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AGENCY

Distinctions

AgencyLease of Work1. Basis is representation2. Agent represents the principal3. Agent exercises discretionary powers

4. 3 persons involved principal, agent, 3rd person w/ whom the agent contracted5. Relates to commercial or business transactions1. Basis is employment2. Lessor does not represent his employer3. Lessor performs only ministerial functions4. 2 persons involved

5. relates to matters of manual execution where the servant acts under the direction and control of the master

AgencyIndependent Contractor1. A acts under the control of P

2. A of A may be may be controlled by P3. A can bind P in case of tort or injury4. Negligence of A is imputable to P1. Authorized to work according to his own method w/o being subject to Ps controlexcept insofar as the result is concerned2. EEs of contractor are not EEs of the P3. Cannot bind P in case of tort or injury4. Negligence of the contractor is not imputable to P

AgencyPartnership1. A acts for the P2. A is controlled by P

3. A assumes NO liability in contracts entered into w/in the scope of his author

ity4. A does not share in the profits1. Partner acts for himself, the firm and for his partners2. P is not controlled by other Ps unless there is an agreement to the effect3. P assumed liability for himself and the firm

4. P shares in the profits and losses

Agency to SellSale1. A receives the goods as the goods of P (ownership is not transferred)2. A delivers the proceeds/price of the sale3. A can return the goods in case he is unable to sell the same

4. A is bound to act according to the instruction of P in dealing w/ the goods5. Essence is the appointment of one to act for another6. A relationship w/c often results in sale1. Buyer receives goods from seller as owner

2. B pays the price3. B, as a general rule, cannot return the goods sold4. B can deal with the goods as he pleases, being the owner

5. Essence is the transfer of title from S to B6. A subsequent step in the transaction

Agency by EstoppelImplied Agency1. There is no agency at all, but the one assuming to acts as agent has apparent

or ostensible, but NOT real authority to represent another2. Can be invoked only by a 3rd person who, in good faith, relied on the conductof P in holding A out as being authorized


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3. A is no agent at all, and, as against P, has none of the rights of an agent

4. Should be restricted to cases in w/c the authority is not real but apparent1. There is an actual agency

2. Reliance by the 3rd person is not necessary because A is a real agent3. A is a real agent w/ authority to act on behalf of the principal4. A fact to be proved by deductions or inferences from other facts

Commission AgentBroker1. Is in possession of the goods of P2. Has a relation w/ P and the goods3. Receives a commission upon the successful conclusion of the transaction1. Only acts as an intermediary, does not posses the goods2. Has no relation with the goods3. Earns his pay merely bringing the buyer and seller together, even if no saleis eventually made

AuthorityPower1. May be considered the source or cause2. An act is w/in the authority of A if it is not a violation of his duty to P

3. An A who has authority also has the power to bind P1 May be considered the effect or the limitation upon As ability to bind P2 An act is w/in As power if he has the legal ability to bind P to a 3rd person,

although the act constitutes a violation of his duty to P3 Power cannot exist without authorityAuthorityInstructions1. The sum total of the powers committed or permitted to A by P

2. Relates to the subject w/ w/c A is empowered to deal or the kind of businessor transactions upon w/c he is empowered to act3. Limitations of authority are operative against those who have or are chargedw/ the knowledge of them4. Is contemplated to be made known to the 3rd person dealing with A1. Directs the manner of transacting the authorized business and contemplates on

ly a private rule of guidance to A and are independent and distinct in character2. Refer to the manner or mode of As action w/ respect to the matters w/c are w/in the scope of the permitted action

3. Without significance as against those dealing with A with neither knowledge nor notice of them4. Not expected to be made known to those w/ whom A deals

Agent (Juridical Possession)Bank Teller (Physical Possession)1. Can assert even against P, an independent, autonomous right to retain the money or goods received in consequence of the agency, as when P fails to reimbursehim for advances he has made2. When A misappropriates or fails to turn over Ps proceeds of goods he was commissioned or authorized to sell, he is guilty of estafa1. Payment by 3rd person to a teller, who is a mere keeper of the funds, is payment to the bank itself; T has no independent right or title to retain or possesthe funds as against the bank

2. If T misappropriates money receives by him for the bank, he is guilty of qualified theft

AgencyTrustAgent usually holds no title at allTrustee may hold legal title to the propertyAgent acts in the name of principalTrustee may act on his own nameAgency may be terminated or revoked at any timeTrust is usually ended by the accomplishment of the purposes for which it was fo

rmedAgency may not be connected at all with propertyTrust involves control over propertyAgent has authority to make contracts which will be binding on is principalTrustee does not necessarily or even possesses such authority to bind the trusto


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r or the cestui que trustAgency is really a contractual relationA trust may be the result of the contract or not; it may be created also by law

Definition:ART 1868. By the contract of agency a person binds himself:1. to render some service or

2. to do something in representation or on behalf of another,with the consent or authority of the latter.

Agency1. Definition - A relationship w/c implies a power in an agent to contract witha 3rd person on behalf of a principal2. Purpose - To extend the personality of the principal through the facility ofthe agent3. Nature of Relation Fiduciary in character since it is based on trust and confidence

Characteristics of Contract of Agency

1. Consensualperfected by mere consent2. Principal it can stand on its own

3. Nominate it has its own name4. Either:a. Unilateral if it is gratuitous, because it creates obligations only for one of the partiesb. Bilateral if it is for compensation, because it gives rise to reciprocal rights and obligations5. Preparatory entered into as a means to an end; i.e., the creation of other transactions or contracts6. Based on fiduciary relationship

Essential Elements of Agency

1. There is consent, express or implied, of the parties to establish the relationship2. The object is the execution of a juridical act in relation to 3rd persons3. The agent acts as a representative and not for himself4. The agent acts within the scope of his authority

Capacity of the Parties1. Principal a. any person who is capacitated may be a principalb. may be a natural or juridical person2. Agent since he assumes no personal liability, he does not have to possess full capacity to act insofar as 3rd persons are concerneda. The agent must be competent to bind himself to the principalb. So far as 3rd persons are concerned, principal must be the one capacitated

