What ARE THE Causes Which Violate THE Agreement?: Thieves and Anti-Thief Robot Stolen Somewhere in Colon.)

WWW August 23, 2014 according to the extent of his failure, of the benefits of the contract
which they have made, and of the fruits thereof to which they are
WHAT ARE THE CAUSES WHICH VIOLATE THE legitimately entitled. Hence, the rule that courts have the power to
AGREEMENT? decree dissolution of a partnership because of incapacity of a
partner which materially affects his ability to discharge the duties
Art. 1830. Dissolution is caused: imposed by his partnership contract. (Barclay vs. Barrie, 102 N.E.
(2) In contravention of the agreement between the partners, 102.)
where the circumstances do not permit a dissolution under
any other provision of this article, by the express will of any
partner at any time; 2. Insanity.
 Sir. Insanity, not Incapacity. Because no one would
Illustration. The agreement was ten years, one of the partners admit that a person is insane! That’s why it declares
wants to dissolve it on five years; it violates the agreement. The judicial declaration.
partner who caused the dissolution and violated the agreement is
liable for damages especially if it can be proven that he is in bad 3. A partner has been guilty of such conduct as tends
faith. to affect prejudicially the carrying on of the business.
 Because a partner might claim the otherwise,
There are also causes which may not be in violation of the meaning he might claim that his conduct does
not affect prejudicially on the business of the
agreement. Meaning , it can be in accordance with the agreement.
partnership.
4. When the business can only be carried on a loss.
Illustration. When there is a termination in accordance with the  No need for an actual. It is enough that there is
term specified in the articles of the partnership. When the partners an imminent danger for loses.
agree that the partnership will last for 15 years, after the lapse of  The imminent danger for loses may be proven
15 years, then the partnership is dissolved. If a partner would ask through financial statements which we would
to dissolve the partnership after the lapse of the agreed person, show an irreversible trend of profits, dwindling
then that partner is NOT liable for damages. They can still down. We need not wait up to the point that we
are already suffering loses because when we
continue the partnership after the 15-year period. The partnership
scan the market, the market does not show any
now becomes a partnership at will. The partners can now dissolve favorable indication that the partnership will be
the partnership anytime and the partners are NOT liable for able to recover from this trend.
damages.  Illustration. When we are engaged in the
manufacture of noodles and nobody buys
 These things (Art. 1830) will not require will not require noodles because everywhere there is instant
any judicial intervention because it’s clear, the agreement noodles. That’s the trend.
is there. Then if we violate that agreement, we can  Nescafe 3 in 1 story. Look at the marker
indicators!
dissolve, but the partner who violated the agreement,
5. When there is abandonment of the business.
who is in bad faith will be for damages. 6. Fraud in the management of the partnership
 If we dissolve it in accordance with the agreement, there business.
is nothing wrong because we are complying with the 7. Refusal of the partner to render financial accounts as
agreement. There is no need for a court intervention for required.
that.
Sir. These are instances when the partners cannot just decide on
their own. They should prove it because when you dissolve, you
are not only involving the rights of the partners; you are also
PARTNERSHIP DISSOLUTION WHERE JUDICIAL
affecting the third parties and therefore the rights of these parties
INTERVENTION IS REQUIRED. must be protected. In a partnership business cannot just close and
say goodbye to their customers, they have to prove that the
1. Incapacity other than Insanity. There is a need for a partnership is suffering from handicaps or suffering from problems,
judicial declaration because the facts are disputable. financial perhaps, which require court’s intervention.
Situation. Industrial partner in charged with repairs in an auto – EFFECT OF DISSOLUTION.

repair shop and in one accident, that industrial partner lost both of
his arms. Is a judicial declaration needed here? (Joke about When dissolutions happen, winding up follows.
thieves and anti-thief robot stolen somewhere in Colon.)
The effect of dissolution is that the partner ceases to be
(Transcriber’s opinion because Sir did not provide for the authorized to act in behalf of the partnership, except for the
answer) De Leon: Incapacity. — Obviously, this refers to purposes of winding up or completing transactions entered by the
incapacity other than insanity. Independent of any express partnership prior to the dissolution.
stipulation, a partner impliedly undertakes to advance the success
of the partnership of which he is a member by devoting to it, within While before the dissolution, when the partnership still existed, the
reasonable limits, his time, effort, and ability. His co-partners are partners have the right to the specific properties, the right to
entitled to his contribution and if, for any reason, he fails to fulfill manage the partnership and the right to their share of the interests
his duties they are thereby deprived, in greater or less degree,
of the partners. In management, each partner had the authority to
WWW Finals Compilation
USC Law, Rm 404 year 2014
EJ Garcia, Hubahib, Ong
Special thanks to Bonghanoy, Fernandez, Tamayo Page 1
bind the partnership. However upon dissolution, the partners’ General Rule:
authority to bind the partnership ceases or terminated except: Before dissolution, each partner is an agent and
therefore could bind the partnership
Unless: 1. No authority
 The authority is for the purposes for the winding 2. Not usual course of business
rd
up of the partnership affairs. 3. Lack of authority is known to 3
 For the purposes of completion unfinished person
business, incurred before dissolution. Upon dissolution, all authority given to each partner
 When the dissolution is caused by the act, ceases, no longer authorized
insolvency and death of the partner, any
transaction will still bind the partnership as if the Effects of dissolution of the partnership to the partners:
Upon dissolution, acts of a partner could no longer bind
partnership has not been dissolved. the partnership
Sir. When the partnership still existed, each partner, in the Exception:
absence of any agreement in the management, each partner was 1. Winding up
2. Finish the uncompleted transactions
authorized to enter into any transaction in behalf of the 3. When the dissolution was caused by the acts,
partnership. Once the dissolution is done, that authority ceases. insolvency or death of the partner
a. Normally these things would have dissolved
GROUNDS OF DISSOLUTION: WHEN THE THING the partnership and therefore his authority
should have ceased but if it involves acts,
CONTRIBUTED IS LOST OR PERISHES
insolvency or death by way of exception,
these do not normally affect the rights of
Illustration. When a Mitsubishi Pajero colored Green is each partner unless:
contributed with plate number, 664; registration no. 0701; with
engine no. 335 is promised to be contributed to the partnership, Exception to the Exception:
1. Unless partner who entered into a
while on its way, as the partner was about to turn over the vehicle, transaction had knowledge or notice of the
the vehicle was involved in accident. partner’s act, insolvency or death
a. It will not bind the partnership
 The partnership will be dissolved. Because that specific
Let’s illustrate:
Mistubishi Pajero with plate number, 664; registration no. ABC, A died. B and C had knowledge of his
0701; with engine no. 335, was lost and there is no yet death. When B and C entered into another contract
transfer of ownership. According to the law, when a involving the partnership, A would not be liable (of course
specific thing is lost, before the delivery to the he is dead). The Estate of A would no longer be held
liable because B and C already had notice and
partnership, the partner bears the loss and the effect is knowledge of A’s death.
that the partner cannot comply with his obligation to
contribute that specific thing, Pajero, to the partnership, Effects of dissolution of the partnership to 3rd persons:
New transactions after dissolution:
then dissolution of the partnership happens.
Generally: the partnership is not bound,
 It would also depend if how the Pajero was contributed. If dissolution stops every transaction
the ownership was really transferred to the partnership Except:
or if it is only the use is being contributed. 1. Winding up of the partnership
2. Complete unfinished business
o Loss Incurred Before Delivery: 3. Transactions entered into with 3rd parties
 If the ownership is already who have extended credit to the partnership
transferred to the partnership but lost prior to its dissolution who had no
knowledge of the dissolution
before delivery, and what was rd
4. 3 parties have not extended credit but
contributed was the car itself, the such party knows of the partnership before
partnership shall be dissolved. dissolution and such dissolution has not
 If only the use is being contributed been advertised in a newspaper of general
circulation. (extended credit after
before delivery. The partnership is dissolution) suki si 3rd person sa partnership
also dissolved.
o Loss Incurred After the delivery. We would If suki partnership then upon dissolution there must be publication.
also distinguish.
If all circumstances are present, there are still transactions where
 If the ownership of the specific things the partnership could never be bound
was transferred to the partnership, then 1. The dissolution was caused by the partnership
the partnership would not be dissolved, business being unlawful
2. Partner is insolvent
 If only for the use of the thing. The 3. Partner has no authority to wind up the partnership
partnership shall be dissolved. (not business except when the parties involved are the
sure with the last part kay to be same who has extended credit prior to the
continued daw) dissolution as well as the person who has no
knowledge but has known the partnership prior to its
dissolution.
WWW, August 28, 2014

In any of these circumstances the partnership cannot be bound.
rd
 In other words, if creditor K has collectibles from ABC
Where 3 parties are aware or not, the partnership could not be partnership and that obligation arose from contract and
bound. Ignorance of the law excuses no one.
the assets of partnership are already exhausted, creditor
Novation: can still collect up to the personal assets of the partners.
- Execution of a new contract to extinguish the old one
- Mode of extinguishing an obligation If an obligation arises from a tort, all are Solidarily liable, Principal
MODES OF EXTINGUISHIN OBLIGATION: and direct. But among them, guilty partner must bear the burden.
The other parties can seek reimbursement from the guilty partner.
PaLoReMeCoNo ARFP:
Payment Illustration. So C here is the guilty partner, but C happens to be a
Loss very close friend of K, so K then released him from the obligation.
Remission
Merger The effect is that it will not change the liability of the partnership. K
Condonation can still go after the partners, A and B.
Novation
Annulment So there has been an new obligation, before there were three A,B
Rescission
Fulfillment of resolutory condition & C, now it is only A and B who were the new debtors.
Prescription
So now that A & B has paid the obligation, can A seek
Remission or Condonation reimbursement from C?
- Obligation ―ahh just forget about it‖… so if the
moment I remember?
- Releasing the debtor from his obligation Yes, because in partnership, when there is novation, there has to
be an agreement between the old debtor, old creditor and the new
debtor and new creditor. Everybody must agree, otherwise it will
WWW August 28, 2014, Part 2 not be binding between the parties.
Continuation on Modes of Extinguishing Obligation: Art. 1835. The dissolution of the partnership does not of itself
discharge the existing liability of any partner.
Merger/Confusion – personalities of both debtor and creditor
merged in one person A partner is discharged from any existing liability upon dissolution
of the partnership by an agreement to that effect between himself,
Novation – a new contract is entered into to replace the old one. the partnership creditor and the person or partnership continuing
the business; and such agreement may be inferred from the
2 Types of Novation: course of dealing between the creditor having knowledge of the
dissolution and the person or partnership continuing the business.
1. REAL NOVATION - change in the thing itself or the subject
matter. The ―Res‖ changes. The individual property of a deceased partner shall be liable for all
obligations of the partnership incurred while he was a partner, but
2. PERSONAL NOVATION - change in the parties involved; this subject to the prior payment of his separate debts. (n)
can be done by changing the creditor - Subrogation
WINDING UP
Illustration. Camasin owes me 10K but instead you pay me 10K. I
cannot collect from Camasin anymore. It is now you who collects. Winding-up - where there is settlement of the partnership affairs.
You step into my shoes/rights. – substitution of the new creditor. Payment of obligations, etc.
Therefore you are the new creditor, and when there is a new
creditor there is novation and it is technically called ―Subrogation‖  Assets are liquidated, determined; pay obligations;
surplus are divided among the partners depending on
 Applying this in partnership, once we dissolve, the agreement and contribution.
creditor can still claim from the partnership since this is
really the purpose of winding up. Winding up can be done, either:
Q: When there is the dissolution of the partnership, can the Judicially – thru the intervention of the courts;
creditors still collect from the partnership? Yes, dissolution of
the partnership does not mean that the obligations are Extrajudicially- agreement by the parties themselves or any
extinguished, that is the purpose of winding up. partner who is not guilty.
So if “K” has collectables from partnership ABC, and that Who can wind-up?
liability/obligation arose from contract, and the assets of the
partnership are now void, can the creditor still collect? Yes, JUDICIAL - any partner or legal representative may seek the
the creditor can collect because General Partners are still liable authority of the court for dissolution.
even up to their personal assets.
EXTRA-JUDICIAL:
1. One designated in the articles of partnership. (b) The contributions of the partners necessary for the
2. If none, any of the partners who is not guilty of the wrongful payment of all the liabilities specified in No. 2.
dissolution. (2) The liabilities of the partnership shall rank in order of payment,
as follows:
If you are the guilty party then you may still receive the surplus of (a) Those owing to creditors other than partners,
(b) Those owing to partners other than for capital and
the assets remaining but you are also equally liable for damages.
profits,
(less damages) (c) Those owing to partners in respect of capital,
(d) Those owing to partners in respect of profits.
What would constitute assets? (stated na an amounts ni (3) The assets shall be applied in the order of their declaration in
Camasin) No. 1 of this article to the satisfaction of the liabilities.
(4) The partners shall contribute, as provided by article 1797, the
1. Partnership property – 10M amount necessary to satisfy the liabilities.
2. Contribution of partners – 30M (5) An assignee for the benefit of creditors or any person
3. Goodwill - good name and reputation of the partnership, appointed by the court shall have the right to enforce the
contributions specified in the preceding number.
which is usually commercial in nature that has monetary
(6) Any partner or his legal representative shall have the right to
value. – 50M enforce the contributions specified in No. 4, to the extent of the
4. Others: Debts collectibles – 5M amount which he has paid in excess of his share of the liability.
(7) The individual property of a deceased partner shall be liable for
The goodwill of the partnership is the good name of the the contributions specified in No. 4.
partnership, if you go to Jollibee and you bring cake from outside (8) When partnership property and the individual properties of the
then somebody gets poisoned by the cake, then the good name of partners are in possession of a court for distribution, partnership
Jollibee will be destroyed. creditors shall have priority on partnership property and separate
creditors on individual property, saving the rights of lien or secured
creditors.
Liabilities with Order of Application of Assets Graph:
(9) Where a partner has become insolvent or his estate is
insolvent, the claims against his separate property shall rank in the
1. Debts following order:
2. Damages (a) Those owing to separate creditors;
3. Suppliers of services and goods (b) Those owing to partnership creditors;
(c) Those owing to partners by way of contribution. (n)
5. Loans – advances made by the partner RESCISSION
Recission – If one is induced by fraud or misrepresentation to

