ETRIII
Civil Law Review Lecture Series
OUTLINE/ LECTURE ON
AGENCY
By: Atty. Eduardo T.
Reyes, III
(Prepared for Law
4-C,
Univ. of San Agustin Law School,
Civil Law Review II, SY 2016-2017)
I.
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[1].
1.1.
Extension of Personality. In an
agent-principal relationship, the personality of the principal is extended
through the facility of the agent. In so doing, the agent, by legal fiction,
becomes the principal, authorized to perform acts which the latter would have
him do.[2]
1.2.
Legal Presence. In agency,
by legal fiction, the actual or real absence of the principal is converted into
his legal or juridical presence- qui
facit per alium facit per se.[3]
1.3.
Elements of Agency.
a) There is
consent, express or implied of the parties to establish the relationship;
b) The object
is the execution of a juridical act in relation to a third person;
c) The agent
acts as a representative and not for himself; and,
d) The agent
acts within the scope of his authority.[4]
1.4.
Lawyer-Client Relationship is Founded on
Agency; Limitations on the Binding Effect of Attorney’s Representation of his
client
“Case law
instructs that when a client is represented by a counsel, notice to counsel is
notice to client. In the absence of a notice of withdrawal or substitution of
counsel, the court will rightly assume that the counsel of record continues to
represent his client[5].”
· Admissions
by counsel. General
Rule- “admissions by a counsel are generally conclusive upon a client(DE Garcia
v. Court of Appeals, 37 SCRA 129). Even the negligence of counsel binds the
client (Sarraga v. Banco Filipino Savings & Mortgage Bank, 393 SCRA 566).
· Exception. “In
cases where reckless or gross negligence of counsel deprives the client of due
process of law, or when its application will result in outright deprivation of
the client’s liberty or property, or when the interests of justice so require,
relief is accorded the client who suffered by reason of the lawyer’s gross or
palpable mistake or negligence (Salazar v. Court of Appeals, 376 SCRA 459;
Silot v. de la Rosa, 543 SCRA 533)[6]”.
1.5.
Express v. Implied Agency.
1.5.1.
Express
Agency. It is expressly agreed upon by the parties.
1.5.2.
Implied
Agency. Presumed 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.
-
Doctrine of Ostensible Authority.
-
In Megan Sugar Corporation v. Regional Trial
Court of Iloilo, Branch 68, Dumangas[7],
the Court ruminated on the doctrine of apparent authority or ostensible
authority in this fashion, viz:
“The doctrine of
estoppel is based upon the grounds of public policy, fair dealing, good faith
and justice, and its purpose is to forbid one to speak against his own act,
representations, or commitments to the injury of one to whom they were directed
and who reasonably relied thereon. The doctrine of estoppel springs from
equitable principles and the equities in the case. It is designed to aid the
law in the administration of justice where without its aid injustice might
result. It has been applied by this Court wherever and whenever special
circumstances of a case so demand.
Based on the events
and circumstances surrounding the issuance of the assailed orders, this Court
rules that MEGAN is estopped from assailing both the authority of Atty. Sabig
and the jurisdiction of the RTC. While it is true, as claimed by MEGAN, that
Atty. Sabig said in court that he was only appearing for the hearing of Passi
Sugars motion for intervention and not for the case itself, his subsequent
acts, coupled with MEGANs inaction and negligence to repudiate his authority,
effectively bars MEGAN from assailing the validity of the RTC proceedings under
the principle of estoppel.
In the first place,
Atty. Sabig is not a complete stranger to MEGAN. As a matter of fact, as
manifested by EPCIB, Atty. Sabig and his law firm SABIG SABIG & VINGCO Law
Office has represented MEGAN in other case where the opposing parties involved were also CIMICO and EPCIB. As
such, contrary to MEGANs claim, such manifestation is neither immaterial nor
irrelevant, because
at the very least, such fact shows that MEGAN knew Atty. Sabig.
MEGAN can no longer
deny the authority of Atty. Sabig as they have already clothed him with
apparent authority to act in their behalf. It must be remembered that when
Atty. Sabig entered his appearance, he was accompanied by Concha, MEGANs
director and general manager. Concha himself attended several court
hearings, and on December 17, 2002, even sent a letter to the RTC asking for the
status of the case. A corporation may be held in estoppel from denying as
against innocent third persons the authority of its officers or agents who have
been clothed by it with ostensible or apparent authority.Atty. Sabig may not
have been armed with a board resolution, but the appearance of Concha made the
parties assume that MEGAN had knowledge of Atty. Sabigs actions and, thus,
clothed Atty. Sabig with apparent authority such that the parties were made to
believe that the proper person and entity to address was Atty.
