Agency Reviewer; March 04, 2014

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Codal & Cases
10% definition of terms
20% MCQ
70% Essay

CHAPTER 1 NATURE, FORM, AND KINDS OF AGENCY

1868
Agency A contract of agency is a contract whereby a person (agent)binds himself to render some service
or to do something in representation or on behalf of another (principal) with the consent or
authority of the latter.

Elements of an Agency: (CORA)
1. There must be a CONSENT, either express or implied, of the parties.
2. There must be an OBJECT, relating to the execution of juridical act in relation to 3
rd
parties.
3. Agent acts in REPRESENTATION of principal and not for himself.
4. Agent acts within the scope of his authority.

Requisites of a contract: (COC)
1. CONSENT of the contracting parties (principal and agent)
2. OBJECT certain which is the subject matter of the contract
3. CAUSE of the obligation which is established

*The PURPOSE of agency is TO EXTEND the personality of principal through the facility of agent; agent by
legal fiction becomes principal,

*3
rd
party is NOT a party to agency contract
*Agent is NOT a party to the contract entered into by him with a 3
rd
party on behalf of principal.

1. Agent is estopped from asserting adverse interest to principal
2. Agent must NOT act as an adverse party
a. Agent can acquire such property after termination of agency contract
3. Agent must not act for an adverse party in dual agency EXCEPT:
a. Principal has full knowledge and consents
b. Interest of the two principals are not conflicting
4. Agent must not use or disclose secret information of principal
5. Agent must give notice of material facts to principal

GR: All acts may be delegated by principal to agent, EXCEPT:
1. Personal acts such as:
a. Right to vote
b. Making of a will
c. Votes as a member of the Board of Directors of a corporation
2. Criminal or Illegal acts

Characteristics of a Contract of Agency:
1. Consensual
2. Nominate
3. Principal
4. Personal, Representative, and derivative authority
5. Revocable and Fiduciary
6. Unilateral (gratuitous)/Bilateral (onerous); and
7. Preparatory

*Contract of Sale - one of the contracting parties obligates himself to transfer the ownership of and to deliver
a determinate thing, and the other to pay therefore a price certain in money or its equivalent.

1869
- Forms of Agency
o As to manner of creation
i. Express
ii. Implied form
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1. The acts of the principal
2. From silence or lack of action from principal
3. Failure to repudiate the agency by principal. With principals knowledge
that another person is acting on his behalf without authority
iii. Oral, unless the law requires a specific form
1. Sale of land or interest therein is VOID if the agents authority is NOT in
WRITING

*Generally, agency is NOT presumed and must be proven by the person alleging its EXISTENCE,
NATURE, and EVENT

1870
- Acceptance by the Agent
o Express
o Implied from
Act of agent which carry out the agency
Silence or inaction of agent according to the circumstances

1871
Acceptance of agency between persons who are PRESENT
Implied if:
1. Principal delivers hi power of attorney to agent; and
2. Agent receives it without objection

1872
Acceptance of agency between persons who are ABSENT
- Silence of agent does not imply acceptance of agency EXCEPT when:
1. Principal transmits power of attorney by letter or telegram to agent who receives it
without objection from agent (with reply)
2. Principal transmits power of attorney by letter or telegram with respect to business
where agent is habitually engaged (without reply)

Power of Attorney is an instrument in writing by which one person, as principal, appoints another as his
agent and confers upon him the authority to perform certain specified acts or kinds on behalf of the principal.

1873
Agency continues until notice is rescinded in the same manner it was given

1874
Sales of land or any interest therein by the agent is VOID of the agents authority is NOT in WRITING
*Special power of attorney is needed to transmit ownership over immovable

1875
Agency is presumed to be for compensation
*Agent is responsible for fraud and negligence, which shall be judged by courts
according to whether the agency was or was not for compensation.

