AGENCY REVIEWER

Prof. Diane A. Desierto

Chapter 1: Nature, Form and Kinds of Agency A. Nature of the Agency Relationship

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 latter. Why do we have agency relationships? Because of recognition of human frailty cannot always be present, cannot do everything Agency is a contract! Elements: Consent of agent and principal Object fulfilment of acts and payment Cause consideration/ gratuity What is the test? 1. Elements: consent, object, representation, limitation 2. Reciprocal (only if onerous) Principal: to pay the compensation Agent: represent Doles v Angeles For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates, and to a great degree, impersonal dealings where the principal need not personally know or meet the third person with whom her agent transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent. If their respective principals do not actually and personally know each other, such ignorance does not affect their juridical standing as agents, especially since the very purpose of agency is to extend the personality of the principal through the facility of the agent. If an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he or she is not so called. The question is to be determined by the fact that one represents and is acting for another, and if relations exist which will constitute an agency, it will be an agency whether the parties understood the exact nature of the relation or not. Victorias Milling Co. Inc. v CA It is clear from Article 1868 that the basis of agency is representation. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions; and on the part of the agent, there must be an intention to accept the appointment and act on it, and in the absence of such intent, there is generally no agency. One factor which most clearly distinguishes agency from other legal concepts is control; one person - the agent - agrees to act under the control or direction of another - the principal. Indeed, the very word "agency" has come to connote control by the principal. Where the relation of agency is dependent upon the acts of the parties, the law makes no presumption of agency, and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show not only the fact of its existence, but also its nature and extent. Dizon, et al. v CA There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private

respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. 1. Presumed to be for compensation

Art. 1875. Agency is presumed to be for compensation, unless there is proof to the contrary. Murao, et al. v People All profits made and any advantage gained by an agent in the execution of his agency should belong to the principal. LMICE is the lawful owner of the entire proceeds. The current Petition concerns an agency contract whereby the principal already received payment from the client but refused to give the sales agent, who negotiated the sale, his commission The obligation of LMICE to pay private complainant Federico his commission does not arise from any duty to deliver or return the money to its supposed owner, but rather from the duty of a principal to give just compensation to its agent for the services rendered by the latter. Scope of agent authority 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. 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. Art. 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted; neither have such persons against the principal. In such case, the agent is the one directly bound in favour of the person with whom he has contracted, as if the transaction were his own, except when the contract involves things belonging to the principal. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. Can an employer-employee relationship be an agency relationship? Not always. Only when they meet the requisites of an agency relationship. Agency can be stipulated against. Doctrine of apparent authority exception to the usual test, to prevent fraud Third party transactions A. In own name agent liable except when it involves things belonging to the principal B. A discloses agency agent not liable to third party except when he expressly binds himself third party ought to be aware limits of agents powers C. A does not disclose

D.

agent is liable to third persons but principal is liable to agent A acts without knowledge agent liable except when principal ratifies or is in estoppel

The general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. A corporation is a juridical person, separate and distinct from its stockholders and members, "having x x x powers, attributes and properties expressly authorized by law or incident to its existence." Being a juridical entity, a corporation may act through its board of directors, which exercises almost all corporate powers, lays down all corporate business policies and is responsible for the efficiency of management, as provided in Section 23 of the Corporation Code of the Philippines. Under this provision, the power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the board, subject to the articles of incorporation, bylaws, or relevant provisions of law. However, just as a natural person may authorize another to do certain acts for and on his behalf, the board of directors may validly delegate some of its functions and powers to officers, committees or agents. The authority of such individuals to bind the corporation is generally derived from law, corporate bylaws or authorization from the board, either expressly or impliedly by habit, custom or acquiescence in the general course of business, viz: A corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that [the] authority to do so has been conferred upon him, and this includes powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused person dealing with the officer or agent to believe that it has conferred. Apparent authority is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, within or beyond the scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its favor or in favor of other parties. It is not the quantity of similar acts which establishes apparent authority, but the vesting of a corporate officer with power to bind the corporation. Lipat, et al. v Pacific Banking Corporation Just as a natural person may authorize another to do certain acts for and on his behalf, the board of directors may validly delegate some of its functions and powers to officers, committees, or agents. The authority of such individuals to bind the corporation is generally derived from law, corporate by-laws, or authorization from the board, either expressly or impliedly by habit, custom, or acquiescence in the general course of business. Apparent authority, is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. If a corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it holds him out to the public as possessing the power to do those acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agents authority

Apparent authority vs. estoppel There is apparent authority when the principal clothes the agent with authority. There is estoppel when by the agents conduct, declaration, admission, a third party believes such agency exist. Special cases 1. medical negligence 2. corporations: board approvals/resolutions, delegated authority, acts of reatification 3. ER-EE/independent contractor Authority of corporate officers corporation by-laws authority from board of directors Eugenio, et al. v CA The substantive law is that payment shall be made to the person in whose favor the obligation has been constituted, or his successor-in-interest or any person authorized to receive it. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and his agent. Tuazon, et al. v Heirs of Ramos In a contract of agency, one binds oneself to render some service or to do something in representation or on behalf of another, with the latters consent or authority. The following are the elements of agency: (1) the parties consent, express or implied, to establish the relationship; (2) the object, which is the execution of a juridical act in relation to a third person; (3) the representation, by which the one who acts as an agent does so, not for oneself, but as a representative; (4) the limitation that the agent acts within the scope of his or her authority. As the basis of agency is representation, there must be, on the part of the principal, an actual intention to appoint, an intention naturally inferable from the principals words or actions. In the same manner, there must be an intention on the part of the agent to accept the appointment and act upon it. Absent such mutual intent, there is generally no agency. The question of whether a contract is one of sale or of agency depends on the intention of the parties. The declarations of agents alone are generally insufficient to establish the fact or extent of their authority. The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it. The petitioners, on their own behalf, sued Evangeline Santos for collection of the amounts represented by the bounced checks, in a separate civil case that they sought to be consolidated with the current one. If, as they claim, they were mere agents of respondents, petitioners should have brought the suit against Santos for and on behalf of their alleged principal, in accordance with Section 2 of Rule 3 of the Rules on Civil Procedure. Their filing a suit against her in their own names negates their claim that they acted as mere agents in selling the rice obtained from Bartolome Ramos. Inter-Asia Investments Industries v CA

Siredy Enterprises v CA By the relationship of agency, one party called the principal authorizes another called the agent to act for and in his behalf in transactions with third persons. The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. "He who acts through another acts himself. The scope of the agents authority is what appears in the written terms of the power of attorney. While third persons are bound to inquire into the extent or scope of the agents authority, they are not required to go beyond the terms of the written power of attorney. Third persons cannot be adversely affected by an understanding between the principal and his agent as to the limits of the latters authority. In the same way, third persons need not concern themselves with instructions given by the principal to his agent outside of the written power of attorney. The essence of agency being the representation of another, it is evident that the obligations contracted are for and on behalf of the principal. This is what gives rise to the juridical relation. A consequence of this representation is the liability of the principal for the acts of his agent performed within the limits of his authority that is equivalent to the performance by the principal himself who should answer therefor Spouses Yu Eng Cho, et al. v Pan American World Airways 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 latter. The elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority. It is a settled rule that persons dealing with an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. The declarations of the agent alone are generally insufficient to establish the fact or extent of his authority. Peoples Aircargo and Warehousing Co. v CA Apparent authority is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. Inasmuch as a corporate president is often given general supervision and control over corporate operations, the strict rule that said officer has no inherent power to act for the corporation is slowly giving way to the realization that such officer has certain limited powers in the transaction of the usual and ordinary business of the corporation. In the absence of a charter or bylaw provision to the contrary, the president is presumed to have the authority to act within the domain of the general objectives of its business and within the scope of his or her usual duties. The president of a corporation possesses the power to enter into a contract for the corporation, when the "conduct on the part of both the president and the corporation [shows] that he had been in the habit of acting in similar matters on behalf of the company and that the company had authorized him so to act and had recognized, approved and ratified his former and similar actions.

