ST.

THOMAS MORE SCHOOL OF LAW

COURSE SYLLABUS FOR
BUSINESS ORGANIZATION 1
(The Law on Partnership, Agency and Trust)

PARTNERSHIP
(General Partnership)

I. CONCEPT OF PARTNERSHIP
a. Historical Background
b. Definition/Object/Purpose
i. Art. 1767
c. Three Levels of Existence of Partnership
i. As a Contractual Relationship (Arts. 1767, 1770, 1771, 1784)
ii. As a Means of Doing Business (Arts. 1768, 44(3), 45, 46, 1774) as a
Juridical Person
1. GR : Acquisition of Juridical Personality;
Effects/Consequences
2. Exception: Piercing the Veil of Separate Juridical Fiction
3. Entitlement to Constitutional Rights and Guarantees
iii. As a Business Enterprise
CASE: Rojas vs. Maglana 192 SCRA 110
Campos Rueda vs Pacific Comm’l. 44 P 916
Ngo Tian Tek vs. Phil. Educ. Co 78 P 275
Tai Tong Chuache vs. Insurance Comm. 158 SCRA 366
CIR vs. Suter 27 SCRA 152 (Piercing the Veil)
d. Essential Elements (Art. 1767, 1770, 1771, 1784)
CASES: Evangelista vs. CIR, 102 P 140
Fernandez vs. dela Rosa, 1 P 671
Tocao vs. CA 342 SCRA 20
Estanislao vs. CA 160 SCRA 830
Yulo vs. Yang Chiao Seng 106 P 111
Sy vs. CA 398 SCRA 301
Arbes vs. Polistico 53 P 489
City of Manila vs. Cumbe 13 P 677
Lyons vs. Rosentock 56 P 632
Pascual vs. CIR
e. Characteristics/ Attributes
i. Characteristics:
ii. Attributes:
Case: Ortega vs. Vitug 245 SCRA 529
Tocao, supra
f. Partnership distinguished from other Business Media
Case: Kilosbayan vs. Guingona, Jr. 232 SCRA 110
Case: Binglangawa vs. Constantino 109 P 168
g. Classes of Partnership and Partners (Arts. 1776-1783)
Case: Lyons vs. Rosentock 56 P 632
CIR vs. Suter
 Ortega vs. CA 245 SCRA 529
i. Who are Partners? (Art. 1769)
CASES: Navarro vs. CA 222 SCRA 675
Obillos, Jr. vs. CIR 139 SCRA 1985
Reyes vs. CIR 24 SCRA 198
Fortis vs. Gutierrez Hermanos 6 P 100
Gatchalian vs. CIR 67 P 666
h. Formal Requirements (Arts. 1771, 1784, 1772, 1773, 1815)
CASES: Dalion vs. CA 182 SCRA 872
Angeles vs. CA 465 SCRA 106
Torres vs. CA 320 SCRA 428
II. OBLIGATIONS OF PARTNERS TO ONE ANOTHER
a. Promised Contribution
b. Contribution of Additional Capital
c. Fiduciary Duty
CASE: Evangelista vs. Abad Santos 51 SCRA 416
d. Participation in Losses
e. Subsequently Admitted Partner (Art. 1826)
f. Diligence, Loyalty, to Account
III. PROPERTY RIGHTS OF A PARTNER (Art. 1810)
a. Right in Specific Partnership Property (Art. 1811)
CASE: Catalan vs. Gatchalian GR L-11648 April 22, 1959
US vs. Clarin 17 P 84
b. Interest in Partnership (Art. 1812, 1813)
c. Participation in Management (Arts. 1818, 1819, 1803, 1820-21)
CASE: Litton vs. Hill and Ceron 67 P 509
d. Access to Partnership Books
CASE: Pardo vs. Hercules Lumber 47 P 964
e. Right to True and Full Information
f. Right to Formal Account (Art. 1807, 1809)
CASE: Fue Leung vs IAC 169 SCRA 746
g. Reimbursement of Advances and Indemnification of Risks
h. Right to Dissolve
IV. RELATIONS AND DEALINGS WITH THIRD PERSONS
a. Firm Name
b. Partners as Agents
c. Individual Liability of Partners for Partnership Acts
CASE: Island Sales vs. United Pioneers GR L-22493 July 31, 1975
d. Suit by or Against Partnership
V. DISSOLUTION, WINDING UP AND TERMINATION (Arts. 1828-31)
a. Concept and Definition
CASE: Idos vs. CA 296 SCRA 194
Singsong vs. Isabela Sawmill 88 SCRA 623
b. Causes of Dissolution
CASE: Fue Leung vs IAC, supra
CASE: Deluao vs Casteel 26 SCRA 475
CASE: Bearneza vs. Dequilla 43 P 237
c. Effect of Dissolution
CASE: Singsong vs. Isabela, supra
 d. Rights of Partners
e. Application of Assets and Liabilities

