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2005 CENTRALIZED BAR OPERATIONS

PARTNERSHIP

PARTNERSHIP By the contract of partnership two or more persons bind themselves to contribute

money, property or industry to a common fund, with the intention of dividing the profits among

themselves. Two or more persons may also form a partnership for the exercise of a profession. (Art.

1767)

partner of the partnership may execute all acts of administration including the right to sue debtors of

the partnership in the case of their failure to pay their obligation when it becomes demandable. (Tai

Tong Chuache & Co. vs. Insurance Commission 158 SCRA 336 [1988]) FORM OF PARTNERSHIP

CONRTRACT No special form is required for the validity or existence of the contract of partnership. 1.

Where immovable property or real rights are contributed, the partnership contract shall be void unless:

a. It is reduced to writing in a public instrument (Art. 1771). b. An inventory of the property contributed

is made, signed by the parties and attached to the public instrument. (Art.1773).

contract which states that the partnership is established to operate a fishpond is not rendered void

because no inventory of the fishpond was made (where it did not clearly appear in the articles of

partnership that the real property had been contributed by anyone of the partners). (Agad vs. Mabolo

and Mabolo Agad and Co., 23 SCRA 1223[1968]) 2. Where the contract is by its terms not to be

performed within a year from the making thereof, such partnership contract is covered by the statute offrauds and thus requires a written agreement to be enforceable. 3. Where the contract of partnership

has a capital of 3,000 pesos or more, in money or property, it shall appear in a public instrument and

must be recorded in the Office of the Securities and Exchange Commission. However, a partnership has

a juridical personality even in case of failure to comply with this requirement. Requisites: 1. intention to

create a partnership 2. common fund obtained from the contributions 3. joint interest in the profits

Essential Features: 1. there must be a valid contract; 2. the parties must have legal capacity to enter into

the contract; NOTE: With regard to number 2 (legal capacity of contracting parties), individuals not

legally incapacitated to contract and partnerships may enter into a contract of partnership. With respect

to corporations, the court held in Aurbach vs. Sanitary Wares Manufacturing Corporation 180 SCRA 130

[1989] that although a corporation cannot enter into a partnership contract, it may however engage in ajoint venture with others. A joint venture has been generally understood to mean an organization

formed for some temporary purpose. There is nothing against one corporation being represented by a

natural or juridical person in a suit in court, for the true rule is that although a corporation has no

power to enter a partnership, it may nevertheless enter into a joint venture with another where the

nature of that venture is in line with the business authorized by the charter. (JM Tuazon and Co., Inc vs.

Bolanos 95 PHIL 106 [1954])


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2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT CHAIRPERSONS Maricel

Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino(VC-Acads),

Jennifer Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres

(VC-Logistics) Jonathan Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), RomualdPadilla (Civil Law), Charmaine Torres (Taxation Law), Mark David Martinez (Criminal Law), Garny Luisa

Alegre (Commercial Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal Ethics)


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San Beda College of Law

151

MEMORY AID IN CIVIL LAW

3. there must be mutual contribution of money, property and industry to a common fund NOTE: A

partnership of a civil nature was formed because Gatchalian & Co. put up money to buy a sweepstakes

ticket for the sole purpose of dividing equally the prize which they may win as they did in fact in the

amount of P50,000. (Gatchalian vs. CIR 67 PHIL 666 [1939]) Where the father sold his rights over 2

parcels of land to his 4 children so they can build their residences, but the latter after 1 year sold them

and paid the capital gains, they should not be treated to have formed an unregistered partnership and

taxed corporate income tax on the sale and on dividend income tax on their shares of the profits from

the sale. (Obillos Jr. vs. CIR [1985]) 4. the object must be lawful; and 5. the primary purpose must be to

obtain profits KEY: CJP3 - D2AFT Partnership Co-ownership

1. Creation Always created by a Generally created by contract, either law, but may exist express or

implied even without a contract 2. Juridical personality Has a juridical Has no juridical personality

separate personality and distinct from that of each partner 3. Purpose Realization of Common

enjoyment profits of a thing or right; does not necessarily involve sharing of profits 4. Duration No

limitation upon An agreement to the duration is set keep the thing by law undivided for more than 10

years is not allowed 5. Transfer of interests A partner may not A co-owner can dispose of his dispose of

his share individual interest in without the consent the partnership so of the others as to make the

assignee a partner without unanimous consent 6. Power to act with third persons In the absence of A

co-owner cannot stipulation to the represent the cocontrary, a partner ownership may bind the

partnership 7. Dissolution Death or incapacity Death or incapacity of a partner results of a co-owner

does in the dissolution of not necessarily partnership dissolve the coownership 8. Agency or

representation As a rule, there is As a rule, there is no mutual agency mutual representation (although it

is enough for a coowner to bring an action for ejectment against a stranger) 9. Profits May be stipulated

Must always depend upon upon proportionate shares and any stipulation to the contrary is VOID

(Art.485) 10. Form May be in any from No public instrument except when real is needed even if property

is real property is the contributed (here a object of the copublic instrument is ownership required)

KEY: CNJPMERET2 - FPG Partnership Corporation

1. Creation Created by mere Created by law agreement of the or by operation parties of law 2. Number

of incorporators May be organized by at Requires at least two persons least five incorporators (except a

corporation sole) 3. Commencement of juridical personality Acquires juridical Acquires personality from


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the juridical moment of execution of personality from the contract of the date of partnership issuance of

the certificate of

CIVIL LAW COMMITTEE

CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: Alnaiza

Hassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family

Relations), Alejandro Casabar(Property), Ma. Rhodora Ferrer(Wills and Succession), Ian Dominic

Pua(Obligations and Contracts), Sha Elijah Dumama(Sales and Lease), John Stephen Quiambao(PAT),

Christopher Cabigao(Credit Transactions), Ligaya Alipao(Torts and Damages), Anthony Purganan(LTD),

Ma. Ricasion Tugadi (Conflicts of Law)


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incorporation by the Securities and Exchange Commission 4. Powers Partnership may Corporation can

exercise any power exercise only authorized by the the powers partners (provided it is expressly not

contrary to law, granted by law morals, good customs, or implied from public order, public those

granted or policy) incident to its existence 5. Management When management is The power to do not

agreed upon, every business and partner is an agent of manage its the partnership affairs is vested in

the board of directors or trustees 6. Effect of mismanagement A partner as such can sue a co-partner

who mismanages The suit against a member of the board of directors or trustees who mismanages must

be in the name of the corporation

10. Term of existence partnership may be corporation may established for any not be formed period of

time for a term in stipulated by the excess of 50 partners years extendible to not more than 50 years in

any one instance 11. Firm name limited partnership is corporation may required by law to add adopt any

name the word Ltd. To its provided it is name not the same as or similar to any registered firm name

12. Dissolution may be dissolved at any can only be time by any or all of the dissolved with partners the

consent of the State 13. Governing Law governed by the governed by the contract and the Civil

Corporation Code Code

7. Right of succession Partnership has no right of succession Corporation has right of succession

8. Extent of liability to third persons Partners are liable Stockholders are personally and liable only to

subsidiarily (sometimes the extent of solidarily) for the shares partnership debts to subscribed by third

persons them 9. Transferability of interest Partner cannot transfer Stockholder has his interest in the

generally the partnership so as to right to transfer make the transferee a his shares partner without the

without prior unanimous consent of consent of the all the existing partners other because the

partnership stockholders is based on the principle because of delectus personarum corporation is notbased on this principle

JOINT VENTURE

community of interest in the business, sharing of profits and losses, and a mutual right of control.

main distinction in common law jurisdiction is that partnership contemplates a general business with


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some degree of continuity, while joint venture is formed for the execution of a single transaction and is

thus of temporary nature

defined a joint venture as an association of persons or companies jointly undertaking some commercial

enterprise; generally all contribute assets and share risks. Its requisites are: a. A community of interest

in the performance of the subject matter; b. A right to direct and govern the policy in connection

therewith; c. Duty to share profits and losses.




