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. (1710a)

KINDS OF AGENCY
1.

2.
3.
4.

5.

AS TO MANNER OF ITS CREATION

a. Express: one where the agent has been actually authorized by the principal, either orally or in writing
b. Implied: one which is implied from the acts of the principal;
Ratification may produce the effect of an express or implied agency. It results in agency by ratification.
AS TO ITS CHARACTER
a. Gratuitous: one where the agent receives no compensation for his services
b. Compensated or onerous: one where the agent receives compensation
AS TO EXTENT OF BUSINESS COVERED
a. General: one which comprises all the business of the principal
b. Special: one which comprises one or more specific transactions.
AS TO AUTHORITY CONFERRED
a. Couched in general terms: one which is created in general terms and is deemed to compromise only acts of
administration.
b. Couched in specific terms: one authorizing only the performance of a specific act or acts.
AS TO ITS NATURE AND EFFECT:
a. Ostensible representative: one where the agent acts in the name and representation of the principal
b. Simple or commission: one where the agent acts in his own name but for the account of the principal

FORM OF AGENCY:

1.

Agency is created by contract which may be oral, written or implied.

In general, there are no formal requirement governing the appointment of an agent. The agents authority may be
oral or written. It may be in public or private writing.

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2.

Agency may even be implied from words and conduct of the parties and the circumstances of the particular case.
But agency cannot be inferred from mere relationship or family ties.
Some provisions of law which require certain formalities for particular contracts:
a. When the form is required for the validity of the contract.
b. When it is required to make the contract effective against third persons such as those mentioned in articles
1357 and 158 of the civil code
c. When it is required for the purpose of proving the existence of a contract such as those provided in the statute
of frauds in article 1403.

APPOITNEMENT OF AGENT:

It is not essential that an agent be appointed directly by the principal, but the appointment may be made through
another, as by referring an application to another and representing that he has authority to act, or the relation may
arise out of an agreement to employ the agent of another, such person then becoming the agent of the first party.
Agent appointed by director of a corporation to act for corporation is an agent of the corporation and not the
director.

PRESUMPTION OF AGENCY:
1.

2.

GENERAL RULE:
Agency is generally not presumed.
Relation between principal and agent must exist as a fact.
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 person alleging the agency to show
not only the fact of its existence, but also its nature and extent.
EXCEPTIONS:
a presumption of agency may arise, however, in those few cases where an agenct msy arise by operation of
law or to prevent unjust enrichment.

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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. (n)

FORMS OF ACCEPTANCE

agency is a contract, therefore there must be consent by both parties.

Agency is either express or implied, and this is true on the part of the principal as well on that of the agent.
It does not depend upon express appointment and acceptance.

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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. (n)
ACCEPTANCE BETWEEN PERSONS PRESENT

Agency is implied accepted if the agent receives a power of attorney from the principal himself personally without
any objections both being present,
With regards to implied acceptance the distinguished between cases:
a. Where persons are present
b. Where persons are absent.

DEFINITION AND PURPOSE OF A POWER OF ATTORNEY

POWER OF ATTORNEY:
Is an instrument in writing by which one person, as principal, appoints another as his agent and confers
one person, as principal, appoints another as his agent and confers upon him the authority to perform
certain specified acts and confers upon him the authority to perform certain specified acts or kinds of acts
on behalf of the principal.
the written authorization itself is the power of attorney.
Its primary purpose is not define the authority of the agent as between himself and his principal but to
evidence the authority of the agent to third parties within whom the agent deals.
A power of attorney is valid although no notary public intervened in its execution.

CONSTRUCTIVE OF POWERS OF ATTORNEY

1.

Rule of strict construction:

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It is general rule that a power of attorney must be strictly construed and strictly pursued.
Under this rule, the instrument will be held to grant only those powers which are specified and defined,
and the agent may neither go beyond nor deviate from the power of attorney.
The act done must be legally identical with that authorized to be done
Qualification of the rule:
The rule is not absolute and should not be applied to the extent of destroying the very purpose of the power
The instrument should always be deemed to give such powers as are essential or usual and reasonably
necessary and proper in effectuating the express powers.

2.

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 is
habitually engaged as an agent, and he did not reply to the letter or telegram. (n)

ACCEPTANCE BETWEEN PARTIED

Both principal and the agent are absent, acceptance of the agency by the agent is not implied from his silence or
inaction.

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The agent is not bound to accept the agency, he cannot simply ignore the offer.
Two cases mentioned in article 1872 agency is implied:
a. Case 1: there is implied acceptance if the agent writes a letter acknowledging receipt of the power of attorney but
offers no objection to the creation of the agency.
b. Case 2: but his mere failure to give a reply does not mean that agency has been accepted unless the power of
attorney is with respect to the business in which he is habitually engaged as an agent.
The acceptance could be inferred from his acts which carry out the agency.
When he begins to act under the authority conferred upon him.
Article 1871: he personally delivers the power of attorney to the agent.
Article 1872: the principal transmits the power of attorney to the agent.

