Short answer. No. An agent must deliver to the principal whatever he received by virtue of the agency, and the Civil Code says this holds even where the money was not owing to the principal. A rebate, discount or commission collected from the other side because of your transaction belongs to you.
What the law says
Every agent is bound to render an account of his transactions and 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.
Civil Code, Article 1891 — Duty to Account. Read the full provision →
The phrase that decides most disputes
Agents faced with this question usually argue that the rebate was never yours to begin with — the supplier gave it voluntarily, out of its own margin, and you were never entitled to demand it. The Civil Code anticipates exactly that argument and closes it. The duty to deliver runs to whatever was received by virtue of the agency, even though it may not be owing to the principal. The test is therefore not who had a right to the money, but why the money moved. If the agent would never have been offered it except in his capacity as your representative, it came by virtue of the agency and it must be turned over along with an accounting.
Why the accounting duty cannot be signed away
The same article voids any stipulation exempting the agent from the obligation to render an account. That is unusual — most contract terms between willing parties stand — and it tells you how seriously the law treats the imbalance of information in an agency. The agent knows what the deal really looked like; the principal often sees only the result. So a clause in an agency agreement saying the agent need not account, or may retain any incentives received from third parties, does not protect him. What you can do is agree, knowingly and after disclosure, to let the agent keep a specific benefit. The difference is disclosure: an informed waiver of a known amount is not the same as a blanket exemption from accounting.
What to ask for, and what this rule does not do
Start by making a written demand for a full accounting of the transaction — dates, counterparties, gross amounts, and every payment or credit the agent received from any source. Ask for the supplier's own records if the agent's are thin. Keep the agency agreement, messages and invoices. Be realistic about the limits, though. This provision fixes the agent's duty to account and deliver; it does not by itself undo the underlying deal with the third party, and it does not automatically make the third party liable to you. Nor does it settle the agent's compensation, which is governed by what you agreed. Recovering an undisclosed rebate is a claim against your agent, and outcomes depend on the evidence of what he actually received.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Carlos S. Palanca IV and Cognatio Holdings, Inc. vs. RCBC Securities, Inc, G.R. No. 241905, March 11, 2020 — read the decision on LawPhil →
- Spouses Alejandro Mirasol, etc., vs. The Court of Appeals, et. al, G.R. No. 128448, February 1, 2001 — read the decision on LawPhil →
- Caridad Segarra Sazon vs. Letecia Vasquez-Menancio, G.R. No. 192085, February 22, 2012 — read the decision on LawPhil →
- Gregorio V. Tongko vs. The Manufacturers Life Insurance Co. (Phils.) Inc. and Renato A. Vergel De Dios, G.R. No. 167622, June 29, 2010 — read the decision on LawPhil →