Partnership, Agency and Trust
A new partner who is admitted to the partnership is liable
63. A substituted partner is one admitted to all the rights of a limited
partner.
TRUE. Article 1859 (2). … A substituted limited partner is a person
admitted to all the rights of a limited partner who had died or has
assigned his interest in a partnership...
64. an assignee of a limited partner acquires all the rights of an assignor
FALSE.only if he becomes a substituted limited partner (Art 1859)
65. When A, a partner by estoppels, combines with B a partner in BDC
partnership, and on the strength of the representation, contracted with X, a
third person, a partnership liability will result even if the other partners, C
and D, had no knowledge of the representation. However, the innocent
partner could demand reimbursement from A and B.
FALSE. The only instance under our law when an existing
partnership is bound by the representation made by or in behalf
of a partner by estoppel is when all of the partners had given their
consent to such representation. It will be only then that a
partnership shall result. (Article 1825)
Since A, alone, acted without the consent of C and D. He alone is
liable separately
66. The partner is the co-owner of other partners with respect to the
undistributed net profits of the partnership.
FALSE. It is based on stipulation, not automatic co-ownership.
67. Q: Winding up may be done by a mere assignee in exceptional
circumstances.
A: TRUE. Art. 1836 provides that unless otherwise agreed, the
partners who have not wrongfully dissolved the partnership or the
legal representative of the last surviving partner, not insolvent,
has the right to wind up the partnership affairs, provided,
however, that any partner, his legal representative or his
assignee, upon cause shown, may obtain winding up by the
court.
68. The share of each partner in the unpaid obligations of the partnership
shall be determined in accordance with the rule on distribution of losses.
FALSE. Art. 1816. All partner including the industrial ones, shall be
liable pro rata with all their property and after all the
partnership assets have been exhausted..
69. The fiduciary duties of partners shall cease after the dissolution of the
partnership.
FALSE. Dissolution doesn't automatically terminate the relations
of partners who remain as co-partners until the winding up of
partnership affairs is completed ( de leon, p 213, art 1829)
* art 1829- On dissolution the partnership is not terminated, but
continues until the winding up of partnership affairs is completed.
70. A partner redeeming foreclosed partnership property with his separate
fund acquires the ownership of the said property because of the
partnership's distinct legal personality.
FALSE. The redeeming partner does not acquire absolute
ownership over the property but holds it in trust for the
partnership consistent with principles of fiduciary relationship.
71. The liability of a newly admitted partner for partnership debts prior to
or after his admission must be limited to his contribution in the partnership
unless otherwise stipulated by the partners.
TRUE.
for the existing obligations (antecedent obligations) of the
partnership but only to the extent of his or her capital
contribution. The new partner is personally liable for debts and
obligations incurred by the partnership after becoming a partner.
(Aquino, p. 649); See also Art. 1826, NCC
72. Q: A decree of dissolution of a partnership may be granted upon
application of the purchaser of partnership interest in case of termination
of the term or undertaking.
Answer: TRUE.
Basis:
“Art. 1831. On application by or for a partner the court shall
decree a dissolution whenever…
xxx
On the application of the purchaser of a partner’s interest under
Art. 1813 or 1814:
(1) After the termination of the specified term or particular
undertaking.”
73. Except as necessary for winding up, dissolution terminates all authority
of partners to act for the partnership.
A: FALSE
LB: After the dissolution, the following acts are binding:
1. Acts to wind up the affairs of the partnership
2. Contracts with the creditor without notice (actual or
constructive as the case may be) of the dissolution (p.653, Aquino,
2014)
74. After dissolution, a partner can bind the partnership by any transaction
which would bind the partnership if dissolution had not taken place,
provided the other party to the transaction had extended credit to the
partnership after dissolution.
FALSE. Dissolution terminates all authority of any partner to act
for the partnership except acts necessary to wind up partnership
affairs and acts necessary to complete transactions begun but not
then finished. (Art 1832) Not included sa exception?
