hi guys welcome to another episode of attorneys of vlogger today we take up a new topic and we'll be talking about the law on agency which is found in the civil code specifically we'll be talking about the nature creation and kinds of agency so if you like this video and you want to see more please hit the subscribe button also please remember that this is only for educational purposes and it's not a substitute for proper legal advice or for studying and understanding the law now a like on this video or any of my other videos will be greatly appreciated please stay tuned as we may be conducting a raffle soon okay so if you want to join please just wait for that video to come out now let's begin with this subject of agency now under the law 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 principle here is that what a man may do in person he may also do through another subject of course to certain exceptions now in a contract of agency there is a principle okay and this principle wants to get something done but does not or cannot do it himself so he gets someone else who will be the agent to do it for him so that principal clothes or dresses that agent with authority and gives him power to act on his behalf in order to bind him with respect to certain transactions with third persons a very simple example is when your mother asks you to buy toyo at alinena's sarisari store ok your mother is the principal and she clothes you with authority to buy the toyo at the sarisari store and you are the agent okay that's that's as simple as agency can be the underlying principle of the contract of agency is to accomplish the results by using the services of others like buying selling or any other act the purpose of agency is to extend the personality of the principal because a person is naturally limited he cannot be in several places at the same time so he can be limited physically okay so through the contract of agency the activities of a person can be legally extended by permitting him to be constructively present in different places and to perform diverse juridical acts and to carry on many different activities through another when his when the physical presence of the principle is impossible or inadvisable now the essence and basis of agency is representation meaning the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal now it is this element of representation which primarily distinguishes the contract of agency from other contracts like sale employment or independent contractorship take note of this because some exams may have this as a trick question in your mind you're already answering in the context of agency when in the first place it's not even agency at all for instance if you have taken up sales remember your sales okay uh you determine if ownership has already been transferred in which case it is a sale or if the person is acting without ownership having been transferred then it may be agency okay so you determine first that example i gave specifically that's the case of kiroga vs persons okay also in the case of labor if you have taken up labor already to determine the existence of an employer employee relationship you use the fourfold test the power to hire the power to pay wages the power to dismiss and the most important the power to discipline or control the employee's conduct you have to know this because an employee is different from an agent because the agent usually has more discretionary powers and the respective contracts governing those relationships are different with agency being a preparatory contract and employing employment being a principal contract then we also have independent contractorship which like the contract of employment is a principal contract but it's different from employment and agency because there is no element of control because the independent contractor is more or less free to accomplish the task according to his own means and methods okay independent contractors often present themselves to possess unique skills expertise or talent to distinguish them from ordinary employees and they are hired because of those unique skills and for the work that they perform they are usually paid a premium rate you can read the case of sons versus abs-cbn for more information on independent contractorship so you have to know these distinctions because claims arising from breach of contract of agency that's governed by the rules on agency under the civil code and only suppletorially by the rules on obligon because agency is a special contract okay so you apply first the rules on agency because those are special rules and in the absence they're off you apply oblique on okay and then you file that case before the regular courts but in claims arising from employer employee relationship though that's governed by the labor code and not the civil code okay and you file that before the nlrc or delay as the case may be whereas in independent contractorship that's governed by the civil code specifically the rules on obligon because independent contractorship is a contractual relation also an agency may be extinguished at will by the principal but for an employee the contract must be respected and he can only be dismissed for the just or authorized causes under the labor code on the other hand for an independent contractor usually he cannot bind the principle through his acts in the same way that an agent does and that independent contractor can only be dismissed for breach of contract or any of those terms in the contractual agreement so by the legal fiction of agency the actual or real absence of the principle is converted into his legal or juridical presence so agency is a representative relation and the relation of an agent to his principle is fiduciary in nature meaning it's based on utmost trust and confidence as such the agent with regard to the property which is the object of the agency is estopped from acquiring or asserting title adverse to that of his principle as stated in article 1435 okay in other words the agent if the agent is tasked with selling property of the principal he cannot later on say