Sabig. Apparent authority, or what is sometimes referred to as the
"holding out" theory, or doctrine of ostensible agency, 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.
Like the CA, this
Court notes that MEGAN never repudiated the authority of Atty. Sabig when all
the motions, pleadings and court orders were sent not to the office of Atty.
Sabig but to the office of MEGAN, who in turn, would forward all of the same to
Atty. Sabig, to wit:
x x x All the motions, pleadings and other notices in the civil
case were mailed to Atty. Reuben Mikhail P. Sabig, Counsel for Megan Sugar,
NFSC Compound, Barangay Man-it, Passi, Iloilo City which is the address of the
Sugar Central being operated by Megan Sugar. The said address is not the real
office address of Atty. Sabig. As pointed out by private respondent Equitable
PCI Bank, the office address of Atty. Sabig is in Bacolod City. All
orders, pleadings or motions filed in Civil Case 02-243 were received in the
sugar central being operated by Megan Central and later forwarded by Megan
Sugar to Atty. Sabig who is based in Bacolod City. We find it incredible
that, granting that there was no authority given to said counsel, the record
shows that it was received in the sugar mill operated by Megan and passed on to
Atty. Sabig. At any stage, petitioner could have repudiated Atty. Sabig when it
received the court pleadings addressed to Atty. Sabig as their counsel.
One of the instances
of estoppel is when the principal has clothed the agent with indicia of
authority as to lead a reasonably prudent person to believe that the agent
actually has such authority. With the case of MEGAN, it had all the
opportunity to repudiate the authority of Atty. Sabig since all motions,
pleadings and court orders were sent to MEGANs office. However, MEGAN never
questioned the acts of Atty. Sabig and even took time and effort to forward all
the court documents to him.”
1.6.
Verbal v. Formal
a. Oral- No written proof of the agency.
b. Formal- The law requires a specific form.
- Authority to sell a piece of land must be in
writing.
1.7.
Contractual v. Legal
a. Contractual
agency or Agency by Contract- Created
through agreement of parties
b. Legal or
Created by Law
1.8.
General v. Special
a. General- The agency comprises all the business of the
principal.
b. Special- The agency is for one or more specific
transactions.
b.1. When
Special Powers of Attorney needed. ~ See Article 1878, NCC.
b.2. Power
to Sell. ~ A special power to
sell excludes the power to mortgage; and a special power to mortgage does not
include the power to sell.[8]
b.3. Power
to Compromise. A special power to compromise does not authorize submission
to arbitration.[9]
1.9.
Requisites of Agency.
The case
of Sps.
Fernando and Lourdes Viloria v. Continental Airlines, Inc.[10]
teaches on the nature and requisites of an agency relationship, to wit:
“I.
A principal-agent relationship exists between CAI and Holiday Travel
With
respect to the first issue, which is a question of fact that would require this
Court to review and re-examine the evidence presented by the parties below,
this Court takes exception to the general rule that the CA’s findings of fact
are conclusive upon Us and our jurisdiction is limited to the review of
questions of law. It is well-settled to the point of being axiomatic that this
Court is authorized to resolve questions of fact if confronted with contrasting
factual findings of the trial court and appellate court and if the findings of
the CA are contradicted by the evidence on record.17
According
to the CA, agency is never presumed and that he who alleges that it exists has
the burden of proof. Spouses Viloria, on whose shoulders such burden rests,
presented evidence that fell short of indubitably demonstrating the existence
of such agency.
We
disagree. The CA failed to consider undisputed facts, discrediting CAI’s denial
that Holiday Travel is one of its agents. Furthermore, in erroneously
characterizing the contractual relationship between CAI and Holiday Travel as a
contract of sale, the CA failed to apply the fundamental civil law principles
governing agency and differentiating it from sale.
In Rallos
v. Felix Go Chan & Sons Realty Corporation,18 this
Court explained the nature of an agency and spelled out the essential elements
thereof:
Out of the above given principles, sprung the creation and
acceptance of the relationship of agency whereby one party,
called the principal (mandante), authorizes another, called the agent (mandatario),
to act for and in his behalf in transactions with third persons. The
essential elements of agency are: (1) there is 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, and (4) the agent acts within the scope of
his authority.
