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70926 January 31, 1989 GUTIERREZ, JR., J.: FACTS: The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch II in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah Panciteria 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 then Court of First Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung. The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established sometime in October, 1955. It was registered as a single proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000.00 to its initial establishment. The private respondents evidence is summarized as follows: About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his contribution to the partnership. This is evidenced by a receipt wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's Equitable Banking Corporation Check from the profits of the operation of the restaurant for the year 1974 The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and impugned the genuineness of the receipt. His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing Sun Wah Panciteria. Petitioner presented various government licenses and permits showing the Sun Wah Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).
ISSUE: WON Private respondent is a partner of the petitioner in Sun Wah Panciteria? HELD: The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are — 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been established. As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership.
entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. and 1809 show that the right to demand an accounting exists as long as the partnership exists. On application by or for a partner the court shall decree a dissolution whenever: xxx xxx xxx (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners. Tan Eng Kee and Tan Eng Lay. 2000 DE LEON. Article 1842 states: The right to an account of his interest shall accrue to any partner.: FACTS: After the second World War. 126881 October 3. No. in the absence or any agreement to the contrary. or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business. and the dissolution. it must be established that (1) two or more persons bound themselves to contribute money. There shall be a liquidation and winding up of partnership affairs. Articles 1806. vs. since statute allows the oral constitution of a . winding up and liquidation thereof. in part. at the date of dissolution. and other incidents of dissolution because the continuation of the partnership has become inequitable. and (2) they intend to divide the profits among themselves. and the equal division of the net assets of Benguet Lumber. pooling their resources and industry together. xxx xxx xxx (6) Other circumstances render a dissolution equitable. J." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him.. Regarding the prescriptive period within which the private respondent may demand an accounting. or industry to a common fund. provides: Art.It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. (4) A partner willfully or persistently commits a breach of the partnership agreement. 1831. JR.R. The agreement need not be formally reduced into writing. petitioners. COURT OF APPEALS and BENGUET LUMBER COMPANY. 1807. represented by its President TAN ENG LAY. G. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. they claimed that in 1981. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Considering the facts of this case. in order to constitute a partnership. Petitioners prayed for accounting of the partnership assets. However. Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company. respondents. return of capital. the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which. ISSUE: whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber HELD: Thus. property.) HEIRS OF TAN ENG KEE. 2.
(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. A particular partnership is distinguished from a joint adventure. if any. (c) As an annuity to a widow or representative of a deceased partner. these rules shall apply: (1) Except as provided by Article 1825. In both cases. since they did not present and offer evidence that would show that Tan Eng Kee received amounts of money allegedly representing his share in the profits of the enterprise. and (2) when the partnership has a capital of three thousand pesos or more. In the light of the aforequoted legal provision. and where each party exercises equal 0rights in the conduct of the business. The essence of a partnership is that the partners share in the profits and losses. whether such co-owners or copossessors do or do not share any profits made by the use of the property. though the amount of payment vary with the profits of the business." But in the situation in the case at bar. . (2) Co-ownership or co-possession does not of itself establish a partnership. A person is presumed to take ordinary care of his concerns.partnership. In determining whether a partnership exists. the deferment. Even if the payrolls as evidence were discarded. Tan Eng Kee. we conclude that Tan Eng Kee was only an employee. with no firm name and no legal personality. although the business of pursuing to a successful termination may continue for a number of years." Tan Eng Kee never asked for an accounting. and can be individually liable therefor. save in two instances: (1) when immovable property or real rights are contributed. so to speak. (4) The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partner in the business. Each has the right to demand an accounting as long as the partnership exists. whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived. had gone on too long to be plausible. (d) As interest on a loan. The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture. not a partner. the participating merchants can transact business under their own name. but no such inference shall be drawn if such profits were received in payment: (a) As a debt by installment or otherwise. petitioners would still be back to square one. persons who are not partners as to each other are not partners as to third persons. to wit: (a) A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership. (b) As wages of an employee or rent to a landlord. (3) The sharing of gross returns does not of itself establish a partnership. a deferment of sharing in the profits is perfectly plausible. (b) Usually. An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership. We have allowed a scenario wherein "[i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate returns. but not necessarily a joint adventure is limited to a SINGLE TRANSACTION. a public instrument is required. in which each party has an equal proprietary interest in the capital or property contributed. 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. Petitioners failed to show how much their father. which it said is akin to a particular partnership. In a joint account.