that hey that's my property okay because the principal has the post trust and confidence that the agent will sell the property belonging to the principal which brings us to the theory of imputed knowledge okay the general rule is that the knowledge of the agent is imputed meaning assigned by inference to the principal even though the agent never communicated such knowledge to the principal in other words knowledge of the agent is knowledge of the principal knowledge of the agent is knowledge of the principle except in the following cases first where the agent's interests are adverse to the interests of the principal may conflicting interest second where the agent's duty is not to disclose the information as where he is informed by way of confidential information and third where the person claiming the benefit of the rule colludes or connives with the agent to defraud the principle now we can move on to the nature and characteristics of the contract of agency agency is a consensual contract meaning it is perfected by mere consent agency is also a principal contract as i mentioned earlier meaning it can stand by itself without the need of any other contract agency is also a nominate contract because it has a name now agency can be gratuitous in which case it is a unilateral contract because it creates obligations for only one party the agent or it can be onerous depending on the situation it can be onerous or for compensation in which case it will now be bilateral okay because now there are reciprocal obligations the agent performs an act on behalf of the principal and the principal pays the agent compensation which is usually in the form of commission okay so it can be unilateral it can be bilateral now agency is also a preparatory contract meaning that it is entered into as a means to an end meaning to create other contracts okay so uh the parties will enter into an agency in order for the agent to enter into another contract on behalf of the principal such as a sale mortgage whatever okay now let's move on to the creation of the contract of agency okay take note that a contract of agency is not presumed except in cases where agency may arise by operation of law such as in the case of partnerships where all partners shall be considered as agents or in order to prevent unjust enrichment okay so as i said a contract of agency is not presumed so it must be proven to exist how through the elements you have to show that the elements are present same as with obligate to prove that that a contract exists you have to prove the existence of the essential elements remember that since agency is a special contract it follows the general principles of obligon so the essential elements of contracts must also exist here in this contract of agency okay so for an agency to exist the following elements must also exist first consent second object which is the execution of a juridical act in relation to third persons third course okay which may be onerous or gratuitous but the agency is presumed to be for compensation according to article 1875 fourth element the agent must act in a representative capacity and not for himself okay he will not act in his own name but he should be representing the principle and fifth the agent must act within the scope of his authority i'll discuss those more in uh in another episode so as may be seen from those elements we have the three essential elements of contracts and two additional elements so we mentioned consent as an element okay and in order to properly give consent the parties to the contract of agency must be capacitated capacity as between the principal and agent okay we follow the principles of obligon if either the principal principal or the agent is incapable of giving consent the contract is avoidable okay only one of the parties huh or if one of the parties is incapable of giving consent the contract is voidable but if both of the parties are incapacitated then the contract is unenforceable okay in so far as the obligations to the principal are concerned the agent must be competent to bind himself now what about the capacity of the principal or agent with regard to third persons okay earlier that was between the principal and the agent now what about principle and agent on the one hand and third persons okay first if the principal is the one that is incapacitated and the agent has entered into a contract with a third person then the contract is avoidable why because the contract is entered into on behalf of the principal the contract is in reality between the principal and the third person but if the agent was aware of the principal's incapacity then he will be personally liable if the agent on the other hand was ignorant of the principal's incapacity then he is not liable okay this rule these rules are governed by the principles of good faith and bad faith okay what if the incapacity of the principle occurs during the effectivity of the agency then generally the agency is extinguished pursuant to article 1919 however if the agent and the third party both acted in good faith without knowledge of the supervening incapacity of the principle then public policy dictates that the contract will remain valid now what if it is the agent that is incapacitated let's say is a minor okay as long as the principal has the necessary capacity to contract then the agent may still bind the principle to the third party since the agent is only an instrument of the principal who is acting in a representative capacity so the rule is that when it comes to third persons it is the legal capacity of the principle that matters okay it's the legal capacity of the principle rather than the agent that matters according to the case of mendoza versus the guzman the capacity of the agent is of no moment because the agent's personality is merely an extension of the principles if the principal has the necessary capacity then that is enough okay in other words a principal must have legal capacity to enter into a contract and the agent's capacity with regard to a third person is usually immaterial in other words the agent does not have to