Short answer. Yes. Even where the agent exceeded his authority, the Code makes the principal solidarily liable with him if the principal allowed him to act as though he had full powers. Solidary means the third person may collect the whole of it from you alone.
What the law says
Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers.
Civil Code, Article 1911 — Principal Solidarily Liable for Apparent Authority. Read the full provision →
The appearance you created is what binds you
Ordinarily a principal answers only for what his agent did within the authority given — Art. 1910 puts it that way, and Art. 1897 leaves the agent personally liable for the excess. Art. 1911 is the exception, and it is aimed at the principal's own conduct rather than the agent's. If you held someone out as having full powers, or knew he was acting that way and let it continue, the third person who relied on that appearance is protected. The question is not what you authorised privately but what you allowed the outside world to see.
Solidary liability is the part that stings
The article does not merely make you liable; it makes you solidarily liable with the agent. The third person can therefore sue you alone for the whole amount without joining the agent and without first trying to collect from him. Whatever you recover from your agent afterwards is a separate matter between the two of you, and it depends on his solvency rather than on your right. So the practical effect of having tolerated an over-reaching representative is that you carry the entire loss first and chase it second.
How principals usually get caught by this
Rarely by an explicit statement. It happens by letting a manager keep signing after his mandate narrowed, by honouring three of his unauthorised deals and disputing the fourth, by leaving an old power of attorney in circulation, or by supplying letterhead, keys and premises to somebody the public reasonably takes for the business. Each is an act of the principal, and together they are what "allowed" means. Art. 1921 makes the same point from the other end for an agency created for a particular person: revocation does not prejudice a third person who was not given notice of it.
Closing the appearance down
The remedy is notice, given to the people who actually deal with you rather than to the agent alone. Write to the customers, suppliers and banks; recall or revoke the written authority and say plainly what the representative may no longer do; and stop paying on transactions you say were unauthorised, because performance is the clearest confirmation there is. If a demand has already arrived, the facts to assemble are the ones about your own conduct — what he was given, what you knew, and what you did about it the first time he went beyond it.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Country Bankers Insurance Corporation vs. Keppel Cebu Shipyard, Inc., et al, G.R. No. 166044, June 18, 2012 — read the decision on LawPhil →
- San Miguel Corporation vs. Leonara Francisco Vda. De Trinidad, et al, G.R. No. 237506, July 28, 2020 — read the decision on LawPhil →
- Citystate Savings Bank vs. Teresita Tobias and Shellidie Valdez, G.R. No. 227990, March 7, 2018 — read the decision on LawPhil →
- Buenavista Properties, Inc. and/or Josephine Conde vs. Ramon G. Mariño, G.R. No. 212980, October 10, 2016 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1911 — Principal Solidarily Liable for Apparent Authority
- Civil Code, Article 1910 — Principal Must Comply With the Agent's Acts
- Civil Code, Article 1897 — Agent Not Personally Liable
- Civil Code, Article 1921 — Revocation and Specified Third Persons