REVIEW NOTES FOR LAW ON AGENCY Defne Agency (MANDATO ( MANDATO): ): Agency Agency is a contra contract ct where whereby by a person person binds to rende renderr some some servic service e or to do something in representation or on behal o another, with the consent or authority o the latter. (Art. 1!) "bserv "bservati ations ons:: Defnit Defnition ion is very very broad broad and and there thereor ore e deect deective ive.. As worded worded,, the defnition includes relationship o master and servant o employer and employee o lessor and independent contractor. #he servant, the employee and the independent contractor all render some wor$ or service in representation or on behal o another. %"#&: 'hat the agent really does or the principal is a *+D+A- A#, and not merely a material one. +n other words, while an agent may eercise discretionary powers, the lessess o service ordinarily perorms only ministerial unctions. ustice /- *eyes: #he true essence o the distribution, it is submitted lies in that the agent enters or is designed to enter 0udicial relations, with or without representation o the principal. Basis of Agency: Agency is also a representation relation. *epresentation constitutes its basic. /y this legal fction o representation, representation, the actual absence o the principal is transerred transerred into legal fction o repre representa sentation, tion, the actual actual absence absence o the principa principall is transer transerre red d into legal legal or 0udicial 0udicial presence. Imo!"ance: +t Imo!"ance: +t enables a man to increase the range o his individual and corporate activity by enabling him to be constructively constructively present in many places and to carry on diverse at the same time. #$!ose an% Na"$!e of Agency: #he purpose is to etend the the personality personality o the principal. principal. +t enables enables the activity activity o man which which is natura naturally lly limite limited d in its eer eercis cise e by imposi impositio tions ns o his physi physiolo ologic gical al condit condition ions s to be etended, permitting him to perorm diverse 0uridical acts at the same time in dierent places. #he relation is fduciary in character since it is based on trust and confdence. 2ence the agent is estopped rom asserting or ac3uiring a title to the sub0ect matter o the agency adverse to that or the principal. 4arties to a ontract o Agency: 4rinc 4rincipa ipall (5anda (5andante nte)) 6 one whom whom the agent agent repr represe esent nt and and rom rom whom whom he deriv derives es his authority, he is the person represented7 and Agent (5andatario) 6 one who acts or and represents another7 he is the person acting in a representative capacity. capacity. %"#&: %"#&: #he princi principa pall is someti sometime me calle called d employ employer er,, consti constitue tuent nt or chie chie.. #he agent agent is re3uen re3uently tly called called attorney, attorney, or an attorney attorney in act. act. &.g. occasionall occasionally y is spo$en spo$en as proy proy,, delegate or representative. Caaci"y of "&e a!"ies: 1. Any person person who is capaci capacitate tated d to act in his own right right may may be principa principal. l. 8. +n the case case o the agent, agent, since since he assumes assumes no persona personall liability liability,, he does not have have to possess ull capacity to act insoar insoar as third persons are are concerned. /ut persons who are are absol absolute utely ly incapa incapacit citate ated d such such as insan insane e person persons s canno cannott be agents agents.. +nsoa +nsoarr as his his obliga obligatio tions ns to his princi principal pal are are concer concerned ned,, the agent agent must must be competent to bind himsel. #!incia' o! essen"ia' e'emen"s of con"!ac" of Agency: 1. #here #here is conse consent, nt, epr epresse essed d or impli implied7 ed7 8. #he ob0ect is the eecution eecution o 0uridicial 0uridicial act in relation to a third third person7 9. #he agent agent acts acts as a repr represen esentativ tative e and not or or himsel7 himsel7
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. #he agent acts within the scope o his authority C(ARACTERISTIC AS A CONTRACT) %ominate onsensual 4reparatory +normal 4ersonal *epresentative Derivative • • • • • • •