possess full capacity to act for himself as such the incapacitated agent can bind the principle since the agent is only an instrument of the principal who acts in a representative capacity and exercises a derivative authority okay he derives his authority from the principal just remember know that ultimately the contract is entered into between the principal and the third person the agent is just an instrument now consent of both principal and agent is necessary to create an agency the principal must intend that the agent shall act for him and the agent must intend to accept the authority and act on it okay the intention of the parties must be expressed either in words or conduct between them without this intent there is generally no agency so in order for an an agency to exist both the principal and the agent must give their consent either expressly or impliedly there is no problem with express consent okay it's orally or in writing so let's just talk about implied consent under article 1869 consent on the part of the principle is implied on in the following cases first from the acts of the principle such as when he actively holds out another as his agent or has habitually and previously employed the agent as such okay i say ah oh yeah agent okay second from the silence or lack of action of the principle third from the failure of the principal to repudiate or deny the agency provided that the principal knows that another person is acting on his behalf without authority okay so uh someone says by ancient man the either the principal is just silent or he does not deny it no either he fails to repudiate or deny the agency okay or he can be expressed and say yeah he is my agent no now the agent must also give his consent to be bound to the contract of agency as an agent okay and how is the acceptance of the agent given it may be expressed again orally or in writing or the agents acceptance may be implied okay first in 1870 it's the acceptance of the agent may be implied through the acts of the agent which carry out the agency let's say the agent didn't say okay i'll be your agent but he didn't say that but he went and did it anyway okay so now we can imply the existence of an agency another instance is his silence the silence of the agent or in action according of course to the circumstances now take note of 1871 and 1872 1871 talks about persons who are present means meaning the principal and agent are face to face in that case agency may be implied if the principal delivers his power of attorney to the agent and the agent receives it without any objection okay and take note however that this is only a presumption of acceptance by the agent and it can be reported by contrary proof take note now of 1872 okay which deals with persons who are absent meaning that the principal and the agent are not physically present okay in which case the general rule is that acceptance cannot be implied from the silence of the agent however the law gives us exceptions when there will be implied acceptance in case of their absence first where the principal transmits his power of attorney to the agent and the agent receives it without any objection take note that it must be the agent who receives the power of attorney which is the written authorization to perform specified acts on behalf of the principal okay when the principal however entrusts to the agent by letter or telegram a power of attorney with respect to the business in which the agent is habitually engaged as an agent and the agent did not reply to the letter or telegram okay then there's also an implied agency take note that here the mere failure to reply does not mean that the agency has been accepted unless first the power of attorney is with respect to the business in which he is habitually engaged as an agent or second in 1870 if the acceptance can be inferred from the acts of the agent which carry out the agency okay as exceptions to the rules on consent which i just discussed agency may be formed either as an apparent or ostensible agency or by estoppel let's talk about apparent or or ostensible agency first this is one where a person whether authorized or not okay appears to third persons to be authorized appears to third persons to be authorized to act as an agent for the principle for the principle because of the manifestations of the principle take note of that no the doctrine of apparent authority which is also also known as the holding out theory or the doctrine of ostensible agency imposes liability on the principle not as a result of a contractual relationship but because of the actions of the principle in somehow misleading third persons into believing that a relationship of agency exists so how do you know apparent authority exists through first the general manner in which the principal holds out an agent as having the power to act second the acquiescence of the principle to the acts of the agency no with actual or constructive knowledge thereof whether within or beyond the scope of the agent's powers okay as if he's the principal says sigue nilang and third evidence of similar acts executed either in its favor or in favor of other parties so apparent authority is determined only by the acts of the principle and not by the acts of the agent okay the principle is therefore not responsible where the agent's own conduct and statements have created the apparent authority okay the question in every case is whether the principal has voluntarily placed the agent in a situation that a person of ordinary prudence and familiar with the business usage is justified to presume that the agent has authority to perform the act in question okay so again hindi agent apparent authority is not the agent saying oh i'm an agent i'm an agent no okay we judge apparent authority through the acts of the principle saying aya agent queen agent okay so we it imposes liability on the principle for the acts done by the principle in holding out this person to be his agent so as i just mentioned the principal has to hold out the person as being is a gem and again that may be done in different ways either