1 | P a g e

BUS ORG. BATCH 2 DIGESTED CASES:

PARTNERSHIP DISTINGUISHED FROM OTHER BUSINESS MEDIA
Kilosbayan Inc s T!o"is#o G$in%ona& '(. 232 SCRA 110 Business
Organization Corporation Law PCSOs Charter
In 1993, the Philippine Charity Sweepstakes Office decided to put up an on-line lottery
system which will establish a national network system that will in turn epand PCSO!s source
of income"
# biddin$ was made" Philippine %amin$ &ana$ement Corporation 'P%&C( won it" # contract
of lease was awarded in fa)or of P%&C"
*ilosbayan opposed the said a$reement between PCSO and P%&C as it alle$ed that+
1" P%&C does not meet the nationality re,uirement because it is -./ forei$n owned
'owned by a &alaysian firm 0er1aya %roup 0erhad(2
3" PCSO, under Section 1 of its charter '4# 1159(, is prohibited from holdin$ and
conductin$ lotteries 6in collaboration, association or 1oint )enture with any person,
association, company or entity72
3" 8he network system sou$ht to be built by P%&C for PCSO is a telecommunications
network" 9nder the law '#ct :o" 3;<5(, a franchise is needed to be $ranted by the
Con$ress before any person may be allowed to set up such2
<" P%&C!s articles of incorporation, as well as the =orei$n In)estments #ct '4"#" :o"
-><3( does not allow it to install, establish and operate the on-line lotto and
telecommunications systems"
P%&C and PCSO, throu$h 8eofisto %uin$ona, ?r" and 4enato Corona, @ecuti)e Secretary and
#sst" @ecuti)e Secretary respecti)ely, alle$ed that P%&C is not a collaborator but merely a
contractor for a piece of work, i"e", the buildin$ of the network2 that P%&C is a mere lessor of
the network it will build as e)idenced by the nature of the contract a$reed upon, i"e",
Contract of Aease"
ISSUE: Bhether or not *ilosbayan is correct"
HE)D: Ces, but only on issues 3, 3, and <"
1" On the issue of nationality, it seems that P%&C!s forei$n ownership was reduced to
<>/ thou$h"
3" On issues 3, 3, and <, Section 1 of 4"#" :o" 1159, as amended by 0"P" 0l$" <3,
prohibits the PCSO from holdin$ and conductin$ lotteries 6in collaboration, association or
1oint )enture with any person, association, company or entity, whether domestic or
forei$n"7 8here is undoubtedly a collaboration between PCSO and P%&C and not merely
a contract of lease" 8he relations between PCSO and P%&C cannot be defined simply by
the desi$nation they used, i"e", a contract of lease" Pursuant to the wordin$s of their
a$reement, P%&C at its own epense shall b$il*& o+!(a#!& an* ,ana%! #-! n!#.o(/
sys#!, includin$ its facilities needed to operate a nationwide online lottery system"
PCSO bears no risk and all it does is to pro)ide its franchise D in )iolation of its charter"
:ecessarily, the use of such franchise by P%&C is a )iolation of #ct :o" 3;<5"
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NO DIGEST FOR BIG)ANGA0A 1S CONSTANTINO
22222222222222222
C)ASSES OF PARTNERSHIP AND PARTNERS 344563478
)9ONS 1S ROSENTOCK
CIR 1S SUTER
ORTEGA 1S CA
:R!"!( #o +(!io$s cas!s;
2222222222222
0HO ARE PARTNERS< :ART. 345=;
NA1ARRO 1S CA 222 SCRA 54>
FACTS:
Pri)ate respondent Oli)ia F" Canson and Petitioner Aourdes :a)arro were en$a$ed in the
business of #ir =rei$ht Ser)ice #$ency"
Pursuant to the #$reement which they entered, they a$reed to operate the said #$ency2
It is the Pri)ate 4espondent Oli)ia Canson who supplies the necessary e,uipment and money
used in the operation of the a$ency" Ger brother in the person of #tty" 4odolfo Fillaflores was
the mana$er thereof while petitioner Aourdes :a)arro was the Cashier2
In compliance to her obli$ation as stated in their a$reement, pri)ate respondent brou$ht into
their business certain chattels or mo)ables or personal properties" Gowe)er, those personal
properties remain to be re$istered in her name2
#mon$ the pro)isions stipulated in their a$reement is the e,ual sharin$ of whate)er
proceeds realiHed from their business2
Gowe)er, sometime on ?uly 33, 19-5, pri)ate respondent Oli)ia F" Canson, in order for her to
reco)ery the abo)e mentioned personal properties which she brou$ht into their business,
filed a complaint a$ainst petitioner Aourdes :a)arro for IJeli)ery of Personal Properties Bith
Jama$es and with an application for a writ of reple)in7
Pri)ate respondentsK application for a writ of reple)in was later appro)edL$ranted by the trial
court"
=or her defense, petitioner :a)arro ar$ue that she and pri)ate respondent Canson actually
formed a )erbal partnership which was en$a$ed in the business of #ir =rei$ht Ser)ice
#$ency" She contended that the decision sustainin$ the writ of reple)in is )oid since the
properties belon$in$ to the partnership do not actually belon$ to any of the parties until the
final disposition and windin$ up of the partnership"
2 | P a g e
ISSUE:
1" Bhether or not there was a partnership that eisted between the parties"
3" Bhether the properties that were commonly used in the operation of #llied #ir =rei$ht
belon$ed to the alle$ed partnership business"
RU)ING:
#rticle 1-5- of the :ew Ci)il Code defines the contract of partnership+
#rt" 1-5-" 0y the contract of partnership two or more persons bind themsel)es to contribute
money, property, or industry to a common fund, with the intention of di)idin$ the proceeds
amon$ themsel)es"
6# cursory eamination of the e)idences presented no proof that a partnership, whether oral
or written had been constituted"7
In fact, those mo)ables brou$ht by the plaintiff for the use in the operation of the business
remain re$istered in her name"
Bhile there may ha)e been co-ownership or co-possession of some items andLor any sharin$
of proceeds by way of ad)ances recei)ed by both plaintiff and the defendant, these are not
indicati)e and supporti)e of the eistence of any partnership between them"
#rt" 1-59 par" 3 pro)ides+
6Co-ownership or co-possession does not of itself establish a partnership, whether such co-
owners or co-possessors do or do not share any profits made by the use of the property7
0esides, the alle$ed profit was a difference found after )aluatin$ the assets and not arisin$
from the real operation of the business" In accountin$ procedures, strictly, this could not be
profit but a net worth"
EEEEEEEEEEEEEEEEEE
OBI))OS 1S CIR
38= SCRA 54>
FACTS
- ?ose Obillos, Sr" completed payment of two parcels of land" 8he net day he transferred his
ri$hts to his four children, the petitioners, to enable them to build their residences" 8he
8orrens titles issued to them would show that they were co-owners of the two lots"
- 8he four brothers and sisters ac,uired lots with the ori$inal purpose to di)ide it amon$
themsel)es for residential purposes2 when later they found it not feasible to build their
residences thereon because of the hi$h cost of construction2 they decided to resell the
properties to dissol)e the co-ownership"
- Petitioners sold the lots they inherited from their father and deri)ed a total profit of
P33,.;< for each of them" 8hey treated the profit as capital $ain and paid an income ta
thereof" 8he CI4 re,uired petitioners to pay corporate income ta on their shares, 3>/ ta
fraud surchar$e and <3/ accumulated interest" Jeficiency ta was assessed on the theory
that they had formed an unre$istered partnership or 1oint )enture"
ISSUE
Bhether or not the sharin$ of $ross returns constitute partnership
HE)D
- :O"
- #rticle 1-59'3( of the Ci)il Code pro)ides that Ithe sharin$ of $ross returns does not of
itself establish a partnership, whether or not the persons sharin$ them ha)e a 1oint or
