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Agency - Bar Questions
Agency - Bar Questions
SUGGESTED ANSWER:
Yes, there was a nominate contract. On the assumption that Aissa accepted the request
of her close friend Jo-Ann to but some groceries for her in the supermarket, what they
entered into was a nominate contract of Agency.
Article 1868 of the New Civil Code provides that by the contract of agency a person
binds himself to render some service or to do something in representation or on behalf
of another, with the consent or authority of the latter.
ALTERNATIVE ANSWER:
Yes, they entered into a nominate contract of lease to service in the absence of a
relation of principal and agent between them (Article 1644, New Civil Code).
Agency vs. Sale (2000)
SUGGESTED ANSWER:
The contract is one of agency, not sale. The notion of sale is negated by the following
indicia: (1) the price is fixed by the manufacturer with the 10% mark-up constituting the
commission; (2) the manufacturer reacquires the unsold units at exactly the same
price; and (3) warranty for the units was borne by the manufacturer. The foregoing
indicia negate sale because they indicate that ownership over the units was never
intended to transfer to the distributor.
SUGGESTED ANSWER:
The revocation is not valid. The power of attorney given to the buyer is irrevocable
because it is coupled with an interest: the agency is the means of fulfilling the
obligation of the buyer to pay the price of the land (Article 1927, CC). In other words, a
bilateral contract (contract to buy and sell the land) is dependent on the agency.
SUGGESTED ANSWER:
No, AL’s objection is not valid and DRBI can collect from AL. Since AL accepted a
guarantee commission, in addition to his regular commission, he agreed to bear the risk
of collection and to pay the principal the proceeds of the sale on the same terms agreed
upon with the purchaser (Article 1907, Civil Code)
Is CX liable for the bank loan? Why or why not? Justify your answer.
SUGGESTED ANSWER:
ALTERNATIVE ANSWER:
And if the proceeds of the foreclosure are not sufficient to pay the loan in full, the bank
cannot run after CX for the deficiency.
ALTERNATIVE ANSWER:
While as a general rule the principal is not liable for the contract entered into by his
agent in case the agent acted in his own name without disclosing his principal, such rule
does not apply if the contract involves a thing belonging to the principal. In such case,
the principal is liable under Article 1883 of the Civil Code. The contract is deemed
made on his behalf (Sy-juco v. Sy-juco, 40 Phil. 634 [1920]).
ALTERNATIVE ANSWER:
CX would not be liable for the bank loan. CX’s property would also not be liable on the
mortgage. Since DY did not specify that he was acting for CX in the transaction with the
bank, DY in effect acted in his own name. In the case
of Rural Bank of Bombon v. CA, 212 SCRA, (1992), the Supreme Court, under the
same facts, ruled that “in order to bind the principal by a mortgage on real property
executed by an agent, it must upon its face purport to be made, signed and sealed in the
name of the principal, otherwise, it will bind the agent only. It is not enough merely that
the agent was in fact authorized to make the mortgage, if he, has not acted in the name
of the 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
principle of law by which a person can become liable on a real estate mortgage which
she never executed in person or by attorney in fact”.
X appoints Y as his agent to sell his products in Cebu City. Can Y appoint a sub-agent an
d if he does, what are the effects of such appointment?
SUGGESTED ANSWER:
Yes, the agent may appoint a substitute or sub-agent if the principal has not prohibited
him from doing so, but he shall be responsible for the acts of the substitute:
(1) when he was not given the power to appoint one;
(2) when he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent.
A as principal appointed B as his agent granting him general and unlimited
management over A’s properties, stating that A withholds no power from B and that the
agent may execute such acts as he may consider appropriate.
Accordingly, B leased A’s parcel of land in Manila to C for four (4) years at P60,000.00
per year, payable annually in advance.
All those contracts were executed by B while A was confined 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.
SUGGESTED ANSWER:
The agency couched in general terms comprised only acts of administration (Art. 1877,
Civil Code). The lease contract on the Manila parcel is not valid, not enforceable and not
binding upon A. For B to lease the property to C, for more than one (1) year, A must
provide B with a special power of attorney (Art. 1878. Civil Code).
The lease of the Caloocan City property to D is valid and binding upon A. Since the lease
is without a fixed term, it is understood to be from month to month, since the rental is
payable monthly (Art. 1687, Civil Code).
The sale of the Quezon City parcel to E is not valid and not binding upon A. B needed a
special power of attorney to validly sell the land (Arts. 1877 and 1878, Civil Code). The
sale of the land at a very good price does not cure the defect of the contract arising from
lack of authority.
Powers of the Agent (1994)
SUGGESTED ANSWER:
a) The general rule is that a person dealing with an agent must inquire into the authority
of that agent. In the present case, if Jesus did not inquire into that authority, he is liable
for the loss due to Nestor’s defalcation unless Article 1900, Civil Code governs, in which
case the developer corporation bears the loss.
Art. 1900 Civil Code provides: “So far as third persons are concerned, an act is deemed
to have been performed within the scope of the agent’s authority, if such act is within the
terms of the power of attorney, as written, even if the agent has in fact exceeded the
limits of his authority according to an understanding between the principal and the
agent.
However, if Jesus made due inquiry and he was not informed by the principal
Prime Realty of the limits of Nestor’s authority. Prime Realty shall bear the loss.
b) Considering that Prime Realty Corporation only “told” Nestor that he could not
receive or collect payments, it appears that the limitation does not appear in his written
authority or power of attorney. In this case, insofar as Jesus, who is a third person is
concerned, Nestor’s acts of collecting payments is deemed to have been performed
within the scope of his authority {Article 1900. Civil Code). Hence, the principal is
liable.
However, if Jesus was aware of the limitation of Nestor’s power as an agent, and Prime
Realty Corporation does not ratify the sale contract, then Jesus shall be liable
(Article 1898. Civil Code).
SUGGESTED ANSWER:
Yes. The death of an agent extinguishes the agency, by express provision of par. 3, Art
1919 of the Civil Code.