2018 PRELIMS

I. Modified True or False

1. FALSE – Partnership commences from the moment parties entered into such agreement.
2. FALSE – Share in the profit of the business venture is not a conclusive evidence to be a partner.
3. FALSE – Not all admissions or representations is evidence against the partnership.
4. TRUE
5. TRUE
6. TRUE
7. FALSE – Spouses may enter into a particular partnership.
8. TRUE
9. FALSE – Article 1813 provides that the transfer by a partner of his interest in the partnership does not cause
the dissolution of the partnership. The reason behind this is that the interest or the equity interest of the partner
is his own property which he can consequently, dispose of. The transfer of the interest does not make the
transferee a partner.
10. FALSE – It depends. In the case of an industrial partner, he is generally not liable for losses.
Article 1797 provides that the share of each partner in the losses would be according to their
agreement. If the agreement only provides for the distribution of profits, such basis shall be used for
losses. In the absence of agreement, losses shall be divided proportionately according to the partner’s
contribution.
II. Modified True or False
11. FALSE – Partnership commences from the moment parties entered into such agreement.
12. FALSE – Share in the profit of the business venture is not a conclusive evidence to be a partner.
13. FALSE – Not all admissions or representations is evidence against the partnership.
14. TRUE
15. TRUE
16. TRUE
17. FALSE – Spouses may enter into a particular partnership.
18. TRUE
19. FALSE – Article 1813 provides that the transfer by a partner of his interest in the partnership does not cause
the dissolution of the partnership. The reason behind this is that the interest or the equity interest of the partner
is his own property which he can consequently, dispose of. The transfer of the interest does not make the
transferee a partner.
20. FALSE – It depends. In the case of an industrial partner, he is generally not liable for losses.
Article 1797 provides that the share of each partner in the losses would be according to their
agreement. If the agreement only provides for the distribution of profits, such basis shall be used for
losses. In the absence of agreement, losses shall be divided proportionately according to the partner’s
contribution.
III. Modified True or False
21. FALSE – Partnership commences from the moment parties entered into such agreement.
22. FALSE – Share in the profit of the business venture is not a conclusive evidence to be a partner.
23. FALSE – Not all admissions or representations is evidence against the partnership.
24. TRUE
25. TRUE
26. TRUE
27. FALSE – Spouses may enter into a particular partnership.
28. TRUE
29. FALSE – Article 1813 provides that the transfer by a partner of his interest in the partnership does not cause
the dissolution of the partnership. The reason behind this is that the interest or the equity interest of the partner
is his own property which he can consequently, dispose of. The transfer of the interest does not make the
transferee a partner.
30. FALSE – It depends. In the case of an industrial partner, he is generally not liable for losses.
Article 1797 provides that the share of each partner in the losses would be according to their
agreement. If the agreement only provides for the distribution of profits, such basis shall be used for
losses. In the absence of agreement, losses shall be divided proportionately according to the partner’s
contribution.
1
II.
1. Definition of Terms

a) Delectus Personae - No one can become a member of the partnership association without the consent of all
the partners. This rule is inherent in every partnership.
RATIO: This is because of the mutual trust among the partners and that this is a case of subjective novation.
There is subjective novation when there is a change in the parties to a contract. Their consent thereto is
necessary in order to bind them (Albano, 2013).
b) Weak Juridical Personality of a Partnership – “weak” because it can be put as under without need of
formal dissolution process, and by the will of any of the partners or all of them, or even by chance
c) Doctrine of Attributes of Proprietorship - a recognition that a partnership arrangement is in essence a
contractual aggregation of sole proprietors, who come together to form a common venture, each acting very
much a proprietor of the business venture, while at the same time as agents to one another
d) Partner by Estoppel - It is one who, by words or conduct does any of the following:
-Directly represents himself to anyone as a partner in an existing partnership or in a non-existing partnership.
-Indirectly represents himself by consenting to another representing him as a partner in an existing partnership
or in a non-existing partnership.
e) Doctrine of Apparent Authority - The principal is liable only as to third persons who have been led
reasonably to believe by the conduct of the principal that such actual authority exists, although none has been
given.

Essay
2.
a. Yes, Latex can collect the full amount of the check from Mia.
Article 1822 of the New Civil Code provides that when through the unlawful act or omission of the partner in
the ordinary course of business or with the authority of the co-partners, a loss or injury was inflicted to a third
person, the partners and the partnership are solidarily liable. This is further elucidated in Article 1824,
solidary liability means that any one of those liable may be held to pay the creditor.

In this case, it is evident that the act of issuing a bouncing check, which is unlawful in accordance with B.P.
22, was made in the ordinary course of business. The purchase of rubber bands is part of the buy-and-sell
operations of the business venture, JM Inc. Hence, Jack, Mia and JM Inc. are solidarily liable to Latex Inc.
Accordingly, Latex, Inc. may collect the full amount of check from Mia.

b. If I am Mia’s counsel, I would argue that Mia did not authorize the use of check in paying for
partnership obligations. Hence, the issuance of the check by Jack is not in the ordinary course of business or
is without the authority of the co-partner. Consequently, the solidary liability provided in Article 1822 will not
be applicable, absent the above-mentioned requisite. Accordingly, Latex cannot collect the full amount from
Mia since there is no solidary liability to begin with.

3. The agreement between the 2 companies is valid.

Well-entrenched is the rule that corporations cannot enter into a partnership unless authorized by a statute or
authorized by its charter. This is because the corporation would be bound by the acts of other persons other
than their duly appointed officer or agent, which is contrary to its nature that it shall manage its own affairs
and that it was exposed to a risk which was not contemplated by the stockholders when they invested.
However, corporations are allowed to enter into a joint venture. A joint venture is an agreement whereby the
parties shall have a particular undertaking. Joint venture is governed by the provisions of partnership.

2
 In this case, the two companies entered into an agreement for a particular undertaking which is the production
of a noon-time show. Hence, it is clear that what they have entered into is a joint venture which is allowed by
law.

4. Zoren and Carmina is engaged in a sole proprietorship. Their properties as husband and wife was used to
put up the business.

There could be no partnership in this instance as both parties are prohibited to form a universal
partnership. The act of pooling the resources and engaging in buy-and-sell of real estate is one of universal
partnership, and not for a particular partnership.

The latter kind is defined as that which comprises for its object determinate things, and its use and
fruits, or that which takes a particular or specific undertaking or profession. Engaging in buy-and-sell is
not one of those contemplated for a specific undertaking.