(VC-Logistics) Jonathan Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald

Padilla (Civil Law), Charmaine Torres (Taxation Law), Mark David Martinez (Criminal Law), Garny Luisa



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NOTE: Under the Civil Code, a partnership may be particular or universal, and a particular partnership

may have for its object a specific undertaking. Hence, a joint venture may be treated like any other

contract, innominate in nature to be regulated and governed primarily by the stipulations of the parties

thereto and suppletorily by the general provisions of the Civil Code on obligations and contracts, by

rules governing the most analogous contracts (e.g. law on partnership), and by the customs of the place.

Other Similar Contracts 1. Collaboration- the act of working together in a joint project. 2. Association-

act of a number of persons uniting together for some special purpose or business. RULES TO DETERMINE

EXISTENCE OF PARTNERSHIP (ART 1769) 1.

-ownership of a

property does not itself establish a partnership, even though the co-owners share in the profits derived

from the incident of joint ownership. 3. Sharing of gross returns alone does not indicate a partnership,

whether or not the persons sharing them have a joint or common right or interest in any property from

which the returns are derived. 4. Receipt of share in the profits is a strong presumptive evidence of

partnership. However, no such inference will be drawn if such profits were received in payment: (a) as a

debt by installments or otherwise; (b) as wages of an employee or rent to a landlord; (c) as an annuity to

a widow or representative of a deceased partner; (d) as interest on a loan, though the amount of

payment vary with the profits of the business; and CIVIL LAW COMMITTEE







(e) as the consideration for the sale of a goodwill of a business or other property by installments orotherwise. CLASSIFICATION OF PARTNERSHIP 1. as to object: a) universal partnership i. universal

partnership of all

present property ii. universal partnership profits of


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b) particular partnership 2. as to liability of partners: a) general partnership b) limited partnership 3. as

to duration: a) partnership at will b) partnership with period 4. as to legality of existence: a) de jure

partnership b) de facto partnership 5. as to representation to others: a) ordinary or real partnership b)

ostensible or partnership by estoppel 6. as to publicity: a) secret partnership b) notorious or open

partnership 7. as to purpose: a) commercial or trading b) professional or non-trading UNIVERSAL

PARTNERSHIP 1. A universal partnership of all present property is one wherein the partners contribute

all the property which actually belong to them to a common fund, with the intention of dividing the

same among themselves, as well as all the profits which they may acquire therewith.

partnership of all present property, the property which belongs to each of the partners at the time of

the constitution of the partnership, becomes the common property of all the partners, as well as

a

fixed


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the profits which they may acquire therewith. A stipulation for the common enjoyment of any other

profits may also be made; but the properties which the partners may acquire subsequently by

inheritance, legacy or donation cannot be included in such stipulation, except the fruits thereof.

Where the articles of partnership do not specify the nature of the universal partnership, whether it is

one of present property or of profits only, it will be presumed that the partiesintended merely a

partnership of profits. NOTE: Future properties cannot be contributed. Thus, property subsequently

acquired by (1) inheritance, (2) legacy or (3) donation cannot be included by stipulation except the fruits

thereof. 2. A universal partnership of profits is one which comprises all that the partners may acquire by

their industry or work during the existence of the partnership and the usufruct of movable orimmovable property which each of the partners may posses at the time of the celebration of the

contract. immovable property which each of the partners may posses at the time of the

celebration of the contract shall continue to pertain exclusively to each, only the usufruct passing to the

partnership. NOTE: Persons who are prohibited from giving each other any donation or advantage

cannot enter into a universal partnership. (Art. 739, Art. 87, Family Code) Profits acquired by their

partners through chance (i.e. lottery) without employment of any physical or intellectual efforts are not

included. PARTICULAR PARTNERSHIP A particular partnership is one which has for its object determinate

things, their use and fruits, or a specific undertaking, or the exercise of a profession or vocation.

GENERAL PARTNERSHIP A partnership consisting of general partners who are liable pro rata and

subsidiarily and sometimes solidarily with their separate property for partnership debts. LIMITED

PARTNERSHIP One formed by two or more persons having as members one or more general partners

and one or more limited partners, the latter not being personally liable for the obligations of the

partnership. PARTNERSHIP AT WILL A partnership wherein no time is specified and is not formed for a

particular undertaking or venture and which may be terminated at anytime by mutual agreement of the

partners, or by the will of anyone partner alone; or one for a fixed term or particular undertaking but

has been continued by the partners after termination of such term or particular undertaking without

express agreement. PARTNERSHIP WITH A FIXED TERM A partnership wherein the term for which the

partnership is to exist is fixed or agreed upon or one formed for a particular undertaking, and upon the

expiration of the term or completion or the particular enterprise, the partnership is dissolved, unless

continued by the partners. OTHER KINDS OF PARTNERSHIP 1. De Jure Partnership- one which has

complied will all the legal requirements for its establishment. 2. De Facto Partnership- one which has

failed to comply with all the legal requirements for its establishment. 3. Ordinary or real partnership-

one which actually exists among the partners and also as to third persons. 4. Ostensible partnership or


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5. Secret partnershipone wherein the existence of certain persons as partners is not avowed or made

known to the public by any of the partners. 6. Open or notorious partnershipone whose existence is

avowed or made known to the public by the members of the firm. 7. Commercial or trading

partnershipone formed for the transaction of business. 8. Professional or non-trading partnershipone

formed for the exercise of a profession. CLASSIFICATION OF PARTNERS 1. as to CONTRIBUTION: a)

Capitalist partner- one who contributes money or property to the common fund. b) Industrial partner-

one who contributes only his industry or personal service. 2. as to LIABILITY: a) General partner- one

whose liability to third persons extends to his separate property, he may either be a capitalist or

industrial partner. b) Limited partner- one whose liability to third persons is limited to his capital

contribution. 3. as to MANAGEMENT: a) Managing partner- one who manages the business or affairs of

the partnership; he may be appointed in the articles of partnership or after constitution of the

partnership. b) Silent partner- one who does not take any active part in the business although he may be

known to be a partner. c) Liquidating partner- one who takes charge of the winding up of the

partnership affairs upon dissolution. 4. Miscellaneous: a) Ostensible partner- one who takes active part

and known to the public as a partner in the business, whether or not he has actual interest in the firm.

