Documentos de Académico
Documentos de Profesional
Documentos de Cultura
PARTNERSHIP
I.CONTRACTOFPARTNERSHIP
A.DEFINITION
Q:Whatispartnership?
A:Acontractwherebytwoormorepersonsbind
themselves to contribute money, property, or
industrytoacommonfund,withtheintentionof
dividingtheprofitsamongthemselves.
B.ELEMENTS
A:
1. Agreement to contribute money,
propertyorindustrytoacommonfund
(mutual contribution to a common
stock);and
2. Intention to divide the profits among
thecontractingparties(jointinterestin
the profits). (Evangelista v. Collector of
Internal Revenue, G.R. No. L9996, Oct.
15,1987).
Q:Whataretherequisitesofapartnership?
A:ICJ
1. Intentiontocreateapartnership
2. Common
fund
obtained
from
contributions
3. Jointinterestindividingtheprofits(and
losses)
Q:Whatarethecharacteristicsofapartnership?
A:BONCCPP
1. Bilateral it is entered into by two or
more persons and the rights and
obligations arising therefrom are
reciprocal
2. Onerouseachofthepartiesaspiresto
procure for himself a benefit through
thegivingofsomething
3. Nominate it has a special name or
designationinourlaw
4. Consensual perfected by mere
consent
5. Commutativetheundertakingofeach
of the partners is considered as the
equivalentofthatoftheothers
6.
A:
1. Yes. Both elements in a contract of
partnership
exist:
a)
mutual
contributiontoacommonstock,andb)
a joint interest in the profits. If the
contractcontainsthesetwoelements,a
partnershiprelationresults,andthelaw
itself fixes the incidents of this relation
if the parties fail to do so. In this case,
therewasmoneyfurnishedbyJoseand
received by Francisco for the purchase
of the cascoes and there was also an
intention to divide the profits
proportionately between them. Thus,
there is a partnership by virtue of the
verbal agreement between Jose and
Francisco.
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
331
INTENTTOCREATEAPARTNERSHIP
332
ofthepriceandthatanequaldivisionshouldbe
madebetweenthemofthelandthuspurchased.
Despite Catalinosdemand foran equaldivision
between them, Ceferino refused to do so and
even profited from the fruits of the land. Are
theypartnersorcoowners?
A:Theyarecoownersbecauseitdoesnotappear
thattheyenteredintoanycontractofpartnership
but only for the sole transaction of acquiring
jointlyorbymutualagreementofthelandunder
theconditionthattheywouldpayoftheprice
ofthelandandthatitbedividedequallybetween
them. (Gallemit v. Tabiliran, G.R. No. 5837, Sept.
15,1911)
COMMONFUND
Q: May a partnership be formed even if the
commonfundiscomprisedentirelyofborrowed
orloanedmoney?Whatwouldbetheliabilityof
thepartnersinsuchacase?
A: Yes. A partnership may be deemed to exist
among parties who agree to borrow money to
pursue a business and to divide the profits or
losses that may arise therefrom, even if it is
shownthattheyhavenotcontributedanycapital
of their own to a "common fund." Their
contribution may be in the form of credit or
industry, not necessarily cash or fixed assets.
Being partners, they are all liable for debts
incurred by or on behalf of thepartnership. (Lim
Tong Lim v. Philippine Fishing Gear Industries,
Inc.,G.R.No.136448,Nov.3,1999)
SHAREINPROFITSANDLOSSES
Q: Mariano and Isabelo entered into a
partnership agreement wherein they are to
contribute P15,000 each for the purpose of
printing 95,000 posters. Isabelo was unable to
printenoughposterspursuanttotheagreement,
thus he executed in favor of Mariano a
promissorynoteinanamountequivalenttothe
unrealizedprofitduetoinsufficientprinting.The
whole amount became due but Isabelo
defaultedpayment.IsMarianoentitledtofilea
casefortherecoveryoftheunrealizedprofitof
thepartnership?
A:No.Theessenceofapartnershipistosharein
the profits and losses, thus, Mariano should
shoulderthelosseswithIsabelo.(MoranJr.,v.CA,
G.R.No.L59956,Oct.31,1984)
Q: To form a lending business, it was verbally
agreedthatNoynoywouldactasfinancierwhile
CoryandKriswouldtakechargeofsolicitationof
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
membersandcollectionofloanpayments.They
agreed that Noynoy would receive 70% of the
profitswhileCoryandKriswouldearn15%each.
Thepartiesexecutedthe'ArticlesofAgreement'
whichformalizedtheirearlierverbalagreement.
Later,NoynoyfiledacomplaintagainstCoryand
Kris for misappropriation of funds allegedly in
their capacitiesas Noynoys employees. In their
answer, Cory and Kris asserted that they were
partners and not mere employees of Noynoy.
What kind of relationship existed between the
parties?
A: A partnership was formed among the parties.
The "Articles of Agreement" stipulated that the
signatoriesshallsharetheprofitsofthebusiness
in a 701515 manner, with Noynoy getting the
lion's share. This stipulation clearly proved the
establishmentofapartnership.(Santosv.Spouses
Reyes,G.R.No.135813,Oct.25,2001)
Q:Joseconveyedhislotsinfavorofhisfoursons
in order for them to build their residences. His
sons sold the lots since they found the lots
impractical for residential purposes because of
high costs of construction. They derived profits
from the sale and paid income tax. The sons
were required to pay corporate income tax and
income tax deficiency, on the theory that they
formed an unregistered partnership or joint
venturetaxableasacorporation.Didthesiblings
formapartnership?
A:No.Theoriginalpurposewastodividethelots
for residential purposes. If later, they found out
thatitisnotfeasibletobuildtheirresidenceson
the lots, they can dissolve the coownership by
reselling said lots. The division on the profit was
merely incidental to the dissolution of the co
ownership which was in the nature of things a
temporary state. (Obillos, Jr. v. CIR, G.R. No. L
68118,Oct.29,1985)
C.RULESTODETERMINEEXISTENCE
Q:Whataretherulestodeterminetheexistence
ofpartnership?
A:
1. Personswhoarenotpartnersastoeach
other are not partners as to third
persons.
2. Coownership/copossession does not
ofitselfestablishapartnership.
3. Sharing of gross returns does not of
itselfestablishapartnership.
4. Receipt of a person of a share in the
profitsisaprimafacieevidencethathe
Q: Distinguish partnership
ownership/copossession.
A:
from
co
COOWNERSHIP/
COPOSSESSION
Intenttoderiveprofits
Theprofitsmustbe
derivedfromthe
Thecoownerssharein
operationofthe
theprofitsderived
businessorundertaking
incidenttothejoint
bythemembersofthe
ownership.
associationandnot
merelyfromproperty
ownership.
Existenceoffiduciaryrelationship
Thereisawelldefined
Thereisnofiduciary
fiduciaryrelationship
relationshipbetween
betweenthemas
theparties.
partners.
Remedyfordispute
Theremedyforadispute
Theremedywouldbe
ordifferencebetween
anaction,asfor
themwouldbeanaction
instance,fornon
fordissolution,
performanceofa
termination,and
contract.
accounting.
Intent
Theremustbean
Thereisnointentto
unmistakableintention
formapartnership.
toformapartnership.
PARTNERSHIP
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
333
If,aftersuchpartition,anheirallowshissharesto
be held in common with his coheirs under a
singlemanagementtobeusedwiththeintentof
making profit thereby in proportion to his share,
therecanbenodoubtthat,evenifnodocument
orinstrumentwereexecutedforthepurpose,for
tax purposes, at least, an unregistered
partnership is formed. (Ona v. Commissioner of
Internalrevenue,45SCRA74[1972])
Q:Whatarethetypicalincidentsofpartnership?
A:
1. Thepartnersshareinprofitsandlosses.
(Arts.1767,179798)
2. They have equal rights in the
management and conduct of the
partnershipbusiness.(Art.1803)
3. Every partner is an agent of
partnership, and entitled to bind the
other partners by his acts, for the
purposeofitsbusiness.(Art.1818)
4. Allpartnersarepersonallyliableforthe
debts of the partnership with their
separateproperty(Arts.1816,182224)
exceptlimitedpartners.
5. A fiduciary relationship exists between
thepartners.(Art.1807)
6. On dissolution, the partnership is not
terminated, but continues until the
windingupofpartnershipiscompleted.
(Art1828)
A:
1. Distributionofprofits
a. Thepartnersshareintheprofits
accordingtotheiragreement
b. Intheabsenceofsuch:
i. Capitalistpartnerin
proportiontohiscontribution
ii. Industrialpartnerwhatis
justandequitableunderthe
circumstances
2. Distributionoflosses
a. The partners share in the losses
accordingtotheiragreement
b. In the absence of such, according
totheiragreementastoprofits
334
c.
Q:Whatistheruleregardingastipulationwhich
excludes a partner in the sharing of profits and
losses?
A:
GR:Stipulationisvoid.
XPN:Industrialpartnerisnotliableforlosses
[Art. 1797(2), NCC]. However, he is not
exempted from liability insofar as third
personsareconcerned.
Note:Lossisdifferentfromliability
If,besideshisservicestheindustrialpartnerhas
contributedcapital,heshallalsoreceiveashare
intheprofitsinproportiontohiscapital.
D.HOWPARTNERSHIPISFORMED
Q:Howarepartnershipsformed?
A:
GR:Nospecialformisrequiredforitsvalidity
orexistence.(Art.1771,NCC)
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
a.
mustregisterwithSEC.However,thisregistration
requirement is not mandatory. Article 1768 NCC
explicitlyprovidesthatthepartnershipretainsits
juridicalpersonalityevenifitfailstoregister.The
failure to register the contract of partnership
does not invalidate the same as among the
partners,solongasthecontracthastheessential
requisites, because the main purpose of
registrationistogivenoticetothirdparties,andit
can be assumed that the members themselves
knew of the contents of their contract. Non
compliance with this directory provision of the
lawwillnotinvalidatethepartnership.
A partnership may be constituted in any form,
except where immovable property of real rights
are contributed thereto, in which case a public
instrument shall be necessary. Hence, based on
the intention of the parties, a verbal contract of
partnershipmayarise.(SungaChanv.Chua,G.R.
No.143340,Aug.15,2001)
Note: Registration is merely for administration and
licensing purposes; hence, it shall not affect the
liabilityofthepartnershipandthemembersthereof
tothirdpersons.[Art.1772,(2),NCC]
A:Itisoneinwhichthetermofitsexistencehas
beenagreeduponbythepartnerseither:
1. Expresslythereisadefiniteperiod
2. Impliedly a particular enterprise or
transactionisundertaken
Note:Themereexpectationthatthebusinesswould
besuccessfulandthatthepartnerswouldbeableto
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
335
recouptheirinvestmentisnotsufficienttocreatea
partnershipforaterm.
CLASSIFICATIONSOFPARTNERSHIP
Q:Whendoesapartnershipcommencetoexist?
Q:Statetheclassificationsofpartnership.
A:Asto:
1. Object
a. Universalpartnership
i. of all present property (Art.
