Digest Upto JV

Yu v. NLRC GR No.
97212, June 30, 1993
Facts:
Benjamin Yu used to be the Assistant General Manager of Jade Mountain, a partnership

engaged in marble quarrying and export business. The majority of the founding partners sold
their interests in said partnership to Willy Co and Emmanuel Zapanta without Yu’s knowledge.
Said new partnership continued operating under the same name and continued the business’s
operations. However, it transferred its main office from Makati to Mandaluyong. Said new
partnership did not anymore availed of the services of Yu. Thus, he filed a complaint for illegal
dismissal, recovery of unpaid wages and damages.
Issue: WON the partnership which had hired Yu as Asst. Gen. Manager had been
extinguished and replaced by a new partnership composed of Co and Zapanta; if indeed a
new partnership had come into existence, WON Yu could nonetheless assert his rights under
his employment contract with the old partnership as against the new partnership
Ruling :
Yes. The legal effect of the changes in the membership of the partnership was the dissolution
of the old partnership which had hired Yu in 1984 and the emergence of a new firm composed
of Willy Co and Emmanuel Zapanta in 1987. The new partnership simply took over the
business enterprise owned by the preceeding partnership, and continued using the old name
of Jade Mountain Products Company Limited, without winding up the business affairs of the
old partnership, paying off its debts, liquidating and distributing its net assets, and then re-
assembling the said assets or most of them and opening a new business enterprise. Not only
the retiring partners but also the new partnership itself which continued the business of the
old, dissolved, one, are liable for the debts of the preceding partnership.
VILLAREAL V. RAMIREZ
Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of
P750,000for the operation of a restaurant and catering business. Respondent Ramirez joined
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as a partner in the business with the capital contribution of P250,000. In 1987, Jesus Jose
withdrew from the partnership and within the same time, Villareal and Carmelito Jose,
petitioners closed the business without prior knowledge of respondents In March 1987,
respondents wrote a letter to petitioners stating that they were no longer interested in
continuing the partnership and that they were accepting the latter’s offer to return their
capital contribution. This was left unheeded by the petitioners, and by reason of which
respondents filed a complaint in the RTC.RTC ruled that the parties had voluntarily entered
into a partnership, which could be dissolved at any time, and this dissolution was showed by
the fact that petitioners stopped operating the restaurant. On appeal, CA upheld RTC’s
decision that the partnership was dissolved and it added that respondents had no right to
demand the return of their capital contribution. However since petitioners did not give the
proper accounting for the liquidation of the partnership, the CA took it upon itself to compute
their liabilities and the amount that is proper to the respondent. The computation of which
was:(capital of the partnership – outstanding obligation) / remaining partners =amount due to
private respondent
Issue: W/N petitioners are liable to respondents for the latter’s share in the partnership?
Ruling:
No. Respondents have no right to demand from petitioner the return of their equity share. As
found by the court petitioners did not personally hold its equity or assets. “The partnership
has a juridical personality separate and distinct from that of each of the partners.” Since the
capital was contributed to the partnership, not to petitioners, it is the partnership that must
refund the equity of the retiring partners. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. Therefore, the exact
amount of refund equivalent to respondents’ one-third share in the partnership cannot be
determined until all the partnership assets will have been liquidated and all partnership
creditors have been paid. CA’s computation of the amount to be refunded to respondents as
their share was thus erroneous.
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Gregorio Ortega, Tomas del Castillo, Jr. and Benjamin Bacorro v. CA, SEC and
Joaquin Misa
Facts:
Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew in said firm.
He filed with SEC a petition for dissolution and liquidation of partnership.
SEC en banc ruled that withdrawal of Misa from the firm had dissolved the partnership.
Reason: since it is partnership at will, the law firm could be dissolved by any partner at
anytime, such as by withdrawal therefrom, regardless of good faith or bad faith, since no
partner can be forced to continue in the partnership against his will.
Issue: 1. WON the partnership of Bito, Misa & Lozada (now Bito, Lozada, Ortega & Castillo)
is a partnership at will; 2. WON the withdrawal of Misa dissolved the partnership regardless
of his good or bad faith;
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Held: 1. Yes. The partnership agreement of the firm provides that ”[t]he partnership shall
continue so long as mutually satisfactory and upon the death or legal incapacity of one of
the partners, shall be continued by the surviving partners.”
2. Yes. Any one of the partners may, at his sole pleasure, dictate a dissolution of the
partnership at will (e.g. by way of withdrawal of a partner). He must, however, act in good
faith, not that the attendance of bad faith can prevent the dissolution of the partnership but
that it can result in a liability for damages
MARJORIE TOCAO and WILLIAM T. BELO, petitioners,

vs.
COURT OF APPEALS and NENITA A. ANAY, respondent.
FACTS
William Belo introduced Nenita Anay to his girlfriend, Marjorie Tocao. The three agreed to
form a joint venture for the sale of cooking wares. Belo was to contribute P2.5 million; Tocao
also contributed some cash and she shall also act as president and general manager; and Anay
shall be in charge of marketing. Belo and Tocao specifically asked Anay because of her
experience and connections as a marketer. They agreed further that Anay shall receive the
following:
1. 10% share of annual net profits

2. 6% overriding commission for weekly sales
3. 30% of sales Anay will make herself
4. 2% share for her demo services
They operated under the name Geminesse Enterprise, this name was however registered as a
sole proprietorship with the Bureau of Domestic Trade under Tocao. The joint venture
agreement was not reduced to writing because Anay trusted Belo’s assurances.
The venture succeeded under Anay’s marketing prowess.
But then the relationship between Anay and Tocao soured. One day, Tocao advised one of the
branch managers that Anay was no longer a part of the company. Anay then demanded that
the company be audited and her shares be given to her.
ISSUE
Whether the parties formed a partnership
HELD
Yes, the parties involved in this case formed a partnership. The Supreme Court held that to be
considered a juridical personality,
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a partnership must fulfill these requisites:
(1) two or more persons bind themselves to contribute money, property or industry to a
common fund; and
(2) intention on the part of the partners to divide the profits among themselves.
It may be constituted in any form; a public instrument is necessary only where immovable
property or real rights are contributed thereto.
This implies that since a contract of partnership is consensual, an oral contract of partnership
is as good as a written one.
In the case at hand, Belo acted as capitalist while Tocao as president and general manager,
and Anay as head of the marketing department and later, vice-president for sales.
Furthermore, Anay was entitled to a percentage of the net profits of the
business. Therefore, the parties formed a partnership.
Kilosbayan Inc vs Teofisto Guingona, Jr.
232 SCRA 110

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 expand PCSO’s source of
income.
A bidding was made. Philippine Gaming Management Corporation (PGMC) won it. A contract
of lease was awarded in favor of PGMC.
Kilosbayan opposed the said agreement between PCSO and PGMC as it alleged that:
1. PGMC does not meet the nationality requirement because it is 75% foreign owned (owned by
a Malaysian firm Berjaya Group Berhad);
2. PCSO, under Section 1 of its charter (RA 1169), is prohibited from holding and conducting
lotteries “in collaboration, association or joint venture with any person, association, company
or entity”;
3. The network system sought to be built by PGMC for PCSO is a telecommunications network.
Under the law (Act No. 3846), a franchise is needed to be granted by the Congress before any
person may be allowed to set up such;
4. PGMC’s articles of incorporation, as well as the Foreign Investments Act (R.A. No. 7042) does
not allow it to install, establish and operate the on-line lotto and telecommunications systems.
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PGMC and PCSO, through Teofisto Guingona, Jr. and Renato Corona, Executive Secretary and
Asst. Executive Secretary respectively, alleged that PGMC is not a collaborator but merely a
contractor for a piece of work, i.e., the building of the network; that PGMC is a mere lessor of
the network it will build as evidenced by the nature of the contract agreed upon, i.e., Contract
of Lease.
ISSUE: Whether or not Kilosbayan is correct.
HELD: Yes, but only on issues 2, 3, and 4.
1. On the issue of nationality, it seems that PGMC’s foreign ownership was reduced to 40%.
2. On issues 2, 3, and 4, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the
PCSO from holding and conducting lotteries “in collaboration, association or joint venture with
any person, association, company or entity, whether domestic or foreign.” There is
undoubtedly a collaboration between PCSO and PGMC and not merely a contract of lease. The
relations between PCSO and PGMC cannot be defined simply by the designation they used,
i.e., a contract of lease. Pursuant to the wordings of their agreement, PGMC at its own
expense shall build, operate, and manage the network system including its facilities needed
to operate a nationwide online lottery system. PCSO bears no risk and all it does is to provide
its franchise – in violation of its charter. Necessarily, the use of such franchise by PGMC is a
violation of Act No. 3846.
Antonia Torres vs Court of Appeals
In 1969, sisters Antonia Torres and Emeteria Baring entered into a joint venture agreement
with Manuel Torres. Under the agreement, the sisters agreed to execute a deed of sale in
favor Manuel over a parcel of land, the sisters received no cash payment from Manuel but the
promise of profits (60% for the sisters and 40% for Manuel) – said parcel of land is to be
developed as a subdivision.
Manuel then had the title of the land transferred in his name and he subsequently mortgaged
the property. He used the proceeds from the mortgage to start building roads, curbs and
gutters. Manuel also contracted an engineering firm for the building of housing units. But due
to adverse claims in the land, prospective buyers were scared off and the subdivision project
eventually failed.
The sisters then filed a civil case against Manuel for damages equivalent to 60% of the value of
the property, which according to the sisters, is what’s due them as per the contract.
ISSUE: Whether or not there exists a partnership.
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HELD: Yes. The joint venture agreement the sisters entered into with Manuel is a partnership
agreement whereby they agreed to contribute property (their land) which was to be
developed as a subdivision. While on the other hand, though Manuel did not contribute
capital, he is an industrial partner for his contribution for general expenses and other costs.
Furthermore, the income from the said project would be divided according to the stipulated
percentage (60-40). Clearly, the contract manifested the intention of the parties to form a
partnership. Further still, the sisters cannot invoke their right to the 60% value of the property
and at the same time deny the same contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the sisters, nor can it be
blamed to Manuel (the sisters on their appeal did not show evidence as to Manuel’s fault in
the failure of the partnership). The sisters must then bear their loss (which is 60%). Manuel
does not bear the loss of the other 40% because as an industrial partner he is exempt from
losses.
JARANTILLA, JR. vs. JARANTILLA

636 SCRA 299, G.R. No. 154486, December 1, 2010
FACTS: The present case stems from the complaintfiled by Antonieta Jarantilla against
Buenaventura Remotigue, Cynthia Remotigue, Federico Jarantilla, Jr., Doroteo Jarantilla and
Tomas Jarantilla, for the accounting of the assets and income of the co-ownership, for its
partition and the delivery of her share corresponding to eight percent (8%), and for damages.
Antonieta claimed that in 1946, she had entered into an agreement with the defendants to
engage in business through the execution of a document denominated as "Acknowledgement
of Participating Capital”. Antonieta also alleged that she had helped in the management of the
business they co-owned without receiving any salary. Antonieta further claimed co-ownership
of certain properties (the subject real properties) in the name of the defendants since the only
way the defendants could have purchased these properties were through the partnership as
they had no other source of income. The respondents did not deny the existence and validity
of the "Acknowledgement of Participating Capital" and in fact used this as evidence to support
their claim that Antonieta’s 8% share was limited to the businesses enumerated therein. The
respondents denied using the partnership’s income to purchase the subject real properties.
During the course of the trial at the RTC, petitioner Federico Jarantilla, Jr., who was one of the
original defendants, entered into a compromise agreement17 with Antonieta Jarantilla
wherein he supported Antonieta’s claims and asserted that he too was entitled to six percent
(6%) of the supposed partnership in the same manner as Antonieta was.
ISSUE: Whether or not the partnership subject of the Acknowledgement of Participating
Capital funded the subject real properties.
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HELD: Under Article 1767 of the Civil Code, there are two essential elements in a contract of
partnership: (a) an agreement to contribute money, property or industry to a common fund;
and (b) intent to divide the profits among the contracting parties. The first element is
undoubtedly present in the case at bar, for, admittedly, all the parties in this case have agreed
to, and did, contribute money and property to a common fund. Hence, the issue narrows down
to their intent in acting as they did. It is not denied that all the parties in this case have agreed
to contribute capital to a common fund to be able to later on share its profits. They have
admitted this fact, agreed to its veracity, and even submitted one common documentary
evidence to prove such partnership - the Acknowledgement of Participating Capital. The
petitioner himself claims his share to be 6%, as stated in the Acknowledgement of
Participating Capital. However, petitioner fails to realize that this document specifically
enumerated the businesses covered by the partnership: Manila Athletic Supply, Remotigue
Trading in Iloilo City and Remotigue Trading in Cotabato City. Since there was a clear
agreement that the capital the partners contributed went to the three businesses, then there
is no reason to deviate from such agreement and go beyond the stipulations in the document.
There is no evidence that the subject real properties were assets of the partnership referred to
in the Acknowledgement of Participating Capital. Petition denied.
Pioneer Insurance & Surety Corporation vs Court of Appeals

175 SCRA 668
Facts:
Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965, Lim convinced
Constancio Maglana, Modesto Cervantes, Francisco Cervantes, and Border Machinery and
Heavy Equipment Company (BORMAHECO) to contribute funds and to buy two aircrafts which
would form part a corporation which will be the expansion of Southern Air Lines. Maglana et al
then contributed and delivered money to Lim. But instead of using the money given to him to
pay in full the aircrafts, Lim, without the knowledge of Maglana et al, made an agreement with
Pioneer Insurance for the latter to insure the two aircrafts which were brought in installment
from Japan Domestic Airlines (JDA) using said aircrafts as security. So when Lim defaulted from
paying JDA, the two aircrafts were foreclosed by Pioneer Insurance.
It was established that no corporation was formally formed between Lim and Maglana et al.
ISSUE: Whether or not Maglana et al must share in the loss as general partners.
HELD: No. There was no de facto partnership. Ordinarily, when co-investors agreed to do
business through a corporation but failed to incorporate, a de facto partnership would have
been formed, and as such, all must share in the losses and/or gains of the venture in
proportion to their contribution. But in this case, it was shown that Lim did not have the intent
to form a corporation with Maglana et al. This can be inferred from acts of unilaterally taking
out a surety from Pioneer Insurance and not using the funds he got from Maglana et al. The
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record shows that Lim was acting on his own and not in behalf of his other would-be
incorporators in transacting the sale of the airplanes and spare parts.
LIM TONG LIM, petitioner,

vs.
PHILIPPINE FISHING GEAR INDUSTRIES, INC., respondent.
FACTS
Antonio Chua and Peter Yao entered into a contract in behalf of Ocean Quest Fishing
Corporation for the purchase of fishing nets from respondent Philippine Fishing Gear
Industries, Inc. Chua and Yao claimed that they were engaged in business venture with
petitioner Lim Tong Lim, who, however, was not a signatory to the contract. The buyers failed
to pay the fishing nets. Respondent filed a collection against Chua, Yao and petitioner Lim in
their capacities as general partners because it turned out that Ocean Quest Fishing
Corporation is a non-existent corporation. The trial court issued a Writ of Preliminary
Attachment, which the sheriff enforced by attaching the fishing nets. The trial court rendered
its decision ruling that respondent was entitled to the Writ of Attachment and that Chua, Yao
and Lim, as general partners, were jointly liable to pay respondent. Lim appealed to the Court
of Appeals, but the appellate court affirmed the decision of the trial court that petitioner Lim
is a partner and may thus be held liable as such. Hence, the present
petition. Petitioner claimed that since his name did not appear on any of the contracts and
since he never directly transacted with the respondent corporation, ergo, he cannot be held
liable.
ISSUE
WON petitioner can be held liable as a general partner.
HELD
The Supreme Court denied the petition. The Court ruled that having reaped the benefits of the
contract entered into by Chua
and Yao, with whom he had an existing relationship, petitioner Lim is deemed a part of said
association and is covered by the doctrine
of corporation by estoppel. The Court also ruled that under the principle of estoppel, those
acting on behalf of a corporation and those
benefited by it, knowing it to be without valid existence, are held liable as general partners.
CASE I: REPUBLIC v. SUN LIFE

FACTS:
Sun Life Assurance Company of Canada (Sun Life) is a mutual life insurance company
organized and existing under the laws of Canada
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Sun Life is registered and authorized by the Securities and Exchange Commission (SEC) and
the Insurance Commission (IC) to engaged in business in the Philippines as a mutual life
insurance company
Sun Life filed with the Commissioner of Internal Revenue (CIR) its insurance premium tax
return for the third quarter of 1997, and paid the necessary premium taxes
Sun Life also filed with the CIR its documentary stamp tax (DST) declaration returns and paid
the total amount therefor
the Court of Tax Appeals (CTA) held in one case that mutual life insurance companies are
purely cooperative companies and are exempt from payment of premium tax and DST
Sun Life filed with the CIR an administrative claim for tax credit of its alleged erroneously
paid premium tax and DST
CIR failed to act upon the claim for tax credit
Sun Life filed with the CTA a petition for review, praying for the issuance of a tax credit
certificate, contending that it is a mutual life insurance company vested with all the
characteristic features and elements of a cooperative company/association (see Sec. 121,
NIRC): (1) management and affairs, conducted by members; (2) operated with money
collected from members; (3) purpose = mutual protection of members, and not profit or gain
ISSUE: Was Sun Life a purely cooperative company/association under Sec. 121, NIRC,
organized and conducted solely by the members thereof for the exclusive benefit of each
member and not for profit, and thus exempt from having to pay premium tax and DST?
RULING: YES
NIRC's definition of a "cooperative": association conducted by the members thereof with the
money collected from among themselves and solely for their own protection and not for profit
SC: Sun Life is a cooperative engaged in a mutual life insurance business -- (1) it is managed
by its members, its management and affairs are conducted by member-policyholders; (2) it is
operated with money collected from its members[-policyholders]; and (3) it is licensed for the
mutual protection of its members, not for the profit of anyone
it does not follow that because respondent is registered as a non-stock corporation and
thus exists for a purpose other than profit, the company can no longer make any profits
earning profits is merely its secondary, not primary, purpose
it may, however, invest its corporate funds in order to earn additional income for paying
its operating expenses and meeting benefit claims
under the Tax Code, although respondent is a cooperative, registration with the Cooperative
Development Authority (CDA) is not necessary in order for it to be exempt from premium tax
and DST
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Joaquin Misa
Facts:

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in the Acknowledgement of Participating Capital. Petition denied.
Fernando Santos vs Spouses Reyes
In June 1986, Fernando Santos (70%), Nieves Reyes (15%), and Melton Zabat (15%) orally
instituted a partnership with them as partners. Their venture is to set up a lending business
where it was agreed that Santos shall be financier and that Nieves and Zabat shall contribute
their industry. **The percentages after their names denote their share in the profit.
Later, Nieves introduced Cesar Gragera to Santos. Gragera was the chairman of a corporation.
It was agreed that the partnership shall provide loans to the employees of Gragera’s
corporation and Gragera shall earn commission from loan payments.
In August 1986, the three partners put into writing their verbal agreement to form the
partnership. As earlier agreed, Santos shall finance and Nieves shall do the daily cash flow
more particularly from their dealings with Gragera, Zabat on the other hand shall be a loan
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investigator. But then later, Nieves and Santos found out that Zabat was engaged in another
lending business which competes with their partnership hence Zabat was expelled.
The two continued with the partnership and they took with them Nieves’ husband, Arsenio,
who became their loan investigator.
Later, Santos accused the spouses of not remitting Gragera’s commissions to the latter. He
sued them for collection of sum of money. The spouses countered that Santos merely filed the
complaint because he did not want the spouses to get their shares in the profits. Santos
argued that the spouses, insofar as the dealing with Gragera is concerned, are merely his
employees. Santos alleged that there is a distinct partnership between him and Gragera which
is separate from the partnership formed between him, Zabat and Nieves.
The trial court as well as the Court of Appeals ruled against Santos and ordered the latter to
pay the shares of the spouses.
ISSUE: Whether or not the spouses are partners.
HELD: Yes. Though it is true that the original partnership between Zabat, Santos and Nieves
was terminated when Zabat was expelled, the said partnership was however considered
continued when Nieves and Santos continued engaging as usual in the lending business even
getting Nieves’ husband, who resigned from the Asian Development Bank, to be their loan
investigator – who, in effect, substituted Zabat.
There is no separate partnership between Santos and Gragera. The latter being merely a
commission agent of the partnership. This is even though the partnership was formalized
shortly after Gragera met with Santos (Note that Nieves was even the one who introduced
Gragera to Santos exactly for the purpose of setting up a lending agreement between the
corporation and the partnership).
HOWEVER, the order of the Court of Appeals directing Santos to give the spouses their shares
in the profit is premature. The accounting made by the trial court is based on the “total
income” of the partnership. Such total income calculated by the trial court 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” of the partnership. The share of each one of them should be based on this
“net profit” and not from the “gross income” or “total income”.

vs.
FACTS
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following:

6. 6% overriding commission for weekly sales
7. 30% of sales Anay will make herself
8. 2% share for her demo services
ISSUE
HELD
common fund; and
(2) intention on the part of the partners to divide the profits among themselves. It may be
constituted in any form; a public instrument is necessary only where immovable property or
real rights are contributed thereto.
Heirs of Tan Eng Kee v. CA & Benguet Lumber Co. & Tan Eng Lay
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Facts:
After Tan Eng Kee’s Death, his common-law wife Matilde Abuho and their children filed an
action against his brother, Tan Eng Lay for accounting, liquidation and winding up of the
alleged partnership Tan Eng Kee had with Tan Eng Lay.
The heirs claim that the two brothers were partners in Benguet Lumber Co. and had been
partners since the company was operating after the end of World War 2. Tan Eng Lay, the
president of the company claims that Tan Eng Kee was only an employee and presented
documents showing that Tan Eng Kee was receiving salary from the company payroll.
Issue:
Whether the two brothers were partners in Benguet Lumber Co.
Held:
NO. They were never partners.
Ratio:
Tan Eng Kee, in his lifetime never executed any acts which would indicate that he was a
partner.
1. He never demanded for periodic accountings of the common fund, which would be
expected of a real partner;
2. He never received any shares in the profits of Benguet Lumber, he only received salary
as evidenced by the payroll documents presented by Tan Eng Lay;
3. The Heirs were unable to prove that the brothers intended to divide the profits of the
business between themselves.
Even if Tan Eng Kee was granted certain privileges not given to regular employees, (such as
being allowed to live with his family on the grounds of the Lumber Compound, and having
supervisory powers over the regular employees) the Court found that these privileges were a
result of being related to the owner of the company and not because he was a partner.
 Tan Eng Kee never represented himself as a partner to any third person his actions, when
he was alive, taken together with how his brother treated him, strongly indicate that he was
NOT a partner.
 Article 1825 is meant to protect third persons who were misled by a person acting as a
partner even if he really isn’t. Since Tan Eng Kee never represented himself as a partner, and
there is no evidence or documentation of him being a partner, then he is not a partner.
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Doctrine: Where circumstances taken singly may be inadequate to prove the intent to form a
partnership, nevertheless, the collective effect of these circumstances may be such as to
support a finding of existence of the parties’ intent.
Gatchalian vs. Collector of Internal Revenue [G.R. No. L-45425, April 29, 1939]
Facts: Plaintiffs purchased, in the ordinary course of business, from one of the duly authorized
agents of the National Charity Sweepstakes Office one ticket for the sum of two pesos (P2),
saidticket was registered in the name of Jose Gatchalian and Company. The ticket won one of
the third-prizes in the amount of P50,000.
Jose Gatchalian was required to file the corresponding income tax return covering the prize
won. Defendant-Collector made an assessment against Jose Gatchalian and Co. requesting the
payment of the sum of P1,499.94 to the deputy provincial treasurer of Pulilan, Bulacan.
Plaintiffs, however through counsel made a request for exemption. It was denied.
Plaintiffs failed to pay the amount due, hence a warrant of distraint and levy was issued.
Plaintiffs paid under protest a part of the tax and penalties to avoid the effects of the warrant.
A request that the balance be paid by plaintiffs in installments was made. This was granted on
the condition that a bond be filed.
Plaintiffs failed in their installment payments. Hence a request forexecution of the warrant of
distraint and levy was made. Plaintiffs paid under protest to avoid the execution.
A claim for refund was made by the plaintiffs, which was dismissed, hence the appeal.
ISSUE:
Whether or not the plaintiffs formed partnership hence liable for income tax
HELD:
Yes, a partnership of a civil nature was formed. The appealed decision is affirmed, with the
costs of the instance to the plaintiff appellants.
RATIO DECIDENDI:
Under Article 1767 of the Civil Code, by 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. In the instant case, the plaintiffs organized a
partnership of a civil nature because each of them put up money to buy a sweepstakes ticket
for the sole purpose of dividing equally the prize which they may win, as they did in fact in the
amount of P50,000. The partnership was not only formed, but upon the organization thereof
and the winning of the prize, Jose Gatchalian personally appeared in the office of the
Philippine Charity Sweepstakes, in his capacity as co-partner, as such collection the prize, the
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office issued the check for P50,000 in favor of Jose Gatchalian and company, and the said
partner, in the same capacity, collected the said check. All these circumstances repel the idea
that the plaintiffs organized and formed a community of property only.
VICENTE SY, TRINIDAD PAULINO, 6B’S TRUCKING CORPORATION, and SBT TRUCKING
CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents.
[G.R. No. 142293. February 27, 2003]
FACTS: Sometime in 1958, private respondent Jaime Sahot[5] started working as a truck helper
for petitioners’ familyowned trucking business named Vicente Sy Trucking. In 1965, he became
a truck driver of the same family business, renamed T. Paulino Trucking Service, later 6B’s
Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994.
Throughout all these changes in names and for 36 years, private respondent continuously
served the trucking business of petitioners. When Sahot was 59 years old, he incurred several
absences due to various ailments. Particularly causing him pain was his left thigh, which
greatly affected the performance of his task as a driver. He inquired about his medical and
retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered that
his premium payments had not been remitted by his employer.Sahot filed a week-long leave
to get medical attention. He was treated for EOR, presleyopia, hypertensive retinopathy G II
and heart enlargement. Because of such, Belen Paulino of the SBT Trucking Service
management told him to file a formal request for extension of his leave. When Sahot applied
for an extended leave, he was threatened of termination of employment should he refuse to
go back to work. Eventually, Sahot was dismissed from employment which prompted the
latter to file an illegal dismissal case with the NLRC. For their part, petitioners admitted they
had a trucking business in the 1950s but denied employing helpers and drivers. They contend
that private respondent was not illegally dismissed as a driver because he was in fact
petitioner’s industrial partner. They add that it was not until the year 1994, when SBT Trucking
Corporation was established, and only then did respondent Sahot become an employee of the
company, with a monthly salary that reached P4,160.00 at the time of his separation. The
NLRC and the CA ruled that Sahot was an employee of the petitioner.
ISSUE: Whether Sahot is an industrial partner
RULING: No. Article 1767 of the Civil Code states that in a 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. Not one of these circumstances is
present in this case. No written agreement exists to prove the partnership between the
parties. Private respondent did not contribute money, property or industry for the purpose of
engaging in the supposed business. There is no proof that he was receiving a share in the
profits as a matter of course, during the period when the trucking business was under
17
operation. Neither is there any proof that he had actively participated in the management,
administration and adoption of policies of the business. Thus, the NLRC and the CA did not err
in reversing the finding of the Labor Arbiter that private respondent was an industrial partner
from 1958 to 1994. On this point, the Court affirmed the findings of the appellate court and
the NLRC. Private respondent Jaime Sahot was not an industrial partner but an employee of
petitioners from 1958 to 1994. The existence of an employer-employee relationship is
ultimately a question of fact and the findings thereon by the NLRC, as affirmed by the Court of
Appeals, deserve not only respect but finality when supported by substantial evidence.
Substantial evidence is such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.
18
AGASEN V. CA, G.R. NO. 115508
Facts:
Respondent Petra Bilog, assisted by her husband Felipe Bilog, filed acomplaint for Recovery of
Possession and Ownership1 with the RegionalTrial Court of Agoo, La Union, involving an Eight Thousand
Four HundredSeventy Four (8,474) square meter parcel of land registered in her name.She alleged that
sometime in 1964 or 1965, petitioners took possession andassumed ownership of the said property,
appropriating the fruits therefrom.She alleged that despite demands on them to vacate the land,
petitionersrefused to do so and even filed a case for Annulment of TCT and/orReconveyance with
Damages before the same court, which case was,however, dismissed. Private respondent prayed that she
be declared the trueand absolute owner of the subject land and petitioners be ordered to turnover
possession thereof to her.
Petitioners Alejandro Agasen and Fortunata Calonge-Agasen asserted thatthe subject land
used to form part of Lot No. 2192, a forty two thousand threehundred seventy two (42,372) square
meter parcel of land owned in commonby the five (5) Bilog siblings, private respondent Petra Bilog
being one ofthem.
RTC favored petitioners declaring TCT of respondent null and void.
CA reversed the decision.
Issue:
whether or not the two (2) documents, relied upon by petitioners asbasis for their claim of
ownership, are valid?
Ruling: No.
The following circumstances all indicate the genuineness and due executionof the subject
documents: (1) The subject documents were duly notarizedpublic documents; (2) The documents enjoy the
legal presumption of validity;(3) Their genuineness and due execution were not specifically denied
underoath by private respondent; (4) Private respondent's signature thereon werefound genuine
by the lower court upon a comparison of her signaturethereon with that in her own documentary
evidence; (5) The actualidentification and positive testimony of petitioner; and (6) The
testimony ofthe lawyer who had notarized one of the subject documents. Privaterespondent's bare denial
of the same cannot, by any measure, overcome theabove-mentioned evidence and legal presumptions in
petitioners' favor.
Contracts are obligatory in whatever form they may have been entered intoprovided all essential requisites
are present. The provision of Article 1358 onthe necessity of a public document is only for
19
convenience, not for validity orenforceability. It is not a requirement for the validity of a
contract of sale of aparcel of land that this be embodied in a public instrument.
The Civil Code provides that contracts are perfected by mere consent. Fromthis moment, the parties are
bound not only to the fulfillment of what hasbeen expressly stipulated but also to all the consequences
which, accordingto their nature, may be in keeping with good faith, usage and law. A contractof sale is
perfected at the moment there is a meeting of the minds upon thething which is the object of the
contract and upon the price. Beingconsensual, a contract of sale has the force of law between the
contractingparties and they are expected to abide in good faith by their respectivecontractual
commitments. Article 1358 of the Civil Code which requires theembodiment of certain
contracts in a public instrument, is only forconvenience, and registration of the instrument only
adversely affects thirdparties. Formal requirements are, therefore, for the benefit of third
parties.Non-compliance therewith does not adversely affect the validity of thecontract nor the
contractual rights and obligations of the parties thereunder.
20
ANGELES v. SECRETARY OF JUSTICE (July 29, 2005)
DOCTRINE:The purpose of registration of the contract of partnership with the SEC is to give
notice to third parties. Failure to register the contract of partnership does not affect the
liability of the partnership and of the partners to third persons, nor does it affect the
partnership’s juridical personality. A partnership may exist even if the partners do not use the
words “partner” or “partnership.”
FACTS:
Angeles spouses filed a criminal complaint for estafa against Mercado, their brother-in-law o
Claimed that Mercado convinced them to enter into a contract of antichresis, to last for 5
years, covering 8 parcels of land planted with fruit-bearing lanzones trees in Nagcarlan, Laguna
and owned by Juan Sanzo o The parties agreed that Mercado would administer the ands and
complete the necessary paperwork
After 3 years, the Angeles spouses asked for an accounting from Mercado, and they claim that
only after this demand for an accounting did thy discover that Mercado had put the contract
of antichresis over the subject land under Mercado and his spouse’s names
Mercado denied the Angeles spouses’ allegations o Claimed that there exists an industrial
partnership, colloquially known as sosyo industrial, between him and his spouse as industrial
partners and the Angeles spouses as financiers, and that this had existed since 1991, before
the contract of antichresis over the subject land o Mercado used his and his spouse’s earnings
as part of the capital in the business transactions which he entered into in behalf of the
Angeles spouses.
During the barangay conciliation proceedings, Oscar Angeles stated that there was a written
sosyo industrial agreement: capital would come from the Angeles spouses while the profit
would be divided evenly between Mercado and the Angeles spouses
ISSUE:
WON a partnership existed between Mercado and the Angeles spouses - Yes
RATIO/RULING:
Angeles spouses allege that they had no partnership with Mercado, relying on Arts. 1771 to
1773 of the Civil Code.
21
The Angeles spouses’ position that there is no partnership because of the lack of a public
instrument indicating the same and a lack of registration with the SEC holds no water
-The Angeles spouses contributed money to the partnership and not immovable property
- Mere failure to register the contract of partnership with the SEC does not invalidate a
contract that has the essential requisites of a partnership. The purpose of registration is to
give notice to third parties.
Failure to register does not affect the liability of the partnership and of the partners to third
persons, nor does it affect the partnership’s juridical personality
The Angeles spouses admit to facts that prove the existence of a partnership: A contract
showing a sosyo industrial or industrial partnership , Contribution of money & industry to a
common fund , Division of profits between the Angeles spouses and Mercado
Fule v. CA
Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange
for P40,000 and a diamond earring owned by the latter. A deed of absolute sale was prepared
by Atty. Belarmino, and on the same day Fule went to the bank with Dichoso and Mendoza,
and Dr. Cruz arrived shortly thereafter. Dr. Cruz got the earrings from her safety deposit box
and handed it to Fule who, when asked if those were alright, nodded and took the earrings.
Two hours after, Fule complained that the earrings were fake. He files a complaint to declare
the sale null and void on the ground of fraud and deceit.
ISSUE:
WON THE CONTRACT OF SALE IS VALID
HELD: YES.
RATIO:
Contract perfected by mere consent, binds parties to stipulation and all the consequences;
Contract of sale perfected upon meeting of minds upon the thing object of the contract and
upon price; Embodiment of contract in public instrument only for convenience, and
22
registration only to affect third parties; Lack of formal requirements does not invalidate the
contract
The Civil Code provides that contracts are perfected by mere consent. From this 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.
Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public
instrument, is only for convenience, and registration of the instrument only adversely affects
third parties. Formal requirements are, therefore, for the benefit of third parties.
Noncompliance therewith does not adversely affect the validity of the contract nor the
contractual rights and obligations of the parties thereunder.
ROJAS V. MAGLANA
Facts: Maglana and Rojas executed their articles of co-partnership called EDE. It had an
indefinite term, was registered with the SEC, and had a Timer License. Later, Agustin
Pahamitang became an industrial partner and another articles of co-partnership was executed.
The term of the second co-partnership was fixed to 30 years. After some
time, the three executed a conditional sale of interest in the partnership where Magalana and
Rojas shall purchase the interest, share, and participation of Pahamotang. It was agreed that,
after payment of such including the loan secured by Pahamotang, the two shall become
owners of all equipment contributed by Pahamotang. The two continued the partnership
without any written agreement or reconstitution of the articles of partnership. Subsequently,
Rojas entered into a contarct with CMS Estate. Maglana reminded him of his contribution to
the capital investments and his duties to the partnership. Rojas said he would not be able to
comply. Maglana told Rojas that the latter is only entitled to 20% of the profits, which was the
sharing from 1957-1959 without dispute. Rojas took funds from the partnership which was
more than his share. Maglana notified Rojas that he had dissolved the partnership. Rojas filed
an action against Maglana.
ISSUE: what is the nature of the partnership and legal relationship of M-R after P retired from
the second partnership? May M unilaterally dissolve the partnership?
Held: There was no intention to dissolve the first partnership upon the constitution of the
second as everything else was the same except for the fact that they took in an industrial
partner: they pursued the same purposes, the capital contributions call for the same amounts,
23
all subsequent renewals of Timber License were secured in favor of the first partnership, all
businesses were carried out under the registered articles. M and R agreed to purchase the
interest, share and participation of P and after, they became owners of the equipment
contributed by P. Both considered themselves as partners as per their letters. It is not a
partnership de facto or at will as it was existing and duly registered. The letter of M dissolving
the partnership is in effect a notice of withdrawal and may be done by expressly withdrawing
even before expiration of the period with or without justifiable cause. As to the liquidation of
the partnership it shall be divided “share and share alike” after an accounting has been made.
R is not entitled to any profits as he failed to give the amount he had undertaken to contribute
thus, had become a debtor of the partnership. M cannot be liable for damages as R
abandoned the partnership thru his acts and also took funds in an amount more than his
contribution.
Antonia Torres vs Court of Appeals
In 1969, sisters Antonia Torres and Emeteria Baring entered into a joint venture agreement
with Manuel Torres. Under the agreement, the sisters agreed to execute a deed of sale in
favor Manuel over a parcel of land, the sisters received no cash payment from Manuel but the
promise of profits (60% for the sisters and 40% for Manuel) – said parcel of land is to be
developed as a subdivision.
Manuel then had the title of the land transferred in his name and he subsequently mortgaged
the property. He used the proceeds from the mortgage to start building roads, curbs and
gutters. Manuel also contracted an engineering firm for the building of housing units. But due
to adverse claims in the land, prospective buyers were scared off and the subdivision project
eventually failed.
The sisters then filed a civil case against Manuel for damages equivalent to 60% of the value of
the property, which according to the sisters, is what’s due them as per the contract.
ISSUE: Whether or not there exists a partnership.
HELD: Yes. The joint venture agreement the sisters entered into with Manuel is a partnership
agreement whereby they agreed to contribute property (their land) which was to be
developed as a subdivision. While on the other hand, though Manuel did not contribute
capital, he is an industrial partner for his contribution for general expenses and other costs.
Furthermore, the income from the said project would be divided according to the stipulated
percentage (60-40). Clearly, the contract manifested the intention of the parties to form a
partnership. Further still, the sisters cannot invoke their right to the 60% value of the property
and at the same time deny the same contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the sisters, nor can it be
blamed to Manuel (the sisters on their appeal did not show evidence as to Manuel’s fault in
24
the failure of the partnership). The sisters must then bear their loss (which is 60%). Manuel
does not bear the loss of the other 40% because as an industrial partner he is exempt from
losses.
Litonjua v. Litonjua, Sr.
FACTS
Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered into a
contract of partnership with him.
Aurelio showed as evidence a letter sent to him by Eduardo that the latter is allowing Aurelio
to manage their family business (if Eduardo’s away) and in exchange thereof he will be giving
Aurelio P1 million or 10% equity, whichever is higher. A memorandum was subsequently made
for the said partnership agreement. The memorandum this time stated that in exchange of
Aurelio, who just got
married, retaining his share in the family business (movie theatres, shipping and land
development) and some other immovable properties, he will be given P1 Million or 10% equity
in all these businesses and those to be subsequently acquired by them whichever is greater.
In 1992 however, the relationship between the brothers went sour. And so Aurelio demanded
an accounting and the liquidation of his share in the partnership. Eduardo did not heed and so
Aurelio sued Eduardo.
ISSUE
Whether or not there exists a partnership.
HELD
No. The partnership is void and legally nonexistent. The documentary evidence presented by
Aurelio, i.e. the letter from Eduardo and the Memorandum, did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is
unsigned and undated. As an unsigned document, there can be no quibbling that said letter
does not meet the public instrumentation requirements exacted under Article 1771 (how
partnership is constituted) of the Civil Code. Moreover, being unsigned and doubtless referring
to a partnership involving more than P3,000.00 in money or property, said letter cannot be
presented for notarization, let alone registered with the Securities and Exchange Commission
(SEC), as called for under the Article 1772 (capitalization of a partnership) of the Code. And
inasmuch as the inventory requirement under the succeeding Article 1773 goes into the
matter of validity when immovable property is contributed to the partnership, the next logical
point of inquiry turns on the nature of Aurelio’s contribution, if any, to the supposed
partnership.
The Memorandum is also not a proof of the partnership for the same is not a public
instrument and again, no inventory was made of the immovable property and no inventory
25
was attached to the Memorandum. Article 1773 of the Civil Code requires that if immovable
property is contributed to the partnership an inventory shall be had and attached to the
contract.
Secuya v. Vda de Selma