1944. because: 1. as well as to the residence tax for corporations and the real estate dealers' fixed tax. they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves. 23. they bought a lot for P100. but in a series of transactions. the issue narrows down to their intent in acting as they did.: FACTS: On June 22. winding up or liquidation to speak of.000. admittedly. it follows that there is no dissolution. ISSUE: whether petitioners are subject to the tax on corporations provided for in section 24 of Commonwealth Act No. On April 3. J. On February 2. 3. they purchased 21 lots for P18.R. 466.D.00. 1943.101.70. This .00 in the sale made in 1970. The first element is undoubtedly present in the case at bar. the petitioners were required to pay the deficiency income tax assessed. vs.00. Hence. which is one of the essential features of a partnership. while they realized a net profit of P60. However. Hence. The corresponding capital gains taxes were paid by petitioners in 1973 and 1974 by availing of the tax amnesties granted in the said years. and that the availment of tax amnesty under P.1970. as amended.received. 1966. Petitioners realized a net profit in the sale made in 1968 in the amount of P165. if any. Pursuant to this article.) MARIANO P. namely: (a) an agreement to contribute money. respondent Commissioner informed petitioners that in the years 1968 and 1970. petitioners have agreed to. What is more they jointly borrowed a substantial portion thereof in order to establish said common fund. for. the essential elements of a partnership are two.000. petitioners bought two (2) parcels of land from Santiago Bernardino. Plana. petitioners were assessed and required to pay a total amount of P107. They invested the same. with the intention of dividing the profits among themselves. as his share in the profits of Benguet Lumber Company for any particular period.70 as alleged deficiency corporate income taxes for the years 1968 and 1970. and (b) intent to divide the profits among the contracting parties. DRAGON. No. 78133 October 18. not merely in one transaction. The first two parcels of land were sold by petitioners in 1968 to Marenir Development Corporation. petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as a corporation under Section 20(b) and its income was subject to the taxes prescribed under Section 24. both of the National Internal Revenue Code 1 that the unregistered partnership was subject to corporate income tax as distinguished from profits derived from the partnership by them which is subject to individual income tax. 1988 GANCAYCO. No. respondents. contribute money and property to a common fund. PASCUAL and RENATO P. in a letter dated March 31. property. Upon consideration of all the facts and circumstances surrounding the case.224. There being no partnership. Hence. 2. and on May 28.THE COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS. HELD: Article 1767 of the Civil Code of the Philippines provides: By the contract of partnership two or more persons bind themselves to contribute money. It was not a property inherited by them pro indiviso. or industry to a common fund. 1965. They created it purposely. G. by petitioners relieved petitioners of their individual income tax liabilities but did not relieve them from the tax liability of the unregistered partnership.000. property or industry to a common fund. they bought another three (3) parcels of land from Juan Roque. petitioners. and did. et al. we are fully satisfied that their purpose was to engage in real estate transactions for monetary gain and then divide the same among themselves. Said common fund was not something they found already in existence. while the three parcels of land were sold by petitioners to Erlinda Reyes and Maria Samson on March 19. 1979 of then Acting BIR Commissioner Efren I. otherwise known as the National Internal Revenue Code.
In other words. paid the total sum of P70. They did not even try to offer an explanation therefor. with full power to lease. for petitioners do not even suggest that there has been any change in the utilization thereof. NAVARRO and LEONARDA ATIENZA ABAD SABTOS. Jr. The properties were leased separately to several persons. by the acquisition of another real estate for P108. petitioners. to sign letters and contracts. remaining in that capacity. J. with herein petitioners Domingo C. DOMINGO C. and that the profits and losses "shall be divided and distributed among the partners . 4. JR. Jr. EVANGELISTA. 5 In the present case. 1973 MAKALINTAL. of petitioners herein. Evangelista. had been paying dividends to the partners except to her. and that they intended to divide the profits among themselves. with a contribution of P17. to bring suits. in the proportion of 70% for the first three partners. since the first property was acquired. alleging that the partnership. Seemingly. hence. and that notwithstanding her demands the defendants had refused and continued to refuse and let her examine the partnership books or to give her information regarding the partnership affairs to pay her any share in the dividends declared . 4. 3.... and to indorse and deposit notes and checks. 1943. vs. that "the contribution of Estrella Abad Santos consists of her industry being an industrial partner". CONCHITA B. The foregoing conditions have existed for more than ten (10) years.was soon followed.14. Since August. 1944). or on the causes for its continued existence.00. respondent. Domingo C. or. Only one or two of the aforementioned circumstances were present in the cases cited by petitioners herein. they got a fourth lot for P237. namely.R. particularly the last three purchases. the collective effect of these circumstances is such as to leave no room for doubt on the existence of said intent in petitioners herein. Simeon Evangelists. inter alia. G.825." On June 7. The number of lots (24) acquired and transcations undertaken. Leonardo Atienza Abad Santos and Conchita P. from 1945 to 1948 inclusive. since Simeon Evangelists became the manager. one cannot but perceive a character of habituality peculiar to business transactions engaged in for purposes of gain. those cases are not in point. Navarro and Leonardo Atienza Abad Santos to be divided among them equally. the affairs relative to said properties have been handled as if the same belonged to a corporation or business enterprise operated for profit.068. L-31684 June 28. 5. ESTRELLA ABAD SANTOS. Navarro." On December 17. as well as the brief interregnum between each. who.234. 1955 the Articles of Copartnership was amended as to include herein respondent. the original capitalist partners. which was also made a party-defendant.) EVANGELISTA & CO. Five (5) days later (April 28. Petitioners have not testified or introduced any evidence. as industrial partner. and. the lots are still being so let. and over twelve (12) years. property or industry to a common fund. they might not suffice to establish the intent necessary to constitute a partnership. 1944. The amended Articles provided. and 30% for the fourth partner Estrella Abad Santos.. is strongly indicative of a pattern or common design that was not limited to the conservation and preservation of the aforementioned common fund or even of the property acquired by petitioners in February. to issue receipts.500 each. over fifteen (15) years. 1963 herein respondent filed suit against the three other partners in the Court of First Instance of Manila. 6. the properties have been under the management of one person. 1945. there is no evidence that petitioners entered into an agreement to contribute money. to collect rents. The aforesaid lots were not devoted to residential purposes or to other personal uses. Respondent commissioner and/ or his representative just assumed these conditions to be present on the basis of the fact that petitioners purchased certain parcels of land and became co-owners thereof. No. 1954 a co-partnership was formed under the name of "Evangelista & Co.: FACTS: On October 9.. Conchita P..30 by way of rentals. either on their purpose in creating the set up already adverted to. Estrella Abad Santos. Evangelista. to be exact. taken singly. Although. Thus. on April 23.
