Short answer. Agency is a contract where one person binds himself to render a service or do something in representation of another. Article 1868 makes the consent or authority of that other person the essential element — without the principal's consent or authority, there is no valid agency, however much the agent claims to act on his behalf.
What the law says
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.
Civil Code, Article 1868 — Contract of Agency Defined. Read the full provision →
The two things an agent does
Article 1868 describes an agent's undertaking as binding himself to render some service or to do something in representation or on behalf of another. This covers both performing a service directly and acting as a stand-in for someone else in dealing with third parties — the common thread is that the agent's action is meant to have effect for the person he represents, not purely for himself.
Consent or authority: the element that actually creates the agency
The clause that matters most for validity is with the consent or authority of the latter — meaning the person on whose behalf the agent claims to act. Without that consent or authority coming from the principal, there is no agency relationship no matter how convincingly someone claims to represent another; the principal's side of the arrangement is what turns a person's unilateral offer to help into an actual contract of agency.
Why agency is described as a contract
Article 1868 frames this as a contract, which means the ordinary elements a contract needs — consent, a definite object such as the service or act to be performed, and a lawful cause — apply here as well. The consent element is doubled in a sense: not only must there be the general contractual consent between agent and principal, but that consent must specifically extend to the agent acting in representation of the principal, which is what the phrase "with the consent or authority of the latter" captures.
What this means for someone dealing with a claimed agent
Because valid agency depends on the principal's consent or authority, a third party dealing with someone who claims to represent another has reason to confirm that the claimed authority actually exists. An arrangement lacking the principal's consent or authority is not the agency Article 1868 describes, whatever label the parties may have put on it, and questions about whether someone had authority to act for another usually come back to whether this basic element was actually present.
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.
- Edita A. De Leon, Lara Bianca L. Sarte and Renzo Edgar L. Sarte, G.R. No. 243733, January 12, 2021 — read the decision on LawPhil →
- Dale Strickland vs. Ernst & Young LLP/Dale Strickland vs. Punongbayan & Araullo, G.R. No. 193782 / G.R. No. 210695, August 1, 2018 — read the decision on LawPhil →
- The Hongkong & Shanghai Banking Corporation, Limited vs National Steel Corporation and Citytrust Banking Corporation, G.R. No. 183486, February 24, 2016 — read the decision on LawPhil →
- Bank of the Philippine Islands and FGU Insurance Corporation vs. Yolanda Laingo, G.R. No. 205206, March 16, 2016 — read the decision on LawPhil →