Partnerships, Agency & Trusts

DVOR College of Law

Section III-A, S. Y. 2016-2017, 1st Semester
Judge Manasseh S. Bastes

COURSE OUTLINE
References:
Republic Act No. 386 (New Civil Code)
Agency Title X (Articles 1868 to 1932)
Trusts Title V (Articles 1440 to 1457)
Partnership Title IX (Articles 1767 to 1867)

Agency & Trusts, Partnerships & Joint Ventures (Villanueva Tansay 2015)
Comments & Cases on Partnership, Agency & Trust (De Leon De Leon, Jr. 2014)

AGENCY
Cases:
What a person may do personally, he may do through another
Philpotts v. Philippine Manufacturing Co., 40 Phil. 471 (1919)
Rallos v. Felix Go Chan & Sons Realty Corp., 81 SCRA 251 (1978)
Orient Air Service & Hotel Representatives v. CA, 197 SCRA 645 (1991)
Litonjua, Jr. v. Eternit Corp., 490 SCRA 204 (2006)
Doles v. Angeles, 492 SCRA 607 (2006)
Eurotech Industrial Technologies, Inc. v. Cuizon, 521 SCRA 584 (2007)
Philex Mining Corp. v. Commissioner of Internal Revenue, 551 SCRA 428 (2008)

Liability of agent.
China Air Lines, Ltd. V. CA, et al., G.R. No. L-45985
PAL, et al., v. CA, et al., L-46036, May 18, 1990

If an agent acts in his own behalf only, the principal is not bound.

Rural Bank of Borbon (Camarines Sur), Inc. v. CA, et al., G.R. No. 95703, Aug. 3,
1992

A person must be authorized to bind another.

Uniland Resources vs. DBP, G.R. No. 95909, Aug. 16, 1991
De la Cruz vs. Northern Enterprises, 95 Phil. 739

The essence of agency is that the agent renders service to the prinicipal.

Sevilla vs. CA, L-41182-3, April 15, 1988

De la Pea v. Hidalgo, 16 Phil. 450

Act of agent is act of the principal.

Sy-Juco vs. Sy-Juco, 40 Phil. 634

Authority to sell does not carry with it authority to sell on credit.

Green Valley Poultry and Allied Products, Inc. vs. Intermediate Appellate Court,
L-49395, Dec. 26, 1981

Breach of loyalty in agency.

Domingo vs. Domingo, L-30573, October 29, 1971

Agency is for compensation.

Aguna v. Larena, 53 Phil. 630

Stipulation granting authority to sell in a mortgage is merely ancillary.

Bicol Savings and Loan Association v. CA, G.R. No. 85302, March 31, 1989
Existence of General Power of Attorney; No need for special power of
attorney.

Francisco Veloso vs. CA, et al., G.R. No. 102737, Aug. 21, 1996

Revocation of agency, when principal is liable.

Dioloso vs. CA, 130 SCRA 350

Revocation of agency.

Rallos v. Yangco, 20 Phil. 269

Revocation of agency at will; Express or implied

CMS Logging, Inc. vs. CA, et al., L-41420, July 10, 1992

When principal may sue the person with whom agent dealt with.

Gold Star Mining Co., Inc. vs. Lim-Jimena, 25 SCRA 597

Responsibility of two agents.

Martinez vs. Ong Pong Co., 14 Phil. 726

Authority of agent to novate must be express.

Villa vs. Bosque, 49 Phil. 126

An agents responsibility extends to fraud and negligence

Travel Wide Associated Sales (Phils.), Inc., et al., vs. CA, et al., G.R. No. 77356, July
15, 1991

Death of principal does not render unenforceable an act of agent who was
unaware of such death.

Herera, etc. vs. Luy Kim Guan, et al., L-17043, January 31, 1961

When principal is solidarily liable with agent.

The Manila Remnant Co., Inc., vs. CA, et al., G.R. No. 82978, Nov. 22, 1990

An undisclosed principal can sue the third person with whom agent dealt
with.

NFA vs. IAC, et al., G.R. No. 75640, April 5, 1990

Operation of the doctrine of promissory estoppel.

PNB vs. CA, et al., G.R. No. 66715, Sept. 18, 1990

TRUSTS
Cases -Trusts are vested with equitable considerations

Government v. Abadilla, 46 Phil. 642 (1924)

Deluao v. Casteel, 22 SCRA 231 (1962)
Miguel v. CA, 29 SCRA 760 (1969)
Salao v. Salao, 70 SCRA 65 (1976)
Ramos v. CA, 232 SCRA 348 (1994)

No trust is implied by law if property is given as gift to a minor; Rebuttable

presumption.

