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Contents AGAD v. MABATO ........................................................................................................................................ 2
PARTNERSHIP [1st SET] 1 (DIONNE) || D2014
TUASON v. BOLANOS .............................................................................................................................. 18 TORRES v. CA ................................................................................................................................................. 2 HEIRS OF TANG ENG KEE v. CA .......................................................................................................... 18 ARBES v. POLISTICO ................................................................................................................................... 4 AURBACH v. SANITARY WARES ......................................................................................................... 19 TOCAO v. CA ................................................................................................................................................... 6 LITONJUA v. LITONJUA .......................................................................................................................... 23 HEIRS OF JOSE LIM, represented by Elenito Lim v. JULIET VILLA LIM ............................... 7 BOURNS v. CARMAN ................................................................................................................................ 23 AGUILA v. CA .................................................................................................................................................. 9 SEVILLA v. CA ............................................................................................................................................. 24 TAN v. DEL ROSARIO ................................................................................................................................. 9 PHILEX v. MINING CORP. ...................................................................................................................... 26 MENDIOLA v. CA ....................................................................................................................................... 10 ORTEGA v. CA ............................................................................................................................................. 27 ANGELES v. SECRETARY OF JUSTICE .............................................................................................. 13 GATCHALIAN v. CIR ................................................................................................................................. 15
PASCUAL v. CIR .......................................................................................................................................... 15
OBILLOS v. CIR ........................................................................................................................................... 16
RIVERA v. PEOPLE’S BANK ................................................................................................................... 17
THE LAW ON PARTNERSHIP I. NATURE; CREATION A. DEFINITION; ESSENTIAL FEATURES B. CREATION AGAD v. MABATO (June 28, 1968) DOCTRINE: A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. A contract of partnership is void, whenever immovable property is contributed thereto, if inventory of said property is not made, signed by the parties, and attached to the public instrument. NATURE: Appeal, taken by plaintiff Mauricio Agad, from an order of dismissal of the Court of First Instance of Davao, we are called upon to determine the applicability of Article 1773 of our Civil Code to the contract of partnership on which the complaint herein is based. PONENTE: Concepcion, C.J. FACTS: Plaintiff alleges that he and defendant Severino Mabato are — pursuant to a public instrument dated August 29, 1952 " — partners in a fishpond business, to the capital of which Agad contributed P1,000, with the right to receive 50% of the profits. That from 1952 up to and including 1956, Mabato who handled the partnership funds, had yearly rendered accounts of the operations of the partnership; and that, despite repeated demands, Mabato had failed and refused to render accounts for the years 1957 to 1963. Agad prayed in his complaint against Mabato and Mabato & Agad Company, filed on June 9, 1964, that judgment be rendered sentencing Mabato to pay him (Agad) the sum of P14,000, as his share in the profits of the partnership for the period from 1957 to 1963, in addition to P1,000 as attorney's fees, and ordering the dissolution of the partnership, as well as the winding up of its affairs by a receiver to be appointed. In his answer, Mabato admitted the formal allegations of the complaint and denied the existence of said partnership, upon the ground that the contract therefor had not been perfected, despite the execution of Annex "A", because Agad had allegedly failed to give his P1,000 contribution to the partnership capital. Mabato prayed, therefore, that the complaint be dismissed; that Annex "A" be declared void ab initio; and that Agad be sentenced to pay actual, moral and exemplary damages, as well as attorney's fees. Mabato filed a motion to dismiss, upon the ground that the complaint states no cause of action and that the lower court had no jurisdiction over the subject matter of the case, because it involves principally the
determination of rights over public lands. After due hearing, the court issued the order appealed from, granting the motion to dismiss the complaint for failure to state a cause of action. This conclusion was predicated upon the theory that the contract of partnership is null and void, pursuant to Art. 1773 of our Civil Code, because an inventory of the fishpond referred in said instrument had not been attached thereto. ISSUES: The issue hinges on whether or not "immovable property or real rights" have been contributed to the partnership under consideration. HELD: NO. (Mabato alleged and the lower court held that the answer should be in the affirmative, because "it is really inconceivable how a partnership engaged in the fishpond business could exist without said fishpond property (being) contributed to the partnership." But...) RATIO/RULING: The Court said that it should be noted, however, that, as stated in Annex "A" the partnership was established "to operate a fishpond", not to "engage in a fishpond business". Moreover, none of the partners contributed either a fishpond or a real right to any fishpond. Their contributions were limited to the sum of P1,000 each. The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership. Neither said fishpond nor a real right thereto was contributed to the partnership or became part of the capital thereof, even if a fishpond or a real right thereto could become part of its assets.
DISPOSITION: WHEREFORE, we find that said Article 1773 of the Civil Code is not in point and that, the order appealed from should be, as it is hereby set aside and the case remanded to the lower court for further proceedings, with the costs of this instance against defendant-‐appellee, Severino Mabato. It is so ordered. VOTE: Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. CONCURRING/DISSENTING OPINION: None. ADDITIONAL NOTES: TORRES v. CA (December 9, 1999)
they filed the present civil case which. they pray that respondent pay them damages equivalent to 60 percent of the value of the property. because petitioners and their relatives had separately caused the annotations of adverse claims on the title to the land. upon the execution of this contract for the property entrusted by the SECOND PARTY.” Petitioners claim CA erred in concluding that the transaction between the parties was a joint venture/partnership. xxx A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership pursuant to Article 1767 of the Civil Code. (P1. but the SECOND PARTY did not actually receive the payment. J. CA ruling: petitioners and respondents formed a partnership for the development of the subdivision. however. petitioners. respondent obtained from Equitable Bank a loan of P40. they assert that under those very same contracts.” . respondent is liable for his failure to implement the project. The lack of an inventory of real property will not ipso facto release the contracting partners from their respective obligations to each other arising from acts executed in accordance with their agreement. Pursuant to the contract.009 square meters. the FIRST PARTY had given the SECOND PARTY. who were however acquitted. for sub-‐division projects and development purposes. in the amount of TWENTY FIVE THOUSAND FIVE HUNDRED THIRTEEN & FIFTY CTVS. CA cited Article 1979 which said “ The losses and profits shall be distributed in conformity with the agreement. in favor of the FIRST PARTY. they executed a Deed of Sale covering the said parcel of land in favor of respondent. He secured the Lapu Lapu City Council’s approval of the subdivision project which he advertised in a local newspaper. That the terms of a contract turn out to be financially disadvantageous to them will not relieve them of their obligations therein. Universal Umbrella Company. this property located at Lapu-‐Lapu City.50) Philippine Currency.513. In the same breath. voluntarily offered the FIRST PARTY. which eventually scared away prospective buyers. As for the profits. They contend that the Joint Venture Agreement and the earlier Deed of Sale were void.” PARTNERSHIP [1st SET] 3 (DIONNE) || D2014 CA also said: “In the absence of stipulation. 1368 covering TCT No. the share of each in the losses shall be in the same proportion. which.000. thereby forcing him to give up on the project. to be sub-‐divided by the FIRST PARTY. Respondent: alleged that he used the loan to implement the Agreement.00) Pesos. -‐Thereafter. By the contract of partnership two or more persons bind themselves to contribute money. the sum of: TWENTY THOUSAND (P20. T-‐0184 with a total area of 17. under the Joint Venture Agreement. “NOW THEREFORE. for and in consideration of the above covenants and promises herein contained the respective parties hereto do hereby stipulate and agree as follows: “ONE: That the SECOND PARTY signed an absolute Deed of Sale x x x dated March 5. the SECOND PARTY. Despite his requests. NATURE: Petition for review on certiorari a CA decision denying MR PONENTE: Panganiban. Respondent claimed that the subdivision project failed. the appellate court remanded the case for further proceedings. -‐petitioners filed a criminal case for estafa against respondent and his wife. upon respondent's motion. but the industrial partner shall not be liable for the losses. as earlier stated. The pertinent portions of the Joint Venture Agreement read as follows: “That. they must bear the loss suffered by the partnership in the same proportion as their share in the profits stipulated in the contract. under Lot No. By mortgaging the property. he entered into a contract with an engineering firm for the building of sixty low-‐cost housing units and actually even set up a model house on one of the subdivision lots. Island of Mactan. Thereafter. ISSUES: WON a partnership relationship existed between the parties? HELD: Yes. the industrial partner shall receive such share as may be just and equitable under the circumstances. was affirmed by the CA. curbs and gutters. but in furtherance of his own company. who then had it registered in his name.50) Philippine Currency. He also caused the construction of roads. (P25. however. he was able to effect the survey and the subdivision of the lots. property. 1767.” They add that respondent used the loan not for the development of the subdivision. or industry to a common fund. Thus. and the land was subsequently foreclosed by the bank.700 square meters at ONE [PESO] & FIFTY CTVS. entered into a "joint venture agreement" with Respondent Manuel Torres for the development of a parcel of land into a subdivision. for 1. With the said amount. and additional profits or whatever income deriving from the sales will be divided equally according to the x x x percentage [agreed upon] by both parties. Philippine Currency. He did all of these for a total expense of P85. was later dismissed by the trial court in an Order dated September 6. the share of each partner in the profits and losses shall be in proportion to what he may have contributed. If only the share of each partner in the profits has been agreed upon. Petitioners: the project failed because of “respondent’s lack of funds or means and skills. RATIO/RULING: Existence of Partnership: Petitioners deny having formed a partnership with respondent. he shall also receive a share in the profits in proportion to his capital. -‐On appeal.000. however. petitioners refused to cause the clearing of the claims. was to be used for the development of the subdivision. 1969. DOCTRINE: Courts may not extricate parties from the necessary consequences of their acts. Because the agreement entitled them to receive 60 percent of the proceeds from the sale of the subdivision lots. which provides: “ART. -‐The project did not push through. whereas. Likewise. All three of them also agreed to share the proceeds from the sale of the subdivided lots. the RTC issued its assailed Decision. with the intention of dividing the profits among themselves. 1982. xxx “FIFTH: That the sales of the sub-‐divided lots will be divided into SIXTY PERCENTUM 60% for the SECOND PARTY and FORTY PERCENTUM 40% for the FIRST PARTY. “Whereas.000 which. If besides his services he has contributed capital. FACTS: -‐Sisters Antonia Torres and Emeteria Baring.
ET AL. Under Article 1767 of the Civil Code. in addition to his industry. for PARTNERSHIP [1st SET] 4 (DIONNE) || D2014 which the land was intended to be used. Alleged Nullity of the Partnership Agreement Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code. x x x There was therefore a consideration for the sale. Melo. petitioners transferred the title to the land in the name of the respondent. Respondent’s actions clearly belie petitioners’ contention that he made no contribution to the partnership. petitioners themselves invoke the allegedly void contract as basis for their claim that respondent should pay them 60 percent of the value of the property. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms. but also industry. 1773. and requiring the former to amend their complaint within a period. the income from the said project would be divided according to the stipulated percentage. Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate. Under the above-‐quoted Agreement. This argument is puerile. which was for the sale of the land without valid consideration. while respondent would give. can take different forms. in default of such. and not the contributions. Clearly." either as plaintiffs or as a defendants. 1929) ADRIANO ARBES. defendants-‐appellants. unprecedented by our law. First. nor state what to be done with them. he developed the roads. introduced to supply an obvious deficiency of the former law. the [petitioners] acting in the expectation that. This is a new rule. and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their obligations. It should be stressed that the parties implemented the contract.The profits are so applied. Furthermore.. because it is the direct result of an earlier illegal contract. DOCTRINE: Hence the distinction made in the second paragraph of this article [in the present case 1666 but under the NCC 1770] of this Code. so as to include all the members of "Turnuhan Polistico & Co. whenever immovable property is contributed thereto. for depriving the partner of the portion of the capital that he contributed. depending on what momentarily suits their purpose. because this would be an excessive and unjust sanction for. but shall upon the dissolution of the partnership. Vitug. “the land was in effect given to the partnership as [petitioner’s] participation therein. and the defendants were designated as president-‐ treasurer. and attached to the public instrument. As explained by the trial court. NATURE: Appeal from a judgment of CFI PONENTE: VILLAMOR. ET AL." The plaintiffs were members or shareholders. Its first stipulation states that petitioners did not actually receive payment for the parcel of land sold to respondent. J. VICENTE POLISTICO. . In this case. plaintiffs-‐appellees. much less approve. providing that the profits obtained by unlawful means shall not enrich the partners. sign or attach to the public instrument an inventory of the real property contributed. the amount needed for general expenses and other costs. The Joint Venture Agreement clearly states that the consideration for the sale was the expectation of profits from the subdivision project. they [would] get sixty percent of the net profits. On the other hand. in such a case. vs. Partnership Agreement Not the Result of an Earlier Illegal Contract Petitioners also contend that the Joint Venture Agreement is void under Article 1422 of the Civil Code. there is no reason. petitioners would contribute property to the partnership in the form of land which was to be developed into a subdivision. be given to the charitable institutions of the domicile of the partnership. CA affirmed. They cannot in one breath deny the contract and in another recognize it. signed by the parties. The first one was when the same plaintiffs appeared from the order of the court below sustaining the defendant's demurrer. the cause of the contract of sale consisted not in the stated peso value of the land. a partner may contribute not only money or property. A contract of partnership is void. such as the prestation or promise of a thing or service by another. VOTE: 3rd Division. such practice. the partnership is void. which did not describe the purpose to which those profits denied the partners were to be applied. As noted earlier. as we have seen. Petitioners Bound by Terms of Contract Courts are not authorized to extricate parties from the necessary consequences of their acts.. the proceeds of which were used for the survey and the subdivision of the land.” They contend that since the parties did not make. Consideration.” DISPOSITION: Petition denied. which provides: “ART. Second. the contract manifested the intention of the parties to form a partnership. POLISTICO (September 7. if an inventory of said property is not made. directors and secretary of said association. but in the expectation of profits from the subdivision project. should the venture come into fruition. the curbs and the gutters of the subdivision and entered into a contract to construct low-‐cost housing units on the property.: FACTS: • This is an action to bring about liquidation of the funds and property of the association called "Turnuhan Polistico & Co. respondent caused the subject land to be mortgaged. Article 1773 was intended primarily to protect third persons. We clarify. the circumstances of the two cases being entirely different. Thus. and Gonzaga-‐Reyes concur CONCURRING/DISSENTING OPINION: none ARBES v.. Purisima. or. more properly denominated as cause. • It is well to remember that this case is now brought before the consideration of this court for the second time. to those of the province.
