Where were we?

Christine Grace Embay-Zamora

September 21, 2011

Answer: It is explicit that the authority must be strictly pursued as well as the instruction. Neither one may be ignored by the agent. Since he did
not act within his authority, then he is liable to the principal for non-execution of the authority.
What if he hired an helicopter. He was able to close the contract with the buyer. If horse, too cheap. If helicopter, too expensive. It is easy to say
common sense. What is common sense? It is exercising diligence. In case of confusion, your actions will be guided by that measure of diligence
diligence of a good father of a family. So that what should have been done? He should have rode in a bus that would really reach his destination in
order to execute the authority to given. To do a little class, if you are selling billions worth of property, he should have rented a car. We were just
trying to point out how to measure in case of confusion and in case on how we could not determine really because of confusion.
If you want to decline the agency, what should you do? He should have informed the principal. So that if one day, you were sleeping still and then
your neighbor rocked in your door dragging behind his 5 cows, Lim! I am in a hurry now. I am going to Bantayan. Can you take care of my cows for
5 months? Lim: oi oi.. oi He was so much in a hurry and without so much discussion, he left leaving the cows. He left and never looked back.
You are scratching your head on how to deal with this. Nobody is watching. You untied all the ropes of the cow and all the cows started to spread
out. And in 10 minutes, all the 5 cows were gone. One week after, your neighbor came back, Lim! Salamat kayo kay imo gibantayan akong baka.
Kumusta ang baka? Lim, Baka? Wala ko kita. The third neighbor passed by, Unsa nyo gilalisan dira? Friend No. 1: katong baka nga akong
gbilin. Friend No. 2, aw, katong baka dira? So the first neighbor has a witness. So what will happen? Being the agent, he is liable to take care fo
the cow and to make sure that it is well fed and when the able will return, you will be able to return the cows in good condition.
The law provides that is a person declines an agency, the person is bound to exercise due diligence fo a good father of a family. In the case, the
person should have observed the diligence of a good father of the family. He should have took care of the cow until the principal has appointed an
agent. So in this case, the agent is liable. MORAL LESSON: Follow the law which requires huge responsibility. By following that law, my responsibility
is feeding the law every morning, seeing to it that it will not be stolen, etc.
What is the other option? What is the other moral lesson? According to Minguez, read books on how to take care of the cow. Yen: Appoint another
agent. Atty. E: While he is still there, you deny the responsibility. This is a very dangerous law. This contemplates a situation that goods are brought
to your house. You should say No! immediately because sometimes no means yes. Anyway, that is the moral lesson.
Assuming that the owner immediately left without having the contending agent to say no. The owner left without leaving a centavo. What
happens? You must still feed the cow but when the owner returns, he can seek reimbursement. When the owner returned he said, I only left my
cow and did not say feed it. Can he say that? No. What if he did not have the money to buy the feeds? What happens? Put the cow in grassy areas.
But if he cannot really find one? You can borrow money from the other neighbors and reimburse them when the owner returns. It might not be
easy. And slowly, because the cow do not have anymore to eat any more, the cow started to fall by themselves. What do you think? Sell the cow.
Do you think you can sell? No. It is not within the authority. There is no agency to speak of here. What is required is diligence of a good father of a
family. So what is the best solution? Call the Department of Agriculture for them to take care of the cows. In other words, it is not an easy
task. This law sometimes is very dangerous. But at least, if we have to comply, we have to think of other options.
That is one option Minguez, but the other option is to sell. You have to observe a good father of family. Do not be afraid to sell if it is only the thing
that you can do.
Once you accepted the agency, you must take care fo that thing and preserve that thing. You also have an obligation to extend funds. Even if
necessary, but if there is no guaranty that you will be reimbursed because the principal is insolvent. Then the law does not also allow this in
sacrificing yourself. That is too much.
Instructions vs. authority
(see the book)
So that if you are authorized by the owner to sell a parcel of land with all the description. For you to sell, you have a full authority to sell and issue
receipt. You are also authorized to sold the land that would seem to be fare and reasonable to you. And so you sold the land for P100,000, do you
think that is reasonable? If the land is worth P100,000, then that is valid. However, before you left, the owner told you secretly not lower than
P150,000. Where is the authority and where is the instruction? Authority is to sell it in a fare and reasonable price. The instruction there is not to
sell lower than P150,000. So you went to another buyer and you sold it for P120,000. So you went to the owner but the owner said, sabot biya ta
not lower than P150,000. Kaw tapal ani. P150,000 man atong sabot. Tapal ka nako ug P30,000. What happens? Both authority and instruction
must not be disregarded. Since the principal instructed you to sold for P150,000, it is a clear noncompliance with the instruction so the agent
should pay the principal for P30,000. You have violated the instruction so you must pay.

Where were we?