G.R. No. 136021 February 22, 2000
Doctrine: Although there is no form required for a sale to be valid, a sale pertaining to land
must be registered in the Registry of Property. If it was not, and that it was only a private
document, then the sale is valid as to only the contracting parties, but not to 3rd parties.
FACTS: Maxima partitioned her land and sold it. Secuya eventually held possession of the land
and cultivated it. When he died, his siblings inherited it. A certain Selma came a long and
bought a partition of the Maxima’s land. In Selma’s title, the land in the possession of the
Secuyas was within the boundary bought by Selma. Selma now asserts ownership over the
land and files a case of quieting of title. SC says in this case, Selma is the owner because of the
strength of his title. Maxima Caballero owned a land. She partitioned the land and executed a
deed selling 1/3 of the land to Pacencia Sabellona. Pacencia took possession of the parted 1/3
portion. Dalmacio Secuya bought the land from Pacenciaby means of a private document
which was lost. Such sale was confirmed by Ramon Sabellona, the only heir of Pacienca.
Pursuant to Pacencia’s will, Ramos inherited all Pacencia’s properties. After Secuya bought the
land, Secuya took possession of the land and cultivated it. A certain Edilberto Superales
married Secuya’s neice..With Secuya’s tolerance, Superales was able to build his house on the
land and continuously lived there. Eventually, Secuya died. Being single, his brothers and
sisters took physical possession of the land. Then, a certain Selma bought a portion of Lot
5679. The land in the Secuyas’ possession was a portion of Lot 5679 and is included within the
boundary of what Selma acquired. Selma is now asserting ownership over the land on the
strength of his title. RTC-Cebu decided in favor of Selma. CA affirmed.
ISSUE: Does the land belong to Selma?
HELD: Yes.
There is strength in his title. Since this is an action for quieting of title, it must first be
established if the Secuyas have the requisite title that would enable them to avail of the
remedy of quieting of title. The Secuyas contest their claim on the basis of 2 documents: the
Agreement of Partition executed by Maxima Caballero and Paciencia Sabellona, and The Deed
of Confirmation of Sale executed by Ramon Sabellona.
Upon closer look, the SC says this Agreement is not one of partition, because there was no
property to partition, and the parties in the contract are not co-owners. This is one in the
26
nature of a trust agreement. Trust is the right to the beneficial enjoyment of property, while
the legal title to land is vested in another. Caballero merely entrusted the portion specified to
Sabellona. It therefore does not constitute a title. Since this is a trust agreement, it can be
repudiated. This (right to) repudiation does not expire, and was therefore exercised by the
heirs of Caballeros, when they sold the land to a 3rd party buyer (Selma).
Decision affirmed.
Heirs of Tan Eng Kee v. CA & Benguet Lumber Co. & Tan Eng Lay
Facts:
After Tan Eng Kee’s Death, his common-law wife Matilde Abuho and their children filed an
action against his brother, Tan Eng Lay for accounting, liquidation and winding up of the
alleged partnership Tan Eng Kee had with Tan Eng Lay.
The heirs claim that the two brothers were partners in Benguet Lumber Co. and had been
partners since the company was operating after the end of World War 2. Tan Eng Lay, the
president of the company claims that Tan Eng Kee was only an employee and presented
documents showing that Tan Eng Kee was receiving salary from the company payroll.
Issue:
Whether the two brothers were partners in Benguet Lumber Co.
Held:
NO. They were never partners.
Ratio:
Tan Eng Kee, in his lifetime never executed any acts which would indicate that he was a
partner.
1. He never demanded for periodic accountings of the common fund, which would be
expected of a real partner;
2. He never received any shares in the profits of Benguet Lumber, he only received salary
as evidenced by the payroll documents presented by Tan Eng Lay;
3. The Heirs were unable to prove that the brothers intended to divide the profits of the
business between themselves.
Even if Tan Eng Kee was granted certain privileges not given to regular employees, (such as
being allowed to live with his family on the grounds of the Lumber Compound, and having
supervisory powers over the regular employees) the Court found that these privileges were a
result of being related to the owner of the company and not because he was a partner.
27
 Tan Eng Kee never represented himself as a partner to any third person his actions, when
he was alive, taken together with how his brother treated him, strongly indicate that he was
NOT a partner.
 Article 1825 is meant to protect third persons who were misled by a person acting as a
partner even if he really isn’t. Since Tan Eng Kee never represented himself as a partner, and
there is no evidence or documentation of him being a partner, then he is not a partner.
Doctrine: Where circumstances taken singly may be inadequate to prove the intent to form a
partnership, nevertheless, the collective effect of these circumstances may be such as to
support a finding of existence of the parties’ intent.
CIR VS. SUTER

28
FACTS:A limited partnership named William J. Suter 'Morcoin' Co., Ltd was formed
30September 1947 by William J. Suter as the general partner, and Julia Spirig
And Gustav Carlson. They contributed, respectively, P20,000.00, P18,000.00 andP2,000.00. it
was also duly registered with the SEC. On 1948 Suter and Spirig got married and in effect
Carlson sold his share to the couple, the same was also registered with the SEC. The limited
partnership had been filing its Income tax returns as a corporation, without objection by the
herein petitioner, Commissioner of Internal Revenue, until in 1959 when the latter, in an
assessment, consolidated the income of the firm and the individual incomes of the partners-
spouses Suter and Spirig resulting in a determination of a deficiency income tax against
respondent Suter in the amount of P2,678.06 for 1954 and P4,567.00 for 1955.
ISSUE:Whether or not the limited partnership has been dissolved after the marriage of Suter
and Spirig and buying the interest of limited partner Carlson.
RULING:
No, the limited partnership was not dissolved. “ A husband and a wife may not enter into a
contract of general co partnership, because under the Civil Code, which applies in the absence
of express provision in the Code of Commerce, persons prohibited from making donations to
each other are prohibited from entering into universal partnerships. (2Echaverri 196) It follows
that the marriage of partners necessarily brings about the dissolution of a pre-existing
partnership.
“What the law prohibits was when the spouses entered into a general partnership. In the case
at bar, the partnership was limited
E. S. LYONS vs. C. W. ROSENSTOCK,

Executor of the Estate of Henry W. Elser, deceased
FACTS:
Henry W. Elser was engaged in buying, selling, and administering real estate. E. S. Lyons joined
with him, the profits being shared by the two in equal parts.
Lyons, whose regular vocation was that of a missionary or missionary agent, of the Methodist
Episcopal Church, went on leave to the United States and was gone for nearly a year and a
half. Elser made written statements showing that Lyons was, at that time, half owner with
Elser of three particular pieces of real property. Concurrently with this act Lyons execute in
favor of Elser a general power of attorney empowering him to manage and dispose of said
properties at will and to represent Lyons fully and amply, to the mutual advantage of both.
The attention of Elser was drawn to a piece of land, referred to as the San Juan Estate. He
obtained the loan of P50,000 to complete the amount needed for the first payment on the San
Juan Estate. The lender insisted that he should procure the signature of the Fidelity & Surety
Co. on the note to be given for said loan. Elser mortgaged to the Fidelity & Surety Co. the
29
equity of redemption in the property owned by himself and Lyons on Carriedo Street to secure
the liability thus assumed by it.
The case for the plaintiff supposes that, when Elser placed a mortgage for P50,000 upon the
equity of redemption in the Carriedo property, Lyons, as half owner of said property, became,
as it were, involuntarily the owner of an undivided interest in the property acquired partly by
that money; and it is insisted for him that, in consideration of this fact, he is entitled to the
four hundred forty-six and two-thirds shares of J. K. Pickering & Company, with the earnings
thereon, as claimed in his complaint.
ISSUE: W/N Lyons is a limited partner of Pickering by virtue of the Carriedo property, which
was used as security for the loan.
HELD: The contention of Lyons is untenable. The mortgage of the Carriedo property was
specifically allowed by Lyons. The risk he might have been exposed to is negligible considering
that the shares issued to Lyons was greater than what Elser owed him. Elser actually used only
his own money to purchase the San Juan property and no danger ever came to the investment
of Lyons. What cannot be denied is that Elser and Lyons were coparticipants in various real
estate ventures in the past. However, in the case of the San Juan Estate venture, no
partnership between Lyons and Elser existed and the law cannot be distorted into a
proposition which would make Lyons a participant in this deal contrary to his express
determination.
Joaquin Misa
Facts:
30
ROJAS V. MAGLANA
The term of the second co-partnership was fixed to 30 years. After some time, the three
executed a conditional sale of interest in the partnership where Magalana and Rojas shall
purchase the interest, share, and participation of Pahamotang. It was agreed that, after
payment of such including the loan secured by Pahamotang, the two shall become owners of
all equipment contributed by Pahamotang. The two continued the partnership without any
written agreement or reconstitution of the articles of partnership. Subsequently, Rojas
entered into a contarct with CMS Estate. Maglana reminded him of his contribution to the
capital investments and his duties to the partnership. Rojas said he would not be able to
comply. Maglana told Rojas that the latter is onlyentitled to 20% of the profits, which was the
an action against Magallana.
31
contribution.
Evangelista & Co. et.al. v. Estrella Abad Santos

FACTS:
On October 9, 1954, a co-partnership with herein petitioners as capitalist partners was formed
under the name “Evangelista & Co.” The Articles of Co-partnership was, however,
amended on June 7, 1955 so as to include herein respondent, Estrella Abad Santos, as an
industrial partner.
Consequently, on December 17, 1963, Abad Santos filed suit against the three (3) capitalist
partners, alleging that the partnership, which was also made a party-defendant, had been
paying dividends to the partners except to her. It was further alleged that despite her requests
that she be allowed to examine partnership books, to give her information regarding the
partnership affairs and to receive her share in the dividends declared by the partnership, the
petitioners refused and continued to refuse. She therefore prayed that the petitioners be
ordered to render an accounting of the partnership business and to pay her the corresponding
share in the dividends.
ISSUE:
Whether or not the Articles of Co-partnership shall be considered as a conclusive evidence of
respondent’s status as a limited partner?
HELD:
NO. The Court held that despite the genuineness of the Articles of Co-partnership
the same did not express the true intent and agreement of the parties, however, as the
subsequent events and testimonial evidences indicate otherwise, the Court upheld that
respondent is an industrial partner of the company.
Article 1789 provides that ‘An industrial partner cannot engage in business for himself, unless
the partnership expressly permits him to do so; and if he should do so, the capitalist partners
may either exclude him from the firm or avail themselves of the benefits which he may have
obtained in violation of this provision, with a right to damages in either case.’ Since 1954 and
32
until after the promulgation of the decision of the appellate court, Abad Santos has served as a
judge of the City Court of Manila and had been paid for services rendered allegedly
contributed by her to the partnership. Though being a judge of the City Court of Manila cannot
be characterized a business and/or may be considered an antagonistic business to the
partnership, the petitioners, subsequent of petitioners’ answer to the complaint, petitioners
reached the decision that respondent be excluded from and deprived of her alleged share in
the interest or participation as an alleged industrial partner in the net profits or income of the
partnership.
Having always known the respondent is a City Judge even before she joined the partnership,
why did it take petitioners so many years before excluding her from said company?
Furthermore, the act of exclusion is premised on the ground that respondent has always been
a partner, an industrial partner. In addition, the Court further held that with the consideration
of Article 1767 that ‘By a contract of partnership two or more persons bind themselves, to
contribute money, property, or industry to a common fund, with the intention of dividing
profits among themselves’, the services rendered by respondent may legitimately be
considered the respondent’s contribution to the common fund.
TUASON VS. BOLANOS
Facts:
Plaintiff’s complaint against defendant was to recover possession of a registered land. In the
complaint, the plaintiff is represented by its Managing Partner, Gregorio Araneta, Inc., another
corporation. Defendant, in his answer, sets up prescription and title in himself thru "open,
continuous, exclusive and public and notorious possession under claim of ownership, adverse
to the entire world by defendant and his predecessors in interest" from "time immemorial".
After trial, the lower court rendered judgment for plaintiff, declaring defendant to be without
any right to the land in question and ordering him to restore possession thereof to plaintiff
and to pay the latter a monthly rent. Defendant appealed directly to the Supreme Court and
contended, among others, that Gregorio Araneta, Inc. can not act as managing partner for
plaintiff on the theory that it is illegal for two corporations to enter into a partnership
Issue:
Whether or not a corporation may enter into a joint venture with another corporation.
Ruling:
It is true that the complaint states that the plaintiff is "represented herein by its Managing
Partner Gregorio Araneta, Inc.", another corporation, but there is nothing against one
corporation being represented by another person, natural or juridical, in a suit in court. The
33
contention that Gregorio Araneta, Inc. cannot act as managing partner for plaintiff on the
theory that it is illegal for two corporations to enter into a partnership is without merit, for the
true rule is that "though a corporation has no power to enter into a partnership, it may
nevertheless enter into a joint venture with another where the nature of that venture is in line
with the business authorized by its charter." (Wyoming-Indiana Oil Gas Co. vs. Weston, 80 A. L.
R., 1043, citing 2. Fletcher Cyc. of Corp., 1082.). There is nothing in the record to indicate that
the venture in which plaintiff is represented by Gregorio Araneta, Inc. as "its managing
partner" is not in line with the corporate business of either of them.
Munasque vs. CA
FACTS: Petitioner Elmo Muñasque in behalf of the partnership "Galan &Muñasque", as a