The commissioner rendered his report. the contract entered into can have no legal effect. commissioner to examine all the books. during its existence as result of the business in which it was engaged. documents. the court appointed Amadeo R. i. And hence." and to receive whatever evidence the parties might desire to present. as a party defendant • If the partnership has no valid existence. and accepting it. in default of such. • This court held then that in an action against the officers of a voluntary association to wind up its affairs and enforce an accounting for money and property in their possessions. and it is not necessary for the said parties to base their action to the existence of the partnership. each one's contribution? COURT: • Ricci: The partner who limits himself to demanding only the amount contributed by him need not resort to the partnership contract on which to base his action. the profits cannot inure to the benefit of the partners. the profits shall be given to charitable institutions of the domicile of the partnership. was not impleaded. if it is considered juridically non-‐ existent. in the case of unlawful partnership. o The action which may arise from said article. and to the rest of the members of the said association rather than order it to be given to charitable institutions. The amount should be returned to the members of the said association because they pertain to their contributions and not to profits derived from such unlawful partnership. and sentencing the defendants jointly and severally to return the amount of P24. o that the partner makes his contribution.The case having been remanded to the court of origin. no charitable institution is a necessary party in the present case of determination of the rights of the parties. as Manresa remarks. how can it give rise to an action in favor of the partners to judicially demand from the manager or the administrator of the partnership capital. o Hence. and must be established for the common benefit of the partners. to breathe the breath of life into a partnership contract with an objection forbidden by law. Petitioner's contention: • If the partnership has no valid existence. both parties amend. The defendants objected to the commissioner's report. because for the purpose. the contract entered into can have no legal effect. RATIO/RULING: Petitioner's contention: • because the partnership is an unlawful partnership. which is to annul and without legal existence by reason of its unlawful object. the charitable institution of the domicile of the partnership. and it is self evident that what does not exist cannot be a cause of action. found the same sufficiently explained in the report and the evidence. o And as said contrast does not exist in the eyes of the law. and accounts of "Turnuhan Polistico & Co.80 to the plaintiffs in this case." is unlawful.e. which passes to the managing partner for the purpose of carrying on the business or industry which is the object of the partnership. the purpose from which the contribution was made has not come into existence. if it is considered juridically non-‐ existent.607. or in other words. the partner will have to base his action upon the partnership contract. Quintos. without any • • ISSUES: Whether the lower court erred in ordering the return of the the amount of P24. holding that the association "Turnuhan Polistico & Co. The appellants refer to article 1666 of the Civil Code. Charitable institution. or. and in that case. and in that case. paragraph 2 of the same article provides that when the dissolution of the unlawful partnership is decreed. HELD: No. to those of the province. o According to said article. . some charitable institution to whom the partnership funds may be ordered to be turned over. and the administrator of the partnership holding said contribution retains what belongs to others. of the Insular Auditor's Office. and to the rest of the members of the said association PARTNERSHIP [1st SET] 5 (DIONNE) || D2014 When the dissolution of an unlawful partnership is decreed. but the trial court. those of the province are not necessary parties in this case. • Appellant's contention on this point is untenable. rendered judgment. their complaint and their answer. respectively. how can it give rise to an action in favor of the partners to judicially demand from the manager or the administrator of the partnership capital. each one's contribution? COURT: • The appellants allege that the necessary party. and by agreement of the parties. should be included..80 to the plaintiffs in this case. but on the fact that of having contributed some money to the partnership capital.607. is that for the recovery of the amounts paid by the member from those in charge of the administration of said partnership. it is not necessary that all members of the association be made parties to the action. but must be given to some charitable institution. having examined the reasons for the objection. which provides: "A partnership must have a lawful object. • The article cited above permits no action for the purpose of obtaining the earnings made by the unlawful partnership. and in the default thereof.
who. Our Code does not state whether. On April 5. but the fact that said contributions are not included in the disposal prescribed profits. and Anay as head of the marketing department and later.dependable and honest when it came to financial commitments. or. So ordered. The following year.360. a sole proprietorship registered in Marjorie Tocao's name. (2) overridingcommission of six percent (6%) of the overall weekly production. as it is hereby.607. They operated underthe name of Geminesse Enterprise. wrote Belo a letter.. to those of the province. She wrote him twice to demand her overriding commissionfor the period of January 8. o Wherefore considering this contract as non-‐existent. in default of such. CA (October 4. with office at 712 Rufino Building. who conveyed her desire to enter into a jointventure with her for the importation and local distribution of kitchen cookwares. 1988. provided. a manufacturer of kitchen cookwares in Wisconsin. FACTS: Petitioner William Belo introduced respondent NenitaAnay to petitioner Marjorie Tocao. Anay attempted to contact Belo. Cruz.J. a publicinstrument is necessary only where immovable property or real rights are contributed thereto. providing that the profits obtained by unlawful means shall not enrich the partners. an oral contract of partnership is as good as a written one. in turn. vice-‐president for sales. she received a note from Lina T. as we have seen. (3) thirty percent (30%) of the sales she would make.S. that Marjorie Tocao had barred her from holding office and conductingdemonstrations in both Makati and Cubao offices. business or speculation which is the object of the partnership o therefor. however. Avanceña. Street. the defendants shall pay the legal interest on the sum of P24. When her letterswere not answered. On October 9. Furthermore. further. Theparties agreed further that Anay would be entitled to: (1) ten percent (10%) of the annual net profits of the business. she did not receive the same commission although thecompany netted a gross sales of P13.Makati City. But this is not the case with regard to profits earned in the course of the partnership.80 from the date of the decision of the court. 1987. concur. nor state what to be done with them. C. and Villa-‐Real. but shall upon the dissolution of the partnership.. and not the contributions. Anay having secured the distributorship of cookware products from the WestBend Company and organized the administrative staff and the sales force. Belo acted as capitalist. Romualdez. J. Tocao aspresident and general manager. NATURE: Petition for review on certiorari PONENTE: YNARES-‐SANTIAGO. Anay still received her fivepercent (5%) overriding commission up to December 1987. U. 1988. Belo made good his monetary commitments to Anay. . which did not describe the purpose to which those profits denied the partners were to be applied. it would be immoral and unjust for the law to permit a profit from an industry prohibited by it. should be. Under the joint venture. This implies that since a contract of partnership is consensual. JJ. The parties agreed to useAnay's name in securing distributorship of cookware from West Bend Company. upon the dissolution of the unlawful partnership. in such a case. the general law must be followed. Johnson. which must be the basis of the judicial complaint. Anay filed Civil Case No. 88-‐509. there is no reason. Hence the distinction made in the second paragraph of this article of this Code.October 10. Ayala Avenue. Still. TOCAO v. unprecedented by our law. because it only deals with the disposition of the profits. Where no immovable property or real rights areinvolved. Johns. and provided. in order that said court may distribute them among the members of said association. . a complaint for sum of • • • DISPOSITION: The judgment appealed from. for which reason he is not bound to return it and he who has paid in his share is entitled to recover it. and hence the partners should reimburse the amount of their respective contributions. Anay learned that Marjorie Tocao had signed a letteraddressed to the Cubao sales office to the effect that she was no longer the vice-‐ president of GeminesseEnterprise. This is a new rule. for depriving the partner of the portion of the capital that he contributed. upon being duly identified in the manner that it may deem proper. be given to the charitable institutions of the domicile of the partnership. that the defendants shall deposit this sum of money and other documents evidencing uncollected credits in the office of the clerk of the trial court. the partner would have to base his action on the contract which is null and void. introduced to supply an obvious deficiency of the former law. Nenita A. affirmed with costs against the appellants. by reason of its illicit object. it cannot give rise to the necessary action. 1988 to February 5. marketing manager.A. the cookware business took off successfully. the amounts contributed are to be returned by the partners. what matters is that the parties have complied with the requisites of a partnership.00. Anay consulted her lawyer. o The profits are so applied. being in accordance with law. The agreement was not reduced to writing on the strength of Belo's assurances that he was sincere. 2000) PARTNERSHIP [1st SET] 6 (DIONNE) || D2014 DOCTRINE: It may be constituted in any form. that letter was not answered. VOTE: EN BANC. The following day. in order to demand the proportional part of the said profits. because they do not constitute or represent the partner's contribution but are the result of the industry. and (4) two percent(2%) for her demonstration services. because this would be an excessive and unjust sanction for. shows that in consequences of said exclusion. the circumstances of the two cases being entirely different.300. 1988 and the audit of the company to determine her share in the net profits. • consideration. since this partition or distribution of the profits is one of the juridical effects thereof.
together with his friends Jimmy Yu and Norberto Uy formed a partnership to engage in the trucking business. NATURE: Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure. to pay private respondent overriding commission on the total production which. 3. purchase or acquire properties using said funds.. Jose. PONENTE: Nachura. 2. the instant petition for review on certiorari is DENIED. and Pardo. This Court cannot set aside factual findings of such courts absent any showing that there is no evidence to support theconclusion drawn by the courta quo. The pertinent provision of the Civil Code on the matter states:Art. Where no immovable property or real rights areinvolved. VOTE: 1st division. and partners agreed to continue the business under the management of Elfledo. Their Motion for Reconsideration was denied by the Court of Appeals for lack of merit. Petitioners are ordered.000.00. JJ. This case is remanded to the Regional Trial Court for proper proceedings relative to said dissolution. amounted to P32. jointly and severally. Accounting and Damages against respondent Juliet Villa Lim (respondent). and (c) there was a jointinterest in the profits. jointly and severally. 1988 to February 5. Petitioners are ordered. including Elfledo. J. ISSUES:Whether or not a partnership exists HELD &RATIO/RULING: Yes. Petitioners are ordered to submit to the Regional Trial Court a formal account of the partnership affairs for the years 1987 and 1988. exemplary damages in the amount of P50. Tocao and William Belo before the Regional Trial Court of Makati. To be considered a juridical personality. 2005. widow of the late Elfledo Lim. Jose managed the operations of this trucking business until his death. Jr. The fact that there appears to be no record in theSecurities and Exchange Commission of a public instrument embodying the partnership agreement pursuant to Article 1772 of the Civil Code did not cause the nullification of the partnership. apartnership must fulfill these requisites: (1) two or more persons bind themselves to contribute money. The partnership has a juridical personality separate and distinct from that of each of the partners. and the parties are ordered to effect the winding up and liquidation of the partnership pursuant to the pertinent provisions of the Civil Code. first paragraph. moneywith damagesagainst Marjorie D.J.000. for the period covering January 8. . This implies that since a contract of partnership is consensual. property or industry to a commonfund. This Court finds no reason to rule otherwise. The partnership among petitioners and private respondent is ordered dissolved. in order to determine private respondent’s ten percent (10%) share in the net profits of the partnership. Petitioners are the heirs of the late Jose Lim. represented by Elenito Lim v. The shares in the partnership profits and income that formed part of the estate of Jose were held in trust by Elfledo. Petitioners appeal to the Court of Appealswas dismissed. In this case. 2004. Petitioners alleged that Jose was the liaison officer of Interwood Sawmill. 1768. The trial court held that therewas indeed an oral partnership agreement between the plaintiff and the defendants. Davide. with petitioners' authority for Elfledo to use. C. Petitioners are ordered. They filed a Complaint for Partition.000. 4. The issue of whether or not a partnership exists is a factual matter which is within the exclusive domain of both the trial andappellate courts. Jose's heirs. which reversed and set aside the decision of the Regional Trial Court (RTC) of Lucena City. JULIET VILLA LIM (March 3. (b) a common fund was established through contributions consisting of money and industry. to pay private respondent five percent (5%) overriding commission for the one hundred and fifty (150) cookware sets available for disposition since the time private respondent was wrongfully excluded from the partnership by petitioners. Puno. (Chairman). The appealed decisions of the Regional Trial Court and the Court of Appeals are AFFIRMED with MODIFICATIONS. concur. an oral contract of partnership is as good as a written one.000. dated April 12. Thereafter. even in case of failure to complywith the requirements of article 1772. based on the following: (a) there was an intention tocreate a partnership.00. jointly and severally. represented by Elenito Lim. what matters is that the parties have complied with the requisites of a partnership. both the trial court and the Court of Appeals are one in ruling that petitioners and privaterespondent established a business partnership. 2. FACTS: 1. DISPOSITION: WHEREFORE. 1988. Branch 140.. It may be constituted in any form. pursuant to Article 1809 of the Civil Code. assailing the Court of Appeals (CA) Decision dated June 29. as follows -‐-‐-‐ PARTNERSHIP [1st SET] 7 (DIONNE) || D2014 1.00. a publicinstrument is necessary only where immovable property or real rights are contributed thereto. and (2) intention on the part of the partners to divide the profits among themselves. Kapunan.00 and attorney’s fees in the amount of P25. who was the eldest son of Jose and Cresencia. to pay private respondent moral damages in the amount of P50.. 2010) DOCTRINE: A demand for periodic accounting is evidence of a partnership. HEIRS OF JOSE LIM.