common ri$ht or interest in any property from which the returns are deri)edI"
- 8he ori$inal intention was merely to collecti)ely purchase the lots and e)entually to
partition them amon$ themsel)es to build their residences2 and that in fact they had no
choice but to resell the same to dissol)e the co-ownership"
Obillos found that the di)ision of the profits was merely incidental to the dissolution of the
co-ownership which was in the nature of thin$s a temporary state2 and that there could not
ha)e been any partnership, but merely a co-ownership, since there was lack of intent to form
a partnership or 1oint )enture"
-#ll co-ownerships are not deemed unre$istered partnership"
-Co-Ownership who own properties which produce income should not automatically be
considered partners of an unre$istered partnership, or a corporation, within the pur)iew of
the income ta law" 8o hold otherwise, would be to sub1ect the income of all co-ownerships
of inherited properties to the ta on corporations, inasmuch as if a property does not produce
an income at all, it is not sub1ect to any kind of income ta, whether the income ta on
indi)iduals or the income ta on corporation"
EEEEEEEEEEEEE
RE9ES 1S CIR
2? SCRA 3=7
FACTS:
Petitioners 'father and son to each other( purchased a lot and buildin$ '%ibs 0uildin$(" 8he
payment thereof was shared e,ually by petitioners"
#t the time of the purchase, the buildin$ was leased to )arious tenants" Petitioners di)ided
e,ually the income from rentals of the buildin$ as well as the epenses in the operation and
maintenance thereof"
8he administration of the buildin$ was entrusted to an administrator who collected the rents"
0elie)in$ that petitioners were partners, respondent Commissioner of Internal 4e)enue
assessed them the sum of P<5,5<-">> as income ta due for the years 19.1 to 19.< and a
sum of P3.,9-3"-., co)erin$ the years 19.. and 19.5"
8he basis of the assessment of said income ta due is the pro)ision of the :ational Internal
4e)enue Code which imposes an income ta on corporations and corporations includes
partnerships"
3 | P a g e
ISSUE:
Bhether or not petitioners are sub1ect to the ta on corporations pro)ided for in section 3<
of Commonwealth #ct :o" <55, otherwise known as the :ational Internal 4e)enue Code"
RU)ING:
Petitioners, in ac,uirin$ the %ibbs 0uildin$, established a partnership sub1ect to income ta
as a corporation under the :ational Internal 4e)enue Code"
8here are two essential elements of a partnership+
'a( an a$reement to contribute money, property or industry to a common fund2 and
'b( intent to di)ide the profits amon$ the contractin$ parties"
In the case at bar, all elements are undoubtedly present" #dmittedly, petitioners ha)e a$reed
to and did, contribute money and property to a common fund" 8heir purpose was to en$a$e
in real estate transactions for monetary $ain and then di)ide the same amon$ themsel)es"
REASONS:
1" the common fund bein$ created purposely not somethin$ already found in eistence2
3" the lots thus ac,uired not bein$ de)oted to residential purposes or to other personal uses
of petitioners2
3" such properties ha)in$ been under the mana$ement of one person with full power to
lease, to collect rents, to issue receipts, to brin$ suits, to si$n letters and contracts and to
endorse notes and checks2
<" petitioners di)idin$ Ie,ually the income of the buildin$ after deductin$ the epenses of
operation and maintenance thereof2
I=or purposes of the ta on corporations, our :ational Internal 4e)enue Code, include these
partnerships M with the eception only of duly re$istered $eneral co-partnerships within the
pur)iew of the term Icorporation"I It is, therefore, clear to our mind that petitioners herein
constitute a partnership, insofar as said Code is concerned, and are sub1ect to the income
ta for corporations"I
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Cas! Di%!s#: R!y!s s. CIR :2? SCRA 3=7;
FACTS:
1" Petitioners =lorencio and #n$el 4eyes, father and son, purchased a lot and buildin$ for P
;3.,>>>">>"
3" 8he amount of P 3-.,>>>">> was paid"
3" 8he balance of P <5>,>>>">> was left, which represents the mort$a$e obli$ation of the
)endors with the China 0ankin$ Corporation, which mort$a$e obli$ations were assumed by
the )endees"
<" 8he initial payment of P 3-.,>>>">> was shared e,ually by the petitioners"
." #t the time of the purchase, the buildin$ was leased to )arious tenants, whose ri$hts
under the lease contracts with the ori$inal owners, the purchaser, petitioners herein, a$reed
to respect"
5" Petitioners di)ided e,ually the income of operation and maintenance"
-" 8he $ross income from rentals of the buildin$ amounted to about P 9>,>>>">> annually"
;" #n assessment was made a$ainst petitioners by the CI4"
9" 8he assessment sou$ht to be reconsidered was futile"
1>" On appeal to the Court of 8a #ppeals, the C8# ruled that petitioners are liable for the
income ta due NOPfrom the partnership formedNO by petitioners"
ISSUE:
#re petitioners sub1ect to the ta on corporations pro)ided for in the :ational Internal
4e)enue CodeQ
HE)D:
#fter referrin$ to another section of the :I4C, which eplicitly pro)ides that the term
corporations NOPincludes partnershipsNO and then to #rticle 1-5- of the Ci)il Code of the
Philippines, definin$ what a contract of partnership is, the opinion $oes on to state that
NOPthe essential elements of a partnership are two, namely+
a( an a$reement to contribute money, property or industry to a common fund2 and
b( intent to di)ide the profits amon$ the contractin$ parties"
8he first element is undoubtedly present in the case, for, admittedly, petitioners ha)e a$reed
to , and did, contribute money and property to a common fund"
Gence, the issue narrows down to their intent in actin$ as they did"
9pon consideration of all the facts and circumstances surroundin$ the case, it was
determined that their purpose was to en$a$e in real estate transaction for monetary $ain
and then di)ide the same amon$ themsel)es, hence taable"
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NO DIGEST FOR FORTIS 1S HERMANOS
S9))ABUS
1" CIFIA P4OC@J94@, @44O42 ?9J%&@:82 4@F@4S#A" M
@rror not pre1udicial is no $round for the re)ersal of a 1ud$ment" 'Sec" .>3,Code of Ci)il
Procedure"(
3" P#48:@4SGIP2 &#:#%@42 0OO**@@P@42 CO:84#C82F#AIJI8C" M
8he $eneral mana$er of a $eneral partnership has authority to employ a bookkeeper, and a
contract thus made in 19>>was )alid, thou$h not in writin$"
3"CO:84#C82 0OO**@@P@42 S#A#4C" M
0y the terms of thecontract the salary of the bookkeeper was to be . per cent of the
netprofits of the business+ Geld, 8hat this contract did not make thebookkeeper a partner"
<"CIFIA P4OC@J94@2 #C8IO:2 P#48:@4SGIP" M
4 | P a g e
In an action a$ainst a partnership to reco)er a debt due from it to the plaintiff, section 3;3,
para$raph -, of the Code of Ci)il Procedure does not prohibit the plaintiff from testifyin$ to a
con)ersation between himself and a then partner who had died prior to the trial of theaction"
."#%@:82 JIS094S@&@:8S" M In an action by an a$ent to reco)er the amount of certain
disbursements and not compensation for ser)ice, the article of the Ci)il Code applicable to
the case is article 1-3;, and not article 1-11
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NO DIGEST FOR GATCHA)IAN 1S CIR
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FORMA) RE@UIREMENTS :ARTS. 3443&347?&3442& 3448&373>;
S+s Dalion . CA :3==A;
P!#i#ion!(s: S+o$s!s DalionR!s+on*!n#s:
CA an* Sab!saB!& '(.Pon!n#!: M!*ial*!a& '.
