AGENCY Characteristics of Agency (PF-BORN-CP)

CHAPTER 1 1. Preparatory
NATURE, FORM AND KINDS OF AGENCY 2. Fiduciary
3. Bilateral (but may be unilateral)
4. Onerous (generally)
5. Representative Relation
6. Nominate
Art. 1868. By the contract of agency a person binds
7. Consensual
himself to render some service or to do something in
8. Principal
representation or on behalf of another, with the
consent or authority of the latter. (1709a)
Art. 1870. Acceptance by the agent may also be
express, or implied from his acts which carry out the
Art. 1869. Agency may be express, or implied from the
agency, or from his silence or inaction according to the
acts of the principal, from his silence or lack of action,
circumstances. (n)
or his failure to repudiate the agency, knowing that
another person is acting on his behalf without
authority. Art. 1871. Between persons who are present, the
acceptance of the agency may also be implied if the
principal delivers his power of attorney to the agent
Agency may be oral, unless the law requires a specific
and the latter receives it without any objection. (n)
form. (1710a)

Art. 1872. Between persons who are absent, the

acceptance of the agency cannot be implied from the
Elements of the Contract of Agency
silence of the agent, except:
Rallos v. Felix Go Chan & Sons Realty Corp., 81
SCRA 251 (1978): The following are the essential (1) When the principal transmits his power of
elements of the contract of agency: attorney to the agent, who receives it without
(a) Consent, express or implied, of the parties to any objection;
establish the relationship;
(2) When the principal entrusts to him by letter
The basis for agency is representation. On the or telegram a power of attorney with respect to
part of the principal, there must be an actual intention the business in which he is habitually engaged
to appoint or an intention naturally inferable from his as an agent, and he did not reply to the letter
words or actions; and on the part of the agent, there or telegram. (n)
must be an intention to accept the appointment and act
on it, and in the absence of such intent, there is Art. 1873. If a person specially informs another or
generally no agency. Dominion Insurance Corp. v. states by public advertisement that he has given a
Court of Appeals, 376 SCRA 239 (2002); power of attorney to a third person, the latter thereby
Loadmasters Customs Services, Inc. v. Glodel becomes a duly authorized agent, in the former case
Brokerage Corp., 639 SCRA 69 (2011). with respect to the person who received the special
information, and in the latter case with regard to any
(b) Object, is the execution of a juridical act in relation person.
to third parties;
The power shall continue to be in full force until the
In an agent-principal relationship, the notice is rescinded in the same manner in which it was
personality of the principal is extended through the given. (n)
facility of the agent. In so doing, the agent, by legal
fiction, becomes the principal, authorized to perform all
Art. 1874. When a sale of a piece of land or any
acts which the latter would have him do. Such a
interest therein is through an agent, the authority of the
relationship can only be effected with the consent of
latter shall be in writing; otherwise, the sale shall be
the principal, which must not, in any way, be compelled
void. (n)
by law or by any court. Litonjua, Jr. v. Eternit Corp.,
490 SCRA 204 (2006).
Art. 1875. Agency is presumed to be for a
(c) The agent acts as a representative and not for compensation, unless there is proof to the contrary. (n)
himself; and
(d) The agent acts within the scope of his authority. Art. 1876. An agency is either general or special.

The former comprises all the business of the principal.

The latter, one or more specific transactions. (1712)

Art. 1877. An agency couched in general terms

comprises only acts of administration, even if the
principal should state that he withholds no power or
that the agent may execute such acts as he may
consider appropriate, or even though the agency
should authorize a general and unlimited Art. 1881. The agent must act within the scope of his
management. (n) authority. He may do such acts as may be conducive
to the accomplishment of the purpose of the agency.
Art. 1878. Special powers of attorney are necessary in (1714a)
the following cases:
Art. 1882. The limits of the agent's authority shall not
(1) To make such payments as are not usually be considered exceeded should it have been
considered as acts of administration; performed in a manner more advantageous to the
principal than that specified by him. (1715)
(2) To effect novations which put an end to
obligations already in existence at the time the Art. 1883. If an agent acts in his own name, the
agency was constituted; principal has no right of action against the persons with
whom the agent has contracted; neither have such
persons against the principal.
(3) To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the In such case the agent is the one directly bound in
venue of an action or to abandon a favor of the person with whom he has contracted, as if
prescription already acquired; the transaction were his own, except when the contract
involves things belonging to the principal.
(4) To waive any obligation gratuitously;
The provisions of this article shall be understood to be
without prejudice to the actions between the principal
(5) To enter into any contract by which the
and agent. (1717)
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration; CHAPTER 2
OBLIGATIONS OF THE AGENT
(6) To make gifts, except customary ones for
charity or those made to employees in the
business managed by the agent;
Art. 1884. The agent is bound by his acceptance to
(7) To loan or borrow money, unless the latter carry out the agency, and is liable for the damages
act be urgent and indispensable for the which, through his non-performance, the principal may
preservation of the things which are under suffer.
administration;
He must also finish the business already begun on the
(8) To lease any real property to another death of the principal, should delay entail any danger.
person for more than one year; (1718)

(9) To bind the principal to render some Art. 1885. In case a person declines an agency, he is
service without compensation; bound to observe the diligence of a good father of a
family in the custody and preservation of the goods
forwarded to him by the owner until the latter should
(10) To bind the principal in a contract of
appoint an agent or take charge of the goods. (n)
partnership;
Art. 1886. Should there be a stipulation that the agent
(11) To obligate the principal as a guarantor or
shall advance the necessary funds, he shall be bound
surety;
to do so except when the principal is insolvent. (n)
(12) To create or convey real rights over
Art. 1887. In the execution of the agency, the agent
immovable property;
shall act in accordance with the instructions of the
principal.
(13) To accept or repudiate an inheritance;
In default thereof, he shall do all that a good father of a
(14) To ratify or recognize obligations family would do, as required by the nature of the
contracted before the agency; business. (1719)

(15) Any other act of strict dominion. (n) Art. 1888. An agent shall not carry out an agency if its
execution would manifestly result in loss or damage to
Art. 1879. A special power to sell excludes the power the principal. (n)
to mortgage; and a special power to mortgage does
not include the power to sell. (n) Art. 1889. The agent shall be liable for damages if,
there being a conflict between his interests and those
Art. 1880. A special power to compromise does not of the principal, he should prefer his own. (n)
authorize submission to arbitration. (1713a)
Art. 1890. If the agent has been empowered to borrow case, however, the agent is liable if he undertook to
money, he may himself be the lender at the current secure the principal's ratification. (n)
rate of interest. If he has been authorized to lend
money at interest, he cannot borrow it without the Art. 1899. If a duly authorized agent acts in
consent of the principal. (n) accordance with the orders of the principal, the latter
cannot set up the ignorance of the agent as to
Art. 1891. Every agent is bound to render an account circumstances whereof he himself was, or ought to
of his transactions and to deliver to the principal have been, aware. (n)
whatever he may have received by virtue of the
agency, even though it may not be owing to the Art. 1900. So far as third persons are concerned, an
principal. act is deemed to have been performed within the
scope of the agent's authority, if such act is within the
Every stipulation exempting the agent from the terms of the power of attorney, as written, even if the
obligation to render an account shall be void. (1720a) agent has in fact exceeded the limits of his authority
according to an understanding between the principal
Art. 1892. The agent may appoint a substitute if the and the agent. (n)
principal has not prohibited him from doing so; but he
shall be responsible for the acts of the substitute: Art. 1901. A third person cannot set up the fact that the
agent has exceeded his powers, if the principal has
(1) When he was not given the power to ratified, or has signified his willingness to ratify the
appoint one; agent's acts. (n)

(2) When he was given such power, but Art. 1902. A third person with whom the agent wishes
without designating the person, and the person to contract on behalf of the principal may require the
appointed was notoriously incompetent or presentation of the power of attorney, or the
insolvent. 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
All acts of the substitute appointed against the
attorney or instructions shown them. (n)
prohibition of the principal shall be void. (1721)

Art. 1903. The commission agent shall be responsible

Art. 1893. In the cases mentioned in Nos. 1 and 2 of
for the goods received by him in the terms and
the preceding article, the principal may furthermore
conditions and as described in the consignment,
bring an action against the substitute with respect to
unless upon receiving them he should make a written
the obligations which the latter has contracted under
statement of the damage and deterioration suffered by
the substitution. (1722a)
the same. (n)
Art. 1894. The responsibility of two or more agents,
Art. 1904. The commission agent who handles goods
even though they have been appointed
of the same kind and mark, which belong to different
simultaneously, is not solidary, if solidarity has not
been expressly stipulated. (1723) owners, shall distinguish them by countermarks, and
designate the merchandise respectively belonging to
each principal. (n)
Art. 1895. If solidarity has been agreed upon, each of
the agents is responsible for the non-fulfillment of
Art. 1905. The commission agent cannot, without the
agency, and for the fault or negligence of his fellows
express or implied consent of the principal, sell on
agents, except in the latter case when the fellow
credit. Should he do so, the principal may demand
agents acted beyond the scope of their authority. (n)
from him payment in cash, but the commission agent
shall be entitled to any interest or benefit, which may
Art. 1896. The agent owes interest on the sums he has result from such sale. (n)
applied to his own use from the day on which he did
so, and on those which he still owes after the
Art. 1906. Should the commission agent, with authority
extinguishment of the agency. (1724a)
of the principal, sell on credit, he shall so inform the
principal, with a statement of the names of the buyers.
Art. 1897. The agent who acts as such is not Should he fail to do so, the sale shall be deemed to
personally liable to the party with whom he contracts, have been made for cash insofar as the principal is
unless he expressly binds himself or exceeds the limits concerned. (n)
of his authority without giving such party sufficient
notice of his powers. (1725)
Art. 1907. Should the commission agent receive on a
sale, in addition to the ordinary commission, another
Art. 1898. If the agent contracts in the name of the called a guarantee commission, he shall bear the risk
principal, exceeding the scope of his authority, and the of collection and shall pay the principal the proceeds of
principal does not ratify the contract, it shall be void if the sale on the same terms agreed upon with the
the party with whom the agent contracted is aware of purchaser. (n)
the limits of the powers granted by the principal. In this
Art. 1908. The commission agent who does not collect Art. 1917. In the case referred to in the preceding
the credits of his principal at the time when they article, if the agent has acted in good faith, the
become due and demandable shall be liable for principal shall be liable in damages to the third person
damages, unless he proves that he exercised due whose contract must be rejected. If the agent acted in
diligence for that purpose. (n) bad faith, he alone shall be responsible. (n)