Jimmy suggested that three out of the nine trucks be given to him as his share. Applying the legal provision to the facts of this case. without any intervention or opposition whatsoever from any of petitioners herein. 4. indicating that what he actually received were shares of the profits of the business. 3. and thus. the partnership only had one truck. Elfledo ran the affairs of the partnership. 5. effects. the business flourished. as share in the partnership. Respondent traversed petitioners' allegations and claimed that Elfledo was himself a partner of Norberto and Jimmy. But that testimony is just one piece of evidence against respondent. Therein. Furthermore. the trucking business started to falter. the following circumstances tend to prove that Elfledo was himself the partner of Jimmy and Norberto: a. as she could no longer run the business. while the other three trucks be given to the heirs of Norberto. Thus. Jimmy testified that Elfledo did not receive wages or salaries from the partnership. TC: favoured petitioners CA: reversed the decision of TC 2. Respondent maintained that all the properties involved in this case were purchased and acquired through her and her husband’s joint efforts and hard work. Petitioners heavily rely on Jimmy's testimony. and to surrender the administration thereof. b. labor. SC agrees with CA’s findings that the testimonities prove that Elfledo was not just a hired help but one of the partners in the trucking business. a demand for periodic accounting is evidence of a partnership. Respondent also stressed that Jose left no properties that Elfledo could have held in trust. PARTNERSHIP [1st SET] 8 (DIONNE) || D2014 The best evidence would have been the contract of partnership or the articles of partnership. However. we cited Article 1769 of the Civil Code. RATIO/RULING: 1. Yes 9. active and visible in the running of its affairs from day one until this ceased operations upon his demise. If it were true that it was Jose Lim and not Elfledo who was the partner. wielding absolute control. 6. Paquita Uy. and without any participation or contribution from petitioners or from Jose. ISSUES: WON Elfledo Lim was a partner in the business HELD: 1. there is none in this case. which were all registered in Elfledo's name. SC affirms the CA decision. was not interested in the vehicles. with the understanding that there shall be a proportionate sharing of the profits and losses among them. e. were registered in the name of Elfledo. administration and management of the partnership and its business. having been derived from Jose's alleged partnership with Jimmy and Norberto. as heirs of Jose.00. It must be considered and weighed along with petitioners' other evidence vis-‐à-‐vis respondent's contrary evidence. 8. Claiming that they are co-‐owners of the properties. Petitioners alleged that Elfledo was never a partner or an investor in the business and merely supervised the purchase of additional trucks using the income from the trucking business of the partners. petitioners required respondent to submit an accounting of all income. When Elfledo died due to a heart attack. c. The evidence presented by petitioners falls short of the quantum of proof required to establish that: (1) Jose was the partner and not Elfledo. d. As repeatedly stressed in Heirs of Tan Eng Kee. and skill in lawful commerce or business. demanded periodic accounting from Elfledo during his lifetime. Cresencia testified that Jose gave Elfledo P50. At this juncture. she had the right to refuse to render an accounting for the income or profits of their own business. All of the properties. 7. Jose gave Elfledo capital in an informal partnership with Jimmy and Norberto. petitioners failed to adduce any evidence to show that the real and personal properties acquired and registered in the names of Elfledo and respondent formed part of the estate of Jose. respondent talked to Jimmy and to the heirs of Norberto. are indicative of the fact that Elfledo was a partner and a controlling one at that. 5. particularly the nine trucks of the partnership. the SC’s ruling in Heirs of Tan Eng Kee v. and the partnership with Jimmy and Norberto ceased upon his demise. on a date that coincided with the payment of the initial capital in the partnership. . 3. When Norberto was ambushed and killed. 7. but through the efforts of Elfledo. profits and rentals received from the estate of Elfledo. When Elfledo and respondent got married. he left no known assets. Petitioners claimed that respondent took over the administration of the properties. the fact that its properties were placed in his name. she sold the same to respondent. Unfortunately. By the time the partnership ceased. and the partnership and its business not only continued but also flourished. it had nine trucks. Norberto's wife. A partnership exists when two or more persons agree to place their money. because the alleged partnership was never formally organized. thus. power and authority. then upon his death the partnership should have 4. Respondent also claimed that per testimony of Cresencia. having been derived from the alleged partnership. Court of Appeals is enlightening. which belonged to the estate of Jose.000. and that he was not paid salary or other compensation by the partners. and (2) all the properties acquired by Elfledo and respondent form part of the estate of Jose. 8. None of the petitioners. the alleged partner. 9. leaving respondent as his sole surviving heir. who paid for them in installments. without their consent and approval. Respondent refused. Respondent submitted that these are conjugal partnership properties. Elfledo died. The extent of his control. Notable too that Jose Lim died when the partnership was barely a year old. the filing of this case. 6. Respondent also alleged that when Jose died.
VOTE: All concur C. Ø In the 1st case. against which this case should have been brought.C. Two special civil actions for prohibition PONENTE: Vitug. 1768 of the Civil Code. Ø As private respondent failed to redeem the property within the prescribed period. Ø Petitioners claim to be taxpayers adversely affected by the continued implementation of the SNIT. unfair. FACTS: Ø This is a consolidated case involving the constitutionality of RA 7496 or the Simplified Net Income Taxation (SNIT) scheme. the title to the subject property is in the name of A. Co. which should be impleaded in any litigation involving property registered in its name. “…Amending Section 21 and 29 of the National Internal Revenue Code. Aguila & Co. Aguila & Sons. and A. Ø Petitioner now contends that he is not the real party in interest but A. SEPARATE JURIDICAL PERSONALITY AGUILA v. Any decision rendered against a Ø PARTNERSHIP [1st SET] 9 (DIONNE) || D2014 person who is not a real party in interest in the case cannot be executed. it is the partnership. Costs against petitioners. This ruling is now embodied in Rule 3. or who is entitled to the avails of the suit. Hence. the instant Petition is DENIED.C. Ø Art. under which the complaint in this case was filed.C. petitioner caused the cancellation of TCT and the issuance of the new certificate of title in the name of the partnership.. Ø Private respondent Felicidad Abrogar entered into a MOA w/ A. Aguila & Sons. Section 2 of the 1997 Revised Rules of Civil Procedure. Co." A real party in interest is one who would be benefited or injured by the judgment. ISSUE: WON the petitioner is the real party in interest. The petitioner also stressed that it violates the equal protection clause as it only imposed taxes upon one who . Aguila & Sons. a complaint filed against such a person should be dismissed for failure to state a cause of action. or illegal purposes. The partners cannot be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent. In this case. J. provided that "every action must be prosecuted and defended in the name of the real party in interest. Aquila & Sons involving a pacto de retro sale of a house & lot. or illegal purposes. Co. A violation of this rule will result in the dismissal of the complaint. Hence. Section 2 of the Rules of Court of 1964. TAN v. Moreover. a partnership engaged in lending activities.” Ø They alleged that this title was in direct violation of Section 26 (1) and 28 (1) in Article VI of the 1987 Constitution. The assailed Court of Appeals Decision dated June 29. private respondent has not shown that A. Ø Rule 3. 2005 is AFFIRMED.C. 1994) DOCTRINE: (see notes below) NATURE: Consolidated case. DEL ROSARIO (October 3. represented by petitioner. as a separate juridical entity. Aguila & Sons. unfair..C. HELD: No. CA FACTS: Ø Petitioner is the manager of A. a partnership has a juridical personality separate and distinct from that of each partner. with the consent of her late husband. Co. not its officers or agents.C.. and the Memorandum of Agreement was executed between private respondent. DISPOSITION: WHEREFORE. is being used for fraudulent. Ø Private respondent filed a petition for a declaration of the nullity of the deed of sale and a criminal complaint for forgery against petitioner alleging that the signature of her husband was a forgery because he was already dead when the deed was supposed to have been executed. they contended that the House Bill which eventually became RA 7496 is a misnomer or deficient because it was named as “Simplified Net Income Taxation Scheme for the Self-‐Employed and Professionals Engaged in the Practice of their Profession” while the actual title contains the said words with the additional phrase.
and the ultimate distribution of such income to. A general professional partnership1. No. Melo. is not itself an income taxpayer. The income tax is imposed not on the professional partnership. 23 and 24. applies to all things of equal conditions and of same class. it is germane to the purpose of the law and. The said law is not arbitrary. o Although the general professional partnership is exempt from the payment of taxes (but it still has an obligation to file an income tax 1 A general professional partnership. Feliciano. Puno. No. o Under the present income tax system. they argued that respondents have exceeded their rule-‐ making authority in applying SNIT to general professional partnerships by issuing Revenue Regulation 2-‐93 to carry out the RA. JJ. no part of the income of which is derived from its engaging in any trade business. in this context. which is tax exempt.. Regalado. . But since it is attached to a law that has already classified taxpayers. but on the partners themselves in their individual capacity computed on their distributive shares of partnership profits. YES HELD: 1. are on leave.R. Ordinary business partnerships. DISPOSITIVE: WHEREFORE. CA Ø Ø ISSUE: 1. NO 2. Cruz. otherwise. which is to say. Padilla and Bidin. concur. Constitutionality of RA 7496 o The SC ruled in the negative.. all individuals deriving income from any source whatsoever are treated in almost invariably the same manner and under a common set of rules. Kapunan and Mendoza. (G. there is no violation of equal protection clause. In the 2nd case. each of the individual partners. o Further. are “taxable partnerships. o The court would have appreciated the contention of the petitioner if RA 7496 was an independent law. C. as a corporation and thereby subject to the corporate income tax. b. 109289).” General professional partnerships are “exempt partnerships. Estate under Judicial Settlement and Irrevocable Trust. Quiason. The only other exempt partnership is a joint venture for undertaking construction projects or engaging in petroleum operations pursuant to an operating agreement under a service contract with the government (see Sections 20. must be formed for the sole purpose of exercising a common profession. the partners themselves are liable for the payment of income tax in their individual capacity computed on their respective and distributive shares of profits. JJ. o It is neither violative of equal protection clause due to the existence of substantial difference between one who practice his profession alone and one who is engaged to proprietorship. VOTING: Narvasa. WON in RA 7496. the general professional partnership is deemed to be no more than a mere mechanism or a flow-‐through entity in the generation of income by.. the SC said that RA 7496 is just an amendatory provision of the code of taxpayers where it classifies taxpayers in to four main groups: Individuals. NOTES: Differences between general professional partnerships and ordinary business partnerships: a. respectively.” Under the Tax Code on income taxation. Application of SNIT to partners in general professional partnerships o There is no distinction in income tax liability between a person who practices his profession alone or individually and one who does it through a partnership (whether registered or not) with others in the exercise of a common profession. WON RA 7496 is unconstitutional (G. 109446). Bellosillo. Romero. This is anchored on the administrative interpretation of public respondents that would apply SNIT topartners in general professional partnerships.. the SNIT applies to partners in general professional partnerships. Davide. Corporations.J. MENDIOLA v. No special pronouncement on costs. practice his profession alone and not to those who are engaged to single proprietorship. the petitions are DISMISSED. National Internal Revenue Code). 2. no matter how created or organized.-‐ Petitioners cited the deliberations in the HOR regarding the implementation of the said rule in which it was shown that framers did not intend for the bill to be applicable to business corporations or partnerships PARTNERSHIP [1st SET] 10 (DIONNE) || D2014 return mainly for administration and data).R. it is subject to tax as an ordinary business partnership or. unlike an ordinary business partnership (which is treated as a corporation for income tax purposes and so subject to the corporate income tax). Jr.
