Sobre el nivel de protección adecuado para las transferencias de datos a terceros

VII. Be Solidarily or Personally Liable

a. The responsibility of two or more agents, even though they have been appointed simultaneously, is not solidary, if solidarity has not been expressly stipulated. [1894]

b. If solidarity has been agreed upon, each of the agents is responsible for the non-fulfillment of agency, and for the fault or negligence of his fellows agents, except in the latter case when the fellow agents acted beyond the scope of their authority. [1895]

c. The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. [1897]

d. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the

contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, Manila the agent is liable if he undertook to secure the principals ratification.

- Take note of Memorial v Linsangan: Third person chargeable with knowledge of agent’s authority if he does [1898] not inquire as to the limits of the agent’s power.

e .The following contracts are unenforceable, unless they are ratified: Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; [1403(1)]

- The rule in 1403 that a contract entered into by an agent beyond his authority is unenforceable does not apply where the contract is being enforced as to damages against the agent itself for doing what it did without authority. 1403 refers to the unenforceability of the contract against the principal.

It is being enforced against the agent because 1897 implies that the agent who acts in excess of authority is personally liable to the party with whom he contracted. And that rule is complemented by 1898 which provides that “if the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. [Napocor v Natl

Merchandising Corp]

f. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted;

neither have such persons against the principal.

In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own

except when the contract involves things belonging to the principal.

The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. [1883]

- the contract does not fall under this exception if the object of the contract is one of service; even if equipment owned by the principal were used. [Go v CA]

- In which case, the contract must be considered as entered into between the principal and the third person. [Sy-Juco and Viardo v Sy-Juco]

g. An agent who obligates his principal to deliver a specific property to a third party may not thereafter, to the prejudice of such third party, appropriate and apply the same property or its proceeds, to the payment of debts owing by the principal to the agent; and the circumstance that the principal assents to such application of the property does not alter the case. [National Bank v Welch]

h. An agent who [without authority] or without a principal is himself regarded as the principal, possessed of all the rights and subject to all the liabilities of a principal; a person acting to act on behalf of a corporation which has no valid existence assumes such privileges and obligations and becomes personally liable for such contracts into or for acts performed as such agent. [Vda. De Salvatierra v Garlitos]

VIII. Pay Interest— 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. [1898]

IX. Special Obligations of Commission Agents

a. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. [1903]

b. The commission agent who handles goods 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. [1904]

c. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit, which may result from such sale. [1905]

d. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. [1906]

e. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. [1907]

f. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. [1908]

Art. 1885. In case a person declines an agency, she is bound to observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner until the latter should appoint an agent. The owner shall as soon as practicable either appoint an agent or take charge of the goods.

Rule if a Person Declines the Agency - A person is of course free to refuse to be an agent; how- ever, equity demands the rule set forth in the first sentence of this Article.

Duty of Owner- Upon the other hand, the owner must also act as soon as possible:

(a) by appointing an agent, or (b) by taking charge of the goods.

Art. 1886. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so except when the principal is insolvent.

Stipulation for Agent to Advance Necessary Funds Example:

Angel is Pedro’s agent. Both agreed that Angel would advance the necessary funds, but later Pedro became insolvent. Is Angel still bound to furnish such necessary funds? ANS.: No more, in view of the principal’s insolvency.

Art. 1887. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.

In default thereof, he shall do all that a good father of a family would do, as required by the nature of the business.

Agent’s Duty to Follow Instruction

(a) Instruction, as we have already seen, differ from authority.

(b) In commenting upon this article (Art. 1887) Dalloz, after laying down the admitted proposition that the acts of an agent beyond his limited powers are invalid, states three qualifications which would bind the principal:

1) where the principal’s acts have contributed to de- ceived a third person in good faith;

2) where the limitations upon the power created by the principal could not have been known by a third person; and 3) where the principal has placed in the hands of the agent instruments signed by him in blank.

