AGENCY

 one person is employed to render service for another, excludes, however, from its
concept the relationship of employer and employee
 Agency is a fiduciary relationship which implies a power in an agent to contract with a
third person on behalf of a principal. It is this power to effect the principal’s contractual
relations with third persons that differentiates the agent from the employee, the
servant, and the independent contractor
 Agency, properly speaking, relates to commercial or business transactions. Agency
relationship may also arise in non-business situations, as for example, a person returns
an article to a lender for a borrower-friend.
CHARACTERISTICS OF A CONTRACT OF AGENCY CPNUBP
(1) CONSENSUAL, because it is based on the agreement of the parties which is perfected
by mere consent;
(2) PRINCIPAL, because it can stand by itself without need of another contract
(3) NOMINATE, because it has its own name
(4) UNILATERAL, if it is gratuitous because it creates obligations for only one of the
parties,
i.e., the agent; or bilateral, if it is for compensation because it gives rise to reciprocal
rights and obligations; and
(5) PREPARATORY, because it is entered into as a means to an end, i.e., the creation of
other transactions or contracts
PARTIES TO THE CONTRACT. PAT
(1) PRINCIPAL. — one whom the agent represents and from whom he derives his; he is the
person represented. Agency imports the contemporaneous existence of a principal, and there is
no agency unless one is acting for and in behalf of another
(2) AGENT. — one who acts for and represents another; he is the person acting in a
representative capacity. The agent has derivative authority in carrying out the principal’s
business. He may employ his own agent in which case he becomes a principal with respect to
the latter
(3) THIRD PARTY-the party with whom the business is transacted. is added to the agency relationship
from the time the agent acts or transacts the business for which he has been employed in
representation of another,

ESSENTIAL ELEMENTS OF AGENCY. CORA

(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 third persons;
(3) The agent acts as a representative and not for himself; and
(4) The agent acts within the scope of his authority

AGENCY DISTINGUISHED FROM LOAN.

(1) Where money advanced to another is expressly regarded as money lent, no agency
results. One who borrows money to conduct a business in which the lender has no interest or
concern in the manner of its conduct is not an agent of the lender, but the financing of
operations to be carried on by another for the mutual advantage of both, without any
obligation of such other to return the money advanced, makes such other an agent rather than
a borrower
(2) An agent may be given funds by the principal to advance the latter’s business,
while a borrower is given money for purposes of his own and he must generally return it
whether or not his own business is successful.
(3) Where checks are deposited with a collecting bank, the nature of the relationship
created at that stage is one of agency, that is, the bank is to collect from the drawees of the
checks the corresponding proceeds. After the checks are collected and converted into cash, the
creditor and debtor relationship is created between the depositor and the bank.
(4) Where one deposits money with a bank with instructions to apply it in satisfaction
of the debt of a third person, the conventional “debtor and creditor relationship” between
the bank and the depositor is created, coupled with an “agency” on the part of the bank to pay
the debt, which is revocable at the will of the depositor

AGENCY DISTINGUISHED FROM LEASE SERVICE.

(1) In agency, the basis is representation, while in lease of service it is employment
(2) In agency, the agent exercises discretionary powers, while in lease of service, the
lessor (like a servant) ordinarily performs only ministerial functions
(3) In agency, three persons are involved: the principal, the agent, and the third
person with whom the agent has contracted, while in lease of service, only two persons are
involved: the lessor (master or employer) and the lessee (servant or employee)
(4) Agency relates to commercial or business transactions, while lease of service (like in
the case of master and servant) relates more to matters of mere manual or mechanical
execution, in which the servant acts under the direction and control of the master
AGENCY DISTINGUISHED FROM INDEPENDENT CONTRACT.
Where one party to a contract undertakes to accomplish a certain result (as the
construction of a house) according to his own method and without being subject to the other
party’s control except as to the result of the work, the contract is one for a piece of work and
not agency
In agency, the agent is subject to the control and direction of the principal whom he
represents with respect to the matters entrusted to him. In a contract for a piece of work, the
independent contractor, without being subject to the control of the employer except only as to
the result of the work, exercises his employment independently, and not in representation of
the employer

AGENCY DISTINGUISHED FROM PARTNERSHIP.

