1. A, agent, makes a contract on behalf of P without knowledge that P was a minor.

P
thereafter disaffirmed the contract. Is A liable to the other party to the contract?
= No. An agent warrants that he is acting within the scope of
his authority, but being a mere mouthpiece of his principal, he
does not warrant the full contractual capacity of his principal

2. The written power of attorney says ‘sells the car for such price as terms as of may be
reasonable”, but the Principal and Agent has a secret understanding not to slel the car
fro less than 500k. If Agent sells the car to third person for 400k, did agent exceed the
scope of his authority?
→ No. because the instruction of the principal was a secret or private order, as far as the
third person is concerned, the agent’s act is deemed to have been performed within the
scope of authority since it is within the terms of the SPA as it is written. As such, the
principal will now be bound to the contract with the third person.

3. The Agent presents the written power of attorney which states that “ the agent must sell
the car for no lower than 500k.”. Third person has notice of the limits of the power
granted to the agent. If the car is sold to the third person for 400k, which is an act done
without or in excess of the authority granted to the agent. What is the effect?
(1) If the principal ratifies, the agent is not liable to the third person. It is valid and
binding on the principal.
(2) If the agent did not undertake to get the ratification of the principal and the
principal did not ratify, under the law, the contract is void but most appropriately it
is unenforceable.
(3) If the agent undertook to get the ratification but the principal did not ratify, the
agent now is personally liable to the third person.

P authorized A to especially transact the purchase of a parcel of land belonging to B who was
given a notice of the authorization given to A. Pending negotiations, P revoked the authority of A
but P did not give notice of the revocation to B.

→ If the purchase is pushed through, P is still liable for the price assuming B acted in good faith
and without knowledge of the revocation.

P appoints A as manager of P’s business. The authority of A to manage P’s business includes
the authority to enter into reasonable contracts of employment of such personnel as are usual
and necessary in the conduct of the business.
→ If subsequently, P grants special power to B to hire personnel for his business, then as
regards this matter of hiring employees, the general power granted to A is revoked. As to
matters not covered by the special power, the general power remains valid.
Article 1881-1900 [Synchronous]
1. Jisoo asked Jennie to be her agent to sell her (Jisoo’s) car to which Jennie accepted.
Upon the car’s delivery to her, Jennie noticed that it could fetch a higher price if cleaned
first at the car wash. Jennie then brought the car to the car wash for a complete
clean-up. Did Jennie exceed the limits of the authority?
➔ No, because according to article 1881, the agent may do such acts as may be
conducive to the accomplishment of the purpose of the agency. In this particular
situation, the purpose of the agency is to sell the car. Of course, as a seller, Jisoo
would want to sell it at a higher price. Since Jennie’s action of bringing the car to
the carwash guarantees a higher profit, which is more beneficial to the principal,
her action is just considered to be conducive to the accomplishment of the
agency’s purpose.

2. Jisoo asked Jennie to be her agent to sell her (Jisoo’s) car to which Jennie accepted.
Jennie then sold the car to Lisa in her own name, Jennie acting as if she is the owner
thereof. Is Jisoo, who is the real owner of the car, affected and bound in the contract of
sale?
➔ Yes, Jisoo is still bound to the contract because although Jennie acted on the
principal’s behalf, within the scope of her authority, and in her own name, Jisoo
will still be bounded to the contract because the transaction involves the thing
owned by the principal.

3. Lisa asked Rose to be her (Lisa’s) agent for the sale of her pink pair of shoes. Rose was
not sure whether she would like to accept the agency so she did not tell Lisa one way or
another. The next day, the pair of shoes were delivered to Rose’s residence. Does Rose
has an obligation over the same if she decides not to be Lisa’s agent after all?
➔ Yes, because according to article 1885, in case a person declines an agency, she
is still bound to observe proper diligence that of a good father of a family until
such time that the principal can appoint another agent or the principal will take
charge of the goods.

Article 1891-1900 [Synchronous]

1. Sheriff Callie asked her good friend Priscilla to sell her pink lasso for and on her behalf,
to which Priscilla accepted. The 2 girls stipulated that P1,000 is a fair price for the lasso.
Eventually, Priscilla sold the lasso to Ella for P1,500.

● How much should Prscilla turn over to Sheriff Callie?

 → P1,500 because the agent must return whatever he may have received from
(full account of her transactions).

● Suppose there is a stipulation exempting Priscilla from such obligation, would

your answer stay the same?
→ Yes, because any stipulation exempting Priscilla from rendering the full
account, is void since it encourages future fraud.

2. Sheriff Callie asked her good friend Priscilla to sell her pink lassos for and on her behalf,
to which Priscilla accepted. The 2 girls stipulated that P1,000 is a fair price for the
lassos. Eventually, Priscilla appointed Peck to be her substitute.

● Is the appointment of Peck valid?

→ Yes, because the principal did not prohibit such substitution. According to
article 1892, the agency may appoint a substitute as long as the principal has not
prohibited him from doing so.

