ARTICLE 1911 - 1925

Q. What are the Specific Obligations of a Principal to his agent?

Ans. The specific obligations of a principal to his agent are:

1. To Comply with all the obligations which the agent may have contracted within
the scope of his authority and in the name of the principal (Art. 1910)

2. To Advance to the agent, should the latter so request, the sums necessary for the
execution of the agency (Art. 1912).

3. To Reimburse the agent for what the latter has advanced (plus interest), even if
the business was not successful, provided the agent was free from fault (Art.
1912).

4. 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).

Note: The agent may retain in pledge the things which are the object of
the agency until the principal effects this reimbursement and pays the indemnity
(Art. 1914).

5. To Pay the agent the compensation agreed upon, or if no compensation agreed

upon, or if no compensation was specified, the reasonable value of the agent’s
services.

Note: Even when the agent has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to act as though he had full
powers. (Art. 1911)

Article 1911

Q. Article 1911 provides that “even when the agent has exceeded his authority,
the principal is solidarily liable with the agent if the former allowed the latter to
act as though he had full powers”. What is the basis of the liability of the
principal under this article?

Ans. The liability of the principal under this article is based on his failure to adopt the
necessary measures to prevent third persons from being deceived by the apparent
authority of the agent. The liability, therefore, extends only in favor of third persons
who have lawfully supposed the existence of the authority.

Q. Who can be estopped to deny agency?

Ans. The following can be stopped to deny agency:

1. Estoppel of Agent - one professing to act as agent estopped to deny his agency
both as against his asserted principal and the third persons interested in the
transaction in which he is engaged

2. Estoppel by the Principal

a. As to agent – one knowing another is acting as his agent and fails to

repudiate his acts, or accept the benefits of them, will be estopped to deny
the agency as against such other

b. As to sub-agent – for the principal to be estopped from denying his liability to

a third person, he must have known or be charged with knowledge of the
transaction and the terms of the agreement between the agent and sub-agent

c. As to third persons – one who knows thatanother is acting as his agent or

permitted another to appear as his agent, to the injury of third persons who
have dealt with the apparent agent as such in good faith and in the exercise
of reasonable prudence, is estopped to deny the agency

3. Estoppel of Third Persons – a third person, having dealt with one as an agent
may be estopped to deny the agency as against the principal, agent or
3rd persons in interest.

4. Estoppel of the Government- government neither estopped by the mistake/error

of its agents; may be estopped through affirmative acts of its officers acting within
the scope of their authority

Q. Lustan executed a Special Power of Attorney in favor of Parangan providing

that it could transact not only for principal loan but also for subsequent
commercial, industrial, agricultural loan or credit accommodation that the
attorney-in-fact may obtain and until the power of attorney is revoked. Are the
loans obtained by Parangan binding upon lustan?

Ans. Yes, because apparently, the agent acted within the scope of his functions. As
far as third persons are concerned, an act is deemed to have been performed within
the scope of the agent’s authority if such is within the terms of the power of attorney
as written even if the agent has in fact exceeded the limits of his authority according
to the understanding between the principal and the agent. (citing Eugenio vs. CA,
 57 SCAD510, G.R. No. 103737, Dec. 15, 1994). Even when the agent has
exceeded his authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers (ART. 1911, NCC; Lustan vs.
CA, et al., G.R. No. 111924, Jan. 27, 1997).

Q. A, P’s agent, authorized to secure saloon-keepers who would sell P’s beer
exclusively, guaranteed on P’s behalf, the payment of rent by such a saloon-
keepre. P, being informed of this, did nothing. Is P answerable for A’s act?

Ans. Yes. “In the case at bar, it is possible that the extension of the term of the lease
and the reduction of the monthly rent might be regarded as creating an equitable
estobble, but however that may be, we rest our decision upon an implied ratification
by the defendant (P) of its agent’s unauthorized assumption of authority, by failing,
when fully notified thereof, promptly to deny his power to consummate the
agreement.” (Depot Realty Syndicate vs. enterprise Brewing Co., 87 Ore. 560, 171,
p. 223 [1918].)

Q. When T, holder of a note, proposed to enforce it, P (purported maker of the

note) had sought and secured additional time from T. When T again took
steps to enforce the note, P set up the claim that the note had been made in
his name by his brother now dead) without authority. Is P stopped to set up
his claim?