Agency is basically personal, representative,
and derivative in nature. 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. Qui facit per
alium facit se. "He who acts through another acts himself."19
Contrary
to the findings of the CA, all the elements of an agency exist in this case.
The first and second elements are present as CAI does not deny that it
concluded an agreement with Holiday Travel, whereby Holiday Travel would enter
into contracts of carriage with third persons on CAI’s behalf. The third
element is also present as it is undisputed that Holiday Travel merely acted in
a representative capacity and it is CAI and not Holiday Travel who is bound by
the contracts of carriage entered into by Holiday Travel on its behalf. The
fourth element is also present considering that CAI has not made any allegation
that Holiday Travel exceeded the authority that was granted to it. In fact, CAI
consistently maintains the validity of the contracts of carriage that Holiday
Travel executed with Spouses Viloria and that Mager was not guilty of any
fraudulent misrepresentation. That CAI admits the authority of Holiday Travel
to enter into contracts of carriage on its behalf is easily discernible from
its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized
the validity of the contracts entered into by Holiday Travel with Spouses
Viloria. When Fernando informed CAI that it was Holiday Travel who issued to
them the subject tickets, CAI did not deny that Holiday Travel is its
authorized agent.
Prior
to Spouses Viloria’s filing of a complaint against it, CAI never refuted that it
gave Holiday Travel the power and authority to conclude contracts of carriage
on its behalf. As clearly extant from the records, CAI recognized the validity
of the contracts of carriage that Holiday Travel entered into with Spouses
Viloria and considered itself bound with Spouses Viloria by the terms and
conditions thereof; and this constitutes an unequivocal testament to Holiday
Travel’s authority to act as its agent. This Court cannot therefore allow CAI
to take an altogether different position and deny that Holiday Travel is its
agent without condoning or giving imprimatur to whatever damage or prejudice
that may result from such denial or retraction to Spouses Viloria, who relied
on good faith on CAI’s acts in recognition of Holiday Travel’s authority.
Estoppel is primarily based on the doctrine of good faith and the avoidance of
harm that will befall an innocent party due to its injurious reliance, the
failure to apply it in this case would result in gross travesty of justice.20 Estoppel
bars CAI from making such denial.
As
categorically provided under Article 1869 of the Civil Code, “[a]gency 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.”
Considering
that the fundamental hallmarks of an agency are present, this Court finds it
rather peculiar that the CA had branded the contractual relationship between
CAI and Holiday Travel as one of sale. The distinctions between a sale and an
agency are not difficult to discern and this Court, as early as 1970, had
already formulated the guidelines that would aid in differentiating the two (2)
contracts. In Commissioner of Internal Revenue v. Constantino,21 this
Court extrapolated that the primordial differentiating consideration between
the two (2) contracts is the transfer of ownership or title over the property
subject of the contract. In an agency, the principal retains ownership and
control over the property and the agent merely acts on the principal’s behalf
and under his instructions in furtherance of the objectives for which the
agency was established. On the other hand, the contract is clearly a sale if
the parties intended that the delivery of the property will effect a
relinquishment of title, control and ownership in such a way that the recipient
may do with the property as he pleases.
Since the company retained ownership of the goods, even as
it delivered possession unto the dealer for resale to customers, the price and
terms of which were subject to the company's control, the relationship between
the company and the dealer is one of agency, tested under the following
criterion:
“The difficulty in distinguishing
between contracts of sale and the creation of an agency to sell has led to the
establishment of rules by the application of which this difficulty may be
solved. The decisions say the transfer of title or agreement to transfer it for
a price paid or promised is the essence of sale. If such transfer puts the
transferee in the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent who
must account for the proceeds of a resale, the transaction is a sale; while the
essence of an agency to sell is the delivery to an agent, not as his property,
but as the property of the principal, who remains the owner and has the right
to control sales, fix the price, and terms, demand and receive the proceeds
less the agent's commission upon sales made. 1 Mechem on Sales, Sec. 43; 1
Mechem on Agency, Sec. 48; Williston on Sales, 1; Tiedeman on Sales, 1.”