Art. 1909. The agent is responsible not only for fraud, Art. 1918. The principal is not liable for the expenses
but also for negligence, which shall be judged with incurred by the agent in the following cases:
more or less rigor by the courts, according to whether
the agency was or was not for a compensation. (1726) (1) If the agent acted in contravention of the
principal's instructions, unless the latter should
CHAPTER 3 wish to avail himself of the benefits derived
OBLIGATIONS OF THE PRINCIPAL from the contract;

(2) When the expenses were due to the fault of

the agent;
Art. 1910. The principal must comply with all the
obligations which the agent may have contracted (3) When the agent incurred them with
within the scope of his authority. knowledge that an unfavorable result would
ensue, if the principal was not aware thereof;
As for any obligation wherein the agent has exceeded
his power, the principal is not bound except when he (4) When it was stipulated that the expenses
ratifies it expressly or tacitly. (1727) would be borne by the agent, or that the latter
would be allowed only a certain sum. (n)
Art. 1911. 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. (n) CHAPTER 4
MODES OF EXTINGUISHMENT OF AGENCY
Art. 1912. The principal must advance to the agent,
should the latter so request, the sums necessary for
the execution of the agency.
Art. 1919. Agency is extinguished:
Should the agent have advanced them, the principal
must reimburse him therefor, even if the business or (1) By its revocation;
undertaking was not successful, provided the agent is
free from all fault.
(2) By the withdrawal of the agent;
The reimbursement shall include interest on the sums
advanced, from the day on which the advance was (3) By the death, civil interdiction, insanity or
made. (1728) insolvency of the principal or of the agent;

Art. 1913. The principal must also indemnify the agent (4) By the dissolution of the firm or corporation
for all the damages which the execution of the agency which entrusted or accepted the agency;
may have caused the latter, without fault or negligence
on his part. (1729) (5) By the accomplishment of the object or
purpose of the agency;
Art. 1914. The agent may retain in pledge the things
which are the object of the agency until the principal (6) By the expiration of the period for which the
effects the reimbursement and pays the indemnity set agency was constituted. (1732a)
forth in the two preceding articles. (1730)
Art. 1920. The principal may revoke the agency at will,
Art. 1915. If two or more persons have appointed an and compel the agent to return the document
agent for a common transaction or undertaking, they evidencing the agency. Such revocation may be
shall be solidarily liable to the agent for all the express or implied. (1733a)
consequences of the agency. (1731)
Art. 1921. If the agency has been entrusted for the
Art. 1916. When two persons contract with regard to purpose of contracting with specified persons, its
the same thing, one of them with the agent and the revocation shall not prejudice the latter if they were not
other with the principal, and the two contracts are given notice thereof. (1734)
incompatible with each other, that of prior date shall be
preferred, without prejudice to the provisions of Article Art. 1922. If the agent had general powers, revocation
1544. (n) of the agency does not prejudice third persons who
acted in good faith and without knowledge of the
revocation. Notice of the revocation in a newspaper of Title V. - TRUSTS (n)
general circulation is a sufficient warning to third CHAPTER 1
persons. (n) GENERAL PROVISIONS

Art. 1923. The appointment of a new agent for the Art. 1440. A person who establishes a trust is called
same business or transaction revokes the previous the trustor; one in whom confidence is reposed as
agency from the day on which notice thereof was given regards property for the benefit of another person is
to the former agent, without prejudice to the provisions known as the trustee; and the person for whose benefit
of the two preceding articles. (1735a) the trust has been created is referred to as the
beneficiary.
Art. 1924. The agency is revoked if the principal
directly manages the business entrusted to the agent, Art. 1441. Trusts are either express or implied.
dealing directly with third persons. (n) Express trusts are created by the intention of the
trustor or of the parties. Implied trusts come into being
Art. 1925. When two or more principals have granted a by operation of law.
power of attorney for a common transaction, any one
of them may revoke the same without the consent of Art. 1442. The principles of the general law of trusts,
the others. (n) insofar as they are not in conflict with this Code, the
Code of Commerce, the Rules of Court and special
Art. 1926. A general power of attorney is revoked by a laws are hereby adopted.
special one granted to another agent, as regards the
special matter involved in the latter. (n) CHAPTER 2
EXPRESS TRUSTS
Art. 1927. An agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of Art. 1443. No express trusts concerning an immovable
fulfilling an obligation already contracted, or if a partner or any interest therein may be proved by parol
is appointed manager of a partnership in the contract evidence.
of partnership and his removal from the management
is unjustifiable. (n) Art. 1444. No particular words are required for the
creation of an express trust, it being sufficient that a
Art. 1928. The agent may withdraw from the agency by trust is clearly intended.
giving due notice to the principal. If the latter should
suffer any damage by reason of the withdrawal, the Art. 1445. No trust shall fail because the trustee
agent must indemnify him therefor, unless the agent appointed declines the designation, unless the contrary
should base his withdrawal upon the impossibility of should appear in the instrument constituting the trust.
continuing the performance of the agency without
grave detriment to himself. (1736a) Art. 1446. Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous condition
Art. 1929. The agent, even if he should withdraw from upon the beneficiary, his acceptance shall be
the agency for a valid reason, must continue to act presumed, if there is no proof to the contrary.
until the principal has had reasonable opportunity to
take the necessary steps to meet the situation. (1737a) CHAPTER 3
IMPLIED TRUSTS
Art. 1930. The agency shall remain in full force and
effect even after the death of the principal, if it has Art. 1447. The enumeration of the following cases of
been constituted in the common interest of the latter implied trust does not exclude others established by
and of the agent, or in the interest of a third person the general law of trust, but the limitation laid down in
who has accepted the stipulation in his favor. (n) Article 1442 shall be applicable.

Art. 1931. Anything done by the agent, without Art. 1448. There is an implied trust when property is
knowledge of the death of the principal or of any other sold, and the legal estate is granted to one party but
cause which extinguishes the agency, is valid and shall the price is paid by another for the purpose of having
be fully effective with respect to third persons who may the beneficial interest of the property. The former is the
have contracted with him in good faith. (1738) trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child,
Art. 1932. If the agent dies, his heirs must notify the legitimate or illegitimate, of the one paying the price of
principal thereof, and in the meantime adopt such the sale, no trust is implied by law, it being disputably
measures as the circumstances may demand in the presumed that there is a gift in favor of the child.
interest of the latter. (1739)
Art. 1449. There is also an implied trust when a
donation is made to a person but it appears that
although the legal estate is transmitted to the donee,
he nevertheless is either to have no beneficial interest
or only a part thereof.
Art. 1450. If the price of a sale of property is loaned or
paid by one person for the benefit of another and the
conveyance is made to the lender or payor to secure
the payment of the debt, a trust arises by operation of
law in favor of the person to whom the money is
loaned or for whom its is paid. The latter may redeem
the property and compel a conveyance thereof to him.

Art. 1451. When land passes by succession to any

person and he causes the legal title to be put in the
name of another, a trust is established by implication of
law for the benefit of the true owner.

Art. 1452. If two or more persons agree to purchase

property and by common consent the legal title is
taken in the name of one of them for the benefit of all,
a trust is created by force of law in favor of the others
in proportion to the interest of each.

Art. 1453. When property is conveyed to a person in

reliance upon his declared intention to hold it for, or
transfer it to another or the grantor, there is an implied
trust in favor of the person whose benefit is
contemplated.

Art. 1454. If an absolute conveyance of property is

made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by
virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property
to him.

Art. 1455. When any trustee, guardian or other person

holding a fiduciary relationship uses trust funds for the
purchase of property and causes the conveyance to be
made to him or to a third person, a trust is established
by operation of law in favor of the person to whom the
funds belong.

Art. 1456. If property is acquired through mistake or

fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit
of the person from whom the property comes.

Art. 1457. An implied trust may be proved by oral

evidence.

