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ATP

 REVIEWER  
 
1. What  is  a  “Procuring  Cause”?  
In  Phil.   Health-­‐Care   Providers   (Maxicare)   v.   Estrada,   542   SCRA   616   (2008),   the   Court   held   that   the   term  
“procuring  cause”  in  describing  a  broker’s  activity,  refers  to  a  cause  originating  a  series  of  events  which,  
without   break   in   their   continuity,   result   in   the   accomplishment   of   the   prime   objective   of   the   employment  
of  the  broker—producing  a  purchaser  ready,  willing  and  able  to  buy  on  the  owner’s  terms.  To  be  regarded  
as  the  “procuring  cause”  of  a  sale  as  to  be  entitled  to  a  commission,  a  broker’s  efforts  must  have  been  the  
foundation  on  which  the  negotiations  resulting  in  a  sale  began.  
 
2. Power  and  Authority  of  the  Agent  
Authority  is  the  power  of  the  agent  to  affect  the  legal  relations  of  the  principal  by  acts  done  in  accordance  
with  the  principal’s  manifestation  of  consent  to  him.  The  authority  of  the  agent  is  the  very  essence  –  the  
sine  qua  non  –  of  the  principal  and  agent  relationship.  
 
Power  is  taken  to  mean  an  ability  on  the  part  of  the  agent  to  produce  a  change  in  a  given  legal  relation,  by  
doing  and  not  doing  a  given  act.  
 
Authority  may  be  considered  the  source  or  cause,  while  power  is  the  effect.  
 
3. Fraud  rectifying  trust  as  compared  to  Intention  enforcing  trust  
 
ESTATE   OF   MARGARITA   D.   CABACUNGAN,   represented   G.R.  No.  175073  
by  LUZ  LAIGO-­‐ALI,  Petitioner,      
    Present:  
*
    CARPIO,  J.,  
-­‐  versus  -­‐   VELASCO,  JR.,  J.,  Chairperson,  
**
    BRION,  
    PERALTA,  and  
***
MARILOU   LAIGO,   PEDRO   ROY   LAIGO,   STELLA   BALAGOT   SERENO,  JJ.  
and  SPOUSES  MARIO  B.  CAMPOS  AND  JULIA  S.  CAMPOS,   Promulgated:  
Respondents.      
August  15,  2011  
 
A   trust   is   the   legal   relationship   between   one   person   having   an   equitable   ownership   of   property   and  
another   person   owning   the   legal   title   to   such   property,   the   equitable   ownership   of   the   former   entitling  
 
him  to  the  performance  of  certain  duties  and  the  exercise  of  certain  powers  by  the  latter. Trusts  are  either  
express  or  implied.  Express  or  direct  trusts  are  created  by  the  direct  and  positive  acts  of  the  parties,  by  
 
some   writing   or   deed,   or   will,   or   by   oral   declaration   in   words   evincing   an   intention   to   create   a   trust.
Implied   trusts   also   called   trusts   by   operation   of   law,   indirect   trusts   and   involuntary   trusts   arise   by   legal  
implication   based   on   the   presumed   intention   of   the   parties   or   on   equitable   principles   independent   of   the  
 
particular  intention  of  the  parties. They  are  those  which,  without  being  expressed,  are  deducible  from  the  
nature  of  the  transaction  as  matters  of  intent  or,  independently  of  the  particular  intention  of  the  parties,  
as  being  inferred  from  the  transaction  by  operation  of  law  basically  by  reason  of  equity.  
   
Implied  trusts  are  further  classified  into  constructive  trusts  and  resulting  trusts.  Constructive  trusts,  on  the  
one   hand,   come   about   in   the   main   by   operation   of   law   and   not   by   agreement   or   intention.  They   arise   not  
by   any   word   or   phrase,   either   expressly   or   impliedly,   evincing   a   direct   intention   to   create   a   trust,   but   one  
 