1778, NCC) comprises the
following:
propertywhichbelonged
toeachofthepartnersat
the time of the
constitution of the
partnership
2. Liabilityofpartners
a. General partnership One where
all partners are general partners
whoareliableevenwithrespectto
their individual properties, after
the assets of the partnership have
beenexhausted(Paras,p.411)
b. Limited partnership One formed
by 2 or more persons having as
members one or more general
partners and one or more limited
partners, the latter not being
personallyliablefortheobligations
ofthepartnership.
3. Duration
a. Partnership at will Partnership
for a particular undertaking or
venture which may be terminated
anytimebymutualagreement.
b. Partnership with a fixed period
Thetermforwhichthepartnership
is to exist is fixed or agreed upon
or one formed for a particular
undertaking.
4. Legalityofexistence
a. Dejurepartnership
b. Defactopartnership
Q:Whenisapartnershipatwillterminate?
A: It may be lawfully terminated at any time by
theexpresswillofallthepartnersoranyofthem.
Q:Howisapartnershipatwilldissolved?
A: Any one of the partners may dictate a
dissolutionofapartnershipatwill.
Note: The partner who wants the partnership
dissolved must do so in good faith, not that the
attendance of bad faith can prevent thedissolution
of the partnership, but to avoid the liability for
damagestootherpartners.
336
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
5.
6.
7.
Representationtoothers
a. Ordinaryorrealpartnership
b. Ostensible or partnership by
estoppel When two or more
persons attempt to create a
partnershipbutfailtocomplywith
thelegalpersonalitiesessentialfor
juridical personality, the law
considers them as partners, and
the association is a partnership
insofar as it is favorable to third
persons,byreasonoftheequitable
principle of estoppel (MacDonald
et. al. v. Natl. City Bank of New
York, G.R. No. L7991, May 21,
1956)
Publicity
a. Secret partnership Partnership
thatisnotknowntomanybutonly
astoitspartners.
b. NotoriousoropenpartnershipIt
is known not only to the partners,
buttothepublicaswell.
Purpose
a. Commercial or trading One
formed for the transaction of
business.
Q:Whatarethedifferentkindsofpartnership
undertheSpanishCivilCode?
A:
1. Sociedad Anonima similar to
anonymouspartnership
2. SociedadColectivawhichisgeneralor
collectivepartnership
3. Sociedad de Cuentas en Participacion
jointaccountpartnership
4. SociedadMercantileRegularColectiva
mercantilepartnershipcompany
5. SociedadLeonilapartnershipbywhich
theentireprofitsshouldbelongtosome
ofthepartnersinexclusionoftherest
Q:Whomaybepartners?
A:
GR: Any person capacitated to contract may
enterintoacontractofpartnership.
XPNs:
1. Personswhoareprohibitedfromgiving
each other any donation or advantage
2.
3.
Q:Whatistheprincipleofdelectuspersonae?
A:Thisreferstotherulethatisinherentinevery
partnership, that no one can become a member
of the partnership association without the
consentofallthepartners.
Note:Evenifapartnerwillassociateanotherperson
in his share in the partnership, the associate shall
not be admitted into the partnership without the
consent of all the partners, even if the partner
havinganassociateshouldbeamanager(Art.1804,
NCC).
Q:Whatarethedifferentkindsofpartners?
A:
1. CapitalistContributesmoneyor
propertytothecommonfund
2. Industrial Contributes only his
industryorpersonalservice
rd
3. General One whose liability to 3
persons extends to his separate or
personalproperty
rd
4. Limited One whose liability to 3
persons is limited to his capital
contribution
5. Managing Manages the affairs or
businessofthepartnership
6. Liquidating Takes charge of the
winding up of partnership affairs upon
dissolution
7. Partner by estoppel Is not really a
partnerbutisliableasapartnerforthe
rd
protectionofinnocent3 persons
8. Continuing partner Continues the
business of a partnership after it has
been dissolved by reason of the
admissionofanewpartner,retirement,
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
337
9.
10.
11.
12.
13.
14.
A:
1. PartnersPartners
2. PartnersPartnership
rd
3. Partnership3 persons with whom it
contracts
4. Partners3rd persons with whom
partnershipcontracts.
F.UNIVERSALVS.PARTICULAR;
GENERALVS.LIMITED
UNIVERSALPARTNERSHIP
A:
ALLPROFITS
ALLPRESENTPROPERTY
Whatconstitutescommonproperty
Onlyusufructof
Allpropertiesactually
thepropertiesof
belongingtothepartnersare
thepartners
contributedtheybecome
becomecommon
commonproperty
property
(ownedbyallofthepartners
andthepartnership)
Astoprofitsascommonproperty
Astoprofitsfromothersources:
Allprofits
acquiredbythe
GR:Asidefromthecontributed
industryofthe
properties,theprofitsofsaid
partnersbecome
propertybecomecommon
commonproperty
property
(whetherornot
theywere
XPN:Profitsfromother
obtainedthrough
sourcesmaybecomecommon
338
theusufruct
contributed)
ifthereisastipulationtosuch
effect
Astopropertiessubsequently
acquired:
GR: Propertiessubsequently
acquiredbyinheritance,legacy
ordonation,cannotbeincluded
inthestipulation
XPN:Onlyfruitsthereofcanbe
includedinthestipulation(Art.
1779,NCC)
Q:IftheArticlesofUniversalPartnershipfailto
specifywhetheritisoneofallpresentproperty
orofprofits,whatshallbethenatureofsuch?
PARTICULARPARTNERSHIP
Q:Whatisparticularpartnership?
Q:J,PandBformedalimitedpartnershipcalled
Suter Co., with P as the general partner and J
and B as limited partners. J and B contributed
P18,000andP20,000respectively.Later,JandB
got married and P sold his share of the
partnership to the spouses which was recorded
in the SEC. Has the limited partnership been
dissolvedbyreasonofthemarriagebetweenthe
limitedpartners?
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
individual interest did not become common
Q:Whoisageneralpartner?
property after their marriage. (Commissioner of
authorized
Q:Whataretheobligationsofapartner?
2. Whenheactsinbehalfandinthename
ofthepartnership
A:
1. Obligationsamongthemselves
GENERALPARTNERSHIP
2. Obligationstothirdpersons
Q:Whatisgeneralpartnership?
Q:Whatisthebasisforsuchobligations?
th
411,19696 ed)
Q:Whatarethedistinctionsbetweenageneralandalimitedpartner/partnership?
A:
GENERAL
LIMITED
ExtentofLiability
Personallyliableforpartnershipobligations
Liabilityextendsonly tohiscapitalcontributions
RightinManagement
Whenmannerofmanagementisnotagreedupon,
allgeneralpartnershaveanequalrightinthe
Noparticipationinmanagement
managementofthebusiness
Contribution
Contributecash,propertyorindustry
Contributecashorpropertyonly,notindustry
IfProperPartyto ProceedingsByorAgainstPartnership
Not proper party to proceedings by/against partnership,
unless:
Properpartytoproceedingsby/againstpartnership 1. Heisalsoageneralpartner;or
2. Where the object of the proceeding is to enforce a
limitedpartnersrightorliabilitytothepartnership
AssignmentofInterest
Interestisnotassignablewithoutconsentofother
Interestisfreelyassignable
partners
FirmName
GR: Namemustnot appearinfirmname
XPNs:
1. Itisalsothesurnameofageneralpartner;
Namemayappearinfirmname
2. Prior to the time when the limited partner became
such,thebusinesshadbeencarriedonunderaname
inwhichhissurnameappeared.
ProhibitiontoEngageinOtherBusiness
Prohibitedinengaginginbusiness
Noprohibition againstengaginginbusiness
EffectofDeath,Insolvency,Retirement,Insanity
Retirement,death,insolvency,insanityofgeneral
Doesnothavesameeffect;rightsaretransferredtolegal
partnerdissolvespartnership
representative
Creation
Asarule,itmaybeconstitutedinanyform,by
Createdbythemembersaftersubstantialcompliancein
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
339
contractorconductofthepartnership
goodfaithoftherequirementssetforthbylaw
Composition/Membership
Composedofoneormoregeneralpartnersandoneor
Composedonlyofgeneralpartners
morelimitedpartners
G.PARTNERSHIPBYESTOPPEL
Q:Whoisapartnerbyestoppel?
A:Onewho,bywordsorconductdoesanyofthe
following:
1. Directlyrepresentshimselftoanyoneas
apartnerinanexistingpartnershiporin
anonexistingpartnership
2. Indirectly represents himself by
consentingtoanotherrepresentinghim
as a partner in an existing partnership
orinanonexistingpartnership
A:
1. Defendant represented himself as
partner or is represented by others as
such, and did not deny/refute such
representation.
2. Plaintiffreliedonsuchrepresentation.
3. Statementofdefendantisnotrefuted.
Q:Whataretheliabilitiesincaseofestoppel?
A:
WhenPartnershipisLiable
Ifallactualpartnersconsentedtothe
representation,thentheliabilityofthepersonwho
representedhimselftobeapartnerorwho
consentedtosuchrepresentationandtheactual
partnerisconsideredapartnershipliability
WhenLiabilityisPRORATA
When there is no existing partnership and all those
represented as partners consented to the
representation, then the liability of thepersonwho
represented himself to be a partner and all who
madeandconsentedtosuchrepresentation,isjoint
orprorata
WhenLiabilityisSEPARATE
Whenthereisnoexistingpartnershipandnotallbut
only some of those represented as partners
consented to the representation, or none of the
partnership in an existing partnership consented to
such representation, then the liability will be
separate
340
H.PARTNERSHIPV.JOINTVENTURE
Q:Whatisajointventure?
A:Anassociationofpersonsorcompaniesjointly
undertaking some commercial enterprise;
generally,allcontributesassetsandsharerisks.It
requires a community of interest in the
performance of the subject matter, a right to
direct and govern the policy in connection
therewith, and a duty which may be altered by
agreementtosharebothinprofitsandlosses.
Partnership
JointVenture
Transactionsenteredinto
Thedurationofa
Limitedtotheperiodin
partnershipgenerally
whichthegoodsare
relatestoacontinuing
soldortheprojectis
businessofvarious
carriedonorasingle
transactionsofacertain
transaction.
kind.
Nature
Permanent,partnersare
interestedincarryingon
togetherofageneraland
continuingbusinessofa
Temporary,althoughit
particularkind.
maycontinuefora
numberofyears.
Note:Aparticular
partnershiphasalimited
andtemporaryoradhoc
nature,beingconfinedto
asingleundertaking.
FirmNameandLiablities
Theremustbea
partnershiporfirmname
Afirmnameisnot
underwhichthe
necessary,thusthe
partnershipshalloperate.
participatingpersons
Thenamesofthe
cantransactbusiness
partnersmayappearin
undertheirownname
thefirmnameandthe
andcanbeindividually
actofthepartnerswill
liabletherefore.
makethepartnership
liable.
Corporationaspartner
Corporationscan
Corporationcannotenter
engageinajoint
intoapartnership
venturewithothers
contract,thusitcannot
throughacontractof
beapartnerbyreasonof
publicpolicy;otherwise agreementifthenature
oftheventureinline
peopleotherthanits
withthebusinessofthe
officersmaybeableto
corporationanditis
bindit(Albano,CivilLaw
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
Reviewer,1998,p.570)
authorizedinits
charter.