Ans. Yes. He was fully aware of the facts surrounding the transaction when he
accepted from T further indulgence and forbearance. His brother was then living
and the note was not barred by the statute of limitations. P made no contention at
that time that the note was not genuine. By remaining silent when it was his duty to
speak, P has disadvantaged T. He ought not to be heard now in repudiation of his
former conduct. (McNelly vs. Walters, 211 N.C. 112, 189 S.E. 114 (1937).

Q. W told her husband P that there was no more money from his account in the
bank, as it had all been drawn out to pay moneys to W’s sister to enable her to
fight a case about a house. W declined to say who had forged P’s name, but
she persuaded him not to go to the bank until her sister’s case was finished.
He consented not to do so. Nothing more happened after eight (8) months
when P again raised the question. Doubting the truth about W’s sister, P told
W he would go to the bank. W thereupon shot herself. Did P, by his silence,
ratify or adopt the forged checks as his own? Was he stopped by his silence
from alleging that his signatures were forgeries?

Ans. No. all the checks were forged and paid before the silence; no checks were
forged after the silence. The silence would not be the proximate cause of the bank’s
mistake. The bank was in no worse position than it was at the time when it was
within the power of P to give the information.

But if the silence of P has caused the bank to lose its right of action against the
forger, P is stopped from alleging the fact which he ought to have disclosed –
 namely, that the checks were forged. In the present case, while the carelessness of
the bank was the proximate cause of the bank’s loss in paying the forged checks, it
was not the proximate cause of the bank’s losing its right of action against the forger.
This was caused by the failure of P to inform the bank of the forgery till his wife was
dead and the cause of action was lost. (Greenwood vs. Artins Bank, Ltd., 1 K.B. 371
[1913].)

Q. P authorized A to sell P’s land, the purchase price payable to P in 12 monthly

installments. A sold the land to T. If P knowingly permits A to collect from T,
what kind of authority does A have?

Ans. If P if P knowingly permits A to collect from T, a may be said to have apparent

authority to receive payment. Apparent authority is that which though not actually
granted, the principal knowingly permits the agent to exercise or holds him out as
possessing. Apparent authority is not founded in negligence of the principal but in
the conscious permission of acts beyond the powers granted.

Q. P authorized A to sell P’s land, the purchase price payable to P in 12 monthly

installments. A sold the land to T. If A collects from T without informing P but
under circumstances as to charge P with knowledge of such collection, what
kind of authority does A have?

Ans. If A collects from T without informing P but under circumstances as to charge P

with knowledge of such collection, as where T has not paid him even a single
installment notwithstanding that several months have already passed, there arises in
this case authority by estoppels founded on the negligence of P. Authority by
estoppels arises in those cases where the principal, by his culpable negligence,
permits his agent to exercise powers not granted to him, even though the principal
may have no notice or knowledge of the conduct of the agent. The rule of estoppels
has its basis in the negligence of tehprincipal in failing properly to supervise the
affairs of the agent, allowing him to exercise powers not granted to him, and so
justifies others in believing he possess the requisite authority.

Q. T came to the hotel of P late at night; one A, who was in fact a lodger but who
“appeared to be in charge,” went behind the counter, had t register, showed
him to a room, and received and signed a receipt for certain valuables on
behalf of the hotel. A absconded with the valuables during the night. Is P
liable to T?

Ans. Yes. An agency may be created by estoppels, and that estoppels may be
allowed on the ground of negligence or fault on the part of the principal, upon the
principle that when one innocent parties must suffer loss, the loss will fall on him
whose conduct brought about the situation.

Here P, the proprietor of the hotel, left a in the office either designedly or
negligently, clothed with apparent authority to do what hotel clerks usually do, and
 one (T) who came in for the purpose of becoming a guest, and did become a guest,
must reasonably conclude that he (A) had apparent authority to do what clerks under
similar circumstances would have a right to do. (Kanelles vs. Locke, 31 O.C.A. 280
[1919].)

Q. After selling his business to A, P took out a license for the business in his
own (P’s) name, leaving a in charge of the business conducted under his
license, leaving his (P’s) name on the sign over the store, directing t to
“deliver his goods to A,” followed by the conduct of A in receiving the goods
shipped and invoiced to P. Upon the facts, is T justified in believing that A
was acting as agent of P?