which   arises   in   order   to   satisfy   the   demands   of   justice. Also   known   as   trusts  ex   maleficio,  trusts  ex  
delicto  and   trusts  de   son   tort,  they   are   construed   against   one   who   by   actual   or   constructive   fraud,   duress,  
abuse   of   confidence,   commission   of   a   wrong   or   any   form   of   unconscionable   conduct,   artifice,  
concealment   of   questionable   means,   or   who   in   any   way   against   equity   and   good   conscience   has   obtained  
or   holds   the   legal   right   to   property   which   he   ought   not,   in   equity   and   good   conscience,   hold   and  
enjoy.  They  are  aptly  characterized  as  fraud-­‐rectifying  trust,  imposed  by  equity  to  satisfy  the  demands  of  
justice  and  to  defeat  or  prevent  the  wrongful  act  of  one  of  the  parties.  Constructive  trusts  are  illustrated  
in  Articles  1450,  1454,  1455  and  1456.  
   
On  the  other  hand,  resulting  trusts  arise  from  the  nature  or  circumstances  of  the  consideration  involved  in  
a  transaction  whereby  one  person  becomes  invested  with  legal  title  but  is  obligated  in  equity  to  hold  his  
title  for  the  benefit  of  another.  This  is  based  on  the  equitable  doctrine  that  valuable  consideration  and  not  
legal   title   is   determinative   of   equitable   title   or   interest   and   is   always   presumed   to   have   been  
contemplated  by  the  parties.  Such  intent  is  presumed  as  it  is  not  expressed  in  the  instrument  or  deed  of  
conveyance  and  is  to  be  found  in  the  nature  of  their  transaction.  Implied  trusts  of  this  nature  are  hence  
describable   as   intention-­‐enforcing   trusts.  Specific   examples   of   resulting   trusts   may   be   found   in   the   Civil  
Code,  particularly  Articles  1448,  1449,  1451,  1452  and  1453.  
Articles  1448  to  1456  of  the  Civil  Code  enumerate  cases  of  implied  trust,  but  the  list  according  to  Article  
1447   is   not   exclusive   of   others   which   may   be   established   by   the   general   law   on   trusts   so   long   as   the  
limitations  laid  down  in  Article  1442  are  observed,  that  is,  that  they  be  not  in  conflict  with  the  New  Civil  
Code,  the  Code  of  Commerce,  the  Rules  of  Court  and  special  laws.  
   
While   resulting   trusts   generally   arise   on   failure   of   an   express   trust   or   of   the   purpose   thereof,   or   on   a  
conveyance   to   one   person   upon   a   consideration   from   another   (sometimes   referred   to   as   a   purchase-­‐
money   resulting   trust),   they   may   also   be   imposed   in   other   circumstances   such   that   the   court,   shaping  
judgment  in  its  most  efficient  form  and  preventing  a  failure  of  justice,  must  decree  the  existence  of  such  a  
trust.  A   resulting   trust,   for   instance,   arises   where,   there   being   no   fraud   or   violation   of   the   trust,   the  
circumstances  indicate  intent  of  the  parties  that  legal  title  in  one  be  held  for  the  benefit  of  another.  It  also  
arises   in   some   instances   where   the   underlying   transaction   is   without   consideration,   such   as   that  
contemplated   in   Article   1449  of   the   Civil   Code.  Where   property,   for   example,   is   gratuitously   conveyed   for  
a  particular  purpose  and  that  purpose  is  either  fulfilled  or  frustrated,  the  court  may  affirm  the  resulting  
trust  in  favor  of  the  grantor  or  transferor,  where  the  beneficial  interest  in  property  was  not  intended  to  
vest  in  the  grantee.  
 
