Escolar Documentos
Profissional Documentos
Cultura Documentos
CONTRACT OF AGENCY
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. (Art. 1868)
Agency is based on the fiduciary relationship. It continues as long as the
agent enjoys the trust and confidence of the principal
Example:
P, owner of land, wants to construct a building on it. He may secure the
services of A to supervise and to act for him in all matters connected with the
construction work.
1. PRINCIPAL
one whom the agent represents and from who he derives his authority
person represented
must be legally competent to act for himself
2. AGENT
One who acts for and represents another
Person acting in a representative capacity
Must be legally competent to enter into any contract(not absolute)
Ordinary intelligence is sufficient qualification
Can be minors, provided that he acts within the scope of his authority
3. THIRD PERSONS
Individuals, partnerships, or corporations
Generally, all acts that a man can do in person can be delegated to the agent.
Exceptions:
a. Personal acts
Right of Suffrage
Right to attend board meetings (for members of the board of directors)
Making of a will
Statements required to be made under oath personally
b. Criminal acts or acts not allowed by law
KINDS OF AGENCY
(4) As to authority:
a. 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
ACTS OF ADMINISTRATION
Those which do not imply the authority to alienate for the exercise of
which an express power is necessary. This includes the acts necessary
to the proper operation of the business. The authority of the agent is
presumed to include all the necessary and usual means to carry out
the agency into effect
EXPRESS ACCEPTANCE
Done through unequivocal terms like, “I agree” or “I accept”
IMPLIED ACCEPTANCE
1. Acts which carry out the agency
P appointed A to be his agent to look for a buyer of his car. A did not
expressly accept or refused. The next day, A looked for a buyer and found
one. A’s acceptance is implied.
2. Silence or Inaction according to the circumstances
a. Acceptance between persons who are present
The agent receives a power of attorney from the principal himself
personally without any objection
Power of Attorney
Written authorization to an agent to perform specified acts in behalf
of his principal which acts, when performed, shall have binding effect
on the principal
KINDS OF PRINCIPALS
1. DISCLOSED PRINCIPAL
If at the time of the transaction contracted by the agent, the other
party thereto has notice that the agent is acting for a principal and of
the principal’s identity
2. PARTIALLY DISCLOSED PRINCIPAL
If the other party has notice that the agent is or may be acting for a
principal but has no notice of the principal’s identity
3. UNDISCLOSED PRINCIPAL
If the other party has no notice that the agent is acting for a principal
KINDS OF AGENTS
1. UNIVERSAL AGENT
One authorized to do all acts that the principal may personally do,
and which he can lawfully delegate to another the power of doing.
2. GENERAL AGENT
One who is authorized to transact all of his principal’s business of a
particular kind or all of his principal’s business at a given place. The
agent has the power to perform any act necessary in connection with
the particular kind of business entrusted to him.
Given the Genral Power of Attorney by the principal
POWER OF ATTORNEY
Authority given to the agent in writing.
