In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a partnership agreement with

Jimmy Yu and Norberto Uy. The three contributed P50,000.00 each and used the funds to
purchase a truck to start their trucking business. A year later however, Jose Lim died. The eldest
son of Jose Lim, Elfledo Lim, took over the trucking business and under his management, the
trucking business prospered. Elfledo was able to but real properties in his name. From one truck,
he increased it to 9 trucks, all trucks were in his name however. He also acquired other motor
vehicles in his name.
In 1993, Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack. Elfledos wife, Juliet
Lim, took over the properties but she intimated to Jimmy and the heirs of Norberto that she could
not go on with the business. So the properties in the partnership were divided among them.
Now the other heirs of Jose Lim, represented by Elenito Lim, required Juliet to do an accounting
of all income, profits, and properties from the estate of Elfledo Lim as they claimed that they are
co-owners thereof. Juliet refused hence they sued her.
The heirs of Jose Lim argued that Elfledo Lim acquired his properties from the partnership that
Jose Lim formed with Norberto and Jimmy. In court, Jimmy Yu testified that Jose Lim was the
partner and not Elfledo Lim. The heirs testified that Elfledo was merely the driver of Jose Lim.
ISSUE: Who is the partner between Jose Lim and Elfledo Lim?
HELD: It is Elfledo Lim based on the evidence presented regardless of Jimmy Yus testimony in
court that Jose Lim was the partner. If Jose Lim was the partner, then the partnership would
have been dissolved upon his death (in fact, though the SC did not say so, I believe it should
have been dissolved upon Norbertos death in 1993). A partnership is dissolved upon the death
of the partner. Further, no evidence was presented as to the articles of partnership or contract
of partnership between Jose, Norberto and Jimmy. Unfortunately, there is none in this case,
because the alleged partnership was never formally organized.
But at any rate, the Supreme Court noted that based on the functions performed by Elfledo, he
is the actual partner.
The following circumstances tend to prove that Elfledo was himself the partner of Jimmy and
Norberto:
1.) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the partnership, on a date
that coincided with the payment of the initial capital in the partnership;
2.) Elfledo ran the affairs of the partnership, wielding absolute control, power and authority,
without any intervention or opposition whatsoever from any of petitioners herein;
3.) all of the properties, particularly the nine trucks of the partnership, were registered in the
name of Elfledo;
4.) Jimmy testified that Elfledo did not receive wages or salaries from the partnership, indicating
that what he actually received were shares of the profits of the business; and
5.) none of the heirs of Jose, the alleged partner, demanded periodic accounting from Elfledo
during his lifetime. As repeatedly stressed in the case of Heirs of Tan Eng Kee, a demand for
periodic accounting is evidence of a partnership.
Furthermore, petitioners failed to adduce any evidence to show that the real and personal
properties acquired and registered in the names of Elfledo and Juliet formed part of the estate
of Jose, having been derived from Joses alleged partnership with Jimmy and Norberto.
Elfledo was not just a hired help but one of the partners in the trucking business, active and
visible in the running of its affairs from day one until this ceased operations upon his demise.
The extent of his control, administration and management of the partnership and its business,
the fact that its properties were placed in his name, and that he was not paid salary or other
compensation by the partners, are indicative of the fact that Elfledo was a partner and a
controlling one at that. It is apparent that the other partners only contributed in the initial capital
but had no say thereafter on how the business was ran. Evidently it was through Elfredos efforts
and hard work that the partnership was able to acquire more trucks and otherwise prosper. Even
the appellant participated in the affairs of the partnership by acting as the bookkeeper sans
salary.
JARANTILLA, JR. vs. JARANTILLA636 SCRA 299, G.R. No. 154486, December 1, 2010, Leonardo-De
Castro, J.: pFACTS:
The present case stems from the complaintfiled by Antonieta Jarantilla againstBuenaventura Remotigue,
Cynthia Remotigue, Federico Jarantilla, Jr., Doroteo Jarantilla andTomas Jarantilla, for the accounting of the
assets and income of the co-ownership, for itspartition and the delivery of her share corresponding to eight
percent (8%), and for
damages. Antonieta claimed that in 1946, she had entered into an agreement with the defendan
ts toengage in business through the execution of a document denominated as "Acknowledgement of
Participating Capital
. Antonieta also alleged that she had helped in the management of thebusiness they co-owned without
receiving any salary. Antonieta further claimed co-ownership of certain properties (the subject real properties)
in the name of the defendants since the only waythe defendants could have purchased these properties were
through the partnership as theyhad no other source of income. The respondents did not deny the existence
and validity of the"Acknowledgement of Participating Capital" and in fact used this as evidence to support their
claim that Antonietas 8% share was limited to the businesses enume
rated therein. The
respondents denied using the partnerships income to purcha
se the subject real properties.During the course of the trial at the RTC, petitioner Federico Jarantilla, Jr., who
was one of theoriginal defendants, entered into a compromise agreement
17
with Antonieta Jarantilla wherein
he supported Antonietas claims and asserted that he too was entitled to six percent
(6%) of thesupposed partnership in the same manner as Antonieta was.
ISSUE:
Whether or not the partnership subject of the Acknowledgement of Participating Capitalfunded the subject real
properties.
HELD:
Under Article 1767 of the Civil Code, there are two essential elements in a contract of partnership:
(a) an agreement to contribute money, property or industry to a common fund; and (b) intent to divide the
profits among the contracting parties
. The first element is undoubtedlypresent in the case at bar, for, admittedly, all the parties in this case
have agreed to, and did,contribute money and property to a common fund.
Hence, the issue narrows down to their intent in acting as they did
. It is not denied that all the parties in this case have agreed to contributecapital to a common fund
to be able to later on share its profits. They have admitted this fact,agreed to its veracity, and even submitted
one common documentary evidence to prove suchpartnership - the Acknowledgement of Participating
Capital. The petitioner himself claims hisshare to be 6%, as stated in the Acknowledgement of Participating
Capital. However, petitioner fails to realize that this document specifically enumerated the businesses covered
by thepartnership: Manila Athletic Supply, Remotigue Trading in Iloilo City and Remotigue Trading inCotabato
City. Since there was a clear agreement that the capital the partners contributed wentto the three businesses,
then there is no reason to deviate from such agreement and go beyondthe stipulations in the document. There
is no evidence that the subject real properties wereassets of the partnership referred to in the
Acknowledgement of Participating Capital. Petitiondenied.