6. Capital
become a partner, the contract is voidable or annullable. If
contract is annulled, injured partner is entitled to restitution.
7. Profits
What are the rights of the partner?
Order of Application of Assets/Payment of Liabilities: (Please
 Right of lien or retention of surplus of partnership
see above list of assets and liabilities.)
property after satisfying partnership liabilities
1. Owing to partnership creditors – 100k (1st Priority)  Right of subrogation in place of partnership creditors
 Right of indemnification by guilty partner – due to
 Debts and Damages
2. Owing to partners other than for capital and profits (ex. Loans damages caused by the guilty partner to the other
from a partner)– 5M partners
 Loans – advances made by the partner
Art. 1838. Where a partnership contract is rescinded on the
3. Owing for return of capital – 30M ground of the fraud or misrepresentation of one of the parties
4. If any partnership assets remain, distributed as profits to the thereto, the party entitled to rescind is, without prejudice to any
partners in the proportion in which profits are to be shared. other right, entitled:
5. Suppliers – ex. If you are involved in a funeral business then
(1) To a lien on, or right of retention of, the surplus of the
you tell your customers that you have a package of flowers, partnership property after satisfying the partnership liabilities to
plus coffin plus all others, all they have to do is cry. So those third persons for any sum of money paid by him for the purchase
flowers and others are from your suppliers. (incorporated in of an interest in the partnership and for any capital or advances
#1) contributed by him;
Art. 1839. In settling accounts between the partners after (2) To stand, after all liabilities to third persons have been
dissolution, the following rules shall be observed, subject to any satisfied, in the place of the creditors of the partnership for any
agreement to the contrary: payments made by him in respect of the partnership liabilities; and
(1) The assets of the partnership are:
(a) The partnership property,

(3) To be indemnified by the person guilty of the fraud or making (5) When any partner wrongfully causes a dissolution and the
the representation against all debts and liabilities of the remaining partners continue the business under the provisions of
partnership. (n) article 1837, second paragraph, No. 2, either alone or with others,
and without liquidation of the partnership affairs;
CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP:
(6) When a partner is expelled and the remaining partners
When all these things may happen, other partners may decide continue the business either alone or with others without
to leave and others may stay. What could be done? liquidation of the partnership affairs.
For those partners who wish to continue, they may still continue to The liability of a third person becoming a partner in the partnership
use the properties. continuing the business, under this article, to the creditors of the
dissolved partnership shall be satisfied out of the partnership
For those who wish to leave, those partners can ask for his share property only, unless there is a stipulation to the contrary.
of the partnership minus the obligations of the partner, and the
obligations of that partner shall be extinguished. When the business of a partnership after dissolution is continued
under any conditions set forth in this article the creditors of the
There can be reorganization of the partnership’s finances, dissolved partnership, as against the separate creditors of the
retiring or deceased partner or the representative of the deceased
although they may have the assets but they do not have the
partner, have a prior right to any claim of the retired partner or the
liquidity to settle what may be due to the retiring partner. They representative of the deceased partner against the person or
may be allowed to come out with an agreement where there could partnership continuing the business, on account of the retired or
be a process on how these accounts due to the retiring partner deceased partner's interest in the dissolved partnership or on
could be paid, they may agree that the remaining partners can account of any consideration promised for such interest or for his
continue using the properties of the business to continue the right in partnership property.
business, and upon continuing the business, they may be able to
pay the obligations due to the retiring partner. Nothing in this article shall be held to modify any right of creditors
to set aside any assignment on the ground of fraud.
We can take care of the retiring partner, and the old creditors.
How about the new creditors? The use by the person or partnership continuing the business of
the partnership name, or the name of a deceased partner as part
 If we continue with the partnership which is a new thereof, shall not of itself make the individual property of the
partnership now, there can be a mixture of old creditors deceased partner liable for any debts contracted by such person
or partnership. (n)
and new creditors. There is a confusion.
Art. 1840. In the following cases creditors of the dissolved Art. 1841. When any partner retires or dies, and the business is
partnership are also creditors of the person or partnership continued under any of the conditions set forth in the preceding
continuing the business: article, or in Article 1837, second paragraph, No. 2, without any
settlement of accounts as between him or his estate and the
(1) When any new partner is admitted into an existing partnership, person or partnership continuing the business, unless otherwise
or when any partner retires and assigns (or the representative of agreed, he or his legal representative as against such person or
the deceased partner assigns) his rights in partnership property to partnership may have the value of his interest at the date of
two or more of the partners, or to one or more of the partners and dissolution ascertained, and shall receive as an ordinary creditor
one or more third persons, if the business is continued without an amount equal to the value of his interest in the dissolved
liquidation of the partnership affairs; partnership with interest, or, at his option or at the option of his
legal representative, in lieu of interest, the profits attributable to
(2) When all but one partner retire and assign (or the the use of his right in the property of the dissolved partnership;
representative of a deceased partner assigns) their rights in provided that the creditors of the dissolved partnership as against
partnership property to the remaining partner, who continues the the separate creditors, or the representative of the retired or
business without liquidation of partnership affairs, either alone or deceased partner, shall have priority on any claim arising under
with others; this article, as provided Article 1840, third paragraph. (n)
(3) When any partner retires or dies and the business of the What is the solution to the confusion?
dissolved partnership is continued as set forth in Nos. 1 and 2 of
this article, with the consent of the retired partners or the Those creditors have the right to claim from the assets of the
representative of the deceased partner, but without any partnership.
assignment of his right in partnership property;
So there are: 1. New assets; 2. Old assets; 3. New creditors; 4.
(4) When all the partners or their representatives assign their Old creditors.
rights in partnership property to one or more third persons who
promise to pay the debts and who continue the business of the Problem: If there are new creditors and old creditors but there are
dissolved partnership; no new assets.

The old assets should be liquidated and winded up and there An industrial partner, being an industrial partner, may be at the
should be payment of the old liabilities, and the surplus will be same time limited partner.
used for the new partnership where the payment of new liabilities
De Leon. Generally, his rights and powers are those of a general
may be taken.
partner. Hence, he is liable with his separate property to third
persons. (Art. 1816.) However, with respect to his contribution as
SIR: THE LAW SAYS, Old creditors should be given
a limited partner, he would have the right of a limited partner
preference to Old assets, New Creditors should be given insofar as the other partners are concerned.
preference to New Assets. If there are no new assets, new
creditors should wait; if there are extras from old assets, new In an articles or certificate of the limited partnership, there are lists
creditors can claim. But in no way can new creditors gain of general partners and limited partners. Here, a name of a partner
preference over old assets. appears twice on the certificate, on the list of general partners and
on the list of limited partners. Why is there a need for his name to
be indicated twice or appear in order for him to be general partner
FINAL EXAMS COVERAGE STARTS HERE: and a limited partner at the same time?
WWW August 30, 2014 For the protection of the third parties and the law requires the
same so that the public will know that your participation in the
LIMITED PARTNERSHIP partnership.
Limited Partnership – composed of one or more general partners Art. 1853. A person may be a general partner and a limited partner
and one or more limited partners. in the same partnership at the same time, provided that this fact
shall be stated in the certificate provided for in Article 1844.
Limited Partners – are those partners who are only liable to the
extent of their contributions to the partnership. They are not liable A person who is a general, and also at the same time a limited
up to their separate or individual properties. partner, shall have all the rights and powers and be subject to all
the restrictions of a general partner; except that, in respect to his
General Partnership – the partnership where it is composed of contribution, he shall have the rights against the other members
general partners only. which he would have had if he were not also a general partner.
General Partners – are those partners whose liabilities extends up If you are businessman, how will you acquire capital?
to their separate or individual properties, it is not only limited to the
extent of their contribution. By investing my funds, loan, seek investors. If the capital
contributions are not enough, they may get a loan from the bank,
Art. 1843. A limited partnership is one formed by two or more but if interests are high, they can seek investors.
persons under the provisions of the following article, having as
members one or more general partners and one or more limited If you are an investor and be admitted as limited partners, would
partners. The limited partners as such shall not be bound by the you agree?
obligations of the partnership.
No, because of the risk for liabilities that I will acquire if I become a
IS AN INDUSTRIAL PARTNER, A GENERAL PARTNER? WHY limited partner. On the other hand, if I have a lot (Sir. Idle) of
IS AN INDUSTRIAL PARTNER NOT A LIMITED PARTNER? funds, I can be a limited partner for the purpose of sharing profits.
Yes because a limited partner can only contribute money or/and Sir. Here an agreement of an investor becoming a limited partner
property and not industry or services whilst a general partner can is a scheme made by law. If an investor becoming a limited
contribute money, property or/and industry or services. partner wants to invest to acquire profits but does not want to
acquire liabilities on his individual or separate properties or incur
Art. 1845. The contributions of a limited partner may be cash or risks on his individual properties. This could have been similar to a
property, but not services. corporation because in a corporation, your liability is limited to
your investments.
SO WHEN YOU SAY THAT AN INDUSTRIAL PARTNER IS A
GENERAL PARTNER, MAY AN INDUSTRIAL PARTNER BE AT So why a limited partner is also named or also added as a general
THE SAME TIME A LIMITED PARTNER? partner in the articles?
Yes. A person may be a general and a limited partner at the same So that you can minimize or spread the risks and at the same
time in the same partnership provided that this fact is stated in the time, increase my chances of getting profits.
certificate signed, sworn to, and recorded in the Office of the
Securities and Exchange Commission. Sir. Remember, the many liabilities among the partners where
they should share. There are liabilities which are pro rata, hence
Why cannot be an industrial partner who is a general partner, why
the partner can limit his exposure to such liabilities and the same
he cannot be a limited partner? WHY??!!??
time, can get for additional profits.