expressly or impliedly take note however of the following rules under 1873 if the principal holds out a person as his agent by specially informing a third person that he has given a power of attorney to his agent then that person becomes a dually authorized agent with respect to the third person who received the special information okay third person agent kotor that and that power of the agent will continue until the notice is rescinded in the same manner it was given specifically the principal must specially inform the third person that he had he has withdrawn or rescinded the power of attorney granted to the agent okay he has to kill that person or a hindi agent on the other hand uh still under 1873 if the principal states by public advertisement that he has given a power of attorney to his agent then that agent becomes such agent with respect to any and all persons okay and that power will continue until the notice is rescinded in the same manner it was given namely by public advertisement why because my public advertisement that's notice to the whole world okay and to revoke the agency you also have to give notice to the whole world in the same manner you know by publication now the doctrine of apparent authority finds its route in estopel which brings us now to agency by estopel take note however that while apparent or ostensible agency is very similar to agency by a snowpl there is a difference an apparent or ostensible agency is not limited to cases in which there is no real agency huh an apparent agency may actually exist meaning the person whom the principal holds out to be his agent can really be the agent no there can really be an underlying contract of agency already okay however in an agency by estoppel there is no agency at all but the one who is assuming to act as agent has apparent or ostensible although not real authority to represent the principal apparent authority claudinia young agency by estoppel okay it covers also agency but by snopel because again as i said apparent authority can cover cases where agency actually exists or where agency does it exist but in agency by estoppel okay there is no real agency at all and the agency by estoppel still finds its meaning in the doctrine of apparent authority which states that one who clothes another with with apparent authority as his agent and holds him out of the public as such cannot be permitted to deny the authority of such person in good faith and in the honest belief that he is what he appears to be if you already held out someone to be your agent you are estopped from later claiming or not no no he's not my agent you cannot do that you are now stopped because you held him out to be your agent okay now there is agency by estoppel where a person by words or conduct represents or permit permits it to be represented that another person is his agent in which case he is stopped to deny the agency as against third persons who have dealt on the faith of such representation with the person who was being held out as an agent even if no agency exists in fact the purpose of applying the principle of estoppel is to bind the principle even if there is no actual agency okay because you held him out now you have to be liable okay so that's how simple is agency by stopping is take note however that this principle applies to the principal and not to third persons because if the principal wants to benefit from the agent's acts in order to bind the third person all he has to do is to ratify the agent's acts it say okay what that what person who was pretending to be my agent he has done well i like that contract okay then he ratifies it so uh the proper party to claim agency by estoppel is the injured third person not the principal as agency by estoppel is for the benefit of third persons okay it is the principal who will want to escape liability by saying no he is not my agent so the proper party to claim agency by stopping is the third person in order to hold the principal liable another let's say i'm the third person i would say hey you held this person out to be your agent so there is an agency by estoppel even if there is in reality no relationship between you because you held this person out to be your agent and i relied in good faith on that you should now be held liable to answer for the obligations that that agent entered into on your behalf okay so i should not be made to suffer the loss because i dealt with the agent on good in good faith believing that he was your agent that's how simple agency by estoppel is okay remember it's the third person the injured third person who can claim it not the principal for the agency by estoppel to exist he must establish that the principal manifested a representation of the agent's authority or he knowingly allowed the agent to assume such authority okay next the third person must have relied upon the representation of the agent in good faith and finally by relying upon such representation the third party the third person has suffered damage now take note that uh while i discussed implied agency earlier that is different from agency by estoppel okay in an agency by estoppel there is no agency at all but the one assuming to act as an agent has apparent or ostensible although not real authority to represent the principle but in an implied agency there is an actual agency okay and the principal alone will be liable in an agency by estoppel the principal will be liable only when third persons have relied upon the representations of the principal but in in an implied agency there is no need for third persons to have real to have relied upon the representations in order for the principal to be liable an agent by estoppel is not an agent at all and he has none of the rights of the agent except where the principal's conduct or representations are such that the agent reasonably believed that the principal intended him to act as an agent in the matter but in an implied agency the agent is a dahir agent a true agent and therefore he has actual authority to to act on behalf of the principal and he also has the rights and obligations of a regular