Lustan v CA The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to represent and act on behalf of the former. Having done so, petitioner clothed Parangan with authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the last three loans were without the express authority of petitioner, it cannot be prejudiced thereby. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such is within the terms of the power of attorney as written even if the agent has in fact exceeded the limits of his authority according to the understanding between the principal and the agent. The SPA particularly provides that the same is good not only for the principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation that the attorney-infact may obtain and until the power of attorney is revoked in a public instrument and a copy of which is furnished to PNB. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Bacaltos Coal Mines v CA A third person dealing with a known agent may not act negligently with regard to the extent of the agent's authority or blindly trust the agent's statements in such respect. Rather, he must use reasonable diligence and prudence to ascertain whether the agent is acting and dealing with him within the scope of his powers. The mere opinion of an agent as to the extent of his powers, or his mere assumption of authority without the foundation, will not bind the principal; and a third person dealing with a known agent must bear the burden of determining for himself, by the exercise of the reasonable diligence and prudence, the existence or nonexistence of the agent's authority to act in the premises. In other words, whether the agency is general or special, the third person is bound to ascertain not only the fact of agency, but the nature and extent of the authority . The principal, on the other hand, may act on the presumption that third persons dealing with his agent will not be negligent in failing to ascertain the extent of his authority as well as the existence of his agency. Since the agency of Savellon is based on a written document, the extent and scope of his powers must be determined on the basis thereof. Professional Services v Agana [The hospitals] liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospitals liability for negligent acts of health professionals. Apparent authority, or what is sometimes referred to as the "holding out" theory, or doctrine of ostensible agency or agency by estoppel, has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. The concept is essentially one of estoppel and has been explained in this manner: "The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.

In cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of the hospital, then the hospital will be liable for the physicians negligence 2. Form

Art. 1871. Between persons who are present, the acceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection. Art. 1872. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except: (1) When the principal transmits his power of attorney to the agent, who receives it without any objection; (2) When the principal entrusts to him by letter or telegram a power of attorney with respect to the business in which he habitually engaged as an agent, and he did not reply to the letter or telegram. 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. The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given. British Airways v CA An agent is also responsible for any negligence in the performance of its functioni and is liable for damages which the principal may suffer by reason of its negligent act. Nogales v Capitol Medical Center In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the ostensible agent of the hospital. This exception is also known as the doctrine of apparent authority. Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a physician providing care at the hospital, regardless of whether the physician is an independent contractor, unless the patient knows, or should have known, that the physician is an independent contractor. The elements of the action have been set out as follows: For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. Litonjua, Jr. v Eternit Corporation While a corporation may appoint agents to negotiate for the sale of its real properties, the final say will have to be with the board of directors through its officers and agents as authorized by a board resolution or by its by-laws. An unauthorized act of an officer of the corporation is not binding on it unless the latter ratifies the same expressly or impliedly by its board of directors. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the corporation is null and void. The declarations of the agent alone are generally insufficient to establish the fact or extent of his/her authority. By the contract of agency, a person binds himself to render some service or to do something in representation on behalf of another, with the consent or authority of the latter. Consent of both principal and agent is necessary to create an agency. The principal must intend that the agent shall act for him; the agent

Art. 1869. Agency may 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. Calibo v CA As indicated in Article 1869, for an agency relationship to be deemed as implied, the principal must know that another person is acting on his behalf without authority. Here, appellee categorically stated that the only purpose for his leaving the subject tractor in the care and custody of Mike Abella was for safekeeping, and definitely not for him to pledge or alienate the same. If it were true that Mike pledged appellees tractor to appellant, then Mike was acting not only without appellees authority but without the latters knowledge as well. Article 1911, on the other hand, mandates that the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Again, in view of appellees lack of knowledge of Mikes pledging the tractor without any authority from him, it stands to reason that the former could not have allowed the latter to pledge the tractor as if he had full powers to do so. Equitable PCI Bank v Rosita Ku An agency may be express but it may also be 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. Likewise, acceptance by the agent may also be express, although it may also be implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. In this case, Joel Rosales averred that "on occasions when I receive mail matters for said law office, it is only to help them receive their letters promptly," implying that counsel had allowed the practice of Rosales receiving mail in behalf of the former. Murao v People It is unequivocal that an agency existed between LMICE and private complainant Federico. Article 1868 of the Civil Code defines agency as a special contract whereby 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 latter. Although private complainant Federico never had the opportunity to operate as a dealer for LMICE under the terms of the Dealership Agreement, he was allowed to act as a sales agent for LMICE. He can negotiate for and on behalf of LMICE for the refill and delivery of fire extinguishers, which he, in fact, did on two occasions with Landbank and with the City Government of Puerto Princesa. Unlike the Dealership Agreement, however, the agreement that private complainant Federico may act as sales agent of LMICE was based on an oral agreement. B. Creation of the Agency Relationship

Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances.

must intend to accept the authority and act on it, and the intention of the parties must find expression either in words or conduct between them. An agency may be expressed or implied from the act 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. Acceptance by the agent may be expressed, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void. Manila Memorial Park Cemetery v Linsangan 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 latter. Thus, the elements of agency are (i) consent, express or implied, of the parties to establish the relationship; (ii) the object is the execution of a juridical act in relation to a third person; (iii) the agent acts as a representative and not for himself; and (iv) the agent acts within the scope of his authority Under its Agency Manager Agreement; an agency manager such as Baluyot is considered an independent contractor and not an agent. However, Baluyot is still an agent of MMPCI, having represented the interest of the latter, and having been allowed by MMPCI to represent it in her dealings with its clients/prospective buyers. BA Finance Corporation v CA Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-fact with full power and authority to file, follow-up, prosecute, compromise or settle insurance claims; to sign execute and deliver the corresponding papers, receipts and documents to the Insurance Company as may be necessary to prove the claim, and to collect from the latter the proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers any loss or damage. In granting B.A. Finance Corporation the aforementioned powers and prerogatives, the Cuady spouses created in the former's favor an agency. Thus, under Article 1884 of the Civil Code of the Philippines, B.A. Finance Corporation is bound by its acceptance to carry out the agency, and is liable for damages which, through its non-performance, the Cuadys, the principal in the case at bar, may suffer. Gozun v Mercado 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 latter. Contracts entered into in the name of another person by one who has been given no authority or legal representation or who has acted beyond his powers are classified as unauthorized contracts and are declared unenforceable, unless they are ratified. Generally, the agency may be oral, unless the law requires a specific form. However, a special power of attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent and indispensable for the preservation of the things which are under administration. Naguiat v CA The Court of Appeals recognized the existence of an agency by estoppel citing Article 1873 of the Civil Code. Apparently, it considered that at the very least, as a

consequence of the interaction between Naguiat and Ruebenfeldt, Queao got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to correct Queaos impression. In that situation, the rule is clear. One who clothes another with apparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith, and in the honest belief that he is what he appears to be. Delos Reyes v CA There is no effective consent in law without the capacity to give such consent. In other words, legal consent presupposes capacity. Thus, there is said to be no consent, and consequently, no contract when the agreement is entered into by one in behalf of another who has never given him authorization therefore unless he has by law a right to represent the latter. It has also been held that if the vendor is not the owner of the property at the time of the sale, the sale is null and void, because a person can sell only what he owns or is authorized to sell. One exception is when a contract entered into in behalf of another who has not authorized it, subsequently confirmed or ratified the same in which case, the transaction becomes valid and binding against him and he is estopped to question its legality. When the 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. In other words, for want of capacity (to give consent) on the part of Renato Gabriel, the oral contract of sale lacks one of the essential requisites for its validity prescribed under Article 1318, and is therefore null and void ab initio. San Juan Structural Steel Fabricators v CA As a general rule, the acts of corporate officers within the scope of their authority are binding on the corporation. But when these officers exceed their authority, their actions "cannot bind the corporation, unless it has ratified such acts or is estopped from disclaiming them." C. Categories and Consequences

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. 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. 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; (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; (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (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; (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; (10) To bind the principal in a contract of partnership; (11) To obligate the principal as a guarantor or surety; (12) To create or convey real rights over immovable property; (13) To accept or repudiate an inheritance; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion. 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. 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. Art. 1880. A special power to compromise does not authorize submission to arbitration. General power acts of administration Special power- acts of dominion/ ownership --> executed to show the public at large The acts in Art. 1878 involve greater risk to the principal, in that they change the legal relation for the principal. 1. Significance of an SPA

captioned General Power of Attorney militate against its construction as granting specific powers to the agent pertaining to the petition for annulment of judgment she instituted in behalf of her father. A general power of attorney may include a special power if such special power is mentioned or referred to in the general power. Veloso v CA Whether the instrument be denominated as "general power of attorney" or "special power of attorney", what matters is the extent of the power or powers contemplated upon the agent or attorney in fact. If the power is couched in general terms, then such power cannot go beyond acts of administration. However, where the power to sell is specific, it not being merely implied, much less couched in general terms, there can not be any doubt that the attorney in fact may execute a valid sale. An instrument may be captioned as "special power of attorney" but if the powers granted are couched in general terms without mentioning any specific power to sell or mortgage or to do other specific acts of strict dominion, then in that case only acts of administration may be deemed conferred. Respondent Aglaloma relied on the power of attorney presented by petitioner's wife, Irma. Being the wife of the owner and having with her the title of the property, there was no reason for the private respondent not to believe in her authority. Moreover, the power of attorney was notarized and as such, carried with it the presumption of its due execution. 2. Rationale for requiring an SPA in specific cases