CIVIL LAW COMMITTEE







b) Secret partner- one who takes active part in the business by is not known to be a partner by outside

parties nor held out as a partner by the other partners. c) Dormant partner- one who does not takeactive part in the business and is not known or held out as partner. KEY: CP2L Capitalist Partner

Industrial Partner

1. as to contribution contributes money contributes his or property industry (mental or physical) 2. as to

prohibition to engage in other business Cannot generally cannot engage in engage in the same any

business for or similar enterprise himself as that of his firm 3. as to profits 1. shares in the receives a just

profits according and equitable to agreement share thereon; 2. if none, pro rata to his contribution 4. as


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c) To answer to the partnership for the fruits of the property the contribution of which is delayed, from

the date they should have been contributed to the time of actual delivery d) To preserve the property

with the diligence of a good father of a family pending delivery to the partnership e) To indemnify the

partners for any damages caused to it by the retention of the same or by delay in its contribution. II.

Obligations with respect to contribution of money and money converted to personal use a) To

contribute on the date due the amount he has undertaken to contribute to the partnership b) To

reimburse any amount he may have taken from the partnership coffers and converted to his own

personal use c) To pay the agreed or legal interest, if he fails to pay his contribution on time or in case

he takes any amount from the common fund and converted to his own personal use d) To indemnify thepartnership for the damages caused to it by the delay in the contribution or the conversion of any sum

for his personal benefit. III. Obligation Not to Engage in Other Business for Himself 1. Industrial partner-

cannot engage in any business for himself unless the partnership expressly permits him to do so. The

other partners have the remedy of either excluding the erring partner from the firm or of availing

themselves of the benefits which he may have obtained. Note: The prohibition is absolute and applies

whether the industrial partner is to engage in the same business in which the partnership is engaged or

in any kind of business. It is clear that the reason for the prohibition exists in both cases, which is to

prevent any conflict of interest between the industrial

partner and the partnership and to insure faithful compliance by said partner with his prestation

(Evangelista & Co. vs. Abad Santos, 51 SCRA 416, 1973) 2. Capitalist partner- The prohibition extends

only to any operation which is of the same kind of business in which the partnership is engaged unless

there is a stipulation to the contrary. IV. Obligation to Contribute Additional Capital As a general rule, a

capitalist partner is not bound to contribute to the partnership more than what he agreed to contribute

but in case of an imminent loss of the business, and there is no agreement to the contrary, he is under

obligation to contribute an additional share to save the venture. If he refuses to contribute, he shall be

obliged to sell his interest in the partnership to other partners. V. Obligation of Managing Partner who

Collects Debt Where a person is separately indebted to the partnership and to the managing partner at

the same time, any sum received by the managing partner shall be applied to the two credits in

proportion to their amounts, except where he received it entirely for the account of the partnership, in

which case the whole sum shall be applied to the partnership credit only. Requisites for the application

of the rule: 1) There exists two debts, one where the collecting partner is creditor, the other, where the

partnership is creditor. 2) Both debts are demandable 3) The partner who collects is authorized to

manage and actually manages the partnership. VI. Obligation of Partner Who Receives Share in


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Partnership Credit A partner who receives, in whole or in part, his share in the partnership, when the

others have not collected








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theirs, shall be obliged, if the debtor should thereafter become insolvent, to bring to the partnership

capital what he received even though he may have given receipt for his share only. Requisites for

application of rule: 1) A partner has received, in whole or in part, his share in the partnership credit 2)

The other partners have not collected their shares. 3) The partnership debtor has become insolvent. VII.

Obligation of Partner for Damages to Partnership Every partner is responsible to the partnership for

damages suffered by it through his fault. He cannot compensate them with the profits and benefits

which he may have earned for the partnership by his industry. VIII. Duty to Render Information Partners

shall render on demand true and full information of all things affecting the partnership to any partner or

the legal representative of any deceased partner of any partner under legal disability. IX. Obligation to

account for any benefit and hold as trustee unauthorized personal profits Every partner must account to

the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent

of the other partners from any transaction connected with the formation, conduct, liquidation of the

partnership or form any use by him of its property. RIGHTS OF A PARTNER: 1. Property rights of a

partner a) His rights in the specific partnership property b) His interest in the partnership c) His right to

participate in the management 2. Right to reimbursement for amounts advanced to the partnership and

to indemnification for risks in consequence of management CIVIL LAW COMMITTEE







3. Right to associate with another person in his share 4. Right of access and inspection of partnership

books 5. Right to true and full information of all things affecting the partnership 6. Right to a formalaccount of partnership affairs under certain circumstances NOTE: The ten year period to demand an

accounting by a partner begins at the dissolution of the partnership. 7. Right to have partnership

dissolved under certain conditions. RULES FOR DISTRIBUTION OF PROFITS AND LOSSES 1. Distribution of

profits a) According to their agreement (but not inequitously to defeat Art.1799) b) If none, 1) Share of

capitalist partner shall be in proportion to his capital contribution 2) Industrial partner shall receive such

share as may be just and equitable under the circumstances 2. Distribution of losses a) According to


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their agreement as to losses (but not inequitously to defeat Art.1799) b) If none, according to their

agreement as to profits c) If none, in proportion to his capital contribution, but the purely industrial

partner shall not be liable for the losses A stipulation excluding a partner from any share in the profits or

losses is VOID (Article 1799) Article 1797(2) excludes an industrial partner from losses. Thus, a

stipulation excluding an industrial partner from losses is VALID, but he is NOT exempted from liability

insofar as third persons are concerned. NOTE: In general, LIABILITY refers to responsibility towards third

persons, and LOSSES refers to responsibility as among partners


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CONTRACT OF SUB-PARTNERSHIP

for a division of profits owing to him from the partnership enterprise.

partnership distinct and separate from the main or principal partnership. NOTE: In the absence of

unanimous consent of all the partners, a subpartner does not become a member of the partnership.

