AGENCY AND PARTNERSHIP

Prof. Dionne Marie M. Sanchez

(2nd Semester, AY-2010 to 2011)

'This outline is based on the oudine of Prof. RN Dio.

Grading System

Recitations 50% + 6-£ 4>r ft)jy^<k- a.\Waw<!,-

Mid Term Exam 20%
Final Exam 30%
Total 100%

Grading Scale

98-100 1.0
94-97 1.25
90-93 1.5
86-89 1.75
81-85 2.0
76-80 2.25
71-75 2.5
66-70 2.75
65 3.0
64 and 5.0
below
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Cotirse-$> w^ & ^ ^d^tns.
Oudine

THE LAW ON AGENCY

I. Introduction

A. How is agency defined? 1868

1. Consent -1868,1969 to 1872,1898,1901,1910,1317,1403(1)

a. Express; ratification
b. Implied; ratification

Object
 3. Consideration -1875

B. Who are the parties to the contract of agency?

C. Must the parties be capacitated?

Cases:

Rallos v. Felix Go Chan, 81 SCRA 251

Orient Air Services v. CA, 197 SCRA 645
Uyv.CA,314SCRA69
Macke v. Camps, 7 Phil. 553
Prudential Bank v. CA, 223 SCRA 350
Litonjua, Jr. v. Eternit Corp. 490 SCRA 204 /

II. What is the form of the contract of agency? 1869, 1874

A. Oral
B. Written

Cases:

Angeles v. Phil. National Railways, 500 SCRA 444 (2006)

Jimenez v. Rabot, 38 Phil. 378
City-Lite v. CA, 325 SCRA 385
Cosmic Lumber v. CA, 265 SCRA 168
San Juan Structural Steel v. CA, 296 SCRA 631
Delos Reyes v. CA, 313 SCRA 632
AF Realty v. Dieselman Freight, 373 SCRA 385

HI. Who has the obligation to determine existence and scope of agency?

Cases: • . •

Keeler Electric Co. v. Rodriguez, 44 Phil. 19

Yu Eng Cho v. Pan American, 328 SCRA 717

rV. How is agency distinguished from other contracts/relationships?

A. Master-servant - 1689 to 1699

B. Employer-employee - 1700
C. Lease of service - 1644
D. Independent contractor -1713
E. Trust - 1440
 F. S a l e - 1 4 5 8
G. Partnership -1767
H. Negotiorum gestio/quasi-contract - 2144,2145
I. Judicial administrator
J. Broker - (City Lite, p. 393)

Cases:

Sevilla v. CA, 160 SCRA 171

Shell v. Firemen's Insurance Co., 100 Phil. 757
Dela Cruz v. Northern Theatrical Enterprises, 95 Phil. 739
Nielson & co. v. Lepanto Consolidated, 26 SCRA 540
Quiroga v. Parsons Hardware, 38 Phil. 501
Gonzalo Puyat & Sons v. Arco Amusement Co., 72 Phil. 402
Lim v. People, 133 SCRA 333
Pacific Commercial v. Yatco, 68 Phil. 398
Ker v. Lingad, 38 SCRA 524
Hahn v. CA, 266 SCRA 537

V. Some classes of agents - see Mechem, Sections 11-14; Sections 76-77; Sections 560-
569

A. Attorneys-at-law
B. Auctioneers
C. Brokers
D. Factors; commission merchants - 1903 to 1908

VI. What are the classifications of agency contracts?

A. Express agency; implied agency

B. Agency by estoppel; no consent - 1900,1911,1921,1922
C. Agency by operation of law - 1869,1884(2), 1930,1931
D. Universal, general and special - 1876
E. ■ Durable agency-1930

Cases:

Siasat v. IAC, 139 SCRA 238

Dominion Insurance v. CA, GR. No. 129919,6 February 2002

F. Couched in general terms; couched in specific terms - 1877 to 1880

1. Mortgage-1878(12)
Cases:

PNB v. Sta. Maria, 29 SCRA 303

Bank of PI v. De Coster, 47 Phil. 594

2. Loan/borrow-1878(7)

Case:

Hodges v. Salas, 63 Phil. 567

3. Sell-1878(5)

Cases:

Strong v. Gutierrez Rupide, 6 Phil. 680 (main opinion only)

Katigbak v. Tai Hung Co., 52 Phil. 622

4. Lease-1878(8)

Case:

Chuav.IAC,229SCRA99

5. Compromise -1878(3)

Cases:

Dungo v. Lopena, 6 SCRA 1007

Vicente v. Geraldez, 52 SCRA 210

6. Other acts of strict dominion - 1878(12)

Case:

Insular Drug Co. v. National Bank, 58 Phil. 684

VII. What are the obligations and liabilities of agents to their principals?

A. Act within scope of authority - 1879,1880,1881,1882,1887

B. Carry out the agency -1884,1928,1929
C. Not to carry out the agency - 1888
D. Loyalty - 1889,1890,1491
 Smith Bell v. Sotelo, 44 Phil. 874
Rural Bank of Bombon v. CA, 212 SCRA 25
Sy-Juco v. Sy-Juco, 40 Phil. 634
National Food Authority v. IAC, 184 SCRA 166
Gold Star Mining v. Lim Jimenez, 25 SCRA 597

X. What are the obligations and liabilities of principals to agents?

A. Advance/reimburse - 1912,1914,1918
B. Indemnify - 1913 (Dela Cruz v. No. Theatrical)
C. Solidary liability- 1915
D. Compensation - 1875
E. Agent's lien - 1914

Cases:

Macondray v. Sellner, 33 Phil. 370

Danon v. Brim & Co.. 42 Phil. 133
Rocha v. Prats, 43 Phil 397
Inland Realty v. CA, 273 SCRA 70
Infante v. Cunanan, 93 Phil. 691
Prats v. CA, 81 SCRA 360
Uniland Resources v. DBP, 200 SCRA 757
Domingo v. Domingo, supra

XI. What are the obligations of principals to third parties?

A. Agent acting within scope of authority - 1883,1910,1917

B. Agent acting outside scope of authority - 1900,1911, 1916,1917
C. For crimes; for torts

Cases:

Gonzalez v. Haberes, 47 Phil. 380

Tuazon v. Orosco, supra

XII. Duty of third parties dealing with agent - 1902

XIII. How is agency extinguished?

A. Revocation; agency coupled with an interest - 1873,1919 to 1927

Cases:
 E. Diligence - 1885,1887,1909
F. Account/deliver-1891
G. Solidary liability - 1894,1895
H. Pay interest - 1896
I. Fraud; negligence - 1909
J. Specific obligations of commission agents - 1903 to 1908

Cases:

Austria v. CA, 39 SCRA 527

PNB v. Manila Surety, 14 SCRA 776
Domingo v. Domingo, 42 SCRA 131
Severino v. Severino, 44 Phil. 343
Green Valley Poultry v. IAC, 133 SCRA 697
Municipal Council of Iloilo v. Evangelista, 55 Phil. 290

VIII. Responsibility for acts of substitutes - 1892,1893

Cases:

Del Rosario v. La Badenia, 33 Phil. 316

International Films v. Lyric Film, 63 Phil. 778

IX. What are the obligations and liabilities of agents to third parties?

A. Agent acting within scope of authority - 1883,1897,1899

B. Agent acting outside of authority - 1897,1898,1911

1. With notice to third parties - 1901

2. Without notice to third parties

Cases:

PNB v. Agudelo, 58 Phil. 655

Philippine Products v. Primateria, 15 SCRA 301
NPC v. National Merchandising, 117 SCRA 789
National Bank & Welch Fairchild, 44 Phil. 780
Tuazon v. Orosco, 5 Phil 596
Cervantes v. CA, 304 SCRA 25

