AGENCY
November 11 2019
RECAP – MANIT DY
RECITS – DY ANDRINO SO RUIZ ROJAS
ASENTISTA BORCES CASTELLO LEQUIGAN
LIGUTOM TORRES SEVILLA TAGALOGUIN
GASPAR
Arbitration vs Compromise
Surety vs Guaranty
Situation 1
You were authorized by your principal to go to
the bank and borrow 10K. After borrowing,
you came back to the principal, but on your way
back, you remembered that you also had to
administer the building of principal and you
have an outstanding balance with VECO. You
paid VECO. How much will you remit to the
principal?
Authority to borrow does not include the
authority to spend.
Situation 2 – Principal authorized you to
borrow specifically 100K to the bank. You
have full power and authority to execute
such papers to be able to carry out the
authority to borrow. Bank required you to
execute a mortgage. You executed a chattel
mortgage. You came back to your principal
that you indeed able to borrow and that you
executed a chattel mortgage, saying that that
is the only way for you to borrow. Do you
think your principal will be happy?
No.
Where you not authorized to execute
other documents?
Yes, but to be able to mortgage, it must be
expressly stated.
What about the terms, “You have full power
and authority to execute such papers to
be able to carry out the authority to
borrow”. How was it then stated?
• The first part was couched in
specific terms – authorized to borrow
• Second part was couched in
general terms – full power and
authority to execute such papers to be
able to carry out the authority to borrow
IF you have authority to enter into compromise,
would you instead submit into arbitration?
No.
Why not?
Administrator – trust is on the agent
Arbitrator – principal does not necessarily trust
the arbitrator because he may not know him
You were authorized to sell the property of your
principal. Parcel of land worth 10M. On your
way to the bank, you thought of helping your
principal. Instead of selling, you went to the
bank and asked if he could mortgage the
property.
Do you think your principal will be happy?
No. Authority to sell does not include the
authority to mortgage.
Is it not more advantageous to the
principal? Why not?
You were appointed as the agent of your
principal to sell his car within the City of Cebu.
Could you call up somebody in Tacloban to sell
the color.
No. Authority is only to sell within Cebu City.
Can your principal look for another buyer
in Cebu City?
What can be your assurance? Do you think
it is fair to the agent?
Retract. There is no point. For all you know,
the principal may sell it for a lower price.
Court said that if you are authorized to sell
within a specific authority, the principal is
not allowed to sell it himself. However, if
there is no limitation to the territory, the
principal is NOT PROHIBITED to sell it
himself. Because there is no territory
mentioned.
Principal may designate another agent. This
is without prejudice to a specific provision of
agency where the principal may reserve for
himself to sell the property himself OR to
appoint another agent.
POINT: If you are a designated agent, make
sure that it is an exclusive appointment.
In so far as the principal is concerned, the
principal cannot be compelled to designate an
exclusive appointment because it is his
prerogative. Moreover, he cannot also prevent
him from designating someone else because it
is the principal who extends the authority.
Compelling the person will be depriving
the principal of his prerogative who to
trust because contract of agency is based on
trust.
The moment you no longer trust the agent you
can revoke the agency because it is
TRUST!!!
If somebody else is being appointed as an
exclusive agent, what would that mean?
Prior agency is deemed revoked by
appointing another exclusive agent
How many agents can be appointed? So long
as?
So long as it is not an appointment of an
exclusive agency
Which is which now??????
Which appointment is subsisting?
IF the subsequent appointment is exclusive –
prior one is deemed revoked.
Appointed A alone (exclusive) – Then
appointed B (not exclusive). Which shall
subsist?
No implied revocation here.
He appoints A as agent (not necessarily
exclusive). Can he appoint some more?
He can appoint some more. He can appoint as
many. Unless perhaps, the subsequent
appointment would indicate a exclusive
appointment. If not exclusive, he only intends
to add more.
If subsequent appointment is exclusive – It is the principal because he gave an
previous one is deemed revoked
Agent must carry out the agency how?
Strictly within authority given
If you were authorized to sell a car for 150K.
Sold it for 175K.Who gives the 25 K?
Exception: Advantageous to the principal
If you exceeded the authority, what would be
the effect?
The principle is not bound by the contract.
If you exceeded the authority, what is the
effect?
Agent personally liable. Principal not
bound/liable.
Situation. I issued to you a check. You have to
fill it up only upto 150K. After checking, the
amount was changed. Nahimo 1.5M.
Enchashed the check for how much?
1.5 Million
And so, you were able to receive 1.5. How much
is deducted from his account?
1.5 M.
What will you do?
Ask for the 1.5 M.
He will now go to the bank and ask why he
released.
Can the principal ask to restore the 1.5M?
Incomplete but delivered instrument – personal
defense
Apply also apparent authority – the bank is
not privy to the transaction between the
principal and the agent
What do you mean by apparent authority?
Authority appeared reasonable in the
viewpoint of the 3rd party
What can the principal do?
Issue a warrant of arrest
How does the law justify that? Why would
the law do that? The law seems to favor
the bank against the principal who is the
customer of the bank. Why do you the law
appear to favor the bank?
What is the practical justification of the
law?
Avoid connivance
IOW, it may be a scheme that the principal and
agent may do.
Who is the more negligent?
instrument in blank (hmmm or was it an
incomplete instrument?)
It cannot prejudice 3rd persons to the
apparent authority of the agent. That is the
justification of the law. Because you are
negligent, you have to BEAR THE
CONSEQUENCE OF YOUR NEGLIGENCE.
BEAR THE CONSEQUENCE OF YOUR OWN
FAULT.
We were discussing an instance where although
the general rule says if the agent exceeds
authority given, the principal is not bound and
the agent is personally liable.
Exceptions?
(1) Delivering a blank instrument signed by
the principal
(2) Ratification of the principal
(3) Estoppel
(4) Authority by emergency or necessity
(5) 3rd parties were not notified by the
limitation of the agent
(6) Action is advantageous
RATIFICATION
EMERGENCY
I left a watch to somebody. Then that
somebody sold a watch to you. You bought it
for 50K. Then I saw you wearing it.
Do you think you can get it back?
Where can you go after? Seller? Or Buyer??
What is your basis?
You did not authorize the sale. There was no
authority to sell given to any other person.
Can Castello say, if I buy something from
someone else and it turns out that the
property belonged to someone else, I - This rule is in accord with the principles of
cannot because there was agency there. equity. But the duty exists only should delay
Was there agency? entail any danger
No agency. Requisites were not complied. (4) To observe the diligence of a good father of
a family in
I authorized Asentista to sell my watch. the custody and preservation of the goods
Asentista sold it to Castello. Later, principal said forwarded to
ako mana! Can I get it back? him by the owner in case he declines an
No. agency, until
an agent is appointed.
3rd Scenario – Asentista went to Castello and he (5) To advance the necessary funds should
sold it in his own behalf (not as agent of Atty. there be a
Espedido). Can I (principal) get back my watch stipulation to do so.
from Castello? (6) To act in accordance with the instructions of
No. No recourse from Castello. the
principal, and in default thereof, to do all that a
Principal cannot go after Castello. good
father of a family would do
Can I get back the watch? (7) Not to carry out the agency if its execution
No. Sale was binding because he gave would
authority. manifestly result in loss or damage to the
principal.
Even if he owned that property still (8) To answer for damages if there being a
immaterial because there was authority to conflict between
sell. The act of selling was binding upon his interests and those of the principal, he
the principal. should prefer
his own.
A thief can never sell because he has no (9) Not to loan to himself if he has been
authority. If a PERSON WHO SELLS authorized to lend
claiming that he owns even if he does not money at interest.
OWN, CAN SELL provided he was given the (10) To render an account of his transactions
authority. and to deliver
to the principal whatever he may have received
General Rule. To bind the principal, the agent by virtue
must act within the authority, the authority of the agency.
must be given. (11) To distinguish goods by countermarks and
designate
Requisites of Authority: the merchandise respectively belonging to each
(1) Agent must have authority principal, in the case of a commission agent
(2) Acts within authority given who who
(3) Indicate that he acts as an agent handles goods of the same kind and mark,
(4) Disclose the name of the principal which belong
to different owners.
(12) To be responsible in certain cases for the
acts of the
It was the principal who told you to buy. substitute appointed by him.
After buying, you told the seller you have 30 (13) To pay interest on funds he has applied to
days. 30 days passed, no payment was his own use.
forthcoming. Seller learned that you were just (14) To inform the principal, where an
the agent of the principal. Seller went to the authorized sale of
principal. Is the principal liable? credit has been made of such sale.
Agent is liable. Payment is already given. (15) To bear the risk of collection, should he
receive also on
If the principal told you to buy the land of X. a sale, a guarantee commission.
You paid X. X received the payment. But later (16) To indemnify the principal for damages for
on he said I will not sign!!!! Can he refuse to his failure to
sign? collect the credits of his principal at the time
No. There was already payment which means that they
the contract is already perfected. become due.
(17) To be responsible for fraud or negligence.
OBLIGATIONS OF THE AGENT
(1) To carry out the agency which he has If you are an agent, what is your BASIC
accepted. OBLIGATION?
(2) To answer for damages which through his (1) Carry out agency in accordance with
performance the principal may suffer. its terms in good faith
(3) To finish the business already begun on the (2) Follow the instructions
death of the principal should delay entail any (3) Preserve and protect the property of
danger the principal