Doc#(in!: # contract of sale is a consensual contract, which means that the sale is perfected
by mere consent" :o particular form isre,uired for its )alidity"
S-o(# !(sion:
# land was re$istered in Jalion!s name" Ge alle$edly sold this to Sabesa1e" Jalion
denies the sale e)er happened 'sayin$ his si$nature was for$ed( and also says that assumin$
the si$nature was )alid, sale is still in)alid because it was not
eecuted in a public document" SC says Jalion!s ar$ument is wron$" In a contract of sale, no
part icular form is re,uired"
# land in Southern Aeyte was declared in the name of Se$undo Jalion" Sabesa1e sued to
reco)er ownership this landbased on a pri)ate document of absolute sale, alle$edly eecuted
by Se$undo Jalion"
Jalion, howe)er, denied the sale, sayin$ that+
O 8he document was fictitious
O Gis si$nature was a for$ery, and
O 8hat the land is con1u$al property, which he and his wife ac,uired in 195> from Saturnina
Sabesa1e ase)idenced by the I@scritura de Fenta #bsoluta"I
8he spouses denied the claims of Sabesa1e that after eecutin$ a deed of sale o)er the parcel
of land, they had pleadedwith Sabesa1e to be allowed to administer the land because Jalion
did not ha)e li)elihood"
Spouses Jalion admitted, howe)er, administerin$ . parcels of land in Southern Aeyte, which
belon$ed to AeonardoSabesa1e, $randfather of Sabesa1e, who died in 19.5"
8he Jalions ne)er recei)ed their a$reed 1>/ and 1./ commission on the sales of copra and
abaca"
Sabesa1eKs suit, they say, was intended merely to harassand forestall JalionKs threat to sue
for these unpaid commissions"
8C decided in fa)or of Sabesa1e and ordered the Jalions to deli)er the parcel of land in a
public document"
C# affirmed"
Iss$!:
Bas the contract of sale )alidQ Is a public document needed for transfer of ownershipQ
H!l*:
:o"
Ra#io: R!: ali*i#y o" #-! con#(ac#
People who witnessed the eecution of the deed positi)ely testified on its authenticity"
8hey stated that it had been eecuted and si$ned by the si$natories"4e+ Public document
8he pro)ision of :CC 13.; on the necessity of a public document is only for con)enience, not
for )alidity or enforceability"
8hat this be embodied in a public instrument is not a re,uirement for the )alidity of a
contract of sale of a parcel of land
Dalion a(%$!*:
O 8hat the sale is in)alid because it is embodied in a pri)ate document"
O 8hat Iacts and contracts which ha)e for their ob1ect the creation, transmission,
modification or etinction of realri$hts o)er immo)able property must appear in a public
instrument"I ':CC 13.; par" 1(
# contract of sale is a consensual contract, which means that the sale is perfected by mere
consent"
O :o particular form is re,uired for its )alidity"
9pon perfection of the contract, the parties may reciprocally demand performance ':CC
1<-., :CC(, i"e", the )endee may compel transfer of ownership of the ob1ect of the sale, and
the )endor may re,uire the )endee topay the thin$ sold ':CC 1<.;("
8he trial court thus ri$htly and le$ally ordered Jalion to deli)er to Sabesa1e the parcel of
land and to eecutecorrespondin$ formal deed of con)eyance in a public document"
5 | P a g e
9nder :CC 1<9;, when the sale is made throu$h a public instrument, the eecution is
e,ui)alent to the deli)ery of the thin$"
O Jeli)ery may either be actual 'real( or constructi)e" 8hus deli)ery of a parcel of land may
be done by placin$the )endee in control and possession of the land 'real( or by embodyin$
the sale in a public instrument 'constructi)e("
D!cision a""i(,!*.
2222222222
S+o$s!s Dalion s. CA
372 SCRA 742

Fac#s:

On &ay 3;, 19-3, Sabesa1e sued to reco)er ownership of a parcel of land, based on a
pri)ate document of absolute sale, dated ?uly 1, 195., alle$edly eecuted by Jalion, who,
howe)er denied the fact of sale, contendin$ that the document sued upon is fictitious, his
si$nature thereon, a for$ery, and that sub1ect land is con1u$al property, which he and his
wife ac,uired in 195> from Saturnina Sabesa1e as e)idenced by the I@scritura de Fenta
#bsolutaI" 8he spouses denied claims of Sabesa1e that after eecutin$ a deed of sale o)er
the parcel of land, they had pleaded with Sabesa1e, their relati)e, to be allowed to administer
the land because Jalion did not ha)e any means of li)elihood" 8hey admitted, howe)er,
administerin$ since 19.;, fi)e parcels of land in So$od, Southern Aeyte, which belon$ed to
Aeonardo Sabesa1e, $randfather of Sabesa1e, who died in 19.5" 8hey ne)er recei)ed their
a$reed 1>/ and 1./ commission on the sales of copra and abaca, respecti)ely" Sabesa1eKs
suit, they countered, was intended merely to harass, preempt and forestall JalionKs threat to
sue for these unpaid commissions"
Iss$!:
Bhether or not the contract of sale of parcel of land is )alid"
R$lin%:
No. # contract of sale is a consensual contract, which means that the sale is perfected
by mere consent" :o particular form is re,uired for its )alidity" 9pon perfection of the
contract, the parties may reciprocally demand performance '#rt" 1<-., :CC(, i"e", the
)endee may compel transfer of ownership of the ob1ect of the sale, and the )endor may
re,uire the )endee to pay the thin$ sold '#rt" 1<.;, :CC("
8he trial court thus ri$htly and le$ally ordered Jalion to deli)er to Sabesa1e the parcel of
land and to eecute correspondin$ formal deed of con)eyance in a public document" 9nder
#rt" 1<9;, :CC, when the sale is made throu$h a public instrument, the eecution thereof is
e,ui)alent to the deli)ery of the thin$" Jeli)ery may either be actual 'real( or constructi)e"
8hus deli)ery of a parcel of land may be done by placin$ the )endee in control and
possession of the land 'real( or by embodyin$ the sale in a public instrument 'constructi)e("
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NO DIGEST FOR ANGE)ES 1S CA
22222222222222222222
TORRES s. COURT OF APPEA)S
G.R. No. 38?>>=& D!c!,b!( =& 3===
Fac#s:
Petitioners 8orres and 0arin$ entered into a 1oint )enture a$reement with pri)ate respondent
&anuel 8orres for the de)elopment of a parcel of land into a subdi)ision" 8he pro1ect,
howe)er, did not push throu$h and the land was subse,uently foreclosed by the creditor-
bank"
Aater on, petitioners filed a ci)il case a$ainst pri)ate respondent for dama$es for the
latter!s mismana$ement and lack of skills" 4espondent court, in affirmin$ the lower court
ruled that petitioners and respondent had formed a partnership for the de)elopment of the
land and thus, must bear the loss proportionately" On appeal to the Supreme Court,
petitioners deny the eistence of a partnership contendin$ that their 1oint )enture a$reement
is )oid since they did not comply with #rticle 1--3 of the Ci)il Code which re,uired an
in)entory of the real property to be contributed in the partnership.
