COLLEGE OF LAW

UNIVERSITY OF THE PHILIPPINES

ATTY. RANIL M. REYNANTE
A.B., M.A. (Sans Thesis), LlB., M.M.
SECOND SEMESTER
ACADEMIC YEAR 2017-2018

THE LAW ON AGENCY AND PARTNERSHIP1

(BOOK V: SPECIAL CONTRACTS
CIVIL CODE)

PART TWO
THE LAW ON PARTNERSHIP
(ARTICLES 1767-1867, CIVIL CODE)
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I. Nature; Creation

Reference: Casis, Rommel J. Analysis of Philippine Partnership

Law & Jurisprudence. (Quezon City: College
of Law, University of the Philippines, 2011).
(hereinafter, “Partnership”)
Preliminary reading: Partnership, pages 1-57.

A. Definition; essential features – Art. 1767

Partnership, pages 59-88

B. Creation – Arts. 1770, 1771, 1772

Arts. 1784, 1815
Code of Professional Responsibility, Rule 3.02
Art. 1411

Cases:

(1) Agad vs. Mabato, 23 SCRA 1223

(2) Torres vs. Court of Appeals, 320 SCRA 428
(3) Arbes vs. Polistico, 53 Phil. 489
(4) Tocao vs. Court of Appeals, 342 SCRA 20

1 The Syllabus is based, primarily, on the course outline of Prof. Salazar and Prof. Oliva, whilst additional materials were drawn from the
“Outline of Philippine Civil Law”, jointly authored by Justice JBL Reyes and Justice Ricardo C. Puno, Jr., and Civil Code of the Philippines,
authored by Dr. Arturo Tolentino.

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C. Separate Juridical Personality – Arts. 1768, 1775
NIRC, Section 22 (b);
Section 26
Art. 1811 (2)

Cases:

(5) Aguila vs. Court of Appeals, 319 SCRA 246

(6) Tan vs. del Rosario, 237 SCRA 324
(7) Mendiola vs. Court of Appeals, 497 SCRA 346
(8) Angeles vs. Secretary of Justice, 465 SCRA 106

D. Mutual Agency – Arts. 1803, 1818, 1819, 1820, 1821, 1825

Revised Rules of Court – Rule 130, Sec. 29;
Revised Rules of Civil Procedure, Rule 14
Section 11
Arts. 1800, 1801, 1802, 1832, 1833, 1834

E. Distinguish from:

(1) Co-ownership; Co-possession

(2) Tenancy in common; joint tenancy
(3) Joint ventures
(4) Joint adventures
(5) Joint accounts
(6) Cuentas en participation
(7) Agency

Arts. 1769, 1825

Code of Commerce, Articles 239-243

Cases:

(9) SEC Opinion, dated 29 February 1980

(10) Gatchalian vs. CIR, 67 Phil. 66_ (667)
(11) Pascual vs. CIR, 166 SCRA 560
(12) Obillos vs. CIR, 139 SCRA 436
(13) Rivera vs. People’s Bank, 73 Phil. 546
(14) Tuason vs. Bolaños, 95 Phil. 106
(15) Heirs of Tan Eng Kee vs. Court of Appeals, 341 SCRA 740
(16) Aurbach vs. Sanitary Wares, 180 SCRA 130
(17) Litonjua vs. Litonjua, 477 SCRA 576
(18) Bourns vs. Carman, 7 Phil. 117
(19) Sevilla vs. Court of Appeals, 160 SCRA 171
(20) Philex Mining Corp. vs. CIR, 551 SCRA 428

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II. Kinds of Partnerships

Reference reading: “Partnership”, pages 90 to 122

A. Universal – Arts. 1776-1782

Art. 739
B. Particular – Arts. 1776, 1783
C. General – Art. 1776
D. Limited – Art. 1776
E. At Will – Art. 1785
F. For a term or (for an) Undertaking – Art. 1785
G. Commercial – Art. 1767
H. Professional – Art. 1767
I. By Estoppel / Apparent – Art. 1825

Case:

(21) Ortega vs. Court of Appeals, 245 SCRA 529

III. Kinds of Partners

A. Industrial – Arts. 1789, 1797

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

IV. Partner’s Obligations to the Partnership

Reference reading: “Partnership”, pages 163 to 176

A. To contribute; warrant – Arts. 1786, 1787, 1788, 1790, 1791,

1795
B. To apply sums collected pro rata – Art. 1792
C. To compensate – Art. 1794
D. To be loyal; fiduciary duty – Art. 1807