Dierent ;inds or lassifcation o Agency: As to orm: a. "ral b. 'ritten As to the manner o creation: a. &press< one where the agent has been actually authori=ed by the principal either orally or in writing7 b. +mplied 6 one, which implied rom the acts o the principal, rom his silence or lac$ o action, or his ailure to repudiate the agency. As to cause: a. "nerous or compensated 6 one where the agent receives compensation or his services. Agency is presumed to be or compensation. (art. 1>?) b. @ratuitous 6 one where the agent receives no compensation. As to etent o business covered: a. @eneral 6 one which comprises all business o the principal (art. 1>!)7 or b. pecial 6 one which comprises one or specifc transactions7 As to authority conerred: a. ouched in general terms 6 one which is created in general terms and is deemed comprise only acts o administration (art. 1>>) b. ouched in specifc terms 6 one authori=ing only one perormance o a specifc act or acts (art. 1>) As to its nature and &ects: a. "stensible or representative 6 one where the agent acts in the name and representation o the principal (art. 1>) b. imple or commission 6 one where the agent acts or the account o the principal but in his own name7 Distinction with other ontracts Distinguish Agency rom -oan: +n loan, a borrower is given money (a) or purpose o his own, in agency, to advance principalBs business and he must generally return it whether or not his business is successul. Distinguish Agency orm lease o service: #he basis o lease o service is employment and the lessor (li$e a servant ordinarily perorms only ministerial (not discretionary powers) unctions. Distinguish Agency rom contract or a piece o wor$: #he independent contractor eercise his employment independently and not in representation o the employer. Distinguish Agency rom partnership:
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A partner acts not only or his co
Fo! con*enience: Art. 138. !he following "ust appear in a public docu"ent# $1% &&&&&&&&& $'% &&&&&&&&& $3% !he power to ad"inister property, or any other power which has for its ob(ect an act appearing or which should appear in a public docu"ent, or should pre(udice a third person;
'hen is there implied acceptance o an agency by an agentH a. As between person present 6 + the principal (personally) delivers his power or attorney to the agent and the latter receives it without any ob0ection. (Art 1>1) b. As between persons absent 'hen the principal transmits the power o attorney to the agent, who receives it without any ob0ection7 'hen the principal entrust to him by letter or telegram a power o attorney with respect to the business in which he is habitually engaged as an agent, and he did not reply to the letter or telegram (Art. 1>8) Art. 1873. )f a person specially infor"s another or states by public advertise"ent that he has given a power of attorney to a third person, the latter thereby beco"es a duly authori*ed agent, in the for"er case with respect to the person who received the special infor"ation, and in the latter case with regard to any person. #he power shall continue to be in ull orce until the notice is rescinded in the same manner in which it was given.
+norming "ther 4eople o the &istence o the agency: #wo ways: a) pecial inormation 6 the person appointed as agent is considered as such with respect to whom it was given b) 4ublic advertisement 6 #he agent is regarded as such with regard to any person.
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*ule in case o revocation: +t must be revo$ed in same manner how the agency was made $nown. /ut revocation made in any manner shall be eective against all persons having $nowledge thereo. *eason according to ustice ./.-. *eyes is to orestall raud. Meaning of #o+e! of A""o!ney A written authori=ation to an agent to perorm specifc acts in behal o his principal which acts, when perormed, shall have binding eect on the principal. Dis"ing$is&e% im'ie% agency f!om agency ,y es"oe' . +n implied agency, there is an actual agency. #he principal alone is liable. +n an agency by estoppel, the authority o the agent is not real but apparent. + the principal causes the estoppel, he is liable to any third person who relied on the misrepresentation. + the estoppel is cause by the agent, then only agent is liable (Art. 1F11). As ,e"+een "&e !incia' an% "&e agen": +n implied agency, the agent is true agent, with rights and duties o an agent. +n an agency by estoppel (caused or instance by estoppel on the part o the agent), the agent is not a true agent7 hence he has nor rights as such. As "o "&i!% e!sons: + the estoppel is caused by the principal, he is liable, but only i the third person acted on misrepresentation in an implied agency, the principal is always liable. + the estoppel is caused by the agent, it is only agent who is liable, never the alleged principal7 in an implied agency, the agency is never personally liable. A$"&o!i"y Disc$sse%: #he right o the agent to eect the legal relations o his principal by the perormance o acts eected in accordance with the principalBs maniestation o consent. ;inds o Authority: 1. 8. 9. .