(Salisbury v. Brooks, 94 SE 117, 118-119)22
As
to how the CA have arrived at the conclusion that the contract between CAI and
Holiday Travel is a sale is certainly confounding, considering that CAI is the
one bound by the contracts of carriage embodied by the tickets being sold by
Holiday Travel on its behalf. It is undisputed that CAI and not Holiday Travel
who is the party to the contracts of carriage executed by Holiday Travel with
third persons who desire to travel via Continental Airlines, and this
conclusively indicates the existence of a principal-agent relationship. That the
principal is bound by all the obligations contracted by the agent within the
scope of the authority granted to him is clearly provided under Article 1910 of
the Civil Code and this constitutes the very notion of agency.”
1.10.Consideration. Agency may
be onerous or gratuitous. Agency is presumed to be for a compensation, unless
there is proof to the contrary[11].
1.10.1.
Procuring
cause rule. The agent is entitled
to the stipulated compensation in the execution of the powers granted to him if
the act of the agent is the procuring cause of the transaction. Thus, in an
agency to sell, the agent is entitled to a commission if he is the procuring
cause of the sale. This means that the sale must be concluded through the
measures that the agent employed and the efforts that he exerted.[12]
-This is akin to the PROXIMATE CAUSE
RULE in torts. “A cause which starts a series of events and results, without
break in their continuity in the accomplishment of a broker’s prime objective
of procuring a purchaser who is ready, willing, and able to buy on the owner’s
terms.[13]”
1.10.2.
Agent’s
Compensation v. Broker’s Commission; When can agency be deemed IRREVOCABLE.
· “The
Court affirms the appellate courts finding that the agency was not revoked
since Ybaez requested that Lim make stop payment orders for the checks payable
to Saban only after the consummation of the sale on March 10, 1994. At that
time, Saban had already performed his obligation as Ybaezs agent when, through
his (Sabans) efforts, Ybaez executed the Deed of Absolute Sale of
the lot with Lim and the Spouses Lim.
To deprive Saban of his commission subsequent to the sale
which was consummated through his efforts would be a breach of his contract of
agency with Ybaez which expressly states that Saban would be entitled to any
excess in the purchase price after deducting the P200,000.00 due to
Ybaez and the transfer taxes and other incidental expenses of the sale.
In Macondray & Co. v. Sellner, the
Court recognized the right of a broker to his commission for finding a suitable
buyer for the sellers property even though the seller himself consummated the
sale with the buyer.The Court held that it would be in
the height of injustice to permit the principal to terminate the contract of
agency to the prejudice of the broker when he had already reaped the benefits
of the brokers efforts.
In Infante v. Cunanan, et al., the Court
upheld the right of the brokers to their commissions although the seller
revoked their authority to act in his behalf after they had found a buyer for
his properties and negotiated the sale directly with the buyer whom he met
through the brokers efforts. The Court ruled that the sellers withdrawal in bad
faith of the brokers authority cannot unjustly deprive the brokers of their commissions
as the sellers duly constituted agents.
The pronouncements of the Court in the aforecited cases are
applicable to the present case, especially considering that Saban had
completely performed his obligations under his contract of agency with Ybaez by
finding a suitable buyer to preparing the Deed of Absolute Sale between
Ybaez and Lim and her co-vendees. Moreover, the contract of agency very clearly
states that Saban is entitled to the excess of the mark-up of the price of the
lot after deducting Ybaezs share of P200,000.00 and the taxes and
other incidental expenses of the sale.
However, the Court does not agree with the appellate courts
pronouncement that Sabans agency was one coupled with an interest. 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 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.
Sabans entitlement to his commission having been settled,
the Court must now determine whether Lim is the proper party against whom Saban
should address his claim.
Sabans right to receive compensation for negotiating as
broker for Ybaez arises from the Agency Agreement between them. Lim is not a
party to the contract. However, the record reveals that she had knowledge of
the fact that Ybaez set the price of the lot at P200,000.00 and
that the P600,000.00the
price agreed upon by her and Sabanwas more than the amount set by Ybaez because
it included the amount for payment of taxes and for Sabans commission as broker
for Ybaez.
According to the trial court, Lim made the following
payments for the lot: P113,257.00 for taxes, P50,000.00
for her broker, and P400.000.00 directly to Ybaez, or a total of
Five Hundred Sixty Three Thousand Two Hundred Fifty Seven Pesos (P563,257.00).[27] Lim,
on the other hand, claims that on March 10, 1994, the date of execution of
the Deed of Absolute Sale, she paid directly to Ybaez the
amount of One Hundred Thousand Pesos (P100,000.00) only, and gave to
Saban P113,257.00 for payment of taxes and P50,000.00
as his commission,[28] and
One Hundred Thirty Thousand Pesos (P130,000.00) on June 28, 1994,[29] or
a total of Three Hundred Ninety Three Thousand Two Hundred Fifty Seven Pesos (P393,257.00).