C. Agent acting in his own name; exception - 1883

Cases:
Barreto v. Sta. Maria, 26 Phil. 440
Dialosa v. CA, 130 SCRA 350
New Manila v. Republic, 107 Phil. 824
Dy Buncio v. Ong Guan, 60 Phil. 606
Garcia v. De Manzano, 39 Phil. 577
Rallos v. Yangco, 20 Phil. 269
Compania General de Tobaccos v. Diabu, 20 Phil 321
Del Rosario v. Abad, 104 Phil. 648
Caleongco v. Claparols, 10 SCRA 577

B. Withdrawal - 1919,1928,1929

Case:

Valera v. Velasco, 51 Phil 695

C. Death; agency coupled with an interest - 1919,1930 to 1932

Cases:

Pasno v. Ravina, 54 Phil 378

Ramon v. Caoibes, 94 Phil. 440
Herrera v. Luy Kim Guan, 1 SCRA 406
Rallos v. Felix Go Chan, supra

D. Dissolution of the firm/corporation

E. Accomplishment of the object/purpose
F. Expiration of the period
G. Civil interdiction, insanity, insolvency
THE LAW ON PARTNERSHIP

Nature; Creation

A. Definition; essential features - 1767

B. Creation - 1770,1771,1772,1784,1815, Code of Professional
Responsibility Rule 3.02,1141

Agad v. Mabato, 23 SCRA 1223

Torres v. CA, 320 SCRA 428
Arbes v. Polistico, 53 Phil. 489
Tocao v. CA, 342 SCRA 20

C. Separate juridical personality - 1768,1775, NIRC Sec. 22(b),

NIRC Sec. 26,1811 second par.

Aguila v. CA, 319 S 246 (1999)

Tan v. Del Rosario, 237 SCRA 324 (1994)
Mendiola v. CA, 497 SCRA 346
Angeles v. Secretary of Justice, 465 SCRA 106

D. Mutual agency -1803,1818,1819,1820,1821,1822,1825, Sec. 29 Rule

130, Section 11, Rule 14,1800,1801,1802,1832,1833,1834

E. Distinguish from:
1. Co-ownership; co-possession
2. Tenancy in common; joint tenancy
3. Joint ventures
4. Joint adventures
5. Joint accounts
6. Cuentas en participation
7. Agency

1769,1825, Arts. 239-243 Code of Commerce

SEC Opinion dated 29 Feb 1980
Gatchalian v. CIR, 67 Phil 666
Pascual v. CIR, 166 SCRA 560 (1988)
Obillos v. CIR, 139 SCRA 436
Rivera v. People's Bank, 73 Phil 546 (1942)
Tuason v. Bolanos, 95 Phil 106
Heirs of Tan Eng Kee v. CA, 341 S 740 (2000)
Aurbach v. Sanitary Wares, 180 SCRA 130
Litonjua v. Litonjua, 477 SCRA 576
 Bourns v. Carman, 7 Phil 117
Sevilla v. CA, 160 SCRA 171 (1988)
Philex Mining Corp v. CIR, 551 SCRA 428

II. Kinds of partnership

A. Universal - 1776 - 1782, 739

B. Particular - 1776,1783
C. General -1776
D. Limited -1776
E. At will-1785
F. For a term or undertaking - 1785
G. Commercial -1767
H. Professional -1767
I. By estoppel/apparent - 1825

Ortega v. CA, 245 SCRA 529 (1995)

III. Kinds of partners

A. Industrial - 1789, 1797

B. Capitalist - 1789,1790,1797,1808
C. Managing - 1792,1800,1801,1802
D. By estoppel - 1825

IV. Partner's obligations to the partnership

A. To contribute; warrant - 1786,1787,1788,1790,1791,1795

B. To apply sums collected pro rata - 1792
C. To compensate - 1794
D. To be loyal; fiduciary duty - 1807

Lim Tanhu v. Remolete, 66 SCRA 425

Liwanag v. CA, 281 SCRA 225 (1997)
US v. Clarin, 17 Phil 84
Pang Lim v. Lo Seng, 42 Phil 282
Catalan v. Gatchalian, 105 Phil 1270

