PARTNERSHIP, AGENCY AND TRUSTS, ARTNERSHIP By the contract of partnership two or more persons bind themseives to contribute money, property oF industry to @ common fund, with the Intention of dividing the profits among themselves (CiVIL CODE, Art.1767), Two (2) or more persons may also_f partnership for the exercise of a pi CODE, A176 7 9 Characteristics 6, 4.Brincipal ~ 2 Preparatory ~ en 3.Gommutative — ur ‘considered equal with 4. Consensual ~ perfected contract of agency oe Cases on Farinership, Agecky-and 12) (hereinater, DE LEONE Partnd and Trusts]. xe Essential Requisites (°OP-G)~ There must be a valid Covitfaahy) a.The partnership relat contractual. The essen Object, & Consideration) of = present, Note: The partnership relat contract itself, but the result of the ér at 13). ee fz Easctoaitens ou: ‘on other co ME Ee gtidvciar in natu pot ea O Barbells Articles of Partnership No required form is necessary but the contract is subject to the provisions of Articles 1771 and 1773, and to the Statute of Frauds. However, it is customary to embody the terms of the agreement in a document known as "Articles of Partnership” stating the name, nature oF purpose and location of the firm, and defining, ‘among members, the powers, rights, duties, and bilities of the partners among themselves, {gir contibutions, the manner by which the liSsand Josses are to be shared, and the ‘\gtodeduré fof dissolving the partnership (Id. at Telation in which the 1ae exists. cea | Délottus, “Persinaé (choice of person or a the althrity of one partner to bind forfothorwise. It involves trust veo the partners. No one (a (iy 78’ general partners (io). toppel applies (CIVIL CODE, \Ge atfectio societatis or the desire to fete union wih peeele among ixist mutual confidence and trust Code of the Philippines, Volume ), p. 576) [hereinatter PARAS, Civil rede Volume Vj. EXECUTIVE COMMITTEE SUBJECT COMMITTEE, REMEGIO D, MORA JR. over- KATE AUBREY G, HOJILLA all chairperson and chairperson subject chais, JAM EDWARD C." AGBAYANI assistant subject chair, ANNA MARGARITA P. MALONZO edp, LAARNI- A. CABRERA petsons and family relations, FERNANDO G. MADARCOS property, | FERMINA A. AGUDO’ wills and succession, CARL RON F. VILLAMIL and JOHN ROBERT A. ELECCION obligations and contracts, for academic operations, TYRONE LEWIS D. chairperson for ‘operations, JANE. KATES. CALIPAY vice-chairperson for ‘operations, REGINA ANNE 5. TUNGOL vice-chairperson for secretariat, CLARISA G. BELO Wice-chairperson for finance, JAMAICA IDA C, PALCE vice ‘chairperson for electronic data processing, , PATRICK ALFIE JAY 0, NIQUIA sales STEPHEN 'M. CUA vice and lease, DAVID BRYAN T, Chairperson for logisties, ONG partnership, FLORIAN.G, JAMES RUSSELL A. SZ vice” SALCEDO credit transactions, chairperson for membership MARY GEANELLIE Mt CABRERA torts and damages, JAMEM JANN Ro NARVASA land titles and deeds, EDGAR B.CRUZ confit of laws MEMBERS MA. PATRICIA B. BARRUGA, MA. LEICHELLE G. BAUTISTA, MARIA ADVISERS. DEAN ED VINCENT S. ALBAN, ATTY. CLARABEL 8. BUSINE, JUN MARR NICASIO. c M. DENILA, JANNAISA AINEE R. CABANEIRO, ATTY. DIMAKUTA, ALA” MELT. JOSEPH DOMINGO, “GREGG G. GAMMAD, JOHN C. ICALIA, “JOYCE GC! SUCUTAN, CARMELA’ J. LUNA, LOURY MAE M. LUZADIO, MARIA BERNADINE H. — MADAMBA, CRISTINE MYSEL "T. MADERAZO, MICHAELA PAOLA A. MALIGAYA’ TOSCA " LEIRA ELLA. MANSUJETO, KLARENCE _D. ‘ORJALO, MARIA LEA BERNADETH S. OTICO, MIKO JIM PAULO V. PANGANIBAN, JUSTIN E, PUJOL, MISHELLE. FAITH D. QUIRANTE, RUBY ANNA 1 TORRES, ERIKA GRACE E. VELASCO, LIANE ROSE R. VELASQUEZ, DIOMDELIA B. VERGARA, PAOLA MARIE. C. VIEDOR, FERDINAND M. DECHAVEZ, | ATTY. EEREN VINCENT M. DIZON, aTry. CHARLITO MARTIN R. MENDOZA, ATTY. BRUCE V. RIVERA, ATTY. FRANCESCA, LOURDES M. SENGA~~ 2.Ths patias dst ave log the contract; Partnership as Partner There is no prohibition against a partnership being @ partner in another partnership (DE LEON, Partnership, Agency and Trusts, supra at 17) Corporation as Partner Unless authorized by a statute or by its charter, a corporation is without capacty of power to enter into @ contract of partnership (Mendiona voy of Appeals, G.R.No. 159333, ly 31 2006) wf A Aithough a Sah cannot™énter into a ion partnership contragt.y\/may however e 8 joint venture ( ve ing a Manufacturing ”, E December 15, 1989) 3 There must be a mufial Girton of one. property, or industry to @ common fundine! Money ~ must be in legal tapder Checks, Frajis, Promissory notes Sand” other ¢-4meértanti documents are notisqhofiey. There Y's no contribution of money’ Uni) thay havg been cashed (CIVIL CODE, Atti} 249}. reo b.Property — may be real, personal corficies! ot incorporsal property. Thug érealtiand g adul Maybe contributed (DELEON, «Parinershio, ‘Agency and Trust, supra-at-79)- c.Industry ~ means the ‘ttivé cooperation): the work of the party assogiated/whicti, may’ be either personal. manual ‘ef and for which he receives ¢rshz (not merely salary) ofthe bustre S Note: Proof is necessary that the ‘of money, property or industry (id. at 4.The Object or purpose must be lawful CODE, Art. 1770): 5.The primary Purpose must be to obtain profits to divide the same among the parties; and 6. There must be at least one General partner (DE LEON, Partnership, Agency and Trust, supra at 12). ‘Transparency of Articles of Partnership It is also required that the articles of partnership must not be kept secret among the members; otherwise, the association shall have no legal personality and shall be governed by the provisions of the Civil Code relating to co-ownership (CIVIL CODE, Art, 1775). ‘SAN BEDA COLLEGE OF LAW 3862015 CenTRAaLizen Bak OPERATIONS oc eae.t oe dot nite ‘Common Fund Co-ownership by the partners of the property and bustiess of the partnership and which implies joint Powers of management and control of the Partnership and in sharing of the profits and losses (QE LEON, Partnership, Agency and Trusts, supra at 61). A partnership may be deemed to exist among parties who agree to borrow money to pursue a sae business and to divide the profits or losses that may tiéTEtrom, even if itis shown that they have wot ‘Gonbibuled: pny capital of thelr own to a “#*eomiolifund,* a8 their contribution to such fund could be intangible tke creat ge-industry (Lim Tong Y, ail. Fishing Gear. industries, Inc., G.R. No. Hh he 3, 195 Mereantile View of thé-ffatufe of a Partnership ‘Pe -Aspaiinership-has a jurdieal personality separate ar istinét from that of each of the partners even in case, of:falire to comply with the requirements of Acie 1772. Par (CIV CODE, Art. 1768). Haas B 1¢ 1768 provides that the partnership retains its, [utigical psrsonaliy even fi tals to register, so long -wens the.conlcact hds the essential requisites (Sunga- f,, Chany. Chua, G.A-No:"143340, August 15, 2001). eS Me x ke “y Parfrersilp forjthe Practice of Law The isohy to practice law is not 2 netural or {earstituyonal right but privilege or franchise which ‘may ba enjoyed fniy tinder such terms as the State may glleenp ‘abtessdry (DE LEON, Partnership, they ists, supra at 11). The use of a nom ime, or trade name in lew practice is eeHul Determine Existence of a Partnership “{QMIL CODE, Art. 1769) ‘Thd-tesue as to whether a partnership exists is a factual matter decided on the basis of all circumstances and no single factor is controlling (DE LEON, Partnership, Agency and Trusts, supra at 29). 1.General Rule: Persons who are not partners as to ‘each other are not pariners as to third persons. Exception:” Partnership by" estoppel (CIVIL CODE, Art. 1825). Mustration: If A and 8 are not partners as to each other, neither will they be pariners with respect to , a third person. But if A, with the consent of B, represents to C that they are partners, then A and B will be considered partners as to C even if they are not really partners.2.Co-ownership or co-possession of a property does ‘not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of the property. Reason: The law does not imply a partnership between co-owners or co-possessors because of the fact that they develop or operate a common’ property, since they may rightfully do this by virtue Of their respective titles or common dominion over the property (DE LEON, Partnership, Agency aNd .