PARTNERSHIP, AGENCY, AND TRUST (2025)

1. Peter and John had greed in writing that Peter shall finance the purchase by
John of a property from Mercy. Peter, however, shall collect all the rentals for
the lease of the purchased property.

A. Was an express trust created? Why?

SUGGESTED ANSWER: NO. However, an implied trust was created by operation of

law due to the nature of the transaction between the parties since the price of the
purchased property is loaned or paid by Peter for the benefit of John and the
conveyance is made to Peter in order to secure the payment of the debt.

B. If John later on repudiated the trust, may Peter be allowed to prove the trust
by the written agreement? Why?

SUGGESTED ANSWER: Yes but such written agreement must deemed trustworthy
by a competent court and clearly prove that the intention between the parties is to
create a trust

C. If the written agreement was lost, may Peter prove his case by oral
evidence?

SUGGESTED ANSWER: Yes, the Civil Code provides that an implied trust may be
proved by oral evidence but it should not rest on loose or equivocal declarations

D. What is the period for prescription for Peter to demand the property to be
transferred to him by John?

SUGGESTED ANSWER: There is no period of prescription unless repudiated, and if

so, then it would be 10 years if not in possession and imprescriptible if in possession.

E. From what time/event will the prescription be tacked?

SUGGESTED ANSWER: The prescription would be tacked on from the moment the
trust is repudiated.

2. Ramil has an existing loan from his neighbor worth 1.5 Million pesos to be paid
without interest for a period of one (1) year and thereafter if still unpaid, a 12%
interest shall be imposed.

On the sixth (6th) month from the date of the loan, Ramil was able to save
enough money to pay Berting. He paid Berting at the latter’s house whereupon
he saw Felix was offering his house for sale to Berting. Berting dismissed the
offer. Ramil got interested and told Berting to buy the property using the
money he just paid and he promised to pay to on the 11th month. Berting
bought the property. On the 8th month, Berting sold the property to Betong, a
seaman who just arrived from Oman and was looking for properties for
investment. A. Was Berting a trustee of Ramil? Why?
 PARTNERSHIP, AGENCY, AND TRUST (2025)

SUGGESTED ANSWER: Yes, a purchase money resulting trust was created to

effectuate what the law presumes to be the intention of the parties because when the
property was sold, and the legal estate is granted to one party but the price is paid by
another, for the purpose of having the beneficial interest of the property, Berting
would be the trustee

B. If so what is the prescriptive period for Ramil to institute recovery?

SUGGESTED ANSWER: The prescriptive period would only commence upon

repudiation of Berting.

C. May Ramil validly implead Betong in the case to recover the property?

SUGGESTED ANSWER: He may not implead Betong since he is an innocent purchaser for
value, that would be his best defense since he had no knowledge of such trust between
Berting and Ramil.

D. What is the defense of Berting? What will be his liability, if any?

SUGGESTED ANSWER: Berting should show proof of contrary intention wherein the money
paid by Ramil was for the payment of his loan rather than payment for the property being
sold by Felix.

Since the property already fell into the hands of Bertong, an innocent purchaser for value,
the property sold to him may no longer be recovered and Ramil, instead, may run after
Berting for the amount he paid to purchase the property from Felix.

E. What is the defense Betong?

SUGGESTED ANSWER: His best defense is that he is just an innocent purchaser for value
because he had no knowledge of the trust between Berting and Ramil.

3. Belinda and Rey has four (4) children. Their eldest Dolor, a law graduate, was age
27 when Belinda and Rey passed due to COVID-06. On that year, the younger siblings
Bea, Patrice and Kat-Kat were age 10, 8, 6 respectively.

Being a law graduate, she thought of executing an affidavit of self-adjudication,

making it appear that she was the sole heir. As a consequence she as able to have
their only property, a five (5) hectare residential farm, registered in her name.

Dolor had to send her siblings to school and she built a few apartments on the
subject property named “Dolor’s Apartments”. She rented them out in her own name.
Twenty (20) years after the death of their parents, the siblings discovered that the
property was already registered in their eldest sister’s name. They now sought to
recover.

