(Partnership) MIDTERMS Case Matrix

Evangelista v.
CIR Case Summary: Having obtained a common fund, invested such common fund in the
buying of real estate, used such real estate for leasing purposes, and allowed the
management of such properties to one of their siblings, the Evangelista are now
arguing that they are not a partnership that can be taxed by the CIR of corporation,
corporation residence, and real estate dealer’s tax. The Supreme Court held that they
are a partnership based on the definition in the Civil Code since they contributed
money to a common fund for the purpose of buying properties in order to lease it to
other parties from whom they derive profit and that they had the intention to divide
the profit amongst themselves.
Doctrine/s:
• Article 1767 of the Civil Code: Definition of Partnership: "By the contract of
partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the
profits among themselves."
Laguna Transportation Co. Inc. v. SSS Case Summary: Laguna Transportation Company (Petitioners) began as an
unregistered partnership in 1949, and became an actual corporation in 1956. In 1957,
the Social Security System (respondent) were obliging the petitioners to pay
contributions under the Social Security Act, and the respondent alleges that the
petitioners are covered by said act. Petitioners state that they are not covered by said
act because they have not been operating for at least 2 years. Whether or not the
petitioners are covered by the act? Yes, the are covered by the act. The partnership
was formed in 1949, and the incorporation of the petitioners in 1956 simply shows a
change in the form of the organization, and there was no transfer of interest.
Doctrine/s: If any general rule can be laid down, in the present state of authority, it is
that a corporation will be looked upon as a legal entity as a general rule, and until
sufficient reason to the contrary appears; but, when the motion of legal entity is used
[Made by: Iron Stomach; Compiled by: Wasabby Fries] CASE MATRIX – Agency
to defeat public convenience, justify wrong, protect fraud, or defend crime, the law
will regard the corporation as an association of persons.
If a corporation continues to use the equipment of the unregistered partnership.
There is, in effect, only a change in the form of the organization of the entity engaged
in the business of transportation of passengers.
Tuason v. Bolaños Case Summary: 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
The issue is W/N a corporation may enter into a joint venture with another
corporation. The Court ruled that 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. 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.
Doctrine/s: 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.
Woodhouse v. Halili Case Summary: On November 29, 1947, plaintiff Woodhouse entered into a written
agreement with defendant Halili stating among others that they shall organize a
partnership for the bottling and distribution of Mission soft drinks. Prior to the
agreement Woodhouse had secured a 30 day exclusive franchise grant from Mission Dry
to entice Halili that Woodhouse had the exclusive franchise but it had already expired
when they signed the agreement. They went to the US where Mission Dry is based at.
Halili learned that Woodhouse’s exclusive franchise was only for 30 days and that it was
already expired. They got a new franchise from Mission Dry under the name of Halili.
They went home to the PH and operated their franchise. Woodhouse wanted to Halili
to execute the partnership but Halili kept refusing so Woodhouse went to court. The
issue is whether Halili can be forced to enter into the agreement. The Court held that he
cannot be forced because the law recognizes the individual's freedom or liberty to do
an act he has promised to do, or not to do it, as he pleases. But he should pay damages
to Woodhouse.
Doctrine/s:
• The parties cannot be compelled to enter into a contract of partnership. The law
recognizes the liberty of an individual to do or not to do an act. The action falls
within Acto Personalisimo (a very personal act) which courts may not compel
compliance.
Evangelista & Co. v. Abad Santos Case Summary: Evangelista & Co was formed as a co-partnership, and its Articles of
Co-partnership was amended to include Estrella Abad Santos as industrial partner.
Estrella filed a suit alleging that the co-partnership paid dividends to the capitalist
partners but not her, and they refused to let her examine the partnership books or
give information about the partnership affairs. The capitalist partners allege that the
Articles of Co-partnership did not express the true agreement of the parties, saying
that Estrella was not an industrial partner but a profit sharer. They also allege that she
could not be an industrial partner because she was working as a judge. The Court ruled
that even while working as a judge, Estrella rendered services to the co-partnership as
an industrial partner. Without such services, the co-partnership would’ve been
inoperative. The purpose of prohibiting an industrial partner from engaging in business
for himself is to prevent any conflict of interest between the industrial partner and the
partnership, and to insure faithful compliance by said partner with his prestation.
Estrella’s occupation as a judge can hardly be characterized as a business, nor was it
proven to be detrimental to the partnership.