1876
General agency vs. Special agency
1. General agency all the business of the principal
2. Special agency one or more specific transactions

1877
If agency is couched in general terms, only acts of administration even if:
a. the principal should state that he withholds no power;
b. that the agent may execute such acts as he may consider appropriate; or
c. even though the agency should authorize a general and unlimited management

1878
- Instances when a special power of attorney is necessary: PNCW EMLL BBO CARO
1. To make such payments as are not usually considered as acts of administration;
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2. To effect novations which put an end to obligations already in existence at the time the agency
was constituted;
3. To compromise, to submit questions to arbitration, to renounce the right to appeal from a
judgment, to waive objections to the venue of an action or to 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 customary ones for charity or 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;
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. (n)

1879
A special power to sell EXCLUDES the power to mortgage, and vice versa.

1880
A special power to compromise does not authorize the agent to submit to arbitration

1881
Agent must act within the scope of his authority.
An agent may do such acts conducive to the accomplishments of the agency.

Effects if agent acts beyond the scope of his authority
1. 1898 VOID if 3
rd
person is aware of the limits of the authority of the agent (should be
unenforceable since the contract can be ratified)
2. unenforceable

1882
The authority of the agent is NOT deemed exceeded if performed in a manner more advantageous to the
principal
*1888 the agent should NOT act if it would manifestly result in loss or damage to the
principal

1883
Consequences if agent acts in HIS OWN NAME
1. The principal has NO right of action against the person with whom the agent has transacted,
and vice versa
2. The agent is the one directly bound in favor of the person with whom he has contracted, as if
the transaction were his own
EXCEPTION: When the contract INVOLVE THINGS belonging to the principal

The provision shall be understood to be without prejudice to the actions between principal and
agent


CHAPTER 2 OBLIGATIONS of the AGENT

1884
Obligations of agent who ACCEPTS agency
- Agent is bound to carry out agency otherwise he/she is liable for damages
- Agent must finish the business already begun upon death of principal should delay entail any
danger
o *Death extinguishes the agency
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1885
Obligations of agent who DECLINES agency
- The agent must observe diligence of a good father of a family in custody and preservation of
good forwarded to him until:
o The principal should appoint an agent
o The principal takes charge of the goods.

1929 agent who withdraws from an agency must still continue to act until principal has
reasonable opportunity to takes necessary steps to meet situation.

1886
Obligation of agent to advance funds
- If stipulated, agent is bound to advance funds necessary for execution of the agency EXCEPT
when principal is insolvent.
o *insolvency extinguishes agency

1887
Agent should carry out agency in accordance with instructions of the principal
- Agent should act in accordance with the instruction of the principal
- In default thereof, agent shall do all that a good father of a family as required by the nature of
the business

1888
An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the
principal

1889
Agent is liable to principal in damages where in cases of conflict of interest, agent preferred his own.
- duty of loyalty of agent
- *agent is prohibited from buying property entrusted to them for administration or sale without
principals consent.

1890
If agent has been empowered to borrow money, he may himself be the lender at the current rate of interest.
If he has been authorized to lend money at interest, he cannot borrow it without the consent of the principal.

1891
Obligations of agent to render account
- Agent must render account to principal; AND
- Agent must deliver to principal whatever is received by virtue of agency (including those not
due the principal)
o Reason: Legally, it is principal who received them and agent has to account for them
*Stipulations exempting agent from obligation to render an account is VOID
*Obligation arises and becomes demandable at agencys end.

1892
When agent may appoint a substitute
Rule: Agent must act in person BUT may appoint a substitute IF NOT prohibited.
Effects when an agent appoints a substitute:
- Agent is responsible for acts of substitute when:
o Agent was NOT given power to appoint one
o Agent was given such power without designating the person and the substitute is
NOTORIOUSLY incompetent or insolvent
***All acts of substitute appointed against principals prohibition are void.

1893
The right of principal against the substitute when: (the principal may furthermore bring action against the
substitute with respect to the obligations
- Agent was not given power to appoint one
- Agent was given such power without designating the person and the substitute is
NOTORIOUSLY incompetent or insolvent
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*Although under 1892, Agent shall be responsible for acts of the substitute, 1893 provides that
principal may furthermore bring an action (direct action) against the substitute.