&press (here, the authority is clearly defned) +mplied (this includes necessary acts to accomplish the purpose) @eneral (#he agentBs discretion is "54-&#&) Apparent (here, the agent or third person was led by the principalBs conduct or words to believe that agent was really authori=ed, when in act he was not. #he eect here is as i there really was an authority.)
&les o +mplied Authority + an authori=ed to collect a debt, he usually is also impliedly authori=ed to employ an attorney as counsel, and to bring suit or the enorcement o the payment. + an agent is authori=ed to eact the payment o the debt by legal means, he has the right to institute a legal suit or its recovery. An agent or attorney in act who is authori=ed to pay the debts o the principal and to employ attorney to deend the interest o the latter is naturally impliedly empowered to pay ees o the attorney or the services rendered in the interest o said principal. E-am'es of Ins"ances +&e!e no im'ie% a$"&o!i"y. 1. An agent authori=ed to borrow necessary unds has no authority to pay his own personal debts therewith. 8. An agent authori=ed to collect a debt has no right to ma$e a novation o the contract and to release sureties o the debtor. 9. An agent authori=ed to collect money belonging to the principal does not posses the implied authority to indorse the chec$s which has been received by him in payment. . An agent authori=ed to borrow is not implied authori=ed to pay loan at maturity nor is he allowed to give the money received to a third person.
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?. Authority to collect does not carry with it authority to receive partial payment, nor the authority to accept commercial paper as payment o the debt.
4*&54#+"% A "%+D&*A#+"% Agency is presumed contrary. (art. 1>?)
to be or compensation, unless there is proo to the
Lega' e/ec" of an agency co$c&e% in gene!a' "e!ms: uch an agency comprises only acts o administration, (a) even i the principal should state that the he withholds no power, or (b) that the agent may eecute such acts as he may consider appropriate (c) even though the agency should authori=e a general and unlimited management. (art. 1>>) &les o Acts o 5ere Administration a. #o sue or the collection o debts. b. #o employ wor$ers or servant and employees needed or the conduct o a business. c. #o engage counsel to preserve the ownership and possession o the principalBs property. d. #o lease real property to another or one year or less provided the lease is not registered . (see Art. 1> %o. by implication) e. #o ma$e customary gits or charity or to employees in business managed by the agent (see Art. 1>, %o. !) . #o borrow money i it urgent and indispensable or the preservation o the thing under administration (see Art. 1>, %o.>) ases where pecial powers o Attorney are re3uired: 1. #o ma$e such payment as are not usually considered as act o administration 8. #o eect novations which put an end to obligation already in eistence at the at the time the agency was constituted7 9. #o compromise, to submit 3uestions to arbitration, to renounce the right to appeal rom the 0udgment, to waive ob0ections to the venue o an action or to abandon a prescription already ac3uired. . #o waive any obligation gratuitously7 ?. #o enter into any contract by which the ownership o immovable is transmitted or ac3uired either gratuitously or or a valuable consideration7 !. #o ma$e git, ecept customary ones or charity or those made to employees in the business management by the agent. >. #o loan or borrow money, unless the latter act be urgent and indispensable or the preservation o the things which are under administration7 . #o lease any real property to another person or more than one year. F. #o bind the principal to render some service without compensation: 1I. #o bind the principal in a contract o partnership7 11. #o obligate the principal as guarantor or surety. 18. #o create or convey real right over immovable property7 19. #o accept or repudiate an inheritance 1. #o ratiy or recogni=e obligations contracted beore the agency7 and 1?. Any other act o strict dominion. (Art. 1>) %ote: 1. #he cases enumerated involve acts o strict dominion or ownership as distinguish rom acts o administration. 8. A special power to sell ecludes the power to mortgage7 and a special power to mortgage does not include the power to sell. (Art. 1>F). #o+e! "o se'' ca!!ies +i"& i" "&e o+e! "o 0n% a $!c&ase! o! "o se'' %i!ec"'y) o+e! "o %e'i*e! "&e !oe!"y1 o+e! "o ma2e "&e $s$a' !e!esen"a"ion an% +a!!an"y) o+e! "o e-ec$"e "&e necessa!y %oc$men"s) o+e! "o 0- "&e "e!ms of "&e sa'e1 inc'$%ing "&e "ime1 'ace1 mo%e of %e'i*e!y1 !ice of "&e goo%s1 an% "&e mo%e of aymen" $n'ess "&e!e ,e a se" con%i"ions s"i$'a"e% ,y "&e !incia') an% o+e! "o se'' on'y fo! CAS( an% o+e! "o !ecei*e "&e !ice $n'ess &e +as a$"&o!i3e% "o on'y so'ici" o!%e!s.