5.
a. In a universal partnership of profits, the usufruct of the properties contributed to the partnership becomes
the common property while the naked ownership thereof is retained by the partners individually.

As to property, the usufruct of the 3-storey building and the usufruct of the 10 cars becomes a common
property of the universal partnership.

Also, as to profits in a universal partnership, the profits derived from work or industry forms part of the
common property of the partnership.

In this case, the 450, 000 pesos earned by Mon from modelling and the 350, 000 pesos rentals of the cars
become part of the common property.

b. The partnership entered into would be a universal partnership of profits.

The law provides that if there is no indication as to what kind of universal partnership has been entered
into, then it will be considered as a universal partnership of profits. The rationale of this is because it
would be less onerous to the parties since they would not part from their ownership of the properties.

Accordingly, the ff. are the properties which belong to their partnership:
1. The 450, 000 earnings from modelling;
2. The 350, 000 rentals from 10 Grab cars.
The properties belonging to the universal partnership of property are those which the partner may acquire
from their own work or industry during the existence of the partnership.
II.
6. Definition of Terms

f) Delectus Personae - No one can become a member of the partnership association without the consent of all
the partners. This rule is inherent in every partnership.
RATIO: This is because of the mutual trust among the partners and that this is a case of subjective novation.
There is subjective novation when there is a change in the parties to a contract. Their consent thereto is
necessary in order to bind them (Albano, 2013).
g) Weak Juridical Personality of a Partnership – “weak” because it can be put as under without need of
formal dissolution process, and by the will of any of the partners or all of them, or even by chance
h) Doctrine of Attributes of Proprietorship - a recognition that a partnership arrangement is in essence a
contractual aggregation of sole proprietors, who come together to form a common venture, each acting very
much a proprietor of the business venture, while at the same time as agents to one another
i) Partner by Estoppel - It is one who, by words or conduct does any of the following:
-Directly represents himself to anyone as a partner in an existing partnership or in a non-existing partnership.
3
 -Indirectly represents himself by consenting to another representing him as a partner in an existing partnership
or in a non-existing partnership.
j) Doctrine of Apparent Authority - The principal is liable only as to third persons who have been led
reasonably to believe by the conduct of the principal that such actual authority exists, although none has been
given.

Essay
7.
c. Yes, Latex can collect the full amount of the check from Mia.
Article 1822 of the New Civil Code provides that when through the unlawful act or omission of the partner in
the ordinary course of business or with the authority of the co-partners, a loss or injury was inflicted to a third
person, the partners and the partnership are solidarily liable. This is further elucidated in Article 1824,
solidary liability means that any one of those liable may be held to pay the creditor.

In this case, it is evident that the act of issuing a bouncing check, which is unlawful in accordance with B.P.
22, was made in the ordinary course of business. The purchase of rubber bands is part of the buy-and-sell
operations of the business venture, JM Inc. Hence, Jack, Mia and JM Inc. are solidarily liable to Latex Inc.
Accordingly, Latex, Inc. may collect the full amount of check from Mia.

d. If I am Mia’s counsel, I would argue that Mia did not authorize the use of check in paying for
partnership obligations. Hence, the issuance of the check by Jack is not in the ordinary course of business or
is without the authority of the co-partner. Consequently, the solidary liability provided in Article 1822 will not
be applicable, absent the above-mentioned requisite. Accordingly, Latex cannot collect the full amount from
Mia since there is no solidary liability to begin with.

8. The agreement between the 2 companies is valid.

Well-entrenched is the rule that corporations cannot enter into a partnership unless authorized by a statute or
authorized by its charter. This is because the corporation would be bound by the acts of other persons other
than their duly appointed officer or agent, which is contrary to its nature that it shall manage its own affairs
and that it was exposed to a risk which was not contemplated by the stockholders when they invested.
However, corporations are allowed to enter into a joint venture. A joint venture is an agreement whereby the
parties shall have a particular undertaking. Joint venture is governed by the provisions of partnership.

In this case, the two companies entered into an agreement for a particular undertaking which is the production
of a noon-time show. Hence, it is clear that what they have entered into is a joint venture which is allowed by
law.

9. Zoren and Carmina is engaged in a sole proprietorship. Their properties as husband and wife was used to
put up the business.

There could be no partnership in this instance as both parties are prohibited to form a universal
partnership. The act of pooling the resources and engaging in buy-and-sell of real estate is one of universal
partnership, and not for a particular partnership.

The latter kind is defined as that which comprises for its object determinate things, and its use and
fruits, or that which takes a particular or specific undertaking or profession. Engaging in buy-and-sell is
not one of those contemplated for a specific undertaking.

10.
c. In a universal partnership of profits, the usufruct of the properties contributed to the partnership becomes
the common property while the naked ownership thereof is retained by the partners individually.

As to property, the usufruct of the 3-storey building and the usufruct of the 10 cars becomes a common
property of the universal partnership.

4
 Also, as to profits in a universal partnership, the profits derived from work or industry forms part of the
common property of the partnership.

In this case, the 450, 000 pesos earned by Mon from modelling and the 350, 000 pesos rentals of the cars
become part of the common property.

d. The partnership entered into would be a universal partnership of profits.

The law provides that if there is no indication as to what kind of universal partnership has been entered
into, then it will be considered as a universal partnership of profits. The rationale of this is because it
would be less onerous to the parties since they would not part from their ownership of the properties.

Accordingly, the ff. are the properties which belong to their partnership:
3. The 450, 000 earnings from modelling;
4. The 350, 000 rentals from 10 Grab cars.
The properties belonging to the universal partnership of property are those which the partner may acquire
from their own work or industry during the existence of the partnership.
2018 MIDTERMS

1.

a. Termination is the point in time after all the partnership affairs have been wound up.
b. Doctrine of Representation means that an agent is subject to the orders of the principal and must act
within the scope of authority expressly or impliedly granted to him.
c. Limited liability in partnership as a general partner means that a partner enjoys preference in the
distribution of partnership profits and return of contribution. But, as a general partner, he is liable up to
his personal properties with the partnership liabilities after all the assets of the latter have been
exhausted.