Acts That May be Delegated to an Agent1. General Rule What a man may do in person, he may do thru another2. Exceptionsa. Personal Acts if personal performance is required* right to vote* making of a will* contract of marriage* statements required to be under oath* member of BOD cannot act validly by proxy* agent cannot delegate to a sub-agent performance of acts w/c he has been appoi

nted to perform in personb. Criminal Actsc. Acts not allowed by law


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* alien cannot purchase land through a Filipino

Fiduciary Nature of Agency1. A is estopped from asserting his interest adverse to P2. A must not act as an adverse party3. A must not act for an adverse party4. A must not use or disclose secret information

5. A must give notice of material facts summons to A is summons to P

Qui facit per alium facit per seHe who acts though another, acts for himself

ART 1869. Agency may be:1. express, or2. implied:a. from the acts of the principal,b. from his silence or lack of action, orc. his failure to repudiate the agency, knowing that another person is acting onhis behalf without authority.

Agency may be oral, unless the law requires a specific form.

Classification of Agency:1. Manner of creationa. Expressb. Implied2. As to its charactera. Gratuitousb. Compensated or onerous3. Extent of business covereda. General = comprises all the business of the principalb. Special = comprises one or more special transaction

4. Authority conferreda. Couched in general terms = deemed to comprise only acts of administration (1877)b. Couched in specific terms = authorizing only the performance of a specific act or acts (1878)5. Nature & effectsa. Ostensible or representative = agents act in the name and representation of the principal (1868)b. Simple or commission = agents act in his own name but for the account of theprincipal

ART 1870. Acceptance by the agent may also be:1. express, or2. implied:a. from his acts which carry out the agency, orb. from his silence or inaction according to the circumstances.

Implied Acceptance:ART 1871. Between persons who are PRESENT, the acceptance of the agency may alsobe implied if:1. the principal delivers his power of attorney to the agent and2. the agent receives it without any objection.

Power of Attorney1. Definition An instrument in writing by which one person, as principal, appoin

ts another as his agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the principal2. Purpose To evidence the authority of A to 3rd parties w/in whom A deals


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Implied Acceptance:ART 1872. Between persons who are ABSENT, the acceptance of the agency CANNOT beimplied from the silence of the agent, except:1. When the principal transmits his power of attorney to the agent, who receivesit without any objection;2. 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, andhe did not reply to the letter or telegram.

Between Persons Who are Absent1. General Rule If both P and A are absent, acceptance of the agency by A is NOTimplied by silence or inaction2. Exceptions When there is implied acceptance:a. When P transmits (sends) his power of attorney to A, who receives it withoutany objection; (must sent a reply, acknowledging receipt)b. When P entrusts to A (by letter or telegram) a power of attorney with respectto the business in which A is habitually engaged as an agent, and A did not reply to the letter or telegram (no need to reply)

ART 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,1. in the former case with respect to the person who received the special information, and2. 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.

2 Ways of Giving Notice of Agency1. By SPECIAL INFORMATION the person appointed as agent is considered such w/ respect to the person to whom it was given

2. By PUBLIC ADVERTISMENT the agent is considered as such w/ regard to any person

NoteThe power of attorney must be revoked in the same manner in w/c it was g

iven.

Agency by Estoppel (1911)Implied Agency (1881-1882)No agency at allThere is an actual agencyIf caused by principal, he is liable to 3rd persons who relied on the misrepresentationPrincipal is always liableIf caused by agent, then A is the only one liableAgent is never personally liableCan be invoked only by a 3rd person who in good faith, reliedReliance by 3rd person not necessaryAn apparent agent is no agent at allAgent is a real agent de jure agent

ART 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shallbe void.

Q ACTUALLY this is voidable since principal can ratify under 1901, 1910(2)Q Agency to Purchase Land = covered by 1878(5)Q Real estate broker is not within Art 1874 where his authority is limited to finding prospective buyer

ART 1875. Agency is presumed to be for a compensation, unless there is proof tothe contrary.

Double AgencyAgent acting at once for both contracting parties


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This is disapproved by law unless:1. the agent acted with full knowledge and free consent of both principal or2. his employment was merely to bring parties together

ART 1876. An agency is either general or special.The former comprises all the business of the principal.The latter, one or more specific transactions.

Classification of an Agent:1. Universal Agent = employed to do all acts that the principal may personally do and which he can lawfully delegate to another the power of doing2. General Agent = employed to do all acts connected with a particular trade, business, or employment3. Special or particular agent = authorized to act in one or more specific transaction, or to do one or more specific acts, or to act upon a particular occasion(atty-at-law; auctioneer; broker; factor)

General AgentSpecial Agent

Authorized to do all acts connected with the businessAuthorized to do only one or more specific acts in pursuance of particular instructionsAuthorized to conduct a series of instructions involving a continuity of serviceAuthorized to conduct a single transaction or a series of transactions not involving continuity of serviceMay bind his principal by an act within the scope of his authority although it may be contrary to his special instructionsCannot bind the principal in a manner beyond or outside the specific acts whichhe is authorized to perform on behalf of the principalContinuing and unrestricted by limitations other than those which confine the authority within the bounds of what is usual, proper, or necessaryTemporary and naturally suggests limitations of power of which 3rd persons mustinform themselvesApparent authority does not terminate without notice to 3rd party3rd party must inquire about the terminationStatement by the principal of the formers authority would ordinarily be regardedas advisorySuch statements will be regarded as words limiting the authority

ART 1877. An agency couched in general terms comprises only acts of administration,1. even if the principal should state:a. that he withholds no power orb. that the agent may execute such acts as he may consider appropriate, or2. even though the agency should authorize a general and unlimited management.

(mem) 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:a. compromise,b. submit questions to arbitration,c. renounce the right to appeal from a judgment,d. waive objections to the venue of an action ore. 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:a. customary ones for charity or

b. 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;


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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.

Summary of Above Acts:1. acts of strict dominion or ownership (as distinguished from acts of mere administration)2. gratuitous contracts3. contracts where personal trust or confidence is of the essence of the agreement

ART 1879. A special power to sell excludes the power to mortgageA special power to mortgage does not include the power to sell.