Now what is the good reason is there to invest 1 more million, why Advantages of being an investor and not a lender:
not just loan it instead of an investor? For example, there’s a A lender is entitled only to the payment of the debt and the
creditor offering a lower interest, let’s say, 5%. interest. But if you’re an investor, although you assume the risk of
loss in case the business is not profitable, but you are entitled to
Because when you invest, if the business is good, you will get a the return of the capital as well as the profits.
higher profit compared to extending a loan with interest in which
Sir: In lieu of the risk of losing, there is the opportunity of
the profit is limited only to the stipulated interest rate. getting higher returns. You are not limited to the agreed
interest, as compared to a lender.
Another reason is that you can, you can also watch your
investments, you will know where your investments would go and So, therefore, is a limited partner an investor or a lender?
you will know what happens to the business; these are viable to a He is an investor because he assumes the risk of loss.
limited partner because ?????????????? to be continued
WWW 09/04/2014 PART 1 RIGHTS OF A LIMITED PARTNER

Rights of a limited partner: (Art. 1851, 1st paragraph)
PARTNERSHIP CONTRIBUTIONS
Art. 1851. A limited partner shall have the same rights as a
What could be the sources for funding for the business of the general partner to:
partnership? (1) Have the partnership books kept at the principal place of
business of the partnership, and at a reasonable hour to
- Contribution of the partners inspect and copy any of them;
- Loans from the partners or lending company (2) Have on demand true and full information of all things
- Funds from investors affecting the partnership, and a formal account of
partnership affairs whenever circumstances render it just
So if the contributions of the partners are not enough to and reasonable; and
operate the business, they have some options: (3) Have dissolution and winding up by decree of court.
- Put up additional contributions; or
- Find some investors; or Purpose of these rights: to protect your investment
- Borrow money from lending institutions or banks (lender)
Sir: the intention of the law in giving you these rights is not for you
So in the 3 options, where do you think a limited partner to actively participate in the management because if you will do
belongs? Investor? or lender? that, you will be liable as a general partner. But the purpose is for
you to protect your investment. As distinguished from a mere
LENDER VS INVESTOR lender, you are given these rights.
What’s the difference between a lender and an investor?
A lender is a person who extends his credit to the partnership. And Although in big businesses (special circumstances),
the lender’s interest on the partnership is only the return of the lenders or creditors are given certain rights to
credit he extended. On the other hand, an investor is a person protect the amounts that they have extended to that
who not only extends his credit but is also interested of the return borrower. For example, 20M or 50M or 100M from the
of the capital as well as the profits. And because he’s interested in bank but still the bank cannot sleep at night even if
the profits, he also assumes the risk of loss if the business is not there is collateral because if you default in payment
good. and there will be foreclosure of the collateral, the
bank might have difficulty in selling your property
and might end up in selling it at a loss and that’s not
Sir: so both the lender and investor are the same in the sense prudent. So in addition to the collaterals, there are
that— provisions in a loan agreement for example wherein
- Both puts in money to the partnership the bank will require its representative to sit in the
- Both would realize returns wherein: board meeting, so that the bank will be able to
o Lender – interest (of the money extended) monitor the funds they extended are prudently spent
o Investor – profit otherwise the bank will just end up foreclosing such
collaterals. And that would not be healthy for the
How do they differ? bank because a bank is engage in money, not
- As to assumption of risk: properties. This can also be applied to a limited partner,
o the investor assumes the risk of loss wherein he wherein he is given that special privilege. While although
might not be paid when the business suffers a we are not talking of a board (of directors) but as a
loss. limited partner, you are entitled to be given regular
o a lender does not assume the risk of loss, reports or to have access to the partnership activities. So
regardless the business has profit or suffers a he could be assured that the funds are being spent
loss. You, as a lender, is certain that you can wisely or prudently. That’s the purpose of the law.
collect. There is no risk at all.
- As to collateral: INVESTOR AND A LENDER AT THE SAME TIME
o A lender may require the borrower to put up a On the other hand, may an investor also be a lender at the
collateral or a security before lending money same time? How?
o An investor does not require such Example: LP may have invested 3M as a LP but if the partnership
still needs additional funds, that LP, who has other funds, and
ADVANTAGES OF AN INVESTOR instead of putting it in a bank which will just earn 5% a year, he
could offer that money to the partnership for 12 or 15%. So I will 4. He makes or is a party to a contract with creditors of an
earn more. So in this situation, how many exposures would I insolvent firm with respect to the disposal of the firm’s assets
now have as a LP? You are exposed to that partnership as a LP in payment of the firm’s debts
because you invested and at the same time as lender because
you lend money.
Compare the rights of a LP and the rights of a GP?
Sir: So, therefore, we now have a situation where a person is both - As to management:
a limited partner and lender/creditor, which is not prohibited. And o LP – not allowed to participate
as a matter of fact, he can also be a general partner. So there is o GP – may manage the partnership
now 3 exposures. (3-in-1) (wala ni natubag ug tarung and ni move-on dayun si sir)
However, if you are a LP and at the same time a lender as Sir: we learned that GP is an agent to the partnership and his acts
distinguished from a third party creditor, what’s the can bind the partnership, unless if it is acts of strict dominion and
disadvantage? thus requires all consents of the partners to bind the partnership
- No right to demand preference of his credit. He is just a (unanimity). In those instances where unanimity is required
junior creditor, as compared to 3rd party creditor who and there are limited partners, what could happen?
enjoys a preferential right to the partnership properties. To bind the partnership, the limited partners must also give their
- No right to require collateral to the loan extended consent
LIMITED PARTNER NOT ALLOWED TO REQUIRE What are these acts of strict dominion?
COLLATERAL Art. 1850. A general partner shall have all the rights and
Why is he not allowed to require collateral? powers and be subject to all the restrictions and liabilities of
rd
Because the reason why a 3 party creditor requires collateral to a partner in a partnership without limited partners. However,
be secured that that the he will be paid. But as to the LP, the law without the written consent or ratification of the specific act
already provides for his protection wherein he has access to the by all the limited partners, a general partner or all of the
books and he knows the partnership properties and transactions. general partners have no authority to:
(1) Do any act in contravention of the certificate;
Sir: In other words, the 3rd party creditor is blinded and does not (2) Do any act which would make it impossible to carry on
know the happenings of the business in the partnership. No the ordinary business of the partnership;
reports, no access to the books, no information on what’s going (3) Confess a judgment against the partnership;
on. So that when there is financial reverses, the 3rd party creditor (4) Possess partnership property, or assign their rights in
would not be able to determine. On the other hand, if you are a specific partnership property, for other than a
LP-lender, you have the advantage of preparing for any partnership purpose;
eventuality. You have the opportunity to determine whether the (5) Admit a person as a general partner;
debt is still secured or not. So the law placed both creditors in the (6) Admit a person as a limited partner, unless the right so to
same playing field. do is given in the certificate;
(7) Continue the business with partnership property on the
INSTANCES WHERE A LIMITED PARTNER IS LIABLE AS A death, retirement, insanity, civil interdiction or insolvency
GENERAL PARTNER of a general partner, unless the right so to do is given in
Generally, we said that a LP is liable only up to the extent of the certificate.
his contribution. He is actually a mere investor. However,
there could be situations when he could be liable as a general
partner: EFFECTS OF DEATH OF A GP AND A LP ON DISSOLUTION
- His name appears in the partnership name, unless it is
also the name of a general partner Death of a General Partner would result in the dissolution of the
- When he participates in the management partnership.
- When there is an error when he thought he was a LP but
then he was listed as a general partner in the articles of Death of a Limited Partner does not dissolve the partnership.
partnership; or when he thought that the partnership was
a limited partnership but it was in fact a general REASON: if the limited partner dies there is no difference in the
partnership partnership, the creditors are still protected because the limited is
o In the last situation, for him not to be liable as a only liable up to the extent of his contributions, unlike a general
GP: he must renounce his interest in the profits partner where his liability extends up to his separate personal
of the business or other compensation by way of property.
income
If a general partner dies, his personal assets goes to his estate,
ACTS OF PARTICIPATING THE MANAGEMENT and since it is now with the estate.
What acts may be considered as participating the
management? (see de leon) To settle his estate, the personal creditors of the deceased
1. The business of the partnership is in fact carried on by a general partner is paid first, If there is an excess, then the
board of directors chosen by limited partners partnership creditors shall be paid. So partnership creditors have
2. An appointee of the limited partners becomes the directing secondary preference.
manager of the firm
3. The limited partner purchases the entire property of the Q: Who will settle the estate? The administrator or an executor.
partnership, taking title in himself and then carries on the
business in his own name and for his own exclusive benefit Administrator – appointed by the court; shall settle the estate of
the deceased partner.
Executor – appointed according to the will and shall execute the It would depend as to how much they contributed.
will. ―When there’s a will, there’s a way‖ (―If nay tabay, nay agi-
anan‖)
Q: How much are limited partners entitled to by way of
compensation?
LIABILITY OF A GENERAL PARTNER WHO IS ALSO A
They can agree among themselves and stipulated in the
LIMITED PARTNER
certificate.
Q: When we talk of liabilities, if you are a General Partner and
NOTE: third party creditors have preference over limited partner’s
at the same time a Limited Partner, what is your liability?
rights.
Generally, his rights and powers are those of a general partner.
The law says there could be a list of partner, General and Limited
Hence, he is liable with his separate property to third persons.
Partners.
However, with respect to his contribution as a limited partner, he
would have the right of a limited partner insofar as the other And limited partners can be further classified.
partners are concerned.
Illustration: We classify coke as REGULAR LP, DIET LP and
This means that while he is not relieved from personal liability to ZERO LP.
third persons for partnership debts, he is entitled to recover from
Limited partners among themselves may be further classified
the general partners the amount he has paid to such third
depending on their agreement or classification as agreed by
persons; and in settling accounts after dissolution, he shall have
ALL THE PARTNERS. So that:
priority over general partners in the return of their respective
contributions. REGULAR LP – 10% return of investment; Partners: X, Y and
Z; ->3rd preference
SIR: Insofar as the public is concerned, you are only a General
Partner, nothing else. If you invest some more as a limited partner, DIET LP – 15% return of investment; Partners: Q, R and S; ->
that is no longer the concern of the public. A limited partner is only 2nd preference
an investor.
ZERO LP – 0% return of investment but entitled to (2) cases
of coke; Partners: T, U and V -> 1st preference.
Additional Limited partners may be allowed, provided that the So this is how you can classify. As to what way they could have
Certificate be amended. preference, and what way they could enjoy separate privileges.
Here there can be several limited partners and classified as to
Requirements for Amendment of Certificate:
their agreement among the partners themselves.
a. Must be in writing
b. Signed and sworn to by all members, including new
ORDER OF PREFERENCE DURING DISSOLUTION
members and assigning limited partners
Q: Here they may enjoy certain preferences. So that if
c. Filed for record in the Securities and Exchange
dissolution would have to be conducted, how would we
Commission
distribute the assets and settle the partnership itself?
SIR: All parties must agree and there should be an amendment of
ORDER OF PREFERENCE:
the certificate, indicating the new limited partner of the new
general partner. Article 1863 In setting accounts after dissolution the liabilities of
the partnership shall be entitled to payment in the following order:
There could be several limited partners because these are
investment opportunities, the partnership may need more capital 1. Those to creditors, in the order of priority as provided by
so they might invite more investors as limited partners. law, except those to limited partners on account of their
contributions, and to general partners;
2. Those to limited partners in respect to their share of the
RIGHTS OF LIMITED PARTNERS
profits and other compensation by way of income on their
Q: What are the rights of limited partners among themselves? contributions;
A limited partner shall have the (1) right to receive a share of the 3. Those to limited partners in respect to the capital of their
profits or other (2) compensation by way of income, and to the contributions;
(3) return of his contribution as provided in Articles 1856 and
4. Those to general partners other than for capital and
1857.
profits;
5. Those to general partners in respect to profits;
Q: How much are these limited partners entitled to by way of
6. Those to general partners in respect to capital.
return of capital/contributions?

Is there a way or what is the requirement for an assignee to
be a substituted limited partner?
LIABILITIES OF A LIMITED PARTNER
When assignee may become substituted limited partner:
What could be the liabilities of the limited partners?
1. All the members must consent to the assignee becoming
Liabilities of a limited partner:
a substituted limited partner OR
1) To the partnership – can be waived. However, the GPs cannot
2. The limited partner is empowered by the certificate to
waive any liability of the limited partners to the prejudice of such
give the assignee the right to become a limited partner
creditors.
and all the members consent;
1. For the difference between his contribution as actually
made and that stated in the certificate as having 3. The certificate must be amended in writing;
been made 4. The certificate as amended must be registered in the

Securities and Exchange Commission.
2. For any unpaid contribution which he agreed in the
certificate to make in the future at the time and on EMPHASIZED BY SIR: And more importantly, the assignment of
the substituted limited partner is allowed only when the assignor
the conditions stated in the certificate
has the authority to appoint or designate a substituted limited
2) To partnership creditors and other partners. – partner.
1. when he contributes services instead of only money or This is important because of the continuing requirement of trust
property and confidence among the partners.
2. when he allows his surname to appear in the firm name So here now we have a limited partner authorized to assign a
3. when he fails to have a false statement in the certificate substituted limited partner, and that substituted limited partner will
corrected, knowing it to be false now assume the rights of a limited partner.
4. when he takes part in the control of the business
5. when he receives partnership property as collateral Q: If you are a mere assignee, are you already a substituted
security, payment, conveyance, or release in fraud of
limited partner?
partnership creditors
6. when there is failure to substantially comply with the legal As long as the requisites are complied with, otherwise he will only
requirements governing the formation of limited be treated as a mere assignee who does not exercise the rights of
a limited partner.
partnerships.
3) To separate creditors. — As in a general partnership, the
personal creditor of a limited partner may, in addition to other Q: Who is this contributor?
remedies allowed under existing laws, apply to the proper court for
Art. 1866. A contributor, unless he is a general partner, is not
a ―charging order‖ subjecting the interest in the partnership of the
a proper party to proceedings by or against a partnership,
debtor partner for the payment of his obligation.
except where the object is to enforce a limited partner's right
against or liability to the partnership.
SUBSTITUTED PARTNER A contributor is referring to a limited partner.
What is a substituted partner?