2. Agency is perfected by the express or implied consent and acceptance of both the principal and the
agent.
a. Under the express acceptance, there is a showing of a certain act that would confirm the
acceptance of the agent, when the principal delivers to him the instrument of agency.
b. Implied acceptance maybe implied from the acts of the principal, from his silence or lack of action,
or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.

c. Article 1871. Between persons who are present, the acceptance of the agency may also be
implied if the principal delivers his power of attorney to the agent and the latter receives it
without any objection. (n)

Article 1872. Between persons who are absent, the acceptance of the agency cannot be implied
from the silence of the agent, except:

(1) When the principal transmits his power of attorney to the agent, who receives it without any
objection;

(2) When the 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, and he did not reply to the letter or telegram.
(n)

3. The certificate of limited partnership is cancelled when:

5
 Article 1864. The certificate shall be cancelled when the partnership is dissolved or all limited partners
cease to be such.

A certificate shall be amended when:

(1) There is a change in the name of the partnership or in the amount or character of the contribution of
any limited partner;

(2) A person is substituted as a limited partner;

(3) An additional limited partner is admitted;

(4) A person is admitted as a general partner;

(5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and
the business is continued under article 1860;

(6) There is a change in the character of the business of the partnership;

(7) There is a false or erroneous statement in the certificate;

(8) There is a change in the time as stated in the certificate for the dissolution of the partnership or for
the return of a contribution;

(9) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time having
been specified in the certificate, or

(10) The members desire to make a change in any other statement in the certificate in order that it shall
accurately represent the agreement among them.

Article 1865. The writing to amend a certificate shall:

(1) Conform to the requirements of article 1844 as far as necessary to set forth clearly the change in the
certificate which it is desired to make; and

(2) Be signed and sworn to by all members, and an amendment substituting a limited partner or adding a
limited or general partner shall be signed also by the member to be substituted or added, and when a
limited partner is to be substituted, the amendment shall also be signed by the assigning limited partner.

The writing to cancel a certificate shall be signed by all members.

A person desiring the cancellation or amendment of a certificate, if any person designated in the first and
second paragraphs as a person who must execute the writing refuses to do so, may petition the court to
order a cancellation or amendment thereof.

If the court finds that the petitioner has a right to have the writing executed by a person who refuses to do so, it
shall order the Office of the Securities and Exchange Commission where the certificate is recorded, to record the
cancellation or amendment of the certificate; and when the certificate is to be amended, the court shall also
cause to be filed for record in said office a certified copy of its decree setting forth the amendment.

A certificate is amended or cancelled when there is filed for record in the Office of the Securities and Exchange
Commission, where the certificate is recorded:

(1) A writing in accordance with the provisions of the first or second paragraph, or

(2) A certified copy of the order of the court in accordance with the provisions of the fourth paragraph;

(3) After the certificate is duly amended in accordance with this article, the amended certified shall
thereafter be for all purposes the certificate provided for in this Chapter.
6
4. General vs Limited partner/ship:

a. As to the extent of liability, a general partner is personally liable up to the extent of his
individual property, while a limited partner is only to the extent of his contribution in the capital.

b. As to what can be contributed, a general partner may contribute either money, property, or
industry. Whereas, a limited partner may only contribute money, and/or property but not his
services.

c. As to management, a general partner may actively manage the partnership affairs. This power
however is not available to a limited partner otherwise, he shall be liable as a general partner.

d. As to name of the partnership, a general partner’s surname may appear at the partnership
name, whereas a limited partner’s surname, as a general rule, is not allowed to appear in the
partnership name. A limited partnership must always add “ltd” or “limited” at the end of the
partnership’s name.

5. Principle of representation in agency law refers to the adherence of the agent in the orders of the principal,
and is required to act only within the scope of authority conferred upon him by the principal. An agent, in
other words, can only represent the principal to the extent of authorized by the principal.

It is similar to the doctrine of mutual agency in a partnership agreement in a sense that a partner acts in
behalf of the other partners with or without their consent subject to some circumstances provided by the law.
An agent also acts in behalf of the principal, or represents the principal in accordance with the authority
granted to him.

The difference between the doctrine of representation and that of mutual agency is that the agent is
bound to the orders of the principal, whose authority is derivative from the latter. He cannot act beyond the
authority granted to him. Unlike in the doctrine of mutual agency, a partner can act without the express grant
of authority, generally, by the other partners, because a partner is considered also as the principal or owner
of the partnership business, provided that it redound to the benefit of the partnership.

6. A. The contract entered into by RT and RB is a contract of sale and not agency to sell clothed in the
guise of exclusive dealership contract as its designation.

Under the contract of sale, the moment it is perfected, the ownership of the goods sold is
transferred to the buyer, which is not in the case of the agency to sell. In agency to sell, the
ownership of the goods is retained by the principal until sold. Also, in the contract of sale, the
buyer when the sale has been perfected, cannot return the unsold goods which is not in the case
of agency to sell. Lastly, under the contract of sale, since the ownership is transferred to the
buyer when sold, he is not obliged to return the proceeds of the sale or its profits to the seller; not
in the case of agency to sell, where the agent is bound to return the proceeds of the sale.
However, he is entitled to its commission when provided.

In the present case, considering the elements of contract of sale as distinguished from agency to
sell, it can be said that the contract entered into by RT and RB constitute contract of sale, by
reason of the second condition in the contract which provides that RB must pay RT for the soap
received within 30 days. By reason of which RB here is the buyer and not an agent of RT.

B. RB’s contention is meritorious.

As defined under Article 1868. By the contract of agency, a person binds himself to
render some service or to do something in representation or on behalf of another, with the
consent or authority of the latter. 
7
 In the given case, the contract of agency is not well established. There was no clear
showing in the herein contract that it intended to bind RB as agent of RT. What the contract
purports is that of a sale and not of agency for reasons mentioned in the preceding answer.

The inevitable consequence is that RB cannot be held liable for damages for breach of
an obligation as RT’s agent. The possible liability of the latter in the present case would be
damages for delayed payment, should there be delay on his part.

7. A. Yes, Two and Three can validly continue the partnership under the same name because the prohibition
only applies when the partnership is a limited one.

Since the partnership is a general partnership, the prohibition does not apply provided that the remaining
partners has consented thereto.

B. Yes, Move Bank can hold Seven, a newly admitted partner, liable to the obligations incurred by the
partnership prior to his admission.

The law provides that a newly admitted partner can be held liable for the obligations incurred by the
existing partnership, as if he has already been a partner prior to its incurring the partnership obligations.

C. Yes, Move Bank can go after the personal properties of Two and Three, because as general partners,
the law provides that the extent of its liability goes beyond to its individual personal properties, in order to
satisfy partnership obligations,

D. No, Move Bank cannot go after the individual personal property of Seven, since the law provides that
a newly admitted partner cannot be made liable personally. His liability extends only up to his
contribution to the capital.

