Batch 2 Digest

7/21/2019 Batch 2 Digest

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[TYPE THE COMPANY NAME]

Case Digest under

Partnership & AgencySubmitted to:Hon. Glenda Ortiz- Soriano

Submitted by: LORELYN D. FERNANDEZ10/10/2013

[Type the abstract of the document here. The abstract is typically a short summary of the contents of

the document. Type the abstract of the document here. The abstract is typically a short summary of the

contents of the document.]


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Table of ContentsCampos Rueda & Co v. Pacific Commercial ........................................................................................... 4

Jo Chung Cang v. Pacific Commercial Co. .............................................................................................. 5

Agad v. Mabato ........................................................................................................................................... 6

Evangelista vs. Santos ................................................................................................................................ 7

Fortis v.Hermanos ..................................................................................................................................... 9

Liwanag v. CA ........................................................................................................................................... 10

Rojas v. Maglana ...................................................................................................................................... 11

VILLAREAL V. RAMIREZ ...................................................................................................................... 12

Heirs of Jose Lim v. Lim ......................................................................................................................... 13

Ortega v. CA .............................................................................................................................................. 15

Santos v. Reyes ......................................................................................................................................... 16

Navarro v. CA ............................................................................................................................................ 18

Heirs of Tang EngKee v. Philippine Fishing Gear Industries............................................................ 20

Lim Tong Lim v. Philippine Fishing Gear Industries Inc................................................................... 22

Tocao v. CA ................................................................................................................................................ 27

Lozana v. Depakakibo .............................................................................................................................. 29

Catalan vs. Gatchalian ............................................................................................................................. 31

Fue Lung v. CA .......................................................................................................................................... 32

Ornum v. Lasala ....................................................................................................................................... 35

Songcuya v. De Luna ................................................................................................................................ 40

Singson v. Isabela Sawmill ...................................................................................................................... 41

Idos v. CA................................................................................................................................................... 42

Republic v. Tancinco ................................................................................................................................ 43

Villareal v. Ramirez .................................................................................................................................. 45

Yu v. NLRC ................................................................................................................................................ 47

J-Phil v. NLRC .......................................................................................................................................... 48

Manila Memorial Park Cemetery, Inc. (MMPCI) v. Pedro Linsangan............................................. 49

Manotoc v. CA ........................................................................................................................................... 51

Constante Amore De Castro v. CA ......................................................................................................... 52

Rallos v. Felix Go Chan ............................................................................................................................ 54


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Tuazon v. Heirs of Bartolome Ramos.................................................................................................... 55

Inland Realty Investment Company v. CA............................................................................................ 56

Prats v. CA ................................................................................................................................................. 57

Manila Development Authority v. CA ................................................................................................... 59

Morales v. CA ............................................................................................................................................ 61

DBP v. COA ............................................................................................................................................... 63

Salao v. Salao ............................................................................................................................................ 65

PNB v. CA .................................................................................................................................................. 66

Lopez v. CA ................................................................................................................................................ 68


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Campos Rueda & Co v. Pacific Commercial

Facts:

Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific

Commercial Co. , Asiatic Petroleum Co, and International Banking Corporationamounting to not less than P1,000.00 (which were not paid more than 30 days prior tothe date of the filing by petitioners of the application for voluntary insolvency).

The trial court denied their petition on the ground that it was not proven, nor alleged,that the members of the firm were insolvent at the time the application was filed. It alsoheld that the partners are personally and solidarily liable for the consequences of thetransactions of the partnership.

Issue:

Whether or not a limited partnership may be held to have committed an act ofinsolvency.

Ruling:

Yes. A limited partnerships juridical personality is different from the personality of itsmembers. On general principle, the limited partnership must answer for and suffer theconsequence of its acts. Under our Insolvency Law, one of the acts of bankruptcy uponw/c an adjudication of involuntary insolvency can be predicated is the failure to pay

obligations.

The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c isspecifically provided for in the Insolvency Law for declaration of involuntary insolvency.The petitioners have a right to a judicial decree declaring the involuntary insolvency ofsaid partnership.


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Jo Chung Cang v. Pacific Commercial Co.

Facts:

Following the presentation of an application to be adjudged an insolvent by the"SociedadMercantil, TeckSeing& Co., Ltd.," the creditors, the Pacific CommercialCompany, Piol& Company, RiuHermanos, and W. H. Anderson & Company, filed amotion in which the Court was prayed to enter an order: "(A) Declaring the individualpartners as described in paragraph 5 parties to this proceeding; (B) to require each ofsaid partners to file an inventory of his property in the manner required by section 51 ofAct No. 1956; and (C) that each of said partners be adjudicated insolvent debtors in thisproceeding." The trial judge first granted the motion, but, subsequently, on oppositionbeing renewed, denied it. It is from this last order that an appeal was taken inaccordance with section 82 of the Insolvency Law.

Issue:

Whether the partnership contract established a general partnership.

Ruling:

No. The partnership contract established a general partnership or, to be more exact, apartnership as this word is used in the Insolvency Law. The legal intention deducible

from the acts of the parties controls in determining the existence of a partnership. Ifthey intend to do a thing which in law constitutes a partnership, they are partners,although their purpose was to avoid the creation of such relation. Here, the intention ofthe persons making up TeckSeing& co., Ltd. was to establish a partnership which theyerroneously denominated a limited partnership. If this was their purpose, allsubterfuges resorted to in order to evade liability for possible losses, while assumingtheir enjoyment of the advantages to be derived from the relation, must be disregarded.The partners who have disguised their identity under a designation distinct from that ofany of the members of the firm should be penalized, and not the creditors whopresumably have dealt with the partnership in good faith.


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Agad v. Mabato

Facts:

Agad alleged in his complaint that he and Mabato were partners in a fishpond businesspursuant to a public instrument; that he contributed P1k to its capital, with the right to receive 50% ofthe profits, that Mabato, who handled the partnership funds, had yearly rendered accounts of itsoperations; and that Mabato failed and refused to render account for the years 1957-1963.

He prayed that Mabato be ordered to give him his share of the profits ofsuchpartnership plus attorneysfees, as well as the dissolution of the partnership.

Mabato denied the existence of the partnership on the ground that the contract therefore had not beenperfected because Agad failed to give his P1k contribution to the capital. He filed a motion to

dismiss on the ground of lack of cause of action

The RTC granted the motion to dismiss and the public instrument was declared null and void.

No inventory of the fishpond has been attached to the public instrument pursuant to Art. 1773.

Issue:

Whether immovableproperty or real rightshave been contributed to the alleged partnership,thusallowing the application of Art. 1773.

Ruling:

No immovable property or real rights have been contributed in the alleged partnership.

Art. 1771 provides that "A partnership may be constituted in any form, except where immovableproperty or real rights are contributed thereto, in which case a public instrument shall be necessary."Art. 1773 also provides that: "A contract of partnership is void, whenever immovable property iscontributed thereto, if inventory of said property is not made, signed by the parties and attached to thepublic instrument."