Doctrine/s: An industrial partner is not deemed to have violated his fiduciary duties to
the other partners by having delivered on the particular service required of her and
devoting her time serving in the judiciary which is not considered to be engaged in an
activity for profit.
Moran Jr. CA Case Summary: Pecson and Moran entered a partnership where both parties failed to
fulfill their obligations. Therefore, Pecson cannot claim from Moran the amount of
damages the CA wrongly granted to him. The Supreme Court asked Moran to pay
Pecson but not as much as the CA ruling because Pecson was also at fault.
Doctrine/s:
• Art. 1786 says, 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.
• He is also liable for interests and damages from the time he should have
complied with his obligation (Art. 1788, Civil Code)
• Art. 1797: The losses and profits shall be distributed in conformity with the
agreement. If only the share of each partner in the profits has been agreed
upon, the share of each in the losses shall be in the same proportion.
The Leyte-Samar Sales Co. v. Sulpicio v. Case Summary: Judgment was rendered against the partner defendants. BUT ONE
CEA partner supposedly sold his rights and shares to Lastrilla, who now claims he owns
such properties/shares and since they were sold should be given a share of the
proceeds of the auction sale. Court said NO, because if ever he did purchase rights
from Fred Brown, he would just be a partner, NOT a creditor. Also the defendants
should have been notified of it because as partners they get to decide if they’ll accept
him as a partner or not.
Doctrine/s: PARTNER DOES NOT EQUAL CREDITOR OVER HIS SHARES OF THE
PARTNERSHIP. Partners may also decide who they partner up with.
CIR v. William Suter and CTA Case Summary: A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.,"
was formed with William Suter as general partner and, Julia Spirig and Gustav Carlson
as limited partners. William and Julia got married after a year into the partnership and
thereafter, Carlson sold his share to the both of them. Due to the marriage and
subsequent ownership of all shares, the Commissioner on Internal Revenue started
treating disregarding the fiction of juridical personality of the partnership and assessed
their income as such, resulting to a deficiency in the income tax paid. Whether or not
this action of the CIR is valid. NO.
Doctrine/s:
• A universal partnership requires either that the object of the association be all
the present property of the partners, as contributed by them to the common
fund, or else "all that the partners may acquire by their industry or work during
the existence of the partnership".
In Re: Petition for Authority, Etc. Case Summary: The surviving partners of Atty. Herminio Ozaeta filed a petition praying
that they be allowed to continue using, in the name of their firm, the names of their
partner who passed away, stating that, under the law, a partnership is not prohibited
from continuing its business under a firm name which includes the name. However,
inasmuch as “Sycip, Salazar, Feliciano, Hernandez and Castillo” and “Ozaeta, Romulo,
De Leon, Mabanta and Reyes” are partnerships, the use in their partnership names of
the names of deceased partners will run counter to Article 1815 of the Civil Code.
Doctrine/s: A partnership for the practice of law is not a legal entity. It is a mere
relationship or association for a particular purpose. It is not a partnership formed for
the purpose of carrying on trade or business or of holding property. Thus, it has been
stated that “the use of a nom de plume, assumed or trade name in law practice is
improper.”
Involuntary Insolvency of Campos Rueda Case Summary: Campos Rueda is a limited partnership who has paid 3 of its creditors
& Co. v. Pacific Commercial Co. et al. 30 days before it filed an application for insolvency. The trial court deemed that the
partnership is not insolvent because its members were not proven to be insolvent. This
interpretation by the trial court is wrong because our law states that a partnership is a
juridical entity separate from its members. Hence, our insolvency law recognizes this
and indicates scenarios when a partnership can be deemed insolvent even if not all of
its members are insolvent.
Doctrine/s:
• A partnership is has a juridical entity of its own which makes it subject to rights
and obligations separate from its members.
Tai Tong Chuache & Co. v. Insurance Case Summary: Complainants Palomo acquired a parcel of land and a building located.