Bar Q’s and A’s

TRUST Q: On 01 January 1980, Redentor and
Remedies entered into an agreement by virtue of A: This is a case of an implied resulting trust. If
which the former was to register a parcel of land in the Walter claims to have acquired ownership of the
name of Remedies under the explicit covenant to land by prescription or if he anchors his defense
reconvey the land to Remigio, son of Redentor, upon on extinctive prescription, the ten year period must
the son’s graduation from college. In 1981, the land be reckoned from 1987 when he demanded that
was registered in the name of Remedies. Redentor Maureen remove the extension house on Lot No. 2
died a year later or in 1982. In March 1983, Remigio because such demand amounts to an express
graduated from college. In February 1992, Remigio repudiation of the trust and it was made known to
accidentally found a copy of the document so Maureen. The action for reconveyance filed in 1992
constituting Remedies as the trustee of the land. In is not yet barred by prescription.
May 1994, Remigio filed a case against Remedies for
the reconveyance of the land to him. Remedies, in her
answer, averred that the action already prescribed.
How should the matter be decided? Q: Explain the concept of trust de son tort
(Constructive Trust) (2007 BAR)
A: The matter should be decided in favor of
Remigio (trustee) because the action has not A: A constructive trust is a trust not created by any
prescribed. The case at bar involves an express word or phrase, either expressly or impliedly,
trust which does not prescribe as long as they evincing a direct intention to create a trust, but is
have not been repudiated by the trustee (Diaz vs. one that arises in order to satisfy the demands of
Gorricho, 103 Phil, 261). justice. It does not come about by agreement or
intention but mainly operation of law and
construed as a trust against one who, by fraud,
duress or abuse of confidence, obtains or holds
Q: Joaquin Reyes bought from Julio Cruz a residential the legal right to property which he ought not, in
lot of 300 square meters in Quezon City for which equity and good conscience, to hold (Heirs of
Joaquin paid Julio the amount of P300, 000.00. When Lorenzo Yap v. Court of Appeals, 371 Phil. 523
the deed was about to be prepared Joaquin told Julio [1999]). The following are examples of constructive
that it be drawn in the name of Joaquina Roxas, his trust: 1. Article 1456 NCC which provides: “If
acknowledged natural child. Thus, the deed was so property is acquired through mistake or fraud, the
prepared and executed by Julio. Joaquina then built a person obtaining it is, by force of law considered a
house on the lot where she, her husband and children trustee of an implied trust for the benefit of the
resided. Upon Joaquin’s death, his legitimate children person from whom the property comes.” 2. Article
sought to recover possession and ownership of the lot, 1451 NCC which provides: “When land passes by
claiming that Joaquina Roxas was but a trustee of their succession to any person and he causes the legal
father. Will the action against Joaquina Roxas title to be put in the name of another, a trust is
prosper? (1993 BAR) established by implication of law for the benefit of
the true-owner.” 3. Article 1454 NCC which
A: Yes, because there is a presumed donation in provides: “If an absolute conveyance of property is
favor of Joaquina under Art. 1448 of the Civil Code
( Civil Code (De Los Santos v. Reyes, 27 January made in order to secure the performance of an
1992, 206 SCRA 437 ). However, the donation obligation of the grantor toward the grantee, a trust
should be collated to the hereditary estate and the by virtue of law is established. If the fulfillment of
legitime of the other heirs should be preserved. the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance
of the property to him.” 4. Article 1455 NCC which
Q: In 1980, Maureen purchased two lots in a plush
provides: “When any trustee, guardian or other
subdivision registering Lot 1 in her name and Lot 2 in
person holding a fiduciary relationship uses trust
the name of her brother Walter with the latter’s
funds for the purchase of property, and causes the
consent. The idea was to circumvent a subdivision
conveyance to be made to him or to a third person,
policy against the acquisition of more than one lot by
a trust is established to whom the findings belong.
one buyer. Maureen constructed a house on Lot 1 with
an extension on Lot 2 to serve as a guest house. In
1987, Walter who had suffered serious business
losses demanded that Maureen remove the extension
house since the lot on which the extension was built
was his property. In 1992, Maureen sued for the
reconveyance to her of Lot 2 asserting that a resulting
trust was created when she had the lot registered in
Walter’s name even if she paid the purchase price.
Walter opposed the suit arguing that assuming the
existence of a resulting trust the action of Maureen has
already prescribed since ten years have already AGENCY Q: A foreign manufacturer of computers and
elapsed from the registration of the title in his name. a Philippine distributor entered into a contract whereby
Decide. Discuss fully. (1995 BAR) the distributor agreed to order 1, 000 units of the
manufacturer’s computers every month and to resell
them in the Philippines at the manufacturer’s A: (B) Valid.
suggested prices plus 10%. All unsold units at the end
of the year shall be bought back by the manufacturer
at the same price they were ordered. The
manufacturer shall hold the distributor free and Q: A as principal appointed B as his agent granting him
harmless from any claim for defects in the units. Is the general and unlimited management over A's
agreement one for sale or agency? (2000 BAR) properties, stating that A withholds no power from B
and that the agent may execute such acts as he may
A: The contract is one of agency not sale. The consider appropriate. Accordingly, B leased A's parcel
notion of sale is negated by the following indicia: of land in Manila to C for four (4) years at P60, 000.00
(1) the price is fixed by the manufacturer with the per year, payable annually in advance. B leased
10% mark up constituting the commission; (2) the another parcel of land of A in Caloocan City to D
manufacturer reacquires the unsold units at without a fixed term at P3, 000.00 per month payable
exactly the same price; and (3) warranty for the monthly. B sold to E a third parcel of land belonging to
units was borne by the manufacturer. The A located in Quezon City for three (3) times the price
foregoing indicia negate sale because they that was listed in the inventory by A to B. All those
indicate that ownership over the units was never contracts were executed by B while A was confined
intended to transfer to the distributor. due to illness in the Makati Medical Center. Rule on
the validity and binding effect of each of the above
contracts upon A the principal. Explain your answers.
(1992 BAR)
Q: Jo-Ann asked her close friend, Aissa, to buy some
groceries for her in the supermarket. Was there a A: The agency couched in general terms
nominate contract entered into between Jo-Ann and comprised only acts of administration ( Art. 1877 ).
Aissa? In the affirmative, what was it? Explain. (2003 The lease contract on the Manila parcel is not
BAR) valid, not enforceable and not binding upon A. For
B to lease the property to C, for more than one (1)
A: Yes, there was a nominate contract. On the year, A must provide B with a special power of
assumption that Aissa accepted the request of her attorney (Art. 1878). The lease of the Caloocan City
close friend Jo-Ann to buy some groceries for her property to D is valid and binding upon A. Since
in the supermarket, what they entered into was the the lease is without a fixed term, it is understood to
nominate contract of Agency. Art. 1898 of the New be from month to month, since the rental is
Civil Code provides that by the contract of agency payable monthly ( Art. 1687 ). The sale of the
a person binds himself to render some service or Quezon City parcel to E is not valid and not
to do something in representation or on behalf of binding upon A. B needed a special power of
another, with the consent or authority of the latter. attorney to validly sell the land ( Arts. 1877 and
1878). The sale of the land at a very good price
does not cure the defect of the contract arising
from lack of authority.
Q: X appoints Y as his agent to sell his products in
Cebu City. Can Y appoint a subagent and if he does,
what are the effects of such appointment? (1999 Bar)
Q: CX executed a special power of attorney
authorizing DY to secure a loan from any bank and to
A: Yes, the agent may appoint a substitute or
mortgage his property covered by the owner’s
subagent if the principal has not prohibited him
certificate of title. In securing a loan from MBank, DY
from doing so, but he shall be responsible for the
did not specify that he was acting for CX in the
acts of the substitute: a. when he was not given
transaction with said bank. Is CX liable for the bank
the power to appoint one; b. when he was given
loan? Why or why not? Justify your answer. (2004
such power, but without designating the person,
BAR)
and the person appointed was notoriously
incompetent or insolvent.
A: CX is liable for the bank loan because he
authorized the mortgage on his property to secure
the loan contracted by DY. If DY later defaults and
fails to pay the loan, CX is liable to pay. However,
Q: An agent, authorized by a special power of attorney his liability is limited to the extent of the value of
to sell a land belonging to the principal succeeded in the said property. Alternative Answer: CX is not
selling the same to a buyer according to the personally liable to the bank loan because it was
instructions given the agent. The agent executed the contracted by DY in his personal capacity. Only the
deed of absolute sale on behalf of his principal two property of CX is liable. Hence, while CX has
days after the principal died, an event that neither the authorized the mortgage on his property to secure
agent nor the buyer knew at the time of the sale. What the loan of DY, the bank cannot sue CX to collect
is the standing of the sale? (2011 BAR) (A) Voidable. the loan in case DY defaults thereon. The bank can
(B) Valid. (C) Void. (D) Unenforceable. only foreclose the property of CX. And if the
proceeds of the foreclosure are not sufficient to
pay the loan in full, the bank cannot run after CX no mutual agency except as provided under Art.
for the deficiency. 487. Thus, Fe cannot sell the shares of Esperanza
and Caridad without a special power of attorney
Alternative Answer: While as a general rule the from them and the sale with respect to the shares
principal is not liable for the contract entered into of the latter without their written authority is void
by his agent in case the agent acted in his own under Art.1874. Hence, the sale of the property to
name Manuel is not valid with respect to the shares of
Esperanza and Caridad. Maria can only assail the
without disclosing his principal, such rule does not portion pertaining to Fe as the same has been
apply if the contract involves a thing belonging to validly sold to her by Fe.
the principal. In such case, the principal is liable
under Article 1SS3 of the Civil Code. The contract
is deemed made on his behalf (Syjuco v. Syjuco 40
Phil. 634 [1920]). Q: X, who was abroad, phoned his brother, Y,
authorizing him to sell X’s parcel of land in Pasay. X
Alternative Answer: CX would not be liable for the sent the title to Y by courier service. Acting for his
bank loan. CX’s property would also not be liable brother, Y executed a notarized deed of absolute sale
on the mortgage. Since DY did not specify that he of the land to Z after receiving payment. What is the
was acting for CX in the transaction with the bank, status of the sale? (2011 BAR) (A) Valid, since a
DY in effect acted in his own name. In the case of notarized deed of absolute sale covered the
Rural Bank of Bombon v. CA, 212 SCRA, (1992), transaction and full payment was made. (B) Void,
the Supreme Court, under the same facts, ruled since X should have authorized agent Y in writing to
that “in order to bind the principal by a mortgage sell the land. (C) Valid, since Y was truly his brother
on real property executed by an agent, it must X’s agent and entrusted with the title needed to effect
upon its face purport to be made, signed and the sale. (D) Valid, since the buyer could file an action
sealed in the name of the principal, otherwise, it to compel X to execute a deed of sale.
will bind the agent only. It is not enough merely
that the agent was in fact authorized to make the A: (B) Void, since X should have authorized agent
mortgage, if he has not acted in the name of the Y in writing to sell the land.
principal. Neither is it ordinarily sufficient that in
the mortgage the agent describes himself as acting
by virtue of a power of attorney, if in fact the agent
has acted in his own name and has set his own
hand and seal to the mortgage. There is no Q: X was the owner of an unregistered parcel of land in
principle of law by which a person can become Cabanatuan City. As she was abroad, she advised her
liable on a real estate mortgage which she never sister Y via overseas call to sell the land and sign a
executed in person or by attorney in fact". contract of sale on her behalf. Y thus sold the land to
B1 on March 31, 2001 and executed a deed of
absolute sale on behalf of X. B1 fully paid the purchase
price. B2, unaware of the sale of the land to B1,
signified to Y his interest to buy it but asked Y for her
Q: Fe, Esperanza, and Caridad inherited from their authority from X. Without informing X that she had sold
parents a 500 sq. m. lot which they leased to Maria for the land to B1, Y sought X for a written authority to sell.
three (3) years. One year after, Fe, claiming to have X e-mailed Y an authority to sell the land. Y thereafter
the authority to represent her siblings Esperanza and sold the land on May 1, 2001 to B2 on monthly
Caridad, offered to sell the leased property to Maria installment basis for two years, the first installment to
which the latter accepted. The sale was not reduced be paid at the end of May 2001. Who between B1 and
into writing, but Maria started to make partial payments B2 has a better right over the land? Explain. (2010 Bar
to Fe, which the latter received and acknowledged. Question)
After giving the full payment, Maria demanded for the
execution of a deed of absolute sale which Esperanza A: B-2 has a better title. This is not a case of
and Caridad refused to do. Worst, Maria learned that double sale since the first sale was void. The law
the siblings sold the same property to Manuel. This provides that when a sale of a piece of land or any
compelled Maria to file a complaint for the annulment interest therein is through an agent, the authority
of the sale with specific performance and damages. If of the latter shall be in writing; otherwise, the sale
you are the judge, how will you decide the case? (2014 shall be void (Article 1874,New Civil Code). The
BAR) property was sold by Y to B1 without any written
authority from the owner X. Hence, the sale to B1
A: I will dismiss the case for annulment of the sale was void.
and specific performance filed by Maria with
respect to the shares pertaining to Esperanza and Alternative Answer: Under the facts, B-1 has a
Caridad. Since the object of the sale is a co-owned better right to the land. Given the fact that the Deed
property, a co-owner may sell his undivided share of Sale in favor of B-1 and B- 2 are not inscribed in
or interest in the property owned in common but the Registry of Deeds, the case is governed by
the sale will be subject to the result of the partition Article 1544 of the New Civil Code which provides
among the co-owners. In a co-ownership there is that in case of double sales of an immovable
property, the ownership shall pertain to the person third persons who may have contracted with him in
who in good faith was first in possession and in good faith.”
the absence thereof to the person who presents
the oldest title, provided there is good faith. In a
case, the Supreme Court has held that in a sale of
real estate the execution of a notarial document of Q: As an agent, AL was given a guarantee
sale is tantamount to delivery of the possession of commission, in addition to his regular commission,
the property sold. Ownership of the land therefore after he sold 20 units of refrigerators to a customer, HT
pertains to the lmt buyer. It may also be mentioned Hotel. The customer, however, failed to pay for the
that under Act 3344 no instruments or deed units sold. AL’s principal, DRB1, demanded from AL
establishing, transmitting, acknowledging, payment for the customer’s accountability. AL
modifying, or extinguishing right to real property objected, on the ground that his job was only to sell
not registered under Act 496 shall be valid between and not to collect payment for units bought by the
the parties. Thus, the Deed of Sale of B-2 has no customer. Is AL’s objection valid? Can DRBI collect
binding effect on B-1. from him or not? Reason. (5%) (2004 Bar Question)