PTA 2018 FINALS

II

1.The following are the acts of a general partner in a limited partnership which require consent of all partners:
(Art. 1850, NCC) 
a. Do any act in contravention of the certificate;
b. Do any act which would make it impossible to carry on the ordinary business of the partnership;
c. Confess a judgment against the partnership;
d. Possess partnership property, or assign their rights in specific partnership property for other than a partnership
purpose;
e. Admit a person as a general partner;
f. Admit a person as a limited partner, unless the right so to do is given in the certificate; and
g. Continue the business with partnership property on the death, retirement, insanity, civil interdiction or
insolvency of a general partner, unless the right so to do is given in the certificate. 

2. The instances when a limited partner can demand the return of his contribution are: (Art. 1857, NCC) 
8
 a. On the dissolution of a partnership; or
b. When the date specified in the certificate for its return has arrived; or
c. After he has given 6 months notice in writing to all the members, if no time is specified in the certificate,
either for the return of the contribution or for the dissolution of the partnership. 

3. Joint Venture vs Ordinary Partnership

a. As to coverage, in partnership, it contemplates the undertaking of a general and continuous business of a
particular kind. While in joint venture, it is ordinarily limited to a single transaction and not intended to pursue
a continuous business;
b. As to use of firm name, in partnership, it is required to operate under a firm name. While in JV, firm name is
not a requisite;
c. As to transfer of property, in P, the property used becomes the property of the business entity, hence of all the
partners. In JV, the property used remains undivided property of its contributor;
d. As to power, in P, a partner acting in pursuance of the firm business, binds not only himself as a principal, but
as their agent as well, also the partnership and the partners. In JV, none of the co-venturers can bind the joint
venture of his co-venturers; and 
e. As to firm name and liabilities, in P, partnership acquires personality after following the requisites required by
law. In JV, it has no legal personality. 

4. The following are the instances when a special power of attorney is necessary: (Art. 1878, NCC) 
a.  To make such payments as are not usually considered as acts of administration;
b. To effect novations which put an end to obligations already in existence at the time the agency was
constituted;
c. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a prescription already acquired;
d. To waive any obligation gratuitously;
e. To enter into any contract by which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration. 

NOTE: at least 5 lang ang girequire ni ma'am, first 5 lang ako gibutang, please check the codal na lang. :) 

1.

d. Termination is the point in time after all the partnership affairs have been wound up.
e. Doctrine of Representation means that an agent is subject to the orders of the principal and must act
within the scope of authority expressly or impliedly granted to him.
f. Limited liability in partnership as a general partner means that a partner enjoys preference in the
distribution of partnership profits and return of contribution. But, as a general partner, he is liable up to
his personal properties with the partnership liabilities after all the assets of the latter have been
exhausted.

3. Agency is perfected by the express or implied consent and acceptance of both the principal and the
agent.
d. Under the express acceptance, there is a showing of a certain act that would confirm the
acceptance of the agent, when the principal delivers to him the instrument of agency.
e. Implied acceptance maybe implied from the acts of the principal, from his silence or lack of action,
or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.

f. Article 1871. Between persons who are present, the acceptance of the agency may also be
implied if the principal delivers his power of attorney to the agent and the latter receives it
without any objection. (n)

Article 1872. Between persons who are absent, the acceptance of the agency cannot be implied
from the silence of the agent, except:
9
 (1) When the principal transmits his power of attorney to the agent, who receives it without any
objection;

(2) When the 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, and he did not reply to the letter or telegram.
(n)

3. The certificate of limited partnership is cancelled when:

Article 1864. The certificate shall be cancelled when the partnership is dissolved or all limited partners
cease to be such.

A certificate shall be amended when:

(1) There is a change in the name of the partnership or in the amount or character of the contribution of
any limited partner;

(2) A person is substituted as a limited partner;

(3) An additional limited partner is admitted;

(4) A person is admitted as a general partner;

(5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and
the business is continued under article 1860;

(6) There is a change in the character of the business of the partnership;

(7) There is a false or erroneous statement in the certificate;

(8) There is a change in the time as stated in the certificate for the dissolution of the partnership or for
the return of a contribution;

(9) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time having
been specified in the certificate, or

(10) The members desire to make a change in any other statement in the certificate in order that it shall
accurately represent the agreement among them.

Article 1865. The writing to amend a certificate shall:

(1) Conform to the requirements of article 1844 as far as necessary to set forth clearly the change in the
certificate which it is desired to make; and

(2) Be signed and sworn to by all members, and an amendment substituting a limited partner or adding a
limited or general partner shall be signed also by the member to be substituted or added, and when a
limited partner is to be substituted, the amendment shall also be signed by the assigning limited partner.

The writing to cancel a certificate shall be signed by all members.

A person desiring the cancellation or amendment of a certificate, if any person designated in the first and
second paragraphs as a person who must execute the writing refuses to do so, may petition the court to
order a cancellation or amendment thereof.

If the court finds that the petitioner has a right to have the writing executed by a person who refuses to do so, it
shall order the Office of the Securities and Exchange Commission where the certificate is recorded, to record the
cancellation or amendment of the certificate; and when the certificate is to be amended, the court shall also
cause to be filed for record in said office a certified copy of its decree setting forth the amendment.

10
A certificate is amended or cancelled when there is filed for record in the Office of the Securities and Exchange
Commission, where the certificate is recorded:

(1) A writing in accordance with the provisions of the first or second paragraph, or

(2) A certified copy of the order of the court in accordance with the provisions of the fourth paragraph;

(3) After the certificate is duly amended in accordance with this article, the amended certified shall
thereafter be for all purposes the certificate provided for in this Chapter.

8. General vs Limited partner/ship:

a. As to the extent of liability, a general partner is personally liable up to the extent of his
individual property, while a limited partner is only to the extent of his contribution in the capital.

b. As to what can be contributed, a general partner may contribute either money, property, or
industry. Whereas, a limited partner may only contribute money, and/or property but not his
services.

c. As to management, a general partner may actively manage the partnership affairs. This power
however is not available to a limited partner otherwise, he shall be liable as a general partner.

d. As to name of the partnership, a general partner’s surname may appear at the partnership
name, whereas a limited partner’s surname, as a general rule, is not allowed to appear in the
partnership name. A limited partnership must always add “ltd” or “limited” at the end of the
partnership’s name.