4. Agency  coupled  with  interest  
As   held   by   the   Supreme   Court   in   the   case   of   [G.R.   No.   156015.   August   11,   2005]   REPUBLIC   OF   THE  
PHILIPPINES   vs.   HON.   VICTORINO   EVANGELISTA:   Art.  1868  of  the  Civil  Code  provides  that  by  the  contract  
of  agency,  an  agent  binds  himself  to  render  some  service  or  do  something  in  representation  or  on  behalf  
of  another,  known  as  the  principal,  with  the  consent  or  authority  of  the  latter.  
A  contract   of   agency  is  generally   revocable  as  it  is  a  personal  contract  of  representation  based  on  trust  
and  confidence  reposed  by  the  principal  on  his  agent.  As  the  power  of  the  agent  to  act  depends  on  the  
will   and   license   of   the   principal   he   represents,   the   power   of   the   agent   ceases   when   the   will   or   permission  
is  withdrawn  by  the  principal.  Thus,  generally,  the  agency  may  be  revoked  by  the  principal  at  will.  
However,  an  exception  to  the  revocability  of  a  contract  of  agency  is  when  it  is  coupled  with  interest,  i.e.,  if  
a   bilateral   contract   depends   upon   the   agency.  The   reason   for   its   irrevocability   is   because   the   agency  
becomes  part  of  another  obligation  or  agreement.  It  is  not  solely  the  rights  of  the  principal  but  also  that  of  
the  agent  and  third  persons  which  are  affected.  Hence,  the  law  provides  that  in  such  cases,  the  agency  
cannot  be  revoked  at  the  sole  will  of  the  principal.  
 
Lim   v.   Saban:   Under   Article   1927   of   the   Civil   Code,   an   agency   cannot   be   revoked   if   a   bilateral   contract  
depends   upon   it,   or   if   it   is   the   means   of   fulfilling   an   obligation   already   contracted,   or   if   a   partner   is  
appointed  manager  of  a  partnership  in  the  contract  of  partnership  and  his  removal  from  the  management  
is   unjustifiable.   Stated   differently,   an   agency   is   deemed   one   coupled   with   an   interest   where   it   is  
established  for  the  mutual  benefit  of  the  principal  and  of  the  agent,  or  for  the  interest  of  the  principal  and  
of  third  persons,  and  it  cannot  be  revoked  by  the  principal  so  long  as  the  interest  of  the  agent  or  of  a  third  
person   subsists.   In   an   agency   coupled   with   an   interest,   the   agent’s   interest   must   be   in   the   subject   matter  
of   the   power   conferred   and   not   merely   an   interest   in   the   exercise   of   the   power   because   it   entitles   him   to  
compensation.   When   an   agent’s   interest   is   confined   to   earning   his   agreed   compensation,   the   agency   is  
not   one   coupled   with   an   interest,   since   an   agent’s   interest   in   obtaining   his   compensation   as   such   agent   is  
an  ordinary  incident  of  the  agency  relationship.    
 
5. Authority  of  the  lawyer  is  presumed  
As   a   general   rule   in   the   law   on   agency,   agency   is   generally   not   presumed;   the   relationship   between  
principal   and   agent   must   exist   as   a   fact.   However,   the   authority   of   attorney   to   appear   on   behalf   of   his  
client  is  one  that  is  presumed.  As  provided  for  in  Sec.  21,  Rule  138  of  the  Rules  of  Court:  An  attorney  is  
presumed  to  be  properly  authorized  to  represent  any  cause  in  which  he  appears,  and  no  written  power  of  
attorney   is   required   to   authorize   him   to   appear   in   court   for   his   client,   but   the   presiding   judge   may,   on  
motion   of   either   party   and   on   reasonable   grounds   therefor   being   shown,   require   any   attorney   who  
assumes  the  right  to  appear  in  a  case  to  produce  or  prove  the  authority  under  which  he  appears,  and  to  
disclose,   whenever   pertinent   to   any   issue,   the   name   of   the   person   who   employed   him,   and   may  
thereupon   make   such   order   as   justice   requires.   An   attorney   willfully   appearing   in   court   for   a   person  
without  being  employed,  unless  by  leave  of  the  court,  may  be  punished  for  contempt  as  an  officer  of  the  
court  who  has  misbehaved  in  his  official  transactions.  
 
6. Do  you  need  an  SPA  when  selling  a  land,  or  just  an  ordinary  authority?  (Case)  
Article  1874.  When  a  sale  of  a  piece  of  land  or  any  interest  therein  is  through  an  agent,  the  authority  of  
the  latter  shall  be  in  writing;  otherwise,  the  sale  shall  be  void.  
 
As   a   general   rule,   the   agent’s   authority   may   be   oral   or   written   (Art.   1869).   An   agency   to   sell   on  
commission   basis   does   not   belong   to   any   of   the   categories   of   contracts   for   which   the   law   requires   certain  
formalities;  hence,  it  is  valid  and  enforceable  in  whatever  form  it  may  be  entered  into.  
 
