I.

Art. 1768 – Partnership is a juridical person separate and distinct from each of the partners.

Consequences:
1. Its juridical personality is separate and distinct from that of each of the partners.
2. The partnership can:
- acquire and possess property of all kinds;
- incur obligations;
- bring civil or criminal actions;
- can be adjudged insolvent even if the individual members be each financially solvent
3. A partner has no right to make a separate appearance in court, if the partnership being sued is
already represented, unless he is personally sued.

 Limitations on Alien Partnership

- Secs. 2, 7, 10 and 11 of Art. 12 of the 1987 the Philippine Constitution

 Rules in case of Associations now lawfully organized as Partnerships

1. If an association is not lawfully organized as a partnership, it possesses no legal personality.
Therefore, it cannot sue. However, the “partners,” in their individual capacity can.
2. One who enters into contract with a “partnership” as such cannot, when sued later on for recovery
of the debt, allege the lack of legal personality on the part of the firm, even if it indeed had no
personality.

Benefits of the juridical personality characteristics

The legal entity is distinct from its members and constitutes a body endowed, under conditions
provided by law, with a distinct juridical personality, which renders it responsible for its
actions and recognizes the shareholders' limited liability, which is limited to their original capital
outlay.

The legal entity has a distinct existence, independent from its members or shareholders, it
possesses property in its own name, acquires rights, assumes obligations and responsibilities,
signs contracts and agreements, and can be sued or institute legal proceedings exactly like a
natural person. A legal entity also has a name, a domicile, an existence and a unique wealth, and
therefore can modify its name or domicile.

Each juridical personality has its advantages and disadvantages and is subject to clearly defined
laws and regulations. Choosing the appropriate legal structure is of great importance.

In order for you to choose the right juridical personality for your business, you must first
understand all the elements related to the benefits of some rights in relation to the legal entity
since rights are granted based on the type of business adopted. Only a company with a full
juridical personality, established since its constitution, can fully benefit from civil rights and the
ability to exercise these rights. Actions should be mediated by a natural person, whether its
existence is fictional or theoretical. There are four categories of legal entities that benefit, on
various levels, from certain attributes:

 Association (and its members)

 Sole proprietorship
 Partnership
 Limited company (corporation)

SEPARATE JURIDICAL PERSONALITY

Art. 1768. The partnership has a juridical personality separate and distinct form
that of each of the partners, even in case of failure to comply with the
requirements of Article 1772, first paragraph. As a JURIDICAL PERSON, a
partnership may: 1. acquire and possess property of all kinds; 2. Incur obligations; and
3. Bring civil or criminal actions, in conformity with the laws and regulations of their
organization. (See Art. 46)

iii.

What is a Notice of Withdrawal from Partnership?

Withdrawal from a partnership is achieved by serving a written notice ending

the involvement of a particular partner in the partnership for one reason or
another.

There are two kinds of withdrawals:

Voluntary withdrawal is when a partner chooses to leave the partnership

and is serving notice on the other partner(s). A common reason for this type
of withdrawal is retirement.

Involuntary (non-voluntary) withdrawal happens when one partner is

withdrawn from the partnership without consent. In this case, the other
partners jointly serve notice of withdrawal on the partner to be dissociated.
Common reasons for this kind of withdrawal include (but are not limited to)
death, incapacity, incompetence, or a criminal conviction of the partner.

What happens when a partner leaves a partnership?

Under classical partnership law, the departure of one partner automatically

meant the end of the partnership. Nowadays, withdrawal of a partner, for
 whatever reason, will be dealt within the partnership agreement and does
not necessarily mean the end of the business.

The dissolution of the partnership and distribution of the assets is a separate

matter and the rules which apply would also be set out in a partnership
agreement.

Often if a partner leaves, the remaining one(s) will continue the business or
form an LLC. The remaining partner(s) simply buy out the withdrawing one.
If a buyout offer is not provided within the notice period described in the
partnership withdrawal letter, action must generally be taken to dissolve or
liquidate the partnership.