9. Principle of representation in agency law refers to the adherence of the agent in the orders of the principal,
and is required to act only within the scope of authority conferred upon him by the principal. An agent, in
other words, can only represent the principal to the extent of authorized by the principal.

It is similar to the doctrine of mutual agency in a partnership agreement in a sense that a partner acts in
behalf of the other partners with or without their consent subject to some circumstances provided by the law.
An agent also acts in behalf of the principal, or represents the principal in accordance with the authority
granted to him.

The difference between the doctrine of representation and that of mutual agency is that the agent is
bound to the orders of the principal, whose authority is derivative from the latter. He cannot act beyond the
authority granted to him. Unlike in the doctrine of mutual agency, a partner can act without the express grant
of authority, generally, by the other partners, because a partner is considered also as the principal or owner
of the partnership business, provided that it redound to the benefit of the partnership.

10. A. The contract entered into by RT and RB is a contract of sale and not agency to sell clothed in the
guise of exclusive dealership contract as its designation.

Under the contract of sale, the moment it is perfected, the ownership of the goods sold is
transferred to the buyer, which is not in the case of the agency to sell. In agency to sell, the
ownership of the goods is retained by the principal until sold. Also, in the contract of sale, the
buyer when the sale has been perfected, cannot return the unsold goods which is not in the case
of agency to sell. Lastly, under the contract of sale, since the ownership is transferred to the
buyer when sold, he is not obliged to return the proceeds of the sale or its profits to the seller; not
in the case of agency to sell, where the agent is bound to return the proceeds of the sale.
However, he is entitled to its commission when provided.

11
 In the present case, considering the elements of contract of sale as distinguished from agency to
sell, it can be said that the contract entered into by RT and RB constitute contract of sale, by
reason of the second condition in the contract which provides that RB must pay RT for the soap
received within 30 days. By reason of which RB here is the buyer and not an agent of RT.

B. RB’s contention is meritorious.

As defined under Article 1868. By the contract of agency, a person binds himself to
render some service or to do something in representation or on behalf of another, with the
consent or authority of the latter. 

In the given case, the contract of agency is not well established. There was no clear
showing in the herein contract that it intended to bind RB as agent of RT. What the contract
purports is that of a sale and not of agency for reasons mentioned in the preceding answer.

The inevitable consequence is that RB cannot be held liable for damages for breach of
an obligation as RT’s agent. The possible liability of the latter in the present case would be
damages for delayed payment, should there be delay on his part.

11. A. Yes, Two and Three can validly continue the partnership under the same name because the prohibition
only applies when the partnership is a limited one.

Since the partnership is a general partnership, the prohibition does not apply provided that the remaining
partners has consented thereto.

B. Yes, Move Bank can hold Seven, a newly admitted partner, liable to the obligations incurred by the
partnership prior to his admission.

The law provides that a newly admitted partner can be held liable for the obligations incurred by the
existing partnership, as if he has already been a partner prior to its incurring the partnership obligations.

C. Yes, Move Bank can go after the personal properties of Two and Three, because as general partners,
the law provides that the extent of its liability goes beyond to its individual personal properties, in order to
satisfy partnership obligations,

D. No, Move Bank cannot go after the individual personal property of Seven, since the law provides that
a newly admitted partner cannot be made liable personally. His liability extends only up to his
contribution to the capital.

12
PTA 2019 Prelims

I.
In the last case cited the partnership was one of cuentas en participacion. "A partnership," quoting from the syllabus in
this case, "constituted in such a manner that its existence was only known to those who had an interest in the same,
there being no mutual agreement between the partners, and without a corporate name indicating to the public in some
way that there were other people besides the one who ostensibly managed and conducted the business, is exactly the
accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce."
In a partnership of cuentas en participacion, under the provisions of article 242 of the Code of Commerce, those who
contract with the person in whose name the business of such a partnership was conducted shall have only the right of
action against such person and not against other persons interested. So this case is easily distinguished from the case at
bar, in that the one did not have the corporate name while the other was known as the Manila Steam Laundry.
Joint Accounts / cuentas en participacion – is an arrangement among merchants who interest themselves in the
transactions of other merchants, contributing thereto the part of the capital they may agree upon, and who participate
in the favorable or unfavorable results thereof in the proportion they may determine (Art. 239).

II.
RULES FOR DISTRIBUTION OF PROFITS ANDLOSSES
The distribution of profits and losses shall bein accordance with the following rules:
(1) They shall be distributed in conformity with the agreement.
(2) If only the share in profits has been stipulated, the share in the losses shall be in the same proportion.
(3) In the absence of any stipulation:

(a) The share in the profits of thecapitalist partners shall be in proportion to their contributions.

(b) The losses shall be borne by the capitalist partners, also in proportion to the contributions.
 
(c) The share of the industrial partners in the profits is that share as may be just and equitable. If he also contributed
capital, he will receive a share of the profits in proportion to his contribution; and
(d) The industrial partner, who did not contribute capital, is not liable for losses [Art. 1797].

III.
CONVEYANCE OF PARTNERSHIP REALPROPERTYTITLE IN PARTNERSHIP NAME
Any partner may convey the real property in the name of the partnership.

The partnership can recover it, except when:

(1) The act of the partner binds the partnership, when he has authority to carry out the usual business of the
partnership, under Article 1818, 1st par.; or
(2) If not so authorized, the property has been conveyed by the grantee, or a person claiming under him, to a holder for
value and without knowledge that the partner exceeded his authority [ Art. 1819, par. 1].
A partner authorized to carry out the usual business may convey, in his own name, the equitable interest of the
partnership [ Art. 1819, par. 2 ].

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IV.
ACTS OF STRICT DOMINION
General Rule: One or some of the partners have no authority to do the following acts of strict dominion:
(1) Assign the partnership property in trust for
creditors or on the assignee’s promise to
pay the debts of the partnership;
(2) Dispose of the goodwill of the business;
(3) Do any other act which makes itimpossible to carry on the ordinary businessof the partnership;
(4) Confess a judgment;
(5) Enter into a compromise concerning apartnership claim or liability;
(6) Submit a partnership claim or liability toarbitration;
(7) Renounce a claim of the partnership.