Christine Grace Embay-Zamora

However, the other owner said, dli tika pataplon but make sure that the buyer will return the land and I will return the P120,000 to the buyer. So
you went back to the buyer. Do you think you could demand for the return of the land? No. It is a valid sale. The principal cannot get the piece of
land anymore because the sale was very much valid. Is the sale valid? Yes because it is according to the authority of the principal that it must be
sold in a fair and reasonable price. He acted within his scope of his authority. But he did not act in accordance with the instructions given? Then the
agent shall be liable to the principal for the deficiency because instructions are private between the principal and the agent. Third parties have
nothing to do with instructions. Unless? Unless the third party knew of the instructions. If he is aware of the instructions, dli siya mka.buang2x, he
will be bound.
Are agent bound to comply with the instructions? Yes. He must comply with the instructions otherwise he will be liable for damages. Deviating
from instructions would cause him liability. Unless? Known to the third party. Another is sudden emergence when there is no possible
communication to the principal. Next, is that the instruction is ambiguous such that it could be capable of 2 or more interpretation. Another is that
if there is insubstantial departure from the principals instruction insignificant deviation.
So that if the agent was authorized by the owner to sell his share of stocks tomorrow at 8am. That was the instruction and the agent was tyring to
listen to the forecast and to the information coming from the PSE. The shares of stocks of that particular company was selling at a very low price.
So the agent decided not to sell. So what happens? There are instances when the agent may not carry out such authority when doing so would
result to a loss. Since the agency is fiduciary in nature, the agent is merely acting as an extended personality of the principal then the diligence of a
good father of the family should be complied. If he knows that selling this shares would result to a loss then he can be justified.
You are authorized by the owner to sell a parcel of land. You met a prospective buyer. And so the buyer appeared to be very lenient in so far as
buying properties are considered, you tell that this buyer is not interested to buy another property as an option. But the buyer is willing to buy
another property. So you offer your property. The buyer has not 2 options. In this case, if there is a conflict of interest, you can be liable for
damages to the principal if you choose your interest instead of the principal. By accepting the agency, you are in a fiduciary relationship and must
be acting for the benefit of the principal. You have to give preference to your principal.
If you are authorized to buy by your principal certain properties and so happened that you also intended to sell your own property, do you think
you could buy your own property. The agent cannot sell his property to the principal. There would be a conflict of interest. If you are a buyer, you
should buy at a lower price. But since you are also an owner, then you have to sell it a high price. Then that is conflict of interest. Is that the only
way? You can sell if the principal consented. In other words, is dealing with your principal as an agent prohibited? No. What is prohibited? What is
prohibited if there is a conflict of interest or it would manifestly result to the loss of the principal. So that transaction is prohibited.
We said that the law abhors conflict of interest, the law said that the agent does not prevent dealing the principal? If the law does not prohibit the
principal and agent to deal directly with each other, although we said the in case of conflict, the interest of the principal should prevail, how do we
reconcile? In short, while conflict of interest is not encouraged, what is not allowed? One principle say no conflict and that the other says if they
agree? The basis of the law is to prevent taint of a moral wrong. So in that there would be not doubts as to the motives of the agent, the selfdealing to the principal should be prevented.
To avoid taint of moral wrong although conflict of interest is prohibited so long as there is full disclosure. You can deal. But please disclose to
the principal. The important thing is that there is no withholding of information. That is the message of the law do not withhold any information
from your principal.
Conflict of interest is not absolute so long as there is full disclosure between the agent and the principal.
However, there seems to be an inconsistent rule subsequently. If you are authorized to borrow, as an agent, you can also lend to your principal.
Even without disclosure? Still you have to disclose. Although the law allows you but there is no substitute for full disclosure to maintain that
relationship. As we said this is a fiduciary relationship, there is no substitute for full disclosure.
If you are authorized to lend, you are not authorized to borrow because you as an agent might turn out to be a bad borrower. Unless? Unless with
the consent of the principal full disclosure. Nothing can prevent the principal.
All these things will have to be accounted for. What should be done? The agent is obliged to render an account for all the transaction concerning
the agency and to deliver to the principal what he received through agency. So you are now preparing an accounting how much property, what
was your authority, how much you sell, advances you made, etc. As you were preparing your accounting report, you paused for a while and
remembered, kato si Bascon, ambot unsay nasulod niya, iyang utang P50k ra unya nibayad ra xa ug P55K, gipakapinan pa gyud ug kidhat. Ako ba
gyud xa gi.ingnan us sobra ug P5k. So where will you report the P5,000? Will you report it? You should report it to the principal because it is still
the fruit of the agency. When Bascon met you the second time, Bascon again opened his wallet with P10,000 this time, nalimtan diay nko ni sa
una. So another P10,000. Would you still report this? You were already made a report. Would you make an amended report? Yes. You are still
obliged to report all the money that you received. The money you received is the fruit of the agency and for the benefit of the principal. So you met

Where were we?

Christine Grace Embay-Zamora
rd

Bascon the 3 time, Libre ka? Charity, Dependende Bascon, Kumusta man ang P15k? Charity, ako man gihatag sa principal. Bascon:
ngano man imo man gihatag? Para man to imo! Kabati ug nawong sa imong principal! So you made another amended account, you wanting to
recover the amount of P15,000. Can you recover? No. (wala ko kadungog explanation ni Bascon)