ART. 1901.

A third person cannot set up the fact that the agent has exceeded his powers, if the principal has ratified, or has signified his willingness to ratify the agents acts. The ratification shall have retroactive effect. It relates back to the time of the act or contract ratified and is equivalent to original authority. Board of Liquidators vs. Kalaw, 20 SCRA 987 987 A principal is deemed to have received the benefits of the unauthorized sale of his property and thereby ratified the transaction where the checks issued by the buyer in favor of the principal were credited to the latters account with a bank or endorsed and negotiated by him. Rafferty vs. Province of Cebu, 52 Phil. 548 [1928] ART. 1902. A third person with whom the agent wishes to contract on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the agency. Private or secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them. As a rule, a third person deals with an agent at his peril. ART. 1903. The commission agent shall be responsible for the goods received by him in the terms and conditions and as described in the consignment, unless upon receiving them he should make a written statement of the damage and deterioration suffered by the same. A factor or commission agent is one whose business is to receive and sell goods for a commission (also called factorage) and who is entrusted by the principal with the possession of goods to be sold, and usually selling in his own name. ART. 1904. The commission agent who handles goods of the same kind and mark, which belong to different owners, shall distinguish them by countermarks, and designate the merchandise respectively belonging to each principal. Two exceptions exist to these general rules. 1st, by custom, some agents, such as auctioneers, normally are permitted to mingle their principals property with their own. 2nd, some agents, such as collecting banks, are permitted to mingle the funds of their principal (depositor) with their own and the property of other principals. Facts: The sugar of A and B were stored together in one single mass without separation or identifi cation in a warehouse. A made withdrawals of sugar without express statement as to whose sugar was being withdrawn, whether his or Bs. Issue: Is there legal basis for Bs contention that as the taking of the sugar was without his consent, and that of A with As consent, all that remained is Bs? Held: No. As the mass of sugar in the warehouse was owned in common, and as it is not possible to determine whose sugar was withdrawn and whose was not, the mass remaining must pertain to the original owners in the proportion of the original amounts owned by each of them. (Montelibano vs. Bacolod Murcia Milling Co., 95 Phil. 407 [1954].) ART. 1905. The commission agent cannot, without the express or implied consent of the principal, sell on credit. Should he do so, the principal may demand from him payment in cash, but the commission agent shall be entitled to any interest or benefit t, which may result from such sale. ART. 1906. Should the commission agent, with authority of the principal, sell on credit, he shall so inform the principal, with a statement of the names of the buyers. Should he fail to do so, the sale shall be deemed to have been made for cash insofar as the principal is concerned. ART. 1907. Should the commission agent receive on a sale, in addition to the ordinary commission, another called a guarantee commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser. Guarantee commission (also called del credere commission) is one where, in consideration of an increased commission, the factor or commission agent guarantees to the principal the payment of debts arising through his agency. del credere agent. An agent who guarantees payment of the customers account in consideration of the higher commission.

Nature of liability of a del credere agent. An agent with a del credere commission is liable to the principal if the buyer fails to pay or is incapable of paying. >But he is not primarily the debtor. the liability of the del credere agent is a contingent pecuniary liability to make good in the event the buyer fails to pay the sum due. >A del credere agent may sue in his name for the purchase price in the event of non-performance by the buyer. ART. 1908. The commission agent who does not collect the credits of his principal at the time when they become due and demandable shall be liable for damages, unless he proves that he exercised due diligence for that purpose. Where the agent is not liable, the principals remedy is to proceed against the debtor ART. 1909. The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or less rigor by the courts, according to whether the agency was or was not for a compensation. It has been held that the failure of a sub-agent with whom fi lm has been left for safekeeping to insure against loss by fi re does not constitute negligence or fraud on its part when it has received no instruction to that effect from its principal, the insurance of the fi lm not forming part of the obligation imposed upon it by law. (International Films vs. Lyric Film Exchange, 63 Phil. 778 [1936].) Quasi-delict or tort may be committed by act or omission. If it causes damage to another, there being fault or negligence, the guilty party is liable for the damage done. >The principal is solidarily liable if the tort was committed by the agent while performing his duties in furtherance of the principals business. Facts: P ordered his broker A, to sell his gold shares at a minimum price of P0.15 which A did. On the day of the sale, gold shares were sold at prices ranging from P0.16 to P0.195, or at an average of P0.175. P brought suit to recover from A the difference between the value of his shares at P0.175 and the price of P0.15 at which they were sold. Issue: Is P entitled to recover the said difference? Held: Yes. A should have sold the shares at the highest possible price. He failed to exercise the prudence and tact of a good father of a family which the law required of him. (Tan Tiong Teck vs. Securities and Exchange Commission, 69 Phil. 425 [1940].) Facts: A, a manager of PNB, violated standing regulations regarding the granting of loans; and what is more, thru his carelessness, laxity, and negligence, he allowed loans to be granted to persons who were not entitled to receive loans. PNB brought action against both A and the borrower to recover the loans granted. Issue: Is it necessary for PNB to fi rst go against the borrower, exhaust all remedies against him and then hold A liable only for the balance? Held: No. PNB could proceed against A for losses it had sustained in consequence of the unauthorized loans released by him. The cause of action of PNB accrued and the injuryto it was complete on the very day that the amounts of the unauthorized loans were released by A. Ordinarily, if the principal collects either judicially or extra-judicially a loan made by an agent without authority, he thereby ratifi es the said act of the agent. However, in the case at bar, PNB is merely trying to diminish as much as possible the loss to itself and automatically decrease the fi nancial liability of A. (Phil. National Bank vs. Bagamaspad and Ferrer, 89 Phil. 365 [1951].)