COMPROMISE
Both parties give up certain concessions in order to come to final
solution
Principal grants agent authority base on the trust and confidence he
has in the judgment of the agent
ARBITRATION
Involves third persons
Arbitrator does not enjoy the trust and confidence of the principal
AUTHORITY POWER
AS TO EXISTENCE Source or cause Effect
AS BETWEEN AGENT AND An act is within authority
An act is within his power
PRINCIPAL if it is not a violation of
if he has the legal ability
his duty to bind the principal,
although it constitutes a
violation of duty
AS TO THIRD PERSONS An act within the power of the agent is deemed
within the scope of his authority even if the agent has
exceeded the limits of his authority
KINDS OF AUTHORITY
1. ACTUAL
Actually granted
May be express or implied
2. EXPRESS
Conferred by words
3. IMPLIED
Incidental to the transaction
Reasonably necessary to accomplish the purpose of the agency
4. APPARENT OR OSTENSIBLE
Conferred by conduct or silence
5. GENERAL
Refers to all business of the principal
6. SPECIAL
Limited only to one or more specific transactions
7. AUTHORITY BY NECESSITY
It is demanded by virtue of the existence of an emergency
OBLIGATIONS OF THE AGENT TO THE PRINCIPAL
INSTRUCTION
Private orders of the principal as to the method of carrying out the
agency
Not binding upon third parties with whom the agent contracts, unless he
has personal knowledge of such
CASES WHER THE PRINCIPAL IS NOT LIABLE FOR THE EXPENSES INCURRED BY
THE AGENT:
1. If the agent acted in contravention of the principal’s 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 unfavorable 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
REVOCATION OF AGENCY
The principal may revoke the agency at will, and compel the agent to return
the document evidencing the agency. It is called RENUNCIATION if done by
the agent
The principal is liable for damages by the wrongful discharge of the agent or
wrongful revocation before the expiration of the period fixed
EXPRESS REVOCATION
Done through spoken words
IMPLIED REVOCATION
THREE FORMS:
1. When the principal appoints a new agent for the same business or
transaction covered by a previous agency
The revocation will take effect only from the day notice of the
appointment of new agent is given to him
2. When the principal directly manages the business entrusted to the agent
EFFECTS OF DIRECT MANAGEMENT:
a. If the desire of the principal is to manage the business with the agent,
the agency is revoked
b. If the purpose of the principal is to avoid payment of the agent’s
commission, the revocation is deemed made in bad faith and cannot be
sanctioned without the commission which is due the agent
3. When the principal executes a special power of attorney as regards special
matter covered by a general power of attorney
Naturally, a specific power prevails over a general power
Example:
P appoints A as manager of P’s business through a general power of
attorney. The authority of A covers everything that is usual and necessary in
the conduct of the business including hiring of employees. If subsequently
P, grants a special power of attorney to B to hire personnel for his business,
the general power covering the hiring of employees of A is revoked.
ONLY the matters covered by the special power are revoked, the general
power remains valid
MANNER OF REVOCATION
The agency must be revoked the same manner the agency was constituted
If the agency is created for the purpose of contracting with specific persons,
it srevocation will not prejudice such third person unitl notice thereof is
given them
In case the agent has general powers, innocent third persons shall not be
prejudiced by the revocation before they had knowledge thereof. Notice of
the revocation in a newspaper of general circulation is sufficient warning to
third persons
AGENCY COUPLED WITH AN INTEREST – where the agent has parted with value
or incurred liability at the principal’s request, looking to the exercise of the
power as the means of reimbursement or indemnity
Agency shall remain in full force and effect even after the death of the principal if:
1. The agency is created not only for the interest of the principal but also for
the interest of third persons
2. The agency is created for the mutual interest of both the principal and the
agent
In the case the agent died, his heirs must notify the principal thereof and wrap up
the business or continue the agency until the principal has adopted measures as
the circumstance demand for his interest.
CIVIL INTERDICTION
A form of disqualification which deprives the offender during the period of
his sentence of the right to manage and dispose property by any act or
conveyance inter vivos
DEPOSIT
A real contract whereby a person receives a thing belonging to another, w/ the
obligation of safely keeping it and of returning the same.