Contractor, entered into a written contract with respondent Tropical for remodeling of its
Cebu Branch building. A totalamount of P25,000 was to be paid under the contract for the
entireservices of the Contractor. The first payment made by Tropical was in theform of a check
for P7,000 in the name of petitioner. Petitioner endorsedthe check in favor of Galan to enable
the latter to deposit it in the bankand pay for the materials and labor used. A
misunderstanding ensuedbetween Muñasque and Galan which came to the knowledge of
Tropical,thus, the second check issued by the latter was drawn in the name of "Galan and
Associates" and was encashed by Galan. Meanwhile, the construction continued through the
sole efforts of petitioner, whichcaused him to borrow money from a certain Mr. Espina. Two
checks were subsequently given to petitioner pursuant to a court order.Petitioner filed a
complaint for payment of sum of money anddamages against the respondents seeking to
recover the amountscovered by the two checks and the additional expenses that petitioner
incurred in the construction.
ISSUE: Whether or not Petitioner Muñasque solidarily or jointly liable with Respondent Galan
to pay the credits of intervenors Blue Diamond Glass and Cebu Southern Hardware.
HELD: Petitioner is solidarily liable with respondent Galan to pay thecredits of the two
intervenors. Therefore, petitioner may recover fromrespondent Galan any amount that he
pays, in his capacity as a partner,to the above intervenors. Art. 1816 should be construed
together with Article 1824 whichprovides that: "All partners are liable solidarily with the
partnership for everything chargeable to the partnership under Articles 1822 and 1823".The
obligation is solidary because the law protects him, who in good faith relied upon the
authority of a partner, whether such authority is real or apparent. That is why under Article
1824 of the Civil Code all partners,whether innocent or guilty, as well as the legal entity which
is thepartnership, are solidarily liable.In this case, Tropical, Blue Diamond and Cebu Hardware
hadevery reason to believe that partnership existed between petitioner andGalan, thus, it is
34
fair that consequences of any wrongful act committed byany of the partners therein should be
answered solidarily by all thepartners and the partnership as a whole. As between petitioner
Muñasque and Galan, justice so dictates that Muñasque be reimbursed by Galan for the
payments made by theformer as it was satisfactorily established that Galan acted in bad faith
inhis dealings with Munasque as a partner.
J. Tiosejo Investment Corp. v. Spouses Benjamin and Eleanor Ang
Facts:
In this case, the petitioners seek the reversal of the CA’s Resolution declaring J. Tiosejo
Investment Corp. solidarily liable with Primetown Property Group, Inc. (PPGI) to pay Spouses
Benjamin and Eleanor Ang their refund for their payments plus legal interest until fully paid
and damages. J. Tiosejo entered into a Joint Venture Agreement with PPGI for the
development of a residential condominium project known as Meditel in Mandaluyong City.
Petitioner contributed the lot while PPGI undertook to develop the condominium. The parties
further agreed to a 17%-83% sharing as to developed units. PPGI further undertook to use all
proceeds from pre-selling of its saleable units for the completion of the Condominium Project.
Sometime in 1996, PPGI executed a Contract to Sell with Spouses Ang on a certain
condominium unit and parking slot for P2,077,334.25 and P313,500.00, respectively. On July
1999, respondent Spouses filed before the Housing and Land Use Regulatory Board(HLURB) a
complaint for the rescission of the Contract to Sell, against J. Tiosejo and PPGI. They claim that
they were promised that the condo unit would be available for turn-over and occupancy by
December 1998, however the project was not completed as of the said date. Spouses Ang
instructed petitioner and PPGI to stop depositing the post-dated checks they issued and to
cancel said Contracts to Sell. Despite several demands, petitioner and PPGI have failed and
refused to refund the P611,519.52 they already paid under the circumstances.
Issue:
Whether or not J. Tiosejo Investment Corp. is exempt from liability by claiming it was not privy
to the Contract to Sell executed by its JV partner, PPGI and the Spouses Ang
Held:
The Supreme Court held that J. Tiosejo Investment Corp. “cannot avoid liability by claiming
that it was not in any way privy to the Contracts to Sell executed by PPGI and respondents.” It
was stated in its ruling that a
“joint venture” is considered as a form of partnership, and as such, it should be governed by
the law of partnerships. Under Article 1824 of the Civil Code of the Philippines, all partners are
solidarily liable with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any wrongful act or
35
omission of any partner acting in the ordinary course of the business of the partnership or
with the authority of his co-partners. Whether innocent or guilty, all the partners are solidarily
liable with the partnership itself.
Litton vs. Hill

Facts:
Litton sold and delivered to Ceron, one of the managing partners of Hill & Ceron, a certain
number of mining claims. By virtue of said transaction, Ceron delivered to plaintiff a document
(receipt) acknowledging that he received from Litton certain share certificates of Big Wedge
Mining Company totalingP1870.Ceron paid to Litton P1, 150 leaving a balance of P720. Litton
was unable to collect the unpaid balance from Hill & Ceron or from its surety. Litton filed a
complaint against the defendants for the recovery of the balance. The court ordered Ceron to
personally pay the amount claimed and absolved the partnership, Hill and the surety.CA
affirmed the decision of the court.
Issue: WON Ceron’s act binds the partnership.
Held:
Yes, we reach the conclusion that the transaction made by Ceron with the plaintiff should be
understood in law as effected by Hill & Ceron and binding upon it.
In the first place, it is an admitted fact by Robert Hill when he testified at the trial that he and
Ceron, during the partnership, had the same power to buy and sell; that in said partnership Hill
as well as Ceron made the transaction as partners in equal parts; that on the date of the
transaction, February 14, 1934, the partnership between Hill and Ceron was in existence.
According to the articles of copartnership of ‘Hill & Ceron,’ a written contract of the firm can
only be signed by one of the partners if the other partner consented. Without the consent of
one partner, the other cannot bind the firm by a written contract. Now, assuming for the
moment that Ceron attempted to represent the firm in this contract with the plaintiff (the
plaintiff conceded that the firm name was not mentioned at that time), the latter has failed to
prove that Hill had consented to such contract. Also, third persons, like the plaintiff, are not
bound in entering into a contract with any of the two partners, to ascertain whether or not
this partner with whom the transaction is made has the consent of the other partner. The
public need not make inquires as to the agreements had between the partners. Its knowledge,
is enough that it is contracting with the partnership which is represented by one of the
managing partners.
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Antonio C. Goquilay, ET AL. vs. Washington Z. Sycip, ET AL.
Antonio C. Goquilay, ET AL. vs. Washington Z. Sycip, ET AL. GR NO. L-11840, December 10,
1963
FACTS:
Tan Sin An and Goquiolay entered into a general commercial partnership under the
partnership name “Tan Sin An and Antonio Goquiolay” for the purpose of dealing in real
estate. The agreement lodged upon Tan Sin An the sole management of the partnership
affairs. The lifetime of the partnership was fixed at ten years and the Articles of Co-partnership
stipulated that in the event of death of any of the partners before the expiration of the term,
the partnership will not be dissolved but will be continued by the heirs or assigns of the
deceased partner. But the partnership could be dissolved upon mutual agreement in writing of
the partners. Goquiolay executed a GPA in favor of Tan Sin An. The plaintiff partnership
purchased 3 parcels of land which was mortgaged to “La Urbana” as payment of P25,000.
Another 46 parcels of land were purchased by Tan Sin An in his individual capacity which he
assumed payment of a mortgage debt for P35K. A downpayment and the amortization were
advanced by Yutivo and Co. The two obligations were consolidated in an instrument executed
by the partnership and Tan Sin An, whereby the entire 49 lots were mortgaged in favor of
“Banco Hipotecario” Tan Sin An died leaving his widow, Kong Chai Pin and four minor
children. The widow subsequently became the administratrix of the estate. Repeated
demands were made by Banco Hipotecario on the partnership and on Tan Sin An.  Defendant
Sing Yee, upon request of defendant Yutivo Sons , paid the remaining balance of the mortgage
debt, the mortgage was cancelled Yutivo Sons and Sing Yee filed their claim in the intestate
proceedings of Tan Sin An for advances, interest and taxes paid in amortizing and discharging
their obligations to “La Urbana” and “Banco Hipotecario.” Kong Chai Pin filed a petition with
the probate court for authority to sell all the 49 parcels of land. She then sold it to Sycip and
Lee in consideration of P37K and of the vendees assuming payment of the claims filed by
Yutivo Sons and Sing Yee. Later, Sycip and Lee executed in favor of Insular Development a
deed of transfer covering the 49 parcels of land. When Goquiolay learned about the sale to
Sycip and Lee, he filed a petition in the intestate proceedings to set aside the order of the
probate court approving the sale in so far as his interest over the parcels of land sold was
37
concerned. Probate court annulled the sale executed by the administratrix w/ respect to the
60% interest of Goquiolay over the properties Administratrix appealed. The decision of
probate court was set aside for failure to include the indispensable parties. New pleadings
were filed. The second amended complaint prays for the annulment of the sale in favor of
Sycip and Lee and their subsequent conveyance to Insular Development. The complaint was
dismissed by the lower court hence this appeal.
ISSUE/S: Whether or not a widow or substitute become also a general partner or only a
limited partner. Whether or not the lower court err in holding that the widow succeeded her
husband Tan Sin An in the sole management of the partnership upon Tan’s death Whether or
not the consent of the other partners was necessary to perfect the sale of the partnership
properties to Sycip and Lee?
HELD:
Kong Chai Pin became a mere general partner. By seeking authority to manage partnership
property, Tan Sin An’s widow showed that she desired to be considered a general partner. By
authorizing the widow to manage partnership property (which a limited partner could not be
authorized to do), Goqulay recognized her as such partner, and is now in estoppel to deny her
position as a general partner, with authority to administer and alienate partnership property.
The articles did not provide that the heirs of the deceased would be merely limited partners;
on the contrary, they expressly stipulated that in case of death of either partner, “the co
partnership will have to be continued” with the heirs or assignees. It certainly could not be
continued if it were to be converted from a general partnership into a limited partnership
since the difference between the two kinds of associations is fundamental, and specially
because the conversion into a limited association would leave the heirs of the deceased
partner without a share in the management. Hence, the contractual stipulation actually
contemplated that the heirs would become general partners rather than limited ones.
38
Isabelo Moran vs Court of Appeals
In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership agreement
where they agreed to contribute P15k each for the purpose of printing 95k posters of the
delegates to the then 1971 Constitutional Commission. Moran shall be in charge in managing
the printing of the posters. It was further agreed that Pecson will receive a commission of P1k
a month starting from April 1971 to December 1971; that the partnership is to be liquidated
on December 15, 1971.
Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the
partnership. He gave the P10k to Moran as the managing partner. Moran however did not add
anything and, instead, he only used P4k out of the P10k in printing 2,000 posters. He only
printed 2,000 posters because he felt that printing all 95k posters is a losing venture because
of the delay by the COMELEC in announcing the full delegates. All the posters were sold for a
total of P10k.
Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of
Appeals affirmed the decision of the trial court but modified the same as it ordered Moran to
pay P47.5k for unrealized profit; P8k for Pecson’s monthly commissions; P7k as return of
investment because the venture never took off; plus interest.
ISSUE: Whether or not the CA judgment is correct.
HELD: No. The award of P47.5k for unrealized profit is speculative. There is no evidence
whatsoever that the partnership between the Moran and Pecson would have been a profitable
venture (because base on the circumstances then i.e. the delay of the COMELEC in proclaiming
the candidates, profit is highly unlikely). In fact, it was a failure doomed from the start. There is
therefore no basis for the award of speculative damages in favor of Pecson. Further, there is
mutual breach in this case, Pecson only gave P10k instead of P15k while Moran gave nothing
at all.
As for the P8k monthly commission, this is without basis. The agreement does not state the
basis of the commission. The payment of the commission could only have been predicated on
relatively extravagant profits. The parties could not have intended the giving of a commission
inspite of loss or failure of the venture. Since the venture was a failure, Pecson is not entitled
to the P8k commission.
As for the P7k award as return for Pecson’s investment, the CA erred in his ruling too. Though
the venture failed, it did took off the ground as evidenced by the 2,000 posters printed. Hence,
return of investment is not proper in this case. There are risks in any business venture and the
39
failure of the undertaking cannot entirely be blamed on the managing partner alone, specially
if the latter exercised his best business judgment, which seems to be true in this case.
Moran must however return the unused P6k of Pecson’s contribution to the partnership plus
P3k representing Pecson’s profit share in the sale of the printed posters. Computation of P3k
profit share is as follows: (P10k profit from the sale of the 2,000 posters printed) – (P4k
expense in printing the 2k posters) = (P6k profit); Profit ÷ 2 = P3k each.
Sison v. Helen McQuaid

December 29, 1953
Principle: Liquidation shall happen before a partner may claim his share of profit from the
partnership.
Facts:
Plaintiff brought an action in the CFI against defendant. Defendant borrowed from him money
(P 2,210) to enable her to pay her obligations and to add to her capital in her lumber business.
She could not pay so she proposed to take plaintiff as a partner in her business, plaintiff to
contribute the P 2,210 due him from defendant.
Before the last World War, the partnership sold 230,000‐board ft. of lumbe rto the US Army
for P 13,800.00. Defendant refused to deliver ½ of it (P 6,900.00) to plaintiff despite his
repeated demands. Plaintiff filed an action to compel defendant to pay him his half of the
profit from the partnership.
The case was dismissed upon the ground of prescription.
Issue: Whether or not plaintiff is entitled to the sum he claims
Held:
NO. Order of dismissal was affirmed, but on the ground that the complaint states no cause of
action.
Ratio: It is not clear from the complaint just when the cause of action accrued. Thus the
dismissal of the case is erroneous. However order should be retained on the ground that the
complaint has no cause of action. Plaintiff seeks to recover from defendant one-half of the
purchase price of lumber sold by the partnership to the United States Army. But his complaint
does not show why he should be entitled to the sum he claims. It does not allege that there
has been a liquidation of the partnership business and the said sum has been found to be due
him as his share of the profits. The proceeds from the sale of a certain amount of lumber
cannot be considered profits until costs and expenses have been deducted. Moreover, the
profits of the business cannot be determined by taking into account the result of one
40
particular transaction instead of all the transactions had. Hence, the need for a general
liquidation before a member of a partnership may claim a specific sum as his share of the
profits.
Tan- Feu Leung vs Intermediate Appellate Court
Facts:The Sun WahPanciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz,
Manila, was established sometime in October, 1955. It was registered as a single
proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue
Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the
case to show that Sun WahPanciteria was actually a partnership and that he was one of the
partners having contributed P4,000.00 to its initial establishment.
Issue:whether or not the private respondent is a partner of the petitioner in the establishment
of SunWahPanciteria.
Held: private respondent is a partner of the petitioner in Sun WahPanciteria. The requisites of
a partnershipwhich are 1) two or more persons bind themselves to contribute money,
property, or industry to acommon fund; and 2) intention on the part of the partners to divide
the profits among themselves havebeen established. As stated by the respondent, a partner
shares not only in profits but also in the lossesof the firm. If excellent relations exist among the
partners at the start of business and all the partnersare more interested in seeing the firm
grow rather than get immediate returns, a deferment of sharingin the profits is perfectly
plausible. It would be incorrect to state that if a partner does not assert hisrights anytime
within ten years from the start of operations, such rights are irretrievably lost. Theprivate
respondent's cause of action is premised upon the failure of the petitioner to give him
theagreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was
asking for anaccounting of his interests in the partnership.
Hanlon vs. Haussermann and Beam