75. Dissolution necessarily discharges a partner for partnership obligations
incurred thereafter.
FALSE:
Basis: Article 1833 in relation to Article 1834, par 1
“Where a partner enters into a new contract with a third person
after dissolution, the new contract generally will bind the partners
(Article 1834, par 1). Each of them is liable for his share of any
liability created by the acting partner as if the partnership had not
been dissolved (De Leon, 2011, p.235)”
Article 1833 - where the dissolution is caused by the act, death, or
insolvency of a partner, eart partner is liable to his co-partners for
his share of any liability created by any partner acting for the
partnership as if the partnership had not been dissolved…
76. Unless otherwise agreed, the partners who have not wrongfully
dissolved the partnership or the legal representative of the last surviving
insolvent partner, has the right to wind up the partnership affairs, provided,
however, that any partner, his legal representative or his assignee, upon
cause shown, may obtain winding up by the court.
FALSE Art. 1836. Unless otherwise agreed, the partners who have
not wrongfully dissolved the partnership or the legal
representative of the last surviving partner, not insolvent, has the
right to wind up the partnership affairs, provided, however, that
 any partner, his legal representative or his assignee, upon cause
shown, may obtain winding up by the court. (n)
77. When the partnership agreement is rescinded on the ground of fraud or
misrepresentation, partners who are not guilty shall have the right to
subrogation for any payments made by them of partnership liabilities.
FALSE. When the partnership agreement is rescinded on the
ground of fraud or mis representation, the innocent partners have
the right of subrogation in place of the partnership creditors after
payment of partnership liabilities. ( 2015 memaid. page 412)
78. Among the partners themselves, the authority of a partner to act for the
partnership is immediately terminated upon the death of a partner or
expiration of the partnership, unless otherwise agreed upon by the
partners.
FALSE.
REASON: Arts. 1832, 1834 NCC.
The dissolution of the partnership terminates all authority of the
managing partner or of any partner as the case may be, to act for
the partnership. This rule however is subject to the following
exceptions:
1. Acts necessary to wind up partnership affairs;
2. Acts necessary to complete transactions begun but not
then finished;
3. Acts or transactions which would bind the partnership
if dissolution had not taken place, provided the other
party to such transactions: a. Had
extended credit to the partnership PRIOR to the
dissolution and had no knowledge or notice of such
dissolution;
b. Although he had not so extended credit, had
nevertheless known of the partnership prior to
dissolution, and, having no knowledge or notice of
dissolution, the fact of dissolution had not been
advertised in a newspaper of general circulation in the
place at which the business was regularly carried on.
79. The dissolution of the partnership because of the death of a partner
shall result to the discharge of the liability of the deceased partner.
FALSE. The individual property of a deceased partner shall be liable for
all the obligations of the partnership incurred while he was a partner,
subject to prior payment of his separate debts. (ART. 1835)
80. During the winding up of business operations, the managing partner
should no longer enter into a contract without the consent of the
partners, otherwise the contract shall be unenforceable for want of
authority
FALSE
During the winding up of business operations, the managing partner
may still enter into contract necessary to wind up the partnership
affairs “without need for consent of the other partners”.
or
TRUE
Dissolution terminates all authority of the partner to act for the
partnership, hence no partner may enter into a new contract. All that
he may perform are acts necessary to dissolve the partnership.
81. Q: A contract of agency to sell personal property is a real contract which
requires the delivery of the thing sold.
A: FALSE
LB: In a contract of agency to sell, the agent receives the goods as
goods of the principal. (P.358, De Leon, 2010)Therefore, there is
no delivery because there is no intent to transfer the ownership
of the thing sold to the agent. Hence, it is not a real contract. (Not
sure about this. Paki-check na lang po.)
82. An agency “coupled with an interest” survives the grantor’s death.
Ans: FALSE. A mere statement that it is “coupled with an interest”
is not enough. In what does such interest consist must be stated.