Iss$!:
Is the in)entory of real property contributed in the partnership necessary for the )alidity of
the partnership a$reementQ
H!l*:
Be clarify" #rticle 1--3 of the Ci)il Code was intended primarily to protect third persons"
8hus, the eminent #rturo 8olentino states that under the aforecited pro)ision which is a
complement of #rticle 1--1, 6the eecution of a public instrument would be useless if there
is no in)entory of the property contributed, because without its desi$nation and description,
they cannot be sub1ect to inscription in the 4e$istry of Property, and their contribution
cannot pre1udice third persons" 8his will result in fraud to those who contract with the
partnership with the belief in the efficacy of the $uaranty in which the immo)ables may
consist" 8hus, the contract is declared )oid by law when no such in)entory is made"7 8he
case at bar does not in)ol)e third parties who may be pre1udiced"
In short, the alle$ed nullity of the partnership will not pre)ent courts from
considerin$ the ?oint Fenture #$reement an ordinary contract from which the parties! ri$hts
and obli$ations to each other may be inferred and enforced"
EEEEEEEEEEEEEEEEEEEE
ANTONIA TORRES assis#!* by -!( -$sban*& ANGE)O TORRESC an* EMETERIA
BARING& +!#i#ion!(s& s. COURT OF APPEA)S an* MANUE) TORRES& (!s+on*!n#s.
FACTS:
6 | P a g e
8his is a petition for 4e)iew on Certiorari for the decision of the Court of #ppeals affirmin$
the decision of the 8rial Court in fa)our of herein respondent and denyin$ reconsideration"
Sisters #ntonia 8orres and @meteria 0arin$, petitioners, entered into a "joint venture
agreement" with 4espondent &anuel 8orres for the de)elopment of a parcel of land into a
subdi)ision" 8hey eecuted a Jeed of Sale co)erin$ the said parcel of land in fa)or of
respondent, who then had it re$istered in his name" 0y mort$a$in$ the property, respondent
obtained from @,uitable 0ank a loan of P<>,>>> which was to be used for the de)elopment of
the subdi)ision" All three of them also agreed to share the proceeds from the sale of the
subdivided lots.
8he pro1ect did not push throu$h, and the land was subse,uently foreclosed by the bank"
4espondent used the loan to implement the #$reement, amon$ others are+ effect the sur)ey
and subdi)ision of the lots2 appro)al of the subdi)ision pro1ect with Aapu Aapu City Council2
ad)ertisement in the local newspaper2 construction of roads, curbs and $utters2 and
construction of 5 low cost housin$ units"
4espondent claimed that the subdi)ision pro1ect failed, howe)er, because petitioners and
their relati)es had separately caused the annotations of ad)erse claims on the title to the
land, which e)entually scared away prospecti)e buyers" Jespite his re,uests, petitioners
refused to cause the clearin$ of the claims, thereby forcin$ him to $i)e up on the pro1ect"
Petitioners filed with the 48C a ci)il action a$ainst respondent" 48C ruled in fa)our of
respondent and which was later affirmed by C#"
H!nc!& #-is P!#i#ion.
ISSUE:
BO:, the C# erred in concludin$ that the a$reement entered between petitioners and
respondent was that of a 1oint )entureLpartnership"
HE)D:
A(#. 3454. 0y the contract of partnership two or more persons bind themsel)es to contribute
money, property, or industry to a common fund, with the intention of di)idin$ the profits
amon$ themsel)es"
9nder the parties #$reement, petitioners would contribute property to the partnership in the
form of land which was to be de)eloped into a subdi)ision2 while respondent would $i)e, in
addition to his industry, the amount needed for $eneral epenses and other costs"
=urthermore, the income from the said pro1ect would be di)ided accordin$ to the stipulated
percenta$e" Clearly, the contract manifested the intention of the parties to form a
partnership"
It should be stressed that the parties implemented the contract" 8hus, petitioners transferred
the title to the land to facilitate its use in the name of the respondent" On the other hand,
respondent caused the sub1ect land to be mort$a$ed, the proceeds of which were used for
the sur)ey and the subdi)ision of the land and so on" 4espondentKs actions clearly contradict
petitionersK contention that he made no contribution to the partnership" 9nder #rticle 1-5- of
the Ci)il Code, a partner may contribute not only money or property, but also industry"
&oreo)er, petitioners contend that they cannot be bound by the contract"
#rt" 131." Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been epressly stipulated but also to all the
conse,uences which, accordin$ to their nature, may be in keepin$ with $ood faith, usa$e and
law"
It is undisputed that petitioners are educated and are thus presumed to ha)e understood the
terms of the contract they )oluntarily si$ned" If it was not in consonance with their
epectations, they should ha)e ob1ected to it and insisted on the pro)isions they wanted"
Courts are not authoriHed to etricate parties from the necessary conse,uences of their acts,
and the fact that the contractual stipulations may turn out to be financially disad)anta$eous
will not relie)e parties thereto of their obli$ations" 8hey cannot now disa)ow the relationship
formed from such a$reement due to their supposed misunderstandin$ of its terms"
Aastly, claimin$ that respondent was solely responsible for the failure of the subdi)ision
pro1ect, petitioners maintain that he should be made to pay dama$es e,ui)alent to 5>
percent of the )alue of the property, which was their share in the profits under the ?oint
Fenture #$reement"
Be are not persuaded" 8rue, the Court of #ppeals G@AJ that petitionersK acts were not the
cause of the failure of the pro1ect" 0ut it also ruled that neither was respondent responsible
therefor" In imputin$ the blame solely to him, petitioners failed to $i)e any reason why we
should disre$ard the factual findin$s of the appellate court relie)in$ him of fault" #ccordin$ly,
we find no re)ersible error in the C#Ks rulin$ that petitioners are not entitled to dama$es"
0HEREFORE& #-! P!#i#ion is -!(!by DENIED an* #-! c-all!n%!* D!cision
AFFIRMED. Cos#s a%ains# +!#i#ion!(s.
