BUSINESS ORGANIZATION I

(Partnership, Agency and Trusts)

[3 Units/ 3hrs. a week]
Atty. Joseph C. Cerezo
This course is composed of Partnership, Agency and Trusts as they
are intimately and closely related to one another. Under this subject BO1,
the students will be graded according to the following: 33.33% recitation,
33.33% midterm exam grade and 33.33% final exam grade. The cases are
intended to supplement the textbook discussions and students are
expected to be always prepared to recite the same.
Week No. 1
I. PARTNERSHIP
A. General Provisions (Art. 1767-1783)
1. What is a contract of partnership? (Art. 1767)
- Santos vs. Sps. Reyes, 368 SCRA 261
2. Determining factors in the existence of partnership (Art. 1769)
-Heirs of Tan Eng Kee vs. CA, 341 SCRA 740 (citing Evangelista vs.
Collector of Internal Revenue, 54 O.G. 996)
-Negado vs. Makabenta, 54 O.G. 4082
-Yulo vs. Yang Chiaco Seng, L-12541, Aug. 28, 1959
3. Distinction between partnership and a private corporation
- 1 Fletcher, Cyc. Corp., Sec. 20
4. Formalities required by law for the organization/constitution
partnership (Art. 1771, 1772, 1773, 1843)

of

Week No. 2
5. Different kinds of partnership
a) As to object (Art. 1777, 1778, 1780, 1783)
i.
Universal Partnership
ii.
Particular Partnership
b) As to liability of the partners
i.
General Partnership
ii.
Limited Partnership
6. Different kinds of partners
a) Industrial Partner
b) Capitalist Partner
c) General Partner
d) Limited Partner
e) Managing Partner
f) Silent Partner
g) Ostensible Partner
h) Secret Partner
i) Partner by Estoppel
Week No. 3
B. Obligations of the Partners (Art. 1784-1827)
1. Obligations of the partners among themselves (Art. 1784-1809)
a) Distribution of profits and losses of partnership
i.
With agreement
ii.
Without agreement
b) Principle of Delectus Personae (Art. 1804)
-Ortega, et al. v. CA, et al., 245 SCRA 529
-Tocao, et al. v. CA, 342 SCRA 20
-JG Summit Holdings v. CA, Sept. 24, 2003, G.R. No.
124293
c) Management of Partnership (Art. 1800-1803)
d) When partner can demand for a formal accounting of
partnership affairs (Art. 1807, 1809)

Week No. 4
2. Property rights of a partner (Art. 1810-1814)
a) Incidents of co-ownership (Art. 1811)
b) Partners interest in the partnership (Art. 1812)
c) Effect of conveyance of interest in the partnership to
third persons (Art. 1813)
d) Charging order upon partners interest (Art. 1814)
3. Obligations of the partner with regard to third persons (Art. 1815-1827)
a) Requisites prescribed by law in order that a partnership may be held liable to
third persons for the act of one partner (Art. 1816, 1822, 1823, 1824)
b) Concept of Mutual Agency (Art. 1818)
c) Partners liability for partnership obligation (nature) (Art. 1816 in rel. to 1824)
-Liwanag vs. Workmens Compenstion Commission, 105 Phil. 741
d) Prohibited acts of partners (unless authorized) (Art. 1818, par. 3)
Weeks No. 5 and 6
C. Dissolution and Winding Up (Art. 1828-1842)
1. Definition and Effects (Art. 1828, 1829)
-difference between Dissolution and Winding Up
2. Causes of dissolution (Art. 1830,1831)
3. Effect of dissolution caused by act, death or insolvency of a partner
(Art. 1833)
4. Residual powers of managing partner and exceptions thereto (Art.
1832, 1834)
5. Duty to wind up/ liquidate partnership affairs (Art. 1836)
-Aldecoa & Co. vs. Warner, Barnes & Co., 16 Phil. 423
-Po Yeng Cheo vs. Lim Ka Yan, 44 Phil. 172
-Guidote vs. Borja, 53 Phil. 900
6. Order of payment in the winding up of partnership liabilities (Art. 1839)
Week No. 7
D. Limited Partnership (Art. 1843-1867)
1. Definition/ Concept/ Nature
2. Power/ Duties/ Rights of a Limited Partner
3. Entitlements of a limited partner after dissolution
Week No. 8
II. AGENCY
A. Historical Context
1. World Context
2. Philippine Context
-Laws 28 and 32, Title 12, Partida 3
-Spanish Civil Code (Civil Agency)
-Spanish Code of Commerce (Commercial Agency)
-Civil Code Art. 2270 (2)
B. Nature, Concept and Purpose
1. Agency as a contract
a) Definition (Art. 1868)
i. Critique/ Articles
-Espiritu, XV Lawyers Journal 297
- J.B.L. Reyes, XVI Lawyers Journal 138
ii. Other definitions
b) Essential requisites/ elements (Art. 1318)
-Rallos vs. Felix Go Chan & Sons Realty Corp., 81 SCRA 251
c) Characteristics
d) Purpose
2. Agency as a relation
a) Fiduciary character
b) Representative character

