1.Tocao vs. CA and Nenita Anay 365 SCRA 463 G.

R 127405 October 4, 2000 Ynares-Santiago, J: Facts: Respondent met the petitioner through Belo. Petitioner Tacao conveyed her desire to enter into a joint venture with her and Anay is to be the marketing head of local distribution of kitchen wares, the former to finance the business. Anay was made to receive commissions based on her performance, as verbally agreed upon by her and Belo, the latter acting as the guarantor of Geminesse enterprise. In 1887, Belo signed a memorandum granting 37% commission to Anay for her business transaction. Two days after, Anay discovered that she was in effect no longer the head of marketing and had been barred from holding office. Issue: Whether or not Anay was an employee or partner of Tocao and thus entitled to damages. Ruling: The RTC and CA found the partnership between petitioners and private respondent exists based on the facts presented. This amount be determined by S.C To be considered as a judicial personality, a partnership must fulfill these requisites: 1) two or more persons bind themselves to contribute money, property or industry to a common fund; (2) intention on the part of the partners to divide profits among themes selves. Where no immovable le property in involved, an oral agreement will suffice to create partnership. Thus, a subject he to action for damages because by the mutual agency that arises in a partnership, the doctrine of delectus personae allows the partners to have the power although not necessarily the right to dissolve the partnership. In 2001, SC issued a resolution, modifying its decision regarding as a partner to firm because he merely acted as a guarantor. As for the award of damages to Anay, the decision was sustained. Tacao vs CA (2000) Private respondent Nenita A. Anay, as marketing adviser of Technolux in Bangkok, Thailand met petitioner William T. Belo, then the vice-president for operations of Ultra Clean Water Purifier, through her former employer in Bangkok. Belo introduced Anay to petitioner Marjorie Tocao, who conveyed her desire to enter into a joint venture with her for the importation and local distribution of kitchen cookwares. Belo volunteered to finance the joint venture and assigned to Anay the job of marketing the product considering her experience and established relationship with West Bend Company, a manufacturer of kitchen wares in Wisconsin, U.S.A. Under the joint venture, Belo acted as capitalist, Tocao as president and general manager, and Anay as head of the marketing department and later, vice-president for sales. Anay organized the administrative staff and sales force while Tocao hired and fired employees, determined commissions and/or salaries of the employees, and assigned them to different branches. The parties agreed that Belos name should not appear in any documents relating to their transactions with West Bend Company. Instead, they agreed to use Anays name in securing distributorship of cookware from that company. The parties agreed further that Anay would be entitled to: (1) ten percent (10%) of the annual net profits of the business; (2) overriding commission of six percent (6%) of the overall weekly production; (3) thirty percent (30%) of the sales she would make; and (4) two percent (2%) for her demonstration services. The agreement was not reduced to writing on the strength of Belos assurances that he was sincere, dependable and honest when it came to financial commitments. The cookware business took off successfully. They operated under the name of Geminesse Enterprise, a sole proprietorship registered in Marjorie Tocaos name Anay arrived from the U.S.A. and immediately undertook the task of saving the business on account of the unsatisfactory sales record in the Makati and Cubao offices. On August 31, 1987, she received a plaque of appreciation from the administrative and sales people through Marjorie Tocao for her excellent job performance. On October 7, 1987, in the presence of Anay, Belo signed a memo entitling her to a (37%) commission for her personal sales "up Dec 31/87. Belo explained to her that said commission was apart from her (10%) share in the profits. On October 9, 1987, Anay learned that Marjorie Tocao had signed a letter addressed to the Cubao sales office to the effect that she was no longer the vice-president of Geminesse Enterprise. The following day, she received a note from Lina T. Cruz, marketing manager, that Marjorie Tocao had barred her from holding office and conducting demonstrations in both Makati and Cubao offices. Anay attempted to contact Belo. She wrote him twice to demand her overriding commission for the period of January 8, 1988 to February 5, 1988 and the audit of the company to determine her share in the net profits. Anay still received her five percent (5%) overriding commission up to December 1987. The following year, 1988, she did not receive the same commission although the company netted a gross sales of P13,300,360.00. Hence, Nenita A. Anay filed a complaint for sum of money with damages against Marjorie D. Tocao and William Belo before the RTC of Makati

In her complaint, Anay prayed that defendants be ordered to pay her, jointly and severally, the following: (1) P32,00.00 as unpaid overriding commission from January 8, 1988 to February 5, 1988 The plaintiff also prayed for an audit of the finances of Geminesse Enterprise from the inception of its business operation until she was illegally dismissed to determine her (10%) share in the net profits. She further prayed that she be paid the five percent (5%) overriding commission on the remaining 150 West Bend cookware sets before her dismissal. In their answer, Marjorie Tocao and Belo asserted that the alleged agreement with Anay that was neither reduced in writing, nor ratified, was either unenforceable or void or inexistent. As far as Belo was concerned, his only role was to introduce Anay to Marjorie Tocao. There could not have been a partnership because, as Anay herself admitted, Geminesse Enterprise was the sole proprietorship of Marjorie Tocao. Because Anay merely acted as marketing demonstrator of Geminesse Enterprise for an agreed remuneration, and her complaint referred to either her compensation or dismissal, such complaint should have been lodged with the Department of Labor and not with the regular court. Petitioners (defendants therein) further alleged that Anay filed the complaint on account of ill -will and resentment because Marjorie Tocao did not allow her to lord it over in the Geminesse Enterprise. Anay had acted like she owned the enterprise because of her experience and expertise. In their defense, Belo denied that Anay was supposed to receive a share in the profit of the business. He, however, admitted that the two had agreed that Anay would receive a (3-4%) share in the gross sales of the cookware. He denied contributing capital to the business or receiving a share in its profits as he merely served as a guarantor of Marjorie Tocao, who was new in the business. He attended and/or presided over business meetings of the venture in his capacity as a guarantor but he never participated in decision-making. He claimed that he wrote the memo granting the plaintiff (37%) commission upon her dismissal from the business venture at the request of Tocao, because Anay had no other income. For her part, Marjorie Tocao denied having entered into an oral partnership agreement with Anay. However, she admitted that Anay was an expert in the cookware business and hence, they agreed to grant her the following commissions: (37%) on personal sales; (5%) on gross sales; (2%) on product demonstrations, and (2%) for recruitment of personnel. Marjorie denied that they agreed on a (10%) commission on the net profits. The trial court held that there was indeed an oral partnership agreement between the plaintiff and the defendants Petitioners Tocao and Belo contend that the Court of Appeals erroneously held that a partnership existed between them and private respondent Anay because Geminesse Enterprise came into being exactly a year before the alleged partnership was formed, and that it was very unlikely that petitioner Belo would invest the sum of P2,500,000.00 with petitioner Tocao contributing nothing, without any memorandum whatsoever regarding the alleged partnership.