22222222222222
OB)IGATIONS OF PARTNERS TO ONE ANOTHER
FIDUCIAR9 DUT9:
E1ANGE)ISTA D CO . ABAD SANTOS :G.R. No. 8357?C '$n! 27& 3=48;
FACTS:
On October 9, 19.< a co-partnership was formed under the name of I@)an$elista R Co"I On
?une -, 19.. the #rticles of Co-partnership was amended as to include herein respondent,
@strella #bad Santos, as industrial partner, with herein petitioners Jomin$o C" @)an$elista,
?r", Aeonardo #tienHa #bad Santos and Conchita P" :a)arro, the ori$inal capitalist partners,
7 | P a g e
remainin$ in that capacity, with a contribution of P1-,.>> each" 8he amended #rticles
pro)ided, inter alia, that Ithe contribution of @strella #bad Santos consists of her industry
bein$ an industrial partnerI, and that the profits and losses Ishall be di)ided and distributed
amon$ the partners """ in the proportion of ->/ for the first three partners, Jomin$o C"
@)an$elista, ?r", Conchita P" :a)arro and Aeonardo #tienHa #bad Santos to be di)ided amon$
them e,ually2 and 3>/ for the fourth partner @strella #bad Santos"I
On Jecember 1-, 1953 herein respondent filed suit a$ainst the three other partners in the
Court of =irst Instance of &anila, alle$in$ that the partnership, which was also made a party-
defendant, had been payin$ di)idends to the partners ecept to her2 and that
notwithstandin$ her demands the defendants had refused and continued to refuse and let
her eamine the partnership books or to $i)e her information re$ardin$ the partnership
affairs to pay her any share in the di)idends declared by the partnership" She therefore
prayed that the defendants be ordered to render accountin$ to her of the partnership
business and to pay her correspondin$ share in the partnership profits after such accountin$,
plus attorneyKs fees and costs"
ISSUE:
Bhether or not #bad Santos is an industrial partner and is entitled to the shares of the
partnershipQ
HE)D:
Ces" It is not disputed that the pro)ision a$ainst the industrial partner en$a$in$ in business
for himself seeks to pre)ent any conflict of interest between the industrial partner and the
partnership, and to insure faithful compliance by said partner with this prestation" 8hat
appellee has faithfully complied with her prestation with respect to appellants is clearly
shown by the fact that it was only after filin$ of the complaint in this case and the answer
thereto appellants eercised their ri$ht of eclusion under the codal art 1ust mentioned by
alle$in$ in their Supplemental #nswer, subse,uent to the filin$ of defendantsK answer to the
complaint, defendants reached an a$reement whereby the herein plaintiff been ecluded
from, and depri)ed of, her alle$ed share, interests or participation, as an alle$ed industrial
partner, in the defendant partnership andLor in its net profits or income, on the $round
plaintiff has ne)er contributed her industry to the partnership, instead she has been and still
is a 1ud$e of the City Court 'formerly &unicipal Court( of the City of &anila, de)otin$ her
time to performance of her duties as such 1ud$e and en1oyin$ the pri)ile$e and emoluments
appertainin$ to the said office, aside from teachin$ in law school in &anila, without the
epress consent of the herein defendantsK" Ga)in$ always knows as a appellee as a City
1ud$e e)en before she 1oined appellant company as an industrial partner, why did it take
appellants many yearn before ecludin$ her from said company as afore,uoted alle$ationsQ
#nd how can they reconcile such eclusi)e with their main theory that appellee has ne)er
been such a partner because I8he real a$reement was to $rant the appellee a share of 3>/
of the net profits which the appellant partnership may realiHe from ?une -, 19.., until the
mort$a$e of P3>,>>>">> obtained from the 4ehabilitation =inance Corporal shall ha)e been
fully paid"
EEEEEEEEEEEEEEE
PROPERT9 RIGHTS OF A PARTNER :ART. 373A;
RIGHTS IN SPECIFIC PARTNERSHIP PROPERT9 :ART. 3733;
Ca#alan 1s. Ga#c-alian
3A> P-il 324A
G.R. No. )6335?7 A+(il 22& 3=>=
Fac#s:
Catalan and %atchalian are partners" 8hey mort$a$ed two lots to Jr" &ara)e
to$ether with the impro)ements thereon to secure a credit from the latter" 8he partnership
failed to pay the obli$ation" 8he properties were sold to Jr" &ara)e at a public auction"
Catalan redeemed the property and he contends that title should be cancelled and a new one
must be issued in his name"
Iss$!:
Jid Catalan!s redemption of the properties make him the absolute owner of the
landsQ

R$lin%:
:o" 9nder #rticle 1;>- of the :CC e)ery partner becomes a trustee for his copartner with
re$ard to any benefits or profits deri)ed from his act as a partner" Conse,uently, when
Catalan redeemed the properties in ,uestion, he became a trustee and held the same in trust
for his copartner %atchalian, sub1ect to his ri$ht to demand from the latter his contribution to
the amount of redemption"
EEEEEEEEEEEEEEEEEEE
PARTICIPATION IN MANAGEMENT
Uni#!* S#a#!s s E$s!bio Cla(in
7 Phil 504 Business Organization Partnership, Agency, Trust Co-Partners
ia!ility "isappropriation
FACTS:
Sometime before 191>, Pedro Aarin formed a partnership with Pedro 8aru$, @usebio Clarin
and Carlos de %uHman" Aarin, bein$ the capitalist, a$reed to contribute P1-3">> to the
partnership and the three others shall use said fund to trade man$oes" 8he three industrial
partners bou$ht man$oes and sell them and they earned P3>3">> but they failed to $i)e
Aarin!s share of the profits" Aarin char$ed them with the crime of estafa, but the pro)incial
fiscal filed an information only a$ainst @usebio Clarin in which he accused him of
8 | P a g e
appropriatin$ to himself not only the P1-3 but also the share of the profits that belon$ed to
Aarin, amountin$ to P1.".>" Clarin was e)entually con)icted"
ISSUE:
Bhether or not the con)iction is correct"
HE)D:
:o" 8he P1-3">> ha)in$ been recei)ed by the partnership, the business commenced and
profits accrued, the action that lies with the partner who furnished the capital for the
reco)ery of his money is not a criminal action for estafa, but a ci)il one arisin$ from the
partnership contract for a li,uidation of the partnership and a le)y on its assets if there
should be any"
8he then Penal Code pro)ides that those who are $uilty of estafa are those 6who, to the
pre1udice of another, shall appropriate or misapply any money, $oods, or any kind of
personal property which they may ha)e recei)ed as a deposit on commission for
administration or in any other producin$ the obli$ation to deli)er or return the same,7 'as,
for eample, in commodatum, precarium, and other unilateral contracts which re,uire the
return of the same thin$ recei)ed( does not include money recei)ed for a partnership2
otherwise the result would be that, if the partnership, instead of obtainin$ profits, suffered
losses, as it could not be held liable ci)illy for the share of the capitalist partner who reser)ed
the ownership of the money brou$ht in by him, it would ha)e to answer to the char$e of
estafa, for which it would be sufficient to ar$ue that the partnership had recei)ed the money
under obli$ation to return it"
EEEEEEEEEEEEEEEEEEE

ACCESS TO PARTNERSHIP BOOKS
ANTONIO PARDO .THE HERCU)ES )UMBER an* IGNACIO FERRER
193< L Street L 4i$hts and obli$ations of the partners amon$ themsel)es S 0ooks,
information, accounts
FACTS
#ntonio Pardo TGercules Aumber Company stockholderU seeks to obtain a writ of
,an*a,$s
to compel the companyand its actin$ secretary I$nacio =errer to permit him TPardoU and his
duly authoriHed a$ent and representati)e toeamine the
company!s
records and business transactions"
T-! ,ain %(o$n* $+on .-ic- #-! *!"!ns! o" #-! co,+any a++!a(s #o b! (!s#!* -as
(!"!(!nc! #o #-! #i,!& o(#i,!s& .i#-in .-ic- #-! (i%-# o" ins+!c#ion ,ay b!
