business organizations i agency & trusts exercises

7/27/2019 Business Organizations I Agency & Trusts Exercises

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Business Organizations IClass Exercises

September 27, 2013Instructions: Answer the respective problems assigned to you by citing the applicable provisions

of law and jurisprudence. Present your answers in a report to class starting on October 3, 2013

and send me a soft copy of your answer.

1. Anthony had an option to purchase a vessel. He entered into a contract with Bartwherein he assigned his option to the latter under the condition that Bart would appoint

him as agent of the vessel for five years. Bart purchased the vessel and appointedAnthony as agent in accordance with the contract. After three years of operation, Bart

revoked the appointment of Anthony as agent for loss of confidence. Anthony sued Bart

for damages. Decide. (Bellingan, Gracelyn)

2. Dennis borrowed P 5 Million from the bank and to secure the payment thereof, signed aDeed of Real Estate Mortgage in favor of the bank in the usual printed form wherein it is

provided among others that for purposes of extra-judicial foreclosure, the mortgagor

hereby appoints the mortgagee his attorney-in-fact to sell the property mortgaged underAct 3135, as amended, to sign all documents and perform any act requisite and necessary

to accomplish said purpose. Upon failure of Dennis to pay the loan, the bank foreclosed

and bought the property at the foreclosure sale. During the one year period of redemption

Dennis died and the property was not redeemed despite the lapse of one year. The bank,despite its actual knowledge of Dennis death, consolidated its title by executing the

affidavit of consolidation and Deed of Sale of the land in its favor as empowered in the

Deed of Real Estate Mortgage. After the bank had consolidated its title, the heirs ofDennis asked the bank to allow them to redeem the property by paying only the P 5

million plus accrued interest and expense of foreclosure, contending that the sale in favor

of the bank was invalid due to the prior death of Dennis which revoked the power of

attorney inserted in the Deed of Mortgage, but the bank demanded payment of P 20million, then the fair market value of the property. Can the bank be required to accept the

tender of redemption by the heirs of Dennis? Decide. (Benigay, Precious)

3. Alfred authorized Ben to sell his property for P 3 million subject to the condition that thepurchaser would assume the mortgage existing in favor of Plaridel Bank and agreed to

pay Ben a commission of 6% on the purchase price plus whatever over-price he may

obtain for the property. Ben found a buyer, Cesar, who was willing to buy the propertyunder the terms stipulated by Alfred. When Ben introduced Cesar to Alfred, Alfred told

Ben that he was no longer interested in selling the property and a document was signed

canceling the written authority to sell with the agreement of Ben. One month later, Alfred

sold the property directly to Cesar for P 3.5 million. Alfred refused to pay Ben hiscommission, contending that when the property was sold to Cesar, Bens authority to sell

was already canceled. Ben sued to collect his commission. Decide. (Villarmea, Mithi)

4. Angela lent Basilio P 1,000,000.00. To secure the loan, Basilio mortgaged a parcel of

land which he owns. In the real estate mortgage contract, Angela was given the power tosell the land, with the proceeds to be applied to the payment of the loan and interest

thereon. Two years later, Basilio received an attractive offer for the mortgaged property

and gave notice to Angela that he was revoking her special authority to sell, although heassured her that the mortgage would remain in force and effect. Angela challenges the


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revocation at will, but Basilio counters that the mortgage more than sufficiently protects

her credit. Decide. (Tam, Leoni)

5. In 1970, Jose authorized Pedro to sell a parcel of land. The SPA was duly annotated onthe title. A year later, Jose died, but Pedro was not aware of this fact which terminated the

agency. In 1973 the children of Jose extrajudicially adjudicated the land to themselves

and sold it in their own name to Juan. Since the owners copy of the title was not in theirpossession, neither Juan nor the heirs were able to have this sale registered. A fewmonths later, Pedro sold the land to Pablo, who had the sale promptly registered. When

Jose learned of the sale to Pablo, he immediately sought to nullify the same on the ground

that he had the better right since 1) he bought the land from the present owners of theland who had acquired it upon the death of Jose; 2) he bought the land prior to its sale to

Pablo; and 3) Pedro was no longer authorized to transact the land as his agency was

extinguished by the death of Jose pursuant to Art. 1919 [4]. Decide. (Cuevas, Leslie)

6. Henry, James and Jojo inherited from their parents a large parcel of land. Henry andJames went abroad to reside in Canada. In their absence, Jojo applied for the registration

of the whole land in his name only. In due time, Jojo obtained a Torrens Title for the

land. When Henry and James returned from Canada after seven years, they found outwhat Jojo did and sued him for their respective shares. Jojo contends that the decree of

title can no longer be reviewed or changed because of the lapse of more than one year

from its issuance. Henry and James come to you for legal advice. Decide. (Subrian,

Chandrina)7. Ulrich executed a special power of attorney in favor of Wendell to sell a parcel of land.

The SPA stipulated that the agents authority would be valid and subsisting even in the

event of the principal predeceasing the agent. Ulrich died. Sometime later, Wendell soldthe land to Persephone, who relied on the SPA. When Leopold, father of Ulrich, learned

of the sale, he sought to annul it on the ground that Wendells authority had already

expired. Decide. (Salon, Marchell)

8. Romeo executed a special power of attorney in favor of Fabian over a parcel of land. Itincluded the power to mortgage the property. Fabian negotiated for a loan with ABC

Bank in his own name and offered the property of Romeo as security. Fabian also

executed a promissory note in his own name for the loan. When the loan became due anddemandable, ABC Bank sought to collect directly from Romeo, asserting that Fabian

acted as Romeos agent in obtaining the loan. Decide. (Maxino, Izzy)

9. Union 76 Oil Company (Union) entered into a licensing agreement with Quirante underthe following terms: P 1.00 annual rental for the use of the premises and equipment of

Union, exclusive purchase sale of Union products at the station, regular maintenance

check of the station and its equipment by Union. A fire broke out at this station resulting

in damages to the neighborhood. The victims of the fire file a claim against Union whichresists it on the ground that Quirante was an independent contractor and should therefore

solely bear the costs of the fire at the station. Decide. (Real, Tara)

10. On November 3, 1990, RSB entered into a compromise with the PCGG and surrendered

51% of his equity in ETPI. On April 17, 1998, the heirs of FM filed an action to recoverthe shares, alleging that their predecessor-in-interest, FM, was the real owner of the

shares which RSB disposed as his own. The Solicitor General seeks your opinion on the

legal options of the Philippine Government. (Herrera, Norman)11. A group of Korean investors purchase a piece of land and build a large building to house


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their association. Being unregistered, the association decided that the property would be

registered in the name of Hyun Dae, a naturalized Filipino. Thereafter, Dae leased a large

portion of the building and collected rent. When the association demanded an accountingfrom Dae, he refused, claiming that he is the owner of the property. The association

comes to you for advice on its legal rights to the property. (Salon, Ephraim)

12. Rosendo gave Celso P 650,000.00 to purchase a parcel of agricultural land in Basay,Negros Oriental. The sale was consummated and title to the property was issued inCelsos name. Rosendo died six months later. Upon learning of the sale at that time,

Gregoria, Celsos elder sister demands that Celso should transfer title to the property to

Rosendos estate, or to all the surviving heirs, because Celso merely held this property intrust for Rosendo. Celso comes to you for legal advice on what his rights are under the

circumstances.(Magcanta, Bryan).

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