UNIVERSITY OF THE PHILIPPINES

COLLEGE OF LAW

Law 173
AGENCY AND PARTNERSHIP
Second Semester, Academic Year 2017-2018

Course Outline1

Prof. Ryan P. Oliva

Email: ryan.oliva@up.edu.ph

Course description: Philippine law on agency and partnership based on the Civil Code
and other relevant special laws.

Pre-requisite: Law 101, Obligations and Contracts

Course requirements:

Active class participation2 and attendance3 50%

Midterm examination 25%
Final examination and/or Report 25%
Total 100%

References:

Casis, R. J., Analysis of Philippine Agency Law & Jurisprudence4

_________., Analysis of Philippine Partnership Law & Jurisprudence5
Mechem, F. R., Outlines of the Law of Agency (1952).

The Law on Agency

Week 1

I. Introduction

Agency, pp. 1 to 35
A. How is agency defined? Civil Code, Art. 18686

1. Consent – Arts. 1868, 1869 to 1872, 1898, 1901, 1910, 1317, 1403(1)
a. Express; ratification
b. Implied; ratification
2. Object
3. Consideration – Art. 1875
                                                                                                               
1 This course outline is based on the outlines of Professors Dionne Marie M. Sanchez and

Roberto N. Dio.
2 May consist of quizzes, recitation and/or group report.
3 University rules on absences will be strictly enforced.
4 Hereafter, “Agency” for brevity.
5 Hereafter, “Partnership” for brevity.
6 Unless otherwise stated, the provisions indicated are those of the New Philippine Civil

Code.    

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 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
Uy v. CA, 314 SCRA 69
Macke v. Camps, 7 Phil. 553
Prudential Bank v. CA, 223 SCRA 350
Litonjua, Jr. v. Eternit Corp. 490 SCRA 204
Spouses Viloria v. Continental Airlines, 663 SCRA 57

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

A. Oral
B. Written

Agency, pp. 67 to 96
Cases:
Angeles v. Phil. National Railways, 500 SCRA 444
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
De los Reyes v. CA, 313 SCRA 632
AF Realty v. Dieselman Freight, 373 SCRA 385

III. 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

Week 2

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

Agency, pp. 312 to 346

A. Master-servant – Arts. 1689 to 1699
B. Employer-employee – Art. 1700
C. Lease of service – Art. 1644
D. Independent contractor – Art. 1713
E. Trust – Art. 1440
F. Sale – Art. 1458
G. Partnership – Art. 1767
H. Negotiorum gestio/quasi-contract – Arts. 2144, 2145
I. Judicial administrator
J. Broker – (City Lite, p. 393)

Cases:
Sevilla v. CA, 160 SCRA 171

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Shell v. Firemen’s Insurance Co., 100 Phil. 757
De la 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 to 14; Sections 76 and 77;
Sections 560 to 569

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

Week 3

VI. What are the classifications of agency contracts?

Agency, pp. 35 to 66; 96 to 123

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

Cases:
Siasat v. IAC, 139 SCRA 238
Dominion Insurance v. CA, 376 SCRA 239
Republic v. Bañez, G.R. No. 169442, October 14, 2015

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

1. Mortgage – Art. 1878(12)

Cases:
PNB v. Sta. Maria, 29 SCRA 303
Bank of PI v. De Coster, 47 Phil. 594

2. Loan/borrow – Art. 1878(7)

Case:
Hodges v. Salas, 63 Phil. 567

3. Sell – Art. 1878(5)

Cases:
Strong v. Gutierrez Repide, 6 Phil. 680 (main opinion only)
Katigbak v. Tai Hung Co., 52 Phil. 622

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 Bautista-Spille v. NICORP Management and Development Corp., G.R. No.
214057, October 19, 2015

4. Lease – Art. 1878(8)

Case:
Chua v. IAC, 229 SCRA 99

5. Compromise – Art. 1878(3)

Cases:
Dungo v. Lopena, 6 SCRA 1007
Vicente v. Geraldez, 52 SCRA 210

6. Other acts of strict dominion – Art. 1878(12)

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

Week 4

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

Agency, pp. 126 to 205

A. Act within scope of authority – Arts. 1879, 1880, 1881, 1882, 1887
B. Carry out the agency – Arts. 1884, 1928, 1929
C. Not to carry out the agency – Art. 1888
D. Loyalty – Art. 1889, 1890, 1491
E. Diligence – Arts. 1885, 1887, 1909
F. Account/deliver – Art. 1891
G. Solidary liability – Arts. 1894, 1895
H. Pay interest – Art. 1896
I. Fraud; negligence – Art. 1909
J. Specific obligations of commission agents – Arts. 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
Abacus Securities v. Ampil, 438 SCRA 315
Oliver v. Philippine Savings Bank and Castro, G.R. No. 214567, April 4, 2016

VIII. Responsibility for acts of substitutes – Arts. 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?

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 Agency, pp. 205 to 217
A. Agent acting within scope of authority – Arts. 1883, 1897, 1899
B. Agent acting outside of authority – Arts. 1897, 1898, 1911

1. With notice to third parties – Art. 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
Bank of the Philippine Islands and FGU Insurance v. Laingo, G.R. No. 205206,
March 16, 2016

C. Agent acting in his own name; exception – Art. 1883

Cases:
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

Week 5

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

Agency, pp. 219 to 243

A. Advance/reimburse – Arts. 1912, 1914, 1918
B. Indemnify – Art. 1913
C. Solidary liability – Art. 1915
D. Compensation – Art. 1875
E. Agent’s lien – Art. 1914

Cases:
Dela Cruz v. Northern Theatrical, supra
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?