The public instrument presented showed that it was the operation of a fishpond and nottheengagement in a fishpondbusinessthat was the purpose established between Agad andMabato.Neither contributed a fishpond nor a real right to any fishpond. Theircontributions were limited to the sum of P 1,000 each.


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Evangelista vs. Santos

Facts:

Juan D. Evangelista, et. al. are minority stockholders of the Vitali Lumber Company,Inc., a Philippine corporation organized for the exploitation of a lumber concession inZamboanga, Philippines, while Rafael Santos holds more than 50% of the stocks of saidcorporation and also is and always has been the president, manager, and treasurerthereof. Santos, in such triple capacity, through fault, neglect, and abandonmentallowed its lumber concession to lapse and its properties and assets, among themmachineries, buildings, warehouses, trucks, etc., to disappear, thus causing thecomplete ruin of the corporation and total depreciation of its stocks. Evangelista, et. al.therefore prays for judgment requiring Santos: (1) to render an account of hisadministration of the corporate affairs and assets: (2) to pay plaintiffs the value of t heirrespective participation in said assets on the basis of the value of the stocks held by each

of them; and (3) to pay the costs of suit. Evangelista, et. al. also ask for such otherremedy as may be and equitable. The complaint does not give Evangelista, et. al.'sresidence, but, but purposes of venue, alleges that Santos resides at 2112 DeweyBoulevard, corner Libertad Street, Pasay, province of Rizal. Having been served withsummons at that place, Santos filed a motion for the dismissal of the complaint on theground of improper venue and also on the ground that the complaint did not state acause of action in favor of Evangelista, et. al. After hearing, the lower court rendered itsorder, granting the motion for dismissal. Reconsideration of the order was denied.Evangelista, et. al. appealed to the Supreme Court.

Issue:

Whether Evangelista, et. al. had the right to bring the action for damages resulting frommismanagement of the affairs and assets of the corporation by its principal officer, itbeing alleged that Santos' maladministration has brought about the ruin of thecorporation and the consequent loss of value of its stocks.

Ruling:

The injury complained of is primarily to the corporation, so that the suit for the damagesclaimed should be by the corporation rather than by the stockholders. The stockholders

may not directly claim those damages for themselves for that would result in theappropriation by, and the distribution among them of part of the corporate assets beforethe dissolution of the corporation and the liquidation of its debts and liabilities,something which cannot be legally done in view of section 16 of the Corporation Law,which provides that "No shall corporation shall make or declare any stock or bonddividend or any dividend whatsoever from the profits arising from its business, or divideor distribute its capital stock or property other than actual profits among its members orstockholders until after the payment of its debts and the termination of its existence by


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limitation or lawful dissolution." But while it is to the corporation that the action shouldpertain in cases of this nature, however, if the officers of the corporation, who are theones called upon to protect their rights, refuse to sue, or where a demand upon them tofile the necessary suit would be futile because they are the very ones to be sued orbecause they hold the controlling interest in the corporation, then in that case any one of

the stockholders is allowed to bring suit. But in that case it is the corporation itself andnot the plaintiff stockholder that is the real property in interest, so that such damages asmay be recovered shall pertain to the corporation. In other words, it is a derivative suitbrought by a stockholder as the nominal party plaintiff for the benefit of thecorporation, which is the real property in interest. Herein, Evangelista, et. al. havebrought the action not for the benefit of the corporation but for their own benefit, sincethey ask that Santos make good the losses occasioned by his mismanagement and pay tothem the value of their respective participation in the corporate assets on the basis oftheir respective holdings. Clearly, this cannot be done until all corporate debts, if therebe any, are paid and the existence of the corporation terminated by the limitation of itscharter or by lawful dissolution in view of the provisions of section 16 of the CorporationLaw. It results that Evangelista, et. al.'s complaint shows no cause of action in theirfavor.


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Fortis v.Hermanos

Facts:

Plaintiff Fortis is an employee of defendant Gutierrez Hermanos. Theformer brought an

action to recover a balance due him as salary forthe year 1902. He also alleged that hewas entitled, as salary, to 5 percent of the net profits of the business of the defendantsfor said year. The complaint also contained a cause of action for the sum of 600pesos,money expended by plaintiff for the defendants during the year1903. The lower courtruled in favor of the plaintiff. The total judgmentrendered amounted to P13, 025.40,which was reduced to Philippinecurrency. The defendants moved for new trial but weredenied. They brought the case in the SC thru bill of exceptions; theappellants(defendants) alleged that that the contract made the plaintiff acopartner ofthe defendants in the business, which they were carryingon.

Issue:WON the plaintiff is a co-partner of the defendants in the business.

Ruling:

NO. It was a mere contract of employment. The plaintiff had neithervoice nor vote in themanagement of the affairs of the company. Thefact that the compensation received byhim was to be determined withreference to the profits made by the defendants in theirbusiness didnot in any sense make by a partner therein. The articles ofpartnershipbetween the defendants provided that the profits should be dividedamongthe partners named in a certain proportion. The contract madebetween the plaintiff and

the then manager of the defendantpartnership did not in any way vary or modify thisprovision of thearticles of partnership.


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Liwanag v. CA

Facts:

Liwanag and Tabligan went to the house of Rosales and asked her to join them in the

business of buying and selling cigarettes. Convinced of the feasibility of the venture,Rosales readily agreed. Under their agreement, Rosales would give the money neededto buy the cigarettes while Liwanag and Tabligan would act as her agents, with acorresponding 40% commission to her if the goods are sold; otherwise the money wouldbe returned to Rosales. Consequently, Rosales gave several cash advances to Liwanagand Tabligan amounting to P633,650.00.

During the first two months, Liwanag and Tabligan made periodic visits toRosales to report on the progress of the transactions. The visits, however, suddenlystopped, and all efforts by Rosales to obtain information regarding their businessproved futile.

Alarmed by this development and believing that the amounts she advanced werebeing misappropriated, Rosales filed a case of estafa against Liwanag.

Issue:

WON Liwanag is guilty of estafa?

Ruling:

The language of the receipt indicates that the money delivered to Liwanag was for aspecific purpose, that is, for the purchase of cigarettes, and in the event the cigarettes

cannot be sold, the money must be returned to Rosales.

Thus, even assuming that a contract of partnership was indeed entered into by andbetween the parties, we have ruled that when money or property have been received by apartner for a specific purpose (such as that obtaining in the instant case) and he latermisappropriated it, such partner is guilty of estafa.

Neither can the transaction be considered a loan, since in a contract of loan once themoney is received by the debtor, ownership over the same is transferred. Being theowner, the borrower can dispose of it for whatever purpose he may deem proper.

In the instant petition, however, it is evident that Liwanag could not dispose of themoney as she pleased because it was only delivered to her for a single purpose, namely,

for the purchase of cigarettes, and if this was not possible then to return the money toRosales. Since in this case there was no transfer of ownership of the money delivered,Liwanag is liable for conversion under Art. 315, par. 1(b) of the Revised Penal Code.


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Rojas v. Maglana

Facts:

Maglana and Rojas executed their Articles of Co-Partnership called Eastcoast

Development Enterprises (EDE). It was a partnership with an indefinite term ofexistence. Maglana shall manage the business affairs while Rojas shall be the loggingsuperintendant and shall manage the logging operation. They shall share in all profitsand loss equally.

