GROUP VI

ELCANA, LEANEL
RIVERA, CHARMAINE
2004 CIVIL LAW BAR EXAM QUESTIONS ON AGENCY
I.
As an agent, AL was given a guarantee commission, in
addition to his regular commission, after he sold 20 units of
refrigerators to a customer, HT Hotel. The customer,
however, failed to pay for the units sold. ALs principal, DRBI,
demanded
from
AL
payment
for
the
customers
accountability. AL objected, on the ground that his job was
only to sell and not to collect payment for units bought by
the customer. Is ALs objection valid? Can DRBI collect from
him or not? Reason.
Answer:
No, AL's objection is not valid and DRBI can collect
from AL.
Should the commission agent receive on a sale, in
addition to the ordinary commission, another called a
guarantee 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, (Article 1907,
Civil Code).
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 HT Hotel
who failed to pay the obligation.
Thus, AL's objection is not valid and DRBI can collect
from AL.

II.
CX executed a special power of attorney authorizing DY
to secure a loan from any bank and to mortgage his
property covered by the owners certificate of title. In
securing a loan from MBank, DY did not specify that he was
acting for CX in the transaction with said bank. Is CX liable
for the bank loan? Why or why not? Justify your answer.
Answer:
CX would not be liable for the bank loan. CX's property
would also not be liable on the mortgage.
The Supreme Court held in the case of Rural Bank of
Bombon v. CA, 212 SCRA, (1992), 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".
In the case at bar, DY, in obtaining a loan from MBank
did not divulge that he was acting as attorney-in-fact of CX,
DY in effect acted in his own name. To bind his principal, the
deed of real estate mortgage must upon its face purport to
be made, signed and sealed in the name of the principal.
Absence of such will render DY personally liable for the loan
transacted.
Hence, CX will have no liability on the loan obtained as
well as his property.

Problem: Bar Question Partnership (2010)

A,B and C entered into a partnership to operate a
restaurant business. When the restaurant had gone pasteven stage and started to garner considerable profits, C
died. A and B continued the business without dissolving the
partnership. They in fact opened a branch of the restaurant,
incurring obligations in the process. Creditors started
demanding for the payment of their obligations.
A. Who are liable for the settlement of the
partnerships obligations? Explain?
Answer:
The two remaining partners, A and B are liable for the
settlement of the partnerships obligation.
Under
business
between
liable for

Article 1841 When any partner dies and the

is continued without any settlement of accounts as
him or his estate, the surviving partners are held
continuing the business.

In the case at bar, despite the death of C, creditors can

demand payment of obligation to the two surviving partners
who continued the restaurant business.
Hence, the surviving partners A and B are liable.
B. What are the creditors recourse/s? Explain.
Answer:
Under Article 1841 When any partner dies and the
business is continued without any settlement of accounts as
between him or his estate, the surviving partners are held
liable for continuing the business.
The Creditors recourses are as follows;
First, the Creditors can file the appropriate actions, for
instance, an action for collection of sum of money against
the partnership at will and if there are no sufficient funds,
the creditor may go after the private properties of A and B.
Second, the Creditors may also sue the estate of C. The
estate is not excused from the liabilities of the partnership

even if C is dead already but only up to the time that he

remained a partner. However, liability of CS individual
properties shall be subject first to the payment of his
separate debts.