W/N the plaintiff was an employee or partner of Marjorie Tocao and Belo To be considered a juridical personality, a partnership must fulfill these requisites: (1) two or more persons bind themselves to contribute money, property or industry to a common fund; and (2) intention on the part of the partners to divide the profits among themselves. It may be constituted in any form; a public instrument is necessary only where immovable property or real rights are contributed thereto. This implies that since a contract of partnership is consensual, an oral contract of partnership is as good as a written one. Where no immovable property or real rights are involved, what matters is that the parties have complied with the requisites of a partnership. The fact that there appears to be no record in the Securities 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. The pertinent provision of the Civil Code on the matter states: Art. 1768. the partnership has a juridical personality separate and distinct from that of each of the partners, even in case of failure to comply with the requirements of article 1772, first paragraph. Petitioners admit that private respondent had the expertise to engage in the business of distributorship of cookware. Private respondent contributed such expertise to the partnership and hence, under the law, she was the industrial or managing partner. It was through her reputation with the West Bend Company that the partnership was able to open the business of distributorship of that companys cookware products; it was through the same efforts that the business was propelled to financial success. Petitioner Tocao herself admitted private respondents indispensable role in putting up the business On the other hand, petitioner Belos denial that he financed the partnership rings hollow in the face of the established fact that he presided over meetings regarding matters affecting the operation of the business. Moreover, his having authorized in writing on October 7, 1987, on a stationery of his own business firm, Wilcon Builders Supply, that private respondent should receive (37%) of the proceeds of her personal sales, could not be interpreted otherwise than that he had a proprietary interest in the business. His claim that he was merely a guarantor is belied by that personal act of proprietorship in the business. Moreover, if he was indeed a guarantor of future debts of petitioner Tocao under Article 2053 of the Civil Code, he should have presented documentary evidence therefor. While Article 2055 of the Civil Code simply provides that guaranty must be express, Article 1403, the Statute of Frauds, requires that a special promise to answer for the debt, default or miscarriage of another be in writing. Petitioner Tocao, a former ramp model, was also a capitalist in the partnership. She claimed that she herself financed the business.

Her and petitioner Belos roles as both capitalists to the partnership with private respondent are buttressed by petitioner Tocaos admissions that petitioner Belo was her boyfriend and that the partnership was not their only business venture together. The special relationship between them dovetails with petitioner Belos claim t hat he was acting in behalf of petitioner Tocao. Significantly, in the early stage of the business operation, petitioners requested West Bend Company to allow them to utiliz e their banking and trading facilities in Singapore in the matter of importation and payment of the cookware products. The inevitable conclusion, therefore, was that petitioners merged their respective capital and infused the amount into the partnership of distributing cookware with private respondent as the managing partner. The business venture operated under Geminesse Enterprise did not result in an employer-employee relationship between petitioners and private respondent. While it is true that the receipt of a percentage of net profits constitutes only prima facie evidence that the recipient is a partner in the business, the evidence in the case at bar controverts an employer-employee relationship between the parties. In the first place, private respondent had a voice in the management of the affairs of the cookware distributorship, including selection of people who would constitute the administrative staff and the sales force. Secondly, petitioner Tocaos admissions militate against an employer -employee relationship. She admitted that, like her who owned Geminesse Enterprise, private respondent received only commissions and transportation and representation allowances and not a fixed salary. If indeed petitioner Tocao was private respondents employer, it is difficult to believe that they shall receive the same inc ome in the business. In a partnership, each partner must share in the profits and losses of the venture, except that the industrial partner shall not be liable for the losses. As an industrial partner, private respondent had the right to demand for a formal accounting of the business and to receive her share in the net profit. Undoubtedly, petitioner Tocao unilaterally excluded private respondent from the partnership to reap for herself and/or for petitioner Belo financial gains resulting from private respondents efforts to make the business venture a success. May 28, 1954

2. G.R. No. L-4935, G.R. No. L-4935

J. M. TUASON & CO., INC., represented by it Managing PARTNER, GREGORIA ARANETA, INC., plaintiff-appellee, vs. QUIRINO BOLAOS, defendant-appellant.

F A C T S : T h i s w a s a n a c t i o n t o r e c o v e r p o s s e s s i o n o f a p a r c e l o f l a n d w h e r e t h e plaintiff was represented by a corporation. I s s u e : W O N t h e c a s e s h o u l d b e d i s m i s s e d o n t h e g r o u n d t h a t t h e c a s e w a s n o t brought by the real property in interest Held:No. t h e r e i s n ot h i n g t o t h e c on t e n t ion t h a t t h e p r e se n t a ct i on i s n ot b r ou g h t b y the real party in interest, that is, by J. M. Tuason and Co., Inc. What the Ruleso f C o u r t r e q u i r e i s t h a t a n a c t i o n b e b r o u g h t i n t h e n a m e o f , b u t n o t necessarily by , the real party in interest. (Section 2, Rule 2.) The complaint is signed by the law firm of Araneta and Araneta, "counsel forplaintiff" and commences with the statement "comes now plaintiff, throughi t s u n de r s i gn e d co u n se l . " It i s t r u e t h a t t h e co m p l a in t a l s o s t a t e s t h a t t h e p l a in t i ff i s " r e p r e se n t e d h e r e i n b y it s M a n a g in g P a r t n e r G r e g o r io A r a n e t a , Inc.", another corporation T h e r e i s n o t h i n g a g a i n s t o n e c o r p o r a t i o n b e i n g r e p r e s e n t e d b y another person, natural or juridical, in a suit in court. T h e c on t e n t i o n t h a t G r e g or i o A r a n e t a In c. ca n n ot a ct a s ma n a g i n g p a r t n e r f o r p l a i n t i f f o n t h e t h e o r y t h a t i t i s i l l e g a l f o r t w o corporations to enter into a partnership is without merit, for the truerule is that though a corporation has no power into a partnership, itmay nevertheless enter into a joint venture with another where then a t u r e of t h a t ve n t u r e i s i n l i n e w it h t h e bu s i n e s s a u t h o r i ze d by i t s charter. N O T E : P o i n t o f t h e c a s e i s a b o u t j o i n t v e n t u r e s b e i n g t r e a t e d s e p a r a t e l y f r o m partnerships. Tuason doe s n ot e xp l a in wh y t h e r e wa s a d i f fe r e n ce in t r e a t me n t o f cor p or a t e in v o l ve me n t i n p a r t n e r sh i p s a s co m pa r e d t o t h a t wh e n i t c o me t o j o i n t ventures. 3. G.R. No. 75875 - WOLRGANG AURBACH vs. ... vs. SANITARY WARES MANUFACTURING CORPORATOIN, F: This consolidated petition assailed the decision of the CA directing a certain MANNER OF ELECTION OF OFFICERS IN THE BOARD OF DIRECTORS *There are two groups in this case, the Lagdameo group composed of Filipino investors and the American Standard Inc. (ASI) composed of foreign investors. The ASI Group and petitioner Salazar (G.R. Nos. 75975-76) contend that the actual intention of the parties should be viewed strictly on the "Agreement" dated August 15,1962 wherein it is clearly stated that the parties' intention was to form a corporation and not a joint venture. I: The main issue hinges on who were the duly elected directors of Saniwares for the year 1983 during its annual stockholders' meeting held on March 8, 1983. To answer this question the following factors should be determined:

*(1) the nature of the business established by the parties whether it was a joint venture or a corporation and H: While certain provisions of the Agreement would make it appear that the parties thereto disclaim being partners or joint venturers such disclaimer is directed at third parties and is not inconsistent with, and does not preclude, the existence of two distinct groups of stockholders in Saniwares one of which (the Philippine Investors) shall constitute the majority, and the other ASI shall constitute the minority stockholder. In any event, the evident intention of the Philippine Investors and ASI in entering into the Agreement is to enter into a joint venture enterprise An examination of the Agreement shows that certain provisions were inccuded to protect the interests of ASI as the minority. For example, the vote of 7 out of 9 directors is required in certain enumerated corporate acts. ASI is contractually entitled to designate a member of the Executive Committee and the vote of this member is required for certain transactions The Agreement also requires a 75% super-majority vote for the amendment of the articles and by-laws of Saniwares. ASI is also given the right to designate the president and plant manager .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. Under the Agreement, ASI agreed to provide technology and know-how to Saniwares and the latter paid royalties for the same. The legal concept of a joint venture is of common law origin. It has no precise legal definition but it has been generally understood to mean an organization formed for some temporary purpose. It is in fact hardly distinguishable from the partnership, since their elements are similar community of interest in the business, sharing of profits and losses, and a mutual right of control. The main distinction cited by most opinions in common law jurisdictions is that the partnership contemplates a general business with some degree of continuity, while the joint venture is formed for the execution of a single transaction, and is thus of a temporary nature.