Partner's obligations inter se

 A. To bring to collation - 1793
B. To share in the profits/losses - 1797,1798,1799
C. To render true and full information - 1806
D. Not to engage in another business - 1789,1808

Pioneer Insurance v. CA, 175 SCRA 668 (1989)

Evangelista v. Abad Santos, 51 SCRA 416
Moran v. CA, 133 SCRA 88
Martinez v. Ong Pong Co, 14 Phil 726
Agustin v. Inocencio, 9 Phil 134
Soncuya v. De Luna, 67 Phil 646

VI. Partner's obligations to personal and partnership creditors; third parties

A. To have his partnership interest charged for personal debts (primary)

1814,1827
B. To be liable pro rata for partnership debts (subsidiary & joint) - 1816,
1817,1835
C. Tort liability; breach of trust liability (primary & solidary) - 1822-1824
D. Liability in case of estoppel - 1825; Sec. 21 Corporation Code
E. Liability of new partners (subsidiary) - 1826

In re Sycip, 92 SCRA 1
Litton v. Hill, 67 Phil 509
Goquiolay v. Sycip, 9 SCRA 663
Goquiolay v. Sycip, 108 Phil 947
MacDonald v. National City Bank, 99 Phil 156
Compania Maritima v. Munoz, 9 Phil 326
Co-Pitco v. Yulo, 8 Phil 544
Pacific Commercial v. Aboitiz, 48 Phil 841
Magdusa v. Albaran, 5 SCRA 511
Island Sales v. United, 65 SCRA 554
Munasque v. CA, 139 SCRA 533
Lim tong Lim v. Philippine Fishing Gear, Inc. 317 SCRA 728
Bachrach v. La Protectora, 37 Phil 441

VII. Rights of a partner

A. To associate another in his share - 1804

B. To access, inspect and copy partnership books - 1805
C. To have a formal account - 1809,1842
D. Property rights - 1810

1. To possess specific partnership property - 1811

 2. To convey partnership interest - 1812, 1813

E. To ask for dissolution - 1830 (2), 1831

Dan Fue Leung v. IAC, 169 SCRA 746

US v. Clarin, supra
Emnace v. CA, 370 S 431

VIII. Partnership's obligations to the partners

A. To reimburse; to answer for obligations contracted - 1796

Martinez v. Ong Pong, 14 Phil 726

Agustin v. Inocencio, Phil 134

X. Rights of assignees

A. To receive the interest - 1813

B. To require an account - 1813
C. To ask for dissolution - 1831

XI. Dissolution & Winding Up

A. Dissolution; winding up; termination - 1828,1829

B. Causes of dissolution

1. Without violating the agreement - 1830(1)

2. In contravention of the agreement - 1830(2)
3. By operation of law - 1830(30)-(7)
4. By court decree -1830(8), 1831

C. Effects of dissolution

- 1. Termination of mutual agency; exceptions - 1832,1833, 1834

D. Right to wind up - 1836

E. Setding of accounts/application of properties/sharing of profits & losses •
1797,1798,1799,1827,1837,1838
F. Effects of rescission - 1838,1839
G. Effects of continuation of the business - 1840,1841
H. Prescription of action - 1153,1144

Idos v. CA, 296 S 194 (1998)

Ortega v. CA, 245 SCRA 529
Rojas v. Maglana, 192 SCRA 110
Lichauco v. Lichauco, 33 Phil 350
Bearneza v. Dequilla, 43 Phil 237
Singson v. Isabela Sawmill, 88 SCRA 623
Bonnevie v. Hernandez, 95 Phil 175
Yu v. NLRC. 224 SCRA 75
Sunga-Chan v. CA, 555 SCRA 275
Primelink Properties v. Lazatin-Magat, 493 SCRA 444

END-