United Coconut Planters Bank v Magpayo Noteworthy is the fact that Section 4, Rule 18 of the 1997 Rules of Court is a new provision; and requires nothing less than that the representative should appear in a partys behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations of facts and of documents. The rules now require the special power of attorney be in writing because the courts can neither second-guess the specific powers given to the representative, nor can the courts assume that all the powers specified in Section 4 of Rule 18 are granted by the party to his representative. Paras v Paras Respondent presented a Special Power of Attorney (SPA) executed in his favor by complainant to negotiate for an agricultural or crop loan from the Bais Rural Bank of Bais City. Instead of exculpating respondent, the presence of the SPA places him in hot water. For if he was so authorized to obtain loans from the banks, then why did he have to falsify his wife's signatures in the bank loan documents? The purpose of an SPA is to especially authorize the attorney-infact to sign for and on behalf of the principal using his own name. Orbete v Sendiong The signing of the verification and certification of non-forum shopping are covered under the said provisions of the General Power of Attorney. A special power of attorney simply refers to a clear mandate specifically authorizing the performance of a specific power and of express acts subsumed therein, and there is a specific authority given to Mae Sendiong to sign her name in behalf of Paul Sendiong in contracts and agreements and to institute suits in behalf of her father. Neither would the fact that the document is

Bravo-Guerrero v Bravo Simona authorized Mauricio to dispose of the Properties when she executed the GPA. True, Article 1878 requires a special power of attorney for an agent to execute a contract that transfers the ownership of an immovable. However, the Court has clarified that Article 1878 refers to the nature of the authorization, not to its form. Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is a clear mandate from the principal specifically authorizing the performance of the act. Dizon v CA There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and private respondent. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it. Gozun v Mercado Generally, the agency may be oral, unless the law requires a specific form. However, a special power of attorney is necessary for an agent to, as in this case, borrow money, unless it be urgent and indispensable for the preservation of the things which are under administration. The requirement of a special power of attorney refers to the nature of the authorization and not to its form. If the special authority is not written, then it must be duly established by evidence.

It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. 3. SPA for sale vis--vis mortgage

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. Bicol Savings and Loan Association v CA The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no foreclosure results. The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential or inseparable part of that bilateral agreement. The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own protection. That power survives the death of the mortgagor. 4. SPA for compromise submission to arbitration does not imply

which may be the subject of an action, or the parties to any contract may in such contract agree to settle by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract. Such submission or contract may include question arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent or subsequent to any issue between the parties. A controversy cannot be arbitrated where one of the parties to the controversy is an infant, or a person judicially declared to be incompetent, unless the appropriate court having jurisdiction approve a petition for permission to submit such controversy to arbitration made by the general guardian or guardian ad litem of the infant or of the incompetent. But where a person capable of entering into a submission or contract has knowingly entered into the same with a person incapable of so doing, the objection on the ground of incapacity can be taken only in behalf of the person so incapacitated. Section 3. Controversies or cases not subject to the provisions of this Act. - This Act shall not apply to controversies and to cases which are subject to the jurisdiction of the Court of Industrial Relations or which have been submitted to it as provided by Commonwealth Act Numbered One hundred and three, as amended. Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising between the parties, as well as a submission to arbitrate an existing controversy shall be in writing and subscribed by the party sought to be charged, or by his lawful agent. The making of a contract or submission for arbitration described in section two hereof, providing for arbitration of any controversy, shall be deemed a consent of the parties to the jurisdiction of the Court of First Instance of the province or city where any of the parties resides, to enforce such contract or submission. UNCITRAL Model Law Article 8. Arbitration agreement and substantive claim before court (1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his fi rst statement on the substance of the dispute, refer the parties to arbitration unless it fi nds that the agreement is null and void, inoperative or incapable of being performed. (2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court. Article 10. Number of arbitrators (1) The parties are free to determine the number of arbitrators. (2) Failing such determination, the number of arbitrators shall be three. Article 11. Appointment of arbitrators (1) No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties. (2) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the provisions of paragraphs (4) and (5) of this article. (3) Failing such agreement, (a) in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the

Art. 1880. A special power to compromise does not authorize submission to arbitration. RA 9285. Alternative Dispute Resolution Actof 2004. SEC. 14. Participation in Mediation. - Except as otherwise provided in this Act, a party may designate a lawyer or any other person to provide assistance in the mediation. A lawyer of this right shall be made in writing by the party waiving it. A waiver of participation or legal representation may be rescinded at any time. SEC. 16. Effect of Agreement to Submit Dispute to Mediation Under Institutional Rules . - An agreement to submit a dispute to mediation by any institution shall include an agreement to be bound by the internal mediation and administrative policies of such institution. Further, an agreement to submit a dispute to mediation under international mediation rule shall be deemed to include an agreement to have such rules govern the mediation of the dispute and for the mediator, the parties, their respective counsel, and nonparty participants to abide by such rules. In case of conflict between the institutional mediation rules and the provisions of this Act, the latter shall prevail. SEC. 22. Legal Representation in International Arbitration. - In international arbitration conducted in the Philippines, a party may be presented by any person of his choice. Provided, that such representative, unless admitted to the practice of law in the Philippines, shall not be authorized to appear as counsel in any Philippine court, or any other quasi-judicial body whether or not such appearance is in relation to the arbitration in which he appears. RA 876. Arbitration Law. Section 2. Persons and matters subject to arbitration. Two or more persons or parties may submit to the arbitration of one or more arbitrators any controversy existing between them at the time of the submission and

appointment shall be made, upon request of a party, by the court or other authority specified in article 6; (b) in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the court or other authority specified in article 6. (4) Where, under an appointment procedure agreed upon by the parties, (a) a party fails to act as required under such procedure, or (b) the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or (c) a third party, including an institution, fails to perform any function entrusted to it under such procedure, any party may request the court or other authority specified in article 6 to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (5) A decision on a matter entrusted by paragraph (3) or (4) of this article to the court or other authority specified in article 6 shall be subject to no appeal. The court or other authority, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties. Article 12. Grounds for challenge (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him. (2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made. Article 13. Challenge procedure (1) The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of paragraph (3) of this article. (2) Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in article 12(2), send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. (3) If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (2) of this article is not successful, the challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the court or other authority specified in article 6 to decide on the challenge, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. Article 14. Failure or impossibility to act (1) If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act

without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may request the court or other authority specified in article 6 to decide on the termination of the mandate, which decision shall be subject to no appeal. (2) If, under this article or article 13(2), an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, this does not imply acceptance of the validity of any ground referred to in this article or article 12(2). Article 18. Equal treatment of parties The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case. Article 19. Determination of rules of procedure (1) Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. (2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence. 5. General agency vis--vis special agency

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. Reyes v Reyes While undoubtedly Duran was an agent of Ramon, he was not a general agent of the latter with respect to the landholding. The record shows that as overseer, Durans duties and responsibilities were limited to "issuing receipts, selling mangoes and bamboo trees and all other things saleable." Thus, by his own admission, Duran was a special agent under Article 1876 of the Civil Code. Durans duties and responsibilities as a special agent do not include the acceptance of rentals from persons other than the tenant so designated by the landowner. Durans authority as a special agent likewise excludes the power to appoint tenants or successor-tenants. Clearly, Duran acted beyond the limits of his authority as an agent. We cannot agree with the Court of Appeals did that since Duran had been the overseer of the Castros for 16 years, he thereby made respondents believe he had full authority from the Castro family relative to the administration of the subject property. Regardless of the number of years that Duran had been the overseer of the Castros, there is absolutely no showing that he was ever authorized to appoint tenants or successor-tenants for the Castros, nor to accept rentals from the persons he would appoint. Absent substantial evidence to show Durans authority from the Castros to give consent to the creation of a tenancy relationship, his actions could not give rise to an implied tenancy. Dominion Insurance Corp v CA A perusal of the Special Power of Attorney would show that petitioner and respondent Guevarra intended to enter into a principal-agent relationship. Despite the word "special" in the title of the document, the contents reveal that what was constituted was actually a general agency. The agency comprises all the business of the principal, but, couched in general terms, it is limited only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special power. Thus, the acts enumerated in or similar to those enumerated in the Special Power of Attorney do not require a special power of attorney. The payment of claims is not an act of administration. The settlement of claims is not included among the acts enumerated in the Special Power of Attorney, neither is it of a character

similar to the acts enumerated therein. A special power of attorney is required before respondent Guevarra could settle the insurance claims of the insured. 6. Generally termed agency only refers to acts of administration

