Partnership, Agency & Trusts (Bar Q&A) - San Beda LSG 2017-2018
Partnership, Agency & Trusts (Bar Q&A) - San Beda LSG 2017-2018
the manufacturer at the same price they were ordered. The manufacturer
LAW STUDENT GOVERNMENT (AY 2017-2018) shall hold the distributor free and harmless from any claim for defects in the units. Is
the agreement one for sale or agency?
ATP - BAR Q&As 1990-2017 (5%)
X was the owner of an unregistered parcel of land in Cabanatuan City. As she was Thereafter, John Paul filed a case for damages and injunction against Lilo for
abroad, she advised her sister Y via overseas call to sell the land and sign a contract illegally entering Joe Miguel’s land. Subsequently, he hired the legal services of
of sale on her behalf. Atty. Audrey aggreing to give the latter thirty percent (30%) of Joe Miguel’s share in
whatever treasure that may be found in the land.
B2, unaware of the sale of the land to B1, signified to Y his interest to buy it but Dissatisfied however with the strategies implemented by John Paul, Joe Miguel
asked Y for her authority from X. Without informing X that she had sold the land to unilaterally revoked the SPA granted to John Paul.
B1, Y sought X for a written authority to sell.
Is the revocation proper?
X e-mailed Y an authority to sell the land. Y thereafter sold the land on May 1, 2001
to B2 on monthly installment basis for two years, the first installment to be paid at SUGGESTED ANDSWER:
the end of May 2001. Yes, the revocation is proper. Art. 1920 provides that the principal may expressly or
impliedly revoke the agency at will, and compel the agent to return the document
Who between B1 and B2 has a better right over the land? Explain. (5%) evidencing the agency. Joe Miguel may however be held liable for damages if he
abused his right in revoking the agency.
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TRUST
ALTERNATIVE ANSWER:
No, the revocation is not proper. Under Art. 1927, an agency cannot be revoked if a Express Trust; Prescription (1997)
bilateral contract depends upon it, or if it is the means of fulfilling an obligation
already contracted, or if a partner is appointed manager of a partnership in the On 01 January 1980, Redentor and Remedies entered into an agreement by virtue of
contract of partnership and his removal from the management is unjustifiable. which the former was to register a parcel of land in the name of Remedies under the
In the case of Republic v. Evangelista, (G.R. No. 156015, August 11, 2005), which explicit covenant to reconvey the land to Remigio, son of Redentor, upon the son's
has similar facts as the present case, it was held that “an exception to the revocability graduation from college. In 1981, the land was registered in the name of Remedies.
of a contract of agency is when it is coupled with interest, i.e., if a bilateral contract Redentor died a year later or in 1982. In March 1983, Remigio graduated from
depends upon the agency. The reason for its irrevocability is because the agency college. In February 1992, Remigio accidentally found a copy of the document so
becomes part of another obligation or agreement. It is not solely the rights of the constituting Remedies as the trustee of the land. In May 1994, Remigio filed a case
principal but also that of the agent and third persons which are affected. Hence, the against Remedies for the reconveyance of the land to him. Remedies, in her answer,
law provided that in such cases, the agency cannot be revoked at the sole will of the averred that the action already prescribed. How should the matter be decided?
principal.”
In this case, the interest of John Paul and Atty. Audrey in the agency is the treasure SUGGESTED ANSWER:
that may be found in the land. The contract with the lawyer depends on the agency The matter should be decided in favor of Remigio (trustee) because the action has
which renders such agency as one coupled with an interest. Therefore, Joe Miguel not prescribed. The case at bar involves an express trust which does not prescribe as
cannot unilaterally revoke the agency. long as they have not been repudiated by the trustee (Diaz vs. Gorricho. 103 Phil,
261).