Under   this   article,   the   sale   of   a   piece   of   land   (not   any   other   real   estate)   or   any   interest   thereon,   like  
usufruct,  mortgage,  etc.,  through  an  agent  is  void  unless  the  authority  of  the  agent  to  sell  is  in  writing.  A  
written   special   power   of   attorney   is   necessarily   “not   only”   to   protect   the   interest   of   an   unsuspecting  
owner  from  being  prejudiced  by  the  unwarranted  act  of  another  but  also  to  caution  the  buyer  to  assure  
himself  of  the  specific  authorization  of  the  putative  agent.    
 
7. What  is  the  effect  of  an  agent  selling  a  property  of  principal  who  dies,  known  by  buyer  and  not  of  
the  agent-­‐seller?  
Article  1919.  Agency  is  extinguished:  xxx  (3)  by  the  death,  civil  interdiction,  insanity  or  insolvency  of  the  
principal  or  of  the  agent.  
 
General  rule:  by  reason  of  the  very  nature  of  the  relationship  between  the  principal  and  agent,  agency  is  
extinguished  ipso  jure  upon  the  death  of  either  principal  or  agent.  
Exceptions:  (a)  that  the  agency  is  coupled  with  interest  (Art.  1930);  and,  (b)  that  the  act  of  the  agent  was  
executed  without  knowledge  of  the  death  of  the  principal  and  the  third  person  who  contracted  with  the  
agent  acted  in  good  faith  (Art.  1931)  
 
Article  1931.  Anything  done  by  the  agent,  without  knowledge  of  the  death  of  the  principal  or  of  any  other  
cause  which  extinguishes  the  agency,  is  valid  and  shall  be  fully  effective  with  respect  to  third  persons  who  
may  have  contracted  with  him  in  good  faith.  
 
Normally,  the  death  of  the  principal  will  terminate  the  agency.  However,  the  agent  is  required  to  “finish  
the  business  already  begun  on  the  death  of  the  principal  should  delay  entail  any  danger”  (Art.  1884,  par.  
2).  
 
The   death   of   the   principal   extinguishes   the   agency;   but   in   the   same   way   that   revocation   of   the   agency  
does   not   prejudice   third   persons   who   have   dealt   with   the   agent   in   good   faith   without   notice   of   the  
revocation,  such  third  persons  are  protected  where  it  is  not  shown  that  the  agent  had  knowledge  of  the  
termination  of  the  agency  because  of  the  death  of  the  principal  or  of  any  other  cause  which  extinguishes  
the  agency.  
 
Rallos  v.  Felix  Go  Chan  &  Sons  Realty  Corp.    
 
Under  Article  1931,  an  act  done  by  the  agent  after  the  death  of  the  principal  is  valid  and  effective  only  
under  two  (2)  conditions:  (1)  that  the  agent  acted  without  knowledge  of  the  death  of  the  principal;  and  
(2)   that   the   third   persons   who   contracted   with   the   agent   himself   acted   in   good   faith.   Good   faith   here  
means  that  the  third  person  was  not  aware  of  the  death  of  the  principal  at  the  time  he  contracted  with  
said  agent.  
 
8. How  do  you  sell  a  property  when  you’re  in  abroad?  What  are  the  requirements?  
 
 
9. Personal  property,  may  an  OFW  sell  his  car  while  abroad  through  just  a  text  or  call?  
 
10. Obligation   to   render   an   account,   what   is   void?   When   is   the   agent   exempt   from   rendering   an  
account?  
Article   1891.   Every   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.  
 
It  is  the  duty  of  the  agent  to  account  for  and  to  deliver  to  the  principal  (or  an  authorized  third  party)  all  
money  and  property  which  may  have  come  into  his  hands  or  of  sub-­‐agent  appointed  by  him  by  virtue  of  
or  as  a  result  of  the  agency.  
 