instead she has been and still is a judge of the City Court (formerly Municipal Court) of the City of Manila. defendants reached an agreement whereby the herein plaintiff been excluded from. Our said holding is based on the following article of the New Civil Code: 'ART. devoting her time to performance of her duties as such judge and enjoying the privilege and emoluments appertaining to the said office. Article 1767 of the New Civil Code which provides that "By contract of partnership two or more persons bind themselves. 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 copartners." (Appellants Brief.00 obtained from the Rehabilitation Finance Corporal shall have been fully paid. as claimed by appellants (herein petitioners). There is no pretense. 1964 — or after around nine (9) years from June 7.by the partnership. even on the part of the appellee is engaged in any business antagonistic to that of appellant company. with the right to demand for a formal accounting and to receive her share in the net profit that may result from such an accounting. ISSUE: whether the plaintiff-appellee (respondent here) is an industrial partner as claimed by her or merely a profit sharer entitled to 30% of the net profits that may be realized by the partnership from June 7. with the intention of dividing the profits among themselves. even as she was and still is a Judge of the City Court of Manila. 1955. and deprived of. 1899. 1955 — subsequent to the filing of defendants' answer to the complaint. 1955 until the mortgage loan from the Rehabilitation Finance Corporation shall be fully paid. What has gone before persuades us to hold with the lower Court that appellee is an industrial partner of appellant company.' It is not disputed that the provision against the industrial partner engaging in business for himself seeks to prevent any conflict of interest between the industrial partner and the partnership. plus attorney's fees and costs. That appellee has faithfully complied with her prestation with respect to appellants is clearly shown by the fact that it was only after filing of the complaint in this case and the answer thereto appellants exercised their right of exclusion under the codal art just mentioned by alleging in their Supplemental Answer dated June 29. or industry to a common fund. in the defendant partnership and/or in its net profits or income. Another article of the same Code relied upon appellants reads: 'ART. without the express consent of the herein defendants' (Record On Appeal. with a right to damages in either case. on the ground plaintiff has never contributed her industry to the partnership. property. she has rendered services for appellants without which they would not have had the wherewithal to operate the business for which appellant company was organized. p. and if he should do so. unless the partnership expressly permits him to do so.000. pp. An industrial partner cannot engage in business for himself. Having always knows as a appellee as a City judge even before she joined appellant company on June 7. since being a Judge of one of the branches of the City Court of Manila can hardly be characterized as a business. the capitalist partners may either exclude him from the firm or avail themselves of the benefits which he may have obtained in violation of this provision. interests or participation. 'does not specify the kind of industry that a partner may thus contribute. her alleged share. as an alleged industrial partner. 1789. which right appellants take exception under their second assigned error. 38). aside from teaching in law school in Manila. 1955 as an industrial partner. 24-25). however. and to insure faithful compliance by said partner with this prestation. hence the said services may legitimately be considered as appellee's contribution to the common fund. why did it take appellants many yearn before excluding her from said company as aforequoted allegations? And how can they reconcile such exclusive with their main theory that appellee has never been such a partner because "The real agreement evidenced by Exhibit "A" was to grant the appellee a share of 30% of the net profits which the appellant partnership may realize from June 7. . She therefore prayed that the defendants be ordered to render accounting to her of the partnership business and to pay her corresponding share in the partnership profits after such accounting. HELD: One cannot read appellee's testimony just quoted without gaining the very definite impression that. to contribute money. until the mortgage of P30.
ET AL. section 1683 of the Civil Code relates to the same manner. (4) Whenever other circumstance render it just and reasonable. that he received nothing from the partnership. No. vs. he is liable to third persons for the obligations contracted by the partnership.(2) If the right exists under the terms of any agreement. Article 125 of the Code of Commerce requires them to state the partners to whom the management is intrusted. Paragraph 12 of the articles of partnership is as follows: . The fact that the receipt of this money was postponed for five years is not important. defendants-appellees. and Rafael Naval formed on ordinary general mercantile partnership under the name of Francisco Muñoz & Sons for the purpose of carrying on the mercantile business in the Province of Albay which had formerly been carried on by Francisco Muñoz. either because he is an industrial partner or because he was so relieved by the express terms of the articles of partnership. 1907 WILLARD. a general partner. G. It can not be said. either in property. or whether he relieved from such liability. That partners in their articles can do this. by signing the articles. FRANCISCO MUÑOZ.R. If the contention of the appellees were sound.500 as long as he was in charge of the branch office established at Ligao. The argument of the appellees seems to be that. the difference between the two being that Rafael Naval was entitled by the articles of agreement to a fixed salary of P2. and the important question in the case is whether.500. This right is recognized also in article 132 ISSUE: HELD: Emilio Muñoz was. therefore. therefore. Rafael Naval. It is also said in the brief of the appellees that Emilio Muñoz was entirely excluded from the management of the business. but would not have affected in any way the partnership nor have produced the effect of relieving him from liability as a partner. admits of no doubt. but did not assign any specific salary to an industrial partner during that time. can not be sustained. It rather should be said that he excluded himself from such management. We find no reason in this case to depart from the rule which limits this Court's appellate jurisdiction to reviewing only errors of law. J.) LA COMPAÑIA MARITIMA. With reference to civil partnerships. for he signed the articles of partnership by the terms of which the management was expressly conferred by him and the others upon the persons therein named. as such general partner. the defendants Francisco Muñoz. agree to contribute their work to the partnership and article 138 of the Code of Commerce prohibits them from engaging in other work except by the express consent of the partnership. accepting as conclusive the factual findings of the lower court upon its own assessment of the evidence. he contributed nothing to the partnership and received nothing from it. Emilio Muñoz. where the articles of partnership provided for a distribution of profits at the end of each year. Francisco Muñoz was a capitalist partner and Emilio Muñoz and Rafael Naval were industrial partners. He contributed as much as did the other industrial partner. or industry.. because no yearly or monthly salary was assigned to Emilio Muñoz. L-3704 December 12. it would result that. (3) As provided by article 1807. If he had left that branch office soon after the partnership was organized. he would have been in the same condition then that Emilio Muñoz was from the beginning. Industrial partners. Such a change would have deprived him of the salary P2.: FACTS: On the 31st day of March. money. 5. plaintiff-appellant. The claim of the appellees that Emilio Muñoz contributed nothing to the partnership. By the articles themselves he was to receive at the end of five years one-eighth of the profits. 1905. he would not be a member of the partnership.