agent and finally when it comes to agency by estoppel it should be restricted to cases where authority is not real but is apparent but in implied agency it has to be proved from deductions or inferences or from other facts okay so that's it for the element of consent now as for the object of a contract of agency which i mentioned earlier to be the execution of a juridical act in relation to a third person the obligation of the agent here is always an obligation to do okay so in case of failure to perform the obligation to do the only remedy is an action for damages remember your oblique on okay why because you cannot file an action for specific performance in a personal obligation to do without violating the constitutional prohibition against involuntary servitude no you cannot compel a person to perform an act against his will so your only remedy is an action for damages so what may be done through an agent in general what a person can do himself he may do through another except for purely personal acts that cannot be done through an agent like marriage okay or exercising the right to vote or making a well you cannot do that through an agent you can get married through an agent okay i'll make a series on marriage don't worry no so uh all those acts of purely personal acts they must be done by the principal himself of course criminal acts or illegal acts those cannot be delegated to an agent so an agency may cover all acts pertaining to a business of the principal in which case it is a general agency or one or more specific transactions which is a special agency just take note that these are different from an agency couch in general terms and an agency couched in special terms okay i'll talk about that next time and that's it for the element of object as for course i discussed it earlier agency may be onerous or gratuitous but under article 1875 the agency is presumed to be for compensation the next element is that the agent must act as a representative and not for himself and the last element is that the agent must act within the scope of his authority and i'll talk about those more in a separate episode so i'll devote more time to that so now let's just finish off with the kinds of agency under article 69 agency maybe express where the agent is actually authorized orally or in writing or it may be implied and i discussed this earlier okay just take note whether the agency is expressed or implied the principal will still be bound by the acts of the agent also agency may be gratuitous or one where the agent receives no compensation for his services or it may be onerous okay and i've mentioned this at least for the two two times prior no agency may also be general when it comprises all the business of the principal or it may be special when it comprises one or more specific transactions and i'll talk about this more in the episode on the extent of an agency just take note again that general or special agency are different from an agency couched in general terms and an agency couched in specific or explicit terms okay an agency couched in general terms comprises only acts of administration even if the principle should state that he withholds no power or that the agent exit may execute such acts as he may consider appropriate or even though the agency should authorize a general and and unlimited management as long as an agency is couched in general terms then acts of administration langen okay an agency couch in specific terms indicates the particular functions which the agent is authorized to exercise whether it be acts of administration or of strict dominion again i will discuss that more on the episode on the extent of agency just take note in a general agency that comprises all the business of the principal and is therefore based on the number of the acts or transactions which is conferred on the agent while in an agency couch in general terms that comprises only acts of administration for a general agency a general agency may be couched in general terms in which case it is limited only to acts of administration but a general agency may also be couched in definite or specific or special terms authorizing only specific juridical acts other than mere administration but if an agency is couched in general terms then the basis of the classification is the nature of the of the juridical act which the agent is authorized to create again if general terms comprises only acts of administration now another kind agency may be ostensible or representative where the agent acts in the name and in representation of the principal or agency may be simple or commission where the agent acts for the account of the principal but in his own name so i have discussed the regular way of creating an agency but an agency may also be created through estoppel so that's another kind of agency agency by estopel finally we have a term which some people may ask why is this not listed in the kinds of agency and this is what is known as the doctrine of agency by necessity now that's not a kind of agency no and it's definitely not a way of creating an agency an agency can never be created by necessity what is created is only additional authority on the part of an agent during an emergency and he is deemed authorized before the emergency arose by virtue of that emergency so under the doctrine of agency by necessity if there is an emergency the authority of an agent is correspondingly enlarged in order to cope with the exigencies or necessities of the moment for this doctrine to apply these are the requisites the the existence of a real emergency the inability of the agent to communicate with the principal the exercise of the additional authority for the principal's own protection and adoption of fairly reasonable means again an agency can never be created by necessity what is created is only additional authority on the part of the agent who is deemed authorized to act by virtue of the emergency having a recent okay so that's it for the nature creation and kinds of agency i hope you may have picked up a thing or two and i hope to see you next time guys see you soon bye