A. If you were the counsel of the younger siblings what action will you recommend
and what is your basis?
 PARTNERSHIP, AGENCY, AND TRUST (2025)

SUGGESTED ANSWER: The younger siblings may file an action for reconveyance for their
share of the property since Dolor fraudulently registered the property under his name.

Where, through fraudulent representations or by pretending to be the sole heir of the

deceased, an heir succeeded in having the original title of a land in the name of the
deceased cancelled and a new one issued in his name thereby enabling him to possess the
land and get its produce, there is created what is called “constructive trust” in favor of the
defrauded. He may be compelled to surrender to each of his co-heirs his appropriate share;
and a proceeding for partition is an appropriate remedy by which to enforce this right

B. If you are the counsel for Dolor, what can you use as defense?

SUGGESTED ANSWER: Dolor’s defense would be to state the action was not timely filed
since the younger siblings only initiated action 20 years after the death of their parents.

She could argue that the three elements for a valid repudiation, which is essential for
acquisitive prescription to take place, were present, which are: a) unequivocal acts of
repudiation amounting to an ouster of the beneficiary; 2) such positive acts were made
known to the beneficiary; and 3) evidence of such repudiation is clear and positive.

C. IF you are the judge, how would you resolve the issue in case Dolor interposes
prescription?

SUGGESTED ANSWER: If I were the judge, I will decide the controversy in favor of the
siblings. Prescription does not run in favor of one who holds in trust for others; and a denial
of the trust made by the trustee to the beneficiaries who, at the time of such repudiation of
the trust were minors, does not have the effect of abrogating the trust relation since they
were not of legal age to initiate action for themselves and register the property under their
names.

4. i) How may a contract of agency be revoked?

SUGGESTED ANSWER: ARTICLE 1919. Agency is extinguished:

(1) By its revocation;

(2) By the withdrawal of the agent;

(3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent;

(4) By the dissolution of the firm or corporation which entrusted or accepted the agency;

(5) By the accomplishment of the object or purpose of the agency;

(6) By the expiration of the period for which the agency was constituted.

Additionally:

(7) Loss and Novation

(8) Mutual Withdrawal by principal and agent

 PARTNERSHIP, AGENCY, AND TRUST (2025)

(9) Happening of supervening event that makes illegal or impossible the purpose for which
the agency was constituted.

ii) What are the exceptions to the rule that agency is revocable at will?

ARTICLE 1927. An agency cannot be revoked if

1. a bilateral contract depends upon it, or

2. if it is the means of fulfilling an obligation already contracted, or

3. if a partner is appointed manager of a partnership in the contract of partnership and his

removal from the management is unjustifiable.

Additionally, the agency may not be revoked when:

4. It is coupled with interest of both the principal and agent; or when

5. It is created not only for the interest of the principal but also for the interest of third
persons who have accepted the stipulation in their favor.

ii.) How may a contract of agency be revoked?

SUGGESTED ANSWER: A contract of agency may be revoked either expressly or impliedly.

Implied revocation may be effected

1. By the act of the principal in appointing another agent for the same business or
transaction

2. By the act of the principal in directly managing the business entrusted to the agent

3. By the act of the principal in subsequently granting a SPA regarding the same business to
another agent, where he had previously granted a general power of attorney to one agent

iii.) Distinguish between implied agency and agency by estoppel

SUGGESTED ANSWER: An implied agent is a true agent, a de jure agent, with rights and
duties as such, whereas an agent by estoppel is not really an agent.

Consequently, third persons who deal with implied agents can always hold the principal
liable whereas those who deal with an agent by estoppel cannot always hold the principal
liable. The law grants relief to the third person only to the extent of the transaction involved
in the supposed agency.

In agency by estoppel, the agency may arise either from representation made by the alleged
agent or from the representation made by the alleged principal. If made by the alleged agent
without the alleged principal’s knowledge, only such agent is liable. If made by the alleged
principal, such principal is liable.

