BUS ORG TIPS

-Is marriage a partnership?

-If the husband and wife put up a business, is it a partnership?
-Partnership 1767 verbatim
-A and B contributed an industry both as a limited partner is it allowed?
(professional partnership)
-What if A and B are experts in sales? (No, sales is not a profession)
-Essential features of partnership
-A B and C entered into a partnership with the agreement that profits will be
donated to charity, is it a partnership?
-What if A and B excluded C from the share in profits? Is that allowed?
-1769 verbatim
-Do the shares in profits and losses need to be stipulated? what if there is no
stipulation?
-Partnership vs. Corporation
-Effect of partial lawful and partial unlawful partnership
-Partnership by estoppel
-Execution of public instrument on movable property and capital 3,00 and up; Rules

Bus Org cases:

1. Heirs of Tan Eng Kee v. CA, (GR No.) 126881, Oct 3, 2000
2. Ferdinand Santos v. Sps. Reyes, 135813, Oct 25, 2001
3. Aurelio Litonjua v. Eduardo Litonjua, 166299-300, Dec 13, 2005
4. Oscar Angeles v. Sec. of Justice, 14261, Jul 29, 2005
5. Lilibeth Suma-Chan v. Lamberto Chua, 143340, Aug 15, 2001
6. Prime Link Property v. Ma. Clarita Lazatin, 167379, Jun 27, 2006
7. Mariano Pascual v. CIR, L-78123, Oct 18, 1983
8. Dan Hue v. IAC, 70926, Jan 31, 1989
9. Marjorie Tocao v. CA, 127405, Oct 4, 2000
10. Antonia Torres v. CA, 134559, Dec 9, 1999
11. Lim Tom Lim v. P. Fishi, 136448, Nov 3, 1999
12. Evangelista & Co. v. Santos, 51 SCRA 416
13. Mobil Oil Phils. v. CFI, 40457, May 8, 1990
14. Ramnani v. CA, 196 SCRA 71

Page 1 of 22

Heirs of Tan Eng Kee vs. CA (October 3, 2000)

Facts: The heirs of Tan Eng Kee, composed of his children and his wife, claims that
their father was a partner of Tan Eng Lay in Benguet Lumber Company. Tan Eng Lay
is the brother of the petitioners' father who accordung to them entered into a
partnership with the former after the WWII were they both pooled in their money in
order to recapitalize the business. Petitioners wants to account, liquidate and wind
up the partnership as well as the equal division of the net assets of the company.
They alleged that since Tan Eng Kee was conducting the affairs of the
company/business with his brother, Gave orders to the employees, prepared orders
for the suppliers, their families beind employed in the business and that their
families lived in the same compound where the Benguet Lumber Company is found
then these establishes the existence of a partnership. They also allege that their
father was a co-owner of some 80 pieces of G.I. Sheets and that their father was
also receiving money from the company.
Benguet Lumber Company, represented by Tan Eng Lay, answered by stating that
Tan Eng Kee was merely an employee of the said company evidenced by payrolls
and the SSS coverage of petitioners' father. They also showed the registration of the
business as that of a proprietorship.
The RTC of Baguio ruled that there was a partnership between the two brothers in
the form of a joint-venture. The CA reversed the decision of the RTC.
Issue: WON Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber?
Held: No partnership was established as the evidence presented was insufficient.
Tan Eng Kee was merely an employee receiving wages. The partnership contract is
required to be in writing the capital of which exceeds P3,000 and the findings of the
lower courts reveals the absence of such contract. Co-ownership or co-possession is
not an indicium of the existence of a partnership. A demand for a periodic
accounting is evidence of a partnership which was not done by Tan Eng Kee during
his lifetime being his right if ever he was a partner. The documents presented, not
validly declared falsified by another court, further proves the non-existence of a
partnership relation between the two brothers but an employer-employee
relationship. Furthermore, petitioners did not offer or present evidence that their
father received amounts pertaining to his share in the profits of the company. The
allegations of petitioners merely shows that their father was merely involved in the
operations of Benguet Lumber but does not establish in what capacity.

Page 2 of 22

Santos VS. Spouses Reyes

FACTS:
On June 13, 1986, a lending business venture was launched by
Fernando Santos (petitioner), Nieves Reyes (respondent) and Meliton Zabat with the
agreement that Santos will be the financer and will receive the lions share of 70%
of the profit. The rest will receive 15% each.
Thereafter, Zabat was replaced by the husband of Reyes because it was discovered
that the latter was engaged in the same lending business in competition with their
partnership.
On June 5, 1987, Zabat filed a complaint for the recovery of sum of money from the
spouses Reyes claiming that the latter misappropriated funds as employees. The
spouses Reyes answered that they are not mere employees but partners of the
petitioner.
The trial court ruled in favor of Spouses Reyes and was affirmed by the Court of
Appeals.
ISSUE: WON there was a partnership established to engage in a money-lending
business.
WON the CA is correct in granting the spouses Reyes counterclaim for their share in
partnership and for damages.
HELD: As to the first ISSUE, there is an establishment of a partnership. Under the
contract of partnership, two or more persons bind themselves to contribute money,
property and industry to a common fund, with the intention of dividing the profit
among themselves. The stipulation between the petitioner and the respondent
spouses clearly shows that there is a partnership wherein the Articles of
Agreement, there are signatories that they shall share the profits of the business in
70-15-15 manner, with petitioner getting the lions share.
As to the second ISSUE, the SC found a reason to disagree with CA. exhibit 10-I
showed that the partnership earned a total income of P20,429,520 for the period of
June 13, 1986 until April 19, 1987. It did not consider the expenses sustained by the
partnership. All expenses incurred by the money-lending enterprise of the parties
must first be deducted from the total income in order to arrive at the net profit.
The respondents exhibits did not reflect the complete financial condition of the
money-lending business.