Substituted limited partner is a person admitted to all the rights of INSATNCE TO AMEND OR CANCEL THE CERTIFICATE
a limited partner who has died or has assigned his interest in a
Q: What happens upon the death of the General Partner?
partnership.
The partnership is dissolved and winding up and settlement will
follow.
Insofar as assignment is concerned, what is the difference
However, in this partnership (limited partnership), all of these
between a limited partner and a general partner?
limited partners might agree to stop the business, and they said
 When you become an assignee of a General Partner, ―since the business is not doing well, we should no longer be
you do not become a General Partner. limited partners and withdraw all our investments.‖
 When you become an assignee of a Limited Partner, you Q: If all limited partners withdraw, would it dissolve the
do not become a limited partner. partnership?
Yes, because it is no longer indicative of the kind of partnership
embodied in their certificate that they are a limited partnership. So

the certificate should be cancelled because all of the limited  They are not agents of USC. Agency in a strict sense,
partners are gone. requires a fiduciary relationship. They must not only be
following the directions of the principal, but they must
If they want to continue as general partners they can organize a
also be able to enter into relationships with other parties.
general partnership but can no longer continue with the limited
It is as if they are the ones deciding but in behalf of the
partnership because there are no longer any limited partners left.
principal.
Therefore the public should be guided that all of them are already
general parties. Yes. They are deciding, because the principal said, ―If Ericson
comes with his hair completely bald, do not allow him to enter but
if his hair is just two centimeters long, allow him to enter.‖ The SC
Instances when amendment of the certificate can be done guard here exercises a discretion of allowing you to enter or not
when: the university campus, is the SC guard an agent? ―Bungoton gani,
1. There is a change in the name of the partnership or in the ayaw pasudla sa school.” DISCRETION!
amount or character of the contribution of any limited
partner; They are acting in behalf of the school. They are authorized to
secure the premises of the school. They can bind the school, in so
2. A person is substituted as a limited partner; far as not allowing someone to get inside. But some guards allow
3. An additional limited partner is admitted; some people who are prohibited to enter the school to enter.
4. A person is admitted as a general partner;  The principal feature of an agent is not the freedom to
exercise your discretion but it is the performance of a
5. A general partner retires, dies, becomes insolvent or
juridical act in relation to third persons. So in this
insane, or is sentenced to civil interdiction and the
case, the SC guard while technically he represents the
business is continued under Article 1860;
school to enforce the rules and relations of the school he
6. There is a change in the character of the business of the does not have the power to enter into juridical relation
partnership; with any of the students. So while he may stop you to
check your id or prevent you to enter because of your
7. There is a false or erroneous statement in the certificate;
haircut, the SC guard cannot do any act such as
8. There is a change in the time as stated in the certificate accepting enrolment or enter into sort of commercial
for the dissolution of the partnership or for the return of a contract. Because his act is merely ministerial and does
contribution; not extend to the juridical acts as contemplated by law.
9. A time is fixed for the dissolution of the partnership, or WHAT DO YOU MEAN BY PERFORMING A JURIDICAL ACT?
the return of a contribution, no time having been specified
in the certificate, or  An act that creates relationship or affects the relations
10. The members desire to make a change in any other between the parties.
statement in the certificate in order that it shall accurately  Sir. He must perform something which is a juridical act,
represent the agreement among them. something which would create or establish a relationship
between the parties.
WWW September 6, 2014 KISSING ANDREA COROMINAS 
Illustration. The boyfriend of Andrea Corominas, authorizes you

AGENCY and the SECURITY GUARD STORY
(Nathan) and said, ―I hereby authorize you to kiss my girlfriend,
Illustration. Security guards in USC, complaining about their Andrea.‖ Are you now the agent of her boyfriend, Nathan?
salaries; maybe there are some ―parts‖ that they are not receiving.
 Nathan is not the agent of Andrea’s boyfriend because
Can they sue USC for that?
the act of Nathan kissing Andrea does not create a
 No, because there is no ee-er relationship. SC guards relationship.
are not employees of USC.  Sir. DOES NOT CREATE A RELATIONSHIP! It might
even DESTROY a relationship! :D So do not follow. Do
But there were authorized by USC, is it not? They could stop you if not comply.
they want. If the USC admins told the SC guards, ―The moment
you see Ericson, stop him and bring him to the office.‖ Can they What is the nature of the act that he has allowed you to do?
do that?
 Well if he tells you, ―Nathan, Nathan, can you please
Yes. The guard will just say, ―Ericson, I’m sorry. We are just enter into a contract of agency because I need a security
following instructions.‖ Are they agents of USC? guard.‖ You are acting as an agent. You could sign that
contract in behalf of someone else.

 But this time authorizing you to kiss Andrea is not an act Art. 1868. By the contract of agency a person binds himself to
of an agent. You cannot be an agent to perform personal render some service or to do something in representation or on
acts. Because when we say personal acts, is only that behalf of another, with the consent or authority of the latter.
particular person who could perform that act.
Agency – to render something or perform an act in behalf of
Illustration. If you are a painter and you are a good artist, and you another with the consent an authority of the latter.
have a client asking you to paint his face, can do you delegate that
act to someone else? Sir. Here, the law is incomplete, it does not say in order to create
a juridical relationship between the principal and someone else.
 This is a personal act. You cannot delegate this act to
your agent. PARTIES OF AN AGENCY
 The act of performing which you have been paid is
because of your ability and skill. It is a highly personal  Principal
act.  Agent
Here, the point here is, the act must be something that will create GUARDIAN and the WARD
a relationship between the parties. And this is not the same with
the security agency. The security agency is not actually an agent. Is a guardian, an agent of the ward?
Is the security agency, an agent of the school?
 The guardian, although he is acting in behalf of the
 According to some authors, agencies could also refer to ward and yet the authority given to the guardian came
other types of concepts which are not contemplated by from the Court, from someone else, NOT the ward.
the civil law.  When we say the law defines an agency as having the
 No, because the relationship between the school and the right or authority to act in behalf of another with the
agency is merely one to supply security services. The consent of the latter.
agency here is not given an authority to enter into acts of  Because the guardian cannot give consent, it cannot
contracts or to perform acts in behalf of the school. Its be said that the ward allowed his guardian to act in his
only duty is to hire guards, post guards into proper behalf.
stations and instruct guards what to do. He has no
HOW WILL AGENCY ARISE?
authority to enter into agreements or relationships in
behalf of the school?
 There must be a contract. Expressed or Implied.
But it hires guards, is it an act in behalf of the school?
Art. 1869. Agency may be express, or implied from the acts of the
 Such act is not an act in behalf of the school but on principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his
behalf of the agency. The agency is an independent
behalf without authority.
contractor.
HOW DO WE DISTINGUISH BETWEEN EE-ER RELATIONSHIP FORM? Agency may be oral, unless the law requires a specific
form. (1710a)
FROM AGENCY
Illustration. Is an employee not an agent? I am teaching in behalf Illustration. Do you have a girlfriend, Ericson? Have you ever
of USC, am I not an agent of USC? thrown your arms around her? As a you were hesitant to throw
that right arm and it only went as far as her right arm. You wanted
 No because the teacher is not empowered by the school to bring her hand lower. And you were hesitant. And so she said,
to enter into juridical acts with third persons. ―Bring it down!‖ And when he said that, did she have to get that
 Sir. I cannot even bring the best lawyers from the US and authority expressly?
hire them in behalf of USC because I have no authority; I
am not agent. I am only a mere employee.  There is no need for an express agreement, Ericson.
 So this will illustrate to us the distinctions between Agency maybe created impliedly! No need for an express
agency, ee-er, independent contractor and perhaps other agreement.
relationships. While it may appear that one is authorized  And so when she said to bring your arm lower, there was
to act in behalf of another but not necessarily an agent. an implied consent already.
 So here when we say agent, he is given the authority to  So that when she does not complain, there is an implied
act in behalf of another in order to establish relationship authority. Implied agency may be created through
but it is not the definition of the law. ―silence‖. :D Silence means? YES! Hahahahahahaha!
September 20, 2014
CONTRACT OF AGENCY: MEANING Trust vs. Agency

Agency holds the property in the name of the principal Do you have a boyfriend Escabarte? (Continuation sa labor
o Revocable any time discussion)
o Appointed by the principal to act for or in his - If someone proposes and you do not answer the call yet
behalf when the he invites you for dinner you respond, anytime
o Title of the property is still under the name of the call me up, text me but you haven’t said yes yet. You
principal never said yes. He keeps on asking, ―unsa man? Gisugot
 Beneficial owner na gyud ba ko nimo? Uyab na bah ta?‖ You never
answered.
Trust holds the property in his own name - Watch a movie? You watch a movie, but wa pa gyud ka
o Revocable only upon fulfillment of the ni sugot. Are you already on a relationship? Even if you
agreement went together watch a movie, even if he held your hand
o Holds in trust the property or funds of another and start putting your hands over the shoulder. Uyab na
o Title of the property is in the name of the trustee bah ta? (with matching bira pa duul sa laki) Imu na gyud
 legal owner for all intents and purposes bah ko gi sugot? ―ay sa, tan.aw sa ta , tan.aw‖ imu gi
in so far as the law is concerned but bitad iyang kamut, uyab na mo?
not the beneficial owner o Depends on the intention
Beneficial owner – the person for whose benefit the - What was your intention when he placed his arm around
property is being held you, you did not say ana (wakli kamut) but ani (pa duul
sa lawas ang kamut). What was your intention pulling his
hand closer?
Mango Plantation (in re: trust vs. agency) o There was already implied relationship
If you are a trustee of a farm with mango bearing fruits,
who will be entitled to the fruits? Murag nanguyab
o The trustee hold in trust for the owner Boy: tan.aw ta cine dai
Girl: cge, way kiss ha?
If the fruits are sold? Boy: wa oi
o The fruits will still be owned by the owner Girl: di gyud mag kupot² ha?
Boy: dili gyud
Custody is given to the trustee but beneficial ownership Girl: nya, di gyud ka mang hilabut?
still belongs to the owner Boy: dili lagi
Girl:Oh! Ikaw nalang tan.aw oi!!!!, tan.aw² tag cine di man
Guardianship vs. Agency diay ko hilabtan
- Agency, authority of the agent comes from the principal
- Guardianship, authority of the guardian comes from the - How may agency be created?
court not from the ward o Expressly or impliedly
Administrator vs. Agency Acceptance of an agency

- Both administer the property of someone else While agency may be created expressly or impliedly,
through silence, inaction or failure to repudiate,
Administrator - administrates the estate of the decedent acceptance of the proposal to be an agent may be also
o Administrator is appointed by the court implied and however, how is this indicated? Expressly
and impliedly
Agent
o appointed by the principal himself - Implied acceptance:
1. Persons Present
Independent Contractor vs. Agency
Independent Contractor renders service to the principal Article 1871. Between persons who are present, the acceptance of
but not subject to the control over the means and methods of the the agency may also be implied if the principal delivers his power
work of attorney to the agent and the latter receives it without any
o independent contractor performs his acts objection.
independently without supervision from the
principal 2. Persons Absent
o can perform acts may perform acts according to Article 1872. Between persons who are absent, the acceptance of
his own method the agency cannot be implied from the silence of the agent,
except:
Agent renders acts subject to the control and supervision (1) When the principal transmits his power of attorney to
of the principal the agent, who receives it without any objection;
o always under the supervision of the principal (2) When the principal entrusts to him by letter or
o cannot perform acts in his own method telegram a power of attorney with respect to the business
in which he is habitually engaged as an agent, and he did
Creation of an Agency(Uyab² Scenario) not reply to the letter or telegram.
How may agency be committed?
- Expressly or impliedly General Rule for parties absent:
o Cannot be (Lenard)
o Cannot be yah?