V.
PARTNER WHO CAUSED THEDISSOLUTION
The partner who caused the dissolutionwrongfully has the following rights:

1)

If the business is not continued, allthe rights

Article 1837, 1st par.
, subjectto liability for damages;2)

If the business is continued, the right,as against his co-partners and allclaiming through them, to:
a) Ascertainment, withoutconsidering the value of thegoodwill of the business, andpayment to him in cash the valueof
his partnership interest, lessany damage, or have the paymentsecured by a bond approved bythe court;
and
b) Be released from all existingliabilities of the partnership[ Article 1837(3)].

VI.
DOCTRINE OF MARSHALING OFASSETS
When partnership property and the individual properties of the partners are in possession of a court for distribution:
1.Partnership creditors have priority on partnership property;
2.Separate creditors have priority on individual property, saving the rights of lien of secured creditors.

14
3. Anything left from either shall beapplied to satisfy the other [ Article1839(8)].

VII.
Article 1837. When dissolution is caused in any way, except in contravention of the partnership agreement, each
partner, as against his co-partners and all persons claiming through them in respect of their interests in the partnership,
unless otherwise agreed, may have the partnership property applied to discharge its liabilities, and the surplus applied
to pay in cash the net amount owing to the respective partners. (Partner’s Lien)

VIII.
A.
Problem: One partner did not contribute. Is there a partnership?
The principle of autonomy of contracts is stated in Article 1306.
“The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public policy.”
By this principle, the parties to a contract are given the freedom to agree on any terms or stipulations in their contract.
The only limitation is that the agreement should not be illegal(i.e., contrary to LaMoG-PuPu). The contracting parties
must respect the law which is considered as an essential part of every contract.

B.
Problem: Advance receipt of what he advanced; terminate partnership?
Dissolution – the change in the relation of thepartners caused by any partner ceasing to beassociated in the carrying
on of the business.It is different from the winding-up of thebusiness [ Article 1828].
It does not terminatethe partnership, which continues until thewinding up of partnership affairs iscompleted [ Article
1829].

Winding up – the actual process of settlingthe partnership business or affairs afterdissolution. It involves collection
anddistribution of partnership assets, payment ofdebts, and determination of the value of theinterest of the partners in
the partnership.
Termination – the point in time when allpartnership affairs are completely wound upand finally settled. It signifies the
end of thepartnership life [ De Leon (2010)].

XI.
Capitalist vs Industrialist
Article 1789. An industrial partner cannot engage in business for himself, unless the partnership expressly permits him
to do so; and if he should do so, the capitalist partners may either exclude him from the firm or avail themselves of the
benefits which he may have obtained in violation of this provision, with a right to damages in either case.
Article 1808. The capitalist partners cannot engage for their own account in any operation which is of the kind of
business in which the partnership is engaged, unless there is a stipulation to the contrary.

Any capitalist partner violating this prohibition shall bring to the common funds any profits accruing to him from his
transactions, and shall personally bear all the losses.
15
X.

In Liwanag v. Court of Appeals,42 three individuals entered into a contract of partnership for the business of buying
and selling cigarettes. They agreed that one would contribute money to buy the cigarettes while the other two would
act as agents in selling. When the capitalist partner demanded from the industrial partners her monetary contribution
because they stopped informing her of business updates, this time, this Court held the industrial partners liable for
estafa.

In Liwanag, this Court held:

Thus, even assuming that a contract of partnership was indeed entered into by and between the parties, we have ruled
that when money or property [had] been received by a partner for a specific purpose (such as that obtaining in
the instant case) and he later misappropriated it, such partner is guilty of estafa.

XI.
Notebook answer perfect!!
No, a partner cannot demand for his share during the existence of a partnership because the law provides that
dissolution and liquidation of the partnership assets must take place before a partner can demand for his share.

It is a well-settled rule that the money, property, or industry contributed to the common fund is owned by the
partnership. Therefore it is the partnership that will refund the share of a partner and not the partner himself. The
partnership has a juridical personality separate and distinct from that of the partners.

Hence, without dissolution and liquidation of partnership assets, a partner cannot demand for his share during the
existence of a partnership.

XII.
A. and B.

ASSIGNMENT OF INTEREST
Assignment by a partner of his whole interest in the partnership, of itself:

(1) Does not dissolve the partnership; or

(2) Does not entitle the assignee to:

(a) Interfere in the management or administration of the partnership business or affairs;
(b) Require information or account of partnership; or
(c) Inspect the partnership books.

It merely entitles the assignee to:

16
(1) Receive the profits to which the assigning partner was entitled;
(2) In case of fraud in management, avail himself of the usual remedies;
(3) In case of dissolution:
(a) Receive his assignor’s interest; and
(b) Require an accounting from the date only of the last account agreed to by all the partners [ Art. 1813].

XII.

Article 1833. Where the dissolution is caused by the act, death or insolvency of a partner, 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 had not
been dissolved unless:

(1) The dissolution being by act of any partner, the partner acting for the partnership had knowledge of the
dissolution; or

(2) The dissolution being by the death or insolvency of a partner, the partner acting for the partnership had
knowledge or

notice of the death or insolvency.

17
2019 MIDTERMS
I.
Cancellation of certificate or articles of limited partnership:
1. When the partnership is dissolved
2. When all the limited partners ceased to be

Instances when a certificate or articles of limited partnership can be amended:

1. It must fall under the following changes and conditions:
a) There is a change in the name of the partnership or in the amount or character of the
contribution of any limited partner;
b) A person is substituted as a limited partner;
c) An additional limited partner is admitted;
d) A person is admitted as a general partner;
e) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil
interdiction and the business is continued under Article 1860;
f) There is a change in the character of the business of the partnership;
g) There is a false or erroneous statement in the certificate;
h) There is a change in the time as stated in the certificate for the dissolution of the partnership
or for the return of a contribution;
i) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time
having been specified in the certificate;
j) The members desire to make a change in any other statement in the certificate in order that it
shall accurately represent the agreement among them (NCC, Art. 1864).

2. Must be signed and sworn to by all of the members including the new members if some added; in
case of substitution, the limited partner must also sign.
3. Must be recorded in the SEC

II.
Substituted limited partner
It is a person admitted to all the rights of a limited partner who has died or assigned his interest in the
partnership.
Rights and liabilities of a substituted limited partner (NCC, Art. 1859)
GR: He has all the rights and powers and is subject to all the restrictions and liabilities of his
assignor.
XPN: Those liabilities which he was ignorant of at the time that he became a limited partner and
which could not be ascertained from the certificate
Requirements for the admission of 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 of the NCC; and

18
 3. The certificate as amended must be registered in the SEC.

