Professional Documents
Culture Documents
GMDP-LCD Digests Session 6 Until 3.15 of
GMDP-LCD Digests Session 6 Until 3.15 of
What is the doctrine of “efficient procuring cause”? How do you determine whether the power granted is a GPA or SPA?
“Procuring cause” is meant to be the proximate cause. The term Whether what is granted is an authority to merely administer , or to do an
“procuring cause,” in describing a broker’s activity, refers to a cause act of strict ownership, is not determined from the title given to the
originating a series of events, without break in their continuity, result in instrument, but on the nature of the power given under the operative
accomplishment of the prime objective of the employment of the broker – provisions of such instrument.
producing a purchaser ready, willing and able to buy real estate on the
owner’s terms. What makes an agency a special power of attorney?
Only when the act or contract enumerated specifically under Art. 1878
has been literally “named” in the grant of commission by the principal.
May an agent with a GPA enter a confession of judgment on behalf May the agent be the lender without being in breach of trust?
of his principal? YES, at the current rate of interest.
NO. SC held that confession of judgment is the same as a compromise.
If the agent is authorized to lend money, may he be the borrower?
May an agent waive any obligation onerously without a SPA to do NO. He cannot borrow it without the consent of the principal.
such?
YES. The equivalent of the term “to waive any obligation onerously,” May an agent lease real property of the principal absent a SPA?
would be payment or performance of the obligation, which by its essence YES, but only for a period of one year or less.
is an act advantageous to the principal, and when done without express
authority is still within the scope of the agent’s authority. May an agent lease personal property of the principal absent a
SPA?
Distinguish Art. 1874 and Art. 1878(5). YES. It only constitutes an act of administration.
Art. 1874 Art. 1878(5)
1. Only covers sale of a piece of 1. Covers sale, acquisition, May an agent bind a principal to render some service for
land or any interest therein disposition or purchase of any compensation?
immovable NO. Even if it is not stated specifically in Art. 1878, any contract of
2. Needs to be in writing, 2. Does not need to be in writing service entered into on behalf of the principal should be considered an
otherwise it is void as to the for it to be enforceable. BUT it act of strict ownership, for it obliges the principal to render a personal
principal. must be specifically expressed. obligation, which if he refuses makes him liable for damages.
How detailed must the SPA to Sell be? May an agent bind the principal in an oral contract of guaranty or
It is the specification of the “power to sell: that is necessary rather than suretyship on behalf of the said principal if an SPA for such was
the specification of the particular piece of land that controls compliance given?
with the requirement of the law.
POWER & AUTHORITY, DUTIES, & OBLIGATIONS, AND RIGHTS OF If there is a conflict between the duty of obedience and duty of
THE AGENT diligence, which one should prevail?
The duty of diligence. An agent may do such acts as may be conducive
Who has the burden of proving that an agent was negligent of his to the accomplishment of the purpose of the agency.
duties?
The person is on the person who seeks to make an agent liable to show What does duty of diligence mean?
that the losses and damage caused were occasioned by the fault or The agent would have to act based on his own assessment of what is
negligence of the agent; mere allegation without substantiation is not necessary under the situation when it is not covered by an express
enough to make the agent personally liable. instruction from the principal.
What are the duties of the “agent” when he declines an agency? Should an agent carry out an agency if its execution would result in
He is bound to observe the diligence of a good father of a family in the loss or damage to the principal?
custody and preservation of the goods forwarded to him by the owner YES. Only those that would “manifestly” lead to losses or damages
until the latter should appoint an agent. should be avoided.
What are the duties of an agent when he withdraws from the If an agent acts in accordance with the orders of the principal, is he
agency? personally liable for damages caused to third parties?
He must continue to act [as agent] until the principal has had reasonable NO. Even though the duty of diligence trumps the duty of obedience, an
opportunity to take the necessary steps to meet the situation. agent cannot be held liable for damages resulting in his acts in
accordance with the instructions of the principal. The principal would be
What are the duties of an agent? liable.
1. Duty of obedience
2. Duty of diligence Is a contract entered into by an agent void wherein he preferred his
3. Duty of loyalty interest rather than that of the principal?
NO. It is valid but the agent would be liable for damages suffered by the
Twin measures on how an agent should act “in the execution of the principal.
agency”
1. Agent must act in accordance with the instructions of the principal What is the consequence when an agent contracts in his own name
2. In default of guiding instructions, the agent shall do all that a good on a matter that falls within the scope of the agency?
father of a family would do, as required by the nature of the business.
What is the consequence when an agent used the funds belonging In what instance may the agent legally withhold property from the
to the principal? principal?