A lawyer was given an authority by means of a Special Power of Attorney by his Juan and his sister Juana inherited from their mother two parcels of farmland with
client to sell a parcel of land for the amount of P3M. Since the client owed the exactly the same areas. For convenience, the Torrens certificates of title covering
lawyer P1M in attorney’s fees in a prior case he handled, the client agreed that if the both lots were placed in Juan's name alone. In 1996, Juan sold to an innocent
property is sold, the lawyer was entitled to get 5% agent’s fee plus P1M as payment purchaser one parcel in its entirety without the knowledge and consent of Juana, and
for his unpaid attorney’s fees. The client, however, subsequently found a buyer of his wrongfully kept for
own who was willing to buy the property for a higher amount. Can the client himself the entire price paid.
unilaterally rescind the authority he gave in favor of his lawyer? Why or why not? 1. What rights of action, if any, does Juana have against and/or the buyer? |3%]
2. Since the two lots have the same area, suppose Juana flies a complaint to have
SUGGESTED ANSWER: herself declared sole owner of the entire remaining second lot, contending that her
No, the client cannot unilaterally rescind the authority he gave in favor of his lawyer brother had forfeited his share thereof by wrongfully disposing of her undivided
because the agency is coupled with interest, the interest being the attorney’s fees share in the first lot. Will the suit prosper? [2%]
which the client owed the lawyer. Under Art. 1927 of the Civil Code, an agency
cannot be revoked if a bilateral contract depends upon it, or if it is the means of SUGGESTED ANSWER:
fulfilling the obligation already contracted, or if a partner is appointed manager of a 1. When, for convenience, the Torrens title to the two parcels of land were placed in
partnership in the contract of partnership and his removal from the management is Joan's name alone, there was created an implied trust (a resulting trust) for the
unjustifiable. In this case, if the lawyer could sell his client’s property, the lawyer benefit of Juana with Juan as trustee of one-half undivided or ideal portion of each of
will be entitled not only to his commission, but also to his attorney’s fees. These the two lots. Therefore, Juana can file an action for
attorney’s fees were already owed by the client to his lawyer before the SPA was damages against Joan for having fraudulently sold one of the two parcels which he
executed. The agency is a means of fulfilling an obligation already contracted. partly held in trust for Juana's benefit. Juana may claim actual or compensatory
damage for the loss of her share in the land; moral damages for the mental anguish,
anxiety, moral shock and wounded feelings she had
suffered; exemplary damage by way of example for the common good, and attorney's
fees. Juana has no cause of action against the buyer who acquired
the land for value and in good faith, relying on the transfer certificate of title
showing that Juan is the registered owner of the land.
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ANOTHER ANSWER: ANOTHER ANSWER:
1. Under Article 476 of the Civil Code, Juana can file an action for quieting of title 2. The suit will prosper, applying the ruling in Imperial vs. CA cited above. Both
as there is a cloud in the title to the subject real property. Second, Juana can also file law and equity authorize such a result, said the Supreme Court.
an action for damages against Juan, because the settled rule is that the proper Strictly speaking, Juana's contention that her brother had forfeited his share in the
recourse of the true owner of the property who was second lot is incorrect. Even if the two lots have the same area, it does not follow
prejudiced and fraudulently dispossessed of the same is to bring an action for that they have the same value. Since the sale of the first lot on the Torrens title in the
damages against those who caused or employed the same. Third, since Juana had the name of Juan was valid, all that Juana may recover is the value of her undivided
right to her share in the property by way of inheritance, she can demand the partition interest therein, plus damages. In addition, she can ask for partition or reconveyance
of the thing owned in common, under Article 494 of the Civil Code, and ask that of her undivided interest in the second lot, without prejudice to any agreement
the title to the remaining property be declared as exclusively hers. between them that in lieu of the payment of the value of Juana's share in the first lot
However, since the farmland was sold to an innocent purchaser for value, then Juana and damages, the second lot be reconveyed to her.
has no cause of action against the buyer consistent with the established rule that the
rights of an innocent purchaser for value must be respected and protected ALTERNATIVE ANSWER:
notwithstanding the fraud employed by the seller in securing his title. (Eduarte vs. 2. The suit will not prosper, since Juan's wrongful act of pocketing the entire
CA, 253 SCRA 391) proceeds of the sale of the first lot is not a ground for divesting him of his rights as a
co-owner of the second lot. Indeed, such wrongdoing by Juan does not constitute, for
ADDITIONAL ANSWER: the benefit of Juana, any of the modes of
1. Juana has the right of action to recover (a) her one half share in the proceeds of the acquiring ownership under Art. 712, Civil Code.