Effect if Agent Follows Instruction - If an agent carrying out the orders of the principal carried out the instruction he has received from said principal,

he cannot be held responsible for the failure of his principal to accomplish the object of the agency unless the said agent exceeded his authority or has acted with negligence, deceit, or fraud.

Clarity of Instructions - It is the duty of the principal, if he desires an authority executed in a particular manner to make his terms so clear and unambiguous that they cannot reasonably be misconstrued. If he does this, it is the agent’s duty to the principal to execute the

authority strictly and faithfully; and third persons who know of the limitations, or who from the circumstances of the case ought to have known of them can claim no rights against the principal based upon their violation.

Different Interpretations Re Instructions - If on the other hand, the authority be couched in such uncertain terms as to be reasonably susceptible of two different meanings, and the agent in good faith and without negligence adopts one of them, the principal cannot be heard to assert, either as against the agent or against third persons who have, in like good faith and without negligence, relied upon the same construction, that he intended the authority to be executed in accordance with the other interpretation. If in such a case, the agent exercises his best judgment and an honest discretion, he fulfills his duty, and though a loss ensues, it cannot be cast upon the agent.

How Instructions Are to Be Construed - An instrument conferring authority is generally, it is said, to be construed by those having occasion to act in reference to it, as a “plain man acquainted with the object in view, and attending reasonably, to the language used, has in fact, construed it. He is not bound to take the opinion of an attorney concerning the meaning of a word not technical and apparently employed in a popular sense.

How Execution May Fail - The execution of the authority in a given case may fail, either:

(a) because the agent has negligently failed to fully exercise his authority;

(b) or because he has exceeded it.

Excessive Execution - If there has been a complete execution of the power and the excess can be distinguished and disregarded, the authorized portion may be given effect.

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

When Agency Should Not Be Carried Out

(a) The reason for the Article is because an agent should exercise due diligence.

(b) Furthermore, the agent must presumably act for the benefit, and not to the detriment of the principal.

(c) “Manifestly” means that the execution would damage ANY principal.

Art. 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of the principal he should prefer his own.

Rule if Agent Prefers His Own Interests - The Article applies whether the agency is onerous or gratuitous for here the law does not distinguish.

Art. 1890. If the 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.

Authority to Borrow or Lend Money - Examples:

a) Angel was authorized to borrow money. May Angel lend his own money to the principal?

ANS.: Yes, at the current rate of interest. Reason — Principal suffers no injury.

- Justice J.B.L. Reyes has questioned the wisdom of Art. 1890. He says: “It is preferable that the agent be not permitted to occupy inconsistent positions, and not allow him to be lender and borrower at the same time. The temptation to insert terms unfavorable to the principal is too great, and lending money involves other considerations besides rate of interest.

b) Angel has been authorized to lend money at interest. May Angel borrow the money for himself?

ANS.: No, unless the principal consents. Reason for the law: The agent may not be a good borrower or he may be insolvent or he may not be a good risk. There is danger here that the interests of the principal would be jeopardized.

Benefit of Principal - The borrowing of the money must be for the benefit of the principal, and not for the agent’s personal benefit.

Prohibition to Purchase - It should be noted that under Art. 1491, agents cannot acquire by purchase, even at public or judicial auction, either in person or thru the mediation of another, the property whose administration or sale may have been entrusted to them, un- less the consent of the principal has been given.

Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.

Every stipulation exempting the agent from the obligation to render an account shall be void.

Duty of Agent to account - An overprice received by the agent for goods he was to sell at a certain price.

(NOTE: The Article does not apply to case, of solutio indebiti for in such cases, recovery can be had by the payor against the agent himself.

Therefore, the agent meantime can keep what had been given to him by error.)

Stipulation Exempting Agent from Duty to Account

Reason for par. 2: - Against public policy because it would be conducive to fraud.