LegalPersonality
A partnership acquires
personality
after
following the requisites
required by law. e.g. Art.
17711773,NCC
Ajointventurehasno
legalpersonality.
Note: SEC registration is
not required before a
partnershipacquireslegal
personality. (Art. 1768,
NCC)
I.PROFESSIONALPARTNERSHIP
Q:Whatisaprofessionalpartnership?
Q:Inaprofessionalpartnership,whoisdeemed
engagedinthepracticeofprofession?
A:Partnershipbetweenlawyersandmembersof
other profession or nonprofessional persons
should not be formed or permitted where any
partofthepartnershipsemploymentconsistsof
the practice of law. (Canons of Professional
Ethics)
Q:Whatarethecharacteristicsofapartnership
forthepracticeoflaw?
A:
a. A duty of public service, of which the
emolumentisabyproduct
b. Arelationasanofficerofcourttothe
administrationofjustice
c. A relation to clients in the highest
fiduciarydegree
d. A relationship to colleagues at the bar
characterized by candor, fairness, and
unwillingness to resort to current
business methods of advertising and
encroachment on their practice, or
dealingwiththeirclients.(IntheMatter
ofPetitionforAuthoritytoContinueUse
of Firm Name Sycip, Salazar, etc. /
Ozeata Romulo, etc., 92 SCRA 1
[1979], citing H.S. Drinker, Legal Ethics
[1953],pp45.)
A:Intheselectionanduseoffirmname,nofalse,
misleading, assumed, or trade names should be
used.(CanonsofProfessionalEthics)
J.MANAGEMENTOFTHEPARTNERSHIP
A:
Appointmentthrough
AppointmentOther
theArticlesof
ThanintheArticles
Partnership
Powerisirrevocable
withoutjustorlawful
cause
Note:Voterequiredfor
Powertoactisrevocable
removalofmanager
1. For just cause anytime,withorwithout
Vote
of
the cause(shouldbedoneby
thecontrollinginterest)
controlling
partners
(controlling
financialinterest)
2. Without cause or
for unjust cause
Unanimousvote
ExtentofPower
1. If he acts in good
faith,hemaydoall
Aslongasheisa
acts
of
manager,hecanperform
administration
allactsofadministration
(despite
opposition of his (ifothersoppose,hecan
beremoved)
partners)
2. If he acts in bad
faith,hecannot
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
341
Q:Whatistherulewheretherearetwoormore
managers?
A:
Withoutspecificationoftheirrespectiveduties
andwithoutstipulationrequiringunanimityof
action
GR: Each may separately execute all acts of
administration
(unlimited
power
to
administer)
XPN:Ifanyofthemanagersopposes,decision
ofthemajorityprevails
Note:IncaseoftieDecisionofthecontrolling
interest(whoarealsomanagers)shallprevail
Nature
GR:Unanimousconsentofallthemanaging
partnersshallbenecessaryforthevalidityofthe
actsandabsenceorinabilityofanymanaging
partnercannotbealleged.
XPN:Wherethereisanimminentdangerofgrave
orirreparableinjurytothepartnership.
A:
1. All partners shall be considered
managersandagents
2. Unanimous consent is required for
alterationofimmovableproperty
Q:AzucenaandPedroacquiredaparcelofland
andabuilding.AzucenaobtainedaloanfromTai
Tong Co., secured by a mortgage which was
executed over the land and building. Arsenio,
representative of Tai Tong, insured it with
Travellers Multi Indemnity Corporation. The
buildingandthecontentsthereofwererazedby
fire. Travellers failed to pay the insurance.
Hence, Azucena and Pedro filed a case against
TravellerswhereinTaiTongintervenedclaiming
entitlement to the proceeds from Travellers.
Whoisentitledtotheproceedsofthepolicy?
A:TaiToingisentitledtotheinsuranceproceeds.
Arseniocontractedtheinsurancepolicyonbehalf
of Tai Tong. As the managing partner of the
partnership, he may execute all acts of
administration including the right to sue debtors
of the partnership in case of their failure to pay
their obligations when it became due and
demandable. Or at the very least, Arsenio is an
agent of the partnership. Being an agent, it is
understoodthatheactedforandinbehalfofthe
342
Note:Ifrefusalofpartnerismanifestlyprejudicialto
theinterestofpartnership,courtsinterventionmay
besought.
A:
1. Separate or individual creditors should
first secure a judgment on their credit;
and
2. Applytothepropercourtforacharging
order subjecting the interest of the
debtorpartner in the partnership for
thepaymentoftheunsatisfiedamount
of the judgment debt with interest
thereon.
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
Q:Whataretheeffectsoftheactsofpartners?
A:
ACTSOFAPARTNER
Actsforapparentlycarryingonintheusualwaythe
businessofthepartnership
1.
2.
Actsnotintheordinarycourseofbusiness
1.
2.
3.
4.
5.
6.
7.
Actsofstrictdominionorownership:
Assigning partnership property in trust for
creditors;
Disposingofgoodwillofbusiness;
Doinganactwhichwouldmakeitimpossibleto
carryontheordinarybusinessofpartnership;
Confessingajudgment;
Entering into a compromise concerning a
partnershipclaimorliability;
Submitting partnership claim or liability to
arbitration;
Renouncingclaimofpartnership
EFFECT
Withbindingeffectexcept:
Whenthepartnersoactinghasinfactnoauthorityto
actforthepartnershipintheparticularmatter,and
Thepersonwithwhomheisdealinghasknowledgeof
thefactthathehasnosuchauthority
Donotbind partnershipunlessauthorizedbyother
partners(par.2,Art.1818,NCC)
GR:Oneormorebutlessthanallthepartnershaveno
authority
XPNs:
1. authorizedbytheotherpartners;or
2. p
3. artners have abandoned the business (par. 2, Art.
1818,NCC)
Partnershipisnotliable to3rdpersonshavingactualor
presumptiveknowledgeoftherestriction
Actsincontraventionofarestrictiononauthority
Q:Whatistheeffectofconveyanceofarealproperty?
A:
TYPEOFCONVEYANCE
Titleinthepartnershipsname;
Conveyanceinpartnershipname
Titleinthepartnershipsname;
Conveyanceinpartner'sname
Titleinthenameof1ormorepartners,and
therecorddoesnotdisclosetherightofthe
partnership;Conveyanceinnameof
partner/sinwhosenametitlestands
Titleinnameof1ormoreorallpartnersor
3rdpersonintrustforpartnership;
Conveyanceexecutedinpartnershipname
orinnameofpartners
Titleinthenamesofallthepartners;
Conveyanceexecutedbyallthepartners
EFFECT
Conveyancepassestitlebutpartnershipcanrecoverunless:
1.
a. Conveyancewasdoneintheusualwayofbusiness,and
b. The partner so acting has the authority to act for the
partnership;or
2. The property which has been conveyed by the grantee or a
person claiming through such grantee to a holder for value
without knowledge that the partner, in making the
conveyance,hasexceededhisauthority
Conveyancedoesnotpasstitlebutonlyequitableinterest,
provided:
1. Conveyancewasdoneintheusualwayofbusiness,or
2. The partner so acting has the authority to act for the
partnership
Conveyancepassestitlebutthepartnershipmayrecoversuch
propertyifthepartnersactdoesnotbindthepartnership:
1. The partner so acting has no authority to act for the
partnership,and
2. The person with whom he is dealing has knowledge of the
fact unless the purchaser of his assignee, is a holder for
value,withoutknowledge
1.
2.
Conveyancewillonlypassequitableinterest,provided:
Theactisonewithintheauthorityofthepartner,and
Conveyancewasdoneintheusualwayofthebusiness
Conveyancewillpassalltherightsinsuchproperty
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
343
II.RIGHTSANDOBLIGATIONSOFPARTNERSHIP
Q:Whataretheresponsibilitiesofapartnership
topartners?
A:
1. Refund the amounts disbursed by
partnerinbehalfofthepartnershipplus
corresponding interest from the time
the expenses are made (e.g. loans and
advances made by a partner to the
partnership aside from capital
contribution)
2. Answer for obligations a partner may
have contracted in good faith in the
interestofthepartnershipbusiness
3. Answer for risks in consequence of its
management(Art.1796)
III.RIGHTSANDOBLIGATIONSOFPARTNERS
AMONGTHEMSELVES
A:
1. Contributionofproperty(Art.1786)
2. Contribution of money and money
convertedtopersonaluse(Art.1788)
3. Prohibition in engaging in business for
himself(Art.1789)
4. Contributeadditionalcapital(Art.1791)
5. Managing partner who collects debt
(Art.1792)
6. Partner who receives share of
partnershipcredit(Art.1793)
7. Damagestopartnership(Art.1794)
8. Renderinformation(Art.1806)
9. Accountableasfiduciary(Art.1807)
CONTRIBUTIONOFPROPERTY
A:ToCAFPI
1. Contribute at the beginning of the
partnership, or at the stipulated time,
the money, property or industry which
hemayhavepromisedtocontribute
3. AnswertothepartnershipfortheFruits
of the property the contribution of
which he delayed, from the date they
344
4.
5.
shouldhavebeencontributeduptothe
timeofactualdelivery
A:
KINDOFPROPERTY/THING
WHOBEARSTHE
RISK?
Specificanddeterminatethings
whicharenotfungiblewhere
onlytheuseiscontributed
partners
Specificanddeterminatethings
theownershipofwhichis
transferredtothepartnership
Fungiblethings(Consumable)
partnership
Thingscontributedtobesold
Thingsbroughtandappraisedin
theinventory
A:
1. Partners become ipso jure a debtor of
the partnership even in the absence of
anydemand(Art.1786,NCC)
2. Remedy of the other partner is not
rescissionbutspecificperformancewith
damagesfromdefaultingpartner
CONTRIBUTIONOFMONEYANDMONEY
CONVERTEDTOPERSONALUSE
Q:Whataretherulesregardingcontributionof
moneytothepartnership?
A:CRIP
1. To Contribute on the date fixed the
amount the partner has undertaken to
contributetothepartnership
2. To Reimburse any amount the partner
may have taken from the partnership
coffersandconvertedtohisownuse
3. To Indemnify the partnership for the
damages caused to it by delay in the
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
4.
CONTRIBUTEADDITIONALCAPITAL
Q:Whataretherulesregardingobligationsto
contributetopartnershipcapital?
A:
1. Partners must contribute equal shares
to the capital of the partnership unless
thereisstipulationtocontrary
2. Capitalist partners must contribute
additional capital in case of imminent
loss to the business of the partnership
when there is no stipulation to the
contrary; Refusal to do so shall create
anobligationontherefusingpartnerto
sellhisinteresttotheotherpartners
A:
1. Imminent loss of the business of the
partnership
2. Majorityofthecapitalistpartnersareof
the opinion that an additional
contribution to the common fund
wouldsavethebusiness
3. Capitalistpartnerrefusesdeliberatelyto
contribute (not due to financial
inability)
4. Thereisnoagreementtothecontrary
MANAGINGPARTNERWHOCOLLECTSDEBT
A:
1. Apply sum collected to 2 credits in
proportiontotheiramounts
2. If he received it for the account of
partnership, the whole sum shall be
appliedtopartnershipcredit
Note:Requisites:
1. Atleast2debts,onewherethecollecting
partner is creditor and the other, where
thepartnershipisthecreditor
2. Bothdebtsaredemandable
3.