Due to difficulties encountered they decided to avail of the sources of Pahamatong asindustrial partners. They again executed their Articles of Co-Partnership under EDE.The term is 30 years. After sometime Pamahatong sold his interest to Maglana andRojas including equipment contributed. After withdrawal of Pamahatong, Maglana andRojas continued the partnership.

After 3 months, Rojas entered into a management contract with another logging

enterprise. He left and abandoned the partnership. He even withdrew his equipmentfrom the partnership and was transferred to CMS. He never told Maglana that he willnot be able to comply with the promised contributions and he will not work as loggingsuperintendent. Maglana then told Rojas that the latter share will just be 20% of the netprofits.

Rojas took funds from the partnership more than his contribution. Thus, Maglananotified Rojas that he dissolved the partnership.

Issue:

What is the nature of the partnership and legal relationship of Maglana and Rojas after

Pahamatong retired from the second partnership

Ruling:

It was not the intention of the partners to dissolve the first partnership, upon theconstitution of the second one, which they unmistakably called additionalagreement.Otherwise stated even during the existence of the second partnership, all businesstransactions were carried out under the duly registered articles. No rights andobligations accrued in the name of the second partnership except in favor ofPahamatong which was fully paid by the duly registered partnership.


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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 cateringbusiness. Respondent Ramirezjoined as a partner inthe business with the capital contribution of P250,000. In 1987,Jesus Jose withdrew from thepartnership and within the same time, VillarealandCarmelitoJose, petitioners closed the businesswithout prior knowledge of respondents

In March 1987, respondents wrote a letter topetitioners stating that they wereno longerinterested in continuing the partnership and thatthey were accepting thelatters offer to return theircapital contribution. This was left unheeded bythepetitioners, and by reason of which respondents fileda complaint in the RTC.RTCruled that the parties had voluntarilyentered into a partnership, which could bedissolvedat any time, and this dissoution was showed by thefact that petitioners stoppedoperating therestaurant.On appeal, CA upheld RTCsdecision thatthe partnership was dissolved

and it added thatrespondents had no right to demand the return of their capitalcontribution. However since petitionersdid not give the proper accounting for theliquidationof the partnership, the CA took it upon itself tocompute their liabilities andthe amount that isproper to the respondent. The computation of whichwas:(capital of thepartnership outstandingobligation) / remaining partners =amount due to privaterespondent

Issue:

W/N petitioners are liable to respondentsforthe lattersshare in the partnership?

Ruling:

No. Respondents have no right to demand frompetitioner the return of their equityshare. As foundby the court petitioners did not personally hold itsequity or assets. Thepartnership has a juridicalpersonality separate and distinct from that of each of thepartners.Since the capital was contributed tothe partnership, not to petitioners, it isthepartnership that must refund the equity of theretiring partners. However, before thepartners canbe paid their shares, the creditors of the partnershipmust first becompensated. Therefore, the exactamount of refund equivalent to respondentsone-thirdshare in the partnership cannot be determineduntil all the partnership assets will have

beenliquidated and all partnership creditors have beenpaid.CAs computation of theamount to berefunded to respondents as their share was thuserroneous.


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Heirs of Jose Lim v. Lim

Facts:

In 1980, the heirs of Jose Lim alleged that Jose Lim entered into a partnership

agreement with Jimmy Yu and Norberto Uy. The three contributed P50,000.00 eachand used the funds to purchase a truck to start their trucking business. A year laterhowever, Jose Lim died. The eldest son of Jose Lim, Elfledo Lim, took over the truckingbusiness and under his management, the trucking business prospered. Elfledo was ableto but real properties in his name. From one truck, he increased it to 9 trucks, all truckswere in his name however. He also acquired other motor vehicles in his name. In 1993,Norberto Uy was killed. In 1995, Elfledo Lim died of a heart attack. Elfledos wife, JulietLim, took over the properties but she intimated to Jimmy and the heirs of Norberto thatshe could not go on with the business. So the properties in the partnership were dividedamong them. Now the other heirs of Jose Lim, represented by Elenito Lim, requiredJuliet to do an accounting of all income, profits, and properties from the estate of

Elfledo Lim as they claimed that they are co-owners thereof. Juliet refused hence theysued her. The heirs of Jose Lim argued that Elfledo Lim acquired his properties from thepartnership that Jose Lim formed with Norberto and Jimmy. In court, Jimmy Yutestified that Jose Lim was the partner and not Elfledo Lim. The heirs testified thatElfledo was merely the driver of Jose Lim.

Issue:

Who is the partner between Jose Lim and Elfledo Lim?

Ruling:

It is Elfledo Lim based on the evidence presented regardless of Jimmy Yus testimony incourt that Jose Lim was the partner. If Jose Lim was the partner, then the partnershipwould have been dissolved upon his death (in fact, though the SC did not say so, Ibelieve it should have been dissolved upon Norbertos death in 1993). A partnership isdissolved upon the death of the partner. Further, no evidence was presented as to thearticles of partnership or contract of partnership between Jose, Norberto and Jimmy.Unfortunately, there is none in this case, because the alleged partnership was neverformally organized. But at any rate, the Supreme Court noted that based on thefunctions performed by Elfledo, he is the actual partner. The following circumstances

tend to prove that Elfledo was himself the partner of Jimmy and Norberto: 1.) Cresenciatestified that Jose gave Elfledo P50,000.00, as share in the partnership, on a date thatcoincided with the payment of the initial capital in the partnership; 2.) Elfledo ran theaffairs of the partnership, wielding absolute control, power and authority, without anyintervention or opposition whatsoever from any of petitioners herein; 3.) all of theproperties, particularly the nine trucks of the partnership, were registered in the nameof Elfledo; 4.) Jimmy testified that Elfledo did not receive wages or salaries from thepartnership, indicating that what he actually received were shares of the profits of the


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business; and 5.) none of the heirs of Jose, the alleged partner, demanded periodicaccounting from Elfledo during his lifetime. As repeatedly stressed in the case ofHeirsof Tan EngKee,a demand for periodic accounting is evidence of a partnership.Furthermore, petitioners failed to adduce any evidence to show that the real andpersonal properties acquired and registered in the names of Elfledo and Juliet formed

part of the estate of Jose, having been derived from Joses alleged partnership withJimmy and Norberto. Elfledo was not just a hired help but one of the partners in thetrucking business, active and visible in the running of its affairs from day one until thisceased operations upon his demise. The extent of his control, administration andmanagement of the partnership and its business, the fact that its properties were placedin his name, and that he was not paid salary or other compensation by the partners, areindicative of the fact that Elfledo was a partner and a controlling one at that. It isapparent that the other partners only contributed in the initial capital but had no saythereafter on how the business was ran. Evidently it was through Elfredos efforts andhard work that the partnership was able to acquire more trucks and otherwise prosper.
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Ortega v. CA

FACTS:

Ortega, then a senior partner in the law firm Bito, Misa, and Lozada withdrew from the

said firm. He filed with SEC a petition for dissolution and liquidation of the partnership.The SEC en banc ruled that withdrawal of Misa from the firm had dissolved thepartnership. Since it is partnership at will, the law firm could be dissolved by anypartner at anytime, such as by withdrawal therefrom, regardless of good faith or badfaith, 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 apartnership at will

2. WON the withdrawal of Misa dissolved the partnership regardlessof his good or badfaith

RULING:

1. Yes. The partnership agreement of the firm provides that [t]he partnership shallcontinue so long as mutually satisfactory and upon the death or legal incapacity of oneof 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 thepartnership at will (e.g. by way of withdrawal of a partner). He must, however, act ingood faith, not that the attendance of bad faith can prevent the dissolution of thepartnership but that it can result in a liability for damages


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Santos v. Reyes

FACTS:

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 lendingbusiness where it was agreed that Santos shall be financier and that Nieves and Zabatshall contribute their industry. **The percentages after their names denote their sharein the profit.Later, Nieves introduced Cesar Gragera to Santos. Gragera was the chairman of acorporation. It was agreed that the partnership shall provide loans to the employees ofGrageras corporation and Gragera shall earn commission from loan payments.

In August 1986, the three partners put into writing their verbal agreement to form thepartnership. As earlier agreed, Santos shall finance and Nieves shall do the daily cashflow more particularly from their dealings with Gragera, Zabat on the other hand shallbe a loan investigator. But then later, Nieves and Santos found out that Zabat wasengaged in another lending business which competes with their partnership hence Zabatwas 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 Grageras commissions to the latter.He sued them for collection of sum of money. The spouses countered that Santos merelyfiled 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 himand Gragera which is separate from the partnership formed between him, Zabat andNieves.

The trial court as well as the Court of Appeals ruled against Santos and ordered thelatter to pay the shares of the spouses.

ISSUE:

Whether or not the spouses are partners.

Ruling:

Yes. Though it is true that the original partnership between Zabat, Santos and Nieveswas terminated when Zabat was expelled, the said partnership was however consideredcontinued when Nieves and Santos continued engaging as usual in the lending business


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even getting Nieves husband, who resigned from the Asian Development Bank, to betheir loan investigator who, in effect, substituted Zabat.There is no separate partnership between Santos and Gragera. The latter being merely acommission agent of the partnership. This is even though the partnership wasformalized 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 lendingagreement between the corporation and the partnership).

HOWEVER, the order of the Court of Appeals directing Santos to give the spouses theirshares in the profit is premature. The accounting made by the trial court is based on thetotal income of the partnership. Such total income calculated by the trial court did notconsider the expenses sustained by the partnership. All expenses incurred by themoney-lending enterprise of the parties must first be deducted from the total incomein order to arrive at the net profit of the partnership. The share of each one of themshould be based on this net profit and not from the gross income or total income.


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Navarro v. CA

FACTS:

Private respondent Olivia V. Yanson and Petitioner Lourdes Navarro were engaged in

the business of Air Freight Service Agency. Pursuant to the Agreement which theyentered, they agreed to operate the said Agency; It is the Private Respondent OliviaYanson who supplies the necessary equipment and money used in the operation of theagency. Her brother in the person of Atty. Rodolfo Villaflores was the manager thereofwhile petitioner Lourdes Navarro was the Cashier; In compliance to her obligation asstated in their agreement, private respondent brought into their business certainchattels or movables or personal properties. However, those personal properties remainto be registered in her name; Among the provisions stipulated in their agreement is theequal sharing of whatever proceeds realized from their business; However, sometime onJuly 23, 1976, private respondent Olivia V. Yanson, in order for her to recovery theabove mentioned personal properties which she brought into their business, filed a

complaint against petitioner Lourdes Navarro for "Delivery of Personal Properties WithDamages and with an application for a writ of replevin. Private respondents' applicationfor a writ of replevin was later approved/granted by the trial court. For her defense,petitioner Navarro argue that she and private respondent Yanson actually formed averbal partnership which was engaged in the business of Air Freight Service Agency. Shecontended that the decision sustaining the writ of replevin is void since the propertiesbelonging to the partnership do not actually belong to any of the parties until the finaldisposition and winding up of the partnership.

ISSUE:

1. Whether or not there was a partnership that existed between theparties.

2. Whether the properties that were commonly used in the operation of Allied AirFreight belonged to the alleged partnership business.

RULING:

Article 1767 of the New Civil Code defines the contract of partnership: Art. 1767. By thecontract of partnership two or more persons bind themselves to contribute money,

property, or industry to a common fund, with the intention of dividing the proceedsamong themselves. A cursory examination of the evidences presented no proof that apartnership, whether oral or written had been constituted. In fact, those movablesbrought by the plaintiff for the use in the operation of the business remain registered inher name. While there may have been co-ownership or co-possession of some itemsand/or any sharing of proceeds by way of advances received by both plaintiff and thedefendant, these are not indicative and supportive of the existence of any partnershipbetween them. Art. 1769 par. 2 provides: Co-ownership or co-possession does not of


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itself establish a partnership, whether such co-owners or co-possessors do or do notshare any profits made by the use of the property Besides, the alleged profit was adifference found after valuating the assets and not arising from the real operation of thebusiness. In accounting procedures, strictly, this could not be profit but a net worth.


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Heirs of Tang EngKee v. Philippine Fishing Gear Industries

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 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 RTCruled 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 orparticular 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 anymemorandum 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


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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 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 theprofits 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.


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Lim Tong Lim v. Philippine Fishing Gear Industries Inc.

FACTS:

Lim Tong Lim requested Peter Yao and Antonio Chua to engage in commercial fishing

with him. The three agreed to purchase two fishing boats but since they do not have the

money they borrowed from one Jesus Lim the brother of Lim Tong Lim. Subsequently,

they again borrowed money for the purchase of fishing nets and other fishing

equipments. Yao and Chua represented themselves as acting in behalf of Ocean Quest

Fishing Corporation (OQFC) and they contracted with Philippine Fishing Gear

Industries (PFGI) for the purchase of fishing nets amounting to more than P500k.

However, they were unable to pay PFGI and hence were sued in their own names as

Ocean Quest Fishing Corporation is a non-existent corporation. Chua admitted his

liability while Lim Tong Lim refused such liability alleging that Chua and Yao acted

without his knowledge and consent in representing themselves as a corporation.

ISSUE:

Whether Lim Tong Lim is liable as a partner

Ruling:

Yes.It is apparent from the factual milieu that the three decided to engage in a fishingbusiness. Moreover, their Compromise Agreement had revealed their intention to pay

the loan with the proceeds of the sale and to divide equally among them the excess or

loss. The boats and equipment used for their business entails their common fund. The

contribution to such fund need not be cash or fixed assets; it could be an intangible like

credit or industry. That the parties agreed that any loss or profit from the sale and

operation of the boats would be divided equally among them also shows that they had

indeed formed a partnership. The principle of corporation by estoppel cannot apply in

the case as Lim Tong Lim also benefited from the use of the nets in the boat, which was

an asset of the partnership. Under the law on estoppel, those acting in behalf of a

corporation and those benefited by it, knowing it to be without valid existence are heldliable as general partners. Hence, the question as to whether such was legally formed for

unknown reasons is immaterial to the case.