Except: Art. 1872
Article 1877. An agency couched in general terms comprises only
Notice of Agency acts of administration, even if the principal should state that he
There can be notice of agency in so far as third persons withholds no power or that the agent may execute such acts as he
are concerned. The acceptance and creation of the agency is may consider appropriate, or even though the agency should
between the parties. (principal and agent) but because the authorize a general and unlimited management.
transaction or authority involved may affect third parties there is
st
also a requirement that third parties should be notified. - 1 Classification is the extent of the business
- 2nd Classification is the extent of the authority, matters of
Article 1873. If a person specially informs another or states by administration only
public advertisement that he has given a power of attorney to a
third person, the latter thereby becomes a duly authorized agent, If I tell you Rocha that authorize you that you will administer all my
in the former case with respect to the person who received the properties here on Earth, with power to do any and all acts as you
special information, and in the latter case with regard to any may find fair and reasoned. Can you now sell the property?
person. - Power is still limited to only administration, it does not
carry with it acts of strict dominion
The power shall continue to be in full force until the notice is
rescinded in the same manner in which it was given. Later on it was necessary to hire a security guard, you said ―I have
to sell some of your properties because I will use the funds to pay
the security guards or else how could I look after or oversee the
If Mr. Alo will inform Salcedo, you know Mr. Salcedo, Ms. properties?‖
Rocha is my agent and I have authorized her to be my agent so - This is very dangerous because mag consabo ang agent
that in so far as Rocha is concerned is she already an agent? ug manga secu ani. Charging a higher rate than the
o In so far as Mr. Salcedo is concerned Rocha is usual.
already an agent. - Ask the principal for funds
Would this agency bind someone else? - Authority by necessity must be looked unto strictly. It may
o No look logical and fair but it cannot be done. It is subject for
abuse
If you want to bind third parties in general there has to be - Unless there is extreme urgency. Like the daughter of the
notice to the whole world by advertisement. You seldom principal is hospitalized. Emergency by extreme
see this, only big companies do this especially when a necessity. For security guards you can still communicate
foreign company appoints a local company. In the
newspaper you see this when a foreign insurance
company appoints a local general agent ―this is to Do you want to be an atty. now Rocha?
formally announce the appointment of ___ as our general - Yes
agents in the Philippines all transactions entered into in Now I will call you an atty. in fact.
our behalf will be honored.‖ But what we usually see is
not the appointment, if your picture will appear in the What is an atty. in fact?
newspaper, ―notice Mr. Alo is no longer connected with - An agent, exercising special power of atty. (SPA)
our company all transactions entered into in our behalf
will not be honored.‖ What are the acts covered by SPA?
Appointment is terminated in the same manner the agent was Article 1878. Special powers of attorney are necessary in the
appointed. No similar publication, still an agent. following cases:
(1) To make such payments as are not usually
Compensation of an Agent considered as acts of administration;
Is the agent entitled to compensation?
(2) To effect novations which put an end to obligations
Article 1875. Agency is presumed to be for a compensation, already in existence at the time the agency was
unless there is proof to the contrary. constituted;
- Presumption is compensation, you rendered service. Di (3) To compromise, to submit questions to arbitration, to
pwede kape ray i hatag. renounce the right to appeal from a judgment, to
waive objections to the venue of an action or to
General vs. Special abandon a prescription already acquired;
Differentiate general and special agency:
(4) To waive any obligation gratuitously;
Article 1876. An agency is either general or special.
(5) To enter into any contract by which the ownership of
The former comprises all the business of the principal. The latter, an immovable is transmitted or acquired either
one or more specific transactions. (1712) gratuitously or for a valuable consideration;
(6) To make gifts, except customary ones for charity or

However there can be general agency couched in general terms those made to employees in the business managed
and specific agency couched in general terms, how do you by the agent;
distinguish?
- Yes, it would be more disadvantageous to Bandoy
(7) To loan or borrow money, unless the latter act be because in the long run in case she could not pay the
urgent and indispensable for the preservation of the mortgage, the bank will have recourse on the car. In case
things which are under administration;
she could not pay the mortgage she will lose money and
(8) To lease any real property to another person for the care.
more than one year; - Mao bitaw gi baligya nako kay wa koy ka bayad.
(9) To bind the principal to render some service without On the other hand it is the reverse, you authorized Ron to
compensation; mortgage but he sold the car. You told Ron, ―Ron this time,
mortgage.‖ However, this time Ron did not mortgage but sold the
(10) To bind the principal in a contract of partnership; car. What could happen?
(11) To obligate the principal as a guarantor or surety;
- Ask for recession of the sale. What was given was an
(12) To create or convey real rights over immovable authority to mortgage and not an authority to sell.
property; - Agent is supposed to act strictly in accordance with the
authority given.
(13) To accept or repudiate an inheritance;
Arbitration
(14) To ratify or recognize obligations contracted before
the agency; What is arbitration?
(15) Any other act of strict dominion. - Both parties agree to submit themselves to an arbitrator
who would conciliate and mediate their dispute. Usually
What is the difference between Guaranty and Surety?
- Guaranty done in labor cases where the voluntary arbitrator is the
o If the debtor does not pay, I will pay quasi-judicial power to mediate the case, none litigious in
o Liability in Guaranty is subsidiary nature.
- Surety - 2 types of arbitration
o If the debtor pays or not, I will pay o Voluntary
o Even if he refuses or not I will pay o Compulsory
o Liability in Surety is solidary
What does the law say?
September 25, 2014
- If you have authority to compromise, you have no
Requisites of Authority
authority to submit to arbitration.
Being a delegated authority the agent must strictly act within the - What type of arbitration is referred to here?
scope of his authority. He must have: o Only voluntary
o The principal’s trust over the agent might not be
1. Authority present or might not be able to trust the
2. Act within the scope of the authority arbitrator.
3. Indicate his capacity as agent
4. Indicate the principal Authority of an Agent
Power to sell and Power to Mortgage While an offer for agency might be expressed or implied.
Generally an acceptance of an agent may be expressed or
Here comes Ms. Bandoy, she approached you because she implied. Authority Canoy? How much authority would you have if
needed cash. She told you ―Honc will you sell my car? you are an agent?
Immediately I need 250k.‖ When you went to a potential buyer
instead of selling, you told your friend buyer ―I have a car and I’m - Expressed and implied
selling the car for 275k, are you interested?‖ the buyer said yes. 1. Actual Authority:
―On second thought, if I will just mortgage that car for the same
Expressed – what was expressly given by the principal
amount, are you still interested?‖ even better. In other words there
is a chance for him to get back the 275k. As for Bandoy, she will
Implied – incidental to the expressed authority
have what she needs and in addition she does not part with the
car. She still owns the care. More advantageous is it not? And so o An agent is authorized by the principal to
you got the 275k from your friend gave it to Bandoy. Bandoy was receive payment. The agent is authorized to
confused. She asked ―did I authorize you to sell?‖ yes, ―did it collect payment from debtor A. What is stated in
authorize you to mortgage?‖ no. Can Bandoy complain? the contract of agency is only to collect payment
from A. A paid but asked for a receipt. The
expressed authority is to only collect payment

but there is implied authority to issue a receipt - Not binding to the principal
for the payment. - Excess of authority is lack of authority, lack of authority
2. Authority by Necessity means not being obliged to represent.
- While he may not have actual authority whether
expressed or implied, he may perform something else Exceptions where agent’s acts without authority still bind
because it is necessary for the preservation of the principal
property.
- Because of the necessity, the agent still has authority. There are occasions where the agent exceeds his authority but
- The issuance of a receipt is not an act of necessity but an still the principal is still bounded.
implied authority
1. Authority by Necessity
2. Ratification by the principal, even if the agent exceeded
Long example ni Rem in short.
his authority but the principal ratified the defect is cured,
o The building was not paying its electricity bill.
principal is bound and the principal is not liable for
The agent in charge of managing the building
damages.
paid the electric company when it was about to
3. Customary to the business, part of the customs of the
cut the power.
business, even if the agent exceeded his authority but by
 Authority by necessity? Obligation to
customs and practice of the business it may still bind the
advance? Obligation to protect the
principal.
interest of the principal? Sometimes
changing your answer might not be Sarip Situation
beneficial.
 Is it both authority by necessity and If Takahashi Sarip issues to you a check, ―I will give Sarip a blank
obligation to advance? check.‖ Sarip will fill it up but she whispered to you ―one thousand
 An agent is obliged to advance lang tawn is butang ha.‖ When Sarip fills it up, ―unsa maning 1k, 0
necessary funds if it is stipulated, it ra bitaw ni ako I dugang.‖ Instead of 1k it became 10k. Sarip went
was not specified whether or not there to the bank, enchashed the check. Do you think the bank will give
was an obligation to advance you 10k?
necessary funds. If no stipulation then
it is by necessity. - Yes, because a check is a negotiable instrument, like a
prono (unsa mani!?!?)
Obligation to advance vs Authority by Necessity - A check is a bill of exchange drawn by a bank
- There are two kinds of bills of exchange:
What makes it different from obligation to advance? (authority by
o Promissory note
necessity) o Bill of exchange
- Obligation to advance, there is a said stipulation to
What is a negotiable instrument? WUPOD
advance.
- Must be in Writing
- Doctrine by necessity, when there is no stipulation to
- Unconditional promise or order to pay a sum certain in
advance funds or when the principal is insolvent
money
Implied Authority vs Authority by Necessity - Payable to order or bearer
- Payable On demand or a determinable future time
How do you distinguish from implied authority? - If addressed to a drawee, then the name must be
indicated with reasonable certainty
- Implied authority, authority that is in connection with the
express authority given by the principal, there is no sense Sharo, unsa man mo oi. 2 years ago? (1 sem ago pa gani sir
of urgency. haha) ako 40 years ago.
- Authority by necessity not connected with the express
authority given by the principal but because of WWW September 25, 2014 1:00:00-1:28:00 by Erks :D
URGENCY there is a necessity to act.
MS. TAKAHASHI’S CHECK
In Canoy’s situation, if the agent does not issue a receipt, what will
So when the bank sent a statement of account to Takahashi, she
the debtor do? Di lagi ko mo issue, walay recibo boss kay wala
noticed the check was P 10,000. ―1,000 raman to ako giingon
koy authority mo issue.
bank?‖ Bank, ―10,000 man ring check ma’am.‖ Agent here wrote
- The principal will suffer a loss. Unable to collect. 10,000php instead of 1,000php. Will you authorized by
Takahashi?
Must act within the scope of his authority, he must not exceed the
authority. If he exceeds his authority what is the effect?  Takahashi did not tell Ms. Sarip she should fill up only
1,000php, Ms. Sarip can fill up any amount. But if Ms.
Takahashi told Ms. Sarip to write only 1,000php, Ms.  Implied
Sarip should only act within the authority given by Ms.  Apparent
Takahashi by writing 1,000php on the check.  By Necessity
 Here, Ms. Sarip exceeded her authority.
Sir. By necessity is a kind of authority, and here we are no longer
Why would the bank debit 10,000php when in fact the authority trying to find out if there is an authority or not. We are trying to find
was only 1,000. out, whether the excess of authority which should not bind the
principal by general rule could still bind the principal, and there
 As a general rule, when an agent exceeds her authority could be instances when the agent exceeds her authority but the
given by the principal, that act of the agent does not bind principal is still bound. Here, in by necessity, there is (was)
the principal. authority, what happened is that the agent exceeded that
 But in this case, since it involves a particular instruction, authority. This is a different issue.
in so far as third person as concerned, here the bank, the
latter has no duty to inquire what are the specific AN AGENT TO BIND THE PRINCIPAL MUST COMPLY WITH
instructions, secret instructions between the agent and CERTAIN THINGS:
the principal.
 Agent must have the authority. Without the authority, he
Why would be Takahashi be bound by the act of the agent who has no business of representing someone else.
exceeded her authority? Can Takahashi complain with the bank  The agent act within the scope of that authority.
because of the act of Ms. Sarip who exceeded her authority?  In entering into transactions, the agent must indicate
therein that he acts as an agent.
 In this case, Takahashi could not complain with the bank  The agent must disclose the name of the principal.
because of her negligence.
 Although we said that generally, the principal would not APPLICATION (guys, wa jud nako nasuwat tong uban gibutang ni
be bound by the acts of the agent exceeding her (agent) Sir sa blackboard! Sorry! - erks)
authority given by the principal but here, because of the
Sarip will please sell the car.
negligence of the principal, the latter then is bound by
such act.
Licup
 Sir. By the acts of the principal herself, she caused the
violation of the authority given. By Hubahib
General rule:  The authority given to Hubahib is to sell the car. (Sayup
pagkasuwat ni sir ang sample sa taas.)
The acts of the agent exceeding her authority given will not bind
the principal. I hereby sell my car to Sarip.
Exceptions, hence WILL BIND the principal: Licup
 The acts of the principal herself caused the violation of By Hubahib