Distinctions1. Exclusive Agency to Sella. P is not prohibited from selling the goods himselfb. P is only prohibited from allowing other agents to sell the goods2. Exclusive Power of Salea. Even P cannot compete with A in the selling of the goodsb. Includes the power to:* look for prospective buyers* execute the documents of sale* accept the payment in cash only* deliver the goods/property

ART 1880. A special power to compromise does not authorize submission to arbitra

tion.

REASON: arbitrator may not enjoy the trust and confidence of the principal

Special Power to Compromise:Agent authorized to compromise can do anything which the principal himse

lf can do to effect a settlement

ART 1881. The agent must act within the scope of his authority.He may do such acts as may be conducive to the accomplishment of the pur

pose of the agency.

Authority:Power of the agent to affect the legal relations of the principal by act

s done in accordance with the principals manifestation of consent to himAuthority may be considered as the source or cause while power is the ef

fect.

Authority by Necessity or Operation of Law1. There must exist an emergency wherein A is required to act immediately2. There must be inability on the part of A to communicate w/ P3. The exercise by A of the authority is for the protection and the benefit of P4. The means used by A must be legal5. The authority ceases when the emergency ceases

Requisites for P to be Bound by Acts of A:1. A must act w/in the scope of his authority


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2. A must act in representation or in behalf of P

Acts in behalf of the principalDoes not act in behalf of PrincipalActs within the scope of his authorityVALID; principal is bound; agent not personally liable unless he bound himself(1883) generally, not binding on principal; agent and stranger are the only parties, except regarding things belonging to the principalOutside the scope of his authorityUnauthorized and Unenforceable but may be RATIFIED (1403, 1407)VALID, w/n the subject matter belongs to the principal, provided, at the time de

livery is to be made, the agent can transfer legally the ownership of the thing. Otherwise, he will be held liable for breach of warranty against eviction

When P is Bound by Acts of P1. General Rule P is not bound by the acts of A beyond his limited powers2. Exceptions:a. Where Ps acts have contributed to deceive a 3rd person in good faithb. Where the limitations upon the power creates by P could not have been known by the 3rd personc. Where P has placed in the hands of A, instruments signed by him in blankd. Where P has ratified the acts of A

ART 1882. The limits of the agent's authority shall not be considered exceeded should it have been performed in a manner more advantageous to the principal thanthat specified by him.

ART 1883. If an agent acts in his own name, the principal has no right of actionagainst the persons with whom the agent has contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the personwith whom he has contracted, as if the transaction were his own, except when thecontract involves things belonging to the principal.

The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent.

Kinds of Principal1. Disclosed if at the time of transaction contracted by A, the 3rd party knowsthat A is acting for P and of Ps identity2. Partially Disclosed if the 3rd party knows that A is acting for P but is unaware of Ps identity3. Undisclosed if the 3rd party has no notice of the fact that A is acting as such for P

Agency with Undisclosed Principal1. General Rule A is directly liable to the 3rd person w/ whom he had contractedas if the transaction were his owna. Reason There is no representation of P when A acts in his own nameb. Therefore P cannot have a right of action against the 3rd person and vice versa2. Exception P is bound if the contract entered into by A involves things belonging to Pa. Reason For the protection of 3rd persons against possible collusion between Aand Pb. In such case, the contract is considered as entered into between P and the 3rd person3. Remedy of P P has the right to demand from A damages for his failure to comply with the agency4. Remedy of 3rd Person He has a right of action not only against P but also against A

CHAPTER 2Obligations of the Agent


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ART 1884. The 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.

He must also finish the business already begun on the death of the principal, should delay entail any danger.

Obligations of an Agent under Art. 18841. To carry out the business of agency2. To answer for damages w/c P may suffer through As non-performance3. To finish the business already began on the death of P

Exceptions to the General Rule That Death of P Extinguishes the Agency1. If delay would entail damages2. Agency coupled with interest

Specific Obligations of A to P1. To carry out the agency w/c he has accepted2. To answer for damages, which through his performance, P may suffer

3. To finish the business already begun on the death of P, should the delay entail any danger4. To observe the diligence of a GFOF in the custody and preservation of the goods forwarded to A by P in case he declines an agency, until an agent is appointed (1885)5. To advance the necessary funds should there be a stipulation to do so (1886)6. To act in accordance w/ the instructions of P, and in default thereof, to doall that a GFOF would do (1887)7. Not to carry out the agency if its execution would manifestly result in lossor damage to the principal (1888)8. To answer for damages if there being a conflict between As interests and thoseof P, he should prefer his own (1889)9. Not to loan to himself if he has been authorized to lend money at interest (1

890)10. To render an account of his transactions and to deliver to P whatever he mayhave received by virtue of the agency (1891)11. To distinguish goods by countermarks and designate the merchandise respectively belonging to each P, when the goods belong to different owners (1904)12. To be responsible for the acts of the substitute appointed by A, in certaincases (1892)13. To pay interest on funds he has applied to his own use (1896)14. To inform P, where an authorized sale of credit has been made, of such sale(1906)15. To bear the risk of collection, should he receive also on a sale, a guarantycommission (1907)16. To indemnify P for damages for his failure to collect the credits of P and the time that they became due (1908)17. To be responsible for fraud or negligence (1909)ART 1885. In case a person declines an agency, he is bound to observe the diligence of a GFOF in the custody and preservation of the goods forwarded to him by the owner until the latter should1. appoint an agent or2. take charge of the goods.

ART 1886. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so EXCEPT when the principal is insolvent.

Q The exception is based on Ps obligation to reimburse A. The insolvency of P isa ground for extinguishment of the agency.


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ART 1887. In the execution of the agency, the agent shall act in accordance withthe instructions of the principal.

In default thereof, he shall do all that a GFOF would do, as required bythe nature of the business.

