1. Nature, Form, and Kinds

A. Nature, Form, and Kinds (Civil Code, arts. 1868-1883)

Civil Code, arts. 1868-1883

CHAPTER 1

Nature, Form and Kinds of Agency

Article 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. (1709a)

Article 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)

Article 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)

Article 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)

Article 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)

Article 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The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given. (n)

Article 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)

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

Article 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)

Article 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. (n)

Article 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)

Article 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)

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

Article 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)

Article 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)

Article 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)

Exception to Contractual Nature

When the agency is created by operation of law

NOTE: An illegal termination of agency does not justify reinstatement of the agent. The agency cannot be compelled by the courts to be reinstated because such relationship can only be given effect with the consent of the principal. (Orient Air Services v. CA, G.R. No. 76931, May 29, 1991.)

Doctrine of Agency by Necessity

Necessity does not create an agency. An emergency may, however, enlarge the authority of an agent who was appointed and authorized before it arose, provided that:

• The agent exercises the additional authority to protect the principal;
• The agent cannot communicate with the principal;
• The measures taken are reasonable under the circumstances; and
• An emergency actually exists.

As to Nature and Effects

• Ostensible or Representative - agent acts in the name and representation of the principal
• Simple or Commission - agent acts in his own name but for the account of the principal.

Kinds of Agency

• Based on business or transactions encompassed - General vs Special Agency

NOTE: Universal Agent - one employed to do all acts which the principal may personally do, and which he can lawfully delegate to another the power of doing. (Siasat v. IAC, G.R. No. L-67889, October 10, 1985.)

• Whether it covers legal matters Attorney at Law vs. Attorney-in-Fact

Attorney-in-Fact

An attorney-in-fact is simply an agent whose authority is strictly limited by the instrument appointing him, though he may do things not mentioned in his appointment necessary to the performance of the duties specifically required of him by the power of attorney appointing him, such authority necessarily being implied (Philippine Legal Encyclopedia, p. 66)

His authority is provided in a special power of attorney or general power of attorney or letter of attorney. An attorney-in-fact is not necessarily a lawyer. (Pineda, Legal Ethics, p. 8)

• Whether it covers acts of administration or acts of dominion General Power vs. Special Power of Attorney

Distinction between Agency by Estoppel and Implied Agency

NOTE: An authority embodied in a letter is sufficient. (Jimenez v. Rabot, G.R. No. L-12579, July 27, 1918.)