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Sardane v. CA

FACTS:

Petitioner brought an action in the collection of a sum of P5,217.25 based on promissorynotes executed by the herein private respondent NobioSardane in favor of the herein

petitioner. Petitioner based his right to collect on the promissory notes executed by

respondent on different dates. It has been established in the trial court that on many

occasions, the petitioner demanded the payment of the total amount of P5,217.25. The

failure of the private respondent to pay the said amount prompted the petitioner to seek

the services of lawyer who made a letter (Exhibit 1) formally demanding the return of

the sum loaned. Because of the failure of the private respondent to heed the demands

extrajudicially made by the petitioner, the latter was constrained to bring an action for

collection of sum of money. During the scheduled day for trial, private respondent failed

to appear and to file an answer. On motion of petitioner, he was granted to present

evidence ex parte. Private respondent filed a motion to lift the order of default which

was granted by the City Court in an order dated May 24, 1976, taking into consideration

that the answer was filed within two hours after the hearing of the evidence

presented ex-parteby the petitioner. The trial court favored plaintiffs petition. One of

the questions raised in the review was whether the oral testimony for the therein private

respondent Sardane that a partnership existed between him and therein petitioner

Acojedo are admissible to vary the meaning of the abovementioned promissory notes.

ISSUE:

Whether a partnership exists between the parties

RULING:

The Court of Appeals held, and agreed with by the Court, that even if

evidence aliundeother than the promissory notes may be admitted to alter the meaning

conveyed thereby, still the evidence is insufficient to prove that a partnership existedbetween the private parties hereto.

As manager of thebasnig Sarcado naturally some degree of control over the operations

and maintenance thereof had to be exercised by herein petitioner. The fact that he had

received 50% of the net profits does not conclusively establish that he was a partner of

the private respondent herein. Article 1769(4) of the Civil Code is explicit that while the

receipt by a person of a share of the profits of a business isprima facieevidence that he


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is a partner in the business, no such inference shall be drawn if such profits were

received in payment as wages of an employee. Furthermore, herein petitioner had no

voice in the management of the affairs of the basnig. Under similar facts, this Court in

the early case ofFortis vs. Gutierrez Hermanos, in denying the claim of the plaintiff

therein that he was a partner in the business of the defendant, declared:

This contention cannot be sustained. It was a mere contract of employment. The

plaintiff had no voice nor vote in the management of the affairs of the company. The fact

that the compensation received by him was to be determined with reference to the

profits made by the defendant in their business did not in any sense make him a partner

therein. ...

Hence, there no partnership exists in the case.


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Sy v. CA

FACTS:

Sometime in 1958, private respondent Jaime Sahot[5]started working as a truck helperfor petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he

became a truck driver of the same family business, renamed T. Paulino Trucking

Service, later 6Bs 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 petitioners industrial partner. They add that it was notuntil 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
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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 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 ofpetitioners from 1958 to 1994. The existence of an employer-employee relationship isultimately a question of fact and the findings thereon by the NLRC, as affirmed by theCourt of Appeals, deserve not only respect but finality when supported by substantialevidence. Substantial evidence is such amount of relevant evidence which a reasonablemind might accept as adequate to justify a conclusion.


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Tocao v. CA

Facts:

William Belo introduced NenitaAnay 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 generalmanager; and Anay shall be in charge of marketing. Belo and Tocao specifically askedAnay because of her experience and connections as a marketer. They agreed further thatAnay shall receive the following:

10% share of annual net profits

6% overriding commission for weekly sales

30% of sales Anay will make herself

2% share for her demo services

They operated under the name Geminesse Enterprise, this name was however registeredas a sole proprietorship with the Bureau of Domestic Trade under Tocao. The jointventure agreement was not reduced to writing because Anay trustedBelosassurances.

The venture succeeded underAnaysmarketing prowess.

But then the relationship between Anay and Tocao soured. One day, Tocao advised oneof the branch managers that Anay was no longer a part of the company. Anay thendemanded that the company be audited and her shares be given to her.

Issue:

Whether or not there is a partnership.

Ruling:

Yes, even though it was not reduced to writing, for a partnership can be instituted in anyform. The fact that it was registered as a sole proprietorship is of no moment for suchregistration was only for the companystrade name.

Anay was not even an employee because when they ventured into the agreement, theyexplicitly agreed to profit sharing this is even though Anay was receiving commissionsbecause this is only incidental to her efforts as a head marketer.

The Supreme Court also noted that a partner who is excluded wrongfully from apartnership is an innocent partner. Hence, the guilty partner must give him his dueupon the dissolution of the partnership as well as damages or share in the profitsrealizedfrom the appropriation of the partnership business and goodwill.An innocentpartner thus possesses pecuniary interest in every existing contract that wasincomplete and in the trade name of the co-partnership and assets at the time he waswrongfully expelled.


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An unjustified dissolution by a partner can subject him to action for damages because bythe mutual agency that arises in a partnership, the doctrine of delectus personae allowsthe partners to have the power, although not necessarily the right to dissolve thepartnership.

Tocaosunilateral exclusion of Anay from the partnership is shown by her memo to the

Cubao office plainly stating that Anay was, as of October 9, 1987, no longer the vice-president for sales of Geminesse Enterprise. By that memo, petitioner Tocaoeffected herown withdrawal from the partnership and considered herself as having ceased to beassociated with the partnership in the carrying on of the business. Nevertheless, thepartnership was not terminated thereby; it continues until the winding up of thebusiness.


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Lozana v. Depakakibo

Facts:

On November 16, 1954 plaintiff Mauro Lozana entered into a contract with defendant

SerafinDepakakibo wherein they established a partnership capitalized at the sum ofP30,000, plaintiff furnishing 60% thereof and the defendant, 40%, for the purpose ofmaintaining, operating and distributing electric light and power in the Municipality ofDumangas, under a franchise issued to Mrs. PiadosaBuenaflor. However, the franchiseor certificate of public necessity and convenience in favor of the said Mrs.PiadosaBuenaflor was cancelled and revoked by the Public Service Commission on May15, 1955. But the decision of the Public Service Commission was appealed to Us onOctober 21, 1955. A temporary certificate of public convenience was issued in the nameof Olimpia D. Decolongon on December 22, 1955. Evidently because of the cancellationof the franchise in the name of Mrs. PiadosaBuenaflor, plaintiff herein Mauro Lozanasold a generator, Buda (diesel), to the new grantee Olimpia D. Decolongon. Defendant

SerafinDepakakibo, on the other hand, sold one Crossly Diesel Engine, to the spousesFelix Jimenea and Felina Harder, by a deed dated July 10, 1956.