Hence, a sub-partner does not acquire the rights of a partner nor is he liable for its debts PROPERTY

RIGHTS OF A PARTNER 1. Right to specific partnership property

specific partnership property belongs to the partnership as a separate juridical personality. The partners

have no actual interest in it until after dissolution. ers to possess specific

assignment of rights of all partners in the same property

except on a claim against the partners

or an interest therein may be acquired in the partnership name. The title so acquired may be conveyed

only in the partnership name subject to the provisions of Article 1819 of the Civil Code. 2. Interest in the

partnership

conveyance by a partner of his interest in the partnership 1. conveyance of his whole interest

partnership may either remain or be dissolved 2. assignee does not necessarily become a partner

3. assignee cannot interfere in the management or administration of the partnership business or affairs

4. assignee cannot demand information, accounting and inspection of the partnership books Remedies

of separate judgment creditor of a partner

his credit to subject the interest of the debtor partner with payment of unsatisfied amount of the

judgment debt Redemption of interest charged 1. General partnership a) with separate property of a

partner; or b) with partnership property, with the consent of all the partners whose interests are not so

charged or sold 2. Limited partnership (interest of limited partner) a) with separate property of any

general partner but NOT with partnership property 3. Right to management participate in the

MANAGEMENT OF PARTNERSHIP I. When the manner of management has been provided for in the

partnership agreement A. When a managing partner has been appointed 1) Appointment in the articles

of partnership a. Power is irrevocable without just or lawful cause

i. to remove him for JUST cause, vote of partners representing controlling interest is necessary to

remove him without just cause or for an UNJUST cause, there must be unanimity including his own vote


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ii.

b. Extent of power

i. if he acts in good faith, he may do all acts of ADMINISTRATION, despite opposition of his partners ii. if

in bad faith, he cannot.








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2) Appointment other than in the articles of partnership a. Power to act may be revoked at any time,

with or without just cause b. Extent of power: as long as he remains manager, he can perform all acts of

administration, but if others oppose and he persists, he can be removed B. When two or more managing

partners have been entrusted with the management of partnership 1)Without specification of their

respective duties and without stipulation requiring unanimity of action Each managing partner may

execute all acts of administration If any of the managing partners should oppose, a) Decision of the

majority of the managing partners shall prevail b) In case of a tie, decision of the partners representing

the controlling interest shall prevail 2) With stipulation unanimity of action requiring b) Unanimous

consent required for alteration of immovable property OBLIGATIONS OF PARTNERS TO THIRD PERSONS

I. Liability for contractual obligations (ART 1816) 1. All partners, including industrial partners, are

personally liable with all their property. Their individual liability is pro rata and subsidiary, unless

otherwise stipulated 2. Liability of partnership for acts of partners a) Acts for apparently carrying on in

the usual way the business of the partnership Act binds the partnership. Partnership is not bound if:

i. ii. acting partner has in fact no authority and the third person knows that the acting partner has no

authority

b) Acts of Strict Dominion or Ownership (acts which are not apparently for carrying on in the usual way

the business of the partnership) Act does not bind the partnership. Partnership is bound if:

i. ii. the act is authorized by all the partners; or they have abandoned the business

Unanimous consent of all the managing partners shall be necessary for the validity of the acts and

absence or inability of any managing partner cannot be alleged When there is an imminent danger of

grave or irreparable injury to the partnership, partner may act alone without the consent of the partnerwho is absent or under disability II. When manner of management has not been agreed upon a) All

partners shall be considered managers and agents CIVIL LAW COMMITTEE

c) Acts in contravention of a restriction on authority

i. Partnership is not liable to third persons having actual or presumptive knowledge of the restrictions


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II. Liability arising from partners tort (ART 1822) or Breach of Trust (ART 1823) 1. Where, by any

wrongful act or omission of any partner acting in the ordinary course of business of the partnership or

with authority of his co-partners, loss or injury is caused to any person,








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not being a partner in the partnership (Article 1822) 2. Where one partner, acting within the scope of his

apparent authority, receives money or property of a third person and misapplies it (Article 1823) 3.

Where the partnership, in the course of its business, receives money or property and it is misapplied by

any partner while it is in the custody of the partnership (Article 1823) NOTE: All partners are solidarily

liable with the partnership for any penalty or damage arising from a partnership tort or breach of trust

III. Criminal liability of partnership ity does not extend to criminal liability where the

wrongdoing is regarded as individual in character. But where the crime is statutory, especially when it

involves a fine rather than imprisonment, criminal liability may be imposed LIABILITY OF STOCKHOLDERS

IN A DEFECTIVELY FORMED CORPORATION o attempt but fail toform a corporation and carry on business under the corporate name occupy the position of partners

inter se. Thus where persons associate themselves together under articles to purchase property to carry

on a business, and their organization is so defective as to come short of creating a corporation within

the statute, they become in legal effect partners inter-se.

subscribe for stock in a proposed corporation, which was never legally formed, does not become a

partner with other subscribers who engage in business under the name of the pretended corporation, so

as to be liable as such in an action for settlement of the alleged partnership and contribution. (Pioneer

Insurance & Surety Corporation vs. Court of Appeals, 175 SCRA 668 [1989].)

PRINCIPLE OF DELECTUS PERSONARUM

become a member of the partnership without the consent of all the partners. NOTE: This element of

delectus personae is true only in case of a general partner, but NOT as regards a limited partner.

MUTUAL AGENCY

his own behalf, and as an agent of his co-partners and the partnership. Requisites When A Partner Binds

The Partnership 1. when he is expressly or impliedly authorized 2. when he acts in behalf and in the

name of the partnership PARTNERSHIP BY ESTOPPEL ises when a person, by words spoken or

written or by conduct, represents himself or consents to another representing him to anyone, as partner

in an existing partnership, or with one or more persons not actual partners; he is liable to any such

person to whom such representation has been made, who has, on the faith of such representation given

credit to the actual or apparent partnership. (Art 1825) NOTE: Art. 1825 does not create a partnership as

between the alleged partners. A contract, express or implied is essential to the creation of partnership.

The law considers them partners and the association as a partnership insofar as it is favorable to third

persons. However, partnership liability is created only in favor of persons who on the faith of such

representation given credit to the actual or apparent partnership


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DISSOLUTION y any partner ceasing to be associated in

business together. It represents the demise of a partnership. NOTE: The dissolution of a partnership

must not be understood in the absolute and strict sense so that at the termination of the object for

which it was created the partnership is extinguished. (Testate of Mota vs. Serra, 47 PHIL 464, 1926.)

Dissolution does not automatically result in the termination of the legal personality of the partnership,

nor the relations of the partners among themselves who remain as co-partners until the partnership is

terminated. WINDING UP he partnership business or affairs after dissolution.

TERMINATION

the partnership life. CAUSES OF DISSOLUTION 1. Extrajudicial dissolution (ART 1830) - the parties may

agree to expand the grounds provided under Art 1830 but NOT to delimit them. The causes enumerated

are as follows: a. Without violation of the agreement between the partners

i. By the termination of the definite term or particular undertaking specified in the agreement; By the

express will of any partner, who must act in good faith, when no definite term or particular undertaking

is specified; By the express will of all the partners who have not assigned their interest or suffered them

to be charged for their separate debts, either before or after the termination of any specified term or

particular undertaking; By the expulsion of any partner from the business bona fide in accordance with

such power conferred by the agreement between the partners;

iv.

b. In contravention of the agreement between the partners, where the circumstances do nor permit a

dissolution under any other provision of this article by the express will of any partner at any time. c. By

any event which makes it unlawful for the business of the partnership to be carried on or for themembers to carry it on in partnership. d. When a specific thing, a partner had promised to contribute,

perishes before its delivery. Or where the partner only contributed the use or enjoyment of the thing

and has reserved ownership thereof, its loss, before or after delivery dissolves the partnership. e. By the

death of any partner; f. By the insolvency of any partner or the partnership; g. By the civil interdiction of

any partner; 2. Judicial dissolution (ART 1831) when so decreed by the court, the presiding judge may

place the partnership under receivership and direct an accounting to be made towards winding up the


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partnership affairs. On application by or for any partner, the court shall decree a dissolution whenever:

a. A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind; b. A

partner becomes in any other way incapable of performing his part of the partnership contract; c. A

partner has been guilty of such conduct as tend to affect

ii.

iii.