Page 3 of 22

AURELIO K. LITONJUA, JR., vs. EDUARDO K. LITONJUA, SR, et al. (G.R. Nos.
166299-300. December 13, 2005)
FACTS:
Petitioner and herein respondent are brothers. The legal dispute between them
started when, Aurelio filed a suit against his brother Eduardo alleging that, since
June 1973, he and Eduardo are into a joint venture/partnership arrangement in the
Odeon Theater business which had accumulated various assets including but not
limited to the corporate defendants and their respective assets. Also, the
substantial assets of most of the corporate defendants consist of real properties.
However, sometime in 1992, the relations between Aurelio and Eduardo became
sour so that Aurelio requested for an accounting and liquidation of his share in the
joint venture/partnership but to no avail. Petitioner has reasonable cause to believe
that respondents are transferring various real properties of the corporations
belonging to the joint venture/partnership to other parties in fraud of petitioner.
ISSUE: WON petitioner and respondent are considered partners in the
theatre, shipping and realty business.
HELD:
The instant petition is DENIED. A further examination of the allegations in the
complaint would show that petitioners contribution to the so-called
"partnership/joint venture" was his supposed share in their family business. In other
words, his contribution as a partner in the alleged partnership/joint venture
consisted of immovable properties and real rights. Lest it be overlooked, the
contract-validating inventory requirement under Article 1773 of the Civil Code
applies as long as real property or real rights are initially brought into the
partnership. In context, the more important consideration is that real property was
contributed, in which case an inventory of the contributed property duly signed by
the parties should be attached to the public instrument, else there is legally no
partnership to speak of.
Considering that the allegations in the complaint showed that petitioner contributed
immovable properties to the alleged partnership, the "Memorandum" which
purports to establish the said "partnership/joint venture" is NOT a public instrument
and there was NO inventory of the immovable property duly signed by the parties.
As such, the said "Memorandum" is null and void for purposes of establishing the
existence of a valid contract of partnership.

Page 4 of 22

Angeles VS. Sec. Of Justice

FACTS:
On November 1992, Mercado convinced Angeles spouses to enter
into a contract of antichresis (sanglaang-perde), covering 8 parcels of land planted
with fruit-bearing lanzones trees located in Laguna and owned by Ivana Sazo. The
said contract was to last for 5 years with P210,000 as consideration. Since during
only the weekends are the spouses able to go to Laguna, Mercado administered the
lands and completed the necessary paper works. Mercado gave accounting only in
1993 and stopped in the year 1995. They discovered that Mercado had put the
contract of sanglaang-perde under Mercado and his spouses names.
In Mercados counter affidavit, he alleged that there was (sosyo industrial) or
industrial partnership agreement between them and that the Angeles spouses are
the financiers and Mercado and his spouse as industrial partners. Under the
industrial agreement, capital would come from the Angeles spouses while the profit
would be divided evenly between Mercado and the Angeles spouses.
In the ruling of the Provincial Prosecution Office, it stated that the accusation of
estafa lacks enough credible evidentiary support to sustain a prima facie finding.
The Angeles spouses appealed on the Secretary of Justice. It was ruled that the
crime of estafa cannot be sustained.
ISSUE: WON a partnership existed between Mercado and the Angeles spouses.
HELD: There was an establishment of partnership between Mercado and the
Angeles spouses. There is a contract showing industrial relationship and
contribution of money and industry to a common fund, and the division of profits
between Angeles spouses and Mercado.
Furthermore, the Angeles spouses contributed money to the partnership and not
immovable property and the mere failure to register the contract of partnership
does not affect the liability of the partnership. The purpose of registration of the
COP is to give notice to third parties. Failure to register the COP, does not affect the
liability of the partnerships juridical personality. A partnership may exist even if the
partners do not use the words partner or partnership.

Lilibeth Sunga Chan vs Lamberto Chua (G.R. No. 143340

August 15, 2001)

FACTS: In 1977, Lamberto Chua verbally entered into a partnership agreement with
Jacinto L Sunga, father of petitioner, in the distribution of Shellane Liquefied
Petroleum Gas (LPG) in Manila. For business convenience, respondent and Jacinto
allegedly agreed to register the business name of their partnership, SHELLITE GAS
APPLIANCE CENTER (hereafter Shellite), under the name of Jacinto as a sole
Page 5 of 22

proprietorship. Respondent allegedly delivered his initial capital contribution of