A: No, AL’s objection is not valid and DRBI can

collect from AL. Since AL accepted a guarantee
Q: In 1950, A executed a power of attorney authorizing commission, in addition to his regular
B to sell a parcel of land consisting of more than 14 commission, he agreed to bear the risk of
hectares. A died in 1954. In 1956, his four children sold collection and to pay the principal the proceeds of
more than 12 hectares of the land to C. In 1957, B the sale on the same terms agreed upon with the
sold. 8 hectares of the same land to D. It appears that purchaser (Article 1907, Civil Code).
C did not register the sale executed by the children. D,
who was not aware of the previous sale, registered the
sale executed by B, whose authority to sell was
annotated at the back of the Original Certificate of
Title. 1. What was the effect of the death of A upon B’s Q: Prime Realty Corporation appointed Nestor the
authority to sell the land? 2. Assuming that B still had exclusive agent in the sale of lots of its newly
the authority to sell the land—who has a developed subdivision. Prime Realty told Nestor that
he could not collect or receive payments from the
better right over the said land, C or D? (1988 Bar buyers. Nestor was able to sell ten lots to Jesus and to
Question) collect the down payments for said lots. He did not turn
over the collections to Prime Realty. Who shall bear
the loss for Nestor's defalcation, Prime Realty or
A: 1. While the death of the principal in 1954 ended Jesus? (1994 Bar Question)
the authority of the agent to sell the land, it has not
been shown that he was aware of his principal s
demise. Hence, the act of such agent is valid and A: a) The general rule is that a person dealing with
shall be fully effective with respect to third persons an agent must inquire into the authority of that
which may have contracted with him in good faith agent. In the present case, if Jesus did not inquire
in conformity with Art. 1931 of the Civil Code. into that authority, he is liable for the
(Buason vs. Panuyas, 105 Phil. 795, Herrera vs.
Luy, 110 Phil. 1020.) 2. As the case at bar is a case loss due to Nestor’s defalcation unless Article
of double sale of registered land he who recorded 1900, Civil Code governs, in which case the
the sale in good faith has a better right in developer corporation bears the loss. Art. 1900
conformity with Art. 1544 of the Civil Code. Since D Civil Code provides: “So far as third persons are
was not aware of the previous sale, he had to rely concerned, an act is deemed to have been
on the face of the certificate of title of the performed within the scope of the agent’s
registered owner. Hence, he now has a better right authority, if such act is within the terms of the
to the land. (Buason vs. Panuyas) power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority
according to an understanding between the
Alternative Answer: 1. The agency is terminated principal and the agent. However, if Jesus made
upon the death of either the principal or agent. due inquiry and he was not Informed by the
Exceptionally, a transaction entered into by the principal Prime Realty of the limits of Nestor’s
agent with a third person where both had acted in authority. Prime Realty shall bear the loss. b)
good faith is valid. Article 1930 of the Civil Code Considering that Prime Realty Corporation only
provides that: “The agency shall remain in full “told" Nestor that he could not receive or collect
force and effect even after the death of the payments, it appears that the limitation does not
principal, if it has been constituted in the common appear in his written authority or power of
interest of the latter and of the agent, or in the attorney. In this case, insofar as Jesus, who is a
interest of a third person who has accepted the third person, is concerned, Nestor’s acts of
stipulation in his favor.” and Article 1931 provides collecting payments is deemed to have been
that: “Anything done by the agent, without performed within the scope of his authority (Article
knowledge of the death of the principal or of any 1900, Civil Code). Hence, the principal is liable.
other cause which extinguishes the agency, is However, if Jesus was aware of the limitation of
valid and shall be fully effective with respect to
Nestor's power as an agent, and Prime Realty Q: Richard sold a large parcel of land in Cebu to Leo
Corporation does not ratify the sale contract, then for P100 million payable in annual installments over a
Jesus shall be liable (Article 1898, Civil Code). period of ten years, but title will remain with Richard
until the purchase price is fully paid. To enable Leo to
pay the price, Richard gave him a power-of-attorney
authorizing him to subdivide the land, sell the
individual lots, and deliver the proceeds to Richard, to
Q: A lawyer was given an authority by means of a
be applied to the purchase price. Five years later,
Special Power of Attorney by his client to sell a parcel
Richard revoked the power of attorney and took over
of land for the amount of P3 Million. Since the client
the sale of the subdivision lots himself. Is the
owed the lawyer Pl Million in attorney's fees in a prior
revocation valid or not? Why? (2001 Bar Question)
case he handled, the client agreed that if the property
is sold, the lawyer was entitled to get 5% agent's fee
plus Pl Million as payment for his unpaid attorney's A: The revocation is not valid. The power of
fees. The client, however, subsequently found a buyer attorney given to the buyer is irrevocable because
of his own who was willing to buy the property for a it is coupled with an interest: the agency is the
higher amount. Can the client unilaterally rescind the means of fulfilling the obligation of the buyer to
authority he gave in favor of his lawyer? Why or why pay the price of the land (Article 1927, CC). In other
not? (2015 BAR) words, a bilateral contract (contract to buy and sell
the land) is dependent on the agency.
A: NO, the agency in the case presented is one
which is coupled with an interest. As a rule,
agency is revocable at will except if it was
established for the common benefit of the agent Q: Will death of an agent end an agency?
and the principal. In this case, the interest of the
lawyer is not merely limited to his commission for A: NO, the revocation was not proper. As a rule, a
the sale of the property but extends to his right to contract of agency may be revoked by the principal
collect his unpaid professional fees. Hence, it is at will. However, an agency ceases to be revocable
not revocable at will (Art.1927). at will if it is coupled with an interest or if it is a
means of fulfilling an obligation already
contracted.