(Del Rosario vs. Abad, 104 Phil. 648)
83. In case there are two or more principals, any one of them may revoke
the agency provided the consent of the other is sought.
Answer: FALSE. Under Article 1925, the revocation may be
without the consent of the other(s) if they have granted a power
of attorney for a common transaction.
84. If a person specially informs another or states by public advertisement
that he has given a power of attorney to a third person, the latter thereby
becomes a duly authorized agent, in the former case with respect to the
person who received the special information, and in the latter case, with
regard to any person even if the latter did not read the publication when he
transacted with the agent.
Answer: TRUE. Express stipulation under Article 1873. Read it in
relation to the accepted principle that publication in a newspaper
of general circulation is more than sufficient compliance with the
notice-posting requirement of the law. (Olizon vs. Court of
Appeals [1994])
85. A special power of attorney is necessary to make gifts for charity or to
employees in the business managed by the agent.
FALSE. It is necessary for the agent to secure Special powers of
attorney to bind the principal in the following cases, inter alia, to
make gifts, except customary ones for charity or those made to
employees in the business managed by the agent.
Basis:
Art. 1878 provides that customary ones for charity or those made
to employees in the business managed by the agent are
exempted.
86. SAME QUESTION
87. Q: An agent may be relieved by an agreement from an obligation to
render accounting
A: FALSE. Art. 1891. An agent is bound to render an account of his
transactions and to deliver to the principal whatever he may have
received by virtue of the agency, even though it may not be owing
to the principal.
Every stipulation exempting the agent from the obligation to
render an account shall be void.
88. Q: If the commission agent receives guaranty commission in addition to
a guarantee comm, the agent shall bear the risk of collection and shall pay
the principal the the proceeds of the sale on the terms agreed upon w/ the
purchaser unless the principal consented to the sale on credit.
A: TRUE/FALSE. Not sure. Hinanap ko sagot sa memaid wala din.
Please double check.
Art. 1907. Should the C.A. receive on sale, in addition to the
ordinary comm, another called a guaranty comm, he shall bear
the risk of collection snd shall pay the principal the proceeds of
the sale on the same terms agreed upon w/ the purchaser.
89. If the third person does not know that the agent exceeded the scope of
his authority, he may hold the agent liable as well as the principal, even if
he has not inquired into the authority of the agent.
ANSWER: FALSE, the third person is bound to inquire into the
authority of the agent to hold the principal liable because,
according to De Leon, the principal is not bound by the acts of an
agent beyond his limited power. In other words, third persons
dealing with an agent do so at their risk and are bound to inquire
as to the scope of his powers. There are, however, four
qualifications whereby the principal is held liable: (a) where his
(principal’s) act have contributed to deceive a third person in
good faith; (b) where the limitations upon the power created by
him could not have been known by the third person; (c) where the
principal has placed in the hands of the agent instruments signed
by him; and (d) where the principal has ratified the acts of the
agent. (De Leon, Partnership, Agency, and Trust (2010), page 436)
90.Agency by ostensible authority consists in the conscious permission of
acts beyond those powers granted.
ANSWER: TRUE, the Supreme Court described agency by
ostensible authority as follows: “Atty. Sabig may not have been
armed with a board resolution, but the appearance of Concha
made the parties assume that MEGAN had knowledge of Atty.
Sabigs actions and, thus, clothed Atty. Sabig with apparent
authority such that the parties were made to believe that the
proper person and entity to address was Atty. Sabig. Apparent
authority, or what is sometimes referred to as the "holding out"
theory, or doctrine of ostensible agency, imposes liability, not as
the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow
misleading the public into believing that the relationship or the
authority exists.” (Megan Sugar Corporation vs. RTC of Iloilo, G.R.
No. 170352, June 1, 2011)
91. If two or more principals have appointed an agent for a common
transaction or undertaking, they are jointly liable unless solidarity is agreed
upon.