5. Waweh, a foreign entity, and a local company entered into a Contract whereby the
latter agreed to order 10,000 units of the Waweh’s phones every month and to resell
 PARTNERSHIP, AGENCY, AND TRUST (2025)

them in the Philippines at Wahweh’s suggested prices with the local manufacturer
given the authority to add ten (10) percent of the said proposed price as its share for
every unit sold. At the end of the fiscal year, all units which were not sold shall be
bought back by Wahweh at the same price they were ordered. Under their contract,
Wahweh holds the local company free and harmless from any claim for defects in the
units.

Is the agreement one of sale or agency?

SUGGESTED ANSWER: The agreement is one of Agency and not of sale. Under ARTICLE
1868. By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the
latter. Specifically, a commission agent is one who receives and sells goods entrusted to him
by the principal for a commission and is usually selling in his own name.

In this case, the elements of agency and the indicators of a commission agency are present.
There is consent between Waweh and the company to establish a relationship whereby the
company acts as the local sales agent or representative of Waweh in selling its phones in
the Philippines. In case of defect in the phones, it is Waweh, the principal, who would be
held answerable and not the company. The fact that there is an authorization in the price
increase meant that there are certain acts that Waweh authorized the company to do in
effecting the sale. The title of the goods remain with the principal because of the obligation of
the company to return the unsold phones to Waweh. Lastly, the commission of the company
would come from the price increase it placed when selling the phones in the Philippines.

6. Gaduy sold a large parcel of land in Pangasinan to Herbert for P10 million and the
purchase price is payable in yearly installments over a period of ten (10) years. Under
their agreement, title will remain with Gaduy until the purchase price is fully paid. To
enable Herbert to fully pay the purchase price, Gaduy executed a separate power of
attorney authorizing and empowering Herbert to cause the subdivision of the land,
sell the individual lots, and deliver to Gaduy the proceeds of the sale to be applied to
the purchase price until the same is fully paid. Three (3) years after the transaction,
Gaduy had a change of heart and revoked the power of attorney and took over the
sale of the subdivision lots himself.

If Herbert protests the revocation, may Gaduy validly revoke the power of attorney at
will? Why?

SUGGESTED ANSWER: No, Gaduy cannot validly revoke the power attorney at will.

Under ARTICLE 1927. 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.

In this case, the contract of agency was entered into as a means to fulfill a previously
contracted obligation between Gaduy and Herbert in which the former would sell his large
parcel of land to the latter. Herbert was appointed as agent to enable Herbert to fully pay the
 PARTNERSHIP, AGENCY, AND TRUST (2025)

purchase price. Without the agency, Herbert cannot sell parts of the lot and deliver the
proceeds to Gaduy as payment for his obligation.

Hence, Gaduy cannot revoke Herbert’s power of attorney at will.

7. In addition to her ordinary commission, Belinda was given by her principal a

guarantee commission for which she was to sell two hundred (200) units of desktop
computers to a valued customer, Rell Corp. Rell Corporation was able to pay only 120
units of the 200 units delivered and failed to pay for the remaining units sold.
Belinda’s principal, TESSMAR, demanded from Belinda payment for the customer’s
accountability. Belinda protested and denied the claim of TESSMAR contending that
her obligation was only to sell and not to ensure collection for units bought by the
customer.

Is Belindsa’s objection valid?

SUGGESTED ANSWER: Belinda’s objection is not valid. Under ARTICLE 1907. Should the
commission agent receive on a sale, in addition to the ordinary commission, another called a
guarantee commission, he shall bear the risk of collection and shall pay the principal the
proceeds of the sale on the same terms agreed upon with the purchaser.

In this case, by virtue of the guarantee commission given to Belinda, in exchange for a
higher remuneration in completing her task with TESSMAR, she would have to bear the risk
in case Rell Corp., the customer, is not able to pay for all the units sold to it. This obligation
to remit to TESSMAR the expected proceeds does not have to be expressed in the
agreement.

May TESSMAR successfully collect from her? Explain.

SUGGESTED ANSWER: TESSMAR may successfully collect from Belinda not only the
proceeds from the 120 units of desktop computers, but also on the value of the 80 unsold
units.