Ybaez, for his part, acknowledged that Lim and her co-vendees paid him P400,000.00
which he said was the full amount for the sale of the lot.[30] It
thus appears that he received P100,000.00 on March 10, 1994,
acknowledged receipt (through Saban) of the P113,257.00 earmarked
for taxes and P50,000.00 for commission, and received the balance
of P130,000.00 on June 28, 1994. Thus, a total of P230,000.00
went directly to Ybaez. Apparently, although the amount actually paid by Lim
was P393,257.00, Ybaez rounded off the amount to P400,000.00
and waived the difference.
Lims act of issuing the four checks amounting to P236,743.00 in
Sabans favor belies her claim that she and her co-vendees did not agree to
purchase the lot at P600,000.00. If she did not agree thereto,
there would be no reason for her to issue those checks which is the balance
of P600,000.00 less the amounts of P200,000.00 (due to
Ybaez), P50,000.00 (commission), and the P113,257.00
(taxes). The only logical conclusion is that Lim changed her mind about
agreeing to purchase the lot at P600,000.00 after talking to Ybaez
and ultimately realizing that Sabans commission is even more than what Ybaez
received as his share of the purchase price as vendor. Obviously, this change
of mind resulted to the prejudice of Saban whose efforts led to the completion
of the sale between the latter, and Lim and her co-vendees. This the Court
cannot countenance.
The ruling of the Court in Infante v. Cunanan, et
al., cited earlier, is enlightening for the facts therein are similar
to the circumstances of the present case. In that case, Consejo Infante asked
Jose Cunanan and Juan Mijares to find a buyer for her two lots and the house
built thereon for Thirty Thousand Pesos (P30,000.00) . She promised to
pay them five percent (5%) of the purchase price plus whatever overprice they
may obtain for the property. Cunanan and Mijares offered the properties to Pio
Noche who in turn expressed willingness to purchase the properties. Cunanan and
Mijares thereafter introduced Noche to Infante. However, the latter told
Cunanan and Mijares that she was no longer interested in selling the property
and asked them to sign a document stating that their written authority to act
as her agents for the sale of the properties was already cancelled.
Subsequently, Infante sold the properties directly to Noche for Thirty One
Thousand Pesos (P31,000.00). The Court upheld the right of Cunanan and
Mijares to their commission, explaining that
[Infante]
had changed her mind even if respondent had found a buyer who was willing to
close the deal, is a matter that would not give rise to a legal consequence if
[Cunanan and Mijares] agreed to call off the transaction in deference to the
request of [Infante]. But the situation varies if one of the parties takes
advantage of the benevolence of the other and acts in a manner that would
promote his own selfish interest. This act is unfair as would amount to bad
faith. This act cannot be sanctioned without according the party prejudiced the
reward which is due him. This is the situation in which [Cunanan and Mijares]
were placed by [Infante]. [Infante] took advantage of the services rendered by
[Cunanan and Mijares], but believing that she could evade payment of their
commission, she made use of a ruse by inducing them to sign the deed of
cancellation.This act of subversion cannot be sanctioned and cannot serve as
basis for [Infante] to escape payment of the commission agreed upon.[31]
The appellate court therefore had sufficient basis for
concluding that Ybaez and Lim connived to deprive Saban of his commission by
dealing with each other directly and reducing the purchase price of the lot and
leaving nothing to compensate Saban for his efforts.
Considering the circumstances surrounding the case, and the
undisputed fact that Lim had not yet paid the balance of P200,000.00
of the purchase price of P600,000.00, it is just and proper for her
to pay Saban the balance of P200,000.00.
Furthermore, since Ybaez received a total of P230,000.00
from Lim, or an excess of P30,000.00 from his asking price of P200,000.00,
Saban may claim such excess from Ybaezs estate, if that remedy is still
available,[32] in
view of the trial courts dismissal of Sabans complaint as against Ybaez, with
Sabans express consent, due to the latters demise on November 11, 1994.[33]
The appellate court however erred in ruling that Lim is
liable on the checks because she issued them as an accommodation party. Section
29 of the Negotiable Instruments Law defines an accommodation party as a person
who has signed the negotiable instrument as maker, drawer, acceptor or
indorser, without receiving value therefor, for the purpose of lending his name
to some other person. The accommodation party is liable on the instrument to a
holder for value even though the holder at the time of taking the instrument
knew him or her to be merely an accommodation party. The accommodation party
may of course seek reimbursement from the party accommodated.[34]
As gleaned from the text of Section 29 of the Negotiable
Instruments Law, the accommodation party is one who meets all these three
requisites, viz: (1) he signed the instrument as maker, drawer,
acceptor, or indorser; (2) he did not receive value for the signature; and (3)
he signed for the purpose of lending his name to some other person. In the case
at bar, while Lim signed as drawer of the checks she did not satisfy the two
other remaining requisites.