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T&e o+e! "o se'' %oes no" ca!!y +i"& i" "&e o+e! "o ,a!"e! o! "o e-c&ange "o mo!"gage o! "o 'e%ge. T&e o+e! "o mo!"gage %oes no" inc'$%e "&e o+e! "o se'') o! "o e-ec$"e a secon% mo!"gage) "o mo!"gage fo! "&e agen"4s e!sona' ,ene0" of any "&i!% e!son1 $n'ess "&e con"!a!y &as ,een c'ea!'y in%ica"e%. A secia' o+e! "o com!ise %oes no" a$"&o!i3e s$,mission "o a!,i"!a"ion. 5a!". 67789 (ence an agen" a$"&o!i3e% "o com!omise can %o any"&ing1 +&ic& "&e !incia' &imse'f can %o "o e/ec" a se""'emen" $n'ess "&e!e is con"!a!y 'ega' !o*ision. Re$isi"es in o!%e! "&e agen" can ,in% "&e !incia': 1. #he agent must act within the scope o his authority, and 8. #he agent act in behal o the principal (see Art. 11, 18) ases wherein the principal may still be bound by the acts o an agent who eceeded his authority: a. 'here the principalBs act have contributed to decide a third person in good aith (see Art. 1F11 b. 'here the limitations upon the power created by him could not have been $nown by the third person (see Art. 1FII) c. 'here the principal has placed in the hands o the agent instruments signed by him in blan$7 and d. 'here the principal has ratifed the acts o the agent. (Art. 1FI1) #he agent is one directly liable to the person with whom he had contracted as i the transaction were his own. #hereore, the principal and such person have no right o action against each other. #he eception is: T&e !incia' is ,o$n% +&en "&e con"!ac" in*o'*es "&ings ,e'onging "o &im) "&e !incia' may s$e "&e agen" fo! ,!eac& of con"!ac". 5A!". 677;9. Seci0c o,'iga"ion of "&e agen": 1. #o carry out the agency in accordance with its items7 otherwise, he shall be liable or damages. (art. 1) *eason: 2e betray the confdence reposed on him by the principal7 8. #o fnish the business already begun on the death o the principal should delay entail any danger. *eason: +n such case, the agency is still deemed in ull orce7 9. #o advance the necessary unds i such is the stipulation ecept when the principal is insolvent (art. 1!) . #o act in accordance with the instruction o the principal and in the absence thereore, to do all that a good ather o the amily would do, as re3uired by the nature o the business (art. 1>). ?. %ot to carry out the agency i its eecution would maniesty result in loss or damage to the principal (art. 1) *eason: #he duty o the agent is to render service or the beneft and not to the determined o the principal. !. #here being a conJict, not to preer his own interest to those o the principal (e.g. buying goods o the principal or selling his own goods to the principal without inorming the principal)7 otherwise, he shall be liable or damages. (art. 1F) *eason: Agency is a fduciary relation: >. %ot to borrow money rom the principal who was authori=e him to lend although at interest, without his consent. (art. 1FI) *eason: the agent may prove to be a bad debtor. /ut i the agent has been authori=e to borrow money he may himsel be the lender at the current rate. *eason: #here is no danger o the principal suering any damage7 . #o render an account o his transactions and deliver to principal whatever he may have received by virtue o the agency though it may not be owing to the principal (art. 1F1): %ote: Duty o the Agent to account is mandatory. 2ence in an overpriced received by the agent or goods he was sell at a certain price, he is duty bound to ma$e an account. #his applies even in cases in cases that the money not be owing to the principal but arose rom the transaction involving the contract o agency.