A: Yes. The death of an agent extinguishes the

Q: Joe Miguel, a well-known treasure hunter in
agency, by express provision of par. 3, Art 1919 of
Mindanao, executed a Special Power of Attorney
the Civil Code.
(SPA) appointing his nephew, John Paul, as his
attorney-in-fact. John Paul was given the power to deal
with treasure-hunting activities on Joe Miguel’s land
and to file charges against those who may enter it
without the latter’s authority. Joe Miguel agreed to give AGENCY
John Paul forty percent (40%) of the treasure that may Agency (2003)
be found on the land. Thereafter, John Paul filed a Jo-Ann asked her close friend, Aissa, to buy some
case for damages and injunction against Lilo for groceries for her in the supermarket. Was there a
illegally entering Joe Miguel’s land. Subsequently, he nominate contract entered into between Jo-Ann and
hired the legal services of Atty. Audrey agreeing to Aissa? In the affirmative, what was it? Explain. 5%
give the latter thirty percent (30%) of Joe Miguel’s
share in whatever treasure that may be found in the SUGGESTED ANSWER:
land. Dissatisfied however with the strategies Yes, there was a nominate contract. On the
implemented by John Paul, Joe Miguel unilaterally assumption that Aissa accepted the request of her
revoked the SPA granted to John Paul. Is the close friend Jo-Ann to but some groceries for her in the
revocation proper? (2014 BAR) supermarket, what they entered into was a nominate
contract of Agency. Article 1868 of the New Civil Code
A: An agency cannot be revoked if a bilateral provides that by the contract of agency a person binds
contract depends upon it, or if it is the means of himself to render some service or to do something in
fulfilling an obligation already contracted, (Art. representation or on behalf of another, with the
1927). In the case at bar, the agency may be consent or authority of the latter.
deemed an agency coupled with an interest not
only because of the fact that John Paul expects to ALTERNATIVE ANSWER:
receive 40% of whatever treasure may be found but Yes, they entered into a nominate contract of lease to
also because he also contracted the services of a service in the absence of a relation of principal and
lawyer pursuant to his mandate under the contract agent between them (Article 1644, New Civil Code).
of agency and he therefore stands to be liable to
the lawyer whose services he has contracted. Agency vs. Sale (2000)
(Sevilla v. Tourist World Service, G.R. No. L-41182- A foreign manufacturer of computers and a Philippine
3 April 16, 1988). distributor entered into a contract whereby the
distributor agreed to order 1,000 units of the
manufacturer's computers every month and to resell
them in the Philippines at the manufacturer's No, AL's objection is not valid and DRBI can collect
suggested prices plus 10%. All unsold units at from
the end of the year shall be bought back by the AL. Since AL accepted a guarantee commission, in
manufacturer at the same price they were ordered. addition
The manufacturer shall hold the distributor free and to his regular commission, he agreed to bear the risk of
harmless from any claim for defects in the units. Is the collection and to pay the principal the proceeds of the
agreement one for sale or agency? sale on
(5%) the same terms agreed upon with the purchaser
(Article 1907,
SUGGESTED ANSWER: Civil Code)
The contract is one of agency, not sale. The notion of Agency; Real Estate Mortgage (2004)
sale is negated by the following indicia: (1) the price is CX executed a special power of attorney authorizing
fixed by the manufacturer with the 10% mark-up DY to
constituting the commission; (2) the manufacturer secure a loan from any bank and to mortgage his
reacquires the unsold units at exactly the same property
price; and (3) warranty for the units was borne by the covered by the owner’s certificate of title. In securing a
manufacturer. The foregoing indicia loan
units was never intended to transfer to the distributor. from MBank, DY did not specify that he was acting for
CX
Agency; coupled with an interest (2001) in the transaction with said bank. Is CX liable for the
Richard sold a large parcel of land in Cebu to Leo for bank
P100 loan? Why or why not? Justify your answer. (5%)
million payable in annual installments over a period of SUGGESTED ANSWER:
ten CX is liable for the bank loan because he authorized
years, but title will remain with Richard until the the
purchase mortgage on his property to secure the loan contracted
price is fully paid. To enable Leo to pay the price, by
Richard DY. If DY later defaults and fails to pay the loan, CX is
gave him a power-of-attorney authorizing him to liable
subdivide to pay. However, his liability is limited to the extent of
the land, sell the individual lots, and deliver the the
proceeds to value of the said property. ALTERNATIVE ANSWER:
Richard, to be applied to the purchase price. Five CX
years later, is not personally liable to the bank loan because it was
Richard revoked the power of attorney and took over contracted by DY in his personal capacity. Only the
the property
sale of the subdivision lots himself. Is the revocation of CX is liable. Hence, while CX has authorized the
valid or mortgage
not? Why? (5%) on his property to secure the loan of DY, the bank
SUGGESTED ANSWER: cannot
The revocation is not valid. The power of attorney sue CX to collect the loan in case DY defaults thereon.
given to The
the buyer is irrevocable because it is coupled with an bank can only foreclose the property of CX.
interest: CIVIL LAW Answers to the BAR as Arranged by
the agency is the means of fulfilling the obligation of Topics (Year 1990-2006)
the And if the proceeds of the foreclosure are not sufficient
buyer to pay the price of the land (Article 1927, CC). In to All those contracts were executed by B while A was
other pay the loan in full, the bank cannot run after CX for
words, a bilateral contract (contract to buy and sell the the
land) deficiency.
is dependent on the agency. ALTERNATIVE ANSWER:
Agency; Guarantee Commission (2004) While as a general rule the principal is not liable for the
As an agent, AL was given a guarantee commission, in contract entered into by his agent in case the agent
addition to his regular commission, after he sold 20 acted in
units of his own name without disclosing his principal, such
refrigerators to a customer, HT Hotel. The customer, rule does
however, failed to pay for the units sold. AL’s principal, not apply if the contract involves a thing belonging to
DRBI, demanded from AL payment for the customer’s the
accountability. AL objected, on the ground that his job principal. In such case, the principal is liable under
was Article
only to sell and not to collect payment for units bought 1883 of the Civil Code. The contract is deemed made
by on his
the customer. Is AL’s objection valid? Can DRBI collect behalf (Sy-juco v. Sy-juco 40 Phil. 634 [1920]).
from him or not? Reason. (5%) ALTERNATIVE ANSWER:
SUGGESTED ANSWER: CX would not be liable for the bank loan. CX's property
would also not be liable on the mortgage. Since DY did B sold to E a third parcel of land belonging to A located
not in
specify that he was acting for CX in the transaction Quezon City for three (3) times the price that was listed
with the in
bank, DY in effect acted in his own name. In the case the inventory by A to B.
of confined due to illness in the Makati Medical Center.
Rural Bank of Bombon v. CA, 212 SCRA, (1992), the Rule on
Supreme the validity and binding effect of each of the above
Court, under the same facts, ruled that "in order to bind contracts
the upon A the principal. Explain your answers,
principal by a mortgage on real property executed by SUGGESTED ANSWER:
an The agency couched in general terms comprised only
agent, it must upon its face purport to be made, signed acts of
and administration (Art. 1877, Civil Code). The lease
sealed in the name of the principal, otherwise, it will contract on
bind the the Manila parcel is not valid, not enforceable and not
agent only. It is not enough merely that the agent was binding upon A. For B to lease the property to C, for
in fact more
authorized to make the mortgage, if he, has not acted than one (1) year, A must provide B with a special
in the power of
name of the principal. Neither is it ordinarily sufficient attorney (Art. 1878. Civil Code).
that in The lease of the Caloocan City property to D is valid
the mortgage the agent describes himself as acting by and
virtue binding upon A. Since the lease is without a fixed term,
of a power of attorney, if in fact the agent has acted in it is
his understood to be from month to month, since the rental
own name and has set his own hand and seal to the is
mortgage. There is no principle of law by which a payable monthly (Art. 1687, Civil Code).
person can The sale of the Quezon City parcel to E is not valid and
become liable on a real estate mortgage which she not
never binding upon A. B needed a special power of attorney
executed in person or by attorney in fact". to
Appointment of Sub-Agent (1999) validly sell the land (Arts. 1877 and 1878, Civil Code).
X appoints Y as his agent to sell his products in Cebu The
City. sale of the land at a very good price does not cure the
Can Y appoint a sub-agent and if he does, what are defect
the of the contract arising from lack of authority
effects of such appointment? (5%) Powers of the Agent (1994)
SUGGESTED ANSWER: Prime Realty Corporation appointed Nestor the
Yes, the agent may appoint a substitute or sub-agent if exclusive
the agent in the sale of lots of its newly developed
principal has not prohibited him from doing so, but he subdivision.
shall Prime Realty told Nestor that he could not collect or
be responsible for the acts of the substitute: receive
(1) when he was not given the power to appoint one; payments from the buyers. Nestor was able to sell ten
(2) when he was given such power, but without lots to
designating Jesus and to collect the down payments for said lots.
the person, and the person appointed was notoriously He did
incompetent or insolvent. not turn over the collections to Prime Realty. Who shall
General Agency vs. Special Agency (1992) bear
A as principal appointed B as his agent granting him the loss for Nestor's defalcation, Prime Realty or
general Jesus?
and unlimited management over A's properties, stating SUGGESTED ANSWER:
that A a) The general rule is that a person dealing with an