A contract of partnership is a contract of agency, and it differs from a pure agency in
that while an agent acts only for his principal, a partner acts not only for his co-partners and
the partnership but also as principal of himself. In other words, each partner is regarded as an
agent of his co-partners when he is acting and as principal of his co-partners when they are
acting. This has been said to be the most certain test of partnership as distinguished from
ordinary agency or employment. A partnership is, in effect, a contract of mutual agency.
In both cases, the agent or partner can bind the principal or his co-partner only by such
contracts as are entered into within the scope of his authority. (Arts. 1910, 1803, 1818.) In
general, both conceptions import the idea of a fiduciary relationship.
The agency which results from the relation of partnership is of a peculiar kind, sui
generis, and must be distinguished sharply from the ordinary concept of agency in two
important respects:
(1) Control by the principal. — An essential characteristic of the agency relationship, i.e.,
control by the principal, which is not applicable to the partnership concept. It is fundamental
in the law of agency that an agent must submit to the principal’s right to control the agent’s
conduct in regard to the subject of the agency. Yet the partnership relation, while having many
of the characteristics of the agency relationship, differs from it in that a partner’s power to
bind his co-partner is not subject to the co-partner’s right to control, unless there is an
agreement to that effect.
(2) Liability of the agent. — A partner acting as agent for the partnership binds not only the
firm members but himself as well, while the ordinary agent assumes no personal liability
where he acts within the scope of his authority.
(3) Sharing of profits.- “If, when earned, the profits belong to all the parties as common
proprietors in agreed proportions, the relation is one of partnership, but if the alleged owner
or partner takes his agreed share of profits, not as owner but as an agreed measure of
compensation for his services or the like, the relation is one of agency.”

AGENCY DISTINGUISHED FROM NEGOTIORUM GESTIO

In both agency and negotiorum gestio or the management of the business or affairs of
an absentee, there is representation.
The distinction lies in the fact that in the first, the representation is expressly
conferred, while in the second, it is not only without the authority of the owner of the
business but is without his knowledge. While the agent acts according to the express will of
the principal, the gestor acts according to the presumed will of the owner by exercising “all the
diligence of a good father of a family.”
AGENCY DISTINGUISHED FROM BROKERAGE.
A broker is one who is engaged for others on a commission; a negotiator between other
parties, never acting in his own name but in the name of those who employed him. Brokerage
refers to the trade or occupation of the broker
(1) A commission agent is one engaged in the purchase or sale for another of personal
property which for this purpose, is placed in his possession and at his disposal. He maintains a
relation not only with his principal and the purchaser or vendor, but also with the property
which is the subject matter of the transaction
On the other hand, a broker has no relation with the thing he buys or sells. He is merely an
intermediary or negotiator between the purchaser and the vendor relative to the property
with the custody or possession of which he has no concern. His only office is to bring together
the parties to the transaction never acting in his own name but in the name of those who
employed him.
(2) An agent receives a commission upon the successful conclusion of a transaction such as
sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller
together, even if no sale is eventually made

AGENCY DISTINGUISHED FROM SALE.

(1) In an agency to sell, the agent receives the goods as the goods of the principal, while in a
sale, the buyer receives the goods as owner
(2) In an agency to sell, the agent delivers the proceeds of the sale, while in a sale, the buyer
pays the price;
(3) In an agency to sell, the agent can return the object in case he is unable to sell the same to
a third person, while in a sale, the buyer, as general rule, cannot return the object sold; and
(4) In an agency to sell, the agent, in dealing with the thing received, is bound to act according
to the instructions of his principal, while in a sale, the buyer can deal with the thing as he
pleases, being the owner.