Ans. Yes. P, by his conduct, put it in the power of a to hold himself out as his agent,
thereby inducing t to sell and ship the goods on P’s credit. The liability of P rests
upon the familiar principle that, when one of two innocent persons must sustain a
loss, the law will place it upon the one whose conduct, either intentionally or
negligently, misleads the other. (Metzger vs. Whitehurst, 60 S.E. 907 [1908].)

Q. When an agency is constituted, what are the obligations of the principal to the
agent?

Ans. The obligations of the principal to the agent are:

(1) to advance to the agent sums necessary for the execution of the agency (Art.
1912, NCC)

(2) to indemnify the agent for all damages which the execution of the agency may
have caused the agent, without fault or negligence on his part(Art. 1913, NCC)

Article 1912

Q. If the agency is gratuitous, is Article 1912 still applicable?

Ans. Yes. Even if the agency be gratuitous, Article 1912 will also apply; hence, the
agent will still be entitled to reimbursement and interest. This is so because the
reimbursement and interest spoken of in this Article do not refer to compensation or
commission. (see Fortis v. Gutierres Hermanos, 6 Phil. 100).

Q. Acting on the direction of his principal and having a reasonable ground to

believe that the personal property belongs to the principal, the agent took the
personal property though it is being claimed adversely by another. Later, the
agent was compelled to pay damages for taking the said personal property.
Is the agent entitled to be indemnified?
Ans. Yes. Wherever the agent is called upon by his principal to do an act which is not
manifestly legal, and which he does not know to be wrong, the law implies a promise
on the part of the principal to indemnify the agent for such losses and damages as
flowing directly and immediately from the execution of the agency

Q. An agent was compelled to pay compensation for professional services

rendered by third person in the execution of the agency. What is the
responsibility of the principal over his agent?

Ans. The principal must reimburse the agent for amounts the latter may have paid as
reasonable compensation for professional services rendered by third persons in the
execution of the agency (1 Antokoletz 539, citing Argentine decisions)

Article 1913

Q. Under Article 1913, “The principal must also 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. “ what is the basis of this article?
When is this article applicable?

Ans. Article 1913 is based on equity, and applies even if the agency be gratuitous, as
matter of fact even more so.
Naturally, this Article can be made use of only if the agency exists, otherwise the
Article cannot apply. In such a case, the supposed agent is not acting in behalf of a
true principal,a nd the reason for the law would cease. (Albaladejo y Cia v. Phil.
Refining Co., 45 Phil. 556).

Article 1914

Q. If the principal fails to reimburse or indemnify the agent as required in Articles

1912 and 1913, what is the right of the agent over his principal?

Ans. If the principal fails to reimburse or indemnify the agent as required in Articles
1912 and 1913, the agent has the right to retain in pledge the things which are the
object of the agency (See. Art. 1914). This is an instance of legal pledge or pledge
which is created by operation of law.

Article 1915

Q. When two or more person appoints an agent for a common transaction or

undertaking, what are their liability against the agent?

Ans. They are solidarily liable to the agent for all the consequences of the agency (Art.
1915)

Q. When there are joint principals, who may revoke the agency?
A. Any one of them may revoke the agency.

Q. What are the requisites for solidary liability under Article 1915?

A. There are three requisites for the application of Article 1915:

(1) There are two or more principals;

(2) The principals have all concurred in the appointment of the same agent; and

(3) The agent is appointed for a common transaction or undertaking

Q. If P and O engage the professional services of A, a lawyer, for the recovery of

a parcel of land of which they are co-owners, who will be liable for the the
payment of A’s attorney’s fees?

Ans. The liability of the principals is solidary for all the consequences of the agency;
that is, each principal may be sued by the agent for the entire amount due and not
just for his proportionate share. Hence, P and O are liable solidarily for the
attorney’s fees. The principal who made the payment may claim from the other the
share which corresponds to him (Art. 1217, par. 2.)

Q. W, X and Y employ agent A to sell land owned in common by the three with A
receiving a commission of P1,5000,000. If A is successful, from whom should
A collect his commission?