Week No. 9
3. Agency distinguished from/ compared with other relations
a) Partnership (Art. 1767)
b) Lease of Work or Service (Art. 1644)
i. Nielson & Company, Inc. v. Lepanto Consolidated Mining
Company, 26 SCRA 540
ii. De la Cruz v. Northern Theatrical Enterprises, 95 Phil.
739
c) Independent Contractor (Art. 1713)
iii. Fressel v. Mariano Uy Chaco & Co., 34 Phil 122
iv. Shell Company of the Phil. V. Firemens Insurance, 100
Phil. 757
v. Africa v. Caltex Phil., Inc., 16 SCRA 448
d) Negotiorum Gestio (Art. 2144-2145)
-De la Pea v. Hidalgo, 16 Phil. 450
e) Loan (Art. 1933)
-2 C.J.S. 1030
vi. Jai Alai Corp. v. BPI, 66 SCRA 29
f) Sale (Art. 1458)
vii. Quiroga v. Persons Hardware, 38 Phil. 501
viii. Gonzalo Puyat and Sons v. Arco Amusement Co., 72 Phil.
402
ix. Velasco v. Universal Trading Co. v. Lim Teck Suan, 97
Phil. 171
x. Pearl Island Commercial Corp. v. Lim Tiang Tong, 101
Phil. 789
xi. Lim v. People, 133 SCRA 333
xii. Green Valley Poultry & allied Products, Inc. v. IAC, 133
SCRA 697
xiii. Bert Osmea & Associates v. CA, 120 SCRA 395
g) Trusteeship (Art. 1440)
xiv. 2 C.J.S. 1034
h) Broker
xv. Pacific Commercial Co. v. Yatco, 68 Phil. 398
i) Guardianship
-2 C.J.S. 1027
-3 AmJur 2d 421
-Fessenden v. Jones, 75 Am. Dec. 445
-McDonald v. spring Valley, 120 N.E. 476, 2 ALR 1355
j) Bailment
-2 C.J.S. 1027
k) Ship Agent
-Switzerland Genral Insurance Co., Ltd. v. Ramirez, 96 SCRA 297
Week No.10
C. Kinds, Creation and Existence
1. General Classification
a) Actual Agency (Art. 1868)
b) Apparent or Ostensible Agency (Art. 1873)
-J.B.L. Reyes 16 Lawyers Journal 138
-Rallos v. Yangco, 20 Phil. 269
-Compaia General de Tabacos v. Diaba, 20 Phil. 321
c) Agency by Estoppel
-2 C.J. 444-445
-2 C.J. 464-466
xvi. Macke v. Camps, 7 Phil. 553
2. Kinds of Actual Agency
a) As to manner of creation (Art. 1869)
b) As to character (Art. 1875)
c) As to extent (Art. 1876)
d) As to scope of authority (Art. 1877, 1878)
3. Creation and Elements of Actual Agency