On November 15, 1955, plaintiff Mauro Lozana brought an action against the defendant,alleging that he is the owner of the Generator Buda (Diesel) and 70 wooden posts withthe wires connecting the generator to the different houses supplied by electric current.Plaintiff prayed that said properties be delivered back to him. Defendant alleged thatunder the partnership agreement the parties were to contribute equipment, plaintiffcontributing the generator and the defendant, the wires for the purpose of installing themain and delivery lines; that the plaintiff sold his contribution to the partnership, inviolation of the terms of their agreement. He, therefore, prayed that the complaintagainst him be dismissed; that plaintiff be adjudged guilty of violating the partnership

contract.

Issue:

WON there was partnership

Ruling:

As it appears from the above stipulation of facts that the plaintiff and the defendantentered into the contract of partnership, plaintiff contributing the amount of P18,000,

and as it is not stated therein that there bas been a liquidation of the partnership assetsat the time plaintiff sold the Buda Diesel Engine on October 15, 1955, and since the courtbelow had found that the plaintiff had actually contributed one engine and 70 posts tothe partnership, it necessarily follows that the Buda diesel engine contributed by theplaintiff 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 theconsent or approval of the partnership or of the other partner.


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Under the circumstances, the court erred in declaring that the contract was illegal fromthe beginning and that parties to the partnership are not bound therefor, such that thecontribution of the plaintiff to the partnership did not pass to it as its property. It alsofollows that the claim of the defendant in his counterclaim that the partnership bedissolved and its assets liquidated is the proper remedy, not for each contributing

partner to claim back what he had contributed.


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Catalan vs. Gatchalian

Facts:

Catalan and Gatchalian are partners. They mortgaged two lots to Dr. Marave together

with the improvements thereon to secure a credit from the latter. The partnership failed

to pay the obligation. The properties were sold to Dr. Marave at a public auction.

Catalan redeemed the property and he contends that title should be cancelled and a new

one must be issued in his name.

Issue:

Did Catalans redemption of the properties make him the absolute owner of the lands?

Ruling:

No. Under Article 1807 of the NCC every partner becomes a trustee for his copartner

with regard to any benefits or profits derived from his act as a partner. Consequently,

when Catalan redeemed the properties in question, he became a trustee and held the

same in trust for his copartner Gatchalian, subject to his right to demand from the latter

his contribution to the amount of redemption.


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Fue Lung v. CA

Facts:

The petitioner asks for the reversal of the decision of the Appellate Court in which

affirmed the decision of the lower court declaring private respondent Leung Yiu a

partner of petitioner Dan Fue Leung in the business of Sun WahPanciteria and ordering

the petitioner to pay to the private respondent his share in the annual profits of the said

restaurant. This case originated from a complaint filed by respondent Leung Yiu with

the lower court to recover the sum equivalent to twenty-two percent (22%) of the annual

profits derived from the operation of Sun WahPanciteria since October, 1955 from

petitioner Dan Fue Leung. The Sun WahPanciteria 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 hewas one of the partners having contributed P4,000.00 to its initial establishment .Lower

court ruled in favor of the private respondent. Petitioner appealed the trial court's

amended decision. However, the questioned decision was further modified and affirmed

by the appellate court. Both the trial court and the appellate court declared that the

private petitioner is a partner and is entitled to a share of the annual profits of the

restaurant. Hence, an appeal to the SC. The petitioner argues that private respondent

extended 'financial assistance to herein petitioner at the time of the establishment of the

Sun WahPanciteria, in return of which private respondent allegedly will receive a share

in the profits of the restaurant. It was, therefore, error for the Appellate Court to

interpretor construe 'financial assistance' to mean the contribution of capital by apartner to a partnership.

Issue:

Whether or not the private respondent is a partner of the petitioner in the establishment

of Sun WahPanciteria?

Ruling

In essence, the private respondent alleged that when Sun WahPanciteria was

established, he gave P4,000.00 to the petitioner with the understanding that he would

be entitled to twenty-two percent (22%) of the annual profit derived from the operation

of the said panciteria. These allegations, which were proved, make the private

respondent and the petitioner partners in the establishment of Sun WahPanciteria


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because Article 1767 of the Civil Code provides that "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". Therefore,

the lower courts did not err in construing the complaint as one wherein the private

respondent asserted his rights as partner of the petitioner in the establishment of the

Sun WahPanciteria, notwithstanding the use of the term financial assistance therein.SC

affirmed appellate courts decision and ordered the dissolution of the partnership.


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Sison v. Helen McQuaid

Facts:

Plaintiff brought an action in the CFI against defendant. Defendant borrowedfrom 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 230,000board ft. of lumber to the US Army for P

13,800.00. Defendant refused to deliver 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?

Ruling:

NO. Order of dismissal was affirmed, but on the ground that the complaint states

no cause of action. 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 prices of lumber sold by the partnership to the

United States Army. Nevertheless, 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 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.


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Ornum v. Lasala

FACTS:

In 1908 Pedro Lasala, father of the respondents, and EmerencianoOrnum formed apartnership, Lasala as capitalist while Ornum will be the industrial partner. Lasaladelivered the sum of P1,000 to Ornum who will conduct a business at his place ofresidence in Romblon. In 1912, when the assets of the partnership consisted ofoutstanding accounts and old stock of merchandise, EmerencianoOrnum, following thewishes of his wife, asked for the dissolution of the Lasala, Emerenciano. Ornum lookedfor some one who could take his place and he suggested the names of the petitionerswho accordingly became the new partners.

Upon joining the business, the petitioners, contributed P505.54 as their capital the newpartnership Pedro Lasala had a capital of P1,000, appraised value of the assets of the

former partnership, plus the said P505.54 invested by the petitioners who, as industrialpartners, were to run the business in Romblon. After the death of Pedro Lasala, hischildren (the respondents) succeeded to all his rights and interest in the partnership.

The partners never knew each other personally. No formal partnership agreement wasever executed.

The petitioners, as managing partners, were received one-half of the net gains, and theother half was to be divided between them and the Lasala group in proportion to thecapital put in by each group. During the course divided, but the partners were given theelection, as evidenced by the statements of accounts referred to in the decision of theCourt of Appeals, to invest their respective shares in such profits as additional capital.The petitioners accordingly let a greater part of their profits as additional investment inthe partnership.

After twenty years the business had grown to such an extent that is total value, includingprofits, amounted to P44,618.67. Statements of accounts were periodically prepared bythe petitioners and sent to the respondents who invariably did not make any objectionthereto.

Before the last statement of accounts was made, the respondents had received P5,387.29by way of profits. The last and final statement of accounts, dated May 27, 1932, andprepared by the petitioners after the respondents had announced their desire to dissolve

the partnership. Pursuant to the request contained in this letter, the petitioners remittedand paid to the respondents the total amount corresponding to them under the above-quoted statement of accounts which, however, was not signed by the latter. Thereafterthe complaint in this case was filed by the respondents, praying for an accounting andfinal liquidation of the assets of the partnership. The Court of First Instance of Manilaheld that the last and final statement of accounts prepared by the petitioners was tacitlyapproved and accepted by the respondents who, by virtue of the above-quoted letter ofFather Mariano Lasala, lost their right to a further accounting from the moment they


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received and accepted their shares as itemized in said statement. This judgment wasreversed by the Court of Appeals principally on the ground that as the final statement ofaccounts remains unsigned by the respondents, the same stands disapproved.