Ans. If A is successful, A can collect from any of the three the amount of P1,5000,000.
Because of their solidary liability. Of course, if X pays the P1,5000,000. , he can
recover reimbursement of P500,000 each from Y and W.

Q. C, D and E appoint F as their agent to sell their separate houses. What is the
liability of C, D, and E against F?

Ans. The liability of C, D and E are merely joint and not solidary even if the
appointment is made in one instrument. This is because this is NOT a common
trasaction or undertaking.

Article 1916

Q. X constituted Y as his agent to sell his land on December 9, 1991. X sold the
land to A. Such contract was not registered. On January 4, 1992, Y sold the
land to B who registered the deed of sale and obtained a title. When A
discovered the sale and transfer, he went to court and asked for
reconveyance. Will the action prosper? Why?
Ans. No. When two persons contract with regard to the same thing, one of them with
the agent and the other with the principal, and the two contracts are incompatible
with each other, that of prior date shall be preferred, without prejudice to the
provisions of Article 1544. (Art. 1916, NCC).

Article 1544, NCC, contemplates of a double sale situation. Under said law,
whoever registers the document first in good faith, he being a buyer in good faith
and for value, hence, the action for reconveyance will not prosper.

Q. On January 31, 2000, A who owns apiece of agricultural land, gave a general
power of attorney to B. On February 20, 2000, a, without the knowledge of B,
executed in favor of C a special power of attorney to sell said piece of land.
On February 25, 2000, B as attorney- in fact of A, executed a deed of sale in
favor of D. On the same date, February 25, 2000, C, under the special power
given by A, sold the same piece of land to E.

Assuming that the vendees have not yet registered their respective
documents or have taken possession of the land, which of the two sales is
valid and enforceable and who is responsible for damages, if any? Reasons.

Ans. The sale by C in favor of E is valid and enforceable because C was specifically
granted authority to sell. B, who only had a general power of attorney had NO right
to sell, since selling ordinarily is not a mere act of administration. Moreover, under
Art. 1878, a special power of attorney is needed to effectuate sale. If anyone is
liable for damages, it is certainly B who performed an unauthorized thing.

Q. A principal authorized his brother as agent to sell certain parcels of land. The
sale was made, with both the deed of sale and the authority of the agent being
registered in the Registry of Property. Subsequently, the principal sold the
same parcels of land to another buyer who managed to have the title given to
him. Which buyer must prevail?

Ans. The buyer from the agent, in view of the registration in good faith in his name of
the sale. Here, Art. 1544 regarding the double sale of property can be applied.
Hence, also, if said buyer sues for annulment of the transaction and seeks to
recover its value, he will prevail in view of the breach of warranty against eviction.
The value of the land must be returned, even if said value be greater or less than the
price of the sale.

Q, P authorized A to contract for the construction of his house for a price of not
more than P100,000.00. Without the knowledge of A, P contracted with B for
the construction of the house for P95,000.00. Later, A enetered into a contract
with C for the construction of the same house for P90,000.00 What contract
should prevail?

Ans. Under Article 1916, the contract with B shall prevail as it is of prior date.
Q. P gave to A a special power of attorney to sell a certain parcel of land. A sold
the land to B who did not register the sale. Later, P sold the same land to C
who in good faith, registered the sale. To whom should ownership belongs?

Ans. The ownership belongs to C. If the sale to B was first recorded, his title would
prevail. (see Sta. Romana vs. Imperio, 15 SCRA 625 [1965].)

Q Pedro gave to Andres a special power of attorney to sell a certain parcel of

land. Andres sold the land to Jose who did not register the sale. Later, Pedro
sold the same to Juan who in good faith but did not also register the sale. To
whom should ownership belongs?

Ans. If neither sale was registered and Juan took possession of the land in good faith,
the ownership shall belong to him.

Q. Maria gave to Anna a special power of attorney to sell her land located at
Antipolo City. Anna sold the land to Fatima but Fatima did not register it.
Later, Maria sold the same land to Candida who failed to register the sale also.
Between Fatima and Candida, to whom should the ownership of the land
belong?

Ans. In the absence of registration and possession by Fatima and Candida, the
ownership shall pertain to Fatima, his title being older than that of Candida.

Article 1916

Q. What is the liability to third person of an agent or principal who contracts

separately?