Movable or immovable property may be the object
Depositor can demand the return of the subject matter at will
CHARACTERISTICS OF DEPOSIT
1. REAL – it is perfected by delivery of the object
2. CONSENSUAL – mere agreement to constitute a deposit is binding, but is not perfected
until the delivery of the thing
3. PRINCIPAL
4. NOMINATE
5. GENERALLY GRATUITOUS except when (1)there is an agreement to the contrary,
(2)where the depositary is engaged in business of storing goods, and (3) where
property is saved from destruction w/o knowledge of the owner
6. UNILATERAL – if there is no compensation OR BILATERAL – if there is compensation
PARTIES TO A DEPOSIT
1. DEPOSITOR – he delivers the thing to another for safekeeping
2. DEPOSITARY – person to whom the thing is delivered for safekeeping
KINDS OF DEPOSIT
JUDICIAL (SEQUESTRATION) EXTRAJUDICIAL
Takes place by the order of the court; Constituted by will of the parties
attachment or seizure of property in Can be either voluntary or necessary
litigation is ordered
Purpose is to put the property in Purpose is for safekeeping of the thing
custodial egis for the protection of the
plaintiff
Onerous Generally gratuitous
Object may be movable or immovable Only movables may be the object
Cannot be relieved of his responsibility Depositor may demand the return of
until the controversy comes to an end, the thing deposited even before the
unless the court so orders specified time for such return has
arrived
VOLUNTARY DEPOSIT
That wherein the delivery is made by the will of the depositor
Generally, depositor must own the thing deposited. But it may belong to a third person,
for the latter can also be the depositor
If two or more persons each claiming to be entitled to a thing, may deposit the same
with a third person who assumes the obligation to return the thing to who really it
belongs. Conflict of claims shall be settled through an interpleader
DEPOSITARY CAPACITATED DEPOSITARY
& DEPOSITOR INCAPACITATED
INCAPACITATED &DEPOSITOR CAPACITATED
DEPOSITARY… … is subject to all the … does not incur the
obligations obligations of the depositary
… must return the property … is liable to return the thing
to the legal representative of deposited while still in his
the depositor or to the possession
depositor himself if he should … must pay the depositor the
acquire capacity amount w/c he may have
benefited himself OR pay its
price subject to the right of
third persons who acquired
the thing in good faith
GUARANTY
A person, the guarantor binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so
May secure the performance of voidable, natural, or unenforceable contracts but not
void contracts
PARTIES INVOLVED
1. Principal debtor
2. Principal creditor
3. Guarantor
CHARACTERISTICS OF GUARANTY
1. ACCESSORY – it is dependent on the existence of a principal obligation
2. SUBSIDIARY – takes effect only upon the failure of the principal debtor in his obligation
3. CONSENSUAL – it is perfected by mere consent
4. NOMINATE – has a definite name in the Civil Code
5. UNILATERAL – it only gives rise duty to the guarantor
6. GRATUITOUS – guarantor does not receive any consideration for his guaranty, unless there
is a stipulation to the contrary
CLASSIFICATIONS OF GUARANTY
1. IN ITS BROAD SENSE:
a. PERSONAL – guarantee is the credit given by the person who guarantees the
fulfillment of the principal obligation
b. REAL – guaranty is property, movable or immovable
2. AS TO ITS ORIGIN
a. CONVENTIONAL – one constituted by agreement of the parties
b. LEGAL – one imposed by virtue of a provision of law
c. JUDICIAL – one required by a court to guarantee the eventual right of one of the
parties in the case
3. AS TO CONSIDERATION
a. GRATUITOUS – guarantor does not receive any price or remuneration
b. ONEROUS – guarantor receives valuable consideration
4. AS TO PERSON GUARANTEED
a. SINGLE – one constituted solely to guarantee performance of the principal
obligation
b. DOUBLE / SUB-GUARANTY – constituted to secure the fulfillment of a prior
guaranty
5. AS TO SCOPE & EXTENT
a. DEFINITE – guaranty is limited to the principal obligation or part only
b. INDEFINITE / SIMPLE – guaranty includes not only the principal obligation but also
all its accessories including judicial costs
SUB-GUARANTY
Guaranty constituted in favor of another guarantor, with the latter’s consent, or w/o
his knowledge, or even over his objection
EXTENT OF GUARANTY
1. The guarantor cannot bind himself for more than the principal debtor. If he does, his
liability shall be reduced to the limits of that of the debtor
2. The guarantor may bind himself for less than the principal debtor