InstructionsPrivate directions w/c P may give A in regard to the manner of performin

g his duties as an agent.Effect of Violation of Ps Instructions1. If the act done by A is w/in the apparent scope of authority w/ w/c he has been clotheda. It does not matter that it is directly contrary to the instructions of Pb. P will be liable UNLESS the 3rd person who dealt with A, knew that A exceededhis authority or violated his instructions2. 3rd persons dealing with A do so at their peril, they are:a. bound to inquire as to the extent of As authority, butb. not required to investigate the instructions of P

ART 1888. An agent shall not carry out an agency if its execution would manifest

ly result in loss or damage to the principal.

ART 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal, he should prefer his own.

Q The agents interests superior to that of P when A has a security interest in the goods of P in his possession

ART 1890. If the agent has been empowered to borrow money, he may himself be thelender at the current rate of interest.

If he has been authorized to lend money at interest, he cannot borrow itwithout the consent of the principal.

Reasons:1. A can be the lender because there is no danger of P suffering any damages since the current rate of interest would have to be paid anyway2. A cannot be the borrower the transaction may be prejudicial to P because A may prove to be a bad debtor

ART 1891. Every agent is bound:1. to render an account of his transactions and2. to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.

Every stipulation exempting the agent from the obligation to render an account shall be void.

ART 1892. The agent may appoint a substitute if the principal has not prohibitedhim from doing so; but he shall be responsible for the acts of the substitute:1. When he was not given the power to appoint one;2. When he was given such power,a. but without designating the person, andb. the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

ART 1893. In the cases mentioned in 1 and 2 of Art. 1892, the principal may furt

hermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.


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Sub-AgentA person to whom A delegates, as his agent, the performance of an act fo

r P which A has been empowered to perform

Rules1. If SA was appointed by A w/o authority, SA is a stranger to P2. If SA was appointed by A w/ authority, there is a relationship between SA and

P3. When the authority of SA is w/ the authority of P, the death of A does not affect the relationship between P and SA4. When SA is accountable only to A, the death of A terminates the authority ofSA

A is Responsible for Damages Caused by S in the Following Cases:1. If SA was appointed by A against the prohibition of P2. If A was not given the power to appoint SA3. Even if A was given the power to appoint SA but SA is notoriously incompetentor insolvent

A is NOT Responsible for Damages Caused by S in the Following Cases:1. If A was given the power by P to appoint SA and SA is NOT notoriously incompetent or insolvent2. If SA is the person designated by P to be the substitute

Substitution of SA is NOT Valid whenA was prohibited by P to appoint a substitute.

Substitution is Valid when:1. A was given the power to appoint a substitute2. Even if A was not given the power, there was no prohibition imposed by P

Acts of SA in the name of P are NOT Valid when:

1. SA was appointed by A against the prohibition of P2. SA acted beyond the scope of his authorityART 1894. The responsibility of 2 or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated.

ART 1895. If solidarity has been agreed upon, each of the agents is responsible:1. for the non-fulfillment of agency, and2. for the fault or negligence of his fellows agents - except when the fellow agents acted beyond the scope of their authority.

General Rule When There are 2 or More AgentsThe liability is joint and personal, but only if each can act separately

.

ART 1896. The agent owes interest:1. on the sums he has applied to his own use from the day on which he did so, and2. on those which he still owes after the extinguishment of the agency.

Q #1: without prejudice to criminal action so agent can be sued for estafaQ #2: demand not necessary

ART 1897. The agent who acts as such is NOT personally liable to the party withwhom he contracts, UNLESS he:1. expressly binds himself or


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2. exceeds the limits of his authority without giving such party sufficient notice of his powers.

Agent may sue the 3rd party in his own name:1. Agent contracts in his own name for an undisclosed principal (1883)2. Agent possess beneficial interest in the subject matter of the agency like 1907

3. Agent pays money of his principal to a 3rd party by mistake or under a contract which subsequently become illegal4. 3rd party commits a tort against the agent

ART 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall bevoid if the party with whom the agent contracted is aware of the limits of thepowers granted by the principal.

In this case, however, the agent is liable if he undertook to secure theprincipal's ratification.

Liability of the Agent:

1. If A acted in the name of P and w/in the scope of his authorityA assumes NOliability

2. If A acts in excess of his authority, EVEN if he contracts in the name of P Ais personally liable UNLESS there is subsequent ratification by P3. If the 3rd person w/ whom A has contracted is aware of the limits of the powers granted by Pa. The contract is:* Unenforceable against P* Void between A and the 3rd personb. However if A promised to secure Ps ratification:* A if personally liable if P does not ratify* P is liable if P ratifies

ART 1899. If a duly authorized agent acts in accordance with the orders of the principal, the latter cannot set up the ignorance of the agent as to circumstances whereof he himself was, or ought to have been, aware.

Q If P appoints an agent who is ignorant, the fault is Ps alone. Equity demands that P should be bound by the acts of his agent.

ART 1900. So far as 3rd persons are concerned, an act is deemed to have been performed within the scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent.

Every person dealing with an assumed agent is put upon inquiry and must discoverupon his peril, if he would hold P liable:1. not only the fact of the agency2. but the nature and extent of authority of the agent

Q If he does not make such an inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority will not be an excuse.Q However, if the authority of A is in writing, such person is not required to inquire further than the terms of the written power of attorney.

ART 1901. A third person cannot set up the fact that the agent has exceeded hispowers, if the principal:

1. has ratified, or2. has signified his willingness to ratify the agent's acts.


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Effect of Ratification by P1. A is granted authority as if P originally authorized the act2. The ratification has a retroactive effect

Q Implied ratification = receipt by the principal of benefits of the transaction

ART 1902. A 3rd person with whom the agent wishes to contract on behalf of the p

rincipal may require the presentation of the power of attorney, or the instructions as regards the agency.

Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them.

ART 1903. The COMMISSION AGENT shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deteriorationsuffered by the same.