petitioner wrote Pacfor-‐USA demanding payment of unpaid commissions and office furniture and equipment rentals.. and the termination of his employment as resident manager of Pacfor Phils. the members become co-‐owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members. 2006) DOCTRINE: In a partnership. "It's simply a 'theoretical company' with the purpose of dividing the income 50-‐50. a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter. This doctrine is based on the following considerations: (1) that the mutual agency between the partners.. replied that petitioner is not a part-‐owner of Pacfor Phils. seeking confirmation of his 50% equity of Pacfor Phils. advising them not to deal with Pacfor Phils.18 Private respondent Pacfor likewise sent letters to its clients in the Philippines. the New Civil Code regards a partner as a co-‐owner of specific partnership property. on a . PHILS. The issues were not resolved. the community of interest. through its President. It also designated petitioner as its resident agent in the Philippines. Private respondent Pacfor. in October 2000. Mendiola (ATM). is equally owned on a 50-‐50 equity by ATM and Pacfor-‐usa." with petitioner Arsenio T. having been the one to propose to private respondent Pacfor the setting up of a representative office. files. in which each party has a proprietary interest. it is not one of partnership.000 per annum." petitioner insisted that he and Pacfor equally own Pacfor Phils. and "not a branch office" in the Philippines to save on taxes. merely shared profits. company car. PONENTE: Puno. This essential element. (Pacfor) is a corporation organized and existing under the laws of California. records. This alone does not make a partnership. INC. it follows that he and Pacfor likewise own. NATIONAL LABOR RELATIONS COMMISSION. (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation. The Side Agreement outlines the business relationship of the parties with regard to the Philippine operations of Pacfor." while the profits and commissions will be shared among them. would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively. or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. and all notices affecting the corporation. Petitioner construed these directives as a severance of the "unregistered partnership" between him and Pacfor." where the salary of petitioner was increased to $78. It is a subsidiary of Cellulose Marketing International (organized in Sweden) Private respondent Pacfor entered into a "Side Agreement on Representative Office known as Pacific Forest Resources (Phils. and/or CELLMARK AB (July 31. PARTNERSHIP [1st SET] 11 (DIONNE) || D2014 In its application (to the SEC). If the relation does not have this feature. COURT OF APPEALS. Privatre respondent Pacfor through counsel ordered petitioner to turn over to it all papers. a common fund. The Side Agreement was amended through a "Revised Operating and Profit Sharing Agreement for the Representative Office Known as Pacific Forest Resources (Philippines). Petitioner claimed that he was all along made to believe that he was in a joint venture with them. Besides. On the basis of the "Side Agreement. because the latter is merely Pacfor-‐USA's representative office and not an entity separate and distinct from Pacfor-‐USA. salary of the employees. authorized to accept summons and processes in all legal proceedings. FACTS: Private respondent Pacific Forest Resources. Each partner possesses a joint interest in the whole of partnership property. or co-‐ownership of. as well as commissions allegedly due him. J. Petitioner's base salary and the overhead expenditures of the company shall be borne by the representative office and funded by Pacfor/ATM. hence. Petitioner raised other issues. Both agreements show that the operational expenses will be borne by the representative office and funded by all parties "as equal partners. Inc. that he would have been better off remaining as an independent agent or representative of Pacfor-‐USA as ATM Marketing Corp. to be known as Pacfor Phils. Inc. private respondent Pacfor proposed to establish its representative office in the Philippines. In fact. xxx the parties in this case. such as the rentals of office furniture. In July 2000. ARSENIO T. petitioner wrote the Vice President for Asia of Pacfor. Thus. PACIFIC FOREST RESOURCES."11 Petitioner presumably knew of this arrangement from the start. Private respondent will establish a Pacfor representative office in the Philippines. whereby the corporation would be bound by the acts of persons who are not its duly appointed and authorized agents and officers. documents. MENDIOLA vs.). and. The property or stock of the partnership forms a community of goods. and petitioner ATM will be its President. since Pacfor Phils. USA. Phils. and other materials in his or ATM Marketing Corporation's possession that belong to Pacfor or Pacfor Phils then to remit more than 300k xmas giveaway fund for clients of Pacfor Phil and finally Pacfor withdraw all its offers of settlement and ordered petitioner to transfer title and turn over to it possession of the service car.
is simply a "theoretical company" for the purpose of dividing the income 50-‐50. or co-‐ownership of. private respondent Pacfor's President established this fact when he said that Pacfor Phils. a common fund. Thus.' office for operations of HEPI LA: ruled in favor of petitioner. which. co-‐ownership. or independent contractorship. MR denied. besides the dollar salary agreed upon by the parties.' office premises. Pacfor Phils. recovery of separation pay. He set aside the July 30. Furthermore. the New Civil Code regards a partner as a co-‐owner of specific partnership property.. for lack of jurisdiction and lack of merit. By directing petitioner to turn over all office records and materials. (HEPI).' office furniture and equipment and the service car. among others. it concluded that petitioner is not an employee of private respondent Pacfor. the parties in this case. now occupies Pacfor Phils. merely shared profits. Petitioner is not a part-‐owner of Pacfor Phils. the Labor Code cannot apply. charged petitioner anew with serious misconduct for the latter's alleged act of fraud and misrepresentation in authorizing the release of an additional peso salary for himself. Petitioner denied the charges. Petitioner's position as resident manager whose duty. it is not one of partnership. and payment of attorney's fees with the NLRC. 50/50 basis. having been the one to propose to private respondent Pacfor the setting up of a representative office. This alone does not make a partnership. He stressed that petitioner knew of this arrangement from the very start. 2001 decision of the labor arbiter. The property or stock of the partnership forms a community of goods. is the "Side Agreement" and the "Revised Operating and Profit Sharing Agreement." Hence. It held there was no employer-‐employee relationship between the parties. Private respondent also alleged loss of confidence and gross neglect of duty on the part of petitioner for allegedly allowing another corporation owned by petitioner's relatives. a corporation cannot become a member of a partnership in the absence of express authorization by statute or charter. Private respondent directed petitioner to explain why he should not be disciplined for serious misconduct and conflict of interest. If the relation does not have this feature. Inc. This doctrine is based on the following considerations: (1) that the mutual agency between the partners. private respondent Pacfor virtually deprived petitioner of his job by the gradual diminution of his authority as resident manager. to possibly steal and divert the sales and business of private respondent. Ratio: Petitioner argues that he is an industrial partner of the partnership he formed with private respondent Pacfor. and demanded payment of his separation pay. Private respondent Pacfor charged petitioner with willful disobedience and serious misconduct for his refusal to turn over the service car and the Christmas giveaway fund which he applied to his alleged unpaid commissions. the lessor of the office premises of Pacfor Phils. Private respondent Pacfor placed petitioner on preventive suspension and ordered him to show cause why no disciplinary action should be taken against him. the community of interest.. wherein he was the signatory to the lease agreement. In fact. or joint interest in partnership property is absent in the relations between petitioner and private respondent Pacfor. finding there was constructive dismissal. This essential element. was to maintain the security of its business transactions and communications was rendered meaningless. Private respondent also accused petitioner of disloyalty and representation of conflicting interests for having continued using the Pacfor Phils. William Gleason. High End Products. in this case. whereby the corporation would be bound by the acts of persons who are not its duly appointed ." He likewise informed private respondent Pacfor that ATM Marketing Corp. regardless of whether he may have retained copies. Petitioner insists that an industrial partner may at the same time be an employee of the partnership. Based on the two agreements between the parties. Petitioner filed his complaint for illegal dismissal. in which each party has a proprietary interest. the members become co-‐owners of what is contributed to the firm capital and of all property that may be acquired thereby and through the efforts of the members. MR denied Issues: Was there an employer-‐employee relationship or a partnership? Can both exist at the same time? There was an employer employee relationship but no partnership Was he constructively dismissed? (Not important so omitted) YES. Each partner possesses a joint interest in the whole of partnership property." We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-‐ownership exists between the parties. He reiterated that he considered the import of Pacfor President’s letters as a "cessation of his position and of the existence of Pacfor Phils. and also an employee of the partnership. provided there is such an agreement. PARTNERSHIP [1st SET] 12 (DIONNE) || D2014 CA: Affirmed holding that "the legal basis of the complaint is not employment but perhaps partnership. he did not renew the lease contract with Pulp and Paper. In a partnership. NLRC: in favor of Private respondent Pacfor. and "not a branch office" in the Philippines to save on taxes. but a full co-‐owner (50/50 equity). to use the same telephone and facsimile numbers of Pacfor. Inc. He also reiterated his demand for unpaid commissions. Besides. and proposed to offset these with the remaining Christmas giveaway fund in his possession.
J. 2003 Resolution. Failure to register the contract of partnership does not affect the liability of the partnership and of the partners to third persons.” NATURE: Special civil action. SECRETARY OF JUSTICE (July 29. petitioners.43 In the instant case. and ordering him to show cause why no disciplinary action should be taken against him. First. and. J. and formulated a revised payment program for DAVCOR. it was private respondent Pacfor which selected and engaged the services of petitioner as its resident agent in the Philippines. Inc. (b) the payment of wages. exactly so. The Court of Appeals' January 30.000. Garcia. and it is not the actual exercise of the right by interfering with the work. 2001 Decision of the Labor Arbiter isREINSTATED with the MODIFICATION that the amount of P250. 2001 Decision of the National Labor Relations Commission.00 representing an alleged increase in petitioner's salary shall be deducted from the grant of separation pay for lack of evidence. affirming the December 20. which constitutes the test of the existence of an employer-‐employee relationship. Corona. as stipulated in their Side Agreement. The July 30. an employer-‐employee relationship is present in the case at bar. we hold that on the basis of the evidence. private respondent Pacfor has the power of control over the means and method of petitioner in accomplishing his work. are ANNULED and SET ASIDE. PONENTE: Carpio. when it ordered petitioner to remit the Christmas giveaway fund intended for clients of Pacfor Phils. I don’t think it’s important but I included it na din if ever magtanong re: paano nagging employee) Be that as it may. but also as to the means and methods to accomplish it. covering 8 parcels of land planted with fruit-‐bearing lanzones trees in Nagcarlan. is. v.. all the foregoing elements are present. clearly possesses such right of control. as may be gleaned through the various memoranda it issued against petitioner. 2003 Decision in CA-‐G. (c) the power of dismissal. but the right to control. VOTE: Sandoval-‐Gutierrez. private respondent Pacfor pays petitioner his salary amounting to $65. DISPOSITIVE: IN VIEW WHEREOF. and gross neglect of duty. private respondent Pacfor replied to the client's request for an invoice payment extension. (2) that such an arrangement would improperly allow corporate property to become subject to risks not contemplated by the stockholders when they originally invested in the corporation.44 In the case at bar. and DAVCOR. when it withdrew all its offers of settlement and ordered petitioner to transfer title and turn over to it the possession PARTNERSHIP [1st SET] 13 (DIONNE) || D2014 of the service car.000. Azcuna. Secretary of Justice and Felino Mercado. who transacts business.R. and. not only as to the result of the work to be done. 2005) Oscar Angeles and Emerita Angeles. and (d) the employer's power to control the employee's conduct. No such authorization has been proved in the case at bar. Certiorari. and authorized agents and officers. the petition is GRANTED. A partnership may exist even if the partners do not use the words “partner” or “partnership. Third. their brother-‐in-‐law o Claimed that Mercado convinced them to enter into a contract of antichresis. advising them not to deal with petitioner and/or Pacfor Phils. Petitioner. SP No. Second. placing the latter on preventive suspension while charging him with various offenses. FACTS: • Angeles spouses filed a criminal complaint for estafa against Mercado. when it directed petitioner to turn over to it all records of Pacfor Phils.. J. The Hon. and accepts service on its behalf. would be inconsistent with the policy of the law that the corporation shall manage its own affairs separately and exclusively. private respondent Pacfor.000 per annum which was later increased to $78. particularly Intercontinental Paper Industries. only an agent of the corporation. concur ANGELES v. as employer. respondents DOCTRINE:The purpose of registration of the contract of partnership with the SEC is to give notice to third parties. This is one unmistakable proof that private respondent Pacfor exercises control over the petitioner. nor does it affect the partnership’s juridical personality. Laguna and owned by Juan Sanzo o The parties agreed that Mercado would administer the ands and complete the necessary paperwork . The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee. In its letter to DAVCOR. including willful disobedience. It was also during this period when private respondent Pacfor sent letters to its clients in the Philippines. a representative of Pacfor. serious misconduct. to last for 5 years. and not to the actual exercise thereof. SO ORDERED. The most important element is the employer's control of the employee's conduct.. This right of control was exercised by private respondent Pacfor during the period of November to December 2000. private respondent Pacfor holds the power of dismissal. The power of control refers merely to the existence of the power. Lastly and most important. as private respondent Pacfor's resident agent in the Philippines. (This part goes into the employer-‐employee relationship bit. The principal consideration is whether the employer has the right to control the manner of doing the work. 71028 and July 30.
and they claim that only after this demand for an accounting did thy discover that Mercado had put the contract of antichresis over the subject land under Mercado and his spouse’s names Mercado denied the Angeles spouses’ allegations o Claimed that there exists an industrial partnership. Mercado satisfactorily explained that the Angeles spouses do not want to be revealed as the financiers. 000 Sec. The purpose of registration is to give notice to third parties. the co-‐partner’s liability is civil in nature o PARTNERSHIP [1st SET] 14 (DIONNE) || D2014 ISSUES/HELD: 1. which was clear from the fact that they contributed money to a common fund and divided the profits among themselves. • Failure to register does not affect the liability of the partnership and of the partners to third persons. W/N a partnership existed between Mercado and the Angeles spouses -‐ Yes 3. Oscar Angeles stated that there was a written sosyo industrial agreement: capital would come from the Angeles spouses while the profit would be divided evenly between Mercado and the Angeles spouses Provincial Prosecution Office: first recommended the filing of a criminal information for estafa. • • • • • . it was more likely that the Angeles spouses knew from the very start that the questioned document was not really in their names o A partnership truly existed between the Angeles spouses and Mercado. Decision of Sec. between him and his spouse as industrial partners and the Angeles spouses as financiers. and that this had existed since 1991. but after Mercado filed his counter-‐affidavit and moved for reconsideration. o There is no estafa where money is delivered by a partner to his co-‐partner on the latter’s representation that the amount shall be applied to the business of their partnership. • The Angeles spouses’ position that there is no partnership because of the lack of a public instrument indicating the same and a lack of registration with the SEC holds no water o The Angeles spouses contributed money to the partnership and not immovable property o Mere failure to register the contract of partnership with the SEC does not invalidate a contract that has the essential requisites of a partnership. the partnership relationship was evident. the Angeles spouses asked for an accounting from Mercado. of Justice’s resolution. 1771 to 1773 of the Civil Code. W/N there was misappropriation by Mercado – No RATIO/RULING: 1. It was their practice to enter into business transactions with other people under the name of Mercado because the Angeles spouses did not want to be identified as the financiers o Attached bank receipts showing deposits in behalf of Emerita Angeles and contracts under his name for the Angeles spouses During the barangay conciliation proceedings. which is already enough reason to dismiss the case. and that such document alone proves Mercado’s misappropriation of their P210. before the contract of antichresis over the subject land o Mercado used his and his spouse’s earnings as part of the capital in the business transactions which he entered into in behalf of the Angeles spouses. In case of the money received. of Justice affirmed. of Justice. all concur. o Angeles spouses acknowledged their joint business venture in the barangay conciliation proceedings although they assailed the manner the business was conducted o Although the legal formalities for the formation were not adhered to. colloquially known as sosyo industrial. nor does it affect the partnership’s juridical personality • The Angeles spouses admit to facts that prove the existence of a partnership o A contract showing a sosyo industrial or industrial partnership o Contribution of money & industry to a common fund o Division of profits between the Angeles spouses and Mercado 3. Laguna. Angeles spouses allege that they had no partnership with Mercado. DISPOSITION: Petition for certiorari dismissed. Moreover. Angeles spouses fail to convince that the Secretary of Justice committed grave abuse of discretion when he dismissed their appeal. saying that the document evidencing the contract of antichresis executed in the name of the Mercado spouses. thus the document which was in the name of Mercado and his spouse fail to convince that there was deceit or false representation that induced the Angeles spouses to part with their money • Even the RTC of Sta. issued an amended resolution dismissing the complaint Angeles spouses appealed to Sec. of Justice: dismissed the appeal o Angeles spouses failed to show sufficient proof that Mercado deliberately deceived them in the transaction o Mercado satisfactorily explained that the Angeles spouses do not want to be revealed as the financiers o Under the circumstances. VOTE: 1st Division. they committed a procedural error when they failed to file a motion for reconsideration of the Sec. After 3 years. of Justice committed grave abuse of discretion in dismissing the appeal -‐ No 2. relying on Arts. instead of the Angeles spouses. 2. • Accounting of the proceeds is not a proper subject for the present case. W/N the Sec. Cruz. which handled the civil case filed by the Angeles spouses against Mercado and Leo Cerayban stated that it was the practice to have the contracts secured in Mercado’s name as the Angeles spouses fear being kidnapped by the NPA or being questioned by the BIR as Oscar Angeles was working with the government.