3. A guaranty may also be given as security to future debts, which amount is not yet
known, and conditional obligations. But the creditor cannot claim from the guarantor
until the debt is liquidated
4. A guaranty must be express and cannot extend to more than what is stipulated
5. The guaranty shall comprise the principal obligation, accessories and judicial costs (if
judicially required) if it is a simple or indefinite guaranty
QUALIFICATIONS OF GUARANTOR
1. He possesses integrity
2. He has capacity to bind himself
3. He has sufficient property
SURETYSHIP
An accessory agreement by w/c a person binds himself for another already bound,
either in whole or part, as for his debt
*THE SUB-GUARANTOR, or the guarantor of the guarantor, shall also enjoy the benefit of
excussion not only w/ respect to the principal debtor but also w/ the guarantor
IF THERE ARE SEVERAL GUARANTORS FOR THE SAME DEBT AND ONLY ONE DEBTOR:
1. The guarantors are jointly liable, except when solidarity was stipulated
They are not liable to the creditor beyond the shares they are respectively bound
to pay
2. Shall be liable for the deficiency of the obligation of the debtor, proportionate to the
share of their obligation
Only after the creditor has exhausted the properties of the debtor and has
resorted to all the legal remedies
COMPROMISE
Contract whereby the parties, by making reciprocal concession, avoid a litigation or
put an end to one already commenced
*The creditor and the principal debtor can enter into compromise provided that it will
not prejudice the guarantor
*The guarantor and the creditor can enter into compromise provided that it will not
prejudice the principal debtor
CASES WHERE THE GUARANTOR MAY PROCEED AGAINST THE PRINICPAL DEBTOR EVEN
BEFORE PAYMENT:
1. When he is sued for the payment
2. If the principal debtor becomes insolvent or is in imminent danger of becoming one
3. When a specified period binding him to the guaranty has expired
4. When the debt has become demandable by reason of expiration of the period for
payment
5. After the lapse of 10 years, when the principal obligation has no fixed period for its
maturity, unless it be natural that it cannot be extinguished except w/in a period
longer than 10 years
6. If there are reasonable grounds to fear that the principal debtor intends to abscond
*A person who becomes a guarantor for the debt of a third person who is absent, by the request
of another, can claim reimbursement from: (1) person who made the request or (2) the debtor
EFFECTS OF GUARANTY BETWEEN CO-GUARANTORS
*If one of the guarantors has paid the debt, he may demand from the others, the share, w/c is
proportionally owing from him, ONLY if a judicial demand has been made or the debtor is
insolvent
*If any of the guarantors become insolvent, his share shall be borne by the other including the
payer, in the same proportion, ONLY if judicial demand has been made or the debtor is
insolvent
*The co-guarantors may set up against the one who paid, the same defenses w/c would have
pertained to the principal debtor against the creditor, and w/c are not purely personal to the
debtor
*A sub-guarantor is liable to the co-guarantors in the same manner as the guarantor, if the
latter whom he is bounded, becomes insolvent
CAUSES OF EXTINGUISHMENT OF GUARANTY
1. Usual methods of extinguishing the principal obligation
2. Annulment
3. Rescission
4. Fulfillment of a resolutory condition
5. Prescription
6. Voluntary acceptance of immovable or other property in payment of the debt
The guarantor remains to be released even if the creditor is evicted
7. Release made by the creditor in favor of one of the guarantors
If w/ the consent of other guarantors, they are solidarily liable for the whole
debt
If w/o the consent of other guarantor, benefits extend to the share of the
guarantor to whim it has been granted
8. Release through extension
If the creditor grants an extension to the debtor w/o the consent of the
guarantor, the latter is discharged
9. When by some act of or by the fault of the creditor, the guarantor cannot be subrogated
to the rights, mortgages, and preferences of the creditor
BOND
An undertaking that is sufficiently secured and not for cash or currency
BONDSMAN
Surety offered in virtue of a provision of law or of a judicial order
Must have the qualifications required of a guarantor
*If the person required to give a legal or judicial bond should not be able to do so, a pledge or
mortgage is sufficient to cover the obligation
*Judicial bondsman cannot demand the exhaustion of the property of the principal debtor
*Sub-surety cannot demand the exhaustion of the property of the principal debtor and surety
CONTRACT OF LOAN