Factor or Commission Agent

BrokerOne whose business is to receive and sell goods for a commission and who is entrusted by P w/ the possession of goods to be sold, and usually selling in his ownname. He may act in his own name OR in that of P.Middleman or intermediary who, in behalf of others, and for a commission or fee,negotiates contracts or transactions relative to real or personal propertyJOB IS 3-WAY: The agent is related not only to his principal and to the buyer orseller, but also to the property constituting the object of the transaction which should be placed in his possession and at his disposalJOB IS 2-WAY: The broker is pure intermediary, a pure go-between who does not have either the custody or the possession of the property that he disposes ofEngages only in the business of buying or selling personal property for his principalEngages in the buying or selling for his clients either personal or real propertyShould have a place of businessNot necessary; more independent than Commission AgentEfficient and procuring cause:

Principle in the law on agency whereby the broker, to be entitled to compensation, must be the efficient agent or procuring cause of the sale

Ready-Willing-and-Able Rule:Principle on the law on agency which states that for the broker to be en

titled to commission, he must produce a person who is ready, willing and able both to accept and live up to the terms offered by his principal

Factorage = compensation of factor or commission agent

ART 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal.

Obligation of Commission Agent Handling Goods of the Same Kind and Mark1. General Rule He may NOT commingle goods w/o authority2. Exceptions:a. Some agents, such as auctioneers, are normally permitted to mingle Ps propertywith their ownb. Collecting banks are permitted to mingle funds of their depositors with theirown property and that of other depositors

ART 1905. The commission agent cannot, without the express or implied consent ofthe principal, sell on credit.

Should he do so, the principal may demand from him payment in cash, but

the commission agent shall be entitled to any interest or benefit, which may result from such sale.


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Authority of CA to Sell:1. General Rule The CA is only authorized to sell in cash2. Exception The CA can sell on credit ONLY with the express or implied consentof P3. Alternative Remedy of P if CA makes a sale on credit w/o his authority:a. P may require payment in cash in w/c case, the interest or benefit from the sale will belong to A, OR

b. P may ratify the sale on credit -- in w/c case it will have all the risks andadvantages to him

ART 1906. Should the commission agent, with authority of the principal, sell oncredit, he shall so inform the principal, with a statement of the names of the buyers.

Should he fail to do so, the sale shall be deemed to have been made forcash insofar as the principal is concerned.

PurposeTo prevent A from stating that the sale was on credit when in fact it wa

s made for cash.

ART 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser.

Guarantee Commission or Del Credere Commission1. Meaning One where, in consideration of an increased commission, the CA or factor guarantees to P, the payment of debts arising through his agency; additionalcommission to ensure collection of debt2. Del Credere Agent agent who receives a guarantee commission3. Purpose to compensate the CA for the risks he will have to bear in the collection of the credit due P

4. A Del Credere Agent is liable to P if the buyer fails to pay BUT he is not primarily the debtor; his is a contingent pecuniary liability (to make good in theevent the buyer fails to pay)5. A Del Credere Agent may sue in his name in the event of non-performance of the buyer

ART 1908. The commission agent who does not collect the credits of his principalat the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose.

Q This article does not apply when there is a guaranty commission.

ART 1909. The agent is responsible not only for fraud, but also for negligence,which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation.

CHAPTER 3Obligations of the Principal

ART 1910. The principal must comply with all the obligations which the agent mayhave contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.

Specific Obligations of P to A1. To comply with all the obligations which the A may have contracted w/in the s


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cope of his authority and in the name of the P2. To advance to the A, should the A so request, the sums necessary for the execution of the agency (1911)3. To reimburse the A for all advances made by him, provided the A is free fromfault (1912)4. To indemnify the A for all the damages w/c the execution of the agency may have caused the A w/o fault or negligence on his part. (1913)

5. To pay the A the compensation agreed upon, or if no compensation was specified, the reasonable value of the As services (1875, 1306)

Liability of P to 3rd Persons1. General Rule P is liable to 3rd persons for all acts committed by A in Ps behalf w/in the scope of his authority2. Reason because the act of A is the act of P

Liability of P for Tort of A1. General Rule P is solidarily liable to 3rd persons for torts of A committed at Ps direction and w/in the scope of his authority; 3rd person may sue both P andA or choose whom he will hold

2. Reasonhe who does an act through another, does it himself

Conditions for Ratification to be Effective1. P must have the intent to ratify2. The ratification must be done voluntarily3. P must have the capacity and power to ratify4. P must have knowledge of material facts5. P must ratify the acts in its entirety6. The act must be capable of ratification7. The act must be done in behalf of P

Effects of Ratification by P1. With respect to A ratification relieves A from liability to:

a. the 3rd party to the unauthorized transactionb. P for acting w/o authority2. With respect to P himself a. P assumes responsibility for the unauthorized act, as fully as if A had actedunder original authorityb. P is not liable for acts outside the authority approved by his ratification3. With respect to 3rd persons a. bound by the ratificationb. but before ratification, the 3rd person is free to revoke the unauthorized contract

GR: Ratification have retroactive effect equivalent to initial approvalEXCEPTION:1. to do so would defeat the right of 3rd parties2. would render wrongful an otherwise rightful act or omission3. allow circumvention of a rule of law formulated in the interest of public policy4. if the 3rd party has withdrawn from the contract

ART 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though hehad full powers.

2 Instances When P is Solidarily Liable With A1. For torts of A committed at Ps direction or w/in the scope of As authority

2. Even when A has exceeded his authority, if P allowed A to act as though he had full powers Estoppel


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EstoppelA bar which precludes a person from denying or asserting anything contra

ry to that which has been established as the truth by his own deed or representation, either express or implied

RatificationEstoppelRests on intention, express or implied, regardless of prejudice to another

Rests on prejudice rather than intentionThe party is bound because he intended to beHe is bound notwithstanding the absence of such intention because the other party will be prejudiced and defrauded by his conduct, unless the law treats him aslegally boundRetroactive affects the entire transaction and from the beginningAffects only the relevant parts o the transaction and from that time only when estoppel may be said to be spelled outThe substance of ratification is confirmation of the unauthorized act or contract after it has been done or madeThe substance of estoppel is the principals inducement to another to act to his prejudiceART 1912. The principal must advance to the agent, should the latter so request,the sums necessary for the execution of the agency. (applies when there is no stipulation that A advance the funds)

Should the agent have advanced them, the principal must reimburse him th

erefor, even if the business or undertaking was not successful, provided the agent is free from all fault. (w/n advanced by A on his own initiative or by stipulation because A is not the insurer of the business of P)

The reimbursement shall include interest on the sums advanced, from theday on which the advance was made. (demand is not necessary in order that delayon the part of P shall exist)

ART 1913. The principal must also indemnify the agent for all the damages whichthe execution of the agency may have caused the latter, without fault or negligence on his part.