The  agent  is  exempted  from  rendering  account  when:  (1)  the  agent  or  broker  acted  only  as  a  middleman  
with   the   task   of   merely   bringing   together   the   vendor   and   the   vendee,   who   themselves   thereafter   will  
negotiate   on   the   terms   and   conditions   of   the   transaction;   (2)   if   the   agent   or   broker   had   informed   the  
principal   of   the   gift   or   bonus   or   profit   he   received   from   the   purchaser   and   his   principal   did   not   object  
thereto;  (3)  where  a  right  of  lien  exists  in  favor  of  the  agent.    
11. Rule  in  Appointment  of  substitute/sub-­‐agent  
 
12. What  is  the  effect  of  receiving  a  secret  profit?  
It   has   been   held   that   an   agent   who   takes   a   secret   profit   in   the   nature   of   a   bonus,   gratuity   or   personal  
benefit  from  the  vendee,  without  revealing  the  same  to  his  principal,  the  vendor,  is  guilty  of  breach  of  his  
loyalty   to   the   principal   and   forfeits   his   right   to   collect   the   commission   from   his   principal,   even   if   the  
principal  does  not  suffer  any  injury  by  reason  of  such  breach  of  fidelity,  or  that  he  obtained  better  results,  
or  that  the  agency  is  a  gratuitous  one,  or  that  usage  or  custom  allows  it;  because  the  rule  is  to  prevent  the  
possibility  of  any  wrong,  not  to  remedy  or  repair  an  actual  damage.  
 
By  taking  such  profit  or  bonus  or  gift  or  propina  from  the  vendee,  the  agent  thereby  assumes  a  position  
wholly  inconsistent  with  that  of  being  an  agent  for  his  principal,  who  has  a  right  to  treat  him,  insofar  as  his  
commission   is   concerned,   as   if   no   agency   existed.   The   fact   that   the   principal   may   have   been   benefited   by  
the  valuable  services  of  the  said  agent  does  not  exculpate  the  agent  who  has  only  himself  to  blame  for  
such  a  result  by  reason  of  his  treachery  or  perfidy.    
 
13. What  is  the  effect  of  stating  a  false  statement  (limited  partnership)  
Art.  1847.  If  the  certificate  contains  a  false  statement,  one  who  suffers  loss  by  reliance  on  such  statement  
may   hold   liable   any   party   to   the   certificate   who   knew   the   statement   to   be   false:   (1)   at   the   time   he   signed  
the  certificate,  or  (2)  subsequently,  but  within  a  sufficient  time  before  the  statement  was  relied  upon  to  
enable  him  to  cancel  or  amend  the  certificate,  or  to  file  a  petition  for  its  cancellation  or  amendment  as  
provided  in  article  1865.  
 
Requisites:   under   this   provision,   any   partner   to   the   certificate   containing   a   false   statement   is   liable  
provided  the  following  requisites  are  present:  (a)  he  knew  the  statement  to  be  false  at  the  time  he  signed  
the  certificate,  or  subsequently,  but  having  sufficient  time  to  cancel  or  amend  it  or  file  a  petition  for  its  
cancellation  or  amendment,  he  failed  to  do  so;  (b)  the  person  seeking  to  enforce  liability  has  relied  upon  
the   false   statement   in   transacting   business   with   the   partnership;   and,   (c)   the   person   suffered   loss   as   a  
result  of  reliance  upon  such  false  statement.  
 
The  liability  imposed  by  article  1847  is  merely  a  statutory  penalty  and  does  not  make  the  limited  partner  a  
general  partner  for  all  purposes,  even  as  to  third  persons.    
 