FALSE - The principals are solidarily liable to the agent for all
consequences of the agency. (Art. 1915)
92. An agency is not revoked by the principal’s death if it has been
constituted in the interest of a third person without notice or knowledge of
the interest.
FALSE - The agency shall remain in full force and effect after
principal’s death, only if the third person has already accepted the
stipulation in his favor beforehand. (Art. 1930)
93. An agent may be bound to render services without compensation
provided there is a special power of attorney
Answer: FALSE
Legal Basis: Article 1875 of the Civil Code in relation to Article
1878 (9) and Article 1884 (1).
Article 1875. Agency is presumed to be for compensation, unless
there is proof to the contrary.
Article 1878. Special powers of attorney are necessary in the
following cases:
… FALSE. The general rule is compensation. Article 1875. Agency is
(9) To bind the principal to render some service
without compensation.
…
Article 1884. The agent is bound by his acceptance to carry out
the agency...
The prima facie presumption is that the agency is for
compensation. However, the principal and the agent may agree
that no compensation shall be given to the agent (De Leon pg.
391). The relation of principal and agent can be created although
the agent receives no compensation. A person who agrees to act
as agent without compensation is called a “gratuitous agent” (De
Leon pg. 393). The agent may, BY CONTRACT, bind himself to
render service without compensation. However, to bind the
principal to that effect, a special power is necessary (De Leon pg.
421).
Ordinarily, the promise of a gratuitous agent to
perform is not enforceable. The agent, however, is bound by his
acceptance to carry out the agency (De Leon pages 393 and 452).
94. In all cases, a special power of attorney is necessary to loan or borrow
money.
Answer: FALSE.
Legal Basis: Article 1878 (7). Special powers of attorney are
necessary in the following cases:
…
(7) To loan or borrow money, unless the latter act be
urgent and indispensable for the preservation of the things
which are under administration.
[Note, however, that the exception refers only to
“borrow” and not to “loan” (De Leon pg. 463).]
95. A special power to compromise authorizes submission to arbitration.
FALSE. Article 1880 NCC provides that a special power to
compromise DOES NOT authorize submission to arbitration.
96. There is an implied acceptance if the principal delivers his power of
attorney to agent and the latter receives it without objection.
TRUE. Article 1871 NCC states, “as 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 and the latter
receives it without any objection.”
97. An agent may be exempted from rendering an accounting.
FALSE.
A stipulation exempting agent from duty to account is void
(domingo v. Domingo). Exceptions: in cases of solutio indebity,
agent acted only as a middleman, right of lien in favor of the
agent against the principal. But as a general rule, an agent is
required to make an accounting.
98. If the principal does not mention the power to substitute at all, the
agent may appoint one but he is responsible for the acts of the substitute.
TRUE. An agent may appoint a sub agent as a general rule. Except
when prohibited by principal or the work entrusted requires the
agent's special skill knowledge or competence. The agent shall be
responsible for the acts of the substitute when he is not given the
power to appoint or the person appointed was notoriously
incompetent or insolvent.
99. An agency is gratuitous unless compensation is agreed upon.
presumed to be for a compensation, unless there is proof to the
contrary. (n)
100. The accomplishment of the object of the agency extinguishes the
agency even prior to the final accounting.
FALSE. Art. 1919 (5) is not qualified
101. An agency at will is revoked even if the revocation is not brought to
the knowledge of the agent.
TRUE. As between the principal and the agent, express notice to
the agent that the agency is revoked is not always necessary. A
revocation without notice to the agent will not render invalid an
act done in pursuance of the authority (3 Am. Jur. 2d 446)
102. A commission agent cannot sell on credit goods or items without the
express or implied consent of the principal
TRUE. Article 1905 The commission agent cannot, without express
or implied consent of the principal, sell on credit. Should he do so
the principal may demand from him payment in cash, but the
commission agent shall be entitled to any interest or benefit,
which may result from such sale.
