Obligations of the Principal

Article 1910 - 1914

Shellah Marie SL. Carpio
BSA III-1

Article 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

Specific Obligations of the Principal

To comply with all the obligations which the agent may have
contracted within the scope of his authority(1910, 1881.) and
in the name of the principal (Art. 1868, 1883.);
To advance to the agent, should the latter so request, the
sums necessary for the execution of the agency (Art. 1920.);
To reimburse the agent for all advances made by him provided
the agent is free from fault;
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
To pay the agent the compensation agreed upon, or if no
compensation has been specified, the reasonable value of the
agents service

Ratification of the Principal

The agent who exceeds his authority is not
deemed a representative of the principal.
Hence, the principal is not bound unless he
ratifies the act expressly or impliedly.
Without ratification, the agent is the one
personally liable (Art. 1897.)

Article 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.

Agency by Estoppel
Estoppel: is a bar which precludes the person from denying or
asserting contrary to that which has been established as the
truth by his own deed or representation either express or
implied.
An admission or representation is thus rendered conclusive
upon the person
The third person may demand from either the principal or the
agent or both, the payment of damages suffered by him (Art.
1915.)
The agent should be exempt from liability if he acted in good
faith.

Apparent
Authority
Not actually granted
The principal
knowingly permits
the agent to exercise
or holds him out as
possessing

Authority by Estoppel
The principal, by his
negligence, permits
the agent to exercise
powers not granted
to him.
Even though the
principal may have
no notice or
knowledge of the
agents conduct.

Implied Agency

There is an actual
agency
The principal, alone
is liable

Agency by Estoppel
The authority of the
agent is not real,
only apparent
Estoppel caused by
the Principal, he is
the only one liable
Estoppel caused by
Agent, only he is
liable

Article 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

Obligation to Advance Funds

The agent is bound by his acceptance to carry out
the agency.
The principal is under the obligation to provide the
means with which to execute the agency.
In the absence of stipulation that the agents shall
advance the necessary funds, the principal must
advance to the agent upon his request the sums
necessary for the execution of the agency.
If the principal fails to make the request, the agent is
not liable for the damages, only the principal will
suffer.

Obligation to reimburse the agent for advances

In case the agent advances the sums necessary for
the execution of the agency, whether by his intent or
by stipulation, the principal must be reimbursed by
the principal including interest from the day the
advances was made.
The obligation to reimburse the agent cannot be
defeated by the fact that the business was not
successful, provided that the agent is free from fault.
The reason for this is the agent obligates him self to
represent the principal, he is not obligated that all
businesses entrusted to him should be successful

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.

Obligation to indemnify agent.

Since the principal receives the benefits of the
agency, he should answer for the damages resulting
from the execution.
Article 1913 also makes the agent liable to the
principal for damages which the latter may suffer
through the agents non-performance, fraud or
negligence.
In the absence of fault and negligence, the principal
should indemnify him.

Article 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.

Right of agent to retain object of agency in pledge

If the principal fails to reimburse or indemnify the agent as
required by Articles 1912 and 1913, the agent has the right to
retain in pledge the things which are object of the agency.
Unlike contractual pledges, the agent is not entitled to the
excess in case the things are sold to satisfy his claim and the
proceeds thereof are more than the amount due.