and by a person authorized to make use thereof. if all the partners do not agree to this. that when the manager appointed mismanages the business the industrial partners should have no right to appoint a comanager. The use of the words se imputaran is significant. Thus article 148. Does the phrase "remaining partners" include industrial partners. but. but the word "obligations" is added. under the signature of the latter. or does it include also industrial partners? Article 132 provides that. if the management of the partnership has not been limited by special act to one of the partners.all the members are general partners. All profits arising from mercantile transactions carried on. Do the words "all the partners" found in this article include industrial partners? The same expression is found in other articles of the code.Twelfth. and the remaining one-eighth thereof for the partner Rafael Naval y Garcia. without either of the two industrial partners participating in such losses. To give a person who contributed no more than. or is it limited to capitalist partners. it is not considered sufficient. the industrial partners should have no voice in the management of the business when the articles of partnership were silent on that subject. but that in certain cases the remaining partners may appoint a comanager. as well as such as may be obtained from the sale of property and other assets which constitute the corporate capital. yet in other articles of the code. In limited partnership the Code of Commerce recognizes a difference between general and special partners. If the phrase "all the partners" as found in the articles other than article 127 includes industrial partners. The fact that some may be industrial and some capitalist partners does not make the members of either of these classes alone such general partners. Does the phrase "the general partners" include industrial partners? In all of these articles the industrial partners must be included. Does this phrase "all the partners" include industrial partners. in lieu of profits. nor is there anything which says that the capitalist partners shall be the only general partners. Does this limitation apply only to capitalist partners or does it extend also to industrial partners? Article 222 provides that a general partnership shall be dissolve by the death of one of the general partners unless it is otherwise provided in the articles. but in a general partnership there is no such distinction-. Does this mean that the capitalist partners are the only ones who have that right. shall be distributed. in the following manner: Three-fourths thereof for the capitalist partner Francisco Muñoz de Bustillo and one-eighth thereof for the industrial partner Emilio Muñoz de Bustillo y Carpiso. If. Would such a partnership continue if all the industrial partners should die? Article 229 provides that upon a dissolution of a general partnership it shall be liquidated by the former managers. on completion of the term of five years agreed to for the continuation of the partnership. would be discriminate unfairly against industrial partners. be they or be they not managing partners of the same. infinitely more than P500. all shall have the right to participate in the management. where there were two industrial and only one capitalist partner. losses should result in the winding up of the partnership. that they should have no right to examine the books. In article 129 it is said that. In article 237 the word "obligations" is used and not the word "losses." . when in the articles of partnership the management has been intrusted to a particular person. It can not have been intended that. This article simply declares how the losses shall be divided among the partners. in speaking of the liability of limited partners. he can not be deprived of such management. a general meeting shall be called. these rights and to take them away from a person who contributed his services. say. or that they have no voice in the liquidation of the business after dissolution. perhaps. in such a partnership as the one in question. then article 127 must include them and they are liable by the terms thereof for the debts of the firm. But it is said that article 141 expressly declares to the contrary. The verb means abonar una partida a alguno en su cuenta o deducirla de su debito. It is to be noticed in the first place that this article does not say that they shall not be liable for losses. and do industrial partners have no right to participate in the selection of the comanager? Article 133 provides that all the partners shall have the right to examine the books of the partnership. uses the phrase las obligaciones y perdidas. P500. There is nothing in the code which says that the industrial partners shall be the only general partners. Under this article are the capitalist partners the only ones who have such right? Article 135 provides that the partners can not use the firm name in their private business. or are the capitalist partners the only ones who have a voice in the selection of a manager during a period of liquidation? Article 237 provides that the private property of the general partners shall not be taken in payment of the obligations of the partnership until its property has been exhausted. the same shall be for the sole and exclusive account of the capitalist partner Francisco Muñoz de Bustillo. There is the same use of the two same words in article 153. relating to anonymous partnership. While in this section the word "losses" stand's alone. that they might use the firm name in their private business. are liable personally and in solidum with all their property for the results of the transactions made in the name and for the account of the partnership. Article 140 declares how the profits shall be divided amongthe partners. where it is clearly intended to impose the liability to third persons. worth. Article 127 of the Code of Commerce is as follows: All the members of the general copartnership. Article 141 says nothing about third persons and nothing about the obligations of the partnership. which shall determine to whom the settlement of the affairs shall be intrusted.