Situation. Agent instructed to take the first
available means of transportation to Oslob. You
rode the parada. Did you violate anything?
Could you be liable?
Yes – taking the parada does not benefit the
principal
Taking the tartanilya is not deemed to be in
good faith!!!
In complying with instructions, you need to
have good faith and to take care of the
instructions.
Situation. Agent authorized to administer the
building. Tenant did not pay. Principal is
demanding payment from you. Could you be
liable for anything?
Did you perform your task faithfully?
No. You failed as an agent and you are liable to
the principal.
Situation. AUTHORITY GIVEN - WITHIN SUCH
AMOUNT AS MAY FIND FAIR AND REASONABLE
Instruction – not less than 150K
Did he violate his authority?
No. Authority
The sale was valid. The owner cannot get back
the car. He only got 120K for his car.
What should the principal do?
Patapal ka – Principal should claim the
difference
Instruction is not binding to 3rd parties.
Why?
3rd parties have no obligation to inquire about
the instruction given.
= END =

Next meeting: Finish Chapter 2 but finish

Situation 1. Villa called you. Driving a reading half of Chapter 3
truck full of fish. You will get 30%
commission. Di ko kabaligya kay mag bar-
ops ko. He went to catch up with his flight
and leaving you with one truck load of
fish. What would you do?

If you decline – you still have the obligation to

protect and preserve the goods forwarded by
the owner with the exercise of diligence of a
good father of a family.

How will you take care of it now?

Find a place to store it

Situation 2. You contacted an ice storage.

56K daw

Plan B?
Find the amount for the payment of ice storage.

Situation 3. Called up Tagaloguin to borrow

money.
Plan B cannot be carried out!

What will be your plan now?

Sell the truckload of fish to the market

What’s the point of our story?

The agent who wanted to decline is obliged to
exert his best efforts in the preservation of the
goods with a diligence of a good father of a
family. However, if your best efforts are not
enough you cannot die for it. “You do not have
to cry for this. You do not have to die for this as
long as you could prove that you did your best”.

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