Ans. Whether the principal or the agent will be the one liable for damages to the third
person who has been prejudiced under Article 1916 depends on whether the agent
acted in bad faith or not. If the agent acted in good faith and within the scope of his
authority, the principal incurs liability. If the agent acted in bad faith, he alone shall
be responsible to such a third person

Article 1916 governs the rights of third persons as between themselves.

Q. P engaged the services of A to contract for the construction of his house.

Without the knowledge of A, P contracted with B for the construction of the
house. Later, A entered into a contract with C for the construction of the same
house. If the contract with B shall b preferred as it is of prior date, who then
should be liable to C?
Ans. If A acted in good faith, P shall be liable in damages to C whose contract must be
rejected; if A acted in bad faith, he alone shall be responsible to C.

Article 1917

Q. What are the Rules on Double Sale by Principal and Agent?

Ans.

1. When two persons contract with regard to the same thing, one of them with the
agent and the other with the principal, an contracts are incompatible with each
other, that of prior date shall be preferred, without prejudice to Art. 1544 (double
sale) (Art. 1916)

2. If the agent has acted in good faith, the principal shall be liable in damages to the
third person whose contract must be rejected. If the agent is in bad faith, he
alone shall be responsible (Art. 1917).

Article 1918

Q. X is the principal of Y, the agent. Under what circumstances is X not liable for
the expenses of Y?

Ans. The principal is not liable for the expenses incurred by the agent in the following
cases:

(1) 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;;

(2) When the expenses were due to the fault of the agent;

(3) When the agent incurred them with the 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 would be allowed only a certain sum. (Art. 1918, NCC).

Q. Number 1 of Art. 1918 provides that “if the agent acted in contravention of the
principal’s instruction, unless the latter should wish to avail himself of the
benefits derived from the contract” the principal is not liable for the expenses
incurred by the agent. What is the reason behind it?

Ans. The reason under No. 1 of Article 1918 is evidently to punish the agent; The
reason for for the exception Is that the acceptance of benefits is implied ratification.
Q. What is the reason behind Number 3 of Art. 1918 which provides that “when
the agent incurred them with knowledge than an unfavorable result would
ensue, if the principal was not aware thereof” the principal is not liable for the
expenses incurred by the agent?

Ans. The reason under No. 3 is that the agent is guilty of bad faith and lack of diligence
(Art. 1888).

Q. Number 4 of Art. 1918 provides that “when it was stipulated that the expenses
would be borne by the agent, or that the latter would be allowed only a certain
sum” the principal is not liable for the expenses incurred by the agent. What
is the reason behind it?

Ans. Under Number 4 of Article 1918, an express stipulation which is not contrary to
law, morals, good customs, public order, or public policy is binding between the
parties. (see Art. 1306.)

Article 1919

Q. What are the causes for the extinguishment of a contract of agency?

Ans. Agency is extinguished:

(1) By its revocation;

(2) By the withdrawal of the agent;

(3) By the death, civil interdiction, insanity or insolvency of the principal or of the
agent;

(4) By the dissolution of the firm or corporation which entrusted or accepted the
agency;

(5) By the accomplishment of the object or purpose of the agency;

(6) By the expiration of the period for which the agency was constituted. (Art. 1919,
NCC)

Q. Cite instances when an agency may be extinguished.

Ans. Agency is extinguished by:

a. expiration of the period for which the agency was constituted;

b. dissolution of the firm or corporation which entrusted or accepted the agency;

 c. withdrawal of the agent;

d. accomplishment of the object or purpose of the agency;

e. revocation;

f. death, civil interdiction, insanity or insolvency of the principal or of agent. (Art.

1919, NCC).

Q. Will the death of an agent end an agency?

Ans. Yes. The death of an agent extinguishes the agency, by express provision of par.
3, Art. 1919 of the New Civil Code.

Q. Are the modes of extinguishment of an agency provided in Article 1919

exclusive?

Ans. No. Article 1919 gives only those causes of extinction which are peculiar to
agency. (see 11 Manresa 570-571.). The list is not exclusive. Thus, Genereally, an
agency may also be extinguished by the modes of extinguishment of obligations in
general when applicable, like loss of the thing and novation (Art. 1231), upon
outbreak of war. , if a change in the law makes the purpose of the agency unlawful,
and also, a sub-agent’s authority terminates with the termination of the principal’s
authority.