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.

COMMUNICATION OF EXISTENE OF AGENCY

2 WAYS OF GIVING NOTICE OF AGENCY WITH DIFFERENT EFFECTS:
1. SPECIAL INFORMATION (LETTER)
The person appointed as agent is considered such with respect to the person to whom it was given
2. PUBLIC ADVERTISEMENT
The agent is considered as such with regard to any person.
May be made through: newspapers, radio, etc., and by posters or billboards.
The agency is deemed to exist whether there is actually an agency or not.

MANNER OF REVOCATION:

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The power of attorney must be revoked in the same manner in which it was given. (par 2).
If the agency had been entrusted for the purpose of contracting with specified persons, its revocation shall not
prejudice the latter if they were not given notice thereof (1921)
If the agent had general powers, revocation of the agency does not prejudice third persons who acted in good
faith and without knowledge of the revocation. Notice of the revocation in a newspaper of general circulation is
a sufficient warning to third persons. (1922)
Nevertheless, revocation made in any manner is effective where the person dealing with the agent has actual
knowledge thereof; otherwise, bad faith and fraud would be committed.

ESTOPPEL TO DENY AGENCY.

1.

2.

3.

ESTOPPEL OF AGENCT:
One professing to act as agent for another may be stopped to deny his agency both as aginst his asserted
principal and the third persons interested in the transaction.
ESTOPPEL OF PRINCIPAL:
A. AS TO AGENT:
One who knows that another is acting as his agent and fails to repudiate his acts, or accepts the
benefits of them, will stopped to deny the agency as against as such.
B. AS TO SUB-AGENT
To estop the principal from denying his liability to a third person, he must have known or be charged
with knowledge of the fact of the transaction and the terms of the agreement between the agent and
sub-agent.
C. AS TO THIRD PERSON:
One who knows that another is acting as agent or permitted another to appear as his agent, to the
injury of third persons who have dealt with the apparent agent as such in good faith and in the
exercise of reasonable prudence, is stopped to deny the agency..
ESTOPPEL OF THIRD PERSONS:

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A third person, having dealt with one as an agent may be stopped to deny the agency as against the
principal, agent, or third persons in interest. He will not however, be stopped where he was withdrawn from
the contract made with the unauthorized agent before receiving any benefits thereunder.
ESTOPPEL OF THE GOVERNMENT:
The government is neither stopped by the mistake or error on the part of its agent.
But it may be stopped through affirmative acts of its officers acting within the scope of their authority.

4.

AGENCY BY ESTOPPEL DISTINHUISHED FROM IMPLIED AGENCY.

AS TO THIRD PERSONS:
1. If the estoppel is caused by the principal he is
liable, but only if the third person acted on the
misrepresentation: in an implied agency, the
principal is always liable.
2. if the estoppels is caused by the agent, it is only the
agent who is liable, never the alleged principal: in
an implied agency, the agent is never personally
liable.

AS BETWEEN THE PRINCIPAL AND THE AGENT

In an implied agency, the agent is a true agent, with rights
and duties of an agent.

in an agency by estoppels (caused for instance by estoppels

on the part of the agent) the agent is not a true agent,
hence he has no right as such.

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. (n)

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speaks of only an agency for sale of a piece of land or any interest therein. It may be argued, therefore, that an
agency to purchase need not be in writing.
Refers to sales made by an agent for a principal and not sales made by the owner personally to another, whether
that other be acting personally or through a representative.
A real state broker is not within this article because his authority is limited to finding to finding prospective
purchasers and does not extend to making a contract to pass title.

SALE OF LAND

as a general rule, the agents authority may be oral or written.

Under this article, the sale of a piece of land (not any other real estate) or any interest thereon, like usufruct,
mortgagee, etc., through an agent is void unless the authority of the agent to sell is in writing. It should, however,
be considered as merely voidable since the sale can be ratified by the principal such as by availing himself for the
benefits derived from the contract.
A letter containing the specific authority to sell is held sufficient

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Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the contrary. (n)

AGENCY PRESUMED TO BE WITH COMPENSATION.

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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. (1712)

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Art. 1877. An agency couched in general terms comprises only acts of administration, even if theprincipal 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. (n)

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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. (n)

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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. (n)

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Art. 1880. A special power to compromise does not authorize submission to arbitration. (1713a)

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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. (1714a)

Art. 1882. The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner
more advantageous to the principal than that specified by him. (1715)

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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 favor 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.
(1717)

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CHAPTER 2 OBLIGATIONS OF THE AGENT

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. (1718)

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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 or take charge
of the goods. (n)

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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. (n)

Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.

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In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business. (1719)

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

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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. (n)

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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. (n)

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