Q But if A is negligent, he can be held liable.

P is NOT Liable:1. For any wrongful act committed by 3rd persons such as muggers, hit and run drivers, etc2. When A acts in his own account and not as an agent

ART 1914. The agent may retain in pledge the things which are the object of theagency until the principal effects the reimbursement and pays the indemnity setforth in the 2 preceding articles.

Right of Lien1. If P fails to reimburse or indemnify A2. An instance of pledge w/c is created by operation of law

Nature of As Right of Lien1. Right is limited to the subject matter of agency not a general lien w/c givesA the right to retain Ps goods for claims disconnected w/ the business of agency2. Right requires possession by A of subject matter actual or constructive; musthave acquired that possession lawfully in his capacity as an agent3. Right generally only in favor of agent not of sub-agent or one who A delegates his authority where no privity exists between SA and P

ART 1915. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.

Requisites for Solidary Liability1. There are 2 or more principals2. The principals have all concurred in the appointment of the same agent


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3. The agent is appointed for a common transaction or undertaking

Double Sale:ART 1916. When 2 persons contract with regard to the same thing,1. one of them with the agent and2. the other with the principal,and the 2 contracts are incompatible with each other, that of prior date shall b

e preferred, without prejudice to the provisions of Art. 1544.

ART 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person:1. who in good faith was first in the possession; and,2. in the absence thereof, to the person who presents the oldest title, providedthere is good faith.

Example When 2 Persons Contract Separately with A and P1. P authorized A to contract for the construction of his house for a price notmore than P100,000. Without the knowledge of A, P contracted w/ B for P95,000. Later A contracted with C for P90,000a. Under Art. 1916, the contract between P and B shall prevail as it is of priordate2. P gave A authority to sell a car. Without the knowledge of A, P sold the carto B to be delivered the next day. Before delivery, A sold the car to C, who bought it in good faith and immediately took possession of the cara. Under Art, 1544[1], C is considered the owner because he took possession of the car first3. P gave A an SPA to sell his land. A sold the land to B who did not register t

he sale. Later, P sold the same land to C, who in good faith, registered the salea. Under Art. 1544[2], C is considered the owner because he registered the salefirst4. If neither sale was registered and C took possession of the land in good faitha. Under Art. 1544[3], the land should belong to C because he first took possession in good faith5. If neither took possession of the landa. Under Art. 1544[3], the land should belong to B because his title is older than C

ART 1917. In the case referred to in Art. 1916,1. If the agent has acted in good faith, the principal shall be liable in damages to the 3rd person whose contract must be rejected.2. If the agent acted in bad faith, he alone shall be responsible.

ART 1918. The principal is not liable for the expenses incurred by the agent inthe following cases:1. If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail himself of the benefits derived from the contract; (this is to punish A unless As acts were impliedly ratified by P)2. When the expenses were due to the fault of the agent;3. When the agent incurred them with knowledge that an unfavorable result wouldensue, if the principal was not aware thereof; (here A is guilty of bad faith an

d lack of diligence)4. When it was stipulated that the expenses would be borne by the agent, or thatthe latter would be allowed only a certain sum. (when a limit was imposed by P


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for the amount of expenses)

CHAPTER 4Modes of Extinguishment of Agency

Agency is extinguished (1919): [EDWARD]1. By the expiration of the period for which the agency was constituted.

2. By the death, civil interdiction, insanity or insolvency of the principal orof the agent;3. By the withdrawal of the agent;4. By the accomplishment of the object or purpose of the agency;5. By its revocation by the principal;6. By the dissolution of the firm or corporation which entrusted or accepted theagency;

Presumption of Continuance of Agency1. When shown to have existed an agency relation will be presumed to have continued2. In the absence of anything to show its termination the burden of proving its

extinguishment is on the party asserting it

Death of the P or A1. General Rule Agency is extinguished ipso jure upon the death of either P or A2. Exceptions:a. When the agency is coupled with interestb. When the act of A was executed w/o the knowledge of the death of P and the 3rd person who contracted with A acted in good faithc. Act 3135 [REM Law] The power of sale in a deed of mortgage is not revoked bythe death of P (mortgagor) as it is not an ordinary agency but an authority conferred upon the mortgagee for his own protection

Other Modes of Extinguishment of Agency

1. Loss of the thing2. Novation of the contract3. War if the A or P is the enemy alien4. Legal impossibility5. Termination of Ps authority as when P is merely an agent or trustee

ART 1920. The principal may revoke the agency at will, and compel the agent to return the document evidencing the agency.

Such revocation may be express or implied.

Revocation of Agency by P1. General Rule P may revoke the agency at will even if the agency is said to beirrevocable2. Exceptions:a. Art. 1927 partially executed contractsb. Art. 1930 agency coupled with interest3. Reasons:a. Since the authority of A emanates from P, it is enough that P should wish toterminate the agencyb. Confidence being the cardinal basis of the relation, it stands to reason thatit should cease when such confidence disappearsc. The P-A relationship is consensual and personal in nature

Liability of P for Damages Caused by Revocation1. When the agency constituted for a fixed period P shall be liable for damages

occasioned by the wrongful discharge of A before the expiration of the period2. When no time fixed for continuance of agency P is at liberty to terminate itwt will subject only to the requirements of good faith


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Kinds of Revocation1. Express either by personal notice or by publication2. Implied examples:a. when P appoints a new agent for the same business transactionb. when P completely takes over the management of the business entrusted to Ac. when P, after granting a GPA to A, grants an SPA to another

Notice of Revocation1. To Agent express or implied2. To 3rd Persons:a. former customers actual noticeb. other persons publication

Renunciation by Agent1. A has the power to renounce the agency, subject only to the contractual obligations owing to P2. Form express or implied

ART 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation shall not prejudice the latter if they were notgiven notice thereof.