Leaving a Partnership — How To Do It Right

So, you’ve decided (or are considering) to leave the company you’ve either helped to
form, purchased an interest in, or otherwise joined for one reason or another. There are
many reasons why you may want or need to leave the company:
 Retirement

 Change of life circumstances, because of a family member death, change of careers, or

other significant event

 Due to a disability or incapacitation

 Differences of opinion or management styles

 Loss of faith, disputes, or open hostility in one or more of the partners or co-owners
The first three green bullets above are most often associated with “uncontested
departures,” while the remaining red bullets to are most often associated with
“contested departures.”
Aside from the emotional issues of departing your partnership, there are legal and
financial considerations that if left to their own devices, could spell financial ruin for you
personally years later, whether contested or uncontested.

V.

Agency presumed for compensation

An agency is presumed to be for a compensation, unless otherwise agreed and upon
and there is such a proof.[1]
Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc.
G.R. No. 167622, 29 June 2010 (En Banc)
Complainant Gregorio V. Tongko filed a labor complaint against defendant The
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) for illegal dismissal. Prior
thereto, the parties entered into a contractual relationship which had two basic phases:
(a) 1st Phase (started on 01 July 1977) was under a Career Agent’s Agreement
(the “Agreement”) which expressly provided, among others, that “the Agent is an
independent contractor and nothing contained herein shall be construed or interpreted
as creating an employer-employee relationship between the Company and the Agent”;
(b) 2nd Phase (started in 1983) was when complainant was named Unit Manager in
Manulife’s Sales Agency Organization, and subsequently he became Branch Manager
in 1990, and afterwards Regional Sales Manager in 1996. Complainant’s gross earnings
consisted of commissions, persistency income, and management overrides. Whenever
complainant submitted his tax returns which are under oath, he declared that himself as
self-employed from the beginning applying deductions for business expenses to arrive
at his taxable business income. Hence, Manulife withheld 10% tax on complainant’s
earnings.
Sometime in 2001, defendant Manulife commenced manpower development programs
at the regional sales management level. Through written notice, defendant informed
complainant of the poor performance of their region bringing into question his leadership
skills. A month later, defendant ended the services of complainant by sending a notice
of termination of agency. Hence, complainant instituted a labor complaint against
defendant. As a defense, defendant challenged the jurisdiction of the labor tribunals on
the ground that no employer-employee relationship existed as the parties entered into a
contract of agency.

The labor arbiter dismissed the complaint finding no employer-employee relationship.

The National Labor Relations Commission (NLRC) reversed the labor and found
defendant liable for illegal dismissal. The Court of Appeals (CA) overturned the NLRC
and reinstated the labor arbiter’s decision. Before the Supreme Court, the high tribunal
initially found the insurance company liable and ordered it to pay Tongko backwages
and separation pay for illegal dismissal. The insurance company elevated the case to
the en banc.
HELD: Manulife was not liable. Considering the factual antecedents were set in the
insurance industry, the Insurance Code primarily governs with the Labor Code and Civil
Code applying suppletorily. “The Labor Code concept of ‘control’ has to be compared
and distinguished with the ‘control’ that must necessarily exist in a principal-agent
relationship. The principal cannot but also have his or her say in directing the course of
the principal-agent relationship, especially in cases where the company-representative
relationship in the insurance industry is an agency.”
An insurance agency contract is required to be expressly agreed upon. “Under the
general law on agency as applied to insurance, an agency must be express in light of
the need for a license and for the designation by the insurance company. In the present
case, the Agreement fully serves as grant of authority to Tongko as Manulife’s
insurance agent. This agreement is supplemented by the company’s agency practices
and usages, duly accepted by the agent in carrying out the agency. By authority of the
Insurance Code, an insurance agency is for compensation, a matter the Civil Code
Rules on Agency presumes in the absence of proof to the contrary.”
The rule requiring the agent to act in accordance with the instructions of the principal is
pertinent “for purposes of the necessary control that the principal exercises over the
agent in undertaking the assigned task, and is an area where the instructions can
intrude into the labor law concept of control so that minute consideration of the facts is
necessary.”