withholds no power from B and that the agent may agent
execute must inquire into the authority of that agent. In the
such acts as he may consider appropriate. present
Accordingly, B leased A's parcel of land in Manila to C case, if Jesus did not inquire into that authority, he is
for liable
four (4) years at P60,000.00 per year, payable for the loss due to Nestor's defalcation unless Article
annually in 1900,
advance. Civil Code governs, in which case the developer
B leased another parcel of land of A in Caloocan City corporation
to D bears the loss.
without a fixed term at P3,000.00 per month payable Art. 1900 Civil Code provides: "So far as third persons
monthly. are
concerned, an act is deemed to have been performed what are the obligations of Y to X as regards the
within contract
the scope of the agent's authority, if such act is within with Z? c) Upon X's return, what are the obligations of
the X as
terms of the power of attorney, as written, even if the regards Y's contract with W? d) What legal effects will
agent result if
has in fact exceeded the limits of his authority X expressly ratifies Y's management and what would
according to be the
an understanding between the principal and the agent. obligations of X in favor of Y? Explain all your answers.
However, if Jesus made due inquiry and he was not SUGGESTED ANSWER:
informed (a) The juridical relation is that of the quasi-contract of
by the principal Prime Realty of the limits of Nestor's "negotiorum gestio". Y is the "gestor" or "officious
authority. Prime Realty shall bear the loss. manager"
b) Considering that Prime Realty Corporation only and X is the "owner" (Art. 2144, Civil Code).
"told" (b) Y must render an account of his operations and
Nestor that he could not receive or collect payments, it deliver to
appears that the limitation does not appear in his X the price he received for the sale of the harvested
written fish
authority or power of attorney. In this case, insofar as (Art, 2145, Civil Code).
Jesus, (c) X must pay the loan obtained by Y from W because
who is a third person is concerned, Nestor's acts of X
collecting must answer for obligations contracted with third
payments is deemed to have been performed within persons in
the scope the interest of the owner (Art. 2150, Civil Code),
of his authority {Article 1900. Civil Code). Hence, the (d) Express ratification by X provides the effects of an
principal is liable. express agency and X is liable to pay the commissions
However, if Jesus was aware of the limitation of habitually received by the gestor as manager (Art.
Nestor's 2149, Civil
power as an agent, and Prime Realty Corporation does Code).
not Quasi-Contracts; Negotiorium Gestio (1995)
CIVIL LAW Answers to the BAR as Arranged by Armando owns a row of residential apartments in San
Topics (Year 1990-2006) Juan,
ratify the sale contract, then Jesus shall be liable Metro Manila, which he rents out to tenants. On 1 April
(Article allowing the other general partner to bind the 1991
corporation he left for the United States without appointing any
1898. Civil Code). administrator to manage his apartments such that
Termination; Effect of Death of Agent (1997) uncollected
Stating briefly the thesis to support your answer to rentals accumulated for three (3) years. Amparo, a
each of niece of
the following cases, will the death - (c) of an agent end Armando, concerned with the interest of her uncle,
an took it
agency? upon herself to administer the property. As a
SUGGESTED ANSWER: consequence,
Yes. The death of an agent extinguishes the agency, she incurred expenses in collecting the rents and in
by some
express provision of par. 3, Art 1919 of the Civil Code. instances even spent for necessary repairs to preserve
Quasi-Contracts; Negotiorium Gestio (1992) the
In fear of reprisals from lawless elements besieging his property.
barangay, X abandoned his fishpond, fled to Manila 1. What Juridical relation between Amparo and
and left Armando, if
for Europe. Seeking that the fish in the fishpond were any, has resulted from Amparo's unilateral act of
ready assuming the
for harvest, Y, who is in the business of managing administration of Armando's apartments? Explain.
fishponds 2. What rights and obligations, if any, does Amparo
on a commission basis, took possession of the have
property, under the circumstances? Explain.
harvested the fish and sold the entire harvest to Z. SUGGESTED ANSWER:
Thereafter, 1. Negotiorum gestio existed between Amparo and
Y borrowed money from W and used the money to buy Armando, She voluntarily took charge of the agency or
new management of the business or property of her uncle
supplies of fish fry and to prepare the fishpond for the without
next any power from her uncle whose property was
crop. a) What is the Juridical relation between X and Y neglected. She
during X's absence? b) Upon the return of X to the is called the gestor negotiorum or officious manager,
barangay, (Art.
2144, NCC)
2. It is recommended by the Committee that an second contract shall be disregarded and the first
enumeration contract will
of any two (2) obligations and two (2) rights as be enforced. (Cadalin v. POEA, 238 SCRA 762).
enumerated in b) No, their claim is not correct. The second contract
Arts. 2145 to 2152, NCC, would entitle the examinee to executed in Hongkong, partakes of the nature of a
full waiver that
credit. is contrary to Philippine law and the public policy
Alma was hired as a domestic helper in Hongkong by governing
the Filipino overseas workers. Art. 17, provides that our
Dragon Services, Ltd., through its local agent. She prohibitive laws concerning persons, their acts, or their
executed a property or which have for their object public order,
standard employment contract designed by the public
Philippine policy and good customs shall not be rendered
Overseas Workers Administration (POEA) for overseas ineffective by
Filipino workers. It provided for her employment for laws or conventions agreed upon in a foreign country.
one Besides,
year at a salary of US$1,000.00 a month. It was Alma's consent to the second contract was vitiated by
submitted to undue
and approved by the POEA. However, when she influence, being virtually helpless and under financial
arrived in distress
Hongkong, she was asked to sign another contract by in a foreign country, as indicated by the given fact that
Dragon she
Services, Ltd. which reduced her salary to only signed because she had no choice. Therefore, the
US$600.00 a defendants
month. Having no other choice, Alma signed the claim that the contract is valid under Hongkong law
contract but should be
when she returned to the Philippines, she demanded rejected since under the DOCTRINE OF
payment PROCESSUAL
of the salary differential of US$400.00 a month. Both PRESUMPTION a foreign law is deemed similar or
Dragon identical
Services, Ltd. and its local agent claimed that the to Philippine law in the absence of proof to the
second contrary, and
contract is valid under the laws of Hongkong, and such is not mentioned in the problem as having been
therefore adduced.
binding on Alma. Is their claim correct? Explain. PARTNERSHIP
SUGGESTED ANSWER: Composition of Partnerships; Spouses;
Their claim is not correct. A contract is the law Corporations (1994)
between the 1) Can a husband and wife form a limited partnership
parties but the law can disregard the contract if it is to engage in real estate business, with the wife being a
contrary limited
to public policy. The provisions of the 1987 partner?
Constitution on 2) Can two corporations organize a general
the protection of labor and on social justice (Sec. 10. partnership under
Art II) the Civil Code of the Philippines? 3) Can a corporation
embody a public policy of the Philippines. Since the and
application of Hongkong law in this case is in violation an individual form a general partnership?
of SUGGESTED ANSWER:
CIVIL LAW Answers to the BAR as Arranged by 1) a) Yes. The Civil Code prohibits a husband and wife
Topics (Year 1990-2006) from
that public policy, the application shall be disregarded constituting a universal partnership. Since a limited
by Court of Appeals (G.R No. 104235, Nov. 10, partnership is not a universal partnership, a husband
1993) the and wife
our Courts. (Cadalin v. POEA. 238 SCRA 762) may validly form one. b) Yes. While spouses cannot
ALTERNATIVE ANSWERS; enter
a) Their claim is not correct. Assuming that the second into a universal partnership, they can enter into a
contract is binding under Hongkong law, such second limited
contract is invalid under Philippine law which partnership or be members thereof (CIR u. Suter, etal.
recognizes as 27
valid only the first contract. Since the case is being SCRA 152).
litigated in SUGGESTED ANSWER:
the Philippines, the Philippine Court as the forum will 2) a) No, A corporation is managed by its board of
not directors. If the corporation were to become a partner,
enforce any foreign claim obnoxious to the forum's co-partners would have the power to make the
public corporation
policy. There is a strong public policy enshrined in our party to transactions in an irregular manner since the
Constitution on the protection of labor. Therefore, the partners
are not agents subject to the control of the Board of partnership does not of itself dissolve the partnership
Directors. But a corporation may enter into a joint in the
venture absence of an agreement. (Art. 1813. Civil Code)
with another corporation as long as the nature of the SUGGESTED ANSWER:
venture 2. Justine cannot interfere or participate in the
is in line with the business authorized by its charter. management or
(Tuason administration of the partnership business or affairs.
& Co., Inc. v. Bolano, 95 Phil. 106). She may,
b) As a general rule a corporation may not form a however, receive the net profits to which Una would
general have
partnership with another corporation or an individual otherwise been entitled. In this case, P120.000 (Art.
because 1813,
a corporation may not be bound by persons who are Civil Code)
neither Dissolution of Partnership (1995)
directors nor officers of the corporation. Pauline, Patricia and Priscilla formed a business
However, a corporation may form a general partnership
partnership with for the purpose of engaging in neon advertising for a
another corporation or an individual provided the term of
following five (5) years. Pauline subsequently assigned to Philip
conditions are met: her