a) Consent/ Mandate
i. Manifestation of Mandate
- Express (Art. 1869, 1874)
- Implied
Conde v. CA, 199 SCRA 245
ii. Manifestation of Acceptance
-Express (Art. 1869, 1870)
-Implied (Art. 1870-1872)
Jimenez v. Rabot, 38 Phil. 357
Lian v. Puno, 31 Phil. 259
Katigbak v. Tai Hing Co., 52 Phil. 622
Amigo v. Teves, 96 Phil. 252
Villa v. Garcia Bosque, 49 Phil. 126
Dir. Of Public Works v. Sing Juco, 53 Phil. 205
BPI v. De Coster, 47 Phil. 594
Germann & Co. v. Donaldson, 1 Phil. 63
Macke v. Camps, 7 Phil. 533
Municipal Council of Iloilo v. Evangelista, 55 Phil.290
Yu Chuck v. Kong Li Po, 46 Phil. 608
Insular Drug v. PNB, 58 Phil. 683
Week No. 11
D. Obligations of the Agent
-Intl Films (China) v. Lyric Films Exchange, 63 Phil. 778
-Nepomuceno, et al. v. Heredia, 7 Phil. 563
-Domingo v. Domingo, 42 SCRA 131
-U.S. vs. Kiene, 7 Phil. 736
-U.S. v. Reyes, 36 Phil. 791
-Ojinaga v. Estate of Perez, 9 Phil. 185
-De Borja v. De Borja, 58 Phil. 811
-PNB v. Welch,Ffairchild, & Co., 44 Phil. 780
-Harry Keeler Electric Co. v. Rodriguez, 44 Phil. 19
-Austria v. CA, 39 SCRA 527
E. Obligations of the Principal
-Gonzales & Gomez v. Haberer, 47 Phil. 380
-Albaladejo y Cia. Phil. Refining Co., 45 Phil. 556
Week 12
F.

Modes of Extinguishment of Agency

-Barretto v. Santa Maria, 26 Phil. 440
-Coleongco v. Claparols, 10 SCRA 577
-De Buncio & Co. v. Ong Guan Gan, 60 Phil. 696
-New Manila Lumber Co., Inc. v. Republic, 107 Phil. 824
-Infante v. Cunanan, 93 Phil. 693
-Valera v. Velasco, 51 Phil. 695
-Buason and Reyes v. Panuyas, 105 Phil. 795
-Herrera, et al. v. Luy Kim Guam, 110 Phil. 1020
-Del Rosario v. Abad, 104 Phil. 648
-Pasno v. Ravina, 54 Phil. 378
-Perez v. PNB, 17 SCRA 834
Week No. 13
III. TRUSTS

A. Definition
B. Parties
C. Different Kinds of Trusts
1. Express Trust (Art. 1443-1446)
-Ramos v. Ramos, 61 SCRA 284
2. Implied Trust (Art. 1447-1457)
-CUAYCONG V. Cuaycong, 21 SCRA 1192
3. Resulting Trust
4. Constructive Trust

Week No. 14
D. Enforcement of Trust
1. In relation to laches
a) Fabian v. Fabian, 21 SCRA 213
b) Sotto v. Teves, 86 SCRA 154
2. In relation to Statute of Limitations
a) Gerona v. De Guzman, 11 SCRA 163
E. Period of Prescription for Reconveyance of Real Property Based on Implied
Trust
-Carantes v. CA, 76 SCRA 514
-Alarcon v. Bidin, 120 SCRA 390
-Bueno v. Reyes, 27 SCRA 1179
-Varsity Hills, Inc. v. Navarro, 43 SCRA 503
-Ecsay v. CA, 61 SCRA 369
-Jaramil v. CA, 78 SCRA 420
-Vda. De Nacalaban vs. CA, 80 SCRA 428
-Duque v. Domingo, 80 SCRA 654
-Tongoy v. CA, 123 SCRA 99
-Caragay-Lagno v. CA, 133 SCRA 718

JCC2-2-15