he is not capacitated sold the car
following the orders of P to C. for Php
50,000. P later on cannot annul the
sale by claiming that the agent was
incapacitated, a circumstance whereof
he himself was, or ought to have been
aware. See (Article 1899)
GENERAL PROVISIONS
5.vAgent discloses his principal or
acts in behalf of the principal
6. Cause is for compensation as a
general rule
GENERAL
PROVISIONS
CHARACTERISTIC AS A
CONTRACT;
Nominate
Consensual
Preparatory
Informal
Personal
Representative
Derivative
GENERAL
PROVISIONS
How is agency created?
a.By appointment - usually made by
giving a person a power of attorney
b.By ratification created when a
person adopts or confirms an act
performed by another in his behalf
without prior authority.
GENERAL
PROVISIONS
c. By estoppel created when a person
willfully, negligently or by his silence
leads another to believe that a certain
person is his agent when no agency
relationship exists. Hence principal is
precluded from denying the existence
of agency
d. By necessity arises when the
emergency makes it necessary for one
to act for another with receiving any
authority from the latter.
GENERAL PROVISIONS
Article 1869
Different Kinds or Classification of
Agency:
As to form:
Oral valid unless the law
requires specific form
GENERAL PROVISIONS
Written
a. Those that require a SPA under
Article 1878 otherwise the act
performed cannot be enforced
against the principal if not in a
special power of attorney
b. When the sale is of a piece of
land or an interest therein made
through agent, the authority of the
agent must be in writing, otherwise
the sale is void. (Art. 1874).
GENERAL PROVISIONS
As to the manner of creation:
Express- one where the agent has
been actually authorized by the
principal either orally or in writing;
Implied one, which implied from
the
a) acts of the principal,
b) from his silence or
c) lack of action, or
d) his failure to repudiate the
agency.
GENERAL PROVISIONS
As to cause:
Onerous or compensated one
where the agent receives
compensation for his services.
Agency is presumed to be for
compensation. (art. 1875)
Gratuitous one where the agent
receives no compensation.
GENERAL PROVISIONS
As to extent of business covered:
General one which comprises all
business of the principal (art.
1876); or
Special one which comprises one
or specific transactions;
GENERAL PROVISIONS
As to authority conferred:
Couched in general terms one
which is created in general terms
and is deemed comprise only acts
of administration (art. 1877)
Couched in specific terms one
authorizing only one performance
of a specific act or acts (art.
1878)
GENERAL PROVISIONS
As to its nature and Effects:
Ostensible or representative
one where the agent acts in the
name and representation of the
principal (art. 1878)
Simple or commission one
where the agent acts for the
account of the principal but in
his own name;
GENERAL
PROVISIONS
Distinguish Agency from Loan:
In loan, a borrower is given money
(a) for purpose of his own, in
agency, to advance principals
business and he must generally
return it whether or not his
business is successful.
GENERAL
PROVISIONS
Distinguish Agency form lease of
service:
The basis of lease of service is
employment and the lessor (like a
servant ordinarily performs only
ministerial (not discretionary
powers) functions.
GENERAL
PROVISIONS
Distinguish Agency from contract
for a piece of work:
The independent contractor
exercise his employment
independently and not in
representation of the employer.
GENERAL
PROVISIONS
Distinguish Agency from
partnership:
A partner acts not only for his
co-partners and the partnership
but also as a principal for himself
(in agency, agent acts only for
his principal).
GENERAL PROVISIONS
Distinguish Agency from negotiorum
gestio:
Negotiorum gestio is a quasicontract; the getio acts authority
and knowledge of the owner of the
property or business although
according to his presumed (not
express) will by exercising all the
diligence of a good father of a
family. (art. 2145. In both
however, there is representation.
GENERAL
PROVISIONS
Distinguish Agency from sale;
In sale (as distinguished from
agency to sell, the buyer receives
the goods as owner, pays the price
(the agent deliver the proceeds of
the sale to the principal), can deal
with the thing as he pleases being
the owner (the agent, according to
the instructions of the principal)
and as a general rule, cannot return
the object sold.
GENERAL
PROVISIONS
GENERAL
PROVISIONS
Articles 1870 to 1872
Acceptance is either
Express orally or in writing
Implied a) from agents acts
which carry out the agency or
b) from his silence or inaction
according to the circumstances
GENERAL
PROVISIONS
Cases of Implied acceptance
When is there implied acceptance
of an agency by an agent?
As between person present If the
principal (personally) delivers his
power or attorney to the agent and
the latter receives it without any
objection. (art 1871)
GENERAL
PROVISIONS
As between persons absent
When the principal transmits the
power of attorney to the agent, who
receives it without any objection;
When the principal entrust to him
by letter or telegram a power of
attorney with respect to the
business in which he is habitually
engaged as an agent, and he did not
reply to the letter or telegram
(Art. 1872)
GENERAL
PROVISIONS
Art. 1873.If a person specially
informs another or states by public
advertisement that he has given a
power of attorney to a third
person, the latter thereby becomes
a duly authorized agent, in the
former case with respect to the
person who received the special
information, and in the latter case
with regard to any person.
GENERAL
PROVISIONS
Informing other people of the
existence are in two ways:
a)Special information
b)Public advertisement.
c)According to Justice JBL Reyes to
forestall fraud, the following
paragraph must be added to Article
1873, But revocation made in any
manner shall be effective against all
persons having actual knowledge
thereof.
GENERAL
PROVISIONS
The power shall continue to be in
full force until the notice is
rescinded in the same manner in
which it was given.
GENERAL
PROVISIONS
Meaning of Power of Attorney
GENERAL
PROVISIONS
GENERAL
PROVISIONS
As between the principal and the
agent:
In implied agency, the agent is
GENERAL
PROVISIONS
As to third persons:
If the estoppel is caused by the
principal, he is liable, but only if
the third person relied on
misrepresentation in an implied
agency, the principal is always
liable.
GENERAL
PROVISIONS
If the estoppel is caused by the
agent, it is only agent who is
liable, never the alleged principal;
in an implied agency, the agency
is never personally liable.
GENERAL
PROVISIONS
Art. 1874.When a sale of a piece of
land or any interest therein is
through an agent, the authority of
the latter shall be in writing;
otherwise, the sale shall be void.
GENERAL
PROVISIONS
Art. 1875.Agency is presumed to
be for a compensation, unless there
is proof to the contrary. (n)
Art. 1876.An agency is either
general or special.
The former comprises all the
business of the principal. The
latter, one or more specific
transactions.
GENERAL
PROVISIONS
Art. 1877.An agency couched in
general terms 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 and unlimited
management.
GENERAL
PROVISIONS
Legal effect of an agency couched in
general terms:
Such an agency comprises only acts of
administration, (a) even if the principal
should state that the he withholds no
power, or (b) that the agent may execute
such acts as he may consider appropriate
(c) even though the agency should
authorize a general and unlimited
management. (art. 1877)
GENERAL
PROVISIONS
Examples of Acts of Mere
Administration
To sue for the collection of debts.
To employ workers or servant and
employees needed for the conduct
of a business.
GENERAL
PROVISIONS
To engage counsel to preserve the
ownership and possession of the
principals property.
To lease real property to another
for one year or less provided the
lease is not registered . (see Art.
1878 No. 8 by implication)
GENERAL
PROVISIONS
To make customary gifts for
charity or to employees in business
managed by the agent (see Art.
1878, No. 6)
To borrow money if it urgent and
indispensable for the preservation
of the thing under administration
(see Art. 1878, No.7)
GENERAL
PROVISIONS
Art. 1878.Special powers of
attorney are necessary in the
following cases:
(1) To make such payments as are not
usually considered as acts of
administration;
(2) To effect novations which put an
end to obligations already in existence
at the time the agency was
constituted;
GENERAL
PROVISIONS
(3) To compromise, to submit
questions to arbitration, to renounce
the right to appeal from a judgment,
to waive objections to the venue of an
action or to abandon a prescription
already acquired;
(4) To waive any obligation
gratuitously;
GENERAL
PROVISIONS
(5) To enter into any contract by
which the ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration;
GENERAL
PROVISIONS
(6) To make gifts, except customary
ones for charity or those made to
employees in the business managed
by the agent;
(7) To loan or borrow money, unless
the latter act be urgent and
indispensable for the preservation of
the things which are under
administration;
GENERAL
PROVISIONS
(8) To lease any real property to
another person for more than one
year;
(9) To bind the principal to
render some service without
compensation;
GENERAL
PROVISIONS
(10) To bind the principal in a
contract of partnership;
(11) To obligate the principal as a
guarantor or surety;
GENERAL
PROVISIONS
(12) To create or convey real
rights over immovable property;
(13) To accept or repudiate an
inheritance;
GENERAL
PROVISIONS
(14) To ratify or recognize
obligations contracted before the
agency;
(15) Any other act of strict
dominion.
GENERAL
PROVISIONS
Reasons:
1.Art. 1878 pars. 1, 2,3 & 9
Acts of strict dominion
2.Pars. 4, 5, 6 gratuitous contracts
3.Pars. 7,8, 11, 12, 13 & 14 Based on trust or confidence is the
essence of the agreement
GENERAL PROVISIONS
A special power to sell excludes the to
mortgage; and a special power to
mortgage does not include the power
to sell. (Art. 1879).
GENERAL
PROVISIONS
Power to sell carries with it the power to
find a purchaser or to sell directly; power to
deliver the property, power to make the
usual representation and warranty; power to
execute the necessary documents; power to
fix the terms of the sale, including the
time, place, mode of delivery, price of the
goods, and the mode of payment unless
there be a set conditions stipulated by the
principal; and power to sell only for CASH
and power to receive the price unless he was
authorized to only solicit orders.
GENERAL
PROVISIONS
The power to sell does not carry with it
the power to barter or to exchange to
mortgage or to pledge.
The power to mortgage does not include
the power to sell; or to execute a
second mortgage; to mortgage for the
agents personal benefit of any third
person, unless the contrary has been
clearly indicated.
GENERAL
PROVISIONS
GENERAL
PROVISIONS
Meaning of Compromise- It is a contract
whereby the parties, by entering
reciprocal concessions, avoid a litigation
or put an end to one already
commenced. (Art. 2042, CC)
Arbitration means parties submitted
their controversies to one or more
arbitrators for decision.
GENERAL
PROVISIONS
Art. 1881.Art. 1881. The agent must
act within the scope of his authority.
He may do such acts as may be
conducive to the accomplishment of the
purpose of the agency.
Authority?
Whose
behalf?
Status of
Contract
With
Principals
authority
Valid
With
Own
authority
Depends.
[1883]
Without
Principals
Unenforceable
Without
Own
Valid
GENERAL
PROVISIONS
Art. 1882.Art. 1882. The limits of the
agents authority shall not be
considered exceeded should it have
been performed in a manner more
advantageous to the principal than that
specified by him.
GENERAL PROVISIONS
Requisites in order the agent can
bind the principal:
The agent must act within the scope
of his authority, and
The agent act in behalf of the
principal (see Art. 1881, 1882)
GENERAL PROVISIONS
Cases wherein the principal may still
be bound by the acts of an agent
who exceeded his authority:
Where the principals act have
contributed to deceive a third
person in good faith (see Art. 1911
Where the limitations upon the
power created by him could not
have been known by the third
person (see Art. 1900)
GENERAL PROVISIONS
Where the principal has placed
in the hands of the agent
instruments signed by him in
blank; and
Where the principal has
ratified the acts of the agent.
(Art. 1901)
GENERAL PROVISIONS
The agent is one directly
liable to the person with
whom he had contracted
as if the transaction were
his own. Therefore, the
principal and such person
have no right of action
against each other.
GENERAL PROVISIONS
The exception is:
GENERAL PROVISIONS
This article speaks of a case
where the agent was
authorized, but instead of
acting in behalf of the
principal, he acts in his own
behalf. Thus, Art. 1883
does not apply if the agent
was unauthorized or he acts
in excess of his
AUTHORITY.
GENERAL PROVISIONS
Example of General Rule
Jose asked Pedro to borrow money
from Juan. Pedro did not disclose
to Juan that he was borrowing
money in Joses behalf, that is,
Pedro borrowed in his own name.
Can Juan ask Jose to pay the
debt>
No.. Only Pedro has the duty
to pay JUAN
a) Third
person
must
therefore verify or
investigate
the
authority.
In instructions, third
persons do not have to
investigate or verify
instructions.
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
Authority
Instructions
Sum total of powers
Direct the manner of
committed or permitted to transacting the authorized
the agent by the principal. business and contemplates
only a private rule of
guidance to the agent.
Relates to the subject with Refers to the manner or
which the agent is
mode of his action with
empowered to deal or the respect to matters which in
kinds of business or
their substance are within
transactions upon which he the scope of permitted
is powered to act.
action.
Limitations of authority are Without significance as
operative as against those against those dealing with
who have or are charged
the agent with neither
with knowledge of them.
knowledge nor notice of
Note:
If a person makes an
inquiry, he is chargeable with
knowledge
of
the
agent's
authority, and his ignorance of
the authority will not be any
excuse.
The acts of an agent beyond his
limited powers are invalid except
on the following qualifications
which would bind the principal:
Manifestly means
that the execution
would
damage
the
principal.
Example:
P instructed his agent to charted
a boat from Japan to Manila
and to load the principals
goods
with
the
specific
instructions to sail from Japan
to Manila on February 16,
2008 and to thereafter sell
the goods upon arrival in
Manila.
Answer:
No, A would not be
liable to P because had A
carried out the agency, it
would have resulted in loss or
damage to his principal.
Take
note:
The
borrowing of the money
must
be
for
the
benefit of the principal
and not for the agents
personal benefit.
Specific obligation of
the agent
Art, 1893 provides in pars. 1 and 2 of
the Article 1892, the principal may
bring an action against the substitute
with respect to the obligations which
the latter has contracted under the
substitution.
The right of action against the
substitute is an exception to the rule
on the principle of relativity
COMMISSION AGENCY
Who is commission agent?
A commission agent (or factor is one
whose business is to receive and to
sell goods for commission and who is
entrusted by the principal with the
possession of goods to be sold. He may
act in his own name of in that of the
principal.
COMMISSION AGENCY
Commission agent vs. Broker
1. Commission agent is one engaged in the
purchase and sale of personal
property for a principal.
a) Goods are placed in his possession
and at his disposal.
b) He has relation not only with his
principal and the buyer/sellers, but
also with the property constituting
the object of the sale.
c) He may act in his own name or in the
name of his principal
d) Subject matter refers only to
persona property.
COMMISSION AGENCY
Broker acts as a middleman or
intermediary who, in behalf of others,
and for a commission or fee,
negotiates contracts or transactions
relative to a real or personal property.
a) He does not have the possession or
custody of the property.
b) He has no relation with the real or
personal property he buys or sells.
c) He merely acts as a go between or
intermediary between seller and the
buyer and cannot close the contract in
his own name.
d) Subject matter refers to either real
or personal property.
COMMISSION
AGENCY
COMMISSION AGENCY
COMMISSION AGENCY
It is the duty of the commission agent
who sells in credit to inform the
principal with the statement of the
names of the buyer. Should he fails
to do so, the sale is deemed to have
been made for cash insofar as the
principal is concerned.
(Art.