14. TCT  is  a  form  of  trust  
 
15. Donation  v.  simple  deed  of  sale  
 
16. Cestui  Que  Trust  
 
17. Aznar  case  determining  prescription  
 
18. Cabacungan  case  determining  recovering  property  mistakenly  
 
19. Obligations  of  the  agent  with  compensation  from  the  buyer  
 
20. Husband  mortgaged  their  property  with  his  wife  without  consent  
 
21. SPA  v.  GPA  
SPA  ART  1878  
 
   
Part  I.  
A. Between  the  two  agents  designated,  the  agent  that  can  prove  that  he  is  the  procuring  cause  is  
the   one   entitled   to   receive   the   commission   as   a   result   of   the   sale.   The   procuring   cause   is   an  
unbroken  chain  of  events  that  led  to  the  perfection  of  the  sale  between  the  buyer  and  seller.  
B. The  cestui  que  trust  or  the  beneficiary  in  the  trust  agreement  is  the  person  for  whose  benefit  the  
trust   was   constituted.   Such   person   holds   the   beneficial   ownership   over   the   property.   A   trustor  
may  at  the  same  time  be  the  beneficiary.  For  example,  A,  as  trustor,  reposes  his  confidence  and  
transfers  legal  title  over  his  property  to  B  for  the  latter  to  preserve  it  and  collect  its  fruits  for  A’s  
benefit  and  enjoyment.  
C. Owing   to   the   fiduciary   relation   in   a   contract   of   agency,   with   the   agent   representing   and  
advancing  the  interest  of  the  principal,  it  is  difficult  to  allow  the  agent  to  serve  two  masters  at  
the   same   time.   Although   it   is   not   prohibited,   as   when   the   two   principals   have   knowledge   and  
have  consented  to  such,  the  agent  is  placed  in  a  difficult  situation  of  serving  what  would  possibly  
be  conflicting  interests.  For  instance,  an  agent  would  have  difficulty  serving  as  such  to  both  the  
vendor  and  vendee,  with  the  former  aiming  for  the  highest  possible  selling  price,  and  the  latter  
seeking  a  bargain.  
D. Under  Sec.  21,  Rule  138  of  the  Rules  of  Court,  the  authority  of  a  lawyer  who  appears  in  court  is  
presumed.  No  written  authority  is  required  to  be  presented.  Nevertheless,  upon  motion  of  the  
adverse   party   upon   reasonable   grounds,   and   in   the   interest   of   justice,   the   court   may   require   a  
lawyer  to  present  his  authority  from  the  client.  
E. An  ordinary  contract  of  agency  is  subject  to  the  general  rule  that  the  same  may  be  revoked  at  will  
by  the  principal.  An  exception  to  this  general  rule  is  when  it  is  an  agency  coupled  with  interest.  
Since  an  agency  coupled  with  interest  is  constituted  for  the  mutual  benefit  of  the  principal  and  
agent  or  of  a  third  person,  the  principal  cannot  revoke  the  agency  while  such  interest  subsists.  
Moreover,   in   an   ordinary   contract   of   agency,   the   agent   is   merely   interested   in   earning   his  
compensation  arising  from  the  services  he  rendered.  If  it  is  one  coupled  with  interest,  the  agent  
is  interested  as  well  in  the  subject  matter  of  the  agency.  
Part  II.    
1.a.  The  contract  of  agency  is  extinguished.  Under  the  law  in  agency,  as  a  general  rule,  indeed  death  of  
the  principal  extinguishes  the  agency.  However,  if  in  accord  to  such  contract  and  acting  with  his  authority,  
the  agent  successfully  sealed  a  contract  without  knowledge  of  the  death  of  the  principal,  at  the  time  of  
execution  of  the  deed  evidencing  the  contract,  the  same  is  valid.  
1.b.  Since  the  sale  is  executed  within  the  authority  granted  to  the  agent,  and  without  knowledge  of  the  
death   of   the   principal,   the   contract   of   sale   is   valid.   The   buyer,   therefore   has   acquired   ownership   over   the  
land.  
 
2.a.  The  sale  is  void.  Under  the  law  on  agency,  a  special  power  of  attorney  is  required  in  authorizing  the  
agent   to   enter   into   contracts   involving   ownership   of   an   immovable,   or   in   conveying   real   rights.   In   the  
instant   case,   the   authority   of   Y,   the   agent,   form   X,   the   principal,   to   sell   the   apartment,   an   immovable  
property,   was   given   orally.   The   authority   of   the   agent   being   void,   the   sale   must   be   void   as   well.  
Furthermore,  if  the  sale  should  include  the  land  on  which  the  apartment  stands,  the  law  is  clear  in  stating  
that  the  authority  of  the  agent  to  sell  must  be  in  writing;  otherwise,  the  sale  is  void.  
 