Commission and Travellers Multi- They assumed the mortgage of the building in favor of SSS. Azucena Palomo obtained
Indemnity Corporation a P100K loan from Tai Tong Chuache Inc. (TTCC) and executed a mortgage over the
land and the building in favor of Tai Tong Chuache & Co. as security of payment. On
April 25, 1975, Arsenio Chua, representative of TTCC insured the latter's interest with
Travellers Multi-Indemnity Corporation for P100K. Pedro Palomo secured a Fire
Insurance Policy, covering the building for P50K with respondent Zenith Insurance
Corporation (ZIC). Another Fire Insurance Policy was later procured from respondent
Philippine British Assurance Company (PBAC), covering the same building for P50K and
contents thereof for P70K. On July 31, 1975, the building and the contents were totally
razed by fire. Based on the computation of the loss, complainants were paid the
following: P41,546.79 by PBAC, P11,877.14 by ZIC, and P5,936.57 by SSS. Demand was
made from respondent Travellers for its share in the loss but was refused. Hence,
complainants demanded from the other 3 respondents the balance of each share in
the loss based on the computation excluding Travellers Multi-Indemnity in the amount
of P30,894.31 (P5,732.79-ZIC: P22,294.62, PBAC: and P2,866.90, SSS) but was refused.
Doctrine/s: Petitioner being a partnership may sue and be sued in its name or by its
duly authorized representative.
Mariano Pascual and Renato Dragon v. CASE SUMMARY: Petitioners bought parcels of land as co-owners, and eventually sold
CIR and CTA them, and the profit was shared between them. The Acting BIR commissioner assessed
the transactions and ordered petitioners to pay for corporate income tax, alleging that
the petitioners were an unregistered partnership. Whether or not the petitioners
formed an unregistered partnership? No, they are not a partnership. The petitioners
are simply co-owners of the parcels of land subsequently sold, and the profit was
shared.
Doctrines: Co-ownership or co-possession does not itself establish a partnership,

whether such co-owners or co-possessors do or do not share any profits made by the
use of the property. The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint or common right or
interest in any property from which the returns are derived.
The presence of other elements constituting partnership is necessary, such as the clear
intent to form a partnership, the existence of a juridical personality different from that
of the individual partners, and the freedom to transfer or assign any interest in the
property by one with the consent of the others.
It is evident that an isolated transaction whereby two or more persons contribute
funds to buy certain real estate for profit in the absence of other circumstances
showing a contrary intention cannot be considered a partnership.
Fortis v. Gutierrez Hermanos Case Summary: Fortis is an employee of Gutierrez Hermanos from 1900-1902. From
the evidence gathered, it appears that Fortis left the employ of Gutierrez Hermanos on
1903. However, at the request of Gutierrez Hermanos, Fortis went to Hongkong and
was there for about 2 months looking after the business of Gutierrez Hermanos in the
matter of the repair of a certain steamship. In Fortis’ complaint, it contained a cause of
action for the sum of 600 php, the amount of money expended by Fortis for the
Gutierrez for the year 1903 (when he was in Hongkong). The issue in this case is
whether or not Fortis is entitled to the collection of 600 pesos, the money he
expended for the Gutierrez during the year 1903. Gutierrez Hermanos were
contending that Fortis is NOT entitled to compensation for his services thus rendered,
because by the provisions of article 1711 of the Old Civil Code, in the absence of an
agreement to the contrary, the contract of agency is supposed to be gratuitous.
However, SC ruled that Fortis is entitled to the collection of 600 php because the
amount is not claimed as compensation for services but as a reimbursement for
money expended by Fortis in the business of Gutierrez Hermanos.
Doctrine/s: Agency is presumed to be for a compensation, unless there is proof to the

contrary.
Mauro Lozana v. Serafin Depakakibo Case Summary: Lozana entered into a partnership with Depakakibo for operating and
distributing electric light and power in Dumangas, Iloilo under the franchise of Mrs.
Buenaflor. Buenaflor’s franchise or certificate of public necessity was cancelled by the
Public Service Commission, and a temporary franchise was issued to Ms. Decolongon.
Lozana sold a Generator Buda (diesel) tp Decolongon. He later brought action against
Depakakibo claiming that Lozana was the owner of the generator buda and 70 wooden
posts, and that Depakakibo was wrongfully detaining his property thus Lozana’s
suffering damages. The Court ruled that without liquidation of the partnership assets,
it necessarily follows that generator buda was property of the partnership, which
could not be disposed of by the party contributing the same without the consent or
approval of the partnership or of the other partner.
Doctrine/s: 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.
Kiel v. Estate of P.S. Sabert Case Summary: Kiel and Sabert entered a partnership agreement to develop Parang
Plantation. When Kiel was deported, Sabert sold his rights and land in Parang to
another Nituan Plantation Company to Kiel’s dismay. Sabert died before Kiel could
take action. He now has to prove his partnership agreement with Sabert to claim his
share of land sold to Nituan Plantation Company. The partnership was proven with
other corroborating evidence like witness testimonies and documents but the court
said Kiel couldn’t not get a share of the land sold. Kiel could only be entitled to ½ share
of the improvements and personal property of the land.