P100,000.00 to Jacinto while the latter in turn produced P100,000.00 as his
counterpart contribution, with the intention that the profits would be equally divided
between them.
Upon Jacinto's death in the later part of 1989, his surviving wife, petitioner Cecilia
and particularly his daughter, petitioner Lilibeth, took over the operations, control,
custody, disposition and management of Shellite without respondent's consent.
Despite respondent's repeated demands upon petitioners for accounting, inventory,
appraisal, winding up and restitution of his net shares in the partnership, petitioners
failed to comply. Petitioner Lilibeth allegedly continued the operations of Shellite,
converting to her own use and advantage its properties.
On March 31, 1991, respondent claimed that after petitioner Lilibeth ran out the
alibis and reasons to evade respondent's demands, she disbursed out of the
partnership funds the amount of P200,000.00 and partially paid the same to
respondent. Petitioner Lilibeth allegedly informed respondent that the P200,000.00
represented partial payment of the latter's share in the partnership, with a promise
that the former would make the complete inventory and winding up of the
properties of the business establishment. Despite such commitment, petitioners
allegedly failed to comply with their duty to account, and continued to benefit from
the assets and income of Shellite to the damage and prejudice of respondent.
Trial court directed petitioner to render an accounting, to restitute to the partnership
all properties, assets, income and profits they misapplied and converted to their
own use and advantage, to pay the plaintiff earned but unreceived income and
profits from the partnership from 1988 to May 30, 1992, ORDERING them to wind up
the affairs of the partnership and terminate its business activities pursuant to law.
CA affirmed the decision.
ISSUES: WON there exists a partnership
HELD: Decision is affirmed.
Ratio Decidendi: A partnership may be constituted in any form, except where
immovable property of real rights are contributed thereto, in which case a public
instrument shall necessary.6 Hence, based on the intention of the parties, as
gathered from the FACTS and ascertained from their language and conduct, a verbal
contract of partnership may arise.7 The essential profits that must be proven to that
a partnership was agreed upon are (1) mutual contribution to a common stock, and
(2) a joint interest in the profits.

Primelink v Lopez (G.R. No. 167379

June 27, 2006)

Page 6 of 22

FACTS: Primelink Properties and Development Corporation (Primelink for brevity) is

a domestic corporation engaged in real estate development. Rafaelito W. Lopez is
its President and Chief Executive Officer.3
Ma. Clara T. Lazatin-Magat and her brothers, are co-owners of two (2) adjoining
parcels of landlocated in Tagaytay City and covered by Transfer Certificate of Title
(TCT) No. T-108484 of the Register of Deeds of Tagaytay City.
On March 10, 1994, the Lazatins and Primelink, represented by Lopez, in his
capacity as President, entered into a Joint Venture Agreement5 (JVA) for the
development of the aforementioned property into a residential subdivision to be
known as "Tagaytay Garden Villas." Under the JVA, the Lazatin siblings obliged
themselves to contribute the two parcels of land as their share in the joint venture.
For its part, Primelink undertook to contribute money, labor, personnel,
machineries, equipment, contractors pool, marketing activities, managerial
expertise and other needed resources to develop the property and construct therein
the units for sale to the public.
In a Letter13 dated April 10, 1997, the Lazatins, through counsel, demanded that
Primelink comply with its obligations under the JVA, otherwise the appropriate action
would be filed against it to protect their rights and interests. This impelled the
officers of Primelink to meet with the Lazatins and enabled the latter to review its
business records/papers. In another Letter14 dated October 22, 1997, the Lazatins
informed Primelink that they had decided to rescind the JVA effective upon its
receipt of the said letter. The Lazatins demanded that Primelink cease and desist
from further developing the property.
Trial court rendered a decision rescinding the Joint Venture Agreement executed
between the plaintiffs and the defendants; immediately restoring to the plaintiffs
possession of the subject parcels of land; ordering the defendants to render an
accounting of all income generated as well as expenses incurred and disbursement
made in connection with the project. CA affirmed trial courts decision rulingthat,
under Philippine law, a joint venture is a form of partnership and is to be governed
by the laws of partnership.
ISSUE: WON trial court erred in rescinding the JVA between the parties
HELD: SC affirmed appellate courts decision.
Ratio Decidendi: As a general rule, the relation of the parties in joint ventures is
governed by their agreement. When the agreement is silent on any particular
ISSUE, the general principles of partnership may be resorted to. The legal concept
of a joint venture is of common law origin. It has no precise legal definition, but it
has been generally understood to mean an organization formed for some temporary
purpose. It is, in fact, hardly distinguishable from the partnership, since elements
are similar community of interest in the business, sharing of profits and losses,
Page 7 of 22

and a mutual right of control. The main distinction cited by most opinions in
common law jurisdictions is that the partnership contemplates a general business
with some degree of continuity, while the joint venture is formed for the execution
of a single transaction, and is thus of a temporary nature. this observation is not
entirely accurate in this jurisdiction, since under the Civil Code, a partnership may
be particular or universal, and a particular partnership may have for its object a
specific undertaking. It would seem therefore that, under Philippine law, a joint
venture is a form of partnership and should thus be governed by the laws of
partnership. The Supreme Court has, however, recognized a distinction between
these two business forms, and has HELD that although a corporation cannot enter
into a partnership contract, it may, however, engage in a joint venture with others.
When the RTC rescinded the JVA on complaint of respondents based on the evidence
on record that petitioners willfully and persistently committed a breach of the JVA,
the court thereby dissolved/cancelled the partnership.54 With the rescission of the
JVA on account of petitioners fraudulent acts, all authority of any partner to act for
the partnership is terminated except so far as may be necessary to wind up the
partnership affairs or to complete transactions begun but not yet finished.55 On
dissolution, the partnership is not terminated but continues until the winding up of
partnership affairs is completed.56 Winding up means the administration of the
assets of the partnership for the purpose of terminating the business and
discharging the obligations of the partnership.

MARIANO P. PASCUAL and RENATO P. DRAGON, petitioners, vs. THE

COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS,
respondents
Facts:
On June 22, 1965, petitioners bought 2 parcels of land from Santiago Bernardino, et
al. And on May 28, 1966, they bought another 3 parcels of land from Juan Roque.
The first 2 parcels of land were sold by petitioners in 1968 to Marenir Devt
Corporation, while the 3 parcels of land were sold to petitioner Erlinda Reyes and
Maria Samson in 1970. Petitioners realized a net profit in the sale made in 1968 in
the amt of 165,224.70 while they realized a net profit of 60,000 in 1970. The
corresponding capital gains taxes were paid by petitioners in 1973 and 1974 by
availing of the tax amnesties granted in the said years.

