RPE: Continuidad de los conductores de protección

belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. (n)

Purpose: to prevent any possible confusion or deception; agent also has duty not to mingle his principal’s property with his own or to deal with such property in a way that would make it appear to be his own property

Exceptions:

1. by custom, some agents, such as auctioneers, normally are permitted to mingle their principal’s property with their own

2. some agents, such as collecting banks, are permitted to mingle the funds of their principal (depositor) with their own and the property of other principals

Art. 1905. 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. (n)

Rule: a commission agent can sell on credit only with the express or implied consent of the principal. If such sale is made without authority, the principal has two alternatives:

1. require payment in cash; any interest or benefit from the sale on credit shall belong to the agent

2. ratify the sale on credit; all the risks and advantages shall pertain to the principal Art. 1906. 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. (n)

An authorized sale on credit shall be deemed to have been on a cash basis insofar as the principal is concerned, upon failure of the agent to inform the principal of such sale on credit with a statement of the names of the buyers.

Purpose: to prevent agent from stating that the sale was on credit when in fact it was made for cash

Art. 1907. 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. (n)

Guarantee commission: also called del credere commission; one where, in consideration of an increased commission, the factor or commission agent guarantees to the principal the payment of debts arising through his agency

Purpose: to compensate the agent for the risks he will have to bear in the collection of credit due to the principal

Applies to both cash and credit sales

Liability of del credere agent: liable to the principal if the buyer fails to pay or is capable of paying. But he is not primarily the debtor. On the contrary, the principal may sue the buyer in his own name notwithstanding the del credere commission, so that the latter amounts to no more than a guaranty.

A del credere agent may sue in his name for the purchase price in the event of non-performance by the buyer.

Art. 1908. 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. (n)

Obligation of commission agent: The commission agent who has made an authorized sale on credit must collect the credits due the principal at the time they become due and demandable. If he fails to do so, he shall be liable for damages unless he can show that the credit could not be collected notwithstanding the exercise of due diligence on his part. In such a case, the principal’s remedy is to proceed against the debtor.

Art. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. (1726)

Liability of agent: both from fraud and negligence

Torts: as a general rule, principal is not responsible if the agent’s tort was intentional rather than merely negligent. The principal is solidarily liable if the tort was committed by the agent while performing his duties in furtherance of the principal’s business

CHAPTER 3

OBLIGATIONS OF THE PRINCIPAL

Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority.

As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly. (1727)

Specific obligations of the principal to the agent in the absence of such agreement:

1.) To comply with all the obligations which the agent may have contracted in his name and within the scope of his authority;

2.) To advance should the agent so request sums necessary for the execution of the agency;

3.) To reimburse the agent for all advances made by him provided the agent is free from fault;

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; and

5.) To pay the agent the compensation agreed upon or the reasonable value of the latter’s services.

General rule: Where the relation of agency legally exists, the principal will be liable to third persons for all acts committed by the agent in his behalf in the course and within the actual or apparent scope of his authority. This is not altered by the fact that the agent may also be liable, nor by the fact that some of the acts are to the principal’s advantage while others are to his disadvantage.

Liability of third persons to principal: 1. in contract

2. in tort

a. where the third person damages or injures property or interest of the principal in the possession of the agent

b. where the third person colludes with the agent to injure or defraud the principal

c. where the third person induces the agent to violate his contract with the principal to betray the trust reposed upon him by the principal

Liability of the principal for mismanagement of the business by the agent: Mismanagement of the business of the principal by the agent does not relieve said principal from the responsibility that he had contracted to thirdpersons. But where the agent’s acts bind the principal, the latter may seek recourse against the agent.

Liability of principal for a tort committed by the agent: The principal is civilly liable to third persons for torts of an agent committed at the principal’s direction or I the course and within the scope of the agent’s employment. The principal cannot escape liability whether the tort is committed willfully or negligently so long as the tort is committed by the agent while performing his duties in furtherance of the principal’s business. Nor is it a defense that the act which caused the tort was unknown to him or even that it was in disobedience to his instructions.

Ratification: the adoption or affirmance by a person of a prior act which did not bind him, but which was done or professed to be done on his account, thus giving effect to the act as if originally authorized.