103-107. Enumerate five instances where a special power of attorney is
necessary.
(1) To make such payments as are not usually considered as acts
of administration;
(2) To effect novations which put an end to obligations already in
existence at the time the agency was constituted;
(3) To compromise, to submit questions to arbitration, to
renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a prescription
already acquired;
(4) To waive any obligation gratuitously;
(5) To enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration;
Alternative answers:
(6) To make gifts, except customary ones for charity or those
made to employees in the business managed by the agent;
(7) To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration;
(8) To lease any real property to another person for more than
one year;
(9) To bind the principal to render some service without
compensation;
(10) To bind the principal in a contract of partnership;
(11) To obligate the principal as a guarantor or surety;
(12) To create or convey real rights over immovable property;
(13) To accept or repudiate an inheritance;
(14) To ratify or recognize obligations contracted before the
agency;
(15) Any other act of strict dominion.
Basis: Article 1878
108-110. What are some of the rules governing the interpretaiton of the
power of agents.
(a) Contracts of Agencies as well as the general powers of atty
must be interpreted in accordance with the language used by the
parties - article 1370;
(b) the real intention of the parties is primarily to be determined
from the language used and gathered from the whole instrument;
(c) Article 1361;
(d) the intention of the parties must be sustained than to be
defeated;
(e) the act of the parties carrying out the contract will be
presumed to be done in good faith and in conformity with the
contract. SOURCE: DE LEON 2010 Edition page 412
111-115. How does the agent observe care and diligence in the execution of
the agency?
1.) Art. 1884. The agent is bound by his acceptance to carry out
the agency, and is liable for the damages which, through his non-
performance, the principal may suffer.
He must also finish the business already begun on the death of
the principal, should delay entail any danger. (1718)
2.) Art. 1885. In case a person declines an agency, he is 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 appoint an agent or take charge of the
goods.
3.) Art. 1886. Should there be a stipulation that the agent shall
advance the necessary funds, he shall be bound to do so except
when the principal is insolvent.
4.) Art. 1887. In the execution of the agency, the agent shall act in
accordance with the instructions of the principal.
In default thereof, he shall do all that a good father of a family
would do, as required by the nature of the business. (1719)
5.) Art. 1888. An agent shall not carry out an agency if its
execution would manifestly result in loss or damage to the
principal.
116-118 How does the agent observe fidelity in the execution of the
agency?
116) Art. 1887 agent shall act in accordance with the instructions
of the principal...
117) Art. 1888 agent shall not carry out an agency if its execution
would manifestly result in loss or damage to the principal
118) Art 1888 agent shall be liable for damages if, there being a
conflict between his interests and those of the principal, he
should prefer his own.
119-124. What are the modes of extinguishing agency?
a) expiration of the period
b) death, civil interdiction, insanity or insolvency of the principal
or of the agent
c) withdrawal of the agent
d) accomplishment of the object or the purpose of the agency
e) revocaction
f) dissolution of the film or corporation, which entrusted or
accepted the agency.
125-128. What are the requisites for a valid revocation of agency.
1. Revocation in the same manner authority was given (Art 1873)
2. Good faith (Danon v Brimo & Co. 42Phil113)
3. No term is fixed, or the fixed term has expired Ramos v CA 63
SCRA 331)
*actually wala ako mahanap na requisites of valid revocation.
Tatlong libro na binasa ko, wala sa albano, paras or de leon. If
meron sa memaid, help me out please. smile emoticon
129-131 When is agency not revoked by Principal's death
A)if it has been constituted in the common interest of the latter
and of the agent,
B)in the interest of a third person who has accepted the
stipulation in his favor
C)
BASIS:
Art. 1930. The agency shall remain in full force and effect even
after the death of the principal, if it has been constituted in the
common interest of the latter and of the agent, or in the interest
of a third person who has accepted the stipulation in his favor. (n)