Duty to Deliver Funds - If nothing in the contract of agency provides otherwise, this Art. 1891 imposes on the agent the obligation to deliver to his principal all funds collected on his (the principal’s) account. As a matter of fact, lawyers are required to render a prompt accounting for money or property received by them on behalf of their clients. Failure to do this constitutes professional misconduct. While it is true that the lawyer may perhaps possess a lien on the money in his hands — money that had been collected on behalf of the clients — still this fact will not excuse him from the duty of accounting promptly for the funds received.

No Co-Ownership Over Funds Despite Right to Commission - Although the agent is entitled to receive a commission, this fact by itself would not make him a co-owner regarding the money that have been collected. Co-ownership is not established. The relationship of principal and agent subsists. If the agent subtracts from the money more than what he is entitled to obtain as his commission, it cannot be denied that he has committed estafa.

Agent Should Not Profit for His Own Account- Neither an agent nor a trustee is allowed to make a profit for his own benefit as long as the agency exists or the trust relations continue. To hold otherwise would be to coun- tenance an unlawful inducement. Thus, if an agent should conceal certain facts from his own principal, he should under no condition be permitted to profit thereby. A principal on the other hand is entitled to recover from the agent what may be due him (the principal) as a consequence of the agency.

Doctrines on the Duty to Account

(a) Whoever administers another’s affairs must render an account because of the representative relation and because of the fiduciary position.

(b) If an agent refuses to account when it is his duty to do so, the principal may at once terminate the agency and sue for the balance due. If the principal dies, the agency is extinguished, BUT the duty to account subsists, and can be demanded by the principal’s heirs or legal representatives

(c) The principal, or his legal representative, has the right to pass upon the correctness of the accounting.

(d) Corollary to his right to demand an accounting, a princi- pal has the right to make a reasonable inspection of the books of account and memoranda, including the original entries.

(e) An agent, as a consequence of his duty to account, can- not dispute his principal’s title to the property in his possession.

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

Appointment of Substitute for the Agent

(a) A is P’s agent. In their contract of agency, nothing was mentioned as to whether or not A could appoint a substi- tute. A appointed S as his substitute. Is the appointment of the substitute valid? ANS.: Yes, but A shall be responsible for the acts of the substitute. (1st par., Art. 1892).

(b) In problem (a), suppose the substitute violated the in- structions of P, whom can P hold liable? ANS.: P can hold A liable (Art.1892) and P can also hold S liable. (Art. 1893).

(c) A is P’s agent. A asked P for permission to appoint a substitute, but A did not mention who the substitute would be. P agreed. Now, the substitute violated P’s instructions as well as A’s instructions, causing damage to P. Can P hold A liable for the substitute’s actuations, in case for example, the substitute is insolvent?

ANS.: It depends. If the substitute appointed by A was at the time of appointment notoriously incompetent or insolvent, then P can hold A liable, subsidiarily or even primarily. If the substitute at the time of appointment was neither notoriously incompetent or insolvent, then P cannot hold A liable, either primarily or subsidiarily. (Art. 1892, No. 2).

(d) A is P’s agent. A was prohibited by P to appoint a sub- stitute. Nevertheless A appointed S as substitute. S sold goods belonging to P to B, who was a purchaser in good faith. Is the sale valid?

ANS.: The sale is completely null and void. The law says that all acts of the substitute appointed against the prohibition of the principal shall be void. (Last par., Art. 1892).

Soundness of the article - Is Art. 1892 sound?

ANS.: Yes, for while ordinarily the agent upon whom the principal has reposed confidence must do the act himself, still the principal need not fear prejudice for in some cases, he can still exact responsibility from his agent.

Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.

When the Principal Can Sue the Substitute

(a) Under the premises given in the Article the principal can sue both the agent and the substitute.

(b) This is one exception to Art. 1311 respecting the privity of contracts.

Art. 1311 (Who Are Bound By Contracts - Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obliga- tions arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir

Art. 1311 (Who Are Bound By Contracts - Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obliga- tions arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir

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