The absence of the second requisite becomes pellucid when it
is noted at the outset that Lim issued the checks in question on account of her
transaction, along with the other purchasers, with Ybaez which was a sale and,
therefore, a reciprocal contract. Specifically, she drew the checks in payment
of the balance of the purchase price of the lot subject of the transaction. And
she had to pay the agreed purchase price in consideration for the sale of the lot
to her and her co-vendees. In other words, the amounts covered by the checks
form part of the cause or consideration from Ybaezs end, as vendor, while the
lot represented the cause or consideration on the side of Lim, as vendee.[35] Ergo,
Lim received value for her signature on the checks.
Neither is there any indication that Lim issued the checks
for the purpose of enabling Ybaez, or any other person for that matter, to
obtain credit or to raise money, thereby totally debunking the presence of the
third requisite of an accommodation party.[14]”
BROKER’S COMMISSION v. AGENT’S COMMISSION
·
“Besides, assuming that the
evidence an oriented to a revocation of Jusean Realty’s authority to sell, the
Court has always recognized the broker’s right to his commission, although the
owner revoked his authority and directly negotiated with the buyer when he went
through the broker’s efforts. It would be unfair not to give the broker the
reward he had earned for helping the owner find a buyer who would pay the
price.[15]”
·
“Unlike agents, brokers do not
represent a principal. A broker is one whose occupation is to bring the parties
together in matters of trade, commerce or navigation.[16]
With respect to compensation of brokers, the action of the agent must also be
the procuring cause which is the
cause originating a series of events which, without break in their continuity,
result in the accomplishment of the prime objective of the employment of the
broker – the broker’s efforts must have been the foundation on which the
negotiations resulting in a sale began.[17]”
1.10. Duties of
Agent.
a) Obedience-Agent must at within the scope of his
authority or even those which were not expressly authorized but are CONDUCIVE
to the accomplishment of the purpose of the agency.
b) Diligence-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.
c) Loyalty- The relationship between the agent and his or
her principal is fiduciary in nature. It is based on trust and confidence.
1.11.
Modes of Extinguishment of Agency
1.11.1.-Article
1920, NCC- Agency is
extinguished by its revocation, express or implied- may be done at will or at
anytime by the principal.
-Exceptions:
a)
If a
bilateral contract depends upon it
b)
If it is a
means of fulfilling an obligation already contracted, or
c)
If a
partner is appointed manager of a partnership in the contract of partnership
and his removal from the management is unjustifiable.
d)
Agency
coupled with interest.
-See Lim
v. Saban.
- If a land
owner executes an SPA in favor of another person who is authorized to obtain a
loan and from the proceeds thereof, the latter is entitled to a share. The
agreement stipulates that the costs for processing the loan shall be borne by
the agent. Can the SPA be revoked at will?
NO,
as it is one coupled with an interest. “There is no question that the SPA executed
by respondents in favor of petitioners is a contract of agency coupled with
interest. This is because their bilateral contract depends upon the agency.
Hence, it “cannot be revoked at the sole will of the principal”[18].
· Art. 1868 of the Civil Code provides that by the contract of agency, an
agent binds himself to render some service or do something in representation or
on behalf of another, known as the principal, with the consent or authority of
the latter.[13]
A contract of agency is generally revocable as it
is a personal contract of representation based on trust and confidence reposed
by the principal on his agent. As the power of the agent to act depends on the
will and license of the principal he represents, the power of the agent ceases
when the will or permission is withdrawn by the principal. Thus, generally, the
agency may be revoked by the principal at will.[14]
However, an exception to the revocability of a
contract of agency is when it is coupled with interest, i.e., if
a bilateral contract depends upon the agency.[15] The
reason for its irrevocability is because the agency becomes part of another
obligation or agreement. It is not solely the rights of the principal but also
that of the agent and third persons which are affected. Hence, the law provides
that in such cases, the agency cannot be revoked at the sole will of the
principal.