=cseAs eset hr Trusts, supra at 31). f apartment whichis Yeased 10 third persons. They are merely co-ontie! nd not partnel, fre, ‘must be a clear intone Wetaiud EG Go-ownership Conv to Parinershij The co-ownership ot herted) proper automatically converted: into ah | unregistered partnership the moment said common.properties andlor the income derived therefrom are Usedjes, £2 common fund with intent-t8 produés profits, for ‘the heirs in proportion to'their respective shares in.» the inheritance as determined in 2 project partition (Oia v. CIR, G.R. No. L*19342, May 25, 1972)... rab alee Note: The property of a man“and @.wwoinan who live together as husband':and wile "shall! Note: To regard the petitioners as having formed afr unregistered partnership would result in oppressive taxation. Their original purpose was to divide the lots for residential purposes, but they were compelled to resell because of the high cost of construction. There must be an unmistakable intention to form a partnership or joint venture (Pascual v. CIR, GR. No. 78133, October 18, 1988). eipt by a person of share in the profits is a ‘prina facie,evidence that he is a partner in the Sey ‘6 “businsse'(Sharing in the net profits presupposes Mustration: A arid Uxnherited trom their father anés iceshating ithe tosses). FB Ea gt no such infore a red ir ment: (DAWIC) E CBs Weare coca Nae 2 wilt be drawn if such b.AS a0, Annuty to alwidow or representative of a ies ES iecesed pertnel \F .c.As Wages of an employee or rent to a landlord : d,s Jfterest’ on+a loan, though the amount of Paftrient'vary withthe profits of the business; cand® <3 $i ‘e:As the Consideration for the sale of a goodwill of a business or other property by installments or - was othenwise (CIYILICOBE, Art 1767, par.4) Ba ee ts 7 ‘» ENote:cin Sil the said“cases, the profits are not Be | S4“sfiaret ad profitsfof a:partner as a partner but in governed by the rules oneo-ownership (FAMILY... < partnership is involved in an unlawful with his knowledge or consent (id. at Applicability of the Rule of Respondeat Superior The rule of respondeat superior (also called the rule of vicarious liability) applies to the law of partnership in the same manner as other rules governing the agency relationship. Itis not only the partners who are liable in solidum; it is also the partnership (CIVIL CODE, Art, 1824). The injured party may proceed against the partnership or any partner (PARAS, Civil Code Volume V, supra at 691), he fedoi for. the laws imposition of wider lability "on the patcership with respect to torts and breach of trust is based on pubic’ policy (DE LEON, sis:sipra at 191). ‘The, pacer must bé-Guity of a wrongful act or (BSR He. must ba! acting inthe Ordinary course of Dusiné8s ior with the ‘authority of his: co-partners yeh ifthe act is uneoinected with the business: © 3,Los8-ot injury isteulfeed by a third person as a steault of the wrongful gct or omission, ‘4-Tho, Agatioved th we etson is not a partner in the fam and, 3 Ihe fo “pxicling contract between the ahip and ier person, if there is, bul i aes as Pees, ‘and deliberately violated, this. itself ‘ (aporsiitutes quasi-delict (DE LEON, Parinership, iS Ader and Trusts supra at 192) ae 2 Srcytal Sr en Acts, A.nbn-aclidg\paitier in a partnership engaged in a jy ot criminally liable for the another pariner but he is criminally Partnership Liability Does not extend to Criminal Liability - where the wrongdoing is regarded as individual in character, i.e. embezzlement Extends to criminal liability - where the crime is statutory, especially where it involves fine or imprisonment (Id. at 192), Mutual Agency Partnership is a contract of “mutual agency’; each partner acts as a principal on his own behalf, and as fan agent of his co-partners and the parinership ([d. at 176).‘A Partner Binds the Partnership: 4.When he is expressly or impliedly authorized; and 2.When he acts in behalf and in the name of the partnership Partnership by Estoppel ‘Arises when a person by any means 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 Note: Art. 1825 does not create a partnership as between: the alleged partners. The law only 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 partnership, Note: The case arising under Art. 1825 must be distinguished from the-situation covered by the last to any such person to whom such representation arees-bat,,0f, Art. 1834 which is not a situation where representation given credit to the ac has been made, who has, on th oe a rinership (CIVIL ee % Partnership ( IERDE, Art 182s) ea Representations If he has made such its being made in a ‘such person whether not been made or commu saving credit or with the kriguledge ‘pr the apparent partner making the reprégehtation dr Sf sopsenling ‘its being made (CIVIL CODE; Aa. 1 eh 1 & Partner by Estoppel ww & A parson tot a parhor qavigasont a: pare by estoppel and thus lable Leave ser 2 a pertner when by words of DiStaut thera in + Directly represents hime Se Jarier in an existing partnerst partnership (with one or partners); or 2.Indirectly represents hit another representing existing partnership or partnership. Partnership Liabitity 4.When partnership fi partners consented to the representatio considered a partnership liability. This is a Gdse of a partnership by estoppels (CIVIL CODE, Art 1825, Par. 1(1)); 2.When liability pro rata — when there is no existing partnership and all those represented as partners consented to the representation, or not all of the partners of an existing partnership consented to the representation, the liability of all those who made and consented to the representation is joint (CIVIL CODE, Art. 1825, Par. 1{2); 3.When liability separate — when there fs no existing partnership and not all but only some of those fepresented as partners consented to the representation, or none of the partners in an existing partnership consented to such representation (CIVIL CODE, Art. 1825, Par. 112). ap tOe on OF N22... existence of Ihe 5 td earhron (PARAS, Civil Bed tse Saas tat eee Voom Person 60TH Y, supia al 652) 2s _ ee Gidetuted by d ek % ee stoppel results. It is rather a ‘ patinership:“fability which continues for lack of Proper.téifinatiod (DE LEON, Partnership, Agency 5 Supra 192). ALY iS \, Bee. ye ere ie laments to Establish Liability as a Partner on the Ground of Estoppel” £1, Proof by plaintiff that tie’ was individually aware of EEO the:Fdefehdant’sTepresentations or that such teprés ations were made by others and not dant liance on sucti representations by the paint a tah day Serehualon of he siaements ‘by-ti fendant {DE LEON, Partnership, Agency eer fo, supra 201) orftion cf ren 85sume to act as a corporation fal jOut authority to do so shall be fartners for ali debts, liabilities, and ricurfed or arising as a ‘result thereof "ION CODE, Sec. 21). ibility of Incoming Partner for Partnership Obligations Liability is limited to his share in partnership property for existing obligations but this liability extends to his separate property for subsequent obligations (CIVIL CODE, Art. 1826). Note: When the incoming partner has assumed the ‘obligation of retiring partner, he is liable directly to the old partnership if the assumption was made primarily to benefit the former creditors. This. is because he partakes of the benefits of the partnership property and an’ established business (DE LEON, Partnership, Agency and Trusts, supra at 206), SAN BEDA COLLEGE OF LAW 2015 CENTRALIZED Bar Operarions 407Partnership Creditors in Partnership Property With respect to partnership assets, the partnership creditors are entitled to priory of payment. However, the private creditors of each partner may ask the attachment and public sale of the share of the latter in the partnership assets (CIVIL CODE, Preference of Art. 1827) Property Preference: Partnership Property - Partnership creditors. 