the authority given.
 When the principal’s acts have contributed to deceive a  Principal – Licup
third person in good faith.  Agent – Hubahib
 When the principal fails to repudiate the act of the agent  Authority – To sell the car of Licup
exceeding her authority.
 When there is a delivery of an instrument in blank I hereby sell my car to Sarip.
 Ratification by the principal
 There is a limitation imposed in the authority and this is By Hubahib
unknown to the principal.  Here, this will not bind the principal because the agent
 Acts of the agent benefited the principal did not disclose the name of the principal.
 Due to the negligence of the principal
ARTICLE 1883 AND NETTY’S WATCH
AUTHORITY BY NECESSITY
Ms. Naldo, we said that agent must have the authority to bind the
I thought, Ms. Licup that when we discussed authority by principal. However when someone will act in behalf of another
necessity, this was not excess of authority? Or is it the same? even if he does not have the authority, it will not bind the principal.
Authority may be: He has authority and he sells it in his name. Will it bind the
principal? So Gaviola was looking for a watch, ―Nalds, daghan
 Actual man kag kaila sa online sale, pangita-i kog nindot na relo sa net.‖
 Express
You saw one and you bought that watch. You gave it Gaviola and  with authority
Gaviola said, ―This is not the watch that I wanted. I am not
-agent's name ---- not bind the orincipal, exc if it involved
accepting it.‖ Can Gaviola complain? If the watch has not been
paid yet, can the seller ask the payment or compel Gaviola to pay things belonging to the principal
for the watch? - principal's name ---- perfect; will bind him
 No. Even if you had the authority but you did not indicate  no authority
to the seller the name of the principal, not binding on the - agent's name --- not bind principal
person. - principal's name --- subject to ratification
You bought the watch from the seller in the name of the principal
and so the watch was given to you and you gave to Gaviola but
09/25/2014 1:30:00-2:00:04 CRT
Gaviola refused to accept and pay it.
Enumerate as many obligations as possible (page 457, de
 Gaviola is bound and can be compelled to pay for the leon. Only 10 are listed below)
watch because Gaviola gave Naldo an authority and 1. To carry out the agency which he has accepted
Naldo bought the watch as an agent indicating the name 2. To answer for damages which through his non-
of Gaviola as her principal. Naldo indicated that she performance the principal may suffer
acted in behalf of the principal. 3. To finish business already begun on the death of the
principal should delay entail any danger
This time, you have NO authority but you still, you went to the
4. Observe diligence of a good father of a family in custody
seller bought the watch and brought it to Gaviola.
and preservation of the goods
5. Advance necessary funds should there be any stipulation
 Gaviola cannot be compelled to pay. No authority. Agent
to do so
bought the watch under her name.
6. Act in accordance with instructions of the principal and in
Here, you have NO authority but you bought the watch and told default, do all that a good father of a family would do
the seller that you are buying the watch in behalf of Gaviola. 7. Not to carry out the agency if it will manifestly result in
damage or loss to the principal
 Gaviola cannot be compelled to pay. No authority. 8. To answer for da mages if there being a conflict between
 However, if Gaviola will pay, then that amounts to his interests and those of the principal, he should prefer
ratification. CURED! his own
9. Not to loan to himself if he has been authorized to lend
You bought the watch, you had authority and you bought it in your money at interest
name. 10. To render an account of his transactions
 You cannot compel the principal to pay.

ICECREAM MELTDOWN
You were authorized by Gaviola to SELL her watch. You (agent)
 Mr. Erojo instructed his driver to bring to the residence of Ms.
sold it under your name. And then Gaviola saw the watch in the
Fernandez 20 gallons of ice cream. The driver gave a note
arms of the girl of his boyfriend. Gaviola wants to get back the
which read, ―Fernandez please sell the ice cream on my
watch. Can Gaviola demand for the return? Remember, you sold it
behalf. Need the proceeds very badly. Your good friend,
in your name.
Erojo.‖
 Gaviola can no longer recover the watch, it binds  So with that proposal, would you accept? You were very busy
Gaviola. with the finals, you did not have time to sell. 20 gallons

nd
Art. 1883, 2 paragraph. In such case the agent is the without proper freezing facilities would just melt. This time,
one directly bound in favor of the person with whom he you wanna tell Erojo ―Sorry but I have to decline‖. So you tried
st nd
has contracted, as if the transaction were his own, to contact him. 1 cellphone, busy. 2 cellphone, out of
rd
except when the contract involves things belonging reach. 3 cellphone, it rang, then there was an answer ―sorry
to the principal. the number you are calling is not yet a cellphone‖.
 Sir. Remember on the previous examples, it did not bind  You are now facing a problem because according to the law,
the principal because we follow the general rule that we you have to observe the diligence of a good father of a family
must indicate the name of the principal but here, it will in the custody and preservation of the goods in case you
now bind the principal because the thing owned by the declined the agency. You can’t just say bahala nana
principal was involved in the transaction, it was mangalata diha. Patilapi nas mga bata diha
transmitted to a third party. This is the exception.  SO what should you do? If I have the money in the meantime,
I’ll take necessary steps like rent freezers. But this is very
THEREFORE prohibitive because it’s expensive.

 SO if you can afford, go ahead. But if you can’t afford? You  If instructions not complied with,
don’t have time? What does the law actually require, the principal is still bound.
extent of you obligation? Up to what extent are you obliged to  SO DISTINCTION: Authority is that
take good care in the preservation of the thing endorsed to given by the principal to agent from
you, of which you are declining? Employ reasonable means. whom the latter derives his power; but
The law does not require you to die for the principal, or do instructions can be given by principal to
something which you are not really capable of doing. What an agent which is only a direction and
the law requires is that you exert best efforts. So once you insofar as third parties are concerned,
prove that you exercised best effort, or due diligence, that is they have nothing to do, the
sufficient. instructions are private, 3rd parties are
not bound
 If instructions are violated, agent is liable for damages
EXCEPTIONS, where agent not liable for damages:
TARTANILLA
1. Sudden emergency
 On the other hand, you were now very apologetic to Erojo. 2. Ambiguous instructions, susceptible to various
Now Erojo has another proposal. He says he is buying a interpretations
resort in the south but the owner is leaving by 7 in the 3. Insubstantial departure
morning. He says he wanted Fernandez to buy, as his agent,
to purchase that property. Here is the check and get the
property. But be there before 7 AM SUB-AGENT
 So you accepted and asked even for a commission  In partnership, we learned there is a substituted partner. Here
 Erojo instructed you to be there before 7 AM, so take the first in agency, there is also a sub-agent
available means of transportation
 A sub-agent is a person employed or appointed by an agent
 Now 4 AM in the morning, you came out of the house and as his agent to assist him in the performance of an act for the
waited for the first available means of transportation as principal which the agent has been empowered to perform
instructed. You something and as it came nearer, the first
 If it was the sub-agent who performed, will that bind the
available means turned out to be a TARTANILLA. You took it principal?
according to his instruction. The resort was in Boljoon. You
Requirements for sub-agent to bind the principal:
were in Minglanilla at 5 AM, but the horse started to pee. You 1. No authority
arrived in Boljoon 3:45 PM. Seller no longer there, you missed
- Agent did not have authority to appoint a sub-agent,
the deal, you reported to Erojo who said he could have
principal will be bound
profited 10 M.
2. Although he was authorized to appoint, but the principal
 Because you complied with his instructions, instead there was did not specify who the sub-agent is, and the agent
a loss appointed someone who is notoriously incompetent or
 What is your liability? (wa mutubag si sir) insolvent
 A sub-agent once approved by the principal, the acts of the
sub-agent are binding on the principal. So if he performs an
AUTHORITY VS INSTRUCTIONS
act prejudicial to the principal?
 What is the difference between authority and instructions?  The agreement is only between the sub-agent and the agent.
 AUTHORITY: total of powers committed or permitted The principal has nothing to do. And yet, if sub-agent
to the agent by the principal performas something that will jeopardize the principal, the
 INSTRUCTIONS: private directions which the principal can go after the agent, Yet, the agreement is
principal may give the agent in regard with the supposed to be binding only between the agent and sub-
manner of performing his duties but of which a third agent. In contrast we learned the PRINCIPLE OF PRIVITY
party is ignorant OF CONTRACTS, which means only contracting parties are
In so far as third parties are concerned, they have bound, not someone else.
nothing to do. They are not bound But here, the principal is allowed to interfere on the
 What should be followed by the agent? Authority or agreement between the agent and sub-agent. This is an
instructions? Both should be followed. exception to the principle of privity of contracts.
 In authority, the agent must act strictly Incidentally, other principles are:
so that if he exceeds or deviates, the - Principle of consensuality: generally, contracts are
principal is not bound unless there is perfected by mere consent
ratification, more advantageous to the - Principle of liberality of contracts: parties may
principal, or principal stopped from stipulate on anything/terms/conditions mutually
denying it, or if it involves things beneficial so long as not contrary to law, morals,
belonging to the principal, or principal public order, public policy
signs blank instruments
You were authorized to sell the car, as you were driving to car, in
order to convince the car. But the buyer was about to leave. So
WWW October 4, 2014 you hurried to the airport and the principal told you to drive fast
that if somebody blocks the way, to hit the pedestrian. So you
AUTHORITY VS INSTRUCTIONS APPLICATION avoided hitting a pedestrian and the police detained you for a
while; and the sale did not push through. (Guys wa nako
If you were authorized to sell a car of your principal, for any price
kadungog ka klaro sa last line/question and sa answer sad, wa
which you may find fair or reasonable. How much should you sell
sad nadungog) The law says, you did not follow instructions, you
the car?
will pay for damages. Will you be entitled to damages?
 Agent has the absolute discretion to sell the car
 No. You are not obliged to commit a crime just because
according to the price you think which is fair or
you wanted to comply with the instructions.
reasonable.
 Here, you could also deviate from the instructions given
However before you left to find the buyer, the principal reminded by the principal. The following circumstances where you
you ―Any price which you may find is fair or reasonable, but can deviate from the instructions are: (answers from de
between you and me, not lower than 100K.‖ So if you sell it for Leon)
80k? Is the sale still valid?
When departure from principal’s instructions justified:
 Sudden Emergency
 The sale is valid. The authority here was to sell the car  Ambiguous Instructions – The instruction is susceptible to
for any amount which is fair or reasonable. As far as the two or more interpretations in which case the ambiguity
third persons as concerned, he (they’re) is not bound by should be charged against the principal for giving
the secret instructions given by the principal to the agent; ambiguous instructions. Principal should have given a
however the principal can demand from the difference clear instruction. Although the agent have followed the
from the price. Here he (agent) did not follow instructions. ambiguous instruction and was not able to pursue the
transaction.
 An agent may not be said to have breached the agency
The buyer learned about the secret instruction, so he called the
contract by reason of an insubstantial departure from the
owner of the car. ―Mr. Owner, I am returning the car. I am principal’s instructions, which does not affect the result.
cancelling the sale.‖ Can he cancel? He discovered that the agent
did not follow the instructions.
CONFLICT OF INTEREST and the ROLEX STORY
 The buyer cannot cancel the sale. The sale was already
affected. Here, the act of the agent is the act of the Article 1889. The agent shall be liable for damages if, there being
principal. a conflict between his interests and those of the principal, he
should prefer his own. (n)
You were authorized to sell the principal’s watch. You were trying
COMMISSION to convince a buyer to buy the principal’s watch. As you were
trying to convince the buyer, you keep on scratching you nose just
Although you were authorized to sell the car, you were not able to to show your watch. The buyer think your watch is better and he
sell it. You were given 30 days to sell it. 60 days have elapsed but bought your watch instead. Are you liable?
you were not able to sell it. Can you (agent) demand for a
commission?  The agent is liable to the principal for preferring his
(agent’s) interest.
 No. Commission contemplates that there is already a
sale. No sale. No commission. No performance. No ARTICLE 1890
commission.
You were authorized to borrow by the principal. The principal told
Once sold? you that he is willing to pay not more than 12% interest. Do you
think you could be a lender?
 Can now ask for a commission.
 Article 1890. If the agent has been empowered to
Because you were not able to sell, the principal demanded borrow money, he may himself be the lender at the
damages from you (agent). Can you be liable? current rate of interest.
 Here there is no conflict of interest.
 No. The agent does not guaranty success.
Here you were authorized to lend by the principal. He gave you
BAD INSTRUCTIONS and DEVIATION FROM INSTRUCTIONS.
30m to lend ―5-6‖.