Is a real contract because the delivery of the thing is necessary for the perfection of the
contract
Is a unilateral contract because once the subject matter has been delivered, it creates
obligation on the part of only one of the parties
KINDS OF LOAN
1. COMMODATUM
The bailor delivers to the bailee a non-consumable thing so that the latter may
use it for a certain time and return the identical thing
BAILOR - lender
BAILEE – borrower
PRECARIUM – a kind of commodatum where the bailor may demand the thing at will. A
contract by w/c the owner of a thing, at the request of another person, gives the latter the
thing for use as long as the owner shall please
2. SIMPLE LOAN (MUTUUM)
Lender delivers to the borrower money or consumable thing upon the condition
that the latter shall pay the same amount of the same kind and quality
DISTINCTIONS BETWEEN COMMODATUM & MUTUUM
COMMODATUM MUTUUM
Subject matter involves non-consumables Subject matter is money or consumables
Ownership of the thing loaned is retained Ownership is transferred to borrower
by the lender
Essentially gratuitous May be gratuitous or onerous with
stipulation to pay interest
Borrower must return the same thing Borrower need only pay the same amount
loaned of the same kind and quality
May involve real or personal property Involves only real property
A loan for use (including the fruits, unless A loan for consumption
a stipulation to the contrary has been
agreed upon)
Bailor may demand return of the thing May not demand its return before the
loaned before the expiration of the term in lapse of the term agreed upon
urgent needs
Loss is suffered by the bailor Borrower suffers the loss
NATURE OF COMMODATUM
Commodatum is purely personal in character, thus it has the following effects:
a. Death of either the bailor or bailee extinguishes the contract
b. Bailee can neither lend nor lease the object of the contract to third persons
c. Bailee’s household may use the thing loaned, unless there is a stipulation to the contrary
or the nature of the thing forbids such use
In Commodatum, the bailor need not be the owner of the thing loaned for what is transferred
in the contract is the ‘use’ not the ownership
RIGHTS & OBLIGATIONS OF BAILEE
1. To take care of the thing loaned w/ the diligence of a good father
2. To pay for the ordinary expenses for the use and preservation of the thing loaned
3. To be liable for the loss of the thing, even if caused by fortuitous event if:
a. He devotes the thing to any purpose different from that for w/c if has been loaned OR
IF HE ACTED IN BAD FAITH
b. He keeps it longer than the period stipulated, or after the accomplishment of the use for
w/c it has been constituted OR WHEN HE INCURS DELAY
c. The thing loaned has been delivered w/ appraisal of its value
Bailee will not be liable if there’s a stipulation exempting him from
responsibility
d. He lends or leases the thing to third persons other than the members of his household
e. He chooses to save his own thing rather than what he had borrowed OR IF HE SHOWS
INGRATITUDE AFTER THE THING IS GRATUITOUSLY LOANED TO HIM
4. He shall not be liable for the deterioration if he is w/o fault
5. He can only exercise the right of retention with respect to the damages he may incurred for
the flaws of the thing loaned w/c the bailor has knowledge of but did not inform him BUT
he cannot exercise it for the grounds of non-reimbursement of expenses
6. If there are two or more bailees, their liability or obligation is joint
RIGHTS & OBLIGATIONS OF BAILOR
1. To demand the thing at will if:
a. There is no stipulation as to the duration of the contract or the use to w/c the thing
loaned should be devoted
b. The use of the thing is merely tolerated by the owner
2. To demand the immediate return of the thing if the bailee:
a. Should commit offenses against the person, honor or property of the bailor, or his wife
or children under his parental authority
b. Imputes to the bailor any criminal offense or any act involving moral turpitude
c. Unduly refuses the bailor support when the former is legally or morally bound to give
support
3. Bailor cannot exempt himself from the payment of the expenses or damages by abandoning
the thing to the bailee
4. To be liable for damages suffered by the bailee, provided that the following requisites are
present:
a. There is a hidden flaw or defect in the thing loaned
b. The bailor is aware of such flaw or defect
c. He does not advise the bailee of such flaw or defect
5. To refund the bailee of the extraordinary expenses made for the preservation of the thing,
provided that the bailee notifies the bailor before incurring such expenses.