2f6-ernne-ohe preferred. paSeen BY. TL Partner's Individual Property - Pat SMa creditors are preibhhd (OE LEC io ‘Agency and Trusts ‘4. Gollection and distribution of assets pPayinent ot depts”, ae or ition ‘of the value of each nar ners fn ee DSi SO sss ars ws |p or conipiéied and is the end of the Anes eapar arship tie. VIE CODE, Art. 1828). apy ile pernership i not terminated, Aiintil the winding up of partnership PES OF DISSOLUTION A. Extrajudicial Dissolution The parties may agree to expand the grounds provided under Art 1830 but not fo delimit them, Causes of ExtravJudicial Dissolution: (WIELD- CID) 1.Without violation of the. agreement between the partners (TEx’): a.By the Termination of the definite term or particular undertaking specified in the agreement; b.By the Express will of any pariner, who must act in good faith, when no definite term or particular undertaking is specified; Note: If the partner insists on leaving the partnership in bad faith, the firm is dissolved, but he may be responsible for damagesc.By the Express will of all the partners who have not assigned their interests or suffered:them to be charged for their separate debs, either before or after the termination of any specified term or particular undertaking: Unanimous Agreement The agreement must be unanimous. Majority alone cannot dissolve the partnership without breach of contract (DE LEON, Partngrshit Agency and Trusts, supra at 216)ecx "4 py ce 4s tho sxcbey of ony odietsicnt ths «2865 business boric) acoordatesewith such Reason: Apparent confidence, without, Prejudice to the fabinty Sor datages (PARAS. TTT Givil Code Volume Vostipra at 701) 4 $ , 2.1m contravention of thevagfeemegt between the | partners, where the cirlirstances tit bérmitia Gissolution under anywolhet révision ‘of Nis article, by the express Wil time; 4 This may be mede even thbeigh the was onered for a. detiiértem, bi undertaking. The rong table fr damages or et (frst no case can he be compel ae partnership. It is @ power fight to dsclve a pater GAR. No. 30616, December 10; 3.By any. Event which makes it uf business of the ‘partnership to be carr Take note, however, that if the business or the object had been unlawful from the very beginning, the firm never had juridical personality (PARAS, Civil Code Volume V, supra at 702). 4.When a specific thing which a partner had promised to contribute to the partnership, perishes before the delivery; In any'case by the Loss of the thing, when the partner who contributed it having reserved the ownership thereof, has only transfered to the partnership the use or enjoyment of the same; but the partnership. shall not be dissolved by the loss of the thing when it ‘occurs after the partnership has acquired the ‘ownership thereof: Wi26f any fpartner|at any Reason: The parinership Is dissolved because the partner has not or is deemed to have not given his ‘contribution. Note: The mere failure by a partner to contribute his share of the capital pursuant to an agreement to form a partnership does not prevent the existence of a firm. Such failure may be waived by the other parties to the agreement (DE LEON, Partnership, Agency and Trusts, supra at 222). Whee f any partner; bSLCi interdiction of aqupesner Unt agreement beliQagh fie} BEBtS Na deprives ‘tender during the COLLEGE Gt tence ight to manage his Bec duiite See ee any ac nee (APC, Art. 34) Se eS ef Wes ( ). & a8, / Reason: One whois trio capacity to manage property should not be allowed to manage ea LEON, Partnership, the “Ins 7 By: amaoe es Cal any patver or of te Freeney of the partner, his uid be impossible for him to liabilities in case the have been exhausted. Partnership results to inability to Dusiness which practcaly amounts ton (d. at 225). Decree of oourt Under At. 1894 (CIVIL CODE, yt?1830) B. Judicial Dissolution 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 partnership affairs (CIVIL CODE, Art. 1837), Causes of Judicial Dissolution: (BI°L-GO) The court shall decree dissolution, on application by or for a partner, whenever: 1.A partner willfully or persistently commits a Breach ‘of the partnership agreement, or otherwise conducts himself in matters telating to the partnership business that it is not reasonably practicable to carry on the business in partnership with im: SAN BEDA COLLEGE OF Law 2015 CENTRALIZED Bar Operations 409ney defeat and materially affect and obstruct the purpose of the partnership (DE con Partnership, Agency and Trusts, supra at 2.A partner has been declared Insane in any judicial proceeding or is shown to be of unsound mind; Note: The partner may have been previously declared insane in a judicial proceeding: otherwise, his insanity must be duly prove ‘must materially affect the capacitysof ay Pato eo er re bats yy other way frcapable of carried on ata Loss; ms, {Tbe business is carried on by board of directors ne Aad Sarre = PRE corres Vos Ws pas, all ctosiien wil Gaited pare boosie: oe {eirereae etn te nel panei petrases the ere parters! eS prea {title in hirnself and then carries on Sin. his own name and for his eft. or is @ party to a contract with creditors f@lvent firm with respect to the disposal of ifn’s assets in the payment of the firm's debts Se LEON, Partnership, Agency and Trusts, supra at28t), ‘Admission of Additional Limited Partners After the formation of the limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate in ‘agvordance with the’ requirements of Article 1865 (CIVIL CODE, Art. 1849) Effect of Failure to Amend: This does not necessarily mean the dissolution of the limited partnership (Tec Bi and Co. v. Collector of Internat Revenue, G.R. No. 42115, March 30, 1935). ‘Management of a Limited Partnership General Rule: A limited partner has no ‘management powers ‘SAN BEDA COLLEGE OF LAW 415 2015 CENTRALIZED BAR OPERATIONS:Exception: A genefal partner ina limited parternp. howerer has no auhody, without ‘written consent or ratification of all fimited partners, to; (CIC-PA’C) 1.00 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 a judgment against the partnership; 4.Possess partnership property, or “assign thelr Fights’ in specific partnership property, for other than a partnership purpose, 5 Admit a person as a general parnennsntiSy Ge i unite 6-darta paring. 8 bnked pari figtio cosa abies as 7.Gontinue the with the" pari oe Broperty on the Qua etrement, nsf iterdiction or insSwe = unless the right to (CIVIL. CODE, Art. 1 The sald acts are aster, stit Tom A ownership and are Doyen ei the dao The!gpnera reer Pe Settee cite ET eS fable for damages to tiginfed pitnersp (DE i LEON, Partnership, Agentyand Trust, sipra at 292). 1.To have the Tarache printipal place of busint: (CIVIL. CODE, Art. 1851); Rights of a Limited pat SNE a books and ‘copy any of th 1851); 3.To demand true and Eul info affecting the partnership (CIVIL 4.To demand a Formal, account of tf affairs whenever circumstances ren reasonable (CIVIL CODE, Art. 1851); 5.To Ask for dissolution and winding up by 4 court (CIVIL CODE, Art. 1851); 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 liablities after such payment (CIVIL CODE, Ar. 1856), 7.To Receive the return of his contribution provided that: a.All the liabilities of the partnership, except fiablities. to general partners and to limited partners on account of their contribution, 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; chee of ‘SAN BEDA COLLEGE OF LAW 416 3015 CENTRALIZED BAR OPERATIONS, sae epee A We) “t ey fasoly sea ME cay demands the . The certificate is cancelied or so amended a8 to set forth’ the withdrawal or reduction (CIVIL * CODE, Art. 1857). Exceptions: When letter (a) and (c) are complied with, the return ofthe contribution is a matter of right: i. On the dissolution ofthe partnership: ii. Upon the arrival of the date specified in the certificate for the return; or ii, After he