What is a contract of agency?
In a 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.”
The essential elements of an agency are: (1) that there is consent, whether express or implied, of the parties to establish a relationship of agency; (2) that the object is the execution of a juridical act in relation to a third person; (3) that the agent acts as a representative and not for himself; and (4) that the agent acts within the scope of his authority.
Sps. Viloria v. Continental Airlines, Inc.
G.R. No. 188288, 16 January 2012
Complainant Spouses Fernando and Lourdes Viloria initiated a complaint for sum of money with damages against defendant Continental Airlines, Inc. Prior thereto, Sps. Viloria purchased 2 roundtrip airline tickets from San Diego, California to Newark, New Jersey on board Continental Airlines. The tickets were bought at USD 400.00 each from a travel agency called “Holiday Travel”, with a certain Margaret Mager was representative. The spouses alleged that they bought the tickets after Mager informed them that there were no available seats at Amtrak, an intercity passenger train service provided in the U.S. Afterwards, the spouses asked to be rescheduled to an earlier date which could not be processed as Mager informed them of full bookings at Continental Airlines. After Mager presented another option of purchasing a more expensive ticket from another airline, the spouses opted to demand refund of their tickets. Refund was denied. Mr. Viloria went to an Amtrak station and made inquiries of trips which he later learned that several seats were available any time and day chosen by the spouses supposedly in direct contradiction to what Mager told them. The spouses purchased the tickets at Amtrak. After the spouses filed their complaint, defendant CAI claimed that they had no contract of agency with Holiday Travel.
HELD: Defendant CAI was not liable. It was never established that defendant CAI was the principal of Holiday Travel as all of the elements of agency are present in their contractual relations. “The first and second elements are present as CAI does not deny that it concluded an agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of carriage with third persons on CAI’s behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that CAI has not made any allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently maintains the validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent misrepresentation. That CAI admits the authority of Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from its February 24, 1998 and March 24, 1998 letters, where it impliedly recognized the validity of the contracts entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who issued to them the subject tickets, CAI did not deny that Holiday Travel is its authorized agent.” Thus, estoppel bars CAI from denying the contract of agency with Holiday Travel.
However, in terms of liability, the spouses’ cause of action is anchored “on the basis of Mager’s alleged fraudulent misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing contractual relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault.” No evidence was presented to establish CAI’s alleged liability. ” Apart from their claim that CAI must be held liable for Mager’s supposed fraud because Holiday Travel is CAI’s agent, Spouses Viloria did not present evidence that CAI was a party or had contributed to Mager’s complained act either by instructing or authorizing Holiday Travel and Mager to issue the said misrepresentation.”
It may appear unjust that CAI’s consider Sps. Viloria bound by the contract (despite the fraud by Mager) and at the same time CAI disavow liability from Mager’s supposed misrepresentation. “However, a person’s vicarious liability is anchored on his possession of control, whether absolute or limited, on the tortfeasor. Without such control, there is nothing which could justify extending the liability to a person other than the one who committed the tort.”
A contract of agency is personal, representative, and derivative. “The authority of the agent to act emanates from the powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority.”
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 CIVIL CODE. Article 1868. Unauthorized contracts are governed by Article 1317 and the principles of agency in the Civil Code (Article 1404, Civil Code).
 Rallos v. Felix Go Chan & Sons Realty Corporation, G.R. No. L-24332, 31 January 1978. Qui facit per alium facit se. He who acts through another acts himself.