III.
When may a limited partner have the
partnership dissolved:

1. When his demand for the return of his contribution is denied although he has a right to such
return; or
2. When his contribution is not paid although he is entitled to its return because the other
liabilities of the partnership have not been paid or the partnership property is insufficient for
their payment.

IV.
Proving the existence of principal-agent relationship through mere representation

Mere representation of an alleged agent is not sufficient to prove the existence of a principal agent
relationship. The declarations of the agent alone are generally insufficient to establish the fact or
extent of agency. It is a settled rule that the persons dealing with the assumed agent are bound at their
peril, if they would hold the principals liable, to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is controverted, the burden of proof is upon them to
establish it (Sps. Yu v. Pan American World Airways, Inc., G.R. No. 123560, March 27, 2000).

V.
Q: A foreign manufacturer of computers and a Philippine distributor entered into a contract whereby
the distributor agreed to order 1,000 units of the manufacturer's computers every month and to resell
them in the Philippines at the manufacturer's suggested prices plus 10%. All unsold units at the end of
the year shall be bought back by the manufacturer at the same price they were ordered. The
manufacturer shall hold the distributor free and harmless from any claim for defects in the units. Is the
agreement one for sale or agency? (2000 BAR)

A: The contract is one of agency not sale.

The notion of sale is negated by the following indicia:

1. the price is fixed by the manufacturer with the 10% mark-up constituting the commission;
2. the manufacturer reacquires the unsold units at exactly the same price; and
3. warranty for the units was borne by the manufacturer.
The foregoing indicia negate sale because they indicate that ownership over the units was never
intended to transfer to the distributor.

VI.
Q: When may the actual or apparent authority of the agent bind the principal?

A: The principal is bound by the acts of the agent on his behalf, whether or not the third person
dealing with the agent believes that the agent has actual authority, so long as the agent has actual
authority, express or implied.

19
Doctrine of Apparent Authority
The principal is liable only as to third persons who have been led reasonably to believe by the conduct
of the principal that such actual authority exists, although none has been given (De Leon, 2014).

VII.

A special power of attorney is required (1992, 2004 BAR)

1. To create or convey real rights over immovable property;

2. To enter into any contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration;
3. To loan or borrow money, unless the latter act be urgent and indispensable for the
preservation of the things which are under administration;
4. To lease any real property to another person for more than one year;
5. To make such payments as are not usually considered as acts of administration;
6. To obligate principal as guarantor or surety;
7. To bind the principal to render some service without compensation;
8. To bind the principal in a contract of partnership;
9. To ratify obligations contracted before the agency;
10. To accept or repudiate an inheritance;
11. To effect novation which put an end to obligations already in existence at the time the agency
was constituted;
12. To make gifts, except customary ones for charity or those made to employees in the business
managed by the agent;
13. To compromise, to submit questions to arbitration, to renounce the right to appeal from a
judgment, to waive objections to the venue of an action or to abandon a prescription already
acquired;
14. Any other act of strict dominion; and
15. To waive an obligation gratuitously (NCC, Art.1878).

VIII.

Instances where an agency is created by operation of law

When the agent withdraws from the agency for a valid reason, he must continue to act until the
principal has had a reasonable opportunity to take the necessary steps like the appointment of a new
agent to remedy the situation caused by the withdrawal (NCC, Art. 1929); and

In case a person declines an agency, he is bound to observe the diligence of good father of the family
in the custody and preservation of the goods forwarded to him by the owner until the latter should
appoint an agent (NCC, Art. 1885).

IX.
Instances when the agent may retain in pledge
the object of the agency (Legal Pledge)

1. If principal fails to reimburse the agent the necessary sums, including interest, which the latter
advanced for the execution of the agency (NCC, Art. 1912).

20
 2. If principal fails to indemnify the agent for all damages which the execution of the agency
may have caused the latter, without fault or negligence on his part (NCC, Art. 1913)

X.

A person acting as an agent cannot escape criminal liability by virtue of the contract of agency

The law on agency has no application in criminal cases. When a person participates in the commission
of a crime, he cannot escape punishment on the ground that he simply acted as an agent of another
party (Ong v. CA, G.R. No. 119858, April 29, 2003).

NOTE: Commission of offenses or crimes are personal in nature, hence, cannot be imputed to those
who did not participate thereto,

XI.
A. Same facts with number 5. (Answer sa notebook. Perfect score man).

There is a principal- agent relationship between Rona and Mary.

A contract of agency binds an agent in rendering some service or to do something in

representation of a principal, who gives his consent or authority thereto.

Verily. When Rona offered to Mary to sell her jewelry and Mary accepted such offer by the
receiving the goods, there is an express contract of agency created. Also, such contract of agency was
founded upon a consideration which is the 10% mark up as commission of Mary in the reselling of the
goods herein.

B. Rule regarding double agency (Appointing sub-agent)

GR: It is disapproved by law for being against public policy and sound morality.

XPN: Where the agent acted with full knowledge and consent of the principals.

XII.
A. Commission agent - He is one engaged in the purchase and sale of personal property for a
principal, which, for this purpose, has to be placed in his possession and at his disposal.
B. Attorney-at-law – is one who has complied with all the legal requirements to practice the
legal profession; Attorney-in-fact – does not necessarily be one who can practice law but
represents a principal to effect juridical acts with third persons.
C. Broker - He is a middleman or intermediary who in behalf of others and for a commission or
fee negotiates contracts/transactions relating to real or personal property.
Distinguished from a broker-agent: Not limited to the task of bringing the principal and the third
person together but also he can do such acts which the principal can do or would do personally, thus,
acting thereof in a representative capacity of the principal.
D. Best Judgment Rule – provides that in the absence of a limiting authority by the principal,
the agent must use his discretion and best judgment to stay within the scope of the authority
given by the principal in the execution of the agency contract. This is a practical measure
allowed by law to meet contingencies, which the principal cannot all the time stipulate to be
within the scope of authority of the agent.

21
2019 FINALS
1. A and B entered into an agreement to form a partnership. Because of A’s refusal to comply
with the agreement, B brought an action to compel the execution of a partnership contract.
May A be compelled against his will to carry out the agreement or execute the partnership
papers?
No. Under Article 1167, A has an obligation to do, not to give. The law recognizes the
individual’s freedom or liberty to do an act as he has promised to do, or not to do it, as he
pleases. It falls within what Spanish commentators call a very personal act (acto
personalismo), of which courts may not compel compliance, as it is considered an act of
violence to do so. (Woodhouse vs. Halili, 83 Phil. 526 [1953].)

