403
AGENCY, TRUST AND PARTNERSHIP WWW [EH 403 SY 2017-2018]
JUNE 17, 2017
Atty: Why are we here?
Flores, Kerven: To study partnership,
agency and trust
Atty: In partnership, there are forms
of business organizations, why should
lawyers study business organizations?
Flores: They would know how to cre-
ate one, manage it and how to dis-
solve it.
Atty: Create, manage and dissolve.
Like human, God created, God kills us.
What else?
Flores: So that we would know the
rights and obligations of the different
kinds of business organizations.
Atty: Rights and obligations, anything
else?
Flores: Inaudible
Atty: Kerven is talking about rights,
what rights could this be?
Villabas, Vilpa: The rights such as
since it invoke a relationship between
the actors in business, so there are
certain rights and obligations that they
must comply with each other especial-
ly if it involve a contract.
Atty: Exactly! Especially if bound by
these contracts, these contracts would
define your rights, liabilities, obliga-
tions of the contracting parties. Any-
thing else? Why should we talk about
the rights and obligations?
Villabas: We should also talk about the
rights and obligations for the parties
themselves to know the extent of their
liabilities, especially if they are engag-
ing in business and commercial activi-
ties so if I am a player of a certain
business, I will be able to know my
rights as well as my liabilities if there
are certain obligations that I failed to
do in such contract.
Atty: Alright because we are talking
here of business, what will be the sub-
ject matter of every business?
Villabas: The subject matter I think is
the realization of profits, sharing
among the parties in the business.
Atty: You’re talking of profits, and you
know profits do not come from above.
Where would these profits come from?
Villabas: The profits would come from
the actors themselves who will be
working with each other. For example
they will be engaging themselves to a
joint venture so there will be a realiza-
tion of profits.
Atty: Alright. How are these profits
realized?
Villabas: For example if they will in-
vest on a certain business so there will
be a capital, there will be investors in
a business so there will be profits from
combined efforts of the actors them-
selves. So if the capital will be ready
to be invested into a business and at
the same time, there will be a person
who is willing to engaged with the
capitalist, so there will be profits as
the effect or result of their efforts.
Atty: So capital could either be?
Villabas: It could either be in a form of
money, land or entrepreneurship or
any means that which could be a
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AGENCY, TRUST AND PARTNERSHIP WWW [EH 403 SY 2017-2018]
stepping stone for business to prolif-
erate.
Atty: We are talking about..
Villabas: Labor, assets…
Atty: So this will be the subject matter
of the law; assets, properties and be-
cause people who will engage in busi-
ness occurs could either real proper-
ties or their assets. Their assets could
either be, be referring to what?
Villabas: Money or financial capacity,
the properties that will be able to con-
tribute in the business.
Atty: Not only that..
Villabas: Also, any forms of credits.
Atty: What are your assets? Tell us
your assets?
Villabas: I think rationality is my as-
set.
Atty: See you got a lot of assets (the
class laughed haha). Everybody has
an asset that’s why we will have to
make certain efforts to be able to
profit from these assets. So now slow-
ly, we are learning. So assets, proper-
ties, profits, what do think to preserve
these assets in a relationship?
Magtibay: There should be because
these involves a lot of interests from
both parties, there should be regula-
tions that would help define or guide
as to what extent the parties are enti-
tled to or their rights or liabilities.
Atty: Exactly, exactly! To study the
law of partnership therefore, is to
study, to determine the rights of every
partner in so far as these assets are
concerned because if we do not im-
pose order, there is no law then there
will be problem in so far as these as-
sets are concerned and because in a
business endeavor you have to be fair
to everyone, the law makes sure that
the business will continue with profits
among the investors. It is bound by
the rules, establishes boundaries of
your possession, of your ownership.
So like any other thing, if you decide
to marry what do you want to discuss
with your future husband?
Magtibay: First I would let him know
that the legal profession if I would be
a lawyer, the legal profession would
be my priority.
Atty: So would be married to your
profession before you will be married
to him.
Magtibay: Yes, because I fell in love
with the law before him. (CLASS RE-
ACTS VIOLENTLY HAHAHAHA)
Atty: So first, your profession. Se-
cond?
Student: Second would be number of
kids.
Atty: The fruits of your love. Alright,
what about the kids?
Magtibay: Normal family planning,
number of kids.
Atty: How many would you prefer? It
depends upon his industry. If he
works overtime then he will be enti-
tled to more profits. (haha hebi nasad
ug katawa ang class) Then?
Magtibay: Also……..
Atty: Feel free, this is a free willing
discussion. These are not in your
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AGENCY, TRUST AND PARTNERSHIP WWW [EH 403 SY 2017-2018]
books, you will be frustrated wa mani
nigawas sa introduction. Those intro-
ductory part of the book is necessary
but here we hit the nail on introduc-
tion. It gives us the situation what this
is all about.
Magtibay: Next would be the proper-
ties we would acquire and maybe en-
gage in business or venture in other
aspects.
Atty: You start from ground zero.
Hopefully you will be a successful as
any other professional or any other
business may be. Of course don’t for-
get your children, these are the im-
portant aspects in your life. And these
are the best gifts you can give to
them. So how many children? Unli?
Magtibay: I want to maintain my
body. Seriously, consider first the ed-
ucation and we will try to send them
to best schools. Not only the academic
aspect but I also want to discover and
mold (?) the talents of my children.
Atty: Why is business law important?
Langomez: Business law is important
because business is prevalent in socie-
ty. We deal it with it everyday which is
why we have to set parameters for the
different individuals connected with
business. For example in Baristo,
there should be parameters imple-
mented by the school or the state
(price of siomai or hamburger).