Doctrine/s:
• Declarations of one partner, not made in the presence of his copartner, are not
competent to prove the existence of a partnership between them as against
such other partner,
• The existence of a partnership also cannot be established by general reputation,
rumor, or hearsay.
• However, with other corroborating evidence like witness testimonies and
documents, a partnership can be proven despite the non-appearance or death
of one of the partners.
Mauricio Agad v. Severino Mabato Case Summary: Agad saying he was not paid his share of the profit. Claiming it.
Mabato said NO, because no partnership, alleging no inventory was made of a
fishpond when they were in the fishpond business. The Court held NO to Mabato and
said AGAD SHOULD BE PAID because PARTNERSHIP exists as the purpose of it was not
for a fishpond business per se, but rather TO OPERATE a fishpond. So they only
contributed P1000 each thus 50% share for each of them.
Doctrine/s: The inventory of the immovable property should be put into a public
instrument if ever for the partnership, but if ever it is not needed or there really is no
immovable property CONTRIBUTED then no need to include inventory.
Wolrgang Aurbach, et. Al. v. Sanitary Case Summary: Filipino corp, Saniwares, entered into an agreement with ASI, foreign
Wares Manufacturing Corporation corporation. The parties agreed that the business operations in the Philippines
known as "Sanitary Wares Manufacturing Corporation." A disagreement erupted
because the Filipino BOD wanted to expand to a country, where ASI already had
subsidiaries. So during the election of officers, there were multiple disagrements.
The main issue hinges on who were the duly elected directors of Saniwares for the
year 1983 during its annual stockholders' meeting held on March 8, 1983. To answer
this question the following factors should be determined: (1) the nature of the
business established by the parties whether it was a joint venture or a corporation...
Doctrine/s: A noted authority has pointed out that just as in close corporations,
shareholders' agreements in joint venture corporations often contain provisions which
do one or more of the following:
1. require greater than majority vote for shareholder and director action;
2. give certain shareholders or groups of shareholders power to select a specified
number of directors;
3. give to the shareholders control over the selection and retention of employees;
and
4. set up a procedure for the settlement of disputes by arbitration.
Mauro Lozana v. Serafin Depakakibo Case Summary: Lozana entered into a partnership with Depakakibo for operating and
distributing electric light and power in Dumangas, Iloilo under the franchise of Mrs.
Buenaflor. Buenaflor’s franchise or certificate of public necessity was cancelled by the
Public Service Commission, and a temporary franchise was issued to Ms. Decolongon.
Lozana sold a Generator Buda (diesel) tp Decolongon. He later brought action against
Depakakibo claiming that Lozana was the owner of the generator buda and 70 wooden
posts, and that Depakakibo was wrongfully detaining his property thus Lozana’s
suffering damages. The Court ruled that without liquidation of the partnership assets,
it necessarily follows that generator buda was property of the partnership, which
could not be disposed of by the party contributing the same without the consent or
approval of the partnership or of the other partner.
Doctrine/s: 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
Maximiliano Sancho v. Severiano Case Summary: Sancho brought an action for the rescission of the partnership
Lizarraga contract between himself and the defendant and the reimbursement of his investment
worth 50,000php with interest at 12% per annum form October 15, 1920, with costs,
and any other just and equitable remedy against said defendant. The defendant denies
generally and specifically all the allegations of the complaint and asked for the
dissolution of the partnership, and the payment to him as its manager and
administrator P500 monthly from October 15, 1920 until the final dissolution with
interest.
The CFI found that the defendant had not contributed all the capital he had bound
himself to invest hence it demanded that the defendant liquidate the partnership,
declared it dissolved on account of the expiration of the period for which it was
constituted, and ordered the defendant, as managing partner, to proceed without
delay to liquidate it, submitting to the court the result of the liquidation together with
the accounts and vouchers within the period of thirty days from receipt of notice of
said judgment. The plaintiff appealed from said decision praying for the rescission of
the partnership contract between him and the defendant in accordance with Art.
1124.