1) The Articles of Incorporation of the interest in the partnership. When Patricia and Priscilla
corporation expressly allows the corporation to enter learned
into partnerships; of the assignment, they decided to dissolve the
2) The Articles of Partnership must provide that partnership
all partners will manage the partnership, and they shall before the expiration of its term as they had an
be unproductive
jointly and severally liable; and business relationship with Philip in the past. On the
3) In case of a foreign corporation, it must be other
licensed to do business in the Philippines. hand, unaware of the move of Patricia and Priscilla but
c) No. A corporation may not be a general partner sensing their negative reaction to his acquisition of
because Pauline's
the principle of mutual agency in general partnership interest, Philip simultaneously petitioned for the
will violate the corporation law principle that only the dissolution
board of the partnership.
of directors may bind the corporation. 1. Is the dissolution done by Patricia and Priscilla
SUGGESTED ANSWER: without
3) No, for the same reasons given in the Answer to the consent of Pauline or Philip valid? Explain.
Number 2. Does Philip have any right to petition for the
2 above. dissolution of the partnership before the expiration of
Conveyance of a Partner’s Share Dissolution its
(1998) specified term? Explain.
Dielle, Karlo and Una are general partners in a SUGGESTED ANSWER:
merchandising 1, Under Art. 1830 (1) (c) of the NCC, the dissolution
firm. Having contributed equal amounts to the capital, by
they Patricia and Priscilla is valid and did not violate the
also agree on equal distribution of whatever net profit contract
is of partnership even though Pauline and Philip did not
realized per fiscal period. After two years of operation, consent thereto. The consent of Pauline is not
however, Una conveys her whole interest in the necessary
partnership to because she had already assigned her interest to
Justine, without the knowledge and consent of Dielle Philip. The
and consent of Philip is not also necessary because the
Karlo. assignment
1. Is the partnership dissolved? to him of Pauline's interest did not make him a partner,
12%] under
2. What are the rights of Justine, if any, should she Art, 1813 of the NCC.
desire to ALTERNATIVE ANSWER:
participate in the management of the partnership and Interpreting Art. 1830 (1) (c) to mean that if one of the
in the partners had assigned his interest on the partnership
distribution of a net profit of P360.000.00 which was to
realized CIVIL LAW Answers to the BAR as Arranged by
after her purchase of Una's interest? [3%] Topics (Year 1990-2006)
SUGGESTED ANSWER: another the remaining partners may not dissolve the A
1. No, a conveyance by a partner of his whole interest should be hired as Secretary. The decision for the
in a hiring
partnership, the dissolution by Patricia and Priscilla A applied for the position of Secretary and B applied
without for the
the consent of Pauline or Philip is not valid. position of Accountant of the partnership.
SUGGESTED ANSWER: The hiring of A was decided upon by W and X, but was
2. No, Philip has no right to petition for dissolution opposed by Y and Z.
because The hiring of B was decided upon by W and Z, but was
he does not have the standing of a partner (Art. 1813 opposed by X and Y.
NCC). Who of the applicants should be hired by the
Dissolution of Partnership; Termination (1993) partnership?
A, B and C formed a partnership for the purpose of Explain and give your reasons.
contracting with the Government in the construction of SUGGESTED ANSWER:
one of A prevails because it is an act of administration
of its bridges. On June 30, 1992, after completion of which can
the be performed by the duly appointed managing
project, the bridge was turned over by the partners to partners, W
the and X.
Government. On August 30, 1992, D, a supplier of B cannot be hired, because in case of a tie in the
materials decision of
used in the project sued A for collection of the the managing partners, the deadlock must be decided
indebtedness by the
to him. A moved to dismiss the complaint against him partners owning the controlling interest. In this case,
on the the
ground that it was the ABC partnership that is liable for opposition of X and Y prevails because Y owns the
the controlling Interest (Art. 1801, Civil Code).
debt. D replied that ABC partnership was dissolved Obligations of a Partner; Industrial Partner (2001)
upon Joe and Rudy formed a partnership to operate a car
completion of the project for which purpose the repair
partnership shop in Quezon City. Joe provided the capital while
was formed. Will you dismiss the complaint against A If Rudy
you contributed his labor and industry. On one side of their
were the Judge? shop,
SUGGESTED ANSWER: Joe opened and operated a coffee shop, while on the
As Judge, I would not dismiss the complaint against A. other
because A is still liable as a general partner for his pro side, Rudy put up a car accessories store. May they
rata engage in
share of 1/3 (Art. 1816, C. C.J. Dissolution of a such separate businesses? Why? [5%]
partnership SUGGESTED ANSWER:
caused by the termination of the particular undertaking Joe, the capitalist partner, may engage in the
specified in the agreement does not extinguish restaurant
obligations, business because it is not the same kind of business
which must be liquidated during the "winding up" of the the
partnership affairs (Articles 1829 and 1830. par. 1-a, partnership is engaged in. On the other hand, Rudy
Civil may not
Code). engage in any other business unless their partnership
Effect of Death of Partner (1997) expressly permits him to do so because as an
Stating briefly the thesis to support your answer to industrial
each of partner he has to devote his full time to the business of
the following cases, will the death - of a partner the
terminate the partnership [Art. 1789, CC).
partnership? Commodatum & Mutuum
SUGGESTED ANSWER: Commodatum (1993)
Yes. The death of a partner will terminate the A, upon request, loaned his passenger Jeepney to B to
partnership, by enable
express provision of par. 5, Art. 1830 of the Civil Code. B to bring his sick wife from Paniqui. Tarlac to the
Obligations of a Partner (1992) Philippine
W, X, Y and Z organized a general partnership with W General Hospital in Manila for treatment. On the way
and X back to
as industrial partners and Y and Z as capitalist Paniqui, after leaving his wife at the hospital, people
partners. Y stopped
contributed P50,000.00 and Z contributed P20,000.00 the passenger Jeepney. B stopped for them and
to the allowed them
common fund. By a unanimous vote of the partners, W to ride on board, accepting payment from them just as
and in the
X were appointed managing partners, without any case of ordinary passenger Jeepneys plying their
specification of their respective powers and duties. route. As B
was crossing Bamban, there was an onrush of Lahar Gorricho. 103 Phil, 261).
from Mt Implied Trust (1998)
Pinatubo, the Jeep that was loaned to him was Juan and his sister Juana inherited from their mother
wrecked. 1) two
What do you call the contract that was entered into by parcels of farmland with exactly the same areas. For
A and B with respect to the passenger Jeepney that convenience, the Torrens certificates of title covering
was both
loaned by A to B to transport the latter's sick wife to lots were placed in Juan's name alone. In 1996, Juan
Manila? 2) Is B obliged to pay A for the use of the sold to
passenger an innocent purchaser one parcel in its entirety without
jeepney? 3) Is B liable to A for the loss of the the
Jeepney? knowledge and consent of Juana, and wrongfully kept
SUGGESTED ANSWER: for
1) The contract is called "commodatum". [Art. 1933. himself the entire price paid.
Civil 1. What rights of action, if any, does Juana have
Code). COMMODATUM is a contract by which one of against
the and/or the buyer? |3%]
parties (bailor) delivers to another (bailee) something 2. Since the two lots have the same area, suppose
not Juana
consumable so that the latter may use it for a certain flies a complaint to have herself declared sole owner of
time the
and return it. entire remaining second lot, contending that her
2) No, B is not obliged to pay A for the use of the brother had
passenger forfeited his share thereof by wrongfully disposing of
Jeepney because commodatum is essentially her
gratuitous. (Art. undivided share in the first lot. Will the suit prosper?
1933. Civil Code] [2%]
3) Yes, because B devoted the thing to a purpose SUGGESTED ANSWER:
different 1. When, for convenience, the Torrens title to the two
from that for parcels
of land were placed in Joan's name alone, there was
TRUST created
Express Trust; Prescription (1997) an implied trust (a resulting trust) for the benefit of
On 01 January 1980, Redentor and Remedies entered Juana
into an with Juan as trustee of one-half undivided or ideal
agreement by virtue of which the former was to register portion of
a each of the two lots. Therefore, Juana can file an
parcel of land in the name of Remedies under the action for
explicit damages against Joan for having fraudulently sold one
covenant to reconvey the land to Remigio, son of of the
Redentor, two parcels which he partly held in trust for Juana's
upon the son's graduation from college. In 1981, the benefit.
land Juana may claim actual or compensatory damage for
was registered in the name of Remedies. the loss
Redentor died a year later or in 1982. In March 1983, of her share in the land; moral damages for the mental
Remigio anguish, anxiety, moral shock and wounded feelings
graduated from college. In February 1992, Remigio she had
accidentally found a copy of the document so suffered; exemplary damage by way of example for the
constituting common good, and attorney's fees.
Remedies as the trustee of the land. In May 1994, Juana has no cause of action against the buyer who
Remigio acquired
filed a case against Remedies for the reconveyance of the land for value and in good faith, relying on the
the land transfer
to him. Remedies, in her answer, averred that the certificate of title showing that Juan is the registered
action owner
already prescribed. How should the matter be of the land.
decided? ANOTHER ANSWER:
SUGGESTED ANSWER: 1. Under Article 476 of the Civil Code, Juana can file
CIVIL LAW Answers to the BAR as Arranged by an