4. G.R. No. L-55397 - TAI TONG CHUACHE & CO., petitioner, vs. THE INSURANCE COMMISSION A partnership may sue and be sued in its name or by its duly authorized representative. INSURANCE DIGEST Facts: Palomo obtained a loan from Taitong for 100T. To secure this, he mortgaged a parcel of land with a building. Taitong insured the mortgaged property with Travelers Multi-Indemnity Corp for 100T. The insured property was razed by fire. Taitong claimed the proceeds from the insurance company. Travelers refused to pay, claiming that Taitong had no more insurable interest in the property since Palomo had allegedly paid the mortgaged debt already. Issue: WON Taitong can collect the proceeds. Held: Yes. The allegation of the insurance company that the debt had already been paid was NOT proved. Taitong on the other hand presented evidence, namely the contract of mortgage which does not appear to have been canceled or released. INSURANCE DIGEST Facts: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000.00. To secure the payment of the loan, a mortgage was executed over the land and the building in favor of Tai Tong Chuache & Co. Arsenio Chua, representative of Thai Tong Chuache & Co. insured the latter's interest with Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for the building and P30,000.00 for the contents thereof) Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000.00 with respondent Zenith Insurance Corporation. On July 16, 1975, another Fire Insurance was procured from respondent Philippine British Assurance Company, covering the same building for P50,000.00 and the contents thereof for P70,000.00. The building and the contents were totally razed by fire. Based on the computation of the loss, including the Travellers Multi- Indemnity, respondents, Zenith Insurance, Phil. British Assurance and S.S.S. Accredited Group of Insurers, paid their corresponding shares of the loss. Complainants were paid the following: P41,546.79 by Philippine British Assurance Co., P11,877.14 by Zenith Insurance Corporation, and P5,936.57 by S.S.S. Group of Accredited Insurers Demand was made from respondent Travellers Multi-Indemnity for its share in the loss but the same was refused. Hence, complainants demanded from the other three (3) respondents the balance of each share in the loss in the amount of P30,894.31 (P5,732.79-Zenith Insurance: P22,294.62, Phil. British: and P2,866.90, SSS Accredited) but the same was refused, hence, this action. In their answers, Philippine British Assurance and Zenith Insurance Corporation denied liability on the ground that the claim of the complainants had already been waived, extinguished or paid. Both companies set up counterclaim in the total amount of P 91,546.79. SSS Accredited Group of Insurers informed the Commission that the claim of complainants for the balance had been paid in the amount in full. Travellers Insurance, on its part, admitted the issuance of a Policy and alleged defenses that Fire Policy, covering the furniture and building of complainants was secured by a certain Arsenio Chua and that the premium due on the fire policy was paid by Arsenio Chua. Tai Tong Chuache & Co. also filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued by respondent Travellers Multi-Indemnity. As adverted to above respondent Insurance Commission dismissed spouses Palomos' complaint on the ground that the insurance policy subject of the complaint was taken out by Tai Tong Chuache & Company, for its own interest only as mortgagee of the insured property and thus complainant as mortgagors of the insured property have no right of action against the respondent. It likewise dismissed petitioner's complaint in intervention in the following words:

From the above decision, only intervenor Tai Tong Chuache filed a motion for reconsideration but it was likewise denied hence, the present petition. Issue: WON Tai Tong had insurable interest Held: Yes. Petition granted. Ratio: Respondent advanced an affirmative defense of lack of insurable interest on the part of the petitioner that before the occurrence of the peril insured against, the Palomos had already paid their credit due the petitioner. However, they were never able to prove that Tai had a lack of insurable interest. Hence, the decision must be adverse against them. However respondent Insurance Commission absolved respondent insurance company from liability on the basis of the certification issued by the then Court of First Instance of Davao, Branch II, that in a certain civil action against the Palomos, Arsenio Lopez Chua stands as the complainant and not Tai Tong Chuache. From said evidence respondent commission inferred that the credit extended by petitioner to the Palomos secured by the insured property must have been paid. These findings was based upon a mere inference. The record of the case shows that the petitioner to support its claim for the insurance proceeds offered as evidence the contract of mortgage which has not been cancelled nor released. It has been held in a long line of cases that when the creditor is in possession of the document of credit, he need not prove non-payment for it is presumed. The validity of the insurance policy taken by petitioner was not assailed by private respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner. Public respondent argues however, that if the civil case really stemmed from the loan granted to Azucena Palomo by petitioner the same should have been brought by Tai Tong Chuache or by its representative in its own behalf. From the above premise, respondent concluded that the obligation secured by the insured property must have been paid. However, it should be borne in mind that petitioner being a partnership may sue and be sued in its name or by its duly authorized representative. Petitioner's declaration that Arsenio Lopez Chua acts as the managing partner of the partnership was corroborated by respondent insurance company. Thus Chua as the managing partner of the partnership may execute all acts of administration including the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable. Public respondent's allegation that the civil case flied by Arsenio Chua was in his capacity as personal creditor of spouses Palomo has no basis. The policy, then had legal force and effect. 5. AGUILA VS. CA 319 SCRA 246 (1999) Facts: P entered into a deed of sale with D Company, a partnership. Subsequently, P filed acase against X, one of the partners of D company, for the declaration of nullity of a deed of sale.X contends the action should be dismissed because he is not the real party in interest Issue: Whether the manager of D company is the real party in interest. Held: No. Rule 3, Sec. 2 of the Rules of Court of 1964, under which the complaint in this casewas filed, provided that every actio n must be prosecuted and defended in the name of the realparty in interest. A real party in interest is one who would be benefited or injured by the judgment, or who is entitled to the avails of the suit. Any decision rendered against a personwho is not a real party in interest in the case cannot be executed. Hence, a complaint filedagainst such a person should be dismissed for failure to state a cause of action.Under the Civil Code, a partnership has a juridical personality separate and distinct fromthat of each of the partners. The partners cannot be held liable for the obligations of thepartnership unless it is shown that the legal fiction is being used for fraudulent, unfair or illegalpurposes SEPARATE JURIDICAL PERSONALITY FACTS: Petitioner is the manager of A.C. Aguila & Sons, Co, a partnership engaged in lending activities. P r i va t e r e sp on de n t Fe l i c i da d A b r o ga r e n t e r e d in t o a M O A w/ A . C . A q u i l a & Sons involving a pacto de retro sale of a house & lot. A s pr i v a t e r e s p on de n t f a i le d t o r e de e m t h e p r o p e r t y w it h i n t h e p r e s cr i b e d p e r i od , p e t i t i on e r c a u se d t h e ca n ce l l a t i on o f T C T a n d t h e i ssu a n ce o f t h e new certificate of title in the name of the partnership. P r i v a t e r e s p o n d e n t f i l e d a p e t i t i o n f o r a d e c l a r a t i o n o f t h e n u l l i t y o f t h e deed of sale and a criminal complaint for forgery against petitioner alleging t h a t t h e s i g n a t u r e o f h e r h u s b a n d w a s a f o r g e r y b e c a u s e h e w a s a l r e a d y dead when the deed was supposed to have been executed. P e t i t i o n e r n o w c o n t e n d s t h a t h e i s n o t t h e r e a l p a r t y i n i n t e r e s t b u t A . C . Aguila & Co., against which this case should have been brought. ISSUE : WON the petitioner is the real party in interest. HELD :