1894
Responsibility of 2 or more agents is NOT solidary UNLESS expressly stipulated

1895
Where two or more agents agreed to be solidarily bound in agency, each agent is responsible for the non-
fulfillment of the agency, and for fault or negligence of his fellow agents, EXCEPT in the latter case when the
fellow agents acted beyond the scope of their authority.

1896
Agent is liable for interest:
- on sums he applied to his own use from the time he used them; AND
- on those which the agent still owes the principal after the extinguishment of agency

1897
Agent who acts as such is not bound to third party
GR: Agent is not personally liable, if he contracts in the name of principal and acts within the scope
of his authority.
EXCEPTIONS:
1. Agent expressly binds himself
2. Agent exceeds his authority WITHOUT giving notice of limited powers

1898
Effect of ungratified acts done by agent is excess of his authority VOID (UNENFORCEABLE)

Comparison of 1898, 1403 (1), and 1317:
Status of contract
Art. 1898

A exceeds the scope of
his authority

Void If 3
rd
person is aware of the limits
of As authority and P does not
ratify the contract.

This should be unenforceable.
Art. 1403 (1)

A has no authority or
legal representation or
acted beyond his power

Unenforceable

Unless ratified, expressly or
impliedly
Art. 1317

A has no authority or
legal representation or
acted beyond his power

Unenforceable Unless ratified, expressly or
impliedly, before revocation by
the other contracting party

*1901
- Principal should be the one to question agents lack or excess of authority
- Principal is the ONLY party that can ratify the acts of agent
*1408 provides that unenforceable contracts cannot be assailed by third persons

1899
If agent acts in accordance with the instructions of principal, and within the scope of his authority, principal
cannot excuse himself from liability towards third persons for IGNORANCE of agent.

1900
An act of agent is within the scope of his authority if such act is within the terms of the power of attorney as
written even if agent has in fact exceeded the limits of his authority according to understanding with principal
and agent.

1901
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Third Person Cannot Set Up Fact of Agents Exceeding Authority Where Principal Ratified or signified
Willingness to Ratify Agents Acts
P should be the one to question agents lack or excess, of authority
P is the only party that can ratify the acts of A.
Art. 1408 provides that unenforceable contracts cannot be assailed by 3
rd
persons.

1902
Third person may require presentation of power of attorney or instructions of the principal
- Third person may require presentation of power of attorney or instructions as regards to the
agency
- However, private or secret orders of principal do not prejudice 3
rd
persons who relied upon
agents power of attorney or principals instructions
o Insofar as 3
rd
persons, Art. 1900 provides that an act of agent is within the
scope of his authority if such act is within the terms of the power of attorney
as written even if agent has in fact exceeded the limits of his authority
according to understanding with principal and agent

1903
Commission agent shall be responsible for the goods received by him

1904
Commission agent who handles good 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

1905
- Commission agent CANNOT sell on credit WITHOUT the express or implied consent of the
principal.
- If the agent should do so, the principal may demand from him (agent) payment in cash, but the
commission agent shall be entitled to any interest or benefit, which may result from such sale.

1906
- Commission agent CAN sell on credit WITH authority of the principal, agent shall inform the
principal, with a statement of the names of the buyers.
- If he failed to do so, the sale SHALL be deemed to have been made for cash insofar as the
principal is concerned.

1907
Commission Agent Effect of Agents Receiving Guaranty or Del Credere Commission
He shall bear risks of collection
He shall pay the principal the proceeds of sale on same terms agreed with purchaser

1908
Commission agent is
- LIABLE for damages if he fails to collect credits of his principal at the time when they become
due and demandable,
- unless he (agent) proves that he exercised due diligence for that purpose.

