REVIEWER

1. Joe and Rudy formed a partnership to operate a car repair shop in Quezon City . Joe provided the capital
while Rudy contributed his labor and industry. On one side of their shop, Joe opened and operated a coffee
shop, while on the other side, Rudy put up a car accessories store. May they engage in such separate business?
Why?

Joe, the capitalist partner, may engage in the restaurant business because it is not the same kind of
business the partnership is engaged in. On the other hand, Rudy may not engage in any other
business unless their partnership expressly permits him to do so because as an industrial partner
he has to devote his full time to the business of the partnership (Art. 1789).

2. Jomig, Martin, and Jana formed a limited partnership. Jomig wants to amend the certificate considering
that was already a change in the name of the partnership . Martin and Jana fully agreed with him. What are the
other instances when there is a need to amend the certificate? Answer fully.

(1) There is a change in the name of the partnership or in the amount or character of the
contribution of any limited partner;
(2) A person is substituted as a limited partner;
(3) An additional limited partner is admitted;
(4) A person is admitted as a general partner;
(5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction
and the business is continued under Article 1860;
(6) There is a change in the character of the business of the partnership;
(7) There is a false or erroneous statement in the certificate;
(8) There is a change in the time as stated in the certificate for the dissolution of the partnership or
for the return of a contribution;
(9) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time
having been specified in the certificate, or
(10) The members desire to make a change in any other statement in the certificate in order that it
shall accurately represent the agreement among them.

3. A foreign manufacturer of computers and a Philippine _________ 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 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 harmless from any claim for defects in the units. Is the agreement one for sale or agency?
Why? Answer fully.

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.

4. ABC Partnership was dissolved last October 1, 2007. Partner A insists that he can still bind the
partnership. A) What are the instance where a partner can still bind the partnership even after the dissolution?
😎 What are the instances where the partnership is not bound by any act of the partner? Art. 1834

When partnership is bound:

 (1) By any act appropriate for winding up partnership affairs or completing transactions
unfinished at dissolution;
(2) By any transaction which would bind the partnership if dissolution had not taken place,
provided the other party to the transaction:
(a) Had extended credit to the partnership prior to dissolution and had no knowledge or
notice of the dissolution; or
(b) Though 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 (or in each place if
more than one) at which the partnership business was regularly carried on.

When partnership not bound:

(1) Where the partnership is dissolved because it is unlawful to carry on the business, unless the
act is appropriate for winding up partnership affairs; or
(2) Where the partner has become insolvent; or
(3) Where the partner has no authority to wind up partnership affairs; except by a transaction
with one who:
(a) Had extended credit to the partnership prior to dissolution and had no knowledge or
notice of his want of authority; or
(b) Had not extended credit to the partnership prior to dissolution, and, having no
knowledge or notice of his want of authority, the fact of his want of authority has not been
advertised in the manner provided for advertising the fact of dissolution in the first
paragraph, No. 2 (b).

5. Ivo, Grace, Richard and Marian are partners in My BFGF partnership. Ivo sold the car belonging to the
partnership without the consent of his other partners. In conveyance of the partnership property by a partner
without the concurrence of his co partners to an innocent purchaser without notice, what are the rights of the
latter?

1. The 3rd person has NO DUTY TO MAKE INQUIRIES AS TO ACTING PARTNER’S

AUTHORITY
2. There is a PRESUMPTION that the acting partner has the authority to BIND the partnership
3. The 3RD PERSON has NO RIGHT TO ASSUME THAT THE ACTING PARTNER HAS AN
UNLIMITED AUTHORITY

6. A) A, a Filipino citizen wrote B, a brother, authorizing him to sell a parcel of land belonging to him
located in Pampanga. On the strength of such letter-authority , B sold the land belonging to his brother. Is the
sale valid? Why?

Yes, the sale is valid. Art. 1874 states that when a sale of a piece of land or any interest therein is
sold through an agent, the authority of the latter shall be in writing; otherwise the sale shall be
void.

😎 ABC Corporation authorized X to deal with customers in the sale of car accessories. X was able to perfect a
contract over the sale of P10M worth of car accessories to be delivered in 12 monthly deliveries and payable
also within the same period. X was entitled to 5% commission. After three months from the first delivery. ABC
Corporation terminated the agency of x and refused to pay him commission. Is the action of ABC Corporation
correct? Why?

No the action is not correct. The termination is unlawful. ABC Corporation has the obligation to
compensate the agent for services made by the agent.

7. When is a power of Atty. Necessary?

(1) To make payments not usually considered acts of administration;

(2) To effect novations which put an end to obligations
(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
(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
(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.

8. A. Manny Marquez , a commission agent of Mega Shipping Corporation entered into a contract with
NFA for the carriage of several sacks of rice from San Jose Occidental Mindoroto Navotas, Metro Manila. After
the delivery of the goods, the carrier demanded the payment of freightage and demurrage plus stevedoring
charges. NFA refused on the ground that Marquez did not disclose his principal and contended that an
undisclosed principal cannot maintain an action upon a contract made by his agent unless the principal was
disclosed in the contract. Is the contention correct? Why? B. what are the modes of extinguishing agency?
Explain fully.

A.
The contention is not correct. The principal is bound by all the obligation which his agent may
have contracted within the scope of his authority under Art. 1910 of the Civil Code. Even if the
principal is undisclosed, the actions of the agent continues to be valid.

B.
1. By revocation
2. By withdrawal of the agent
3. By death, civil interdiction, insanity or insolvency of the principal or the agent
4. By dissolution of the firm which entrusted the agency
5. By the accomplishment of the purpose of the agency
6. By the expiration of the period for which the agency was constituted
9. Give five (5) distinctions between express and implied trust.

Express trust:
1. Created by intention of the parties
2. Interest cannot be proved by parol evidence
3. Action must be made within 10 yrs from knowlegde of repudiation, otherwise prescribed
4. beneficiary is necessary in order that laches may bar an action to enforce
5. Trustee can sue and be sued

Implied:
- created by operation of law
- interest may be proved by oral evidence
- Action must be made 10 yrs from the date of registration (constructive)
- laches may bar an action even if there is no repudiation
- trustee cannot sue or be sued

10. What is the period of prescription of an action for reconveyance of real property based on an implied
trust? Answer fully.

An action for reconveyance of real property based on implied trust prescribes in 10 years from the
date of registration of the deed or the date of the issuance of the certificate of title over the
property. The 10 – year prescriptive period applies only when the person enforcing the trust is not
in possession of the property. If a person claiming to be its owner is in actual possession of the
property, the right to seek reconveyance does not prescribe. The reason is that the one who is in
actual possession of the land claiming to be its owner may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right.