No . Ru le 3 , S e c t i on 2 o f t h e Ru le s o f C ou r t o f 1 9 6 4 , u n d e r w h i ch t h e co m p l a in t in t h i s ca se w a s f i le d , p r ov i d e d t h a t " e ve r y a ct i on mu st be p r ose cu t e d a n d defended in the name of the real party in interest." A real party in interest is on e wh o w ou l d be be n e f i t e d or in j u r e d by t h e j u d g me n t , or wh o i s e n t i t le d t o t h e a v a i l s of t h e su i t . T h i s r u l in g i s n o w e mb od i e d in R u le 3 , S e ct i on 2 o f t h e 1 9 9 7 Re v ise d Ru le s o f C i v i l P r o ce d u r e . A n y d e c i s i on r e n de r e d a g a in st a pe r s on wh o is n ot a r e a l pa r t y in in t e r e s t i n t h e c a se ca n n ot b e e xe cu t e d . H e n c e , a c o m p l a i n t f i l e d a g a i n s t s u c h a p e r s o n s h o u l d b e d i s m i s s e d f o r failure to state a cause of action. A r t . 1 7 6 8 o f t h e C i v i l C o d e , a p a r t n e r s h i p h a s a j u r i d i c a l p e r s o n a l i t y separate and distinct from that of each partner. The partners cannot be held l i a b l e for t h e o b l i g a t i on s o f t h e p a r t n e r sh i p u n l e s s it i s sh o w n t h a t t h e l e ga l f i c t i o n o f a d i f f e r e n t j u r i d i c a l p e r s o n a l i t y i s b e i n g u s e d f o r f r a u d u l e n t , unfair, or illegal purposes. In t h i s c a se , pr i v a t e r e s p on d e n t h a s n ot s h o wn t h a t A . C . A g u i l a & S on s , C o . , a s a se p a r a t e j u r i d i ca l e n t it y , i s be in g u se d f or fr a u du le n t , u n fa i r , or i l l e ga l p u r p o se s. M or e o ve r , t h e t i t le t o t h e su b j e ct p r o p e r t y is i n t h e n a me o f A . C . A g u i l a & S o n s , C o . a n d t h e M e m o r a n d u m o f A g r e e m e n t w a s e x e c u t e d be t we e n p r i va t e r e sp on de n t , w it h t h e c on se n t o f h e r la t e h u sb a n d , a n d A . C . A g u i l a & S on s, C o . , r e p r e se n t e d by pe t it i o n e r . H e n ce , i t i s t h e p a r t n e r sh i p, n o t i t s o f f i c e r s o r a g e n t s , w h i c h s h o u l d b e i m p l e a d e d i n a n y l i t i g a t i o n in vo l v i n g p r op e r t y r e g i st e r e d i n it s n a me . A v i o l a t i on o f t h i s r u le w i l l r e su lt in the dismissal of the complaint 6. HEIRS OF TAN ENG KEE, petitioners, vs. COURT OF APPEALS and BENGUET LUMBER COMPANY, represented by its President TAN ENG LAY, respondents. G.R. No. 126881 October 3, 2000 DE LEON, JR., J.: FACTS: After the second World War, Tan Eng Kee and Tan Eng Lay, pooling their resources and industry together, entered into a partnership engaged in the business of selling lumber and hardware and construction supplies. They named their enterprise "Benguet Lumber" which they jointly managed until Tan Eng Kee's death. Petitioners herein averred that the business prospered due to the hard work and thrift of the alleged partners. However, they claimed that in 1981, Tan Eng Lay and his children caused the conversion of the partnership "Benguet Lumber" into a corporation called "Benguet Lumber Company." The incorporation was purportedly a ruse to deprive Tan Eng Kee and his heirs of their rightful participation in the profits of the business. Petitioners prayed for accounting of the partnership assets, and the dissolution, winding up and liquidation thereof, and the equal division of the net assets of Benguet Lumber. ISSUE: whether Tan Eng Kee and Tan Eng Lay were partners in Benguet Lumber HELD: Thus, in order to constitute a partnership, it must be established that (1) two or more persons bound themselves to contribute money, property, or industry to a common fund, and (2) they intend to divide the profits among themselves. The agreement need not be formally reduced into writing, since statute allows the oral constitution of a partnership, save in two instances: (1) when immovable property or real rights are contributed, and (2) when the partnership has a capital of three thousand pesos or more. In both cases, a public instrument is required. An inventory to be signed by the parties and attached to the public instrument is also indispensable to the validity of the partnership whenever immovable property is contributed to the partnership. The trial court determined that Tan Eng Kee and Tan Eng Lay had entered into a joint venture, which it said is akin to a particular partnership. A particular partnership is distinguished from a joint adventure, to wit: (a) A joint adventure (an American concept similar to our joint accounts) is a sort of informal partnership, with no firm name and no legal personality. In a joint account, the participating merchants can transact business under their own name, and can be individually liable therefor. (b) Usually, but not necessarily a joint adventure is limited to a SINGLE TRANSACTION, although the business of pursuing to a successful termination may continue for a number of years; a partnership generally relates to a continuing business of various transactions of a certain kind. A joint venture "presupposes generally a parity of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal 0rights in the conduct of the business." Tan Eng Kee never asked for an accounting. The essence of a partnership is that the partners share in the profits and losses. Each has the right to demand an accounting as long as the partnership exists. We have allowed a scenario wherein "[i]f excellent relations exist among the partners at the start of the business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible." But in the situation in the case at bar, the deferment, if any, had gone on too long to be plausible. A person is presumed to take ordinary care of his concerns. In determining whether a partnership exists, 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; (2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of the property; (3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived; (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, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installment or otherwise; (b) As wages of an employee or rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. In the light of the aforequoted legal provision, we conclude that Tan Eng Kee was only an employee, not a partner. Even if the payrolls as evidence were discarded, petitioners would still be back to square one, so to speak, 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. Petitioners failed to show how much their father, Tan Eng Kee, received, if any, as his share in the profits of Benguet Lumber Company for any particular period. Hence, they failed to prove that Tan Eng Kee and Tan Eng Lay intended to divide the profits of the business between themselves, which is one of the essential features of a partnership. There being no partnership, it follows that there is no dissolution, winding up or liquidation to speak of. 7. MARIANO P. PASCUAL and RENATO P. DRAGON, petitioners, vs.THE COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents. G.R. No. 78133 October 18, 1988 GANCAYCO, J.:

FACTS: On June 22, 1965, petitioners bought two (2) parcels of land from Santiago Bernardino, et al. and on May 28, 1966, they bought another three (3) parcels of land from Juan Roque. The first two parcels of land were sold by petitioners in 1968 to Marenir Development Corporation, while the three parcels of land were sold by petitioners to Erlinda Reyes and Maria Samson on March 19,1970. Petitioners realized a net profit in the sale made in 1968 in the amount of P165,224.70, while they realized a net profit of P60,000.00 in the sale made in 1970. The corresponding capital gains taxes were paid by petitioners in 1973 and 1974 by availing of the tax amnesties granted in the said years. However, in a letter dated March 31, 1979 of then Acting BIR Commissioner Efren I. Plana, petitioners were assessed and required to pay a total amount of P107,101.70 as alleged deficiency corporate income taxes for the years 1968 and 1970. respondent Commissioner informed petitioners that in the years 1968 and 1970, petitioners as co-owners in the real estate transactions formed an unregistered partnership or joint venture taxable as a corporation under Section 20(b) and its income was subject to the taxes prescribed under Section 24, both of the National Internal Revenue Code 1 that the unregistered partnership was subject to corporate income tax as distinguished from profits derived from the partnership by them which is subject to individual income tax; and that the availment of tax amnesty under P.D. No. 23, as amended, by petitioners relieved petitioners of their individual income tax liabilities but did not relieve them from the tax liability of the unregistered partnership. Hence, the petitioners were required to pay the deficiency income tax assessed. ISSUE: whether petitioners are subject to the tax on corporations provided for in section 24 of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, as well as to the residence tax for corporations and the real estate dealers' fixed tax. HELD: Article 1767 of the Civil Code of the Philippines provides: By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Pursuant to this article, the essential elements of a partnership are two, namely: (a) an agreement to contribute money, property or industry to a common fund; and (b) intent to divide the profits among the contracting parties. The first element is undoubtedly present in the case at bar, for, admittedly, petitioners have agreed to, and did, contribute money and property to a common fund. Hence, the issue narrows down to their intent in acting as they did. Upon consideration of all the facts and circumstances surrounding the case, we are fully satisfied that their purpose was to engage in real estate transactions for monetary gain and then divide the same among themselves, because: 1. Said common fund was not something they found already in existence . It was not a property inherited by them pro indiviso. They created it purposely. What is more they jointly borrowed a substantial portion thereof in order to establish said common fund. 2. They invested the same, not merely in one transaction, but in a series of transactions . On February 2, 1943, they bought a lot for P100,000.00. On April 3, 1944, they purchased 21 lots for P18,000.00. This was soon followed, on April 23, 1944, by the acquisition of another real estate for P108,825.00. Five (5) days later (April 28, 1944), they got a fourth lot for P237,234.14. The number of lots (24) acquired and transcations undertaken, as well as the brief interregnum between each, particularly the last three purchases, is strongly indicative of a pattern or common design that was not limited to the conservation and preservation of the aforementioned common fund or even of the property acquired by petitioners in February, 1943. In other