Facts:
This action was originally instituted by R. Y. Hanlon to compel the defendants, John W.
Haussermann and A. W. Beam, to account for a share of the profits gained by them in
rehabilitating the plant of the Benguet Consolidated Mining Company and in particular to
compel them to surrender to the plaintiff 50,000 shares of the stock of said company, with
dividends paid thereon. It was initially agreed by Hanlon, Haussermann, Beam and Sellner that
P75,000.00 was needed to rehabilitate the mine; P50,000.00 would come from Hanlon by
41
securing and obtaining subscriptions for the company’s stocks, P25,000.00 would come from
Haussermann and Beam. They were to receive compensation in the form of shares of stock for
the services rendered in
the flotation of this proposition. The funds were needed on a certain date. It was also stated in
the contract that Haussermann and Beam would be discharged if Sellner could not provide the
amount due from him within the time frame stipulated. Hanlon was unable to raise the
P75,000.00, so that Haussermann and Beam made
arrangements to finance the rehabilitation of the mine. Because of this new arrangement, the
company became profitable that it was able to pay dividends. Because of this, the value of the
company’s stocks appreciated.
Issues:
WON Hanlon is not entitled to an accounting for his share in the profits of the company;
WON Haussermann and Beam are absolved.
Held:
Under the equitable doctrine, if the contracting parties have treated time as of the essence of
the contract, the delinquency will not be excused and specific performance will not be
granted;
but on the other hand, if it appears that time has not been made of the essence of the
contract,
equity will relieve from the delinquency and specific performance may be granted, due
compensation being made for the damage caused by the delay.
Time is of the essence of the contract for the sale of an option on mining property, or a
contract
for the sale thereof, even though there is no express stipulation to that effect. The same idea
is
clearly applicable to a contract like that now under consideration which provides for the
rehabilitation of a mining plant with funds to be supplied by the contractor within a limited
period.
LIM TANHU v. HON. JOSE R. RAMOLETE
FACTS:
42
Tan alleged that she is the widow of Tee Hoon Lim Po Chuan, who was a partner in the
commercial partnership, Glory Commercial Company with Antonio Lim Tanhu and Alfonso Ng
Sua".
Defendant Antonio Lim Tanhu, Alfonso Leonardo Ng Sua, Lim Teck Chuan, and Eng Chong
Leonardo, through fraud and machination, took actual and active management of the
partnership and although Tee Hoon Lim Po Chuan was the manager of Glory Commercial
Company, defendants managed to use the funds of the partnership to purchase lands and
buildings in the cities of Cebu, Lapulapu, Mandaue, and the municipalities of Talisay and
Minglanilla.
She alleged in her complaint that after the death of Tee Hoon Lim Po Chuan, the defendants,
without liquidation, continued the business of Glory Commercial Company, by purportedly
organizing a corporation known as the Glory Commercial Company, Incorporated and
sometime in the month of November, 1967, defendants, particularly Antonio Lim Tanhu, by
means of fraud deceit, and misrepresentations did then and there, induce and convince her to
execute a quitclaim of all her rights and interests, in the assets of the partnership of Glory
Commercial Company.
Thereafter, in the year 1968-69, the defendants who had earlier promised to liquidate the
aforesaid properties and assets in favor, among others of plaintiff and until the middle of the
year 1970 when the plaintiff formally demanded from the defendants the accounting of real
and personal properties of the Glory Commercial Company, defendants refused and stated
that they would not give the share of the plaintiff.
ISSUE:
Whether Tan has a right over the liquidated properties of the partnership
HELD:
43
No, Tan has no right over the liquidated properties of the partnership
The Supreme Court held that there is no alternative but to hold that plaintiff Tan Put's
allegation that she is the widow of Tee Hoon Lim Po Chuan has not been satisfactorily
established and that, on the contrary, the evidence on record convincingly shows that her
relation with said deceased was that of a common-law wife.
Moreover, the Supreme Court said that the lower courts committed an error by awarding 1/3
of the partnership properties to Tan because there has been no liquidation proceedings yet.
And if there has not yet been any liquidation of the partnership, the only right plaintiff could
have would be to what might result after much liquidation to belong to the deceased partner
(her alleged husband) and before this is finished, it is impossible to determine, what rights or
interest, if any the deceased had.
In other words, no specific amounts or properties may be adjudicated to the heir or legal
representative of the deceased partner without the liquidation being first terminated.
ROJAS V. MAGLANA
44
contribution.
45
Uy Vs. Puzon
Facts:
 Bartolome Puzon had two contracts with the government for the construction of roads
and bridges. (Bureau of Public Highways)
 He sought the financial assistance of William Uy, so he proposed that they create a
partnership which would be the sub-contractor of the projects.
 They also agreed that the profits will be divided among themselves.
 William Uy agreed to the formation of the partnership "U.P. Construction Company". They
agreed to contribute P50,000 each. (Note: P40,000 was advanced by William Uy while
Puzon was waiting for the approval of his P150,000 PNB Loan. Upon release of the loan,
he promised to reimburse William Uy of the P40,000; pay his share of P50,000 and loan
P60,000 to the partnership).
 Loan was approved by November 1956. Note: At the end of 1957, Uy contributed a total
of P115,
 The partnership agreement was signed in 1957 (January 18) although the work for the
projects began as early as 1956 (October 1).
 Since Puzon was busy with other projects, Uy was the one who managed the partnership.
 In order to guarantee the PNB Loan, Puzon, without the knowledge of Uy, assigned the
payments to the payments to be received from the projects to PNB.
 Due to the financial demands of the projects, Uy demanded that Puzon comply with his
obligation to place his capital contribution in the company.
 However, Puzon failed to comply even after formal demand letters were sent to him.
 Thereafter, Puzon (as the primary contractor of the projects) wrote terminated the
subcontract agreement with the partnership to which he is also a partner. (November 27,
1957)
 Thereafter, Uy was not allowed to hold office in the UP Construction Company and his
authority to negotiate with the Bureau was revoked by Puzon.
 Uy clamied that Puzon had violated the terms of their partnership agreement. He sought
for the dissolution of the partnership with damages.
 The lower court ruled in favor of Uy.
46
ISSUE/S: W/N the amount of money ordered by the trial court for the failure to contribute his
share in the capital of the partnership is proper.
RULING:
The award of P200,000.00 as his share in the unrealized profits of the partnership is proper.
Under Article 2200 of the Civil Code, indemnification for damages shall comprehend not only
the value of the loss suffered, but also that of the profits which the obligee failed to obtain. In
other words lucrum cessans is also a basis for indemnification. There is no doubt Uy failed to
make profits because of Puzon's breach of contract. The partnership showed some profits
even though the profit and loss statement showed net loss; it may be due to error in
accounting.
Had the appellant not been remiss in his obligations as partner and as prime contractor of the
construction projects in question as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total contract amount of these two
projects is P2,327,335.76, it is reasonable to expect that the partnership would have earned
much more than the P334,255.61 We have hereinabove indicated. The award, therefore,
made by the trial court of the amount of P200,000.00, as compensatory damages, is not
speculative, but based on reasonable estimate.
The rule is, when a partner who has undertaken to contribute a sum of money fails to do so,
he becomes a debtor of the partnership for whatever he may have promised to contribute
(Art. 1786, Civil Code) and for interests and damages from the time he should have complied
with his obligation (Art. 1788, Civil Code).
47
total of P10k.
at all.
Sancho vs. Lizarraga
FACTS:
48
Sancho and Lizarraga entered into a contract of partnership. Sancho thereafter brought an
action for the rescission of the partnership and prayed for the reimbursement of the P 50, 000
investment he contributed with interest at 12% per annum against Lizarraga.
Lizarraga denied allegations and asked for the dissolution of their partnership and payment to
him as manager and administrator of the partnership of P500 monthly from October 15, 1920
[the day the contract was entered into] until final dissolution.
CFI Manila proceedings proved Lizarraga had not contributed all the capital he bound himself
to invest and that Sancho demanded Lizarraga to liquidate partnership. CFI declared
partnership dissolved on account of the expiration period for which it was constituted and
ordered liquidation of the partnership.
The plaintiff appealed from said decision praying for the rescission of the partnership contract
between him and the defendant in accordance with Art. 1124.
ISSUE/S:
W/N plaintiff acquired the right to demand rescission of the partnership contract according to
article 1124 of the Civil Code.
RULING:
RIGHT TO DEMAND RESCISSION OF THE PARTNERSHIP CONTRACT. The Supreme Court ruled
that plaintiff has not acquired the right to demand rescission of the partnership contract
according to Article 1124 of the Civil Code. The Court ratiocinated that owing to the
defendant’s failure to pay to the partnership the whole amount which he bound himself to
pay, he became indebted to the partnership for the remainder, with interest and any damages
occasioned thereby, but the plaintiff did not thereby acquire the right to demand rescission of
the partnership contract according to article 1124 of the Code. Article 1124 cannot be applied
to the case in question, because it refers to the resolution of obligations in general, whereas
articles 1681 and 1682 [of Old Civil Code] specifically refer to the contract of partnership in
particular. And it is a well known principle that special provisions prevail over general
provisions. Hence, SC dismissed the appeal left the decision appealed from in full force.
Lozana vs. Depakakibo
FACTS:
Lozana and Depakakibo established a partnership for the purpose of maintaining, operating,
and distributing electric light and power in the Municipality of Dumangas. The partnership is
capitalized at the sum of P30, 000.00 where Lozana agreed to furnish 60% while Depakakibo,
40%.
However, the franchise for venture in favor of Buenaflor was cancelled and revoked by the
Public Service Commission. Lozana thereafter sold Generator Buda [Lozana’s contribution to
49
the partnership; no liquidation made] to Decologon. When the decision was appealed, a
temporary certificate of public convenience was issued in the name of Decolongon.
Depakakibo sold one Crossly Diesel Engine [Depakakibo’s contribution to the partnership] to
Spouses Jimenea and Harder.
Lozana brought action against Depakakibo alleging the latter wrongfully detained the
Generator Buda and wooden posts to which he is entitled to the possession of. Lozano prayed
the properties be delivered back to him.
ISSUE:
W/N partnership is void or the act of the partnership in furnishing electric current to the
franchise holder without previous approval of Public Service Commission render the
partnership void?
W/N disposal of contribution of parties is allowed.
RULING:
Validity of the Partnership. Partnership is valid. The fact of furnishing the current to the holder
of the franchise alone, without the previous approval of the Public Service Commission, does
not per se make the contract of partnership null and void from the beginning and render the
partnership entered into by the parties for the purpose also void and non-existent
Disposal of Contributed Property to the Partnership. Facts show that parties entered into the
contract of partnership, Lozana contributing the amount of P18, 000, and there has not been
liquidation prior to the sale of the contributed properties: Buda Diesel Engine and 70 posts. It
necessarily follows that the Buda diesel engine contributed by the plaintiff had become the
property of the partnership. As properties of the partnership, the same could not be disposed
of by the party contributing the same without the consent or approval of the partnership or of
the other partner. (Clemente vs. Galvan, 67 Phil., 565)
Hanlon vs. Haussermann and Beam

Facts:
This action was originally instituted by R. Y. Hanlon to compel the defendants, John W.
Haussermann and A. W. Beam, to account for a share of the profits gained by them in
rehabilitating the plant of the Benguet Consolidated Mining Company and in particular to
compel them to surrender to the plaintiff 50,000 shares of the stock of said company, with
dividends paid thereon. It was initially agreed by Hanlon, Haussermann, Beam and Sellner that
P75,000.00 was needed to rehabilitate the mine; P50,000.00 would come from Hanlon by
securing and obtaining subscriptions for the company’s stocks, P25,000.00 would come from
Haussermann and Beam. They were to receive compensation in the form of shares of stock for
the services rendered in
the flotation of this proposition. The funds were needed on a certain date. It was also stated in
the contract that Haussermann and Beam would be discharged if Sellner could not provide the
50
amount due from him within the time frame stipulated. Hanlon was unable to raise the
P75,000.00, so that Haussermann and Beam made
arrangements to finance the rehabilitation of the mine. Because of this new arrangement, the
company became profitable that it was able to pay dividends. Because of this, the value of the
company’s stocks appreciated.
Issues:
WON Hanlon is not entitled to an accounting for his share in the profits of the company;
WON Haussermann and Beam are absolved.
Held:
Under the equitable doctrine, if the contracting parties have treated time as of the essence of
the contract, the delinquency will not be excused and specific performance will not be
granted;
but on the other hand, if it appears that time has not been made of the essence of the
contract,
equity will relieve from the delinquency and specific performance may be granted, due
compensation being made for the damage caused by the delay.
Time is of the essence of the contract for the sale of an option on mining property, or a
contract
for the sale thereof, even though there is no express stipulation to that effect. The same idea
is
clearly applicable to a contract like that now under consideration which provides for the
rehabilitation of a mining plant with funds to be supplied by the contractor within a limited
period.
LIM TANHU v. HON. JOSE R. RAMOLETE
FACTS:
Tan alleged that she is the widow of Tee Hoon Lim Po Chuan, who was a partner in the
commercial partnership, Glory Commercial Company with Antonio Lim Tanhu and Alfonso Ng
Sua".
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Defendant Antonio Lim Tanhu, Alfonso Leonardo Ng Sua, Lim Teck Chuan, and Eng Chong
Leonardo, through fraud and machination, took actual and active management of the
partnership and although Tee Hoon Lim Po Chuan was the manager of Glory Commercial
Company, defendants managed to use the funds of the partnership to purchase lands and
buildings in the cities of Cebu, Lapulapu, Mandaue, and the municipalities of Talisay and
Minglanilla.
She alleged in her complaint that after the death of Tee Hoon Lim Po Chuan, the defendants,
without liquidation, continued the business of Glory Commercial Company, by purportedly
organizing a corporation known as the Glory Commercial Company, Incorporated and
sometime in the month of November, 1967, defendants, particularly Antonio Lim Tanhu, by
means of fraud deceit, and misrepresentations did then and there, induce and convince her to
execute a quitclaim of all her rights and interests, in the assets of the partnership of Glory
Commercial Company.
Thereafter, in the year 1968-69, the defendants who had earlier promised to liquidate the
aforesaid properties and assets in favor, among others of plaintiff and until the middle of the
year 1970 when the plaintiff formally demanded from the defendants the accounting of real
and personal properties of the Glory Commercial Company, defendants refused and stated
that they would not give the share of the plaintiff.
ISSUE:
Whether Tan has a right over the liquidated properties of the partnership
HELD:
No, Tan has no right over the liquidated properties of the partnership
The Supreme Court held that there is no alternative but to hold that plaintiff Tan Put's
allegation that she is the widow of Tee Hoon Lim Po Chuan has not been satisfactorily
52
established and that, on the contrary, the evidence on record convincingly shows that her
relation with said deceased was that of a common-law wife.
Moreover, the Supreme Court said that the lower courts committed an error by awarding 1/3
of the partnership properties to Tan because there has been no liquidation proceedings yet.
And if there has not yet been any liquidation of the partnership, the only right plaintiff could
have would be to what might result after much liquidation to belong to the deceased partner
(her alleged husband) and before this is finished, it is impossible to determine, what rights or
interest, if any the deceased had.
In other words, no specific amounts or properties may be adjudicated to the heir or legal
representative of the deceased partner without the liquidation being first terminated.
Evangelista & Co. et.al. v. Estrella Abad Santos

FACTS:
On October 9, 1954, a co-partnership with herein petitioners as capitalist partners was formed
under the name “Evangelista & Co.” The Articles of Co-partnership was, however,
amended on June 7, 1955 so as to include herein respondent, Estrella Abad Santos, as an
industrial partner.
Consequently, on December 17, 1963, Abad Santos filed suit against the three (3) capitalist
partners, alleging that the partnership, which was also made a party-defendant, had been
paying dividends to the partners except to her. It was further alleged that despite her requests
that she be allowed to examine partnership books, to give her information regarding the
partnership affairs and to receive her share in the dividends declared by the partnership, the
petitioners refused and continued to refuse. She therefore prayed that the petitioners be
ordered to render an accounting of the partnership business and to pay her the corresponding
share in the dividends.
ISSUE:
Whether or not the Articles of Co-partnership shall be considered as a conclusive evidence of
respondent’s status as a limited partner?
53
HELD:
NO. The Court held that despite the genuineness of the Articles of Co-partnership
the same did not express the true intent and agreement of the parties, however, as the
subsequent events and testimonial evidences indicate otherwise, the Court upheld that
respondent is an industrial partner of the company.
Article 1789 provides that ‘An industrial partner cannot engage in business for himself, unless
the partnership expressly permits him to do so; and if he should do so, the capitalist partners
may either exclude him from the firm or avail themselves of the benefits which he may have
obtained in violation of this provision, with a right to damages in either case.’ Since 1954 and
until after the promulgation of the decision of the appellate court, Abad Santos has served as a
judge of the City Court of Manila and had been paid for services rendered allegedly
contributed by her to the partnership. Though being a judge of the City Court of Manila cannot
be characterized a business and/or may be considered an antagonistic business to the
partnership, the petitioners, subsequent of petitioners’ answer to the complaint, petitioners
reached the decision that respondent be excluded from and deprived of her alleged share in
the interest or participation as an alleged industrial partner in the net profits or income of the
partnership.
Having always known the respondent is a City Judge even before she joined the partnership,
why did it take petitioners so many years before excluding her from said company?
Furthermore, the act of exclusion is premised on the ground that respondent has always been
a partner, an industrial partner. In addition, the Court further held that with the consideration
of Article 1767 that ‘By a contract of partnership two or more persons bind themselves, to
contribute money, property, or industry to a common fund, with the intention of dividing
profits among themselves’, the services rendered by respondent may legitimately be
considered the respondent’s contribution to the common fund.
Idos v. CA
Facts:
In 1985, Eddie Alarilla and Irma Idos formed a partnership which they decided to terminate
after a year. To
pay Alarilla’s share of the asset, Idos issued 4 post dated checks. Alarilla was able to encash the
first,
54
second and fourth checks but the third was dishonored for insufficiency of funds. He
demanded payment
but Idos failed to pay. She claimed that the checks were issued as assurance of Alarilla’s share
in the
assets of the partnership and that it was supposed to be deposited until the stocks were sold.
He filed an
information for violation of BP blg. 22 against Idos in which she was found guilty by the trial
court.
Issue: Did the court confused and merged into one the legal concepts of dissolution,
liquidation and
termination of a partnership?
Ruling: The partners agreement to terminate the partnership did not automatically dissolved
the
partnership. They were in the process of winding-up when the check in question was issued.
The best
evidenceof the existence of the partnership, which was not yet terminated were the unsold
goods and
uncollected receivables which were presented to the trial court. Article 1829 of the Civil Code
provides
that “on dissolution the partnership is not terminated but continues until the winding-up of
partnership
affairs is completed. Since the partnership has not been terminated, Idos and Alarilla remained
copartners.
The check was issued by petitioner to respondent as would a partner to another and not as a
payment by debtor to creditor. Thus, absent the first element of the complained offense, the
act is not
punishable by the statute.

vs.
FACTS
55
following:

10.6% overriding commission for weekly sales
11.30% of sales Anay will make herself
12.2% share for her demo services
ISSUE
HELD
common fund; and
(2) intention on the part of the partners to divide the profits among themselves. It may be
constituted in any form; a public instrument is necessary only where immovable property or
real rights are contributed thereto.
FERNANDEZ vs. DE LA ROSA
FACTS: Fernandez alleges that in January, 1900, he entered into a verbal agreement with Dela
Rosa to form a partnership for the purchase of cascoes and the carrying on of the business of
56
letting the same for hire in Manila, and Dela Rosa is to buy the cascoes and each partner to
furnish for that purpose such amount of money as he could, the profits to be divided
proportionately; Fernandez furnished Dela Rosa sums to purchase and repair cascoes, the
latter taking the titles in his own name; that in April the parties undertook to draw up articles
of partnership for the purpose of embodying the same in an authentic document, but that the
defendant having proposed a draft of such articles which differed materially from the terms of
the earlier verbal agreement, and being unwillingly to include the 2nd casco in the
partnership, they were unable to come to any understanding and no written agreement was
executed; that the defendant having in the meantime had the control and management of the
two cascoes, the plaintiff made a demand for an accounting upon him, which the defendant
refused to render, denying the existence of the partnership altogether.
Dela Rosa admits that the project of forming a partnership in the casco business in which he
was already engaged to some extent individually was discussed between himself and the
plaintiff in January, 1900, but he denies that any agreement was ever consummated. He
denies that the plaintiff furnished any money in January, 1900, for the purchase of the first
casco, or for repairs on the same, but claims that he borrowed 300 pesos on his individual
account in January from the bakery firm, consisting of the plaintiff, Marcos Angulo, and
Antonio Angulo. The 825 pesos, which he admits he received from the Fernandez March 5, he
claims was for the purchase of the first casco, which he alleged was bought March 12, and he
alleges that he never received anything from the defendant toward the purchase of the
2nd casco. He claims to have paid, exclusive of repairs, 1,200 pesos for the first casco and 2,000
pesos for the second one.
ISSUE:
(1) Did a partnership exist between the parties?
(2) If such partnership existed, was it terminated as a result of the act of the defendant in
receiving back the 1,125 pesos?
HELD:
(1) “Partnership is a contract by which 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.” (Civil Code, art. 1665.)
The essential points upon which the minds of the parties must meet in a contract of
partnership are, therefore, (1) mutual contribution to a common stock, and (2) a joint interest
in the profits. If the contract contains these two elements the partnership relation results, and
the law itself fixes the incidents of this relation if the parties fail to do so. (Civil Code, secs.
1689, 1695.)
We have found as a fact that money was furnished by the plaintiff and received by the
defendant with the understanding that it was to be used for the purchase of the cascoes in
question. This establishes the first element of the contract, namely, mutual contribution to a
common stock. The second element, namely, the intention to share profits, appears to be an
unavoidable deduction from the fact of the purchase of the cascoes in common, in the
57
absence of any other explanation of the object of the parties in making the purchase in that
form, and, it may be added, in view of the admitted fact that prior to the purchase of the first
casco the formation of a partnership had been a subject of negotiation between them.
It is thus apparent that a complete and perfect contract of partnership was entered into by the
parties. This contract, it is true, might have been subject to a suspensive condition, postponing
its operation until an agreement was reached as to the respective participation of the partners
in the profits, the character of the partnership as collective or en comandita, and other details,
but although it is asserted by counsel for the defendant that such was the case, there is little
or nothing in the record to support this claim, and that fact that the defendant did actually go
on and purchase the boat, as it would seem, before any attempt had been made to formulate
partnership articles, strongly discountenances the theory.
The execution of a written agreement was not necessary in order to give efficacy to the verbal
contract of partnership as a civil contract, the contributions of the partners not having been in
the form of immovables or rights in immovables. (Civil Code, art. 1667.) The special provision
cited, requiring the execution of a public writing in the single case mentioned and dispensing
with all formal requirements in other cases, renders inapplicable to this species of contract the
general provisions of article 1280 of the Civil Code.
2) The remaining question is as to the legal effect of the acceptance by the plaintiff of the
money returned to him by the defendant after the definitive failure of the attempt to agree
upon partnership articles. The amount returned fell short, in our view of the facts, of that
which the plaintiff had contributed to the capital of the partnership, since it did not include
the sum which he had furnished for the repairs of casco No. 1515. Moreover, it is quite
possible, as claimed by the plaintiff, that a profit may have been realized from the business
during the period in which the defendant have been administering it prior to the return of the
money, and if so he still retained that sum in his hands. For these reasons the acceptance of
the money by the plaintiff did not have the effect of terminating the legal existence of the
partnership by converting it into a societas leonina, as claimed by counsel for the defendant.
The result is that we hold and declare that a partnership was formed between the parties in
January, 1900, the existence of which the defendant is bound to recognize; that cascoes No.
1515 and 2089 constitute partnership property, and that the plaintiff is entitled to an
accounting of the defendant’s administration of such property, and of the profits derived
therefrom. This declaration does not involve an adjudication as to any disputed items of the
partnership account.
58
total of P10k.
at all.
59
ROJAS V. MAGLANA
60
contribution.
Singson vs. Isabela Sawmill
Facts:
Isabela Sawmill was formed by partners Saldajeno, Lon and Timoteo. Withdraw from the
partnership and after dissolution, L and T continued the business still under the name Isabela
Sawmill. The partnership is indebted to various creditors and that Sheriff sold the assets of
Isabela Sawmill to S and was subsequently sold to a separate company.
Issue:
Whether or not Isabela Sawmill ceased to be a partnership and that creditors could no longer
demand payment.
Ruling:
On dissolution, the partnership is not terminated but continues until the winding up of the
business. It does not appear that the withdrawal of S from the partnership was published in
the newspapers. The Apelles and the public had a right to expect the public had a right to
expect that whatever credit they extended to L & T doing business. In the name of the
partnership could be enforced against the partnership of said partnership. The judicial
foreclosure of the chattel mortgage executed in the favor of S did not relieve her from liability
to the creditors of the partnership.
It may be presumed S acted in good faith, the Apelles also acted in good faith in extending
credit to they partnership. Where one of the two innocent persons must suffer, that persons
must suffer, that person who gave occasion for the damages to be caused must bear the
consequences.
SONCUYA v. DE LUNA
Josue SONCUYA, Carmen DE LUNA and Librado Avelino were partners in the business called
"Centro Escolar de Señoritas." DE LUNA was its managing partner
Claiming fraudulent administration of the partnership, SONCUYA filed with the CFI Manila an
amended complaint against DE LUNA in her own name and as administratrix of the estate of
the deceased partner Avelino, in which he prayed that DE LUNA be sentenced to pay him the
sum of P700,432 as damages and costs
DE LUNA interposed a demurrer based on the following grounds: (1) no cause of action; and
(2) that the complaint is ambiguous, unintelligible and vague
61
ISSUE: WON SONCUYA’s amended complaint states a cause of action
HELD: NO, it does not state a cause of action. The order of dismissal is AFFIRMED.
RATIO:
For the purpose of adjudicating SONCUYA’s claim to damages which he alleges to have
suffered as a partner by reason of the supposed fraudulent management of the partnership by
DE LUNA, it is first necessary that a liquidation of the business thereof be made so that the
profits and losses may be known and the liabilities of DE LUNA as well as the damages which
each partner may have suffered, may be determined
It is not alleged in the complaint that such a liquidation has been effected nor is it prayed that
it be made. Consequently, there is no reason or cause for SONCUYA to institute the action for
damages which he claims from the managing partner DE LUNA
For a partner to be able to claim from another partner who manages the general co-
partnership, damages allegedly suffered by him by reason of the fraudulent administration
of the latter, a previous liquidation of said partnership is necessary
VILLAREAL V. RAMIREZ
Facts:
In 1984, Villareal, Carmelito Jose and Jesus Jose formed a partnership with a capital of
P750,000for the operation of a restaurant and catering business. Respondent Ramirez joined
as a partner in the business with the capital contribution of P250,000. In 1987, Jesus Jose
withdrew from the partnership and within the same time, Villareal and Carmelito Jose,
petitioners closed the business without prior knowledge of respondents In March 1987,
respondents wrote a letter to petitioners stating that they were no longer interested in
continuing the partnership and that they were accepting the latter’s offer to return their
capital contribution. This was left unheeded by the petitioners, and by reason of which
respondents filed a complaint in the RTC.RTC ruled that the parties had voluntarily entered
into a partnership, which could be dissolved at any time, and this dissolution was showed by
the fact that petitioners stopped operating the restaurant. On appeal, CA upheld RTC’s
decision that the partnership was dissolved and it added that respondents had no right to
demand the return of their capital contribution. However since petitioners did not give the
proper accounting for the liquidation of the partnership, the CA took it upon itself to compute
their liabilities and the amount that is proper to the respondent. The computation of which
was:(capital of the partnership – outstanding obligation) / remaining partners =amount due to
private respondent
62
Issue: W/N petitioners are liable to respondents for the latter’s share in the partnership?
Ruling:
No. Respondents have no right to demand from petitioner the return of their equity share. As
found by the court petitioners did not personally hold its equity or assets. “The partnership
has a juridical personality separate and distinct from that of each of the partners.” Since the
capital was contributed to the partnership, not to petitioners, it is the partnership that must
refund the equity of the retiring partners. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. Therefore, the exact
amount of refund equivalent to respondents’ one-third share in the partnership cannot be
determined until all the partnership assets will have been liquidated and all partnership
creditors have been paid. CA’s computation of the amount to be refunded to respondents as
their share was thus erroneous.
GREGORIO MAGDUSA, ET AL., petitioners,

vs.
GERUNDIO ALBARAN, ET AL., respondents.
Facts:
Appellant and appellees, together with various other persons, had verbally formed a
partnership de facto, for the sale of general merchandise to which appellant contributed
P2,000 as capital, and the others contributed their labor, under the condition that out of the
net profits of the business, 25% would be added to the original capital, and the remaining 75%
would be divided among the members in proportion to the length of service of each.
Sometime in 1953 and 1954, the appellees expressed their desire to withdraw from the
partnership, and
appellant thereupon made a computation to determine the value of the partners' shares to
that date. The results of the computation were embodied in the document drawn in the
handwriting of appellant. Appellees thereafter made demands upon appellant for payment,
but appellant having refused, they filed the initial complaint in the court below. Appellant
defended by denying any partnership with appellees, whom he claimed to be mere employees
of his.
Issue: Whether or not appellees' action can be entertained, because in the distribution of all
or part of a
partnership's assets, all the partners have no interest and are indispensable parties without
whose intervention no decree of distribution can be validly entered.
63
Held:
It cannot be entertained. A partner's share cannot be returned without first dissolving and
liquidating the
partnership, for the return is dependent on the discharge of the creditors, whose claims enjoy
preference over
those of the partners; and it is self-evident that all members of the partnership are interested
in his assets and
business, and are entitled to be heard in the matter of the firm's liquidation and the
distribution of its property. The liquidation drawn by appellant is not signed by the other
members of the partnership besides appellees and appellant; it does not appear that they
have approved, authorized, or ratified the same, and, therefore, it is not binding upon them.
At the very least, they are entitled to be heard upon its correctness.
In addition, unless a proper accounting and liquidation of the partnership affairs is first had,
the capital shares of the appellees, as retiring partners, cannot be repaid, for the firm's outside
creditors have preference over the assets of the enterprise, and the firm's property can not be
diminished to their prejudice. Finally, the appellant cannot be held liable in his personal
capacity for the payment of partners' shares for he does not hold them except as manager of,
or trustee for, the partnership. It is the latter that must refund their shares to the retiring
partners. Since not all the members of the partnership have been impleaded, no judgment for
refund can be rendered.
Martinez v. Ong Pong Co
Quick Facts: Martinez delivered P1,500 to Ong Pong Co and Ong Lay to invest in a store. They
agreed that the profits and losses would be equally shared by all of them. Martinez was
demanding for the 2 Ongs to render an accounting or to refund him the P1,500. Ong Pong Co
alleged that Ong Lay, now deceased was the one who managed the business, and the capita of
P1,500 resulted in a loss.
Ratio: The 2 partners (Ongs) were the administrators and obliged to render accounting. Since
neither of them rendered an account nor proven the losses, they are obliged to return the
capital. Art. 1796 is not applicable because no other money than that contributed as capital
was involved. The liability of the partners is joint. Ong Pong Co shall only pay P750 to Martinez.
MARTINEZ v. ONG PONG CO
Facts:
64
MARTINEZ delivered to Ong Pong Co and Ong Lay (ONGS) the sum of P1,500. The ONGS, in a
private document, acknowledged that they had received the money with the agreement that
they will invest it in a store, and the profits or losses therefrom was to be divided with
MARTINEZ in equal shares
Later, MARTINEZ filed a complaint in order to compel the ONGS to render him an accounting
of the partnership, or else to refund him the P1,500 that he had given them
Ong Pong Co alone appeared to answer the complaint. He admitted the fact of the agreement,
but he alleged that Ong Lay (deceased) was the one who had managed the business, and that
nothing had resulted therefrom except the loss of the capital of P1,500, to which loss
MARTINEZ agreed to bear
CFI rendered decision ordering Ong Pong Co to return to MARTINEZ one-half of the capital of
P1,500 (P750) plus P90 as one-half of the profits, calculated at the rate of 12% per annum for
the six months that the store was supposed to have been open (total of P840) with legal
interest of 6% until the full payment, with costs hence, this appeal by Ong Pong Co
ISSUE: WON MARTINEZ is entitled to the capital he contributed to the partnership
HELD: YES. The ONGS failed to fulfill their obligation as partners who, acting as MARTINEZ’s
agents in receiving money, did not render proper accounting therefor. Such renders them
jointly liable for the losses, solidarity not having been established. CFI decision is AFFRIMED in
this regard but REVERSED inasmuch as it found that the capital invested earned profits. Thus,
the CFI ruling awarding MARTINEZ another P840 is DELETED. Ong Pong Co is only liable to pay
MARTINEZ half of the capital, or P750, representing half of the loss which both ONGS should
jointly bear due to their omission, to earn legal interest of 6% from time of filing this
complaint, and costs
Art. 1688 is NOT applicable in this case, in so far as it provides "that the partnership is liable to
every partner for the amounts he may have disbursed on account of the same and for the
proper interest," for the reason that no other money than that contributed as is involved
Art. 1138, CC is also NOT applicable here as this deals with debts of a partnership where the
obligation is NOT joint. Likewise, Art 1723 regarding the liability of two or more agents with
respect to the return of the money that they received from their principal is NOT applicable.
No showing of solidarity having been established, their liability is JOINT!
Uy Vs. Puzon
Facts:
 Bartolome Puzon had two contracts with the government for the construction of roads
and bridges. (Bureau of Public Highways)
65
 He sought the financial assistance of William Uy, so he proposed that they create a
partnership which would be the sub-contractor of the projects.
 They also agreed that the profits will be divided among themselves.
 William Uy agreed to the formation of the partnership "U.P. Construction Company". They
agreed to contribute P50,000 each. (Note: P40,000 was advanced by William Uy while
Puzon was waiting for the approval of his P150,000 PNB Loan. Upon release of the loan,
he promised to reimburse William Uy of the P40,000; pay his share of P50,000 and loan
P60,000 to the partnership).
 Loan was approved by November 1956. Note: At the end of 1957, Uy contributed a total
of P115,
 The partnership agreement was signed in 1957 (January 18) although the work for the
projects began as early as 1956 (October 1).
 Since Puzon was busy with other projects, Uy was the one who managed the partnership.
 In order to guarantee the PNB Loan, Puzon, without the knowledge of Uy, assigned the
payments to the payments to be received from the projects to PNB.
 Due to the financial demands of the projects, Uy demanded that Puzon comply with his
obligation to place his capital contribution in the company.
 However, Puzon failed to comply even after formal demand letters were sent to him.
 Thereafter, Puzon (as the primary contractor of the projects) wrote terminated the
subcontract agreement with the partnership to which he is also a partner. (November 27,
1957)
 Thereafter, Uy was not allowed to hold office in the UP Construction Company and his
authority to negotiate with the Bureau was revoked by Puzon.
 Uy clamied that Puzon had violated the terms of their partnership agreement. He sought
for the dissolution of the partnership with damages.
 The lower court ruled in favor of Uy.
ISSUE/S: W/N the amount of money ordered by the trial court for the failure to contribute his
share in the capital of the partnership is proper.
RULING:
The award of P200,000.00 as his share in the unrealized profits of the partnership is proper.
Under Article 2200 of the Civil Code, indemnification for damages shall comprehend not only
the value of the loss suffered, but also that of the profits which the obligee failed to obtain. In
other words lucrum cessans is also a basis for indemnification. There is no doubt Uy failed to
make profits because of Puzon's breach of contract. The partnership showed some profits
even though the profit and loss statement showed net loss; it may be due to error in
accounting.
66
Had the appellant not been remiss in his obligations as partner and as prime contractor of the
construction projects in question as he was bound to perform pursuant to the partnership and
subcontract agreements, and considering the fact that the total contract amount of these two
projects is P2,327,335.76, it is reasonable to expect that the partnership would have earned
much more than the P334,255.61 We have hereinabove indicated. The award, therefore,
made by the trial court of the amount of P200,000.00, as compensatory damages, is not
speculative, but based on reasonable estimate.
The rule is, when a partner who has undertaken to contribute a sum of money fails to do so,
he becomes a debtor of the partnership for whatever he may have promised to contribute
(Art. 1786, Civil Code) and for interests and damages from the time he should have complied
with his obligation (Art. 1788, Civil Code).