therefor. Inocencio. but the construction which they put upon article 141 makes such capitalist partners liable for only a proportionate part of the debts. The liability of the partners as to third persons is treated in a distinct section. It might very easily happen. Waiving the question as to whether there can be a commercial partnership composed entirely of industrial partners. the usufruct only passing to the partnership. Article 1675 of the Civil Code is as follows: General partnership of profits include all that the partners may acquire by their by their industry or work during the continuation of the partnership. If industrial partners in commercial partnerships are not responsible to third persons for the debts of the firm. at the end of five years — it turns out that there had been losses instead of gains. that a civil partnership could be composed entirely of industrial partners. when the affairs of the partnership are liquidated — that is. It is to be noticed that these articles are found in section 1 of Chapter II [Title VIII] of Book IV. according to the claim of the appellees. that each one of the industrial partners is liable to third persons for the debts of the firm. and if it results that there is not enough property in the partnership to pay him. It might very well happen in partnership of this kind that no one of the partners would have any private property and that if they did the usufruct thereof would be inconsiderable. namely. .000. it was alleged in the complaint. shall pay such losses — that is. then the capitalist partners must pay him. Creditors could rely only upon the property which the partnership had. There is no injustice in imposing this liability upon the industrial partners. article 141 is directly in conflict with article 127. or the exercise of a profession or art. one of whom has contributed two-thirds of the capital and the other one-third. and admitted by the answer — That is partnership has been formed without articles of association or capital other than the personal work of each one of the partners. the latter is liable to a creditor of the company for only one-third of the debt and the former for only two-thirds. It is admitted that if in this case there had been a capitalist partner who had contributed only P100 he would be liable for this entire debt of P26. that if there are only two capitalist partners. There it is stated that if. They have a voice in the management of the business. then the capitalist partner. regardless of the amount of his contribution. Francisco Muñoz. it also says that the capitalist partners shall be only liable for such debts in proportion to the amount of the money which they have contributed to the partnership. above quoted. Articles 1689 and 1691 contain. While this is a commercial partnership and must be governed therefore by the rules of the Code of Commerce. if no manager has been named in the articles. they share in the profits and as to third persons it is no more than right that they should share in the obligations. In the case of Agustin vs. then industrial partners in civil partnerships are not. when given this construction. If it were. Our construction of the article is that it relates exclusively to the settlement of the partnership affairs among the partners themselves and has nothing to do with the liability of the partners to third persons. which in the case of a partnership organized for the practice of any art or profession would be practically nothing. If it does. their use of profits. in substance. Personal or real property which each of the partners may possess at the time of the celebration of the agreement shall continue to be their private property. In this particular case that view is strengthened by the provisions of article 12. 1 just decided by this court. there would be no personal responsibility whatever for the debts of the partnership. when its affairs are settled he is entitled to credit for the amount so paid. comprising articles from 1697 to 1699. That section treats of the obligations of the partners between themselves. that is to say. If this article says that industrial partners are not liable for the debts of the concern. whose profits are to be equally divided among themselves. It is not disputed by the appellees that by the terms of article 127 each one of the capitalist partners is liable for all of the debts. pay them to the industrial partners if they have been compelled to disburse their own money in payment of the debts of the partnership. for article 1678 of the Civil Code provides as follows: A particular partnership has for its object specified things only. It is apparent that. the provisions of articles 140 and 141 of the Code of Commerce. it seems clear that there can be such civil partnership. that if he has paid such debts out of his private property during the life of the partnership. then it also fixes the liability of the capitalist partners to the same persons for the same obligations. or a specified undertaking. yet an examination of the provisions of the Civil Code in reference to partnerships may throw some light upon the question here to be resolved.The claim of the appellees is that this article 141 fixes the liability of the industrial partners to third persons for the obligations of the company. section 2.
the industrial partner. reputation. In this last respect his view is opposed to that of Manresa. 11. nor is there anything . and he alone is entitled to use it. to say to its creditors that they contributed no capital to the company but only their services. 3. because such a name or style is an accessory to the work of industrial partner. Instituciones de Derecho Mercantil (vol. who says (Commentaries on the Spanish Civil Code. upon the bankruptcy of the latter. credits. (p. In Estasen's recent publication on mercantile partnerships (Tratado de las Sociedades Mercantiles) he quotes from the work of Benito. (p. Benito. Article 269 of the Code of Commerce of 1829 relates to this subject and apparently provides that such partners shall not be liable for debts. with no responsibility at all. In fact. We held in the case of Fortis vs. so long as the copartnership lasts. in his former treatise.. but upon dissolution thereof the aforesaid name or corporate name pertains to the partner who contributed the same. . . each with a large amount of private property. but adopting his view as to industrial partners. to form and carry on a partnership and. It has thus been decided by the French court of cassation in a decision dated June 6. that construction of the law should be avoided which would enable two persons. we find nothing which recognizes the existence of these irregular general partnerships. and the third. vol. but we do not understand that he commits himself to the doctrines therein laid down.) And again: lawphil. 129.net The only defect that can be pointed out in this article is the fact that it has been forgotten that in collective partnerships there are industrial partners who. 1859. or goods. An examination of the works of Manresa and Sanchez Roman on the Civil Code. divides general partnership into ordinary and irregular. giving him in place of a fixed salary a proportionate part of the profits of the business. and upon recovering his work or his industry he also recovers his name or the style under which he exercised his activity. will shows that no one of these mentions in any way the irregular general partnership spoken of by Dr. should not include their names in that of the firm. 127. or the exemption from the liability to third persons of the industrial partners. and name or corporate name under which such industry is carried on. He says: . not being jointly liable for the obligations of the copartnership. but it has not been very fortunate in sketching the characters of a regular collective partnership (since it says nothing conclusive in reference to the irregular partnership) . another with limited responsibility. In this case. pp. In speaking of limited partnerships Benito says (p. it can be so no longer. at page 127. Gutirrez Hermanos (6 Phil. liable for its debts. Benito's view. and of Blanco's Mercantile Law. which partners generally participate in the profits but not in the losses. and whose position must also be determined in the articles of copartnership. for it does not appear in the present code. The author. it should be said that there are three kinds of partners. 100) that a mere agreement of that kind does not make the employee a partner. It may be said in passing that his views can not apply to this case because the articles of partnership directly state that it is an ordinary partnership and do not state that it is an irregular one. . and that their private property is not. The irregular partnership are those which include one or more industrial partners. it can enjoy the credit. therefore. No judgment of the supreme court of Spain has been called to our attention. one with unlimited responsibility and the other with limited responsibility. p. In a work published by Lorenzo Benito in 1889 (Lecciones de derecho mercantil) it is said that industrial partners are not liable for debts. But little light is thrown upon this question by the authorities. 330): It only remains to us to state that a partner who contributes his industry to the concern can also confer upon it the name or the corporate name under which such industry should be carried on. (p. There is. Rep. 144) that here are found two kinds of partners. therefore. Benito the irregular general partner originated from the desire of the partnership to associate with itself some old clerk or employee as a reward for his services and the interest which he had shown in the affairs of the partnership. If this article was the basis for Dr. and we have been able to find none which refers in any way to this question. . 1-99). 128.Having in mind these different cases which may arise in the practice. He says in his latter work (p. no authority from the tribunal for saying that an industrial partner is not liable to third persons for the debts of the partnership.) And again: This article would not need to be commented upon were it not because the writer entirely overlooked the fact that there might exist industrial partners who did not contribute with capital in money.) As a logical result of his theory he says that an industrial partner has no right to participate in the administration of the partnership and that his name can not appear in the firm name. . 186) that according to Dr. But his view of the law seems to be derived from something other than the Code of Commerce now in force. one with unlimited responsibility.