words, one cannot but perceive a character of habituality peculiar to business transactions engaged in for purposes of gain. 3. The aforesaid lots were not devoted to residential purposes or to other personal uses, of petitioners herein. The properties were leased separately to several persons, who, from 1945 to 1948 inclusive, paid the total sum of P70,068.30 by way of rentals. Seemingly, the lots are still being so let, for petitioners do not even suggest that there has been any change in the utilization thereof. 4. Since August, 1945, the properties have been under the management of one person , namely, Simeon Evangelists, with full power to lease, to collect rents, to issue receipts, to bring suits, to sign letters and contracts, and to indorse and deposit notes and checks. Thus, the affairs relative to said properties have been handled as if the same belonged to a corporation or business enterprise operated for profit. 5. The foregoing conditions have existed for more than ten (10) years, or, to be exact, over fifteen (15) years, since the first property was acquired, and over twelve (12) years, since Simeon Evangelists became the manager. 6. Petitioners have not testified or introduced any evidence, either on their purpose in creating the set up already adverted to, or on the causes for its continued existence. They did not even try to offer an explanation therefor. Although, taken singly, they might not suffice to establish the intent necessary to constitute a partnership, the collective effect of these circumstances is such as to leave no room for doubt on the existence of said intent in petitioners herein. Only one or two of the aforementioned circumstances were present in the cases cited by petitioners herein, and, hence, those cases are not in point. 5 In the present case, there is no evidence that petitioners entered into an agreement to contribute money, property or industry to a common fund, and that they intended to divide the profits among themselves. Respondent commissioner and/ or his representative just assumed these conditions to be present on the basis of the fact that petitioners purchased certain parcels of land and became co-owners thereof. 8. G.R. No. L-19342 Ona vs. CIR (LORENZO OA V CIR) Facts: Julia Buales died leaving as heirs her surviving spouse, Lorenzo Oa and her five children. A civil case was instituted for the settlement of her state, in which Oa was appointed administrator and later on the guardian of the three heirs who were still minors when the project for partition was approved. This shows that the heirs have undivided interest in 10 parcels of land, 6 houses and money from the War Damage Commission. Although the project of partition was approved by the Court, no attempt was made to divide the properties and they remained under the management of Oa who used said properties in business by leasing or selling them and investing the income derived therefrom and the proceeds from the sales thereof in real properties and securities. As a re sult, petitioners properties and investments gradually increased. Petitioners returned for income tax purposes their shares in the net income but they did not actually receive their shares because this left with Oa who invested them. Based on these facts, CIR decided that petitioners formed an unregistered partnership and therefore, subject to the corporate income tax, particularly for years 1955 and 1956. Petitioners asked for reconsideration, which was denied hence this petition for review from CTAs decision. Issue: W/N there was a co-ownership or an unregistered partnership W/N the petitioners are liable for the deficiency corporate income tax Held: Unregistered partnership. The Tax Court found that instead of actually distributing the estate of the deceased among themselves pursuant to the project of partition, the heirs allowed their properties to remain under the management of Oa and let him use their shares as part of the common fund for their ventures, even as they paid corresponding income taxes on their respective shares. Yes. For tax purposes, the co-ownership of inherited properties is automatically converted into an unregistered partnership the moment the said common properties and/or the incomes derived therefrom are used as a common fund with intent to produce profits for the heirs in proportion to their respective shares in the inheritance as determined in a project partition either duly executed in an extrajudicial settlement or approved by the court in the corresponding testate or intestate proceeding. The reason is simple. From the moment of such partition, the heirs are entitled already to their respective definite shares of the estate and the incomes thereof, for each of them to manage and dispose of as exclusively his own without the intervention of the other heirs, and, accordingly, he becomes liable individually for all taxes in connection therewith. If after such partition, he allows his share to be held in common with his co-heirs under a single management to be used with the intent of making profit thereby in proportion to his share, there can be no doubt that, even if no document or instrument were executed, for the purpose, for tax purposes, at least, an unregistered partnership is formed. For purposes of the tax on corporations, our National Internal Revenue Code includes these partnerships The term partnership includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on (8 Mertens Law of Federal Income Taxation, p. 562 Note 63; emphasis ours.)

with the exception only of duly registered general copartnerships within the purview of the term corporation. It is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said Code is concerned, and are subject to the income tax for corporations. Judgment affirmed. 9. L-45425 April 29, 1939. JOSE GATCHALIAN v CIR Facts: Plaintiffs purchased, in the ordinary course of business, from one of the duly authorized agents of the National Charity Sweepstakes Office one ticket for the sum of two pesos (P2), said ticket was registered in the name of Jose Gatchalian and Company. The ticket won one of the third-prizes in the amount of P50,000. Jose Gatchalian was required to file the corresponding income tax return covering the prize won. Defendant-Collector made an assessment against Jose Gatchalian and Co. requesting the payment of the sum of P1,499.94 to the deputy provincial treasurer of Pulilan, Bulacan. Plaintiffs, however through counsel made a request for exemption. It was denied. Plaintiffs failed to pay the amount due, hence a warrant of distraint and levy was issued. Plaintiffs paid under protest a part of the tax and penalties to avoid the effects of the warrant. A request that the balance be paid by plaintiffs in installments was made. This was granted on the condition that a bond be filed. Plaintiffs failed in their installment payments. Hence a request for execution of the warrant of distraint and levy was made. Plaintiffs paid under protest to avoid the execution. A claim for refund was made by the plaintiffs, which was dismissed, hence the appeal. Issue: Whether the plaintiffs formed a partnership hence liable for income tax. Held: Yes. 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, as they did in fact in the amount of P50,000. The partnership was not only formed, but upon the organization thereof and the winning of the prize, Jose Gatchalian personally appeared in the office of the Philippines Charity Sweepstakes, in his capacity as co-partner, as such collection the prize, the office issued the check for P50,000 in favor of Jose Gatchalian and company, and the said partner, in the same capacity, collected the said check. All these circumstances repel the idea that the plaintiffs organized and formed a community of property only. 10. G.R. No. L-68118 - JOSE P. OBILLOS, JR., ET AL. vs. COMMISSIONER OF INTERNAL REVENUE. Facts: For at least one year after their receipt of two parcels of land from their father, petitioners resold said lots to the Walled City Securities Corporation and Olga Cruz Canda, for which they earned a profit of P134,341.88 or P33,584 for each of them. They treated the profit as a capital gain and paid an income tax on one-half thereof or of P16,792. One day before the expiration of the five-year prescriptive period, the Commissioner of Internal Revenue, Commissioner acting on the theory that the four petitioners had formed an unregistered partnership or joint venture, required the four petitioners to pay corporate income tax on the total profit of P134,336 in addition to individual income tax on their shares thereof, a 50% fraud surcharge and a 42% accumulated interest. Further, the Commissioner considered the share of the profits of each petitioner in the sum of P33,584 as a " taxable in full (not a mere capital gain of which is taxable) and required them to pay deficiency income taxes aggregating P56,707.20 including the 50% fraud surcharge and the accumulated interest. The petitioners contested the assessments. Two Judges of the Tax Court sustained the same. Judge Roaquin dissented. Hence, the instant appeal. Issue: Whether or not petitioners have indeed formed a partnership or joint venture and thus, liable for corporate income tax. Held: 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 P178,708.12 to buy the two lots, resold the same and divided the profit among themselves. 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. That eventuality should be obviated. As testified by Jose Obillos, Jr., they had no such intention. They were co-owners pure and simple. To consider them as partners would obliterate the distinction between a co-ownership and a partnership. The petitioners were not engaged in any joint venture by reason of that isolated transaction. Article 1769(3) of the Civil Code provides that "the sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived". There must be an unmistakable intention to form a partnership or joint venture. WHEREFORE, the judgment of the Tax Court is reversed and set aside. The assessments are cancelled. No costs. 11. AFISCO INSURANCE CORP. V CA 302 SCRA 1 (January 25, 1999) Facts: AFISCO and 40 other non-life insurance companies entered into a Quota Share Reinsurance Treaties with Munich, a nonresident foreign insurance corporation, to cover for All Risk Insurance Policiesover machinery erection, breakdown and boiler explosion. The treaties required petitioners to form a pool, to which AFISCO and the others complied. On April 14, 1976, the pool of machinery insurers submitted a financial statement and filed an Information Return of Organization Exempt from Income Tax for the year ending 1975, on the basis of which, it was assessed by the commissioner of Internal Revenue deficiency corporate taxes. A protest was filed but denied by the CIR. Petitioners contend that they cannot be taxed as a corporation, because (a) the reinsurance policies were written by them individually and separately, (b) their liability was limited to the extent of their allocated share in the original risks insured and not solidary, (c) there was no common fund, (d) the executive board of the pool did not exercise control and management of its funds, unlike the board of a corporation, (e) the pool or clearing house was not and could not possibly have engaged in the business of reinsurance from which it could have derived income for itself. They further contend that remittances to Munich are not dividends