CIVIL LAW COMMITTEE

CHAIRPERSON: Romuald Padilla ASST.CHAIRPERSON: Vida Bocar, Joyce Vidad EDP: AlnaizaHassiman, Dorothy Gayon SUBJECT HEADS: Christopher Rey Marasigan (Persons and Family






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prejudicially the carrying on of the business; d. A partner willfully or persistently commits a breach of

the partnership agreement, or otherwise so conducts himself in matters relating to the partnership

business that it is not reasonably practicable to carry on the business in partnership with him. e. The

business of the partnership can only be carried on in a loss; f. Other circumstances render a dissolution

equitable. On application of the purchaser of a partners interest under Article 1813 or 1814: a. After the

termination of the specified term or particular undertaking; b. At any time if the partnership was a

partnership at will when the interest was assigned or when the charging order was issued. EFFECTS OF

DISSOLUTION A. As to partners authority to act for the partnership Dissolution terminates all authority

of any partner to act for the partnership 1. Acts necessary to wind up partnership affairs 2. Actsnecessary to complete transactions begun but not then finished Note: Thus, dissolution terminates the

ACTUAL authority of a partner to undertake NEW business for the partnership QUALIFICATIONS TO THE

GENERAL RULE: 1. With respect to the partners (in so far as partners themselves are concerned) a)

Dissolution is not by act, insolvency or death of a partner: General Rule applies. Hence, dissolution

terminates the ACTUAL authority of a partner to undertake NEW business for the partnership

b) Dissolution is by act, insolvency or death of a partner: Authority of partners inter se to act for the

partnership is NOT deemed terminated. Thus, each partner is liable to his co-partners for his share of

any liability created by any partner acting for the partnership as if the partnership has not been

dissolved 1) The cause of dissolution is the ACT of a partner and the acting partner had KNOWLEDGE of

such dissolution 2) The cause of dissolution is the DEATH or INSOLVENCY of a partner and the acting

partner had KNOWLEDGE or NOTICE of such dissolution 2. With respect to persons not partners (third

persons) a) When partnership is bound to third persons after dissolution 1) Act appropriate for winding

up partnership affairs 2) Act appropriate for completing unfinished transactions 3) Completely NEW

transaction which would bind the partnership if dissolution had not taken place provided: the other

party is in good faith, meaning: i. Previous creditor (had previously extended credit) AND he had NO

KNOWLEDGE or NOTICE of the dissolution, OR ii. NOT a previous creditor AND the fact of dissolution had

not been published in a newspaper of general circulation b) When partnership is NOT bound to third

persons after dissolution 1) Where partnership was dissolved because it was unlawful to carry on the

business, except when the act is for winding up




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2) Where the acting partner in the transaction has become insolvent 3) Where the partner is

unauthorized to wind up, except if the transaction is with third persons in good faith (under the same

circumstances as defined above) 4) Where act is NOT appropriate for winding up partnership affairs or

for completing unfinished transactions 5) completely NEW transaction which would bind the partnership

if dissolution had not taken place with third persons in bad faith B. As to partners existing liabilit y

Dissolution does not automatically discharge the existing liability of any partner A partner may be

relieved from all existing liabilities upon dissolution ONLY by an agreement between: 1. Partner

concerned 2. Other partners 3. Partnership creditors Note: The consent of the partnership creditors and

the other partners to the novation may be implied from their conduct. RIGHTS OF A PARTNER UPON

DISSOLUTION 1. Where dissolution is NOT in contravention of the partnership agreement a) To have

partnership property applied to discharge partnership liabilities b) To receive in cash his share of the

surplus 2. Where dissolution is in contravention of the partnership agreement a) Rights of a partner who

has not caused the dissolution wrongfully 1) To have partnership property applied to discharge

partnership liabilities CIVIL LAW COMMITTEE







2) To receive in cash his share of the surplus 3) To be indemnified for damages caused by the partner

guilty of the wrongful dissolution 4) To continue the business in the same name during the agreed term

of the partnership, by themselves or jointly with others 5) To possess partnership property should they

decide to continue the business b) Rights of a partner who has wrongfully caused the dissolution 1) Ifthe business is not continued by the other partners

i. To have partnership property applied to discharge partnership liabilities To receive in cash his share of

the surplus less damages caused by his wrongful dissolution To have the value of his interest in the

partnership at the time of the dissolution, surplus less damages caused by his wrongful dissolution to his

co-partners, ascertained and paid in cash or secured by a bond approved by the court; AND To be

released from all existing and future liabilities


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ii.

2) If the business is continued

i.

ii.

NOTE: The value of the goodwill of the business is not considered in ascertaining the value of the

interest of the guilty partners. RIGHTS OF A PARTNER WHERE PARTNERSHIP CONTRACT IS RESCINDED

ON THE GROUND OF FRAUD OR MISREPRESENTATION (NOTE: The following are the rights of the partner

entitled to rescind) 1. Right of LIEN on, or RETENTION of, the surplus of partnership property after

satisfying partnership liabilities


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for any sum of money paid or contributed by him 2. Right of SUBROGATION in place of the partnership

creditors after payment of partnership liabilities; and 3. Right of INDEMNIFICATION by the guilty partner

against all debts and liabilities of the partnership MANNER OF WINDING UP 1. Extrajudicialby the

partners themselves without the intervention of the court 2. Judicialunder the control and direction of

the court upon proper cause shown by any partner, his legal representative or his assignee PERSONS

AUTHORIZED TO WIND UP 1. partners designated by the agreement 2. in the absence of such

agreement, all partners who have not wrongfully dissolved the partnership 3. legal representative of last

surviving partner not insolvent ORDER OF PAYMENT IN WINDING UP 1. General Partnership (ART 1839

(2)) a) those owing to creditors other than partners b) those owing to partners other than for capital orprofits c) those owing to partners in respect of capital d) those owing to partners in respect of profits 2.