PARTNERWHORECEIVESSHAREOF
PARTNERSHIPCREDIT
Q:Whatistheobligationofapartnerwho
receivesshareofpartnershipcredit?
A:Tobringtothepartnershipcapitalwhathehas
received even though he may have given receipt
forhisshareonly.
Note:Requisites:
1. Apartnerhasreceivedinwholeorinpart,
hisshareofthepartnershipcredit
2. Other partners have not collected their
shares
3. Partnershipdebtorhasbecomeinsolvent
Q:Mayapersonwhohasnotdirectlytransacted
in behalf of an unincorporated association be
held liable for a contract entered into by such
association?
A:Yes.Theliabilityforacontractenteredintoon
behalf of an unincorporated association or
ostensible corporation may lie in a person who
may not have directly transacted on its behalf,
butreapedbenefitsfromthatcontract.(LimTong
Limv.PhilippineFishingGearIndustriesInc.,G.R.
No.136448,Nov.3,1999)
PROHIBITIONINENGAGINGINBUSINESS
A:
INDUSTRIALPARTNER
CAPITALISTPARTNER
Prohibition
Cannotengagein
Cannotengagein
business(withsame
businessforhimself
kindofbusinesswith
unlessthepartnership
thepartnership)forhis
expresslypermitshimto
ownaccount,unless
doso
thereisastipulationto
thecontrary
Remedy
Capitalistpartnersmay:
Capitalist partner, who
1. Exclude him from
violatedshall:
thefirm
1. Bring
to
the
2. Avail themselves of
common fund any
the benefits which
profits accruing to
he
may
have
him from said
obtained
transaction;and
3. Damages, in either
2. Bears all losses
case (Art. 1789,
(Art.1808,NCC)
NCC)
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
345
Q:JoeandRudyformedapartnershiptooperate
a car repair shop in Quezon City. Joe provided
thecapitalwhileRudycontributedhislaborand
industry. Onone side of their shop, Joe opened
and operated a coffee shop, while on the other
side, Rudy put up a car accessories store. May
theyengageinsuchseparatebusinesses?Why?
DAMAGESTOPARTNERSHIP
Q:Whatistherulewithregardtotheobligation
of a partner as to damages suffered by the
partnershipthroughhisfault?
A:
GR: Every partner is responsible to the
partnership for damages suffered by it
throughhisownfault.Thesedamagescannot
be offset by the profits or benefits which he
may have earned for the partnership by his
industry.
XPN:Ifunusualprofitsarerealizedthrough
extraordinaryeffortsoftheguiltypartner,the
courtsmayequitablymitigateorlessenhis
liabilityfordamages.(Art.1794,NCC)
DUTYTORENDERINFORMATION
Q:Whatisthedutyofthepartnerswithrespect
toinformationaffectingthepartnership?
ACCOUNTABLEASFIDUCIARY
A:Everypartnermustaccounttothepartnership
for any benefit, and hold as trustee for it any
profitsderivedbyhimwithouttheconsentofthe
346
RIGHTSOFGENERALPARTNERS
Q:Whatarethepropertyrightsofapartner?
A:SIM
1. RightinSpecificpartnershipproperty
2. Interestinthepartnership(shareinthe
profitsandsurplus)
3. RighttoparticipateintheManagement
A:
1. Equal right to possession for
partnershippurposes
2. Right is not assignable, except in
connectionwithassignmentofrightsof
allpartnersinthesameproperty
3. Right is limited to his share of what
remains after partnership debts have
beenpaid
4. Right is not subject to attachment or
executionexceptonaclaimagainstthe
partnership
5. Rightisnotsubjecttolegalsupport
A:
1. Rightswithheldfromtheassignee:
Such assignment does not grant the
assigneetherightto:
a. Tointerfereinthemanagement
b. To require any information or
account
c. Toinspectpartnershipbooks
2. Rightsofassigneeonpartnersinterest:
a. To receive in accordance with his
contracttheprofitsaccruingtothe
assigningpartner
b. To avail himself of the usual
remedies provided by law in the
eventoffraudinthemanagement
c. Toreceivetheassignorsinterestin
caseofdissolution
d. To require an account of
partnershipaffairs,butonlyincase
the partnership is dissolved, and
suchaccountshallcovertheperiod
from the date only of the last
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
IV.OBLIGATIONSOFPARTNERSHIP/PARTNERS
TOTHIRDPERSONS
Q:Whataretheeffectsofconveyanceofa
partnerofhisinterestinthepartnership?
A:
1. Conveyance of his whole interest
partnership may either remain or be
dissolved
2. Assigneedoesnotnecessarilybecomea
partner;hecannot:
a. interfere in the management or
administration;or
b. demand information, accounting
and inspection of the partnership
books.
Note:Buttheassigneehasthefollowingrights:
1. receive in accordance with his contract
the profits which the assigning partner
wouldotherwisebeentitled
2. avail himself of the usual remedies
provided by law in event of fraud in
management
3. receive assignors interest in case of
dissolution
4. requireandaccountofpartnershipaffairs
but only in case the partnership is
dissolved, and such account shall cover
the period from the date only of the last
accountagreedtobyalltheparties
CRIMINALLIABILITYFORMISAPPROPRIATION:
ESTAFA
A:
1. Everypartnershipshalloperateundera
firm name. Persons who include their
names in the partnership name even if
theyarenotmembersshallbeliableas
apartner
2. All partners shall be liable for
contractual obligations of the
partnershipwiththeirproperty,afterall
partnership
assets
have
been
exhausted:
a. Prorata
b. Subsidiary
3. Admission or representation made by
any partner concerning partnership
affairswithinthescopeofhisauthority
isevidenceagainstthepartnership
4. Noticetopartnerofanymatterrelating
topartnershipaffairsoperatesasnotice
topartnershipexceptincaseoffraud:
a. Knowledgeofpartneractinginthe
particular matter acquired while a
partner
b. Knowledgeofthepartneractingin
the particular matter then present
tohismind
c. Knowledge of any other partner
who reasonably could and should
have communicated it to the
actingpartner
5. Partners and the partnership are
rd
solidarily liable to 3 persons for the
partner'stortorbreachoftrust
6. Liability of incoming partner is limited
to:
a. His share in the partnership
propertyforexistingobligations
b. His separate property for
subsequentobligations
7. Creditorsofpartnershiparepreferredin
partnership property & may attach
partner'sshareinpartnershipassets
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
347
V.DISSOLUTION
Dissolution
Achangeinthe
relationofthe
partners
causedbyany
partnerceasing
tobe
associatedin
carryingonthe
business.
Windingup
Termination
Settlingthe
partnership
businessor
affairsafter
dissolution
Pointintime
whenall
partnership
affairsare
woundupor
completed;the
endofthe
partnershiplife
Q:Whatarethecausesofdissolution?
A:
1. Withoutviolatingtheagreement:
a. Terminationofthedefinitetermor
specificundertaking
b. Expresswillofanypartneringood
faith, when there is no definite
termandnospecifiedundertaking
c. Express will of all partners (except
those who have assigned their
interests or suffered them to be
charged for their separate debts)
either before or after the
termination of any specified term
orparticularundertaking
d. Expulsion of any partner in good
faithofamember
2. Violatingtheagreement
3. Unlawfulnessofthebusiness
4. Loss
a. Specific thing promised as
contribution is lost or perished
beforedelivery
b. Lossofaspecificthingcontributed
beforeorafterdelivery,ifonlythe
useofsuchiscontributed
5.
6.
7.
8.
348
Deathofanyofthepartners
Insolvency of any partner or of the
partnership
Civilinterdictionofanypartner
BydecreeofcourtunderArt.1831,NCC
a. apartnerhasbeendeclaredinsane
orofunsoundmind
b. a partner becomes in any other
way incapable of performing his
partofthepartnershipcontract
c.
d.
e.
f.
Q:Whataretheeffectsofdissolution?
A:
1. Partnershipisnotterminated
2. Partnership continues for a limited
purpose
3. Transaction of new business is
prohibited (De Leon, Comments and
Cases on Partnership, Agency, and
Trust,p.229,2005ed)
A:
GR: The partnership ceases to be a going
concern
XPN:Thepartnerspowerofrepresentationis
confinedonlytoactsincidenttowindingupor
completing transactions begun but not then
finished.(Art.1832,NCC)
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
2.
Q:Thearticlesofcopartnershipprovidethatin
case of death of one partner, the partnership
shallnotbedissolvedbutshallbecontinuedby
thedeceasedpartnersheirs.WhenH,apartner,
died,hiswife,W,tookoverthemanagementof
some of the real properties with permission of
the surviving partner, X, but her name was not
included in the partnership name. She
eventuallysoldtheserealpropertiesafterafew
years. X now claims that W did not have the
authoritytomanageandsellthosepropertiesas
shewasnotapartner.Isthesalevalid?
A:Yes.Thewidowwasnotamereagent,because
she had become a partner upon her husband's
death,asexpresslyprovidedbythearticlesofco
partnership, and by authorizing the widow to
managepartnershippropertyXrecognizedheras
a general partner with authority to administer
andalienatepartnershipproperty.Itisimmaterial
thatW'snamewasnotincludedinthefirmname,
sincenoconversionofstatusisinvolved,andthe
articlesofcopartnershipexpresslycontemplated
the admission of the partner's heirs into the
partnership.(Goquiolayv.Sycip,G.R.No.L11840,
Dec.16,1963)
A:
GR: Each partner is liable to his copartners
for his share, of any liability created by any
partner for the partnership, as if the
partnershiphadnotbeendissolved.
XPNs:Partnersshallnotbeliablewhen:
1. the dissolution, being by act of any
partner, the partner acting for the
partnership had knowledge of the
dissolution;or
2. the dissolution, being by the death or
insolvency of a partner, the partner
acting for the partnership had
knowledge or notice of the death or
insolvency(Art.1833,NCC)
A:
GR: Yes. A partner continues to bind
partnership even after dissolution in the
followingcases:
1. Transactions to wind up partnership
affairs/complete
transactions
unfinishedatdissolution;
2. Transactions which would bind
partnership if not dissolved dissolution
hadnottakenplace,providedtheother
party/obligee:
a.
i.
ii.
b.
i.
ii.
iii.
Didnotextendcredittopartnership;
Had known partnership prior to
dissolution;and
Had no knowledge/notice of
dissolution/fact of dissolution not
advertisedinanewspaperofgeneral
circulation in the place where
partnershipisregularlycarriedon.
XPNtoXPN:Windingupofpartnershipaffairs
1. Partnerhasbecomeinsolvent
2. Actisnotappropriateforwindingupor
forcompletingunfinishedtransactions
3. Completely new transactions which
would bind the partnership if
dissolution had not taken place with
thirdpersonsinbadfaith.
4. Partner is unauthorized to wind up
partnership
affairs,
except
by
transactionwithonewho:
a.
i.
ii.
b.
i.
ii.
iii.
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
349
A:
GR:No.