Bernardo delos Santos vs. Faustino Reyes, et al., L-45027, Jan. 27, 1992

Action for partition in implied trust prescribes after 10 years.

Juanito Gonzales, et al., vs. IAC et al., G.R. NO. 66479, Nov. 21, 1991

Implied trust; Imprescriptibility of action.

Ancog, et al., vs. CA, et al., G.R. No. 112260, June 30, 1997

Trust; Resulting trust

Morales vs. CA, G.R. NO. 117228, June 19, 1997

Implied trust; 10-year period to question title.

Purita Salvatierra v. CA, G.R. No. 107797, Aug. 26, 1996

A person who acquires a property thru fraud, holds it in trust.

Veran vs. CA, L-41154, Jan. 29, 1988

Partnership
Cases -When partnership exists
Leung vs. IAC, G.R. 709826, Jan. 31, 1989

Historical Background of Partnership

Prautch, etc. v. Hernandez, 1 Phil. 705, (1903)

Evangelista V. Commissioner of Internal Revenue, 102 Phil. 140 (1957)
Dietrrich v. Freedman, 18 Phil. 341 (1911)
Kwong-Wo-Sing v. Kieng-Chiong-Seng, 6 Phil. 498 (1906)
De los Reyes v. Lukban, 35 Phil. 757 (1916)
Compania Agricola de Ultramar v. Reyes, 4 Phil. 2 (1904)

Levels of Existence of a Partnership

Yu v. NLRC, 224 SCRA 75 (1993)

US v. Clarin, 17 Phil. 84 (1910)
Rojas v. Maglana, 192 SCRA 110 (1990)

A contractual relationship

Lyons v. Rosentock, 56 Phil. 632 (1932)

A contract to pursue a business enterprise

Lim v. Lim, 614 SCRA 141 (2010)

Villareal v. Ramirez, 406 SCRA 145 (2003)

Right to form a partnership is subject to legal requirements

Ang Pue and Co., et al., v. Secretary of Commerce and Industry, 5 SCRA 645

Doctrine of Separate Juridical Personality of Partnership

Vargas & Co. vs. Chan, 29 Phil. 446 (1915)

Campos Rueda & Co. v. Pacific Commercial Co., 44 Phil. 916 (1923)
Commissioner of Internal Revenue v. Suter, 27 SCRA 152 (1969)

Aguila Jr., v. Court of Appeals, 319 SCRA 246 (1999)

Mere sharing of profits does not of itself establish a partnership

Jose Obillos et al., vs. Commissioner of Internal Revenue and CTA, 139 SCRA 436
(1985)
Pascual v. Commissioner of Internal Revenue (166 SCRA 560)
Navarro v. CA, 222 SCRA 19930
Reyes v. CIR, 24 SCRA 198 (1968)
Evangelista v. CIR, 102 Phil. 140 (1957)
Pastor v. Gaspar 2 Phil. 592 (1903)
Fortis v. Gutierrez Hermanos, 6 Phil. 100 (1906)
Bastida v. Menzi & Co., 58 Phil. 188 (1933)
Tan Eng Kee v. CA, 341 SCRA 740 (2000)
Tocao v. CA, 342 SCRA 20 (2001)

De Facto partnership

Mac Donald v. National City Bank of New York, 99 Phil. 156 (1956)
Pioneer Insurance & Surety Corp. v. CA, 175 SCRA 668 (1989)
Lim Tong Lim v. Phil. Fishing Gear Industries, Inc., 317 SCRA 728 (1999)

Doctrine of delectus personae

Ortega v. CA, 245 SCRA 529 (1995)

Tocao v. CA, 342 SCRA 20 (2000)

Essence of a partnership contract

Yulo v. Yang Chiao Seng, 106 Phil. 111 (1959)

Estanisla Jr. v. CA, 160 SCRA 830 (1988)
Evangelista v. CIR

Ona v. CIR, 45 SCRA 74 (1972)

Gatchalian v. CIR, 67 Phil. 666 (1939)
Gallemet v. Tabilaran, 20 Phil. 241 (1911)
Tan Eng Kee v. CA, 341 SCRA 740 (2000)

Badges that normally accompany a partnership relationship

Sy v. CA, 398 SCRA 301 (2003)