499 tax on the lottery winnings. ISSUE: 1.000. Whether the plaintiffs formed a partnership. Having organized and constituted a partnership of a civil nature. or merely a community of property without a personality of its own. but are co-‐owners who have paid their corresponding capital gains in ‘73 and ‘74. in his capacity as co-‐partner. in the same capacity. Whether they should pay the tax collectively or whether the latter should be prorated among them and paid individually. and the freedom of each party to transfer or assign the whole property. stating that the plaintiffs are a partnership. According to the stipulation facts the plaintiffs organized a partnership of a civil nature because each of them put up money to buy a sweepstakes ticket for the sole purpose of dividing equally the prize which they may win. CIR PONENTE: Imperial.101. Tenancy in common. DISTINGUISH FROM 1. • PARTNERSHIP [1st SET] 15 (DIONNE) || D2014 The partnership was not only formed. Joint Ventures 4. the existence of a juridical personality different from the individual partners. PONENTE: Gancayo.00 profit. 1988) 2. 2. Co-‐ownership. Co-‐possession 2. 3761. the said entity is the one bound to pay the income tax which the defendant collected under the aforesaid section 10 (a) of Act No. D. J. as such collection the prize. • All these circumstances repel the idea that the plaintiffs organized and formed a community of property only. Joint Adventures 5. Collectively. o CIR denied the plaintiff’s request for exemption. NATURE: Petition for review on certiorari of the decision of the Court of Tax Appeals (CTA) affirming the decision of the Commissioner of Internal Revenue. Formed a partnership of a civil nature. Petitioners assert that they are not a partnership. Dragon are siblings. purchased one sweepstakes ticket valued at two pesos (P2). Bulacan. • Plaintiff submitted 15 income tax returns for exemption from the 1. FACTS: Petitioners Mariano Pascual and Renato P. Cuentas en Participacion 7. They realized a total of P 60. o the said ticket was registered in the name of Jose Gatchalian and Company.000. Agency GATCHALIAN v. the office issued the check for P50. MUTUAL AGENCY E. o The ticket won 50.000 in favor of Jose Gatchalian and company. 1939 PASCUAL v. as amended by section 2 of Act No. joint tenancy 3. Joint accounts 6. divided in various amounts among themselves. DOCTRINE: There must be a clear intent to form a partnership. FACTS: • The 15plaintiff are all residents of the municipality of Pulilan. but upon the organization thereof and the winning of the prize. HELD: 1. 1965 – Bought 2 Parcels of Land 1966 – Bought another 3 Parcels of Land 1968 – Sold the first to Parcels of Land 1970 – Sold the remaining 3 Parcels. and paid the corresponding capital gains by availing of the tax amnesty in the years 1973 – 74. 2833. CIR (October 18. BIR Commissioner assessed that the siblings owed P107. Jose Gatchalian personally appeared in the office of the Philippines Charity Sweepstakes. April 29.70 for corporate income tax being an unregistered partnership.000 pesos. and the said partner. asking that the tax be divided according to the amount paid by each plaintiff. as they did in fact in the amount of P50. collected the said check. ISSUES: W/N the Siblings were an unregistered partnership which was liable to pay corporate tax? . J.
the existence of a juridical personality different from the individual partners. There must be an unmistakable intention to form a partnership or joint venture. The assessments are cancelled. There must be an unmistakable intention to form a partnership or joint venture. Commissioner acting on the theory that the four petitioners had formed an unregistered partnership or joint venture. There must be intent to create a PARTNERSHIP with a distinct juridical personality to that of the partners. 1985) DOCTRINE: The sharing of gross returns does not of itself establish a partnership. J.792. The common ownership of property does not in itself create a partnership between the owners. the instant appeal. The sharing of returns does not in itself establish a partnership whether or not the persons sharing therein have a joint or common right or interest in the property. . the Commissioner considered the share of the profits of each petitioner in the sum of P33. whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived". J. There must be a clear intent to form a partnership. To consider them as partners would obliterate the distinction between a co-‐ownership and a partnership. Medialdea. One day before the expiration of the five-‐year prescriptive period. They treated the profit as a capital gain and paid an income tax on one-‐half thereof or of P16. a 50% fraud surcharge and a 42% accumulated interest.336 in addition to individual income tax on their shares thereof. Article 1769(3) of the Civil Code provides that "the sharing of gross returns does not of itself establish a partnership. HELD &RATIO/RULING:We hold that it is error to consider the petitioners as having formed a partnership under article 1767 of the Civil Code simply because they allegedly contributed P178. Concur Narvasa. agree among themselves as to the management. liable for corporate income tax. Hence. The petitioners contested the assessments. and use of such property and applications of the proceeds therefrom.584 for each of them.341. ISSUES:Whether or not petitioners have indeed formed a partnership or joint venture and thus. Further. property or industry to a common fund and that they intended to divide the profits among themselves. and the freedom of each party to transfer or assign the whole property. they were co-‐owners. Two Judges of the Tax Court sustained the same. Which held that the requisite for a partnership is a) an agreement to contribute money. Grino-‐Aquino. Took no part OBILLOS v. petitioners resold said lots to the Walled City Securities Corporation and Olga Cruz Canda. That eventuality should be obviated.. To regard the petitioners as having formed a taxable unregistered partnership would result in oppressive taxation and confirm the dictum that the power to tax involves the power to destroy. which showed the character of habitually peculiar to business transactions engaged in for the purpose of gain was present.20 including the 50% fraud surcharge and the accumulated interest. Jr. In the present case. Judge Roaquin dissented. for which they earned a profit of P134. there is no evidence that petitioners entered into an agreement to contribute money. PONENTE: Aquino. the judgment of the Tax Court is reversed and set aside.707. whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived. As testified by Jose Obillos. Cruz. They were co-‐ owners pure and simple. the Commissioner of Internal Revenue. required the four petitioners to pay corporate income tax on the total profit of P134.584 as a " taxable in full (not a mere capital gain of which is taxable) and required them to pay deficiency income taxes aggregating P56. DISPOSITION:WHEREFORE. without becoming partners.12 to buy the two lots. resold the same and divided the profit among themselves. FACTS: PARTNERSHIP [1st SET] 16 (DIONNE) || D2014 NATURE: Petition to review the decision of the Court of Tax Appeals For at least one year after their receipt of two parcels of land from their father. though they may use it for purpose of making gains. JJ. DISPOSITION: Petition is GRANTED decision of the CTA is REVERSED and SET ASIDE VOTE: 3rd Division. property or industry in a common fund. they had no such intention. and b) intent to divide the profits among the contracting parties. HELD: No. The petitioners were not engaged in any joint venture by reason of that isolated transaction.88 or P33. RATIO/RULING: The CTA anchored their ruling on an earlier case of Evangelista.708. Commissioner merely assumed the presence of these elements. Also. and they may. No costs. the earlier ruling in Evangelista showed that there were several transactions. CIR (October 29.
PEOPLE’S BANK (April 7. TC: held that the agreement in question.072 in said account. Alampayconcur. if any. which assumption was in turn based on the facts (1) that the account was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased. and there was a balance in said account of P701. and the survivor take the whole on the death of the other. that they were joint owners and that either of them could withdraw any part or the whole of said account during the lifetime of both. upon the death of either. which recites in effect that the funds in question belonged to persons A and B. viewed from its effect after the death of either of the parties. administratix of the estate of the deceased. 3. Prima facie. When there was a balance of P2. intervened and claimed the amount for the estate. FACTS: Ana Rivera was employed by Edgar Stephenson as housekeeper. viewed from its effect during the lives of the parties. Concepcion Jr. nullifies the assumption that Stephenson was the exclusive owner of the bank account. and transferring the balance to the survivor upon the death of one of them. now deceased. if it be shown in a given case that such agreement is a mere cloak to hide an . Escolin. appellant herein PONENTE: Ozaeta. the SC gives full faith and credit to the certificate of deposit. The fact that subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and executed with the latter the survivorship agreement in question although there was no relation of kinship between them but only that of master and servant. and Ana Rivera. Cuevas. Furthermore. upon the death of either. belonged to the survivor.43. In the absence of clear proof of the contrary. SC thinks it is valid. not having been executed with the formalities of a testamentary disposition as required by the Civil Code. the survivorship agreement in question was executed and the said account was transferred to the name of "Edgar Stephenson and/or Ana Rivera. "it is well established that a bank account may be so created that two persons shall be joint owners thereof during their mutual lives. 2. the agreement was a donation mortis causa with reference to the balance remaining at the death of one of them. The right to make such joint deposits has generally been held not to be done with by statutes abolishing joint tenancy and survivorship generally as they existed at common law. the SC gives full faith and credit to the certificate of deposit. on leave. RIVERA v. belonged to the survivor. ISSUES: 1. WON the survivorship agreement is valid HELD: Second issue: 1. No Yes PARTNERSHIP [1st SET] 17 (DIONNE) || D2014 RATIO/RULING: First Issue 1. which power terminated upon the death of the principal. was a mere power of attorney authorizing Ana Rivera to withdraw the deposit." But it not infrequently happens that a person deposits money in the bank in the name of another. and the balance. Stephenson opened an account in his name with the defendant Peoples Bank. and Minnie Stephenson. 2. 2. Ana Rivera instituted the present action against the bank. if any.WON the survivorship agreement was a mere power of attorney from Stephenson to Ana Rivera. and in the instant case it also appears that Ana Rivera served her master for about nineteen years without actually receiving her salary from him. 2." Although the survivorship agreement is per se not contrary to law. was of no legal effect. NATURE: The question raised in this appeal is the validity of the survivorship agreement made by and between Edgar Stephenson. which. or that it is a gift mortis causa of the bank account in question from him to her. Abad Santos. but that. It is an aleatory contract supported by law a lawful consideration — the mutual agreement of the joint depositors permitting either of them to withdraw the whole deposit during their lifetime. VOTE: 2nd Division. J. 3. its operation or effect may be violative of the law. that they were joint owners and that either of them could withdraw any part or the whole of said account during the lifetime of both. alleging that the money deposited in said account was and is the exclusive property of the deceased. which Ana Rivera claimed but which the bank refused to pay to her upon advice of its attorneys who gave the opinion that the survivorship agreement was of doubtful validity. The TC’s conclusion is predicated on the assumption that Stephenson was the exclusive owner of the funds deposited in the bank. Edgar Stephenson. which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera. For instance." At the time of Stephenson's death Ana Rivera held the deposit book. 1942) DOCTRINE: In the absence of clear proof of the contrary. 3. The trial court said that the Civil Code "contains no provisions sanctioning such an agreement" SC thinks it is covered by article 1790 of the Civil Code. and the balance.