67
in the Acknowledgement of Participating Capital. Petition denied
Tan- Feu Leung vs Intermediate Appellate Court
Facts:The Sun WahPanciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz,
Manila, was established sometime in October, 1955. It was registered as a single
proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue
Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the
case to show that Sun WahPanciteria was actually a partnership and that he was one of the
partners having contributed P4,000.00 to its initial establishment.
Issue:whether or not the private respondent is a partner of the petitioner in the establishment
of SunWahPanciteria.
Held: private respondent is a partner of the petitioner in Sun WahPanciteria. The requisites of
a partnershipwhich are 1) two or more persons bind themselves to contribute money,
property, or industry to acommon fund; and 2) intention on the part of the partners to divide
the profits among themselves havebeen established. As stated by the respondent, a partner
shares not only in profits but also in the lossesof the firm. If excellent relations exist among the
partners at the start of business and all the partnersare more interested in seeing the firm
grow rather than get immediate returns, a deferment of sharingin the profits is perfectly
plausible. It would be incorrect to state that if a partner does not assert hisrights anytime
within ten years from the start of operations, such rights are irretrievably lost. Theprivate
respondent's cause of action is premised upon the failure of the petitioner to give him
theagreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was
asking for anaccounting of his interests in the partnership.
TUASON VS. BOLANOS

68
Facts:
Plaintiff’s complaint against defendant was to recover possession of a registered land. In the
complaint, the plaintiff is represented by its Managing Partner, Gregorio Araneta, Inc., another
corporation. Defendant, in his answer, sets up prescription and title in himself thru "open,
continuous, exclusive and public and notorious possession under claim of ownership, adverse
to the entire world by defendant and his predecessors in interest" from "time immemorial".
After trial, the lower court rendered judgment for plaintiff, declaring defendant to be without
any right to the land in question and ordering him to restore possession thereof to plaintiff
and to pay the latter a monthly rent. Defendant appealed directly to the Supreme Court and
contended, among others, that Gregorio Araneta, Inc. can not act as managing partner for
plaintiff on the theory that it is illegal for two corporations to enter into a partnership
Issue:
Whether or not a corporation may enter into a joint venture with another corporation.
Ruling:
It is true that the complaint states that the plaintiff is "represented herein by its Managing
Partner Gregorio Araneta, Inc.", another corporation, but there is nothing against one
corporation being represented by another person, natural or juridical, in a suit in court. The
contention that Gregorio Araneta, Inc. cannot act as managing partner for plaintiff on the
theory that it is illegal for two corporations to enter into a partnership is without merit, for the
true rule is that "though a corporation has no power to enter into a partnership, it may
nevertheless enter into a joint venture with another where the nature of that venture is in line
with the business authorized by its charter." (Wyoming-Indiana Oil Gas Co. vs. Weston, 80 A. L.
R., 1043, citing 2. Fletcher Cyc. of Corp., 1082.). There is nothing in the record to indicate that
the venture in which plaintiff is represented by Gregorio Araneta, Inc. as "its managing
partner" is not in line with the corporate business of either of them.
Kilosbayan Inc vs Teofisto Guingona, Jr.
232 SCRA 110

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 expand PCSO’s source of
income.
A bidding was made. Philippine Gaming Management Corporation (PGMC) won it. A contract
of lease was awarded in favor of PGMC.
Kilosbayan opposed the said agreement between PCSO and PGMC as it alleged that:
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1. PGMC does not meet the nationality requirement because it is 75% foreign owned (owned
by a Malaysian firm Berjaya Group Berhad);
2. PCSO, under Section 1 of its charter (RA 1169), is prohibited from holding and conducting
lotteries “in collaboration, association or joint venture with any person, association,
company or entity”;
3. The network system sought to be built by PGMC for PCSO is a telecommunications

network. Under the law (Act No. 3846), a franchise is needed to be granted by the Congress
before any person may be allowed to set up such;
4. PGMC’s articles of incorporation, as well as the Foreign Investments Act (R.A. No. 7042)
does not allow it to install, establish and operate the on-line lotto and telecommunications
systems.
PGMC and PCSO, through Teofisto Guingona, Jr. and Renato Corona, Executive Secretary and
Asst. Executive Secretary respectively, alleged that PGMC is not a collaborator but merely a
contractor for a piece of work, i.e., the building of the network; that PGMC is a mere lessor of
the network it will build as evidenced by the nature of the contract agreed upon, i.e., Contract
of Lease.
ISSUE: Whether or not Kilosbayan is correct.
HELD: Yes, but only on issues 2, 3, and 4.
-On the issue of nationality, it seems that PGMC’s foreign ownership was reduced to 40%.
-On issues 2, 3, and 4, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the
PCSO from holding and conducting lotteries “in collaboration, association or joint venture with
any person, association, company or entity, whether domestic or foreign.” There is
undoubtedly a collaboration between PCSO and PGMC and not merely a contract of lease. The
relations between PCSO and PGMC cannot be defined simply by the designation they used,
i.e., a contract of lease. Pursuant to the wordings of their agreement, PGMC at its own
expense shall build, operate, and manage the network system including its facilities needed
to operate a nationwide online lottery system. PCSO bears no risk and all it does is to provide
its franchise – in violation of its charter. Necessarily, the use of such franchise by PGMC is a
violation of Act No. 3846.
INFORMATION TECHNOLOGY OF THE PHILIPPINES V COMELEC
Facts:
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This Petition seeks
(1) to declare null and void Resolution No. 6074 of COMELEC, which awarded “Phase
II of the Modernization Project of the Commission to Mega Pacific Consortium (MPC);”
(2) to enjoin the implementation of any further contract between Comelec and Mega
Pacific Consortium and/or Mega Pacific eSolutions, Inc. (MPEI); (3) to compel Comelec to
conduct a rebidding of the project.
ISSUES:
WON COMELEC committed grave abuse of discretion in the bidding process and the awarding
of the contract to MPC.
Held: yes
COMELEC committed a grave abuse of discretion throughout the entire process.
a) MPC was not a valid bidder.
i. MPC was not the bidder, but Mega Pacific eSolutions, Inc.. No proof was shown that MPEI
was pre-authorized by the “Consortium” members to represent them collectively as MPC.
ii. Despite the existence of several memoranda of agreement between MPEI, SK &C and
WeSolv (as joint undertakings), and Election.com and ePLDT (as subcontractors), the terms of
the agreements did not specify the investments that each entity was to make, nor the scopes
and limitations of their
duties to MPEI.
iii. The Commissioners themselves had no proof that there was a consortium.
there is no sign whatsoever of any joint venture agreement, consortium agreement,

memorandum of agreement, or business plan executed among the members of the purported
consortium. So, it necessarily follows that, during the bidding process, Comelec had no basis at
all for determining that the alleged consortium really existed and was eligible and qualified;
and that the arrangements among the members were satisfactory and sufficient to ensure
delivery on the Contract
WHEREFORE, the Petition is GRANTED. The Court hereby declares NULL and VOID Comelec
Resolution No. 6074
Aurbach v Sanitary Wares
Facts:
Saniwares was a domestic corporation which entered into an agreement w/ the ASI foreign
group in order to expand their business
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internationally. In the election of their board members, they agreed that 3 of the 9 directors
shall be designated by ASI while the other 6 shall be designated by the Filipino stockholders.
Dispute ensued when ASI invoked their right to cumulative voting and nominated another
candidate. In order to
determine who the directors are, the court discussed whether the business was a joint venture
or a corporation.
Issue:
Whether the nature of the business established by the parties was a joint venture or a
corporation?
HELD: Joint venture
The important provisions of the parties’ agreement, as well as testimonial evidence, showed
that the parties agreed to establish a joint venture and not an ordinary corporation, implying
that rigid principles of corporation law need not be applied. The rule is that whether the
parties to a particular contract have thereby established among themselves a joint venture or
some other relation depends upon their actual intention which is determined in accordance
with the rules governing the interpretation and construction of contracts. A joint venture is a
form of partnership and should thus be governed by the law of partnerships. SC 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.
JG SUMMIT HOLDINGS, INC. vs. COURT OF APPEALS

G.R. No. 124293. September 24, 2003
FACTS:
The core issue posed by the Motions for Reconsideration is whether a shipyard is a public
utility whose capitalization must be sixty percent (60%) owned by Filipinos. Our resolution of
this issue will determine the fate of the shipbuilding and ship repair industry. It can either spell
the industry’s demise or breathe new life to the struggling but potentially healthy partner in
the country’s bid for economic growth. It can either kill an initiative yet in its infancy, or
harness creativity in the productive disposition of government assets.
ISSUE:
Whether PHILSECO is a Public Utility.
Whether under the 1977 Joint Venture Agreement, KAWASAKI can purchase only a maximum
of 40% of PHILSECO’s total capitalization.
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Held:
In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA
No. 146. On the other hand, Kawasaki/PHI argued that PD No. 666 explicitly stated that a
“shipyard” was not a “public utility.” But the SC stated that sec. 1 of PD No. 666 was expressly
repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was subsequently repealed by EO 226,
the latter law did not revive sec. 1 of PD No. 666. Therefore, the law that states that a shipyard
is a public utility still stands.
A shipyard such as PHILSECO being a public utility as provided by law is therefore required to
comply with the 60%-40% capitalization under the Constitution. Likewise, the JVA between
NIDC and Kawasaki manifests an intention of the parties to abide by this constitutional
mandate. Thus, under the JVA, should the NIDC opt to sell its shares of stock to a third party,
Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock
would not exceed 40% of the entire shares of stock. The NIDC, on the other hand, may
purchase even beyond 60% of the total shares. As a government corporation and necessarily a
100% Filipino-owned corporation, there is nothing to prevent its purchase of stocks even
beyond 60% of the capitalization as the Constitution clearly limits only foreign capitalization.
Kawasaki was bound by its contractual obligation under the JVA that limits its right of first
refusal to 40% of the total capitalization of PHILSECO. Thus, Kawasaki cannot purchase beyond
40% of the capitalization of the joint venture on account of both constitutional and contractual
proscriptions.
HEIRS OF TAN ENG KEE vs.CA
FACTS:
After the second World War, Tan EngKee and Tan Eng Lay, pooling their resources and
industry together, entered into a partnership engaged in the business of selling lumber and
hardware and construction supplies. They named their enterprise "Benguet Lumber" which
they jointly managed until Tan EngKee's death. Petitioners herein averred that the business
prospered due to the hard work and thrift of the alleged partners. However, they claimed that
in 1981, Tan Eng Lay and his children caused the conversion of the partnership "Benguet
Lumber" into a corporation called "Benguet Lumber Company." The incorporation was
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purportedly a ruse to deprive Tan EngKee and his heirs of their rightful participation in the
profits of the business. Petitioners prayed for accounting of the partnership assets, and the
dissolution, winding up and liquidation thereof, and the equal division of the net assets of
Benguet Lumber. The RTC ruled in favor of petitioners, declaring that Benguet Lumber is a
joint venture which is akin to a particular partnership. The Court of Appeals rendered the
assailed decision reversing the judgment of the trial court.
ISSUE: Whether the deceased Tan EngKee and Tan Eng Lay are joint adventurers and/or
partners in a business venture and/or particular partnership called Benguet Lumber and as
such should share in the profits and/or losses of the business venture or particular partnership
RULING:
There was no partnership whatsoever. Except for a firm name, there was no firm account, no
firm letterheads submitted as evidence, no certificate of partnership, no agreement as to
profits and losses, and no time fixed for the duration of the partnership. There was even no
attempt to submit an accounting corresponding to the period after the war until Kee's death in
1984. It had no business book, no written account nor any memorandum for that matter and
no license mentioning the existence of a partnership. Also, the trial court determined that Tan
EngKee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular
partnership. A particular partnership is distinguished from a joint adventure, to wit:(a) A joint
adventure (an American concept similar to our joint accounts) is a sort of informal partnership,
with no firm name and no legal personality. In a joint account, the participating merchants can
transact business under their own name, and can be individually liable therefor. (b) Usually,
but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the
business of pursuing to a successful termination maycontinue for a number of years; a
partnership generally relates to a continuing business of various transactions of a certain kind.
A joint venture "presupposes generally a parity of standing between the joint co-ventures or
partners, in which each party has an equal proprietary interest in the capital or property
contributed, and where each party exercises equal rights in the conduct of the business. The
evidence presented by petitioners falls short of the quantum of proof required to establish a
partnership. In the absence of evidence, we cannot accept as an established fact that Tan
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EngKee allegedly contributed his resources to a common fund for the purpose of establishing a
partnership. Besides, it is indeed odd, if not unnatural, that despite the forty years the
partnership was allegedly in existence, Tan EngKee never asked for an accounting. The essence
of a partnership is that the partners share in the profits and losses .Each has the right to
demand an accounting as long as the partnership exists. A demand for periodic accounting is
evidence of a partnership. During his lifetime, Tan EngKee appeared never to have made any
such demand for accounting from his brother, Tang Eng Lay. We conclude that Tan EngKee
was only an employee, not a partner since they did not present and offer evidence that would
show that Tan EngKee received amounts of money allegedly representing his share in the
profits of the enterprise. There being no partnership, it follows that there is no dissolution,
winding up or liquidation to speak of.
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION and RAFAELITO W. LOPEZ,

Petitioners,
vs.
MA. CLARITA T. LAZATIN-MAGAT, JOSE SERAFIN T. LAZATIN, JAIME TEODORO T. LAZATIN
and JOSE MARCOS T. LAZATIN, Respondents.
FACTS
In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement
whereby the Lazatins shall contribute a huge parcel of land and Primelink shall develop the
same into a subdivision. For 4 years however, Primelink failed to develop the said land. So in
1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for
preliminary injunction. In said case, Primelink was declared in default or failing to file an
answer and for asking multiple motions for extension. The trial court eventually ruled in favor
of the Lazatins and it ordered Primelink to return the possession of said land to the Lazatins as
well as some improvements which Primelink had so far over the property without the Lazatins
paying for said improvements. This decision was affirmed by the Court of Appeals. Primelink is
now assailing the order; that turning over improvements to the Lazatins without
reimbursement is unjust; that the Lazatins did not ask the properties to be placed under their
possession but they merely asked for rescission.
ISSUE
Whether or not the improvements made by Primelink should also be turned over under the
possession of the Lazatins.
HELD
Yes. In the first place, even though the Lazatins did specifically pray for possession the same
(placing of improvements under their possession) is incidental in the relief they prayed for.
They are therefore entitled possession over the parcel of land plus the improvements made
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thereon made by Primelink. In this jurisdiction, joint ventures are governed by the laws of
partnership. Under the laws of partnership, when a partnership is dissolved, as in this case
when the trial court rescinded the joint venture agreement, the innocent party has the right to
wind up the partnership affairs.
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. On dissolution,
the partnership is not terminated but continues until the winding up of partnership affairs is
completed. 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. It must
be stressed, too, that although the Lazatins acquired possession of the lands and the
improvements thereon, the said lands and improvements remained partnership property,
subject to the rights and obligations of the parties, inter se, of the creditors and of third parties
and subject to the outcome of the settlement of the accounts between the parties, absent any
agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to
winding up). Until the partnership accounts are determined, it cannot be ascertained how
much any of the parties is entitled to, if at all.
Philex Mining Corp vs. CIR

(Joint Venture for Mining)
Facts:
Petitioner entered into an agreement with Baguio Gold, where the former agreed to manage
the mining operations of the latter. The agreement was evidenced by a “Power of Attorney”. It
was indicated in the said
document, that Baguio Gold would contribute P11M under its owner's account plus any of
its income that is left in the project, in addition to its actual mining claim. Meanwhile,
petitioner's contribution would consist of its expertise in the management and operation of
mines, as well as the manager's account which is comprised of P11M in funds and property
and petitioner's "compensation" as manager that cannot be paid in cash. The mining suffered
serious loses which ended business of both parties evidenced by their execution of a
“compromise agreement.” The CIR assessed Philex Mining for tax deficiencies. It stressed that
Philex entered into a partnership with Baguio Gold. Petitioner denied the allegations of the CIR
and maintained that its advances of money and property to Baguio Gold were in a nature of a
loan as evidenced by the “compromise agreement”.
Isue:
W/N Philex and Baguio Mining formed partnership.
Held:
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· Yes. The parties entered into the compromise agreements as a consequence of the
dissolution of their
business relationship. It did not define that relationship or indicate its real character.
· The relationship of the parties may be gleaned upon the “power of attorney” document
entered between the 2.
· An examination of the "Power of Attorney" reveals that a partnership or joint venture was
indeed intended by
the parties. Under a 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.
· The term “compensation” found in the said document could not be deemed as “wages”. It is
impossible for a
company to give a salary to an employee representing 50% of its net profit.
· While a corporation, like petitioner, cannot generally enter into a contract of partnership
unless authorized by law or its charter, it has been held that it may enter into a joint venture
which is akin to a particular partnership. Under Philippine law, a joint venture is a form of
partnership and should be governed by the law of partnerships.
Realubit v. Jaso
Facts: Realubit (as industrial partner) entered into a JVA with Biondo (as capitalist
partner) for the operation of an ice manufacturing business. They agreed that they
would each receive 40% of the net profit, with the remaining 20% to be used for the
payment of the ice making machine which was purchased for the business. Biondo
subsequently assigned his rights and interests in the business in favor of Jaso. Jaso
demanded an accounting and inventory thereof as well as the remittance of their
portion of its profits. Jaso filed complaint for specific performance and dissolution of the
JV.
Issue: 1. WON the Court may order Realubit as partner in JV to render an accounting
to one who is not a partner in said JV? No.
Ruling:
- Generally understood to mean an organization formed for some temporary purpose, a
joint venture is likened to a particular partnership or one which has for its object
determinate things, their use or fruits, or a specific undertaking, or the exercise of a
profession or vocation.
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- The rule is settled that joint ventures are governed by the law on partnerships which
are, in turn, based on mutual agency or delectus personae.
- Insofar as a partners conveyance of the entirety of his interest in the partnership is
concerned, Article 1813 provides that the transfer by a partner of his partnership
interest does not make the assignee of such interest a partner of the firm, nor entitle
the assignee to interfere in the management of the partnership business or to receive
anything except the assignees profits.
- The assignment does not purport to transfer an interest in the partnership, but only a
future contingent right to a portion of the ultimate residue as the assignor may become
entitled to receive by virtue of his proportionate interest in the capital.
- Since a partner’s interest in the partnership includes his share in the profits, Spouses
Jaso are entitled to Biondo’s share in the profits, despite Juanita’s lack of consent to
the assignment of said Biondo’s interest in the joint venture.
Issue 2: WON the assignee may ask for the dissolution of the JV?
Ruling: Although Jaso did not become a partner as a consequence of the assignment
and/or acquire the right to require an accounting of the partnership business, she may
ask for the dissolution of the joint venture conformably with the right granted to the
purchaser of a partner’s interest under Article 1831 of the Civil Code.
AURELIO LITONJUA JR. vs. EDUARDO LITONJUA SR., ET AL
Facts:
Petitioner Aurelio alleged that, since June 1973, he and his brotherEduardo are into a joint
venture/partnership arrangement for thecontinuation of their family business and common
family funds. Asevidence, Aurelio showed a Memorandum addressed by Eduardo tohim that in
consideration of Aurelio’s remaining share in the familybusinesses and contributing his
industry to its operations, Aurelio willbe given Php 1 Million or 10% equity in all the businesses
and thoseto be subsequently acquired by them whichever is greater. SuchMemorandum is
unsigned and undated. Sometime in 1992, therelations between Aurelio and Eduardo became
sour so Aureliorequested for an accounting and liquidation of his share in the
jointventure/partnership but these demands were not heeded.
Issue: Whether or not a joint venture/partnership was created by the Memorandum.
HELD:
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No. A partnership exists when two or more persons agree to place their money, effects, labor
and skill in lawful commerce of business, with the understanding that there shall be a
proportionate sharing of the profits and losses between them. A contract of partnership is
defined as one where two or more persons bound themselves to contribute money, property
or industry to a common fund with the intention of dividing the profits among themselves. A
joint venture, on the other hand, is hardly distinguishable form, and may be likened to, a
partnership since their elements are similar, i.e. community of interests in the business and
sharing of profits and losses. Being a form of partnership, a joint venture is governed by the
law on partnership. A partnership may be constituted in any form, save when immovable
property or real rights are contributed thereto or when the partnership has a capital of at least
P3,000 in which case a public instrument shall be necessary. An inventory to be signed by the
parties and attached to the public instrument is also indispensable to the validity of the
partnership whenever immovable property is contributed to it. CAB: The document in
question contained typewritten entries, personal in tone, but is unsigned and undated. As an
unsigned document, it does not meet the public instrumentation requirements under Art 1771
NCC. Moreover, being unsigned and referring to a partnership involving more than P3,000 in
money or property, cannot be presented for notarization, let alone registered with SEC, as
called for under Art 1772. Because of the failure to comply with the essential formalities of a
valid contract, the purported partnership/joint venture is legally inexistent and it produces no
effect whatsoever. Necessarily, a void or legally inexistent contract cannot be the source of
any contractual or legal right.
MARSMAN DRYSDALE LAND, INC., petitioner, vs. PHILIPPINE GEOANALYTICS, INC.

