A. How Agency May Be Constituted (Art.
1869)
Article 1869 states: "Agency is a contract whereby a person (the agent) is authorized to act on
behalf of another (the principal) in dealings with third persons."
Forms of Agency:
1. From the Side of the Principal (Art. 1869): The principal expresses their intention to create
an agency relationship, which can be done through explicit communication (verbal or
written).
o Case Reference: Lim v. Court of Appeals, 254 SCRA 170 (1996) - This case
illustrates the importance of the principal’s authority and intention in constituting
an agency.
2. From the Side of the Agent (Arts. 1870, 1871, and 1872): The agent must accept the
agency for it to be valid. Acceptance can be express or implied through conduct.
o Case Reference: Bordador v. Luz, 283 SCRA 374 (1997) - Highlights the necessity
of acceptance by the agent for the agency to take effect.
3. From the Side of Third Parties/Public (Arts. 1873 and 1408; 1921 and 1922): Third parties
must be aware that an agency exists, and the agent must have the authority to bind the
principal in contracts.
o Case References:
▪ Jusayan v. Sombilla, 746 SCRA 437 (2015) - Discusses the obligations of
the agent towards third parties.
▪ Salvador v. Rabaja, 749 SCRA 654 (2015) - Examines the implications of
third-party reliance on the agent’s authority.
▪ Country Bankers Insurance v. Keppel Cebu Shipyard, 673 SCRA 427
(2012) - Explores the agent's role in binding the principal.
▪ Republic v. Bañez, 772 SCRA 297 (2015) - Clarifies the requirements for
agency relationships in public dealings.
B. Kinds of Agency
1. Based on Business or Transactions Encompassed (Art. 1876):
o General or Universal Agency: Covers all business or transactions.
o Special or Particular Agency: Limited to specific transactions.
2. Whether It Covers Legal Matters:
o Attorney-at-Law: A legal representative with full authority to act on legal matters.
o Attorney-in-Fact: An agent authorized to perform acts outside legal representation.
3. Whether It Covers Acts of Administration or Acts of Dominion:
o General Power of Attorney: Broad authority, including acts of administration.
o Special Power of Attorney: Limited to specific acts or transactions.
C. General Powers of Attorney (Art. 1877)
Article 1877 stipulates that a general power of attorney allows the agent to act on behalf of the
principal in all transactions unless limited by specific provisions.
D. Special Powers of Attorney (Art. 1878)
Article 1878 indicates that a special power of attorney is necessary for specific acts, such as:
1. With Respect to Matters in Litigation Involving the Principal (Art. 1880): Requires explicit
authorization for the agent to represent the principal in court.
2. With Respect to Money or Funds of the Principal:
o Case Reference: Dominion Insurance Corp. v. CA, 376 SCRA 239 (2002) -
Discusses the authority needed to handle funds.
3. To Loan or Borrow Money:
o Case Reference: Patrimonio v. Gutierrez, 724 SCRA 636 (2014) - Analyzes the
limits of authority regarding loans.
4. With Respect to Obligations Due to/from the Principal:
o Case Reference: Virata v. Ng Wee, 830 SCRA 271 (2017) - Highlights the
requirements for managing obligations.
5. With Respect to Immovable Properties (Art. 1874, 1491[2], 1879):
o Case References:
▪ Gutierrez Hermanos v. Orense, 28 Phil. 572 (1914) - Examines authority
over real property.
▪ Escueta v. Lim, 512 SCRA 411 (2007) - Discusses the necessary powers for
real estate transactions.
6. With Respect to Specific Contracts “Deemed Personal” to the Principal: Certain
contracts require personal involvement of the principal.
7. Any Other Act of Strict Dominion:
o Case Reference: Pineda v. Court of Appeals, 226 SCRA 754 (1993) - Discusses the
limitations of agent powers regarding strict dominion.