By virtue of the guarantee commission, Belindsa obligates herself to collect all the proceeds
from the sale and bear the risk in case she cannot collect the remaining proceeds from the
customer. As far as TESSMAR is concerned, it is entitled to the expected amount that the
sale would yield, including those that were not sold by Belindsa.

8. Val Concepcion had executed a special power of attorney authorizing Thelma

Atienza to secure a loan from any bank which the latter desires and to mortgage his
property covered by the owner’s certificate of title which he delivered to Ms Atienza.
In securing a loan from Rural Bank of Bulacan, Ms. Atienza did not disclose that she
was acting for Mr. Val Concepcion in the transaction with said bank. In the event the
Ms. Atienza refuses to pay the loan, is Val Concepcion liable for the bank loan? Why
or why not? Justify your answer.

SUGGESTED ANSWER: Yes, Val Concepcion may be made liable for the bank loan
provided that he had received the proceeds of the loan.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

ARTICLE 1883. If an agent acts in his own name, the principal has no right of action against
the persons with whom the agent has contracted; neither have such persons against the
principal.

In such case the agent is the one directly bound in favor of the person with whom he has
contracted, as if the transaction were his own, except when the contract involves things
belonging to the principal.

Another exception is when the principal ratifies the contract or DERIVES BENEFITS
therefrom.

In this case, Ms. Atienza had acted within the scope of her authority when she made the
loan to Rural Bank. There was a valid contract of loan established but only as between her
and the Bank. However, if Val had received the proceeds of the loan and thus deriving
benefit therefrom, then the loan is binding as to Val and he may be held liable to pay for it as
the principal.

9. Atty. Phix, as principal appointed Attorney Dilatorre as his agent giving him general
and unlimited management over Phix’s properties. Under the Power of Attorney, it is
stipulated that Phix withholds no power from Dilatorre and that the latter may execute
any and all acts as he may consider appropriate in the premises. With this authority,
Dilatorre executed the following:

a. Dilatorre leased to Attorney Poshpone a property owned by Phix for a period of six
(6) years at P200,000. 00 per annum by way of rental

b. Dilatorre leased a two (2) storey building of Phix in BF to Attorney Sickly without a
fixed term at P25,000.00 per month payable monthly.

c. Dilatorre sold to Attorney Porma another parcel of land of Phix for a price which is
double that amount stated in the inventory of prop

All of the above transactions were entered into by Attorney Dilatorre while Attorney
Phix was ill and confined in an undisclosed hospital.

What can you say on the validity or invalidity of the above transactions. Explain

SUGGESTED ANSWER: The lease to Attorney Poshpone for 6 years is unenforceable. The
sale of the land to Attorney Porma, however, is void. But the lease to Attorney Sickly is valid,
assuming that the aggregate period of the monthly lease had not lasted for more than one
year.

ARTICLE 1874. When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void.

ARTICLE 1878. Special powers of attorney are necessary in the following cases:

(8) To lease any real property to another person for more than one year;
 PARTNERSHIP, AGENCY, AND TRUST (2025)

10. B9 Corp appointed Nene as the only agent in selling the lots of its Oats and Bulls
Subdivision. B9 specifically instructed Nene that she is not authorized to collect or
receive payments from the purchasers of the lots of the subdivision. Nene sold five
(5) lots to Pepe and collected the down-payments for said lots. However, Nene did not
account and deliver to B9 Corp the said amounts he collected from Pepe and
misappropriated the money.

If Nene could no longer be found to return the money, who shall bear the loss, B9
Corp or Pepe? Explain your answers with assumptions.

SUGGESTED ANSWER: The answer would depend on whether B9 corp. ratified Nene’s act
of collecting the payment from Pepe

Under ARTICLE 1898. If the agent contracts in the name of the principal, exceeding the
scope of his authority, and the principal does not ratify the contract, it shall be void if the
party with whom the agent contracted is aware of the limits of the powers granted by the
principal. In this case, however, the agent is liable if he undertook to secure the principal’s
ratification.

Assuming that Pepe was aware of the limitation of the agency, then he should bear the loss.
The consequence would be the same even if Pepe was not aware of the limitation. Even if
Nene told Pepe that she would eventually secure B9 Corp’s ratification, Pepe still bears the
loss unless there would be a subsequent ratification by B9 Corp.