Q. If an agent sells the land of his principal after the latter’s death, is the sale still
valid?

Ans. Yes. The sale will still be valid., if the agent did NOT know at the time of the sale
that the principal was already dead (Natividad Herrera, et al. v. Luy Kim Guan, et al.
L-17043, Jan 31, 1961)

Q. Dayao authorized in 1930 his agent Bayuga to sell a particular parcel of land.
This authority to sell was annotated on the original certificate of title of the
registered land. Dayao died in 1934, and in 1939, his children sold the land to
Buason. This sale was never registered. In 1944, Bayuga, who did not know
of the death of Dayao, sold the same land to Panuyas,a n innocent purchaser
for value. This 1944 sale was duly registered. Buason now seeks to cancel
the sale to Panuyas. Between Bauson and Bayuga, who has the better right
over the land?

Ans. The sale will not be cancelled as Panuyas has a better right to the land. In case
of double sale of land, he who has first recorded the sale in good faith has a better
right. While it is true that the death of Dayao in 1934 terminated the agent’s
authority to sell the land, still under Art. 1738 of the old Civil Code, “anything done by
 the agent, without knowledge of the death of the principal or any other cause which
extinguishes the agency, is valid and shall be fully effective with respect to third
person who may have contracted with him in good faith (Manuel Buason, et al. vs.
Mariano Panuyas, 105 Phil. 795)

Q. P authorized A to support the former’s grandson. P subsequently died. Is A

still required to give support?

Ans. No, for two reasons. P’s death terminated A’s authority. Also, P’s obligation to
give support, being a personal one, was extinguished on his death. (Hermosa v
Longara, L-5267, Oct. 27, 1953)

Article 1920

Q. How may a contract of agency be revoked?

Ans. A contract of agency may be revoked either expressly or impliedly (Art. 1920).

Q. What is the reason behind Article 1920 that “the principal may revoke the
agency at will”?

Ans. Agency is generally revocable at the will of the principal because the trust and
confidence may have been lost. (See Barretto v. Santa Marina, 26 Phil. 440).

Q. When is revocation at will proper?

Ans. Revocation at will is proper:

1) even if the agency is onerous;

2) even if the period fixed has not yet expired. (See Barretto v. Santa Marina, 26
Phil. 440).

Q. Give instances when the agency cannot be revoked at the principal’s will?

Ans. The agency cannot be revoked at the will in the following instances:

a) When it is “coupled with an interest”

b) In the case mentioned under Art. 1927

1) when a bilateral contract depends on the agency;

2) when the agency is the means of fulfilling an obligation already contracted;

 3) in the case of a partner appointed manager in the contract of partnership and
his removal from the management is unjustifiable

c) When there has been a WAIVER by the principal

d) When the principal is obliged not to revoke

e) When the revocation is done in bad faith

Q. When revocation is proper, can the agent recover damages?

Ans. Under the general rule, when revocation is proper, the agent cannot get
damages because the principal is merely exercising a right.

Article 1921

Q. What is the distinction between Article 1921 and 1922?

A. In Article 1922, as distinguished from art. 1921, the third persons have not been
SPECIFIED.

Article 1922

Q. Q was granted general powers by Y. Suppose Y revoked the authority, but A

and B dealt with X without knowledge of such revocation. Will the contracts
bind Y? Why?

Ans. Yes. If the agent had general powers, revocation of the agency does not
prejudice third persons whoa cted in good faith and without knowledge of the
revocation. Notice of the revocation in a newspaper of general circulation is a
sufficient warning to third persons. (Art. 1922, NCC).

Q. It is not disputed that P (surety company) has not caused to be published any
notice of revocation of A’s authority to issue surety bonds on its behalf,
notwithstanding the fact that the powers of A, as its branch manager in Iloilo
City, were of a general nature, for she had exclusive authority, in said place, to
represent P, not with a particular person, but with the public in general, “in all
negotiations, transactions, and business wherein the company may lawfully
transact or engage in subject only to the restrictions specified in their
agreement.” When the surety bond in question was executd in favor of T, P
had already withdrawn the authority of A to issue, inter alia, surety bonds.