XPN:Saidliabilityisdischargedwhenthereis
anagreementbetween:
1. Partnerhimself;
2. Person/scontinuingthebusiness;and
3. Partnershipcreditors
WINDINGUP
Note:Examplesofwindingup:
1. Payingpreviousobligations
2. Collectingassetspreviouslydemandable
350
Annotated,Volume5,p.485,19696thed)
Q:Whoarethepersonsauthorizedtowindup?
A:
1. Partnersdesignatedbytheagreement
2. Intheabsenceofsuch,allpartnerswho
have not wrongfully dissolved the
partnership
3. Legal representative of last surviving
partnerwhoisnotinsolvent
Q:Whatarepartnershipassets?
A:
1. Partnershipproperty
2. Contributionsofthepartnersnecessary
for the payment of all liabilities [Art.
1839(2),NCC]
Q:Whatistheorderofpaymentinwindingup?
A:
1. Those owing to creditors other than
partners
2. Thoseowingtopartnersotherthanfor
capitalorprofits
3. Those owing to partners in respect of
capital
4. Those owing to partners in respect to
profits[Art.1839(2),NCC]
Q:Whatisthedoctrineofmarshallingofassets?
A:
1. Partnership creditors have preference
inpartnershipassets
2. Separate or individual creditors have
preference in separate or individual
properties
3. Anything left from either goes to the
other.
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
Q: What are the rights of a partner where
dissolution is in contravention of the
agreement?
Q:Whataretherightsofinjuredpartnerwhere
partnershipcontractisrescinded?
A:
1. Right of a lien on, or retention of, the
surplus of partnership property after
satisfying partnership liabilities for any
sum of money paid or contributed by
him;
2. Right of subrogation in place of
partnership creditors after payment of
partnershipliabilities;and
3.
A:
1. Assetsofthepartnershipinclude:
a. Partnership property (including
goodwill)
b. Contributionsofthepartners
2. Orderofapplicationoftheassets:
a. First, those owing to partnership
creditors
b. Second, those owing to partners
other than for capital and profits
suchasloansgivenbythepartners
oradvancesforbusinessexpenses
c. Third,thoseowingforthereturnof
the capital contributed by the
partners
d. Fourth, the share of the profits, if
any,duetoeachpartner
Q:Whatispartnerslien?
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
351
Q:Canapartnerdemandforhisshareduringthe
existenceofapartnership?
Q:Whataretheeffectswhenthebusinessofa
dissolvedpartnershipiscontinued?
A:
1. Creditors of old partnership are also
creditors of the new partnership who
continues the business of the old one
without liquidation of the partnership
affairs.
2. Creditors have an equitable lien on the
consideration
paid
to
the
retiring/deceased partner by the
purchaser when retiring/deceased
partner sold his interest without final
settlementwithcreditors.
3. Rights of retiring/estate of deceased
partner:
a. To have the value of his interest
ascertained as of the date of
dissolution;and
b. Toreceiveasordinarycreditorthe
value of his share in the dissolved
partnershipwithinterestorprofits
attributable to use of his right, at
hisoption.
Prescriptionbeginstorunonlyuponthedissolution
of the partnership, when the final accounting is
done.
352
Q:Whoarethepersonsrequiredtorenderan
account?
A:
1. Windinguppartner;
2. Survivingpartner;and
3. Person or partnership continuing the
business
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
Does Philip have any right to petition for the
dissolution of the partnership before the
expirationofitsspecifiedterm?Explain.
VI.LIMITEDPARTNERSHIP
A.DEFINITION
Q:Whatislimitedpartnership?
A:Oneformedbytwoormorepersonshavingas
members one or more general partners and one
or more limited partners, the latter not being
personallyliableforpartnershipdebts(Art.1843)
Q:Whatarethecharacteristicsoflimited
partnership?
A:
1. It is formed by compliance with the
statutoryrequirements
2. One or more general partners control
thebusinessandarepersonallyliableto
creditors
3. One or more limited partners
contribute to the capital and share in
theprofitsbutdonotparticipateinthe
management of the business and are
not personally liable for partnership
obligations beyond their capital
contributions
4. The limited partners may ask for the
return of their capital contributions
underconditionsprescribedbylaw
5. Partnership debts are paid out of
common fund and the individual
propertiesofgeneralpartners
B.HOWLIMITEDPARTNERSHIPIS
FORMED/AMENDED
A:
1. Certificate of articles of limited
partnership which states the matters
enumeratedinArt.1844,NCC,mustbe
signedandsworn;and
2. Certificate must be filed for record in
theofficeoftheSEC.
Q:Doesalimitedpartnershiphaveapersonality
separateanddistinctfromthatofthepartners?
Whataretheconsequencesofsuch?
A:
1. Whenthepartnershipisdissolved
2. Whenallthelimitedpartnersceasedto
besuch
A:
1. Itmustfallunderthefollowingchanges
andconditions:
a. There is a change in the name of
the partnership or in the amount
orcharacterofthecontributionof
anylimitedpartner
b. Apersonissubstitutedasalimited
partner
c. An additional limited partner is
admitted
d. A person is admitted as a general
partner
e. A general partner retires, dies,
becomes insolvent or insane, or is
sentenced to civil interdiction and
the business is continued under
Article1860
f. There is a change in the character
ofthebusinessofthepartnership
g. There is a false or erroneous
statementinthecertificate
h. There is a change in the time as
stated in the certificate for the
dissolution of the partnership or
forthereturnofacontribution
i.
A time is fixed for the dissolution
ofthepartnership,orthereturnof
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
353
j.
2.
3.
MustberecordedintheSEC
LIMITEDPARTNER
Q:Whataretheliabilitiesofalimitedpartner?
A:
ASCREDITOR
Deficiencyin
contribution
Unpaid
contribution
ASTRUSTEE
Specificpropertystatedas
contributedbutnotyet
contributed/wrongfullyreturned
Money/otherproperty
wrongfullypaid/conveyedtohim
onaccountofhiscontribution
A:
1. Allowed
a. Grantingloanstopartnership
b. Transacting
business
with
partnership
c. Receiving pro rata share of
partnership assets with general
creditorsifheisnotalsoageneral
partner
2.
Prohibited
a. Receiving/holding
partnership
propertyascollateralsecurity
b. Receiving
any
payment,
conveyance,releasefromliabilityif
rd
itwillprejudicerightof3 persons
Note:Violationoftheprohibitionwillgiverisetothe
presumption that it has been made to defraud
partnershipcreditors.
354
Q:Whendoesageneralpartnerneedconsentor
ratificationofallthelimitedpartners?
A:Whenhe:
1. does any act in contravention of the
certificate;
2. does any act which would make it
impossible to carry on the ordinary
businessofthepartnership;
3. confesses
judgment
against
partnership;
4. possesses partnership property /
assigns rights in specific partnership
property other than for partnership
purposes;
5. admitspersonasgeneralpartner;
6. admits person as limited partner
unlessauthorizedincertificate;or
7. continues business with partnership
property on death, retirement, civil
interdiction, insanity or insolvency of
generalpartnerunlessauthorizedinthe
certificate.
PARTNERSHIPTORT
Q:Whenisthereapartnershiptort?
A:Where:
1. by any wrongful act or omission of any
partner,actingintheordinarycourseof
business of the partnership or with
authority of his copartners, loss or
injuryiscausedtoanyperson,notbeing
apartnerinthepartnership;
2. one partner, acting within the scope of
his apparent authority, receives money
or property from a third person, and
misappliesit;or
3. the partnership, in the course of its
business, receives money or property,
anditismisappliedbyanypartnerwhile
itisinthecustodyofthepartnership.
C.RIGHTSANDOBLIGATIONSOFALIMITED
PARTNER
A:To:
1. havepartnershipbookskeptatprincipal
placeofbusiness;
2. inspect/copy books at reasonable
hours;
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
3.
4.
5.
6.
7.
Q:Whoisasubstitutedlimitedpartner?
A:Apersonadmittedtoalltherightsofalimited
partner who has died or assigned his interest in
thepartnership
A:
GR: He has all the rights and powers and is
subjecttoalltherestrictionsandliabilitiesof
hisassignor.
Q:Whataretherequirementsfortheadmission
ofasubstitutedlimitedpartner?
A:
1. All the members must consent to the
assigneebecomingasubstitutedlimited
partner or the limited partner, being
empoweredbythecertificatemustgive
the assignee the right to become a
limitedpartner;
2. The certificate must be amended in
accordancewithArt.1865,NCC;and
3. The certificate as amended must be
registeredintheSEC.
A:
1. All liabilities of the partnership have
been paid or if they have not yet been
paid, the assets of the partnership are
sufficienttopaysuchliabilities;
2. The consent of all the members
(generalandlimitedpartners)hasbeen
obtained except when the return may
berightfullydemanded;and
3. The certificate of limited partnership is
cancelledoramended
Q:Whataretheliabilitiesofalimitedpartner?
1. Tothepartnership
A:Sincelimitedpartnersarenotprincipalsinthe
transaction of a partnership, their liability as a
rule,istothepartnership,nottothecreditorsof
the partnership. The general partners cannot,
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
355
3. Toseparatecreditors
A:Thewaiverorcompromise:
1. ismadewiththeconsentofallpartners;
and
2. does not prejudice partnership
creditorswhoextendedcreditorwhose
claims arose before the cancellation or
amendmentofthecertificate.
A:
1. When his demand for the return of his
contributionisdeniedalthoughhehasa
righttosuchreturn;or
2. When his contribution is not paid
although he is entitled to its return
because the other liabilities of the
partnership have not been paid or the
partnership property is insufficient for
theirpayment.
SUMMARYOFRIGHTSANDOBLIGATIONSOFPARTNERS
GENERALPARTNER
LIMITEDPARTNER
Rights
1.
1.
2.
3.
4.
Rightinspecificpartnershipproperty
Interestinthepartnership(shareintheprofitsandsurplus)
Righttoparticipateinthemanagement
Righttoassociateanotherpersonwithhiminhissharewithout
theconsentofotherpartners(subpartnership)
5. Right to inspect and copy partnership books at any reasonable
hour.
6. Right to a formal account as to partnership affairs (even during
existenceofpartnership)
a. if he is wrongfully excluded from partnership business or
possessionofitspropertybyhiscopartners.
b. ifrightexistsunderthetermsofanyagreement.
c. asprovidedinArt.1807,NCC
d. wheneverthecircumstancesrenderitjustandreasonable.
1.
2.
3.
4.
356
Obligations
Obligationsof partnersamongthemselves
Contributionofproperty
Contributionofmoneyandmoneyconvertedtopersonaluse
Prohibitioninengaginginbusinessforhimself
Contributeadditionalcapital
2.
3.
4.
5.
6.
7.
Tothepartnership
Sincelimitedpartnersarenotprincipalsin
thetransactionofapartnership,their
liabilityasarule,istothepartnership,not
tothecreditorsofthepartnership.The
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
PARTNERSHIP
5.
6.
7.
8.
9.
Managingpartnerwhocollectsdebt
Partnerwhoreceivesshareofpartnershipcredit
Damagestopartnership
Renderinformation
Accountableasfiduciary
Obligationsofpartnersto3rd persons
generalpartnerscannot,howeverwaive
anyliabilityofthelimitedpartnerstothe
prejudiceofsuchcreditors.