However, if B9 Corp ratifies Nene’s acts expressly or impliedly or if B9 Corp. allowed Nene
to act as though she had full powers, B9 corp would now be held liable for the loss. In case
of ratification, there would be a valid contract between B9 Corp and Pepe. In case B9 corp
allowed Nene to act as though she had full powers, the company would be solidarily liable
for the acts of Nene.

11. The Lee family is well-known for owning vast tracts of land in Tarlac. When their
children were still minors, they sold the property in favor of the Municipality of
Camiling. However, due to the lapses committed by the series of administration in the
municipality, the sale was not registered, and the certificate of title remained in the
name of the Lee’s. Upon the demise of the Lee couple, the children executed an
extrajudicial settlement of estate which included the subject property. Hence, the Lee
children were able to register the property in their names. Thereafter, they instituted
an action to recover possession from the municipality of Camiling.

SUGGESTED ANSWER: Although the municipality may be said to have purchased the
property in good faith, it may only be availed of when the land is registered; the unregistered
status of the property should have prompted the municipality to inquire further as to the
rights over the property. In the case at bar, the municipality was a trustee by operation of law
for the benefit of the true owner which makes the Lee children to have better rights over the
land for it becomes vested to them upon the death of their parents. The fact that they
successfully registered the land in their names further strengthens their action to recover
possession.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

The defense of having purchased the property in good faith may be availed of only where
registered land is involved and the buyer had relied in good faith on the clear title of the
registered owner. It does not apply when the land is not yet registered with the Registry of
Deeds.

12. A nephew was given a limited power of attorney by his uncle to administer a
property. However, on the basis of this authority, he was able to convince someone to
buy the property he is managing to a third person. The uncle subsequently became
bankrupt and his creditors, in their efforts to collect, proceeded to question in court
the sale made by the nephew on the ground that his authority does not include the
power to sell. The nephew then produced a duly executed Special Power of Attorney
previously given to him by his uncle contending that on the basis of this SPA which is
older than that was used in the sale, he has the power to sell. Decide.

SUGGESTED ANSWER: The sale made by the nephew to the third person is void.

ARTICLE 1874. When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void.

As a rule, a previous special power of attorney, which may be referred to as a limited power
of attorney, may be revoked by the execution of a new special power of attorney which is
incompatible with the previous one.

In this case, while there was a special power of attorney granted to the nephew to sell, the
current limited power of attorney only allows him to manage the property. Clearly, this is
irreconcilable with the previous power to sell and the uncle intended the nephew’s power to
be limited to management.

Because of this, the nephew did not have the power to sell at the time the contract of sale
was executed. Hence, the sale is void for want of authority in writing, following Art. 1874 of
the Civil Code.

TRUE OR FALSE

1. An act which would make it impossible to carry on the ordinary business of the
partnership would need only the written consent of the general partners in order
for it to be valid.

SUGGESTED ANSWER:

False.

2. Entering into a compromise concerning a partnership or liability will only need the
consent of all of the general partners.

SUGGESTED ANSWER:

False.

3. In admitting a general partner, all of the partners, general or limited, must consent.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

SUGGESTED ANSWER:

True.

4. In renouncing the claim of the partnership, the vote of the limited partner is not
necessary.

SUGGESTED ANSWER:

True.

5. In disposing the goodwill of the business, only the consent of the majority of all of
the partners is required.

SUGGESTED ANSWER:

False. Article 1818 (2).

6. Partnership in the buying and selling of cars needs to be registered in order to be

valid.

SUGGESTED ANSWER:

False.

7. Partnership may be registered or named under just one of the partners.

SUGGESTED ANSWER:

False*

8. Since a partner is a co-owner with his co-partners over a particular partnership

property, they shall be governed by law on partnership.

SUGGESTED ANSWER:

True.

9. The transferee of the share of the partners in a partnership can never demand for
the books of the partnership.

SUGGESTED ANSWER:

False.

10. A person admitted as a partner into an existing partnership is liable even beyond
his contribution to satisfy the obligations of the partnership prior to his admission.