another corporation. 1082. it may be assailed and annulled upon such grounds. CA October 3. no certificate of partnership. 80 A. and the costs in both instances. Tan Eng Kee and Tan Eng Lay. Quezon City. o HOWEVER: These are not evidences supporting the existence of a partnership. jointly. • RTC granted the petitioner for accouting and determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture. Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company. Ø The contention that Gregorio Araneta Inc. So ordered.) There is nothing in the record to indicate that the venture in which plaintiff is represented by Gregorio Araneta. in a suit in court. liquidation and winding up of the alleged partnership formed after World War II between Tan Eng Kee and Tan Eng Lay." It is true that the complaint also states that the plaintiff is "represented herein by its Managing Partner Gregorio Araneta. (3) they were the ones preparing orders from the suppliers. the real party in interest. the law firm Araneta & Araneta. Inc. 2000 FACTS: • The common-‐law spouse and children of TAN ENG KEE (the plaintiffs) filed suit against the decedent's brother TAN ENG LAY for accounting. There was no partnership whatsoever. entered into a partnership engaged in the business of selling lumber and hardware and construction supplies named "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. VOTE: All concur TUASON v. is obvious from the fact that: (1) they conducted the affairs of the business during Kee's lifetime. pooling their resources and industry together. Ø There is nothing to the contention that the present action is not brought by the real party in interest. L. through its undersigned counsel. Rule 2. The plaintiff was represented by a corporation. Tuason and Co. o After the second World War. natural or juridical. M. 1043.". "counsel for plaintiff" and commences with the statement "comes now plaintiff. or to defeat the legitime of a forced heir. it may nevertheless enter into a joint venture with another where the nature of that venture is in line with the business authorized by its charter (Wyoming-‐Indiana Oil Gas Co. R. No such vice has been imputed and established against the agreement involved in the case. citing 2 Fletcher Cyc. (2) they were the ones giving orders to the employees. vs.. there was no firm account. but the CA reversed such decision. cannot act as managing partner for plaintiff on the theory that it is illegal for two corporations to enter into a partnership is without merit. no agreement as to profits and . HEIRS OF TANG ENG KEE v. Inc.43. Weston. ISSUE: Was there a partnership between Tan Eng Kee and Tan Eng Lay? No. but not necessarily by. by J. Ø There is nothing against one corporation being represented by another person. Inc. hence the present petition. for the true rule is that though a corporation has no power into a Ø PARTNERSHIP [1st SET] 18 (DIONNE) || D2014 partnership. o Petitioners claim that in 1981. as "its managing partner" is not in line with the corporate business of either of them. BOLANOS FACTS: This was an action to recover possesion of registered land situated in barrio Tatalon.. of Corp. What the Rules of Court require is that an action be brought in the name of. DISPOSITION: The agreement appealed from is reversed and another judgment will be entered in favor of the plaintiff ordering the defendant bank to pay to her the sum of P701.. ISSUE: WON the case should be dismissed on the ground that the case was not brought by the real property in interest HELD: No. inofficious donation. (Section 2. to transfer property in fraud of creditors. that is. That the father of the plaintiffs and Lay were partners. the post-‐war Benguet Lumber was eventually established." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Except for a firm name. and (5) all their children were employed in the business in different capacities. (4) their families stayed together at the Benguet Lumber compound. with legal interest thereon from the date of the complaint. no firm letterheads submitted as evidence.) Ø The complaint is signed by the law firm of Araneta and Araneta. HELD: • PLAINTIFFS CLAIM THAT because of the pooling of resources.
received. Articles of Incorporation (a) The Articles of Incorporation of the Corporation shall be substantially in the form annexed hereto as Exhibit A and. Even if the payrolls as evidence were discarded. 1962." 3. Furthermore. that an employee's position is higher in rank. close personal relations existed between them. SP Nos. European or American who could help in its expansion plans. • In determining whether a partnership exists.R. factory or store gives orders and directions to his subordinates. if any. ASI. So long. (2) Co-‐ownership or co-‐possession does not of itself establish a partnership. (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. together with his family. though the amount of payment vary with the profits of the business. as his share in the profits of Benguet Lumber Company for any particular period. can order materials from suppliers for and in behalf of Benguet Lumber. no written account nor any memorandum for that matter and no license mentioning the existence of a partnership. 1989) DOCTRINE: The rule is that whether the parties to a particular contract have thereby established among themselves a joint venture or some other relation depends upon their actual intention which is determined in accordance with the rules governing the interpretation and construction of contracts. a foreign corporation domiciled in Delaware. not a partner. Jr. (d) As interest on a loan. NATURE: Consolidated petitions seek the review of the amended decision of the Court of Appeals in CA-‐G. The parties agreed that the business operations in the Philippines shall be carried on by an incorporated enterprise and that the name of the corporation shall initially be "Sanitary Wares Manufacturing Corporation. DISPOSITIVE: There being no partnership. of the then Intermediate Appellate Court PONENTE: Gutierrez. losses. Tan Eng Kee. lived in the lumber compound and this privilege was not accorded to other employees. On August 15. they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves. therefore. and which were not given the other employees. Hence. Petitioners failed to show how much their father. whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived. (b) As wages of an employee or rent to a landlord. Naturally. the undisputed fact remains that Tan Eng Kee is the brother of Tan Eng Lay. AURBACH v. 05604 and 05617 which set aside the earlier decision dated June 5. SANITARY WARES (December 15. it follows that there is no dissolution. United States entered into an Agreement with Saniwares and some Filipino investors whereby ASI and the Filipino investors agreed to participate in the ownership of an enterprise which would engage primarily in the business of manufacturing in the Philippines and selling here and abroad vitreous china and sanitary wares. shall specifically provide for (1) Cumulative voting for directors: xxx xxx xxx - . FACTS: In 1961. not an indication that Tan Eng Kee was a partner. thus. (3) The sharing of gross returns does not of itself establish a partnership. Hence. Whatever privileges Tan Eng Lay gave his brother. 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. Saniwares. which is one of the essential features of a partnership. On preparing supply orders: even a messenger or other trusted employee. whether such co-‐owners or co-‐possessors do or do not share any profits made by the use of the property. One of the incorporators. it is not unusual that he orders around those lower in rank. It is. over whom confidence is reposed by the owner. insofar as permitted under Philippine law. J. On profits earned: Tan Eng Kee was only an employee. Baldwin Young went abroad to look for foreign partners. the petition must fail.. these rules shall apply: (1) Except as provided by Article 1825. persons who are not partners as to each other are not partners as to third persons. It had no business book. and no time fixed for the duration of the partnership. but no PARTNERSHIP [1st SET] 19 (DIONNE) || D2014 such inference shall be drawn if such profits were received in payment: (a) As a debt by installment or otherwise. On staying in the premises of Benguet Lumber: although Tan Eng Kee. On power to give orders: even a mere supervisor in a company. petitioners would still be back to square one. only proves the kindness and generosity of Tan Eng Lay towards a blood relative. so to speak. even a partner does not necessarily have to perform this particular task. (c) As an annuity to a widow or representative of a deceased partner. 1986. Mr. winding up or liquidation to speak of. There was even no attempt to submit an accounting corresponding to the period after the war until Kee's death in 1984. a domestic corporation was incorporated for the primary purpose of manufacturing and marketing sanitary wares. (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.
Luciano E. decided to continue the meeting at the elevator lobby of the American Standard Building. Luciano E. 75975-‐76 assails the amended decision on the following grounds: 11. and the legal advice of Saniwares' legal counsel. Whittingham. 75875 assign the following errors: I.R. 05617). Andres Gatmaitan. According to the Filipino group. The ASI group nominated three persons namely. SP No. Eduardo R. The agreement contained provisions designed to protect it as a minority group. Ernesto Lagdameo. Mr. Salazar (docketed as AC-‐G. THE COURT OF APPEALS PROHIBITS THE STOCKHOLDERS FROM EXERCISING THEIR FULL VOTING RIGHTS REPRESENTED BY THE NUMBER OF SHARES IN SANIWARES. 75951 contend that: THE AMENDED DECISION OF THE RESPONDENT COURT. THUS DEPRIVING PETITIONERS AND THE CORPORATION THEY REPRESENT OF THEIR PROPERTY RIGHTS WITHOUT DUE PROCESS OF LAW. Sr. - - - - - - - - - . SP No. These incidents triggered off the filing of separate petitions by the parties with the Securities and Exchange Commission (SEC). Boncan. WHILE RECOGNIZING THAT THE STOCKHOLDERS OF SANIWARES ARE DIVIDED INTO TWO BLOCKS. David Whittingham and Charles Chamsay. As long as American-‐ Standard shall own at least 30% of the outstanding stock of the Corporation. Upon a motion for reconsideration filed by the appellees (Lagdameo Group) the appellate court (Court of Appeals) rendered the questioned amended decision. the ASI Group nominated its four nominees. and Baldwin Young. Nos. (pp.1. while Andres Gatmaitan acted as Secretary. IN EFFECT. The Philippine investors nominated six. John Griffin. such as a member of the Executive Committee whose vote was required for important corporate transactions. Salazar voted for himself. Salazar. a basic disagreement was due to their desire to expand the export operations of the company to which ASI objected as it apparently had other subsidiaries of joint joint venture groups in the countries where Philippine exports were contemplated.R. FAILS TO FULLY ENFORCE THE BASIC INTENT OF THE AGREEMENT AND THE LAW. That Amended Decision would sanction the CA's disregard of binding contractual agreements entered into by stockholders and the replacement of the conditions of such agreements with terms never contemplated by the stockholders but merely dictated by the CA . the consistent practice of the parties during the past annual stockholders' meetings to nominate only nine persons as nominees for the nine-‐member board of directors.R.2. David Whittingham and Charles Chamsay (docketed as AC-‐G. including the grant of veto powers over a number of corporate acts and the right to designate certain officers. allegedly representing 53 or 54% of the shares of Saniwares. under the supervision of the Commission. On the basis of the cumulative votes cast earlier in the meeting. Baldwin Young ruled the last two nominations out of order on the basis of section 5 (a) of the Agreement. The two petitions were consolidated and tried jointly by a hearing officer who rendered a decision upholding the election of the Lagdameo Group and dismissing the quo warranto petition of Salazar and Chamsay. with the explanation that there was a tie - PARTNERSHIP [1st SET] 20 (DIONNE) || D2014 among the other six (6) nominees for the four (4) remaining positions of directors and that the body decided not to break the tie. John Griffin and David P. On March 8. The joint enterprise thus entered into by the Filipino investors and the American corporation prospered. An appeal was made by the ASI representative to the body of stockholders present that a vote be taken on the ruling of the Chairman. Wolfgang Aurbach. No. Rollo-‐ 75975-‐76) On the other hand. Ceniza then nominated Mr. who in turn nominated Mr. three of the nine directors shall be designated by American-‐ Standard. 14-‐15. THE COURT OF APPEALS. which shall consist of nine individuals.. Raul A. Whittingham and Charles Chamsay in G.R. the petitioners in G. Jr. A series of events then ensued that culminated in the eventual adjournment of the meeting and where the ASI Group. The chairman. 1983. Lagdameo. John Griffin. Lee. Salazar in G. The Amended decision would likewise sanction the deprivation of the property rights of stockholders without due process of law in order that a favored group of stockholders may be illegally benefitted and guaranteed a continuing monopoly of the control of a corporation. Charles Chamsay. Wolfgang Aurbach. there came a deterioration of the initially harmonious relations between the two groups. Petitioner Luciano E.. and the other six shall be designated by the other stockholders of the Corporation. The continued meeting was presided by Luciano E. No. 05604) and by Luciano E. David P.R. Salazar and other stockholders. Luciano E. UPHELD THE ALLEGED ELECTION OF PRIVATE RESPONDENTS AS MEMBERS OF THE BOARD OF DIRECTORS OF SANIWARES WHEN IN FACT THERE WAS NO ELECTION AT ALL. Petitioners Wolfgang Aurbach. The ASI Group and Salazar appealed the decision to the SEC en banc which affirmed the hearing officer's decision. The SEC decision led to the filing of two separate appeals with the Intermediate Appellate Court by Wolfgang Aurbach. John Griffin. Unfortunately. 5. II. namely. the annual stockholders' meeting was held. There were protests against the action of the Chairman and heated arguments ensued. Salazar. with the business successes. 11. Management (a) The management of the Corporation shall be vested in a Board of Directors. George F. thus the said five directors were certified as elected directors by the Acting Secretary. The petitions were consolidated and the appellate court in its decision ordered the remand of the case to the Securities and Exchange Commission with the directive that a new stockholders' meeting of Saniwares be ordered convoked as soon as possible. Ernesto R.