Limited Partnership (ART 1863) a) those owing to creditors, except those to limited partners on account

of their contribution, and to general partners b) those owing to limited partners in respect of their share

of the profits and other compensation by way of income c) those owing to limited partners in respect of

their capital contributions d) those owing to general partners other than for capital and profits e) those

owing to general partners in respect of profits f) those owing to general partners in respect of capital

DOCTRINE OF MARSHALLING OF ASSETS (Article 1839(8)) 1. Partnership creditors have preference in

partnership assets 2. Separate or individual creditors have preference in separate or individual

properties 3. Anything left from either goes to the other PARTNERS LIEN tner to

have the partnership property applied to discharge partnership liabilities AND to have the surplus

assets, if any, distributed in cash to the respective partners, after deducting what may be due to the

partnership from them as partners. LIMITED PARTNERSHIP

as members one or more general partners and one or more limited partners, the latter not being

personally liable for partnership debts. NOTE: The Supreme Court, declared a firm to be a general

partnership in a case where it appears that the inclusion of Ltd. (limited) in the firmwas only a

subterfuge resorted to by the partners in order to evade liability for possible losses, while assuming their

enjoyment of advantages to be derived from the relation. Jo Chung Cang vs. Pacific Commercial Co. 45

PHIL 142 [1923]). In other words if the parties intended a general partnership, they are general partners

although their purpose is to avoid the creation of such a relation. Characteristics of Limited Partnership

1. Limited partnership is formed by substantial compliance in good faith with the statutory requirements

2. One or more general partners control the business and are personally liable to creditors 3. One or

more limited partners contribute to the capital and share in the profits but do not participate in the

management of the business and are not personally liable for


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partnership obligations beyond the amount of their capital contributions 4. The limited partners may ask

for the return of their capital contributions under the conditions prescribed by law 5. The partnership

debts are paid out of the common fund and the individual properties of the general partners Limited

Partner/Partnership General Partner/ Partnership

5. Transferability of interest Limited partners interest is freely assignable, with assignee acquiring all the

rights of the limited partner subject to certain qualifications General partners interest in the partnership

may not be assigned as to make the assignee a new partner without the consent of the other partners,

although he may associate a third person with him in his share 6. Inclusion of partners name in the firm

name Name of a general partner may appear in the firm name

1. Extent of liability Limited partners General liability extends only to partner is his capital contribution

personally liable for partnership obligations 2. Right to participate in the management of partnership

Limited partner has no General share in the partners have management of a an equal right limited

partnership and in the renders himself liable to management of partnership creditors as the business a

general partner if he (when the takes part in the control manner of of the business management has not

been agreed upon) 3. Contribution Limited partner must General contribute cash or partner may

property to the contribute partnership but not money, services property or industry to the partnership

4. Proper party to proceedings by or against the partnership Limited partner is not a proper party to

proceedings by or against a partnership Unless: 1. he is also a general partner, or 2. where the object of

the proceeding is to enforce a limited partners right against or liability to the partnership General

partner is the proper party to proceedings by or against a partnership

As a general rule, name of a limited partner must not appear in the firm name

7. Prohibition to engage in other business No such prohibition in the case of a limited partner who is

considered a mere contributor to the partnership General partner is prohibited from engaging in a

business which is of the SAME kind of business in which the partnership is engaged, if he is a capitalist

partner, or in ANY of business for himself if he is an industrial partner


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8. Effect of retirement, death, insanity or insolvency Retirement, death, insanity or insolvency of a

limited partner does not dissolve the partnership for his executor or administrator shall have the rights

of a limited partner for the purpose of selling his estate Retirement, death, insanity or insolvency of a

general partner dissolves the partnership

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9. Creation Limited partnership is General created by the members partnership, as after substantial a

general rule, compliance in good may be faith with the constituted in requirements set forth any form

by by law contract or conduct of the partnership 10. Members of the partnership Composed of one or

Composed only more general partners of general and one or more limited partners partners 11. Firm

name Firm name must be No such followed by the word requirement Limited 12. Rules governing

dissolution and winding up Governed by Art. 1839 Governed by Art. 1863

As to third persons or creditors guilty of estoppel, the firm shall not be treated as a general partnership

despite lack of substantial compliance to the requirements of a limited partnership. If creditors deal with

the firm as a limited partnership, they will be estopped from insisting that there is no such partnership,

or that the terms of the partnership were not sufficiently stated in the notice of its formation. (40 Am.

Jur. 476.) CONTENTS OF THE CERTIFICATE OR ARTICLES OF LIMITED PARTNERSHIP 1. Name of the

partnership, adding thereto the word limited; 2. Character of the business; 3. Location of the principal

place of business; 4. Name and place of residence of each member, general and limited partners being

respectively designated; 5. Term for which the partnership is to exist; 6. Amount of cash and description

of and the agree value of the other property contributed by each limited partner; 7. Additional

contributions to be made by each limited partner and the times at which or events on the happening of

which they shall be made; 8. Time, if agreed upon, when to contribution of each limited partner is to be

returned; 9. Share in the profits or other compensation by way of income which each limited partner

shall receive by reason of his contribution; 10. Right, if given, of a limited partner to substitute an

assignee as contributor in his place, and the terms and conditions of the substitution; 11. Right, if given,

of the partners to admit additional partners; 12. Right, if given, of one or more of the limited partners to

priority over other limited partners, as to contributions or as to compensation by way of income, and

the nature of such priority;

ESSENTIAL REQUIREMENTS FOR FORMATION OF LIMITED PARTNERSHIP 1. A certificate or articles oflimited partnership which states the matters enumerated in Article 1844, which must be signed and

sworn; 2. Such certificate must be filed for record in the Office of the Securities and Exchange

Commission. NOTE: A strict compliance with the legal requirements is not necessary. It is sufficient that

there is substantial compliance in good faith. If there is no substantial compliance, the partnership

becomes a general partnership as far as third persons are concerned, in which all the members are liable

as general partners. (Jo Chung Cang vs. Pacific Commercial Co., 45 PHIL 142 [1923].) However, a firm


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which fails to substantially comply with the formal requirements of a limited partnership is a general

partnership only as to its relations to third persons. The firm is a limited partnership, subject to all rules

applicable to such partnership; and as between the partners they are bound by their agreement; and

that all the limited partners relations to his co-partners and their obligations to him growing out of the

relation remain unimpaired.








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13. Right, if given, of the remaining general partner or partners to continue the business on the death,

retirement, civil interdiction, insanity or insolvency of a general partner; and 14. Right, if given, of a

limited partner to demand and receive property other than cash in return of his contribution. LIABILITY

FOR FALSE STATEMENT IN CERTIFICATE Any partner to the certificate containing a false statement is

liable to one who suffers loss by reliance on such certificate provided the following requisites are

present: 1. He knew the statement to be false at the time he signed the certificate, or subsequently

having sufficient time to cancel or amend it or file a petition for its cancellation or amendment, he failed

to do so; 2. The person seeking to enforce liability has relied upon the false statement in transacting

business with the partnership; 3. The person suffered a loss as a result of reliance upon such false

statement. MANAGEMENT OF LIMITED PARTNERSHIP

vested with the entire control of the firms business and has all the rights and powers and is subject to

all the liabilities and restrictions of a partner in a general partnership.

partnership however has no authority, without written consent or ratification of all limited partners, to:

1. Do any act in contravention of the certificate; 2. Do any act which would make it impossible to carry

on the ordinary business of the partnership; 3. Confess judgment against the partnership; CIVIL LAW

