Aurelio Litonjua Jr vs Eduardo Litonjua Sr.

et al
Aurelio and Eduardo are brothers. In 1973, Aurelio alleged that Eduardo entered
into a contract of partnership with him. Aurelio showed as evidence a letter sent to
him by Eduardo that the latter is allowing Aurelio to manage their family business (if
Eduardos away) and in exchange thereof he will be giving Aurelio P1 million or 10%
equity, whichever is higher. A memorandum was subsequently made for the said
partnership agreement. The memorandum this time stated that in exchange of
Aurelio, who just got married, retaining his share in the family business (movie
theatres, shipping and land development) and some other immovable properties, he
will be given P1 Million or 10% equity in all these businesses and those to be
subsequently acquired by them whichever is greater.
In 1992 however, the relationship between the brothers went sour. And so Aurelio
demanded an accounting and the liquidation of his share in the partnership.
Eduardo did not heed and so Aurelio sued Eduardo.
ISSUE: Whether or not there exists a partnership.
HELD: No. The partnership is void and legally nonexistent. The documentary
evidence presented by Aurelio, i.e. the letter from Eduardo and the Memorandum,
did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in
tone, but is unsigned and undated. As an unsigned document, there can be no
quibbling that said letter does not meet the public instrumentation requirements
exacted under Article 1771 (how partnership is constituted) of the Civil Code.
Moreover, being unsigned and doubtless referring to a partnership involving more
than P3,000.00 in money or property, said letter cannot be presented for
notarization, let alone registered with the Securities and Exchange Commission
(SEC), as called for under the Article 1772 (capitalization of a partnership) of the
Code. 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, the next logical point of inquiry turns on the nature of Aurelios
contribution, if any, to the supposed partnership.
The Memorandum is also not a proof of the partnership for the same is not a public
instrument and again, no inventory was made of the immovable property and no
inventory was attached to the Memorandum. Article 1773 of the Civil Code requires
that if immovable property is contributed to the partnership an inventory shall be
had and attached to the contract.
AGUILA JR. vs. CA 319 SCRA 246, G.R. No. 127347, November 25, 1999,
Mendoza, J.:p

FACTS: In April 1991, the spouses Ruben and Felicidad Abrogar entered into a loan
agreement with a lending firm called A.C. Aguila & Sons, Co., a partnership. The
loan was for P200k. To secure the loan, the spouses mortgaged their house and lot
located in a subdivision. The terms of the loan further stipulates that in case of nonpayment, the property shall be automatically appropriated to the partnership and a
deed of sale be readily executed in favor of the partnership. She does have a 90 day
redemption period.
Ruben died, and Felicidad failed to make payment. She refused to turn over the
property and so the firm filed an ejectment case against her (wherein she lost). She
also failed to redeem the property within the period stipulated. She then filed a civil
case against Alfredo Aguila, manager of the firm, seeking for the declaration of
nullity of the deed of sale. The RTC retained the validity of the deed of sale. The
Court of Appeals reversed the RTC. The CA ruled that the sale is void for it is a
pactum commissorium sale which is prohibited under Art. 2088 of the Civil Code
(note the disparity of the purchase price, which is the loan amount, with the actual
value of the property which is after all located in a subdivision).
ISSUE: Whether or not the case filed by Felicidad shall prosper.
HELD: No. Unfortunately, the civil case was filed not against the real party in
interest. As pointed out by Aguila, he is not the real party in interest but rather it
was the partnership A.C. Aguila & Sons, Co. The Rules of Court provide that every
action must be prosecuted and defended in the name of the real party 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 person who
is not a real party in interest in the case cannot be executed. Hence, a complaint
filed against such a person should be dismissed for failure to state a cause of action,
as in the case at bar.
Under Art.1768 of the Civil Code, a partnership has a juridical personality separate
and distinct from that of each of the partners. 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, unfair, or illegal purposes.
In this case, Felicidad has not shown that A.C. Aguila & Sons, Co., as a separate
juridical entity, is being used for fraudulent, unfair, or illegal purposes. Moreover,
the title to the subject property is in the name of A.C. Aguila & Sons, Co. It is the
partnership, not its officers or agents, which should be impleaded in any litigation
involving property registered in its name. A violation of this rule will result in the
dismissal of the complaint.
Sunga Chan v. Chua
Facts:

On June 22, 1992, respondent Lamberto T. Chua filed a complaint against

petitioners, Lilibeth Sunga Sunga Chan and Cecilia Sunga, daughter and wife,
respectively of the deceased Jacinto L. Sunga, for winding up of Partnership Affairs,
accounting, appraisal and recovery of Shares and Damages with Writ of Preliminary
Attachment with the Regional Trial Court, Branch 11, Zamboanga del Norte.
Respondent alleged that in 1977, he verbally entered into a partnership with Jacinto
in the distribution of Shellane Liquefied Petroleum Gas (LPG) in Manila with initial
capital contribution of Php100,000.00 each, with the intention that the profits would
be equally divided between them. For business convenience, respondent and Jacinto
agreed to register the business name of their partnership SHELLITE GAS APPLIANCE
CENTER under the name of Jacinto as sole proprietorship.
Petitioners question the correctness of the finding of the Trial Court and the Court of
Appeals that a partnership existed in the absence of any written document to show
partnership between respondent and Jacinto from 1977 until Jacintos death.
Issue:
Whether or not respondent Lamberto Chua and Jacinto L. Sunga has entered into a
partnership?
Held:
Yes. The court ruled that 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. Also, Article 1772 of the Civil Code requires
that partnership with a capital of Php3,000.00 or more must register with the
Securities and Exchange Commission, however this registration requirement is not
mandatory. Article 1768 of the Civil Code explicitly provides that the partnership
retains its juridical personality even if it fails register. The failure to register the
contract of partnership does not invalidate the same as among the partners, so long
as the contract has the essential requisites, because the main purpose of
registration is to give notice to third parties, and it can be assumed that the
members themselves knew of the contents of their contract.
Campos Rueda & Co v Pacific Commercial (44 Phil 916)
Facts:
Campos, Rueda & Co., a limited partnership, is indebted to the appellants: Pacific
Commercial Co. , Asiatic Petroleum Co, and International Banking Corporation
amounting to not less than P1,000.00 (which were not paid more than 30 days prior
to the date of the filing by petitioners of the application for voluntary insolvency).
The trial court denied their petition on the ground that it was not proven, nor
alleged, that the members of the firm were insolvent at the time the application was

filed. It also held that the partners are personally and solidarily liable for the
consequences of the transactions of the partnership.
Issue:
Whether or not a limited partnership may be held to have committed an act of
insolvency.
Held:
Yes. A limited partnerships juridical personality is different from the personality of
its members. On general principle, the limited partnership must answer for and
suffer the consequence of its acts. Under our Insolvency Law, one of the acts of
bankruptcy upon w/c an adjudication of involuntary insolvency can be predicated is
the failure to pay obligations.
The failure of Campos, Rueda & Co., to pay its obligations constitutes an act w/c is
specifically provided for in the Insolvency Law for declaration of involuntary
insolvency. The petitioners have a right to a judicial decree declaring the involuntary
insolvency of said partnership.
CIR VS. SUTER
FACTS:A limited partnership named William J. Suter 'Morcoin' Co., Ltd was
formed 30September 1947 by William J. Suter as the general partner, and Julia
Spirig
and
Gustav
Carlson.
They
contributed,
respectively,
P20,000.00, P18,000.00 andP2,000.00. It was also duly registered with the SEC. On
1948 Suter and Spirig got married and in effect Carlson sold his share to the couple,
the same was also registered with the SEC. The limited partnership had been filing
its income tax returns as a corporation, without objection by the herein petitioner,
Commissioner of Internal Revenue, until in1959 when the latter, in an assessment,
consolidated the income of the firm and the individual incomes of the partnersspouses Suter and Spirig resulting in a determination of a deficiency income tax
against respondent Suter in the amount of P2,678.06 for 1954 and P4,567.00
for 1955.
ISSUE: Whether or not the limited partnership has been dissolved after the marriage
of Suter and Spirig and buying the interest of limited partner Carlson.
RULING: No, the limited partnership was not dissolved. A husband and a wife may
not enter into a contract of general co-partnership, because under the Civil Code,
which applies in the absence of express provision in the Code of Commerce, persons
prohibited from making donations to each other are prohibited from entering into
universal partnerships. (2Echaverri 196) It follows that the marriage of partners
necessarily brings about the dissolution of a pre-existing partnership. What the law
prohibits
was
when
the
spouses
entered into a generalpartnership. In the case at bar, the partnership was limited.