The agent owes interest on the sums he applied to his own use from the The agent may retain in pledge the things which are the object of the
day on which he did so, and those which he still owes after the agency until the principal effects the reimbursement and pays the
extinguishment of the contract. indemnity provided in Arts. 1912 and 1913 (advances necessary for the
execution of the agency, and damages incurred by the agent in the
What is the effect when the principal demands that the contract or execution of the agency, provided that he did not act with negligence or
property acquired by the agent in breach of his duty of loyalty be fault)
turned over to him?
The principal ratifies the contract. Thus, the agent is no longer personally In what instance can the agent refuse to advance the necessary
liable for the interest due on the use of the principal’s sum to acquire funds even if such was stipulated in the contract?
such contract or business. Only when the principal is insolvent. (Useless provision because the
agency is already extinguished because of the principal’s insolvency)
What is the status of the sale when agent buys the property of the
principal whose administration or sale has been entrusted to him? Items wherein the agent would own interest to the principal
It is void, unless prior consent by the principal was given. Thus, the 1. Sums that the agent applied to his own use from the time he used
prohibition is not absolute. them
2. Sums owing to the principal which remain outstanding at the time of
What happens when the agent violates his obligations under Art. the extinguishment of the agency, with the interest to run during the
1890 (lending and borrowing money)? time of such extinguishment
1. Agent lends to the principal at The difference would have to be
a rate higher than the current returned to the principal Effects of appointing a substitute agent
rate Not given the power to appoint one Agent is responsible for the acts of
2. Agent borrows money without Liable for the current interest that the substitute
the consent of the principal the principal would have earned Given such power, but without Agent is responsible for the acts of
had it been lent out to a third party designating the person, and the the substitute
person appointed is notoriously
Liable to the damages that the incompetent or insolvent
principal may have suffered Prohibited by the principal All acts of the appointed substitute
are void as to the principal
If a gift or propina was given to an agent separate from the
consideration for the contract entered into, should he turn it over to Agent is personally liable for the
the principal? acts of the substitute, as thought
YES. Every agent is bound to deliver to the principal whatever he may the contract of the substitute were
have received by virtue of the agency, even though it may not be owing his own
to the principal, and even when given to him for his benefit. Given the power and designated Principal will be liable
candidates or a specific person
When may the PRINCIPAL receive damages (as a consequence of When is there an agency coupled with interest?
withdrawal)? 1. When a bilateral contract depends upon the agency for its fulfillment
Good Faith Damages – that which were 2. The contract of agency is the means of fulfilling an obligation already
incurred by the principal by reason contracted
thereof 3. A partner is appointed manager of a partnership and the removal
from management is unjustifiable (not relevant)
Exception: When the reason for
the withdrawal is the impossibility NOTE: The bilateral agreement must come first before the agency. In
of continuing the performance of this case, the agency agreement is just a stipulation for the fulfillment of
the agency without grave detriment the bilateral contract. Thus, it is irrevocable because a bilateral contract
to himself cannot be revoked.
Bad Faith (i.e. in order to enter into Damages for breach of duty (duty
a contract in his own name) of loyalty) Can there still be an instance where it can be revoked?
Where a period is stipulated Damages for breach of contract YES, if the bilateral contract is actually that of partnership. It is a
characteristic of partnership that there is mutual agency between the
Rules on express revocation parties. Hence, it can still be revoked. (Sevilla case)
If the agent fails or refuses to return the power of attorney, the
principal must give notice to the public who may be affected. What is the obligation of the agent even if he withdrew from the
agency for a valid reason?
He must continue to act on behalf of the principal until the latter has had
If the agency is for the purpose of Notice to specified persons
reasonable opportunity to take necessary steps to meet the situation.
contracting with specified persons
If the agent had general powers Notice in a newspaper of general
When shall an agency continue despite the death of principal?
circulation is sufficient.
1. If it has been constituted in the common interest of the principal and of
the agent, or
When is there implied revocation?
2. If in the interest of a third person who has accepted the stipulation his
1. Appointment of new agent for the same business/transaction
favor
o From the day notice was given to former agent
TRUSTS What is the difference in legal effect between express trust and
implied trust?
Express trust Implied trust
INTRODUCTION
not susceptible to charges of the cause of action of the
prescription or laches beneficiary may be extinguished by
Nature of trust
prescription or laches.
Trusts do not create separate juridical entities
Trust divorces naked title of the trustee from the rest of the trustee’s
express trust over an immovable regardless of the nature of the trust
estate
cannot be enforced by parol property, may always be enforced
Trust is anchored on splitting or intention to split the naked title and evidence even when constituted orally
beneficial title
Who are the parties in a trust relationship? What are the essential elements of an express trust?