2.b.  My  answer  will  be  the  same.  It  is  still  void,  for  lack  of  proper  authority  of  the  agent  to  enter  into  a  sale  
conract.  
 
3.a.   I   would   advise   her   that   the   sale   cannot   be   properly   contested   on   the   ground   of   lack   of   written  
authority  to  sell  on  the  part  of  the  agent.  A  contract  of  agency  may  be  entered  into  in  writing  or  orally,  
unless   the   law   requires   a   specific   form.   In   the   sale   of   a   movable,   however,   no   specific   form   is   required   by  
law  in  granting  the  agent  the  authority  to  sell.  The  agent’s  authority,  in  this  case  is  therefore  valid.  
 
3.b.   Yes.   Under   the   Civil   Code,   by   a   contract   of   agency,   one   party   binds   himself   to   render   some   service   or  
to  do  something  in  representation  of  another,  with  the  consent  and  knowledge  of  the  latter.  
 
In  the  case  at  bar,  the  agent  friend  was  asked  by  the  principal  through  text  message  to  look  for  a  buyer,  
negotiate   a   good   price   in   the   process   of   selling   his   car   the   authority   was   even   up   to   the   point   of   finalizing  
the  deed  because,  as  stated,  the  execution  of  the  document  by  the  principal  will  only  be  for  formality.  The  
elements  of  agency  are  present.  There  is  consent;  a  requirement  to  do  some  service,  which  by  his  acts,  
the  agent  bound  himself  to  do;  there  was  representation  of  the  principal.  The  consideration  is  presumed  
to   be   for   compensation,   although   liberality,   in   a   gratuitous   agency   is   possible.   The   scope   of   authority   is  
likewise  clear.    
 
4.a.  The  agent  is  liable.  
 
Under   the   law,   when   the   agent   is   authorized   to   appoint   the   substitute,   but   without   the   principal  
designating  the  person,  and  the  substitute  is  notoriously  incompetent  or  insolvent,  the  agent  is  liable.  
 
Facts   show   that   the   agent   was   granted   authority   to   appoint   a   substitute,   who   was   shown   to   be   insolvent.  
As  such,  the  law  renders  the  agent  liable,  particularly  since  the  principal  did  not  designate  the  person  who  
will  be  the  substitute.  
 
4.b.   I   would   advise   the   agent   that   should   the   principal   proceed   against   him,   he,   in   turn,   should   file   a  
counterclaim   against   the   substitute   whom   he   appointed.   He   should   also   proceed   against   the   creditors,  
who  in  bad  faith  attacked  the  properties  in  possession  of  the  substitute,  but  not  owned  by  him.    
 
5.  There  is  an  implied  constructive  trust  created  between  M  and  his  aunt  N,  with  M  as  the  trustee.  
 
The   TCT   under   the   name   of   N   is   not   evidence   of   ownership.   The   Supreme   Court   has   underscored   the  
difference  between  a  certificate  of  title  from  ownership,  the  former  being  a  mere  evidence  of  the  latter.  
The  Court  has  also  said  that  a  trustee  who  has  in  his  name  a  Torrens  title,  held  by  him  for  another  will  not  
be  allowed  to  betray  the  trust  by  virtue  of  the  Torrens  system.  
 
Nevertheless,  15  years  having  lapsed,  acquisitive  prescription  has  set  in  in  favor  of  M  and  his  heirs,  upon  
his   death.   The   Supreme   Court   has   held   that   in   a   constructive   trust,   10   years   is   required   for   acquisitive  
prescription  to  set  in.  
 
Furthermore,  the  action  of  O  is  barred  by  laches.  N,  as  trustor,  slept  on  her  rights  for  15  years,  without  
demanding  M  to  return  the  title,  even  after  M  was  able  to  pay  his  loan  and  presumably  grow  his  business,  
and   even   after   M’s   death.   Such   failure   to   assert   her   rights   is   an   indication   that   N   has   renounced   the   same  
in  favor  of  M.    
 
Therefore,  M,  upon  his  death,  his  heirs  have  the  legal  title  over  the  property.  
 