AND GOTESCO PROPERTIES, INC., respondents.
FACTS:
Marsman Drysdale, Inc. and Gotesco Properties, Inc. entered into a Joint Venture Agreement
for the construction and development of an office building on a land owned by Marsman
Drysdale in
Makati City. Parties agreed about the capital, expenses and proceeds that each should provide
and
claim for the said project. The building of the office building required the services of Philippine
Geoanalytics, Inc. The services rendered by PGI were incomplete. They were able to drill only 4
boreholes, out of 5, due to the failure of the partners to clear the area that was supposed to
be drilled.
After such, PGI billed the joint venture for the work done. Despite repeated demands, joint
venture
wasn’t able to pay PGI. PGI filed a case against both Marsman Drysdale and Gotesco. Marsman
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claims that he is not liable to PGI because according to their agreement, Gotesco will be the
one to
shoulder monetary expenses. On the other hand, Gotesco contested that PGI had no cause of
action
because the service rendered was incomplete.
ISSUE:
Whether or not Marsman Drysdale and Gotesco are both liable to pay PGI the unpaid claims
HELD:
In the case at bar, the Court ruled that Marsman Drysdale and Gotesco are jointly liable to PGI.
PGI was never a party to the JVA, but it entered into a Technical Service Contract with the JVA.
While the JVA clearly spelled out, inter alia, the capital contributions of Marsman Drysdale
(land) and
Gotesco (cash) as well as the funding and financing mechanism for the project, the same
cannot be
used to defeat the lawful claim of PGI against the two joint venturers-partners. Marsman
Drysdale and Gotesco were listed as owners of the project in the TSC, and that all billing
invoices indicated the
consortium as the client.
It is assumed that the obligation of Marsman Drysdale and Gotesco is joint since it was not
expressly stated, nor does the law or the nature of the obligation required it to be solidary.
This is
supported by Article 1207 and 1208 of the New Civil Code.
A joint venture is a form of partnership, therefore the joint venture of Marsman Drysdale and
Gotesco shall be governed by the laws on partnership. Since both parties have agreed upon
the profits they will get and was silent on the losses, they shall shoulder the losses the same
way as the profits. This is based on Article 1797 on the laws on partnership.
J. Tiosejo Investment Corp. v. Spouses Benjamin and Eleanor Ang
Facts:
In this case, the petitioners seek the reversal of the CA’s Resolution declaring J. Tiosejo
Investment Corp. solidarily liable with Primetown Property Group, Inc. (PPGI) to pay Spouses
Benjamin and Eleanor Ang their refund for their payments plus legal interest until fully paid
and damages. J. Tiosejo entered into a Joint Venture Agreement with PPGI for the
development of a residential condominium project known as Meditel in Mandaluyong City.
Petitioner contributed the lot while PPGI undertook to develop the condominium. The parties
further agreed to a 17%-83% sharing as to developed units. PPGI further undertook to use all
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proceeds from pre-selling of its saleable units for the completion of the Condominium Project.
Sometime in 1996, PPGI executed a Contract to Sell with Spouses Ang on a certain
condominium unit and parking slot for P2,077,334.25 and P313,500.00, respectively. On July
1999, respondent Spouses filed before the Housing and Land Use Regulatory Board(HLURB) a
complaint for the rescission of the Contract to Sell, against J. Tiosejo and PPGI. They claim that
they were promised that the condo unit would be available for turn-over and occupancy by
December 1998, however the project was not completed as of the said date. Spouses Ang
instructed petitioner and PPGI to stop depositing the post-dated checks they issued and to
cancel said Contracts to Sell. Despite several demands, petitioner and PPGI have failed and
refused to refund the P611,519.52 they already paid under the circumstances.
Issue:
Whether or not J. Tiosejo Investment Corp. is exempt from liability by claiming it was not privy
to the Contract to Sell executed by its JV partner, PPGI and the Spouses Ang
Held:
The Supreme Court held that J. Tiosejo Investment Corp. “cannot avoid liability by claiming
that it was not in any way privy to the Contracts to Sell executed by PPGI and respondents.” It
was stated in its ruling that a
“joint venture” is considered as a form of partnership, and as such, it should be governed by
the law of partnerships. Under Article 1824 of the Civil Code of the Philippines, all partners are
solidarily liable with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any wrongful act or
omission of any partner acting in the ordinary course of the business of the partnership or
with the authority of his co-partners. Whether innocent or guilty, all the partners are solidarily
liable with the partnership itself.
OLDARICO S. TRAVEÑO vs.BOBONGON BANANA GROWERS MULTI-PURPOSE

COOPERATIVE
FACTS:
Petitioner Oldarico Traveño and his 16 co-petitioners worked at a banana plantation at
Bobongan
Santo Tomas, Davao del Norte. Sometime in 2000, they filed three separate complaints for
illegal
dismissal, individually and collectively, with the NLRC against said respondents including
respondent
Dole Asia Philippines as it then supposedly owned TACOR, for unpaid salaries, overtime pay,
13th month
pay, service incentive leave pay, damages, and attorney’s fees.
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DFI answered for itself and TACOR denied that they hired petitioners; That it had an
arrangement with several landowners for them to extend financial and technical assistance to
them for
the development of their lands into a banana plantation on the condition that the bananas
produced
therein would be sold exclusively to TACOR and it was the landowners who worked on their
own farms
and hired laborers to assist them and that the landowners themselves decided to form a
cooperative in
order to better attain their business objectives;
The Cooperative failed to file a position paper despite due notice, prompting the Labor Arbiter
to consider
it to have waived its right to adduce evidence in its defense.Nothing was heard from
respondent Dole Asia
Philippines.
ISSUE: Whether or not DFI and DPI should be held solidarily liable with Cooperative for
petitioner’s
illegal dismissal and money claims.
HELD:
No
They are not solidarily liable. Petition is dismissed. There is no ER-EE relationship between
petitioners
and Cooperative’s co-respondents. DFI did not farm out to the Cooperative the performance
of a specific
job, work, or service. Instead, it entered into a Banana Production and Purchase Agreement
(Contract)
with the Cooperative, under which the Cooperative would handle and fund the production of
bananas and
operation of the plantation covering lands owned by its members in consideration of DFI’s
commitment
to provide financial and technical assistance as needed, including the supply of information
and
equipment in growing, packing, and shipping bananas. The Cooperative would hire its own
workers and
pay their wages and benefits, and sell exclusively to DFI all export quality bananas produced
that meet the
specifications agreed upon.
To the Court, the Contract between the Cooperative and DFI, far from being a job contracting
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arrangement, is in essence a business partnership that partakes of the nature of a joint
venture. The rules
on job contracting are, therefore, inapposite. Further, petitioners’ claim of employment
relationship with
the Cooperative’s herein co-respondents must be assessed on the basis of four standards, viz:
(a) the
manner of their selection and engagement (No employment contract was; (b) the mode of
payment of
their wages; (c) the presence or absence of the power of dismissal; and (d) the presence or
absence of
control over their conduct. Most determinative among these factors is the so-called "control
test." There is
nothing in the records which indicates the presence of any of the foregoing elements of an
employeremployee
relationship.
While the Court commiserates with petitioners on their loss of employment, especially now
that
the Cooperative is no longer a going concern since it has been dissolved, it cannot simply, by
default, hold
the Cooperative’s co-respondents liable for their claims without any factual and legal
justification
therefor. The social justice policy of labor laws and the Constitution is not meant to be
oppressive of
capital. En passant, petitioners are not precluded from pursuing any available remedies
against the
former members of the defunct Cooperative as their individual circumstances may warrant.
Mendoza v. Paule (informal JV)
Paule is the proprietor of E.M. Paule Construction and Trading (EMPCT). He executed an SPA
authorizing Mendoza to participate in the pre-qualification and bidding of a National Irrigation
Administration (NIA) project and to represent him in all transactions related thereto, and most
importantly, to collect payments. Mendoza was able to participate and win in the NIA bidding
which involved the construction of a road system, among others. When Cruz learned that
Mendoza is in need of heavy equipment for use in the NIA project, he met up with her
resulting to a concluded transaction wherein Mendoza signed two Job Orders/Agreement for
the lease of the latter’s heavy equipment (dump trucks for hauling purposes) to EMPCT. Later
on, Paule revoked the SPA he previously issued in favor of Mendoza; consequently, NIA
refused to make payment to her on her billings. Cruz, therefore, could not be paid for the rent
of the equipment. Upon advice of Mendoza, Cruz addressed his demands for payment of lease
83
rentals directly to NIA but the latter refused to acknowledge the same and informed Cruz that
it would be remitting payment only to EMPCT as the winning contractor for the project. Cruz
then instituted an action for collection of sum of money with damages. In her cross-claim,
Mendoza alleged that because of Paule’s "whimsical revocation" of the SPA, she was barred
from collecting payments from NIA, thus resulting in her inability to fund her checks which she
had issued to suppliers of materials, equipment and labor for the project.
ISSUE:
Whether or not there an agency is in existence, where Paule is the principal and Mendoza is
the agent, under the SPA and Paule is thus liable for obligations (unpaid construction
materials, fuel and heavy equipment rentals) incurred by the latter for the purpose of
implementing and carrying out the NIA project awarded to EMPCT
RULING/RATIO:
Records show that Paule (or, more appropriately, EMPCT) and Mendoza had entered into a
partnership in regard to the NIA project. PAULE‘s contribution thereto is his contractor’s
license and expertise, while Mendoza would provide and secure the needed funds for labor,
materials and services; deal with the suppliers and sub-contractors; and in general and
together with Paule, oversee the effective implementation of the project. For this, PAULE
would receive as his share three per cent (3%) of the project cost while the rest of the profits
shall go to Mendoza.
There was an agency, as well, with Mendoza as the agent. Although the SPAs limit Mendoza’s
authority to such acts as representing EMPCT in its business transactions with NIA,
participating in the bidding of the project, receiving and collecting payment in behalf of
EMPCT, and performing other acts in furtherance thereof, the evidence shows that when
Mendoza and Cruz met and discussed (at the EMPCT office) the lease of the latter’s heavy
equipment for use in the project, Paule was present and interposed no objection to Mendoza’s
actuations. Mendoza’s actions were in accord with what she and Paule originally agreed upon,
as to division of labor and delineation of functions within their partnership. Under the Civil
Code, every partner is an agent of the partnership for the purpose of its business; each one
may separately execute all acts of administration, unless a specification of their respective
duties has been agreed upon, or else it is stipulated that any one of them shall not act without
the consent of all the others. At any rate, Paule does not have any valid cause for opposition
because his only role in the partnership is to provide his contractor’s license and expertise,
while the sourcing of funds, materials, labor and equipment has been relegated to Mendoza.
Moreover, it does not speak well for Paule that he reinstated Mendoza as his attorney-in-fact,
this time with broader powers, even after Cruz has already filed his complaint. Despite
knowledge that he was already being sued on the SPAs, he proceeded to execute another in
Mendoza’s favor, and even granted her broader powers of administration than in those being
sued upon. If he truly believed that Mendoza exceeded her authority with respect to the initial
SPA, then he would not have issued another SPA. If he thought that his trust had been
84
violated, then he should not have executed another SPA in favor of Mendoza, much less grant
her broader authority.
There was no valid reason for Paule to revoke Mendoza’s SPAs. Since Mendoza took care of
the funding and sourcing of labor, materials and equipment for the project, it is only logical
that she controls the finances, which means that the SPAs issued to her were necessary for the
proper performance of her role in the partnership, and to discharge the obligations she had
already contracted prior to revocation. Paule’s revocation of the SPAs was done in evident bad
faith. Admitting all throughout that his only entitlement in the partnership with Mendoza is his
3% royalty for the use of his contractor’s license, he knew that the rest of the amounts
collected from NIA was owing to Mendoza and suppliers of materials and services, as well as
the laborers. Yet, he deliberately revoked Mendoza’s authority such that the latter could no
longer collect from NIA the amounts necessary to proceed with the project and settle
outstanding obligations.
Mendoza v. Paule
Facts: Engineer Eduardo M. Paule is the proprietor of E.M. Paule Construction and Trading.
Paule executed a SPA authorizing Zenaida Mendoza to participate in the bidding of National
Irrigation Administration project and to represent him in all transactions related thereto.
EMPCT, through Mendoza was awarded projects. Manuel de la Cruz leased heavy equipments
to EMPCT through Mendoza. On April 27, 2000, Paule revoked the SPA in favor of Mendoza.
Cruz filed an action against Mendoza and Cruz.
Issue: Whether or not Mendoza is an agent of Paule
Held: No Ratio: Records show that Paule and Mendoza entered into a partnership in regard to
the NIA project. Paule's contribution is his contractor's license and expertise, while Mendoza is
to secure the funds for labor, materials and services. There is no valid reason for Paule to
revoke Mendoza's SPA. Since Mendoza took care of the funding it is only logical that the SPA
issued were necessary for the performance of her role in the partnership. Paule's revocation of
SPA was done in bad faith. Paule is liable for abandoning the partnership, leaving Mendoza to
fend for her own.
85

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Yu v. NLRC GR No.

97212, June 30, 1993

Benjamin Yu used to be the Assistant General Manager of Jade Mountain, a partnership

MARJORIE TOCAO and WILLIAM T. BELO, petitioners,

1. 10% share of annual net profits

Kilosbayan Inc vs Teofisto Guingona, Jr.

232 SCRA 110

Antonia Torres vs Court of Appeals

JARANTILLA, JR. vs. JARANTILLA

Pioneer Insurance & Surety Corporation vs Court of Appeals

LIM TONG LIM, petitioner,

CASE I: REPUBLIC v. SUN LIFE

JARANTILLA, JR. vs. JARANTILLA

Fernando Santos vs Spouses Reyes

MARJORIE TOCAO and WILLIAM T. BELO, petitioners,

5. 10% share of annual net profits

RTC favored petitioners declaring TCT of respondent null and void.

CA reversed the decision.

WON THE CONTRACT OF SALE IS VALID

Antonia Torres vs Court of Appeals

Litonjua v. Litonjua, Sr.

Secuya v. Vda de Selma

ISSUE: Does the land belong to Selma?

CIR VS. SUTER

E. S. LYONS vs. C. W. ROSENSTOCK,

Evangelista & Co. et.al. v. Estrella Abad Santos

TUASON VS. BOLANOS

FACTS: Petitioner Elmo Muñasque in behalf of the partnership "Galan &Muñasque", as a

J. Tiosejo Investment Corp. v. Spouses Benjamin and Eleanor Ang

Litton vs. Hill

Issue: WON Ceron’s act binds the partnership.

ISSUE: Whether or not the CA judgment is correct.

Sison v. Helen McQuaid

Issue: Whether or not plaintiff is entitled to the sum he claims

Tan- Feu Leung vs Intermediate Appellate Court

Hanlon vs. Haussermann and Beam

LIM TANHU v. HON. JOSE R. RAMOLETE

Isabelo Moran vs Court of Appeals

ISSUE: Whether or not the CA judgment is correct.

Sancho vs. Lizarraga

Lozana vs. Depakakibo

Hanlon vs. Haussermann and Beam

LIM TANHU v. HON. JOSE R. RAMOLETE

Evangelista & Co. et.al. v. Estrella Abad Santos

MARJORIE TOCAO and WILLIAM T. BELO, petitioners,

9. 10% share of annual net profits

FERNANDEZ vs. DE LA ROSA

Isabelo Moran vs Court of Appeals

ISSUE: Whether or not the CA judgment is correct.

Singson vs. Isabela Sawmill

GREGORIO MAGDUSA, ET AL., petitioners,

Martinez v. Ong Pong Co

MARTINEZ v. ONG PONG CO

ISSUE: WON MARTINEZ is entitled to the capital he contributed to the partnership

JARANTILLA, JR. vs. JARANTILLA

Tan- Feu Leung vs Intermediate Appellate Court

TUASON VS. BOLANOS

Kilosbayan Inc vs Teofisto Guingona, Jr.

232 SCRA 110

3. The network system sought to be built by PGMC for PCSO is a telecommunications

INFORMATION TECHNOLOGY OF THE PHILIPPINES V COMELEC

there is no sign whatsoever of any joint venture agreement, consortium agreement,

Aurbach v Sanitary Wares