Page 8 of 22

In 1979, Acting Commissioner Efren Plana, in his letter, assessed petitioners and
required them to pay a total of 107,101.70 as alleged deficiency corporate income
taxes for the years 1968 and 1970. Petitioners protested the assessment asserting
that they had availed of tax amnesties in 1974.
In their reply, Commissioner informed that in 1968 and 1970, petitioners as coownersd in the real estate transactions formed an unregistered partnership or joint
venture taxable as a corporation and its income was subject to the taxes prescribed
under sec24, both of the National Internal Revenue Code; that the unregistered
partnership was subject to the taxes prescribed therein; and that the availment of
tax amnesty under PD 23 did not relieve them from the liability of the unregistered
partnership. Hence petitioners were required to pay the deficiency income tax
assessed. Petitioners filed a petition for review with the respondent court of tax
appeals; the court affirmed the decision of the respondent commissioner.
Issue: whether or not an unregistered partnership was really formed by petitioners
which like a corporation was subject to corporate income tax distinct from that
imposed on the partners
Ruling:
There is no evidence that petitioners entered into an agreement to contribute
money, property, or industry to a common fund, and that they intended to divide
the profits among themselves. Respondent commisiioner just assumed these
conditions to be present on the basis of the fact that petitioners purchased certain
parcels of land and became co-owners thereof. In the instant case, petitioners
bought parcels of land in 1965, they did not sell the same nor make any
improvements thereon. In 1966, they bought another 3 parcels of land from one
seller. It was only in 1968 when they sold the two parcels of land after which they
did not make any addl or new purchase. The transactions were isolated. The
character of habituality peculiar to business transactions were not present. In the
Evangelista case, the properties were leased out to tenants for several years. The
business was under manangement of one of the partners, uch condition existed for
15years. None of those circumstances are present in the case at bar.
The sharing of returns does not in itself establish a partnership whether or not the
persons sharing therein have a joint or common right or interest in the property.
There must be a clear intent to form a partnership, the existence of a juridical
personality different from the individual partners
In the present case, there is clear evidence of co-ownership between the
petitioners. There is no adequate basis to support the proposition that they formed
an unregistered partnership..
They shared in the gross profits as co-owners and paid their capital gains taxes on
their net profits and availed of the tax amnesty thereby.
Page 9 of 22

Even assuming that such an unregistered partnership exists, since there is no such
existing unregistered partnership with a distinct personality nor with assets that can
be held liable for said deficiency corporate income tax, then petitioners xan be held
individually liable as partners for the unpaid obligation of the partnership. However,
as petitioners have availed of the benefits of tax amnesty as individual taxpayers in
these transactions, they are thereby relieved of any further tax liability arising
therefrom.

DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT

and LEUNG YIU, respondents.
FACTS: Sun Wah Panciteria, a restaurant established sometime in October 1955 in
Sta. Cruz, Manila, was registered as a single proprietorship, with licenses and
permits issued to and in favor of petitioner Dan Fue Leung. Private respondent
Leung Yiu allege that the restaurant was actually a partnership as he had
contributed P4, 000.00 to its initial establishment with the understanding that he
would be entitled to 22% of the annual profit derived from the operation of the said
panciteria. He also produced evidence that he received the amount of P12, 000.00
from the petitioner from the profits of the operation of the restaurant in 1974.
Petitioner, on the other hand, denied respondents claim and also contended lately
that it was erroneous for the courts to interpret or construe thefinancial assistance
mentioned in the private respondents complaint to mean the contribution of a
partner to a partnership. As between the conflicting evidence of the parties, the trial
court and the appellate court gave credence to the fact that private respondent is a
partner of the petitioner in the setting up and operations of the panciteria, entitling
him to his share of the annual profits of the said restaurant.
ISSUE: Is the private respondent a partner of the petitioner in the establishment of
Sun Wah Panciteria?
HELD: YES. The lower courts did not err in construing the complaint as one wherein
the private respondent asserted his rights as partner of the petitioner in the
establishment of the Sun Wah Panciteria, notwithstanding the use of the term
financial assistance therein. Given its ordinary meaning, financial assistance is the
giving out of money to another without the expectation of any returns therefrom
but this circumstance under which the P4, 000.00 was given to the petitioner does
not obtain in this case. The complaint explicitly stated that as a return for such
financial assistance, plaintiff would be entitled to 22% of the annual profit derived
from the operation of the said panciteria. The requisites of a partnership which are
1) two or more persons bind themselves to contribute money, property or industry
to a common fund and 2) intention on the partner of the partners to divide the
profits among themselves have been also established.
Page 10 of 22

MARJORIE TOCAO and WILLIAM T. BELO, petitioners, vs. COURT OF APPEALS

and NENITA A. ANAY, respondent.
RESOLUTION
The inherent powers of a Court to amend and control its processes and orders so as
to make them conformable to law and justice includes the right to reverse itself,
especially when in its honest opinion it has committed an error or mistake in
judgment, and that to adhere to its decision will cause injustice to a party litigant.1
On November 14, 2001, petitioners Marjorie Tocao and William T. Belo filed a Motion
for Reconsideration of our Decision dated October 4, 2000. They maintain that there
was no partnership between petitioner Belo, on the one hand, and respondent
Nenita A. Anay, on the other hand; and that the latter being merely an employee of
petitioner Tocao.
After a careful review of the evidence presented, we are convinced that, indeed,
petitioner Belo acted merely as guarantor of Geminesse Enterprise. This was
categorically affirmed by respondent's own witness, Elizabeth Bantilan, during her
cross-examination. Furthermore, Bantilan testified that it was Peter Lo who was the
company's financier. Thus:
Q
- You mentioned a while ago the name William Belo. Now, what is the role of
William Belo with Geminesse Enterprise?
A
- William Belo is the friend of Marjorie Tocao and he was the guarantor of the
company.
Q

What do you mean by guarantor?