1. trustor – person who establishes a trust 1. Trustee – holds the trust property and is subject to equitable duties to
2. trustee – person in whom confidence is reposed as regards the deal with it for another’s benefit
property held in trust; assumes certain duties relating to the trust property 2. Beneficiary – to whom the trustee owns equitable duties to deal with
with respect to the person for whose benefit the trust is created the trust properties
3. beneficiary – person for whose benefit the trust has been created 3. Res – the trust property which the trustee manages for the sake or
(cestui que trust) interest of the beneficiary
Express Trust Lease What are the different kinds of express trusts?
As naked/legal title holder, Lessor retains not only naked
trustee manages the trust title to the property leased, but 1. Contractual Trusts
property for the benefit of other beneficial titles
Distinguish Constructive Trust and Quasi-contracts of Solutio What is the most distinguishing mark between an express trust and
Indebiti a resulting trust?
Constructive Trust Solutio Indebiti In an express trust, the parties bound by the trust are formally constituted
1. Enforceable by a proceeding in 1. Gives rise to a personal liability with naked or legal title placed in the trustee and beneficial title pertains
equity to compel the defendant ordinarily enforceable by an tot the beneficiary.
to surrender specific property action of law In a resulting trust, full title, not just naked or legal title, is placed in the
2. Prescription period of 10 years 2. Prescription period of 6 years name of a person who is not referred formally as a “trustee” nor is the
person who paid for the purchase price referred to formally as a
Why are constructive trust and solution indebiti similar? “beneficiary.”
1. Both embody the principle of equity above strict legalism
2. A relationship is “forced” by operation of law upon the parties, not Rule when title is placed in the name of a child
because of any intention on their part but in order to prevent unjust It cannot be presumed that a parent placing property he bought in the
enrichment, thus giving rise to certain obligations not within the name of the child intended any form of trust, since it cannot be normally
contemplation by the parties expected that a child would administer property for the benefit of the
parents.
When can the principles established by the general law on trust be It is disputably presumed that there is a gift/donation in favor of the child.
included as cases of implied trust?
When those principles are not in conflict with the Civil Code, the Code of Rule when the child supplies the purchase price
Commerce, the Rules of Court and special laws. That the purchase price was furnished by way of loan and did not
transfer to the child any interest in the property.
The presumption of resulting trust arises from what truism?
That one who pays for something usually does so for his own benefit. Is there a resulting trust when the purchase price is extended as a
loan?
What are the kinds of resulting trust mentioned in the Civil Code? NO. There is a lack of intention on the part of the person supplying the
1. Purchase of property where title placed in one person, but price paid money to have beneficial interest in the property bought.
by another person
2. Purchase of property where title is placed in the name of person who Is there a resulting trust when the purchase is made in violation of
loaned the purchase price to secure the payment of a debt an existing statute?
3. When absolute conveyance of property was effected as a means to NO. Since implied trusts are essentially founded on equity principles, no
secure the performance of an obligation trust can be valid when it is violative of the law, morals or public policy.
4. Two or more persons purchase property jointly, but placed title in one
of them Why is Art. 1450 (purchase of property where title is placed in the
5. Property conveyed to a person merely as holder thereof name of the person who loaned the purchase price to secure the
6. Donation of property to a done who shall have no beneficial title payment of the debt) akin to an equitable mortgage?
7. Land passes by succession but the heir places title in the name of Since title to the property intended for the borrower is placed in the name
another of the lender to secure the payment of the debt.
General Rule: Express trust is not susceptible to acquisitive prescription What is the prescriptive period for implied trusts?
Exception: Where there is valid repudiation 10 years
Requisites for repudiation to be effective Rules of prescription and laches when it comes to implied trusts
1. The trustee must perform unequivocal acts of repudiation amounting (laid down in Ramos v. Ramos)
to an ouster of the cestui que trust 1. Rule of imprescriptibility of the action to recover property held in trust
2. Such positive acts of repudiation have been made known to the may possibly apply to resulting trusts as long as the trustee has not
cestui que trust repudiated the trust
3. The evidence thereon is clear and convincing 2. Rule of imprescriptibility was misapplied to constructive trust
3. With respect to constructive trusts, the rule is different. The
Prevailing rules against prescription when it comes to express prescriptibility of an action for reconveyance based on constructive
trusts trust is now settled (it prescribes in 10 years)
1. A trustee cannot acquire by prescription the ownership of property 4. Prescription may supervene in an implied trust
entrusted to him. 5. Whether the trust is resulting or constructive, its enforcement may be
barred by laches.