Agency, pp. 243 to 252

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 A. Agent acting within scope of authority – Arts. 1883, 1910, 1917
B. Agent acting outside scope of authority – Arts. 1900, 1911, 1916, 1917
C. For crimes; for torts

Cases:
Gonzalez v. Haberes, 47 Phil. 380
Tuazon v. Orosco, supra
Spouses Salvador v. Spouses Rabaja, G.R. No. 199990, February 4, 2015

Week 6

XII. Duty of third parties dealing with agent – Art. 1902

Agency, pp. 254 to 275

XIII. How is agency extinguished?

Agency, 276 to 310

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

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
Compañia General de Tabacos de Filipinas v. Diabu, 20 Phil 321
Del Rosario v. Abad, 104 Phil. 648
Caleongco v. Claparols, 10 SCRA 577

B. Withdrawal – Arts. 1919, 1928, 1929

Case:
Valera v. Velasco, 51 Phil 695

C. Death; agency coupled with an interest – Arts. 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

Week 7

Midterm examination

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 The Law on Partnership
Week 8

I. Nature; Creation

Partnership, pp. 1 to 57
A. Definition; essential features – Art. 1767

Partnership, pp. 59 to 88
B. Creation – Arts. 1770, 1771, 1772, 1784, 1815, Code of Professional
Responsibility Rule 3.02, Art. 1411

Cases:
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 – Arts. 1768, 1775; National Internal Revenue

Code Sec. 22(b), NIRC Sec. 26; Art. 1811 par. (2)

Cases:
Aguila v. CA, 319 SCRA 246
Tan v. Del Rosario, 237 SCRA 324
Mendiola v. CA, 497 SCRA 346
Angeles v. Secretary of Justice, 465 SCRA 106

D. Mutual agency – Arts. 1803, 1818, 1819, 1820, 1821, 1822, 1825; Revised
Rules of Court, Rule 130, Sec. 29; 1997 Revised Rules of Civil Procedure Rule
14, Section 11; Arts. 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 participación
7. Agency

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

Cases:
SEC Opinion dated February 29, 1980
Gatchalian v. CIR, 67 Phil 666
Pascual v. CIR, 166 SCRA 560
Obillos v. CIR, 139 SCRA 436
Rivera v. People’s Bank, 73 Phil 546
Tuason v. Bolanos, 95 Phil 106

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 Heirs of Tan Eng Kee v. CA, 341 SCRA 740
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
Philex Mining Corp v. CIR, 551 SCRA 428

Week 9

II. Kinds of partnership

Partnership, pp. 90 to 122

A. Universal – Arts. 1776 – 1782, 739
B. Particular – Arts. 1776, 1783
C. General – Art. 1776
D. Limited – Art. 1776
E. At will – Art. 1785
F. For a term or undertaking – Art. 1785
G. Commercial – Art. 1767
H. Professional – Art. 1767
I. By estoppel/apparent – Art. 1825

Case:
Ortega v. CA, 245 SCRA 529

III. Kinds of partners

A. Industrial – Arts. 1789, 1797

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

IV. Partner’s obligations to the partnership

Partnership, pp. 163 to 176

A. To contribute; warrant – Arts. 1786, 1787, 1788, 1790, 1791, 1795
B. To apply sums collected pro rata – Art. 1792
C. To compensate – Art. 1794
D. To be loyal; fiduciary duty – Art. 1807

Cases:
Lim Tanhu v. Remolete, 66 SCRA 425
Liwanag v. CA, 281 SCRA 225
US v. Clarin, 17 Phil 84
Pang Lim v. Lo Seng, 42 Phil 282
Catalan v. Gatchalian, 105 Phil 1270

Week 10

V. Partner’s obligations inter se

A. To bring to collation – Art. 1793

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 B. To share in the profits/losses – Arts. 1797, 1798, 1799
C. To render true and full information – Art. 1806
D. Not to engage in another business – Arts. 1789, 1808

Cases:
Pioneer Insurance v. CA, 175 SCRA 668
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

Partnership, pp. 178 to 187

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

Cases:
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
Compañia 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
Muñasque v. CA, 139 SCRA 533
Lim Tong Lim v. Philippine Fishing Gear, Inc. 317 SCRA 728
Bachrach v. La Protectora, 37 Phil 441
Guy v. Gacott, G.R. No. 206147, January 13, 2016

Week 11

VII. Rights of a partner

Partnership, pp. 123 to 163

A. To associate another in his share – Art. 1804
B. To access, inspect and copy partnership books – Art. 1805
C. To have a formal account – Arts. 1809, 1842
D. Property rights – Art. 1810

1. To possess specific partnership property – Art. 1811

2. To convey partnership interest – Arts. 1812, 1813

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

Partnership, pp. 232 to 238

Cases:
Emnace v. CA, 370 SCRA 431
Dan Fue Leung v. IAC, 169 SCRA 746
US v. Clarin, supra

VIII. Partnership’s obligations to the partners

A. To reimburse; to answer for obligations contracted – Art. 1796

Cases:
Martinez v. Ong Pong, 14 Phil 726
Agustin v. Inocencio, 9 Phil 134

IX. Rights of assignees

A. To receive the interest – Art. 1813

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

Week 12

X. Dissolution & Winding Up

Partnership, pp. 188 to 211

A. Dissolution; winding up; termination – Arts. 1828, 1829
B. Causes of dissolution

1. Without violating the agreement – Art. 1830(1)

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

C. Effects of dissolution

Partnership, pp. 211 to 232; 238 to 251

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

D. Right to wind up – 1836

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

Cases:
Idos v. CA, 296 SCRA 194

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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

Week 13

XI. Limited Partnership – Arts. 1843 to 1867

Partnership, pp. 253 to 300

Case:
Najim v. De Mesa, SEC-SICD Case No. 2526, September 21, 1987

XII. Integration

Week 14

Final examination

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