SUGGESTED ANSWER:

False.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

11. Title is conveyed if a partnership property is registered under one of the partners
and only this partner signed the Deed of Sale as the seller.

SUGGESTED ANSWER:

True.

12. Partnership may be registered or named under just one of the industrial partners.

SUGGESTED ANSWER:

False.

13. In a universal partnership all of the properties of the partners, all of the partners’
property become the property of the partnership and this includes properties
subsequently inherited by the partner.

SUGGESTED ANSWER:

False.

14. The transferee of the share of the partners in a partnership can never demand for
accounting of the finances of the Partnership.

SUGGESTED ANSWER:

False.

15. A person admitted as a partner into an existing partnership is liable even beyond
his contribution to satisfy the obligations of the partnership prior to his admission.

SUGGESTED ANSWER:

False.

16. In a contract of agency, the agent becomes the principal, authorized to perform all
acts which the principal directs him to do.

SUGGESTED ANSWER:

False.

17. The absence of consent on either the agent or the principal affects the validity of
the contract of agency.

SUGGESTED ANSWER:

True.

18. F If the agent has not yet completed the task given by the principal, the contract of
agency is invalidated.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

SUGGESTED ANSWER:

False. It’s only preparatory.

19. If an agent has acted beyond the scope of his authority, this affects the
enforceability of the agreement entered into by the agent with third parties.

SUGGESTED ANSWER:

False.

20. If the agent enters into a contract with a third person under his/her own name,
such third person would have a cause of action both against the principal and the
agent.

SUGGESTED ANSWER:

False.

21. A principal or agent may either be a natural or juridical person.

SUGGESTED ANSWER:

True.

22. If the agent in a contract of agency is a minor, the agency itself is voidable.

SUGGESTED ANSWER:

False.

23. The contract entered into by a minor agent is voidable.

SUGGESTED ANSWER:

False.

24. When the agency was constituted by way of public advertisement and the
authority was withdrawn likewise by way of publication, a person who subsequently
contracts with the agent and who acted in good faith is protected under the law and
may maintain a cause of action against the principal in case of breach.

SUGGESTED ANSWER:

False.

25. The object of agency is service or the execution of juridical act and nothing more.

SUGGESTED ANSWER:

False.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

ESSAY

1. Gigi, Rey and Rachel are general partners in a merchandising firm. Having
contributed equal amounts to the capital, they also agree on equal distribution of
whatever net profit is realized per fiscal period. After two years of operation,
however, Rachel conveys her whole interest in the partnership to Jojo, without the
knowledge, and consent of Gigi and Rey.

a. Is the partnership dissolved?

SUGGESTED ANSWER: NO, the partnership is not dissolved.

Under the law, a conveyance by a partner of his whole interest in a

partnership does not of itself dissolve the partnership (Art. 1813, NCC). In this
case, Rachel’s conveyance of her whole interest in the partnership to Jojo did
not result in the dissolution of the partnership

b. What are the rights of Jojo, if any, should he desire to participate in

the management of the partnership and in the distribution of a net
profit of PHP 360,000.00 which was realized after his purchase of
Rachel’s interest?

SUGGESTED ANSWER: Jojo cannot interfere or participate in the

management or administration of the partnership business or affairs. He may,
however, receive the net profits to which Rachel would have otherwise been
entitled.

Under the law, a conveyance by a partner of his whole interest in the

partnership, as against the other partners in the absence of agreement,
DOES NOT entitle the assignee, during the continuance of the partnership, to
interfere in the management or administration of the partnership business or
affairs, or to require any information or account of partnership transactions, or
to inspect the partnership books; but it merely entitles the assignee to receive
in accordance with his contract the profits to which the assigning partner
would otherwise be entitled. However, in case of fraud in the management of
the partnership, the assignee may avail himself of the usual remedies.