the date of the notes.found in any one of these commentaries which in any way indicates that an industrial partner is not liable to third persons for the debts of the partnership. Ignacio Flores. 34.: FACTS: In the year 1913. the present action was instituted in the Court of First Instance of the city of Manila. Antonio Adiarte. 361. From time to time after this purchase was made. One was signed by Marcelo Barba in the following manner: P.000 in cash. Nicolas Segundo. 1914. He paid the sum of 3. No question has been made as to the propriety of impleading "La Protectora" as if it were a . 1913. and there are exhibited with the complaint in the cause. G.57 In May. 256.net 6. The other two notes are signed in the same way with the word "By" omitted before the name of Marcelo Barba in the second line of the signature. vs. Marcelo Barba purchased of the plaintiff various automobile effects and accessories to be used in the business of "La Protectora."LA PROTECTORA".375 each. E. Provision was also made in the notes for the payment of 25 per cent of the amount due if it should be necessary to place the notes in the hands of an attorney for collection." for the purpose of engaging in the business of transporting passengers and freight at Laoag.. the defendants Nicolas Segundo. Marcelo Barba. In the body of the note the word "I" (yo) instead of "we" (nosotros) is used before the words "promise to pay" (prometemos) used in the printed form. and Modesto Serrano. An action can be maintained against the partnership and partners. L-11624 January 21. the indebtedness resulting from these additional purchases amounted to the sum of P2. the plaintiff foreclosed a chattel mortgage which he had retained on the trucks in order to secure the purchase price.R. 1918 STREET. J. It is apparently claimed by the appellee in his brief that one action can not be maintained against the partnership and the individual partners.) Our conclusion is upon this branch of the case that neither on principle nor on authority can the industrial partner be relieved from liability to third persons for the debts of the partnership. came to Manila and upon June 23. lawphil. 1914. Bachrach. for the sum of P3. M." Upon May 21. BACHRACH. It is obvious that in thus signing the notes Marcelo Barba intended to bind both the partnership and himself. negotiated the purchase of two automobile trucks from the plaintiff. This was credited unpaid. Ignacio Flores.500. The document in question was delivered by him to Bachrach at the time the automobiles were purchased. upon June 12. at the rate of 10 per cent per annum. This document was apparently executed in obedience to the requirements of subsection 2 of article 1697 of the Civil Code. the individuals named as defendants in this action formed a civil partnership. P.000.916. and 512. against "La Protectora" and the five individuals Marcelo Barba. 1913. In order to provide the enterprise with means of transportation. and for the balance executed promissory notes representing the deferred payments. M. upon May 29. pp. for the agree price of P16.) E. but the judgment should recognize the rights of the individual partners which are secured by said article 237. together with the sum due for additional purchases. An examination of the French law will also show that no distinction of that kind is therein anywhere made and nothing can be found therein which indicates that the industrial partners are not liable for the debts of the partnership. Antonio Adiarte. These notes provided for the payment of interest from June 23. It is plain that the singular pronoun here has all the force of the plural. Repertoire de Droit Francais. But this article furnishes to argument in support of the appellee's claim. called "La Protectora. No. 1913. have been made the subject of the present action. acting as manager. vol. La Protectora By Marcelo Barba Marcelo Barba. ET AL. (Fuzier-Herman. plaintiff-appellee. Ilocos Norte. To recover this balance. As preliminary to the purchase of these trucks. defendants-appellants. 510. for the purpose of evidencing the authority of Marcelo Barba to bind the partnership by the purchase. and Modesto Serrano. Three of these notes. this claim being based upon the provisions of article 237 of the Code of Commerce which provides that the private property of the partners shall not be taken until the partnership property has been exhausted. The amount realized from this sale was P1. 1914. executed in due form a document in which they declared that they were members of the firm "La Protectora" and that they had granted to its president full authority "in the name and representation of said partnership to contract for the purchase of two automobiles" (en nombre y representacion de la mencionada sociedad contratante la compra de dos automoviles).