Doctrine/s: But even going into the merits of the case, the affirmation of the judgment
appealed from is inevitable. In view of the lower court's findings referred to above,
which we cannot revise because the parol evidence has not been forwarded to this
court, articles 1681 and 1682 of the Civil Code have been properly applied. Owing to
the defendant's failure to pay to the partnership the whole amount which he bound
himself to pay, he became indebted to it 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.
Mora Electric Co. Inc. v. Matic and Case Summary: Matic obtained a concession from the City of Manila, and transferred
Quiogue his right to the concession of Quiogue where she entered into a contract with Mora
Electric Co., to conduct the business and pay the concession. The business failed, and
the insurance company for which the amount owed to the City of Manila is insured
sued Matic and Quiogue for the recovery of the amount. In turn Matic and Quiogue
sued Mora for the amount. Mora alleges that Quiogue also bound herself to pay the
amount pointing to the Civil Code regarding the distribution of the profits and losses
between the partners. Whether or not the Quiogue must pay with Mora. The amount
now sought to be recovered is not claimed as loss or profit, but as the contribution
which Mora Electric Co., Inc., bound itself to make to the partnership and which it was
under a duty to pay, although it was paid instead by Matic and Quiogue.
Doctrine: The amount now sought to be recovered is not claimed as loss or profit, but
as the contribution which Mora Electric Co., Inc., bound itself to make to the
partnership and which it was under a duty to pay, although it was paid instead by
Matic and Quiogue.
If there is no record by the parties, it is not possible to determine whether there was a
profit or loss and what is the extent thereof and the measure of the respective liability
or benefit.
Antonia Torres et al. v. CA and Manuel Case Summary: Antonia Torres et al. entered into a joint venture agreement with
Torres Manuel Torres where the former contributed a parcel of land which was mortgaged by
the latter in order for the latter to receive a loan - all of these to be used for the
development of a subdivision. When the project failed, Antonia alleges estafa on the
part of Manuel. Hence, Antonia claims 60% of the value of the land contributed as
damages. The court ruled that what they had was a partnership since they had their
own contributions to the project and such was made with the intention of dividing the
income within themselves 60% for Antonia and 40% for Manuel. The Court ruled that
they shall bear the losses proportion to the profits they have agreed upon on their
JVA.
Doctrine/s:
• Art. 1797 — The losses and profits shall be distributed in conformity with the
agreement. If only the share of each partner in the profits has been agreed
upon, the share of each in the losses shall be in the same proportion. In the
absence of stipulation, the share of each partner in the profits and losses shall
be in proportion to what he may have contributed, but the industrial partner
shall not be liable for the losses. As for the profits, the industrial partner shall
receive such share as may be just and equitable under the circumstances. If
besides his services he has contributed capital, he shall also receive a share in
the profits in proportion to his capital.
Miguel Cuenco v. Concepcion Cuenco Case Summary: Miguel Cuenco and Mariano Jesus Cuenco (respondent’s father)
Vda. De Manguerra handled cases involving a dispute over ownership of a certain lot. They won the case,
and was able to get portions of said lot as attorney’s fees. Because Mariano was
actively practicing law in Manila, the distribution of the lot was entrusted to his
brother Miguel Cuenco. Mariano’s share was to be distributed to his 6 children, but
Miguel only distributed to the 5 and left Concepcion out. Concepcion fenced his
supposed share, and paid for the taxes of which. Mariano later died, and Miguel claims
the ownership of the last portion of the lot for himself. The Court ruled that there was
an implied trust given to Miguel and thus he wasn’t the owner of the portion of the
lot. The implied trust was found by looking at the nature and circumstances of the case
including its acquisition and distribution.
Doctrine/s: Implied trusts are those that, "without being express, are deducible from
the nature of the transaction as matters of intent[;] or which are superinduced on the
transaction by operation of law as a matter of equity, independently of the particular
intention of the parties. Implied trusts may either be resulting or constructive trusts,
both coming into being by operation of law.
Tai Tong Chuache v. Insurance Comm. Case Summary: Polomo’s acquired a parcel of land and a building with an existing
mortgage. They then got a loan form Tai Tong and to secure it, they mortgaged the
building in favor of Tai Tong. Chua, the rep of Tai Tong, insured the interest of Tai Tong
with Travellers. Palomo later secured a Fire Insurance Policy twice from different
companies. A few days later, the building burned down. They recovered all the
insurance money except from Travellers because they refused to pay. They went to
court and Travellers wouldn’t pay because Tai Tong isn’t the real party in interest as it
was a Chua who acquired the insurance from Travellers. The court ruled that Chua was
the managing partner of Tai Tong which means he may execute all acts of
administration.