ISSUES:

(1) WoN the accounting stated in the letter including the last and final statement ofaccount was tacitly accepted by the petitioners as the final liquidation andaccounting of the assets of the partnership?

(2) Are there really mistakes and misrepresentations made in the statement ofaccounts made?

RULING:

1. YES. SC stated that thelast and final statement of accounts hereinabove quoted, hadbeen approved by the respondents. This approval resulted, by virtue of the letter ofFather Mariano Lasala of July 19, 1932, quoted in part in the appealed decision fromthe failure of the respondents to object to the statement and from their promise tosign the same as soon as they received their shares as shown in said statement.

After such shares had been paid by the petitioners and accepted by the respondentswithout any reservation, the approval of the statement of accounts was virtuallyconfirmed and its signing thereby became a mere formality to be complied with by therespondents exclusively. Their refusal to sign, after receiving their shares, amounted to awaiver to that formality in favor of the petitioners who has already performed theirobligation.

This approval precludes any right on the part of the respondents to a furtherliquidation, unless the latter can show that there was fraud, deceit, error or mistake insaid approval. (Pastor, vs.Nicasio, 6 Phil., 152; Aldecoa& Co., vs. Warner, Barnes & Co.,16 Phil., 423; Gonsalezvs.Harty, 32 Phil. 328.) The Court of Appeals did not make anyfindings that there was fraud, and on the matter of error or mistake it merely said:

2: No. The pronouncement that the evidence tends to prove that there were mistakes in

the petitioners' statements of accounts, without specifying the mistakes, merelyintimates as suspicion and is not such a positive and unmistakable finding of fact as tojustify a revision, especially because the Court of Appeals has relied on the bareallegations of the parties, Moreover, as the petitioners did not appeal from the decisionof the Court abandoned such allegation in the Court of Appeals. No justifiable reason(fraud, deceit, error or mistake) has been positively and unmistakably found by theCourt of Appeals so as to warrant the liquidations sought by the respondents.


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McDonald v. National City Bank of New York

Facts:

Stasikinocey is a partnership formed by da Costa, Gorcey, Kusik and Gavino. It wasdenied registration by the SEC due to a confusion between the partnership and CardinalRattan. Cardinal Rattan is the business name or style used by Stasikinocey. Da Costaand Gorcey are the general partners of Cardinal Rattan. Moreover, Da Costa is themanaging partner of Cardinal Rattan. Stasikinocey had an overdaft account withNationa City Bank, which was later converted into an ordinary loan due thepartnerships failure in paying its obligation. The ordinary loan was secured by a chattelmortgage over 3 vehicles. During the subsistence of the loan, the vehicles were sold toMacDonald and later on, MacDonald sold 2 of the 3 vehicles to Gonzales. The bankbrought an action for recovery of its credit and foreclosure of the chattel mortgage uponlearning of these transactions.

Issue:

WON the partnership, Stasikinocey is estopped from asserting that it does not havejuridical personality since it is an unregistered commercial partnership

Ruling:

While an unregistered commercial partnership has no juridical personality,nevertheless, where two or more persons attempt to create a partnership failing tocomply with all the legal formalities, the law considers them as partners and theassociation is a partnership in so far as it is a favorable to third persons, by reason of theequitable principle of estoppel. Where a partnership not duly organized has beenrecognized as such in its dealings with certain persons, it shall be considered aspartnership by estoppel and the persons dealing with it are estopped from denying itspartnership existence.


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Goquilay v. Sycip

FACTS:

Tan Sin An and Goquiolay entered into a general commercial partnership under thepartnership name Tan Sin An and Antonio Goquiolay for the purpose of dealing in realestate. The agreement lodged upon Tan Sin An the sole management of the partnershipaffairs. 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 theexpiration of the term, the partnership will not be dissolved but will be continued by theheirs or assigns of the deceased partner. But the partnership could be dissolved uponmutual agreement in writing of the partners.

Goquiolay executed a GPA in favor of Tan Sin An.The plaintiff partnership purchased 3parcels 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 heassumed payment of a mortgage debt for P35K. A downpayment and the amortizationwere advanced by Yutivo and Co.

The two obligations were consolidated in an instrument executed by the partnership andTan Sin An, whereby the entire 49 lots were mortgaged in favor of

BancoHipotecarioTan Sin An died leaving his widow, Kong Chai Pin and four minorchildren. The widow subsequently became the administratrix of the estate.

Repeated demands were made by BancoHipotecario on the partnership and on Tan Sin

An. Defendant Sing Yee, upon request of defendant YutivoSons , paid the remaining

balance of the mortgage debt, the mortgage was cancelledYutivo Sons and Sing Yee filed their claim in the intestate proceedings of Tan Sin An foradvances, interest and taxes paid in amortizing and discharging their obligations to LaUrbana and BancoHipotecario. Kong Chai Pin filed a petition with the probate courtfor authority to sell all the 49 parcels of land. She then sold it to Sycip and Lee inconsideration of P37K and of the vendees assuming payment of the claims filed byYutivo 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 andLee, 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 wasconcerned.Probate court annulled the sale executed by the administratrix w/ respect tothe 60% interest of Goquiolay over the properties Administratrix appealed.Thedecision 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 ofthe sale in favor of Sycip and Lee and their subsequent conveyance to InsularDevelopment.The complaint was dismissed by the lower court hence this appeal.


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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 husbandTan Sin An in the sole management of the partnership upon Tans death

Whether or not the consent of the other partners was necessary to perfect the sale of thepartnership properties to Sycip and Lee?

Ruling:

Kong Chai Pin became a mere general partner. By seeking authority to manage

partnership property, Tan Sin Ans widow showed that she desired to be considered ageneral partner. By authorizing the widow to manage partnership property (which alimited 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 toadminister and alienate partnership property.

The articles did not provide that the heirs of the deceased would be merely limitedpartners; on the contrary, they expressly stipulated that in case of death of eitherpartner, the co partnership will have to be continued with the heirs or assignees. Itcertainly could not be continued if it were to be converted from a general partnershipinto a limited partnership since the difference between the two kinds of associations is

fundamental, and specially because the conversion into a limited association wouldleave the heirs of the deceased partner without a share in the management. Hence, thecontractual stipulation actually contemplated that the heirs would become generalpartners rather than limited ones.


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Songcuya v. De Luna

Facts:

Petitioner filed a complaint against respondent for damages as a result of the fraudulent

administration of the partnership, Centro Escolar de Senoritas of which petitioner and

the deceased AvelinoLibrada were members. For the purpose of adjudicating to plaintiff

damages which he alleges to have suffered as a partner, it is necessary that a liquidation

of the business be made that the end profits and losses maybe known and the causes of

the latter and the responsibility of the defendant as well as the damages in which each

partner may have suffered, maybe determined.

Issue:

Whether the petitioner is entitled to damages.

Ruling:

According to the Supreme Court the complaint is not sufficient to constitute a

cause of action on the part of the plaintiff as member of the partnership to collect

damages from defendant as managing partner thereof, without previous liquidation.