Here, it must be pointed out that “the only contract or document extant and submitted as
evidence in the present case is the Agreement – a pure agency agreement in the Civil
Code” and by the express terms of the Agreement the parties agreed to a contract of
agency. Thus, “while Tongko was later on designated unit manager in 1983, Branch
Manager in 1990, and Regional Sales Manager in 1996, no formal contract regarding
these undertakings appears in the records of the case.”

While not conclusive, the parties’ legal characterization of their intent is critical. The
Supreme Court took judicial notice “that as a matter of Insurance Code-based
business practice, an agency relationship prevails in the insurance industry for
the purpose of selling insurance. The Agreement, by its express terms, is in
accordance with the Insurance Code model when it provided for a principal-agent
relationship, and thus cannot lightly be set aside nor simply be considered as an
agreement that does not reflect the parties’ true intent. This intent, incidentally, is
reinforced by the system of compensation the Agreement provides, which likewise is in
accordance with the production-based sales commissions the Insurance Code
provides.” (Emphasis supplied.)
Moreover, Tongko did not adduce evidence that would establish the fact that Manulife
exercised “means-and-manner control” over him as he climbed the sales ladder. “In
1983, Tongko was appointed unit manager. Inexplicably, Tongko never bothered to
present any evidence at all on what this designation meant. This also holds true for
Tongko’s appointment as branch manager in 1990, and as Regional Sales Manager in
1996. The best evidence of control – the agreement or directive relating to Tongko’s
duties and responsibilities – was never introduced as part of the records of the
case. The reality is, prior to de Dios’ letter, Manulife had practically left Tongko alone
not only in doing the business of selling insurance, but also in guiding the agents under
his wing. As discussed below, the alleged directives covered by de Dios’ letter,
heretofore quoted in full, were policy directions and targeted results that the company
wanted Tongko and the other sales groups to realign with in their own selling activities.”
It must be noted that the general law on agency “expressly allows the principal an
element of control over the agent in a manner consistent with an agency relationship. In
this sense, these control measures cannot be read as indicative of labor law control.”
The principal may issue directives to achieve the assigned tasks insofar as “they do not
involve the means and manner of undertaking these tasks.”

On the other hand, in the absence of contractual stipulations to the contrary, the following are the
obligations of the principal:
e. To pay the agent the compensation agreed upon, or if no compensation was specified, the
reasonable value of the agent’s services. [Articles, 1875 and 1306, Civil Code; De Leon, The
Law on Sales, Agency and Credit Transactions, 1999, pp. 277-278]

c. Consideration

The cause or consideration in agency is the compensation or commission

that the principal agreed or committed to be paid to the agent for the latter’s
services. Under Article 1875 of the Civil Code, agency is presumed to be for
compensation, unless there is proof to the contrary. In other words,
liberality may be the proper cause or consideration for an agency contract
only when it is so expressly agreed upon. Unless otherwise stipulated,
therefore, every agent is entitled to remuneration or compensation for the
services performed under the contract of agency.

The old decision in Aguna v. Larena, 57 Phil 630 (1932), did not reflect the
general rule of agency-is-for-compensation reflected subsequently in Article
1875 of the Civil Code. In Aguna, although the agent had rendered service
to the principal covering collection of rentals from the various tenants of the
principal, and in spite of the agreement that principal would pay for the
agent’s service, nevertheless, the principal allowed the agent to occupy one
of his parcels of land and to build his house thereon. The Court held that the
service rendered by the agent was deemed to be gratuitous, apart from the
occupation of some of the house of the deceased by the plaintiff and his
family, “for if it were true that the agent and the deceased principal had an
understanding to the effect that the agent was to receive compensation
aside from the use and occupation of the houses of the deceased, it cannot
be explained how the agent could have rendered services as he did for eight
years without receiving and claiming any compensation from the deceased.”
(at p. 632) If Agunawere decided under the New Civil Code, then under
Article 1875, which mandates that every contract of agency is deemed to be
for compensation, then the result would have been quite the opposite.