Doctrine/s:
The managing partner of the partnership may execute all acts of administration
including the right to sue debtors of the partnership in case of their failure to pay their
obligations when it became due and demandable.
Art. 1800. The partner who has been appointed manager in the articles of partnership
may execute all acts of administration despite the opposition of his partners, unless he
should act in bad faith; and his power is irrevocable without just or lawful cause. The
vote of the partners representing the controlling interest shall be necessary for such
revocation of power.
A power granted after the partnership has been constituted may be revoked at any
time.
George Litton v. Hill & Ceron, et al. Case Summary: Plaintiff sold and delivered to Carlos Ceron, one of the managing
partners of Hill & Ceron, a certain number of mining claims, and by virtue of said
transaction, the defendant Carlos Ceron delivered to the plaintiff a document signed
by Carlos Ceron, with the name of the partnership, “Hill & Ceron” indicated. Carlos
Ceron failed to pay the balance, therefore, Litton tried collecting from the partnership
and it surety. Whether or not Ceron bound the partnership in the transaction. YES,
transaction made by Ceron with the plaintiff should be understood in law as effected
by Hill & Ceron and binding upon it. The management is entrusted to both partners,
and unless it is proven that one of the copartners did not consent to the transaction
entered into by the other, the transaction remains binding to the entire partnership.
Doctrine: ARTICLE 1801. If two or more partners have been entrusted with the
management of the partnership without specification of their respective duties, or
without a stipulation that one of them shall not act without the consent of all the
others, each one may separately execute all acts of administration, but if any of them
should oppose the acts of the others, the decision of the majority shall prevail. In case
of a tie, the matter shall be decided by the partners owning the controlling interest.
E.M. Bachrach v. La Protectora et al. Case Summary: 4 Defendants formed a partnership and authorized Barba to purchase
2 trucks for their partnership business. Barba used promissory notes to pay for the
trucks and signed “I promise to pay” with Barba and the partnership being parties. The
defendants contend that they cannot be made liable to pay for the debt since they are
not parties to the promissory note. The court said they are not solidarily liable to
answer for the debt but are still severally liable for the debt since they are partners of
La Protectora.
Doctrine/s: Art. 1698 of the old civil code declares that a member of a civil
partnership is not liable in solidum with this fellow partners for the entire
indebtedness, but each is liable with the others for his share in such indebtedness.
(Joint liability lang)
Art. 1804. Every partner may associate another person with him in his share, but the
associate shall not be admitted into the partnership without the consent of all the
other partners, even if the partner having an associate should be a manager. (1696
old civil code)
Matinez v. Ong Pong Co Case Summary: Martinez delivered to defendants Ong Pong Co and Ong Lay the sum
of P1,500 to be invested in a store where the profits or losses are to be divided among
the three of them in equal shares. After almost 7 years, Martinez filed a complaint
against defendants to compel them to render an accounting of the partnership as
agreed to, or else to refund him the P1,500. Ong Pong Co alleged that that Ong Lay,
who was then deceased, was the one who had managed the business, that nothing
resulted from the partnership and that the capital of P1,500 was lost. The CFI ordered
defendants to return to the plaintiff the P1,500 capital as well as 1⁄2 of the supposed
profits of the partnership. Ong Pong Co appealed from this judgment. The issue is
whether or not Ong Pong Co is to be held liable for the return of the capital and profits
of the partnership in favor of Martinez. The Court held that he is liable for the return
of the capital since there is no proof that the same was lost. However, he is not liable
for the supposed profits since the amount thereof was not n proven, nor it is possible
to estimate its certain amount.
Doctrine/s:
In the absence of a special agreement vesting in one sole person the management of
the business, were the actual administrators thereof; as such administrators they were
the agent of the company and incurred the liabilities peculiar to every agent, among
which is that of rendering account to the principal of their transactions, and paying
him everything they may have received by virtue of the mandatum.
Garcia Ron v. De Minas De Batan Case Summary: Garcia is asking for payment for the services he rendered to De Minas
De Batan. Defendant company alleges that he never received such services (which
were proven to be false) and that even if they did receive such service, the manager of
the company was not authorized to hire Garcia in the first place. The trial court found
otherwise.
Doctrine/s: The nature of the enterprise is taken into consideration when it comes to
authorizing a manager regarding employment contracts.