and to subject it to tax would be tantamount to an illegal double taxation, as it would result to taxing the same premium income twice in the hands of the same taxpayer. Finally, petitioners argue that the governments right to assess and collect the subject Information Return was filed by the pool on April 14, 1976. On the basis of this return, the BIR telephoned petitioners on November 11, 1981 to give them notice of its letter ofassessment dated March 27, 1981. Thus, the petitioners contend that the five-year prescriptive period then provided in the NIRC had already lapsed, and that the internal revenue commissioner was already barred by prescription from making an assessment. Held: A pool is considered a corporation for taxation purposes. Citing the case of Evangelista v. CIR, the court held that Sec. 24 of the NIRC covered these unregistered partnerships and even associations or joint accounts, which had no legal personalities apart from individual members. Further, the pool is a partnership as evidence by a common fund, the existence of executive board and the fact that while the pool is not in itself, a reinsurer and does not issue any insurance policy, its work is indispensable, beneficial and economically useful to the business of the ceding companies and Munich, because without it they would not have received their premiums. As to the claim of double taxation, the pool is a taxable entity distinct from the individual corporate entities of the ceding companies. The tax on its income is obviously different from the tax on the dividends received by the said companies. Clearly, there is no double taxation. As to the argument on prescription, the prescriptive period was totaled under the Section 333 of the NIRC, because the taxpayer cannot be located at the address given in the information return filed and for which reason there was delay in sending the assessment. Further, the law clearly states that the prescriptive period will be suspended only if the taxpayer informs the CIR of any change in the address. 12. Torres vs CA : 134559 : December 9, 1999 ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA BARING,petitioners, vs. COURT OF APPEALS and MANUEL TORRES, respondents. FACTS: This is a petition for Review on Certiorari for the decision of the Court of Appeals affirming the decision of the Trial Court in favour of herein respondent and denying reconsideration. Sisters Antonia Torres and Emeteria Baring, petitioners, entered into a "joint venture agreement"with Respondent Manuel Torres for the development of a parcel of land into a subdivision. They executed a Deed of Sale covering the said parcel of land in favor of respondent, who then had it registered in his name. By mortgaging the property, respondent obtained from Equitable Bank a loan of P40,000 which was to be used for the development of the subdivision. All three of them also agreed to share the proceeds from the sale of the subdivided lots. The project did not push through, and the land was subsequently foreclosed by the bank. Respondent used the loan to implement the Agreement, among others are: effect the survey and subdivision of the lots; approva l of the subdivision project with Lapu Lapu City Council; advertisement in the local newspaper; construction of roads, curbs and gutters; and construction of 6 low cost housing units. Respondent claimed that the subdivision project failed, however, because petitioners and their relatives had separately caused the annotations of adverse claims on the title to the land, which eventually scared away prospective buyers. Despite his requests , petitioners refused to cause the clearing of the claims, thereby forcing him to give up on the project. Petitioners filed with the RTC a civil action against respondent. RTC ruled in favour of respondent and which was later affirmed by CA. Hence, this Petition. ISSUE: WON, the CA erred in concluding that the agreement entered between petitioners and respondent was that of a joint venture/partnership. HELD: Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industr y to a common fund, with the intention of dividing the profits among themselves. Under the parties Agreement, petitioners would contribute property to the partnership in the form of land which was to be developed into a subdivision; while respondent would give, in addition to his industry, the amount needed for general expenses and other costs. Furthermore, the income from the said project would be divided according to the stipulated percentage. Clearly, the contract manifested the intention of the parties to form a partnership. It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title to the land to facilitate its use in the name of the respondent. On the other hand, respondent caused the subject land to be mortgaged, the proceeds of which were used for the survey and the subdivision of the land and so on. Respondent's actions clearly contradict petitioners' contention that he made no contribution to the partnership. Under Article 1767 of the Civil Code, a partner may contribute not only money or property, but also industry. Moreover, petitioners contend that they cannot be bound by the contract. Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. It is undisputed that petitioners are educated and are thus presumed to have understood the terms of the contract they voluntarily signed. If it was not in consonance with their expectations, they should have objected to it and insisted on the provisions they wanted. Courts are not authorized to extricate parties from the necessary consequences of their acts, and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their obligations. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms. Lastly, claiming that respondent was solely responsible for the failure of the subdivision project, petitioners maintain that he should be made to pay damages equivalent to 60 percent of the value of the property, which was their share in the profits under the Joint Venture Agreement.