Cases:

(22) Lim Tanhu vs. Remolete, 66 SCRA 425

(23) Liwanag vs. Court of Appeals, 281 SCRA 225
(24) U.S. vs. Clarin, 17 Phil. 84
(25) Pang Lim vs. Lo Sheng, 42 Phil. 282
(26) Catalan vs. Gatchalian, 105 Phil. 1270

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V. Partners’ obligations inter se

A. To bring to collation – Art. 1793

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

Cases:

(27) Pioneer Insurance vs. Court of Appeals, 175 SCRA 668

(28) Evangelista vs. Abad Santos, 51 SCRA 416
(29) Moran vs. Court of Appeals, 133 SCRA 88
(30) Martinez vs. Ong Pong Co, 14 Phil. 726
(31) Agustin vs. Inocencio, 9 Phi. 134
(32) Soncuya vs. de Luna, 67 Phil. 646

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

parties

Reference reading: “Partnership”, pages 178 to 187

A. To have his partnership interest charged for personal debts

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

Cases:

(33) In re: SyCip, 92 SCRA 1

(34) Litton vs. Hill, 67 Phil. 509
(35) Goquiolay vs. SyCip, 9 SCRA 663
(36) Goquiolay vs. SyCip, 108 Phil. 947
(37) MacDonald vs. National City Bank, 99 Phil. 156
(38) Compania Maritima vs. Muñoz, 9 Phil. 326
(39) Co-Pitco vs. Yulo, 8 Phil. 544
(40) Pacific Commercial vs. Aboitiz, 48 Phil. 841
(41) Magdusa vs. Albaran, 5 SCRA 511
(42) Island Sales vs. United, 65 SCRA 554

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 (43) Muñasque vs. Court of Appeals, 139 SCRA 533
(44) Lim Tong Lim vs. Philippine Fishing Gear, Inc. 317 SCRA 728
(45) Bachrach vs. La Protectora, 37 Phi. 441
(46) Guy vs. Gascott, G.R. No.: 206147, 13 January 2016

VII. Rights of a Partner

Reference reading: “Partnership”, pages 123 to 163

A. To associate another in his share – Art. 1804

B. To access, inspect and copy partnership books – Art. 1805
C. To have a formal account – Arts. 1908, 1842
D. Property rights – Art. 1810

(1) To possess specific partnership property – Art. 1811

(2) To convey partnership interest – Art. 1812, 1813

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

Reference reading: “Partnership”, pages 232 to 238

Cases:

(47) Emnace vs. Court of Appeals, 370 SCRA 431

(48) Dan Fue Leung vs. IAC, 169 SCRA 746
(49) U.S. vs. Clarin, supra

VIII. Partnership’s obligations to the partners

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

Cases:

(50) Martinez vs. Ong Pong, 14 Phil. 726

(51) Agustin vs. Inocencio, 9 Phil. 134

IX. Rights of assignees

A. To receive the interest – Art. 1813

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

X. Dissolution and Winding Up

Reference reading: “Partnership”, pages 188 to 211

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

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

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

C. Effects of dissolution

Reference reading: “Partnership”, pages 211 to 232; 238 to 251

(1) Termination of mutual agency; exceptions – Arts. 1832,

1833, 1834

D. Right to wind up – Art. 1836

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

Cases:

(52) Idos vs. Court of Appeals, 296 SCRA 194

(53) Ortega vs. Court of Appeals, 245 SCRA 529
(54) Rojas vs. Maglana, 192 SCRA 110
(55) Lichauco vs. Lichauco, 33 Phil. 350
(56) Bearneza vs. Dequilla, 43 Phil. 237
(57) Singson vs. Isabela Sawmill, 88 SCRA 623
(58) Bonnevie vs. Hernandez, 95 Phil. 175
(59) Yu vs. NLRC, 224 SCRA 75
(60) Sunga-Chan vs. Court of Appeals, 555 SCRA 275
(61) Primelink Properties vs. Lazatin-Magat, 493 SCRA 444

XI. Limited Partnership – Arts. 1843 to 1867

Reference reading: “Partnership”, pages 253-300

Case:

(62) Najim vs. de Mesa, SEC-SICD Case No. 2526; 21 September 1987

XII. Integration