Chua sunga
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership for the sale and
distribution of Shellane LPGs. Their business was very profitable but in 1989 Jacinto died. Upon
Jacintos death, his daughter Lilibeth took over the business as well as the business assets.
Chua then demanded for an accounting but Lilibeth kept on evading him. In 1992 however,
Lilibeth gave Chua P200k. She said that the same represents a partial payment; that the rest
will come after she finally made an accounting. She never made an accounting so in 1992, Chua
filed a complaint for Winding Up of Partnership Affairs, Accounting, Appraisal and Recovery of
Shares and Damages with Writ of Preliminary Attachment against Lilibeth.
Lilibeth in her defense argued among others that Chuas action has prescribed.
ISSUE: Whether or not Chuas claim is barred by prescription.
 HELD: No. The action for accounting filed by Chua three (3) years after Jacintos death was well
within the prescribed period. The Civil Code provides that an action to enforce an oral contract
prescribes in six (6) years while the right to demand an accounting for a partners interest as
against the person continuing the business accrues at the date of dissolution, in the absence of
any contrary agreement. Considering that the death of a partner results in the dissolution of the
partnership, in this case, it was after Jacintos death that Chua as the surviving partner had the
right to an account of his interest as against Lilibeth. It bears stressing that while Jacintos death
dissolved the partnership, the dissolution did not immediately terminate the partnership. The
Civil Code expressly provides that upon dissolution, the partnership continues and its legal
personality is retained until the complete winding up of its business, culminating in its termination.

Spouses Villoria case

In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a
travel agency working for Continental Airlines, to purchase tickets from Newark to San Diego.
The travel agent, Margaret Mager, advised the couple that they cannot travel by train because it
was already fully booked; that they must purchase plane tickets for Continental Airlines; that if
they wont purchase plane tickets; theyll never reach their destination in time. The couple
believed Magers representations and so they purchased two plane tickets worth $800.00.
Later however, the spouses found out that the train trip wasnt really fully booked and so they
purchased train tickets and went to their destination by train instead. Then they called up Mager
to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines.
As the couple were now in the Philippines, they filed their request with Continental Airlines office
in Ayala. The spouses Viloria alleged that Mager misled them into believing that the only way to
travel was by plane and so they were fooled into buying expensive plane tickets.
Continental Airlines refused to refund the amount of the tickets and so the spouses sued the
airline company. In its defense, Continental Airlines claimed that the tickets sold to them by
Mager were non-refundable; that, if any, they were not bound by the misrepresentations of
Mager because theres no contract of agency existing between Continental Airlines and Mager.
The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of
the RTC.
ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager.
HELD: Yes. All the elements of agency are present, to wit:

1. there is 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, and
4. the agent acts within the scope of his authority.