In case of a dissolution of the partnership, the assignee is entitled to receive

his assignor's interest and may require an account from the date only of the
last account agreed to by all the partners. (Art. 1813, NCC)

In this case, Jojo is entitled to P120,000 because said amount is what Rachel
would have received if she were still entitled thereto. He may also avail
himself of the usual remedies in case there is fraud in the management. If a
dissolution happens, Jojo is entitled to receive Rachel’s interest and may
require an account from the date only of the last account agreed to by all the
partners.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

2. Odette, Sam and Paris formed a business partnership for the purpose of engaging
in advertising for a term of five (5) years. Odette subsequently assigned to Andy
her interest in the partnership. When Sam and Paris learned of the assignment,
they decided to dissolve the partnership before the expiration of its term as they
had an unproductive business relationship with Andy in the past. On the other
hand, unaware of the move of Sam and Paris but sensing their negative reaction to
the acquisition of Odette’s interest, Andy simultaneously petitioned for the
dissolution of the partnership.

a. Is the dissolution done by Sam and Paris without the consent of

Odette or Andy valid? Explain.

SUGGESTED ANSWER: Yes, the dissolution by Sam and Paris is valid and
did not violate the contract of partnership even though Odette and Andy did
not consent thereto.

Under Art. 1830(1)(c) of the NCC, dissolution is caused without violation of

the agreement between the partners by the express will of all the partners
who have not assigned their interests or suffered them to be charged for their
separate debts, either before or after the termination of any specified term or
particular undertaking

In this case, the consent of Odette is not necessary because she had already
assigned her interest to Andy. The consent of Andy is not also necessary
because the assignment to him of Odette’s interest did not make him a
partner, under Art. 1813, NCC.

b. Does Andy have any right to petition for the dissolution of the
partnership before the expiration of its specified term? Explain.

SUGGESTED ANSWER: b. NO, Andy has no right to petition for dissolution

because he does not have the standing of a partner. (Art. 1813, NCC)

Owing to the principle of delectus personae where a person can only be

admitted into the partnership by the consent of all the partners, a conveyance
by a partner of his whole interest in the partnership does not mean that the
transferee becomes a partner. Such transferee does not even have a right in
the management of the partnership affairs unless otherwise agreed upon.

In this case, Andy, being a mere transferee of the share of Odette, cannot be
considered a partner who has the personality to petition for the dissolution of
the partnership.

3. A, B, and C formed a partnership to operate a car repair shop in Quezon City. A

and B provided the capital while C contributed his labor and industry. On one side
of their shop, A opened and operated a coffee shop, while on the other side, B put
up a car accessories store. C established a carwash and ice cream parlor in
Caloocan City. May they engage in such separate businesses? Why?
 PARTNERSHIP, AGENCY, AND TRUST (2025)

SUGGESTED ANSWER: A may engage in his separate business while B and C may
not.

Under the law, the capitalist partners cannot engage for their own account in any
operation which is of the kind of business in which the partnership is engaged, unless
there is a stipulation to the contrary.

An industrial partner cannot engage in business for himself, unless the partnership
expressly permits him to do so; and if he should do so, the capitalist partners may either
exclude him from the firm or avail themselves of the benefits which he may have
obtained in violation of this provision, with a right to damages in either case.

Here, A, the capitalist partner, may engage in the restaurant business because it is not
the same kind of business the partnership is engaged in. B, as a capitalist partner, may
not engage in the sale car accessories because while not the same or directly competing
in the partnership’s business of car repair, his business is connected with the
partnership’s line of business.

On the other hand, C may not engage in any other business unless their partnership
expressly permits him to do so because as an industrial partner he has to devote his full
time to the business of the partnership (Art. 1789).

4. Wally, Xave, Yuhan and Zion organized a general partnership with Wally and Xave
as industrial partners and Yuhan and Zion as capitalist partners. Yuhan
contributed Php50,000.00 and Zion contributed Php20,000.00 to the common fund.
By a unanimous vote of the partners, Wally and Xave are appointed managing
partners, without any specification of their respective powers and duties.

Angel applied for the position of Secretary and Bianca applied for the position of
Accountant of the partnership.

The hiring of Angel was decided upon by Wally and Xave, but was opposed by
Yuhan and Zion.

The hiring of Bianca was decided upon by Wally and Zion, but was opposed by
Xave and Yuhan.

Who of the applicants should be hired by the partnership? Explain and give your
reasons.