544. Co. 1913. the amount of P6. vs.: FACTS: Petitioner Elmo Muñasque filed a complaint for payment of sum of money and damages against respondents Celestino Galan. And so it has been held by this court. But in addition to this he is shown to have been in fact the president or manager. Of this amount it must now be assumed.R. agreed to give petitioner the amount of P7. There is no proof in the record showing what the agreement.916) represents the amount due for automobile supplies and accessories. 1967 when the .) ELMO MUÑASQUE. and there can be no doubt that he had actual authority to incur this obligation. that by virtue of his having introduced the petitioner to the employing company (Tropical).00 every fifteen (15) days during the construction to make a total sum of P25. The four individuals who signed the document to which reference has been made. Inc.00 not to the plaintiff but to a stranger to the contract. but it results from this article.000. appealed and assigned errors.037. COURT OF APPEALS. (Co-Pitco vs.000. From this judgment no appeal was taken in behalf either of "La Protectora" or Marcelo Barba. if any. who succeeded in getting petitioner's indorsement on the same check persuading the latter that the same be deposited in a joint account. petitioner.00 soon after the construction began and thereafter. alleging that the petitioner entered into a contract with respondent Tropical through its Cebu Branch Manager Pons for remodelling a portion of its building without exchanging or expecting any consideration from Galan although the latter was casually named as partner in the contract. Galan. Galan would receive some kind of compensation in the form of some percentages or commission. and the liability of the partners to this association must be determined under the provisions of the Civil Code. Barba therefore must be held to have had authority to incur these expenses. 8 Phil. 1985 GUTTIERREZ.. Under these circumstances it is declared in article 1695 of the Civil Code that all the partners are considered agents of the partnership.. no less obvious than upon the debt incurred by the purchase of the trucks. in view of the finding of the trial court. 1967. The amount of indebtedness owing to the plaintiff is not in dispute. that each is liable with the others (mancomunadamente) for his aliquot part of such indebtedness. ISSUE: WON Barba has the authority to bind the partnership? HELD: The business conducted under the name of "La Protectora" was evidently that of a civil partnership. Tropical and/or Pons delivered a check for P7. The question here to be determined is whether or not these individuals are liable for the firm debts and if so to what extent.00.legal entity. Their liability is based on the fact that they are members of the civil partnership and as such are liable for its debts. was made with regard to the form of management.respondents. The promissory notes constitute the obligation exclusively of "La Protectora" and of Marcelo Barba. however. G. L-39780 November 11. that on January 26. it is obvious that the document of June 12. (Tropical) and Ramon Pons. from which no appeal has been taken by the plaintiff.000. judgment was rendered against all of the defendants. as the principal of the debt is agreed to be P7. that Tropical. 7. JR.121. while the remainder (P2. authorizing Barba to purchase the two trucks have. and they do not in any sense constitute an obligation directly binding on the four appellants. in the purchase of the trucks. affords no authority for holding the appellants liable. No. that on January 9. Rep. Their liability upon this account is.. At the hearing. The transaction by which Barba secured these trucks was in conformity with the tenor of this document. Tropical Commercial. 1913. The authority of Marcelo Barba to bind the partnership. and their liability is not here under consideration. It is true that article 1698 of the Civil Code declares that a member of a civil partnership is not liable in solidum (solidariamente) with his fellows for its entire indebtedness.CELESTINO GALAN TROPICAL COMMERCIAL COMPANY and RAMON PONS. however. that the unpaid balance of the notes amounts to P4. Yulo. J. is fully established by the document executed by the four appellants upon June 12.000. under the terms of the contract. and such liability is derived from the fact that the debt was lawfully incurred in the prosecution of the partnership enterprise.) As to so much of the indebtedness as is based upon the claim for automobile supplies and accessories. in connection with article 1137 of the Civil Code.
: . respondent Pons succeeded in changing the payee's name from Elmo Muñasque to Galan and Associates. Articles 1822 and 1823 of the Civil Code provide: Art. 136448 November 3. under its signature and by a person authorized to act for the partner-ship. not being a partner in the partnership or any penalty is incurred. vs. Thus. INC.00 was due. and (2) Where the partnership in the course of its business receives money or property of a third person and t he money or property so received is misapplied by any partner while it is in the custody of the partnership. In the case at bar the respondent Tropical had every reason to believe that a partnership existed between the petitioner and Galan and no fault or error can be imputed against it for making payments to "Galan and Associates" and delivering the same to Galan because as far as it was concerned. as between the partners Muñasque and Galan. by any wrongful act or omission of any partner acting in the ordinary course of the business of the partner-ship or with the authority of his co-partners. including industrial ones. as well as the legal entity which is the partnership. loss or injury is caused to any person. The obligation is solidary. The partnership is bound to make good: (1) Where one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it. J.". the partnership is liable therefor to the same extent as the partner so acting or omitting to act.that because of the unauthorized disbursement by respondents Tropical and Pons of the sum of P13. whether innocent or guilty. as it was satisfactorily established that Galan acted in bad faith in his dealings with Muñasque as a partner. whether such authority is real or apparent. 1823.. 1822. a third person who transacted with said partnership can hold the partners solidarily liable for the whole obligation if the case of the third person falls under Articles 1822 or 1823. who in good faith relied upon the authority of a partner.. petitioner refused to indorse said cheek presented to him by Galan but through later manipulations. are solidarily liable.justice also dictates that Muñasque be reimbursed by Galan for the payments made by the former representing the liability of their partnership to herein intervenors.00 received by Galan. the payment of which should have been made from the P13.second check for P6." In short. That is why under Article 1824 of the Civil Code all partners. ISSUE: Whether or not there existed a partners between Celestino Galan and Elmo Muñasque HELD: While it is true that under Article 1816 of the Civil Code. shall be liable prorate with all their property and after all the partnership assets have been exhausted.000.000.. 1999 PANGANIBAN. that petitioner undertook the construction at his own expense completing it prior to the March 16. Art. Where. . while the liability of the partners are merely joint in transactions entered into by the partnership. 1967 deadline.) LIM TONG LIM.R. petitioner.000. Galan was a true partner with real authority to transact on behalf of the partnership with which it was dealing. respondent. this provision should be construed together with Article 1824 which provides that: "All partners are liable solidarily with the partnership for everything chargeable to the partnership under Articles 1822 and 1823. because the law protects him. This is even more true in the cases of Cebu Southern Hardware and Blue Diamond Glass Palace who supplied materials on credit to the partnership. PHILIPPINE FISHING GEAR INDUSTRIES.00 to Galan petitioner demanded that said amount be paid to him by respondents under the terms of the written contract between the petitioner and respondent company. G."All partners. 8. No. thus enabling Galan to cash the same at the Cebu Branch of the Philippine Commercial and Industrial Bank (PCIB) placing the petitioner in great financial difficulty in his construction business and subjecting him to demands of creditors to pay' for construction materials. it is but fair that the consequences of any wrongful act committed by any of the partners therein should be answered solidarily by all the partners and the partnership as a whole However. for the contracts which may be entered into the name and fm the account cd the partnership.