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 the goods. B. 1. If agency is accepted Agents general obligation

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. Act of administration or dominion? Juridical tie (act) nature of obligation between actors (actors)

Art. 1884. The agent is bound by his acceptance to carry out the agency and is liable for the damages which, through his non-performance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. Principal Agent 1. funds receipt, lending/borrowing, accounting 2. interest of third party, of principal 3. contracting authority, scope, ratification 4. special rules for commission BA Finance v CA Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-fact with full power and authority to file, follow-up, prosecute, compromise or settle insurance claims; to sign execute and deliver the corresponding papers, receipts and documents to the Insurance Company as may be necessary to prove the claim, and to collect from the latter the proceeds of insurance to the extent of its interests, in the event that the mortgaged car suffers any loss or damage. In granting B.A. Finance Corporation the aforementioned powers and prerogatives, the Cuady spouses created in the former's favor an agency. Thus, under Article 1884 of the Civil Code of the Philippines, B.A. Finance Corporation is bound by its acceptance to carry out the agency, and is liable for damages which, through its non-performance, the Cuadys, the principal in the case at bar, may suffer. Gutierrez Hermanos v Oria Hermanos The whole case as presented, both by the oral testimony and the exhibits, demonstrates beyond shadow of doubt that the plaintiff was acting as the agent of the defendant in placing the insurance upon the vessels in question and that such act redounded to its benefit. The idea presented in argument of counsel for appellant that all relations were broken off and terminated by the commencement of the action upon the account current by the plaintiff in March, 1909, and that, therefore, the plaintiff could do nothing whatever on behalf of the defendant thereafter, wholly loses its force when we observe that, in reality, the plaintiff did not do anything on behalf of the defendant after that time. What it did and all it did was to fulfill a contract which it had made with the insurance company prior to the beginning of that action. The plaintiff had secured the insurance of the two vessels during the years 1907, 1908, and 1909, and had agreed to pay the insurance company the premiums thereon. The three contracts for those years had been made by the plaintiff and it had become liable to fulfill the same on its part prior to the commencement of the action on the 30th of March, 1909. The payment thereafter of the insurance premiums for those three years is no proof that the plaintiff was still exercising a relation which existed after the commencement of that action, but indicates simply that it was completing an obligation which it had made when that relation was admittedly in force. 2. When agent can refuse to carry out agency

Fabia v David All the acts of administration to collect the rents for herself, and to conserve the property by making all necessary repairs and paying all the taxes, special assessments, and insurance premiums thereon were by said judgment vested in the usufructuary. The pretension of the respondent Juan Grey that he is the administrator of the property with the right to choose the tenants and to dictate the conditions of the lease is contrary to both the letter and the spirit of the said clause of the will, the stipulation of the parties, and the judgment of the court. He cannot manage or administer the property after all the acts of management or administration have been vested by the court, with his consent, in the usufructuary. He admitted that before said judgment he had been collecting the rents as agent of the usufructuary under an agreement with the latter. What legal justification or valid excuse could he have to claim the right to choose the tenant and fix the amount of the rent when under the will, the stipulation of the parties, and the final judgment of the court it is not he but the usufructuary who is entitled to said rents? Nario v Philippine American Life Insurance Co. The result would be the same even if we regarded the interest of the ward to be worth less than P2,000.00. While the father or mother would in such event be exempt from the duty of filing a bond, and securing judicial appointment, still the parent's authority over the estate of the ward as a legal-guardian would not extend to acts of encumbrance or disposition, as distinguished from acts of management or administration. The distinction between one and the other kind of power is too basic in our law to be ignored. Thus, under Article 1877 of the Civil Code of the Philippines, an agency in general terms does not include power to encumber or dispose the property of the principal; and the Code explicitly requires a special power or authority for the agent "to loan or borrow money, unless the latter act be urgent or indispensable for the preservation of the thing under administration" (Art. 1878, no. 7). Similarly, special powers are required to effect novations, to waive any obligation gratuitously or obligate the principal as guarantor or surety (Do., nos. 2, 4 and 11). By analogy, since the law merely constitutes the parent as legal administrator of the child's property (which is a general power), the parent requires special authority for the acts above specified, and this authority can be given only by a court. This restricted interpretation of the parent's authority becomes all the more necessary where as in case before us, there is no bond to guarantee the ward against eventual losses. Chapter 2: Obligations of the Agent A. If agency is declined

Art. 1888. An agent shall not carry out an agency if its execution would materially result in loss or damage to the principal.

Agent should refuse when the act is in contravention of the purpose of the agency. 3. Agent substitutes and multiple agents

estafa by either misappropriation or conversion. The abuse of confidence that is characteristic of this offense is missing under the circumstances Vizconde v IAC Nothing in the language of the receipt, Exhibit "A", or in the proven circumstances attending its execution can logically be considered as evidencing the creation of an agency between Perlas, as principal, and Vizconde, as agent, for the sale of the former's ring. True, reference to what may be taken for an agency agreement appears in the clause ". . . which I agree to sell . . . on commission basis" in the main text of that document. But it is clear that if any agency was established, it was one between Perlas and Pagulayan only, this being the only logical conclusion from the use of the singular "I" in said clause, in conjunction with the fact that the part of the receipt in which the clause appears bears only the signature of Pagulayan. To warrant anything more than a mere conjecture that the receipt also constituted Vizconde the agent of Perlas for the same purpose of selling the ring, the cited clause should at least have used the plural "we," or the text of the receipt containing that clause should also have carried Vizconde's signature. The joint and several undertaking assumed by Vizconde in a separate writing below the main body of the receipt, Exhibit "A", merely guaranteed the civil obligation of Pagulayan to pay Perlas the value of the ring in the event of her (Pagulayan's) failure to return said article. It cannot, in any sense, be construed as assuming any criminal responsibility consequent upon the failure of Pagulayan to return the ring or deliver its value. It is fundamental that criminal responsibility is personal and that in the absence of conspiracy, one cannot be held criminally liable for the act or default of another. 4. Specific agency a. obligations in the execution of the

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one; (2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the principal shall be void. Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution. 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. Art. 1895. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment 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. Liability under Art. 1893 is joint only. Difference between substitute and sub-agent Principal Agent Sub-agent Substitute

Act pursuant to principals instructions

In case of a substitute, the juridical tie between principal and original agent is lost. The substitute takes the place of the original agent. In case of a sub-agent, the original agent still has a juridical tie with the principal. The sub-agent is bound to the original agent and not to the principal. Serona v CA The law on agency in our jurisdiction allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the appointment of Labrador as petitioners sub-agent was not expressly prohibited by Quilatan, as the acknowledgment receipt does not contain any such limitation. Neither does it appear that petitioner was verbally forbidden by Quilatan from passing on the jewelry to another person before the acknowledgment receipt was executed or at any other time. Thus, it cannot be said that petitioners act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is, in fact, legally sanctioned. Where, as in the present case, the agents to whom personal property was entrusted for sale, conclusively proves the inability to return the same is solely due to malfeasance of a subagent to whom the first agent had actually entrusted the property in good faith, and for the same purpose for which it was received; there being no prohibition to do so and the chattel being delivered to the subagent before the owner demands its return or before such return becomes due, we hold that the first agent can not be held guilty of

Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal. In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware. Roxas v CA What gave rise to this litigation was a general power of attorney made on October 28, 1973 by Elisea G. Roxas authorizing Edgardo Jose, among other things, "(t)o buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements, and hereditaments and other forms of real property, upon such terms and conditions and under covenant as said attorney shall deem fit and proper." On the strength of this general power, Edgardo Jose sold to Clarence Pimentel on May 30, 1975, Roxas' house and lot. The transaction took place while Roxas was in the United States. On July 26, 1975, shortly upon her return to the Philippines, she revoked Jose's general power of attorney and then, by her attorney's letter dated November 28, 1975, demanded from Jose the delivery of the cash proceeds of the sale, as well as the chattels and effects she had left in her house. But Jose evidently failed to comply with Roxas' demand. The sale is valid. Prior to the execution of the deed of sale, Roxas had been informed while in America of the terms thereof and had approved them; that on her return to this country she had confirmed the sale through two documents: one entitled "Acknowledgement and/or Confirmation" dated July 29, 1975 and the other, "Receipt Confirmation and/or Acknowledgment" dated August 17, 1975; and that her ratification had been made

indubitable by her counsel's aforementioned letter of November 28, 1975 demanding from Jose delivery or accounting of the proceeds of the sale. Samar Mining Co. v Lloyd Two undertakings appeared embodied and/or provided for in the Bill of Lading in question. The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee. At the hiatus between these two undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case before Us. But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods, It is true that the transshipment of the goods, which was the object of the agency, was not fully performed. However, appellant had commenced said performance, the completion of which was aborted by circumstances beyond its control. An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to accomplish the object of the agency. Salonga v Warner Bros & Co. Ltd. The scope and extent of the functions of an adjustment and settlement agent do not include personal liability. His functions are merely to settle and adjusts claims in behalf of his principal if those claims are proven and undisputed, and if the claim is disputed or is disapproved by the principal, like in the instant case, the agent does not assume any personal liability. b. Advance funds when stipulated except when principal insolvent Art. 1886. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so except when the principal is insolvent. Agency coupled with an interest agent has interest in the contract which is the object of the agency; irrevocable because it involves or protects a third person. Uy v CA We find the following declaration in Section 372 (1) of the Restatement of the Law on Agency (Second): Section 372. Agent as Owner of Contract Right (1) Unless otherwise agreed, an agent who has or who acquires an interest in a contract which he makes on behalf of his principal can, although not a promisee, maintain such action thereon as might a transferee having a similar interest. (2) An agent does not have such an interest in a contract as to entitle him to maintain an action at law upon it in his own name merely because he is entilted to a portion of the proceeds as compensation for making it or because he is liable for its breach. While they alleged that they made advances and that they suffered loss of commissions, they have not established any agreement granting them the right to receive payment and

out of the proceeds to reimburse [themselves] for advances and commissions before turning the balance over to the principals. c. Borrowing and lending money

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. DBP v CA The DBP is not authorized to accept applications for MRI when its clients are more than 60 years of age. Knowing all the while that Dans was ineligible for MRI coverage because of his advanced age, DBP exceeded the scope of its authority when it accepted Dan's application for MRI by collecting the insurance premium, and deducting its agent's commission and service fee. The liability of an agent who exceeds the scope of his authority depends upon whether the third person is aware of the limits of the agent's powers. There is no showing that Dans knew of the limitation on DBP's authority to solicit applications for MRI. If the third person dealing with an agent is unaware of the limits of the authority conferred by the principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the agent, then the latter is liable for damages to him. The rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some wrong or omission on his part either in misrepresenting, or in affirming, or concealing the authority under which he assumes to act. Inasmuch as the non-disclosure of the limits of the agency carries with it the implication that a deception was perpetrated on the unsuspecting client, the provisions of Articles 19, 20 and 21 of the Civil Code of the Philippines come into play. d. Accounting and delivery to principal 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 the principal. Every stipulation exempting the agent from the obligation to render an account shall be void. Northcott v Canon Under such a conditional advance of funds the agent would doubtless be required to account to the company for all expenditures, and under the terms of the bonds the sureties would, perhaps, be liable for his failure so to do, and might be required to refund any part of such advances not satisfactorily accounted for. But even in that event they would not be liable for moneys so advanced and actually expended and accounted for. The covenant of the bond manifestly contemplates merely the failure to account for, or the misappropriation of moneys, securities, etc., payable to, or the property of the company; and any money expended and accounted for under the conditions indicated would cease to be payable to, or the property of the company, the effect of the lawful expenditure of such money being to convert the conditional advance into an absolute one. Mirasol v CA An agents failure to render an accounting to his principal is contrary to Article 1891 of the Civil Code, The erring agent is liable for damages under Article 1170 of the Civil Code, which states: Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. petitioners have failed to show malice or bad faith on the part of PNB in failing to render an accounting. Absent such showing, moral damages cannot be awarded. Filadams Pharma v CA

The essence of estafa under Article 315 (1)(b) of the Revised Penal Code is the appropriation or conversion of money or property received, to the prejudice of the owner thereof. It takes place when a person actually appropriates the property of another for his own benefit, use and enjoyment. The failure to account, upon demand, for funds or property held in trust is circumstantial evidence of misappropriation. The rule that the failure to account, upon demand, for funds or property held in trust is circumstantial evidence of misappropriation applies without doubt in the present case. e. Responsibility negligence for fraud and

g.

Agent authority to contract in principals name

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. Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware. Rustan Pulp and Paper Mills v IAC The President and Manager of a corporation who entered into and signed a contract in his official capacity, cannot be made liable thereunder in his individual capacity in the absence of stipulation to that effect due to the personality of the corporation being separate and distinct from the person composing it.. And because of this precept, Vergara's supposed non-participation in the contract of sale although he signed the letter dated September 30, 1968 is completely immaterial. The two exceptions contemplated by Article 1897 of the New Civil Code where agents are directly responsible are absent and wanting. Manila Remnant v CA In the case at bar, the Valencia realty firm had clearly overstepped the bounds of its authority as agent and for that matter, even the law when it undertook the double sale of the disputed lots. Such being the case, the principal, Manila Remnant, would have been in the clear pursuant to Article 1897 of the Civil Code which states that "(t)he agent who acts as such is not personally liable to that 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." However, the unique relationship existing between the principal and the agent at the time of the dual sale must be underscored. Bear in mind that the president then of both firms was Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the fact that the double sale was beyond the power of the agent, Manila Remnant as principal was chargeable with the knowledge or constructive notice of that fact and not having done anything to correct such an irregularity was deemed to have ratified the same. Manila Memorial Park Cemetery v Linsangan Persons dealing with an agent are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such an inquiry, he is chargeable with knowledge of the agents authority and his ignorance of that authority will not be any excuse. The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them, expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. Moreover, the principal must have knowledge of the acts he is to ratify. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior authority. Ordinarily, the principal must have full knowledge at the time of ratification of all the material facts and circumstances relating

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, according to whether the agency was or was not for a compensation. Metrobank v CA In stressing that it was acting only as a collecting agent for Golden Savings, Metrobank seems to be suggesting that as a mere agent it cannot be liable to the principal. This is not exactly true The agent is responsible not only for fraud, but also for negligence, which shall be judged 'with more or less rigor by the courts, according to whether the agency was or was not for a compensation. Associated Bank v Tan As a general rule, a bank is liable for the wrongful or tortuous acts and declarations of its officers or agents within the course and scope of their employment. Due to the very nature of their business, banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. Jurisprudence has established that the lack of diligence of a servant is imputed to the negligence of the employer, when the negligent or wrongful act of the former proximately results in an injury to a third person; in this case, the depositor. Being the branch manager, Santiago clearly acted within the scope of her authority in authorizing the withdrawal and the subsequent debiting without notice. Accordingly, what remains to be determined is whether her actions proximately caused respondents injury. Proximate cause is that which -- in a natural and continuous sequence, unbroken by any efficient intervening cause --produces the injury, and without which the result would not have occurred. f. Conflict of interest with principal and consequences

Art. 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own. 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. Molina v Pacific Plans While acting as an agent of his employer, an employee owes the duty of fidelity and loyalty. Being a fiduciary, he cannot act inconsistently with his agency or trust. He cannot solicit his employers customers or co-employees for himself or for a business competitor of his employer. If such employee or officer connives with and induces another to betray his employer in favor of a business competitor of his employer, he is held accountable for his mischief.

to the unauthorized act of the person who assumed to act as agent. Thus, if material facts were suppressed or unknown, there can be no valid ratification and this regardless of the purpose or lack thereof in concealing such facts and regardless of the parties between whom the question of ratification may arise. Nevertheless, this principle does not apply if the principals ignorance of the material facts and circumstances was willful, or that the principal chooses to act in ignorance of the facts. However, in the absence of circumstances putting a reasonably prudent man on inquiry, ratification cannot be implied as against the principal who is ignorant of the facts. (1) Performance within scope of agent authority Art. 1900. So far as third persons are concerned, a act is deemed to have been performed within the scope of the agents authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. Esguerra v CA The Civil Code provides that a contract is unenforceable when it is ". . . entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers." And that "(a) contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, . . ." After a thorough review of the case at bench, the Court finds the sale of Esguerra Building II by VECCI to private respondent Sureste Properties, Inc. valid. The sale was expressly and clearly authorized under the judiciallyapproved compromise agreement freely consented to and voluntarily signed by petitioner Julieta Esguerra. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (2) Contract where agent exceeds limits of authority Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of 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 granted by the principal. In this case, however, the agent is liable if he undertook to secure the principals ratification. Art. 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware. Cervantes v CA Under Article 1898 of the New Civil Code, the acts of an agent beyond the scope of his authority do not bind the principal, unless the latter ratifies the same expressly or impliedly. Furthermore, when the third person knows that the agent was acting beyond his power or authority, the principal cannot be held liable for the acts of the agent. If the said third person is aware of such limits of authority, he is to blame, and is not entitled to recover damages from the agent, unless the latter undertook to secure the principals ratification.