1.
5.
6.
Tothepartnershipcreditorsandother
partners
Toseparatecreditors
Otherobligations
Asinageneralpartnership,thecreditorof
alimitedpartnermay,inadditiontoother
Duty to render on demand true and full information affecting
remediesallowedunderexistinglaws,
partnership to any partner or legal representative of any
applytothepropercourtforacharging
deceasedpartnerorofanypartnerunderlegaldisability.
ordersubjectingtheinterestinthe
Dutytoaccounttothepartnershipasfiduciary.
partnershipofthedebtorpartnerforthe
paymentofhisobligation.
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
357
AGENCY
Q:Whatiscontractofagency?
A:Bycontractofagencyapersonbindshimselfto
render some service or to do something in
representation or on behalf of another, with the
consentorauthorityofthelatter.(Art.1868NCC)
A:BUNCPP
1. Bilateral If it is for compensation
becauseitgivesrisetoreciprocalrights
andobligations
2. Unilateral If gratuitous, because it
creates obligations for only one of the
parties
3. Nominate
4. Consensual It is perfected by mere
consent
5. Principal
6. Preparatory It is entered into as a
meanstoanend
Q:Whataretheclassificationsofagency?
A:
1. Astomannerofcreation
a. Express agent has been actually
authorized by the principal, either
orallyorinwriting
b. Implied agency is implied from
the acts of the principal, from his
silence or lack of action or his
failure to repudiate the agency,
knowing that another person is
acting on his behalf without
authority
2. Astocharacter
a. Gratuitous agent receives no
compensationforhisservices
b. Onerous agent receives
compensationforhisservices
3. Astoextentofbusinessoftheprincipal
a. Generalagencycomprisesallthe
businessoftheprincipal
b. Special agency comprises one or
morespecifictransactions
4. Astoauthorityconferred
a. Couchedingeneraltermsagency
is created in general terms and is
deemed to comprise only acts in
358
b.
A:CORS
1. Consent (express or implied) of the
partiestoestablishtherelationship;
2. TheObjectistheexecutionofajuridical
actinrelationtothirdpersons;
3. TheagentactsasaRepresentativeand
notforhimself;and
4. The agent acts within the Scope of his
authority.
A:
GR: There are no formal requirements
governingtheappointmentofanagent.
XPN:Whenthelawrequiresaspecificform.
i.e.whensaleoflandoranyinteresttherein
isthroughanagent,theauthorityofthelatter
must be in writing; otherwise, the sale shall
bevoid(Art.1874,NCC)
Q:Whoarethepartiestoacontractofagency?
Distinguish.
A:
1. Principal One whom the agent
represents and from whom he derives
authority; he is the one primarily
concernedinthecontract.
2. Agent One who represents the
principalinatransactionorbusiness.
Note:Fromthetimetheagentactsortransactsthe
business for which he has been employed in
representationofanother,athirdpartyisaddedto
the agency relationship the party with whom the
business is transacted. (De Leon, Comments and
Cases on Partnership, Agency, and Trust, p. 352,
2005ed)
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
Q:Whatarethequalificationsofaprincipal?
A:
1. Naturalorjuridicalperson
2. Hemusthavecapacitytoact
Note:Ifapersoniscapacitatedtoactforhimselfor
hisownright,hecanactthroughanagent.
Insofarasthirdpersonsareconcerned,itisenough
that the principal is capacitated. But insofar as his
obligationstohisprincipalareconcerned,theagent
mustbeabletobindhimself.
Q:Whatisthetermjointprincipals?
Q:Whataretherequisitesforsolidaryliabilityof
jointprincipals?
A:
1. Therearetwoormoreprincipals;
2. They have all concurred in the
appointmentofthesameagent;and
3. Agent is appointed for a common
transactionorundertaking.(DeLeon,p.
604,2005ed)
Q:Whatarethekindsofagents?
A:
1. Universal agent one employed to do
all acts which the principal may
personally do, and which he can
lawfully delegate to another the power
ofdoing
2. General agent one employed to
transactallbusinessoftheprincipal,or
allthebusinessofaparticularkindorin
aparticularplace,doallactsconnected
with a particular trade, business or
employment
3. Special or particular agent one
authorized to do act in one or more
specific transactions or to do one or
more specific acts or to act upon a
particularoccasion
Q:Canagencybecreatedbynecessity?
A:No.Whatiscreatedisadditionalauthorityin
anagentappointedandauthorizedbeforethe
emergencyarose.
Q:Whataretherequisitesfortheexistenceof
agencybynecessity?
A:
1. Realexistenceofemergency
2. Inability of the agent to communicate
withtheprincipal
3. Exercise of additional authority is for
theprincipalsprotection
4. Adoption of fairly reasonable means,
premisesdulyconsidered
Q:Whatistheruleregardingdoubleagency?
A:
GR:Itisdisapprovedbylawforbeingagainst
publicpolicyandsoundmorality.
XPN:Wheretheagentactedwithfull
knowledgeandconsentoftheprincipals.
A:ThecontractbetweenAandBisasalenotan
agency to sell because the price is payable by B
upon60daysfromdeliveryevenifBisunableto
resell it. If B were an agent, he is not bound to
pay the price if he is unable to resell it. As a
buyer,ownershippassedtoBupondeliveryand,
under Art. 1504, NCC, the thing perishes for the
owner. Hence, B must still pay the price. (1999
BarQuestion)
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
359
II.POWERS
Q:Whatarethekindsofagencyastoextentof
powersconferred?
A:Anagencymaybecouchedingeneraltermsor
couchedinspecificterms.
Q:Whatisanagencycouchedingeneralterms?
Q:Whenisanexpresspowernecessary?
Q:Whatismeantbyactsofadministration?
Q:Whenispaymentanactofadministration?
A:Whenpaymentismadeintheordinarycourse
ofmanagement.
360
A.TOBINDPRINCIPAL
A:
1. When the agent acts as such without
expressly binding himself or does not
exceed the limits of his authority. (Art.
1897)
2. If principal ratifies the act of the agent
which exceeded his authority. (Art.
1898)
3. Circumstances where the principal
himself was, or ought to have been
aware.(Art.1899)
4. If such act is within the terms of the
powerofattorney,aswritten.(Art.1900
&1902)
5. Principalhasratified,orhassignifiedhis
willingnesstoratifytheagentsact.(Art
1901)
A:
GR: Knowledge of agent is knowledge of
principal.
XPNs:
1. Agents interests are adverse to those
oftheprincipal;
2. Agents duty is not to disclose the
information (confidential information);
or
3. Where the person claiming the benefit
of the rule colludes with the agent to
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
defraud the principal. (De Leon,
Comments and Cases on Partnership,
Agency,andTrust,p.367,2005ed)
Q:Whataretheeffectsoftheactsofanagent?
A:
1. Withauthority
a. Inprincipalsnamevalid
b. In his own name not binding on
the principal; agent and stranger
are the only parties, except
regarding things belonging to the
principal or when the principal
ratifies the contract or derives
benefittherefrom
2. Withoutauthority
a. Inprincipalsnameunauthorized
and unenforceable but may be
ratified, in which case, may be
validated retroactively from the
beginning
b. In his own name valid on the
agent,butnotontheprincipal
A:
AUTHORITY
Sumtotalofthepowers
committedtotheagent
bytheprincipal
Relatestothe
subject/businesswith
whichtheagentis
empoweredtodealor
act
Limitationsofauthority
areoperativeasagainst
thosewhohave/charged
withknowledgeofthem
Contemplatedtobe
madeknowntothird
personsdealingwiththe
agent
INSTRUCTIONS
Contemplatesonlya
privateruleofguidance
totheagent;
independentand
distinctincharacter
Referstothemanneror
modeofagentsaction
Withoutsignificanceas
againstthosewith
neitherknowledgenor
noticeofthem
Notexpectedtobe
madeknowntothose
withwhomtheagent
deals
Q:Whenistheprincipalboundbytheactualor
apparentauthorityoftheagent?
A:Theprincipalisboundbytheactsoftheagent
on his behalf, whether or not the third person
dealingwiththeagentbelievesthattheagenthas
actual authority, so long as the agent has actual
authority,expressorimplied.
Q:Whatisdoctrineofapparentauthority?
A:
ApparentAuthority
Thatwhichisthough
notactuallygranted,
theprincipal
knowinglypermitsthe
agenttoexerciseor
holdshimoutas
possessing
Foundedinconscious
permissionofacts
beyondthepowers
granted
AuthoritybyEstoppel
Ariseswhentheprincipal,
byhisculpablenegligence,
permitshisagentto
exercisepowersnot
grantedtohim,even
thoughtheprincipalmay
havenonoticeor
knowledgeoftheagents
conduct
Foundedontheprincipals
negligenceinfailing
properlytosupervisethe
affairsoftheagent
A:No.Agentsarenotapartywithrespecttothat
contractbetweenhisprincipalandthirdpersons.
As agents, they only render some service or do
somethinginrepresentationoronbehalfoftheir
principals.Therenderingofsuchservicedidnot
make them parties to the contracts of sale
executedinbehalfofthelatter.
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
361
SUMMARYOFRULES;ACTSOFANAGENT
1.
2.
Inbehalfoftheprincipal,withinthescopeofauthority
Bindsprincipal;
Agentnotpersonallyliable
Withoutorbeyondscopeofauthority
Contractisunenforceableasagainsttheprincipalbutbindstheagenttothethirdperson
Bindingontheprincipalwhen:
1. Ratifiedor
2. Theprincipalallowedtheagenttoactasthoughhehadfullpowers
Withinthescopeofauthoritybutintheagentsname
1. Notbindingontheprincipal;
2. Principalhasnocauseofactionagainstthe3rdpartiesandviceversa
Note:Whenthetransactioninvolvesthingsbelongingtotheprincipal:
Remedyoftheprincipaldamagesforagentsfailuretocomplywiththeagency
Withinthescopeofthewrittenpowerofattorneybutagenthasactuallyexceededhisauthorityaccording
toanunderstandingbetweenhimandtheprincipal
1. Insofaras3rdpersonsareconcerned(notrequiredtoinquirefurtherthanthetermsofthewritten
power,agentactedwithinscopeofhisauthority;
2. Principalestopped
Withimpropermotives
Motiveisimmaterial;aslongaswithinthescopeofauthority,valid
Withmisrepresentationsbytheagent
1. Authorizedprincipalstillliable
2. Beyondthescopeoftheagentsauthority
GR:Principalnotliable
XPN:Principaltakesadvantageofacontractorreceivesbenefitsmadeunderfalserepresentationofhis
agent
Mismanagementofthebusinessbytheagent
1. Principalstillresponsiblefortheactscontractedbytheagentwithrespectto3rd persons;
2. Principal,however,mayseekrecoursefromtheagent
Tortcommittedbytheagent
Principalcivillyliablesolongasthetortiscommittedbytheagentwhileperforminghisdutiesinfurtherance
oftheprincipalsbusiness
Agentingoodfaithbutprejudices3rd parties
Principalisliablefordamages
B.EXCEPTION
Q:Whenistheactofanagentnotbindingtothe
principal?