1906)
Guarantee commission (Del Credere
Commission) is given in return for the
risks the agent will have to bear in
the collection of the credit. An
agent who receives a guarantee
commission is called Del credere
agent.
COMMISSION AGENCY
The guarantee commission is given in the
risks the agent will have to bear in the
collection of credits.
If an agent receives a guarantee
commission and the third person does
not pay, the agent will have to pay the
principal just the same. If the agent
receives a guarantee commission, he
cannot the put up the defense that the
debtor possesses no property.
COMMISSION AGENCY
Liability of Agent
Agent is liable for fraud and/or
negligence. This shall be
determined by the courts and
shall apply whether agency was
or was not for a compensation.
As to the degree of liability,
the courts may refer to the
fact whether or not the agency
is for compensation. (Art. 1900.
OBLIGATIONS OF THE
PRINCIPAL
EXTINGUISHMENT OF AGENCY
By its revocation;
By the withdrawal of the agent;
Death, civil interdiction, insanity or
insolvency of the principal or of the agent
EXTINGUISHMENT OF AGENCY
By dissolution of the firm or corporation
which entrusted or accepted the agency
By the accomplishment of the object or
purpose of the agency; and
By the expiration of the period for which
the agency was constituted. (art. 1919)
EXTINGUISHMENT OF AGENCY
Keyword: EDWARD
E Expiration
D Death, etc.
W- Withdrawal
A Accomplishment of the agency
R- Revocation
D- Dissolution
EXTINGUISHMENT OF AGENCY
Modes of extinguishing an agency,
generally: [ASO]
1.) Agreement;
2.) Subsequent acts of the parties
which may be either:
a.) By the act of both parties or by
mutual consent;
b.) By the unilateral act of one of
them.
3.) By operation of law.
EXTINGUISHMENT OF AGENCY
Other causes:
Termination by mutual consent,
novation, loss of the subject matter
of the agency, transfer or sale of the
object of agency, change of law which
makes agency illegal, war, fortuitous
event or impossibility or difficulty of
performance and other modes of
extinguishment of obligation.
EXTINGUISHMENT OF AGENCY
Revocation- applies to the principal. The act
of recalling back the authroity as agency is
based on trust and confidence in his agent.
The moment this ceases, principal can
revoke the agency.
EXTINGUISHMENT OF AGENCY
Withdrawal in the agent (RENUNCIATION) In the same manner the agent cannot be
compel to act as an agent and as such he
can withdraw from the agency.
Renunciation of his duty as an agent is
equivalent to withdrawal
EXTINGUISHMENT OF AGENCY
Death, Civil Interdiction, Insanity or
Insolvency of Either the Principal or the
Agent.
Reason: Agency is personal in nature. Thus
if either of the contracting parties dies,
contract of agency is extinguished.
EXTINGUISHMENT OF AGENCY
Death Ordinarily death of the principal
terminates agency, even if a period had
been stipulated and such period has not yet
ended. However, under Art. 1931,
anything done by the agent, without
knowledge of the death of the principal or
any other cause which extinguishes the
agency is VALID and shall be fully effective
with respect to third persons who may
contracted with him in good faith.
EXTINGUISHMENT OF AGENCY
Dissolution of the firm or corporation
(whether it be the principal or agent) ends
the agency.
Dissolution of the Firm or Corporation- this
will cause the termination or break up of a
legal relationship. This is similar to death
of a natural person.
EXTINGUISHMENT OF AGENCY
Accomplishment of the object or
purpose of the agency.
Expiration of the Period of Agency
unless otherwise renewed.
EXTINGUISHMENT OF AGENCY
Modes of extinguishment, specifically:
[WR-DEAD]
1.) Withdrawal of the agent;
2.) Revocation;
3.) Death, civil interdiction, insanity or
insolvency of the principal or of the
agent;
4.) Expiration of the period for which
the agency was constituted;
5.) Accomplishment of the object or
purpose of the agency; and
6.) Dissolution of the firm/corp which
entrusted or accepted the agency;
EXTINGUISHMENT OF AGENCY
Art. 1920. The principal may revoke the
agency at will, and compel the agent
to return the document evidencing
the agency. Such revocation may be
express or implied.
