PARTNERSHIP, AGENCY AND TRUST

LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., G.R. NO.
136448, November 3, 1999
A partnership may be deemed to exist among parties who agree to borrow money to pursue a
business and to divide the profits or losses that may arise therefrom, even if it is shown that
they have not contributed any capital of their own to a common fund. Their contribution may
be in the form of credit or industry, not necessarily cash or fixed assets.
ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L-12541, August 28,
1959
The following are the requisites of partnership: (1) two or more persons who bind themselves
to contribute money, property, or industry to a common fund; (2) intention on the part of the
partners to divide the profits among themselves. (Art. 1767, Civil Code.).
HEIRS OF TAN ENG KEE vs .COURT OF APPEALS and BENGUET LUMBER
COMPANY, G.R. NO. 126881; October 3, 2000
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other are not
partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether such coowners or co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the
persons sharing them have a joint or common right or interest in any property which the returns
are derived;
(4) The receipt by a person of a share of the profits of a business is a prima facie evidence
that he is a partner in the business, but no such inference shall be drawn if such profits were
received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the business;

(e) As the consideration for the sale of a goodwill of a business or other property by
installments or otherwise.
ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and FELICIDAD S. VDA. DE
ABROGAR, G.R. NO. 127347, November 25, 1999
Under Art. 1768 of the Civil Code, a partnership has a juridical personality separate and
distinct from that of each of the partners. The partners cannot be held liable for the obligations
of the partnership unless it is shown that the legal fiction of a different juridical personality is
being used for fraudulent, unfair, or illegal purposes, hence it is the partnership, not its officers
or agents, which should be impleaded in any litigation involving property registered in its name,
violation of this rule will result in the dismissal of the complaint.
Villareal vs. Ramirez, G.R. NO. 144214. July 14, 2003
Since it is the partnership, as a separate and distinct entity, that must refund the shares of the
partners, the amount to be refunded is necessarily limited to its total resources. In other words,
it can only pay out what it has in its coffers, which consists of all its assets. However, before the
partners can be paid their shares, the creditors of the partnership must first be compensated.
After all the creditors have been paid, whatever is left of the partnership assets becomes
available for the payment of the partners shares.
Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29, 2005
The Angeles spouses position that there is no partnership because of the lack of a public
instrument indicating the same and a lack of registration with the Securities and Exchange
Commission (SEC) holds no water for the following reasons: first, the Angeles spouses
contributed money to the partnership and not immovable property; and second, mere failure to
register the contract of partnership with the SEC does not invalidate a contract that has the
essential requisites of a partnership. The purpose of registration of the contract of partnership
is to give notice to third parties. Failure to register the contract of partnership does not affect
the liability of the partnership and of the partners to third persons. Neither does such failure to
register affect the partnerships juridical personality. A partnership may exist even if the
partners do not use the words partner or partnership.
Ortega vs. CA, G.R. NO. 109248, July 3, 1995

The right to choose with whom a person wishes to associate himself is the very foundation and
essence of that partnership. Its continued existence is, in turn, dependent on the constancy of
that mutual resolve, along with each partners capability to give it, and the absence of a cause
for dissolution provided by the law itself. Verily, any one of the partners may, at his sole
pleasure, dictate a dissolution of the partnership at will. He must, however, act in good faith,
not that the attendance of bad faith can prevent the dissolution of the partnership but that it can
result in a liability for damages. Among partners, mutual agency arises and the doctrine
of delectus personae allows them to have the power, although not necessarily the right, to
dissolve the partnership. An unjustified dissolution by the partner can subject him to a possible
action for damages.
Liwanag vs. CA, G.R. NO. 114398, October 24, 1997
Petitioner was charged with the crime of estafa and advances the theory that the intention of
the parties was to enter into a contract of partnership, wherein Rosales (private complainant for
Estafa) would contribute the funds while she would buy and sell the cigarettes, and later divide
the profits between them But even assuming that a contract of partnership was indeed entered
into by and between the parties, SC ruled that when money or property have been received by
a partner for a specific purpose (such as that obtaining in the instant case) and he later
misappropriated it, such partner is guilty of estafa.
Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984
The rule is, when a partner who has undertaken to contribute a sum of money fails to do so, he
becomes a debtor of the partnership for whatever he may have promised to contribute (Art.
1786, Civil Code) and for interests and damages from the time he should have complied with
his obligation (Art. 1788, Civil Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted
Art. 2200 of the Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in his obligations
as a partner and as prime contractor of the construction projects in question.
Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO. L-55397
February 29, 1988