● Is Priscilla responsible for the actions of Peck as regards the agency?

→ Yes, since she was not specifically given the power to appoint a substitute.
(not given prohibition, not given authorization/powers)

3. Sheriff Callie appointed Priscilla and Ella to be her agents for the sale of her pink lasso.
The girls stipulated that the reasonable price for such Lasso is P1,000.

● How would you describe the nature of the liability or the obligation (s) of Priscilla
and Ella as the agents of Sheriff Callie?
→ their obligation is only a joint obligation since solidarity has not been
stipulated.

● As between a joint obligation and a solidary one, why should it be necessarily a

joint obligation in the absence of a stipulation to the contrary?
→ Since a joint obligation is less onerous to the agents.

4. Deputy Sheriff Peck appointed priscilla and Ella to be his agents for the sale of his
leather hat. The friends stipulated that the reasonable price for such hat is P1,500 and
the liability of the agents is solidary. Peck also further stipulated that the hat should not
be used by the agents for their own personal purposes and in no case should it be
brought outside of their city.
 ● Priscilla, while bringing the hat to show to a prospective buyer, accidentally
poured soda on it, causing the leather to shrink and the hat to depreciate in
value. Can Peck demand payment from Ella for damages incurred thereon? How
much? → Yes, since the obligation of the agents is solidary in nature. The
amount that Peck can collect from Ella is to the extent of P1,500.

● Priscilla, while bringing the hat to show to a prospective buyer who lives on the
neighboring town, used it to cover her head as a protection from the UV rays of
the sun. Upon arrival, a strong gust of wind suddenly blew the hat away. After
much effort, both Priscilla and Ella could no longer find the hat. Who should be
liable to pay for the value thereof?
→ Only Priscilla, since she acted beyond the limits of her authority.

5. Peck asked his best friend Tobi to be his agent to borrow money in the sum of P5,000
from Callie. On May 1, Callie loaned money to peck and gave the amount to Tobi as his
agent. The parties stipulated that the principal is payable one month thereafter together
with the interest of P150 which corresponds to the daily interest of P5.

● From whom can Callie collect the sum of P5,150 when such becomes due?
→ From Peck since he is the Principal.
Peck is the one who borrowed the money and is ultimately responsible for
repayment as per the principal-agent relationship between Peck and Tobi.

● Tobi became busy and forgot to withdraw money from the ATM. He then used the
P5,000 to pay for sum bills and only gave to Peck the same amount 5 days later.
Is Tobi liable to peck? For what and for how much? Why?
→ The total amount of Tobi's liability to Peck would be the sum of the actual
damages (P25) which is the amount of the interest for 5 days. This is because he
applied the money to his own use.

P5 daily interest x 5 days= P25

P5,150 + P25= P5,175

6.
 ● As regards its validity, what is the status of the sale between Peck and Ella?
→ First: Void, since Tobi acted beyond the scope of his authority and Ella (buyer) knew
that Tobi acted beyond the scope of his authority (Art.1898).
→ Second: Valid but Unenforceable, since Tobi acted in excess of or beyond the limits of
his power or authority. (Art. 1317 and 1403).

● Supposed Peck later on knew of the sale and eventually consented to its ratification,
what can be said of the status of the sale?
→ First: the sale shall become valid since ratification cleanses the contract of all its
defects.
→ Second: the sale remains to be void since a void contract cannot be ratified as there
is nothing to ratify in the first place.

7. Peck is in need of P100,000 and asked his friend Tobi to be his agent to mortgage his
(Peck’s car). The special power of attorney indicated that the authority given to Tobi is for
the alienation and disposal of the thing. Since Tobi knew that Peck needed money he
acted upon his own initiative and offered the car for sale to Ella, who is willing to pay
P150,000 for it. Ella checked the SPA and saw the scope of tobi’s authority. Tobi and Ella
then entered into a contract of sale.

● As to Ella, what can be said of the status of the contract of sale?

→

● As to Peck, what can be said of the status of the contract of sale?

→

Article 1897
 ● A was given a written power of attorney by P to sell the latter’s car for P150,000.00. He
sold it to B for P130,000.00.
→ The sale is unenforceable against P but A becomes personally liable to B.
However, if B was shown the power of attorney by A, neither P nor A will be
liable.

● If B, in the preceding example, knew that A was not authorized to sell P’s car for
P130,000.00,
→ the sale is void even as between A and B. However, if B bought the car on the
assurance of A that he would obtain the consent of P, A would be liable in case of failure
to obtain such ratification.
→ If P’s consent is subsequently given, then there is ratification and the sale will be
binding on P.

Article 1900:
● P gave A a written power of attorney wherein A is authorized to sell P’s factory for such
price and upon such terms and conditions as A may deem reasonable. However, P and
A had an understanding to the effect that A should sell the factory for not less than P5
million and for cash. A sold the factory to B on credit for P4,500,000.00.
→ Under Article 1900, P is bound. As far as B is concerned, A acted within the scope of
his authority. Here, A has the power to make the sale binding on P even though as
between them, A has no authority to make such sale.