has given six (6) month notice in ngeto, all other partners, given that no n@1S%sfeciied in the certificate for the lun ofthe contribution oF forthe dissolution ofthe pelesie. xe Boe whan digi partner may have i Contributions St abitiés.9f the partnership have not imited-partner would otherwise be“; return. pt his contribution (Clit Le oes ‘art Sashae & poe} NEY Int of Lifhited’ Partrer to Cash in Return for * ES ipution (CIVIL CODE, Art. 1857) ‘Rille: Alifted partner, irespective of the“ Joie cools i tion, has only the right to able Transactions of a Limited Partner ssacting other business with the partnershi 2Receving a pro tala shore of the partnership assets with the general creditors if he is not also a ‘general partner; and 3.Granting loans'to the partnership (CIVIL CODE, Art. 1854), Reason behind allowed transactions: The felationship between a fimted partner and a partnership is not based on trust ard confidence (PINEDA, Partnership, supra at 223). Note: In transacting a business with the partnership as a non-momber, the limited partner is considered a nor-partner creditor (DE LEON, Partnership, ‘Agency and Trusts, supra at 300).1.Receiving or holding as collateral security any partnership property; or 2Receiving any payment, conveyance, or release from liability if the partnership assets are less than its liabilities (CIVIL CODE, Art. 1854). Reason behind the prohibited transactions: To Prevent illegal competition between the limited partner and creditors of the partnership for the assets of the partnership (A.T.E. Financial Services... Inc. v. Corson, 268 A. 2d 73, July 10,1 970}= = fe partnership credito absolute, there “is Partnership assets Partnership liabilities te general oF limited parnststO Agency and Trusts, supra. a WT 1. ead Preferred Limited Pann Preference over one orn 5d tind ba or nade by agreement of all parters 45 Stated in the certificate as to the: “TA, 1.Return of contributions; i) 2.Compensation by way ofincomp; 1s a 3.Any other matter (CIVIL. cote fe rt, 16 BRS Note: In the absence a, sttorien certificate, even if there iskarl gan limited partners. shall. stark al respect of these matters ( Agency and Trusts, supra at 30% Liablities of a Limited Partner “<¥ General Rule: A limited partner is fot‘ ‘general pariner (CIVIL CODE, Art. 1848) Exception: If he takes part in the control°éf the business (CIVIL CODE, Art. 1848), _ which contemplates active participation in the business of the partnershi As limited partners they are not principals in the transaction of a partnership, their liability, a3 a rule, is to the partnership (CIVIL CODE, Art, 1858), not to the creditors of the partnership. 1 bility 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 (CIVIL CODE, 1858 par. 1). % ee ‘partners : Violation othe ition wali sfiseto thes < prejidies, Presumption thaf,application will result in outright deprivation of the client's liberty or property; and ‘5. Wirnuhe iteroste of sticp sp seguir (Air Phi 7 Wimalional Busipdss Aviation Services G3; Soptomber 9, 2004). 7 fet wittt apparent authority as One,who elathes anot ~"his-dgent;-and-holds ini Gat to the public as such, cannot be’ permitted'to'deny the authority of such person in dood fly, and Ip the honest ele thal he is what he appears) to“be (Cuison v. Court of Appeals, G.R, No, 885397 October 26, 1993). Estoppelio Deny’Agendy 1.£stoppelof agent one professing to act as agent may be estopped fo deny agency both against the ptincipal, arid third persons. alAsio Sgenl “if Reknows thal another is acting and Spat, Abufals to repudiate Ns acs oF “Bepepts tne behets of them E ee to subS6éit* to estop him, he must have jarged with the knowledge of the < Be ct Sent be see BeScion ard twins of apeerent af 5 Gee ‘agent and sub-agent LAF third persons — A third person, having ith one as an agent may be estopped to Set the agency as against the principal, agent, or third persons in interest. Ho will not, however, be Secyed ware’ bs ae ‘aneasun) orn ie contract made with the unauthorized agent before receiving any benefits thereunder. 4.Estoppel of the government — the government is neither estopped by the mistake or error on the part of its agents. But it may be stopped through affirmative acts of its officers acting within the ‘scope of their authority. (DE LEON, Partnership; Agency and Trusts, supra at 385). Hospital Liability The applicability of the Doctrine of Apparent Authority in the field of hospital liability has been upheld in Irving v. Doctor Hospital of Lake Worth Inc. In this case, it was said that there is no rational basis for excluding the concept of apparent authority, from the field of hospital liability. In cases where itPARTNERSHIP, AGENCY AND TRUSTS can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that the pationt has accepted treatment from the physician in the reasonable belief that it is being tendered in behalf of the hospital then the hospital will be liable for the physician's negligence (Irving vs. Doctor Hospital of Lake Worth, Inc, 415 So.2d 55, July 8, 1982). Oe ae ee nee ae crn There is no-agency. at all, but the Sorte assuming ostensible, although teal, authority represent another ‘An apparent agent has |" none of the rights of an) >t yo] agent, except where | .§ i the principal's conduct ‘or representations are such that the agent Feasonably believed that the —_peincipal intended him to act as agent in the matter. Should be restricted to | cases where authority is not real but apparent. at 563) Notice of Agency (CIVIL CODE, Art, 1873) 1.By special Information 2.By public advertisement Manner of Termination or __Rescission Notice/information or advertisement had been rescinded in the same manner it is given (CIVIL CODE, Art. 1873). General Rule: Agency is presumed to be for compensation (CIVIL CODE, Art. 1875). Exception: Uniess there is proof to the contrary. The promise of a gratuitous agent (agent without compensation) is ordinarily not enforceable but the fact that he is such has no effect upon his rights and pt Guties with reference to the principal and third . Persons. However, the fact that the agency was for compensation or not, shall be considered by the court in determining the extent of liability of agent for fraud or negligence (CIVIL CODE, Art. 1909). 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. spen@sBgner! Agent — one employed to transact all he ‘busliess of the principal, or all the business of a _e BaticUlar kifdGr in a particular place, or in other “Words to: do"ilacts, connectedwith a particular trade, busitiéS€'br employ in eae, Parteuiar Agere DI autnorized to act tions, or to do one ‘act upon a particular DE LEO i Pafinership, Agency and 1 405) i a Authorized to do only! Jat ache opecieg sya 2!8_ i pursuance of| I acts" Sit fe Specie SMith particular instructions or! pee Basch asc ein” rato ‘necessarily implied from| the acts to be done rinclpal his principal his pring Binge es ye Py alin a manner beyond of 1 wane hE tePPe Ol outside the specific acts A ren which he fs authorized to |perform on behalf of the| principal Py 3 [Usually involves a single transaction or a series of| "transactions not involving ‘continuity Ene non Ranken Satoment “of “principal lwith respect to Jagentsauthorty. woud |r of agent: rida lordinariy be regarded as} ee ladvisory only PCE ee eT [Apparent authority does|Mere revocation i not terminate by the|effective to terminate the| Imere revocation of his|authorily as to third authority without noticepersons because —the| lothe thid party thd person has a duty to instructions. = Conducts a series of! |transactions involving ai continuity of service, San BEDA COLLEGE OF Law 2015 CenTeauizeD BAR Openarions 423inquire (at 405-465} Note: Agency comprises all the business of the principal but couched in general terms, it is limited only to acts of administrations (Dominion Insurance Corp. v. Court of Appeals, GR. No. 129919, February 6, 2002) Acts of Administration ‘Acts of administration are those which