A
- He guarantees the stocks that she owes somebody who is Peter Lo and he
acts as guarantor for us. We can borrow money from him.
Q

You mentioned a certain Peter Lo. Who is this Peter Lo?

Peter Lo is based in Singapore.

What is the role of Peter Lo in the Geminesse Enterprise?

He is the one fixing our orders that open the L/C.

You mean Peter Lo is the financier?

Yes, he is the financier.

Page 11 of 22

Q
And the defendant William Belo is merely the guarantor of Geminesse
Enterprise, am I correct?
A

Yes, sir2

The foregoing was neither refuted nor contradicted by respondent's evidence. It

should be recalled that the business relationship created between petitioner Tocao
and respondent Anay was an informal partnership, which was not even recorded
with the Securities and Exchange Commission. As such, it was understandable that
Belo, who was after all petitioner Tocao's good friend and confidante, would
occasionally participate in the affairs of the business, although never in a formal or
official capacity.3 Again, respondent's witness, Elizabeth Bantilan, confirmed that
petitioner Belo's presence in Geminesse Enterprise's meetings was merely as
guarantor of the company and to help petitioner Tocao.4
Furthermore, no evidence was presented to show that petitioner Belo participated in
the profits of the business enterprise. Respondent herself professed lack of
knowledge that petitioner Belo received any share in the net income of the
partnership.5 On the other hand, petitioner Tocao declared that petitioner Belo was
not entitled to any share in the profits of Geminesse Enterprise.6 With no
participation in the profits, petitioner Belo cannot be deemed a partner since the
essence of a partnership is that the partners share in the profits and losses.7
Consequently, inasmuch as petitioner Belo was not a partner in Geminesse
Enterprise, respondent had no cause of action against him and her complaint
against him should accordingly be dismissed.
As regards the award of damages, petitioners argue that respondent should be
deemed in bad faith for failing to account for stocks of Geminesse Enterprise
amounting to P208,250.00 and that, accordingly, her claim for damages should be
barred to that extent. We do not agree. Given the circumstances surrounding
private respondent's sudden ouster from the partnership by petitioner Tocao, her
act of withholding whatever stocks were in her possession and control was justified,
if only to serve as security for her claims against the partnership. However, while
we do not agree that the same renders private respondent in bad faith and should
bar her claim for damages, we find that the said sum of P208,250.00 should be
deducted from whatever amount is finally adjudged in her favor on the basis of the
formal account of the partnership affairs to be submitted to the Regional Trial Court.

WHEREFORE, based on the foregoing, the Motion for Reconsideration of petitioners

is PARTIALLY GRANTED. The Regional Trial Court of Makati is hereby ordered to
DISMISS the complaint, docketed as Civil Case No. 88-509, as against petitioner
William T. Belo only. The sum of P208,250.00 shall be deducted from whatever

Page 12 of 22

amount petitioner Marjorie Tocao shall be HELD liable to pay respondent after the
normal accounting of the partnership affairs.

ANTONIA TORRES assisted by her husband, ANGELO TORRES; and

EMETERIA BARING,petitioners, vs. COURT OF APPEALS and MANUEL
TORRES, respondents.
FACTS: This is a petition for Review on Certiorari for the decision of the Court of
Appeals affirming the decision of the Trial Court in favour of herein respondent and
denying reconsideration.
Sisters Antonia Torres and Emeteria Baring, petitioners, entered into a "joint
venture agreement"with Respondent Manuel Torres for the development of a
parcel of land into a subdivision. They executed a Deed of Sale covering the said
parcel of land in favor of respondent, who then had it registered in his name. By
mortgaging the property, respondent obtained from Equitable Bank a loan of
P40,000 which was to be used for the development of the subdivision. All three of
them also agreed to share the proceeds from the sale of the subdivided
lots.
The project did not push through, and the land was subsequently foreclosed by the
bank.
Respondent used the loan to implement the Agreement, among others are: effect
the survey and subdivision of the lots; approval of the subdivision project with Lapu
Lapu City Council; advertisement in the local newspaper; construction of roads,
curbs and gutters; and construction of 6 low cost housing units.
Respondent claimed that the subdivision project failed, however, because
petitioners and their relatives had separately caused the annotations of adverse
claims on the title to the land, which eventually scared away prospective buyers.
Despite his requests, petitioners refused to cause the clearing of the claims, thereby
forcing him to give up on the project.
Petitioners filed with the RTC a civil action against respondent. RTC ruled in favour of
respondent and which was later affirmed by CA. Hence, this Petition.
ISSUE: WON, the CA erred in concluding that the agreement entered between
petitioners and respondent was that of a joint venture/partnership.
HELD: Art. 1767. By the contract of partnership two or more persons bind
themselves to contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves.