THE AMENDED DECISION DOES NOT CATEGORICALLY RULE THAT PRIVATE PETITIONERS HEREIN WERE THE DULY ELECTED DIRECTORS DURING THE 8 MARCH 1983 ANNUAL STOCKHOLDERS MEETING OF SANTWARES. Rule 130 of the Revised Rules of Court. 24. 75875) They object to the admission of other evidence which tends to show that the parties' agreement was to establish a joint venture presented by the Lagdameo and Young Group on the ground that it contravenes the parol evidence rule under section 7. our examination of important provisions of the Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and not a corporation. the grant to ASI of the right to designate certain officers of the corporation. we believe that under the Agreement there are two groups of stockholders who established a corporation with provisions for a special contractual relationship between the parties. the super-‐majority voting requirements for amendments of the articles and by-‐laws. composed of foreign investors. on the condition that the Agreement should contain provisions to protect ASI as the minority. the vote of 7 out of 9 directors is required in certain enumerated corporate acts. The history of the organization of Saniwares and the unusual arrangements which govern its policy making - - - - - - - - - - . As stated by the SEC: According to the unrebutted testimony of Mr. the provision that ASI shall designate 3 out of the 9 directors and the other stockholders shall designate the other 6. For example. 4-‐5) Section 5 (a) of the agreement uses the word "designated" and not "nominated" or "elected" in the selection of the nine directors on a six to three ratio. Rollo-‐GR No. The ASI Group and petitioner Salazar (G. ASI is also given the right to designate the president and plant manager. Baldwin Young. It is pertinent to note that the provisions of the Agreement requiring a 7 out of 9 votes of the board of directors for certain actions. In the instant cases. To answer this question the following factors should be determined: (1) the nature of the business established by the parties whether it was a joint venture or a corporation and (2) whether or not the ASI Group may vote their additional 10% equity during elections of Saniwares' board of directors. They specifically mention number 16 under Miscellaneous Provisions which states: xxx xxx xxx c) nothing herein contained shall be construed to constitute any of the parties hereto partners or joint venturers in respect of any transaction hereunder. (P. RATIO/RULING: There are two groups in this case. Quite often. clearly indicate that there are two distinct groups in Saniwares. HELD: In the instant cases. The Agreement further provides that the sales policy of Saniwares shall be that which is normally followed by ASI and that Saniwares should not export "Standard" products otherwise than through ASI's Export Marketing Services. He testified that ASI agreed to accept the role of minority vis-‐a-‐vis the Philippine National group of investors. i.e. Baldwin Young also testified that Section 16(c) of the Agreement that "Nothing herein contained shall be construed to constitute any of the parties hereto partners or joint venturers in respect of any transaction hereunder" was merely to obviate the possibility of the enterprise being treated as partnership for tax purposes and liabilities to third parties. ASI and the other stockholders. he negotiated the Agreement with ASI in behalf of the Philippine nationals.1962 wherein it is clearly stated that the parties' intention was to form a corporation and not a joint venture.R. Rollo-‐75951) - PARTNERSHIP [1st SET] 21 (DIONNE) || D2014 body are all consistent with a joint venture and not with an ordinary corporation. and most significantly to the issues of tms case. Filipino entrepreneurs in their desire to develop the industrial and manufacturing capacities of a local firm are constrained ISSUES: The main issue hinges on who were the duly elected directors of Saniwares for the year 1983 during its annual stockholders' meeting held on March 8.. ASI agreed to provide technology and know-‐how to Saniwares and the latter paid royalties for the same. ASI in its communications referred to the enterprise as joint venture. in effect gave ASI (which designates 3 directors under the Agreement) an effective veto power. which owns 40% of the capital stock and the Philippine National stockholders who own the balance of 60%. 1962 wherein it stated the parties’ intention was to form a corporation and not a joint venture. ASI is contractually entitled to designate a member of the Executive Committee and the vote of this member is required for certain transactions. Under the Agreement. Furthermore. Each group is assured of a fixed number of directors in the board. namely ASI. Premises considered. 66. The ASI Group and petitioner Salazar contend that the actual intention of the parties should be viewed strictly on the “Agreement” dated August 15. (At P. our examination of important provisions of the Agreement as well as the testimonial evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and not a corporation. 75975-‐76) contend that the actual intention of the parties should be viewed strictly on the "Agreement" dated August 15. An examination of the Agreement shows that certain provisions were included to protect the interests of ASI as the minority. Nos. 1983. and that 2) ASI is given certain protections as the minority stockholder. (pp. The Agreement also requires a 75% super-‐majority vote for the amendment of the articles and by-‐laws of Saniwares. Moreover. the Lagdameo group composed of Filipino investors and the American Standard Inc.
its nominees and lawyers count for 13 of the 95 stockholders. Wolfgang Aurbach John Griffin. Baldwin Young. If the members of one family and/or business or interest group are considered as one (which. as long as they do not intend to commit any wrong. This undermining of joint ventures is not consistent with fair dealing to say the least. from the start. (Please refer to discussion in pp. 100 of the Corporation Code does not necessarily imply that agreements regarding the exercise of voting rights are allowed only in close corporations. even assuming that sec. In short. The foreign group may.R. Surely. (3) give to the shareholders control over the selection and retention of employees. - - - - DISPOSITION: WHEREFORE. Enrique Lagdameo. As the Philippine firm enlarges its operations and becomes profitable. since the Code limits the legal meaning of close corporations to those which comply with the requisites laid down by section 96. use of its brand names.-‐ xxx xxx xxx 2. Or the covetousness may come later. PARTNERSHIP [1st SET] 22 (DIONNE) || D2014 Secondly. Lagdameo. Appellants contend that the above provision is included in the Corporation Code's chapter on close corporations and Saniwares cannot be a close corporation because it has 95 stockholders. 75975-‐76 and G. as correctly held by the SEC. 75951 is partly GRANTED. shareholders' agreements in joint venture corporations often contain provisions which do one or more of the following: (1) require greater than majority vote for shareholder and director action. Jr. the Philippine Corporation Code itself recognizes the right of stockholders to enter into agreements regarding the exercise of their voting rights. or as determined in accordance with a procedure agreed upon by them. In such case. Of course. the foreign group undermines the local majority ownership and actively tries to completely or predominantly take over the entire company. the undeniable fact is that it is a close-‐held corporation. As correctly held by the SEC Hearing Officer: It is said that participants in a joint venture. ASI. or fraud on the other stockholders not parties to the agreement. although Saniwares had 95 stockholders at the time of the disputed stockholders meeting. and George F. David Whittingham Emesto V. is valid and binding upon the signatories thereto. so to speak. intend to establish its own sole or monopolistic operations and merely uses the joint venture arrangement to gain a foothold or test the Philippine waters. Nos. voting or pooling agreements are perhaps more useful and more often resorted to in close corporations. etc. However. if in writing and signed by the parties thereto. To the extent that such subversive actions can be lawfully prevented. and (4) set up a procedure for the settlement of disputes by arbitration. its stockholders should not be precluded from entering into contracts like voting agreements if these are otherwise valid.R. 5 to 6 of appellees' Rejoinder Memorandum dated 11 December 1984 and Annex "A" thereof). Arrangements are formalized where a foreign group becomes a minority owner of a firm in exchange for its manufacturing expertise. the petitions in G. No. and other such assistance. An agreement between two or more stockholders. 100.1983 annual stockholders' meeting. Lagdameo. appellants cannot honestly claim that Saniwares is a public issue or a widely held corporation. In all other . The YoungYutivo family count for another 13 stockholders. Boncan. to seek the technology and marketing assistance of huge multinational corporations of the developed world. these 95 stockholders are not separate from each other but are divisible into groups representing a single Identifiable interest. A noted authority has pointed out that just as in close corporations. Firstly. As Campos and Lopez-‐Campos explain: Paragraph 2 refers to pooling and voting agreements in particular. it is entirely possible that a corporation which is in fact a close corporation will not come within the definition. even assuming that Saniwares is technically not a close corporation because it has more than 20 stockholders. in organizing the joint venture deviate from the traditional pattern of corporation management. Sec. But they may also be found necessary even in widely held corporations. the courts should extend protection especially in industries where constitutional and legal requirements reserve controlling ownership to Filipino citizens. 75875 are DISMISSED and the petition in G. Moreover. Thirdly paragraph 2 of Sec. the Chamsay family for 8 stockholders. may provide that in exercising any voting rights. Lee are declared as the duly elected directors of Saniwares at the March 8. the shares held by them shall be voted as therein provided. Raul A. (2) give certain shareholders or groups of shareholders power to select a specified number of directors. or as they may agree. Agreements by stockholders. such contractual provision. Ernesto R. it is respectfully submitted. practically only 17 stockholders of Saniwares. the Dy family for 7 stockholders.R.. For example. they should be for purposes of determining how closely held Saniwares is there were as of 8 March 1983. which include appellants. 5(a) of the Agreement relating to the designation or nomination of directors restricts the right of the Agreement's signatories to vote for directors. The amended decision of the Court of Appeals is MODIFIED in that Messrs. the Santos family for 9 stockholders. there is always a danger from such arrangements. No. It is submitted that there is no reason for denying stockholders of corporations other than close ones the right to enter into not voting or pooling agreements to protect their interests. The Lagdameo Group stated in their appellees' brief in the Court of Appeal: In fact.
inventory of such is needed signed by the partners. If it involves immoveable property. being unsigned and doubtless referring to a partnership involving more than P3.00 in money or property. 2005) DOCTRINE: A Partnership must be in a public document if: 1) 2) Immoveable Property and Real Rights contributed to it. LITONJUA (Dec 13. that the contract was not one of partnership that the same actually established an innominate contract and was a source of actionable rights. on its face. as called for under the Article 1772 of the Code. assuming arguendo. Aurelio alleges that he had a partnership with his brother Eduardo evidenced by a private memorandum (unsigned) executed by Eduardo which said he was giving 10% of the equity or 1 million pesos. 3) And inasmuch as the inventory requirement under the succeeding Article 1773 goes into the matter of validity when immovable property is contributed to the partnership. and 1773 of the Civil Code. is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. the questioned decision is AFFIRMED. The Memorandum cannot be presented for notarization. Feliciano. there can be no quibbling that 1) The memorandum does not meet the public instrumentation requirements exacted under Article 1771 of the Civil Code.J.) DISPOSITION: Petition is DENIED ruling of the CA AFFIRMED VOTE: 1st Division. the existence of which was only known to those who had an interest in the same. Carpio-‐Morales concur BOURNS v. CARMAN (December 4. Here Aurelio files for an action of Specific Performance against his partners. ET AL. M.. Plaintiff-‐Appellee . 2) Moreover. RATIO/RULING: The supposed contract of partnership was evidenced by a private memorandum (unsigned). Panganiban. BOURNS. D. Yung doctrine lang naman ang importante. • Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted. As an unsigned document. LITONJUA v. for being contrary to Articles 1771. Fernan. C. (Being it’s performance was to be done 1 year after perfection of the contract.. the contract was void or at most unenforceable. ADDITIONAL NOTES: Sorry mahaba at magulo.. FACTS: Aurelio (Petitioner) and Eduardo Litonjua are brothers. then goes on to allege that. Costs against the petitioners in G. DOCTRINE: A partnership..000. being no mutual agreements between the partners and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business. The memorandum. Petitioner. and promising him a 10% share or 1 million pesos. CARMAN. shall have only a NATURE: Petition for review on certiorari PONENTE: Garcia. Defendants-‐ Appellants. vs. 75975-‐76 and G.R. J. respects. Nos. personal in tone. concur. SO ORDERED. the rest of the discussions show the HOW and WHY of the doctrine na joint venture nga yung intent. to render an accounting and give him his share of the profits. No. Bidin and Cortes. Corona. and that they would work together in maintaining the family business. contains typewritten entries. but is unsigned and undated. J. Court ruled even as a innominate contract. (Chairman). VOTE: 3rd Division. 75875. JJ. in which Eduardo expressed his desire to train his brother. it would be void as in violation of the statute of frauds. a. 1772.R. let alone registered with the Securities and Exchange Commission (SEC). took no part. the next logical point of inquiry turns on the nature of petitioner’s contribution. (else VOID) It involves capital P 3. if any. ISSUES: W/N there is a Valid Partnership? HELD: No. . Essentially just read the doctrine and the underlined portions sa ratio. 1906) FRANK S. A third person Yang was also alleged to be a member in the joint venture and partnership. to the supposed partnership. Sandoval-‐Gutierrez. CONCURRING/DISSENTING OPINION: None.000 (must be filed in the SEC) PARTNERSHIP [1st SET] 23 (DIONNE) || D2014 The supposed contract is void.
• PARTNERSHIP [1st SET] 24 (DIONNE) || D2014 Those who contract with the person under whose name the business of such partnership of cuentas en participacion is conducted. and participated in the profits and losses of business and that Lo-‐Chim-‐Lim was managing partner of the said lumber yard. has brought this action against Lo-‐Chim-‐Lim and his codefendants jointly." and that Go-‐Tuaco received part of the earnings of the lumber yard in the management of which he was interested. "That Lo-‐Chim-‐Lim had a certain lumber yard in Calle Lemery of the city of Manila. C. right of action against such person and not against the other persons interested.." In other words. NATURE: Appeal from a judgment of the CFI PONENTE: MAPA. as Lo-‐Chim-‐Lim was the only one who contracted with him. or that it was ever recorded in a public instrument. • Moreover.: FACTS: • The plaintiff in this action seeks to recover the sum of $437. between the parties. Go-‐Tuaco had a lumber yard in Calle Lemmery of the city of Manila in the year 1904. At least there is no evidence tending to show that the said agreement was reduced to writing. shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his right to them. it has not been shown what the agreement was.) It follows. therefore that the plaintiff has no right to demand from the appellants the payment of the amount claimed in the complaint. o that the other defendants were the partners of Lo-‐Chim-‐Lim in the said lumber-‐yard business. Vicente Palanca.J. • On the other hand. CA . on the other hand. As far as the evidence shows it seems that the business was conducted by Lo-‐Chim-‐Lim in his own name. as Lo-‐Chim-‐Lim was the only one who contracted with him. however. and if there were any. The plaintiff himself alleges in his complaint that the partnership was engaged in business under the name and style of Lo-‐Chim-‐Lim only. it does not appear that there was any mutual agreement. ISSUES: What is the real legal nature of the participation which the appellants had in Lo-‐Chim-‐Lim's lumber yard and consequently their liability toward the plaintiff? HELD: The partnership is a partnership of cuentas en participacion. Carson. alleging that. • The evidence of record shows. Vicente Palanca and Go-‐Tauco only excepted to the said judgment. • The contract relating to the said work was entered into by the said Lo-‐ Chim-‐Lim. moved for a new trial. being no mutual agreements between the partners and without a corporate name indicating to the public in some way that there were other people besides the one who ostensibly managed and conducted the business. balance due on a contract for the sawing of lumber for the lumber yard of Lo-‐Chim-‐Lim. but a simple business conducted by Lo-‐Chim-‐Lim exclusively. (Art 242 of the code Of Commerce. the names of other persons interested in the profits and losses of the business nowhere appearing. as a matter of fact. shall have only a right of action against such person and not against the other persons interested. on the other hand. Willard and Tracey. acting as in his own name with the plaintiff. they were the joint proprietors and operators of the said lumber yard engaged in the purchase and sale of lumber under the name and style of Lo-‐Chim-‐Lim. Carman and Fulgencio Tan-‐Tongco on the ground that they were not the partners of Lo-‐Chim-‐Lim. which according to the evidence was the name of one of the defendants. coparticipants with the said Lo-‐ Chim-‐Lim in the business in question. • A partnership constituted in such a manner. • Under such circumstances we find nothing upon which to consider this partnership other than as a partnership of cuentas en participacion. and that Vicente Palanca was his partner.. M. o The contracts made with the plaintiff were made by Lo-‐Chim-‐Lim individually in his own name. • CFI: "Lo-‐Chim-‐Lim. o at the time the contract was made. • The plaintiff.50. although he gave to the appellants a share was has been shown with certainty. DISPOSITION: The judgment appealed from this hereby reversed and the appellants are absolved of the complaint without express provisions as to the costs of both instances. and the latter. it is something different. . It may be that. shall have no right of action against the third person who contracted with the manager unless such manager formally transfers his right to them. and it appears that the said Lo-‐Chim-‐Lim personally agreed to pay for the work himself. JJ. J. according to the judgment of the court. VOTE: EN BANC. having ordered the plaintiff to do some work for him at his sawmill in the city of Manila. is exactly the accidental partnership of cuentas en participacion defined in article 239 of the Code of Commerce. therefore that the plaintiff has no right to demand from the appellants the payment of the amount claimed in the complaint. and had an interest in the said business as well as in the profits and losses thereof . Torres. Johnson. in his own name. that partnership had no corporate name. and that he was the manager of the same. (Art 242 of the code Of Commerce. RATIO/RULING: • It seems that the alleged partnership between Lo-‐Chim-‐Lim and the appellants was formed by verbal agreement only. and there is no evidence that the partnership over contracted in any other form. Arellano.) It follows. . concur SEVILLA v. and have brought the case to this court by bill of exceptions. • The court below dismissed the action as to the defendants D. the existence of which was only known to those who had an interest in the same.. and the latter.