do. notimply= the authority to alienate (DE LEON" Partrietship: Agency and Trust gyre at 406) Peay Power of Attorney: An instrument in acts or kinds of acts on'BahA of the-principalin(ldcat 378), * wd ; n ‘Att. 1878 does not state That the spacial iautiictity be in wring (Id. at 415). owejer, should Ine 1 require that such special authority Gein witing:in | exc for he SPA oh ein coract te vad or enforceable, such requirement becomes absolute and indispensable. wt wi Note: It need not be notarized’ excopt where ills 2 2 FEBS 2, tavcredte opcapioy real ights over immovecie executed in a foreign count aut Sccordance withthe Rules ofgurt) : Se fy civil CODE, Instances Where SPA Is ‘Art. 1876) (PECWEM-LLB-BOCARO)3) a2 72 14, To® Rati 4 To make Payments as are ea Wponsideed gg ane as acts of administration; 270. Effect novations ‘which ‘pULSHJENd to obligations already in existence at tite ghe-agtnoy was constituted; ae 3.T0 Compromise, submit questions to arbiffation, renounce the right to appeal from a judgment, waive objections to the venue ef an action of abandon a prescription already acquired; 4.70 Waive any obligation gratultously: 5.To Enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously oF for a valuable consideration. Note; The authority of an agent to execute a contract of sale of real estate must be 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 he did execute. The express mandate required by law to enable an appointee of an agency (couched) in ‘general terms to sell must be one that expressly mentions a sale or that includes a sale as a SAN BEDA COLLEGE OF LAW 424 2015 CENTRALIZED BAR OPERATIONS. nstunent taf vivien one edt Bat EB Bip epi anya mop gnj cies = C} re eee ra ir Woe OFLA . exeppt customary ones for charity ES Sprtosesmiade to employees in the business 6, Ta Bing the principal ih a contract of partnership; Af Be i necessary ingredient of the act mentioned. For the principal to confer the right upon’an agent to sell steal estate, a power of attorney must so express. the powers of the agent in clear and unmistakable language. When there is any reasonable doubt, that the language so used conveys such power, no such construction shall be given to the document (Cosmic Lumber Corporation v. Court of ‘Appeals G.A. No, 114311, November 28, 1996). Absence of Written Authority , thas, Been. repeatedly held that the absence of a ‘written authorty’to sell a piece of land is /pso jure, “Suvoidieteclsely, to. protect. they interest of an unsuspecting ojner from jbo” prejudiced by the Ep artes ctf thde-YPanud v. CA, GR. f Kee 5) managed by the agents; 7.70 Loan ot Borrow money, unless the latter act be igent-alid iadispensable for the preservation of 13 things. which are ryder administration; ¥ @ ef real property to another person’ for ‘more than che year, ~" ‘9.To.Bind::the principal: to render some ‘service * without compensation ‘Dbiigate the principal as guarantor or surety; ‘ebudiate an inheritance; gnize obligations contracted i gency; and Any Got det of strict dominion, f i 5. S226 pron win whom he eget wishes to itracbon behalf of the principal may require the tation “of the power of attorney or the instructions as regards the agency. Private or Secret orders and instructions of the principal do not prejudice third persons who have relied upon the power of attorney or instructions shown them (CIVIL CODE, Art. 1902). Scope of Agent's Authority ‘The scope of the agent's authority is what appears in the waitten terms of the power of attorney. While third persons are bound to inquire into the extent or scope of the agent's authority, they are not required to go beyond the terms of the written power of attorney. Third persons cannot be adversely affected by an understanding between the principal and his agent as to the limits of the latter's authority. {In the same way, third persons need not concern themselves with instructions given by the principat to hhis agent outside the written power of attorney(Seay Enterprises, inc. v. Court of Appeals, ot al GR No. 129039, September 27; 2002}. SPA to sell does not include the power to mortgage; and vice versa. SPA to mortgage includes the power to allow the extrajudicial foreclosure of the mortgaged property (CIVIL CODE, Art. 1879). A forged special power of attorney cannot be the basis of a valid mortgage contract (Lao v. Vilnes- Lao, G.A. No, 126777, April 29, 1999) SPA to compromise goes not aiut to arbitration, cnn ar 1a Effect of Lack of 2 r@ One is Re Gyeaeig ad ‘from th Effects of Agent's Act 1.With Authority + “a.ln principal's name — valid; principal is bound; ‘agent not personally liable unless he bound himself (CIVIL CODE, Art. 1897): bln his own name — Apply Art. 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. “RWS AUIhoxity ni, * printipa unauthorized & Ig but may, be-xratified by the ich cashagay be. validated fining (CIVIL CODE, name — principal,“i is UNENFORCEABLI COLLEGE OM UB AMma IEE (n cive of sao, When A Principal is Bqutd By ACLS! Agent: ‘whether of not thy ‘matter belongs to the ‘1.Agent must act within Iezscope tof his” ear 2 sipeil Providdd> shratat the time of delivery, (CIVIL CODE, Art 1803), | 2.hgent must actin behalf Ne vain | ote: The limits of the agontSGuthahit Waal ot'be considered exceeded should it tiave Been peHormies than that specified by him (az Ar. 1882)» Authority Aarts tho power of the je al rolations ofthe principal by dete Sone in aocorsance with the principal's manifest ate or onsen to Nin (DE LEON, Partnership, AgQ Trusts, Si) at 428) When A Principal ts NOT Bi Agent: 1.agent acts without or beyond thé ‘authority in the principal's name; and 2.Agent acts within the scope of his “sys his own name (Undisclosed Principal), ‘except when the transaction involves a thing belonging to the principal (CIVIL CODE, Art. 1883), Kinds of Authority 4.Actual, 2.Express; 3.implied; 4-Apparent or ostensible; 5.General; 6.Spocial; and 7.By necessity or operation of law (DE LEON, Partnership, Agency and Trusts, supra at 430 to 431). a manner more advantagéous t6 the principal : ine egal =) BR)> tha*agent’ can legally transfer the ownership of he thing: Othenwise;=he will be held liable tor breach of jwarranly-abainst eviction; Art, 1883 does NOT pon 7 Geeaions Finer Oia 1s Bound By The Acts SOL Tee dose Bales Latter’s Powers: (DL- acts have contributed 10 ‘Deceiyé third befgons; ‘2:Whesé the Limjtatiohs upon the power created by hi? could (nbiéfisve been“known by the third Diy iAncBal nas placed in the hands of the stiumients signed by him in Blank; * principal has Ratified the acts of the Eagent{DE LEON, Partnership, Agency and Trusts, Neugea at 436) Doctrine of Agency By Necessity By virtue of the existence of an emergency, the authority of an agent is correspondingly enlarged in ‘order to cope with the exigencies or the necessities ‘of the moment (Id. at 503). ~ Requisite: 1.Real existence of an emergency; 2Jnability of the agent to communicate with the principal; 3.Exercise of the additional authority for the principal's own protection; and 4.Adoption of fairly reasonable means, premises duly considered (Id. at 503). Note: Actually, agency can never be created by necessity; what is created is additional authority in SAN BEDA COLLEGE OF Law 2015 CENTRALIZED BAR OPERATIONS 425fan agent appointed and authorized before the purpose of profiting from the transaction (PINEDA, emergency arose (Id. at 503).). + Partnership, supra at 321), Kinds of Principat: 8.Not to Loan to himself if he has been authorized to 1. Disclosed lend money at interest (CIVIL. CODE, Art. 1890); 2. Partially disclosed Exception: When the principal consents to the 3. Undisclosed ((d, at 437). same (CIVIL CODE, at Art, 1890). ‘Agent May Lend Money to the Principal: But OBLIGATIONS OF THE AGENT the interest he may charge cannot be higher than smrwenhe,current rate of interest = . ay : (Reason: The pineal will suffer no. prejudice General Obi etlgns of an Ages (aoe) da fa Te 4.70. Act. with, eis faith oe ‘oyally i Z furtherance of print uote a fee an cong op et transactions and to 2.70 Obey all Sag pajever he may have principal within’ tose aa Leite een 1891); 3.To Exercise reasonabld iss je. aa re (ld. at 447 to 449). Nese ‘fF Stipulation || ae from Duty to k “Account is Void Specific Obligations of sichael to. ede ipal: Reason: It is contrary,to public policy (CIVIL (CAFOA-DALAR-PAID-BiR) ~. A © CODE, Ait: 15306)... Fin ng ne +e 1.To Garry out"the ageney-whiel 2 (CIVIL CODE, Art. 188: "The ‘agent tins an absolute duty to make a full Exception: CIV. CODE, Ait 4888), “disclosure: or accounting to his principal of all 2, tgwenerneseyssdvansstioié ont fate facts hat may have 2.To Answer for damages: ise throuigh his ‘fons <7 2 relevance” yiith the agency (Domingo v. performance the principal thay gece 8 Sony ipgo {G.F.Ne, 30573, October 28, 1971) CODE, ar. 1884), =) vaarateg * Be © iain To Account NOT Applicable: (SLIM) "Gage egios of Solo nae 8YeWpere angight-of Lien exists in favor of the jot also applicable. 