Page 13 of 22

Under the parties Agreement, petitioners would contribute property to the

partnership in the form of land which was to be developed into a subdivision; while
respondent would give, in addition to his industry, the amount needed for general
expenses and other costs. Furthermore, the income from the said project would be
divided according to the stipulated percentage. Clearly, the contract manifested the
intention of the parties to form a partnership.
It should be stressed that the parties implemented the contract. Thus, petitioners
transferred the title to the land to facilitate its use in the name of the respondent.
On the other hand, respondent caused the subject land to be mortgaged, the
proceeds of which were used for the survey and the subdivision of the land and so
on. Respondent's actions clearly contradict petitioners' contention that he made no
contribution to the partnership. Under Article 1767 of the Civil Code, a partner may
contribute not only money or property, but also industry.
Moreover, petitioners contend that they cannot be bound by the contract.
Art. 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law.
It is undisputed that petitioners are educated and are thus presumed to have
understood the terms of the contract they voluntarily signed. If it was not in
consonance with their expectations, they should have objected to it and insisted on
the provisions they wanted.
Courts are not authorized to extricate parties from the necessary consequences of
their acts, and the fact that the contractual stipulations may turn out to be
financially disadvantageous will not relieve parties thereto of their obligations. They
cannot now disavow the relationship formed from such agreement due to their
supposed misunderstanding of its terms.
Lastly, claiming that respondent was solely responsible for the failure of the
subdivision project, petitioners maintain that he should be made to pay damages
equivalent to 60 percent of the value of the property, which was their share in the
profits under the Joint Venture Agreement.
We are not persuaded. True, the Court of Appeals HELD that petitioners' acts were
not the cause of the failure of the project. But it also ruled that neither was
respondent responsible therefor. In imputing the blame solely to him, petitioners
failed to give any reason why we should disregard the factual findings of the
appellate court relieving him of fault. Accordingly, we find no reversible error in the
CA's ruling that petitioners are not entitled to damages.

Page 14 of 22

WHEREFORE, the Petition is hereby DENIED and the challenged Decision AFFIRMED.
Costs against petitioners.

LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC (G.R. No.
136448; November 3, 1999)
FACTS: On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao
entered into a Contract dated February 7, 1990, for the purchase of fishing nets of
various sizes from the Philippine Fishing Gear Industries, Inc. (herein respondent).
They claimed that they were engaged in a business venture with Petitioner Lim Tong
Lim, who however was not a signatory to the agreement. The total price of the nets
amounted to P532,045. Four hundred pieces of floats worth P68,000 were also sold
to the Corporation.
The buyers, however, failed to pay for the fishing nets and the floats; hence, private
respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim
with a prayer for a writ of preliminary attachment. The suit was brought against the
three in their capacities as general partners, on the allegation that "Ocean Quest
Fishing Corporation" was a nonexistent corporation as shown by a Certification from
the Securities and Exchange Commission. On September 20, 1990, the lower court
ISSUEd a Writ of Preliminary Attachment, which the sheriff enforced by attaching the
fishing nets on board F/B Lourdes which was then docked at the Fisheries Port,
Navotas, Metro Manila.
ISSUE: Whether or not there was a partnership?
HELD: Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing
business, which they started by buying boats worth P3.35 million, financed by a
loan secured from Jesus Lim who was petitioner's brother. These boats, the
purchase and the repair of which were financed with borrowed money, fell under the
term "common fund" under Article 1767. The contribution to such fund need not be
cash or fixed assets; it could be an intangible like credit or industry. That the parties
agreed that any loss or profit from the sale and operation of the boats would be
divided equally among them also shows that they had indeed formed a partnership.
Given the preceding FACTS, it is clear that there was, among petitioner, Chua and
Yao, a partnership engaged in the fishing business. They purchased the boats, which
constituted the main assets of the partnership, and they agreed that the proceeds
from the sales and operations thereof would be divided among them.

Page 15 of 22

EVANGELISTA & CO v. ABAD SANTOS (G.R. No. 31684; June 28, 1973)
Doctrine:
It is not disputed that the provision against the industrial partner
engaging in business for himself seeks to prevent any conflict of interest between
the industrial partner and the partnership, and to insure faithful compliance by said
partner with this prestation.
Facts:
On Octorber 09, 1954, a co-partnership was formed named Evangelista and Co.
On June 07, 1955, the Articles of the Co-partnership was amended in order to
include herein respondent Estrella Abad Santos as an industrial partner.
Furthermore, in the said amended article, it was agreed upon that the profits and
losses shall be divided as follows: (1) 70% for the first three (3) partners; and (2)
30% for respondent Estrella Abad Santos.
On December 17, 1963, herein respondent filed suit against the three other
partners in the Court of First Instance of Manila, alleging that the partnership, which
was also made a party-defendant, had been paying dividends to the
partners except to her; and that notwithstanding her demands the defendants had
refused and continued to refuse and let her examine the partnership books or to
give her information regarding the partnership affairs to pay her any share in the
dividends declared by the partnership. She therefore prayed that the defendants be
ordered to render accounting to her of the partnership business and to pay her
corresponding share in the partnership profits after such accounting, plus attorney's
fees and costs.
The defendants, in their answer, alleged the following: (1) the amended Articles of
Co-partnership did not express the true agreement of the parties, which was that
the plaintiff was not an industrial partner; (2) that she did not in fact contribute
industry to the partnership; and (3) that her share of 30% was to be based on the
profits which might be realized by the partnership only until full payment of the
loan which it had obtained in December, 1955 from the Rehabilitation Finance
Corporation in the sum of P30,000, for which the plaintiff had signed a promisory
note as co-maker and mortgaged her property as security; and (4) that in any event
the respondent (as a Judge of the City Court of Manila)was lawfully (See Article
1789) excluded from, and deprived of, her alleged share, interests and participation,
as an alleged industrial partner, in the partnership Evangelista & Co., and its profits
or net income.
Issue: 1.) Whether or not the respondent Estrella Abad Santos is an industrial
partner or merely a profit sharer (as alleged by petitioners) entitled to 30% of the
net profits that may be realized by the partnership from June 07, 1955 until her
mortgage loan shall be fully paid?