Petitioner being a partnership may sue and be sued in its name or by its duly authorized
representative. Thus, Chua as the managing partner of the partnership may execute all acts of
administration including the right to sue debtors of the partnership in case of their failure to pay
their obligations when it became due and demandable.
Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959
Catalan and Gatchalian as partners mortgaged two lots together with the improvements
thereon to secure a credit. Catalan redeemed the property and he contends that title should be
cancelled and a new one must be issued in his name. Under Article 1807 of the NCC every
partner becomes a trustee for his co-partner with regard to any benefits or profits derived from
his act as a partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his co partner Gatchalian, subject to his right
to demand from the latter his contribution to the amount of redemption.
Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June 28, 1973
Respondent industrial partner has the right to demand for a formal accounting and to receive
her share in the net profit that may result from such an accounting.
ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL CONSTRUCTION
COMPANY, G.R. NO. L-22493, July 31, 1975
Defendant company, a general partnership purchased from the plaintiff a motor vehicle on an
installment basis with the condition that failure to pay any of said installments as they fall due
would render the whole unpaid balance immediately due and demandable. Having failed to
receive the installment, the plaintiff sued the defendant company for the unpaid balance with
Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto Palisoc
were included as co-defendants in their capacity as general partners of the defendant
company. In this case, there were five (5) general partners when the promissory note in
question was executed for and in behalf of the partnership. Since the liability of the partners is
pro rata, the liability of the appellant Benjamin C. Daco shall be limited to only one-fifth of the
obligations of the defendant company. The fact that the complaint against the defendant
Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not unmake the said
Lumauig as a general partner in the defendant company. In so moving to dismiss the
complaint, the plaintiff merely condoned Lumauigs individual liability to the plaintiff.

ELMO MUASQUE vs. COURT OF APPEALS, G.R. NO. L-39780, November

11, 1985
There is a general presumption that each individual partner is an authorized agent for the firm
and that he has authority to bind the firm in carrying on the partnership transactions. The
presumption is sufficient to permit third persons to hold the firm liable on transactions entered
into by one of members of the firm acting apparently in its behalf and within the scope of his
authority.
ANTONIO C. GOQUIOLAY, ET AL. vs. WASHINGTON Z. SYCIP, ET AL, G.R. NO.
L-11840, December 10, 1963
Where the partnership business is to deal in merchandise and goods, i.e., movable property,
the sale of its real property (immovables) is not within the ordinary powers of a partner,
because it is not in line with the normal business of the firm. But where the express and
avowed purpose of the partnership is to buy and sell real estate (as in the present case), the
immovables thus acquired by the firm from part of its stock-in-trade, and the sale thereof is in
pursuance of partnership purposes, hence within the ordinary powers of the partner.
1.

TIOSEJO INVESTMENT CORP. vs. Ang, G.R. NO. 174149, September 8,

2010
Petitioner cannot avoid liability by claiming that it was not in any way privy to the Contracts to
Sell executed by PPGI and respondents. As correctly argued by the respondent, a joint venture
is considered in this jurisdiction as a form of partnership and is, accordingly, governed by the
law of partnerships and under Article 1824 of the Civil Code of the Philippines, all partners
are solidarily liable with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any wrongful act or omission
of any partner acting in the ordinary course of the business of the partnership or with the
authority of his co-partners.

PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION vs. LAZATINMAGAT, et.al, G.R. NO. 167379, June 27, 2006

On dissolution, the partnership is not terminated but continues until the winding up of
partnership affairs is completed. Winding up means the administration of the assets of the
partnership for the purpose of terminating the business and discharging the obligations of the
partnership.
MARJORIE TOCAO vs. COURT OF APPEALS, G.R. NO. 127405, October 4,
2000
An unjustified dissolution by a partner can subject him to action for damages because by the
mutual agency that arises in a partnership, the doctrine of delectus personae allows the
partners to have the power, although not necessarily the right to dissolve the partnership.
COMMISSIONER OF INTERNAL REVENUE vs. WILLIAM J. SUTER, G.R. NO. L25532, February 28, 1969
A limited partnership, named William J. Suter Morcoin Co., Ltd., was formed on 30
September 1947 by herein respondent William J. Suter as the general partner, and Julia Spirig
and Gustav Carlson, as the limited partners. The thesis that the limited partnership, William J.
Suter Morcoin Co., Ltd., has been dissolved by operation of law because of the marriage of
the only general partner, William J. Suter to the originally limited partner, Julia Spirig one year
after the partnership was organized is not tenable. The subsequent marriage of the partners
does not operate to dissolve it, such marriage not being one of the causes provided for that
purpose either by the Spanish Civil Code or the Code of Commerce. The appellants view, that
by the marriage of both partners the company became a single proprietorship, is equally
erroneous. The capital contributions of partners William J. Suter and Julia Spirig were
separately owned and contributed by them before their marriage; and after they were joined in
wedlock, such contributions remained their respective separate property under the Spanish
Civil Code.
Country Bankers Insurance Corp.. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
In a contract of agency, a person, the agent, binds himself to represent another, the principal,
with the latters consent or authority. Thus, agency is based on representation, where the agent
acts for and in behalf of the principal on matters within the scope of the authority conferred
upon him. Such acts have the same legal effect as if they were personally done by the