3.To ‘Finish the business "i death of the principal sh3il danger (CIVIL CODE, Art. 1683 Po en s ‘The legant-may, under At1914, retain 4.To Observe diigence of a go #7 siédgeithe-things which are the object of the in the custody and. preservat Gheiicy-Unti the principal effects the forwarded to him by the owner in gears ‘and pays the indemnity Snagoncy, unll an agom f.opported” Ee ided in Articles 1912 and 1813. CODE, Art. 1885); yh lawyer shall have a lien upon the funds, Jdocuments and papers of his client and may 5.To Advance the necessary funds should there be retain the same until his lawful fees and ‘a stipulation to do so (CIVIL CODE, Art. 1886); disbursements have been paid (RULES OF Exception: The agent is not bound to provide the COURT, Fule 138, Sec. 37) funds if the principal is insolvent. Neither would the rule apply if the agent or broker had Informed the principal of the gift or {6.Not to carry out the agency if its execution would onus oF profit he received from the purchaser manifestly result in loss or Damage to the principal and his principal did not object thereto. (CIVIL CODE, Art. 1888) d.The duty embodied in Art. 1891 will not apply if the agent or broker acted only as a Middleman 7.To Answer for damages if there being conflict with the task of merely bringing together the between his interest and those of the principal, he vendor and the vendee, who themselves should prefer his own (CIVIL CODE, Art. 1889); thereafter will negotiate on the terms and conditions of the transaction (Domingo v. Remedy when an Agent Wishes to Prefer His Domingo, G.R. No. L-30573, October 29, 1971). Own Interest: He must timely renounce the agency, provided his renunciation is not for the Note: An agent who takes a secret profit is guilty of breach of his loyalty and forfeits his right to SAN BeEDA COLLEGE OF LAW 426 2015 CENTRALIZED BAR OPERATIONSPARTNERSHIP, AGENCY AND TRUSTS collect the commission. It does not even matter if the agency was a gratuitous one, or that the principal obtained better results, or that usage or custom allows a receipt of such bonus (Domingo v. Domingo, G.R. No. L-30573, October 29, 1971). No co-ownership is created even if the ‘commission of the agent is settled (U.S. v. Reyes, GR. No. 12743, August 25, 1917). to the details of the execution of the agency while the latter refers to the general parameters or extent of the agency (PINEDA, Partnership, supra at 318 to 319). 13. To Inform the principal, where an authorized sale of credit has been made, of such sale (CIVIL CODE, Art. 1906); 14. To Distinguish goods by countermarks and the — merchandise respectively An agent has both physical and jug jgnate possession but he may not set om ont! ? Jing.to each principal, in the case of a Possession asragaipst that of the pala ig “ eieymest gent who handles goods of the agency is term 9572, July 31, 1 (Guzman ve Report distinguis] Report imports a Accounting means. jing of administration or agengy (DE LEON, Partnership, Agency ahd Trusts, supra at 471) * i T Hes no "independent Has independent and’ autonomous right. iyment fo" of the substitute appointed by hit Art, 1892) Sass 11. To Pay interest on funds he has appliod“{a"Fis ‘own use (CIVIL CODE, Art. 1896); Two cases in contemplation of the rule: a.The sum belonging to the principal which he applied to his own use; b.The sum that the agent still owed the principal after the expiration of the agency (Mendezona v. C. Vda. de Goitia, G.R. No, L-31739, March 11, 1930). . 42. 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 (C/VIL CODE, Art. 1887); Note: Acting in accordance with the instructions of the principal is different from acting within the scope of the agent's authority. The former refers i me AN BED Seager ich eotanee SEEMS { paytheht to hay am jd mark, which belong to different MECODE, Art. 1904), ion, should he receive 3 commission (CIVIL anheZkin DA (cl iss tt ae bl 16. To Indemnity the pfincipal for damages for his failure to greet the;crédits of his principal at the timé.that they become due (CIVIL CODE, Art. 1908), and - ‘ ATS To" be. espe for fraud or negligence WCIVIZCADE, Art? 1909). bill yehce of a Good Father of Family \f& préen'Who decifhes an agency is 2till bound to obsgiye dfigance df good father of family. (CIVIL Se 1885) ye? Sub,gent.( yatison se ‘or appointed by an agent as his ith in the performance of an act for pat. which the agent has been empowered (DE LEON, Partnership, Agency and GSts,Supra at 473), General Rul (Id. at 473). : An agent may appoint a sub-agent Reason: For convenience and practical ulility (Jd). Exceptions: 4. When prohibited by the principal; 2.When the work entrusted to the agent to carry out requires special knowledge, skill or competence When so Exception to the 2" exceptior authorized by the principal (id. at 474). If an agent, through his own sub-agent buys from the principal, the principal is not required to fill such orders unless said principal ratifies the sale after he has full knowledge of the facts of the case (Barton v. Leyte Asphalt, G.R. No. L-21237, March 22, 1924) SAN BEDA COLLEGE OF Law 2015 CENTRALIZED BAR OpERATIONS 427Reason: An agent is not allowed to. bind the principal by selling merchandise to himself elther directly or indirectly (Barton v. Leyte Asphalt, G.R. No. L-21237, March 22, 1924). Instances when Agent shall be Responsible for the Acts of the Substitute: (CIVIL CODE, Art 1892) 1.He is not given the power to appoint; and 2.He.was given such power but without designating It solidarity has been agreed upon, each agent Is responsible for the: 4:Non-fulfilment of the agency, and 2.Fault or negligence of his fellow agents; Exception: When the fellow agents aoted beyond the scope of their authority (CIVIL CODE, Art. 1895). Note: An innocent agent has a right later on to recover from the guilly or negligent agent (CIVIL the person, and the person appointed at2S.aracuGQQE, Art 121712). notoriously incompatentor Recher arb ie fee Reason: This AX use by tiie ayentuotéthe: EON. Partnership, principal's confid ELEC Aas it SAN BERRA : oie tule Oberland Otstlowers Note: In these two bing an acon agate sta des to the obligations thal ater aS a ‘contracted under the substitution (21 a Are 1899) We Effect of Death of Prinegaicgent | the It will dopend from whom the astha agent was derived: ia ‘ve ‘re te pines = Ber he sare him does not age is ar th of th appointed 2.From the agent who appointed him e agent terminates his Salthoriy ¢ Partnership, Agency andFrusts} ot 78) Y Etfécté of Substitution: Sh ) ee ae 1.Substitution expressly a) al & xa substtte chet be woe OES 2.Substitution authorized a.The substitute was designated, has the effect of releasing th responsibilty unless the perso notoriously incompetent or insolvent. b.The substitute was designated by the pri absolute exemption of the agent 3.Substitution not authorized, but not prohibited — if the substitution has occasioned damage to