but concede that "whatever might have been the true relationship between Sevilla and Tourist World Service." the Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands. In the first place.. 2. 1963. J. a. in reference to the padlocking now questioned. was not subject to control by the private respondent Tourist World Service. 3. in its opinion being "whether or not the padlocking of the premises by the Tourist World Service. or otherwise. the reinstated counterclaim of Segundina Noguera and the new complaint of appellant Lina Sevilla were jointly heard following which the court a quo ordered both cases dismiss for lack of merit PARTNERSHIP [1st SET] 25 (DIONNE) || D2014 ISSUES: WON there was a partnership between Tourist World Service and Lina Sevilla HELD: NO RATIO/RULING: 1. Inc. that relation between the between parties was one of joint venture. The Court is asked to declare the true nature of the relation between Lina Sevilla and Tourist World Service. NATURE: Appeal by certiorari PONENTE: Sarmiento. since in any case. however. b. either as to the result of the enterprise or as to the means used in connection therewith. the corporate secretary Gabino Canilao went over to the branch office. '[w]hen the branch office was opened. Inc. leased the premises belonging to Noguera at Mabini St. Inc. maintains. that the relation between the parties was in the character of employer and employee. presupposes generally a of standing between the joint co-‐venturers or partners. Tourist World Service. an arrangement that would be like claims of a master-‐servant relationship. In that event. finding the premises locked. This was firmed up by two resolutions of the board of directors of Tourist World Service. Manila for the former’s use as a branch office.. a true employee cannot be made to part with his own money in pursuance of his employer's business. the same was run by the herein appellant Lina Sevilla. Inc... Appellant Lina Sevilla refiled her case against the herein appellees and after the issues were joined. he padlocked the premises on June 4. The respondent Court of see fit to rule on the question. insists. 1988) DOCTRINE: A joint venture. 1962 to protect the interests of the Tourist World Service. that Lina SEVILLA was a mere employee. Segundina Noguera and the Tourist World Service. Inc. For apparent lack of interest of the parties therein. Tourist World Service. 4. The petitioners contend. The Court finds the resolution of the issue material. and.. the crucial issue. being unable to contact Lina Sevilla. for if. 5. In the second place. When neither the appellant Lina Sevilla nor any of her employees could enter the locked premises. Inc. The Tourist World Service. being "branch manager" of its Ermita "branch" office and that inferentially. in an order dated June 8. and as found by the Appellate Court. as the private respondent. Lina Sevilla. 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. Ermita Branch. the same was run by the herein 2. unilaterally and without the consent of the appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World Service. the Tourist World Service. a complaint was filed by the herein appellants against the appellees with a prayer for the issuance of mandatory preliminary injunction. Inc. the trial court ordered the dismissal of the case without prejudice. granted permitting her to present evidence in support of her counterclaim. Segundina Noguera. including a partnership. 5. that does not make her an employee of Tourist World. later. on the other hand. On the strength of a contract entered into by and between Mrs. the Tourist World Service considered closing down its office. since the branch office was anyhow losing. the courts would have been without jurisdiction to try the case. Inc. the Bureau Of Labor Relations. 4. the parties must be bound by some other relation. True the respondent Court would later minimize her participation in the lease as one of mere guaranty. Eliseo Canilao. Inc. appears to have been informed that Lina Sevilla was connected with a rival firm. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the relief of damages prayed for and whether or not the evidence for the said appellant supports the contention that the appellee Tourist World Service.. pursuant to statutes then in force. she had bound herself in solidum as and for rental payments. Inc. and. FACTS: 1. authorizing the corporate secretary to receive the properties of the Tourist World Service then located at the said branch office. The records will show that the petitioner. the Philippine Travel Bureau. but certainly not employment. . When the branch office was opened. Inc. under the contract of lease covering the Tourist Worlds Ermita office. she had no say on the lease executed with the private respondent. (April 16. assume any liability thereof. and the second. Both appellees answered with counterclaims. the first abolishing the office of the manager and vice-‐president of the Tourist World Service. represented by Mr. 3. labor disputes being the exclusive domain of the Court of Industrial Relations. Inc. and. The appellee Segundina Noguera sought reconsideration of the order dismissing her counterclaim which the court a quo. To comply with the mandate of the Tourist World Service.
considering the circumstances and from the respondent Court's recital of facts. Inc. "as to the means used.00. Lina Sevilla. The private respondent. that is. cannot be revoked at will. Tourist World Service. And as we said. by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. that the ties had contemplated a principal agent relationship. Lina Sevilla.. obviously relied on her own gifts and capabilities. the parties did not hold themselves out as partners. But unlike simple grants of a power of attorney. we are not. she received 4% of the proceeds in the concept of commissions. and as such. as and for exemplary damages. pre-‐assumed her principal's authority as owner of the business undertaking. 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. she had acquired an interest in the business entrusted to her. cannot be revoked at the pleasure of the principal. using her own name. Inc. the agency that we hereby declare to be compatible with the intent of the parties. It is the Court's considered opinion. and the sum of P5. agreed to (wo)man the private respondent. as and for nominal and/or temperate damages. A joint venture. Inc. holding herself solidarily liable for the payment of rentals. presupposes generally a of standing between the joint co-‐ venturers or partners. Ø Meanwhile. The agreement was evidenced by a “Power of Attorney”. as we said. MINING CORP. 11. accepting Lina Sevilla's own. in lieu of a distinct partnership name. rather than a joint managament or a partnership. it cannot be said that Sevilla was under the control of Tourist World Service. she must have done so pursuant to a contract of agency.'s Ermita office. Sevilla herself based on her letter of November 28. Ø It was indicated in the said document. the revocation complained of should entitle the petitioner. where the former agreed to manage the mining operations of the latter. We are convinced. she expressly 'concedes your [Tourist World Service. accepting Tourist World Service. but one that extends to the very subject matter of the power of management delegated to her.'s control over the manner in which the business was run. Sevilla solicited airline fares. she retained 4% in commissions from airline bookings. obviously.000. Inc. Inc. Inc. Unlike an employee then. but she did so for and on behalf of her principal. For her efforts. Her interest. FACTS: Petitioner Philex Mining Corp. In rejecting Tourist World Service. entered into an agreement with Baguio Gold. 1975 as well as the Resolution issued on July 31. to damages. It is further admitted that Sevilla was not in the company's payroll. It is an agency that. the sum of P10. is not to the commissions she earned as a result of her business transactions. employment is determined by the right-‐of-‐control test and certain economic parameters.” The CIR assessed Philex Mining for tax deficiencies. when the petitioner. Inc. Tourist World Service. petitioner's contribution would consist of its expertise in the management and operation of mines. Inc. DISPOSITION: WHEREFORE. Inc. As compensation." Sevilla in pursuing the business. 9. It appears that Lina Sevilla is a bona fide travel agent herself. 6. that Baguio Gold would contribute P11M under its owner's account plus any of its income that is left in the project. It stressed that Philex entered into a partnership with Baguio Gold. 1975. and Eliseo Canilao. who earns a fixed salary usually.00 as and for moral damages.'s arguments however. as a consequence. Tourist World Service. Ø The compensation of the MANAGER shall be fifty per cent (50%) of the net profit of the project before income tax. she earned compensation in fluctuating amounts depending on her booking successes. by any airline for any fare brought in on the effort of Mrs. 1961. The fact that Sevilla had been designated 'branch manager" does not make her Tourist World's employee. It is the essence of this contract that the agent renders services "in representation or on behalf of another.'s] right to stop the operation of your branch office in effect. appellant Lina O. Sevilla payable to Tourist World Service.000. . and the building itself was embellished with the electric sign "Tourist World Service. The mining suffered serious loses which ended business of both parties evidenced by their execution of a “compromise agreement. including a partnership. after Tourist World had stopped further operations. In the case at bar. She continued the business. a partnership. the sum of 25. the Decision promulgated on January 23. the agency having been created for mutual interest. Sevilla herself did not recognize the existence of such a relation. are ORDERED jointly and severally to indemnify the petitioner. Moreover. in addition to its actual mining claim. and of the manager's account which is comprised of P11M in funds. In her letter of November 28. Accordingly.00. Lina Sevilla. of the agent and the principal. 7. As we said. And apparently. the remaining 3% going to Tourist World. VOTE: All concur PHILEX v. she had PARTNERSHIP [1st SET] 26 (DIONNE) || D2014 assumed a personal obligation for the operation thereof.00. Under these circumstances. 8. Furthermore. The reason is that it is one coupled with an interest. 10. Lina Sevilla. 1961. that the parties had embarked on a joint venture or otherwise.
KINDS OF PARTNERSHIP A. a joint venture is a form of partnership and should be governed by the law of partnerships II. • Neither can paragraph 16 of the agreement be taken as an indication that the relationship of the parties was one of agency and not a partnership. Petitioner denied the allegations of the CIR and maintained that its advances of money and property to Baguio Gold were in a nature of a loan as evidenced by the “compromise agreement”. ISSUE: WON the parties entered into a contract of agency coupled with an interest which is not revocable at will HELD: No. CA (err walang nakaassign ditto?) III. it is the agency that cannot be revoked or withdrawn by the principal due to an interest of a third party that depends upon it. The essence of an agency. KINDS OF PARTNER A. is the agent’s ability to represent his principal and bring about business relations between the latter and third persons.” it does not necessarily follow that the parties entered into an agency contract coupled with an interest that cannot be withdrawn by Baguio Gold. CAPITALIST C. COMMERCIAL H. The entirety of the parties’ contractual stipulations simply leads to no other conclusion than that petitioner’s “compensation” is actually its share in the income of the joint venture. it cannot be inferred from the stipulation that the parties’ relation under the agreement is one of agency coupled with an interest and not a partnership. it has been o PARTNERSHIP [1st SET] 27 (DIONNE) || D2014 held that it may enter into a joint venture which is akin to a particular partnership: under Philippine law. UNIVERSAL B. the non-‐revocation or non-‐withdrawal under paragraph 5(c) applies to the advances made by petitioner who is supposedly the agent and not the principal under the contract. like the petitioner. INDUSTRIAL B. PROFESSIONAL I. • The main object of the “Power of Attorney” was not to confer a power in favor of petitioner to contract with third persons on behalf of Baguio Gold but to create a business relationship between petitioner and Baguio Gold. even one that is coupled with interest.” • While a corporation. AT WILL F. An examination of the “Power of Attorney” reveals that a partnership or joint venture was indeed intended by the parties. PARTICULAR C. cannot generally enter into a contract of partnership unless authorized by law or its charter. or the mutual interest of both principal and agent. inclusive of the MANAGERS’ account. BY ESTOPPEL APPARENT ORTEGA v. In this case. FOR A TERM OR UNDERTAKING G. Thus. Nino Mine is the fact that it would receive 50% of the net profits as “compensation” under paragraph 12 of the agreement. • In an agency coupled with interest. • The strongest indication that petitioner was a partner in the Sto. Although the said provision states that “this Agency shall be irrevocable while any obligation of the PRINCIPAL in favor of the MANAGERS is outstanding. BY ESTOPPEL . LIMITED E. MANAGING D. in which the former was to manage and operate the latter’s mine through the parties’ mutual contribution of material resources and industry. GENERAL D. Article 1769 (4) of the Civil Code explicitly provides that the “receipt by a person of a share in the profits of a business is prima facie evidence that he is a partner in the business.
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