COMMITTEE







4. Possess partnership property, or assign their rights in specific partnership property, for other that a

partnership purpose; 5. Admit a person as a general partner; 6. Admit a person as a limited partner,unless the right to do so is given in the certificate 7. Continue the business with the partnership property

on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right to

do so is given in the certificate. general partner for the firms obligations

if he takes part or interferes in the management of the business. RIGHTS OF A LIMITED PARTNER KEY:

BIF2AR2 1. To have the partnership books kept at the principal place of business of the partnership 2. To

inspect, at a reasonable hour, partnership books and copy any of them 3. To demand true and full


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information of the things affecting the partnership 4. To demand a formal account of the partnership

affairs whenever circumstances render it just and reasonable 5. To ask for dissolution and winding up by

decree of court 6. To receive a share in the profits or other compensation by way of income provided:

that the partnership assets are in excess of partnership liabilities after such payment 7. To receive the

return of his contribution provided: a) All the liabilities of the partnership have been paid OR the

partnership assets are sufficient to pay partnership liabilities b) The consent of all the members (general

and limited partners) has been obtained


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When the return of the contribution may be rightfully demanded: 1) On the dissolution of the

partnership 2) Upon the arrival of the date specified in the certificate for the return 3) After he has given

6 months notice in writing to all other partners, if no time is specified in the certificate their for the

return of the contribution or for the dissolution of the partnership c) The certificate is cancelled or so

amended as to set forth the withdrawal or reduction LIABILITIES OF A LIMITED PARTNER 1. Liability for

unpaid contribution a) For the difference between his contribution as actually made and that stated in

the certificate as having been made; AND b) For any unpaid contribution which he has agreed in the

certificate to make in the future at the time and the conditions stated in the certificate 2. Liability as

trustee a) Specific property stated in the certificate as contributed by him, but which was notcontributed or which has been wrongfully returned; AND b) Money or other property wrongfully paid or

conveyed to him on account of his contribution NOTE: These liabilities can be waived or compromised

only by consent of all the members; but a waiver or compromise shall NOT affect the right of a creditor

of a partnership who extended credit or whose claim arose after the filling and before the cancellation

or amendment of the certificate, to enforce such liabilities.

SUBSTITUTED LIMITED PARTNER

of has assigned his interest in the partnership. RAL RULE: He has all, the rights and powers, and is

subject to all the restrictions and liabilities of his assignor. Those liabilities which he was ignorant at the

time he became a limited partner AND which could not be ascertained from the certificate. REQUISITES

IN ORDER THAT THE ASSIGNEE MAY BECOME A SUBSTITUTED LIMITED PARTNER 1. All the members

must consent to the assignee becoming a substituted limited partner, OR the limited partner, being

empowered by the certificate must give the assignee the right to become a limited partner 2. The

certificate must be amended in accordance with Art.1865 3. The certificate as amended must be

registered in the Securities and Exchange Commission ALLOWABLE TRANSACTIONS OF A LIMITED

PARTNER

partnership 2. transacting other business with the partnership 3. receiving a pro rata share of the

partnership assets with the general creditors if he is NOT also a general partner NOTE: In transacting a

business with the partnership as a non-member, the limited partner is considered a nonpartner creditor

PROHIBITED TRANSACTIONS OF A LIMITED PARTNER 1. receiving or holding as collateral security any

partnership property; or 2. receiving any payment, conveyance, or release from liability if it will

prejudice the partnership creditors


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NOTES:

assets are sufficient to discharge partnership liabilities to persons not claiming as general or limited

partners.

3. Agent can return the object in case he is unable to sell the same 4. Bound to act according to the

instructions of his principal. 3. the buyer, as a rule, cannot return the object sold 4. The buyer can deal

with the thing as he please being the owner.

AGENCY

CONTRACT OF AGENCY

to do something in representation or on behalf of another (principal), with the consent or authority of

the latter. (Article 1868) - one whom the agent represents

and from whom he derives authority; he is the person represented. 2. Agent- one who acts for and

represents another; he is the person acting in a representative capacity. AGENCY

1. Principle of representation is applied. 2. Extinguished at will of the principal. 3. Agent exercise

discretionary power to attain an end for which he was appointed. 4. Preparatory Contract

PURPOSE OF AGENCY

facility of the agent. It enables the activity of man which is naturally limited in its exercise by the

impositions of his physiological conditions to be legally extended by permitting him to be constructively

present in many different places and to perform diverse juridical acts and carry on many different

activities through another when physical presence is impossible or inadvisable at the same time. (11

Manresa 434) ELEMENTS OF AGENCY A. Consent

whom the agent acts or contracts, the legal capacity of the principal rather than the agent, is of the

greater import. B. Object

extent of the agents authority to act, whether it be a general or a special agency, depends on how the


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agency is couched. C. Cause

agent may not be deprived of his right to compensation by an unjustified revocation of the agency

LEASE OF SERVICES

1. Principle of employment is applied. 2. Concurrence of parties is necessary. 3. Employee exercise

ministerial functions only. 4. Principal Contract

AGENCY TO SELL

1. Agent receives the goods as the goods of the principal. 2. Agent delivers the proceeds of the sale

SALE

1. The buyer receives goods as owner 2. Buyer pays the price.

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KINDS OF AGENCY 1. as to manner of creation a) express- one where the agent has been actually

authorized by the principal, either orally or in writing; b) implied- one which is implied from the

i. 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. Acts of the agent- when he carries out the

agency, or from his silence or inaction according to the circumstances.

ACTS WHICH MAY BE DELEGATED TO AN AGENT person, he may do thru another. 1. Personal actsifpersonal performance is required the doing of an act by a person on behalf of another does not

constitute performance by the latter. a) Voting during an election; b) Making a will; c) Making

statements which are required to be done under oath; d) A member of the board of directors or trustees

in a corporation cannot validly act as such by proxy e) An agent cannot delegate to a sub-agent the

performance of acts which he has been appointed to perform in person. 2. Criminal Acts or Acts not

allowed by law- There can be no agency in the perpetration of a crime or unlawful act. Examples: a) An

alien principal using an agent to acquire lands; b) Persons who, because of their position and relation

with the persons under their charge or property under control, are prohibited from acquiring said

property and cannot do so through an agent. FORM OF AGENCY

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. (Article 1869) NOTE: In an implied

agency, the principal is still bound by the acts of the agent just as in case of express agency There are no

formal requirements governing the appointment of an agent. The agents authority may be oral or

written. It may be in a public or private writing. When the law requires a specific form

ii.

2. as to its character a) gratuitous- one where the agent receives no compensation for his services. b)

compensated or onerousone where the agent receives compensation for his services. 3. as to extent of

business covered a) general- one which comprises all the business of the principal; b) special- one which

comprises one or more specific transactions. 4. as to authority conferred a) couched in general

termsone which is created in general terms and is deemed to comprise only acts of administration; b)

couched in specific termsone authorizing only the performance of a specific act or acts. 5. as to its


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nature and effects a) ostensible or representative- one where the agent acts in the name and in

representation of the principal. b) simple or commission- one where the agent acts in his own name but

for the account of the principal.