It appeared that some surety bonds issued by A in favor of T after her

authority had allegedly been curtailed, on March 15, 1952, were honored by P
despite the fact that these were not reported to P’s main office at the time of
their issuance.
 Is Article 1922 applicable?

Ans. Yes. The opening of P’s branch office amounted to a publication of the grant of
powers to A, as manager of said office. Furtehrmore, by honoring several surety
bonds issued in its behalf subsequently to March 15, 1952, P induced the public to
believe that A had authority to issue such bonds. As a consequence, P is now
stopped from pleading, particularly against a regular customer thereof, like T, the
absence of said authority. (Central Surety & Insurance Co. vs. C.N. Hodges, 38
SCRA 159 [1971].)

Q. P authorized A to sell the former’s land. Subsequently, P also gave authority

to B to sell the same land. Is there an implied revocation of the previous
agency?

Ans. There is no implied revocation of the previous agency. The intention of P may be
to authorize both A and B for the same transaction. If B was given an exclusive
authority to sell, there is an implied revocation of the previous agency. In either
case, the knowledge by A (or B) of the sale or contract for sale of the land by B (or
A), terminates the authority of A (or B).

Article 1923, 1924 and 1925

Q. How is Implied revocation be effected?

A. Implied revocation may be effected –

(1)By the act of the principal in appointing another agent for the same business or
transaction (Art. 1923, NCC); or

(2) By the act of the principal in directly managing the business entrusted to the
agent (Art. 1924, NCC); or

(3) By the act of the principal in subsequently granting a special power of attorney
as regards the same business to another agent, where he had previously granted
a general power of attorney to one agent (Art. 1926, NCC)

Q. Give examples of an implied revocation of an agency.

Ans.

1. When the principal appoints a new agent for the same business or transaction
(Art. 1923)

2. When the principal directly manages the business entrusted to the agent (Art.
1924)
 3. When the principal after granting a general power of attorney to an agent, grants
a special one to another agent, there is implied revocation of the former as
regards the special matter involved in the latter. (Art. 1926)

4. The agent’s authority may also be revoked impliedly in the same manner as in
the case of appointment of an agent (Art. 1869.)

Article 1923

Q. What is the effect of an appointment of a new agent?

Ans.

a) Appointment of a new agent revokes the first agency only in case of

incompatibility . (See Dy Buncio and Co. v. Ong Guan Can, 60 Phil. 696).

b) A special power revokes a general one (Artcile 1926);

c) If the first agent is not notified of the appointment of the second agent, it is
undertood that the firt agency still exists. (Garcia v. De Manzano, 39 Phil. 577).

Article 1924

Q. P authorized A to manage the former’s printing press. Every now and then, P
takes direct part in the management of the business. Is there a revocation of
the agency in this case?

Ans. No. There is no implied revocation where the only purpose of P is to help A in the
management of the business.

Q. P authorized A to collect whatever amounts may be due P from T.

Subsequently, P demanded payment from T, telling the latter to remit to him
(P) the amount the collection of which he entrusted to A. Is there a revocation
of agency in this case?

Ans. Yes. The agency to A is revoked. (New Manila Lumber Co., Inc. vs. Republic,
107 Phil. 824 [1960].) Unless the only desire of the principal is for him and the agent
to manage the business together, the effect of the direct management of the
principal himself is to revoke the agency for there would no longer be any basis for
the representation previously conferred. (11 Manresa 574)

Q. P appointed A as its agent for the sale of P’s logs to Japanese firms. During
the existence of the contract of agency, P sold its logs directly to several
Japanese firms. Is there a revocation of agency in this case?
Ans. Yes. This act of P constituted an implied revocation of the contract of agency
with A. (CMS Logging, Inc. vs. court of Appeals, 211 SCRA 374 [1992].) Under Art.
1924, “the agency is revoked if the principal directly manages the business entrusted
to the agent, dealing directly with third persons.”

Article 1925

Q. X and Y appointed Z as their agent to sell their property. Can X alone revoke
the special power of attorney? Why?

Ans. Yes, because when two or more principals have granted a power of attorney for a
common transaction, any one of them may revoke the same without the consent of
the others. (Art. 1925, NCC). The power to revoke is a consequence of the solidary
liability of the co-principals.