principal. By this legal fiction of representation, the actual or legal absence of the principal is
converted into his legal or juridical presence.
SALLY YOSHIZAKI v. JOY TRAINING CENTER OF AURORA, INC., G.R. No.
174978. July 31, 2013
As a general rule, a contract of agency may be oral. However, it must be written when the law
requires a specific form. Specifically, Article 1874 of the Civil Code provides that the contract of
agency must be written for the validity of the sale of a piece of land or any interest therein.
Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil Code, states that
special powers of attorney are necessary to convey real rights over immovable properties.
Further the special power of attorney mandated by law must be one that expressly mentions a
sale or that includes a sale as a necessary ingredient of the authorized act. Such power must
be must express in clear and unmistakable language. In the present case, the pieces of
documentary evidence by Sally did not convince the Court as to the existence of agency.
Necessarily, the absence of a contract of agency renders the contract of sale unenforceable.
Joy Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
It bears stressing that in an agent-principal relationship, the personality of the principal is
extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the
principal, authorized to perform all acts which the latter would have him do. Such a relationship
can only be effected with the consent of the principal, which must not, in any way, be
compelled by law or by any court.
Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO. 167552, April 23,
2007
In a contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another with the latters consent. The underlying principle of the
contract of agency is to accomplish results by using the services of others to do a great
variety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend
the personality of the principal or the party for whom another acts and from whom he or she
derives the authority to act. It is said that the basis of agency is representation, that is, the
agent acts for and on behalf of the principal on matters within the scope of his authority and

said acts have the same legal effect as if they were personally executed by the principal. By
this legal fiction, the actual or real absence of the principal is converted into his legal or juridical
presence qui facit per alium facit per se. The elements of the contract of agency are: (1)
consent, express or implied, of the parties to establish the relationship; (2) the object is the
execution of a juridical act in relation to a third person; (3) the agent acts as a representative
and not for himself; (4) the agent acts within the scope of his authority.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
An agency may be expressed or implied from the act of the principal, from his silence or lack of
action, or his failure to repudiate the agency knowing that another person is acting on his
behalf without authority. Acceptance by the agent may be expressed, or implied from his acts
which carry out the agency, or from his silence or inaction according to the circumstances.
Agency may be oral unless the law requires a specific form. However, to create or convey real
rights over immovable property, a special power of attorney is necessary. Thus, when a sale of
a piece of land or any portion thereof is through an agent, the authority of the latter shall be in
writing, otherwise, the sale shall be void.
Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3, 2003
The Court of Appeals recognized the existence of an agency by estoppels citing Article 1873
of the Civil Code. Apparently, it considered that at the very least, as a consequence of the
interaction between Naguiat and Ruebenfeldt, Queao got the impression that Ruebenfeldt
was the agent of Naguiat, but Naguiat did nothing to correct Queaos impression. In that
situation, the rule is clear. One who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority of such person to
act as his agent, to the prejudice of innocent third parties dealing with such person in good
faith, and in the honest belief that he is what he appears to be. The Court of Appeals is correct
in invoking the said rule on agency by estoppel.
Siasat vs. Intermediate Appellate Court, G.R. NO. L-67889, October 10,
1985
A general agent is one authorized to do all acts pertaining to a business of a certain kind or at
a particular place, or all acts pertaining to a business of a particular class or series. He has
usually authority either expressly conferred in general terms or in effect made general by the

usages, customs or nature of the business which he is authorized to transact. An agent,

therefore, who is empowered to transact all the business of his principal of a particular kind or
in a particular place, would, for this reason, be ordinarily deemed a general agent. A special
agent is one authorized to do some particular act or to act upon some particular occasion, acts
usually in accordance with specific instructions or under limitations necessarily implied from the
nature of the act to be done
Veloso vs. Court of Appeals, G.R. NO. 102737, August 21, 1996
There was no need to execute a separate and special power of attorney since the general
power of attorney had expressly authorized the agent or attorney in fact the power to sell the
subject property. The special power of attorney can be included in the general power when it is
specified therein the act or transaction for which the special power is required. Whether the
instrument be denominated as general power of attorney or special power of attorney, what
matters is the extent of the power or powers contemplated upon the agent or attorney in fact. If
the power is couched in general terms, then such power cannot go beyond acts of
administration. However, where the power to sell is specific, it not being merely implied, much
less couched in general terms, there cannot be any doubt that the attorney in fact may execute
a valid sale. An instrument may be captioned as special power of attorney but if the powers
granted are couched in general terms without mentioning any specific power to sell or
mortgage or to do other specific acts of strict dominion, then in that case only acts of
administration may be deemed conferred
Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005
A special power of attorney simply refers to a clear mandate specifically authorizing the
performance of a specific power and of express acts subsumed therein, and there is a specific
authority given to Mae Sendiong to sign her name in behalf of Paul Sendiong in contracts and
agreements and to institute suits in behalf of her father. Neither would the fact that the
document is captioned General Power of Attorney militate against its construction as
granting specific powers to the agent pertaining to the petition for annulment of judgment she
instituted in behalf of her father. As Justice Paras has noted, a general power of attorney may
include a special power if such special power is mentioned or referred to in the general power.
Country Bankers Insurance Corp. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044