Safic Alcan & Cie v Imperial Vegetable Oil Co. It can be clearly seen from the foregoing provision of IVO's Bylaws that Monteverde had no blanket authority to bind IVO to any contract. He must act according to the instructions of the Board of Directors. Even in instances when he was authorized to act according to his discretion, that discretion must not conflict with prior Board orders, resolutions and instructions. The evidence shows that the IVO Board knew nothing of the 1986 contracts[6] and that it did not authorize Monteverde to enter into speculative contracts.[7] In fact, Monteverde had earlier proposed that the company engage in such transactions but the IVO Board rejected his proposal.[8] Since the 1986 contracts marked a sharp departure from past IVO transactions, Safic should have obtained from Monteverde the prior authorization of the IVO Board. Safic can not rely on the doctrine of implied agency because before the controversial 1986 contracts, IVO did not enter into identical contracts with Safic.. Under Article 1898 of the Civil Code, the acts of an agent beyond the scope of his authority do not bind the principal unless the latter ratifies the same expressly or impliedly. It also bears emphasizing that when the third person knows that the agent was acting beyond his power or authority, the principal can not be held liable for the acts of the agent. If the said third person is aware of such limits of authority, he is to blame, and is not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification. (3) Effect of principal ratification by

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. (4) Principals private/secret instructions unavailing against third persons relying on power of attorney or instructions previously shown 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. Cruz v CA Needless to state, since on the face of the document, the "owner/manager" of the "Mang Uro Store", which is written on the column Trade Name, is Lauro Cruz, and not the parties signing the same, it was incumbent upon the private respondent to inquire into the relationship of the signatories to the petitioner or to satisfy itself as to their authority to act for or represent the petitioner. Under the circumstances, it is apparent that petitioner had no direct participation and that the two applicants could have acted without authority from him or as his duly authorized representatives. In either case, for the protection of its interest, private respondent should have made the necessary inquiry verification as to the authority of the applicants and to find out from them whether Lauro Cruz is both the owner and manager or merely the owner or the manager, for that is what "owner/manager" in its form could signify. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. It is for this reason that under Article No. 1902 of the Civil Code, 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, and that 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. h. Rules on commission agents

Art. 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. Art. 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. 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 sale. Art. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. Art. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. Art. 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. Commission merchants agents, brokers, commission

A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some purpose the agent of both parties. A broker is one whose occupation it is to bring parties together to bargain, or to bargain for them, in matters of trade, commerce or navigation. Judge Storey, in his work on Agency, defines a broker as an agent employed to make bargains and contracts between other persons, in matters of trade, commerce or navigation, for compensation commonly called brokerage. A commission merchant is one engaged in the purchase or sale for another of personal property which, for this purpose, is placed in his possession and at his disposal. He maintains a relation not only with his principal and the purchasers or vendors, but also with the property which is subject matter of the transaction Webster defines an indent as "a purchase order for goods especially when sent from a foreign country." It would appear that there are three parties to an indent transaction, namely, the buyer, the indentor, and the supplier who is usually a nonresident manufacturer residing in the country where the goods are to be bought. An indentor may therefore be best described as one who, for compensation, acts as a middleman in bringing about a purchase and sale of goods between a foreign supplier and a local purchaser. Kerr & Co. v Collector Merchant- a person engaged in the sale, barter or exchange of personal property of whatever character Commission merchants have their establishments of own for the keeping and disposal of goods of which sales or exchanges are effected. Sale on credit Toyota Shaw v CA In a sale on installment basis which is financed by a financing company, three parties are thus involved: the buyer who executes a note or notes for the unpaid balance of the price of the thing purchased on installment, the seller who assigns the notes or discounts them with a financing company, and the financing company which is subrogated in the place of the seller, as the creditor of the installment buyer. Since B.A. Finance did not approve Sosa's application, there was then no meeting of minds on the sale on installment basis. Chapter 3: Obligations of the Principal A. 1. Principals obligations to persons with whom the agent contracted Within scope of agent authority

What is a commission agent? One who has possession of the goods of the principal Medrano v CA A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him;he is strictly a middleman and for some purposes the agent of both parties. A broker is one whose occupation is to bring parties together, in matters of trade, commerce or navigation. Procuring cause is meant to be the proximate cause. The term procuring cause, in describing a brokers activity, refers to a cause originating a series of events which, without break in their continuity, result in accomplishment of prime objective of the employment of the broker producing a purchaser ready, willing and able to buy real estate on the owners terms. A broker will be regarded as the procuring cause of a sale, so as to be entitled to commission, if his efforts are the foundation on which the negotiations resulting in a sale are begun. The broker must be the efficient agent or the procuring cause of the sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker. Schmid & Oberly v RJL Martinez Fishing Corp.

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. When is the principal liable for the acts of the agent outside the scope of his authority? 1. When he ratifies it 2. Apparent authority 3. Agency by estoppel 4. Plenary power Bedia v White

If the plaintiffs had any doubt about the capacity in which Bedia was acting, what they should have done was verify the matter with Hontiveros. They did not. Instead, they simply accepted Bedia's representation that she was an agent of Hontiveros and dealt with her as such. Under Article 1910 of the Civil Code, "the principal must comply with all the obligations which the agent may have contracted within the scope of his authority." Hence, the private respondents cannot now hold Bedia liable for the acts performed by her for, and imputable to, Hontiveros as her principal. Woodchild Holdings v Roxas Electric and Construction Roxas was not specifically authorized under the said resolution to grant a right of way in favor of the petitioner on a portion of Lot No. 491-A-3-B-1 or to agree to sell to the petitioner a portion thereof. Under paragraph 12, Article 1878 of the New Civil Code, a special power of attorney is required to convey real rights over immovable property. Article 1358 of the New Civil Code requires that contracts which have for their object the creation of real rights over immovable property must appear in a public document. The petitioner cannot feign ignorance of the need for Roxas to have been specifically authorized in writing by the Board of Directors to be able to validly grant a right of way and agree to sell a portion of Lot No. 491-A-3-B-1. The rule is that if the act of the agent is one which requires authority in writing, those dealing with him are charged with notice of that fact. Powers of attorney are generally construed strictly and courts will not infer or presume broad powers from deeds which do not sufficiently include property or subject under which the agent is to deal. The general rule is that the power of attorney must be pursued within legal strictures, and the agent can neither go beyond it; nor beside it. The act done must be legally identical with that authorized to be done. In sum, then, the consent of the respondent to the assailed provisions in the deed of absolute sale was not obtained; hence, the assailed provisions are not binding on it. Apparent authority is based on estoppel and can arise from two instances: first, the principal may knowingly permit the agent to so hold himself out as having such authority, and in this way, the principal becomes estopped to claim that the agent does not have such authority; second, the principal may so clothe the agent with the indicia of authority as to lead a reasonably prudent person to believe that he actually has such authority. There can be no apparent authority of an agent without acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment. The apparent power of an agent is to be determined by the acts of the principal and not by the acts of the agent. For an act of the principal to be considered as an implied ratification of an unauthorized act of an agent, such act must be inconsistent with any other hypothesis than that he approved and intended to adopt what had been done in his name. Ratification is based on waiver- the intentional relinquishment of a known right. Ratification cannot be inferred from acts that a principal has a right to do independently of the unauthorized act of the agent. Moreover, if a writing is required to grant an authority to do a particular act, ratification of that act must also be in writing. Areola v CA