ART 1922. If the agent had general powers, revocation of the agency does not prejudice third persons:1. who acted in good faith and2. without knowledge of the revocation.

Notice of the revocation in a newspaper of general circulation is a sufficient warning to third persons.

Effect of Revocation in Relation to 3rd Persons

1. When A is authorized to contract with SPECIFIED persons actual or personal notice should be given to them2. When A is authorized to contract with the public in GENERAL mere publicationis sufficient warning

ART 1923. (Implied Revocation)The appointment of a new agent for the same business or transaction revo

kes the previous agency from the day on which notice thereof was given to the former agent, without prejudice to the provisions of the 2 preceding articles.

ART 1924. (Implied Revocation)The agency is revoked if the principal directly manages the business ent

rusted to the agent, dealing directly with third persons.

Q Art. 1924 should be distinguished from Art. 1916.

ART 1925. When 2 or more principals have granted a power of attorney for a common transaction, any one of them may revoke the same without the consent of the others.

ART 1926. (Partial Implied Revocation)A general power of attorney is revoked by a SPA granted to another agent

, as regards the special matter involved in SPA.

ART 1927. (VIP)

An agency cannot be revoked:1. if a bilateral contract depends upon it, or2. if it is the means of fulfilling an obligation already contracted, or


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3. if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

When Agency Irrevocable (Exception to Art. 1920)1. General Rule P may revoke an agency at will2. Exceptions:a. When the agency is created:

* not only for the interest of P but also for the interest of 3rd persons* for the mutual interest of both P and Ab. When it is a means of fulfilling an obligation already contracted* Example P borrowed money from A (contract of loan). P then authorizes A to collect rents from Ps property to pay for the loan P contracted from Ac. When A, who is a partner, is appointed as manager, he cannot be removed:* unless for justifiable or lawful causes* upon the vote of the partners representing controlling interest

ART 1928. The agent may withdraw from the agency by giving due notice to the principal.

If P should suffer any damage by reason of the withdrawal, the agent mus

t indemnify him therefor, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detrimentto himself.

Right of A to Withdraw1. Without Just Cause a. A should give notice to Pb. A must indemnify P should P suffer any damage by reason of such withdrawal2. With Just Cause A cannot be held liable, such as when:a. the withdrawal is based on the impossibility of continuing w/ the agency w/ograve detriment to Ab. it is due to a fortuitous event

ART 1929. The agent, even if he should withdraw from the agency for a valid reason, must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation.

ART 1930. (Agency Coupled with Interest)The agency shall remain in full force and effect even after the death of

the principal, if it has been constituted:1. in the common interest of the latter and of the agent, or2. in the interest of a third person who has accepted the stipulation in his favor.

Agency coupled with an Interest:The agent has acquired some interest of his own in the execution of the

authority granted to him, in addition to his mere interest in the contract of employment with the resulting gains

ART 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall befully effective with respect to third persons who may have contracted with himin good faith.

Q Applies to all other modes of extinguishment of agency

Act Done by A after Death of P Valid ONLY under 2 Conditions:1. A acted w/o knowledge of the death of P

2. 3rd person who contracted with A acted in good faith

ART 1932. If the agent dies, his heirs must:


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1. notify the principal thereof, and2. in the meantime adopt such measures as the circumstances may demand in the interest of P.

Q Art. 1932 does NOT impose a duty on the heirs of P to notify A of the death ofP.

GR: Agents duties cannot be performed by his personal representationsEXCEPTIONS:1. Heirs duty to continue the agency after the death of the agent (agency by operation of law; presumed or tacit agency)2. Where the agency is one coupled with an interest in the subject matter of theagency, his heirs may subsequently exercise the power conferred at least insofar as may be necessary to protect the interests of the estate of the agent

Trusts

CHAPTER 1General Provisions

Express TrustImplied Trust1. Created by the intention of the trustor or parties2. Created by direct and positive acts of the parties by some writing or deed orwill or by words evidencing an intention to create a trust3. If it concerns an immovable, it cannot be proven by parole evidence4. In order that prescription may bar an action to enforce an express trust, anexpress repudiation made known to B is required1. Comes into being by operation of law2. Those w/o being expressed, are deducible from the nature of the transaction by operation of law as matters of equity

3. May be proven by parole evidence4. No express repudiation is required for laches or prescription to lie

ART 1440. A person who establishes a trust is called the trustor.One in whom confidence is reposed as regards property for the benefit of

another person is known as the trustee.The person for whose benefit the trust has been created is referred to a

s the beneficiary.

Concept of TrustIt is a fiduciary relationship created by law or agreement where legal t

itle is held by one and beneficial title is held by another

Characteristics of Trust:1. It is a fiduciary relationship2. Created by law or by agreement3. Where the legal title is held by one and the equitable title or beneficial title is held by another

Persons Involved in the Creation of Trust1. Trustor or Setter one who intentionally creates or establishes the trust2. Trustee one who takes and holds the legal title:


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a. for the benefit of anotherb. with certain powers and subject to certain duties3. Beneficiary or Cestui Que Trust one who has an equitable interest in the property and enjoys the benefit of administration of the trust by the trustee.

Trust property or trust res* property actually existing in which the trustor has transferable interest or t

itle* it may be a real or personal property (undivided, future or contingent interest)* cannot beo mere expectancy without right or interest; oro mere interest in the performance of a contract although such interest is in the nature of a property right

Nature of Ownership of Trustee or Beneficiary: Duplicate Ownership1. Ownership by 2 persons at the same time = one of them is under an obligationto use his ownership for the benefit of the other2. Ownership of trustee, a mere matter of form and nominal

a. Agent = because duty of administering the propertyb. In legal theory, not a mere agent but an owner = acts for himself and transacts in his name

ART 1441. Trusts are either express or implied.Express trusts are created by the intention of the trustor or of the par

ties.Implied trusts come into being by operation of law.