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IMPLIED ACCEPTANCE

1. De Jure Agent 2. Binds the principal for acts within the scope of his authority.

AGENCY BY ESTOPPEL

1. Not really an agent 2. Only the purported agent is liable.

and he did not reply to the letter or telegram RULE ON AGENCY BY ESTOPPEL

with apparent authority as his agent, and holds him out to the public as such, cannot be permitted to

deny the authority of such person in good faith, and in the honest belief that he is what he appears to

be. (Cuison vs. CA, GR.88531, October 26, 1993) CLASSES AND KINDS OF AGENTS 1. Universal Agent- one

employed to do all acts that the principal may personally do, and which he can lawfully delegate to

another the power of doing. 2. General Agent- one employed to transact all the business of the

principal, or all the business of a particular kind or in a particular place, or in other words to do all acts,

connected with a particular trade, business or employment. 3. Special or Particular Agent- one

authorized to act in one or more specific transactions, or to do one or more specific acts, or to act upon

a particular occasion. General Agent Special Agent

Example: Sale of a piece of land or any interest therein through an agent: NOTES:

ould be in writing in order to

be enforceable.

conferred in writing and must give him specific authority, either to conduct the general business of the

principal or to execute a binding contract containing terms and conditions which are in the contract hedid execute. (Dizon et al. vs. CA et al., GR 124741, January 28, 2003) FORM OF ACCEPTANCE BY AGENT

Acceptance by the agent may also be express or implied from his acts which carry out the agency, or

from his silence or inaction according to the circumstances Kinds of Implied Acceptance 1. Where

persons are present

agent and b. agent receives it without any objection 2. Where persons are absent Acceptance cannot be

implied from silence of the agent 1. principal transmits his power of attorney to the agent, who receives


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it without any objection; 2. principal entrusts to him by letter or telegram a power of attorney with

respect to the business in which he is habitually engaged as an agent, CIVIL LAW COMMITTEE

1. Scope of Authority Usually authorized to do all acts connected with the business or employment in

which he is engaged. Authorized to do only acts in pursuance of particular instructions or with

restrictions necessarily implied from the acts to be done

2. Continuity Conducts a series of transactions involving a continuity of service. Usually involves a single

transaction or a series of transactions not involving continuity








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NOTES: gage

includes the power to allow the extrajudicial foreclosure of the mortgaged property.

court to eject all persons in the principals lots so that the principal could take material possession

thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or

compromise agreement but only insofar as this is protective of the rights and interests of the principal in

the property, does not grant any power to the agent to sell the subject property nor a portion thereof.

(Cosmic Lumber Corp vs. CA 265 SCRA 168) EFFECT OF LACK OF SPA WHERE ONE IS REQUIRED:

UNENFORCEABLE When principal bound by act of agent 1. Agent must act within the scope of his

authority 2. Agent must act in behalf of the principal NOTE: The limits of the agents authority shall not

be considered exceeded should it have been performed in a manner more advantageous to the principal

than that specified by him. When a person NOT bound by act of another 1. Latter acts without or

beyond the scope of his authority in the formers name; and 2. Latter acts within the scope of his

authority but in his own name (UNDISCLOSED PRINCIPAL), except when the transaction involves a thing

belonging to the principal. In such case, the contract is deemed as entered between the principal and

the third person. EFFECTS OF AGENTS ACTS 1. With Authority a. in principals name valid; principal is

bound; agent not personally liable unless he bound himself (Article 1897) b. in his own nameApplyArticle 1883; generally 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 benefit

therefrom. 2. Without Authority a. in principals name unauthorized and unenforceable but may be

ratified, in which case, may be validated retroactively from the beginning (Article 1407) b. in his own

namevalid, whether or not the subject matter belongs to the principal, provided that at the time of

delivery, the agent can transfer legally the ownership of the thing. Otherwise, he will be held liable for

breach of warranty against eviction; Article 1883 does NOT apply OCCASIONS WHEN PRINCIPAL IS

BOUND BY THE ACTS OF THE AGENT BEYOND THE LATTERS POWERS General Rule: The principal is not

bound by the acts of the agent beyond his limited powers. Exceptions: 1. Where the principals acts have

contributed to deceive the third person in good faith; 2. Where the limitations upon the power createdby him could not have been known by the third person; 3. Where the principal has placed in the hands

of the agent instruments signed by him in blank (Strong vs. Gutierrez Repide 6 PHIL 680 [1906]) 4.

Where the principal has ratified the acts of the agent.

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Doctrine of Agency by Necessity t

is correspondingly enlarged in order to cope with the exigencies or the necessities of the moment

Requisites: 1. Real existence of an emergency 2. Inability of the agent to communicate with the principal

3. Exercise of the additional authority for the principals own protection 4. Adoption of fairly reasonable

means, premises duly considered NOTE: Agency can never be created by necessity; what is created is

additional authority in an agent appointed and authorized before the emergency arose. GENERAL

OBLIGATIONS OF AGENT TO PRINCIPAL: 1. To act with utmost good faith and loyalty for furtherance of

principals interests 2. To obey all lawful orders and instructions of principal within the scope of the

agancy 3. To exercise reasonable care, skill and diligence SPECIFIC OBLIGATIONS OF AGENT TOPRINCIPAL 1. To carry out the agency which he has accepted 2. To answer for damages which through

his performance the principal may suffer 3. To finish the business already begun on the death of the

principal should delay entail any danger 4. To observe diligence of a good father of a family in the

custody and preservation of the goods forwarded to him by the owner in case he declines an agency,

until an agent is appointed 5. To advance the necessary funds should there be a stipulation to do so 6.

To act in accordance with the instructions of the principal, and in default thereof, to do all that a good

father of a family would do

7. Not to carry out the agency if its execution would manifestly result in loss or damage to the principal

8. To answer for damages if there being a conflict between his interest and those of the principal, he

should prefer his own 9. Not to loan to himself if he has been authorized to lend money at interest 10.

To render an account of his transactions and to deliver to the principal whatever he may have received

by virtue of the agency 11. To distinguish goods by countermarks and designate the merchandise

respectively belonging to each principal, in the case of a commission agent who handles goods of the

same kind and mark, which belong to different owners 12. To be responsible in certain cases for the acts

of the substitute appointed by him 13. To pay interest on funds he has applied to his own use 14. To

inform the principal, where an authorized sale of credit has been made, of such sale 15. To bear the risk

of collection, should he receive also on sale, a guarantee commission 16. To indemnify the principal for

damages for his failure to collect the credits of his principal at the time that they become due 17. To be

responsible for fraud or negligence NOTE: A stipulation exempting the agent from the obligation to

render an account shall be VOID. Knowledge of agent is knowledge of principal. 1. Agents interests are

adverse to those of the principal 2. Agents duty is not to disclose the information (confidential

information) 3. Where the person claiming the benefit of the rule colludes with the agent to defraud the

principal


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Par Ner Ship

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