Contract off Agency Contract o Agency

Chapter 3 - OBLIGATIONS OF THE PRINCIPAL

1. Specific obligations of the Principal. a. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority (Art. 1910, 1881) and in the name of the principal; b. To advance to the agent, should the latter so request, the sums necessary for the execution of the agency (Art. 1912); c. To reimburse the agent for all advances made by him provided the agent is free from fault; d. To indemnify the agent for all the damages which the execution of the agency may have caused the latter without fault or negligence on his part (Art. 1913); and e. To pay the agent the compensation agreed upon, or if no compensation was specified, the reasonable value of the agent’s services. (Art. 1875, 1306) 2. Rules in case the agent exceeded his authority. GENERAL RULE: The principal is not bound unless he ratifies it expressly or tacitly. EXCEPTION: The principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. 3. When principal solidarily liable to agency. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the consequences of the agency. (Art. 1915) 4. Rule where two persons contract separately with agent and principal. A. If the two contracts are incompatible with each other, the following rules shall be observed: a. If the thing is a movable - ownership shall belong to: 1. The first possessor in good faith. 2. In the absence thereof, the contract with a prior date shall be preferred. (Art. 1544, 1916) b. If the thing is an immovable - ownership shall belong to: 1. The first registrant in good faith. 2. In the absence thereof, the first possessor in good faith. 3. In the absence of both, the one who presents the oldest title in good faith. (Art. 1544) B. Liability for damages to third person whose contract is rejected in incompatible contracts a. Agent is liable if he acted in bad faith b. Principal is liable if the agent acted in good faith. (Art. 1917) 5. When principal is not liable for the expenses incurred by the agent. a. If the agent acted in contravention of the principal’s instructions, unless the latter should wish to avail himself of the benefits derived from the contract; b. When the expenses were due to the fault of the agent; c. When the agent incurred them 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 would be allowed only a certain sum. (Art. 1918) 6. PROBLEMS: a. P gave a special power of attorney to A for the latter to engage the services of a trucking company for a period of three days. Later, P overheard A who was negotiating with the trucking company through the telephone that he (A) was agreeing a five-day contract which was the minimum number of days demanded by the trucking company as per its policy. P did not stop A from concluding the contract with the trucking company although he could have done so. Is P liable for the payment of the services of the trucking company for five days? b. P instructed A to buy 1,000 shares of stock of XYZ Corporation at the Philippine Stock Exchange at the price prevailing on that particular day at P50.00 per share. Can A ask P to advance to the sums necessary to carry out the purchase? c. P1, P2 and P3 are the co-owners of a specific lot. They gave A a special power of attorney to sell the lot for P500,000 cash for a commission of 3% of the selling price. A was able to sell the lot for P500,000 cash. From whom may A collect his commission of P15,000?
Chapter 3 (Obligations of the Principal) Page 1 of 2

Neither X nor Y knew of the sale made to other. The sale was in a public instrument with X taking immediate physical possession of the land. the sale was made in a public instrument which Y registered in the Register of Deeds. P gave a special power of attorney to A to sell a piece of land belonging to him (P). Nonetheless. A still sold the piano to Y through a public instrument. Before A could find a buyer.Contract off Agency Contract o Agency d. Who is the owner of the piece of land? Who will be liable for damages to the party whose contract will be rejected? Chapter 3 (Obligations of the Principal) Page 2 of 2 . Neither X nor Y knew of the sale made to the other. Whose contract will prevail? Who will be liable for damage to the buyer whose contract will be rejected? e. P sold the same piece of land to Y. P gave a power of attorney to A to sell a certain piano. Without knowledge that A had already sold the lot. P was able to sell the piano to X through a private instrument and informed A about it.