A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit. 2. Beyond scope of agent authority but with ratification by principal or agency by estoppel

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. Art. 1911. Even when the agent has exceeded his authority, the principal is soldarily liable with the agent if the former allowed the latter to act as though he had full powers. Manila Remnant v CA In the case at bar, the Valencia realty firm had clearly overstepped the bounds of its authority as agent and for that matter, even the law when it undertook the double sale of the disputed lots. Such being the case, the principal, Manila Remnant, would have been in the clear pursuant to Article 1897 of the Civil Code which states that "(t)he agent who acts as such is not personally liable to that 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." However, the unique relationship existing between the principal and the agent at the time of the dual sale must be underscored. Bear in mind that the president then of both firms was Artemio U. Valencia, the individual directly responsible for the sale scam. Hence, despite the fact that the double sale was beyond the power of the agent, Manila Remnant as principal was chargeable with the knowledge or constructive notice of that fact and not having done anything to correct such an irregularity was deemed to have ratified the same. By the principle of estoppel, Manila Remnant is deemed to have allowed its agent to act as though it had plenary powers. In essence, therefore, the basis for Manila Remnant's solidary liability is estoppel which, in turn, is rooted in the principal's neglectfulness in failing to properly supervise and control the affairs of its agent and to adopt the needed measures to prevent further misrepresentation. As a consequence, Manila Remnant is considered estopped from pleading the truth that it had no direct hand in the deception employed by its agent. Cuison v CA One who clothes another with apparent authority as his agent and holds him out to the public as such cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith and in the honest belief that he is what he appears to be. Tiu Huy Tiac, therefore, by petitioner's own representations and manifestations, became an agent of petitioner by estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon (Article 1431, Civil Code). A party

cannot be allowed to go back on his own acts and representations to the prejudice of the other party who, in good faith, relied upon them. Taken in this light, petitioner is liable for the transaction entered into by Tiu Huy Tiac on his behalf. Thus, even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to fact as though he had full powers. 3. Double contracting with principal and agent

Should the agent have advanced them, the principal must reimburse him therefore, 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 advance was made. a. Exceptions

Art. 1916. When two persons contract with regard to 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 the prior date shall be preferred, without prejudice to the provisions of article 1544. Art. 1917. In the case referred to in the proceeding article, if the agent has acted in good faith, the principal shall be liable in damages to the third person whose contract must be rejected. If the agent acted in bad faith, he alone shall be responsible. Sta. Romana v Imperio The vendor warrants his title to the thing sold, and that, in the event of eviction, the vendee shall be entitled to the return of the value which the thing sold has at the time of the eviction, be it greater or less than the price of the sale. Said contract is governed by Title VI of the same Book, on Sales in particular, specially by the aforesaid Articles 1495, 1547 and 1555, which are part of said Title VI, regarding breach of the warranty arising from a valid contract of sale, due to the application of Art. 1544 of the same title, regulating the effects of double sales. Incidentally, these provisions suggest, also, the remedies available to appellant herein. B. Principals obligations to the agent 1. Solidary liability to common agent

Art. 1918. The principal is not liable for the expenses incurred by the agent in the following cases: (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 the agent; (3) When the agent incurred them with knowledge that an unfavourable result would ensue, if the principal was not aware thereof; (4) When it was stipulated that the expenses would be borne by the agent, or that the latter would be allowed only a certain sum. Uy v CA Even though the agent has not settled with his principal, he may, by agreement with the principal, have a right to receive payment and out of the proceeds to reimburse himself for advances and commissions before turning the balance over to the principal. In such a case, although there is no formal assignment, the agent is in the position of a transferee of the whole claim for security; he has an irrevocable power to sue in his principals name and, under statutes which permit the real party in interest to sue, he can maintain an action in his own name. While they alleged that they made advances and that they suffered loss of commissions, they have not established any agreement granting them the right to receive payment and out of the proceeds to reimburse [themselves] for advances and commissions before turning the balance over to the principals. An agent does not have such an interest in a contract as to entitle him to maintain an action at law upon it in his own name merely because he is entilted to a portion of the proceeds as compensation for making it or because he is liable for its breach. The fact that an agent who makes a contract for his principal will gain or suffer loss by the performance or nonperformance of the contract by the principal or by the other party thereto does not entitle him to maintain an action on his own behalf against the other party for its breach. An agent entitled to receive a commission from his principal upon the performance of a contract which he has made on his principals account does not, from this fact alone, have any claim against the other party for breach of the contract, either in an action on the contract or otherwise. An agent who is not a promisee cannot maintain an action at law against a purchaser merely because he is entitled to have his compensation or advances paid out of the purchase price before payment to the principal. b. Agents right of retention in pledge

Art. 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. De Castro v CA Constante signed the note as owner and as representative of the other co-owners. Under this note, a contract of agency was clearly constituted between Constante and Artigo. Whether Constante appointed Artigo as agent, in Constante's individual or representative capacity, or both, the De Castros cannot seek the dismissal of the case for failure to implead the other co-owners as indispensable parties. The De Castros admit that the other co-owners are solidarily liable under the contract of agency , citing Article 1915 of the Civil Code. When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency, each obligor may be compelled to pay the entire obligation The agent may recover the whole compensation from any one of the co-principals. 2. Pay necessary sums and expenses incurred for execution of the agency

Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. Only applicable to movable property. Why? Because possession of immovable property can ripen into ownership. 3. Indemnify all damages caused by execution of the agency without fault or negligence

Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Art. 1913. The principal must also 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. Chapter 4: Modes of Extinguishment of Agency Art. 1919. Agency is extinguished by: (1) By its revocation; (2) By the withdrawal by the agent; (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; (4) By the dissolution of the firm or corporation which entrusted or accepted the agency; (5) By the accomplishment of the object or purpose of the agency; (6) By the expiration of the period for which the agency was constituted. Can be revoked at will? YES Agency coupled Except: Bilateral contract with an interest Means of fulfilling Partner appointed Mode of revocation: Purpose General or special? implied express ------------------------------------------------------except: just causes (Art. 1170, NCC) see rescission vis--vis resolution A. Revocation by the principal

be entitled to collect damages from CMS, since damages generally not awarded to the agent for the revocation of agency, and the case at bar is not one falling under exception mentioned, which is to evade the payment of agent's commission.

are the the the

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. 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. 1. Principal revocation at will

Barretto v Santa Marina What did occur was that, in view of the resignation tendered by the plaintiff for the reasons which he himself conscientiously deemed to warrant his surrender of the position he was holding in the La Insular factory, the principal owner of this establishment, the defendant Santa Marina, had to look for and appoint another agent and manager to relieve and substitute him in the said employment ---- a lawful act performed by the principal owner of the factory and one which cannot serve as a ground upon which to demand from the latter an indemnity for losses and damages, inasmuch as, in view of the facts that occurred and were acknowledged and confessed by Barretto in is letters, the plaintiff could not expect, nor ought to have expected, that the defendant should have insisted on the unsuccessful agent's continuance in his position, or that he should not have accepted the resignation tendered by the plaintiff in his first letter. By the mere fact that the defendant remained silent and designated another person, Mr. J. McGavin, to discharge in the plaintiff's stead the powers and duties of agent and manager of the said factory, Barretto should have understood that his resignation had been accepted and that if its acceptance was not communicated to him immediately it was owing to the circumstance that the principal owner of the factory did not then have, nor until several months afterwards, any other person whom he could appoint and place in his stead, for, as soon as the defendant Santa Marina could appoint the said McGavin, he revoked the power he had conferred upon the plaintiff and communicated this fact to the latter, by means of the letter, which was presented to him by the bearer thereof, McGavin himself, the new manager and agent appointed. From the mere fact that the principal no longer had confidence in the agent, he is entitled to withdraw it and to revoke the power he conferred upon the latter, even before the expiration of the period of the period of the engagement or of the agreement made between them; but, in the present case, once it has been shown that, between the deceased Joaquin Santa Marina and the latter's heir, now the defendant, on the one hand, and the plaintiff Barretto, on the other, no period whatever was stipulated during which the last-named should hold the office of agent manager of the said factory, it is unquestionable that the defendant, even without good reasons, could lawfully revoke the power conferred upon the plaintiff and appoint in his place Mr. McGavin, and thereby contracted no liability whatever other than the obligation to pay the plaintiff the salary pertaining to one month and some odd days. 2. Principal directly manages the business