d. Entitlement of Agent to Commission Anchored on the Rendering of

Service

The compensation that the principal agrees to pay to the agent is part of the
terms of the contract of agency upon which their minds meet. Therefore, the
extent and manner by which the agent would be entitled to receive
compensation or commission is based on the terms of the contract.
Sometimes, the terms are not that clear, and decisions have had to deal
with the issue of when an agent has merited the right to receive the
compensation either stipulated or implied from the terms of the contract.
The doctrine that may be derived from the various decisions on the matter
are anchored on the nature of the contract of agency as a species of
contracts of services in general. When the rendering of service alone, and
not the results, is the primordial basis for which the compensation is given,
then the proof that services have been rendered should entitle the agent to
the compensation agreed upon. On the other hand, if the nature of the
service to be compensated is understood by the results to be achieved, e.g.,
that a particular contract with a third party is entered into in behalf of the
principal, then mere rendering of service without achievement of the results
agreed upon to be achieved would not entitle the agent to the compensation
agreed upon.

In contrast, in Manotok Bros. Inc. v. Court of Appeals, 221 SCRA 224

(1993), the Court held that although the sale of the object of the agency to
sell was perfected three days after the expiration of the agency period, the
agent was still be entitled to receive the commission stipulated based on the
doctrine held in Prats v. Court of Appeals, 81 SCRA 360 (1978), that when
the agent was the efficient procuring cause in bringing about the sale that
the agent was entitled to compensation. In essence, the Court ruled that
when there is a close, proximate and causal connection between the agent’s
efforts and labor and the principal’s sale of his property, the agent is entitled
to a commission.

VII.

What’s the difference between an Agency Agreement and a Contract of Sale?

An agency agreement is the contract between the seller and real estate agent. It
outlines details such as the agent’s fee (commission), the length of time the agreement
will last (typically three months), the estimated selling price and any marketing
arrangements. There are two main types:

 Exclusive Agency Agreement – your property is listed for sale with just one agent
exclusively
 Open Agency Agreement - your property can be listed for sale by more than one
agent at once
A Contract of Sale is the agreement entered between the person selling a property and
the buyer of the property. It covers things like what is included in the sale, the title,
whether there is a mortgage over the property, important legal details, and the length of
 time between paying the deposit and the settlement (when the balance must be paid,
the keys are handed over, and you can move in).

What is contract to sell?

a formal agreement in which a person, company, etc. agrees to sell something to a

buyer at a time in the future, and the buyer agrees to buy it: A conditional contract is
similar to a normal contract to sell, except that the contract is subject to the fulfilment
of certain conditions.

What is an authority to sell?

Sales authority. An authority is the document that enables a client (seller, landlord or
other person) to appoint an agency to act (buy, sell, lease or manage real estate) on
their behalf. An authority may be: drafted by an estate agent. drafted by a legal
practitioner.Sep 7, 2017

Contract of Sale Contract of Agency

Buyer receives the goods as owner Agent receives the goods as the goods of the
principal who retains his ownership over them

Buyer has to pay the price Agent has simply to account for the proceeds
of the sale he may make on the principal‟s behalf

Buyer, as a general rule, cannot return the object sold Agent can return the
object in case he is unable to sell the same to a third person

Seller warrants the thing sold Agent makes no warranty for which he
assumes personal liability as long as he acts within his authority and in the name of the
seller

Buyer can deal with the thing sold as he pleases The agent in dealing with
the thing received, must act and is bound according to the instructions of his principal