1909
Agent is liable for FRAUD and NEGLIGENCE which shall be judged with more or less rigor by the courts,
according to WON agency was for compensation


CHAPTER 3 OBLIGATIONS OF THE PRINCIPAL

1910
- Obligation of the principal to comply with all obligations, which the agent may have contracted
within the scope of his authority.
o GENERAL RULE:
The principal must comply with all obligations, which the agent may have
contracted within the scope of his authority.
The principal is not bound when the agent has exceeded his authority.
o EXCEPTIONS:
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1. Even if the agent exceeded his power, if the principal ratifies, expressly or
tacitly, principal shall be bound by the obligation.
ONLY principal can ratify that unauthorized act of the agent
i. Doctrine of RATIFICATION
Ratification in agency is the adoption or
confirmation by one person (principal) of an act
performed on his behalf by another person
(agent) without authority.
The substance of the doctrine is confirmation
after conduct, amounting to a substitute for a
prior authority.
The principal must have full knowledge at the
time of ratification of all the material facts and
circumstances relating to the unauthorized act of
the person who assumed to act as agent. Thus, if
material facts were suppressed or unknown, the
can be NO VALID ratification.
This principle will NOT apply if the principals
ignorance of the material facts and
circumstances was willful, or that the principal
chooses to act in ignorance of the facts.
Ratification CANNOT be implied as against the
principal who is ignorant of the facts.
2. Even if the agent exceeded his authority, if the principal allowed the agent to
act as though he had full powers principal shall be solidarily liable with the
agent (1911).
This is one of the exceptions to the rule that obligations are
presumed to be joint
i. Doctrine of APPARENT AUTHORITY
Acts and contracts of the agent, as are within the
apparent scope of authority conferred on him,
although no actual authority to do such acts or to
make such contracts has been conferred, bind
the principal.
The principals liability is only limited to third
persons who have led reasonably to believe by
the conduct of the principal that such actual
authority exists, although none was give.
Apparent authority is determined ONLY by acts
of the principal and NOT by the acts of the agent.
NO apparent authority of an agent without acts or
conduct on the part of the principal and this acts
or conduct must have produced a change of
position to the third partys detriment
ii. Agency by ESTOPPEL
It states that the principal is solidarily liable with
the agent even when the agent has exceeded his
authority, if the principal allowed him to act as he
had full powers. The following must be
established in estoppel:
a. The principal manifested a
REPRESENTATION of the agents
authority or knowingly allowed the agent
to assume such authority;
b. The 3
rd
person, in good faith, relied upon
such representation; AND
c. Relying upon such representation, such
3
rd
person has changed his position to
his detriment.
In Litonjua, Jr. v. Eternit Corp., this Court said that [a]n agency by
estoppel, which is similar to the doctrine of apparent authority,
requires proof of reliance upon the representations, and that, in
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turn, needs proof that the representations predated the action taken
in reliance.

1911
- # 2 exception above

1912
Obligation of the Principal to Advance the Sums Necessary for the Execution of the Agency
Compare: Agent is bound to advance sums as stipulated (Art. 1886)
Principal has the obligation to reimburse even if the business or undertaking was not successful
provided that the agent is free from all fault
o Reimbursement shall include interest on sums advances, from the day the advance was
made

EXCEPTIONS: Principal is not liable to agent for expenses incurred (Art.1918)
a. When agent acted in contravention of the principals instructions unless principal
wishes to avail the benefits derived from the contract
b. When expenses is due to the fault of the agent
c. When agent incurred expenses with knowledge that an unfavorable result would
ensue, if the principal was not aware thereof
d. When it was stipulated that the expenses would be borne by the agent, or that
the latter was allowed only a certain sum

1913
Obligation of the Principal to indemnify the Agent for All Damages
- Compare: Agent is bound by his acceptance to carry out the agency and is liable for damages,
which through his non-performance the principal may suffer (Art. 1884)

1914
- Agent right to retain in Pledge (as security) the Object of the Agency until the Principal effects
a. reimbursement of advances (with interest, if any), and
b. pays indemnity
Compare: Agent is bound to deliver to the principal everything he received
even if not due the principal (Art. 1891)
The thing pledged may only be sold after demand of amount due - Public
auction to take place within one (1) month after demand. If, without just
grounds, the creditor does not cause the public sale within such period, the
debtor may demand the return of the thing within such period. (Art. 2122)

1915
Obligation Two (or Several) Principals with Common Agent is Solidary
o Compare with: obligation of two agents or more agents is not solidary (Art. 1894).
o The obligation of the principals is solidary because of their common interest
o Each principal has the right to revoke authority of the common agent without the consent
of the other (Art. 1925).

