1. Define Agency

ARTICLE 1868: 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.

2. What are the four essential elements of an agency?

They are as follows:

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 third persons;c. The agent acts as a representative and not for himself;d. The agent acts within the scope of his authority.

3. A contract of agency maybe expressed or implied. Enumerate four instances where the existence of an agency may be implied. Give examples for each instance to illustrate implied agency.Instances where implied agency exists:

a. ARTICLE 1869: Agency may be express, or implied from the acts of the principal, from the silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.e.g. Mark’s property is administered by Floro. Later, Mike became in charge of the administration of the said property thru the designation of Floro due to the latter’s hospitalization. Mark did not oppose the designation of Mike nor did Mark appoint a new agent. Mark remained silent for nine years allowing Mike to take charge of the property

b. ARTICLE: 1871. Between persons who are present, the acceptance of the agency may also be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection.e.g. Joyce personally gave Jeff a written power of attorney to sell a parcel of land. Jeff accepted the authorization without any objections.

c. ARTICLE 1872. Between persons who are absent, the acceptance of the agency cannot be implied from the silence of the agent, except:

i. When the principal transmits his power of attorney to the agent, who receives it without any objection;

ii. When the principal entrusts to him by letter or telegram a power of 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.

e.g. Jesse sent to Elaine a written power of attorney through registered mail to sell a parcel of land owned by Jesse. Elaine wrote back acknowledging the receipt of the letter and the power of attorney but did not indicate any objections thereto.

d. ARTICLE 1873. If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the latter thereby becomes a duly authorized agent, in the former case with respect to the person who received the special information, and in the latter case with regard to any person.

The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given.e.g. Grace especially informs Morris that he has given Berto a power of attorney. With respect to Morris, Berto thereby becomes a duly authorized agent of Grace.

4. Enumerate 15 circumstances where a special power of attorney is necessary. Give examples to illustrate these circumstances. Whenever necessary, use the name of your classmates.

ARTICLE 1878: Special powers of attorney are necessary in the following cases:a. To make such payments as are not usually considered as acts of administration;

e.g. Anthony authorized and appointed Jefferlyn to purchase a parcel of land on his behalf in Baguio City.

b. To effect novations which put an end to obligations already in existence at the time the agency was constituted;

c. 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;

d. To waive any obligation gratuitously;e. To enter into any contract by which the ownership of an immovable is transmitted or

acquired either gratuitously or for valuable consideration;f. To make gifts, except customary ones for charity or those made to employees in the

business managed by the agent;g. To loan or borrow money, unless the latter act be urgent and indispensable for the

preservation of the things which are under administration;h. To lease any real property to another person for more than one year;i. To bind the principal to render some service without compensation;j. To bind the principal in a contract of partnership;k. To obligate the principal as a guarantor or surety;l. To create or convey real rights over immovable property;m. To accept or repudiate inheritance;n. To ratify or recognize obligations contracted before the agency;o. Any other act of strict dominion.

5. As a rule, in a contract of agency the agent represents the principal to third person. When or under what conditions is the principal bound by the act of the agent to the said third person with whom the agent contracted?In order that the principal may be bound by the act of the agent as to third persons and as to the agent himself, there are two requisites or conditions that must be present:

a. The agent must act within the scope of his authority; and b. The agent must act in behalf of the principal.

Also, the principal is bound by either actual or apparent authority of the agent. a. So long as the agent has actual authority, express or implied, the principal is bound by the

acts of the agent on his behalf, whether or not the third person dealing with the agent believes that the agent has actual authority.

b. Under the doctrine of apparent authority (estoppel), the principal is liable only as to third persons who have been led reasonably to believe by the conduct of the principal that such actual authority exists, although none has been given.

6. What is the doctrine of apparent authority?Apparent authority is that which though not actually granted, the principal knowingly permits the agent to exercise or holds him out as possessing. Apparent authority is not founded in negligence of the principal but in the conscious permission of acts beyond the powers granted.e.g.

Fortun authorized Fred to sell his land, the purchase price payable to Fortun in 12 monthly installments. Fred sold the land to Shelly. Fortun knowingly permits A to collect from Shelly, Fred may be said to have apparent authority to receive payment.

7. Explain how an agency is created by ratification.As applied to the law of agency, ratification is the adoption or affirmance by a person of a prior act which did not bind him, but which was done or professed to be done on his account thus giving effect to the acts as if originally authorized. The doctrine applies to the ratification of the act of an agent in excess of his authority or the act of one who purports to be an agent but is really not.

8. Explain the difference between a disclosed principal and an undisclosed principal from the point of view of a third person.In the perspective of a third person, a disclosed principal is equal to the ordinary mode of agency where the agent acts in behalf of the principal within the scope of authority given him by the latter. The third person in this case sees the agent as a mere representative of the principal. On the other hand, a third person may or may not know the existence of an undisclosed principal. The important aspect to note in this kind of principal is that the agent’s action does not bind him.

9. Explain why the contract of agency is a preparatory contract. Illustrate.Agency is a preparatory contract because it is entered into as a means to an end. Once an agency is constituted, the creation of other transactions or contracts may arise which may be entered into by the agent in representation of the principal within the scope of authority given to him.

10. Mr. Onofre authorized Mr. Andres to sell the former’s land. May the latter be himself the buyer of the same land?No. Article 1491 (2) of the Civil Code provides:

“Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given;”