We are not persuaded. True, the Court of Appeals HELD that petitioners' acts were not the cause of the failure of the project . But it also ruled that neither was respondent responsible therefor. In imputing the blame solely to him, petitioners failed to give any reason why we should disregard the factual findings of the appellate court relieving him of fault. Accordingly, we find no re versible error in the CA's ruling that petitioners are not entitled to damages. WHEREFORE, the Petition is hereby DENIED and the challenged Decision AFFIRMED. Costs against petitioners. 13.LIM TONG LIM v. PHILIPPINE FISHING GEAR INDUSTRIES INC (G.R. No. 136448; November 3, 1999) FACTS: On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries, Inc. (herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong Lim, who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four hundred pieces of floats worth P68,000 were also sold to the Corporation. The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a collection suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment. The suit was brought against the three in their capacities as general partners, on the allegation that "Ocean Quest Fishing Corporation" was a nonexistent corporation as shown by a Certification from the Securities and Exchange Commission. On September 20, 1990, the lower court ISSUEd a Writ of Preliminary Attachment, which the sheriff enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the Fisheries Port, Navotas, Metro Manila. ISSUE: Whether or not there was a partnership? HELD: Yes. it is clear that Chua, Yao and Lim had decided to engage in a fishing business, which they started by buying boats worth P3.35 million, financed by a loan secured from Jesus Lim who was petitioner's brother. These boats, the purchase and the repa ir of which were financed with borrowed money, fell under the term "common fund" under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be divided equally among them also shows that they had indeed formed a partnership. Given the preceding FACTS, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in the fishing business. They purchased the boats, which constituted the main assets of the partnership, and they agreed that the proceeds from the sales and operations thereof would be divided among them. 14. L-24193 June 28, 1968. MAURICIO AGAD, plaintiff-appellant, vs. SEVERINO MABATO and MABATO and AGAD COMPANY, 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. P O N E NT E : 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: N O . (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. 15. G.R. No. L-59956 ISABELO MORAN, JR., petitioner, vs. THE HON. COURT OF APPEALS Business Organization Partnership, Agency, Trust Profit and Loss Sharing Speculative Damages In February 1971, Isabelo Moran and Mariano Pecson entered into a partnership agreement where they agreed to contribute P15k each for the purpose of printing 95k posters of the delegates to the then 1971 Constitutional Commission. Moran shall be incharge in managing the printing of the posters. It was further agreed that Pecson will receive a commission of P1k a month starting from April 1971 to December 1971; that the partnership is to be liquidated on December 15, 1971. Pecson partially fulfilled his obligation to the partnership when he issued P10k in favor of the partnership. He gave the P10k to Moran as the managing partner. Moran however did not add anything and, instead, he only used P4k out of the P10k in printing 2,000 posters. He only printed 2,000 posters because he felt that printing all 95k posters is a losing venture because of the delay by the COMELEC in announcing the full delegates. All the posters were sold for a total of P10k. Pecson sued Moran. The trial court ordered Moran to pay Pecson damages. The Court of Appeals affirmed the decision of the trial court but modified the same as it ordered Moran to pay P47.5k for unrealized profit; P8k for Pecsons monthly commissions; P7k as return of investment because the venture never took off; plus interest. ISSUE: Whether or not the CA judgment is correct. HELD: No. The award of P47.5k for unrealized profit is speculative. There is no evidence whatsoever that the partnership between the Moran and Pecson would have been a profitable venture (because base on the circumstances then i.e. the delay of the COMELEC in proclaiming the candidates, profit is highly unlikely). In fact, it was a failure doomed from the start. There is therefore no basis for the award of speculative damages in favor of Pecson. Further, there is mutual breach in this case, Pecson only gave P10k instead of P15k while Moran gave nothing at all. As for the P8k monthly commission, this is without basis. The agreement does not state the basis of the commission. The paymentof the commission could only have been predicated on relatively extravagant profits. The parties could not have intended the giving of a commission inspite of loss or failure of the venture. Since the venture was a failure, Pecson is not entitled to the P8kcommission. As for the P7k award as return for Pecsons investment, the CA erred in his ruling too. Though the venture failed, it did took off the ground as evidenced by the 2,000 posters printed. Hence, return of investment is not proper in this case. There are risks in any

business venture and the failure of the undertaking cannot entirely be blamed on the managing partner alone, specially if the latter exercised his best business judgment, which seems to be true in this case. Moran must however return the unused P6k of Pecsons contribution to the partnership plus P3k representing Pecsons profit share in the sale of the printed posters. Computation of P3k profit share is as follows: (P10k profit from the sale of the 2,000 posters printed) (P4k expense in printing the 2k posters) = (P6k profit); Profit 2 = P3k each. 16.FUE LUNG v IAC 1989 DAN FUE LEUNG, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents. G.R. No. 70926 January 31, 1989 GUTIERREZ, JR., J.: FACTS: The petitioner asks for the reversal of the decision of the then Intermediate Appellate Court in AC-G.R. No. CV-00881 which affirmed the decision of the then Court of First Instance of Manila, Branch II in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of petitioner Dan Fue Leung in the business of Sun Wah Panciteria and ordering the petitioner to pay to the private respondent his share in the annual profits of the said restaurant. This case originated from a complaint filed by respondent Leung Yiu with the then Court of First Instance of Manila, Branch II to recover the sum equivalent to twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria since October, 1955 from petitioner Dan Fue Leung. The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established sometime in October, 1955. It was registered as a single proprietorship and its licenses and permits were issued to and in favor of petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial of the case to show that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000.00 to its initial establishment. The private respondents evidence is summarized as follows: About the time the Sun Wah Panciteria started to become operational, the private respondent gave P4,000.00 as his contribution to the partnership. This is evidenced by a receipt wherein the petitioner acknowledged his acceptance of the P4,000.00 by affixing his signature thereto. Furthermore, the private respondent received from the petitioner the amount of P12,000.00 covered by the latter's Equitable Banking Corporation Check from the profits of the operation of the restaurant for the year 1974 The petitioner denied having received from the private respondent the amount of P4,000.00. He contested and impugned the genuineness of the receipt. His evidence is summarized as follows: The petitioner did not receive any contribution at the time he started the Sun Wah Panciteria. He used his savings from his salaries as an employee at Camp Stotsenberg in Clark Field and later as waiter at the Toho Restaurant amounting to a little more than P2,000.00 as capital in establishing Sun Wah Panciteria. Petitioner presented various government licenses and permits showing the Sun Wah Panciteria was and still is a single proprietorship solely owned and operated by himself alone. Fue Leung also flatly denied having issued to the private respondent the receipt (Exhibit G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount of P12,000.00 (Exhibit B). ISSUE: WON Private respondent is a partner of the petitioner in Sun Wah Panciteria? HELD: The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership which are 1) two or more persons bind themselves to contribute money, property, or industry to a common fund; and 2) intention on the part of the partners to divide the profits among themselves (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been established. As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent relations exist among the partners at the start of business and all the partners are more interested in seeing the firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible. It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of operations, such rights are irretrievably lost. The private respondent's cause of action is premised upon the failure of the petitioner to give him the agreed profits in the operation of Sun Wah Panciteria. In effect the private respondent was asking for an accounting of his interests in the partnership. It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. Article 1842 states: The right to an account of his interest shall accrue to any partner, or his legal representative as against the winding up partners or the surviving partners or the person or partnership continuing the business, at the date of dissolution, in the absence or any agreement to the contrary. Regarding the prescriptive period within which the private respondent may demand an accounting, Articles 1806, 1807, and 1809 show that the right to demand an accounting exists as long as the partnership exists. Prescription begins to run only upon the dissolution of the partnership when the final accounting is done. Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which, in part, provides: Art. 1831. On application by or for a partner the court shall decree a dissolution whenever: xxx xxx xxx (3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business; (4) A partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him; xxx xxx xxx (6) Other circumstances render a dissolution equitable. There shall be a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable.