Conditions to ratification: 1.) Intent to ratify

2.) Principal must have capacity & power to ratify 3.) He must have had knowledge of material facts 4.) The act must be done in behalf of the principal 5.) Principal must ratify acts in its entirety 6.) The act must be capable of ratification

• acts that may be ratified:

o valid acts; acts which are absolutely void cannot be authorized or ratified o voidable acts o unrevoked acts o criminal acts o tortious acts Effects of ratification:

• with respect to the agent:

1.) Relieves the agent from liability to the third party to the unauthorized transaction; and

2.) To his principal for acting without authority; and

3.) He may recover compensation due for performing the act which has been ratified. • with respect to the principal:

1.) He assumes responsibility for the unauthorized act, as fully as if the agent had acted under original authority; but

2.) He is not liable for acts outside the authority approved by his ratification. • with respect to third persons:

1.) thirdperson is bound by ratification to the same extent as he would have been bound if the ratified act had been authorized in the firstinstance; and

2.) He cannot raise the question of the agent’s authority to do the ratified act. Ratification has a retroactive effect: it is equivalent to initial approval or prior authority

Art. 1911. 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. (n)

Estoppel: a bar which precludes a person from denying or asserting anything contrary to that which has been established as the truth by his own deed or representation either express or implied

Ratification Estoppel

Rests on intention, express or implied, regardless of prejudice to another

Rests on prejudice rather than intention Retroactive, makes the agent’s unauthorized

acts good from the beginning Affects only the relevant parts of the transaction Substance is confirmation of the unauthorized

act or contract after it has been done or made

Substance is the principal’s inducement to another to act to his prejudice.

Apparent Authority Authority by Estoppel Though not exactly granted, the principal

knowingly permits the agent to exercise or holds him out as possessing authority

The principal through 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

Not founded in negligence of the principal but in the conscious permission of acts beyond the powers granted

Has its basis in the negligence of the principal 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 possesses the requisite authority. Art. 1912. The principal must advance to the agent, should the latter so request, the sums necessary for the execution of the agency.

Should the agent have advanced them, the principal must reimburse him therefor, even if the business or undertaking was not successful, provided the agent is free from all fault. The reimbursement shall include interest on the sums advanced, from the day on which the advance was made. (1728)

Obligation to advance funds: principal must advance the necessary funds to carry out the agency if it should be requested by the agent

Funds advanced by the agent: must be reimbursed by the principal, even if the undertaking was not successful, provided that the agent is free from fault

Art. 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. (1729)

Reason: equity; since principal receives the benefits of the agency had has a right to demand damages from the agent should the latter not perform the agency, he should answer for the damages resulting from the execution thereof without fault or negligence of latter

Liability only for damages caused by execution of agency: principal not liable for losses or damages caused by independent and unexpected wrongful acts of third persons for which the principal is in no way responsible, and in situations where the agent acts upon his own account and not as an agent

Art. 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the indemnity set forth in the two preceding articles. (1730)

Nature of agent’s right of lien:

• the lien is specific or particular in character

• agent must have some possession, custody, control or disposing power in and over the subject matter in which the lien is claimed; actual or constructive possesion

• in the absence of a ratification of a sub-agent’s acts by the principal, the right of lien exists only in favor of the agent, and cannot be claimed by one to whom the agent delegates his authority where no privity exists between sub-agent and principal

Art. 1915. 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. (1731)

Requisites:

1. there are two or more principals

2. the principals have all concurred to the appointment of the same agent 3. the agent is appointed for a common transaction or undertaking

However, if principals are members of a non-proft association, they are liable only under two circumstances:

1. where the member assented to the particular act or transaction in respect of which personal liability is sought to be fastened

2. where the member assented by his conduct

Art. 1916. 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. (n)

Contracts are compatible: both will be given effect.

Contracts incompatible: the contract of prior date shall be preferred Take note of Aricle 1544:

• If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first aken possession thereof in good faith if it should e movable property.

• Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith firstrecorded it in the Registry of Property.

• Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and in the absence thereof, to the person who presents the oldest title, provided there is good faith.

Art. 1917. In the case referred to in the preceding article, 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 acted in bad faith, he alone shall be responsible. (n)

Whether the principal or the agent will be the one liable for damages to the third person who has been prejudiced 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 person.

Art. 1918. 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 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. (n)

This article is pretty much self-explanatory.

CHAPTER 4

MODES OF EXTINGUISHMENT OF AGENCY

Art. 1919. 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;