Published — June 1, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Read also: Basics of land titles, transactions, and real property registration
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An agent is not allowed, without his principal’s permission, to sell to himself what he has been ordered to buy; or to buy for himself what he has been ordered to sell.
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The fiduciary relations between the agent and the principal prevents the agent from asserting a title adverse to that of the principal.
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An agent can buy for himself the property after the termination of the agency or other properties different from those he has been commissioned to sell.
An agent is one who binds himself to render some service or to do something in representation of his principal. Since the agent is acting on behalf of the principal, may he be allowed to buy the properties intended for sale by the principal, which has been entrusted to him?
Civil Code provides that:
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:
xxx
(2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; xxx
An agent is not allowed, without his principal’s permission, to sell to himself what he has been ordered to buy; or to buy for himself what he has been ordered to sell. The fiduciary relations between them estop the agent from asserting a title adverse to that of the principal. And therefore, such a sale to himself would be ineffectual and void, because it is expressly prohibited by law.
The agent may, of course, buy after the termination of the agency. Under the old Civil Code, an agent or administrator was disqualified from purchasing property in his hands for sale or management. However, under the new Civil Code, this prohibition was modified in that the agent may now buy the property placed in his hands for sale or administration, provided the principal gives his consent thereto.
The agent’s incapacity to buy his principal’s property rests on the fact that the agent and the principal form one juridical person. However, the consent of the principal removes the transaction out of the prohibition. Further, the incapacity of the agent is only against buying the property he is required to sell during the existence of the relationship. Therefore, an agent can buy for himself the property after the termination of the agency or other properties different from those he has been commissioned to sell.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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