Heirs of Tan Eng Kee v. CA, 341 SCRA 740 (2000)
Heirs of Jose Lim v. Lim 614 SCRA 141 (2010)

Unlawful Partnerhsip

Arbes v. Polistico, 53 Phil. 489 (1929)

Deluao v. Casteel, 26 SCRA 474 (1968)

Registration of the contract of partnership

Angeles v. Secretary of Justice, 465 SCRA 106 (2005)

Rojas v. Maglana, 192 SCRA 110 (1990)

When immovable property contributed

Borja v. Addison, 44 Phil. 895 (1922)

Agad v. Mabato, 23 SCRA 1223 (1968)
Torres v. CA, 320 SCRA 428 (1999)
Litonjua Jr. v. Litonjua Sr., 477 SCRA 576 (2005)
Secuya v. Vda. De Selma, 326 SCRA 244 (2000)

Partnership name
Jo Chung Cang v. Pacific Commercial Co., 45 Phil. 142 (1923)
Compania Agricola de Ultramar v. Reyes
Litton v. Hill & Ceron, 67 Phil. 509 (1939)

Goquiolay v. Sycip, 108 Phil. 947 (1960)

Spouses as partners between themselves or with third persons

Commission of Internal Revenue (CIR) v. Suter, 27 SCRA 152 (1969)

Guiang v. CA, 291 SCRA 372 (1998)
Cirelos v. Hernandez, 490 SCRA 625 (2006)
Bautista v. Silva, 502 SCRA 334 (2006)

Every partner has a right to manage

Muasque v. CA, 139 SCRA 533 (1985)

Council of Red Men v. Veterans Army, 7 Phil. 685 (1907)
Litton v. Hill & Ceron, 67 Phil. 509 (1935)
Smith, Bell & Co. v. Aznar, 40 O.G. 1881 (1941)
Goquiolay v. Sycip, 108 Phil. 947 (1960)

Partners right to partnership property

Catlan v. Gatchalian, 105 SCRA 1270 (1959)

Clemente v. Galvan, 67 Phil. 565
Lozana v. Depakakibo, 107 Phil. 728 (196))

Right to participate in profits and losses

Moran Jr. v. CA, 133 SCRA 88 (1984)

Sison v. McQuaid, 94 Phil. 201 (1953)

Fiduciary duties of partners

Pang Lim and Galvez v. Lo Seng, 42 Phil. 282 (1921)

Hanlon v. Hausserman, 40 Phil. 796 (1920)
Evangelista & Co. v. Abad Santos, 51 SCRA 416 (1973)

Liability of withdrawing partner from a partnership

Rojas v. Maglana, L-30616, Dec. 10, 1990

If a partnership does not pay his share, the partnership can proceed
against him.

Pabalan v. Velez, 22 Phil. 29

Personal liability of partners for obligations of partnership

De los Reyes v. Lukban and Borja, 35 Phil. 769, Dec. 16, 1916
Munasque v. CA, 159 SCRA 533

Dissolution and Winding-up a partnership

Idos v. CA, 296 SCRA 194, 206 (1998)

Tocao v. CA, 342 SCRA 20 (2000)
Fernandez v. De la Rosa, 1 Phil. 671 (1902)
Rojas v. Maglana, 192 SCRA 110 (1990)
Singzon v. Isabela Sawmill, 88 SCRA 623 (1979)
Soncuya v. De Luna, 67 Phil. 646 (1939)
Villareal v. Ramirez, 406 SCRA 145 (2003)
Magdusa v. Albaran, 5 SCRA 511 (1962)
Martinez v. Ong Pong Co., 14 Phil. 726 (1910)
Uy v. Puzon, 79 SCRA 598 (1977)

Limited partnership

Jo Chung Cang v. Pacific Commercial Co., 45 Phil. 142 (1923)

Goquiolay v. Sycip, 9 SCRA 663 (1963)

Grading Method
Attendance - 10%
Recitation/Quizzes - 40%
Mid-term Examinations - 50%
Final Examinations - 50%

Class Days:1
July 4, 6, 8; 11, 13, 15, 18, 20, 22, 25, 27, 29;
Aug 1, 3, 5, 8, 10, 12, 15, 17, 19, 22, 24, 26, 29, 31;
Sep 2, 5, 7, 9, 12, 14, 16, 19, 21, 23, 26, 28, 30;
Oct 3, 5, 7, 10, 12, 14, 17, 19, 21, 24, 26, 28, 31;
Nov - Finals

Subject to one week deduction for midterm examinations