7 On November 18. the CA held that petitioner was a partner of Chua and Yao in a fishing business and may thus be held liable as a such for the fishing nets and floats purchased by and for the use of the partnership. 6The trial court maintained the Writ." Antonio Chua and Peter Yao entered into a Contract dated February 7. 1990. The suit was brought against the three in their capacities as general partners. who however was not a signatory to the agreement. (4) That they bought the boats from CMF Fishing Corporation. (herein respondent). Chua and Yao agreed that the refurbishing. as general partners. Yao and Lim. and upon motion of private respondent. Peter Yao filed an Answer. . ISSUE: HELD: whether by their acts. filed an Answer with Counterclaim and Crossclaim and moved for the lifting of the Writ of Attachment. Specifically. Chua.25 million from Jesus Lim. and Yao verbally agreed to acquire two fishing boats. We are not persuaded by the arguments of petitioner. while Antonio Chua was already Yao's partner. pursuant to Article 1767 of the Civil Code which provides: Art. property. however. were jointly liable to pay respondent. 1992. Chua filed a Manifestation admitting his liability and requesting a reasonable time within which to pay. 1767 — By the contract of partnership. 4 The buyers. Lim Tong Lim. Metro Manila. 5 On September 20. (5) That Lim. Chua and Yao could be deemed to have entered into a partnership. 1990. private respondents filed a collection suit against Chua. failed to pay for the fishing nets and the floats. the FB Lourdes and the FB Nelson for the sum of P3. the lower court issued a Writ of Preliminary Attachment. hence. repairing. Lim. In affirming the trial court. (3) That they borrowed P3. Lim. re-equipping. brother of Petitioner Lim Tong Lim. which the sheriff enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port. 8 The trial court ruled that a partnership among Lim. which executed a Deed of Sale over these two (2) boats in favor of Petitioner Lim Tong Lim only to serve as security for the loan extended by Jesus Lim. the trial court rendered its Decision. with the intention of dividing the profits among themselves. ruling that Philippine Fishing Gear Industries was entitled to the Writ of Attachment and that Chua. for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries. Four hundred pieces of floats worth P68.000 were also sold to the Corporation. ordered the sale of the fishing nets at a public auction. Navotas. because of his failure to appear in subsequent hearings. Instead of answering the Complaint. Chua and Yao existed based (1) on the testimonies of the witnesses presented and (2) on a Compromise Agreement executed by the three. Inc. or industry to a common fund. Yao and him. Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment.045. to finance the venture. (2) That after convening for a few times.FACTS: On behalf of "Ocean Quest Fishing Corporation. The total price of the nets amounted to P532.000. The facts as found by the two lower courts clearly showed that there existed a partnership among Chua. They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim. on the other hand. He also turned over to respondent some of the nets which were in his possession. both lower courts ruled that a partnership among the three existed based on the following factual findings: 15 (1) That Petitioner Lim Tong Lim requested Peter Yao who was engaged in commercial fishing to join him. on the allegation that "Ocean Quest Fishing Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange Commission. after which he was deemed to have waived his right to cross-examine witnesses and to present evidence on his behalf. dry docking and other expenses for the boats would be shouldered by Chua and Yao. Philippine Fishing Gear Industries won the bidding and deposited with the said court the sales proceeds of P900. two or more persons bind themselves to contribute money.35 million.
They purchased the boats. it could be an intangible like credit or industry. Branch 72 by Antonio Chua and Peter Yao against Lim Tong Lim for (a) declaration of nullity of commercial documents. a partnership engaged in the fishing business. Given the preceding facts. they subsequently revealed their intention to pay the loan with the proceeds of the sale of the boats. were obviously acquired in furtherance of their business. Yao and Chua entrusted the ownership papers of two other boats. These boats. which they started by buying boats worth P3. Peter Yao and Antonio Chua bought nets from Respondent Philippine Fishing Gear. among petitioner. fell under the term "common fund" under Article 1767. because of which. (9) That the case was amicably settled through a Compromise Agreement executed between the partieslitigants the terms of which are already enumerated above. (b) reformation of contracts. 1492-MN was filed in the Malabon RTC." their purported business name. without which the business could not have proceeded. (8) That subsequently. (4) injunction. financed by a loan secured from Jesus Lim who was petitioner's brother. both essential to fishing. From the factual findings of both lower courts. which constituted the main assets of the partnership. . it is clear that the partnership extended not only to the purchase of the boat. It would have been inconceivable for Lim to involve himself so much in buying the boat but not in the acquisition of the aforesaid equipment. and they agreed that the proceeds from the sales and operations thereof would be divided among them. Chua's FB Lady Anne Mel and Yao's FB Tracy to Lim Tong Lim.(6) That because of the "unavailability of funds. The fishing nets and the floats. Civil Case No. and to divide equally among them the excess or loss. Chua and Yao. it is clear that Chua. (c) declaration of ownership of fishing boats. The contribution to such fund need not be cash or fixed assets. 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 purchase and the repair of which were financed with borrowed money. Yao and Lim had decided to engage in a fishing business. but also to that of the nets and the floats. Moreover. (7) That in pursuance of the business agreement. and (e) damages. in behalf of "Ocean Quest Fishing Corporation. it is clear that there was." Jesus Lim again extended a loan to the partnership in the amount of P1 million secured by a check. In their Compromise Agreement.35 million.