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. Why allow principal to revoke at will? Agency primarily serves his interest. CMS Logging v CA The principal may revoke a contract of agency at will, and such revocation may be express, or implied, and may be availed of even if the period fixed in the contract of agency as not yet expired. As the principal has this absolute right to revoke the agency, the agent can not object thereto; neither may he claim damages arising from such revocation, unless it is shown that such was done in order to evade the payment of agent's commission. CMS appointed DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms. This act constituted an implied revocation of the contract of agency under Article 1924 of the Civil Code. Since the contract of agency was revoked by CMS when its sold its logs to Japanese firms without the intervention of DRACOR, the latter is no longer entitled to its commission from the proceeds of such sale and is not entitled to retain whatever moneys it may have received as its commission for said transactions. Neither would DRACOR

Art. 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. Policarpio v CA We hold that an implied trust was created by the agreement between petitioner (and other tenants) and private respondent. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction by operation of law as matters of equity, independently of the particular intention of the parties. Constructive trusts are created in order to satisfy the demands of justice and prevent unjust enrichment. They arise against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. It is not necessary that the intention of the tenants to purchase their apartments units be categorically stated in the purposes of their Association. A constructive trust as invoked by petitioner can be implied from

the nature of the transaction as a matter of equity, regardless of the absence of such intention in the purposes of their Association. A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property of which equity, in accordance with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision, takes cognizance. It has been broadly ruled that a breach of confidence, although in business or social relations, rendering an acquisition or retention of property by one person unconscionable against another, raises a constructive trust. 3. Principal business appoints new agent for same

partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. Stated differently, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agents interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agents interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agents interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship. Dela Rama Steamship v Tan Held: Agreement was an agency coupled with an interest on the first year when agent made investments on the ships and got part of the profits. Thereafter, it became a simple agency notwithstanding the fact that agent has the right to purchase the ships after the 5th year. Thus, principal may validly revoke at will the management agreement. B. Withdrawal by agent

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. 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 therefore, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. 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. How? Due notice no particular form Indemnification except impossibility of performance or prejudice to agent Withdrawal of counsels still act as counsel until court approval If third parties will not be prejudiced, no notice or specific form is revoke the agency. Revocation is between the principal and agent. Mode/binding effect is considered for third parties. Art. 1929 refers to preservative acts only, not the fulfilment of the agency. Dela Pena v Hidalgo From the procedure followed by the agent, Federico Hidalgo, it is logically inferred that he had definitely renounced his agency was duly terminated, according to the provisions of article 1732 of the Civil Code, because, although in the said letter of March 22, 1894, the word "renounce" was not employed in connection with the agency or power of attorney executed in his favor, yet when the agent informs his principal that for reasons of health and by medical advice he is about to depart from the place where he is exercising his trust and where the property subject to his administration is situated, abandons the property, turns it over a third party, without stating when he may return to take charge of the administration, renders accounts of its revenues up to a certain date, and transmits to his principal a general statement which summarizes and embraces all the balances of

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. 4. Principals issuance of SPA to another agent prevails over general power of attorney previously given

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. 5. When revocation cannot be made; agency coupled with an interest

Art. 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership and his removal from the management is unjustifiable. Jurisprudence refers to this as agency coupled with an interest When a bilateral contract depends upon the agency essential elements of bilateral contract depends on agency. Example: A buys from B. A makes B his agent to collect money from C. Amount B collects will be applied to the purchase price still not paid by A. When the agency is the means of fulfilling an obligation already conracted without the agency, the previous obligation will become potestative. Lim v Saban Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a

his accounts since he began to exercise his agency to the date when he ceased to hold his trust, and asks that a power of attorney in due form in due form be executed and transmitted to another person who substituted him and took charge of the administration of the principal's property, it is then reasonable and just to conclude that the said agent expressly and definitely renounced his agency, and it may not be alleged that the designation of Antonio Hidalgo to take charge of the said administration was that of a mere proceed lasted for more than fifteen years, for such an allegation would be in conflict with the nature of the agency. This renouncement was confirmed by the subsequent procedure, as well as of the agent as of the principal, until the latter died, on August 2, 1902, since the principal Pea did not disapprove the designation of Antonio Hidalgo, nor did he appoint another, nor send a new power of attorney to the same, as he was requested to by the previous administrator who abandoned his charge; and the trial record certainly contains no proof that the defendant, since he left these Islands in March, 1894, until January, 1904, when he returned to this city, took any part whatever, directly or even indirectly, in the said administration of the principal's property, while Antonio Hidalgo was the only person who was in charge of the aforementioned administration of De la Pea y Gomiz's property and the one who was to represent the latter in his business affairs, with his tacit consent. From all of which it is perfectly concluded (unless here be proof to the contrary, and none appears in the record), that Antonio Hidalgo acted in the matter of the administration of the property of Jose de la Pea y Gomiz by virtue of an implied agency derived from the latter, in accordance with the provisions of Art 1710 of the Civil Code. Valera v Velasco The fact that an agent institutes an action against his principle for the recovery of the balance in his favor resulting from the liquidation of the accounts between them arising from the agency and renders a final accounts of his operations is equivalent to an express renunciation of the agency and terminates the juridical relation between them. C. Death, civil interdiction, insanity, insolvency of principal OR agent

execution of any power of attorney in favor of Coleongco. But granting appellant's view, it must not be forgotten that a power of attorney can be made irrevocable by contract only in the sense that the principal may not recall it at his pleasure; but coupled with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney- in-fact betrays the interest of the principal, as happened in this case. It is not open to serious doubt that the irrevocability of the power of attorney may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the agent, for that would amount to holding that a power, coupled with an interest authorizes the agent to commit frauds against the principal. Article 1172, expressly provides the contrary in prescribing that responsibility arising from fraud is demandable in all obligations, and that any waiver of action for future fraud is void. It is also on this principle that the Civil Code, in its Article 1800, declares that the powers of a partner, appointed as manager, in the articles of copartnership are irrevocable without just or lawful cause; and an agent with power coupled with an interest can not stand on better ground than such a partner in so far as irrevocability of the power is concerned. Rallos v Felix Go Chan & Sons Realty Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of his principal is valid and effective only under two conditions, viz: (1) that the agent acted without knowledge of the death of the principal, and (2) that the third person who contracted with the agent himself acted in good faith. Good faith here means that the third son was not aware of the death of the principal at the time he contracted with said agent. These two requisites must concur: the absence of one will render the act of the agent invalid unenforceable. Article 1919 provides the general rule that the death of the principal extinguishes the agency. That being the general rule it follows a fortiori that any act o an agent after the death of his principal is void ab initio unless the same falls under the exceptions provided for in the aforementioned Articles 1930 and 1931. Article 1931, being an exception to the general rule, is to be strictly construed; it is not to be given an interpretation or application beyond the clear import of its terms for otherwise the courts will be involved in a process of legislation outside of their judicial function. D. Dissolution of the firm or corporation which entrusted or accepted the 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. 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. Art. 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt such measures as the circumstances may demand in the interest of the latter. Coleongco v Claparols It is first contended by the appellant Coleongco that the power of attorney was made to protect his interest under the financing agreement, and was one coupled with an interest that the appellee Claparols had no legal power to revoke. This point can not be sustained. The financing agreement itself already contained clauses for the protection of appellant's interest, and did not call for the

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. Lustan v CA The SPA executed by petitioner in favor of Parangan duly authorized the latter to represent and act on behalf of the former. Having done so, petitioner clothed Parangan with authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the last three loans were without the express authority of petitioner, it cannot be prejudiced thereby. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such is within the terms of the power of attorney as written even if the agent has in fact exceeded the limits of his authority according to the understanding between the principal and the agent. The SPA particularly provides that the same is good not only for the principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument and a copy of which is furnished to PNB. Even when the agent has exceeded his authority, the principal is solidarily liable with the

agent if the former allowed the latter to act as though he had full powers. E. Accomplishment of the object or purpose of the agency

Art. 1231. (1) Obligations are extinguished: (1) By payment or performance; (2) By the loss of the thing due; (3) By the condonation or remission of the debt; (4) By the confusion or merger of the rights of creditor and debtor; (5) By compensation; (6) By novation. F. Expiration of the period for which agency was constituted

Art. 1231. (last paragraph) Other causes of extinguishment of obligations, such as annulment, rescission, fulfilment of a resolutory condition, and prescription, are governed elsewhere in this Code. Art. 1193. (2) Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.