How revocation by principal is made:
a) Express may be oral or written
b) Implied from the acts of the
principal.
\
EXTINGUISHMENT OF AGENCY
Revocation by Principal or Agency
Agency is generally revocable at the will
of the principal because the trust and
confidence may have been lost.
Revocation at will is proper:
-Even if the agency is onerous
-Even if the period fixed has not yet
expired.
EXTINGUISHMENT OF AGENCY
When agency cannot be revoked at the
Principals will:
A)When it is coupled with interest
( interest possessed by the agent not in
the proceeds arising from the exercise
of the power but interest in the subject
matter of the power.
EXTINGUISHMENT OF AGENCY
B) In the case mentioned under Article
1927
1. when a bilateral depends on the
agency;
2. When the agency is the means of
fulfilling an obligation already
contracted;
3. In the case of a partner appointed
manager in the contract of partnership
and his removal from the management is
unjustifiable.
EXTINGUISHMENT OF AGENCY
C) When there has been a waiver by the
principal (however, the irrevocability of the
power of attorney cannot affect one who is not
party thereto, it being obligatory on the
principal who created the agency).
D) When the principal is obliged not to revoke.
(here the principal cn still revoke but he can be
liable for damages for breach of contract.
e) When revocation is done in bad faith. (here
principal can still revoke but innocent third
parties should not be prejudiced; moreover the
innocent agent can be entitled to damages from
him.
EXTINGUISHMENT OF AGENCY
When revocation is proper, agent
cannot generally recover damages.
Reason is simple principal is merely
exercising a right.
Kinds of revocation
Express
Implied
a) appointment of new agent for the
same business
b) Principal directly manages the
business entrusted to the agent.
EXTINGUISHMENT OF AGENCY
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.
Agency for contracting with specified
persons:
- So that innocent third parties may not
be prejudiced, the principal who fails to
give the notification can be held liable for
damages.
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
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.
In this article as distinguished from the
preceding article, the third persons have
not been specified. Note the
effect of revocation in a
newspaper of general circulation.
EXTINGUISHMENT OF AGENCY
Impliedly Revoked when:
Art. 1923. The appointment of a new
agent for the same business or
transaction revokes the previous agency
from the day on which notice thereof
was given to the former agent, without
prejudice to the provisions of the two
preceding articles.
Appointment of a new agent revokes
the first agency only in case of
incompatibility.
EXTINGUISHMENT OF AGENCY
A special power revokes a general one.
If the first agent is not notified of
the appointment of the second agent,
it is understood that the first
agency still exists.
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
Effect if the principal directly manages
the business
The rule applies only in case of
incompatibility, because it may be
that the only desire of the principal
is for him and the agent to manage
the business together. In case of
true inconsistency, the agency is
revoked, for there woild no longer be
any basis therefor.
EXTINGUISHMENT OF AGENCY
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.
EXTINGUISHMENT OF AGENCY
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 without the consent of the
others.
The power to revoke here is a consequence
of solidary liability of co-principals.
EXTINGUISHMENT OF AGENCY
Cases when agency is irrevocable:
The principal may generally revoke an
agency at will. (Art. 1920).
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
If the agency is means of
fulfilling an obligation already
contracted (e.g. agency in favor
of creditor to collect sums due
debtor- principal)
EXTINGUISHMENT OF AGENCY
Example:
Sonia is indebted to Concepcion for
the purchase of diamond
heaadband. But Sonia in the
meantime has no money. So she
appoints Concepcion as her agent to
collect from Maria some money which
Maria owes her (Sonia), which
money in turn will be applied to the
purchase price of the headband. It
is clear that Sonia cannot revoke the
agency here, unless she first pays
Concepcion.