Thus, for a partner to be able to claim from another partner who manages the general

co-partnership, allegedly suffered by him by reason of the fraudulent administration ofthe latter, a previous liquidation of said partnership is necessary.


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Singson v. Isabela Sawmill

Facts:

In 1951, defendants entered into a contract of partnership under the firm name Isabela

Sawmill. In 1956 the plaintiff sold to the partnership a motor truck and two tractors.

The partnership was not able to pay their whole balance even after demand was made.

One of the partners withdrew from the partnership but instead of terminating the said

partnership it was continued by the two remaining partners under the same firm name.

Plaintiffs also seek the annulment of the assignment of right with chattel mortgage

entered into by the withdrawing partner and the remaining partners. The appellants

contend that the chattel mortgage may no longer be nullified because it had been

judicially approved and said chattel mortgage had been judicially foreclosed.

Issue:

Whether the withdrawal of one of the partners dissolved the partnership.

Ruling:

It does not appear that the withdrawal of the partner was not published in the

newspapers. The appellees and the public in general had a right to expect that whatever,

credit they extended to the remaining partners could be enforced against the propertiesof the partnership. The withdrawing partner cannot be relieved from her liability to the

creditor of the partnership due to her own fault by not insisting on the liquidation of the

partnership. Though she had acted in good faith, the appellees also acted in good faith in

extending credit to the partnership. Where one of two innocent persons must suffer,

that person who gave occasion for the damages to be caused must bear the

consequences. Technically, the partnership was dissolved by the withdrawal of one of

the partners. Through her acts of entering into a memorandum with the remaining

partners misled the creditors that they were doing business with the partnership. Hence,

from the order of the lower court ordering the withdrawing partner to pay the plaintiffs,

she is thus entitled for reimbursement from the remaining partners.


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Idos v. CA

Facts:

In 1985, Eddie Alarilla and Irma Idos formed a partnership which they decided to

terminate after a year. To pay Alarillas share of the asset, Idos issued 4 post dated

checks. Alarilla was able to encash the first, 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 Alarillas 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 yetterminated 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 co-partners.

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.


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Republic v. Tancinco

Facts:

The National Sugar Trading Corporation (NASUTRA), a domestic corporation created

for the purpose of engaging in the trading of sugar, and a subsidiary of the PhilippineSugar Commission (Philsucom), an entity owned and controlled by the Philippinegovernment, leased the warehouse of SulpicioTancinco in Cagayan de Oro City. Thecontract was for a period of 3 months starting November 23, 1984 renewable for another3 years.

On December 29, 1984, the eastern wall of the warehouse collapsed causing death andinjuries to several persons and damage to houses within the area. Tancinco wasconstrained to incur expenses for the repair and restoration of the warehouse andindemnity for the victims. Due to NASUTRAs refusal to reimburse Tancinco, the latterfiled on March 28, 1985 a complaint for Damages with the Regional Trial Court ofCagayan de Oro City (Branch 23). NASUTRA filed its Answer disclaiming any liability.

In the meantime, NASUTRA was converted into a private corporation called thePhilippine Sugar Marketing Corporation (Philsuma), the sole marketing agency for thesugar industry to be owned completely by sugar producers. Thereafter, Philsucom wasphased out by Executive Order No. 18 in 1986, at same time creating petitioner SRA.NASUTRA substituted petitioner SRA and filed on February 8, 1988, an Answer puttingup the defenses that it cannot be liable for NASUTRAs obligation as it was created afterthe incident took place and that it is a separate and distinct entity from the former.

Issue:

Whether or not Tancinco or his heirs may recover NASUTRAs adjudged liability fromSRA.

Ruling:

YES.There is no question that Executive Order No. 18 abolished the Philippine SugarCommission (Philsucom) and created the Sugar Regulatory Administration(SRA). However, the abolition of NASUTRA and eventually Philsucom did not abate thependency of the suits filed against them. The termination of the life of a juridical entitydoes not by itself cause the extinction or diminution of the rights and liabilities of suchentity; specially in this case where, pursuant to the transitory provision of E.O. No. 18,

Philsucom, under the supervision of SRA, was allowed to continue as a juridical entityfor 3 years for the purpose of prosecuting and defending suits by or against it andenabling it to settle and close its affairs, to dispose of and convey its property; and todistribute its assets.

If and when a pending action cannot be terminated within said 3-year period, SRA,which has been appointed by law to supervise the closing affairs of Philsucom, isconsidered a trustee which shall continue to prosecute and defend suits filed by or


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against it. It being the trustee, SRA must therefore continue the legal personality of thedefunct NASUTRA and Philsucom until final judgment and execution stage of the case.


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Villareal v. Ramirez

Facts:

Luzviminda J. Villareal, Carmelito Jose and Jesus Jose formed a partnership with a

capital of P750,000 for the operation of a restaurant and catering business under thename Aquarius Food House and Catering Services.Villareal was appointed generalmanager and Carmelito Jose, operations manager. Respondent Donaldo Ramirez joinedas a partner on September 5, 1984 with a capital contribution of P250,000 which waspaid by his parents, Respondents Cesar and Carmelita Ramirez. Jesus Jose withdrewfrom the partnership and his capital contribution of P250,000 was refunded to him incash by agreement of the partners.

In the same month, without prior knowledge of respondents, petitioners closed downthe restaurant, allegedly because of increased rental. The restaurant furniture andequipment were deposited in the respondents house for storage. On March 1, 1987,respondent spouses wrote petitioners, saying that they were no longer interested in

continuing their partnership or in reopening the restaurant, and that they wereaccepting the latters offer to return their capital contribution. Respondent wroteanother letter informing petitioners of the deterioration of the restaurant furniture andequipment stored in their house. She also reiterated the request for the return of theirone-third share in the equity of the partnership. The repeated oral and written requestswere, however, left unheeded.

Respondents filed before the RTC for the collection of a sum of money from petitioners.Petitioners contended that respondents had expressed a desire to withdraw from thepartnership and had called for its dissolution under Articles 1830 and 1831; thatrespondents had been paid, upon the turnover to them of furniture and equipmentworth over P400,000; and that the latter had no right to demand a return of their equity

because their share, together with the rest of the capital of the partnership, had beenspent as a result of irreversible business losses.

In their Reply, respondents alleged that had not received any regular report oraccounting from the latter, who had solely managed the business. Respondents alsoalleged that they expected the equipment and the furniture stored in their house to beremoved by petitioners as soon as the latter found a better location for the restaurant.RTC 17 ruled that the parties had voluntarily entered into a partnership, which could bedissolved at any time. Petitioners clearly intended to dissolve it when they stoppedoperating the restaurant. Hence, the trial court rendered a judgment in favor ofrespondents and ordering the petitioners to pay jointly and severally.

Issue:

Whether or not petitioners are liable to respondents for the latters share in thepartnership

Ruling:


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The petition has merit. Both the trial and the appellate courts found that a partnershiphad indeed existed, and that it was dissolved on March 1, 1987. They found that thedissolut

Documents

Batch 2 Digest