2. An agency to sell differs from sale in the following ways:

(1) In an agency to sell, the agent receives the goods as the goods of the principal, while in a
sale, the buyer receives the goods as owner;
(2) In an agency to sell, the agent delivers the proceeds of the sale, while in a sale, the buyer
pays the price;
(3) In an agency to sell, the agent can return the object in case he is unable to sell the same to
a third person, while in a sale, the buyer, as general rule, cannot return the object sold; and
(4) In an agency to sell, the agent, in dealing with the thing received, is bound to act
according to the instructions of his principal, while in a sale, the buyer can deal with the
thing as he pleases, being the owner.

3. The contractual relationship between Tim and Kris is a (co-ownership, joint venture, etc.; not
partnership)
Art 1769(3) provides that the sharing of gross return does not itself establish a partnership,
whether or not the persons sharing them have a joint or common right or interest in nay
property from which the returns are derived.
The MOA provided for Tim’s share in the proceeds of the business venture. However, this
fact alone, without the intention of contributing money, property, or industry to a common
fund with the intention of dividing the profits among themselves do not partake of a nature
of a partnership.
Hence, the relationship is a ___ and not a partnership.

4. a. X and Y are partners in a shop offering portrait painting. Y provided the capital and the
marketing while X was the portrait artist. They accepted the P50,000.00 payment of Kyla to
do her portrait but X passed away without being able to do it. Can Kyla demand that Y
deliver the portrait she had paid for because she was dealing the with business
establishment and not with the artist personally? Why or why not?
NO, Kyla cannot demand that Y deliver the portrait. The death of X has the effect of
dissolving the partnership (Art. 1830). Also, while the obligation was contracted by the
partnership, it was X who was supposed to create the portrait for Kyla. Since X died before

22
 creating the portrait, the obligation can no longer be complied because of impossibility of
performance (Art. 1266). In obligations to do, the debtor shall be released when the prestation
becomes legally or physically impossible without the debtor’s fault.

b. In this jurisdiction, is a joint venture (i.e., a group of corporations contributing resources

for a specific project and sharing the profits therefrom) considered a partnership?
YES, under Philippine law, a joint venture is understood to mean an organization formed for
some temporary purpose and is hardly distinguishable form a partnership since its elements
are similar which are: community of interest in business, sharing of profits, and losses, and a
mutual right of control (Primelink Properties v. Lazatin, G.R. No. 167379, June 27, 2006
citing Blackner v. Mcdermott, 176 F. 2d 498[1949]).

5. a. A lawyer was given an authority by means of a Special Power of Attorney by his client to
sell a parcel of land for the amount of P3 Million. Since the client owed the lawyer Pl
Million in attorney's fees in a prior case he handled, the client agreed that if the property is
sold, the lawyer was entitled to get 5% agent's fee plus Pl Million as payment for his
unpaid attorney's fees. The client, however, subsequently found a buyer of his own who
was willing to buy the property for a higher amount. Can the client unilaterally rescind the
authority he gave in favor of his lawyer? Why or why not?
NO, the agency in the case presented is one which is coupled with an interest. As a rule,
agency is revocable at will except if it was established for the common benefit of the agent
and the principal. In this case, the interest of the lawyer is not merely limited to his
commission for the sale of the property but extends to his right to collect his

b. Yes, a validly constituted agency may be revoked at will by the principal without infringing
on the rights of the agent provided that such revocation is duly communicated to the agent and
the public or third persons who in good faith relied thereon.

c. However, the rule above does not apply when:

1. a bilateral contract depends upon it;
2. it is the means of fulfilling an obligation already contracted;
3. a partner is appointed manager of a partnership and his termination is unjustifiable; and
4. it is created not only for the interest of the principal but also for the interest of third
persons.

6. Can a husband and wife form a limited partnership to engage in real estate business, with
the wife being a limited partner?
Yes. While spouses cannot enter into a universal partnership, they can enter into a limited
partnership or be members thereof

23
7. No, the motion to dismiss must be denied. The dissolution of ABC Co. Should not prejudice
the rights of third persons who contracted with the partnership prior to dissolution. All
partners are solidarily liable against partnership creditors hence Dessa can soelely collect
from Alex without prejudice to the latter’s right to ask reimbursement from his co-partners.

8. W, X, Y and Z organized a general partnership with W and X as industrial partners and Y

and Z as capitalist partners. Y contributed P50.000.00 and Z contributed P20.000.00 to the
common fund. By a unanimous vote of the partners, W and X were appointed managing
partners, without any specification of their respective powers and duties.
A applied for the position of Secretary and B applied for the position of Accountant of the
partnership. The hiring of A was decided upon by W and X, but was opposed by Y and Z.
The hiring of B was decided upon by W and Z, but was opposed by X and Y. Who of the
applicants should be hired by the partnership? Explain and give your reasons.
A should be hired as Secretary. The decision for the hiring of A prevails because it is an act of
administration which can be performed by the duly appointed managing partners, W and X. B
cannot be hired, because in case of a tie in the decision of the managing partner, the deadlock
must be decided by the partners owning the controlling interest. In this case, the opposition of
X and Y prevails because Y owns the controlling interest (Art. 1801, Civil Code).

9. A trust de son tort is a trust created by the purchase or redemption of property by one other
than the person lawfully entitled to do so and in fraud of the other.

10. X was the owner of an unregistered parcel of land in Cabanatuan City. As she was abroad,
she advised her sister Y via overseas call to sell the land and sign a contract of sale on her
behalf. Y thus sold the land to B1 on March 31, 2001 and executed a deed of absolute sale
on behalf of X. B1 fully paid the purchase price. B2, unaware of the sale of the land to B1,
signified to Y his interest to buy it but asked Y for her authority from X. Without informing
X that she had sold the land to B1, Y sought X for a written authority to sell. X e-mailed Y
an authority to sell the land. Y thereafter sold the land on May 1, 2001 to B2 on monthly
installment basis for two years, the first installment to be paid at the end of May 2001. Who
between B1 and B2 has a better right over the land? Explain.
B-2 has a better title. This is not a case of double sale since the first sale was void. The law
provides that when a sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void (Article 1874,New
Civil Code). The property was sold by Y to B1 without any written authority from the owner
X. Hence, the sale to B1 was void.

24