EXTINGUISHMENT OF AGENCY
If a partner is appointed
manager of a contract of
partnership, his appointment
being revocable only upon just
and lawful cause and upon the
vote of the partners
representing the controlling
interest. (see Art. 1927 in
relation to Art. 1800, Law on
Partnership)
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
Art. 1928. The agent may withdraw
from the agency by giving due notice
to the principal. If the latter should
suffer any damage by reason of the
withdrawal, the agent must
indemnify him therefor, unless the
agent should base his withdrawal
upon the impossibility of continuing
the performance of the agency
without grave detriment to himself.
(1736a)
EXTINGUISHMENT OF AGENCY
Art. 1929. The agent, even if he
should withdraw from the agency
for a valid reason, must continue
to act until the principal has had
reasonable opportunity to take the
necessary steps to meet the
situation.
EXTINGUISHMENT OF AGENCY
Just as a principal may revoke under Article
1920, so also my agent withdraw under
Article 1928
Withdrawal of the Agent is another mode of
extinguishment of agency.
He shall no be liable if:
1) He gives prior notice to the principal of his
intention to withdraw and
2) His withdrawal is for a valid and justifiable
cause.
Nevertheless, he can still withdraw if he insists
and if the withdrawal is for unjustifiable
cause, agent is liable for damages.
EXTINGUISHMENT OF AGENCY
Some valid reasons for withdrawal
a) Poor health
b) Where there is conflict of interest
between the principal and agent
c) Where there is incompatible interest
between two, as when the principal or
the agent files action against each
other.
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
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
favor.
General Rule: Death of either the
principal or agent extinguishes the
contract agency.
EXTINGUISHMENT OF AGENCY
EXTINGUISHMENT OF AGENCY
If it has been constituted in
the common interest of the
principal and the agent (art.
1930)
Zenaida borrows from Jose and as
a secuirty entrusts to Jose a
ring which Jose can sell in case
Zenaida fails to pay the debt at
the time of maturity. Even if
Zenaida dies, the agency of
Jose would still remain.
EXTINGUISHMENT OF AGENCY
If it has constituted in the
interest of the third person who
has accepted the stipulation in
favor (Art. 1311) STIPULATION
POUR AUTRUI
Melady sells his land to Bravo and
appoints Bravo his agent in paying
the purchase price what Melady
owes Arellano, a third person.
Here even when Melady dies, the
agency of Bravo continues to exist.
EXTINGUISHMENT OF AGENCY
In the given examples are in
accordance with the well-settled
rule that if the authority is one
that is coupled with interest, it is
not revocable by death, act or
condition of the principal unless
there is some agreement to the
contrary between the parties.
EXTINGUISHMENT OF AGENCY
A power has not been held to be
coupled with an interest where the
interest arises out of commission
or out of the proceeds of a
transaction as where the agents
interest is merely his right to
receive by way of compensation,
certain percentage of the
proceeds.
EXTINGUISHMENT OF AGENCY
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 faith.
EXTINGUISHMENT OF AGENCY
Effect of Agents act without knowledge
of the principals death- Anything
consummated between third person
and the third person even after the
death of the principal is considered
valid and effective if:
a. Agent acted in good faith and
without knowledge of his principals
death and or of any cause which
extinguishes the agency; and
b. The third person likewise acted in
good faith and without knowledge of
the principals death. (Art. 1931)
EXTINGUISHMENT OF AGENCY
d. In the meantime, adopt such
measures as the circumstances
may demand in the interest of
the principal.
f. Continue the agency temporarily
until the principal can make such
1. Appoint a new agent, or
2. Arrange for return of the
object to him immediately.
EXTINGUISHMENT OF AGENCY
DOCTRINE OF AGENCY BY
NECESSITY
Example:
If a bus conductor is seriously
hurt, the driver is authorized to
engage the services of the physician,
in the companys name, sot that the
conductor may survive. This is really
for the best interest of all
concerned.