Topics (Year 1990-2006) action for quieting of title as there is a cloud in the title
The matter should be decided in favor of Remigio to the
(trustee) 1. Juana has the right of action to recover (a) subject real property. Second, Juana can also file an
her one-half action for
because the action has not prescribed. The case at bar damages against Juan, because the settled rule is that
involves an express trust which does not prescribe as the
long as
they have not been repudiated by the trustee (Diaz vs.
proper recourse of the true owner of the property who Juana has no cause of action against the buyer who
was acquired
prejudiced and fraudulently dispossessed of the same the land for value and in good faith, relying on the
is to transfer
bring an action for damages against those who caused certificate showing that Juan is the registered owner of
or the
employed the same. Third, since Juana had the right to land.
her SUGGESTED ANSWER:
share in the property by way of inheritance, she can 2. Juana's suit to have herself declared as sole owner
demand of the
the partition of the thing owned in common, under entire remaining area will not prosper because while
Article Juan's
494 of the Civil Code, and ask that the title to the act in selling the other lot was wrongful. It did not have
remaining the
property be declared as exclusively hers. legal effect of forfeiting his share in the remaining lot.
However, since the farmland was sold to an innocent However, Juana can file an action against Juan for
purchaser partition
for value, then Juana has no cause of action against or termination of the co-ownership with a prayer that
the buyer the lot
consistent with the established rule that the rights of an sold be adjudicated to Juan, and the remaining lot be
innocent adjudicated and reconveyed to her.
purchaser for value must be respected and protected ANOTHER ANSWER:
notwithstanding the fraud employed by the seller in 2. The suit will prosper, applying the ruling in Imperial
securing his vs.
title. (Eduarte vs. CA, 253 SCRA 391) CA cited above. Both law and equity authorize such a
ADDITIONAL ANSWER: result,
share in the proceeds of the sale with legal interest said the Supreme Court.
thereof, Strictly speaking, Juana's contention that her brother
and (b) such damages as she may be able to prove as had
having forfeited his share in the second lot is incorrect. Even if
been suffered by her, which may include actual or the
compensatory damages as well as moral and two lots have the same area, it does not follow that
exemplary they have
damages due to the breach of trust and bad faith the same value. Since the sale of the first lot on the
(Imperial Torrens
vs. CA, 259 SCRA 65). Of course, if the buyer knew of title in the name of Juan was valid, all that Juana may
the recover
co-ownership over the lot he was buying, Juana can is the value of her undivided interest therein, plus
seek (c) damages.
reconvenyance of her one-half share instead but she In addition, she can ask for partition or reconveyance
must of her
implead the buyer as co-defendant and allege his bad undivided interest in the second lot, without prejudice
faith in to any
purchasing the entire lot. Finally, consistent with the agreement between them that in lieu of the payment of
ruling in the
Imperial us. CA. Juana may seek instead (d) a value of Juana's share in the first lot and damages, the
declaration that second
she is now the sole owner of the entire remaining lot lot be reconveyed to her.
on the ALTERNATIVE ANSWER:
theory that Juan has forfeited his one-half share 2. The suit will not prosper, since Juan's wrongful act
therein. of
ADDITIONAL ANSWER: pocketing the entire proceeds of the sale of the first lot
1. Juana can file an action for damages against Juan is not
for having a ground for divesting him of his rights as a co-owner
fraudulently sold one of the two parcels which he partly of the
held second lot. Indeed, such wrongdoing by Juan does not
in trust for Juana's benefit. Juana may claim actual or constitute, for the benefit of Juana, any of the modes of
compensatory damage for the loss of her share in the acquiring ownership under Art. 712, Civil Code.
land; CIVIL LAW Answers to the BAR as Arranged by
moral damages for the mental anguish, anxiety, moral Topics (Year 1990-2006)
shock Trust; Implied Resulting Trust (1995)
and wounded feelings she had suffered; exemplary In 1960, Maureen purchased two lots in a plush
damage by subdivision
way of example for the common good, and attorney's registering Lot 1 in her name and Lot 2 in the name of
fees. her
brother Walter with the latter's consent. The idea was moved to dismiss the complaint against him on the
to ground
circumvent a subdivision policy against the acquisition that Hadji Butu was not a real party in interest and,
of therefore,
more than one lot by one buyer. Maureen constructed without legal capacity to sue and that he had not
a house agreed to a
on Lot 1 with an extension on Lot 2 to serve as a guest subrogation of creditor. Will Peter Co's defense of
house. absence of
In 1987, Walter who had suffered serious business agreement to a subrogation of creditor prosper?
losses SUGGESTED ANSWER:
demanded that Maureen remove the extension house No, Co's defense will not prosper. This is not a case of
since subrogation, but an assignment of credit.
the lot on which the extension was built was his ASSIGNMENT OF
property. In CREDIT is the process of transferring the right of the
1992, Maureen sued for the reconveyance to her of Lot assignor to the assignee. The assignment may be
2 done either
asserting that a resulting trust was created when she gratuitously or onerously, in which case, the
had the assignment has
lot registered in Walter's name even if she paid the an effect similar to that of a sale (Nyco Sales
purchase Corp.v.BA
price. Walter opposed the suit arguing that assuming Finance Corp. G.R No.71694. Aug.16, 1991 200
the SCRA 637). As a
existence of a resulting trust the action of Maureen has result of the assignment, the plaintiff acquired all the
already rights of
prescribed since ten years have already elapsed from the assignor including the right to sue in his own name
the as the
registration of the title in his name. Decide. Discuss legal assignee. In assignment, the debtor's consent is
fully. not
SUGGESTED ANSWER: essential for the validity of the assignment
This is a case of an implied resulting trust. If Walter (Art. 1624; 1475. CC; Rodriguez v. CA, et al, G. R
claims to No. 84220,
have acquired ownership of the land by prescription or March 25. 1992 207 SCRA 553).
if he ALTERNATIVE ANSWER:
anchors his defense on extinctive prescription, the ten No, the defense of Peter Co will not prosper. Hadji
year Butu
period must be reckoned from 1987 when he validly acquired his right by an assignment of credit
demanded that under
Maureen remove the extension house on Lot No. 2 Article 1624 of the Civil Code. However, the provisions
because on
such demand amounts to an express repudiation of the the contract of sale (Article 1475 Civil Code) will apply,
trust and
and it was made known to Maureen. The action for the transaction is covered by the Statute of Frauds.
reconveyance filed in 1992 is not yet barred by (Art.
prescription. 1403 par. (2) Civil Code)
(Spouses Huang v. Court of Appeals, Sept. 13, Conditional Sale vs. Absolute Sale (1997)
1994). Distinguish between a conditional sale, on the one
SALES hand, and
Assignment of Credit vs. Subrogation (1993) an absolute sale, on the other hand.
Peter Co, a trader from Manila, has dealt business with SUGGESTED ANSWER:
Allied A CONDITIONAL SALE is one where the vendor is
Commodities in Hongkong for five years. All through granted the right to unilaterally rescind the contract
the predicated
years, Peter Co accumulated an indebtedness of on the fulfillment or non-fulfillment, as the case may
P500,000.00 be, of
with Allied Commodities. Upon demand by its agent in the prescribed condition. An ABSOLUTE SALE is one
Manila, Peter Co paid Allied Commodities by check the where the title to the property is not reserved to the
amount owed. Upon deposit in the payee's account in vendor or
Manila, if the vendor is not granted the right to rescind the
the check was dishonored for insufficiency of funds. contract
For and based on the fulfillment or nonfulfillment, as the case
in consideration of P1.00, Allied Commodities assigned may be,
the of the prescribed condition.
credit to Hadji Butu who brought suit against Peter Co Contract of Sale vs. Agency to Sell (1999)
in the A granted B the exclusive right to sell his brand of
RTC of Manila for recovery of the amount owed. Peter Maong
Co
pants in Isabela, the price for his merchandise payable
within
60 days from delivery, and promising B a commission
of 20%
on all sales. After the delivery of the merchandise to B
but
before he could sell any of them, B’s store in Isabela
was
completely burned without his fault, together with all of
A's
pants. Must B pay A for his lost pants? Why? (5%)
SUGGESTED ANSWER:
The contract between A and B is a sale not an agency
to sell
because the price is payable by B upon 60 days from
delivery
even if B is unable to resell it. If B were an agent, he is
not
bound to pay the price if he is unable to resell it.
As a buyer, ownership passed to B upon delivery and,
under
Art. 1504 of the Civil Code, the thing perishes for the
owner.
Hence, B must still pay the price.

Q: A lawyer was given an authority by means of a

Special Power of Attorney by his client to sell a parcel
of land for the amount of P3 Million. Since the client
owed the lawyer Pl Million in attorney's fees in a prior
case he handled, the client agreed that if the property
is sold, the lawyer was entitled to get 5% agent's fee
plus Pl Million as payment for his unpaid attorney's
fees. The client, however, subsequently found a buyer
of his own who was willing to buy the property for a
higher amount. Can the client unilaterallythe rescind
authority he gave in favor of his lawyer? Why or why
not? (4%)

SUGGESTED ANSWER: No, the agency in the case

presented is one which is coupled with an interest.
As a rule, agency is revocable at will except if it
was established for the common benefit of the
agent and the principal. In this case, the interest of
the lawyer is not merely limited to his commission
for the sale of the property but extends to his right
to collect his unpaid professional fees. Hence, it is
not revocable at will. (Article 1927)