Atp2version2.pdf

PARTNERSHIP, AGENCY, AND TRUST 1.

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 has died or has assigned his interest in a partnership

2.

An assignee of a limited partner acquires all the rights of an assignor FALSE Only if he becomes a substituted limited partner (Art. 1959)

3.

When A, a partner by estoppel, combines with B, a partner in BCD 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. (Art. 1825). Since A alone acted without the consent of C and D. He alone is liable separately.

4.

Winding up may be done by a mere assignee in exceptional circumstances TRUE Article 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.

5.

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

6.

The fiduciary duties of partners shall cease after the dissolution of the partnership

7.

Except as necessary for winding up, dissolution terminates all authority of partners to act for the partnership FALSE After the dissolution, the following acts are binding: a. Acts to wind up the affairs of the partnership b. Contracts with the creditor without notice (actual or constructive as the case may be) of the dissolution

8.

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

9.

Dissolution necessarily discharges a partner for partnership obligations incurred thereafter FALSE Art. 1833. Where the dissolution is caused by the act, death, or insolvency of a partner, each 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. Where a partner enters into a new contract with a third person after dissolution, the new contract generally will bind the partners. Each of them is liable for any liability created by the acting partner as if the partnership had not been dissolved

10. 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 11. When the partnership agreement is rescinded on the ground of fraud or misrepresentation, partners who are not guilty shall have the right of subrogation for any payments made by them of partnership liabilities. FALSE When the partnership agreement is rescinded on the ground of fraud or misrepresentation, the innocent partners have the right of subrogation in place of the partnership creditors after payment of partnership liabilities 12. FALSE 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. Art. 1832, 1834. 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 expectations: a. Acts necessary to wind up partnership affairs b. Acts necessary to complete transactions begun but not then finished c. Acts or transactions which would bind the partnership if dissolution had not taken place, provided the other party to such transactions: i. Had extended credit to the partnership prior to the dissolution and had no knowledge or notice of such dissolution ii. 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. 13. 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) 14. 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 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 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 15. A contract of agency to sell personal property is a real contract which requires the delivery of the thing sold FALSE In a contract of agency to sell, the agent receives the goods as goods of the principal. 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 16. An agency “coupled with an interest” survives the grantor ’s death 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) 17. In case there are two or more principals, any one of them may revoke the agency provided the consent of the other is sought 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 18. 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 TRUE Express stipulation under Article 1873. Read it in relation to the accepted principle that publication in a newspaper of a general circulation is more than sufficient compliance with the notice-posting requirement of the law (Olizon vs CA) 19. A special power of attorney is necessary to make gifts for harity or to employees in the business managed by the agent. FALSE It is necessary for the agent to secure SPA 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 (Art 1878) 20. An agent may be relieved by an agreement from an obligation to render accounting FALSE Art. 1891. An agent is bound 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. 21. 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 proceeds of the sale on the terms agreed upon with the purchaser unless the principal consented to the sale on credit TRUE/FALSE Art. 1907. Should the CA receive on sale, in addition to the ordinary commission, another called a guaranty commission, he shall bear the risk of collection and shall pay the principal the proceeds of the sale on the same terms agreed upon with the purchaser 22. 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 FALSE The third person is bound to inquire into the authority of the agent to hold the principal liable because 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 the 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 d. Where the principal has ratified the acts of the agent 23. Agency by ostensible authority consists in the conscious permission of acts beyond those powers granted TRUE Apparent authority, or what is sometimes refreed 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) 24. 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) 25. 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 26. A special power to compromise authorizes submission to arbitration FALSE Article 1880 provides that a special power to compromise does not authorize submission to arbitration 27. There is an implied acceptance if the principal delivers his power of attorney to the agent and the latter receives it without objection TRUE

Article 1871 states that as between persons who are present, the acceptance of the agency may be implied if the principal delivers his power of attorney to the agent and the latter receives it without any objection 28. An agent may be exempted from rendering an accounting FALSE A stipulation exempting agent from duty to account is void (Domingo vs Domingo. Exceptions: In case of solution indebiti, agent acted only as a middleman, right of lien in favor of the agent against the principal 29. 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, knowlesge, 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 30. An agency is gratuitous unless compensation is agreed upon FALSE The general rule is compensation. Art 1875 provides that agency is presumed to be for a compensation, unless there is proof to the contrary 31. The accomplishment of the object of the agency extinguishes the agency even prior to the final accounting FALSE. Article 1919 (5) is not qualified 32. 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 33. 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 34. Enumerate 5 instances where a SPA is necessary: a. To make such payments as are not usually considered as acts of administration b. To effect novations which put an end to obligations already in existence at the time that agency was constituted c. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgement, to waive objections to the venue of an action or to abandon a prescription already acquired d. To waive any obligation gratuitously e. To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration f. To make gifts, except customary ones for charity or those made to employees in business managed by the agent g. To loan or borrow money, unless the latter act be urgent and indispensable for preservation of the things which are under administration h. To lease any real property to another person for more than one year i. To bind the principal to render some service without compensation j. To bind the principal in a contract of partnership k. To obligate the principal as a guarantor or surety l. To create or convey real rights over immovable property m. To accept or repudiate an inheritance n. To ratify or recognize obligations contracted before the agency o. Any other act of strict dominion (Art 1878) 35. What are some of the rules governing the interpretation of the power of agents (5) a. Contracts of agencies as well as the general powers of attorney must be interpreted in accordance with the language used by the parties (Art 1370)

b. c. d. e.

The real intention of the parties is primarily to be determined from the language used and gathered from the whole instrument Article 1361 The intention of the parties must be sustained than to be defeated The act of the parties in carrying out the contract will be presumed to be done in good faith and in conformity with the contract

36. How does the agent observe care and diligence in the execution of the agency (5) a. 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) b. 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. c. Art. 1886. Should there be stipulation that the agent shall advance the necessary funds, he shall be bound to do so except when the principal is insolvent d. 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) e. Art. 1888. An agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal 37. How does the agent observe fidelity in the execution of the agency (3) a. Art 1887. Agent shall act in accordance with the instructions of the principal b. Art 1888. Agent shall not carry out an agency if its execution would manifestly result in loss or damage to the principal c. Art 1888. Agent shall be liable for damages if there being conflict between his interests and those of the principal, he should prefer his own 38. Modes a. b. c. d. e. f.

of extinguishing agency (6) Expiration of the period Death, civil interdiction, insanity or insolvency of the principal or of the agent Withdrawal of the agent Accomplishment of the object or the purpose of the agency Revocation Dissolution of the firm or corporation, which entrusted or accepted the agency

39. Requisites for a valid revocation of agency (4) a. Revocation in the same manner authority was given b. Good faith c. No term is fixed, or the fixed term has expired 40. When is agency not revoked by principal’s death (3) 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. The act of the agent was executed without knowledge of the death of the principal and the third person who contracted with the agent in good faith