principal, the agent shall be primarily responsible for the acts of the substitute (Serona v. CA, G.A. No, 130423, November 18, 2002). Joint Agents Agents appointed by one or mére principals under such circumstances as to induce the inference that it was the principal's intent that all should act in conjunction in consummating the transaction for which they were appointed (DE LEON, Partnership, Agency and Trusts, supra at 478). Liability of Joint Agents Their responsibilty 1s joint; except if solidarity has been expressly stipulated (CIVIL CODE, Art. 1894). dog SANGEDA COLLEGE OF Law 28 2015 CENTRALIZED BAR OPERATIONS pened ee iti eres 3 hy eee Instances. Wher Agent may Incur Personal “Liability:{FOLWEEP) (CIVIL CODE; Art 1897): 4.Fraud and negligence < gett peje, CODE, Art. __Exceptic BVecsract Involves things =P belongiag t6 th he ba {CIVIL CODE, Art. 1883, 1: BWibn.a parson Seks'ae sae ‘an agent Without authority 1 Sot withouta principal, Agent Exprey binds himself othe aoa fatty of the agent can be en adfither security in favor of the pier a) 385 not affect or preclude the liability of 0 hs repel th are liabio, ci Gisass his authority; fe: The contract will bo void. Nonetholess, the agent will be liable if he undertook to secure the principal's ratification (CIVIL CODE, Art. 1898). Exceptions: a.When the agent has given the third person sufficient notice about the extent of his power to put him on guard, b.When the principal ratifies the act 7-Acts of the agent Prevent performance on the part of the principal. ‘Scope of Agent's Authority as to Third Persons, (CIVIL CODE, Art. 1900) Includes not only the actual authorization conferred upon the agent by his principal, but also that which ‘was apparently or impliodly delegated to him.SS PARTNERSHIP, AGENCY AND TRUSTS 4.Where authority not in writing — every person dealing with an assumed agent is put upon inquiry and must discover upon his peril, if he would hold the principal liable, not only the fact of the agency but the nature and extent of the authority of the agent. Note: If he does not make such inquiry, he is chargeable with knowledge of the agent's authoriy, and his ignorance of that authorty wil not be any excuse (Pineda v. CA, GAN 2 Soa 27.09 gy 2.Where authori required to indice vrtten power ofa than thd”terms of the, Methods -of Broader Authority: (UNDIE) 1.By Usage and custom Exceptions: (V-DEC) © aLwhere itis sought’ to. Way tie tend lof.an express authorization © ( eee “b.Where itis. sought thereby, to Disee Lig legal requirement enacted for-the principal's benefit c.Where itis sought to vary dn Essential qialty of the agency relationship. and? .Where it is sought thereby,tq changelacrue of law or as to dispense witli formality tequired by law (DE LEON, Partiefahip, ene Trusts, supra at 502) 2,By Necessity the principals Brotecton: | SNC b.The Emergency really exists; c.The means adopted are Reasorfable, circumstances; and d.The agent is Unable to communicate principal (Id. at 503). 3.By certain Doctrines ‘a:Of apparent authority; b.Of liability by estoppel; and . Of ratification 4,By Implication; or 5.By the rule of Ejusdem generis (Id. at 502). ‘Third Party is Liable toward the Agent: (CBIT) 4.Where the agent Contracts in his own name for an undisclosed principal, in which case, the agent may sue the third party to enforce the contract (CIVIL CODE, Art. 1883); aN yriting — sub seen we SAN E a Restcthaladats EE EEptlond VY at nee a a.The agent's enlarged ok der 3 2.Where the agent possesses a Beneficial intorest in the subject matter of the agency (CIVIL CODE, Art. 1907), 3.Where the agent pays money of his principal to a third party by mistake or under a contract which proves subsequently to be illegal, the agent being ignorant with respect to its illegal nature; and 4.Where the third party commits 2 Tort against the ‘agent (DE LEON, Partnership, Agency and Trusts, supra at 490) {'Prizelpai's: Responsibility Where Agent Acted ith improper MGtives aged Se General Piste of mph Lmao. BEDA Ve > HN Nin eet hemomrtiendina for his private benefit’ Where, owner is sesking recovery of personal ‘property of which he has.been unlawfully deprived (Dizon Wi Suntay, G.Ft’ No. 130817, September f ipal's/ Responsibility for Agent's i Mlatspresentation: + ry BREE peat thant ~ ec ‘feast ‘Stacy ¥ The agent's position faciitates “stheconsummation of the. fraud from the point of 1 SSiew/ot the third person. “QiBeyond the™scope of agent's authority — pel Naotbound but he cannot take i divantage Di the contract m8 For the yagent’s own benefit ~ If itis within the { extinguishes the agency,.is:Valid anid shi hal Ee tly t Seceutn a eect eee nae contracted with him in oot ith (cle ‘CODE, Art. | 1931). ee Digsotution of Firm or Covpotation SE This is equivalent to death'of-a fatural 575)” ‘Accomplishment of Object 8 PUrBOse a. It foso facto terminates the 2 ” wie He? expressed to be irrevocable. Anagayfo}may al terminated by the non-accompli cr purpose within @reasonabe it~) Expiration of Term 4. Time is specified — upon the. arrival of t! ‘agreed upon. 2.Time not specified — at the end of a reasonable ‘ime. Either party can terminate the relationship at will by giving notice to the other. 3.Period implied ~ the period may be implied from the terms of the agreement, the purpose of the agency, and the circumstances of the parties (Ibid ai 578). Loss or Destruction of Subject Matter General Rule: Agency is terminated (ibid at 587). Exception: Lif it is possible to be substituted by another. 2.Partial loss or destruction does not always terminate the agency. It may continue in existence ws oneot nadie ota Partnership, AGESand, ER SEE eeet EQELEGE reso ped gel Pte a apna ite DEP Terminate upon change of circumstances ifthe oma BS ‘Excep! Sire bilateral contract depends upon it; ial ‘Gitcumstances are restored within a fe petiod of time, reasqaatlé doubts as to whether Jd destce.hizp to act, his authority i Mibbes resonatty tay rguthority to act will not reasonabl th pen Kris. the principal is aware of the change Sand) oes gt give Kier new instructions (/d. at cipal eGeneral. Rule: ager is revocable at will of the Ea ogre tro he overan a Soot aR or wiifcit reason (CIVIL CODE, At ee fiohs: sult Zove, Art. 1927) EF pos fo emieeG hie mursty-s09 Gyiagent as 9 sort of inducement. to Sfqhim from eventual loss (PARAS, Civil ume V, Supra al 820). {ig the means of fulfiling an obligation already \racted; Mustration: J is indebted to G for the purchase price of a fountain pen. But J in the meantime has no money. So he appoints G as his agent to collect from R some money which R owes him, which money will in turn be applied to the purchase price of the fountain pen. 3.1f partner is appointed manager of a partnership and his termination is unjustifiable; and 4.If it is created not only for the interest of the principal but also for the interest of third persons, Who have accepted the stipulation in their favor 5.When the agency is coupled with interest (DE iow Partnership, Agency and Trusts, supra at SAN Broa COLLEGE oF LAW 2015 CENTRALIZED BAR OPERATIONS 435Note: Agency coupled with Interest may be revoked for a just cause (Id. at. 606) Uability of Principal for Damage Caused by Revocation 1.Where agency is constituted for a fixed period — principal is liable for damages occasioned by the Wrongful discharge of the agent before the expiration of the fixed period. 2Where no time is fixed for continuance of agency = principals a liberty to terminate that wil subject nsuificiont. ae z Tigh Vote only to the requirements of good fa Brimo & Co., No. 15623, Se 1921). NOTICE OF REVOG, To the agent - Expr always necessary. If knows, or has reason his authority has been-Y8 there is sufficient notios. (OE, Agency and Trusts, supr@-atS30) 3” gem 13, facts jngicatir ated? or suspended, Noto: A revocation withoUt- ole td tel addnt not render invalid an acttdone’in sere] the sore (sa To third persons — notice.by, cali ae (1. at 448; see CIVIL. CODE, Alt 1873) 5 Principal may-also be held™lig6 persons who never dealt with the revocation, if they, in large, are justified in believt continues to exist. (3 Am. Jur. 2 Kinds of Revocation: 1.Express revocation 2.