 Article 1890. If he has been authorized to lend money at  When the agent was authorized and no
interest, he cannot borrow it without the consent of the designated agent but he appointed someone
principal. (n) who is notoriously incompetent or insolvent.
 Principal bound by the acts of the sub-agent when

 Principal specified the sub-agent to be
THE ROLEX WATCH
appointed.
You were authorized to sell the car of your principal and when you  Agent was authorized, he is given the discretion
brought the car to be delivered to the buyer. The buyer happened and he appointed someone not notoriously
to be someone who unfortunately happens to be a woman who incompetent or insolvent.
finds you, Entera a handsome man. And so as a token of  Agent was authorized to appoint a subagent
appreciation as the result of the sale, the woman buyer gave you a who was specifically designated by the principal
rolex watch. You went to the principal, should you account the as such but was notoriously incompetent or
watch? insolvent.
 Principal ratified the appointment. (This was not
 Article 1891. Every agent is bound to render an account mentioned by Sir)
of his transactions and to deliver to the principal whatever
he may have received by virtue of the agency, even  When agent designates a subagent. There is a new
though it may not be owing to the principal. contract between the agent and the subagent. So that if
the agent now acts as a subagent. Is the principal
 De Leon. It has been held that an agent who takes a bound?
secret profit in the nature of a bonus, gratuity or personal  The principal is bound only if the agent was
benefit from the vendee, without revealing the same to authorized to appoint a subagent.
his principal, the vendor, is guilty of breach of his loyalty  If the subagent does something without the
to the principal and forfeits his right to collect the authority and against the interest of the
commission from his principal, even if the principal does principal, the principal go against or sue the
subagent. This is an exception to the general
not suffer any injury by reason of such breach of fidelity,
rule on the concept of privity of contracts (Only
or that he obtained better results, or that the agency is a parties to the contract are bound.); even if the
gratuitous one, or that usage or custom allows it; principal was not privy to the contract between
because the rule is to prevent the possibility of any the agent and the subagent, he can go against
wrong, not to remedy or repair an actual damage. the subagent.
 Atty. The law says account everything that you have
received, even if it does not owing to the principal. Full LIABILITY OF AGENTS:
disclosure is required.
Article 1894. The responsibility of two or more agents, even
 Not just inform. The law says, account. though they have been appointed simultaneously, is not solidary, if
solidarity has not been expressly stipulated. (1723)
SUBSTITUTE AGENT  Solidary is the rule if agreed on the contract.
Article 1892. The agent may appoint a substitute if the principal Instances when the agent is personally liable:
has not prohibited him from doing so; but he shall be responsible  Agent acts in his own name.
for the acts of the substitute:  Agent has no/lack/absence authority to designate a
(1) When he was not given the power to appoint one; subagent and for the acts of the subagent.
(2) When he was given such power, but without  Acts beyond his authority.
designating the person, and the person appointed was notoriously  Acts without authority.
incompetent or insolvent.  Does acts that prevent the principal from performing the
All acts of the substitute appointed against the prohibition of the contract.
principal shall be void. (1721)
RATIFICATION
 What’s a substituted agent?
Article 1897. The agent who acts as such is not personally liable
 A substituted agent or a substitute is a person to to the party with whom he contracts, unless he expressly binds
whom the agent delegates, as his agent, the himself or exceeds the limits of his authority without giving such
performance of an act for the principal which the party sufficient notice of his powers.
agent has been empowered to perform through
his representative. However that excess of authority can be cured by the ratification
by the principal.
 There are instances where the act of the subagent will
not bind the principal: Requisites for Ratification:
 When the agent is prohibited to appoint a Principal must:
subagent. 1. Have full knowledge of all the material facts - he must
 When the agent has no authority to appoint a know what he is trying to ratify, he must be aware and
subagent. understand the implication of his acts. Otherwise, if he

did not understand what he is doing, that he was trying to COMMISSION AGENT WITH TWO OR MORE PRINCIPALS
cure a defect, then, there can be NO RATIFICATION.
2. Have the capacity to make the ratification. A commission agent assumes possession.
3. Have done that ratification voluntarily.
Article 1904. The commission agent who handles goods of
The act of agent to be ratified must: the same kind and mark, which belong to different owners,
4. Be capable of being ratified (ei. must not be void).
shall distinguish them by countermarks, and designate the
5. Be done in the name of the principal.
merchandise respectively belonging to each principal. (n)
Act of ratification must be done:
6. Before the third party repudiates or rescinded the If the commission agent is an agent or represents several
contract, otherwise if the contract is already rescinded or principals what could happen?
ratify, there is nothing to ratify.
7. In its entirety or total ratification. The agent should account it and if there is a sale, the agent should
[8. In the same manner of the authority. if the authority should account and allocate the sale in proportion to the goods deposited
be given in writing, then ratification must also be in writing.]? by the principal in the warehouse, if they involve the same kind of
goods.
Situation: One principal authorize agent to sell 1 truck of guavas;

COMMISSION AGENT and another principal authorize agent to sell 2 trucks of lansones;
and the third principal authorize the agent to sell 5 sacks of
Commission agent is one engaged in the purchase and sale of the mancenitas, what could happen?
principal’s personal property, which for this purpose, such property
has to be placed in his possession at his disposal. He assumes If there is a sale, the agent should account for the fruits separately
custody or possession of the property. for each specific goods.
How do we distinguish a commission from an ordinary agent
RULE 1: If it involves the same kind of goods, account the sale in
(OA)?
1. CA may act in his own name, while OA acts in behalf of proportion to what each principal deposited or authorized the
the principal. agent to sell.
2. CA has possession of the goods, while the OA need not
have possession of the goods. RULE 2: If it involves various kinds of goods of each principal,
then you account each separately.
ARTICLE 1905 and ARTICLE 1906
If it involves various kinds of goods, the agent should segregate
If the principal owns jewelry, was under you custody, the moment them, unless it involves the same kind of goods.
you sell it, you have consummated the transaction. You were
ordered to sell it on cash but you instead sold it on credit. Situation: one principal from Bohol has 1 truck of Brown Rice and
another principal from Bohol has 1 truck of ganador rice, what
Article 1905. The commission agent cannot, without the express
or implied consent of the principal, sell on credit. Should he do so, should the agent do?
the principal may demand from him payment in cash, but the
commission agent shall be entitled to any interest or benefit, which Segregate the rice since they are of different kinds of goods
may result from such sale. although each principal has brought rice, they are of different
variety.
 Presumption is the sale must always be on cash, unless
otherwise stipulated. PRINCIPAL IN ESTOPPEL
General rule: principal liable for acts of agent done within scope
And so you were authorized to sell the jewelry on credit, the buyer, of his authority
failed to pay the second installment. Can the principal complain?
When agent is liable:
Article 1906. Should the commission agent, with authority of the
principal, sell on credit, he shall so inform the principal, with a
statement of the names of the buyers. Should he fail to do so, the a. Expressly binds himself
sale shall be deemed to have been made for cash insofar as the b. Exceeds limits of his authority without giving
principal is concerned. (n) sufficient notice of his powers
c. Prevents performance on the part of principal,
And so you were able to collect the second installment but you did liable to 3rd persons
not remit it to the principal. d. Acts as agent without authority or without a
 Answer, wa ko kadungog kay bell na and hinay ang
principal
tingoooooog 
 One way of preventing this problem is Article 1906. To e. Purports to act as agent of incapacitated
able to check if payment was made. principal

Principal is not liable unless: GUARANTY COMMISSION AGENT
1. The principal ratifies; Article 1907. Should the commission agent receive on a sale,
2. The principal is guilty of estoppel in addition to the ordinary commission, another called a
guarantee commission, he shall bear the risk of collection
Estoppel - Bar which precludes person from denying or asserting and shall pay the principal the proceeds of the sale on the
anything contrary to that which has been established as the truth same terms agreed upon with the purchaser.
by his own deed or representation either express or implied
Here, there is a presumption that it is sold in cash.
By estoppel originally the principal is not liable for certain
instances but by estoppel the principal may now become liable. Article 1905. The commission agent cannot, without the
express or implied consent of the principal, sell on credit.
ESTOPPEL VS RATIFICATION Should he do so, the principal may demand from him
payment in cash, but the commission agent shall be entitled
to any interest or benefit, which may result from such sale.
Ratification Estoppel
Rests on intention, Rests on prejudice rather
express or implied, than intention
regardless of prejudice GUARANTEE AGENT VS COMMISSION AGENT
Party intended to be Bound notwithstanding
bound absence of intention Guarantee agent is liable regardless of the reason for his failure to
Retroactive Operates upon something collect the proceeds. (whether with due diligence or not)
which has been done
Affects entire transaction Affects only relevant parts of A commission agent will only be liable when he is remiss in his
and from the beginning transaction and from the duties and failed to exercise due diligence in the collection of the
time only when estoppels proceeds. (also when it is due and demandable)
may be said to be spelled
out GIBALIK NI SIR:
Substance is confirmation Substance is principal’s
of unauthorized act or inducement to another to act
General rule: principal liable for acts of agent done within scope
contract after it has been to his prejudice
done or made of his authority
Similarity:
Principal bound to 3rd Principal bound to 3rd When agent is liable:
persons persons
1. Expressly binds himself
PROMISSORY NOTE SITUATION 2. Exceeds limits of his authority without giving sufficient
notice of his powers
Situation 1: If the principal authorize his agent to borrow from the 3. Prevents performance on the part of principal, liable to
L the lender P50,000 and the agent executed and signed a 3rd persons
promissory note in behalf of his principal, whereby the agent said I 4. Acts as agent without authority or without a principal
acknowledge to pay P50,000 to L the lender upon demand. And 5. Purports to act as agent of incapacitated principal
so he signed as agent in behalf of principal.
Principal is not liable unless:
When the lender told the principal about it, he said I never
authorized the agent to do such thing. 1. The principal ratifies;
2. The principal is guilty of estoppel
What would happen? What conduct could it have been? (wala pa 3. MOST DEFINITELY IF BY NECESSITY TO INCUR
na answer) SUCH LIABLITY
Situation 2: Your boyfriend said to you, ―kiss the aping‖ and you DIABETES
said ―ugma nlng‖ the next day your boyfriend kissed you. You are
already estopped because of your promise. The agent saw the potential buyer and saw his wounds, he had
diabetes and to induce him to buy he said lets fix it, afterwards he
Situation 1 if the principal signs the promissory note after then it is went back and he was chewing something, (nag albolaryo)
ratification. ―tomorrow you will be healed‖ the buyer agreed and but the next
day it got worse and it had to be amputated.
For the principal in Situation 1 to be in estoppel, if he asks an
extension to pay then he is in estoppel. There is an indirect The buyer said you should pay for the damage you caused.
assumption of the obligation/liability.
The agent went to the principal and complained, ―sir pa bayron ko
sa amputation sa buyer‖, can the boss/principal liable to pay?
No, because even though the agent had the desire to serve the Mortgage : dependent on principal contract of loan
principal, his action was in extreme deviation of the instruction of
the principal. Real Estate Mort. -real prop as security
RULE: Tortious Acts – must be done within the scope of the Chattel Mort. -personal prop as security
agent’s employment. Follow Motivation – Deviation test.
2 Factors in Motivation – Deviation Test: (for the principal to

be liable) Pledge- - surrendered possession of prop
a. Agent motivated by desire to serve employer Mort. - possession not surrendered

b. Not an extreme deviation from normal conduct
Definitions:
of employee (if in extreme deviation then the
principal is not liable) Obligation - juridical necessity to give, to do, or not
to do
PART 2 51:42 – 1: 23: 00
- sources : law, contract, q.contract,
SELF-DEFENSE
delict, q.delict
-
Prof: You are given jewelry, take care , sell it, I will guaranty you Contract - a meeting of minds between
comm. You bring it along. And the driver saw it. Driver called two persons whereby one binds himself, with respect to
someone informing him that you have jewelry. In the tricyle, the other, to give something or to
someone stopped you demanding the jewelry at gunpoint. You
killed the person with your own gun. Heir demanded settlement render some service
P5MM. You settled then ask P for reimbursement. Is P liable?
Pledge , - an accessory, real and

Itao – P is liable ; desire to protect ; under normal situation you unilateral contract by virtue of which the debtor or a third person
will do the same , not an extreme deviation. P is liable for the delivers to the creditor or to a
expense.
third person movable property as
security for the performance of the principal obligation, upon the
fulfillment of which
PLEDGE / CONTRACT / OBLIGATIONS / GUARANTY /
SURETY the thing pledged, with all its accession
and accessories, shall be returned to the
Whats the difference? Contract vs Obligation debtor or to the third person.
-contract is a source of obligation
Real Estate Mort. - an accessory contract

whereby the debtor guarantees the performance of the principal
What are the sources of obligation?
obligation by subjecting real
-Law, contracts, q.contract, delicts, q.delicts
property or real rights as security in
case of nonperformance of such obligation
within the period agreed upon
Pledge is just an accessory obligation.
Principal contract is the loan.

Chattel Mort. - personal property is recorded in the
Example: Chattel Mort. Register as a security for the performance of an
obligation.
Prof : Asa man ka?
Me: Mamendra ko.

Antichresis - contract by virtue of which the creditor
Prof: dili! manghuwam ka! Nya para makahuwam moprenda acquires the right to receive the fruits of an immovable of his
ka. debtor, with the

Obligation to apply them to the -Subject of agency cannot be separated – common transaction
payment of the interest, if owing, and thereafter, to the principal
of his credit
DOUBLE SALE - MOVABLE (WATCH)
Suretyship - a contract by virtue of which a person Prof: here is my cheap watch cadorna, sell it for 30K. then after I
binds himself solidarily with the principal debtor to fulfill the authorized you, I saw a friend, I sold it immediately
obligation
Prof: What happens to your authority?