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tipulation eempting rom the duty to account is K"+D, being contrary to public policy as it would be conducive to raud. ome Doctrines on the duty to account: 1. 'hoever administers anotherBs aairs must render an account because o the representative relation and because o the fduciary position. 8. + an agent reuses to account when it is his duty to do so, the principal may at once terminate the agency and sue or the balance due. + the principal dies, the agency is etinguished, /# the duty to account subsists, and can be demanded by the principalBs heirs or legal representatives. 9. #he principal, or his legal representative, has the right to pass upon the correctness o the accounting. . orollary to his right to demand an accounting, a principal has the right to ma$e reasonable inspection o the boo$s o account and memoranda, including the original entries. ?. An agent, as a conse3uence o his duty to account, cannot dispute his principalBs title to the property in his possession. !. #o be responsible in certain cases or the acts o the substituted appointed by him (art. 1F1). >. #o be responsible or the goods received by him, etc. #o sell on credit only with the consent o the principal, etc. and to collect with due diligence the credits o the principal (art. 1FI9<1FI)7 and . #o answer or his raud or negligence (art. 1FIF) -+A/+-+#L "G A@&%# -iability o two or more agent, even i they may have been appointed simultaneously is "+%#. (Art. 1F). Agent is liable or interest on the sums he has applied to his own use rom the day with he converted the said unds and so which owes ater the etinguishment o the agency. 2e is liable personally in the contract o agency i he epressly binds himsel (art. 1F>) or i he eceeded his authority7 &GG&# "G "%#*A# &%#&*&D +%#" +% &M& "G A#2"*+#L #he principal is not at all bound, ecept o course i there is subse3uent ratifcation by him. #hereore, it shall be K"+D reers to the tie between the agent and the third party. *egarding the principal, other articles are applicable. (art. 1FF) C+ the agent contracts in the name o the principal, eceeding the scope o his authority, and the principal does not ratiy the contract, it shall be void i the party with whom the agent contracted is aware i the limits o the powers granted by the principal. +n this case, however, the agent is liable i he undertoo$ to secure the principalBs ratifcations. (art. 1FF) &le: An agent was authori=ed to sell his principalBs car. #he agent sold in the principalBs name the principalBs radio cabinet to third person who $new that the agent was not authori=ed. +n the above eample, even as between the agent and the third person , such sale is completely null and void. 2owever, i the agent had promised to obtain the principalBs ratifcation, said agent would be liable in case o ailure to obtain such ratifcation. + ratifcation has been obtained, then the principal would be bound. D+#+%@+2 A#2"*+#L G*"5 +%#*#+"%: Authority is the etent or the limitation o the agentBs power to represent the principal. +nstructions are directions which the principal may give the agent to ollow in the discharge o his duties as such agent. #hird persons dealing with an agent do so at their own ris$ and are duty bound to investigate his authority, the principal is not bound. /ut persons dealing with the agent need not veriy or investigate the instructions o the principal since they concern only the principal and the agent. &MA54-&: 4 writes to / that A is authori=ed to buy certain merchandise. 4 privately instructions A not to but merely to obtain /Bs lowest price. + violation o said instruction, A buys the merchandise. +n this case, the sale is binding upon 4 because A has authority to ma$e the purchase although it is not in accordance with the instruction given.