LIMITED PARTNERSHIP

I. CONCEPT AND RATIONALE

II. FORMATION
a. Statutory Requirements
i. Failure to Fulfill Requirements
ii. False Statement in Certificate
III. RIGHTS, POWERS, RESTRICTIONS AND LIABILITIES OF PARTNERS
a. General Partner
i. Rights, Powers, Restrictions
ii. Liabilities
iii. Effect of Death, Retirement, etc.
b. Limited Partner
i. Rights
ii. Liabilities
c. Limited Partner who is also a General Partner
d. Person Erroneously Believing Himself a Limited Partner
IV. DISSOLUTION AND WINDING UP
a. Dissolution
i. Causes or Modes of Dissolution
ii. Effect of Dissolution
b. Distribution of Assets
i. Order of Distribution

AGENCY

I. NATURE, OBJECTIVE AND KINDS OF CONTRACT OF AGENCY

a. Definition (Art. 1317, 1403, 1868)
CASES: Rallos vs. Felix Go Chan 81 SCRA 251
Litonjua vs. Eternit Corp. 490 SCRA 204
Doles vs. Angeles 492 SCRA 607
b. Parties
c. Elements
i. Consent
1. Capacity of the Parties
CASE: Victorias Milling vs. CA 333 SCRA 663
 ii. Object/Subject Matter
iii. Consideration/Commission (Art. 1875)
CASES: De Castro vs. CA 384 SCRA 607
Manotok vs. CA 221 SCRA 224
d. Essential Characterisitcs
CASE: Severino vs. Severino 44 P343
e. Distinguished from other Contracts
CASE: Dela Cruz vs. Northern Theatrical 95 P 739
CASE: Fressel vs. Mariano Uy Chaco 34 P 122
CASE: Nielson vs. Lepanto 26 SCRA 540
CASE: Quiroga vs. Parsons 38 P 501
CASE: Schmid Oberly vs. RJL Martinez 166 SCRA 493
II. FORMAL REQUIREMENTS
a. How Constituted (Art. 1869, 1870)
CASES: Lim vs. CA 254 SCRA 170
Borador vs. Luz 283 SCRA 374
Equitable PCIB vs. Ku 355 SCRA 309
b. Perfection of the Contract of Agency as it Affects Third Persons (Arts. 1873,
1922, 1921)
CASES: Dela Pena vs. Hidalgo 16 P 450
Macke vs. Camps 7 P 553
c. Formal Requirements on Grant of Power to Agent
CASES: Home Insurance vs. US Lines 21 SCRA 863
Yu Chuck vs. Kong Li Po 46 P 608
d. Authority of Agent; Kinds of (Art. 1881, 1882)
e. Kinds of Principal (1883)
III. OBLIGATIONS OF THE AGENT
a. General Obligation (1884)
b. Obligation of Agent who Declines (Art. 1885)
c. General Rule on Agent’s Power and Authority (Arts. 1881, 1882, 1887,
1888, 1889)
d. Duty of Obedience
e. Duty of Diligence
CASE: British Airways vs. CA 285 SCRA 450
Domingo vs. Domingo 42 SCRA 131
f. Duty of Loyalty (Art. 1889)
g. Duty to Render an Account (Art. 1891)
h. Specific Obligation Rules for Agents
i. Power of Agent to Appoint a Substitute (Art. 1892, 1893)
CASE: Escueta vs. Lim 512 SCRA 411
j. Fiduciary Duties of Agents to Third Parties (Art. 1900, 1901, 1902, 1911)
CASE: Angeles vs. PNR 500 SCRA 444
CASE: Cervantes vs. CA 304 SCRA 25
 CASE: Cason vs. Richards 5 P 611
CASE: Behn Meyer vs. Banco Espanol 51 P 253
Rural Bank Bombon vs. CA 212 SCRA 25
k. Obligations of a Commission Agent
IV. OBLIGATIONS OF THE PRINCIPAL
CASE: Filipinas Life vs. Pedroso 543 SCRA 542
Pahud vs. CA 597 SCRA 13
Versoza vs. Lim 45 P 416
De Castro vs. CA 384 SCRA 607
V. EXTINGUISHMENT OF AGENCY
a. How and When Extinguished (Art. 1919)
CASE: Dialosa vs. CA 130 SCRA 350
CASE: CMS Logging vs. CA 211 SCRA 374
CASE: Valenzuela vs. CA 191 SCRA 1
Bacaling vs. Muya 380 SCRA 714
CASE: Dela Pena vs. Hidalgo 16 P 450
CASE: Sarsaba vs. Vda. de Te 594 SCRA 410
CASE: Perez vs. PNB 17 SCRA 833
CASE: Rallos vs. Felix Go Chan, supra
CASE: Terrado vs. CA 131 SCRA 371
b. Duty of Agent After Agency is Extinguished