Page 16 of 22

2.) Whether or not respondent as a Judge of the City Court of Manila is

engaged in business and thereby lawfully excluded and deprived of, her alleged
share, interests and participation, as an alleged industrial partner, in the
partnership Evangelista & Co., and its profits or net income pursuant to Article
1789.
Ruling:
1.)
The Supreme Court affirmed the facts concluded by the Court of
Appeals that respondent Estrella Santos is an industrial partner because the Articles
of the co-partnership indubitably show the respondent is an industrial partner. Also
by the fact that from June 7, 1955 up to the filing of their answer to the complaint
on February 8, 1964 or a period of over eight (8) years appellants did nothing
to correct the alleged false agreement of the parties contained in the same.
2.)
It is not disputed that the provision against the industrial partner
engaging in business for himself seeks to prevent any conflict of interest between
the industrial partner and the partnership, and to insure faithful compliance by said
partner with this prestation. There is no pretense, however, even on the part of the
appellee is engaged in any business antagonistic to that of appellant
company, since being a Judge of one of the branches of the City Court of Manila can
hardly be characterized as a business.
The Supreme Court further held:
What has gone before persuades us to hold with the lower Court that appellee is
an industrial partner of appellant company, with the right to demand for a formal
accounting and to receive her share in the net profit that may result from such an
accounting, which right appellants take exception under their second assigned
error. Our said holding is based on the following article of the New Civil Code:
'ART. 1899. Any partner shall have the right to a formal account as to partnership
affairs:
(1) If he is wrongfully excluded from the partnership business or possession of its
property by his co-partners;
(2) If the right exists under the terms of any agreement;
(3) As provided by article 1807;
(4) Whenever other circumstance render it just and reasonable.
We find no reason in this case to depart from the rule which limits this Court's
appellate jurisdiction to reviewing only errors of law, accepting as conclusive the
factual findings of the lower court upon its own assessment of the evidence.

Page 17 of 22

MOBIL OIL PHILIPPINES, INC., petitioner, vs. COURT OF FIRST INSTANCE OF

RIZAL, BRANCH VI, GEMINIANO F. YABUT and AGUEDA ENRIQUEZ YABUT,
respondents (G.R. No. 40457 May 8, 1992)
Facts:
On November 8, 1972, petitioner Mobil Oil filed a complaint in the CFI of Rizal
against the partnership La Mallorca and its general partners, which included private
respondents for collection of a sum of money arising from gasoline purchased on
credit but not paid, for damages and attorneys fees.
On December 22, 1972, Mobil, with leave of court filed an Amended complaint
impleading the heirs of the deceased partners as defendants. During the hearing,
the parties agreed to submit the case for decision on the basis of evidence on
record adduced by petitioner but to exclude past interest in the amount of P150,
000 and to award nominal attorneys fees. On 25 July 1974, a decision was
rendered in favor of petitioner. Private respondents filed a petition to modify
decision and a petition for reconsideration. The petition was predicated on the
following:
1.
That there was no stipulation or agreement of the parties on the award of
attys fees
2.
That Miguel Enriquez, not being a general partner, could not bind the
partnership in the sales agreement he signed with plaintiff and
3.
That defendant Geminiano Yabut already withdrew as partner and pres of La
Mallorca on Sept 14, 1972.
The court issued its disputed order declaring null and void its decision insofar as
priv respondents are concerned on the ground that there was no evidence to show
that the counsel for the defendants had been authorized by their clients to enter
into a stipulation of facts with petitioner. Petitioner filed a motion for reconsideration
and clarification, seeking the recon of such order, hence this petition.
Issue: whether or not public respondent court acted with grave abuse of discretion
amounting to lack of jurisdiction in declaring null and void its earlier decision
Ruling: The Court finds merit in the instant petition.
The records show that petitioner had already adduced evidence and formally
offered its evidence in court; that during the hearing for the presentation of
defendants evidence the parties, through their counsels, MUTUALLY agreed to the
waiver of the presentation of defendants evidence on the one hand, and the waiver
of past interest on the part of the plaintiff and the payment of only nominal attys
Page 18 of 22

fees. There has been a mutual waiver by the parties. The counsels hadthe implied
authority to do all acts necessary or incidental to the prosecution and management
of the suit in behalf of their clients who were all present and never objected to the
disputed order of the respondent court.
Moreover, the court does not find the grounds relied upon in the petition of the
private respondents. Mr Miguel Enriquez automatically became general partner of
the partnership La Mallorca being one of the heirs of the deceased partner Mariano
Enriquez. The Article of Co-Partnership of La Mallorca provides if during the
existence of the co-partnership, any of the herein petitioners should die, the copartnership shall continue to exist amongst the surviving partners and the heir or
heirs of the deceased partners
As to respondent Yabuts claim that he cannot be liable as partner, he having
withdrawn as such, does not convince the court. The debt was incurred long before
his withdrawal as partner and long before his resignation from the partnership. He
could not just withdraw unilaterally to avoid his liability as a general partner to third
persons.