Our law mandates an agent to act within the scope of his authority. The scope of an agents
authority is what appears in the written terms of the power of attorney granted upon him. Under
Article 1878(11) of the Civil Code, a special power of attorney is necessary to obligate the
principal as a guarantor or surety.
Mercado vs. Allied Banking Corpporation, G.R. NO. 171460, July 24, 2007
Equally relevant is the rule that a power of attorney must be strictly construed and pursued.
The instrument will be held to grant only those powers which are specified therein, and the
agent may neither go beyond nor deviate from the power of attorney. Where powers and duties
are specified and defined in an instrument, all such powers and duties are limited and are
confined to those which are specified and defined, and all other powers and duties are
excluded. This is but in accord with the disinclination of courts to enlarge the authority
G.R.anted beyond the powers expressly given and those which incidentally flow or derive
therefrom as being usual and reasonably necessary and proper for the performance of such
express powers.
Angeles vs. Philippines National Railways, G.R. NO. 150128, August 31,
2006
A power of attorney is only but an instrument in writing by which a person, as principal,
appoints another as his agent and confers upon him the authority to perform certain specified
acts on behalf of the principal. The written authorization itself is the power of attorney, and this
is clearly indicated by the fact that it has also been called a letter of attorney. Its primary
purpose is not to define the authority of the agent as between himself and his principal but to
evidence the authority of the agent to third parties with whom the agent deals. Except as may
be required by statute, a power of attorney is valid although no notary public intervened in its
execution.
SHOPPERS PARADISE REALTY & DEVELOPMENT CORPORATION vs. EFREN
P. ROQUE, G.R. NO. 148775, January 13, 2004
Article 1878 of the Civil Code expresses that a special power of attorney is necessary to lease
any real property to another person for more than one year. The lease of real property for more
than one year is considered not merely an act of administration but an act of strict dominion or
of ownership. A special power of attorney is thus necessary for its execution through an agent.

VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO. 117356, June 19,
2000
One factor which most clearly distinguishes agency from other legal concepts is control; one
person the agent agrees to act under the control or direction of another the principal.
Indeed, the very word agency has come to connote control by the principal. The control
factor, more than any other, has caused the courts to put contracts between principal and
agent in a separate category.
Republic vs. Evangelista, G.R. NO. 156015, August 11, 2005
A contract of agency is generally revocable as it is a personal contract of representation based
on trust and confidence reposed by the principal on his agent. As the power of the agent to act
depends on the will and license of the principal he represents, the power of the agent ceases
when the will or permission is withdrawn by the principal. Thus, generally, the agency may be
revoked by the principal at will. However, an exception to the revocability of a contract of
agency is when it is coupled with interest, i.e., if a bilateral contract depends upon the agency.
The reason for its irrevocability is because the agency becomes part of another obligation or
agreement. It is not solely the rights of the principal but also that of the agent and third persons
which are affected. Hence, the law provides that in such cases, the agency cannot be revoked
at the sole will of the principal.
Lim vs. Saban, G.R. NO. 163720, December 16, 2004
Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract
depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner
is appointed manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable. Stated differently, an agency is deemed as one coupled with an
interest where it is established for the mutual benefit of the principal and of the agent, or for the
interest of the principal and of third persons, and it cannot be revoked by the principal so long
as the interest of the agent or of a third person subsists. In an agency coupled with an interest,
the agents interest must be in the subject matter of the power conferred and not merely an
interest in the exercise of the power because it entitles him to compensation. When an agents
interest is confined to earning his agreed compensation, the agency is not one coupled with an
interest, since an agents interest in obtaining his compensation as such agent is an ordinary
incident of the agency relationship.

RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs.

FELIX GO CHAN & SONS REALTY CORPORATION, G.R. NO. L-24332, January
31, 1978
By reason of the very nature of the relationship between principal and agent, agency is
extinguished ipso jure upon the death of either principal or agent. Although a revocation of a
power of attorney to be effective must be communicated to the parties concerned, yet a
revocation by operation of law, such as by death of the principal is, as a rule, instantaneously
effective inasmuch as by legal fiction the agents exercise of authority is regarded as an
execution of the principals continuing will. With death, the principals will ceases or is the
authority is extinguished.