Article 1927:

(1) P sold to B a factory for P1,000,000.00. B paid only P800,000.00. It was stipulated that
the ownership in the factory would be transferred to B only after the payment of the
balance of P200,000.00 to be made within six (6) months. It was further agreed that P
would appoint A to manage the factory and that any profits would be used to pay off the
balance of the purchase price.
→ Here, P cannot revoke the agency at will for a bilateral contract depends upon
it.

(2) P borrowed from B P50,000.00. As security for the debt, P gives A a power of attorney to
collect rents due from tenants of P and authorizes A to apply the same to the debt of
P50,000.00.
→ In this case, P cannot revoke the agency, without any justifiable cause, for it is
a means of fulfilling his obligation to B.

(3) A, B, and C are partners in business. By common agreement, A was appointed a

manager in the articles of partnership (written document embodying the contract of
partnership).
 → The appointment of A is revocable only upon just and lawful cause and upon the vote
of the partners representing the controlling interest. (Art. 1800.) The reason is that the
appointment is in effect one of the conditions of the contract and it is only logical that
such appointment should not be revoked without the consent of all the partners,
including A.

(4) P owes B P10,000.00. At the request of P, A consented to be P’s surety but only after P
delivered to A a certificate of stock as security with a power to transfer it in case A
becomes liable to B.
→ It is clear that P cannot revoke the agency unless he fi rst pays B.
(5) P borrows from A P10,000.00. P pledges or mortgages his property to A as security for
the debt and gives A the power to dispose of it should P default.
→ There is also an agency coupled with an interest which is irrevocable.
(6) P appoints A as his agent to sell specific goods on commission and with power to retain
such commission out of the proceeds of the sale.
→ The power given to A is not given as security nor is it coupled with interest because
his interest is merely in the commission which will arise from the exercise of the power.
Hence, P can revoke the agency at will.

Article 1930
(1) A renders services to P who authorizes A to sell the latter’s land for not less than a
certain price and pay himself out of the proceeds. Before the land is sold, P dies.
→ It is clear that the agency to sell is one coupled with an interest and is not
extinguished by the death of P.

(2) P authorized A to sell the former’s land. Subsequently, P died. Without the knowledge of
P’s death, A sold the land to T. Can the heirs of P recover the land from T?
→ No, if both A and T acted in good faith.
→ Yes, if either A or T acted in bad faith.

Pledge
(1) D pledged his wristwatch in favor of c to secure his obligation amounting to P15,000.
The wristwatch was delivered to C to perfect the pledge so that if D wants to sell the
wristwatch, it should be with the consent of C. What if D sold the wriswatch to X with the
consent of C?
→ the sale is valid because there is the consent given by the pledgee (the creditor). But,
the ownership of the wristwatch is transferred to X, but C shall still continue in
possession until the debt has paid.
 Article 2098: “the contract of pledge gives a right to the creditor to retain the thing
in his possession or in that of a third person to whom it has been delivered, until
the debt is paid’
(2) D pledged his with C his only laptop as a security for the loan he obtained from the altter
in the amount of P60,000. Their agreement is that the pledge is for a period of 1 month.
After 2 weeks and upon the request of D, C returned the laptop with the agreement that
the pledge will not be extinguished.
→ the stipulation is void. Thus, pledge is still considered to be extinguished.
→ if after 3 weeks, the laptop is seen to be on the hands of D (pledgor), then it is
presumed that the pledged thing has been returned and thus, the pledge is extinguished,
but this doesn’t mean that the principal obligation has been extinguished as well since it
can onlny be extinguished if the debt has been paid. Hence, only the pledge is
extinguished, and not the principal obligation, of this particular case.

(3) D owes C P10,000.00. The debt is secured by a pledge of D's shares of stock which is
evidenced by a stock certificate delivered by D to C at the time D received the proceeds.
→ If D defaults and C sells the shares of stock at P9,500.00, D's debt is extinguished. C
cannot recover the deficiency of P500
→ If the shares of stock are sold at P11,000.00, D's debt is likewise extinguished. The
excess of P1,000 belongs to C (pledgee) unless the parties had an agreement that any
excess shall be turned over to D (pledgor/owner).

MORTGAGE
(1) D obtained a loan from C amounting to P100,000.00. To secure the debt, D constituted a
mortgage on his lot which C registered with the Register of Deeds. Before the due date
of the loan, D sold the lot to X who knew nothing of the mortgage.
→ If D later defaults in the payment of his loan, C can foreclose the mortgage although X
was not a party thereto and even if he was not aware of the existence of the mortgage at
the time he purchased the lot.

(2) D mortgaged his only parcel of land with C to secure his loan. Subsequently, D sold said
parcel of land to X. On the maturity date, C will demand payment from D so that if D
cannot pay,
→ the remedy of C is to foreclose the mortgage. In the alternative, C may claim from X
the payment of the credit secured by the property.