1916
- Right of Persons who Contracted for the Same Thing, One with the Principal and the other with
the Agent
o If the two contracts are incompatible, the following rules shall be observed:
That of prior date is preferred
If a double sale situation takes place Article 1544 governs

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1917
In case referred to Art. 1916
- If the agent acted in good faith the principal SHALL be LIABLE in damages to 3
rd
party
- If the agent acted in bad faith agent alone SHALL be LIABLE
1918
- Principal is NOT LIABLE to agent for expenses incurred (CFUS)
1. When agent acted in contravention of the principals instructions unless principal wishes to
avail the benefits derived from the contract
2. When expenses is due to the fault of the agent
3. When agent incurred expenses with knowledge that an unfavorable result would ensue, if
the principal was not aware thereof
4. When it was stipulated that the expenses would be borne by the agent, or that the latter
was allowed only a certain sum

CHAPTER 4 MODES OF EXTINGUISHMENT OF AGENCY

1919
How and When Agency Extinguished
1. By principals revocation of agency (express or implied)
2. By agents withdrawal from agency
3. By death, civil interdiction, insanity or insolvency of the principal or the agent
4. By the dissolution of the juridical entity which entrusted or accepted the agency
5. By the accomplishment of the object or purpose of agency
6. By the expiration of the period for which agency was constituted

Express Revocation
1920
The Principal may Revoke an Agency at Will
o In which case, the principal may compel the agent to return the document evidencing the
agency


1925
Each Principal has the Right to Revoke Authority of the Common Agent
o Obligation of several principals to a common agent is solidary. (Art. 1915)
o Each principal has the right to revoke authority of the common agent without the consent
of the other

Implied Revocation
1923
The Appointment of a New Agent for the Same Business or Transaction
Agency is revoked from the day on which notice thereof is given to the former agent, without
prejudice to Art. 1921 and Art. 1922
o Impliedly revoked as to the agent only
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o As to third persons, notice to them is necessary:
Revocation of agency entrusted for purpose of contracting with specified persons
specified persons shall not be prejudiced if they were not given notice (Art.
1921)
Revocation of agent who had general power of attorney third persons who
acted in good faith and without knowledge shall not be prejudiced NOTE:
notice in newspaper of general circulation is sufficient warning
Special notification or public advertisement of power of attorney revoked in the
same manner (Art. 1873)

1924
- Agency is revoked
o If the principal directly manages the business entrusted to the agent, dealing directly
with third persons

1926
- A general power of attorney is revoked by a special power of attorney granted to another
agent, as regards the special matter involved in the latter

Irrevocable Agency (Agency Coupled with Interest)
1927
- The principal may NOT revoke an agency at will, IF:
1. A bilateral contract depends upon it
a. Agency shall remain in full force and effect even after the death of the
principal is when if it has been constituted in the common interest of the
latter and of the agent, or in the interest of a third person who has accepted
the stipulation in his favor.
2. It is the means of fulfilling an obligation already contracted
a. Agency that we hereby declare to be compatible with the intent of the parties
cannot be revoked at will
3. If a partner is appointed manager of partnership in the contract of partnership and his
removal from the management is unjustifiable.
a. Revocation needs the vote of controlling partners

Effects of Revocation on 3
rd
Parties
1921
- When It Affects Dealing with Specified Third Parties
o Art. 1921 refers to an agency created by principal to deal with specified third persons
o Revocation of agency entrusted for purpose of contracting with specified person
specified persons shall NOT be prejudiced if they were not given notice

1922
- When Revocation of Agents General Powers Effective Against Third Persons
o Refers to agency created to deal with the general public
o Revocation of agent who had general power of attorney third persons who acted in
good faith and without knowledge shall NOT be prejudiced
o However, notice in newspaper of general circulation is sufficient warning to 3
rd

persons

Agents Withdrawal (Resignation) from Agency
1928
- Right of Agent to Withdraw (Resign) from Agency
o By giving due notice to principal
o Agent to indemnify principal should be suffer any damage unless withdrawal is due to
impossibility of continuing agency without grave detriment to agent

1929
Obligation of Agent to Continue to Act Even After Withdrawing From Agency
o Even if the agent withdraws from the agency for a valid reason, he must continue to act
until the principal has had reasonable opportunity to take necessary steps to meet
situation
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o Compare: Obligation of the agent in a situation when the agent declines the agency (Art.
1885)

Death of the Principal
1930
- Agency continues despite the death of the principal, IF:
o It was constituted for COMMON INTEREST of the principal and the agent; OR
o It was constituted in favor of 3
rd
person who accepted stipulation in his favor

1931
- Effects of acts done by agent without knowledge of Principals Death
o Acts are VALID, provided that:
i. The agent does not know of the death or other cause of
extinguishment of agency;
ii. The 3
rd
person dealing with the agent must be in good faith (not
aware of death or other cause)

Death of the Agent
1932
- Obligation of agents HEIRS in case of Agents Death
o Notify the principal of the death of the agent
o Adopt measures as the circumstances may demand in the interest of the principal
***If principal dies, the law is SILENT on whether his heirs have any obligation to notify the agent.







































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NOTES FROM CASES

1. Implied agency has been created from their silence or lack of action, or their failure to repudiate the
agency.
2. The implied agency is founded on the lack of contradiction or opposition, which constitutes
simultaneous agreement on the part of the presumed principal to the execution of the contract.
3. Authority of the agent should be in writing when entering an agreement for leasing for longer than
one year or for the sale of real property.
4. A contact person to sell is not an agent to sell.
5. A sale of a parcel of land or any interest therein made through an agent, a SPA is essential,
otherwise the sale shall be void.
6. A salesman with authority to collect money belonging to his principal does NOT have the implied
authority to indorse checks received in payment.
7. A general power permits the agent to do all acts for which the law does not require a special power.
8. As managing agent, he has the authority to buy such reasonable quantities of supplies as might
from time to time be necessary in carrying on the business.
9. The agency comprises all the business of principal, but, couched in general terms, is limited only to
acts of administration.
10. The payment of claims is not an act of administration.
11. The special power of attorney can be included in the general power when it is specified therein the
act or transaction fro which the special power is required.
12. The power of administration does not include acts of disposition or encumbrance, which are acts of
strict ownership, which needs special power of attorney.
13. Authority to compromise must be in writing.
14. A special power of attorney is needed when entering into a lease contract to a real property from
more than one year.
15. A special power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired for a valuable consideration.
16. Where an instrument powers and duties are specified and defined, such is limited and confined to
those which are specified and defined and all others are excluded.
17. The acts of such agents in entering into agreements or contracts beyond the scope of their actual
authority DO NOT bind or obligate the Government. The moment this happens, the principal-agent
relationship between the Government and the contracting officer ceases to exist.
18. Authority to sell rather than merely to find a purchaser; mere broker no authority to make a binding
contract.
19. Contracts entered into in the name of another person by one who has been given no authority or
legal representation or who acted beyond his powers are classified as unauthorized contracts and
are declared unenforceable, unless they are ratified.
20. Since third party knew of such excess in authority of the agents, principal cant be held liable of
their acts and third party not entitled to recover damages from such agents.
21. The principal must fulfill the obligations contracted by the agent, but a mortgage on real property of
the principal not made and signed in the name of the principal, is not valid as to the principal.
22. Agents apparent representation yields to the principals true representation and the contract is
considered as entered into between the principal and third person.
23. An agent is required to act with the care of a good father of a family and becomes liable for the
damages, which the principal may suffer through his nonperformance.
24. Every agent is bound to give an account of his transactions and to pay to the principal all that he
may received by virtue of the agency, even though what has been received is not owed to the
principal.
25. Failure of an agent to make full disclosure make shim guilty of breach of loyalty to the principal
26. Duty and fidelity (in art 1891) does not apply if the agent or broker acted ONLY as a middleman
with the task of merely bringing together the vendor and the vendee, who themselves thereafter will