The first and second elements are present as Continental Airlines does not deny that it
concluded an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel
would enter into contracts of carriage with third persons on the airlines behalf. The third element
is also present as it is undisputed that Holiday Travel merely acted in a representative capacity
and it is Continental Airlines and not Holiday Travel who is bound by the contracts of carriage
entered into by Holiday Travel on its behalf. The fourth element is also present considering that
Continental Airlines has not made any allegation that Holiday Travel exceeded the authority that
was granted to it.
Continental Airlines also never questioned the validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppel. Continental Airlines cannot be allowed to
take an altogether different position and deny that Holiday Travel is its agent without condoning
or giving imprimatur to whatever damage or prejudice that may result from such denial or
retraction to Spouses Viloria, who relied on good faith on Continental Airlines acts in recognition
of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the
avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to
apply it in this case would result in gross travesty of justice.
Case Name:

Country Bankers Insurance v. Keppel Cebu ShipyardPetitioner:

Country Bankers Insurance Corporation
Respondent:
Keppel Cebu Shipyard, Unimarine Shipping Lines, Inc., Paul Rodriguez
SCRA:
673 SCRA 427
G.R. No:
166044
Date:
June 18, 2012
FACTS:
Unimarine Shipping Lines, Inc. (Unimarine) is a corporation engaged in the shipping industry.
Unimarine contracted theservices of Keppel Cebu Shipyard for dry-docking and ship repair
works on its vessel, the MV Pacific Fortune.Cebu Shipyard issued a bill to Unimarine in
consideration for its services. They negotiated to a reduction to P3.85M and
terms of this agreement were embodied in Cebu Shipyards letter to the President/GM of
Unimarine.
In compliance withthe agreement, Unimarine secured from Country Bankers Insurance Corp.
(CBIC)
, through its agent, Bethoven Quinain
(Quinain), a Surety Bond of P3M. The expiration of the Surety Bond was extended through an
Endorsement attached tothe Surety Bond.Cebu Shipyard sent Unimarine letters, demandi
ng it to settle its account. Due to Unimarines nonpayment, Cebu Shipyard
asked the surety CBIC to fulfill their obligations as sureties. However, CBIC alleged that the
Surety Bond was issued by itsagent, Quinain, in excess of his authority.

ISSUE:
W/N the provisions of Article 1911 of the Civil Code is applicable in the present case to hold
petitioner liable for the actsdone by its agent in excess of authority. YES

HELD:
CBIC is liable for the surety bond. CBIC could not be allowed to disclaim liabil
ity because Quinains actions were within the
terms of the special power of attorney given to him. 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 at
torney granted upon him.
Under Articles 1898 and 1910, an agents act, even if done beyond the scope of his authority,
may bind the principal if he
ratifies them, whether expressly or tacitly. It must be stressed though that only the principal, and
not the agent, can ratifythe unauthorized acts, which the principal must have knowledge of.
Neither Unimarine nor Cebu Shipyard was able to repudiate CBICs testimony that it was
unaware of the existence of
Surety Bond and Endorsement. There were no allegations either that CBIC should have been
put on alert with regard to
Quinains business transactions done on its behalf. It is clear, and undisputed therefore,
that there can be no ratification
inthis case, whether express or implied.Article 1911, on the other hand, is based on the principle
of estoppel, which is necessary for the protection of third persons.It states that the principal is
solidarily liable with the agent even when the latter has exceeded his authority, if the
principalallowed him to act as though he had full powers. However, for an agency by estoppel to
exist, the following must beestablished:1.

The principal manifested a representation of the agents authority or knowingly allowed the agent
to assume suchauthority;
2.
The third person, in good faith, relied upon such representation3.

Relying upon such representation, such third person has changed his position to his
detriment.An agency by estoppel, which is similar to the doctrine of apparent authority, requires
proof of reliance upon therepresentations, and that, in turn, needs proof that the representations
predated the action taken in reliance.
This Court cannot agree with the Court of Appeals pronouncement of negligence on CBICs
part. CBIC not only clearly
stated the limits of its ag
ents powers in their contracts, it even stamped its surety bonds with the restrictions, in order to
alert the concerned parties. Moreover, its company procedures, such as reporting requirements,
show that it has designeda system to monitor the insurance
contracts issued by its agents. CBIC cannot be faulted for Quinains deliberate failure to
notify it of his transactions with Unimarine. In fact, CBIC did not even receive the premiums paid
by Unimarine to Quinain