\mplied revocation Implied revocation may be effected: 1.By the act of the principal in appointing another agent for the same business of transaction (CIVIL CODE, Art. 1923); 2.By the act of the principal in directly managing the business entrusted to the agent (CIVIL CODE, Art. 1924); or 3.By the act of the principal in subsequently granting 2 special power of attomey as regards the same business “to another agent, where he had previously granted a general power of attorney to ‘one agent (CIVIL CODE, Art. 1926). Note: A special power is not revoked by a subsequent general power of attorney given to another agent, unless the latter refers also to the act authorized under the special power ‘SAN BEDA COLLEGE OF LAW WBE Sicie Pceseas es cs Cree: ona aa i, Partoership, © (TOLENTINO, Givi Code Volume V, “supra at 436). Effects of Revocation to Third Persons: 4.If the agent is authorized to contract with specified persons, revocation will not prejudice such third persons’ until notice is given to them (CIVIL CODE, Art. 1921); 2.ff the ‘agent is authorized to contract with the public in general, publication in a newspaper is Bah fation of Agency by Agent at als Hs the powey Be = subject-only to “a te Principal. If igs oF aaa joke the agency ictual obligations ScAO contract existing ntract is not for a it is terminable by innership, Agency and nelle: won by the agent: na Be ia otice Toit oe | parvo SS wale oe Note: in the absence of any'r zl na : | Ne eveg +10 4 a rp wiseyate’| Gmcletiy placing we carts me the 5 {Sv8 detriment to himself (CIVIL ie aT the principal; }dut just cause, agent must sipaj_should the’ latter’-suffer y recat the withdrawal unless the “pase his withdrawal from” the “agent, even if he should withdraw from F a valid reason, must continue to act pal has had reasonable opportunity to er necessary steps to meet the situation (id at A legal relationship between one person having an equitable ownership in a property and another ‘owning the legal ttle to such property, the equitable ownership of the former entiting him to the Performance of certain duties and the exercise of certain powers by the latter for the benefit of the former (DE LEON, Partnership, Agency and Trusts, supra at 619). Note: Trust implies confidence in a relationship,‘Trust Is based on equity Trust v. Contract, Itls founded on equity such that it cannot result from a contract formed for an illegal purpose. Neither may’ + a trust be created for the purpose of evading a legal prohibition (Delvao v Castel, G.R. No. 121906, December 25, 1968). lAways involves]A legal obligation based lownership, embracing alon an undertaking set of rights and duties|supported by a liduciery in character.{consideration, which obligation may or may not be fiduciary in| character. Mlustration: There cannot be a trust created for the Purpose of obtaining homestead patents, in favar of @ person already disqualified to obtain additional homesteads. Concept of Trust (Fideicomisso) *.’ Itis a fiduciary rel ile created BY by law whore rai ee tho PUSSY has the title is vested mete There zis a transfer of! saa fe 08 wo os te ldgposttion of both legall equitable ownership| pt in cases of gis in} (rustee). The truste: benefit of another ( ‘tustor himself or a thi S a st ary of a “el Note: The trustee is not an’agent of the trusf state or of the cestui que trust but He acts for-hiiselfiin fee 4May.s 53? agn the administration of tnettust estate, ai : jh Pees 4pertormance a of j subject to the torms of the taist'and the'idw f trdsts t. (OE LEON, Partnership, Aganey and Trusts HA epte| The donee mist comply at 624) ~¥, | i 5 Blwith the. legal . requirements in snee—in nee accepting donations | ree (Gtipalations Ce pI rte | fereliciary of a trust{A creditor has merely a Neficial interest|personal claim against) ty. the debtor. Snir aes [There is a fiduciary|There is no fiduciary relationship between alrelationship between a ltustee and a beneficiary. |debtor and creditor. | Exception: A trustee has Been reateeheare agent of tho benefice ofthe tus at least we Certain purposes, such gsatipt) the ou oe Imputin to the beneficiaries ol tia rust ole Glen to the trustee. “EC? \ ay oars Conia i eS) {slr onanta ronagip ee rue — the prc wo nae Wo ba peat ire bee wah cttan fone aanbies iia a.Beneficlary or the cestul que trust iho has the oqutable terest Ine moma njoys the ber of admiration by he Ha ay be tal parton 4 gat edly. The trstor roy eatalsh'e bust with Ansell os te beneficiary (usual case). Note: The trust may provide for more than one beneficiary (Id. at 622). Trust v. Stipulation Pour Autrut Trust Distinguished from Other Relations What distinguishes a trust from other relations is the separation of the legal fille and the equitable ‘ownership of the subject property between two or ‘more people (id. at 621). Tt can arise only by virtue of a contract and ever by operation of Nt can arise either by virtue of a contract or by legal provision. Could either be a Property, whether real | specific property or or personal, including | other things ‘an_undivided interest SAN BEDA COLLEGE OF LAW 2015 CenTRALIZED BAROPERATIONS 437therein as in ¢o- 7 ‘ownership or choses in action ‘Always express and must be accepted by the third person before the grant stipulated in his favor “is mutually revoked by the parties Either express or implied. It continues to exist unless repudiated. Trust v. Trust Receip The night. to beneficial enjoyment a property but the title to which is ves! in another. j Fiduciary enjoyment of invaives ga ery a property a op mere edo + firtahcing Tier ‘and [retail Trust Property The property so held is referred to as the property’ or “trust res”, which is the subject mg the. trust (DE LEON, Partnership, Agency and Trusts, supra at 623). Property Must be Existing It must consist of property actually in existence in which the trustor has a transferable interest or title although it may, as a rule, be any kind of transferable property either realty.or personalty. But it cannot be a mere expectancy without right or interest or a mere interest in the performance of a contract although such interest is in the nature of a property right (54 Am. Jur 44). Owned by Two Persons The trust property is owned by two persons at the same time, the relation between the two owners being such that one of them is under an obligation to use his ownership for the benefit of the other. (DE SAN BEDA COLLEGE OF LAW 438 2015 CENTRALIZED BAR OPERATIONS: LEON, Partnership, Agency and Trusts, supra at 623). The ownership of the trustee is a mere matter of form rather than substance, and nominal rather than real. The trustee is not a mere agent, but an owner (1d. at 624). Note: A trust is not void for indefiniteness if by its terms the whole property will go to beneficiaries who 2pryupictemined but wll be delernined at the .the trust, at the latest It is not Hioahreaton of a tust thatthe costa {fcthened or even Re Jorensience at ne he viewpoint of the creative nto existence, it may be es P prose rush Proj by tho intention of the > dedston of of 3. is created by the direct i aigiveyacks Ot jhe partes, by some writing, <4, Weed fill orFbY_Avords, ether expressly or aay ay. Jng:an intention to create a trust. rl istor and trustee; trust Res} and Mthplied trust - one which comes into being by operation of law. This may either be: {Resulting trust — one in which the intention to creale a trust is presumed by law to exist from the transaction and facts of the case; of fi, Constructive trust - one imposed by law + itrespective of and even contrary to the intention of the parties. It is designed to promote justice, frustrate fraud and prevent unjust enrichment (Id. at 626). Reason: No one shall be unjustly enriched at the expense of another.