G.R. No. 85494 May 7, 1991

CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI and MOTI G.
RAMNANI,petitioners, vs.COURT OF APPEALS, SPOUSES ISHWAR JETHMAL
RAMNANI, SONYA JETHMAL RAMNANI and OVERSEAS HOLDING CO.,
LTD., respondents.
G.R. No. 85496 May 7, 1991
SPOUSES ISHWAR JETHMAL RAMNANI AND SONYA JET RAMNANI, petitioners,
vs. THE HONORABLE COURT OF APPEALS, ORTIGAS & CO., LTD.
PARTNERSHIP, and OVERSEAS HOLDING CO., LTD., respondents.
FACTS: Ishwar Jethmal Ramnani and his wife Sonya had their main business based
in New York. Ishwar received US $150,000.00 from his father-in-law in Switzerland.
In 1965, Ishwar Jethmal Ramnani sent the amount of US $150,000.00 to Choithram
in two bank drafts of US$65,000.00 and US$85,000.00 for the purpose of investing
the same in real estate in the Philippines.
Subsequently, spouses Ishwar executed a general power of attorney appointing
Ishwars full blood brothers Choithram and Navalrai as attorneys-in-fact,
empowering them to manage and conduct their business concerns in the
Philippines.
Page 19 of 22

Choithram, as attorney-in-factr, entered into two agreements for the purchase of

two parcels of land located in Pasig Rizal from Ortigas & Company, Ltd. Partnership
(Ortigas Ltd.) with a total area of approximately 10,048 square meters.
Three buildings were constructed thereon and were leased out by Choithram as
attorney-in-fact of spouses Ishwar. Two of these buildings were later burned.
In 1970 Ishwar asked Choithram to account for the income and expenses relative to
these properties during the period 1967 to 1970.
Choithram failed and refused to render such accounting which prompted Ishwar to
revoke the general power of attorney.
Choithram and Ortigas Ltd. were duly notified by notice in writing of such
revocation. It was also registered with the Securities and Exchange Commission and
published in The Manila Times.
Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights
and interests of Ishwar spouses in favor of Nirmla Ramnani, the wife of Choitrams
son, Moti.
Ortigas also executed the corresponding deeds of sale in favor of Nirmla and the
TCT ISSUEd in her favour..
Thus, spouses Ishwar filed a complaint in the Court of First Instance of Rizal against
Choithram and spouses Nirmla and Moti (Choithram et al.) and Ortigas Ltd. for
reconveyance of said properties or payment of its value and damages.
Trial court dismissed the complaint ruling that the lone testimony of Ishwar
regarding the cash remittance is unworthy of faith and credit because the cash
remittance was made before the execution of the general power of attorney. Ishwar
also failed to corroborate this lone testimony and did not exhibit any commercial
document as regard to the alleged remittances.
It believed the claim of Choitram that he and Ishwar entered into a temporary
arrangement in order to enable Choithram, then a British citizen, to purchase the
properties in the name of Ishwar who was an American citizen and who was then
qualified to purchase property in the Philippines under the then Parity Amendment.
Upon appeal, the CA reversed the decision and gave credence to Ishwar.
It upHELD the validity of Ishwars testimony and gave cognizance to a letter written
by Choihtram imploring Ishwar to renew the power of attorney after it was revoked.
It states therein that Choithram reassures his brother that he is not after his money
and that the revocation is hurting the reputation of Ishwar. Choithram also made no
mention of his claimed temporary arrangement in the letter..

Page 20 of 22

The CA ruled that Choithram is also estopped in pais or by deed from claiming an
interest over the properties. Because of Choitrams admissions from (1) power of
attorney, (2) the Agreements, and (3) the Contract of Lease
It furthermore HELD that Choithram's 'temporary arrangement, by which he
claimed purchasing the two (2) parcels in question in 1966 and placing them in the
name of Ishwar who is an American citizen circumvents the disqualification
provision of aliens acquiring real properties in the Philippines. Upholding the
supposed "temporary arrangement" with Ishwar would be sanctioning the
perpetration of an illegal act and culpable violation of the Constitution.
During the pendency of the case, Choithram made several attempts to dispose of
his properties by way of donation and also mortgaged the properties under litigation
for 3 million USD to a shell partnership with a mere capital of 100 USD.
The Supreme Court affirms the findings of the Court of Appeals.
ISSUE: Whether or not there was a partnership between the brothers Ishwar and
Choithram
HELD: Yes, Even without a written agreement, the scenario is clear. Spouses Ishwar
supplied the capital of $150,000.00 for the business. They entrusted the money to
Choithram to invest in a profitable business venture in the Philippines. For this
purpose they appointed Choithram as their attorney-in-fact.
Choithram in turn decided to invest in the real estate business. He bought the two
(2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar- Instead of
paying for the lots in cash, he paid in installments and used the balance of the
capital entrusted to him, plus a loan, to build two buildings. Although the buildings
were burned later, Choithram was able to build two other buildings on the property.
He rented them out and collected the rentals. Through the industry and genius of
Choithram, Ishwar's property was developed and improved into what it is nowa
valuable asset worth millions of pesos.
We have a situation where two brothers engaged in a business venture. One
furnished the capital, the other contributed his industry and talent. Justice and
equity dictate that the two share equally the fruit of their joint investment and
efforts. Perhaps this Solomonic solution may pave the way towards their
reconciliation. Both would stand to gain. No one would end up the loser. After all,
blood is thicker than water.
However, because of the devious machinations and schemes that Choithram
employed he should pay moral and exemplary damages as well as attorney's fees
to spouses Ishwar.
ISSUE: Whether or not Ortigas Ltd. is liable.
Page 21 of 22

HELD: Yes, because Ortigas had several notices of the revocation. Despite said
notices, Ortigas nevertheless acceded to the representation of Choithram, as
alleged attorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar to Nirmla.
While the primary blame should be laid at the doorstep of Choithram, Ortigas is not
entirely without fault. It should have required Choithram to secure another power of
attorney from Ishwar. For recklessly believing the pretension of Choithram that his
power of attorney was still good, it must, therefore, share in the latter's liability to
Ishwar.

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