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'2" + A / A@&%# A sub
) *eason: #he contract being unenorceable the third person is deprived o any remedy against the principal. #he scope o agentBs Authority as ar as third persons are concerned, i such acts is within the terms o the power o attorney, as written, even i the agent has in act eceeded the limits o his authority according to an understanding between the principal and the agent (Art. 1II). 4urpose o the rule: #o protect the interest o third persons. *ules when there is multiplicity o agents: #he responsibility o two or more agents is not solidary unless it is epressly stipulated (art. 1F) and i solidarity has been agreed upon, each o them is responsible or the deliberate non<ulfllment o the o the agency7 and the ault o negligence o his ellow agents ecept when the latter acted beyond the scope o their authority. (art. 1F?) 'ho is commission agentH A commission agent (or actor is one who e business is to receive an d sell goods or commission and who is entrusted by the principal with the possession o goods to be sold. 2e may act in his own name o in that o the principal. A commission agent is not authori=ed to sell in credit i not so epressly authori=ed (Art. 1FI?). 2e also has the duty to place countermar$s to goods he handles with dierent owners. (art. 1FI). W&a" !ig&"s a!e gi*en "o "&e !incia' +&e!e a sa'e on c!e%i" is ma%e +i"&o$" a$"&o!i"y< 1. *e3uire payment in cash, in which case, any interest or beneft rom the sale shall belong to the agent since the principal or 8. *atiy the sale on credit in which case it will have all the ris$s and advantages to him. (art. 1FI?) @uarantee commission (Del redere ommission) is given in return or the ris$s the agent will have to bear in the collection o the credit. An agent who receives a guarantee commission is called del credere agent. Seci0c o,'iga"ion of "&e !incia': 1. #o comply with all the obligations which the agent may have contracted within the scope o his authority (art. 1F1I, 11) and in the name o the principal (art. 1!, 19) 8. #o advance to the agent, should the latter so re3uest, the sums necessary to the eecution o the agency (Art. 1F18) 9. #o reimbursement the agent or all advance made by him provided the agent is ree rom ault. . #o indemniy the agent or all the damages which the eecution o the agency may have caused the latter without ault or negligence on his part. (Art. 1F19)7 and
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?. #o pay the agent the compensation agreed upon, or i no compensation was specifed the reasonable value o the agentBs services. (Art. 1>?) #he principal is solidarily with the agent even when the latter eceeded his authority i the principal allowed the agent to act as though he had ull powers. (Art. 1F11) this rules is based on the principle o estoppel. R$'es in case "+o e!sons con"!ac" +i"& !ega!%s "o "&e same "&ing. One of "&em +i"& "&e agen" an% "&e o"&e! +i"& "&e !incia'. 1. + the two contract are compatible to each other, both shall be enorced7 8. + they are incompatible with each other, that o prior date shall be preerred sub0ect to the provisions o Art. 1? (Art. 1F1!) 9. + the agent acted in good aith, the principal shall be liable to the third person whose agent contract must be re0ected7 and . + the agent acted in bad aith, he alone shall be responsible. (art. 1F1>) R$'es +&en "&e!e is m$'"i'ici"y of !incia's: 'hen two or more persons have appointed and agent or a common transaction or understanding they shall solidarily liable to the agent or all the conse3uences o agency (art. 1F1?). ases the principal not liable or the epense incurred by the agent. 1. + the agent acted in contravention o the principalBs instruction, unless the latter should wish to avail himsel, or the benefts derived rom the contract7 8. 'hen the epense were due to the ault o the agent. 9. 'hen the agent incurred them with $nowledge that the unavorable result would ensue, i the principal was not aware thereo, and . 'hen it was stipulated that the epenses would be borne by agent, or that he latter would be allowed only a certain sum. &tinguishment " Agent: 1. /y its revocation7 8. /y the withdrawal o the agent7 9. /y the accomplishment o the ob0ect or purpose o the agency7 and . /y the epiration o the period or which the agency was constituted. (art. 1F1F) ;ey word: &D'A*D & 6 &piration D 6 Death, etc. '< 'ithdrawal A 6 Accomplishment o the agency *< *evocation D< Dissolution "ther causes: Te!mina"ion ,y m$"$a' consen"1 no*a"ion1 'oss of "&e s$,=ec" ma""e! of "&e agency. 5ay a contract o agency be revo$edH &pressly7 or +mpliedly 1. /y the appointment o anew agent or the same business transaction (art. 1F89) 8. /y direct management by the principal o the business entrusted to agent (Art. 1F) 9. 'ith respect to a general power o attorney previously granted (e.g. to manage a business ) as regards the matter involved in the latter (Art. 1F8!) ases when agency is irrevocable #he principal may generally revo$e an agency at will. (Art. 1F8I). +n the ollowing case, he has no right to revo$e the agency without incurring liability or damages:
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+ the agency is coupled with interest, i.e. the agent possesses an interest in the sub0ect matter o the power conerred and nor merely in the compensation arising rom the eercise o the power (e.g. where the principal pledges his property to the agent as security or his debt and gives the agent the power to dispose o it should be in deault). nder Art. 1F8>: 1. + a bilateral contract depends on the agency (e.g. where it is stipulated that the ownership o the actory sold would be transerred to the buyer only ater payment o the balance o the purchase price and that the seller (principal) would appoint the agent to manage the actory and that any proft would be used to pay o the balance. 8. + the agency is means o ulflling an obligation already contracted (e.g. agency in avor o creditor to collect sums due debtor< principal) 7 and 9. + a partner is appointed manager o a contract o partnership, his appoint being revocable only upon 0ust and lawul cause and upon the vote o the partners representing the controlling interest. (see Art. 1F8>) . 'hen there has been waiver by the principal (however, the irrevocability o a power o attorney cannot aect one who is not party thereto, it being obligatory only on the principal who created the agency. ?. 'hen the principal is obliged not to revo$e. ( here the principal can still revo$e but he can held liable or damages, or breach o contract). !. 'hen the revocation is done is bad aith. (2ere, the principal can still revo$e but innocent third parties should not be pre0udiced7 moreover the innocent agent can be entitled to damages rom him. Agency is no" "e!mina"e% imme%ia"e'y ,y %ea"& in "&e fo''o+ing cases: 1. + the agency is necessary to fnish the business already begun on the death o principal where delay should entail any danger. (1): 8. + it has been constituted in the common interest o the principal and the agent (art. 1F9I) 9. + it has constituted in the interest o the third person who has accepted the stipulation in avor (Art. 1911) +--#*A#+K& ases: +. A let his car at shell station, operated by /, to be washed, greased and sprayed. 'hen the car was being raised in the elevator shat, it ell rom the service platorm and as a result is suered damage estimated 48,III. ince the car was insured by M insurance o., the latter had to pay 48,III to A. pon payment o the amount M, insurance o. brought an action against the hell ompany o the 4hilippines to recover said amount. #he deendant ompany interposed the deense that /, operator o the service station, is an independent contractor, conse3uently, it cannot be held liable or damages. +s this correctH *eason. *uling: #he contention o the hell 4hilippines is not correct. #he upreme ourt ruled the contract entered between the company and the operator station is a contract o agency. #he operator o a service station is not an independent contractor, but merely and agent o the ompany because even the e3uipment which he use in his service station are owned by the ompany and oil, gasoline and other products which he sells the public are sold at commission. ++. A constituted son as his agent to mortgage parcel o land with the ban$. +n the contract o mortgage, there is a provision that the ban$ can oreclose the mortgage in case the debtorBs ailure to pay his obligation, the ban$ oreclosed and sold the same to the higher bidder. A 3uestioned the sale contending that the authority to mortgage does not carry with it the power to sell. +s ABs contention correctH 'hyH %o. 'hile it is true that pecial 4ower o Attorney to sell does not carry with it the power o mortgage o the power to mortgage does not carry the power to sell, yet the stipulation granting an authority to oreclose a mortgage is an ancillary stipulation supported by the same cause or consideration or the mortgage and orms an essential or inseparable part o the bilateral agreement. DOCTRINE OF AGENCY BY NECESSITY
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trictly spea$ing, an agency can never be created by necessity. 'hat is meant by the phrase Cagency by necessity is however this: #hat by virtue o the eistence o an emergency the authority o an agent is correspondingly enlarged in order to cope with the eigencies or the necessities o the moment.
1. 8. 9. . ?.
Give conditions laid down by the upreme ourt or Authority o Agency by %ecessity: #he real eistence o an emergency7 +nability o the agent to communicate with the principal7 #he eercise o the additional authority or the principalBs own protection7 Adoption o airly reasonable means, premises duly considered7 #he ceasing o the authority the moment the emergency no longer demands the same.
&le: + a bus conductor is seriously hurt, the driver is authori=ed to engage the services o the physician, in the companyBs name, sot that the conductor may survive. #his is really or the best interest o all concerned.
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