SHOULD THE AGENT HAVE ADVANCED THEM, THE PRI NCI PAL MUST REI MBURSE HI M THEREFOR, EVEN I F THE BUSI NESS OR UNDERTAKI NG WAS NOT SUCCESSFUL, PROVI DED THE AGENT I S FREE FROM ALL FAULT.
THE REI MBURSEMENT SHALL I NCLUDE I NTEREST ON THE SUMS ADVANCED, FROM THE DAY ON WHI CH THE ADVANCE WAS MADE. ( 1 728)
Art 1912
An agency is for the principals benefit. In case the agent advanced the sums necessary for the execution of the agency, whether on his own initiative or by virtue of stipulation, the said advances must be reimbursed by the principal with interest from the day the advance was made. Obligation to reimburse agent for funds advanced by latter.
Obligation founded on implied promise to repay. The general rule is that, where one is employed or directed by another to do an act in his behalf, not manifestly wrong, the law implies a promise by the principal to reimburse the agent for expenditures incurred as a proximate consequence of the good faith execution of the agency, which includes interest thereon. -rule is based upon the principle that a request to undertake an agency, the proper execution of which involves the expenditure of money on the part of the agent, operates not only as an implied request on the part of the principal to incur such expenditure but also as a promise to repay it. Obligation not affected even if undertaking not successful. The law adds that the obligation to reimburse the agent cannot be defeated by the fact that the business or undertaking was not successful provided the agent is free from all fault.
-The reason for this rule is that the agent simply obligates himself to represent the principal and not that all the business entrusted to him shall be successful. THE PRI NCI PAL MUST ALSO I NDEMNI FY THE AGENT FOR ALL THE DAMAGES WHI CH THE EXECUTI ON OF THE AGENCY MAY HAVE CAUSED THE LATTER, WI THOUT FAULT OR NEGLI GENCE ON HI S PART. ( 1 729)
Art. 1913 Obligation to indemnify agent for damages. The rule in the above article is based on equity. Since the principal receives the benefits of the agency and has a right to demand damages from the agent should the latter not perform the agency (Art. 1884.), he should answer for the damages resulting from the execution thereof without fault or negligence on the part of the agent. (1) Where damages caused by the execution of agency. The agent has the right to assume that the principal will not call upon him to perform any duty which would render him liable in damages to third persons. Having no personal interest in the act other than the performance of his duty, the agent should not be required to suffer loss from the doing of an act apparently lawful in itself, and which he has undertaken to do by the direction and for the benefit and advantage of his principal. Where damages caused by wrongful acts of third persons. Be it noted, however, that the liability of the principal for damages is limited only to that which the execution of the agency has caused the agent. Thus, no promise to indemnify will be implied for losses or damages caused by the independent and unexpected wrongful acts of third persons for which the principal is in no way responsible. Example: A broker while going upon his principals business should be waylaid by a robber, or should be injured by the negligence of a motor vehicle driver, the principal would not be liable more than he would be if the agent, during the existence of the agency, should contract a contagious disease or be struck by lightning. (Mechem on Agency, Sec. 1604, cited in Teller, p. 155.)
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) Art. 1915 Requisites for solidary liability There are three requisites for the application of the above article:
1) There are two or more principals;
2) The principals have all concurred in the appointment of the same agent; and
3) The agent is appointed for a common transaction or undertaking. Where principals are members of a non- profit association A distinction has been made in respect of the liability of the principals of a profit association as compared to that of a non-profit or voluntary association. While the principals in the first are personally liable on all business contracts, the principals or members in the second are liable personally 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. Such assent is usually indicated by an affirmative vote at the meeting where the proposal is discussed. 2) Where the member assented by his conduct 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 IN- COMPATIBLE WITH EACH OTHER, THAT OF PRIOR DATE SHALL BE PREFERRED, WITHOUT PREJUDICE TO THE PROVISIONS OF ARTICLE 1544. (N) Art. 1916 Example P authorized A to contract for the construction of his house for a price of not more than P100,000.00. Without the knowledge of A, P contracted with B for the construction of the house for P95,000.00. Later, A entered into a contract with C for the construction of the same house for P90,000.00.
Under Article 1916, the contract with B shall be preferred as it is of prior date.
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)
Art. 1917 THE PRI NCI PAL I S NOT LI ABLE FOR THE EXPENS- ES I NCURRED BY THE AGENT I N THE FOLLOWI NG CASES:
( 1) I F THE AGENT ACTED I N CONTRAVENTI ON OF THE PRINCI - PAL S I NSTRUCTI ONS, UNLESS THE LATTER SHOULD WI SH TO AVAI L HIMSELF OF THE BENEFI TS DERI VED FROM THE CONTRACT;
( 2) WHEN THE EXPENSES WERE DUE TO THE FAULT OF THE AGENT;
Art. 1918 ( 3) WHEN THE AGENT INCURRED THEM WI TH KNOWLEDGE THAT AN UNFAVORABLE RESULT WOULD ENSUE, I F THE PRI NCI PAL WAS NOT AWARE THEREOF;
( 4) WHEN I T WAS STI PULATED THAT THE EXPENSES WOULD BE BORNE BY THE AGENT, OR THAT THE LATTER WOULD BE ALLOWED ONLY A CERTAIN SUM. ( N)