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. Specifi c obligations of principal to agent. (1) To comply with all the obligations which the agent may have contracted within the scope of his authority and in the name of the principal (2) To advance to the agent, should the latter so request, the 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 (5) To pay the agent the compensation agreed upon, or if no compensation was specifi ed, the reasonable value of the agents services. Liability of principal to third persons. Gen rule. the principal will be liable to third persons for all acts committed by the agent and obligations contracted by him in the principals behalf in the course and within the actual (express or implied) or apparent scope of his authority, and should bear the damage caused to third persons Liability principal is liable for the acts of his agent within his express authority because the act of such agent is the act of the principal. it has been held that if a bank could give the authority to sell to a licensed broker, there is no reason to doubt the authority to sell of two of the banks vice-presidents (with whom the broker fi nalized the details of the contract to sell) whose precise job in the bank was to manage and administer its real estate property. (Limketkai Sons Milling, Inc. vs. Court of Appeals, 250 SCRA 523 [1995].) A bank is liable to innocent third persons where representation is made in the course of its normal business by an agent even though such agent abused his authority. (Rural Bank of Milaor vs. Ocfemia, 25 SCRA 99 [2000].) Equitable maxim. The equitable maxim that between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss is applicable. Since it is the principal who should be answerable for the obligation arising from the agency, it is obvious that if a third person waives his claims against the principal, he cannot assert them against the agent. Bedia vs. White, 204 SCRA 273 [1991].) An agency from necessity is created, or the ordinary powers of an agent may be enlarged, when an emergency occurs and an employee or an agent is unable to get in touch with his employer agencyfrom- necessity Liability of third persons to principal. In contract > third party may not set-off or allege any defense against the agent, in an action by the principal to enforce the contract other than one which arises out of the particular contract upon which the action is brought >notice by a third party to the agent is notice to the principal, the third party is not liable for damages for failure of the agent to give notice to his principal. 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; and

(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.
Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.
Liability of principal for mismanagement of business by his agent. GEN RULE the principal is civilly liable to third persons for torts of an agent committed at the principals direction or in the course and within the scope of the agents employment.

Liability If the principal has the power of control over an agent, he should take responsibility for the latters action, and since the agents acts are for the principals benefi t, the principal should also be responsible for the consequences of the agents improper behavior. The agent, to be sure, is also liable with the principal and their liability shall be solidary. Ratification is 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 acts as if originally authorized. Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratifi ed, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. (1259a) Art. 1403. The following contracts are unenforceable, unless they are ratifi ed: (1) Those entered into the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; x x x. Art. 1393. Ratifi cation may be effected expressly or tacitly. It is understood that there is a tacit ratifi cation if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. Conditions for ratifi cation. (1) The principal must have the capacity and power to ratify; (2) He must have had knowledge or had reason to know of material or essential facts about the transaction; (3) He must ratify the acts in its entirety; (4) The act must be capable of ratification; and (5) The act must be done in behalf of the principal. 4Art. 1391. The action for annulment shall be brought within four years. This period shall begin: In cases of intimidation, violence or undue infl uence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases Meaning of material facts. they are those which reasonably ought to be known by the principal, having in mind the factors of time, place, and circumstance, and especially the situation of the parties (a) Actual knowledge will be assumed where the principals reckless disregard of the natural consequences of known facts induces an inference that he was willing to assume a risk in respect of the facts. (b) actual knowledge will be assumed where the principal has actual knowledge of a fact or facts that a person of ordinary intelligence would thereby infer the existence of the fact or facts about which the dispute exists. Acts that may be ratifi ed. (1) Valid/void acts. Usually, those acts that may be authorized (i.e., they are valid) may be ratifi ed. Acts which are absolutely void cannot be authorized nor ratifi ed. (2) Voidable acts. Acts which are merely voidable may be ratifi ed.5 The reason is that a voidable act is not inoperative but imperfectly inoperative. Ratification, indeed, is a method by which a voidable act may be ratified (3) Unrevoked acts. The act or transaction must remain capable of ratifi cation. The general rule is that a principal must ratify his agents unauthorized contract before it is revoked by the other contracting party 4 criminal acts 5 tortious act The third partys offer to a principal arising out of a contract with his unauthorized agent, may be revoked in one of two ways: 1st, by express revocation 2nd, by a change in the nature of the contract as originally entered into. 5Art. 1327. The following cannot give consent to a contract: (1) Unemancipated minors; 2 Insane or demented persons, and deaf-mutes who do not know how to write. Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of drunkenness or during a hypnotic spell are voidable. Art. 1329. The incapacity declared in Article 1327 is subject to the modifi cations determined by law, and is understood to be without prejudice to special disqualifi cations established in the laws. (1264) Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue infl uence, or fraud is voidable. (1265a) Art. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contractings parties: (1) Those where one of the parties is incapable of giving consent to a contract; (2) Those where the consent is vitiated by mistake, violence, intimidation, undue infl uence or fraud.