sale with legal interest thereof, and (b) such damages as she may be able to prove as
having been suffered by her, which may include actual or compensatory damages as Trust; Implied Resulting Trust (1995)
well as moral and exemplary In 1960, Maureen purchased two lots in
damages due to the breach of trust and bad faith (Imperial vs. CA, 259 SCRA 65). a plush subdivision registering Lot 1 in her name and Lot 2 in the name of her
Of course, if the buyer knew of the co-ownership over the lot he was buying, Juana brother Walter with the latter's consent. The idea was to circumvent a subdivision
can seek (c) reconvenyance of her one-half share instead but she must implead the policy against the acquisition of more than one lot by one buyer. Maureen
buyer as co-defendant and allege his bad faith in constructed a house
purchasing the entire lot. Finally, consistent with the ruling in Imperial us. CA. on Lot 1 with an extension on Lot 2 to serve as a guest house.
Juana may seek instead (d) a declaration that she is now the sole owner of the entire In 1987, Walter who had suffered serious business losses demanded that Maureen
remaining lot on the theory that Juan has forfeited his one-half share therein. 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
ADDITIONAL ANSWER: resulting trust was created when she had the
1. Juana can file an action for damages against Juan for having fraudulently sold one lot registered in Walter's name even if she paid the purchase price. Walter opposed
of the two parcels which he partly held in trust for Juana's benefit. Juana may claim the suit arguing that assuming the existence of a resulting trust the action of Maureen
actual or compensatory damage for the loss of her share in the land; moral damages has already prescribed since ten years have already elapsed from the registration of
for the mental anguish, anxiety, moral shock and wounded feelings she had suffered; the title in his name. Decide. Discuss fully.
exemplary damage by way of example for the common good, and attorney's fees.
Juana has no cause of action against the buyer who acquired the land for value and in SUGGESTED ANSWER:
good faith, relying on the transfer certificate showing that Juan is the registered This is a case of an implied resulting trust. If Walter claims to have acquired
owner of the land. ownership of the land by prescription or if he anchors his defense on extinctive
prescription, the ten year period must be reckoned from 1987 when he demanded
SUGGESTED ANSWER: that Maureen remove the extension house on Lot No. 2 because such demand
2. Juana's suit to have herself declared as sole owner of the entire remaining area will amounts to an express repudiation of the trust and it was made known to Maureen.
not prosper because while Juan's act in selling the other lot was wrongful. It did not The action for reconveyance filed in 1992 is not yet barred by prescription.
have the legal effect of forfeiting his share in the remaining lot. (Spouses Huang v. Court of Appeals, Sept. 13, 1994).
However, Juana can file an action against Juan for partition or termination of the co-
ownership with a prayer that the lot sold be adjudicated to Juan, and the remaining
lot be adjudicated and reconveyed to her.
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2007-2013 siblings because more than 5 years have passed since the titles were registered in his
name. Do you agree? Explain.
Trust De Son Tort (2007)
Explain the following concepts and doctrines and give an example of each:
SUGGESTED ANSWER:
(A).concept of trust de son tort (constructive trust) (5%)
No, I don’t agree with X. This is clear case of an implied trust provided in Art. 1453
SUGGESTED ANSWER: of the Civil Code which states that “when property is conveyed to a person in
reliance upon his declared intention to hold it for, or transfer it to another or the
A constructive trust is a trust NOT created by any word or phrase, either expressly
grantor, there is an implied trust in favor of the person for whose benefit it is
or impliedly, evincing a direct intention to create a trust, but is one that arises in
contemplated.” In this case, A is the trustor, S is the trustee, and the three other
order to satisfy the demands of justice. It does not come about by agreement or
children of A are the beneficiaries. A and/or his three children may file an action to
intention but mainly operation of law and construed as a trust against one who, by
compel X to transfer title in favor his three siblings within ten (10) years from the
fraud, duress or abuse of confidence, obtains or holds the legal right to property
time the cause of action accrues upon an obligation created by law- when the
which he ought not, in equity and good conscience, to hold (Heirs of Lorenzo Yap
children attains the age of majority. (Art. 1144, Civil Code)
v. CA, 371 Phil 523, 1991). The following are examples of constructive trust: 1.