Rallos vs. Felix Go Chan & Realty Corp., Munoz-Palma

March 25, 2016

Plaintiff: Ramon Rallos

Defendant: Felix Go Chan & Sons Realty Corporation

Facts: Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of
land known as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of
Title No. 11116 of the Registry of Cebu.They executed a special power of attorney in favor of
their brother, Simeon Rallos, authorizing him to sell such land for and in their behalf. After
Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. New TCTs
were issued to the latter. Petitioner Ramon Rallos, administrator of the Intestate Estate of
Concepcion filed a complaint praying (1) that the sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be unenforceable, and said share be reconveyed to her estate;
(2) that the Certificate of title issued in the name of Felix Go Chan & Sons Realty Corporation
be cancelled and another title be issuedin the names of the corporation and the Intestate estate
of Concepcion Rallos in equal undivided and (3) that plaintiff be indemnified by way of attorneys
fees and payment of costs of suit.

Issues:

1) WON sale was valid although it was executed after the death of the principal, Concepcion.

2) WON sale fell within the exception to the general rule that death extinguishes the authority of
the

agent

3) WON agents knowledge of the principals death is a material factor.

4) WON petitioner must suffer the consequence of failing to annotate a notice of death in the title

(thus there was good faith on the part of the Respondent vendee)
5) WON good faith on the part of the respondent in this case should be treated parallel to that of
an

CFI: Sale of land was null and void insofar as the one-half pro-indiviso share of Concepcion
Rallos Ordered the issuance of new TCTs to respondent corporation and the estate of
Concepcion in theproportion of share each pro-indiviso and the payment of attorneys fees
and cost of litigation Respondent filed cross claim against Simon Rallos(*Simon and Gerundia
died during pendency of case) juan T. Borromeo, administrator of the Estate of Simeon Rallos
was ordered to pay defendant the price of the share of the land (P5,343.45) plus attorneys
fees [Borromeo filed a third party complaint against Josefina Rallos, special administratrix of the
Estate of Gerundia] Dismissed without prejudice to filing either a complaint against the regular
administrator of the Estate of Gerundia Rallos or a claim in the Intestate-Estate of Cerundia
Rallos, covering the same subject-matter

CA: CFI Decision reversed, upheld the sale of Concepcions share.MR: denied.innocent
purchaser for a value of a land.

76) NIELSON & CO., INC. vs LEPANTO CONSOLIDATED MINING CO.

CASE NUMBER: L-21601DATE: December 28, 1968PONENTE: Zaldivar, J.FACTS:

Nielson & Company, Inc. and Lepanto Consolidated Mining Company entered into a management
contract.
o

Nielson had agreed, for a period of five years, with the right to renew for a like period,
to explore, developand operate the mining claims of Lepanto, and to mine, or mine and mill,
such pay ore as may be found andto market the metallic products recovered therefrom
which may prove to be marketable, as well as torender for Lepanto other services
specified in the contract.
o

Nielson was to take complete charge, subject at all times to the general control of the
Board of Directors ofLepanto, of the exploration and development of the mining claims,
of the hiring of a sufficient andcompetent staff and of sufficient and capable laborers,
of the prospecting and development of the mine, ofthe erection and operation of the mill,
and of the benefication and marketing of the minerals found on themining properties.
o

Nielson was also to act as purchasing agent of supplies, equipment and other necessary
purchases byLepanto, but no purchase shall be made without the prior approval of
Lepanto and no commission shall beclaimed or retained by Nielson on such purchase.
o

The principal and paramount undertaking of Nielson under the management contract was
the operationand development of the mine and the operation of the mill. All the other
undertakings mentioned in thecontract are necessary or incidental to the principal.
o

In the performance of this principal undertaking, Nielson was not in any way executing
juridical acts forLepanto.
Lepanto terminated the contract in 1945, 2 years before its expiration, when it took over
and assumed exclusivemanagement of the work previously entrusted to Nielson under the
contract.

Lepanto finally maintains that Nielson as an agent is not entitled to damages since the law
gives to the principal theright to terminate the agency at will.
ISSUE:
Was the management contract entered into by and between Nielson and Lepanto a contract of agency
such that it hasthe right to revoke and terminate the contract at will, or a contract of lease of
services?

RULING: Contract of Lease of Services

The management contract was one of contract of lease of services and not a contract of agency.

In both agency and lease of services, one of the parties binds himself to render some
service to the other party.Agency, however is distinguished from lease of work or
services in that:
o

The basis of agency is representation, while in the lease of work or services, the basis is
employment