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WWW 11.28.2018

Q: Obligations of the Principal

1) To comply with the obligations contracted by agent within the scope of his authority.

2) To advance necessary funds for execution of agency advanced to the agent.

3) To reimburse agent for advances made by him.

4) To indemnify agent for damages he suffered in execution of agency without fault or negligence on his part.

5) Compensation of agent paid.

GR: Principal not bound if agent exceeded authority.


Ratification by Principal

Estoppel by Principal

Authority by Necessity

Act is beneficial to the principal

Principal signed in blank the document

Ratification – the principal accedes to the act of the agent that was unauthorized. In effect, the act of the agent is the act of the
principal. It cures the defect.

Elements of Ratification:

1) Capacity and power to ratify

2) Knowledge of material facts
3) Ratify in its entirety
4) Acts capable of ratification
5) Must be done in behalf of principal

Illustration 1:

Principal gave the Agent jewelries to show the buyer. What kind of agent Is he?

Commission agent because he has in him the possession of the jewelries.

On his way, he hit a pedestrian. Who will be liable for the medical expenses?

In torts, the principal is civilly liable while the agent is civilly liable and criminally liable.

In our case, the pedestrian may claim from the principal and agent.

When he arrived at the house of the buyer, it was too dark, he couldn’t see the buyer. “Kung ipasiga nimo ang suga, mu palit
ko.” So, he fiddled with the wires and got electrocuted. Who will now bear the expenses?

Agent alone. Motivation-Deviation Test.

Motivation – the agent’s desire to do acts is for principal

Deviation – there must be no extreme deviation from the normal conduct of an employee.

The agent failed the deviation test. Fiddling with wires = extreme deviation because THERE WAS DEVIATION FROM NORMAL

But, if the agent was an electrician, principal is liable since there would be no deviation in this case. “Ipasiga ra? Nadisgrasya


Agent and Principal solidarily liable for torts provided it passes the motivation-deviation test.

Illustration 2:

If the principal authorized the agent to sell his property for P1M. But agent sold it for only 900k. Is principal obliged?

No. Agent acted in excess of his authority.

But if principal nevertheless accepts the 900k?


However, when he accepted the 900k, he told the seller I’ll deliver only ½.

Invalid. Must be ratified in its entirety.

Illustration 3:

Agent authorized to sell for P1M. Sold it again for 900k. Buyer called the principal “boss, 900k ha? I deliver dayun.” Principal
says “Ill deliver in 30 days”. Is he obliged to deliver?

Yes. Estoppel.

Ratification vs. Estoppel

Ratification is retroactive. Estoppel is proactive.

Ratification, the substance is the confirmation to the unauthorized acts. Estoppel, the substance is the inducement of 3

Ratification rests on intent. Estoppel rests on prejudice.

Ratification, there is intention. Estoppel, intent doesn’t matter.

In estoppel what happens? What is estoppel?

Bar that precludes from asserting or denying an established fact.