Si-Boco v. Yap Teng Case Summary: Plaintiff Si-Boco, for around 3 years, had been furnishing to defendant
Yap Teng native cloth for the latter’s store. Defendant had a PARTNER by the name of
Yapsuan, who was the MANAGER of the business. Defendant told Plaintiff that
Yapsuan had authority to receive the cloth, but the value to be paid was to be taken
from DEFENDANT’S ACCOUNT. In 1902, Yapsuan returned to China due to health
issues, and a liquidation of the accounts showed an unpaid balance of P1,444.95 in
favor of Plaintiff. Defendant EXPRESSLY UNDERTOOK TO PAY SAID BALANCE, yet failed
to do so. Defendant now contends that the petitioner should bring this action against
the PARTNERSHIP or the PARTNERS, JOINTLY instead of him, alone. W/N the lower
court properly allowed the plaintiff to bring this action against the defendant ONLY.
YES, because (1) it is the defendant who is the ONLY ONE who contradicted plaintiff
in defendant’s own name; and (2) defendant instructed the plaintiff to the charge
the goods to him PERSONALLY.
Doctrine/s: [Ab/N: walang doctrine nor legal basis binigay ang case. Weird. But here’s
the article it’s under!] Art. 1804. Every partner may associate another person with him
in his share, but the associate shall not be admitted into the partnership without the
consent of all the other partners, even if the partner having an associate should be a
manager.
The Great Council of the United States of Case Summary: Whether the association of Veterans Army of the Philippines is
the Improved Order of Red Men v. The considered as a partnership in the absence of profit as the reason of its existence? NO.
Veteran Army of the Philippines No profit and no empowerment as agents of each other.
Doctrine/s:
• Article 1695 of the Civil Code provides as follows:
o Should no agreement have been made with regard to the form of
management, the following rules shall be observed:
All the partners shall be considered as agents, and whatever any
▪
one of them may do by himself shall bind the partnership; but
each one may oppose the act of the others before they may have
produced any legal effect.
• One partner, therefore, is empowered to contract in the name of the
partnership only when the articles of partnership make no provision for the
management of the partnership business.
William Uy v. Bartolome Puzon Case Summary: Puzon invited Uy to make a partnership where such partnership shall
become the sub-contractor to 2 projects Puzon has with the Republic of the
Philippines. They agreed to contribute 50,000 pesos each. In order to contribute to the
partnership, Puzon needed to obtain a loan first. However, Puzon was only able to
contribute 20,000 from this loan. Soon, Puzon assigned all of payments of the Bureau
of Public Highways for the construction projects to PNB in order to pay-off his loan.
When Puzon and Uy could not come up with an agreement, Puzon ended the sub-
contract with his partnership and ousted Uy from the partnership. The trial court soon
found him guilty of violating terms (Puzon) of the contract - he ousted Uy from the
partnership for no reason, he was not able to contribute the capital agreed upon, and
he misapplied funds of the partnership for personal use.
Doctrine/s:
Article 1809. Any partner shall have the right to a formal account as to partnership
affairs: (1) If he is wrongfully excluded from the partnership business or possession
of its property by his co-partners; (2) If the right exists under the terms of any
agreement; (3) As provided by article 1807; (4) Whenever other circumstances
render it just and reasonable. (n)
Jose Ornum and Emerenciana Ornum v. Case Summary: Lasala, father of respondents, formed a partnership with Emerenciano
Mariano, Lasala, et al. Ornum. Ornum later found other partners to invest capital in the partnership. No
formal agreement for a partnership was made. After Lasala’s death, his children
succeeded to all his rights and interest in the partnership. The children became the
managing partners. They gave 10 statement of accounts to the partners over the
course of the partnership’s life. 20 years later, when the 10th statement of account
was given, the partners wished to dissolve the partnership. Father Mariano Lasala,
spokesman for respondents, requested that the total amounts in the last statement of
accounts (which wasn’t signed by the respondents) be given to the respondents.
Petitioners paid and remitted such amounts to the respondents, and had the
partnership dissolved. Respondents later filed a complaint, praying for an accounting
and final liquidation of the assets of the partnership. Petitioners denied the request for
respondents to check the books saying that the respondents already accepted the
statement of accounts when they accepted the payment. The Court ruled that after
such shares had been paid by the petitioners and accepted by the respondents
without any reservation, the approval of the statement of accounts was virtually
confirmed.