TRUST

I. INTRODUCTION
a. Origin/Basis
b. Essence of Trust
CASE: Canezo vs. Rojas 538 SCRA 242
Salao vs. Salao 70 SCRA 65
Macababad vs. Masirag 576 SCRA 70
c. Kinds of Trust (Art. 1441)
II. EXPRESS TRUST
a. Definition and Nature of Express Trust (Art. 1440, 1441)
i. Parties in a Trust Relationship
b. Essential Characteristics
CASE: Morales vs. CA 274 SCRA 282
c. Elements
CASE: Mindanao Dev’t. Authority vs. CA 113 SCRA 429
d. Essentially Contractual (Art. 1445, 1446)
CASE: Hrs. of Labiste vs. Labiste 587 SCRA 417
e. Rules of Enforceability (Arts. 1443, 1444)
CASE: Penalber vs. Ramos 577 SCRA 509
 f. Distinguished from other similar Arrangements
g. Kinds of Express Trust
CASE: DBP vs. COA 422 SCRA 459
h. Capacities, Rights, Duties and Obligations of the Parties
i. Trustor
CASE: Gayondato vs. Treasurer 49 P 244
ii. Trustee
iii. Beneficiary
CASE: De Leon vs Molo Peckson 6 SCRA 978
i. How Extinguished/Terminated

III. IMPLIED TRUST

a. Nature and Types (Art. 1441, 1442, 1445)
CASES: Ramos vs. Ramos 61 SCRA 284
Morales, supra
Aznar Bros vs. Aying 458 SCRA 496
Salao, supra
Cañezo, supra
Morales, supra
Ty vs. Ty 553 SCRA 306
Trinidad vs. Ricafort 7 P 449
Raymundo vs Bandong 526 SCRA 514
Uy Aloc vs Cho Jan 19 P 202
Pacheco vs. Arro 85 P 505
Adaza vs. CA 171 SCRA 369
Lopez vs. CA 574 SCRA 26
PNB vs. CA 217 SCRA 347