17. 85494. July 10, 2001]. CHOITHRAM JETHMAL RAMNANI and/or NIRMLA V. RAMNANI and MOTI C. RAMNANI, petitioners, vs. COURT OF APPEALS CHOITHRAM JETHMAL RAMNANI AND/OR NIRMLA V. RAMNANI and MOTI G. RAMNANI, petitioners, vs.COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI, SONYA JETHMAL RAMNANI and OVERSEAS HOLDING CO., LTD., respondents. G.R. No. 85496 May 7, 1991 SPOUSES ISHWAR JETHMAL RAMNANI AND SONYA JET RAMNANI, petitioners, vs. THE HONORABLE COURT OF APPEALS, ORTIGAS & CO., LTD. PARTNERSHIP, and OVERSEAS HOLDING CO., LTD., respondents. FACTS: Ishwar Jethmal Ramnani and his wife Sonya had their main business based in New York. Ishwar received US $150,000.00 from his father-in-law in Switzerland. In 1965, Ishwar Jethmal Ramnani sent the amount of US $150,000.00 to Choithram in two bank drafts of US$65,000.00 and US$85,000.00 for the purpose of investing the same in real estate in the Philippines. Subsequently, spouses Ishwar executed a general power of attorney appointing Ishwars full blood brothers Choithram and Navalrai as attorneys-in-fact, empowering them to manage and conduct their business concerns in the Philippines. Choithram, as attorney-in-factr, entered into two agreements for the purchase of two parcels of land located in Pasig Rizal from Ortigas & Company, Ltd. Partnership (Ortigas Ltd.) with a total area of approximately 10,048 square meters. Three buildings were constructed thereon and were leased out by Choithram as attorney-in-fact of spouses Ishwar. Two of these buildings were later burned. In 1970 Ishwar asked Choithram to account for the income and expenses relative to these properties during the period 1967 to 1970. Choithram failed and refused to render such accounting which prompted Ishwar to revoke the general power of attorney. Choithram and Ortigas Ltd. were duly notified by notice in writing of such revocation. It was also registered with the Securities and Exchange Commission and published in The Manila Times. Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and interests of Ishwar spouses in favor of Nirmla Ramnani, the wife of Choitrams son, Moti. Ortigas also executed the corresponding deeds of sale in favor of Nirmla and the TCT ISSUEd in her favour.. Thus, spouses Ishwar filed a complaint in the Court of First Instance of Rizal against Choithram and spouses Nirmla and Moti (Choithram et al.) and Ortigas Ltd. for reconveyance of said properties or payment of its value and damages. Trial court dismissed the complaint ruling that the lone testimony of Ishwar regarding the cash remittance is unworthy of faith and credit because the cash remittance was made before the execution of the general power of attorney. Ishwar also failed to corroborate this lone testimony and did not exhibit any commercial document as regard to the alleged remittances. It believed the claim of Choitram that he and Ishwar entered into a temporary arrangement in order to enable Choithram, then a British citizen, to purchase the properties in the name of Ishwar who was an American citizen and who was then qualified to purchase property in the Philippines under the then Parity Amendment. Upon appeal, the CA reversed the decision and gave credence to Ishwar. It upHELD the validity of Ishwars testimony and gave cognizance to a letter written by Choihtram imploring Ishwar to renew the power of attorney after it was revoked. It states therein that Choithram reassures his brother that he is not after his money and that the revocation is hurting the reputation of Ishwar. Choithram also made no mention of his claimed temporary arrangement in the letter.. The CA ruled that Choithram is also estopped in pais or by deed from claiming an interest over the properties. Because of Choitrams admissions from (1) power of attorney, (2) the Agreements, and (3) the Contract of Lease It furthermore HELD that Choithram's 'temporary arrangement, by which he claimed purchasing the two (2) parcels in question in 1966 and placing them in the name of Ishwar who is an American citizen circumvents the disqualification provision of aliens acquiring real properties in the Philippines. Upholding the supposed "temporary arrangement" with Ishwar would be sanctioning the perpetration of an illegal act and culpable violation of the Constitution. During the pendency of the case, Choithram made several attempts to dispose of his properties by way of donation and also mortgaged the properties under litigation for 3 million USD to a shell partnership with a mere capital of 100 USD. The Supreme Court affirms the findings of the Court of Appeals. ISSUE1: Whether or not there was a partnership between the brothers Ishwar and Choithram HELD: Yes, Even without a written agreement, the scenario is clear. Spouses Ishwar supplied the capital of $150,000.00 for the business. They entrusted the money to Choithram to invest in a profitable business venture in the Philippines. For this purpose they appointed Choithram as their attorney-in-fact. Choithram in turn decided to invest in the real estate business. He bought the two (2) parcels of land in question from Ortigas as attorney-in-fact of Ishwar- Instead of paying for the lots in cash, he paid in installments and used the balance of the capital entrusted to him, plus a loan, to build two buildings. Although the buildings were burned later, Choithram was able to build two other buildings on the property. He rented them out and collected the rentals. Through the industry and genius of Choithram, Ishwar's property was developed and improved into what it is nowa valuable asset worth millions of pesos. We have a situation where two brothers engaged in a business venture. One furnished the capital, the other contributed his industry and talent. Justice and equity dictate that the two share equally the fruit of their joint investment and efforts. Perhaps this Solomonic solution may pave the way towards their reconciliation. Both would stand to gain. No one would end up the loser. After all, blood is thicker than water. However, because of the devious machinations and schemes that Choithram employed he should pay moral and exemplary damages as well as attorney's fees to spouses Ishwar. ISSUE2: Whether or not Ortigas Ltd. is liable.

HELD: Yes, because Ortigas had several notices of the revocation. Despite said notices, Ortigas nevertheless acceded to the representation of Choithram, as alleged attorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar to Nirmla. While the primary blame should be laid at the doorstep of Choithram, Ortigas is not entirely without fault. It should have required Choithram to secure another power of attorney from Ishwar. For recklessly believing the pretension of Choithram that his power of attorney was still good, it must, therefore, share in the latter's liability to Ishwar. 18. Marsman Drysdale Land, Inc. vs. Philippine Geoanalytics, Inc. and Gotesco Properties, Inc. (G.R. No. 183374; 29 June 29, 2010 If parties to a joint venture agreed on how the profits from the joint venture would be divided, but did not specify how losses would be split, how should the losses be distributed? A joint venture, being a form of partnership, is to be governed by the laws on partnership. Under the laws on partnership, particularly Article 1797 of the Civil Code, the losses and profits shall be distributed in accordance with the partnership agreement; if only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. FACTS: On February 12, 1997, Marsman Drysdale Land, Inc. and Gotesco Properties, Inc. entered into a Joint Venture Agreement (JVA) for the construction and development of an office building on a land owned by Marsman Drysdale in Makati City. Via Technical Services Contract (TSC) dated July 14, 1997, the joint venture engaged the services of the Philippine Geoanalytics, Inc. (PGI) to provide subsurface soil exploration, laboratory testing, seismic study and geotechnical engineering for the project. PGI, was, however, able to drill only four or five boreholes needed to conduct its subsurface soil exploration and laboratory testing, justifying its failure to drill the remaining borehole to the failure on the part of the joint venture partners to clear the area where the drilling was to be made. PGI was able to complete its seismic study though. PGI then billed the joint venture on November 24, 1997 for 284, 553.50 representing the cost of partial subsurface soil exploration; and on January 15, 1998 for 250, 800.00 representing the cost of the completed seismic study. Despite repeated demands from PGI, the joint venture failed to pay its obligations. Due to unfavorable economic conditions at the time, the joint venture was cut short and the planned building project was eventually shelved. PGI subsequently filed on November 11, 1999 a complaint for a collection of sum of money and damages at the RTC of Quezon City against Marsman Drysdale and Gotesco. ISSUE: WON Philippine Geoanalytics, Inc is entitled to the payment of services it rendered. If so, which between joint venturers Marsman Drysdale and Gotesco bears the liability to pay PGI its unpaid claims.

RULING: Yes. The Court is convinced that PGI had more than sufficiently established its claims against the joint venture. In fact, Marsman Drysdale had long recognized PGIs contractual claims when it received a Certificate of Payment from the joint ventures project manager which was endorsed to Gotesco for processing and payment. The Court finds Marsman and Gotesco jointly liable to PGI. PGI executed a technical service contract with the joint venture and was never a party to the JVA. While the JVA clearly spelled out, inter alia, the capital contributions of Marsman Drysdale and Gotesco as well as the funding and financing mechanism for the project, the same cannot be used to defeat the lawful claim of PGI against the two joint venturers-partners. A joint venture being a form of partnership, it is to be governed by the laws on partnership. In the JVA, Marsman Drysdale and Gotesco agreed on a 50-50 ratio on the proceeds of the project. They did not provide for the splitting of the losses, however. Applying the provision of Article 1797 then, the same ratio applies in splitting the 535,353.50 obligation-loss of the joint venture.