Kinds of Trusts1. Express can come into existence only by the execution of an intention to create it by the trustor or parties; there is an agreement in writing2. Implied which come into being by operation of law; either:

a. Resulting (Bare or Passive) - one in w/c the intention to create a trust isimplied or presumed in lawb. Constructive one imposed by law irrespective of, and even contrary to, any such intention for the purpose of:* promoting justice* frustrating fraud* preventing unjust enrichment

ART 1442. The principles of the general law of trusts, insofar as they are not in conflict with this Code, the Code of Commerce, the Rules of Court and speciallaws are hereby adopted.

CHAPTER 2Express Trusts

ART 1443. No express trusts concerning an immovable or any interest therein maybe proved by parol evidence.

Evidence to Prove Trust1. Express Trust Concerning Immovable property must be in writing (to bind 3rd persons, must be in public instrument and registered)2. Express Trust Concerning Personal property oral evidence is sufficient3. Implied Trust, whether concerning immovable or personal oral evidence is sufficient (1457)

ART 1444. No particular words are required for the creation of an express trust,it being sufficient that a trust is clearly intended.


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ART 1445. No trust shall fail because the trustee appointed declines the designation, unless the contrary should appear in the instrument constituting the trust.

Q If he declines, the courts will appoint a trustee to fill the office that he declines.

ART 1446. Acceptance by the beneficiary is necessary. Nevertheless, if the trustimposes no onerous condition upon the beneficiary, his acceptance shall be presumed, if there is no proof to the contrary.

* Acceptance by B is presumed if the trust is gratuitous. It is only necessary when the trust imposes an onerous condition.

How Express Trusts are Ended1. By mutual agreement of all the parties2. By expiration of terms agreed upon3. By fulfillment of the resolutory condition4. By loss of the subject matter of the trust

5. By merger6. By accomplishment of the purpose of the trust

CHAPTER 3Implied Trusts

ART 1447. The enumeration of the following cases of implied trust does not exclude others established by the general law of trust, but the limitation laid downin article 1442 shall be applicable.

Implied TrustsThose, w/o being express, are deducible from the nature of the transacti

on as matters of intent, or which are superinduced on the transaction by operation of law, as matters of equity, independently of the particular intention of the parties.

Consequences of an Implied TrustThe implied trustee shall deliver the possession and reconvey title to t

he property to B and pay B the fruits and other net profits received from such property during the period of wrongful holding

Trustee May Claim Title by Prescription Founded on Adverse Possession When:1. His repudiation is open and unequivocal2. The positive acts of repudiation have been made known to B3. The evidence thereon should be clear and conclusive or convincing4. The period fixed by law has prescribed

Prescription1. Prescriptive Periodsa. Express trust none, as long as not repudiated; no lachesb. Resulting none, as long as not repudiated; laches applyc. Constructive 10 years; laches apply2. An action for reconveyance of land based on constructive trust prescribes in10 years from the time the right of action accrues a. but this only applies when the person enforcing the trust is not in possession of the landb. if he is in possession of the land, he may wait until his possession is distu

rbed or his title attacked before taking steps to vindicate his right3. The only limitation upon the right of B to recover title held in trust is that the property must not have been transferred to an Innocent Purchaser for Value


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, in which event, his remedy is to ask for damages

Ground is Fraudulent Representation

Action for Reconveyance of Real Prop based on Implied TrustPeriod of PrescriptionAnnulment of a Voidable Contract4 yrs from discovery of fraud (1391[4] NCC)No annulment10 yrs from discovery of fraud (1144 NCC)Declaration of the nullity of a void contractImprescriptible (1410 NCC)Action to quiet title and legitimate owner is in possessionImprescriptible rule on constructive notice does not applyART 1448. (Resulting Trust)

There is an implied trust when property is sold, and1. the legal estate is granted to one party2. but the price is paid by another for the purpose of having the beneficial int

erest of the property.

The former is the trustee, while the latter is the beneficiary. However,if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.

REASON: one who pays for something usually does so for his own benefit

Requisites of Purchase Money Resulting Trust:1. an actual payment of money, property or services or an equivalent, consistingof valuable consideration2. such consideration must be furnished by the alleged beneficiary of the result

ing trust

Exceptions to Purchase Money Resulting Trust:1. (last par of 1448): parents pay the purchase money and the title is conveyedto the child2. actual contrary intention is proved3. purchase is made in violation of an existing statute and in evasion of its express provision

ART 1449. (Resulting Trust)There is also an implied trust when a donation is made to a person but i

t appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof.

ART 1451. (Resulting Trust)When land passes by succession to any person and he causes the legal tit

le to be put in the name of another, a trust is established by implication of law for the benefit of the true owner.

ART 1452. (Resulting Trust)If two or more persons agree to purchase property and by common consent

the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.

ART 1453. (Resulting Trust)When property is conveyed to a person in reliance upon his declared inte

ntion to hold it for, or transfer it to another or the grantor, there is an impl


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ied trust in favor of the person whose benefit is contemplated.

ART 1450. (Constructive Trust)If the price of a sale of property is loaned or paid by one person for t

he benefit of another and the conveyance is made to the lender or payor to secure the payment of the debt, a trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid.

The latter may redeem the property and compel a conveyance thereof to him.

Q Contrary rule will result to pactum commisorium which is expressly prohibitedby 2088 NCCQ Upon payment of loan, may ask for reconveyance

ART 1454. (Constructive Trust)If an absolute conveyance of property is made in order to secure the per

formance of an obligation of the grantor toward the grantee, a trust by virtue of law is established.

If the fulfillment of the obligation is offered by the grantor when it b

ecomes due, he may demand the reconveyance of the property to him.

ART 1455. (Constructive Trust)When any trustee, guardian or other person holding a fiduciary relations

hip uses trust funds for the purchase of property and causes the conveyance to be made to him or to a third person, a trust is established by operation of law in favor of the person to whom the funds belong.

ART 1456. (Constructive Trust)If property is acquired through mistake or fraud, the person obtaining i

t is, by force of law, considered a trustee of an implied trust for the benefitof the person from whom the property comes.

Q The mistake referred to here is made by a 3rd person, not that made by a partyto the contract. For if made by the party, no trust is created

ART 1457. An implied trust may be proved by oral evidence.

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