Doctrine/s: After such shares had been paid by the petitioners and accepted by the
respondents without any reservation, the approval of the statement of accounts was
virtually confirmed and its signing thereby became a mere formality to be complied
with by the respondents exclusively. Their refusal to sign, after receiving their shares,
amounted to a waiver to that formality in favor of the petitioners who has already
performed their obligation.
Evangelista v. Abad Santos Case Summary: Evangelista & Co. amended their articles of co-partnership in order to
include Estrella as industrial partner with 30% share in the net profits. A few years
later, Estrella filed a suit against her partners because they excluded her from the
dividends declared by the partnership and they refused when she asked to have a
formal account as to the partnership affairs. The other partners denied that they
declared dividends and denied that Estrella asked for a formal account. The other
partners went on to say that Estrella was not an industrial partner. The issue in the
case is whether Estrella was an industrial partner. The CFI and the CA said that she was
an industrial partner and the Supreme Court just reiterated what the CA said.
Therefore, Estrella being an industrial partner has the right to demand for a formal
accounting and to receive her share in the net profit based on Art 1809.
Doctrine/s:
ART. 1809. Any partner shall have the right to a formal account as to partnership
affairs:
If he is wrongfully excluded from the partnership business or possession of its property
by his co-partners;
If the right exists under the terms of any agreement;
As provided by article 1807;
Whenever other circumstance render it just and reasonable.
Inocencia Deluao v. Nicanor Casteel Case Summary: Nicanor Casteel repeatedly filed fishpond applications for a tract of
land in Davao, but to no avail. Meanwhile, several applications were submitted by
other persons for portions of the area covered by Casteel's application, one of which is
Felipe Deluao. Because of the threat poised upon his position by the above applicants
who entered upon and spread themselves within the area, Casteel realized the urgent
necessity of expanding his occupation thereof by constructing dikes and cultivating
marketable fishes, in order to prevent old and new squatters from usurping the land.
But lacking financial resources at that time, he sought financial aid from his uncle
Felipe Deluao who then extended loans totalling more or less P27,000 with which to
finance the needed improvements on the fishpond. Hence, a wide productive
fishpond was built. Plaintiffs and defendants in this case entered a Contract of Service,
giving Casteel the power to manage the fishpond, and Deluao as the administrator and
financer. When Casteel became successful in having the permits of other applicants
cancelled, hence, was given due course for his applications by the authorities, he
forbade the Deluaos from administering the fishpond. W/N there was a contract of
partnership between the parties. YES, the evidence preponderates in favor of the view
that the initial intention of the parties was not to form a co-ownership but to establish
a partnership — Inocencia Deluao as capitalist partner and Casteel as industrial
partner — the ultimate undertaking of which was to divide into two equal parts such
portion of the fishpond as might have been developed by the amount extended by the
plaintiffs-appellees, with the further provision that Casteel should reimburse the
expenses incurred by the appellees over one-half of the fishpond that would pertain to
him.
Doctrine:
• ARTICLE 1810. The property rights of a partner are:
(1) His rights in specific partnership property;
(2) His interest in the partnership; and
(3) His right to participate in the management.
• Each must be deemed to have expressly withdrawn from the partnership,
thereby causing its dissolution pursuant to art. 1830(2) of the Civil Code which
provides, inter alia, that dissolution is caused "by the express will of any partner
at any time."
• Art. 1830(3) of the Civil Code enumerates, as one of the causes for the
dissolution of a partnership, "... any event which makes it unlawful for the
business of the partnership to be carried on or for the members to carry it on in
partnership."
In re: Petition for Authority etc. Case Summary: Partners petition to continue using the names of their dead partners
in the name of their legal firms. The court denied the petition because it run contrary
to Art. 1815 and because it went against legal ethics.
Doctrine/s
Art. 1815 “Every partnership shall operate under a firm name, which may or may not
include the name of one or more of the partners. Those who, not being members of
the partnership, include their names in the firm name, shall be subject to the liability
of a partner.”
This article tacitly says that firm names may only include living partners or those
people who are not partners but are still alive and can therefore be subject to the
liability of a partner. Dead people cannot be subject to the liability of a partner so
they cannot be in the firm name.

(Partnership) MIDTERMS Case Matrix

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Evangelista v.

Doctrines: Co-ownership or co-possession does not itself establish a partnership,

Doctrine/s: Agency is presumed to be for a compensation, unless there is proof to the

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