negotiate on the terms and conditions of the transaction.
27. In our jurisdiction, it allows the appointment by an agent of a substitute or sub-agent in the absence
of express agreement to the contrary between the agent and the principal.
28. An agent can only appoint a substitute within the limits set to him by the principal
29. The agent owes interest on the sums he has applied to his own use from the day on which he did
so, and on those, which he still owes after the extinguishment of the agency.
30. There being no evidence showing that the agent converted the money entrusted to him to his own
use, he is not liable for interest thereon.
31. A debt thus incurred by the agent is binding directly upon the principal, provided the agent acted
within the scope of his authority.
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32. Scope and extent of the functions of an adjustment and settlement agent do not include personal
liability. Their functions are merely to settle and adjust claims in behalf of his principal. The
adjustment and settlement agent does not assume any personal liability. The recourse of the
insured is to press his claim against the principal.
33. In the absence of express legislation, the liability of the agent of a foreign corporation, but not
licensed in the PH, is premised of the inability to sue the principal or non-liability thereof.
34. A contract entered into, in excess of authority, is voidable.
35. An agent who exceeds the limit of his authority is personally liable.
36. The acts of an agent beyond the scope of his authority do not bind the principal, unless the
principal ratifies the same expressly or impliedly.
37. Even if a partys counsel exceeded his authority in inserting the penalty clause, the status of the
said clause is not void but merely voidable, i.e., capable of being ratified.
38. Only the principal can question the authority of the counsel to enter into a compromise agreement.
39. The authority to borrow money, conferred on an agent, must be created by express terms or
necessarily implied from the nature of the agency, for authority to borrow money is on the most
dangerous powers a principal can confer upon an agent.
40. - Every person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent.
41. - The authorization is a special power of attorney for it refers to a clear mandate specifically
authorizing the performance of a special power and of express acts assumed therein.
42. Rule that between 2 innocent parties, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss.
43. Contract may be considered as an agency to sell; therefore, agent is liable for selling on credit
without authority from the principal.
44. The principal assumes all the risk on the valid actions of its agent.
45. If the 3
rd
person was aware of such limits of authority, he is to blame and is not entitled to recover
damages from the agent, unless the latter undertook to secure the principals ratification.
46. The knowledge of the agent is considered knowledge by the principle.
47. Good faith consists in the belief of the builder that the land he is building on is his and his ignorance
of any defect or flaw in his title. The burden of proving bad faith belongs to the one asserting it.
48. When a bank, by its acts and failure to act, has clearly clothed its manager with apparent authority
to sell an acquires asset in the normal course of business, it is legally obliged to confirm the
transaction by issuing a board resolution to enable the buyers to register the property in their
names.
49. Even if the agent exceeded his power, if the principal ratifies, expressly or tacitly, principal shall be
bound by the obligation.
50. There can be no apparent authority of an agent without acts or conduct on the part of the principal.
51. Contracts in behalf of the Rep of the Phil shall be executed by the President, unless authority
therefore is expressly vested by law or by him in any other public officer
52. Art 1911 is intended to protect the rights of innocent persons. In such a situation, both the principal
and the agent may be considered as joint whose liability is joint and solidary.
53. Agent, as efficient procuring cause in bringing about sale, is entitled to agents commission.
54. Though the sale was consummated upon expiration of his authority, agent is still entitled to
commission.
55. When there is a close proximate and causal connection between the agents efforts and labor and
the principals sale of his property, the agent is entitled to a commission.
56. AGENT: receives commission upon the SUCCESSFUL conclusion of sale.
57. BROKER: earns his pay merely by bringing the buyer and the seller together, EVEN IF NO SALE
IS EVENTUALLY MADE.
58. The fact that an individual invested his own money to put up service centers and showrooms, under
the control and regulation of another entity, does not necessarily prove that he is not an agent of
the latter.
59. A substitution should not be presumed from the mere filing of a notice of appearance of a new
lawyer. The fact that a second attorney enters his appearance for the same party does not
necessarily raise the presumption that the authority of the first attorney has been withdrawn.