SUGGESTED ANSWER: Angel should be hired as Secretary while Bianca should not.

Under the law, the partner who has been appointed manager in the articles of
partnership may execute all acts of administration despite the opposition of his partners,
unless he should act in bad faith (Art. 1800).

If two or more partners have been intrusted with the management of the partnership
without specification of their respective duties, or without a stipulation that one of them
 PARTNERSHIP, AGENCY, AND TRUST (2025)

shall not act without the consent of all the others, each one may separately execute all
acts of administration, but if any of them should oppose the acts of the others, the
decision of the majority shall prevail. In case of a tie, the matter shall be decided by the
partners owning the controlling interest. (Art. 1801, Civil Code).

In this case, the decision for the hiring of Angel prevails because it is an act of
administration which can be performed by Wally and Xave, the duly appointed managing
partners, despite opposition of Yuhan and Zion.

Bianca cannot be hired, because in case of a tie in the decision of the managing
partners, the deadlock must be decided by the partners owning the controlling interest.
Here, the opposition of Xave and Yuhan prevails because Yuhan owns the controlling
interest

5. Cite instances where title to partnership’s real property may be conveyed even
when the same is not registered under the partnership’s name; and what is the
instance where the property is in the partnership’s name, yet only equitable
interest is transferred in the Deed of Conveyance.

SUGGESTED ANSWER: 1st Question:

(1) title to real property is in the name of one or more but not all the partners, and the record
does not disclose the right of the partnership, the partners in whose name the title stands
may convey title to such property, but the partnership may recover such property if the
partners' act does not bind the partnership under the provisions of the first paragraph of
article 1818, unless the purchaser or his assignee, is a holder for value, without
knowledge.

(2) title to real property is in the name of one or more or all the partners, or in a third person
in trust for the partnership, a conveyance executed by a partner in the partnership name,
or in his own name, passes the equitable interest of the partnership, provided the act is
one within the authority of the partner under the provisions of the first paragraph of article
1818.

Where the title to real property is in the name of all the partners a conveyance executed
by all the partners passes all their rights in such property.

2nd Question:

Where title to real property is in the name of the partnership, a conveyance executed by
a partner, in his own name, passes the equitable interest of the partnership, provided the
act is one within the authority of the partner under the provisions of the first paragraph of
Article 1818.

6. May husband and wife enter into any kind of business partnership? Why?

SUGGESTED ANSWER: While the husband and wife may still enter into a business
partnership, it cannot be just any kind.
 PARTNERSHIP, AGENCY, AND TRUST (2025)

If the partnership is a universal partnership, a husband and wife cannot enter into such
contract.

Under Art. 1782 of the NCC, persons prohibited from making donations to each other are
prohibited from entering into a universal partnerships. Under Art. 87 of the FC. Every
donation or grant of gratuitous advantage, direct or indirect, between the spouses during
the marriage shall be void, except moderate gifts which the spouses may give each other
on the occasion of any family rejoicing. The prohibition shall also apply to persons living
together as husband and wife without a valid marriage.

However, if the partnership is a particular partnership or a limited partnership, the

husband and wife may engage in said partnership.

7. Dissolution of Partnership may be classified as a). Dissolution without court

decree and b) Dissolution with court decree. Cite all of the instances wherein a
petition for dissolution must be filed in court. (10 points)

SUGGESTED ANSWER: Art. 1831. On application by or for a partner the court shall
decree a dissolution whenever: [W.I.G.I.B.O – T.U.W]

(1) A partner has been declared insane in any judicial proceeding or is shown to be of
unsound mind;
(2) A partner becomes in any other way incapable of performing his part of the
partnership contract;
(3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying
on of the business;
(4) A partner wilfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership business that it is not
reasonably practicable to carry on the business in partnership with him;
(5) The business of the partnership can only be carried on at a loss;
(6) Other circumstances render a dissolution equitable.

On the application of the purchaser of a partner's interest under Article 1813 or 1814:

(1) After the termination of the specified term or particular undertaking;

(2) At any time if the partnership was a partnership at will when the interest was assigned
or when the charging order was issued.