Art. 1456 NCC which provides: "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 for whom the property comes." 2. Art 1451 NCC which
provides: "When land passes by succession through 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." 3. Art 1454 NCC which provides: "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." 4. Art 1455 NCC which provides:
"When any trustee, guardian or any person holding a fiduciary relationship uses trust
funds for the purchase of property and causes conveyance to be made to him or to
third person, a trust is established by operation of law in favor of the person to whom
the funds belong."
Mr. A, a business man, put several real estate properties under the name of his eldest
son X because at that time, X was the only one of legal age among his four children.
He told his son he was to hold those assets for his siblings until they become adults
themselves. X then got married. After 5 years, Mr. A asked X to transfer the titles
over three properties to his three siblings, leaving two properties to himself. To A’s
surprise, X said that he can no longer be made to transfer the properties to his
SUGGESTED ANSWER:
Yes. The death of a partner will terminate the partnership, by express provision of No.XV. A, B, and C entered into a partnership to operate a restaurant business.
par. 5, Art. 1830 of the Civil Code. When the restaurant had gone past break-even stage and started to garner
considerable profits, C died. A and B continued the business without dissolving the
Obligations of a Partner (1992) partnership. They in fact opened a branch of the restaurant, incurring obligations in
the process. Creditors started demanding for the payment of their obligations.
W, X, Y and Z organized a general partnership with W and X as industrial partners
and Y and Z as capitalist partners. Y contributed P50,000.00 and Z contributed (A). Who are liable for the settlement of the partnership’s obligations? Explain?
P20,000.00 to the common fund. By a unanimous vote of the partners, W and X were (3%)
appointed managing partners, without any specification of their respective powers
and duties. A applied for the position of Secretary and B applied for the position of SUGGESTED ANSWER:
Accountant of the partnership.
The hiring of A was decided upon by W and X, but was opposed by Y and Z. The two remaining partners, A and B, are liable. When any partner dies and the
The hiring of B was decided upon by W and Z, but was opposed by X and Y. business is continued without any settlement of accounts as between him or his
X and Y are partners in a shop offering portrait painting. Y provided the capital and
the marketing while X was the portrait artist. They accepted the P50, 000.00
payment of Kyla to do her portrait but X passed away without being able to do it.
Can Kyla demand that Y deliver the portrait she had paid for because she was
dealing with the business establishment and not with the artist personally? Why or
why not?
SUGGESTED ANSWER:
A. No, Kyla cannot validly demand that Y deliver the portrait. Although she may be
correct that it is the partnership that she contracted with, Kyla cannot demand that Y
deliver the portrait if the intention of the parties was that the portrait should be done
by X and this is precisely why the obligation was constituted. With the death of X,
the obligation was extinguished because it is a purely personal obligation which is
extinguished upon the death of the obligor. Finally, the obligation is an obligation to
do. To oblige the surviving partner, Y, to deliver the painting (do the painting) would
be tantamount to an involuntary servitude, which is against the law.
ALTERNATIVE ANSWER:
A. Yes. Art. 1768 states that a partnership has a juridical personality separate and
distinct from that of each of the partners. The facts do not allege that Kyla contracted
for a purely personal service, hence the partnership is the entity which she contracted
with, so even upon the death of X, she can demand that Y as the remaining partner
deliver the portrait in fulfillment of the obligation of the partnership to her.
SUGGESTED ANSWER:
B. Yes. The Supreme Court has ruled that a joint venture may be considered a
species of partnership (Aurbach v Sanitary Wares Manufacturing Corp., 1989;
Philex Minig v CIR, 2008). It has also ruled that “a joint venture is hardly
distinguishable from, and may be likened to a partnership since their elements are
similar, i.e., community of interests in the business and sharing profits and losses.
Being a form of partnership, a joint venture is generally governed by the law on
partnership.” (Litonjua v Litonjua, 2005)