!E!(cis!*.

A(#icl! 3A o" #-! By6la.s o" #-! co,+any
I@)ery shareholder may eamine the books of the company and other documents pertainin$
to thesame upon the days which the board of directors shall annually fi"I
Boa(* R!sol$#ion +ass!* a# #-! *i(!c#o(sF ,!!#in% -!l* on 35 F!b($a(y 3=2?
8he board also resol)ed to call the usual $eneral 'meetin$ of shareholders( for &arch 3> of
thepresent year, with notice to the shareholders that the books of the company are at their
dispositionfrom the 1.th to 3.th of the same month for eamination, in appropriate hours"
ISSUES D HO)DING
1( BO: the board resolution constitutes a lawful restriction on the ri$ht conferred by statute"
NO
3( BO: Pardo lost his ri$ht to inspection and eamination for the year, since he has not
a)ailed himself of the permission Tto inspect the company!s books and transactions within
the 1> days defined in the board resolution"
NO
3( BO: the shareholder!s mo ti)e in eercisin$ this ri$ht is material"
NO
RATIO
8he basis o" (i%-# o" ins+!c#ion is S!c. >3 o" Ac# No. 3?>=
TCorporation AawU" 1 In Philpotts )" Philippine&anufacturin$ Co", and 0erry
, it was held that the ri$ht of eamination there conceded to the stockholder may
beeercised either by a stockholder in person or by any duly authoriHed a$ent or
representati)e"
I# ,ay b! a*,i##!* #-a# #-! o""icials in c-a(%! o" a co(+o(a#ion ,ay *!ny
ins+!c#ion .-!n so$%-# a# $n$s$al-o$(s o( $n*!( o#-!( i,+(o+!( con*i#ionsC b$#
n!i#-!( #-! !E!c$#i! o""ic!(s no( #-! boa(* o" *i(!c#o(s -a!#-! +o.!( #o *!+(i! a
s#oc/-ol*!( o" #-! (i%-# al#o%!#-!(.

A by6la. $n*$ly (!s#(ic#in% #-! (i%-# o" ins+!c#ionis $n*o$b#!*ly inali*.
9nder a statute similar to our own it has been held that the statutory ri$ht of inspection
is notaffected by the adoption by the board of directors of a resolution pro)idin$ for the
closin$ of transfer books thirty daysbefore an election"Our statute declares that the ri$ht of
inspection can be eercised Iat reasonable hours"I
9 | P a g e
T-is ,!ans a# (!asonabl!-o$(s on b$sin!ss *ays #-(o$%-o$# #-! y!a(& an* no#
,!(!ly *$(in% so,! a(bi#(a(y +!(io* o" a "!. *aysc-os!n by #-!
*i(!c#o(s.A**i#ional iss$!: T-! ,o#i!s #-a# +(o,+#!* Pa(*o #o ,a/! ins+!c#ion
It is alle$ed that the information which Pardo seeks is desired for ulterior purposes in
connection with a competiti)efirm with which Pardo is alle$ed to be connected" It is also
insisted that one of Pardo!s purposes is to obtain e)idencepreparatory to the institution of an
action, which he means to brin$ a$ainst the company re+ a contract of employmentwhich
once eisted between the corporation and himself"
T-!s! s$%%!s#ions a(! !n#i(!ly a+a(# "(o, #-! iss$! #-! ,o#i! o" #-! s-a(!-ol*!(
!E!(cisin% #-! (i%-# is i,,a#!(ial.

0(i# o" ,an*a,$s .ill iss$!
NOTE:
S!c#ion >3.
#ll business corporations shall keep and carefully preser)e a record of all business
transactions, and a minute of allmeetin$s of directors, members, or stockholders, in which
shall be set forth in detail the time and place of holdin$ the meetin$, howauthoriHed, the
notice $i)en, whether the meetin$ was re$ular or special, if special its ob1ect, those present
and absent, and e)eryact done or ordered done at the meetin$" On the demand of any
director, member, or stockholder, the time when any director,member, or stockholder entered
or left the meetin$ must be noted on the minutes, and on a similar demand, the yeas and
naysmust be taken on any motion or proposition and a record thereof carefully made" 8he
protest of any director, member, orstockholder on any action or proposed action must be
recorded in full on his demand"8he record of all business transactions of the corporation and
the minutes of any meetin$ shall be open to the inspectionof any director, member, or
stockholder of the corporation at reasonable hours"
EEEEEEEEEEEEEEEEEEEEEEEEEEEE
DAN FUE )EUNG& +!#i#ion!(& s. HON. INTERMEDIATE APPE))ATE COURT an*
)EUNG 9IU& (!s+on*!n#s.
FACTS:
8his case ori$inated from a complaint filed by respondent Aeun$ Ciu with the then Court of
=irst Instance of &anila, 0ranch II to reco)er the sum e,ui)alent to twenty-two percent
'33/( of the annual profits deri)ed from the operation of Sun Bah Panciteria since October,
19.. from petitioner Jan =ue Aeun$"
8he Sun Bah Panciteria, a restaurant, located at =lorentino 8orres Street, Sta" CruH, &anila,
was established sometime in October, 19.." It was re$istered as a sin$le proprietorship and
its licenses and permits were ISS9@d to and in fa)or of petitioner Jan =ue Aeun$ as the sole
proprietor" 4espondent Aeun$ Ciu adduced e)idence durin$ the trial of the case to show that
Sun Bah Panciteria was actually a partnership and that he was one of the partners ha)in$
contributed P<,>>>">> to its initial establishment"
8he pri)ate respondentKs e)idence is summariHed as follows+
#bout the time the Sun Bah Panciteria started to become operational, the pri)ate respondent
$a)e P<,>>>">> as his contribution to the partnership" 8his is e)idenced by a receipt
identified as @hibit I#I wherein the petitioner acknowled$ed his acceptance of the
P<,>>>">> by affiin$ his si$nature thereto" 8he pri)ate respondent identified the si$nature
on the receipt as that of the petitioner '@hibit #-3( because it was affied by the latter in his
'pri)ate respondentsKs( presence" Bitnesses So Sia and #ntonio #h Gen$ corroborated the
pri)ate respondentKs testimony to the effect that they were both present when the receipt
'@hibit I#I( was si$ned by the petitioner" So Sia further testified that he himself recei)ed
from the petitioner a similar receipt '@hibit J( e)idencin$ deli)ery of his own in)estment in
another amount of P<,>>>">>" #n eamination was conducted by the PC Crime Aaboratory on
orders of the trial court $rantin$ the pri)ate respondentKs motion for eamination of certain
documentary ehibits" 8he si$natures in @hibits I#I and IJI when compared to the
si$nature of the petitioner appearin$ in the pay en)elopes of employees of the restaurant,
namely #h Gen$ and &aria Bon$ '@hibits G, G-1 to G-3<( showed that the si$natures in the
two receipts were indeed the si$natures of the petitioner" llcd
=urthermore, the pri)ate respondent recei)ed from the petitioner the amount of P13,>>>">>
co)ered by the latterKs @,uitable 0ankin$ Corporation Check :o" 133;9<->-0 from the profits
of the operation of the restaurant for the year 19-<" Bitness 8eodulo JiaH, Chief of the
Sa)in$s Jepartment of the China 0ankin$ Corporation testified that said check '@hibit 0(
was deposited by and duly credited to the pri)ate respondentKs sa)in$s account with the
bank after it was cleared by the drawee bank, the @,uitable 0ankin$ Corporation"
8he petitioner denied ha)in$ recei)ed from the pri)ate respondent the amount of P<,>>>">>"
Ge contested and impu$ned the $enuineness of the receipt '@hibit J(" Gis e)idence is
summariHed as follows+ 8he petitioner did not recei)e any contribution at the time he started
the Sun Bah Panciteria" Ge used his sa)in$s from his salaries as an employee at Camp
Stotsenber$ in Clark =ield and later as waiter at the 8oho 4estaurant amountin$ to a little
more than P3,>>>">> as capital in establishin$ Sun Bah Panciteria" 8o bolster his contention
that he was the sole owner of the restaurant, the petitioner presented )arious $o)ernment
licenses and permits showin$ the Sun Bah Panciteria was and still is a sin$le proprietorship
solely owned and operated by himself alone" =ue Aeun$ also flatly denied ha)in$ ISS9@d to
the pri)ate respondent the receipt '@hibit %( and the @,uitable 0ankin$ CorporationKs Check
:o" 133;9<-> 0 in the amount of P13,>>>">> '@hibit 0("
#s between the conflictin$ e)idence of the parties, the trial court $a)e credence to that of
the plaintiffKs" Gence, the court ruled in fa)or of the pri)ate respondent"
Plaintiff also asked for a motion for reconsideration which was $ranted by the court the
pertinent portion reads as follows+ I=O4 #AA 8G@ =O4@%OI:% CO:SIJ@4#8IO:S, the motion
for reconsideration filed by the plaintiff, which was $ranted earlier by the Court, is hereby
reiterated and the decision rendered by this Court on September 3>, 19;>, is hereby
amended" 8he dispositi)e portion of said decision should read now as follows+
IBG@4@=O4@, 1ud$ment is hereby rendered, orderin$ the plaintiff 'sic( and a$ainst the
defendant, orderin$ the latter to pay the former the sum e,ui)alent to 33/ of the net profit
of P;,>>>">> per day from the time of 1udicial demand, until fully paid, plus the sum of
P.,>>>">> as and for attorneyKs fees and costs of suit"I 'p" 1.>, 4ollo(
8he petitioner appealed the trial courtKs amended decision to the then Intermediate #ppellate
Court" 8he modified resolution of the appellate court is as follows+
BG@4@=O4@, 1ud$ment is rendered in fa)or of the plaintiff and a$ainst the defendant,
orderin$ the latter to pay to the former the sum e,ui)alent to 33/ of the net profit of
10 | P a g e
P;,>>>">> per day from the time of 1udicial demand, until fully Kpaid, plus the sum of
P.,>>>">> as and for attorneyKs fees and costs of suitK"
is hereby retained in full and affirmed in toto it bein$ understood that the date of 1udicial
demand is ?uly 13, 19-;"I 'pp" 1>.-1>5, 4ollo("
In the same resolution, the motion for reconsideration filed by petitioner was denied"
0oth the trial court and the appellate court found that the pri)ate respondent is a partner of
the petitioner in the settin$ up and operations of the panciteria" Bhile the dispositi)e
portions merely ordered the payment of the respondentKs share, there is no ,uestion from
the factual findin$s that the respondent in)ested in the business as a partner" Gence, the two
courts declared that the pri)ate petitioner is entitled to a share of the annual profits of the
restaurant" 8he petitioner, howe)er, claims that this factual findin$ is erroneous"
ISSUE:
Bhether or not pri)ate respondent Aeun$ Ciu is a partner of petitioner Jan =ue Aeun$ in the
establishment of the Sun Bah Panciteria and therefore should be entitled to 33/ of the
annual income of the restaurant as a)erred by the former
HE)D:
In essence, the pri)ate respondent alle$ed that when Sun Bah Panciteria was established, he
$a)e P<,>>>">> to the petitioner with the understandin$ that he would be entitled to twenty-
two percent '33/( of the annual profit deri)ed from the operation of the said panciteria"
8hese alle$ations, which were pro)ed, make the pri)ate respondent and the petitioner
partners in the establishment of Sun Bah Panciteria because #rticle 1-5- of the Ci)il Code
pro)ides that I0y the contract of partnership two or more persons bind themsel)es to
contribute money, property or industry to a common fund, with the intention of di)idin$ the
profits amon$ themsel)esI"
8herefore, the lower courts did not err in construin$ the complaint as one wherein the
pri)ate respondent asserted his ri$hts as partner of the petitioner in the establishment of the
Sun Bah Panciteria, notwithstandin$ the use of the term financial assistance therein"
Be a$ree with the appellate courtKs obser)ation to the effect that I" " " $i)en its ordinary
meanin$, financial assistance Kis the $i)in$ out of money to another without the epectation
of any returns therefromK" It connotes an e $ratia dole out in fa)or of someone dri)en into a
state of destitution" 0ut this circumstance under which the P<,>>>">> was $i)en to the
petitioner does not obtain in this case"I 'p" 99, 4ollo( 8he complaint eplicitly stated that Ias
a return for such financial assistance, plaintiff 'pri)ate respondent( would be entitled to
twenty-two percentum '33/( of the annual profit deri)ed from the operation of the said
panciteria"I 'p" 1>-, 4ollo( 8he well-settled doctrine is that the I" " " nature of the action filed
in court is determined by the =#C8S alle$ed in the complaint as constitutin$ the cause of
action"I 'Je 8a)era )" Philippine 8uberculosis Society, Inc", 113 SC4# 3<32 #l$er @lectric, Inc"
)" Court of #ppeals, 13. SC4# 3-("
8he pri)ate respondent is a partner of the petitioner in Sun Bah Panciteria" 8he re,uisites of
a partnership which are M 1( two or more persons bind themsel)es to contribute money,
property, or industry to a common fund2 and 3( intention on the part of the partners to
di)ide the profits amon$ themsel)es '#rticle 1-5-, Ci)il Code2 Culo )" Can$ Chiao Chen$, 1>5
Phil" 11>( M ha)e been established" #s stated by the respondent, a partner shares not only
in profits but also in the losses of the firm" If ecellent relations eist amon$ the partners at
the start of business and all the partners are more interested in seein$ the firm $row rather
than $et immediate returns, a deferment of sharin$ in the profits is perfectly plausible" It
would be incorrect to state that if a partner does not assert his ri$hts anytime within ten
years from the start of operations, such ri$hts are irretrie)ably lost" 8he pri)ate respondentKs
cause of action is premised upon the failure of the petitioner to $i)e him the a$reed profits in
the operation of Sun Bah Panciteria" In effect the pri)ate respondent was askin$ for an
accountin$ of his interests in the partnership"
EEEEEEEEEEEEEEEEE

G.R. No. 4A=25 'an$a(y 83& 3=7=DAN FUE )EUNG& +!#i#ion!(&s.HON.