A:Ifanagentactsinhisownname.Insuchcase,
theagentistheonedirectlyboundinfavorofthe
person with whom he has contracted, as if the
transactionwerehisown.(Art.1883,NCC)
362
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
III.EXPRESSVS.IMPLIEDAGENCY
Q:Distinguishexpressandimpliedagency.
A:
EXPRESSAGENCY
IMPLIEDAGENCY
Astodefinition
Onewheretheagent
hasbeenactually
Onewhichisimpliedfrom
authorizedbythe
theactsoftheprincipal,
principal,eitherorally
orinwriting
Astoauthority
Whenitisincidentaltothe
transactionorreasonably
necessarytoaccomplishthe
purposeoftheagency,and
Whenitisdirectly
therefore,theprincipalis
conferredbywords
deemedtohaveactually
intendedtheagentto
possess
Q:Distinguishagencyfromguardianship.
A:
AGENCY
Agentrepresentsa
capacitatedperson
Agentderives
authorityfromthe
principal
Agentisappointedby
theprincipalandcan
beremovedbythe
latter
Agentissubjectto
directionsofthe
principal
Agentcanmakethe
principalpersonally
liable
Q:
Distinguish
administration.
A:
AGENCY
Agentisappointed
bytheprincipal
Representsthe
principal
Agentdoesnotfile
abond
Agentiscontrolled
bytheprincipal
thrutheagreement
GUARDIANSHIP
Guardianrepresentsan
incapacitatedperson
Guardianderivesauthority
fromthecourt
Guardianisappointedby
thecourt,andstandsin
locoparentis
Guardianisnot subjectto
thedirectionsoftheward,
butmustactforthewards
benefit
Guardianhasnopowerto
imposepersonalliability
ontheward
agency
from
judicial
JUDICIALADMINISTRATION
JudicialAdministratoris
appointedbythecourt
Representsnotonlythe
courtbutalsotheheirsand
creditorsoftheestate
JudicialAdministratorfilesa
bond
Hisactsaresubjectto
specificordersfromthe
court
Q:Distinguishagencyfromleaseofservices.
A:
AGENCY
LEASEOFSERVICES
Agentrepresentsthe
Workerorlessorof
principal
servicesdoesnot
representhisemployer
Relationshipcanbe
Generally,relationship
terminatedatthewill
canbeterminatedonly
ofeitherprincipalor
atthewillofboth
agent
Agentexercises
Employeehasministerial
discretionarypowers
functions
Q:Distinguishagencyfromtrust.
A:
AGENCY
TRUST
Agentusuallyholds
Trusteemayholdlegal
notitleatall
titletotheproperty
Agentusuallyactsin
Trusteemayactinhis
thenameofthe
ownname
principal
Trustusuallyendsbythe
Agencyusuallymay
accomplishmentofthe
beterminatedor
purposesforwhichitwas
revokedanytime
formed
Agencymaynotbe
Trustinvolvescontrol
connectedatallwith
overproperty
property
Trusteedoesnot
Agenthasauthority
necessarilyoreven
tomakecontracts
possesssuchauthorityto
whichwillbebinding
bindthetrustororthe
onhisprincipal
cestuiquetrust
Agencyisreallya
Trustmaybetheresultof
contractualrelation
acontract,itmayalsobe
createdbylaw
IV.AGENCYBYESTOPPEL
Q:Whenisthereanagencybyestoppel?
Q:Whataretherulesregardingestoppelin
agency?
A:
1. Estoppel of agent One professing to
act as agent for another may be
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
363
2.
Estoppelofprincipal
a. AstoagentOnewhoknowsthat
another is acting as his agent and
fails to repudiate his acts, or
accepts the benefits, will be
estopped to deny the agency as
againsttheother.
b. As to subagent To estop the
principal from denying his liability
to a third person, he must have
known or be charged with
knowledge of the fact of the
transaction and the terms of the
agreementbetweentheagentand
subagent.
c. As to third persons One who
knowsthatanotherisactingashis
agent or permitted another to
appearashisagent,totheinjuryof
third persons who have dealt with
theapparentagentassuchingood
faith and in the exercise of
reasonable prudence, is estopped
todenytheagency.
3.
4.
Q:Distinguishimpliedagencyfromagencyby
estoppel.
A:
IMPLIEDAGENCY
AGENCYBYESTOPPEL
Astoliabilitybetweenprincipalandagent
Ifcausedbytheagent,he
Agentisatrueagent,
isnotconsideredatrue
withrightsandduties
agent,hence,hehasno
ofanagent
rightsassuch
Astoliabilitytothirdpersons
1. If caused by the
principal, he is liable,
1. The principal is
but only if the 3rd
alwaysliable
person acted on the
2. Theagentisnever
misrepresentation;
personallyliable
2. If caused by the agent
alone,onlytheagentis
364
liable
V.GENERALvs.SPECIALAGENCY
Q:Distinguishageneralagentfromaspecial
agent?
A:
GeneralAgent
SpecialAgent
ScopeofAuthority
Specificactsin
pursuanceofparticular
Allactsconnectedwith
instructionsorwith
thebusinessor
restrictionsnecessarily
employmentinwhichhe
impliedfromtheactto
isengaged
bedone
NatureofServiceAuthorized
Involvescontinuityof
Nocontinuityofservice
service
ExtenttowhichtheAgentmayBindthePrincipal
Maybindhisprincipalby
Cannotbindhisprincipal
anactwithinthescope
inamannerbeyondor
ofhisauthorityalthough
outsidethespecificacts
itmaybecontrarytothe
whichheisauthorizedto
lattersspecial
perform
instructions
TerminationofAuthority
Dutyimposeduponthe
Apparentauthoritydoes
thirdpartytoinquire
notterminatebymere
makesterminationofthe
revocationofhis
relationshipeffective
authoritywithoutnotice
uponrevocation
tothethirdparty
ConstructionofPrincipalsInstruction
Strictlyconstruedasthey
Merelyadvisoryin
limittheagents
nature
authority
Q:Whoisafactor/commissionagent?
Q:Whoisabroker?
Q:Whatisfactorage?
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
Q:Whatisordinarycommission?
Q:Whatisguarantycommission?
A:Itisthefeewhichisgiveninreturnfortherisk
that the agent has to bear in the collection of
credits.
VI.AGENCYCOUCHEDINGENERALTERMS
Q:Whatisanagencycouchedingeneralterms?
A:Onewhichiscreatedingeneraltermsandis
deemedtocompriseonlyactsofadministration
(Art.1877,NCC).
VII.AGENCYREQUIRINGSPECIALPOWEROF
ATTORNEY
Q:Whatisspecialpowerofattorney(SPA)?
A:No.SPAisnotrequiredtobeinwritingand
neednotbenotarizedinordertobevalid.(De
Leon,CommentsandCasesonPartnership,
Agency,andTrust,p.443,2005ed)
Q:Istheinterventionofanotarypublicrequired
forthevalidityofanSPA?
A:
GR: A power of attorney is valid although no
notary public intervened in its execution.
(Barrettov.Tuason,G.R.Nos.L36811,36827,
36840, 36872, Mar. 31, 1934) (De Leon, p.
443,2005ed)
cannotbeadmittedinevidenceunlessitiscertified
as such in accordance with the foregoing provision
of the rules by a secretary of embassy or legation,
consulgeneral,consul,viceconsul,orconsularagent
or by any officer in the foreign service of the
Philippinesstationedintheforeigncountryinwhich
the record is kept of said public document and
authenticated by the seal of his office. (Medina v.
Natividad,G.R.No.177505,Nov.27,2008)
Q:Whenisaspecialpowernecessary?
A:CALLMOSPRINGCOW
Q:Whatarethelimitationstoaspecialpowerof
attorney?
A:
1. A special power to sell excludes the
powertomortgage
2. A special power to mortgage does not
include the power to sell (Art. 1879,
NCC)
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
365
3.
VIII.AGENCYBYOPERATIONOFLAW
IX.RIGHTSANDOBLIGATIONSOFPRINCIPAL
A:To:
1. comply with all obligations which the
agent may have contracted within the
scopeofhisauthority(Art.1910,NCC);
2. advancetotheagent,shouldthelatter
so request, the sums necessary for the
execution of the agency (Art. 1912,
NCC);
3. reimburse the agent for all advance
madebyhim,providedtheagentisfree
fromfault(Ibid.);
4. indemnify the agent for all damages
whichtheexecutionoftheagencymay
have caused the latter without fault or
negligenceonhispart(Art.1913,NCC);
and
5. paytheagentthecompensationagreed
upon, or if no compensation was
specified, the reasonable value of the
agents services. (De Leon, Comments
and Cases on Partnership, Agency, and
Trust,pp.545555,2005ed)
A:
GR:Yes.
XPNs:
1. If the agent acted in contravention of
the principal's instructions, unless
principal derives benefits from the
contract;
2. When the expenses were due to the
faultoftheagent;
366
3.
4.
Q:Whatistheliabilityoftheprincipalregarding
contractsenteredintobytheagent?
A:
GR: The principal must comply with all the
obligations which the agent may have
contractedwithinthescopeofhisauthority.
XPN:Wheretheagentexceededhisauthority.
XPNtotheXPN:Whentheprincipalratifiesit.
A:
GR: Where the fault or crime committed by
the agent is not in the performance of an
obligation of the principal, the latter is not
boundbytheillicitactsoftheagent,evenifit
isdoneinconnectionwiththeagency.
XPNs:
1. Where the tort was committed by the
agent because of defective instructions
from the principal or due to lack of
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
2.
necessaryvigilanceorsupervisiononhis
part;or
When the tort consists in the
performance of an act which is within
the powers of an agent but becomes
criminal only because of themanner in
which the agent has performed it; the
principal is civilly liable to 3rd persons
whoactedingoodfaith.
Q:Whenistheprincipalnotboundbytheactof
theagent?
A:
1. GR:Whentheactiswithoutorbeyond
the scope of his authority in the
principalsname.
XPNs:
a. Where the acts of the principal
have contributed to deceive a 3rd
personingoodfaith
b. Where the limitation upon the
power created by the principal
couldnothavebeenknownbythe
rd
3 person
c. Where the principal has placed in
thehandsoftheagentinstruments
signedbyhiminblank
d. Where the principal has ratified
theactsoftheagent
2. Whentheactiswithinthescopeofthe
agents authority but in his own name,
except when the transaction involves
thingsbelongingtotheprincipal.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Note:Thelimitsoftheagentsauthorityshallnotbe
consideredexceededshouldithavebeenperformed
in a manner more advantageous to the principal
thanthatspecifiedbyhim.
14.
15.
RESPONSIBILITIESANDOBLIGATIONSOFAN
AGENT
Q:Whatarethespecificobligationsofanagent
totheprincipal?
A:CAFOFANALADRIPBIR
1. Carry out the agency which he has
accepted
2. Answer for damages which through his
nonperformance the principal may
suffer
3. Finish the business already begun on
the death of the principal should delay
entailanydanger
4. Observe the diligence of a good father
of a family in the custody and
16.