In cases of urgent incidences, the bailee need not wait for the reply to the notification
to make such expenses if the waiting will entail danger
6. To be solidarily liable with the bailee on extraordinary expenses arising from the actual use
of the thing loaned (Ratio = 50:50)
EXTINGUISHMENT OF COMMODATUM
1. Expiration of the period or accomplishment of the use as stipulated
2. Death of either the bailor or bailee
The penalty of arresto mayor or a fine amounting to twice the value of the property shall be
imposed upon:
1. Anyone who shall knowingly remove any personal property mortgaged under the
Chattel Mortgage Law w/o the written consent of the mortgagee, or his executors,
administrators or assigns
2. Any mortgagor who shall sell or pledge personal property already pledged under the
terms of the Chattel Mortgage Law w/o the consent of the mortgagee written on the
back of the mortgage and noted on the record in the Chattel Mortgage Register
RIGHTS & LIABILITIES OF PLEDGEE
1. The creditor shall take care of the thing pledged w/ diligence of a good father.
He is entitled to reimbursement of the expenses incurred for its preservation
He is not liable for loss or deterioration due to fortuitous event, however, he is liable
if it is due to negligence, fraud or delay
2. The pledgee cannot deposit the thing pledged with a third person, unless there is a
stipulation authorizing him to do so
He is liable for the acts of his agents or employees with respect to the thing pledged
3. The pledgee cannot use the thing pledged w/o the authority of the owner. It can be only
used if it is required for its preservation.
4. The pledgee is bound to advise the pledgor, w/o delay, of any danger to the thing pledged
5. The pledgee may bring the actions w/c pertain to the owner of the thing pledged in order
to recover it from, or defend It against third person
6. If two or more things are pledged, pledge may choose which he will cause to be sold, unless
there is a stipulation to the contrary. He may demand the sale of only as many of the things
as are necessary for the payment of the debt
7. After the public auction, pledge shall promptly advise the pledgor or owner of the result
thereof
8. If a credit w/c has been pledged becomes due before it is redeemed, pledge may collect and
receive the amount due. He shall apply it as payment to his claim and deliver the surplus, if
any, to the pledgor
9. If creditor I deceived on the substance or quality of the thing pledged, he may either claim
another thing in its stead, or demand immediate payment of the principal obligation
10. Pledgee cause the thing to be sold at a public auction, if there is danger of destruction,
impairment, or diminution in value of the thing pledged, without his fault
RIGHTS & DUTIES OF PLEDGOR
1. Unless the thing pledged is expropriated, debtor continues to be the owner thereof
2. The owner may ask the thing be deposited if:
a. The creditor uses the thing w/o authority
b. He misuses the thing in any other way
c. The thing is danger of being lost or impaired because of negligence
3. The debtor cannot ask for the return of the thing pledged against the will of the creditor,
unless and until he has paid the debt and its interest, with expenses in the proper case
4. If through the negligence or willful act of the pledgee, the thing pledged is in danger of
being lost or impaired, pledgor may require that it be deposited with a third person
5. The pledgor had the right to demand the return of the thing pledged upon offering another
thing in pledge provided that the:
a. Pledgor has reasonable grounds to fear the destruction or impairment of the thing
pledged
b. There is no fault on the part of the pledgee
c. The thing offered is of the same kind and quality
d. Pledgee does not choose to exercise his right to sold the thing at public auction
WAYS TO EXTINGUISH PLEDGE
1. If the thing pledged is returned by the pledgee to the pledgor, pledge is extinguished.
Any stipulation to the contrary shall be void.
It shall be presumed that the pledge is extinguished if the object pledged is found at
the possession of pledgor
2. Written statement by the pledgee renouncing or abandoning the pledge
Pledge becomes a depositary
3. Other ways to extinguish an obligation