INTERMEDIATE APPE))ATE COURT an* )EUNG 9IU& (!s+on*!n#s.
FACTS:
8he petitioner asks for the re)ersal of the decision of the #ppellate Court in which affirmed
the decision of the lower court declarin$ pri)ate respondent Aeun$ Ciu a partner of petitioner
Jan =ue Aeun$ in the business of Sun BahPanciteria and orderin$ the petitioner to pay to
the pri)ate respondent his share in the annual profits of the saidrestaurant"8his case
ori$inated from a complaint filed by respondent Aeun$ Ciu with the lower court to reco)er the
sume,ui)alent to twenty-two percent '33/( of the annual profits deri)ed from the operation
of Sun Bah Panciteria sinceOctober, 19.. from petitioner Jan =ue Aeun$"8he Sun Bah
Panciteria was re$istered as a sin$le proprietorship and its licenses and permits were issued
to and infa)or of petitioner Jan =ue Aeun$ as the sole proprietor" 4espondent Aeun$ Ciu
adduced e)idence durin$ the trial of the case to show that Sun Bah Panciteria was actually a
partnership and that he was one of the partners ha)in$contributed P<,>>>">> to its initial
establishment"Aower court ruled in fa)or of the pri)ate respondent" Petitioner appealed the
trial courtKs amended decision" Gowe)er,the ,uestioned decision was further modified and
affirmed by the appellate court" 0oth the trial court and theappellate court declared that the
pri)ate petitioner is a partner and is entitled to a share of the annual profits of therestaurant"
Gence, an appeal to the SC"8he petitioner ar$ues that pri)ate respondent etended Kfinancial
assistanceKto herein petitioner at the time of the establishment of the Sun Bah Panciteria, in
return of which pri)ate respondentalle$edly will recei)e a share in the profits of the
restaurant" It was, therefore, error for the #ppellate Court to interpretor construe Kfinancial
assistanceK to mean the contribution of capital by a partner to a partnership"
ISSUE:
BO: the pri)ate respondent is a partner of the petitioner in the establishment of Sun Bah
Panciteria"
HE)D:
In essence, the pri)ate respondent alle$ed that when Sun Bah Panciteria was established, he
$a)e P<,>>>">> to thepetitioner with the understandin$ that he would be entitled to twenty-
11 | P a g e
two percent '33/( of the annual profit deri)edfrom the operation of the said panciteria"
8hese alle$ations, which were pro)ed, make the pri)ate respondent and thepetitioner
partners in the establishment of Sun Bah Panciteria because #rticle 1-5- of the Ci)il Code
pro)ides thatI0y the contract of partnership two or more persons bind themsel)es to
contribute money, property or industry to acommon fund, with the intention of di)idin$ the
profits amon$ themsel)esI"8herefore, the lower courts did not err in construin$ the
complaint as one wherein the pri)ate respondent asserted hisri$hts as partner of the
petitioner in the establishment of the Sun Bah Panciteria, notwithstandin$ the use of the
termfinancial assistance therein"SC affirmed appellate courtVs decision and ordered the
dissolution of the partnership"
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RE)ATIONS AND DEA)INGS 0ITH THIRD PERSONS
INDI1IDUA) )IABI)IT9 OF PARTNERS FOR PARTNERSHIP ACTS
Islan* Sal!s s Uni#!* Pion!!(s G!n!(al Cons#($c#ion Co,+any !# al
Business Organization Partnership, Agency, rust !iability of Partners Pro"rata
#ondonation
FACTS:
9nited Pioneers %eneral Construction Company is a $eneral partnership formed by 0en1amin
Jaco, Janiel %uiHona, :oel Sim, #u$usto Palisoc and 4omulo Aumaui$" In 1951, 9nited
Pioneers purchased by installment a motor )ehicle from Island Sales, Inc" 9nited Pioneers
defaulted in its payment hence it was sued and the . partners were impleaded as co-
defendants"
9pon motion of Island Sales, Aumaui$ was remo)ed as a defendant"
9nited Pioneers lost the ci)il case and the trial court rendered 1ud$ment orderin$ 9nited
Pioneers to pay the outstandin$ balance plus interest and costs" It further decreed that the
remainin$ < co-defendants shall pay Island Sales in case 9nited Pioneers! property will not
be enou$h to satisfy its indebtedness to Island Sales"
ISSUE:
Bhat is the etent of the liability of the partners considerin$ that one partner was remo)ed
as a co-defendant on motion of Island SalesQ
HE)D:
8heir liability is pro-rata pursuant to #rticle 1;15 of the Ci)il Code" 0ut is should be noted
that since there were . partners when the purchase was made in behalf of the partnership,
the liability of each partner should be 1L.
th
'of the company!s obli$ation( each" 8he fact that
the complaint a$ainst Aumaui$ was dismissed, upon motion of the Island Sales, does not
unmake Aumaui$ as a $eneral partner in the company" In so mo)in$ to dismiss the
complaint, Island Sales merely condoned Aumaui$!s indi)idual liability to them"
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