Guaranty - a contract by virtue of which a person,
called the guarantor, binds himself to the -considered revoked because authority is by nature revocable
creditor to fulfill the obligation of the
principal debtor in case the latter

Prof: However before you learned of what I did you finalized the
should fail to do so.
sale, with proceeds received.
P: Dugay ra nahalin!
3 BROS, COMMON PROP, COMMON AGENT
3 brothers who own a common prop. Sell prop to someone

-double sale ; same prop is sold to diff persons.
through common agent
-Watch – movable - 1st in possession
A- terminating the agency
is the entire agency terminated?
Entera : yes – solidary

Prof: What happens to your buyer?
-damages
Prof: What is nature of liability of Principal?
-Solidary
Prof : who is liable?
Prof: Agent?
Garcia: P is liable– act of A is act of P.
-joint
Prof: A in good faith
Free from liability

3 BROS, SEPARATE PROP, COMMON AGENT
P should be blamed, he revoked without informing A
3 brothers who own each an apartment
Bro A: authorized Agent to rent out/ sell .

DOUBLE SALE – IMMOVABLE (LAND)
Bro B: so with mine.
Prof: If what I authorized to sell was my parcel of land? Same
Then answer?
Bro A:terminate agent. -No. diff. rule for immovable.
Prof :what happens to other units? 1.registration
– not affected ; separately owned 2.possession
3.oldest title
Prof. When may that agency be pursued ?
(all 3 in good faith done)

-depends -ask for reimbursement if necessary and reasonable.
Rules in double sale: Prof:So aguilar, It is a necessary exp.
1. movable - possession
2. immovable -registration WINE, DINE & MORE
-possession After dinner, sulod ta karaoke + girls….
-oldest title Girl: gutom ko.
Prof: RDO issues one title ; problem is Xerox machine ; several Agent: waiter ilisdi ug nakapanihapon. Dako ta ug gasto ani.
agents selling same property. Advance payment received from
one buyer, agent disappears then goes to another buyer. Lesson: New girls, 10 girls, started to drink. Ladies drink. P250 / shot.
be very cautious in dealing with agents.
@ 2 am – boss uli na ta
Article 1544. If the same thing should have been sold to different BILL: P25,000 {ROOM, CHICKS ,DRINKS, BODY SHOT}
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should
be movable property.
1:23:01
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the While it is the obligation of the principal to reimburse and provide
Registry of Property. for expenses, these are not obligations that cannot be unlimited.
No such thing as unli expense. Unli expenses pwede.
Should there be no inscription, the ownership shall pertain to the
person who in good faith was first in the possession; and, in the When can the principal refuse to reimburse?
absence thereof, to the person who presents the oldest title,
provided there is good faith. (1473) Article 1918. The principal is not liable for the expenses
incurred by the agent in the following cases:
Rules in Double Sale (1) If the agent acted in contravention of the
(when 2 persons contract with the same thing, one with the principal's instructions, unless the latter should wish
principal, the other with the agent. Which transaction shall to avail himself of the benefits derived from the
prevail?) contract;
1. Prior Date of Sale (2) When the expenses were due to the fault of the
2. If transacted in the same date - determine what kind of agent;
property, whether:
A. MOVABLE - the first possessor in good faith prevails. It stops (3) When the agent incurred them with knowledge
here since it is impossible for 2 persons to possess a movable that an unfavorable result would ensue, if the
thing at the same time. principal was not aware thereof;
b. IMMOVABLE - first to register it in the Registry of Property in
good faith prevails. (4) When it was stipulated that the expenses would
 If both registered at the same time - first possessor in be borne by the agent, or that the latter would be
good faith prevails. allowed only a certain sum. (n)
 If both possessed at the same time - the person who can
present oldest title in good faith shall prevail.
Modes of Extinguishment of Agency
If same oldest title? IMPOSSIBLE!
Article 1919. Agency is extinguished: EDWARD
AGENT ADVANCES ; PRINCIPAL REIMBURSEMENT (1) By its revocation;
(2) By the withdrawal of the agent;
(3) By the death, civil interdiction, insanity or
Prof. : A may make advances.
insolvency of the principal or of the agent;
(4) By the dissolution of the firm or corporation
P obliged to reimburse expenses which entrusted or accepted the agency;
(5) By the accomplishment of the object or purpose
DINE of the agency;
(6) By the expiration of the period for which the
Prof: Cadorna to sell prop. Because of his desire, says to agency was constituted.
prospective buyer boss manihapon ta. Agent advances P5,000
dinner with client. Can he ask reimbursement? Who withdraws?
- The agent

- The agent has no knowledge of the death, the contract of
When are there instances when the principal revoke the agency? agency will not be extinguished
- Conditions:
Article 1927. An agency cannot be revoked if a bilateral o Benefit of the agent and the principal
contract depends upon it, or if it is the means of fulfilling an o Benefit of third parties (stipulation pour attriui)
obligation already contracted, or if a partner is appointed
manager of a partnership in the contract of partnership and INTEREST
his removal from the management is unjustifiable.
There is a contract of agency and the agent will get a 20% of the
1. Bilateral contract depends upon it sale of the property in addition to compensation. If the principal will
2. Means of fulfilling an obligation already contracted die, then just because the principal died it doesn’t terminate the
3. Partner is appointed manager of a partnership in the right of the agent to the sale. The property will be sold and the
contract of partnership and his removal from the agent will get 20% additional commission from the sale. But later
management is unjustifiable on, the principal said Ong, ako checke bah nag ongong naman ni,
I’m cancelling your authority. Unsaun man nako pag paningil sa
20% commission plus 5% bonus? Can you still revoke?
- Principal can still revoke the agency
STIPULATION POUR AUTRIUI - In order for the contract to be irrevocable the interest of
the subject matter, not merely just because he derives
One instance where the agency is irrevocable is when there is a commission from the agency.
stipulation pour autriui. Stipulation pour autriui means?
- Stipulation in favor of a third person What interest does the law talk about that will jeopardize the
- French term (very difficult to understand sometimes) interest of the agent; the principal could no longer revoke the
There was a dinner, and I happened to be following a French agency.
guy. He was telling me bon appétit and I said Eugene - It is the means of fulfilling an obligation already
Espedido. We met again on the following day, bon appetite, contracted
Eugene Espedido. I could not understand. Third time, it was - it refers to an obligation separate and independent of the
the last dinner, it was my turn to tell him bon appetite, then he subject matter of the agency
said Eugene Espedido. He thought the Cebuano of thank you - It does not refer to the commission of the agent, the
was Eugene Espedido. Tabla mi. kani manga ignoy lagi. commission of the agent it is not a separate transaction
but the result of the agency.
If there is an agreement for Escabarte to sell my property, with the
agreement that the proceeds of the sale shall be used to pay what Prior to the constitution of the agency, the principal has already a
I borrowed from a third party. You cannot cancel that otherwise debt in favor of the agent, he already has a loan therefore he
that is one less security for the loan incurred. constitutes the agency for the agent to sell his car so that the
proceeds of the sale shall be applied to his outstanding debt
DEATH OF PRINCIPAL towards the agent. The agent may refuse to have the authority
revoked.
As a matter of fact even if the principal is already dead, normally if
the principal is dead what will happen? DEATH OF THE PRINCIPAL AGAIN
GR – the agency dies with the principal.
Death of the principal cancels the authority of the agent, meaning
However, even if the principal is dead, there is a stipulation pour if the principal is already dead, can the agent still pursue the
atriui? agency?
GR – no more
Article 1927. An agency cannot be revoked if a Exc –
bilateral contract depends upon it, or if it is the Article 1931. Anything done by the agent, without
means of fulfilling an obligation already contracted, knowledge of the death of the principal or of any
or if a partner is appointed manager of a partnership other cause which extinguishes the agency, is valid
in the contract of partnership and his removal from and shall be fully effective with respect to third
the management is unjustifiable. persons who may have contracted with him in good
faith.
- The contract of agency will not be extinguished
- The authority to sell is for the benefit of third parties - Contract will still be binding on the principal as well as the
- The heirs of the successors in interest shall be obliged to heirs who may question the authority later. The third
honor that authority given party could always say that he did not know that the
principal died, the agent could also say that he was not
There is another instance where death will not extinguish. informed about the death of the principal. The transaction
remains valid.
Article 1931. Anything done by the agent, without
knowledge of the death of the principal or of any WITHDRAWAL OF THE AGENT
other cause which extinguishes the agency, is valid
and shall be fully effective with respect to third Article 1928. The agent may withdraw from the agency by
persons who may have contracted with him in good giving due notice to the principal. If the latter should suffer
faith any damage by reason of the withdrawal, the agent must
indemnify him therefor, unless the agent should base his

withdrawal upon the impossibility of continuing the
performance of the agency without grave detriment to
himself.
Who may cause the withdrawal?

- The agent
When an agent withdraws, what should he do?

- The agent will notify the principal of his intent to
withdraw, otherwise the withdrawal will not take effect.
If despite his withdrawal, the property which he was authorized to

sell was not sold, when in fact somebody else went to the owner
and wanted to buy the property. The principal was supposed to
entertain another buyer but because of your agency the principal
said, ―ako nalang I hatag ni san luis, deal with san luis.‖ He
refused the offer to buy. It would have given him a profit of 50m.
When he went to you, you said, ―dugay nako ni withdraw.‖ The
buyer said ―ni adto kos principal, ingun dinhi nimo karun ana ka ni
withdraw, ahw di nako oi.‖ The principal missed the opportunity for
profit. There was no sale made. What is the effect of the
withdrawal? Is it effective?
- No, it is not effective because the sale was not
consummated because of the withdrawal
- The agent can be held liable for damages.


What ARE THE Causes Which Violate THE Agreement?: Thieves and Anti-Thief Robot Stolen Somewhere in Colon.)

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

What ARE THE Causes Which Violate THE Agreement?: Thieves and Anti-Thief Robot Stolen Somewhere in Colon.)

Caricato da

Copyright:

Formati disponibili

WWW August 23, 2014 according to the extent of his failure, of the benefits of the contract

Situation. Industrial partner in charged with repairs in an auto – EFFECT OF DISSOLUTION.

WWW Finals Compilation

Recission – If one is induced by fraud or misrepresentation to

WWW Finals Compilation

WWW Finals Compilation

WWW Finals Compilation

WWW 09/04/2014 PART 1 RIGHTS OF A LIMITED PARTNER

WWW Finals Compilation

been made 4. The certificate as amended must be registered in the

SUBSTITUTED PARTNER A contributor is referring to a limited partner.

What is a substituted partner?

WWW Finals Compilation

WWW September 6, 2014 KISSING ANDREA COROMINAS 

Illustration. The boyfriend of Andrea Corominas, authorizes you

WWW Finals Compilation

September 20, 2014

CONTRACT OF AGENCY: MEANING Trust vs. Agency

WWW Finals Compilation

Administrator vs. Agency Acceptance of an agency

WWW Finals Compilation

(6) To make gifts, except customary ones for charity or

WWW Finals Compilation

Exceptions, hence WILL BIND the principal: Licup

 The acts of the principal herself caused the violation of By Hubahib

 You cannot compel the principal to pay.

WWW Finals Compilation

WWW Finals Compilation

 Principal bound by the acts of the sub-agent when

WWW Finals Compilation

Situation: One principal authorize agent to sell 1 truck of guavas;

WWW Finals Compilation

2 Factors in Motivation – Deviation Test: (for the principal to

a. Agent motivated by desire to serve employer Mort. - possession not surrendered

Pledge , - an accessory, real and

-contract is a source of obligation

Real Estate Mort. - an accessory contract

Principal contract is the loan.

Me: Mamendra ko.

WWW Finals Compilation

DOUBLE SALE - MOVABLE (WATCH)

Prof: What happens to your authority?

principal debtor in case the latter

3 brothers who own a common prop. Sell prop to someone

Entera : yes – solidary

Free from liability

Bro A: authorized Agent to rent out/ sell .

Bro A:terminate agent. -No. diff. rule for immovable.

Prof :what happens to other units? 1.registration

– not affected ; separately owned 2.possession

WWW Finals Compilation

Rules in double sale: Prof:So aguilar, It is a necessary exp.

2. immovable -registration WINE, DINE & MORE

-possession After dinner, sulod ta karaoke + girls….

-oldest title Girl: gutom ko.

WWW Finals Compilation

WWW Finals Compilation

Who may cause the withdrawal?

When an agent withdraws, what should he do?

If despite his withdrawal, the property which he was authorized to

WWW Finals Compilation

Potrebbero piacerti anche