AGENCY DISTINGUISHED FROM BAILMENT.

There are two other essential characteristics of agency that are not present in
bailment, to wit: the bailee is possessed of no power to bind the bailor in personal liability
and he owes neither loyalty nor obedience to the bailor. A bailee, however, may be
constituted an agent as to third parties, where, for example, he is vested with ostensible
authority to sell or to make binding contracts with respect to the subject matter of the bailment

AGENCY DISTINGUISHED FROM GUARDIANSHIP

(1) While the agent derives his authority from his principal, the guardian, although he acts for
and on behalf of his ward, does not derive his authority so to act from the ward
(2) The relation of principal and agent is founded upon consent of the parties thereto, while
that of guardian and ward may be created irrespective of the consent or capacity of the ward;
(3) Agents are subject to the control of their principals, while guardians are not subject to the
direction of their wards;
(4) A legal guardian is substituted by law, while ordinarily an agent is the appointee of the
principal and his power may at any time be abrogated or modified by the principal
(5) While an agent represents one who has capacity to contract for himself where he present,
a guardian represents one who has no such capacity

AGENCY DISTINGUISHED FROM TRUST

The essential distinctions between a trust and an agency are found ordinarily in the fact
that in a trust, the title and control of the property under the trust instrument passes to the
trustee who acts in his own name, while the agent represents and acts for his principal and in
the further fact that while a trust may ordinarily be terminated only by the fulfillment of its
purpose, an agency may in general be revoked at any time.
 Agency is formed with the thought of constant supervision and control by principal,
whereas a trust is based on the idea of discretion in the trustee and guidance by the settler or
cestui only to a limited extent and when expressly provided for. But while trust is not an
agency, it is possible for a trustee to be an agent also where extensive direction and control are
kept over the trustee

AGENCY DISTINGUISHED FROM JUDICIAL ADMINISTRATION.

A judicial administrator is appointed by the court. He is not only the representative of
the said court, but also of the heirs and creditors of the estate. A judicial administrator, before
entering into his duties, is required to file a bond. These circumstances are not true in case of
agency. The agent is only answerable to his principal. The protection which the law gives the
principal, in limiting the powers and rights of an agent, stems from the fact that control by the
principal can only be through agreements; whereas, the acts of a judicial administrator are
subject to specific provisions of law and orders of the appointing court.

KINDS OF AGENCY 371

(1) 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, 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 or from the acts of the agent which carry out the agency, or from
his silence or inaction according to the circumstances.
(2) 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 for his
services.
(3) 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.
(4) As to authority conferred:
 (a) couched in general terms. — one which is created in general terms and is deemed to
comprise only acts of administration
(b) couched in specific terms. — one authorizing only the performance of a specific act
or acts
(5) As to its nature and effects:
(a) ostensible or 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.

CLASSES AND KINDS OF AGENTS.

(1) A universal agent is one employed to do all acts that the principal may personally do,
and which he can lawfully delegate to another the power of doing.
(2) A general agent is one employed to transact all the business of his principal, or all
business of a particular kind or in a particular place, or in other words, to do all acts, connected
with a particular trade, business, or employment
(3) A special or particular agent is one authorized to act in one or more specific
transactions, or to do one or more specific acts, or to act upon a particular occasion.
(1) Attorney at law, or one whose business is to represent clients in legal
proceedings;
(2) Auctioneer, or one whose business is to sell property for others to the
highest bidder at a public sale;
(3) Broker, or one whose business is to act as intermediary between two other
parties such as insurance broker and real estate broker
(4) Factor (synonymous with commission merchant), or one whose business is
to receive and sell goods for a commission, being entrusted with the possession of the goods
involved in the transaction
(5) Cashier in bank, or one whose business is to represent a banking institution
in its financial transactions
(6) Attorney-in-fact, infra- is one who is given authority by his principal to do a
particular act not of a legal character, it means an agent having a special authority created by
deed.
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 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)