Atty: In other words, it is always a
two-way proposition in business. Cus-
tomer-business relationship. We pro-
vide Baristo the opportunity to earn
but also protect the students so that it
will serve its purpose. Baristo is here
to serve the students but the price
must be controlled so that the stu-
dents will not go out.
Langomez: Aside from the control of
price, there is a relationship that is
developed because of the business.
The producer-consumer relationship is
developed so business law is im-
portant.
Atty: You take care of the history of
partnership. It is in the book. I’m not
too old to discuss it. So that now we
discuss about business organizations.
Lao: There are three types of business
organization. First the sole-
proprietorship, second is partnership
and third is corporation.
Atty: It’s like the biblical story of Gen-
esis. How do you remember Genesis?
Lao: First, God created light.
Atty: God said; “let there be light, and
there was light.”
Lao: God created heaven and separat-
ed it from earth. Then God created the
birds, the animals in the land and
seas.
Atty: The birds and the bees, the
flowers and the trees. It became a
very nice place. God said, “sayang”
this is a very beautiful asset with no
one to enjoy. So someone must enjoy
this. And so…
Lao: God created man from mud. Ad-
am was created.
Atty: What did Joshua did first? He
was alone. No nothing. (joke about sa
nudity ni Joshua). As Joshua was
about to rest?
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Lao: God took a rib from Joshua.
Atty: God did not voluntarily take the
rib. He sang a song. (Atty singing
Lonely).
Lao: As Joshua was sleeping, God took
a rib from Joshua and created a wom-
an.
Atty: So the partnership of Joshua
with Meg was born. So since some-
body was already with him, he went
around looking for banana leaves.
(green jokes) They started to join
their assets. Joshua worked hard – in-
dustry. How happens?
Lao: Because of this a corporation ex-
isted.
Atty: Children came, so the third type
of business organization was created.
Just remember the bible and you will
remember the three types of business
organization. What is the difference
between sole-proprietorship and part-
nership?
Lao: In sole-proprietorship, there is
only one owner. He is the only one
who manages the business. The only
one benefits and suffers from losses of
the profit. On the other hand, partner-
ship there are two or more persons,
thus, they contribute. Partners share
profits and also bear the losses.
Atty: So Sole-proprietorship is very
lonely. You are by yourself. Ako ang
matag sayo. Magluto. Abot ang cus-
tomer, ako sukli pero ang ginansiya
ako ra pod. But that was not the best
way because I have limited facilities. I
have limited industry, arms. I cannot
do it alone. So one decides to go on a
partnership. So what happens if there
is partnership?
Lao: In partnership there will be two
or more persons. There will be more
contribution of assets, more labor. But
the downside of it is that you are go-
ing to share your profits.
Atty: you have to share your assets
but you have to make sure that one
plus one is equals three. Because if it
is only one plus one equals two, I’d
rather be alone. Why three? Because
you need to share the profits. Your
objective is to gain three. With com-
bined resources, industry and effort
you must aim for a higher profit to
share. So that the advantage and dis-
advantage and disadvantage of sole-
proprietorship and partneship is clear.
If there is an opportunity for business,
what would you prefer?
Almerino: I think I would prefer to be
in a partnership. Because the ad-
vantages outweigh the disad-
vanatages. As humans, we are more
inclined to work with other people. We
re social animals. So it is very natural
to work with other people. Partnership
is a very old institution. And in the dif-
ferent part of human history, partner-
ship was there.
Atty: What are the downside of part-
nership.
Student: You have to share your prof-
its.
Atty: Any other downside?
Almerino: Another downside is man-
agement because there will be two
minds instead one.
Atty: If one partner says you should
start at seven then the other says you
should start at ten, what time do you
think should you start?
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AGENCY, TRUST AND PARTNERSHIP WWW [EH 403 SY 2017-2018]
Almerino: Compromise, sir.
Atty: What other problems?
Almerino: There is also this problem of
determining the terms of your rela-
tionship with each other. Like your
rights to the business or the proper-
ties involved or any other related mat-
ters.
Atty: Any specific issue?
Almerino: The common example will
be on the management.
Atty: We have discuss that. Any oth-
er?
Almerino: The terms of dissolution if
the partnership does not work out.
How do we divide the properties?
Atty: We share losses. But that’s too
naïve to talk about losses. We start a
business, we don’t talk about losses
but rather, profits. We talk about how
we divide the profits. Will it be based
on how much we contribute? Will it be
based on how much industry we put
in? Any other problem?
Almerino: Also the issue of partner-
ship.
Atty: Who will be admitted as part-
ners. Can I bring my wife? Good for
you have a wife! Everything could be a
source (of issues) of course. That’s
why the law defines the relationship
so well so that as much as possible
there will no conflict. That’s the pur-
pose of the law to bring order to the
relationship. That relationship howev-
er is defined by?
Almerino Result of agreement.
Atty: Because basically, the law de-
fines partnership?
Almerino: Civil Code defines the part-
nership as a contract wherein two or
more persons agree to contribute
money, property or industry to a
common fund with the purpose of
sharing the profits.
Atty: It is first and foremost a con-
tract. Do you think you can be a part-
ner?
Tanggor: Yes, atty. The Civil Code
says the biological persons can be a
partner. Aside from that, I also have a
legal capacity.
Atty: Many persons don’t have legal
capacity. When we say legal capacity
therefore we mean…
Tanggor: It is the capacity to enter
into a contract.
Atty: Among others, who do not have
the capacity?
Tanggor: 1. Unemancipated minor; 2.
Deaf mute who doesn’t know how to
write; 3. Insane; 4. Those who are
still guardianship.
Atty: Do you fall under any of this?
Tanggor: No.
Atty: That’s why you said that you can
enter into a contract. What is a con-
tract?
Elnas: Contract is the meeting of the
minds between two or more persons
that has three characteristics – con-
sent, object, consideration.