In the case at bar, we agree with the finding of
the trial and appellate courts that the agency granted by Legaspi to Gutierrez
is coupled with interest as a bilateral contract depends on it. It is clear
from the records that Gutierrez was given by Legaspi, inter
alia, the power to manage the treasure hunting activities in the
subject land; to file any case against anyone who enters the land without
authority from Legaspi; to engage the services of lawyers to carry out the
agency; and, to dig for any treasure within the land and enter into agreements
relative thereto. It was likewise agreed upon that Gutierrez
shall be entitled to 40% of whatever treasure may be found in the land.
Pursuant to this authority and to protect Legaspis land from the alleged
illegal entry of petitioners, agent Gutierrez hired the services of Atty. Adaza
to prosecute the case for damages and injunction against petitioners. As
payment for legal services, Gutierrez agreed to assign to Atty. Adaza 30% of
Legaspis share in whatever treasure may be recovered in the subject land.
It is clear that the treasure that may be found in the land is the subject
matter of the agency; that under the SPA, Gutierrez can enter into contract for
the legal services of Atty. Adaza; and, thus Gutierrez and Atty. Adaza have an
interest in the subject matter of the agency, i.e., in the
treasures that may be found in the land. This bilateral contract depends on the
agency and thus renders it as one coupled with interest, irrevocable at the
sole will of the principal Legaspi.[16] When
an agency is constituted as a clause in a bilateral contract, that is, when the
agency is inserted in another agreement, the agency ceases to be revocable at
the pleasure of the principal as the agency shall now follow the condition of
the bilateral agreement.[17] Consequently,
the Deed of Revocation executed by Legaspi has no effect. The authority of
Gutierrez to file and continue with the prosecution of the case at bar is
unaffected[19]”.
1.11.2.
DEATH of either principal or agent EXTINGUISHES THE AGENCY.
-HOWEVER,
Anything done by the
agent , without the knowledge of the death of the principal or 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[20].
[2] Litonjua, Jr. v. Eternit Corp., 490 SCRA 204 (2006)
[3] p. 669, Reviewer on Civil Law, Timoteo B. Aquino, citing Eurotech
Industrial Technologies, Inc. v. Cuizon, G.R. No. 167552, April 23, 2007,
Country Bankers Insurance Corp., v. Keppel Cebu Shipyard, 673 SCRA 427 (2012)
[4] Viloria v. Continental Airlines, Inc. 663 SCRA 57 (2012)
[5] Jose Romullo L. Francisco v. Loyola Plans Consolidated, Inc.,
Jesusa Conception and Gerardo B. Monzon, G.R. No. 194134,February 1, 2016
[6] Id.
[7] G.R. No. 170352, June 1, 2011
[8] Article 1879, NCC
[9] Article 1880, NCC
[10] G.R. No. 188288, January 16, 2012
[11] Article 1875, NCC
[12] Sanchez v. Medicard, G.R. No. 141525, September 2, 2005
[13] Oriental Petroleum v. Tuscan Realty, Inc., G.R. No. 195481, July
10, 2013
[14] Genevieve Limv. Florencio Saban,G.R. No. 163720,December 16, 2004
[15] Oriented Petroleum and Minerals Corporation v. Jusean Realty, Inc.,
G.R. No. 195-481, July 10, 2013
[16] Tan v. Gullas, G.R. No. 143978, December 3, 2002
[17] Philippine Health-Care Providers, Inc. v. Estrada, G.R. No. 171052,
January 28, 2008
[18] See Ching v. Bantolo, et al., G.R. No. 177086, December 5, 2012
[19] REPUBLIC OF
THE PHILIPPINES, represented by LT. GEN. JOSE M. CALIMLIM, in his capacity as
former Chief of the Intelligence Service, Armed Forces of the Philippines
(ISAFP), and former Commanding General, Presidential Security Group (PSG), and
MAJ. DAVID B. DICIANO, in his capacity as an Officer of ISAFP and former member
of the PSG, petitioners, vs.
HON. VICTORINO EVANGELISTA, in his capacity as Presiding Judge, Regional Trial
Court, Branch 223, Quezon City, and DANTE LEGASPI, represented by his
attorney-in-fact, Paul Gutierrez, respondents.
[G.R. No. 156015. August 11, 2005]
[20] Article 1931, NCC.
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