6.   Yes,   P   is   entitled   to   recover   from   A.   The   law   requires   the   agent   to   render   account   and   to   deliver   to   the  
principal   all   the   money   received   by   the   former,   even   though   not   owing   to   the   latter.   This   includes   any  
commission  received  by  the  agent  from  the  other  party,  in  this  case  the  buyer.  The  non-­‐disclosure  of  the  
“secret  profit”  is  a  violation  of  the  fiduciary  relation  between  the  principal  and  the  agent,  much  more  if  
the  payment  of  the  “secret  profit”  results  from  bargaining  agreement  detrimental  to  the  interest  of  the  
herein  seller.    
 
7.a.  L  will  be  liable  to  such  false  statement  if  a  person,  relying  on  such  false  statement  suffers  loss  as  a  
result.   However,   considering   that   the   actual   contribution   is   more   than   sufficient   to   cover   the   declared  
contribution,   on   which   third   persons   would   rely,   loss   on   their   part   may   not   be   imminent.   Until   loss   is  
proven,  arising  from  such  false  statement,  L  is  not  liable.    
 
8.  A  is  liable  to  pay  S.  
 
An   agent   acting   as   such   is   not   liable   to   third   persons   for   contracts   entered   into   on   behalf   of   the   principal,  
if  it  is  done  within  his  authority.  Otherwise,  he  shall  be  liable,  unless  the  principal  ratifies  his  acts  or  fails  
to  repudiate  the  same.  
 
Here,  A  did  not  carry  out  the  instruction  of  P  to  buy  only  “class  A”  copra.  There  can  also  be  no  ratification  
as   P   clearly   questions   the   quality   of   the   copra   A   is   supplying.   Therefore,   for   procuring   from   S   copra   of  
lesser  grade,  which  is  contrary  to  the  instructions  of  P,  A  should  be  liable.    
 
9.  No,  the  mortgage  is  not  binding  upon  W.  
The   reasoning   of   H   that   the   debts   of   the   law   firm   would   qualify   as   his   loan,   he   being   a   general   partner,   in  
order  to  come  within  the  terms  of  the  power  of  attorney  is  not  tenable.  The  law  firm,  as  a  professional  
partnership,  has  a  separate  and  distinct  personality.  It  can  enter  into  contracts  and  incur  obligations  on  its  
own   name.   The   law   firm’s   debt,   therefore,   is   distinct   from   H’s   debt.   As   such,   the   mortgage   executed   is  
beyond  the  authority  granted  by  W,  and  not  binding  upon  her.    
 
10.   The   agency   contract   is   valid.   However,   the   stipulation   excepting   the   agent   A   from   rendering   an  
account  is  void,  as  provided  under  the  law.  
 
Therefore,  A  is  not  correct.  He  cannot  rely  in  the  exemption  stipulated  in  the  agency  contract,  as  the  same  
is  contrary  to  law.    
 
11.  The  facts  show  that  P’s  employee,  the  mechanic,  is  the  one  supervising  the  operation  of  the  service  
station.  It  is  the  mechanic’s  negligence  that  led  to  the  unfortunate  incident  that  broke  C’s  car.  Under  the  
principle   of   vicarious   liability,   P   is   liable   for   the   mechanic’s   actions.   Of   course,   the   mechanic   should   be  
held  liable  for  his  negligence  as  well.  
 
A,  as  agent,  should  also  be  liable.  Facts  show  that  it  is  the  mechanic  who  supervises  the  operation  of  the  
service  station,  and  that  A  should  only  be  selling  the  products  of  the  P  at  a  fixed  price.  Therefore,  A  and  
his  personnel  have  no  business  placing  the  car  on  the  hydraulic  lifter  and  ordering  it  to  be  lifted.  Acting  
beyond  his  authority,  A  should  likewise  be  liable.    
 
12.  I’ll  stay  true  and  faithful  to  my  oath  as  a  lawyer.  Many  challenges  in  the  administration  of  justice  in  the  
country   are   worsened,   if   not   caused   by   lawyers   who   sacrifice   their   reputation   and   integrity   for   easy  
money.  I  believe  that  a  big  difference  will  take  place  if  a  new  breed  of  lawyers  will  come  in,  drawing  the  
line  and  never  crossing  the  bounds  of  their  professional  ethics.