17.
preservationofthegoodsforwardedto
himbytheownerincasehedeclinesan
agency,untilanagentisappointed(Art.
1885,NCC)
advance the necessary Funds should
there be a stipulation to do so (Art.
1886,NCC)
Act in accordance with the instructions
of the principal, and in default thereof,
to do all that a good father of a family
woulddo(Art.1887,NCC)
Not to carry out the agency of its
execution would manifestly result in
loss or damage to the principal (Art.
1888,NCC)
Answer for damages if there being a
conflictbetweenhisinterestsandthose
of the principal, he should prefer his
own(Art.1889,NCC)
not to Loan to himself if he has been
authorized to lend money at interest
(Art.1890,NCC)
render an Account of his transactions
andtodelivertotheprincipalwhatever
he may have received by virtue of the
agency(Art.1891,NCC)
Distinguish goods by countermarks and
designate the merchandise respectively
belonging toeach principal, in the case
of a commission agent who handles
goodsofthesamekindandmark,which
belong to different owners (Art. 1904,
NCC)
be Responsible in certain cases for the
actsofthesubstituteappointedbyhim
(Art.1890,NCC)
Payinterestonfundshehasappliedto
hisownuse(Art.1896,NCC)
Inform the principal, where an
authorized sale of credit has been
made,ofsuchsale(Art.1906,NCC)
Bear the risk of collection and pay the
principaltheproceedsofthesaleonthe
same terms agreed upon with the
purchaser, should he receive also on
sale, a guarantee commission (Art.
1907,NCC)
Indemnifytheprincipalfordamagesfor
his failure to collect the credits of his
principal at the time that they become
due(Art.1908,NCC)
be Responsible for fraud or negligence
(Art. 1909, NCC; De Leon, Comments
and Cases on Partnership, Agency, and
Trust,pp.478479,2005ed)
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
367
A:No,Theforfeitureofthecommissionwilltake
place regardless of whether the principal suffers
any injury by reason of such breach of loyalty. It
does not even matter if the agency is for a
gratuitous one, or that the principal obtained
betterresults,orthatusageandcustomsallowa
receiptofsuchabonus.
Note:Anagenthasanabsolutedutytomakeafull
disclosure or accounting to his principal of all
transactionsandmaterialfactsthatmayhavesome
relevance with the agency. (Domingo v. Domingo,
G.R.No.L30573,Oct.29,1971)
A:
1. Iftheagentactedonlyasamiddleman
with the task of merely bringing
togetherthevendorandvendees;
2. If the agent informed the principal of
the gift/bonus/profit he received from
the purchaser and his principal did not
objectthereto;or
3. Where a right of lien exists in favor of
theagent.
A:
GR:Jointlyliable.
XPN:Solidarityhasbeenexpresslystipulated.
Each of the agents becomes solidarily liable
for:
1. thenonfulfillmentoftheagency;or
2. faultornegligenceofhisfellowagent.
Q:Whatistherulewithregardtotheexecution
oftheagency?
A:
GR: The agent is bound by his acceptance to
carryouttheagency,andisliablefordamages
which, through his nonperformance, the
principalmaysuffer.
368
XPN:Ifitsexecutioncouldmanifestlyresultin
lossordamagetotheprincipal
A:
1. Agentexpresslyboundhimself;
2. Agentexceedshisauthority;
3. Acts of the agent prevent the
performance on the part of the
principal;
4. When a person acts as agent without
authorityorwithoutaprincipal;or
5. A person who acts as an agent of an
incapacitated principal unless the third
person was aware of the incapacity at
thetimeofthemakingofthecontract.
Q:Whatisthescopeoftheagentsauthorityas
tothirdpersons?
A:
1. WhereauthorityisnotinwritingEvery
person dealing with an assumed agent
must discover upon his peril, if he
wouldholdtheprincipalliable,notonly
the fact of the agency but the nature
and extent of the authority of the
agent.
2. Where authority is in writing 3rd
personisnotrequiredtoinquirefurther
thanthetermsofthewrittenpowerof
attorney.
Note:Athirdpersonwithwhomtheagentwishesto
contract on behalf of the principal may require the
presentation of the power of attorney or the
instructionsasregardstheagency.
A:
GR: There must be a stipulation in the
contract that the agent shall advance the
necessaryfunds
XPN:Whentheprincipalisinsolvent.
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
RIGHTSOFAGENTS
Q:Whataretheinstanceswhentheagentmay
retaininpledgetheobjectoftheagency?
A:
1. If principal fails to reimburse the agent
the necessary sums, including interest,
which the latter advanced for the
execution of the agency (Art. 1912,
NCC);or
2. If principal fails to indemnify the agent
for all damages which the execution of
theagencymayhavecausedthelatter,
without fault or negligence onhis part.
(Art.1913,NCC)
A:Ifthetwocontractsareincompatiblewitheach
other, the one of prior date shall be preferred.
Thisissubjecthowevertotheruleondoublesale
underArt.1544,NCC.
Note:Rulesofpreferenceindoublesale
1. Personal property possessor in good
faith
2. Realproperty
a. Registrantingoodfaith
b. Possessoringoodfaith
c. Person with the oldest title in good
faith(Art.1544,NCC)
PROHIBITEDACTSOFANAGENT
Q:Whataretheprohibitedactsofanagent?
A:
1. Personalacts
2. Criminalorillegalacts
Note:e.g.:
1. Righttovote
2. Makingofawill
3. Underoathstatements
4. Attendingboardmeetingsofcorporations.
(DeLeon,p.358,2005ed)
X.IRREVOCABLEAGENCY
Q:Whenisagencyirrevocable?
A:
1. Ifabilateralcontractdependsuponit
2. if it is the means of fulfilling an
obligationalreadycontracted
3. ifpartnerisappointedmanagerandhis
removal from the management is
unjustifiable.(Art1927)
4. if it has been constituted in the
common interest of the principal and
theagent(Art.1930)
5. Stipulationpouratrui
XI.MODESOFEXTINGUISHMENT
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
369
A:Bothprincipalandagentmustbe:
1. Present
2. Capacitated
3. Solvent (De Leon, Comments and Cases
on Partnership, Agency, and Trust, p.
610,2005ed)
Q:Cantheheirscontinuetheagency?
A:
GR:No.
XPNs:
1. Agency by operation of law, or a
presumedortacitagency
2. Agency is coupled with an interest in
the subject matter of the agency (e.g.
powerofsaleinamortgage)
A:EDWARD
1. Expirationoftheperiod
2. Death, civil interdiction, insanity or
insolvencyofprincipaloroftheagent
3. Withdrawalbytheagent
4. Accomplishment of the object or the
purposeoftheagency
5. Revocation
6. Dissolution of the firm or corporation
which entrusted or accepted the
agency.
REVOCATION
Q:Isacontractofagencyrevocable?
A:
GR: Yes. Agency is revocable at will by the
principal.
XPNs:Itcannotberevokedif:
1. abilateralcontractdependsuponit
2. itisthemeansoffulfillinganobligation
alreadycontracted
370
3.
4.
Q:Whatarethekindsofrevocation?
Q:Howisagencyimpliedlyrevoked?
A:Principal:
1. appoints a new agent for the same
business or transaction (Art. 1923,
NCC);
2. directly manages the business
entrustedtotheagent(Art.1924,NCC);
or
3. after granting general power of
attorney, grants a special one to
another agent which results in the
revocationoftheformerasregardsthe
special matter involved in the latter.
(Art.1926,NCC)
A:Anyoneoftheprincipalsisgrantedtherightto
revoke the power of attorney without the
consentoftheothers.
Q:Isnoticeofrevocationnecessary?
A:
1. As to the agent Express notice is not
necessary; sufficient notice if the party
to be notified actually knows, or has
reason to know, a fact indicating that
his
authority
has
been
terminated/suspended;
revocation
without notice to the agent will not
renderinvalidanactdoneinpursuance
oftheauthority
rd
2. As to 3 persons Express notice is
necessary
a.
As to former customers Actual
notice must be given to them
because they always assume the
continuance of the agency
relationship
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
AGENCY
b.
Q:Whatistheeffectofthedirectmanagement
bytheprincipal?
A:
GR:Theagencyisrevokedfortherewouldno
longer be any basis for the representation
previously conferred. But the principal must
act in good faith and not merely to avoid his
obligationtotheagent.
Q:RichardsoldalargeparceloflandinCebuto
Leo for P100 million payable in annual
installmentsoveraperiodoftenyears,buttitle
willremainwithRicharduntilthepurchaseprice
is fully paid. To enable Leo to pay the price,
Richard gave him a powerofattorney
authorizing him to subdivide the land, sell the
individual lots, and deliver the proceeds to
Richard,tobeappliedtothepurchaseprice.Five
years later, Richard revoked the power of
attorney and took over the sale of the
subdivision lots himself. Is the revocation valid
ornot?Why?
DEATH
A:
GR:Theagencyisterminatedbythedeathof
the principal even if the agency is for a
definiteperiod.
XPNs:
1. If it has been constituted in common
interest of the principal and the agent
or in the interest of the third person
who accepted the stipulation in his
favor;or
2. Anythingdonebytheagentwithoutthe
knowledgeofthedeathoftheprincipal
or on any other cause which
extinguishes the agency is valid and
shall be effective on third persons who
may have contracted with him in good
faith.
Q:Isthesaleofthelandbytheagentafterthe
deathoftheprincipalvalid?
A:Article1931,NCCprovidesthatanactdoneby
theagentafterthedeathoftheprincipalisvalid
andeffectiveifthesetworequisitesconcur:
1. that the agent acted without the
knowledgeofthedeathoftheprincipal;
and
2. that the third person who contracted
with the agent himself acted in good
faith.
Goodfaithheremeansthatthethirdpersonwas
not aware of the death of the principal at the
timethathecontractedwithsaidagent.(Rallosv.
FelixGoChan,G.R.No.L24332,Jan.31,1978)
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
V
ICE
C
HAIRFOR
A
DMINISTRATIONAND
F
INANCE
:
J
EANELLE
C.
L
EE
VICECHAIRSFORLAYOUTANDDESIGN:EARLLOUIEM.MASACAYAN&THEENAC.MARTINEZ
371
CHANGEOFCIRCUMSTANCESSURROUNDING
TRANSACTION
Q:Whatistheeffectofachangeofcircumstance
surroundingthetransaction?
A:
GR:Theauthorityoftheagentisterminated.
XPNs:
1. If the original circumstances are
restored within a reasonable period of
time, the agent's authority may be
revived;
2. Wheretheagenthasreasonabledoubts
as to whether the principal would
desire him to act, his authority will not
beterminatedifheactsreasonably;or
3. Where the principal and agent are in
close daily contact, the agent's
authoritytoactwillnotterminateupon
a change of circumstances if the agent
knows the principal is aware of the
change and does not give him new
instructions. (De Leon, pp. 616617,
2005ed)
WITHDRAWALBYTHEAGENT
Q:Cantheagentwithdrawfromtheagency?
A:
3. Without just cause The law imposes
upon the agent the duty to give due
noticetotheprincipalandtoindemnify
the principal should the latter suffer
damagebyreasonofsuchwithdrawal.
4. With just cause The agent cannot be
heldliable.
372
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM